08-03-21 Agenda PacketDATE: TO: FROM: CONTACT: SUBJECT: Summary: AGENDA REPORT CityofPoway August 3, 2021 Honorable Mayor and Me~s of the City Council Jon M. Canavan, Fire Chief~ Jon M. Canavan, Fire Chief (858) 668-4461 or jcanavan@poway.org CITY COUNCIL Resolution to Continue the Existence of a Local Emergency Within the City of Poway Due to the Novel Coronavirus (COVID-19) Global Pandemic The Novel Coronavirus (COVID-19) global pandemic continues to cause unprecedented impacts on all economic and social segments of the United States. Federal, state, and county directives, mandates and orders to prevent, control and manage the spread of COVID-19 have, and continue to, impact Poway residents, businesses and visitors. On March 18, 2020, the City Council approved a resolution proclaiming a local emergency. The adopted resolution requires the City Council to either continue the emergency action or declare the emergency ended at each regular meeting. Recommended Action: It is recommended that the City Council approve a resolution continuing the Proclamation of Local Emergency authorizing the City Manager to take necessary actions to protect the public and welfare of the City from the serious and imminent threat of COVID-19. This action requires a four-fifths (4/5) vote of the City Council. Discussion: The COVID-19 global pandemic continues to impact business, education, healthcare, military, and social segments of the United States. COVID-19 has resulted in a swift economic slowdown and high unemployment rates. Federal, state, and county directives, mandates, orders and guidelines have been issued to prevent, control and manage the spread of COVID-19. While efforts are focused on re-opening the economy and relaxing restrictions, impact on Poway residents, businesses and visitors continues. In response to the COVID-19 global pandemic, and its impact on Poway, the City Manager, serving as Director of Emergency Services for the City of Poway, proclaimed a local emergency on March 13, 2020. On March 18, 2020, the City Council approved Resolution No. 20-013 ratifying the City Manager's Proclamation of Local Emergency. The City Council approved to continue the emergency action in 2020 on April 7, April 21, May 5, May 19, June 2, June 16, July 7, July 21, August 4, September 1, September 15, October 6, October 20, November 17, December 1, and December 15. And in 2021, the City Council approved to continue the emergency action on January 19, February 2, February 16, March 2, March 16, April 6, April 20, May 4, May 18, June 1, June 15 and July 20. The 1 of 5 August 3, 2021, Item #2
adopted resolution requires the City Council to either continue the emergency action or declare the emergency ended at each regular meeting. Environmental Review: This action is not subject to review under the California Environmental Quality Act (CEQA). Fiscal Impact: As of July 20, 2021, City costs to respond to COVID-19 are estimated at $990,434. These costs specifically relate to FEMA eligible expenditures. The total fiscal impact is unknown at this time. Per the City Council adopted General Fund Reserve policy, the City maintains a General Fund Reserve of 45 percent of the budgeted annual General Fund operating expenditures, or $19,233,004 as of June 30, 2020, net of the $2,000,000 used from the Extreme Events/Public Safety reserve the City Council approved on April 16, 2020 to fund the Poway Emergency Assistance Recovery Loan (PEARL) program. The PEARL program is discussed in more detail below. Within that 45 percent, $12,142,455 is set aside for Extreme Events/Public Safety. Based upon the City's reserve policy, there are adequate reserves to cover the costs to respond to this health emergency. Further, staff believes some of the costs are recoverable under State and Federal Disaster programs. Amounts recovered under these programs will be used to replenish the General Fund reserve. Pursuant to the reserve policy, staff will return with a plan to replenish any General Fund reserves not replenished under a State or Federal Disaster program. Staff will recommend applicable budget adjustments prior to the completion of the current fiscal year. In addition to using reserves to respond to COVID-19, as mentioned above, on April 20, 2020, the City Council approved $2,000,000 to fund the PEARL program for small businesses. The PEARL program's goal is to offer financial assistance to small businesses located in Poway by complementing existing state and federal loan programs and to provide a financial bridge to businesses to survive the current emergency. The PEARL program provides loans of up to $50,000 to eligible business. As of July 20, 2021, staff has received 80 applications requesting $2,912,165 in loans. Based on staffs review, 35 loans totaling $1,385,326 have been approved and two loans totaling $100,000 have been repaid. The reserve fund will be replenished from the repayment of PEARL loans over a three-year period following the end of the local COVID-19 emergency. This period falls within the General Fund Reserve Policy's direction to fully replenish reserves within five years of use. Public Notification: None. Attachments: A. Resolution B. Proclamation of Local Emergency Reviewed/ Approved By: Wendy serman Assistant City Manager 2 of 5 Reviewed By: Alan Fenstermacher City Attorney City Manager August 3, 2021, Item #2
RESOLUTION NO. 21-A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY, CALIFORNIA, FINDING AND DECLARING THE CONTINUED EXISTENCE OF AN EMERGENCY WITHIN THE CITY DUE TO THE NOVEL CORONAVIRUS (COVID-19) GLOBAL PANDEMIC WHEREAS, the Novel Coronavirus (COVID-19) global pandemic in the City of Poway, commencing on or about January 24, 2020 that creates a threat to public health and safety; WHEREAS, Government Code section 8630 and Poway Municipal Code (PMC) Section 2.12.060 empower the City Manager, acting as the Director of Emergency Services, to proclaim the existence of a local emergency when the City is affected by a public calamity, and the City Council is not in session; WHEREAS, on March 13, 2020, the City Manager, acting pursuant to Government Code section 8630 and PMC section 2.12.060, proclaimed the existence of a local emergency based on conditions of extreme peril to the health and safety of persons caused by the Novel Coronavirus (COVID-19) global pandemic; WHEREAS, on March 18, 2020, the City Council, acting pursuant to Government Code section 8630 and PMC section 2.12.065, ratified the existence of a local emergency within seven (7) days of a Proclamation of Local Emergency by the City Manager; WHEREAS, the City Council, acting pursuant to PMC section 2.12.065, approved extending the emergency declaration during regularly scheduled meetings in 2020 on April 7, April 21, May 5, May 19, June 2, June 16, July 7, July 21, August 4, September 1, September 15, October 6, October 20, November 17, December 1, December 15, and in 2021 on January 19, February 2, February 16, March 2, March 16, April 6, April 20, May 4, May 18, June 1, June 15 and July 20; WHEREAS, Public Contract Code Section 20168 provides that the City Council may pass by four-fifths (4/5) vote, a resolution declaring that the public interest and necessity demand the immediate expenditure of public money to safeguard life, health, or property; WHEREAS, upon adoption of such resolution, the City Manager may expend any sum required in the emergency and report the same to the City Council in accordance with Public Contract Code Section 22050; WHEREAS, if such expenditure is ordered, the City Council shall review the emergency action at each regular meeting, to determine if there is a need to continue the action or if the Proclamation of Local Emergency may be terminated; and WHEREAS, such the Novel Coronavirus (COVID-19) global pandemic constitute an emergency within the terms of Public Contract Code Sections 20168 and 22050 which requires that the City Manager be able to act quickly and without complying with the notice and bidding procedures of the Public Contract Code to safeguard life, health, or property. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway hereby finds and declares: 3 of 5 ATTACHMENT A August 3, 2021, Item #2
Resolution No. 21-Page 2 SECTION 1: An emergency continues to exist within the City as the result of the Novel Coronavirus (COVID-19) global pandemic; and (a) The continuing threat of the Novel Coronavirus (COVID-19) global pandemic requires that the City be able to expend public money in order to safeguard life, health, or property; (b) The City Manager, as the City's Personnel Officer, is authorized to take actions necessary to alter employee leave policies and ensure a safe and healthy workforce; (c) The City Manager is authorized to safeguard life, health, or property without complying with notice or bidding procedures; and (d) Once such expenditure is made, the City Manager shall report the conditions to the City Council at each regular meeting, at which time the City Council shall either continue the emergency action or declare the emergency ended. SECTION 2: This Proclamation of Local Emergency and all subsequent resolutions in connection herewith shall require a four-fifths (4/5) vote of the City Council. PASSED, ADOPTED AND APPROVED at a Regular Meeting of the City Council of the City of Poway, California on the 3rd day of August, 2021 by the following vote, to wit: AYES: NOES: ABSENT: DISQUALIFIED: Steve Vaus, Mayor ATTEST: Deborah Harrington, Interim City Clerk 4of 5 August 3, 2021, Item #2
PROCLAMATION OF LOCAL EMERGENCY WHEREAS, section 2.12.060 of the Poway Municipal Code empowers the Director of Emergency Services to proclaim the existence or threatened existence of a local emergency when the City is affected or likely to be affected by a public calamity and the City Council is not in session; WHEREAS, the City Manager, as Director of Emergency Services of the City of Poway, does hereby find that conditions of extreme peril to the safety of persons and property have arisen within the City of Poway, caused by the Novel Coronavirus (COVID-19) commencing on January 24, 2020; WHEREAS, that the City Council of the City of Poway is not in session and cannot immediately be called into session; and WHEREAS, this Proclamation of Local Emergency will be ratified by the City Council within seven days of being issued. NOW, THEREFORE, IT IS HEREBY PROCLAIMED by the Director of Emergency Services for the City of Poway, that a local emergency now exists throughout the City and that said local emergency shall be deemed to continue to exist until its termination is proclaimed by the City Council; IT IS FURTHER PROCLAIMED AND ORDERED that during the existence of said local emergency the powers, functions, and duties of the emergency organization of this City shall be those prescribed by state law, ordinances, and resolutions of this City, and by the City of Poway Emergency Plan; and IT IS FURTHER PROCLAIMED AND ORDERED that a copy of this Proclamation of Local Emergency be forwarded to the State Director of the Governor's Office of Emergency Services with a request that; 1. The State Director find the Proclamation of Local Emergency acceptable in accordance with provisions of the Natural Disaster Assistance Act; and 2. The State Director forward this Proclamation, and request for a State Proclamation and Presidential Declaration of Emergency, to the Governor of California for consideration and action. PASSED AND ADOPTED by the Director of Emergency Services for the City of Poway this 13th day of March 2020. Director of Emergency Services 5 of 5 ATTACHMENT B August 3, 2021, Item #2
August 3, 2021, Item #3,., l.,1' I ' ·~-.: ~~+' Hf ' DATE: TO: FROM: CONTACT: SUBJECT: Summary: AGENDA RE PO RT City of Poway August 3, 2021 Honorable Mayor and Members of the City Cou~cil Eric Heidemann, Director of Public Works f CITY COUNCIL Troy DePriest, Assistant Director of Public Works for Utilities 1'\)\' · (858) 668-4750 or tdepriest@poway.org ~ Will Wiley, Assistant Director of Public Works for Maintenance Operatio / (858) 668-4705 or wwiley@poway.org Award of Agreement to Bay City Equipment Industries Inc. dba Bay City Electric Works for Generator and Switchgear Maintenance Services, RFP No. 21-031 A Request for Proposals (RFP) for Generator and Switchgear Maintenance Services was duly advertised on May 27, 2021, and June 10, 2021. Three proposals were received and opened on June 21, 2021. Bay City Equipment Industries Inc. dba Bay City Electric Works (Bay City) was found to be responsive to the criteria in the proposal. The first term of the agreement is two (2) years beginning August 1, 2021, through July 31, 2023 and may be extended for up to three (3) one-year terms. Recommended Action: It is recommended that the City Council award the Agreement for Generator and Switchgear Maintenance Services, RFP No. 21-031, to Bay City Equipment Industries Inc. dba Bay City Electric Works and authorize the City Manager to execute the necessary documents. Discussion: The City of Poway (City) maintains twenty-six portable and stationary generators and transfer switches. The majority of the generators are designated to provide emergency power for City water pumping stations, sewage lift stations and other facilities in the event of a power outage or catastrophic event. The remaining stationary generators provide emergency backup power to City facilities, such as the Lester Berglund Water Treatment Plant, City Hall, City fire stations and the Poway Sheriff's sub-station. On May 27 and June 10, 2021, the City advertised an RFP for generator and switchgear maintenance services in support of the Public Works Department. The RFP was advertised on the City's website and local newspaper and posted to eBidboard (the City's eProcurement system). On June 21, 2021, the City received three proposals. Evaluation criteria for the proposals included: qualifications and 1 of 36
August 3, 2021, Item #3experience affirm, staff qualifications and experience, additional knowledge or abilities that add value outside of the scope and cost. The recommended contractor is highlighted in bold in the table below. Table 1: Award Summary for Generator and Switchgear Maintenance Services, RFP No. 21-031 Contractor Annual Annual Quarterly Remote Total PM Service Service Monitoring Bay City Electric $15,801.45 $18,658.00 $8,892.00 $7,050.00 $50,401.45 Works Duthie Power $18,752.99 $28,674.50 $20,220.00 $10,890.00 $78,537.49 Services Global Power $16,790.32 $13,485.00 $7,875.00 $14,676.00 $52,826.32 Group, Inc. The agreement's scope of work includes the costs to perform quarterly and annual inspections and service, remote monitoring, as well as preventative maintenance, testing, and repairs on an as-needed basis. Bay City met the City's specifications and provided additional value by offering technicians of varying levels and qualifications, as well as an office within City limits with a dedicated service team. Additionally, as the City's current contractor for generator and switchgear maintenance services, Bay City has a proven history of providing reliable service to the City. The term of the agreement will be from August 1, 2021, through July 31, 2023, and may be extended for up to three (3) one-year terms. Environmental Review: This action is not subject to review under the California Environmental Quality Act (CEQA). Fiscal Impact: Sufficient funds are available in the: Water Supply, Treatment and Storage (402060-43080); Sewer Pumping/Disposal (403070-43080); and Vehicle and Equipment Maintenance (413010-41200) Fiscal Year 2021-22 budgets for Generator and Switchgear Maintenance. Public Notification: None. Attachments: A. Agreement with Bay City Equipment Industries Inc. dba Bay City Electric Works. Reviewed/ Approved By: Wendyaserman Assistant City Manager 2 of36 Reviewed By: Alan Fenstermacher City Attorney City Manager
August 3, 2021, Item #3City of Poway STANDARD AGREEMENT FOR SERVICES This Agreement, entered into this 1st day of August, 2021, by and between the CITY OF POWAY (hereinafter referred to as "City") and Bay City Equipment Industries Inc. dba Bay City Electric Works (hereinafter referred to as "Contractor"). RECITALS WHEREAS, City desires to obtain the services of a private contractor to perform comprehensive maintenance services for City-owned portable and stationary generators and transfer switchgears in support of the Public Works Department; WHEREAS, Contractor has represented that Contractor possesses the necessary qualifications to provide such services; WHEREAS, City has authorized the preparation of an agreement to retain the services of Contractor as hereinafter set forth. NOW, THEREFORE, IT IS MUTUALLY AGREED THAT CITY DOES HEREBY RETAIN CONTRACTOR ON THE FOLLOWING TERMS AND CONDITIONS: 1. Scope of Services. Contractor shall provide services as described in Exhibit "A" entitled "Special Provisions" attached hereto and made a part hereof. 2. Compensation and Reimbursement. City shall compensate and reimburse Contractor as provided in Exhibit "A" entitled "Special Provisions" attached hereto and made a part hereof. 3. Term of Agreement. The term of this Agreement shall be as described in Exhibit "A" entitled "Special Provisions" attached hereto and made a part hereof. 4. Termination. This Agreement may be terminated with or without cause by City. Termination without cause shall be effective only upon 60-day written notice to Contractor. During said 60-day period Contractor shall perform all consulting services in accordance with this Agreement. This Agreement may be terminated by City for cause in the event of a material breach of this Agreement, misrepresentation by Contractor in connection with the formation of this Agreement or the performance of services, or the 3 of36 ATTACHMENT A
August 3, 2021, Item #3failure to perform services as directed by City. Termination for cause shall be effected by delivery of written notice of termination to Contractor. Such termination shall be effective upon delivery of said notice. 5. Confidential Relationship. City may from time to time communicate to Contractor certain information to enable Contractor to effectively perform the services. Contractor shall treat all such information as confidential, whether or not so identified, and shall not disclose any part thereof without the prior written consent of the City. Contractor shall limit the use and circulation of such information, even within its own organization, to the extent necessary to perform the services. The foregoing obligation of this Paragraph 5, however, shall not apply to any part of the information that (i) has been disclosed in publicly available sources of information; (ii) is, through no fault of Contractor, hereafter disclosed in publicly available sources of information; (iii) is now in the possession of Contractor without any obligation of confidentiality; or (iv) has been or is hereafter rightfully disclosed to Contractor by a third party, but only to the extent that the use or disclosure thereof has been or is rightfully authorized by that third party. Contractor shall not disclose any reports, recommendations, conclusions or other results of the services or the existence of the subject matter of this contract without the prior written consent of the City. In its performance hereunder, Contractor shall comply with all legal obligations it may now or hereafter have respecting the information or other property of any other person, firm or corporation. 6. Office Space and Clerical Support. Contractor shall provide its own office space and clerical support at its sole cost and expense. 7. Covenant Against Contingent Fees. Contractor declares that it has not employed or retained any company or person, other than a bona fide employee working for Contractor, to solicit or secure this Agreement, that it has not paid or agreed to pay any company or person, other than a bona fide employee, any fee, commission, percentage, brokerage fee, gift or any other consideration, contingent upon or resulting from the award or making of the Agreement. For breach of violation of this warranty, City shall have the right to annul this Agreement without liability, or, at its sole discretion, to deduct from the Agreement price or consideration, or otherwise recover the full amount of such fee, commission, percentage, brokerage fee, gift or contingent fee. 8. Ownership of Documents. All memoranda, reports, plans, specifications, maps and other documents prepared or obtained under the terms of this Agreement shall be the property of City and shall be delivered to City by Contractor upon demand. 4of36 2
August 3, 2021, Item #39. Conflict of Interest and Political Reform Act Obligations. During the term of this Agreement Contractor shall not act as Contractor or perform services of any kind for any person or entity whose interests conflict in any way with those of the City of Poway. Contractor shall at all times comply with the terms of the Political Reform Act and the local conflict of interest code. Contractor shall immediately disqualify itself and shall not use its official position to influence in any way any matter coming before the City in which the Contractor has a financial interest as defined in Government Code Section 87103. Contractor represents that it has no knowledge of any financial interests which would require it to disqualify itself from any matter on which it might perform services for the City. "Contractor" means an individual who, pursuant to a contract with a state or local agency: (A) Makes a governmental decision whether to: 1. Approve a rate, rule or regulation; 2. Adopt or enforce a law; 3. Issue, deny, suspend, or revoke any permit, license, application, certificate, approval, order, or similar authorization or entitlement; 4. Authorize the City to enter into, modify, or renew a contract provided it is the type of contract that requires City approval; 5. Grant City approval to a contract that requires City approval and to which the City is a party, or to the specifications for such a contract; 6. Grant City approval to a plan, design, report, study, or similar item; 7. Adopt, or grant City approval of, policies, standards, or guidelines for the City, or for any subdivision thereof; or (B) Serves in a staff capacity with the City and in that capacity participates in making a governmental decision as defined in the Political Reform Act and/or implementing regulations promulgated by the Fair Political Practices Commission, or performs the same or substantially all the same duties for the City that would otherwise be performed by an individual holding a position specified in the City's Conflict of Interest Code. 5 of 36 3
August 3, 2021, Item #3DISCLOSURE DETERMINATION: ~ 1. Contractor will not be "making a government decision" or "serving in a staff capacity" as defined in Sections A and B above. No disclosure required. D 2. Contractor will be "making a government decision" or "serving in a staff capacity" as defined in Sections A and B above. As a result, Contractor shall be required to file a Statement of Economic Interest with the City Clerk of the City of Poway in a timely manner as required by law. Department Director 10. No Assignments. Neither any part nor all of this Agreement may be assigned or subcontracted, except as otherwise specifically provided herein, or to which City, in its sole discretion, consents to in advance thereof in writing. Any assignment or subcontracting in violation of this provision shall be void. 11. Maintenance of Records. Contractor shall maintain all books, documents, papers, employee time sheets, accounting records, and other evidence pertaining to costs incurred and shall make such materials available at its office at all reasonable times during the contract period and for three (3) years from the date of final payment under this Agreement, for inspection by City and copies thereof shall be furnished, if requested. 12. Independent Contractor. At all times during the term of this Agreement, Contractor shall be an independent contractor and shall not be an employee of the City of Poway. City shall have the right to control Contractor only insofar as the results of Contractor's services rendered pursuant to this Agreement; however, City shall not have the right to control the means by which Contractor accomplishes such services. 13. Licenses, Permits, Etc. Contractor represents and declares to City that it has all licenses, permits, qualifications, and approvals of whatever nature that are legally required to practice its profession. Contractor represents and warrants to City that Contractor shall, at its sole cost and expense, keep in effect at all times during the term of this Agreement, any license, permit, or approval which is legally required for Contractor to practice its profession. 6 of36 4
August 3, 2021, Item #314. Contractor's Insurance. Contractor shall provide insurance as set forth in Exhibit "A" entitled "Special Provisions" attached hereto and made a part hereof. 15. Indemnification. (a) For Claims (as defined herein) other than those alleged to arise from Contractor's negligent performance of professional services, City and its respective elected and appointed boards, officials, officers, agents, employees and volunteers (individually and collectively, "lndemnitees") shall have no liability to Contractor or any other person for, and Contractor shall indemnify, protect and hold harmless lndemnitees from and against, any and all liabilities, claims, actions, causes of action, proceedings, suits, damages, judgments, liens, levies, costs and expenses, including reasonable attorneys' fees and disbursements (collectively "Claims"), which lndemnitees may suffer or incur or to which lndemnitees may become subject by reason of or arising out of any injury to or death of any person(s), damage to property, loss of use of property, economic loss or otherwise occurring as a result of Contractor's negligent performance under this Agreement, or by the negligent or willful acts or omissions of Contractor, its agents, officers, directors, sub-Contractors or employees. (b) For Claims alleged to arise from Contractor's negligent performance of professional services, lndemnitees shall have no liability to Contractor or any other person for, and Contractor shall indemnify and hold harmless lndemnitees from and against, any and all Claims that lndemnitees may suffer or incur or to which lndemnitees may become subject by reason of or arising out of any injury to or death of any person(s), damage to property, loss of use of property, economic loss or otherwise to the extent occurring as a result of Contractor's negligent performance of any professional services under this Agreement, or by the negligent or willful acts or omissions of Contractor, its agents, officers, directors, sub-contractors or employees, committed in performing any of the professional services under this Agreement. For Claims alleged to arise from Contractor's professional services, Contractor's defense obligation to lndemnitees shall include only the reimbursement of reasonable defense costs and attorneys' fees to the extent caused by Contractor's negligence. (c) The foregoing obligations of Contractor shall not apply to the extent that the Claims arise from the sole negligence or willful misconduct of City or its elected and appointed boards, officials, officers, agents, employees and volunteers. (d) In any and all Claims against City by any employees of the Contractor, anyone directly or indirectly employed by it or anyone for whose acts it may be liable, the indemnification obligation under this Section 15 shall not be limited in any way by any limitation on the amount or type of damages, compensation or benefits payable by or for the Contractor under worker's compensation acts, disability benefit acts or other employee benefit acts. (e) Contractor shall, upon receipt of written notice of any Claim, promptly take all action necessary to make a claim under any applicable insurance policy or policies 7 of36 5
August 3, 2021, Item #3Contractor is carrying and maintaining; however, if Contractor fails to take such action as is necessary to make a claim under any such insurance policy, Contractor shall reimburse City for any and all costs, charges, expenses, damages and liabilities incurred by City in making any claim on behalf of Contractor under any insurance policy or policies required pursuant to this Agreement. (f) The obligations described in Section 15(a) through (e) above shall not be construed to negate, abridge or otherwise reduce any other right or obligation of indemnity which would otherwise exist as to any party or person indemnified pursuant to this Section 15. (g) The rights and obligations of the parties described in this Section 15 shall survive the termination of this Agreement. 16. Assumption of Risk. Except for injuries to persons caused by the willful misconduct of any lndemnitee and not covered by insurance maintained, or required by this Agreement to be maintained, by Contractor: (a) Contractor hereby assumes the risk of any and all injury and damage to the personnel (including death) and property of Contractor that occurs in the course of, or in connection with, the performance of Contractor's obligations under this Agreement, including but not limited to Contractor's Scope of Services; and (b) it is hereby agreed that the lndemnitees are not to be liable for injury or damage which may be sustained by the person, goods or property of Contractor or its employees in connection with Contractor's performance its obligations under this Agreement, including but not limited to Contractor's Scope of Services. 17. Contractor Not an Agent. Except as City may specify in writing, Contractor shall have no authority, expressed or implied, to act on behalf of City in any capacity whatsoever as an agent. Contractor shall have no authority, expressed or implied, pursuant to this Agreement to bind City to any obligation whatsoever. 18. Personnel. Contractor shall assign qualified and certified personnel to perform requested services. The City shall have the right to review and disapprove personnel for assignment to Poway projects. City shall have the unrestricted right to order the removal of any person(s) assigned by Contractor by giving oral or written notice to Contractor to such effect. Contractor's personnel shall at all times comply with City's drug and alcohol policies then in effect. 8 of36 6
August 3, 2021, Item #319. Notices. Notices shall be given as described on Exhibit "A" entitled "Special Provisions" attached hereto and made a part hereof. 20. Governing Law. Forum Selection and Attorneys' Fees. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California. Each party to this Agreement consents to personal jurisdiction in San Diego County, California, and hereby authorizes and accepts service of process sufficient for personal jurisdiction by first class mail, registered or certified, postage prepaid, to its address for giving notice as set forth in Exhibit "A" hereto. Any action to enforce or interpret the terms or conditions of this Agreement shall be brought in the Superior Court in San Diego County, Central Division, unless the parties mutually agree to submit their dispute to arbitration. Contractor hereby waives any right to remove any such action from San Diego County as is otherwise permitted by California Code of Civil Procedure section 394. The prevailing party in any such action or proceeding shall be entitled to recover all of its reasonable litigation expenses, including its expert fees, attorneys' fees, courts costs, arbitration costs, and any other fees. Notwithstanding the foregoing, in the event that the subject of such an action is compensation claimed by Contractor in the event of termination, Contractor's damages shall be limited to compensation for the 60-day period for which Contractor would have been entitled to receive compensation if terminated without cause, and neither party shall be entitled to recover their litigation expenses. 21. Gender. Whether referred to in the masculine, feminine, or as "it," "Contractor" shall mean the individual or corporate Contractor and any and all employees of Contractor providing services hereunder. 22. Counterparts. This Agreement (and any amendments) may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument. Documents delivered by telephonic facsimile transmission shall be valid and binding. 23. Entire Agreement. This Agreement shall constitute the entire understanding between Contractor and City relating to the terms and conditions of the services to be performed by Contractor. No agreements, representations or promises made by either party, whether oral or in writing, shall be of any force or effect unless it is in writing and executed by the party to be bound thereby. 9 of36 7
August 3, 2021, Item #324. Certification and Indemnification Regarding Public Employees' Retirement Law/Pension Reform Act of 2013. Contractor hereby certifies that all persons providing services to City by Contractor are not current members of the California Public Employees' Retirement System (Cal PERS) and shall not become members of Cal PERS while providing services to City. Contractor further provides that in the event Contractor assigns a retired annuitant receiving a pension benefit from CalPERS to perform services for City, the retired annuitant is in full compliance with Government Code section 7522.56. A copy of Government Code section 7522.56 is attached hereto as Exhibit "B." Further, Contractor hereby fully and unconditionally indemnifies City from all penalties, fees, employer and employee contributions, or any other assessments imposed by CalPERS in the event CalPERS determines the person assigned by Contractor to provide services to City has been misclassified. 25. Severability. If any provision of this Agreement is determined by any court of competent jurisdiction or arbitrator to be invalid, illegal, or unenforceable to any extent, that provision shall, if possible, be construed as though more narrowly drawn, if a narrower construction would avoid such invalidity, illegality, or unenforceability or, if that is not possible, such provision shall, to the extent of such invalidity, illegality, or unenforceability, be severed, and the remaining provisions of this Agreement shall remain in effect. (Remainder of page intentionally left blank) 10 of 36 8
August 3, 2021, Item #3IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the date first above written. CITY OF POWAY By:----------Chris Hazeltine, City Manager Date: __________ _ ATTEST: Deborah Harrington, Interim City Clerk APPROVED AS TO FORM: By:-----------Alan Fenstermacher, City Attorney 11 of 36 9 Bay City Equipment Industries Inc. dba Bay City Electric Works By:-----------Jeff Allan, Service Sales Executive Date: ------------
August 3, 2021, Item #3A. "SPECIAL PROVISIONS" EXHIBIT "A" Scope of Services. Contractor agrees to perform portable and stationary generator and transfer switchgear maintenance services as required by City, further described in the agreement which is included in this document as Attachment 1, and incorporated by reference, as if its contents were fully set forth herein. Contractor shall provide the necessary qualified personnel to perform the services. B. Compensation and Reimbursement. City shall pay Contractor a fee in accordance with the Fee Proposals submitted in writing on June 21, 2021, which is included in this document as Attachment 2. Contractor's fee shall include, and Contractor shall be responsible for the payment of all federal, state, and local taxes of any kind which are attributable to the compensation received. In addition to said consulting fee, Contractor shall be reimbursed for all reasonable expenses, including lodging, telephone, and travel (air, auto, rail) necessarily incurred in performance of the services. Contractor shall bill City for such expenses as incurred, referencing this Agreement. All expenses shall be itemized and supported by receipts for amounts in excess of Twenty-Five Dollars ($25.00). Statements for reimbursement of expenses shall be paid within ten (10) days of approval by City. All air travel shall be billed at coach or special fare rates. Reimbursement for lodging is limited to travel from outside of San Diego County. Contractor shall receive prior authorization for air travel and lodging expenses. All other expenses shall be reimbursed in accordance with City's cash disbursement policies in effect at the time incurred. C. Term of Agreement. This Agreement shall be effective from the period commencing August 1, 2021 and ending July 31, 2023, unless sooner terminated by City as provided in the section of this Agreement entitled "Termination." This Agreement may be extended for up to three (3) additional one-year periods upon approval in writing of the City Manager and Contractor. Award of the Contract and any Contract extensions are subject to City Council appropriation of funds. Each renewal period (fiscal), the Contractor's costs shall be adjusted based on the annual change in the previous calendar year's Consumer Price Index for the San Diego-Carlsbad area (All Urban Consumers CPI-U) or 5%, whichever is less. The first adjustment would occur no earlier than August 1, 2023. Upon expiration or termination of this Agreement, Contractor shall return to City any and all equipment, documents or materials and all copies made thereof which Contractor received from City or produced for City for the purposes of this Agreement. 12 of 36 10
August 3, 2021, Item #3D. Contractor's Insurance. 1. Coverages: Contractor shall obtain and maintain during the life of this Agreement all of the following insurance coverages: (a) Comprehensive General Liability, including premises-operations, products/completed, broad form property damage, and blanket contractual liability with the following coverages: General Liability $1,000,000 Bodily Injury and Property Damage combined each occurrence and $2,000,000 aggregate. (b) Automobile Liability, including owned, hired, and non-owned vehicles: $1,000,000 combined single limit. (c) Workers' Compensation insurance in statutory amount. All of the endorsements which are required above shall be obtained for the policy of Workers' Compensation insurance. 2. Endorsements: Endorsements shall be obtained so that each policy contains the following three provisions: (a) Additional Insured. (Not required for Professional Errors and Omissions Liability Insurance or Workers' Compensation.) "City of Poway and its elected and appointed boards, officers, agents, and employees are additional insureds with respect to this subject project and contract with City." (b) Notice. "Said policy shall not terminate, nor shall it be canceled, until thirty (30) days after written notice is given to City." (c) Primary Coverage. "The policy provides primary coverage to City and its elected and appointed boards, officers, agents, and employees. It is not secondary or in any way subordinate to any other insurance or coverage maintained by City." 3. Insurance Certificates: Contractor shall provide City certificates of insurance showing the insurance coverages described in the paragraphs above, in a form and content approved by City, prior to beginning work under this Agreement. 13 of 36 11
August 3, 2021, Item #3E. Notices. All notices, billings and payments hereunder shall be in writing and sent to the following addresses: 14 of 36 To City: To Contractor: City of Poway P.O. Box 789 Poway, CA 9207 4 Bay City Equipment Industries Inc. d/b/a Bay City Electric Works 13625 Danielson Street Poway, CA 92064 (Remainder of page intentionally left blank) 12
August 3, 2021, Item #3ATTACHMENT 1 TECHNICAL SPECIFICATIONS 1. Purpose: The purpose of this Agreement is to provide comprehensive maintenance services for City-owned portable and stationary generators and transfer switchgear. 2. Technical Specifications: The City of Poway currently maintains a variety of portable and stationary generators and transfer switchgear ranging from 20KW to 81 0KW. A list of City-owned portable and stationary generators and transfer switchgear is included at the end of these specifications for reference. The Contractor shall be responsible for the repair, maintenance, and service of portable and stationary generators and manual/automatic transfer switchgear. The Contractor shall also perform quarterly inspections/service, annual inspections/service, preventive maintenance (PM), annual load bank testing, annual fuel polishing, provide fueling services, perform annual transfer switchgear testing and service, and provide remote monitoring equipment and services. The Contractor shall comply with applicable OSHA and Federal regulations under CFR 29; Section 1910.12 for proper training and by providing Material Safety Data Sheets proposed for use within ten ( 10) days of award of Agreement. 3. Personnel: Contractor will perform all work in a timely and workmanlike manner, using only qualified technicians with a minimum of five (5) years of experience with equipment identified in the Agreement, and will adhere to all code standards of the City, EPA and any other state and federal requirements. 4. Method of Performing Work: a. Methods of Operation: The Contractor shall be responsible for the safety, adequacy, and efficiency of the Contractor's personnel, equipment and methods. The approval by the City of any plan or method of work proposed by Contractor shall not relieve the Contractor of any responsibility thereof, and such approval shall not be considered an assumption by the City of any kind of liability, and the Contractor shall have no claim under this contract on account of failure or inefficiency of any plan or method so approved. Such approval shall be considered and shall mean the City has no objection to the Contractor's use or adoption at the Contractor's own risk and responsibility, of the plan or method so proposed by the Contractor. b. Scheduling of Operations: Contractor shall perform this work at such time as to minimize disturbance or interference to residents, and pedestrian or vehicle circulation. Working hours shall be 7 a.m. to 3:30 p.m., Monday through Thursday, and 7 a.m. to 2:30 p.m. alternating Fridays, excluding holidays. There shall be no work on the alternating Friday on which City offices are closed. Deviation from these hours will not be permitted without the prior consent of the Director of Public Works, or their designee. (Maintenance and testing on Generators located within 1000ft. of any school will be scheduled outside of school hours) 15 of 36 13
August 3, 2021, Item #3c. Holiday Operations: There shall be no work on weekends or holidays on which City Hall is closed. Deviation from these hours will not be permitted without the prior consent of the Director, except for emergencies involving immediate hazard to persons or property. d. Safety: All work performed under this Agreement shall be performed in such manner as to provide maximum safety to the public and comply with all safety standards required by Cal-OSHA. The City reserves the right to issue restraint or cease and desist orders to the Contractor when unsafe or harmful acts are observed or reported relative to the performance of the work under this agreement. 5. Work Order Records: Contractor shall complete the maintenance service within 15 business days from the date of the manufacturer's recommended maintenance time frame. Oil changes will be performed once each calendar year where required for APCD compliance. Contractor shall provide City with a copy of the Contractor's maintenance work order record, including the record of oil change showing appropriate filters and materials used. 6. Hazardous Waste Disposal: The Contractor shall be responsible for the proper transport and disposal of all hazardous and non-hazardous fluids and materials resulting from maintenance performed. Contractor shall provide manifest to the City as proof of removal and proper disposal. a. Hazardous Waste Hauler Permit: Waste shall be hauled by a licensed hazardous waste hauler and disposed of at an approved landfill. The Contractor shall furnish evidence of a current hazardous waste hauler permit. Permit(s) shall be available to City staff anytime throughout the duration of the contract. The Contractor shall be responsible for providing this document for any subcontractor. The Contractor shall be responsible for the EPA Uniform Hazardous Waste Manifest to track waste from generator(s) location(s) to the site of its disposition. 7. Cooperation and Coordination with other Contractors: The Contractor shall cooperate with all other contractors who may be performing work on behalf of the City and workers who may be employed by the City on any work in the vicinity of the work to be done under this Agreement. The Contractor's operation shall interfere to the least possible extent with the work of such contractors or workers. Any difference or conflict that may arise between the Contactor and other contractors, or between the Contractor and City workers, with respect to execution of their work, shall be adjusted and determined by the City. If the work of the Contractor is delayed because of any acts or omissions of any other contractor or contractors, the Contractor shall have no claim against the City on that account other than for an extension of time. 16 of 36 14
August 3, 2021, Item #38. Sound Control: Contractor shall comply with all local sound control and noise level rules, regulations and ordinances that apply to any work performed pursuant to this contract. Operations that generate excess noise, e.g. running any type of power equipment, would not be allowed before 8 a.m. so as not to disturb the residents of the area. Any internal combustion engine, used for any purpose on the job or related to the job, shall be equipped with a type of muffler recommended by the manufacturer of such equipment. No internal combustion engine shall be operated on the project without said muffler and spark arrestor. 9. Unfavorable or Hazardous Maintenance Conditions: Contractor shall maintain all work sites free of hazards to persons and/or property resulting from her or his operation. Any hazardous conditions noted by the Contractor that is or is not a result of her or his operation shall immediately be reported to the City of Poway Public Works Department. During inclement weather, or other unsuitable maintenance conditions, the Contractor shall confine operations to work that will not be adversely affected. No portion of the work shall be done under conditions that would adversely affect the quality or the efficiency of the work, unless by special means or precaution approved by the City, allowing the Contractor the ability to perform the work in a proper and satisfactory manner. 10. Protection of Existing Facilities and Structures: Contractor shall exercise due care in protecting from damage all existing facilities, structures and utilities both above surface and underground on the City's property. Any damage to City or private property deemed to be caused by the Contractor's neglect, shall be corrected or paid for by the Contractor at no cost to the City. If the City requests or directs the Contractor to perform work in a given area it will be the Contractor's responsibility to contact the various utility companies to verify and locate any underground systems or utility lines. Contractor shall take responsibility for exercising caution when working in these areas. If the Contractor damages utilities, he will be responsible for making the necessary repairs at his own expense. Contractor will notify the City within two (2) hours of any damage that occurs. 11. Repairs: All damages or alterations to City property resulting from the performance of work under these specifications during the term of contract shall be repaired or replaced immediately and in kind, to the satisfaction of the Director of Public Works and at no cost to the City. Repairs or replacements not completed to the satisfaction of the Director of Public Works shall be deducted from the contract payment to cover costs. 12. Litter Control: All debris generated by Contractor in the performance of work required in these specifications shall be removed from the site and properly disposed of by Contractor. Should Contractor not be able to self-haul, Contractor must contact the City's exclusive franchise hauler (presently EDCO Waste and Recycling Services) for 17 of 36 15
August 3, 2021, Item #3services. The Contractor shall not enter into a contract with any hauler other than the City's franchise hauler. Hazardous materials (e.g., chemicals, oils, other fuels,) used in the performance of work required in these specifications shall not be placed in any gutter or storm drain system, but must be collected and disposed of according to Federal or State laws, and/or County or City of Poway ordinances. 13. Project Inspections: The City will periodically inspect each project location for compliance with these specifications. 14. Maintenance Service General Requirements: a. The Contractor is to provide all necessary labor, materials, equipment, and supervision to perform the work. b. Contractor's technicians performing maintenance or repairs will be required to check in with the Fleet Maintenance Supervisor or the Utility Systems Supervisor or their designee prior to and upon completion of service. Payment for service will require a signed field worksheet. c. The Contractor is to provide for continuous protection of the City of Poway's equipment, property and personnel from the work performed. The Contractor shall be responsible for protection of the work until finished work has been accepted. d. All work shall be subject to the approval of the Director of Public Works or Director's representative, and any work in need of correction because of improper preparation or workmanship shall be corrected by the Contractor to the satisfaction of and at no cost to the City of Poway. e. The areas are to be left clean and in as good a condition at the end of the job. The Contractor shall remedy all damage caused by this work to the satisfaction of and at no cost to the City of Poway. 15. Mechanical Repairs/Replacements: a. Repairs made to equipment will be logged on the inside of the equipment panel adjacent to the wiring diagram. Repairs will be dated and the defective components will be returned to the Fleet Maintenance Supervisor or the Utility Systems Supervisor or their designee. b. Costs for non-emergency repairs for equipment will be submitted in advance via a written quote to the Public Works representative. 18 of 36 16
August 3, 2021, Item #3c. Technician(s) will respond by telephone to all service calls on a 24-hour, 7-days-a-week basis within 30 minutes of call-out. d. On-site response time will be within two (2) hours of an emergency call-out, unless notified by the Utility Systems Supervisor or the Duty Responder or the Water Treatment Plant Duty Operator. Failure to respond within the two-hour window may cause a deduction of $100 for every hour or part of an hour that the Contractor's technician is non-responsive. e. The technician is to check-in and checkout with the Fleet Maintenance Supervisor or Utility Systems Supervisor or their designee. In the event of an emergency call-out, the technician is to check-in and checkout with the Duty Responder or the Water Treatment Plant Duty Operator. 16. Repair Parts and Replacement Equipment/Warranties: a. The Contractor will supply all repair and replacement parts, to be billed separately as an additional item on an invoice to the City of Poway. The cost of parts shall be Contractor's cost plus 15% markup, subject to approval by the City's Public Works representative. b. Parts replaced under warranty shall be provided through the Contractor, and the Contractor is responsible to assure all parts covered under warranty are procured as such on behalf of the City of Poway. The Fleet Maintenance Supervisor or Utility Systems Supervisor or their designee shall intervene should the manufacturer not honor said warranty. c. Parts and labor shall be considered under Contractor's warranty for a minimum of 90 (ninety) days after any repairs have been completed. The Contractor shall represent the City of Poway for all other manufacturer warranties as stipulated in the above paragraph. 17. Maintenance and Call-Out Reports: The Contractor shall provide a Preventive Maintenance Report (PMR) for each piece of equipment being serviced under the provisions of these contract specifications. The report will consist of the following: a. Service Technician's name b. Date of service, including generator run time, start and shut down time when engine is operating in compliance with the APCD c. The technician's signed checklist indicating all items inspected, tested, replaced, or serviced in accordance with the provisions of these contract specifications d. A list of all deficiencies found, recommended repairs, and replacements needed 19 of 36 17
August 3, 2021, Item #3e. A statement on the signature line of the checklist to attest the items checked off were completed The Contractor shall provide a Repair Call-Out Report (RCOR) for each service call performed, with the exception of preventive maintenance services. The report will include, at a minimum, the following information: a. Date and time of service call b. Time and method of call-out notice c. Complaint that initiated the call-out d. Cause for fault condition e. Action taken to restore service, items repaired or replaced including the reason, and service time incurred f. Other items as may be determined by the Contractor or requested by the City Contractor shall log maintenance related run hours in generator logbook located on-site. 18. Invoicing: The Contractor shall submit a separate invoice for each preventive maintenance or repair call-out service, and each invoice shall include at a minimum: a. Labor and contract cost -all costs broken down and billed separately by line item as per contract agreement unit pricing b. A signed copy of the technician's PMR or the RCOR associated with the work 19. Inspection and Maintenance Scope: a. Quarterly Visual and Operational Inspection and Maintenance: Performed every 250 hours of operation or every three (3) months, whichever comes first. Contractor shall refer to manufacturer's recommendations. Visual and Operational Inspection and Maintenance service includes, but is not limited to, the following: i. Inspect enclosure for obstructions or debris ii. Inspect enclosure for corrosion or openings iii. Check all belts for proper tension and alignment; check for signs of 20 of 36 18
August 3, 2021, Item #321 of 36 age/wear iv. Check engine supports and connections v. Check engine block heater(s) and associated plumbing for proper operation vi. Check engine gauges for proper operation and readings; check panel lights vii. Check engine governor system and linkage (if equipped) for binding and proper operation viii. Check batteries for proper electrolyte levels and specific gravity ix. Load test each battery x. Check battery charger for proper operation xi. Check electrical connections and wiring for abrasion or chaffing xii. Check generator voltage and frequency output xiii. Check for abnormal vibration or noises xiv. Check air cleaner element and manifolds xv. Check engine for oil, fuel, or coolant leaks; tighten all bolts as necessary xvi. Inspect above-ground diesel fuel tanks and lines for defects xvii. Check all fluid levels and top off as necessary (fuel not included) xviii. Check radiator externally for debris, leaks or corrosion xix. Test coolant for proper mixture with a coolant test strip; check radiator cap for proper seal xx. Check and tighten cooling system hoses and clamps xxi. Check and tighten all electrical connections xxii. Clean starting batteries xxiii. Visually inspect automatic transfer switches xxiv. Check switchgear panel lights and displays 19
August 3, 2021, Item #3xxv. Inspect fuel vessels for leaks or defects; inspect fuel lines for cracks and wear xxvi. Record lube oil level xxvii. Record coolant level xxviii. Record fuel level xxix. Simulate commercial power failure AS REQUESTED BY STAFF ONLY xxx. Record start time xxxi. Record engine and generator gauge readings xxxii. Check circuit breaker or transfer switch operation xxxiii. Record total run time Contractor shall submit a written report of any deficiencies noted during each inspection. Contractor shall submit a completed check-off list with all items checked and signed by technician within one week of inspection. The checklist shall include all items listed for each inspection. 20. Annual Preventive Maintenance (PM Service): Performed every 250 hours or every 12 months, whichever comes first. Contractor shall refer to manufacturer's recommendations. Lubrication and Maintenance service includes, but is not limited to, the following: a. Start engine and check lubricating oil level and pressure, coolant level, condition and temperature b. Take lube oil sample for laboratory analysis c. Take fuel sample for laboratory analysis d. Take coolant sample for laboratory analysis e. Change engine lubricating oil and oil filters f. Change engine fuel filter g. Clean engine primary fuel filter h. Change air cleaner element or clean as needed 22 of 36 20
August 3, 2021, Item #3i. Lubricate fan drive pulleys j. All other maintenance recommended by the manufacturer on an annual basis Contractor shall submit a written report of any deficiencies noted during each inspection. Results of the oil, fuel, and coolant sample tests will be provided, along with recommendations when appropriate. Contractor shall submit a completed check-off list with all items checked and signed by technician within one week of inspection. The checklist shall include all items listed for each inspection. Contractor shall log maintenance related run hours in generator logbook located on-site. 21. Annual Load Bank Testing: Service performed annually. Contractor shall refer to manufacturer's recommendations. Annual Load Bank Testing includes, but is not limited to, the following: a. Simulated power failure with specified load requirements provided with a load bank which includes run time both start and stop b. Elapsed time from start to assuming load will be recorded, plus voltage fluctuation and governor response c. All operating gauges will be read and recorded to prevent thermal overload d. Use a handheld, infrared, thermal imagining monitor to prevent buss/breaker thermal overload e. A written report indicating results of the test f. Run time and load bank testing must adhere to the following or as directed: • 25% 30 minutes • 50% 30 minutes • 75% 30 minutes • 100% 30 minutes • Total 2 hours Contractor shall submit a written report of any deficiencies noted during each inspection, along with recommendations when appropriate. Contractor shall submit a completed check-off list with all items checked and signed by technician within one week of inspection. The checklist shall include all items listed for each inspection. Contractor shall log maintenance related run hours in generator logbook located on-site. 23 of 36 21
August 3, 2021, Item #322.Annual Fuel Polishing: Service performed annually. Contractor shall refer to manufacturer's recommendations. Annual Fuel Polishing includes, but is not limited to, the following: a. Diesel fuel will be circulated through an adequate polisher, three times the capacity of the supply tank b. Treatment chemicals shall be added as necessary to control microbial contamination Contractor shall submit a written report of any deficiencies noted during each inspection, along with recommendations when appropriate. Contractor shall submit a completed check-off list with all items checked and signed by technician within one week of inspection. Checklist shall include all items listed for each service. 23. Annual Manual/Automatic Transfer Switchgear Service: Service performed annually. Contractor shall refer to manufacturer's recommendations. Power Outages: Where a facility will be affected by a power outage during the service work, the work will be scheduled after business hours. Annual Manual/Automatic Transfer Switchgear Service includes, but is not limited to, the following: a. Maintenance programs for transfer switches include checking of connections b. Inspection or testing for evidence of overheating and excessive contact erosion c. Removal of dust and dirt, and replacement of contacts when required d. The maintenance procedure and frequency shall follow those recommended by the manufacturer 24. Fuel Top-Off Service (As Requested by City Only): Service consists of refueling or top-off of a diesel fuel storage/main tank or day tank. Fuel Top-Off Service includes the following: a. Time and materials visit to refuel or top-off generator(s)' diesel fuel storage/main tank or day tank b. Diesel fuel delivered is treated with a diesel fuel stabilizer c. Fuel delivered is GARB-approved diesel fuel 24 of 36 22
August 3, 2021, Item #325 of 36 d. The cost of the fuel is based on the Contractor's current charge rate at the time of the request for this service plus 15% markup (Remainder of page intentionally left blank) 23
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2
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4
5
6
7
8
9
10
11
12
13
14
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16
17
18
19
20
21
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756
757
758
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760
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Location Legend:
WTP = Water Treatment
Plant
LS = Lift Station
PS = Pump Station
WTP
WTP
WTP
WTP
WTP
WTP
WTP
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PS-1
Martincoit
Fire Station 3
PCPA
Fire Station 2
City Hall
Sheriffs Station
MQ Wisperwatt
Vehicle Maintenance
PS-5
PS14
PS15
LS-3
Public Work Admin
Transfer Switch
Operations Transfer
Switch
Mickey Cafagna Center
Manual Transfer Switch
CITY OF POWAY -LIST OF PORTABLE AND STATIONARY GENERATORS AND TRANSFER SWITCHES
Stationary Tier Voltage Voltage Address or kW (Single Engine Model Engine Serial Trailer Serial# Transfe Transfer Switch Model
Portable Rating or Multi) Output Number r Switch
14521 Lake Poway Rd Portable 250 Tier3 Single 480 Caterpillar C-9 S9102029 4AGEU 15288C04228 No NA 8
14521 Lake Poway Rd Portable 250 Tier 3 Single 480 Caterpillar C-9 S9102030 4AGEU 15288C04229 No NA 0
14521 Lake Poway Rd Portable 250 Tier 3 Single 480 Caterpillar C-9 S9102031 4AGEU 15288C04228 No NA 7
14521 Lake Poway Rd Portable 250 Tier3 Single 480 Caterpillar C-9 S9102033 4AGEU 15288C04228 No NA 9
14521 Lake Poway Rd Portable 350 Tier 3 Single 480 Caterpillar C-15 S9102032 4AGEU15288C04228 No NA 6
14521 Lake Poway Rd Portable 80 Tier 3 Single 208 Caterpillar D80-6 C4.4 ESM00586 4AGEU 15288C04228 No NA 5
14521 Lake Poway Rd Portable 80 Tier 3 Single 480 Caterpillar D80-6 C4.4 ESM00578 4AGEU 15288C04228 No NA 4
14521 Lake Poway Rd Stationary 350 Tier3 Single 480 Caterpillar C-15 FSE03408 NIA yes ZENITH Model: ZS5DB10033-07E601X Serial#
1596008-1
14521 Lake Poway Rd Stationary 300 Tier2 Single 480 Caterpillar 3406B 4RG00747 NIA Yes ZENITH Model: ZS5DB0624N-07S601X Serial:
1594911-1
17710 Old Coach Rd Stationary 85 Tier1 Single 480 Cummins 6BT5.9 G6 8990944840 NIA Yes GE Spectra/Order# 17752468 400 amp
14445 Lake Poway Rd Stationary 20 NIA Single 240 Spectrum 20DS60 371013 NIA Yes Spectrum s-564243-0070
Old pump station site Portable NIA Tier 3 NIA NA Caterpillar C-15 JRE07921 16MPF19328D051836 No NIA
14322 Pomerado Road Stationary 200 Tier2 Single 1901600 John Deere 6081AF001J RG6081A16276 NIA Yes Detroil Diesel SCP-ACVA-0600S 0
15498 Espola Rd Stationary 55 Tier2 Multi 1201240 John Deere 404TF270E PE4045T 415956 NIA Yes Detroit Diesel MPV GM2655
16914 Wesling Court Stationary 26 Tier 2 Single 208 John Deere T04045D894472 NIA Yes Spectrum RLS-168643-0100 4045DF 150Dl158
13325 Civic Center Drive Stationary 810 Tier2 Multi 1391240 Detroit Diesel 16V-2000 5362002695 NIA Yes Kohler Model KBT-AMWA-1000S R1637K35
13100 Bowron Rd Stationary 300 NIA Multi 1391240 Kohler 300ROZD 132476 NIA Yes Cutler Hammer SPB65
14415 Lake Poway Rd Portable 40 NIA Multi 48012401120 40SSKV No NA
14415 Lake Poway Rd Stationary 100 Tier3 Single NIA Caterpillar C4.4 D100 EM01493 NIA Yes ASCO Series 300 Cat No E003000030400N10F
14090 Northcrest Ln Stationary 350 Tier3 Single 480 Caterpillar c-15 FSE03063 NIA Yes CUTLER HAMMER Model: A TC3C3X40600XRU serial:
GO#SSN0230814
14710 valley view Stationary 100 Tier3 Single 480 Caterpillar C4.4 D100 N3R01903 NIA yes THOMPSON TECT Model:
TS874A0150B1AM3AMMAA Serial: W-070420
18130 sunset point Stationary 100 Tier3 Single 480 Caterpillar C4.4 D100 N3R01905 NIA yes THOMPSON TECT Model:
TS874A015081AM3AMMAA Serial: W-070419
12910 Camino del Valle Stationary 175 Tier 3 Single 480 CaterpillarC6.6 D175 E6M01893 NIA Yes EA TON TYPE: 69C2990G03 Serial #
20110519F010027
14467 Lake Poway Rd NA NA NA NA NA NA NA NA Yes Russelectric Model RMTDMAN -2254E
14445 Lake Poway Rd NA NA NA NA NA NA NA NA Yes Russelectric Model RMTDMAN -4004E
13094 Civic Center NA NA NA NA NA NA NA NA Yes PSI Control Solutions Model STS800N3RNF3
24
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Authoria:•d .A9enl or Qffler:; Jeff Allan
11t••: Service Sales fxea,tive
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August 3, 2021, Item #3Annual Service -Fuel Polishing, Load Test, Transfer Switch Line Thln■ftr Tron1ltr Swllcl\ Anl\llal l'wl Polshl111 lwloMi Lead BMk Tttllnll Annual Transfer SWllch Service ANMIAL 58'11/ICES 'IOTAL --Unl.......,, cSwilch· Mocltl LUM'-SUM SBIVICE LUMP SUM SEIIYICE LUMP SUM SERVICE FUEL POUSHINO ♦ UMD IIAIIK ♦ (M~ralaa) C,,•"-'1ratu) (nolio.u,lyratH) TMNSl'Ell SIIIITC:H 755, WfP, 1<4521 L ... ,-Y Rd No .:. • 200.00 I 563.00 763.00 Porwbllt2501tw 75C. WTP, 1◄ 521 llb-y Rd Na ' 563.00 $ 763.00 l'alt-2IOIM 757. WTP, 1◄521Lall•-•1Ad Ho s 200.00 • 563.00 • 763.00 Por\oblo25Cll<w 751, Wl'P, 1◄521 ..... ~ Rd Ho '563.00 • 763.00 ""'1aW.25011w 15g, WTP, 14521 lake "-Y Rd ... 200.00 • 625.00 -llle3501rw 711. WTP, 14521 Lthl P-y Rd ... 200.00 s 445.00 l'O!falalolOll111 710, WTP, 1◄52' Lalc• Poway Rd Ho s 445.00 . • 645.00 Potlable .... 712, High V..,,, Punc, Slallon GE Zenith Enlolll• s 200.00 '625.00 1.c521lAk•~Rd Yes awllch 25G Slaliora,y◄50kW HJ.WTP 14521 ltlall'llwayRd Yn GEZ.IIIU.f:nloll-• 200.00 • 625.00 • 250.00 • 1,075.00 SlaUDrwy~• O'#llchZ5G 7011, Old Coach LS-1 GE Sp .. lra/0-, , 845.00 IQ 1n1DOIIIC-"Rd Yu • 150.00 s 445.00 s 250.00 Sldt>na<y1511111 17752411 4GG a111p 705,PS-1 Sp1et1um 1.s&◄za. s 400.00 s 250.00 11 1444i Lake P""'•1 Rd Yu s 200.00 I 850.00 S11done,y20llw GG70 12 750.115111Martlncoil No 200.00 I NIA f'QflaUoWalerPUmp 513, Rnr Slllon 3 Deltvit Dlesol SCP, • 200.00 s 250.00 13 1◄322....,...-doRd YH • 563.00 I 1,013.00 Slallullaly ZOVIIW ACVA-41GGS 514.PCPA DotroltD!aallll'V 14 11411 Espolll Rd Vos 1150.00 • 400.00 s 250.00 • 800.00 Slallona,y5,..., GM2155 511il'hSlallan2 5,-:ln>mRI.S-15 1Hf4WullngCl Yes s 100.00 • 400.00 • 250.00 • 750.00 StaClo,ayZIIIW 11UtJ.01GG IIIZClyHal Kahltr Modal KIT• • 300.00 • 1,750.00 16 13325 CMc C-r Dr YH AIIWA, 1GaGS '1,150.00 • 300.00 siaoor..,11111<w 741,ShlriflaSlallon Cullorltlln1111or s 1,175.00 17 1311111■-Rd Yos • 300.00 • 625.00 • 250.00 SlalonaY3Dlllw Sl'815 763A,MQ~t 475.00 111 1◄415 l.Ho "-1 Rd No I 400.00 l'altabla30bl Fleol Mailllonanco ASCOSa<IHlOGC■I 19 14415l■tltc,._yRd Vu Ho s 200.00 s 445.00 • 250.00 • 895.00 SlallaraytllOlow EGD3GGOOJG400HfGf 20 PS-5, 14090 Norl!lcrnt ln v .. Ealon CUiiar Hemme •200.00 • 625.00 • 250.00 11,075.00 s-...,.JSOl<w ATC.;JOG 21 LS-3, 12110 Camino dol Vallo Yes Eaton CUiier Hommor I 200.00 • 563.00 I 250.00 • 1,013.00 Slallona,yf75kw ATC-30G Publc-Acl-Uon RUHeleetrlc Medal '250.00 22 14417 l.ah1 Pt,,nyRd Yu RNTtlMAN • 2U4E T,__h RuallllclTI, Nodal 22 Pllbtlc:"""""Oporallons v .. • 250.00 • 250.00 14445 la•-., Rd RMTDMAN • 4"4E Transl• s..lol• PSIContn,f 23 MlclreyCal19MC-r Yos Solu1lon1Modol 250.00 • 250.00 f30l4CM:C..r STSlaoHlRHFl TOTAL THIS PROPOSAL SHEET .................... , 18,658.00 El teen Thousand Six Hundred Fin · Ei hi Dollars and Zero cenls NOTI!! The City AH,.,.• Ill• rl9ht to -rd tho pr■poHI hi whola or In part .. tho .. ,,..,i.,i contractor. ■ustness N•-•!!l!osl!!I Contractor (elease er1nt!: Bai Citi EguiE!!!!ent Industries Inc. OBA Bai Ci~ Electric Works Authatfud A9ent ... Offtcar: Jeff Allan TIU•: Service Sales Executive 27
August 3, 2021, Item #330 of 36 Une llem 11 11 1Z 13 14 15 11 17 11 2G 21 22 u 23 Equlpm■nt ID 755, WfP, 1.C521 Lak■ Poway Rd Par1abl■250kw 75&, WrP, 1"521 Uk■ Poway Rd Portable 25Gkw 7!f1, WrP, 1.C511 Lake Poway Rd Ponable Z5Gkw 758, WTP, 1◄521 Lake Poway Rd Porlable 250kw 759, WTP, 1"521 I.Ilk■ Pow■y Rd Pari.ble J50kw 711, WTP, 14521 Lake Poway Rd Pot1abl■ 10kW 7110, WTP, 1.C521 Lekw Poway Rd Port.Irle IOkw 762, 1.C211111 High Valley Rd. Stationary .CSOkw 4113, WTP, 1.C511 Lak■ Poway Rd Stationary, 300kw 701, Old CDKh LS-1 17710OIdCaachRd Stationary 15kw 7115,PS-1 14445 lake Poway Rd Siatlanary 20kw 750, 11H1 MM11ncall Parlabl■ WIiiet P11mp Sil, Fin Station l 14322 Pom.rada Rd Statlona1y 200kw 564, PCPA 15'411Espol■Rd Stationary 5511w 511, fir. Station 2 111114 Wisting Ct Stalonary Zlkw 112 Cllytl■ll 1JJZ5ClwlcC■nlerDr Sllltlonary 110kw 7-41, Sheriff's Slatlan 13100 Bawran Rd Stationary~ 713A, 14.C15 Lake Poway Rd, Poltalrle30kw Flaet Malnlananc:■ 14415 Lake Poway Rd Sta Ilona 1 OOkw 753: PS..S, 1"090 Norther.al Ln Statlonaoy JSOkw 754: LS..:J, 12910 Camino d■I Vale Stationary 17:illw Tnrn1far Switch Pubic 'Worb Admlnl■traUon 14417 Lake Pow■ Rd Tnrn■f■r SWl!dl Pubic Wcirkll Opar~an 14"5 uk■Pow Rd Tnrnafw Switch Mickey c.r.gna Center C Quarterly Service Table TrallSflll' SWlldl Model G■Z■nllh Enlall-swllch 250 G■Zenllh Enle■•-ftch GE SpeclralOrd■rlf 1n524A400 ... Q11,1rterlyVlsual and Op■ratlonal Inspection and Maintenance LUMP SUM SERVICE PER GENERATOR / TRANSFER SWlfCH (nollourly,.t■ s) 426.00 426.00 426.00 426.00 s 426.00 420.00 420.00 '426.00 • 426.00 • 420.00 Sp■cltllffl s..s&424J .. 70 S 420. 00 Detroit Dl::~:CP-ACVA S 426 • 00 O■tnltt DleHIMPV GM21S5 t 420.00 SpKtnan RLS-1&1143-01IO Kahler Model KBT• AMWA-10005 ZanllhZBTS Eaton CUiiar .._.t ATC..:100, IOO Alllp Eaton Cullar Hamon■ r ATC~N. 400 Afflp Russ■l■ctric: llodll IUITDMAN ,225<4E Rusa■lactrfc: Model RMTDIIAN -4111ME PSI Control Soliallons Model STSIIIDHJRNFl 420.00 • 426.00 1 426.00 , 426.00 • 426.00 TOTAL THIS PROPOSAL SHEET •••••• -•• ······-·-----$ P. ~~o.H<Jnd e· h{ Hundred Nine(· Two Dollars and Zero Cents NOTE• The City,.. • .,.,.,, the lf ... t lo award the pr■posal In wh■I• or Ill pa,t f• 11,e sefecled eMlraGl■r. Busf11ess Name/Propo■tng Contractor (please print): Bay City Equipment Industries Inc. OBA Bay City Electric Works Authorized A,ent or Ofllcar: Jeff Allan Tltt•: Service Sales Executive 28
August 3, 2021, Item #3U11ti 11am 1a 11 1Z 1l u 15 11 17 ,. 1t H 21 22 23 24 E.,tpmonrlO 755, WIP, 14521 l.alle l'oWlly ltd PombleHOl<w 751, WrP, 1◄'2f Loire P-•yltd ,_,.~ 7S7, WTl', 1"21 L .. a,.....,ltd PorllMeJSllrw 751, WTl', 14521 l.llle l'-.y Rd Po'11111e2SOIIW 751,WTI', 14521 ulat-,yltd PorllbloJIOkw 711, WTJ', 14Qf l1llt P-•Y ltd Poll.W. IOllw 710, WTJ', 14521 Loll• J'-.y ltd l'orlablel-712. WrP, f41Z1 Lila,._.., Rd Po,t1llleJSOllw HJ, WTJ', ·14521 like P-y Rd s1111o .... y,-70S. Old Couh LS-1 17710 Old Cuch Rd Sr,,llou,y, ISlrw 70S, PS-1, 14445 like Powoy ltd Slall.nuy20kw 750, 1U.1 M11ll11eok J'orllbleW1ler,._p HJ, Fl19 51111011 J 14JUJ'-tldoltd Slollon"'Y200kw H4,J'CPA 15411 Eapolo Rd Slodonary SSkw Hf, Fire St10on 2 11914 WnlNIIII Cowt 5r,,11on,ry2111w Ml,CllyHall 13321 Civic Ctlller Or sr,,11-y11otrw 741, Slulflll'• Sladon 13100 Bowran Rd S1ollon11)1 J0Olcw 71JA, MQ Wb,-111 14415 l•• Poway ltd Portdle2-513, Fl■-1 Malnlenenc:a ~11 uillo P-y ltd Slallo1111Y10lkw 7SJ, J'$0
S, 14010 Not1hcrul ln sr,,11orwry JSokw 7 .. , LS-J, 12910 c-lno d•l VIiie Stallonal)l 17-Trarn,r,rSwll.,, PullllcWorlls Adml.ist,.lion 1◄417 l•k• Powll// Rd TronsferSwllch P.tlc Warila OpoRl!on t4441Lab~ltd Tr1naforSwllch Mlckl)I C.t-s,H canter 1lD14 Ct.le Cont• Remote Monitoring Equipment and Service No · NA No No No No No No Ho Yu Yd v .. No Delroll Dlaet SCP• s 525.00 25.00 Yu s 625.00 l ACVA~IOOS Delroll Dlenl MPV 625.00 25.00 Yu s 525.00 $ $ GM2155 YH Spac1t1111~:ii,s.1111◄l 5 525.00 $ 625.00 , 25.00 Kohler Mocltl IC8T0 s 525.00 25.00 Yu AMWA-fOOOS 625.00 s y .. Cutler H-mer SPll15 s 525.00 s 625.00 25.00 No Yes Yu Yu Yu Yu YH NOTE: The City reserves the rfght to award the proposal In whole or In part to the selected contractor. s 1,175.00 s 1,175.00 1,175.00 1,175.00 1,175.00 •swla■H Hemetemee1ln1 Gonlc1sloc(e•■---ednf)• Ra)( Git¥ fQI •iproeot loci, 15trjes lac QBA Bay Git¥ Electr;c Works . Jeff Allan T1t1e: Service Sales Executive 31 of 36 29
August 3, 2021, Item #3EXHIBIT "B" Cal Gov Code § 7522.56 Deering's California Codes are current through all 1016 chapters of the 2018 Regular Session and the November 6, 2018 Ballot Measures. Deering's California Codes Annotated > GOVERNMENT CODE> Title 1 General > Division 7 Miscellaneous > Chapter 21 Public Pension and Retirement Plans > Article 4 California Public Employees' Pension Reform Act of 2013 § 7522.56. Provisions applicable to person receiving pension benefit from public retirement system; Section supersedes conflicting provisions (a) This section shall apply to any person who is receiving a pension benefit from a public retirement system and shall supersede any other provision in conflict with this section. (b) A retired person shall not serve, be employed by, or be employed through a contract directly by, a public employer in the same public retirement system from which the retiree receives the benefit without reinstatement from retirement, except as permitted by this section. (c) A person who retires from a public employer may serve without reinstatement from retirement or loss or interruption of benefits provided by the retirement system upon appointment by the appointing power of a public employer either during an emergency to prevent stoppage of public business or because the retired person has skills needed to perform work of limited duration. (d) Appointments of the person authorized under this section shall not exceed a total for all employers in that public retirement system of 960 hours or other equivalent limit, in a calendar or fiscal year, depending on the administrator of the system. The rate of pay for the employment shall not be less than the minimum, nor exceed the maximum, paid by the employer to other employees performing comparable duties, divided by 173.333 to equal an hourly rate. A retired person whose employment without reinstatement is authorized by this section shall acquire no service credit or retirement rights under this section with respect to the employment unless he or she reinstates from retirement. (e) 32 of 36 (1) Notwithstanding subdivision ( c), any retired person shall not be eligible to serve or be employed by a public employer if, during the 12-month period prior 30
August 3, 2021, Item #3to an appointment described in this section, the retired person received any unemployment insurance compensation arising out of prior employment subject to this section with a public employer. A retiree shall certify in writing to the employer upon accepting an offer of employment that he or she is in compliance with this requirement. (2) A retired person who accepts an appointment after receiving unemployment insurance compensation as described in this subdivision shall terminate that employment on the last day of the current pay period and shall not be eligible for reappointment subject to this section for a period of 12 months following the last day of employment. (f) A retired person shall not be eligible to be employed pursuant to this section for a period of 180 days following the date of retirement unless he or she meets one of the following conditions: 33 of 36 (1) The employer certifies the nature of the employment and that the appointment is necessary to fill a critically needed position before 180 days have passed and the appointment has been approved by the governing body of the employer in a public meeting. The appointment may not be placed on a consent calendar. (2) (A) Except as otherwise provided in this paragraph, for state employees, the state employer certifies the nature of the employment and that the appointment is necessary to fill a critically needed state employment position before 180 days have passed and the appointment has been approved by the Department of Human Resources. The department may establish a process to delegate appointing authority to individual state agencies, but shall audit the process to determine if abuses of the system occur. If necessary, the department may assume an agency's appointing authority for retired workers and may charge the department an appropriate amount for administering that authority. (B) For legislative employees, the Senate Committee on Rules or the Assembly Rules Committee certifies the nature of the employment and that the appointment is necessary to fill a critically needed position before 180 days have passed and approves the appointment in a public meeting. The appointment may not be placed on a consent calendar. (C) For employees of the California State University, the Trustees of the California State University certifies the nature of the employment and that the appointment is necessary to fill a critically needed position before 180 days have passed and approves the appointment in a public meeting. The appointment may not be placed on a consent calendar. 31
August 3, 2021, Item #3(3) The retiree is eligible to participate in the Faculty Early Retirement Program pursuant to a collective bargaining agreement with the California State University that existed prior to January 1, 2013, or has been included in subsequent agreements. (4) The retiree is a public safety officer or firefighter hired to perform a function or functions regularly performed by a public safety officer or firefighter. (g) A retired person who accepted a retirement incentive upon retirement shall not be eligible to be employed pursuant to this section for a period of 180 days following the date of retirement and subdivision (f) shall not apply. (h) This section shall not apply to a person who is retired from the State Teachers' Retirement System, and who is subject to Section 24214. 24214.5 or 26812 of the Education Code. (i) This section shall not apply to (1) a subordinate judicial officer whose position. upon retirement, is converted to a judgeship pursuant to Section 69615, and he or she returns to work in the converted position, and the employer is a trial court, or (2) a retiree of the Judges' Retirement System or the Judges' Retirement System II who is assigned to serve in a court pursuant to Section 68543. 5. History Added Stats 2012 ch 296 § 15 (AB 340). effective January 1, 2013. Amended Stats 2013 ch 528 § 11 (SB 13). effective October 4, 2013 (ch 528 prevails); ch 76 § 75 (AB 383), effective January 1, 2013; Stats 2014 ch 238 § 1 (AB 2476). effective January 1, 2015. Annotations Notes 2013 Amendment: Substituted (1) "have passed" for "has passed" in the first sentence of subds (f)(I) and (f)(2); (2) "or firefighter hired to perform a function or functions regularly performed by a public safety officer or firefighter" for "of firefighter" in subd (f)(4); and (3) "Judges' Retirement System" for "Judges' Retirement System I" in subd (i). 34 of 36 32
August 3, 2021, Item #3GUARANTY To the City of Poway, City Council, for: PORTABLE AND STATIONARY GENERATORS AND TRANSFER SWITCHGEAR MAINTENANCE SERVICES The undersigned guarantees the work included in this project(s). Should any of the materials or equipment prove defective or should the work as a whole prove defective, due to faulty workmanship, material furnished or methods of installation, or should the work or any part thereof fail to operate properly as originally intended and in accordance with the Plans and Specifications, due to any of the above causes, all within the number of months the site is to be maintained after date on which this Contract is accepted by the City, or the date of recordation of Notice of Completion, whichever is the later, the undersigned agrees to reimburse the City upon demand, for its expenses incurred in restoring said work to the condition contemplated in said project, including the cost of any such equipment or materials replaced and the cost of removing and replacing any other work necessary to make such replacement or repairs, or upon demand by the City, to replace any such material and to repair said work completely without cost to the City so that said work will function successfully as originally contemplated. The City shall have the unqualified option to make any needed replacements or repairs itself or to have such replacements or repairs done by the undersigned. In the event the City elects to have said work performed by the undersigned, the undersigned agrees that the repairs shall be made and such materials as are necessary shall be furnished and installed within a reasonable time after the receipt of demand from the City. If the undersigned shall fail or refuse to comply with his obligations under this guaranty, the City shall be entitled to all cost and expenses, including attorney's fees, reasonably incurred by reason of the said failure or refusal. Contractor Signature Date **TO BE SUBMITTED WITH EXECUTED AGREEMENT** 35 of 36
August 3, 2021, Item #3WORKERS' COMPENSATION INSURANCE CERT/FICA TE Pursuant to Section 1861 of the State Labor Code, each Consultant to whom a public works Contract has been awarded shall sign the following certificate and shall submit same to the City of Poway prior to performing any work on the Contract: "I am aware of the provisions of Section 3700 of the Labor Code which require every employer to be insured against liability for Workers' Compensation or to undertake self-insurance in accordance with the provisions of that Code, and I will comply with such provisions before commencing the performance of the work of this Contract." Consultant By: Title Date Section 3700 of the State Labor Code reads in part as follows: "Every employer except the State shall secure the payment of compensation in one or more of the following ways: (a) By being insured against liability to pay compensation by one or more insurers duly authorized to write compensation insurance in this state. (b) By securing from the Director of Industrial Relations a certificate of consent to self-insure, either as an individual employer, or as one employer in a group of employers, which may be given upon furnishing proof satisfactory to the Director of Industrial Relations of ability to self-insure and to pay any compensation that may become due to his employees." **TO BE SUBMITTED WITH EXECUTED AGREEMENT** 36 of 36
August 3, 2021, Item #4DATE: TO: FROM: CONTACT: SUBJECT: Summary: AGENDA REPORT CityofPoway August 3, 2021 Honorable Mayor and Members of the City Council Aaron Beanan, Director of Finance .6 Stacey Tang, Finance Manager 3(' 858-668-4426 or STang@poway.org Updated Investment Policy CITY COUNCIL Pursuant to California Government Code, Sec. 53646, and the City's Investment Policy (Policy), the Director of Finance serving in the capacity as City Treasurer is rendering the Policy to the City Council for its annual review. This Policy is an important tool for ensuring the stewardship of the City's financial resources. Staff is proposing to update the Approved Broker/Dealers list. The Policy requires that any amendments be approved by resolution of the City Council. Recommended Action: It is recommended that the City Council adopt the resolution approving the revised Investment Policy. Discussion: The City of Poway invests its funds according to parameters set forth in the City's adopted Investment Policy. The Policy is consistent with California Government Code Section 53600, et seq. which provides standards regarding investment policies and reports, securities, and repurchase agreements for local agencies. The Policy was last modified on August 4, 2020. Since July 1, 1996, the City has worked with an investment advisor to assist in the administration of the City's investment portfolio. The current investment advisor is Insight Investment, an investment firm of BNY Mellon Investment Management. The Policy defines the role of the City's investment advisor and the procedures to be followed. The Investment Oversight Committee (Committee) comprised of the Director of Finance, the Finance Manager, and the Senior Accountant, oversees the investment of the City's funds. This Committee works with the investment advisor to ensure that the Policy is being followed. 1 of 23
August 3, 2021, Item #4Based on a review of the Policy, the Committee and investment advisor have no proposed changes to the investment portion of the current investment policy but recommend making updates to the Approved Broker/Dealers list, which is to help ensure the City has a broad selection of credit worthy broker/dealers that can facilitate investments at competitive prices. The updated Policy is attached to the resolution as Exhibit A. A strike-out version is provided for review (Attachment B). Environmental Review: This action is not subject to review under the California Environmental Quality Act (CEQA). Fiscal Impact: The Investment Policy is designed to enhance the economic status of the City while protecting its funds. Public Notification: None. Attachments: A. Resolution Amending the Investment Policy for Public Funds B. Investment Policy (Strikeout Version) Reviewed/ Approved By: Wend aserman Assistant City Manager 2 of 23 Reviewed By: Alan Fenstermacher City Attorney City Manager
August 3, 2021, Item #4RESOLUTION NO. 21-A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY, CALIFORNIA, AMENDING THE INVESTMENT POLICY FOR PUBLIC FUNDS WHEREAS, the City of Poway's Investment Policy (Policy) shall be reviewed at least annually to ensure its consistency with the overall objectives of preservation of principal, liquidity, yield, and diversification, and its relevance to current law and economic trends; WHEREAS, in accordance with the Policy provisions, the City of Poway has conducted a review of the Policy adopted on August 4, 2020 by Resolution No. 20-063; WHEREAS, the City of Poway proposes certain amendments to the Policy concerning the broker/dealers list; and WHEREAS, in accordance with the Policy provisions, amendments to the City's Policy shall be approved by resolution of the City Council. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway as follows: SECTION 1: The Investment Policy, attached hereto as Exhibit A, is hereby adopted as the Investment Policy of the City of Poway and supersedes all previous versions. SECTION 2: Resolution No. 20-063 is hereby rescinded. PASSED, ADOPTED AND APPROVED at a Regular Meeting of the City Council of the City of Poway, California on the 3rd day of August, 2021 by the following vote, to wit: AYES: NOES: ABSENT: DISQUALIFIED: Steve Vaus, Mayor ATTEST: Deborah Harrington, Interim City Clerk 3 of23 ATTACHMENT A
August 3, 2021, Item #4EXHIBIT A CITY OF POWAY INVESTMENT POLICY Dated: August 3, 2021 Resolution No. 21-Page 2 The City of Poway (the City) has adopted this Investment Policy (the Policy) in order to establish the investment scope, objectives, delegation of authority, standards of prudence, reporting requirements, internal controls, eligible investments and transactions, diversification requirements, risk tolerance, and safekeeping and custodial procedures for the investment of the funds of the City. All City funds will be invested in accordance with this Policy and with applicable sections of the California Government Code. This Policy, dated August 3, 2021, replaces any previous Policy or investment procedures of the City. SCOPE The provisions of this Policy shall apply to all financial assets and investment activities of the City as accounted for in the City's Comprehensive Annual Financial Report. The employees' retirement and deferred compensation funds are not covered by this Policy. Also, bond reserve funds will be invested in accordance with each bond issue's indenture agreement. All cash shall be pooled for investment purposes. The investment income derived from the pooled investment account shall be allocated to the General Fund, the Water Fund, the Sewer Fund, and other funds as budgeted or required by legislation based upon the proportion of the respective average balances relative to the total pooled balance. Investment income shall be distributed to the individual funds not less than annually. OBJECTIVES The City's funds shall be invested in accordance with all applicable City resolutions, California statutes, and Federal regulations, and in a manner designed to accomplish the following objectives, which are listed in priority order: 1 . Preservation of capital and protection of investment principal. 2. Maintenance of sufficient liquidity to meet anticipated cash flows. 3. Attainment of a market rate of return. 4. Diversification to avoid incurring unreasonable market risks. 4of23
August 3, 2021, Item #4DELEGATION OF AUTHORITY Resolution No. 21-Page 3 In accordance with City of Poway Resolution No. 21-xxx, the City Treasurer/Finance Department is authorized to invest the City's funds in accordance with the California Government Code Section 53607. The City's Director of Finance serves as the Treasurer. The Director of Finance may delegate the authority to conduct investment transactions and to manage the operation of the investment portfolio to other specifically authorized staff members. No person may engage in an investment transaction except as expressly provided under the terms of this Policy. The Director of Finance shall develop administrative procedures and internal controls, consistent with this Policy, for the operation of the City's investment program. Such procedures shall be designed to prevent losses of public funds arising from fraud, employee error, misrepresentation by third parties, or imprudent actions by employees of the City. The City may engage the support services of outside investment advisors with respect to its investment program, so long as it can be demonstrated that these services produce a net financial advantage or necessary financial protection of the City's financial resources. If an investment advisor is selected to help manage the investment program, a City Investment Oversight Committee shall be kept informed of the changing investment environment and any potential restructuring of the portfolio which could result. This Investment Committee shall consist of the Director of Finance, the Finance Manager, and the Senior Accountant. PRUDENCE The standard of prudence to be used for managing the City's investment program is California Government Code Section 53600.3, the prudent investor standard, which states that "when investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency." The City's overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. The City recognizes that no investment is totally without risk and that the investment activities of the City are a matter of public record. Accordingly, the City recognizes that occasional measured losses may occur in a diversified portfolio and shall be considered within the context of the overall portfolio's return, provided that adequate diversification has been implemented and that the sale of a security is in the best long-term interest of the City. The Director of Finance and authorized investment personnel acting in accordance with established procedures and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided that deviations from expectations are reported in a timely fashion to the City Council and appropriate action is taken to control adverse developments. 5 of23
August 3, 2021, Item #4ETHICS AND CONFLICTS OF INTEREST Resolution No. 21-Page 4 Elected officials and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the City's investment program or could impair or create the appearance of an impairment of their ability to make impartial investment decisions. Employees and investment officials shall subordinate their personal investment transactions to those of the City. In addition, City Councilmembers, the Director of Finance, the Finance Manager, and the Senior Accountant shall file a Statement of Economic Interests each year as required by California Government Code Section 87203 and regulations of the Fair Political Practices Commission. AUTHORIZED SECURITIES AND TRANSACTIONS All investments and deposits of the City shall be made in accordance with California Government Code Sections 16429.1, 53600-53609, and 53630-53686. Any revisions or extensions of these code sections will be assumed to be part of this Policy immediately upon being enacted. The City shall not knowingly make any investments in any institution, company, corporation, subsidiary, or affiliate that practices or supports directly or indirectly through its actions, discrimination on the basis of race, religion, color, creed, national or ethnic origin, age, sex, sexual preference, or physical disability. The City has further restricted the eligible types of securities and transactions as follows: 1 . United States Treasury bills, notes, or bonds with a final maturity not exceeding five years from the date of trade settlement. There is no limit on the percentage of the portfolio that may be invested in U.S. Treasury securities. 2. Government Securities Government Securities in the aggregate shall not exceed 75% of the City's total portfolio. • Federal Instrumentality Obligations (government sponsored enterprises) with a final maturity not exceeding five years from the date of trade settlement. No more than 25% of the City's total portfolio shall be invested in any one issuer and the aggregate amount shall not exceed 75% of the City's total portfolio. • Federal Agency Obligations with a final maturity not exceeding five years from the date of trade settlement. No more than 25% of the City's total portfolio shall be invested in any one issuer and the aggregate amount shall not exceed 75% of the City's total portfolio. • Mortgage-Related Securities, including Federal Agency and Federal Instrumentality mortgage-backed securities and collateralized mortgage obligations. Such securities shall not exceed five years from the date of trade settlement and must be rated at least "AAA" by at least one Nationally Recognized Statistical Ratings Organization (NRSRO) and issued by an issuer rated at least "A" or the equivalent by an NRSRO. No more than 20% of the City's total portfolio shall be invested in the combination of Mortgage-Related Securities and Asset-Backed Securities. 6 of23
August 3, 2021, Item #4Resolution No. 21-Page 5 3. Supranationals are United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank, with a maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Investments under this subdivision shall be rated in a rating category of "AA" or its equivalent or better by an NRSRO. No more than 30% of the City's total portfolio shall be invested pursuant to this section. 4. Corporate Securities No more than 5% of the City's portfolio shall be invested in the obligations of any one corporate issuer. Rule 144A (private placement) securities are prohibited from purchase. • Medium-Term Notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Such securities shall have a final maturity not exceeding five years from the date of trade settlement and shall be rated at least "A", or the equivalent, by an NRSRO. No more than 30% of the City's total portfolio shall be invested in Medium-term Notes. • Asset-Backed Securities including equipment lease-backed certificates, consumer receivable pass-through certificates, or consumer-receivable-backed bonds. Such securities shall not exceed five years from the date of trade settlement and must be rated at least "AAA" by at least one NRSRO and issued by an issuer rated at least "A" or the equivalent by an NRSRO. No more than 20% of the City's total portfolio shall be invested in Mortgage-Related Securities and Asset-Backed Securities. • Prime Commercial Paper with a maturity not exceeding 270 days from the date of trade settlement and rated at least "A-1", or the equivalent, by an NRSRO. The entity that issues the commercial paper shall meet all of the following conditions in either sub-paragraph A. or sub-paragraph B. below: A. The entity shall (1) be organized and operating in the United States as a general corporation, (2) have total assets in excess of $500,000,000 and (3) have debt other than commercial paper, if any, that is rated at least "A" or the equivalent by an NRSRO. B. The entity shall (1) be organized within the United States as a special purpose corporation, trust, or limited liability company, (2) have program wide credit enhancements, including, but not limited to, over collateralization, letters of credit or surety bond and (3) have commercial paper that is rated at least "A-1" or the equivalent by an NRSRO. Investment in commercial paper shall not exceed 25% of the City's total portfolio. 5. Municipal Bonds including registered notes or bonds of any of the 50 states, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the 50 states. In addition, bonds, notes, warrants, or other evidences of indebtedness of any local agency in California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. 7 of23
August 3, 2021, Item #4Resolution No. 21-Page 6 Municipal Bonds must be rated at least "A" or the equivalent by an NRSRO with maturities not exceeding five years from the date of trade settlement. No more than 5% of the City's portfolio shall be invested in the obligations of any one issuer, and the aggregate investment in municipal bonds shall not exceed 30% of the City's total portfolio. 6. Negotiable Certificates of Deposits (CDs) of commercial banks rated at least "A-1", or the equivalent, with maturities not exceeding five years from the date of trade settlement. In addition, the City may not invest in the CD of a state or federal credit union where any person with investment decision making authority at the City also serves on the board of directors, or any committee appointed by the board of directors, or the credit committee or the supervisory committee of the state or federal credit union issuing the negotiable certificates of deposit. No more than 5% of the portfolio may be invested in the CDs of any one issuer, and the aggregate investment in CDs shall not exceed 30% of the portfolio. 7. Non-negotiable Certificates of Deposit and savings deposits with a maturity not exceeding five years from the date of trade settlement, in FDIC insured state or nationally chartered banks or savings banks that qualify as a depository of public funds in the State of California as defined in California Government Code Section 53630.5. Deposits in excess of the insured amount shall be secured pursuant to California Government Code Section 53651 and 53652. The City shall comply with and act to secure compliance with the security (collateralization) system specified in the Government Code Section 53649 and 53652. 8. Eligible Banker's Acceptances with a maturity not exceeding 180 days from the date of trade settlement, drawn on and accepted by a commercial bank whose senior long-term debt is rated at least "A", or the equivalent, by an NRSRO at the time of purchase. Banker's Acceptances shall be rated at least "A-1 ", or the equivalent, at the time of purchase by an NRSRO. No more than 5% of the City's total portfolio shall be invested in banker's acceptances of any one bank and the aggregate investment in banker's acceptances shall not exceed 40% of the City's total portfolio. 9. Money Market Funds registered under the Investment Company Act of 1940 that (1) are "no-load" (meaning no commission or fee shall be charged on purchases or sales of shares); (2) have a constant net asset value per share of $1.00; (3) invest only in the securities and obligations authorized in the applicable California statutes and (4) have a rating of at least "AAA", or the equivalent by at least two NRSROs. No more than 10% of the portfolio may be invested in any one fund and the aggregate investment in money market funds shall not exceed 20% of the City's total portfolio. 10. Shares of Beneficial Interest issued by a joint powers authority (e.g., CalTRUST) organized pursuant to Section 6509. 7 that invest in the securities and obligations authorized in subdivisions (a) to (o}, inclusive, of California Government Code Section 53601. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment advisor that: 8 of23 (1) is registered or exempt from registration with the Securities and Exchange Commission. (2) has at least five years of experience investing in the securities and obligations authorized in subdivisions (a) to (o), inclusive, of California Government Code Section 53601. (3) has assets under management in excess of $500,000,000.
August 3, 2021, Item #4Resolution No. 21-Page 7 11. State of California's Local Agency Investment Fund (LAIF). pursuant to California Government Code Section 16429.1. 12. The San Diego County Investment Pool. The City may invest in this investment pool, established by the San Diego County Treasurer for the benefit of local public agencies. The foregoing list of authorized securities and transactions shall be strictly interpreted. Any deviation from this list must be preapproved by resolution of the City Council. INVESTMENT MANAGEMENT If the City has employed an external investment advisor to help manage its portfolio, the investment advisor shall be bound by the aforementioned list of authorized securities, the state and local laws and regulations that govern the investment activity of the City, and the following additional parameters. • While it is understood that occasionally it may be in the best interest of the City to take losses in its security portfolio, losses taken to increase the yield in the portfolio may only be taken if the increased yield results in the loss being recouped in one year or less. Credit-related losses on the other hand are taken to prevent potentially larger losses in the future. When possible, the investment advisor will get prior approval of the City before taking credit-related losses. In any case, the City will be notified as soon as possible about any losses taken in the portfolio. • Securities that are downgraded by one or more rating agency to below the ratings required by this Policy do not have to be sold. However, the investment advisor will immediately notify the City of the downgrade. The advisor will prepare a credit report on the downgraded security and forward it to the City. While the City entrusts its investment portfolio to the advisor, the City retains the right to ultimately make the decisions on how to invest its monies. INVESTMENT DIVERSIFICATION The City shall diversify its investments to avoid incurring unreasonable risks inherent in over-investing in specific instruments, individual financial institutions or maturities. Nevertheless, the asset allocation in the investment portfolio should be flexible depending upon the outlook for the economy, the securities markets and the City's anticipated cash flow needs. PORTFOLIO MATURITIES AND LIQUIDITY To the extent possible, investments shall be matched with anticipated cash flow requirements and known future liabilities. The City will not invest in securities maturing more than five years from the date of trade settlement, unless the City Council has by resolution granted authority to make such an investment at least three months prior to the date of investment. 9 of23
August 3, 2021, Item #4SELECTION OF BROKER/DEALERS Resolution No. 21-Page 8 The Finance Manager shall maintain a list of broker/dealers approved for investment purposes, and it shall be the policy of the City to purchase securities only from those brokers and the firms they represent. Each approved broker/dealer must possess an authorizing certificate from the California Commissioner of Corporations as required by Section 25210 of the California Corporations Code. To be eligible, a firm must meet at least one of the following criteria: 1. Be recognized as Primary Dealers by the Federal Reserve Bank of New York or have a primary dealer within their holding company structure, or 2. Report voluntarily to the Federal Reserve Bank of New York, or 3. Qualify under Securities and Exchange Commission (SEC) Rule 15c3-1 (Uniform Net Capital Rule). The City may engage the services of investment advisory firms to assist in the management of the portfolio and investment advisors may utilize their own list of approved broker/dealers. Such broker/dealers will comply with the selection criteria above and the list of approved firms shall be provided to the City on an annual basis or upon request. In the event that an external investment advisor is not used in the process of recommending a particular transaction in the City's portfolio, authorized broker/dealers shall attest in writing that they have received a copy of this Policy and each authorized broker/dealer shall be required to submit and annually update a City approved Broker/Dealer Information Request form that includes the firm's most recent financial statements. The City may purchase commercial paper from direct issuers even though they are not on the approved broker/dealers list as long as they meet the criteria outlined in Item 4 of the Authorized Securities and Transactions section of this Policy. COMPETITIVE TRANSACTIONS All investment transactions shall be conducted competitively with authorized broker/dealers. At least three broker/dealers shall be contacted for each transaction and their bid or offering prices shall be recorded. If the City is offered a security for which there is no other readily available competitive offering, then the Finance Manager will document quotations for comparable or alternative securities. SELECTION OF BANKS The Finance Manager shall maintain a list of FDIC insured banks approved to provide depository and other banking services for the City. To be eligible, a bank shall qualify as a depository of public funds in the State of California as defined in California Government Code Section 53630.5 and shall secure deposits in excess of FDIC insurance coverage in accordance with California Government Code Section 53652. 10 of 23
August 3, 2021, Item #4SAFEKEEPING AND CUSTODY Resolution No. 21-Page 9 The Finance Manager shall select one or more banks to provide safekeeping and custodial services for the City. A Safekeeping Agreement approved by the City shall be executed with each custodian bank prior to utilizing that bank's safekeeping services. Custodian banks will be selected on the basis of their ability to provide services for the City's account and the competitive pricing of their safekeeping related services. The purchase and sale of securities and repurchase agreement transactions shall be settled on a delivery versus payment basis. All securities shall be perfected in the name of the City. Sufficient evidence to title shall be consistent with modern investment, banking, and commercial practices. All deliverable securities purchased by the City will be delivered by book entry and will be held in third-party safekeeping by a City approved custodian bank or its Depository Trust Company (OTC) participant account. PORTFOLIO PERFORMANCE The investment portfolio shall be designed to attain a market rate of return throughout budgetary and economic cycles, taking into account prevailing market conditions, risk constraints for eligible securities, and cash flow requirements. The performance of the City's investments shall be compared to the average yield on the U.S. Treasury security that most closely corresponds to the portfolio's weighted average effective maturity. When comparing the performance of the City's portfolio, its rate of return will be computed net of all fees and expenses. REPORTING Quarterly, the Director of Finance shall submit to the City Council a report of the investment earnings and performance results of the City's investment portfolio. The report shall include the following information: 1. Investment type, issuer, date of maturity, par value and dollar amount invested in all securities, and investments and monies held by the City; 2. A description of the funds, investments, and programs; 3. A market value as of the date of the report (or the most recent valuation as to assets not valued monthly) and the source of the valuation; 4. A statement of compliance with the Investment Policy or an explanation for non-compliance; and 5. A statement of the City's ability to meet expenditure requirements for six months, and an explanation of why money will not be available if that is the case. 11 of 23
August 3, 2021, Item #4POLICY REVIEW Resolution No. 21-Page 10 This Policy shall be reviewed at least annually to ensure its consistency with the overall objectives of preservation of principal, liquidity, yield and diversification, and its relevance to current law and economic trends. Amendments to this Policy shall be approved by resolution of the City Council. SEGREGATION OF RESPONSIBILITIES FUNCTION 1.0 Investment Policy: 1.1 Preparation and annual review of Investment Policy 1.2 Approval of Investment Policy 2.0 Investment Transactions: 2.1 Calculation of cash position 2.2 If applicable, notify investment advisor of current available cash to be invested 2.3 Investment recommendation: Determination of amount to be invested, selection of type of investment, and term of investment 2.4 Review of investment recommendation and execution of transaction 3.0 Recording of Transactions: 3.1 In investment subsidiary ledgers 3.2 In accounting records 3.3 Match investment confirmation to subsidiary ledgers 4.0 Safeguarding of Assets and Records: 4.1 Reconciliation of subsidiary records to the accounting records 4.2 Reconciliation of subsidiary records to bank statements and safekeeping records 4.3 Review of financial institutions and investment brokers' reputation and financial condition 4.4 Review of collaterals 5.0 Investment portfolio: 5.1 Preparation of investment report 5.2 Review of portfolio for compliance with stated Investment Policy 5.3 Approval of investment report 12 of 23 RESPONSIBILITY Director of Finance/ Oversight Committee City Council Sr. Accountant/Finance Mgr. Written approval by 2 members of Oversight Committee Investment Advisor/ Director of Finance/Finance Mgr. Written approval by member of Oversight Committee Sr. Accountant/Accountant Sr. Accountant/Accountant Senior Accountant Senior Accountant Senior Accountant Investment Advisor/ Oversight Committee Investment Adv./Oversight Comm. Senior Accountant Oversight Committee City Council
August 3, 2021, Item #4Resolution No. 21-Page 11 APPROVED BROKER/DEALERS The following Broker/Dealers are approved for execution of trades. Amherst Pierpont ANZ Securities Barclays Capital BB&T Securities Blaylock Van BMO Capital Markets BNP Paribas Securities BofA Securities Cantor Fitzgerald & Co. Citigroup Global Markets Credit Agricole Securities (USA) Credit Suisse Securities (USA) Daiwa Capital Markets America Deutsche Bank Securities FHN Financial Securities Goldman Sachs & Co. HSBC Securities (USA) Inca pita I I NTL FCStone Financial Jefferies JP Morgan Securities Keybanc Capital Markets Mizuho Securities (USA) Broker/Dealers Morgan Stanley & Co. MUFG Securities Americas NAB Securities NatWest Markets Securities Nomura Securities International Oppenheimer & Co. Piper Jaffray & Co. Raymond James & Associates RBC Capital Markets Robert W. Baird & Co. Samuel A. Ramirez & Co. Scotia Capital (USA) SMBC Nikko Securities America SG America Securities Stifel Nicolaus & Co. TD Securities (USA) Truist Securities UBS Securities US Bancorp Investments Wells Fargo Securities Vining Sparks This list of approved broker/dealers is subject to change at any time based upon periodic recommendations of the investment advisor throughout the year. 13 of 23
August 3, 2021, Item #4CITY OF POWAY INVESTMENT POLICY Dated: August 4, 2020 August 3, 2021 The City of Poway (the City) has adopted this Investment Policy (the Policy) in order to establish the investment scope, objectives, delegation of authority, standards of prudence, reporting requirements, internal controls, eligible investments and transactions, diversification requirements, risk tolerance, and safekeeping and custodial procedures for the investment of the funds of the City. All City funds will be invested in accordance with this Policy and with applicable sections of the California Government Code. This Policy, dated August 4, 2020 August 3, 2021, replaces any previous Policy or investment procedures of the City. SCOPE The provisions of this Policy shall apply to all financial assets and investment activities of the City as accounted for in the City's Comprehensive Annual Financial Report. The employees' retirement and deferred compensation funds are not covered by this Policy. Also, bond reserve funds will be invested in accordance with each bond issue's indenture agreement. All cash shall be pooled for investment purposes. The investment income derived from the pooled investment account shall be allocated to the General Fund, the Water Fund, the Sewer Fund, and other funds as budgeted or required by legislation based upon the proportion of the respective average balances relative to the total pooled balance. Investment income shall be distributed to the individual funds not less than annually. OBJECTIVES The City's funds shall be invested in accordance with all applicable City resolutions, California statutes, and Federal regulations, and in a manner designed to accomplish the following objectives, which are listed in priority order: 1. Preservation of capital and protection of investment principal. 2. Maintenance of sufficient liquidity to meet anticipated cash flows. 3. Attainment of a market rate of return. 4. Diversification to avoid incurring unreasonable market risks. 14 of 23 ATTACHMENT B
August 3, 2021, Item #4DELEGATION OF AUTHORITY In accordance with City of Poway Resolution No. 20 063 21-xxx, the City Treasurer/Finance Department is authorized to invest the City's funds in accordance with the California Government Code Section 53607. The City's Director of Finance serves as the Treasurer. The Director of Finance may delegate the authority to conduct investment transactions and to manage the operation of the investment portfolio to other specifically authorized staff members. No person may engage in an investment transaction except as expressly provided under the terms of this Policy. The Director of Finance shall develop administrative procedures and internal controls, consistent with this Policy, for the operation of the City's investment program. Such procedures shall be designed to prevent losses of public funds arising from fraud, employee error, misrepresentation by third parties, or imprudent actions by employees of the City. The City may engage the support services of outside investment advisors with respect to its investment program, so long as it can be demonstrated that these services produce a net financial advantage or necessary financial protection of the City's financial resources. If an investment advisor is selected to help manage the investment program, a City Investment Oversight Committee shall be kept informed of the changing investment environment and any potential restructuring of the portfolio which could result. This Investment Committee shall consist of the Director of Finance, the Finance Manager, and a-the Senior Accountant. PRUDENCE The standard of prudence to be used for managing the City's investment program is California Government Code Section 53600.3, the prudent investor standard, which states that "when investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency." The City's overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. The City recognizes that no investment is totally without risk and that the investment activities of the City are a matter of public record. Accordingly, the City recognizes that occasional measured losses may occur in a diversified portfolio and shall be considered within the context of the overall portfolio's return, provided that adequate diversification has been implemented and that the sale of a security is in the best long-term interest of the City. The Director of Finance and authorized investment personnel acting in accordance with established procedures and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided that deviations from expectations are reported in a timely fashion to the City Council and appropriate action is taken to control adverse developments. 15 of 23
August 3, 2021, Item #4ETHICS AND CONFLICTS OF INTEREST Elected officials and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the City's investment program or could impair or create the appearance of an impairment of their ability to make impartial investment decisions. Employees and investment officials shall subordinate their personal investment transactions to those of the City. In addition, City Councilmembers, the Director of Finance, the Finance Manager, and the Senior Accountant shall file a Statement of Economic Interests each year as required by California Government Code Section 87203 and regulations of the Fair Political Practices Commission. AUTHORIZED SECURITIES AND TRANSACTIONS All investments and deposits of the City shall be made in accordance with California Government Code Sections 16429.1, 53600-53609, and 53630-53686. Any revisions or extensions of these code sections will be assumed to be part of this Policy immediately upon being enacted. The City shall not knowingly make any investments in any institution, company, corporation, subsidiary, or affiliate that practices or supports directly or indirectly through its actions, discrimination on the basis of race, religion, color, creed, national or ethnic origin, age, sex, sexual preference, or physical disability. The City has further restricted the eligible types of securities and transactions as follows: 1. United States Treasury bills, notes, or bonds with a final maturity not exceeding five years from the date of trade settlement. There is no limit on the percentage of the portfolio that may be invested in U.S. Treasury securities. 2. Government Securities Government Securities in the aggregate shall not exceed 75% of the City's total portfolio. • Federal Instrumentality Obligations (government sponsored enterprises) with a final maturity not exceeding five years from the date of trade settlement. No more than 25% of the City's total portfolio shall be invested in any one issuer and the aggregate amount shall not exceed 75% of the City's total portfolio. • Federal Agency Obligations with a final maturity not exceeding five years from the date of trade settlement. No more than 25% of the City's total portfolio shall be invested in any one issuer and the aggregate amount shall not exceed 75% of the City's total portfolio. • Mortgage-Related Securities, including Federal Agency and Federal Instrumentality mortgage-backed securities and collateralized mortgage obligations. Such securities shall not exceed five years from the date of trade settlement and must be rated at least "AAA" by at least one Nationally Recognized Statistical Ratings Organization (NRSRO) and issued by an issuer rated at least "A" or the equivalent by an NRSRO. No more than 20% of the City's total portfolio shall be invested in the combination of Mortgage-Related Securities and Asset-Backed Securities. 16 of 23
August 3, 2021, Item #43. Supranationals are United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank, with a maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Investments under this subdivision shall be rated in a rating category of "AA" or its equivalent or better by an NRSRO. No more than 30% of the City's total portfolio shall be invested pursuant to this section. 4. Corporate Securities No more than 5% of the City's portfolio shall be invested in the obligations of any one corporate issuer. Rule 144A (private placement) securities are prohibited from purchase. • Medium-Term Notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Such securities shall have a final maturity not exceeding five years from the date of trade settlement and shall be rated at least "A", or the equivalent, by an NRSRO. No more than 30% of the City's total portfolio shall be invested in Medium-term Notes. • Asset-Backed Securities including equipment lease-backed certificates, consumer receivable pass-through certificates, or consumer-receivable-backed bonds. Such securities shall not exceed five years from the date of trade settlement and must be rated at least "AAA" by at least one NRSRO and issued by an issuer rated at least "A" or the equivalent by an NRSRO. No more than 20% of the City's total portfolio shall be invested in Mortgage-Related Securities and Asset-Backed Securities. • Prime Commercial Paper with a maturity not exceeding 270 days from the date of trade settlement and rated at least "A-1 ", or the equivalent, by an NRSRO. The entity that issues the commercial paper shall meet all of the following conditions in either sub-paragraph A. or sub-paragraph B. below: A. The entity shall (1) be organized and operating in the United States as a general corporation, (2) have total assets in excess of $500,000,000 and (3) have debt other than commercial paper, if any, that is rated at least "A" or the equivalent by an NRSRO. B. The entity shall (1) be organized within the United States as a special purpose corporation, trust, or limited liability company, (2) have program wide credit enhancements, including, but not limited to, over collateralization, letters of credit or surety bond and (3) have commercial paper that is rated at least "A-1" or the equivalent by an NRSRO. Investment in commercial paper shall not exceed 25% of the City's total portfolio. 5. Municipal Bonds including registered notes or bonds of any of the 50 states, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the 50 states. In addition, bonds, notes, warrants, or other evidences of indebtedness of any local agency in California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. Municipal Bonds must be rated at least "A" or the equivalent by an NRSRO with maturities not exceeding five years from the date of trade settlement. No more than 5% of the City's portfolio 17 of 23
August 3, 2021, Item #4shall be invested in the obligations of any one issuer, and the aggregate investment in municipal bonds shall not exceed 30% of the City's total portfolio. 6. Negotiable Certificates of Deposits (CDs) of commercial banks rated at least "A-1 ", or the equivalent, with maturities not exceeding five years from the date of trade settlement. In addition, the City may not invest in the CD of a state or federal credit union where any person with investment decision making authority at the City also serves on the board of directors, or any committee appointed by the board of directors, or the credit committee or the supervisory committee of the state or federal credit union issuing the negotiable certificates of deposit. No more than 5% of the portfolio may be invested in the CDs of any one issuer, and the aggregate investment in CDs shall not exceed 30% of the portfolio. 7. Non-negotiable Certificates of Deposit and savings deposits with a maturity not exceeding five years from the date of trade settlement, in FDIC insured state or nationally chartered banks or savings banks that qualify as a depository of public funds in the State of California as defined in California Government Code Section 53630.5. Deposits in excess of the insured amount shall be secured pursuant to California Government Code Section 53651 and 53652. The City shall comply with and act to secure compliance with the security ( collateralization) system specified in the Government Code Section 53649 and 53652. 8. Eligible Banker's Acceptances with a maturity not exceeding 180 days from the date of trade settlement, drawn on and accepted by a commercial bank whose senior long-term debt is rated at least "A", or the equivalent, by an NRSRO at the time of purchase. Banker's Acceptances shall be rated at least "A-1 ", or the equivalent, at the time of purchase by an NRSRO. No more than 5% of the City's total portfolio shall be invested in banker's acceptances of any one bank and the aggregate investment in banker's acceptances shall not exceed 40% of the City's total portfolio. 9. Money Market Funds registered under the Investment Company Act of 1940 that (1) are "no-load" (meaning no commission or fee shall be charged on purchases or sales of shares); (2) have a constant net asset value per share of $1.00; (3) invest only in the securities and obligations authorized in the applicable California statutes and (4) have a rating of at least "AAA", or the equivalent by at least two NRSROs. No more than 10% of the portfolio may be invested in any one fund and the aggregate investment in money market funds shall not exceed 20% of the City's total portfolio. 10. Shares of Beneficial Interest issued by a joint powers authority (e.g., CalTRUST) organized pursuant to Section 6509.7 that invest in the securities and obligations authorized in subdivisions (a) to (o), inclusive, of California Government Code Section 53601. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment advisor that: (1) is registered or exempt from registration with the Securities and Exchange Commission. (2) has at least five years of experience investing in the securities and obligations authorized in subdivisions (a) to (o), inclusive, of California Government Code Section 53601. (3) has assets under management in excess of $500,000,000. 11. State of California's Local Agency Investment Fund (LAIF). pursuant to California Government Code Section 16429.1. 18 of 23
August 3, 2021, Item #412. The San Diego County Investment Pool. The City may invest in this investment pool, established by the San Diego County Treasurer for the benefit of local public agencies. The foregoing list of authorized securities and transactions shall be strictly interpreted. Any deviation from this list must be preapproved by resolution of the City Council. INVESTMENT MANAGEMENT If the City has employed an external investment advisor to help manage its portfolio, the investment advisor shall be bound by the aforementioned list of authorized securities, the state and local laws and regulations that govern the investment activity of the City, and the following additional parameters. • While it is understood that occasionally it may be in the best interest of the City to take losses in its security portfolio, losses taken to increase the yield in the portfolio may only be taken if the increased yield results in the loss being recouped in one year or less. Credit-related losses on the other hand are taken to prevent potentially larger losses in the future. When possible, the investment advisor will get prior approval of the City before taking credit-related losses. In any case, the City will be notified as soon as possible about any losses taken in the portfolio. • Securities that are downgraded by one or more rating agency to below the ratings required by this Policy do not have to be sold. However, the investment advisor will immediately notify the City of the downgrade. The advisor will prepare a credit report on the downgraded security and forward it to the City. While the City entrusts its investment portfolio to the advisor, the City retains the right to ultimately make the decisions on how to invest its monies. INVESTMENT DIVERSIFICATION The City shall diversify its investments to avoid incurring unreasonable risks inherent in over-investing in specific instruments, individual financial institutions or maturities. Nevertheless, the asset allocation in the investment portfolio should be flexible depending upon the outlook for the economy, the securities markets and the City's anticipated cash flow needs. PORTFOLIO MATURITIES AND LIQUIDITY To the extent possible, investments shall be matched with anticipated cash flow requirements and known future liabilities. The City will not invest in securities maturing more than five years from the date of trade settlement, unless the City Council has by resolution granted authority to make such an investment at least three months prior to the date of investment. 19 of 23
August 3, 2021, Item #4SELECTION OF BROKER/DEALERS The Finance Manager shall maintain a list of broker/dealers approved for investment purposes, and it shall be the policy of the City to purchase securities only from those brokers and the firms they represent. Each approved broker/dealer must possess an authorizing certificate from the California Commissioner of Corporations as required by Section 25210 of the California Corporations Code. To be eligible, a firm must meet at least one of the following criteria: 1. Be recognized as Primary Dealers by the Federal Reserve Bank of New York or have a primary dealer within their holding company structure, or 2. Report voluntarily to the Federal Reserve Bank of New York, or 3. Qualify under Securities and Exchange Commission (SEC) Rule 15c3-1 (Uniform Net Capital Rule). The City may engage the services of investment advisory firms to assist in the management of the portfolio and investment advisors may utilize their own list of approved broker/dealers. Such broker/dealers will comply with the selection criteria above and the list of approved firms shall be provided to the City on an annual basis or upon request. In the event that an external investment advisor is not used in the process of recommending a particular transaction in the City's portfolio, authorized broker/dealers shall attest in writing that they have received a copy of this Policy and each authorized broker/dealer shall be required to submit and annually update a City approved Broker/Dealer Information Request form that includes the firm's most recent financial statements. The City may purchase commercial paper from direct issuers even though they are not on the approved broker/dealers list as long as they meet the criteria outlined in Item 4 of the Authorized Securities and Transactions section of this Policy. COMPETITIVE TRANSACTIONS All investment transactions shall be conducted competitively with authorized broker/dealers. At least three broker/dealers shall be contacted for each transaction and their bid or offering prices shall be recorded. If the City is offered a security for which there is no other readily available competitive offering, then the Finance Manager will document quotations for comparable or alternative securities. SELECTION OF BANKS The Finance Manager shall maintain a list of FDIC insured banks approved to provide depository and other banking services for the City. To be eligible, a bank shall qualify as a depository of public funds in the State of California as defined in California Government Code Section 53630.5 and shall secure deposits in excess of FDIC insurance coverage in accordance with California Government Code Section 53652. SAFEKEEPING AND CUSTODY 20 of 23
August 3, 2021, Item #4The Finance Manager shall select one or more banks to provide safekeeping and custodial services for the City. A Safekeeping Agreement approved by the City shall be executed with each custodian bank prior to utilizing that bank's safekeeping services. Custodian banks will be selected on the basis of their ability to provide services for the City's account and the competitive pricing of their safekeeping related services. The purchase and sale of securities and repurchase agreement transactions shall be settled on a delivery versus payment basis. All securities shall be perfected in the name of the City. Sufficient evidence to title shall be consistent with modern investment, banking, and commercial practices. All deliverable securities purchased by the City will be delivered by book entry and will be held in third-party safekeeping by a City approved custodian bank or its Depository Trust Company (OTC) participant account. PORTFOLIO PERFORMANCE The investment portfolio shall be designed to attain a market rate of return throughout budgetary and economic cycles, taking into account prevailing market conditions, risk constraints for eligible securities, and cash flow requirements. The performance of the City's investments shall be compared to the average yield on the U.S. Treasury security that most closely corresponds to the portfolio's weighted average effective maturity. When comparing the performance of the City's portfolio, its rate of return will be computed net of all fees and expenses. REPORTING Quarterly, the Director of Finance shall submit to the City Council a report of the investment earnings and performance results of the City's investment portfolio. The report shall include the following information: 1. Investment type, issuer, date of maturity, par value and dollar amount invested in all securities, and investments and monies held by the City; 2. A description of the funds, investments, and programs; 3. A market value as of the date of the report ( or the most recent valuation as to assets not valued monthly) and the source of the valuation; 4. A statement of compliance with the Investment Policy or an explanation for non-compliance; and 5. A statement of the City's ability to meet expenditure requirements for six months, and an explanation of why money will not be available if that is the case. 21 of 23
August 3, 2021, Item #4POLICY REVIEW This Policy shall be reviewed at least annually to ensure its consistency with the overall objectives of preservation of principal, liquidity, yield and diversification, and its relevance to current law and economic trends. Amendments to this Policy shall be approved by resolution of the City Council. SEGREGATION OF RESPONSIBILITIES FUNCTION 1.0 Investment Policy: 1.1 Preparation and annual review of Investment Policy 1.2 Approval of Investment Policy 2.0 Investment Transactions: 2.1 Calculation of cash position 2.2 If applicable, notify investment advisor of current available cash to be invested 2.3 Investment recommendation: Determination of amount to be invested, selection of type of investment, and term of investment 2.4 Review of investment recommendation and execution of transaction 3.0 Recording of Transactions: 3.1 In investment subsidiary ledgers 3.2 In accounting records 3.3 Match investment confirmation to subsidiary ledgers 4.0 Safeguarding of Assets and Records: 4.1 Reconciliation of subsidiary records to the accounting records 4.2 Reconciliation of subsidiary records to bank statements and safekeeping records 4.3 Review of financial institutions and investment brokers' reputation and financial condition 4.4 Review of collaterals 5.0 Investment portfolio: 5.1 Preparation of investment report 5.2 Review of portfolio for compliance with stated Investment Policy 5.3 Approval of investment report 22 of 23 RESPONSIBILITY Director of Finance/ Oversight Committee City Council Sr. Accountant/Finance Mgr. Written approval by 2 members of Oversight Committee Investment Advisor/ Director of Finance/Finance Mgr. Written approval by member of Oversight Committee Sr. Accountant/Accountant Sr. Accountant/Accountant Senior Accountant Senior Accountant Senior Accountant Investment Advisor/ Oversight Committee Investment Adv./Oversight Comm. Senior Accountant Oversight Committee City Council
August 3, 2021, Item #4APPROVED BROKER/DEALERS The following Broker/Dealers are approved for execution of trades. Amherst Pierpont ANZ Securities Barclays Capital BB&T Securities Blaylock Van BMO Capital Markets BNP Paribas Securities BofA Securities Cantor Fitzgerald & Co. Citigroup Global Markets Credit Agricole Securities (USA) Credit Suisse Securities (USA) Daiwa Capital Markets America Deutsche Bank Securities FHN Financial Securities Goldman Sachs & Co. HSBC Securities (USA) lncapital INTL FCStone Financial Jefferies JP Morgan Securities Keybanc Capital Markets Mizuho Securities (USA) Morgan Stanley & Co. Broker/Dealers MUFG Securities Americas NAB Securities NatWest Markets Securities Nomura Securities International Oppenheimer & Co. Piper Jaffray & Co. Raymond James & Associates RBC Capital Markets Robert W. Baird & Co. Samuel A. Ramirez & Co. Scotia Capital (USA) SMBC Nikko Securities America SG America Securities Stifel Nicolaus & Co. SunTrust Robinson Humphrey TD Securities (USA) Truist Securities UBS Securities US Bancorp Investments Wells Fargo Securities Vining Sparks This list of approved broker/dealers is subject to change at any time based upon periodic recommendations of the investment advisor throughout the year. 23 of 23
August 3, 2021, Item #5DATE: TO: FROM: CONTACT: SUBJECT: Summary: AGENDA REPORT CityofPoway August 3, 2021 Honorable Mayor and Members of the City Council Chris Hazeltine, City Manager Chris Hazeltine (858) 668-4501 or chazeltine@poway.org CITY COUNCIL Adoption of Resolution to Adopt the 1st Naval Gunfire Liaison Company In September, 2019, Mayor Vaus asked Council member Mullin to respond to an inquiry from America Supporting Americans (ASA), a non-profit 501 (c)(3) organization founded in 1968. ASA's mission is to link American military units based on U.S. soil or deployed worldwide with American communities that want to show their support. ASA contacted the City of Poway to propose that the City consider adopting the 1st Air Naval Gunfire Liaison Company (1st ANG LICO), based at Camp Pendleton, California. Following Councilmember Mullin's initial conversation with ASA, and knowing how enthusiastically Poway residents have supported members of the military in the past, Councilmember Mullin spoke with several local service clubs and stakeholders to discuss the creation of an adoptive relationship between the City of Poway and 1st ANG LICO. Recommended Action: It is recommended that the City Council adopt a Resolution to adopt the 1st Air Naval Gunfire Liaison Company. Discussion: In November 2019, the City of Poway met with Poway resident and ASA Board Member Dr. Joe Spooner, ASA Founder Linda Patterson and the leaders of 1st ANG LICO and the Company's Deployment Resource Coordinator (formerly called Family Readiness Officer ("FRO"). The meeting topics included a candid discussion of the goals and expectations of the relationship and the challenges and pitfalls of maintaining the adoptive relationship over time. The meeting concluded with a mutual understanding of those challenges and a plan to pursue a mechanism through which the Poway Community could support the 1st ANGLICO. After informal consultations with members of Poway service clubs and organizations -Kiwanis, Rotary, VFW Posts, Poway Veterans Organization, Fleet Reserve Association, and Poway Elks, a follow-up meeting took place in mid-March, 2020, and arrangements were made to bring this potential adoption before the full City Council at a meeting in May, 2020. Due to COVID-19 restrictions, presentation to 1 of 3
August 3, 2021, Item #5Council was delayed due to the inability to include and introduce the stakeholders. Now that restrictions have been lifted, the City of Poway and 1st ANG LICO are ready to gather as a community and proceed in formally adopting 1st ANG LICO as a show of support for our men and women in the armed forces. Environmental Review: This action is not subject to review under the California Environmental Quality Act (CEQA). Fiscal Impact: None. Public Notification: None. Attachment: A. Resolution Reviewed/ Approved By: Wendy Ka rman Assistant City Manager 2 of 3 Reviewed By: Alan Fenstermacher City Attorney
August 3, 2021, Item #5RESOLUTION NO. 21 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY, CALIFORNIA, SUPPORTING THE "AMERICA SUPPORTING AMERICANS' ADOPTION PROGRAM AND ADOPTING THE 1sr AIR NAVAL GUNFIRE LIAISON COMPANY WHEREAS, America Supporting Americans (ASA) was created to establish an adoption program for every branch of the United States Armed Services by an American City; and WHEREAS, the purpose of the adoption program is to bond American communities with the military men and women who bravely serve their country in a show of moral support with no political ties; and WHEREAS, the City of Poway, alongside local service organizations, has pledged its support of this worthwhile program. NOW, THEREFORE, BE IT RESOLVED by the City Council of Poway as follows: SECTION 1: The City of Poway hereby adopts the United States 1st Air Naval Gunfire Liaison Company (1st ANGLICO), homebased at Camp Pendleton. The City offers its ongoing respect and support for this battalion. SECTION 2: The City Council hereby designates Cheri Hoy, Executive Assistant to the City Manager, to serve as the official liaison between the City of Poway in its efforts to support the 1st ANGLICO. The City of Poway hereby encourages all City employees, City businesses, local branches of service organizations, schools and residents to become involved in this effort to support our men and women in the armed services. PASSED, ADOPTED AND APPROVED at a Regular Meeting of the City Council of the City of Poway, California on the 3rd day of August, 2021 by the following vote, to wit: AYES: NOES: ABSENT: DISQUALIFIED: Steve Vaus, Mayor ATTEST: Deborah Harrington, Interim City Clerk 3 of 3 ATTACHMENT A
DATE: TO: FROM: CONTACT: SUBJECT: Summary: AGENDA REPORT August 3, 2021 Honorable Mayor and Members of the City Council Aaron Beanan, Director of Finance Jt, Stacey Tang, Finance Manager ~ (858) 668-4426 or stang@poway.org City of Poway CITY COUNCIL Resolution Renewing the Fire Protection Special Tax to be Collected on the Property Tax Roll for Fiscal Year 2021-22 Consideration of a Resolution renewing the Fire Protection Special Tax to be collected on the property tax roll for Fiscal Year 2021-22. Recommended Action: It is recommended that the City Council take public input, close the public hearing, and adopt the Resolution approving the collection of the Fire Protection Special Tax on the property tax roll for Fiscal Year 2021-22. Discussion: Annually, the City collects various taxes, fees, charges, and assessments on the property tax roll by following the San Diego County Auditor and Controller's procedures established for such collections. The composition of the taxes, fees, charges, and assessments varies slightly from year to year as the time span for the assessments expires or new areas and charges are added. The taxes, fees, charges, and assessments include: Fire Protection Special Tax; Weed Abatement; Landscape Maintenance District Assessments; and Nuisance Abatement. To collect these items on the property tax roll, it is necessary to adopt a Resolution setting the charges and to authorize staff to transmit the information to the San Diego County Clerk of the Board of Supervisors, and Auditor and Controller. The following narrative explains the Fire Protection Special Tax that is to be collected via the San Diego County property tax roll. A parcel-specific listing of the amounts to be collected is on file in the City Clerk's Office. 1 of 3 August 3, 2021, Item #6
Fire Protection Special Tax -Voters approved the Fire Protection Special Tax on June 17, 1997, which was codified as Poway Municipal Code Chapter 3.20 via Ordinance No. 476. As a special tax, the Fire Protection Special Tax can only be used to support fire protection services, including but not limited to, the acquisition of equipment and the payment of personnel costs. For Fiscal Year 2021-22, the Fire Department has assigned 206,325 points to 14,820 parcels. The tax rate of $3.12 per point is unchanged from Fiscal Year 2020-21. The estimated Fire Protection Special Tax to be collected for Fiscal Year 2021-22 is $643,720. For property tax roll purposes, a not-to-exceed amount of $700,000 is authorized by the Resolution (Attachment A). The higher amount is used in the Resolution to ensure that if further additions to the property tax roll are made, for properties in the business park for example, the authorized amount will not be exceeded. The amount per parcel is rounded to the nearest even whole cent. Parcels that are not listed on the property tax roll will be billed directly by the City. Environmental Review: This action is not subject to review under the California Environmental Quality Act (CEQA). Fiscal Impact: The Fire Protection Special Tax helps support fire protection services provided by the Fire Department. The Fire Department's total operating budget for Fiscal Year 2021-22 is $13,658,574 while the estimated Fire Protection Special Tax to be collected is $643,720, or 4.71 percent of the total budget. While the revenue can be used to offset all fire protection services, this revenue is specifically being used toward offsetting Fire Prevention division operating costs of $668,205 for Fiscal Year 2021-22. Expenses exceed the revenues to be collected through the Fire Protection Special Tax because the voter approved tax rate adopted in 1997 did not include an inflator. The Fire Protection Special Tax revenue estimate for Fiscal Year 1997-98 was $535,000 which helped support a Fiscal Year 1997-98 Fire Department budget of $3,193,860, or 16.75 percent of the total budget. In order for taxes, fees, and assessments to be collected on the property tax roll for Fiscal Year 2021-22, it is necessary for the City Council to adopt a Resolution authorizing this action. Public Notification: A Notice of Public Hearing was published in the Poway News Chieftain on Thursday, July 22, 2021 and Thursday, July 29, 2021. Attachments: A Resolution Renewing the Fire Protection Special Tax to be Collected on the Property Tax Roll for Fiscal Year 2021-22 Reviewed/ Approved By: c~~ L---We~aserman Assistant City Manager 2 of3 Reviewed By: Alan Fenstermacher City Attorney August 3, 2021, Item #6
RESOLUTION NO. 21-A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY, CALIFORNIA, RENEWING THE FIRE PROTECTION SPECIAL TAX TO BE COLLECTED ON THE PROPERTY TAX ROLLS FOR FISCAL YEAR 2021-22 WHEREAS, the residents of Poway approved a Fire Protection Special Tax in 1997; WHEREAS, the City Council of the City of Poway desires to have the Fire Protection Special Tax collected on the property tax roll; WHEREAS, pursuant to Poway Municipal Code 3.20.070 the City Clerk fixed the public hearing date as August 3, 2021 to adopt the Fire Protection Special Tax; and WHEREAS, following duly given notice, the City Council of the City of Poway did hold such public hearing, receiving, considering and evaluating public comments. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway as follows: SECTION 1: The not-to-exceed amount of $700,000 shall be collected on the property tax roll in the form of a Fire Protection Special Tax of $3.12 per point as authorized by Ordinance No. 476 of the City of Poway. SECTION 2: The City Clerk is instructed to forward a certified copy of this Resolution to the Clerk of the Board of Supervisors and the Auditor and Controller of the County of San Diego. PASSED, ADOPTED AND APPROVED at a Regular Meeting of the City Council of the City of Poway, California on the 3rd day of August, 2021 by the following vote, to wit: AYES: NOES: ABSENT: DISQUALIFIED: Steve Vaus, Mayor ATTEST: Deborah Harrington, Interim City Clerk 3 of3 ATTACHMENT A August 3, 2021, Item #6
August 3, 2021, Item #7DATE: TO: FROM: CONTACT: SUBJECT: Summary: AGENDA REPORT CityofPoway August 3, 2021 Honorable Mayor and Members of the City Council Robert Manis, Director of Development Services /,,VI David De Vries, City Planner Db D 858-668-4604 or ddevries@poway.org CITY COUNCIL Environmental Assessment (EA) 21-001, General Plan Amendment (GPA) 21-001 and GPA 21-002; a staff-initiated request to adopt the City of Poway 2020-2029 Housing Element and Submittal of the Housing Element Update to the California Department of Housing and Community Development for 90-Day Review Each California municipality is required by Article 10.6 of the Government Code (Sections 65580-65589.8) to adopt a housing element as a part of its general plan. Unique from other General Plan elements, the housing element is subject to detailed statutory requirements and mandatory review by the California Department of Housing and Community Development (HCD). Changes to State law for the new housing element cycle require cities to adopt and submit an updated housing element to HCD by August 13, 2021 (120 days from the April 15th due date) to avoid penalty. The City of Poway 2020-2029 Housing Element (Housing Element Update) addresses statutory requirements and public feedback and includes several modifications to address statutory requirements since the City Council last reviewed the Housing Element Update on May 4, 2021. The City received comments from HCD on July 9, 2021. These comments are not addressed in the Housing Element Update, but staff is coordinating with HCD to address them. The City will avoid penalty if the Housing Element Update is adopted on August 3, 2021 regardless of comments by HCD being addressed. Recommended Action: It is recommended that the City Council take public input, close the public hearing, certify the Negative Declaration (Attachment A), approve both General Plan Amendment (GPA) 21-001 adopting the Housing Element Update and GPA 21-002 related text amendments to the Community Development (Land Use) Element (Attachment B), and authorize the Housing Element Update (Attachment C) to be submitted to HCD for 90-day review with any requested modifications by HCD corrected administratively by staff. Discussion: Background State law requires local governments to meet housing goals by requiring all municipalities to prepare, implement, and update the housing element of its general plan. The Housing Element Update for the 1 of 62
August 3, 2021, Item #7City of Poway covers June 30, 2020 to April 15, 2029. The previous Poway Housing Element (2010-2020) was adopted in 2013. The Housing Element Update is similar to the 2010-2020 Housing Element, except that updates were made in accordance with revisions to State housing element guidelines and statutes and to address public feedback. The updates resulted in a new Residential Sites Inventory that identifies many new affordable housing sites. The Public Safety Element is also in the process of being updated to meet the requirements of SB1035 which includes requirements to reduce wildfire risk. The Draft Public Safety Element is anticipated to be released for review later this year. Preparation of the Housing Element Update included two community workshops, a City Council workshop, a community survey, a 60-day public review, a 30-day Negative Declaration environmental review, and continuous coordination with HCD. The City notified various housing, community, and special interest groups, including groups serving affordable housing and special needs populations about the Housing Element Update public outreach opportunities. Full responses provided via the survey and summaries of the workshops are posted on the Housing and Public Safety Element Update webpage (www.poway.org/hpse) and are in Chapter 1 of the Housing Element Update. Public comments and feedback from HCD were considered in the Housing Element Update. On May 4, 2021, the City Council held a public workshop where staff provided an overview of the draft Housing Element Update and the public feedback and HCD corrections received up to that point. Requested edits from the City Council public workshop included resolving edits requested by HCD and adding funding sources to the programs as recommended by the San Diego Housing Federation. The City Council authorized submittal of the draft Housing Element Update to HCD for a 60-day review that is required prior to adoption. On May 10, 2021, staff submitted the draft Housing Element Update to HCD for a 60-day review which concluded on July 9, 2021. City staff coordinated with HCD staff on several revisions during a presubmittal review and during the 60-day review period; the resulting document is the Housing Element Update. Feedback on the draft document was positive. HCD, however, requested additional information and revisions to the document to address State law. Revisions, as of June 25, 2021, included: • Chapter 1, expanded and updated public participation information; • Chapter 2, expanded information related to: affirmatively furthering fair housing, demographic data, housing in need of rehabilitation, and special needs households; • Chapter 3, expanded information related to: compliance with transparency laws, housing development projects seeking vesting rights pursuant to SB 330 (the Housing Crisis Act of 2019), development standards in the Poway Road Specific Plan area and water and wastewater capacity to accommodate the RHNA projections. Provided clarifications on exactions (e.g., requiring street improvements), fees, construction in Very High Fire Hazard Severity Zones (VHFHSZ), reasonable accommodations, market constraints, and code compliance procedures; • Chapter 4, provided information on Regional Housing Needs Assessment (RHNA) credits, development trends, site availability, capacity assumptions, opportunities for lot consolidation, site analysis effects on furthering fair housing, and financial sources for the development of housing; • Chapter 5, provided clarifications on programs for residents with special needs; • Chapter 6, provided information and objectives related to: housing for special needs groups, financial sources for the development of housing, construction monitoring for accessory dwelling units (ADUs), parking constraints, and housing preservation. Provided clarifications 2 of62
August 3, 2021, Item #7on contributing factors to affirmatively furthering fair housing. Added objective standards and procedures for allowing large residential care facilities and group homes for seven or more persons in all residential zones and allowing employee housing for six or fewer persons subject to regulations that apply to other residential dwellings of the same type in the same zone. On July 9, 2021, the City received a letter from HCD which included corrections to address all statutory requirements (Attachment D). These corrections are generally new comments provided on the draft Housing Element Update. Staff will submit revisions to address comments in the July 9, 2021 letter from HCD after City Council adoption. Recommended changes will be incorporated into the Housing Element Update prior to formal submission to HCD for a 90-day review. The City Council will be updated on the changes after HCD certification. Findings State law requires local governments to adequately plan for the housing needs of all economic segments (very low, low, moderate, and above moderate-income households) of the municipality. The law states that all jurisdictions must adopt land use plans and regulatory systems which provide opportunities for, and do not constrain, housing development. Government Code Section 65583 states that each jurisdiction in the State is required to update its housing element to accommodate its fair share of regional housing needs. A major component of the housing element is the RHNA. The RHNA prepared and allocated by the San Diego Association of Governments (SAN DAG) and accepted by HCD, is the total number of housing units needed to meet the regional demand. Each jurisdiction is required to accommodate its fair share of units. To accommodate means that zoning is in place and sites are identified where the units could be located. It does not require that the units be produced. The housing unit share is identified by income categories -very low (including extremely low), low, moderate, and above moderate. The current RHNA is an eight-year cycle Uune 30, 2020 -April 15, 2029). Poway's housing element cycle is aligned with other jurisdictions in the San Diego region as all are required to update their housing elements at the same time. Poway's fair share of the RHNA is 1,319 units. While Poway received a slight increase (up from 1,253 units) from the previous fifth housing element cycle, many jurisdictions received significant increases (often two or three times higher than the fifth housing element cycle). The table below details the housing unit distribution for Poway and the San Diego region in all four income categories as required by State law for the 2020-2029 housing cycle. 3 of62 Regional Housing Needs Assessment (RHNA) 6/30/20 to 04/15/29 Poway Total Housing Units 1,319 Very Low3 468 Low 268 Moderate 241 Above Moderate 342 1 SAN DAG Final RHNA for the City of Poway 2HCD RHNA Determination for the San Diego region 350% to be Extremely Low Income Percent of Total1 Region 100% 171,685 35.5% 42,332 20.3% 26,627 18.3% 29,734 25.9% 72,992 Percent of Tota12 100% 24.7% 15.5% 17.3% 42.5%
August 3, 2021, Item #7The housing element is designed to provide the City with a coordinated and comprehensive strategy for promoting the production of safe, decent and affordable housing within the community. The housing element presents a plan to achieve the City's housing goal while meeting the requirements of the State of California (Article 10.6 of the Government Code) and includes: • Analysis of the previous housing element (2010-2020) and current housing factors (physical, fiscal, regulatory); • Identification of constraints to achieving the housing goal including constraints to furthering fair housing; and • Proposed modifications and refinements to the objectives, policies and programs identified in the 2010-2020 Housing Element. Based on past success of affordable housing developments in the City, many of the goals and strategies identified in the 2010-2020 Housing Element will continue to be included in the Housing Element Update. The Housing Element Update programs in Chapter 6 address existing and new legislation pertaining to housing for special needs (emergency homeless shelters, transitional housing, supportive housing, low barrier navigation centers, etc.), Density Bonus law, SB 35 Permit Streamlining processes, No Net Loss provisions, updating the Public Safety Element, monitoring housing production during the RHNA cycle, and furthering fair housing. Based on public comments discussed previously, HCD recommendations to address State mandates, and/or staff recommendations, some other notable policies and programs in the Housing Element Update include: • Encourage State and Federal agencies to reduce constraints to the provision of housing. • Encourage the State to allow cities to implement their RHNA and implement their visions for their communities without State intervention and provide sufficient funding for affordable housing. • Continue to encourage SANDAG and Caltrans to provide a multi-modal transit corridor along Scripps Poway Parkway and the SR-67 corridors to increase access to jobs and areas of opportunity. • Discourage short term rental of one or more rooms or whole homes on a daily or weekly basis to preserve permanent housing. • Encourage additional housing choices through the development of the Poway Road Specific Plan (PRSP). • Encourage diverse housing design with varying architectural styles, roof and siding materials, colors, and architectural projections while maintaining compatibility and unifying elements with the architecture in the surrounding area. • Encourage building heights scaled to surrounding structures, increased landscape and trees, and private and common active and passive open space in housing projects. • Encourage connections (connectivity) between housing and essential services, parks, trails and related amenities promoting outdoor walking and biking opportunities. • Encourage traffic safety and reduced congestion with appropriate analysis as a part of new housing projects. • Encourage the development of multigenerational housing through ADUs and junior ADUs. • Encourage safety within housing developments through Crime Prevention Through Environmental Design (CPTED), including increased pedestrian scale lighting. • Require new housing units in VHFHSZs to provide adequate fire access and suppression. • Ensure housing construction includes sufficient access including adequate street widths and load capacity along rural streets and curb, gutter, and sidewalk with street trees along nonrural streets. • Require trail easements and related trail improvements and connections for appropriate use 4 of 62
August 3, 2021, Item #7as a part of new housing unit construction to promote health and wellness and connectivity. • Create objective design standards for new housing projects as determined by the City Council. As with the 2010-2020 Housing Element, the elimination of the redevelopment agency has had a profound impact on the City's affordable housings efforts. Redevelopment funds were a major funding source for affordable housing developments in the City. Based on past success of affordable housing developments in the City, many of the goals and strategies identified in the 2010-2020 Housing Element will continue to be included in the Housing Element Update. A critical factor to the actual production of affordable housing units will continue to be the identification of funding for housing and related programs. The Housing Element Update consists of the following Chapters: • Chapter 1 -Introduction: Provides a brief overview of the purpose and background for the Housing Element Update. It also includes State requirements with recent legislative amendments, a list of HCD required components, and a summary of public outreach and participation. • Chapter 2 -Community Profile: A profile and analysis of the City's demographics, housing characteristics, existing and future housing needs, and a fair housing assessment per AB 686 that analyzes and addresses constraints to fair housing choice and includes impediments imposed by the State and federal governments. As required by HCD, the fair housing assessment includes an analysis of integration and segregation patterns and trends, racially or ethnically concentrated areas of poverty, disparities in access to opportunity, and disproportionate housing needs within the jurisdiction including displacement risk. • Chapter 3 -Constraints: An analysis of constraints to housing production and retention, including various market, governmental, and environmental limitations to meeting Poway's identified housing needs. Provisions for housing for special needs and constraints related to ADUs and providing housing within the Poway Road Specific Plan and the Farm in Poway Specific Plan areas are included. Constraints related to VHFHSZs is included (e.g., 30-foot setbacks). A new section on wildfire risk constraints is included. • Chapter 4 -Housing Resources: An overview of resources available to accommodate and provide housing for all income levels, including land available for new construction and financial and administrative resources available for housing in Poway. This chapter includes the new Residential Sites Inventory (RSI) to accommodate the RHNA. The RSI includes prospective ADUs, sites owned by the City or Poway Housing Authority, and Poway Road Specific Plan sites to meet the needs of the RHNA at all income levels. Villa De Vida (54 units), Poway Commons (97 units), and Apollo Apartments (43 units) are in the "Under Construction" section of the RSI. The State allows Poway to meet its housing needs with sites that allow for up to 30 dwelling units per acre. No rezoning is proposed, and previous sites poised to be rezoned with the Affordable Housing Overlay Zone (AHOZ) were abandoned since the Poway Road Specific Plan sites provide sufficient density to meet State requirements. HCD provided the City credit in the RHNA for Fairfield (212 units), The Farm in Poway (160 units), and the Outpost (53 units). Other projects not in the RSI are accounted for in the Additional Above Moderate-Income Sites Inventory (Attachment A of the Housing Element Update). • Chapter 5 -Program Accomplishments: An assessment of past accomplishments and an evaluation of programs that should be continued, modified, or added in the new housing 5 of62
August 3, 2021, Item #7cycle. During the 2010 to 2020 RHNA planning cycle, 488 of the 1,253 housing units allocated in the RHNA were constructed. While housing needs at the very low and low-income affordability levels were met, 10 of the 100 extremely low-income affordable units allocated were met. • Chapter 6 -Housing Plan: Outlines the City's overall housing goals, objectives, policies, and programs over the housing cycle (2020-2029), and addresses the City's identified housing needs and requirements to comply with State law. The next step in the process is for the City Council to consider adopting the Housing Element Update and submitting it to HCD for a 90-day review. Staff will continue to coordinate with HCD to resolve any outstanding HCD requirements. If municipalities within San Diego County do not adopt an updated housing element by August 13, 2021, they will be required to revise their housing element every four years instead of eight years. Staff will incorporate any comments from HCD into a final Housing Element Update document for HCD's review and certification. After HCD certification, the Director of Development Services will administratively adopt the Housing Element Update and staff will post the final version on the designated Housing Element Update webpage (www.poway.org/hpse) with notification to the City Council and the Housing Element Update stakeholders. Community Development (Land Use) Element Text Amendment (GPA 21-002) Staff is also recommending a minor modification to the Community Development (Land Use) Element of the General Plan to be consistent with the Housing Element Update. A strikeout/underline of the proposed text amendment references the Housing Element Update and the RHNA for the sixth cycle in the General Plan amendment. Fiscal Impact: None. Environmental Review: As required under the California Environmental Quality Act (CEQA), an Environmental Initial Study (EIS) was completed for the project. The EIS determined that the project would not have a significant impact on the environment and, therefore, does not require any mitigation. A Negative Declaration (ND) has been prepared. The EIS and draft ND were sent to the State Clearinghouse for distribution and review by relevant state agencies (State Clearinghouse #2021060520) for a required 30-day public review and comment period. The EIS and ND is included as exhibit A of the resolution provided as Attachment A to this report. A Notice of Availability of the EIS and ND for public review and comment was provided pursuant to the requirements of CEQA. As of the writing of this report, no comments have been received. Any comments that are received will be provided to City Council prior to the public hearing on this matter. Public Notification: A Notice of the 30-day Public Review Period for a Negative Declaration and Notice for Public Hearing was published in the Poway News Chieftain on Thursday, June 24, 2021. The notice was also posted on the City's website with notification e-mailed to all participants that attended the Community 6 of62
August 3, 2021, Item #7Workshops, related listserve registrants, and other interested parties. Attachments: A. Resolution certifying the ND B. Resolution approving GPA21-001 and GPA21-002 C. City of Poway 2020-2029 Housing Element (on file in the Office of the City Clerk) https://docs.poway.org/Weblink/Browse.aspx?id=151673&dbid=0&repo=CityofPoway D. HCD 60-day review Correction Letter, dated July 9, 2021 Reviewed/ Approved By: Wendy Kerman Assistant City Manager 7 of62 Reviewed By: Alan Fenstermacher City Attorney Approved By: Chwz City Manager
August 3, 2021, Item #7RESOLUTION NO. 21-A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY, CALIFORNIA, ADOPTING A NEGATIVE DECLARATION (ENVIRONMENTAL ASSESSMENT) FOR GENERAL PLAN AMENDMENT 21-001 AND 21-002 FOR THE ADOPTION OF CITY OF POWAY HOUSING ELEMENT UPDATE (2020-2029) WHEREAS, State Law requires that cities periodically update the Housing Element of the General Plan; WHEREAS, an Environmental Initial Study (EIS) was completed for the project, as required under the California Environmental Quality Act (CEQA). A letter was sent to the tribal representatives which are traditionally and culturally affiliated with the geographic area within the City of Poway's jurisdiction. The EIS determined that the project would not have a significant effect on the environment. A Notice of the Availability of the EIS and proposed Negative Declaration (ND) for public review and comment was provided pursuant to the requirements of CEQA; WHEREAS, the EIS and draft ND were sent to the State Clearinghouse for distribution and review by relevant state agencies (State Clearinghouse # 2021060520) for a required 30-day public review and comment period; WHEREAS, Notice of Availability of the EIS and ND for public review and comment was provided pursuant to the requirements of CEQA. No comments were received during the 30-day public review and comment period; WHEREAS, on August 3, 2021, the City Council held a duly advertised public hearing to receive testimony from the public, both for and against, relative to this matter; and WHEREAS, the City Council has read and considered the agenda report for the proposed project, including the attachments, and has considered all other evidence presented at the public hearing. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway as follows: SECTION 1: In accordance with the requirements of the California Environmental Quality Act (CEQA), an Environmental Initial Study (EIS) and a Negative Declaration (ND) have been prepared for General Plan Amendment (GPA) 21-001, GPA21-002 and Environmental Assessment (EA) 21-001 for the Housing Element Update. It was determined that the project will not have any significant adverse impacts on the environment. Any anticipated impacts were determined to be below a level of significance and, therefore, do not require any mitigation. The EIS and draft Negative Declaration were sent to the State Clearinghouse for distribution and review by relevant state agencies (State Clearinghouse #2021060520) for a required 30-day public review and comment period. The City Council has considered the EIS and ND, and public comments received on the EIS and ND. The subject EIS and ND documentation are fully incorporated herein by this reference. The City Council finds, on the basis of the whole record before it, that there is no substantial evidence the project will have a significant impact on the environment. The City Council hereby adopts the ND (Exhibit A). 8 of 62 ATTACHMENT A
August 3, 2021, Item #7Resolution No. 20-Page 2 PASSED, ADOPTED AND APPROVED at a Regular Meeting of the City Council of the City of Poway, California on the 3rd day of August, 2021 by the following vote, to wit: AYES: NOES: ABSENT: DISQUALIFIED: Steve Vaus, Mayor ATTEST: Deborah Harrington, Interim City Clerk 9 of 62
August 3, 2021, Item #7STEVE VAUS, Mayor BARRY LEONARD, Deputy Mayor DA VE GROSCH, Councilmember CA YLIN FRANK, Councilmember JOHN MULLIN, Councilmember CITY OF POWAY EXHIBIT A CITY OF POWAY NEGATIVE DECLARATION 1. Name and Address of Applicant: City of Poway, Development Services, 13325 Civic Center Drive, Poway, CA 92064. 2. Project Name and Brief Description of Project: Environmental Assessment (EA) 21-001; General Plan Amendment (GPA) 21-001 adopting the City of Poway 2020-2029 Housing Element of the General Plan and amending the text of the Community Development (Land Use) Element of the General Plan to reflect the updated Housing Element. 3. In accordance with Resolution 83-084 of the City of Poway, implementing the California Environmental Quality Act of 1970, the City of Poway City Council has found that the above project will not have a significant effect upon the environment and has approved a Negative Declaration. An Environmental Impact Report will not be required. 4. This Negative Declaration is comprised of this form along with the Environmental Initial Study that includes the Initial Study. 5. The decision of the City Council of the City of Poway is final. Contact Person: Scott Nespor Phone: (858) 668-4656 Attachments: 1. Environmental Initial Study City Hall Located at 13325 Civic Center Drive Mailing Address: P.O. Box 789, Poway, California 92074,0789 www.poway.org
August 3, 2021, Item #7A. INTRODUCTION ATTACHMENT 1 CITY OF POWAY ENVIRONMENTAL INITIAL STUDY AND CHECKLIST This Environmental Initial Study and Checklist, along with information contained in the public record, comprise the environmental documentation for the proposed project as described below pursuant to the requirements of the California Environmental Quality Act (CEQA). Based upon the information contained herein and in the public record, the City of Poway has prepared Negative Declaration for the proposed project. B. PROJECT INFORMATION 1. Project Title: 2020-2029 City of Poway Housing Element of the General Plan; Environmental Assessment (EA) 21-001; General Plan Amendment (GPA) 21-001 2. Lead Agency Name and Address: ___ ____,;C;...;.it.c...Ly_o;...;.f....;..P.....;o;.._w_a....,,.y...,_, _D_e_v....;_el_o ..... p_m_e_n_t _S_e_rv_ic_e_s __ 13325 Civic Center Drive, Poway, CA 92064 3. Contact Person and Phone Number: Scott Nespor, Associate Planner, 858-668-4656 4. Project Location: Citywide (Exhibit A -Attached) 5. Project Sponsor's Name and Address: ____ C_it....,_y_o_f_P_o_w_a ...... y ________ _ 13325 Civic Center Drive, Poway, CA 92064 6. General Plan Designation: Citywide -Not Applicable for adoption of a Housing Element Update 7. Zoning: Citywide -Not Applicable for adoption of Housing Element Update 8. Description of Project: This project is a General Plan Amendment to update and adopt the City of Poway 2020-2029 Housing Element for the Sixth Cycle planning period from June 30, 2020 to April 15, 2029 and amend the text of the Community Development (Land Use) Element of the General Plan to reflect the updated Housing Element. The Housing Element update, which is one of the seven City's General Plan elements, is a policy document designed to provide the City with a coordinated and comprehensive strategy for promoting the production of safe, decent, and affordable housing within the community. California Government Code Section 65580 states the following regarding the importance of creating housing elements: a. The availability of housing is of vital statewide importance, and the early attainment of decent housing and a suitable living environment for every Californian, including farmworkers, is a priority of the highest order. 11 of 62 1
August 3, 2021, Item #7EIS and Checklist b. The early attainment of housing goals requires the cooperative participation of government and the private sector in an effort to expand housing opportunities and accommodate the housing needs of Californians of all economic levels. c. The provision of housing affordable to low-and moderate-income households requires the cooperation of all levels of government. d. Local and state governments have a responsibility to use the powers vested in them to facilitate the improvement and development of housing to make adequate provision for the housing needs of all economic segments of the community. e. The Legislature recognizes that in carrying out this responsibility, each local government also has the responsibility to consider economic, environmental, and fiscal factors and community goals set forth in the general plan and to cooperate with other local governments and the State in addressing regional housing needs. f. Designating and maintaining a supply of land and adequate sites suitable, feasible, and available for the development of housing sufficient to meet the locality's housing need for all income levels is essential to achieving the State's housing goals and the purposes of this article. According to state law, the Housing Element has two main purposes: a. To provide an assessment of both current and future housing needs and constraints in meeting these needs; and b. To provide a strategy that establishes housing goals, policies, and programs. The City's Housing Element serves as an integrated part of the General Plan, and is subject to detailed statutory requirements, including a requirement to be updated every eight years, and a mandatory review by the California Housing and Community Development (HCD). The proposed Housing Element update is an over eight-year plan for the 2020-2029 period. Pursuant to Government Code Section 65583, a housing element is required to consist of an identification and analysis of existing and projected housing needs and a statement of goals, polices, quantified objectives, financial resources, and scheduled programs for the preservation, improvement, and development of housing. A housing element is required to contain the following: • An assessment of housing needs and an inventory of resources and constraints relevant to the meeting of these needs (Government Code Section 65583(a]); • A statement of the community's goals, quantified objectives, and policies relative to the maintenance, preservation, improvement, and development of housing (Government Code Section 65583[a]); and • A program that sets forth a schedule of actions during the planning period, each with a timeline for implementation of the policies and achieve the goals and objectives of the housing element (Government Code Section 65583[c]). The updated housing element includes an over eight-year plan for the 2020-2029 housing cycle that includes all 19 jurisdictions in the San Diego region. The Housing Element update serves as an integrated part of the General Plan, but is updated more frequently, as required by state law, to ensure its relevancy and accuracy. The Housing Element identifies strategies and program that focus on: 12 of 62 2
August 3, 2021, Item #7EIS and Checklist • Matching housing supply with need; • Maximizing housing choices throughout the community • Assisting in the provision of affordable housing • Removing governmental and other constraints to housing investment; and • Promoting fair and equal housing opportunities. The City's Housing Element update contains the following components: • A profile and analysis of the City's demographics, housing characteristics, existing and future housing needs, and fair and equal housing opportunities and constraints (Chapter 2, Community Profile). • A review of the constraints to housing production and preservation. Constraints include potential market, governmental, policy, and environmental limitations to meeting the City's identified housing needs (Chapter 3, Constraints). • An assessment of resources available to meet the City's objectives regarding housing production and preservation and its ability to further fair housing. Resources include land available for new construction and redevelopment, an analysis of site constraints and the site's ability to further fair housing, as well as financial and administrative resources available (Chapter 4, Housing Resources). • A statement of the housing plan to address the City's identified housing needs, including housing goals, policies, and programs (Chapter 6, Housing Plan). Regional Housing Needs Allocation {RHNA) The Regional Housing Needs Allocation (RHNA) is mandated by State law as part of the periodic process of updating the local housing element of the General Plan. The RHNA process begins with the regional determination figure (the total number of housing units needed to meet housing needs in the SANDAG region) issued by HCD, followed by an allocation to each jurisdiction within the region (specific number of units allocated to each jurisdiction). For the 2020 to 2029 Housing Element, the regional determination was based solely on projected housing need during an over eight-year planning period. Recent changes to State law added a requirement that existing housing needs must be incorporated in the regional determination by housing need indicators such as vacancy rates, job/housing balance, cost burden, and overcrowding. SANDAG is mandated to allocate the regional housing need set by HCD to jurisdictions in the region. In allocating the region's future housing needs to jurisdictions, SANDAG is required to take the following factors into consideration pursuant to Section 65584 of the State Government Code: • Market demand for housing; • Employment opportunities; • Availability of suitable sites and public facilities; • Commuting patterns; • Types of tenure housing; • Loss of units in assisted housing developments; • Over-concentration of lower income households; and 13 of 62 3
August 3, 2021, Item #7EIS and Checklist • Geological and topographical constraints. The RHNA of the SANDAG region was adopted July 2020 covering the planning period from June 30, 2020 through April 15, 2029. The major goal of the RHNA is to assure a fair distribution of housing among cities and counties within the San Diego region, so that every community provides an opportunity for a mix of housing for all economic segments. The housing allocation targets are not building requirements, but goals for each community to accommodate through appropriate planning, policies, and land use regulation. Overall, the region needs to plan for an additional 171,685 units. Allocation targets are intended to assure that adequate sites and zoning are made available to address anticipated housing demand during the planning period. The City of Poway's share of regional housing needs per the RHNA is a total of 1,319 units for the 2020-2029 Housing Element. Of the 1,319 units allocated to the City, Poway must plan for units affordable to all income levels. The Residential Sites Inventory (Chapter 4, Figure 4-5) identifies vacant land within a variety of residentially-zoned areas including Rural Residential zones, Residential Single Family-4 (RS-4) and Residential Single Family-? (RS-7). There are several mixed-use properties on the list with land use designations that are Town Center (TC), Commercial Office (CO), Commercial Business (CB), and Commercial General (CG), several of which are within the Poway Road Specific Plan area. Residential Sites Inventory State law requires that jurisdictions demonstrate in the housing element that the land inventory is adequate to accommodate that jurisdiction's share of the region's projected growth. As part of this housing element update, the City identified residential sites that could accommodate Poway's future housing needs through an evaluation of vacant and underutilized residential and mixed-use properties with potential for residential development within the timeframe of the housing element. The Residential Sites Inventory (Table 4-5 and Appendix A-1) of the City of Poway 2020-2029 Housing Element provides a detailed survey of parcels that were appropriate for residential development. Housing Plan As required by state Housing Element law, the proposed Housing Element update includes a Housing Plan to facilitate and accommodate the provision of housing consistent with the RHNA. The plan would be to implement strategies and programs intended to address a number of important housing-related issues and achieve the City's overarching housing goal, which states: IT IS THE GOAL OF THE CITY OF POWAY TO PROVIDE ADEQUATE APPROPRIATE HOUSING OPPORTUNITIES TO MEET THE NEEDS OF CURRENT AND FUTURE RESIDENTS. The following is a summary of the key programs that will be included in the Housing Plan. Some of these are the continuation of the 2013 Housing Element as follows: Conservation of Existing Housing 14 of 62 Maintain Rehabilitation Loans for Low-and Moderate-Income Households, as funding becomes available Continue to enforce existing Condominium Conversions Regulations 4
August 3, 2021, Item #7EIS and Checklist Continue to maintain the Mobile Home Park Zone Continue to enforce Construction Codes Continue to maintain Neighborhoods Revitalization Continue to maintain and enhance Resident Services Continue to fund Nonprofit Housing Development Corporations, as funding becomes available Continue to monitor Affordable Housing Projects Develop and implement a Comprehensive Maintenance Agreement for Affordable Housing Developments Development of New Housing Develop new Rental Housing 15 of 62 Continue to develop new Affordable Housing on Parcels with the Affordable Housing Overlay Zone (AHOZ) Designation Implement Mixed-Use Development Standards Continue to collect In-Lieu fees and monitor the City's lnclusionary Housing Ordinance Continue allowing Poway Housing Authority to retain, promote, and provide affordable housing and maintain reporting Implement Zoning Amendments for Special Needs Housing (e.g., Low Barrier Navigation Centers, Transitional and Supportive Housing, Emergency Shelters, Residential Care Facilities, Agricultural Worker Housing, Employee Housing, Housing with Reasonable Accommodations, Single-Room Occupancy) Continue to provide for Special Needs Housing including determining the availability of funding for implementation of housing programs Continue the First Time Homebuyer Assistance Program to assist Program participants with loan servicing and resale processing, as funding is available Continue offering single-family rehabilitation loans with the Home Enhancement Loan Program, as funding is available Maintain Zoning Categories in the General Plan to encourage diversity of development to serve as many types of residents as possible while minimizing land-use related conflicts Evaluate Community Land Trusts to determine options for use of the community land trust model Continue to provide priority for the provision of services to Lower Income Households Continue to enforce City codes, General Plan Polices, and Zoning Regulations Continue to monitor Ordinances, User Charges, and Fees Update the Poway Municipal Code to comply with current Density Bonus law Conduct public outreach and education programs that engage the community to help create an understanding of and support for affordable housing, as funding is available Promote Transit-Oriented projects Encourage the provision of housing for Extremely-Low Income Households, as funding is available Monitor and evaluate No Net Loss requirement per state law Monitor and preserve potential At-Risk housing units to ensure adequate sites are available throughout planning period, as funding is available Monitor and evaluate the AHOZ Ordinance Development Standards Update the Public Safety Element and ensure consistency with the Adopted Housing Element Implement SB35 permit streamlining and adopt procedures for processing of new affordable housing projects 5
August 3, 2021, Item #7EIS and Checklist Amend the City's objective design standards in the General Plan and Municipal Code Adopt Development Standards for Parking, Open Space, and Recreational Areas in Floodways Review parking requires to ensure parking Is not a constraint on housing Affirmatively Fair Housing Practices Continue to provide information on Fair Housing in the Quarterly Newsletter Obtain and distribute flyers on Fair Housing from San Diego County Obtain and display posters on Fair Housing from the State Include Anti-Discrimination Clauses in Deed Restrictions for Affordable Housing Continue to assist in addressing Fair Housing questions Reduce impediments to Furthering Fair Housing by addressing the contributing factors to ensure, pursuant to AB 686, the City will affirmatively further fair housing by taking meaningful actions in addition to resisting discrimination, that overcomes patterns of segregation and fosters inclusive communities free from barriers that restrict access to opportunity based on protected classes, as defined by state law Affirmatively Furthering Fair Housing (AB 686) Pursuant to Assembly Bill (AB) 686 (2018), the Housing Element must include an analysis and determination of consistency with Affirmatively Furthering Fair Housing (AFFH) requirements. AFFH means "taking meaningful actions, in addition to combating discrimination, that overcome patterns of segregation and foster inclusive communities free from barriers that restrict access to opportunity based on protected characteristics. These actions must, when taken together, address significant disparities in housing needs and in access to opportunity, replace segregated living patterns with truly integrated and balanced living patterns, transform racially and ethnically concentrated areas of poverty into areas of opportunity, and foster and maintain compliance with civil rights and fair housing laws. To comply with these requirements, the implementation programs of the Housing Element must affirmatively further fair housing and must include an assessment of fair housing. Additionally, the list of opportunity sites suitable for housing development must be identified throughout the City in a manner that affirmatively furthers fair housing opportunities. For purposes of the housing element Residential Sites Inventory, this means that sites identified to accommodate the lower-income portion of the RHNA are not concentrated in low-resourced areas (lack of access to high performing schools, proximity to jobs, location disproportionately exposed to pollution or other health impacts) or areas of segregation and concentrations of poverty. Sites identified to accommodate the lower income RHNA must be distributed throughout the community in a manner that affirmatively furthers fair housing. To conduct this analysis, the City utilized the California Tax Credit Allocation Committee (TCAC)/California Department of Housing and Community Development (HCD) Opportunity which can be accessed at https://www.treasurer.ca.gov/ctcac/opportunity.asp. Analysis of the fair housing issues was also from the 2020 San Diego Regional Analysis of Impediments to Fair Housing Choice, in which the City of Poway participated. The 2020-2029 Housing Element complies with AB 686 requirements. Additional Requirements Related to the Opportunity Sites List (AB 1397 and SB 166) 16 of 62 6
August 3, 2021, Item #7EIS and Checklist Since the 5th cycle Housing Element was adopted in 2013, the State Legislature has adopted several bills which strengthen requirements related to the Residential Sites Inventory. Among these, the most significant are AB 1397 (2017) and SB 166 (2017), which imposed several key new requirements. These new requirements are summarized as follows: Enhanced Requirements: Realistic Development Potential (AB 1397) Assembly Bill 1397 requires that, for each site included in the Residential Sites Inventory, the City identify the realistic development potential for the site within the eight-year planning period. For non-vacant sites, the methodology used to identify realistic development potential must consider factors such as existing uses, past development trends, market conditions, and the availability of regulatory and/or other development incentives. No Net Loss (SB 166) Senate Bill 166 amended the existing No Net Loss Law to require sufficient adequate sites to be available at all times throughout the housing element planning period to meet a jurisdiction's remaining unmet RHNA goals for each income category. To comply with the No Net Loss Law, as jurisdictions make decisions regarding zoning and land use, or development occurs, jurisdictions must assess their ability to accommodate new housing in each income category on the remaining sites in their housing element site inventories. A jurisdiction must add additional sites to its inventory if land use decisions or development results in a shortfall of sufficient sites to accommodate its remaining housing need for each income category. In particular, a jurisdiction may be required to identify additional sites according to the No Net Loss Law if a jurisdiction rezones a site or if the jurisdiction approves a project at a different income level or lower density than shown in the Residential Sites Inventory. Lower density means fewer units than the capacity assumed in the site inventory. To ensure that sufficient capacity exists in the housing element to accommodate the RHNA throughout the planning period, HCD recommends that jurisdiction create a buffer in the housing element inventory of more capacity than required, especially for capacity to accommodate the lower income RHNA. Jurisdictions can also create a buffer by projecting site capacity at less than the maximum density to allow for some reductions in density at a project level. The 2020-2029 Housing Element identifies a 140 unit buffer above the RHNA with credits from Table 4-4 and sites from Table 4-5 (1,459 total housing units provided to meet RHNA, excluding additional sites identified in Table A-1). Rezoning for Re-Use of Sites to Accommodate Lower Income RHNA (20 percent inclusionary, By-right) Sites identified to accommodate the lower-income RHNA are subject to additional requirements if they were identified in a previous planning period. Generally, these requirements would apply to the use of a non-vacant site that was identified in the prior planning period's housing element (i.e., 5th cycle Housing Element), or to the use of a vacant site that was identified in two or more consecutive planning periods (i.e., 5th and 4th cycle Housing Elements). When sites meeting these conditions are used to accommodate the lower-income RHNA, the jurisdiction's housing element must include a program to be completed within three years of the beginning of the planning period to allow residential use by-right at specified densities for housing developments in which at least 20 percent of the units are affordable to lower income households. 17 of 62 7
August 3, 2021, Item #7EIS and Checklist Sites where zoning already permits residential "use by-right" as set forth in Government Code Section 65583.2 (i) at the beginning of the planning period would be considered to meet this requirement. Three sites are carried over from the previous 2013 Housing Element Cycle that were rezoned with the Affordable Housing Overlay Zone (AHOZ) in 2012 allowing for by-right affordable housing at densities up to 30 du/ac. These sites are owned by the Poway Housing Authority or the City and are identified as "Park and Ride," "Twin Peaks," and "Monte Vista North" in both The 2020-2029 Housing Element and the 2013 Housing Element. With the AHOZ, these sites have a maximum capacity of 165 dwelling units at 30 du/ac and can be approved by-right with no discretionary approval required when affordable housing is built on any of these sites. Additional details are available as a part of the Residential Sites Inventory in Chapter 4. Replacement Requirements Government Code Section 65583.2(g)(3) now requires that the housing element include a program to impose housing replacement requirements on certain sites identified in the Residential Sites Inventory. These replacement requirements would require the replacement of units affordable to the same or lower income level as a condition of any development on a non-vacant site consistent with those requirements set forth in State Density Bonus Law (Government Code Section 65915(c)(3).) The housing replacement requirements would be required for sites identified in the Residential Sites Inventory (Table 4-5) that currently have residential uses, or within the past five years have had residential uses that have been vacated or demolished, and: • Were subject to a recorded covenant, ordinance, or law that restricts rents to levels affordable to persons and families of low or very low-income; • Subject to any other form of rent or price control through a public entity's valid exercise of its police power; or • Occupied by low or very low-income households. No sites identified in the Residential Sites Inventory (Table 4-5) meet these requirements for replacement housing. Additional Requirements Related to the General Plan -AB 162 (2007). SB 1241 (2012). SB 99 (2019). AB 747 (2019). SB 1035 (2018), SB 379 (2015), and SB 1000 (2016) Several recent state laws require the City to make updates to other sections of the General Plan alongside the update to the Housing Element. These laws place a particular emphasis on the Public Safety Element, with an expanded focus on planning for flooding, wildfires, and climate change impacts. Through the City's annual General Plan implementation review process, the City will ensure internal consistency among the various elements of the General Plan. Additionally, SB 1000 expands requirements surrounding Environmental Justice, however, requirement for an Environmental Justice Element are not applicable to the City of Poway. 9. Surrounding Land Uses and Setting: The City of Poway is east and north of the City of San Diego and south of the city of Escondido. Located in northeast San Diego County. Poway is 18 of 62 8
August 3, 2021, Item #7EIS and Checklist known as "The City in the Country" and prides itself on the fact that over half of the 39.4 square-mile area is preserved as dedicated open space. The community offers a diverse range of housing options1 an outstanding school district a thriving business park1 a broad range of dining and shopping opportunities1 beautiful parks1 and trails. Most of the City's residentially zoned land has already been developed with a diversity of housing types1 including single-family homes, mobile home parks1 townhomes1 condominiums1 and apartments. New mixed-use housing opportunities were developed with the adoption of the Poway Road Specific Plan in 2017. 10. Other Public Agencies Whose Approval is Required: The California Department of Housing and Community Development (HCD) reviews and determines whether the Housing Element update complies with the State of California law and certifies the Housing Element as applicable. No other approvals by outside public agencies are required. 11. Have California Native American tribes traditionally and culturally affiliated with the project area requested consultation pursuant to Public Resources Code section 21080.3.1 If so, is there a plan for consultation that includes, for example, the determination of significance of impacts to tribal cultural resources, procedures regarding confidentiality, etc. In accordance with Government Codes Sections 65352.3 and 65342.4 and Public Resources Code Section 21080.3.11 the City of Poway1 as Lead Agency, sent a letter to the Tribal Representatives notifying the tribes identified by the Native American Heritage Commission (NAHC) of the proposed project in accordance with AB 52 and SB 18. The City received responses from the Rincon Band of Luiserio Indians tribe1 which noted they are not traditionally and culturally affiliated within the geographic area within the City of Poway's jurisdiction. Responses to the AB 52 and SB 18 consultation notices were received and consultation concluded as discussed in this document. SUPPORTING DOCUMENTATION: City of Poway General Plan and EIR for the General Plan Poway Road Specific Plan and El R for the Poway Road Specific Plan City of Poway Municipal Code City of Poway 2020-2029 Housing Element City of Poway Subarea Habitat Conservation Plan (HCP) NOTE: Conducting consultation early in the CEQA process allows tribal governments, lead agencies, and project proponents to discuss the level of environmental review, identify and address potential adverse impacts to tribal cultural resources, and reduce the potential for delay and conflict in the environmental review process. (See Public Resources Code section 21080.3.2.) Information may also be available from the California Native American Heritage Commission's Sacred Lands File per Public Resources Code section 5097.96 and the California Historical Resources Information System administered by the California Office of Historic Preservation. Please also note that Public Resources Code section 21082.3(c) contains provisions specific to confidentiality. 19 of 62 9
August 3, 2021, Item #7EIS and Checklist Environmental Factors Potentially Affected: The environmental factors checked below would be potentially affected by this project, involving at least one impact that is a "Potentially Significant Impact" as indicated by the checklist on the following pages. D Aesthetics D Agricultural /Forestry D Air Quality D Biological Resource Resources D Energy D Greenhouse Gas Emissions D Cultural Resources D Geology /Soils D Land Use and Planning D Hazards/Hazardous Materials D Hydrology/ Water D Population and Housing D Mineral Resources Quality D Transportation D Public Services D Noise D Mandatory Findings of D Tribal Cultural Resources D Recreation Significance □ Wildfire D Utilities and Service Systems Determination (To be completed by the Lead Agency): On the basis of this initial evaluation: I find that the proposed project COULD NOT have a significant effect on the environment ~ and a NEGATIVE DECLARATION will be prepared. I find that although the proposed project could have a significant effect on the environment, □ there will not be a significant effect in this case as revisions in the project have been made by or agreed to by the project proponent and/or mitigation has been agreed to. A MITIGATED NEGATIVE DECLARATION will be prepared. I find that the proposed project MAY have a significant effect on the environment, and an □ ENVIRONMENTAL IMPACT REPORT is required. I find that the proposed MAY have a "potentially significant impact" or "potentially significant □ unless mitigated" impact on the environment, but at least one effect 1) has been adequately analyzed in an earlier document pursuant to applicable legal standards, and 2) has been addressed by mitigation measures based on the earlier analysis as described on attached sheets. An ENVIRONMENTAL IMPACT REPORT is required, but it must analyze only the effects that remain to be addressed. I find that although the proposed project could have a significant effect on the environment, because all potentially significant effects (a) have been analyzed adequately in an earlier □ EIR or NEGATIVE DECLARATION pursuant to applicable standards, and (b) have been avoided or mitigated pursuant to that earlier EIR or NEGATIVE DECLARATION, including revisions or mitigation measures that are imposed upon the proposed project, nothing further is required. Scott N espor hme 8 2021 City of Poway Date 20 of 62 10
August 3, 2021, Item #7EIS and Checklist C. EIS and Checklist I. a. b. C. d. II. ISSUE AESTHETICS. Except as provided in Public Code Section 21099, would the project: Have a substantial adverse effect on a scenic vista? Substantially damage scenic resources, including, but not limited to, trees, rock outcroppings, and historic buildings within a State scenic highway? In non-urbanized areas, substantially degrade the existing visual character or quality of public views of the site and its surroundings? (Public views are those that are experienced from publicly accessible vantage point). If the project is in an urbanized area, would the project conflict with applicable zoning and other regulations governing scenic quality? Create a new source of substantial light or glare which would adversely affect day or nighttime views in the area? AGRICULTURAL AND FORESTRY RESOURCES. In determining whether impacts to agricultural resources are significant environmental effects, lead agencies may refer to the California Agricultural Land Evaluation and Site Assessment Model (1997) prepared by the California Department of Conservation as an optional model to use in assessing impacts on agriculture and farmland. In determining whether impacts to forest resources, including timberland, are significant environmental effects, lead agencies may refer to information compiled by the California Department of Forestry and Fire Protection regarding the 21 of 62 POTENTIALLY SIGNIFICANT IMPACT 11 POTENTIALLY SIGNIFICANT UNLESS MITIGATION INCORPORATED LESS THAN SIGNIFICANT IMPACT NO IMPACT X X X X
August 3, 2021, Item #7EIS and Checklist ISSUE State's inventory of forest land, including the Forest and Range Assessment Project and the Forest Legacy Assessment project; and forest carbon measurement methodology provided in Forest Protocols adopted by the California Air Resources Board. Would the project: a. Convert prime farmland, unique farmland, or farmland of statewide importance (farmland), as shown on the maps prepared pursuant to the Farmland Mapping and Monitoring Program of the California Resources AQencv, to non-aQricultural use? b. Conflict with existing zoning for agricultural use, or a Williamson Act contract? C. Conflict with existing zoning for, or cause rezoning of, forest land (as defined in Public Resources Code section 12220(9)), timberland (as defined by Public Resources Code section 4526), or timberland zoned Timberland Production (as defined by Government Code section 51104(g))? d. Result in the loss of forest land or conversion of forest land to non-forest land? e. Involve other changes in the existing environment which, due to their location or nature, could result in conversion of farmland to non-agricultural use or conversion of forest land to non-forest use? Ill. AIR QUALITY. Where available, the significance criteria established by the applicable air quality management district or air pollution control district may be relied upon to make the following determinations. Would the project: 22 of 62 POTENTIALLY POTENTIALLY SIGNIFICANT LESS THAN NO SIGNIFICANT UNLESS SIGNIFICANT IMPACT IMPACT MITIGATION IMPACT INCORPORATED X X X X X 12
August 3, 2021, Item #7EIS and Checklist POTENTIALLY ISSUE POTENTIALLY SIGNIFICANT LESS THAN NO SIGNIFICANT UNLESS SIGNIFICANT IMPACT IMPACT MITIGATION IMPACT INCORPORATED a. Conflict with or obstruct implementation of the applicable air X quality plan? b. Result in a cumulatively considerable net increase of any criteria pollutant for which the project region is non-X attainment under an applicable federal or state ambient air quality standard? C. Expose sensitive receptors to X substantial pollutant concentrations? d. Result in other emissions (such as those leading to odors adversely X affecting a substantial number of • • I? IV. BIOLOGICAL RESOURCES. Would the project: a. Have a substantial adverse effect, either directly or through habitat modifications, on any species identified as a candidate, sensitive, or special status species in local or X regional plans, policies, or regulations, or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? b. Have a substantial adverse effect on any riparian habitat or other sensitive natural community identified in local or regional plans, policies, X regulations, or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? C. Have a substantial adverse effect on state or federally protected wetlands (including, but not limited to, marsh, X vernal pool, coastal, etc.) through direct removal, filing, hydrological interruption, or other means? d. Interfere substantially with the movement of any native resident or migratory fish or wildlife species or X with established native resident migratory wildlife corridors, or 23 of 62 13
August 3, 2021, Item #7EIS and Checklist ISSUE impede the use of native wildlife nursery sites? e. Conflict with any local policies or ordinances protecting biological resources, such as a tree preservation policy or ordinance? f. Conflict with the provisions of an adopted Habitat Conservation Plan, Natural Community Conservation Plan, or other approved local, regional or state habitat conservation • I ? V. CULTURAL RESOURCES. Would the project: a. Cause a substantial adverse change in the significance of a historical resource pursuant to Section 15064.5? b. Cause a substantial adverse change in the significance of an archaeological resource pursuant to Section 15064.5? C. Disturb any human remains, including those interred outside of dedicated cemeteries? VI. ENERGY. Would the project: a. Result in potentially significant environmental impact due to wasteful, inefficient, or unnecessary consumption of energy resources, during project construction or operation? b. Conflict with or obstruct a state or local plan for renewable energy or energy efficiency? VII.GEOLOGY AND SOILS. Would the project: a. Directly or indirectly cause potential substantial adverse effects, including the risk of loss, injury or death involvinQ: i) Rupture of a known earthquake fault, as delineated on the most 24 of 62 POTENTIALLY POTENTIALLY SIGNIFICANT LESS THAN NO SIGNIFICANT UNLESS SIGNIFICANT IMPACT IMPACT MITIGATION IMPACT INCORPORATED X X X X X X X X X 14
August 3, 2021, Item #7EIS and Checklist POTENTIALLY ISSUE POTENTIALLY SIGNIFICANT LESS THAN NO SIGNIFICANT UNLESS SIGNIFICANT IMPACT MITIGATION IMPACT IMPACT INCORPORATED recent Alquist-Priolo Earthquake Fault Zoning Map issued by the State Geologist for the area or based on other substantial evidence of a known fault? Refer to Division of Mines and Geology Special Publication 42. ii) Strong seismic ground shaking? X iii) Seismic-related ground failure, X including liquefaction? iv) Landslides? X b. Result in substantial soil erosion or X the loss of topsoil? C. Be located on a geologic unit or soil that is unstable, or that would become unstable as a result of the X project, and potentially result in on-or offsite landslide, lateral spreading, subsidence, liquefaction or collapse? d. Be located on expansive soil, as defined in Table 18-1-B of the Uniform Building Code (1994), X creating substantial direct or indirect risk to life or property? e. Have soils incapable of adequately supporting the use of septic tanks or alternative wastewater disposal X systems where sewers are not available for the disposal of wastewater? f. Directly or indirectly destroy a unique paleontological resource or site or X unique geologic feature? 25 of 62 15
August 3, 2021, Item #7EIS and Checklist VIII. GREENHOUSE GAS EMISSIONS. Would the project: a. Generate greenhouse gas emissions, either directly or indirectly, that may have a significant impact on the environment? b. Conflict with an applicable plan, policy or regulation adopted for the purpose of reducing the emissions of • h ? • IX. HAZARDS AND HAZARDOUS MATERIALS. Would the project: a. Create a significant hazard to the public or the environment through the routine transport, use, or disposal of hazardous materials? b. Create a significant hazard to the public or the environment through reasonable foreseeable upset and accident conditions involving the release of hazardous materials into the environment? C. Emit hazardous emissions or handle hazardous or acutely hazardous materials, substances or waste within one-quarter mile of an existing or proposed school? d. Be located on a site which is included on a list of hazardous materials sites compiled pursuant to Government Code Section 65962. 5 and, as a result, would it create a significant hazard to the public or the environment? e. For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project result in a safety hazard or excessive noise for people residing or working within the project area f. Impair implementation of, or physically interfere with, an adopted emergency response plan or emerQency evacuation plan? g. Expose people or structures either directly or indirectly, to a significant 26 of 62 X X X X X X X X X 16
August 3, 2021, Item #7EIS and Checklist risk of loss, injury or death involving wildland fires? a. Violate any water quality standards or waste discharge requirements or otherwise substantially degrade surface or round water ualit ? b. Substantially decrease groundwater supplies or interfere substantially with groundwater recharge such that the project may impede sustainable groundwater management of the basin? c. Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, or through the addition of impervious surfaces, in a manner which would: (i) result in substantial erosion or siltation on-or offsite? (ii) substantially increase the rate or amount of surface runoff in a matter which would result in floodin on-or offsite; (iii) create or contribute runoff water which would exceed the capacity of existing or planned stormwater drainage systems or provide substantial additional sources of olluted runoff; or d. In flood hazard, tsunami, or seiche zones, risk release of pollutants due to ro·ect inundation? e. Conflict with or obstruct implementation of a water quality control plan or sustainable roundwater mana ement Ian? 27 of 62 X X X X X X X X X 17
August 3, 2021, Item #7EIS and Checklist XI. LAND USE AND PLANNING. Would the project: a. Physically divide an established community? b. Cause a significant environmental impact due to a conflict with any land use plan, policy, or regulation adopted for the purpose of avoiding or mitigating an environmental effect? XII. MINERAL RESOURCES. Would the project: a. Result in the loss of availability of a known mineral resource that would be of future value to the region and the residents of the State? b. Result in the loss of availability of a locally-important mineral resource recovery site delineated on a local general plan, specific plan or other I d I ? • XIII. NOISE. Would the project result in: a. Generation of a substantial temporary or permanent increase in ambient, noise levels in the vicinity of the project in excess of standards established in the local general plan or noise ordinance, or applicable standards of other agencies? b. Generation of, excessive ground borne vibration or ground borne noise levels? C. For a project located within the vicinity of a private airstrip or an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project expose people residing or working in the project area to excessive noise levels? XIV. POPULATION AND HOUSING. Would the project: a. Induce substantial unplanned population growth in an area either directly (for example, by proposing new homes and businesses) or indirectly (for example, throuqh 28 of 62 X X X X X X X X 18
August 3, 2021, Item #7EIS and Checklist extension of roads or other infrastructure)? b. Displace substantial numbers of existing people or housing, necessitating the construction of re lacement housin elsewhere? a. Would the project result in substantial adverse physical impacts associated with the provision of new or physically altered governmental facilities, need for new or physically altered governmental facilities, the construction of which could cause significant environmental impacts, in order to maintain acceptable service ratios, response times or other performance objectives for any of the ublic services. a. Would the project increase the use of existing neighborhood and regional parks or other recreational facilities such that substantial physical deterioration of the facility would occur or be accelerated? b. Does the project include recreational facilities or require the construction or expansion of recreational facilities which might have an adverse • h s. I ff t th . t? XVII. TRANSPORTATION Would the project: a. Conflict with program plan, ordinance or policy addressing the circulation system, including transit, roadway, bicycle and pedestrian facilities? b. Would the project conflict or be inconsistent with CEQA Guidelines section 15064.3, subdivision (b)? C. Substantially increase hazards due to a geometric design feature (e.g.: sharp curves or dangerous 29 of 62 X X X X X X 19
August 3, 2021, Item #7EIS and Checklist intersections) or incompatible uses (e.g.: farm equipment)? d. Result in inadequate emergency access? XVIII. TRIBAL CULTURAL RESOURCES a. Would the project cause a substantial adverse change in the significance of a tribal cultural resource, defined in Public Resources Code section 2107 4 as either a site, feature, place, cultural landscape that is geographically defined in terms of the size and scope of the landscape, sacred place, or object with cultural value to a California Native American tribe, and that is: i. Listed or eligible for listing in the California Register of Historical Resources, or in a local register of historical resources as defined in Public Resources Code section 5020.1 (k), or ii. A resource determined by the lead agency, in its discretion and supported by substantial evidence, to be significant pursuant to criteria set forth in subdivision (c) of Public Resources Code Section 5024.1. In applying the criteria set forth in subdivision (c) of Public Resource Code Section 5024.1, the lead agency shall consider the significance of the resource to a California Native American tribe. XIX. UTILITIES AND SERVICE SYSTEMS. Would the project: a. Require or result in the relocation or construction of new or expanded water wastewater treatment or storm water drainage, electric power, natural gas, or telecommunications facilities, the construction or relocation of which could cause significant environmental effects? 30 of 62 X X X X 20
August 3, 2021, Item #7EIS and Checklist b. Have sufficient water supplies available to serve the project and reasonably foreseeable future X development during normal, dry and multiple dry years? C. Result in the determination by the wastewater treatment provider, which serves or may serve the project, that it has adequate capacity X to serve the project's projected demand in addition to the provider's existing commitments? d. Generate solid waste in excess of state or local standards, or in excess of the capacity of local infrastructure, X or otherwise impair the attainment of solid waste reduction goals? e. Comply with federal, state and local management and reduction statutes X and regulations related to solid waste? XX. WILDFIRE If located in or near State responsibility areas or lands classified as very high fire hazard severity zones, would the project: a. Substantially impair an adopted emergency response plan or X emergency evacuation plan? b. Due to slope, prevailing winds, and other factors, exacerbate wildfire risks, and thereby expose project X occupants to, pollutant concentrations from a wildfire or the uncontrolled spread of a wildfire? C. Require the installation or maintenance of associated infrastructure (such as roads, fuel breaks, emergency water sources, X power lines or other utilities) that may exacerbate fire risk or that may result in temporary or ongoing impacts to the environment? d. Expose people or structures to significant risks, including downslope or downstream flooding or landslides, X as a result of runoff, post-fire slope instability, or drainage changes? 31 of 62 21
August 3, 2021, Item #7EIS and Checklist XXI. MANDATORY FINDINGS OF SIGNIFICANCE a. Does the project have the potential to substantially degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self-sustaining levels, threaten to X eliminate a plant or animal community, substantially reduce the number or restrict the range of a rare or endangered plant or animal, or eliminate important examples or the major periods of California history or prehistory? b. Does the project have impacts that are individually limited, but cumulatively considerable? ("Cumulative considerable" means that the incremental effects of a X project are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects)? C. Does the project have environmental effects which will cause substantial X adverse effects on human beings either directly or indirectly? 32 of 62 22
August 3, 2021, Item #7EIS and Checklist D. DISCUSSION OF ENVIRONMENTAL EVALUATION Please refer to the Environmental Initial Study Checklist Form above when reading the following evaluation. I. AESTHETICS: a. No Impact. The 2020-2029 Housing Element identifies an assigned RHNA allocation of 1,319 housing units for development from June 30, 2020 through April 29, 2029. To ensure that significant impacts to scenic vistas or scenic resources do not occur, future development of residential uses will be in accordance with applicable City standards and guidelines, as well as requirements mandated during the environmental review of individual projects. In addition, new residential development, with the exception of new affordable housing, may be subject to a Development Review permit by the City Council that will address project design issues pursuant to the requirements of the Poway Municipal Code (PMC). The same standards, guidelines and Development Review requirements would also address aesthetics maintaining the existing visual character of the individual sites and surroundings and address potential light and glare impacts from a specific design proposal. Affordable housing will be subject to a design review process that will be intended to also maintain the existing visual character of the individual sites and surroundings and address potential light and glare impacts from a specific design proposal. Therefore, adherence to City standards and/or requirements will result in no impacts. No mitigation measures are required. b. See response I.a. above. c. See response I.a. above. d. See response I.a. above. II. AGRICULTURAL AND FORESTRY_RESOURCES: 33 of 62 a. No Impact. There is no land within the City of Poway that is shown as Prime Farmland, Unique Farmland or Farmland of statewide Importance on the San Diego County Important Farmland map produced by the State Department of Conservation, Division of Land Resource Protection, Farmland Mapping and Monitoring Program (California Department of Conservation 2008). Therefore, there would be no impacts to agricultural resources. The 2020-2029 Housing Element does not change any boundaries or the potential for agricultural activities. There are no proposals contained in the Housing Element update to convert Prime Farmland or any farmland of unique or statewide Importance. There are also no proposals that would conflict with existing agricultural zoning or a Williamson Act contract, or result in the conversion of Prime Farmland, Unique Farmland, or Farmland of statewide Importance to non-agricultural use, or conversion or loss of forest land. In addition, because the City does not contain forest land, there is no rezoning or development proposed on forest land, or land 23
August 3, 2021, Item #7EIS and Checklist or timber property zoned Timberland Production. Therefore, there is no impact. No mitigation measures are required. b. See response II.a. above. c. See response II.a. above. d. See response II.a. above. e. See response II.a. above. Ill. AIR QUALITY: 34 of 62 a. Less Than Significant Impact. The San Diego Regional Air Quality Strategy (RAQS) Plan, amended in 2016 Uointly developed by the San Diego Air Pollution Control District and the San Diego Association of Governments (SANDAG)), provides strategies and pollution controls to improve air quality in the San Diego region. The Land Use Plan and build out projections of the Poway General Plan as well as other jurisdictions in the region were considered when establishing the strategies of the Regional Air Quality Strategies Plan. The Poway General Plan includes strategies that are directed toward reducing air emissions through land use patterns, transportation planning, regional agency cooperation, energy conservation and construction. New development within the City shall comply with the density and intensity standards outlined in the Community Development (Land Use) Element and the City's current Zoning Ordinance. Implementation of the 2020-2029 Housing Element will be in compliance with the Community Development Element of the Poway General Plan. Any future grading and construction activities associated with development of new housing units will generate temporary increased levels of particulate matter and emissions from construction equipment. In addition, construction activity may generate detectable odors from heavy-duty equipment exhaust in proximity to sensitive receptor locations. Subsequent to construction, an increase in air emissions will occur as a result of increased traffic volumes associated with operation of the proposed on site uses, use of equipment and off-site power, and natural gas consumption. Residential, school, and park uses would be considered receptors sensitive to air emissions generated during construction and operation of new housing developments. Most future affordable housing development projects will be located in areas near transit, commercial and other community services -thereby reducing the demand for vehicle trips. Additionally, energy efficient building materials and compliance with California Green Building Code requirements will be required. Adherence to such requirements will reduce potential impacts associated with air quality to less than a significant level. No mitigation measures are required. b. See response Ill.a. above. c. See response Ill.a. above. d. See response Ill.a. above. 24
August 3, 2021, Item #7EIS and Checklist IV. BIOLOGICAL RESOURCES: a. Less than Significant Impact. The 2020-2029 Housing Element identifies an assigned growth need of 1,319 housing units for development from June 30, 2020 through April 29, 2029. Of that total, 519 housing units were under construction or entitled as of December 2020, leaving a remaining need of 800 housing units. Approximately 53 percent of the City's land area is within the Mitigation Area of the Poway Subarea Habitat Conservation Plan (HCP). The Poway Subarea lies in an area of overlap between two sub-regional NCCP plan areas in the San Diego region: the MSCP and the MHCP. The northern edge of the Poway Subarea also overlaps the Focused Planning Area of the San Dieguito River Valley Park. The sites identified as appropriate for low-and moderate-income housing are not located within the Mitigation Area of the HCP. However, it is expected that above moderate-income housing may be constructed within the rural residential areas of the City that coincide with the boundaries of the HCP Mitigation Area. Without a specific project, it is not possible to anticipate how the development of these new housing units will potentially impact sensitive biological resources including riparian habitats, federally protected wetlands or other sensitive natural communities, however, no conflict with the provisions of the HCP is proposed or anticipated and compliance will be required. The HCP requires limitations on the amount of biological impact on each property and a Biological Conservation Easement (BCE) will be required as properties develop. It is also not possible to anticipate how the development of new housing will specifically affect the movement of native resident or migratory fish or wildlife species, adversely affect wildlife corridors or impeded the use of native wildlife nursery sites. The City does have a tree protection ordinance (Poway Municipal Code Chapter 12.32) and a tree inventory on a specific property will be required to evaluate the need to mitigate any tree removals as specified by City codes. To ensure significant impacts to sensitive biological resources do not occur, future development of residential units will be in accordance with applicable City standards and guidelines, the HCP, the State and Federal Endangered Species Act, as well as requirements mandated during the environmental review of individual projects for sites identified for above moderate-income housing. Adherence to such requirements will reduce potential impacts associated with biological resources to less than a significant level. No mitigation measures are required. c. See response IV.a. above. d. See response IV.a. above. e. See response IV.a. above. f. No Impact. See response IV.a. above. V. CULTURAL RESOURCES: 35 of 62 a. Less than Significant Impact. CEQA Guidelines Section 15064.5 defines historic resources as any object, building, structure, site, area, place, record, manuscript or other resource listed or determined to be eligible for listing by the 25
August 3, 2021, Item #7EIS and Checklist State Historical Resources Commission, a local register of historic resources, or the lead agency. Generally, a resource is considered to be historically significant if it meets one of the following criteria: Is associated with events that have made a significant contribution to the broad patterns of California's history and cultural heritage; Is associated with the lives of important persons in the past; Embodies the distinctive characteristics of a type, period, region or method of construction, or represents the work of an important creative individual, or possesses high artistic values, or; Has yielded, or may be likely to yield, information important in prehistory or history. According to State CEQA Guidelines (Section 15064.5) and Public Resources Code (Sections 21083.1 and 21083.2), the proposed project would be considered to have a significant impact if it would cause a substantial adverse change to a unique archeological resource. The 2020-2029 Housing Element update identifies an assigned growth need of 1,319 housing units for development from June 30, 2020 through April 29, 2029. Of that total, 519 housing units were under construction or entitled as of December 2020, leaving a remaining need of 800 housing units. To ensure significant impacts to cultural resources do not occur, future development of residential units will be in accordance with applicable City, state and federal standards and guidelines including General Plan policies and Municipal Code regulations. The City has adopted a list of Historical Sites List which is implemented through the City's Historical Structure Ordinance (PMC 17.45). The City's General Plan also includes a Prehistoric and Historic Resources Element, which identifies archaeologically sensitive areas within the City. If a site identified in the Residential Sites Inventory has a high or moderate probability of containing historically sensitive areas, an archaeological report may be required. Any recommended mitigation measures would be made conditions of any project approval. Housing sites must comply with General Plan policies and the PMC where applicable. Adherence to such requirements will reduce potential impacts associated with cultural resources to less than a significant level. No mitigation measures are required. b. See response V.b. above. VI. ENERGY: 36 of 62 a. Less than Significant. No conflict with or obstruction of a state or local plan for renewable energy or energy efficiency is proposed or anticipated. Many sites identified for very low-and low-income housing are allowed by-right, but will be required to conform to General Plan policies and Municipal Code regulations for residential developments. Many of the residential projects that will be developed to meet the RHNA requirement are anticipated to be located near community services, where pedestrian and transit-oriented development is encouraged. Such development may reduce the number of new vehicle trips typically associated with residential projects and, thus, would help to reduce GHG 26
August 3, 2021, Item #7EIS and Checklist production resulting from the combustion of fossil fuels for transportation purposes. Adherence to such requirements will reduce potential impacts associated greenhouse gas emissions to less than a significant level. According to the U.S. Environmental Protection Agency, the burning of fossil fuels, along with deforestation, has caused the concentrations of heat-trapping greenhouse gasses (GHGs) to increase significantly in the earth's atmosphere (U.S. Environmental Protection Agency 2012). The increase in GHGs results in global warming, as more heat is trapped in the atmosphere. The 2020-2029 Housing Element would not, in itself, produce environmental impacts. The Housing Element update identifies sites that can accommodate the City's RHNA of 1,319 new housing units through 2029. The potential impacts related to GHG emissions and global warming for any specific future residential projects may be assessed at the time the projects are actually proposed. Mitigation measures would be adopted as necessary, in conformance with CEQA. No mitigation measures are required. b. No Impact. See response VI.a. above. VII. GEOLOGY AND SOILS: 37 of 62 a.i) Less Than Significant Impact. The 2020-2029 Housing Element identifies adequate sites in areas already designated for residential and mixed-use use to meet the City's RHNA. The project will not result in the approval of any physical improvements and does not propose any changes to the General Plan Community Development Element, to a base designation, or to any physical development standards. Though it proposes neither specific development projects nor changes in base zoning, the Housing Element Update identifies opportunity sites that are feasible for development. The 2020-2029 Housing Element could indirectly result in residential development and improvement, the development would occur in residential and mixed-use areas of the City already designated in the General Plan for housing. Therefore, development within these sites and their associated impacts have already been accounted for in association with the adopted General Plan or Specific Plan. In addition, any future development projects supported by the 2020-2029 Housing Element would be evaluated at the project proposal stage and subject to the state, regional, and local plans, and the policies therein. The 2020-2029 Housing Element identifies an assigned growth need of 1,319 housing units for development from June 30, 2020 through April 29, 2029. Of that total, 519 housing units were under construction or entitled as of December 2020, leaving a remaining need of 800 housing units. Murphy Canyon Fault is the nearest main southern California fault, located approximately nine miles southwest of the City jurisdictional boundary. Three major fault systems within the project vicinity include the Elsinore, San Jacinto and Rose Canyon faults. The active Elsinore fault trends northwest and is about 22 miles northeast of Poway. The San Jacinto fault is also an active northwest-trending fault about 45 miles northeast of Poway. The Rose Canyon fault is located about 16 to 20 miles west of Poway in the Pacific Ocean and is considered potentially active. There is potential for some local damage in the event of a major earthquake along one of these fault systems which could result in significant impacts to facilities in the City. While the potential for onsite rupture cannot be completely discounted (e.g., unmapped 27
August 3, 2021, Item #7EIS and Checklist faults could be present), the likelihood for such an occurrence is considered low due to the absence of known faulting within or adjacent to the City. Without specific information regarding the construction methods to be used when building the housing units, it is not possible to determine specific mitigation measures with regard to geology and soils. A Geotechnical Investigation report may be required with the development of any new housing project identified in the Residential Site Inventory and the recommendations of that report will be incorporated into the project design. Many new projects that propose housing for very low-income and low-income can be developed by-right, however, will have to comply with General Plan policies and Municipal Code requirements for soil analyses at individual sites. Adherence to such requirements will reduce potential impacts associated with geology and soils to less than a significant level. No mitigation measures are required. a.ii) See response Vll.ai. above. a.iii) See response Vll.ai. above. a.iv) See response Vll.ai. above. b. See response Vll.ai. above. c. See response Vll.ai. above. d. See response Vll.ai. above. e. See response Vll.ai. above. f. See response Vll.ai. above. VIII. GREENHOUSE GAS EMISSIONS: 38 of 62 a. Less Than Significant Impact. According to the U.S. Environmental Protection Agency, the burning of fossil fuels, along with deforestation, has caused the concentrations of heat-trapping greenhouse gasses (GHGs) to increase significantly in the earth's atmosphere (U.S. Environmental Protection Agency 2012). The increase in GHGs results in global warming, as more heat is trapped in the atmosphere. The 2020-2029 Housing Element would not, in itself, produce environmental impacts. The Housing Element update identifies sites that can accommodate the City's RHNA of 1,319 new housing units through 2029. The potential impacts related to GHG emissions and global warming for any specific future residential projects may be assessed at the time the projects are actually proposed. Mitigation measures would then be adopted as necessary, in conformance with CEQA. Many sites identified for very low-and low-income housing are allowed by-right, however, will be required to conform to General Plan policies and PMC regulations for residential developments. Many of the residential projects that will be developed to meet the RHNA requirement are anticipated to be located near community services, where pedestrian and transit-oriented development is encouraged. Such development may reduce the 28
August 3, 2021, Item #7EIS and Checklist number of new vehicle trips typically associated with residential projects and, thus, would help to reduce GHG production resulting from the combustion of fossil fuels for transportation purposes. Adherence to such requirements will reduce potential impacts associated greenhouse gas emissions to less than a significant level. No mitigation measures are required. No conflict with an applicable plan, policy or regulation adopted for the purpose of reducing the emissions of greenhouse gases is anticipated or proposed. b. No Impact. See response VIII.a. above. IX. HAZARDS AND HAZARDOUS MATERIALS: 39 of 62 a. Less Than Significant Impact. The 2020-2029 Housing Element identifies adequate sites in areas already designated for residential and mixed-use use to meet the City's RHNA. The project will not result in the approval of any physical improvements and does not propose any changes to the General Plan Community Development Element, to a base designation, or to any physical development standards. Though it proposes neither specific development projects nor changes in base zoning, the Housing Element Update identifies opportunity sites that are feasible for development. The 2020-2029 Housing Element could indirectly result in residential development and improvement, the development would occur in residential and mixed-use areas of the City already designated in the General Plan for housing. Therefore, development within these sites and their associated impacts have already been accounted for in association with the adopted General Plan or Specific Plan. In addition, any future development projects supported by the 2020-2029 Housing Element would be evaluated at the project proposal stage and subject to the state, regional, and local plans, and the policies therein. The 2020-2029 Housing Element identifies an assigned growth need of 1,319 housing units for development from June 30, 2020 through April 29, 2029. Of that total, 519 housing units were under construction or entitled as of December 2020, leaving a remaining need of 800 housing units. The potential release of hazardous materials is an ongoing condition that is regulated by federal, state and local regulations. This condition will exist with or without the project. The development of residential units will take place on undeveloped or underutilized land. Incidental amounts of hazardous materials may be utilized during the construction and/or occupation of new residential units. In addition, it is anticipated that the nature and quantity of hazardous materials utilized will be typical of those of residential uses and would not be significant. The City of Poway is not located within an area of influence of an airport land use plan and is not located within two miles of a public airport. It also does not contain any private airstrips. Development of residential units will be consistent with applicable requirements of adopted emergency response/evacuation plans. New residential development may be located adjacent to areas with a significant risk for property damage or injury resulting from wildland fires. The City has adopted the Wildland Urban Interface Code to address potential impacts in these areas. An analysis of potential impacts with regard to hazards and hazardous 29
August 3, 2021, Item #7EIS and Checklist materials will be conducted during the environmental review of specific residential developments for housing. Many new projects that propose housing for very low-and low-income households can be developed by-right, however, will have to comply with General Plan policies and PMC requirements for compliance with requirements for the potential release hazardous materials at individual sites. Adherence to applicable city, state and/or federal regulations will be applied at that time and will reduce the potential impacts to below a level of significance. No mitigation measures are required. b. See response IX.a. above. c. See response IX.a. above. d. No Impact. See response IX.a. above. e. See response IX.a. above. f. See response IX.a. above. g. Less Than Significant Impact. See response IX.a. above. X. HYDROLOGY AND WATER QUALITY: 40 of 62 a. Less Than Significant Impact. Under Section 402 of the Clean Water Act, the Regional Water Quality Control Board (RWQCB) issues National Pollutant Discharge Elimination System (NPDES) permits to regulate waste discharges to waters of the nation (rivers, lakes and their tributary waters such as creeks and ephemeral streams). Through the City's entitlement process future residential development would be evaluated on an individual basis for potential violation of water quality standards or waste discharge requirements. Individual projects will be required to incorporate current RWQCB and City of Poway Standard Urban Stormwater Mitigation Plan (SUSMP) and NPDES permit requirements in the project design as appropriate. Individual projects will be required to be designed to treat and slowly release run-off before discharge into the public storm drainage system consistent with SUSMP requirements. Erosion control plans will also be required in association with any grading plans. Many new projects that propose housing for very low-and low-income households can be developed by-right, however, will have to comply with stormwater guidelines and policies in the General Plan as well as stormwater regulations in the City's Municipal Code. By following Best Management Practices (BMPs) as specified by the NPDES permit and an approved Storm Water Pollution Prevention (SWPP) permit during construction, the project will not have a significant adverse effect on water or ground water quality or quantity, nor promote increased erosion. Therefore, no impacts would occur and no mitigation is required. City codes do not allow construction within a floodway. Construction within a floodplain is allowed if structures are raised one foot above the 100-year flood 30
August 3, 2021, Item #7EIS and Checklist 41 of 62 level and all weather access. In addition, a hydrology study, completed by a qualified civil or hydrological engineer is required for housing sites. The study must show that there will be no changes to the downstream or upstream 100-year floodplain with the new construction. The 2020-2029 Housing Element identifies adequate sites in areas already designated for residential and mixed-use use to meet the City's RHNA. The project will not result in the approval of any physical improvements and does not propose any changes to the General Plan Community Development Element, to a base designation, or to any physical development standards. Though it proposes neither specific development projects nor changes in base zoning, the Housing Element Update identifies opportunity sites that are feasible for development. The 2020-2029 Housing Element could indirectly result in residential development and improvement, the development would occur in residential and mixed-use areas of the City already designated in the General Plan for housing. Therefore, development within these sites and their associated impacts have already been accounted for in association with the adopted General Plan or Specific Plan. In addition, any future development projects supported by the 2020-2029 Housing Element would be evaluated at the project proposal stage and subject to the state, regional, and local plans, and the policies therein. During the environmental review of any future housing project for housing sites, the development will be reviewed to ensure compliance with city and federal standards for flood protection. New projects that propose housing for very low-and low-income households can be developed by-right, however, will have to comply with General Plan policies and PMC requirements for development within a floodplain. The City requires a Floodplain Development Permit (ministerial) for any development within a floodplain that ensures compliance with all city floodplain regulations. Adherence to applicable city, state and/or federal regulations will be applied at that time and will reduce the potential impacts to below a level of significance. No mitigation is required. The City is not located adjacent to coastal waters so no impact related to tsunamis would occur. The design, construction, placement and maintenance of any water retention, detention facilities would adhere to applicable city building code standards and/or previously referenced flood/erosion control requirements. Therefore, potential impacts associated with seiche or mudflows would be reduced to a less than significant level. No mitigation is required. b. See response X.a. above. c. See response X.a. above. c.i) See response X.a. above. c.ii) See response X.a. above. c.iii-iv) See response X.a. above. d. See response X.a. above. 31
August 3, 2021, Item #7EIS and Checklist e. See response X.a. above. XI. LAND USE AND PLANNING: a. No Impact. Adoption of the 2020-2029 Housing Element and the text amendment to the Community Development (Land Use) Element will not result in physical divisions to an established community. The 2020-2029 Housing Element provides policies and programs to ensure the provision of housing for all segments of the community throughout the City including actions to affectively further fair housing. The 2020-2029 Housing Element and Community Development Element amendment do not conflict with the City's HCP. The adoption of the 2020-2029 Housing Element and the Community Development Element text amendment reflecting the updated Housing Element will not conflict with the General Plan or any other policy or regulation adopted for the purpose of avoiding or mitigating an environmental effect. The 1,319 units required by the RHNA are within the capacity of the City's General Plan and land use policies. All locations identified for housing developments are designated for residential development, which is consistent with the General Plan. All new development will be required to comply with General Plan land use policies and PMC regulations. The Housing Plan (Chapter 6) of the 2020-2029 Housing Element includes a monitoring program to ensure consistency with the General Plan. Therefore, no impacts would result from the project. No mitigation measures are required. b. See response XI.a. above. XII. MINERAL RESOURCES: 42 of 62 a. No Impact. The 2020-2029 Housing Element identifies adequate sites in areas already designated for residential and mixed-use use to meet the City's RHNA. The project will not result in the approval of any physical improvements and does not propose any changes to the General Plan Community Development Element, to a base designation, or to any physical development standards. Though it proposes neither specific development projects nor changes in base zoning, the Housing Element Update identifies opportunity sites that are feasible for development. The 2020-2029 Housing Element could indirectly result in residential development and improvement, the development would occur in residential and mixed-use areas of the City already designated in the General Plan for housing. Therefore, development within these sites and their associated impacts have already been accounted for in association with the adopted General Plan or Specific Plan. In addition, any future development projects supported by the 2020-2029 Housing Element would be evaluated at the project proposal stage and subject to the state, regional, and local plans, and the policies therein. The 2020-2029 Housing Element identifies an assigned growth need of 1 ·,319 housing units for development from June 30, 2020 through April 29, 2029. Of that total, 519 housing units were under construction or entitled as of December 2020, leaving a remaining need of 800 housing units. Poway's only known valuable mineral resource, as recognized by the California Department of Conservation, Division of Mines and Geology, is construction quality sand and gravel located along the City's southern border within the South Poway Business Park which 32
August 3, 2021, Item #7EIS and Checklist does not allow for or provide housing. Therefore, no impacts would result. No mitigation is required. b. See response XII.a. above. XIII. NOISE: a. Less Than Significant Impact. The 2020-2029 Housing Element identifies adequate sites in areas already designated for residential and mixed-use use to meet the City's RHNA. The project will not result in the approval of any physical improvements and does not propose any changes to the General Plan Community Development Element, to a base designation, or to any physical development standards. Though it proposes neither specific development projects nor changes in base zoning, the Housing Element Update identifies opportunity sites that are feasible for development. The 2020-2029 Housing Element could indirectly result in residential development and improvement, the development would occur in residential and mixed-use areas of the City already designated in the General Plan for housing. Therefore, development within these sites and their associated impacts have already been accounted for in association with the adopted General Plan or Specific Plan. In addition, any future development projects supported by the 2020-2029 Housing Element would be evaluated at the project proposal stage and subject to the state, regional, and local plans, and the policies therein. The 2020-2029 Housing Element identifies an assigned growth need of 1,319 housing units for development from June 30, 2020 through April 29, 2029. Of that total, 519 housing units were under construction or entitled as of December 2020, leaving a remaining need of 800 housing units. Without specific details regarding each new housing development, it is not possible to determine potential noise impacts and specific mitigation measures. However, city codes have established noise level limits for residential development and noise mitigation measures are required as part of any new residential development. This includes the provision of noise attenuation walls for protection from traffic noise and compliance with building code requirements for interior noise levels. All future development for housing may be subject to site-specific environmental studies with regard to noise impacts and compliance with city codes and policies would be required. New projects that propose housing for very low-and low-income households can be developed by-right, however, will be required to comply with General Plan policies and PMC requirements for noise compliance for residential developments. Adherence to applicable city regulations would reduce the potential impacts to below a level of significance. No mitigation is required. b. See response XIII.a. above. c. No Impact. See response XIII.a. above. d. Less Than Significant Impact. See response XIII.a. above. XIV. POPULATION AND HOUSING: 43 of 62 33
August 3, 2021, Item #7EIS and Checklist a. Less Than Significant Impact. The 2020-2029 Housing Element contains updated demographic and growth project information to allow the City to plan for its future housing needs as required by state law. The City of Poway was assigned a future housing need goal of 1,319 housing units for the 2020-2029 planning period by HCD and SANDAG. Poway must plan for units affordable to all income levels, specifically: 468 very low-income units, 268 low-income units, 241 moderate-income units and 342 above moderate-income units. Of that total, 519 housing units were under construction or entitled as of December 2020, leaving a remaining need of 800 housing units. The City is not required to build these housing units, but must show it has sites with adequate zoning and development standards that could accommodate the housing units during the 2020-2029 planning period. The updated Housing Element contains an inventory of sites that could accommodate the allocated need as required by state law. Through the City's environmental review process for housing projects, the potential for growth inducing impacts would be evaluated. The 2020-2029 Housing Element identifies adequate sites in areas already designated for residential and mixed-use use to meet the City's RHNA. The project will not result in the approval of any physical improvements and does not propose any changes to the General Plan Community Development Element, to a base designation, or to any physical development standards. Though it proposes neither specific development projects nor changes in base zoning, the Housing Element Update identifies opportunity sites that are feasible for development. The 2020-2029 Housing Element could indirectly result in residential development and improvement, the development would occur in residential and mixed-use areas of the City already designated in the General Plan for housing. Therefore, development within these sites and their associated impacts have already been accounted for in association with the adopted General Plan or Specific Plan. In addition, any future development projects supported by the 2020-2029 Housing Element would be evaluated at the project proposal stage and subject to the state, regional, and local plans, and the policies therein. New projects that propose housing for very low-and low-income households can be developed by-right, however, will have to comply with all land use and housing policies and regulations identified in the General Plan and PMC. Adoption of the 2020-2029 Housing Element and the Community Development Element amendment accommodates the development of housing in the City. The 2020-2029 Housing Element and associated amendments to the Community Development Element would result in a less than significant impact with regard to Population and Housing. No mitigation is required. b. See response XIV.a. above. XV. PUBLIC SERVICES: 44 of 62 a.i. Fire Protection -Less Than Significant Impact. The City of Poway provides fire and paramedic services along with managing a contract with the San Diego County Sheriff's Department for public safety protection services for the City of 34
August 3, 2021, Item #7EIS and Checklist Poway. Public services are adequate to serve current and future population. Implementation of the 2020-2029 Housing Element is not expected to increase the demand for public services. Development of additional housing as identified in the 2020-2029 Housing Element is consistent with the anticipated population growth in the Poway General Plan and could potentially increase the demand on schools. All new residential development is required to pay school impact fees to offset the cost of providing additional services. Park-in lieu fees or the provision for park land and improvements will be required with the development of any new housing development to offset any impacts to park services. Impacts to public services will be less than significant. No mitigation is required. a.ii. Police Protection -See response XV.a. above. a.iii. Schools -See response XV.a. above. a.iv. Parks -See response XV.a. above. a.v. Other Public Facilities -See response XV.a. above. XVI. RECREATION: a. Less Than Significant Impact. The City currently has 17 parks, including two regional park facilities (Blue Sky Ecological Preserve and Lake Poway), 78 miles of trails and over 5,000 acres of dedicated open space. New development anticipated by the 2020-2029 Housing Element may increase the demand for parks and recreation facilities in the City. Projects would be required to pay park in-lieu impact fees or provide park land and improvements pursuant to City codes. The City has adequate park and recreation facilities to serve existing and future population. New projects that propose housing will be encouraged to include private park/recreation areas within individual developments. Impacts will be less than significant. No mitigation measures are required. b. See response XVI .a. above. XVII. TRANSPORTATION: 45 of 62 a. No Impact. The 2020-2029 Housing Element would not expand the area in which development is permitted under the General Plan or Zoning Ordinance. The 2020-2029 Housing Element identifies adequate sites in areas already designated for residential and mixed-use use to meet the City's RHNA. The project will not result in the approval of any physical improvements and does not propose any changes to the General Plan Community Development Element, to a base designation, or to any physical development standards. Though it proposes neither specific development projects nor changes in base zoning, the Housing Element Update identifies opportunity sites that are feasible for development. The 2020-2029 Housing Element could indirectly result in residential development and improvement, the development would occur in residential and mixed-use areas of the City already designated in the General Plan for housing. Therefore, development within these sites and their associated impacts have already 35
August 3, 2021, Item #7EIS and Checklist been accounted for in association with the adopted General Plan or Specific Plan. In addition, any future development projects supported by the 2020-2029 Housing Element would be evaluated at the project proposal stage and subject to the state, regional, and local plans, and the policies therein. Many new projects that propose housing for very low-and low-income households can be developed by-right, however, will have to comply with General Plan policies and Municipal Code requirements for any potential impacts to transportation and traffic. The 2020-2029 Housing Element identifies an assigned growth need of 1,319 housing units for development from June 30, 2020 through April 29, 2029. Of that total, 519 housing units were under construction or entitled as of December 2020, leaving a remaining need of 800 housing units. Any new housing units will generate increased levels of traffic and demand for parking. Most future housing development projects will be located in areas near transit, commercial and other community services -thereby reducing the demand for vehicle trips. New housing development proposed within the City shall comply with the density and intensity standards outlined in the General Plan, the City's current Zoning Ordinance, and/or applicable specific plans and does not conflict with applicable General Plan or Specific Plan projections for housing which were previously certified in an EIR. Adherence to such requirements will reduce potential impacts associated with transportation to less than a significant level. No mitigation measures are required as a part of this project. The Housing Element update would not increase hazards due to a design feature, result in inadequate emergency access, or conflict with adopted policies, plans, or programs supporting alternative transportation. b. See response XVII.a. above. c. Less Than Significant Impact. See response XVII.a. above. d. See response XVII.a. above. XVIII. TRIBAL CULTURAL RESOURCES: 46 of 62 a.i) Less Than Significant Impact. According to State CEQA Guidelines (Section 15064.5) and Public Resources Code (Sections 21083.1 and 21083.2), the proposed project would be considered to have a significant impact if it would cause a substantial adverse change to a unique archeological resource. Assembly Bill 52 (AB 52, Gatto. Native Americans: California Environmental Quality Act) and CEQA Public Resources Code Section 21080.31, subdivisions (b), (d)), requires a lead agency to consult with any California Native American tribe that requests consultation and is traditionally and culturally affiliated with the geographic area of a proposed project. California Government Code Section 65352.3 (adopted pursuant to the requirements of Senate Bill (SB) 18) requires local governments to contact, refer plans to, and consult with tribal organizations prior to making a decision to adopt or amend a general or specific plan, or to designate open space that includes Native American Cultural Places. The tribal organizations eligible to consult have traditional lands in a local government's jurisdiction, and are identified, upon request, by the Native American Heritage Commission (NAHC). As noted in the 36
August 3, 2021, Item #7EIS and Checklist California Office of Planning and Research's Tribal Consultation Guidelines (2005), "the intent of SB 18 is to provide California Native American tribes an opportunity to participate in local land use decisions at an early planning stage, for the purpose of protecting, or mitigating impacts to cultural places." In accordance with Government Codes Sections 65352.3 and 65342.4 and Public Resources Code Section 21080.3.1, the City of Poway, as Lead Agency, sent a letter to the Tribal Representatives notifying the tribes identified by the Native American Heritage Commission (NAHC) of the proposed project in accordance with AB 52 and SB 18. The City received responses from the Rincon Band of Luiserio Indians tribe, which noted they are not traditionally and culturally affiliated within the geographic area within the City of Poway's jurisdiction. Responses to the AB 52 and SB 18 consultation notices were received and consultation concluded. Future housing projects will require AB 52 and SB 18 consultation and sacred lands file searches as applicable. The 2020-2029 Housing Element identifies an assigned growth need of 1,319 housing units for development from June 30, 2020 through April 29, 2029. Of that total, 519 housing units were under construction or entitled as of December 2020, leaving a remaining need of 800 housing units. To ensure significant impacts to cultural resources do not occur, future development of residential units will be in accordance with applicable city, state, and federal standards and guidelines including General Plan policies and PMC regulations. The City has adopted a list of Historical Sites List which is implemented through the City's Historical Structure Ordinance (PMC Chapter 17.45). The City's General Plan also includes a Prehistoric and Historic Resources Element, which identifies archaeologically sensitive areas within the City. If a site identified in the Residential Sites Inventory has a high or moderate probability of containing historically sensitive areas, an archaeological report may be required. Any recommended mitigation measures would be made conditions of any project approval. Adherence to such requirements will reduce potential impacts associated with cultural resources to less than a significant level. No mitigation measures are required. a.ii) See response XVlll.a.i. above. XIX. UTILITIES AND SERVICE SYSTEMS: 47 of 62 a. Less Than Significant Impact. The 2020-2029 Housing Element identifies adequate sites in areas already designated for residential and mixed-use use to meet the City's RHNA. The project will not result in the approval of any physical improvements and does not propose any changes to the General Plan Community Development Element, to a base designation, or to any physical development standards. Though it proposes neither specific development projects nor changes in base zoning, the Housing Element Update identifies opportunity sites that are feasible for development. The 2020-2029 Housing Element could indirectly result in residential development and improvement, the development would occur in residential and mixed-use areas of the City already designated in the General Plan for housing. Therefore, development within these sites and their associated impacts have already been accounted for in 37
August 3, 2021, Item #7EIS and Checklist association with the adopted General Plan or Specific Plan. In addition, any future development projects supported by the 2020-2029 Housing Element would be evaluated at the project proposal stage and subject to the state, regional, and local plans, and the policies therein. The 2020-2029 Housing Element update identifies an assigned growth need of 1,319 housing units for development from June 30, 2020 through April 15, 2029. Of that total, 519 housing units were under construction or entitled as of December 2020, leaving a remaining need of 800 housing units. Future wastewater treatment, storm water drainage, electric power, natural gas, or telecommunications facility needs will be evaluated on an ongoing basis with each new development that is proposed. Recommendations for improvements and/or new facilities will be made at that time. Adherence to all applicable standards and policies of the city, state, and federal governments, including Regional Water Quality Control Board requirements and applicable management and reduction statutes, would be required. Demand for sufficient water supplies and solid waste will also be evaluated. The volume of potable water demand and solid waste generated by the anticipated housing units is not anticipated to adversely water supply or impact landfills or other solid waste disposal facilities. New projects that propose housing for very low-and low-income households can be developed by-right, however, will have to comply with General Plan policies and PMC requirements to address any potential increase in facility needs and demand. Adherence to applicable city policies and regulations would be required at that time and would reduce the potential impacts to below a level of significance. No mitigation is required. b. See response XIX.a. above. c. See response XIX.a. above. d. See response XIX.a. above. e. See response XIX.a. above. XX. WILDFIRE: 48 of 62 a. Less Than Significant Impact. Any geographic area mapped by the State or designated by a local jurisdiction as a moderate, high, or very high fire hazard area or which the Fire Authority Having Jurisdiction (FAHJ) has determined is a hazardous fire area, because the type and condition of vegetation, topography, weather and structure density increase the probability that the area will be susceptible to a wildfire. According to the Very High Fire Hazard Severity Zones (VHFHSZ) map for Poway (CAL FIRE 2009), the majority of Poway is located within the VHFHSZ. Fire Prevention staff applies additional code requirements and fuel modification requirements to new construction projects in these areas. Vegetation management programs applies to existing parcels in these areas and is managed by Code Compliance in consultation with the staff from the Fire Prevention Division. The Fire Protection Plan (FPP) is a document may be required for projects within a VHFHSZ and prepared for a specific project or development proposed in the wildland-urban interface fire area that describes ways to minimize and mitigate potential loss from wildfire exposure, with the purpose of reducing impact on the community's fire protection delivery system. 38
August 3, 2021, Item #7EIS and Checklist The City of Poway adopts by reference the International Fire Code and the California Fire Code. Local amendments are included in the triennial adoption process that addresses Poway's unique climatic, geologic, and topographic characteristics. This adoption creates Poway's Fire Code within the Poway Municipal Code. The 2020-2029 Housing Element identifies adequate sites in areas already designated for residential and mixed-use use to meet the City's RHNA. The project will not result in the approval of any physical improvements and does not propose any changes to the General Plan Community Development Element, to a base designation, or to any physical development standards. Though it proposes neither specific development projects nor changes in base zoning, the 2020-2029 Housing Element identifies opportunity sites that are feasible for development. The 2020-2029 Housing Element could indirectly result in residential development and improvement, the development would occur in residential and mixed-use areas of the City already designated in the General Plan for housing. Therefore, development within these sites and their associated impacts have already been accounted for in association with the adopted General Plan or Specific Plan. In addition, any future development projects supported by the 2020-2029 Housing Element would be evaluated at the project proposal stage and subject to the state, regional, and local plans, and the policies therein. The 2020-2029 Housing Element update identifies an assigned growth need of 1,319 housing units for development from June 30, 2020 through April 15, 2029. Of that total, 519 housing units were under construction or entitled as of December 2020, leaving a remaining need of 800 housing units. The project does not substantially impair an adopted emergency response plan or emergency evacuation plan. The project does not exacerbate wildfire risks, nor expose project occupants to pollutant concentrations from a wildfire or the uncontrolled spread of a wildfire. The project does not require the installation or maintenance of associated infrastructure ( such as roads, fuel breaks, emergency water sources, power lines or other utilities) that may exacerbate fire risk or that may result in temporary or ongoing impacts to the environment. The project does not expose people or structures to significant risks, including downslope or downstream flooding or landslides, as a result of runoff, post-fire slope instability, or drainage changes. New projects that propose housing for very low-and low-income households can be developed by-right, however, will have to comply with General Plan policies and PMC requirements to address any potential wildfire risks. Adherence to applicable city policies and regulations would be required at that time and would reduce the potential impacts to below a level of significance. No mitigation is required. b. See response XX.a. above. c. See response XX.a. above. d. See response XX.a. above. XXI. MANDATORY FINDING OF SIGNIFICANCE: 49 of 62 39
August 3, 2021, Item #7EIS and Checklist 50 of 62 Less than Significant Impact. Development of additional housing units in the City has the potential to increase the amount of traffic on local roadways, generate emission of pollutants and particulate matter, generate noise within the project limits, affect the amount and distribution of biological resources and affect the provision of public services. The 2020-2029 Housing Element identifies adequate sites in areas already designated for residential and mixed-use use to meet the City's RHNA. The project will not result in the approval of any physical improvements and does not propose any changes to the General Plan Community Development Element, to a base designation, or to any physical development standards. Though it proposes neither specific development projects nor changes in base zoning, the 2020-2029 Housing Element identifies opportunity sites that are feasible for development. The 2020-2029 Housing Element could indirectly result in residential development and improvement, the development would occur in residential and mixed-use areas of the City already designated in the General Plan for housing. Therefore, development within these sites and their associated impacts have already been accounted for in association with the adopted General Plan or Specific Plan. In addition, any future development projects supported by the 2020-2029 Housing Element would be evaluated at the project proposal stage and subject to the state, regional, and local plans, and the policies therein. The 2020-2029 Housing Element update identifies an assigned growth need of 1,319 housing units for development from June 30, 2020 through April 29, 2029. Although the Housing Element update identifies an assigned growth need of 1,319 housing units by 2029, all units would not necessarily be constructed. New projects that propose housing for very low-and low-income households can be developed by-right, however, will have to comply with General Plan policies and PMC requirements. To ensure that significant impacts to sensitive biological or historical resources do not occur, future development of residential units will be in accordance with the Poway Subarea Habitat Conservation Plan, the General Plan, the PMC and any other requirements. Adherence to other applicable city policies and regulations would be required at that time and would reduce the potential impacts to below a level of significance. No mitigation is required a. See response XXl.a. above. b. See response XXl.a. above. 40
August 3, 2021, Item #7EIS and Checklist Attachment(s): Transparency -----'di'· ::; ;,. r.' r· 111 I, r. ·rn.-,r -, -.,11r1,·I r I :,!Ill ,•11n l•'._ir1J1 L_J. Exhibit A Project Location Map City of Poway / )M • Get X,Y j 32° 59.649' N, 117° 1.485' W 51 of 62 41 Map Legend X " Califo ·,~ Coor inate G id □ " PLSS Towns ip □ -" PLSS Sectio
August 3, 2021, Item #7RESOLUTION NO. 21-A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY, CALIFORNIA, APPROVING GENERAL PLAN AMENDMENT 21-001 AND 21-002 FOR THE ADOPTION OF CITY OF POWAY 2020-2029 HOUSING ELEMENT WHEREAS, State Law requires that cities periodically update the Housing Element of the General Plan; WHEREAS, California Government Code Section 65350, et. seq., describes the procedures for amending the General Plan; WHEREAS, the City of Poway 2020-2029 Housing Element has been prepared pursuant to Article 10.6, Sections 65580-65589.11 of the California Government Code; WHEREAS, the City has held community workshops on the Housing Element Update on November 19, 2020 and April 29, 2021, a City Council Workshop on May 4, 2021, a public housing and public safety element survey, a 20-day Housing Element review, a 30-day State Clearinghouse Negative Declaration environment review, and numerous informal reviews and a 60-day formal review with HCD to solicit public comment and has also notified community and special interest groups serving affordable housing and special needs populations about the public outreach opportunities that have been conducted throughout the process as further described in Chapter 1 of the Housing Element; WHEREAS, on May 4, 2021, the City Council held a duly advertised public meeting and authorized submittal of the Draft 2020-2029 Housing Element to HCD for 60-day review and comment; WHEREAS, on July 9, 2021, the City received a letter from HCD, which included written findings stating that the Draft 2020-2029 Housing Element does not address all statutory requirements with corrections provided to address all statutory requirements; WHEREAS, an Environmental Initial Study (EIS) and Negative Declaration (ND) for the 2020-2029 Housing Element was circulated for a required 30-day public review and comment period beginning on June 24, 2021 and ending on July 24, 2021, in accordance with California Environmental Quality Act (CEQA) Guidelines Section 15105, The EIS and ND were sent to the State Clearinghouse for distribution and review by relevant state agencies (State Clearinghouse #2021060520) for a required 30-day public review and comment period. The City Council has considered the EIS and ND, and public comments received on the EIS and ND; WHEREAS, the 2020-2029 Housing Element requires that the City also amend the City's General Plan. Text amendments to the Community Development (Land Use) Element of the General Plan have been prepared that are necessary for consistency with the City of Poway 2020-2029 Housing Element (GPA 21-002); WHEREAS, on August 3, 2021, the City Council held a duly advertised public hearing to receive testimony from the public, both for and against, relative to this matter; and WHEREAS, the City Council has read and considered the agenda report for the proposed project, including the attachments, and has considered all other evidence presented 52 of 62 ATTACHMENT B
August 3, 2021, Item #7at the public hearing. Resolution No. 21-Page 2 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway as follows: SECTION 1: The above recitals are true and correct. SECTION 2: In accordance with the requirements of the California Environmental Quality Act (CEQA), an Environmental Initial Study (EIS) and a proposed Negative Declaration (ND) have been prepared for General Plan Amendment (GPA) 21-001 and GPA 21-002 and Environmental Assessment (EA) 21-001 for the 2020-2029 Housing Element. It was determined that the project will not have any significant adverse impacts on the environment. Any anticipated impacts were determined to be below a level of significance and, therefore, do not require any mitigation. The EIS and ND were sent to the State Clearinghouse for distribution and 30-day public review by relevant state agencies (State Clearinghouse # 2021060520). SECTION 3: The City Council hereby approves GPA 21-001 for adoption of the 2020-2029 Housing Element incorporated herein by reference and GPA 21-002 amending the Community Development (Land Use) Element of the General Plan as specified below. Removals are indicated with strikethroughs and additions are indicated with underline. SECTION 4: Page five, "Land Use Plan" section, paragraph four, of the Community Development (Land Use) Element of the General Plan (GPA 21-002) shall be amended as follows: For the ~2020-2029 planning period for the Housing Element, Poway was assigned a future housing need goal of ~1.319 housing units (see Table 4-1 of the Housing Element). The City is not required to build these units, but must show it has sites with adequate zoning and development standards that could accommodate the housing units during the planning period. Table 4-44-5 in Chapter 4 of the Housing Element contains a site inventory for Very Low, Low and Moderate Income households demonstrating that there are adequate sites to meet the regional housing goal with the placement of the Affordable Housing Overlay Zone (AHOZ) on the sites as discussed in Chapter 4 of the Housing Element. SECTION 5: The City Council hereby authorizes the 2020-2029 Housing Element incorporated herein by reference to be submitted to HCD for 90-day review and certification with any requested modifications by HCD corrected administratively to the satisfaction of the Director of Development Services consistent with the July 9, 2021 Correction Letter by HCD or similar non-substantive changes. SECTION 6: Severability. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this resolution or its application to any person or circumstance, is for any reason held to be invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases of this ordinance, or its application to any other person or circumstance. The City Council declares that it would have adopted each section subsection, subdivision, paragraph, sentence, clause or phrase hereof, irrespective of the fact of any one or more sections, subsections, subdivisions, 53 of 62
August 3, 2021, Item #7Resolution No. 21-Page 3 paragraphs, sentences, clauses or phrases hereof be declared invalid or unenforceable. PASSED, ADOPTED AND APPROVED at a Regular Meeting of the City Council of the City of Poway, California on the 3rd day of August, 2021 by the following vote, to wit: AYES: NOES: ABSENT: DISQUALIFIED: Steve Vaus, Mayor ATTEST: Deborah Harrington, Interim City Clerk 54 of 62
August 3, 2021, Item #755 of 62 City of Poway 2020-2029 Housing Element (on file in the Office of the City Clerk) https://docs.poway.org/Weblink/Browse.aspx?id=151673&dbid=0&repo=CityofPoway ATTACHMENT C
August 3, 2021, Item #7STATE OF CALIFORNIA -BUSINESS CONSUMER SERVICES AND HOUSING AGENCY DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT DIVISION OF HOUSING POLICY DEVELOPMENT 2020 W. El Camino Avenue, Suite 500 Sacramento, CA 95833 (916) 263-2911 / FAX (916) 263-7453 www.hcd.ca.gov July 9, 2021 Bob Manis, Director of Development Services Development Services Department City of Poway 13325 Civic Center Drive Poway, CA 92064 Dear Bob Manis: RE: Review of the City of Poway's 6th Cycle (2021-2029) Draft Housing Element Thank you for submitting the City of Poway's (City) draft housing element received for review on May 10, 2021 along with revisions received on June 25, 2021. Pursuant to Government Code section 65585, subdivision (b), the California Department of Housing and Community Development (HCD) is reporting the results of its review. Our review was facilitated by a telephone conversation on June 23, 2021 with David De Vries, City Planner; Austin Silva, Senior Planner; Scott Nespor, Associate Planner; and Polina Mitcheom, Planning Intern. In addition, HCD considered comments from Chris Cruse pursuant to Government Code section 65585, subdivision (c). The draft element addresses many statutory requirements; however, revisions will be necessary to comply with State Housing Element Law (Article 10.6 of the Gov. Code). In particular, the Affirmatively Furthering Fair Housing, sites analysis, and programs sections, amongst other, need revisions to fully comply with State Housing Element Law. The enclosed Appendix describes these, and other revisions needed to comply with State Housing Element Law. As a reminder, the City's 6th cycle housing element was due April 15, 2021. As of today, the City has not completed the housing element process for the 6th cycle. The City's 5th cycle housing element no longer satisfies statutory requirements. HCD encourages the City to make revisions to the element as described herein, adopt, and submit to HCD to regain housing element compliance. As a reminder, pursuant to Government Code section 65583.3, the City must submit an electronic sites inventory with its adopted housing element. The City must utilize standards, forms, and definitions adopted by HCD. Please see HCD's housing element webpage at https://www.hcd.ca.gov/community-development/housinq-element/index.shtml for a copy of the form and instructions. The City can reach out to HCD at sitesinventory@hcd.ca.qov for technical assistance. 56 of 62 ATTACHMENT D
August 3, 2021, Item #7Bob Manis, Director of Development Services Page 2 To remain on an eight-year planning cycle, the City must adopt its housing element within 120 calendar days from the statutory due date of April 15, 2021 for San Diego Association of Governments (SANDAG) localities. If adopted after this date, Government Code section 65588, subdivision (e)(4), requires the housing element be revised every four years until adopting at least two consecutive revisions by the statutory deadline. For more information on housing element adoption requirements, please visit HCD's website at: http://www.hcd.ca.gov/community-development/housing-element/housinq-element-memos/docs/sb375 final100413.pdf. Public participation in the development, adoption and implementation of the housing element is essential to effective housing planning. Throughout the housing element process, the City should continue to engage the community, including organizations that represent lower-income and special needs households, by making information regularly available and considering and incorporating comments where appropriate. Several federal, state, and regional funding programs consider housing element compliance as an eligibility or ranking criteria. For example, the CalTrans Senate Bill (SB) 1 Sustainable Communities grant; the Strategic Growth Council and HCD's Affordable Housing and Sustainable Communities programs; and HCD's Permanent Local Housing Allocation consider housing element compliance and/or annual reporting requirements pursuant to Government Code section 65400. With a compliant housing element, the City meets housing element requirements for these and other funding sources. HCD appreciates the responsiveness and dedication David De Vries, Austin Silva, Scott Nespor, and Polina Mitcheom provided during the course of our review. We are committed to assisting the City in addressing all statutory requirements of State Housing Element Law. If you have any questions or need additional technical assistance, please contact Jose Ayala, of our staff, at Jose.Ayala@hcd.ca.gov. Sincerely, Shannan West Land Use & Planning Unit Chief Enclosure 57 of 62
August 3, 2021, Item #7APPENDIX CITY OF POWAY The following changes are necessary to bring the City's housing element into compliance with Article 10.6 of the Government Code. Accompanying each recommended change, we cite the supporting section of the Government Code. Housing element technical assistance information is available on HCD's website at http://www.hcd.ca.gov/community-development/housinq-element/housing-element-memos.shtml. Among other resources, the housing element section contains HCD's latest technical assistance tool, Building Blocks for Effective Housing Elements (Building Blocks), available at http://www.hcd.ca.gov/community-development/building-blocks/index.shtml and includes the Government Code addressing State Housing Element Law and other resources. A. Review and Revision Review the previous element to evaluate the appropriateness, effectiveness, and progress in implementation, and reflect the results of this review in the revised element. (Gov. Code, § 65588 (a) and (b).) The element reviews the 5th cycle programs but does not provide a specific review for programs regarding the effectiveness of the 5th cycle programs for meeting the community's special housing needs. An analysis must be provided for the cumulative impact of the previous housing element's programs to address the housing needs of special needs populations. The element should specifically look at programs targeted for special needs populations and provide a narrative analysis. B. Housing Needs, Resources, and Constraints 1. Affirmatively further[ing] fair housing in accordance with Chapter 15 (commencing with Section 8899.50) of Division 1 of Title 2 ... shall include an assessment of fair housing in the jurisdiction (Gov. Code, § 65583, subd. (c)(1 O)(A).) Additional analysis is required to meet the statutory requirements. In particular, the element must analyze the enforcement and outreach capacity trends and patterns at the regional level. Currently, the element only analyzes this data at the local level. Additionally, the element must analyze trends and patterns of race at the regional level. Currently, the element only analyzes the trends and patterns at the local level. Moreover, the element must analyze the economic access to opportunity at the regional level; currently, the element only analyzes the data at the local level. In addition, more information is needed to fully analyze the disproportionate housing needs at the local and regional level. At the local and regional level, the element must analyze the homeless housing need. Additionally, at the regional level, the element must analyze cost burden and substandard housing. Next, the element must also look at other relevant factors that contribute to fair housing issues in the jurisdiction. To meet this requirement, the element should consider information beyond data that identifies and compares concentrations of groups with protected characteristics. HCD Review of City of Poway's 6th Cycle Housing Element July 9, 2021 58 of 62 Page 1
August 3, 2021, Item #7Additionally, the element must analyze how the sites inventory affirmatively furthers fair housing. For example, the element should analyze whether and/or how concentrating the lower-income housing need in the portion of the City that has the most non-white and less affluent residents furthers the goals of fair housing. Lastly, the element must include programs that (1) enhance housing mobility strategies, (2) encourage development of new affordable housing in areas of opportunity, (3) improve place-based strategies to encourage community revitalization, including preservation of existing affordable housing, and (4) protect existing residents from displacement. Currently, the programs listed in the element are not sufficient to take any meaningful actions in combating fair housing issues in Poway. The actions must directly target the contributing factors to fair housing issues and have a quantifiable outcome. 2. An inventory of land suitable and available for residential development, including vacant sites and sites having realistic and demonstrated potential for redevelopment during the planning period to meet the locality's housing need for a designated income level, and an analysis of the relationship of zoning and public facilities and services to these sites. (Gov. Code, § 65583, subd. (a)(3).) The City has a regional housing need allocation (RHNA) of 1,319 housing units, of which 736 are for lower-income households. To address this need, the element relies on vacant, nonvacant, and sites located in the Poway Road Specific Plan (PRSP). To demonstrate the adequacy of these sites and strategies to accommodate the City's RHNA, the element must include complete analyses. Progress in Meeting the RHNA: The element indicates (pages 4-6) that 144 units affordable to low-income households have been built or are under construction or approved but provides no information documenting how affordability of the units was determined. As you know, the City's RHNA may be reduced by the number of new units built since June 30, 2020; however, the element must describe the City's methodology for assigning these units to the various income groups based on actual sales price or rent level of the units and demonstrate their availability in the planning period. Currently, the element states that over the last few years projects have had deed restrictions to ensure affordability. While this information is useful, the element must describe how 6th cycle RHNA credits are assumed to be affordable. Realistic Capacity: While the element provides some information regarding realistic capacity, the element must also describe the methodology used to assume realistic capacity for all sites. For example, Sites 23-30 assume full build-out without any supporting information on how this assumption was calculated. While these sites are residentially zoned, the element must describe past projects, incentives, and other factors that support full build-out of these sites. Furthermore, the analysis on Pages 4-19 concludes that past projects located in the PRSP have averaged 27 dwelling units per acre, but the development assumptions for sites listed in the PRSP is 30 dwelling units per acre. In addition, most of the sites located in the PRSP are not residentially zoned sites; the element must account for the potential for non-residential development in these non-residential zones in its development assumptions. HCD Review of City of Poway's 6th Cycle Housing Element July 9, 2021 59 of 62 Page 2
August 3, 2021, Item #7Zoning for Lower Income Households: The element relies upon the City's inclusionary housing requirement to accommodate the regional housing need for lower-income households on Site 23 and Site 25. However, identifying potential results of an inclusionary zoning ordinance, by itself, is not sufficient or appropriate to demonstrate the adequacy of a zone to accommodate housing affordable to lower-income households; therefore, HCD is not considering the unit potential for lower-income on these sites when assessing the adequacy of sites to accommodate the RHNA for lower income. Suitability of Nonvacant Sites: While the element includes some recent developments (Pages 4-20) to demonstrate past experience, it does not explain how those developments relate to zoning, existing uses, densities, and the listed sites in the inventory. To analyze the extent that existing uses may impede additional residential development, the element should also include information on whether existing uses are operating, have been operating, or whether they are or not anticipated to continue operating. The element can also analyze the age of the structure, structural conditions or other circumstances and trends, lease information, market conditions, and regulatory or other incentives or standards to encourage additional residential development on these sites to demonstrate redevelopment potential. Infrastructure: While the element describes water and sewer infrastructure, it must also demonstrate sufficient existing or planned dry utilities supply capacity, including the availability and access to distribution facilities to accommodate the City's regional housing need for the planning period (Gov. Code, § 65583.2, subd. (b).). For additional information, see the Building Blocks at https://www.hcd.ca.gov/community-development/building-blocks/site-inventory-analysis/analysis-of-sites-and-zoning.shtml. 3. An analysis of potential and actual governmental constraints upon the maintenance, improvement, or development of housing for all income levels, including the types of housing identified in paragraph (1) of subdivision (c), and for persons with disabilities as identified in the analysis pursuant to paragraph (7), including land use controls, building codes and their enforcement, site improvements, fees and other exactions required of developers, and local processing and permit procedures. The analysis shall a/so demonstrate local efforts to remove governmental constraints that hinder the locality from meeting its share of the regional housing need in accordance with Government Code section 65584 and from meeting the need for housing for persons with disabilities, supportive housing, transitional housing, and emergency shelters identified pursuant to paragraph (7). Transitional housing and supportive housing shall be considered a residential use of property and shall be subject only to those restrictions that apply to other residential dwellings of the same type in the same zone. (Gov. Code, § 65583, subd. (a)(5).) Design Review: While the element provides a general overview of the design review process, the element must analyze the effects of design review on the cost and length of the approval process, and whether design review is a constraint to housing development in the City. HCD Review of City of Poway's 6th Cycle Housing Element July 9, 2021 60 of 62 Page 3
August 3, 2021, Item #7lnclusionary Housing: The element must analyze the effects of the inclusionary housing requirements on the development of housing for all income levels, specifically housing supply, and affordability. Namely, the element should provide greater detail on the effects of the inclusionary housing requirements on the development of housing, and whether the inclusionary housing requirements are having the intended impact. Constraints on housing for Persons with Disabilities: While the element describes its definition for "family" does not pose a constraint, the element does not include the definition of family in the element. The element must describe the zoning code definitions of family and analyze the impact of the definition on housing for persons with disabilities. 4. Analyze any special housing needs such as elderly; persons with disabilities, including a developmental disability; large families; farmworkers; families with female heads of households; and families and persons in need of emergency shelter. (Gov. Code, § 65583, subd. (a)(7).) The element provides a general overview of the special housing needs of farmworkers, but additional analysis is needed to fully meet requirements. For example, the element must identify and analyze the housing needs of farmworkers relative to the region. Farmworkers may choose to live within a city to ensure higher access to services but travel to more rural areas of the city for work. Comparing Poway's farmworker population relative to the region would help fully describe the farmworker housing need. C. Housing Programs 1. Include a program which sets forth a schedule of actions during the planning period, each with a timeline for implementation, which may recognize that certain programs are ongoing, such that there will be beneficial impacts of the programs within the planning period, that the local government is undertaking or intends to undertake to implement the policies and achieve the goals and objectives of the housing element through the administration of land use and development controls, the provision of regulatory concessions and incentives, and the utilization of appropriate federal and state financing and subsidy programs when available. The program shall include an identification of the agencies and officials responsible for the implementation of the various actions. (Gov. Code, § 65583, subd. (c).) While the element provides outcomes for most programs, Program 16 must be revised to include more specific commitments during the planning period for persons with special housing needs. In this specific case, the program should commit to actions beyond a semi-annual review of HCD's Program Directory and establish more concrete actions to assist in the development in housing for persons with special housing needs. 2. Identify actions that will be taken to make sites available during the planning period HCD Review of City of Poway's 6th Cycle Housing Element July 9, 2021 61 of 62 Page 4
August 3, 2021, Item #7with appropriate zoning and development standards and with services and facilities to accommodate that portion of the city's or county's share of the regional housing need for each income level that could not be accommodated on sites identified in the inventory completed pursuant to paragraph (3) of subdivision (a) without rezoning, and to comply with the requirements of Government Code section 65584. 09. Sites shall be identified as needed to facilitate and encourage the development of a variety of types of housing for all income levels, including multifamily rental housing, factory-built housing, mobilehomes, housing for agricultural employees, supportive housing, single-room occupancy units, emergency shelters, and transitional housing. (Gov. Code, § 65583, subd. (c)(1).) As noted in Finding B2, the element does not include a complete site analysis; therefore, the adequacy of sites and zoning were not established. Based on the results of a complete sites inventory and analysis, the City may need to add or revise programs to address a shortfall of sites or zoning available to encourage a variety of housing types. 3. Address and, where appropriate and legally possible, remove governmental and nongovernmental constraints to the maintenance, improvement, and development of housing, including housing for all income levels and housing for persons with disabilities. The program shall remove constraints to, and provide reasonable accommodations for housing designed for, intended for occupancy by, or with supportive services for, persons with disabilities. (Gov. Code, § 65583, subd. (c)(3).) As noted in Finding B3, the element requires a complete analysis of potential governmental constraints. Depending upon the results of that analysis, the City may need to revise or add programs and address and remove or mitigate any identified constraints. 4. Promote and affirmatively further fair housing opportunities and promote housing throughout the community or communities far all persons regardless of race, religion, sex, marital status, ancestry, national origin, color, familial status, or disability, and other characteristics protected by the California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3 of Title 2), Section 65008, and any other state and federal fair housing and planning law. (Gov. Code, § 65583, subd. (c)(5).) As noted in Finding B 1, the element does not fully meet the requirements for Affirmatively Furthering Fair Housing. The element must complete an analysis of impediments to fair housing and create targeted programs that will directly assist in mitigating these fair housing issues. HCD Review of City of Poway's 6th Cycle Housing Element July 9, 2021 62 of 62 Page 5
August 3, 2021, Item #8AGENDA REPORT CityofPoway DATE: TO: FROM: CONTACT: August 3, 2021 Honorable Mayor and Members of the City Council Aaron Beanan, Director of Finance ~ Aaron Beanan, Director of Finance (858) 668-4411 or abeanan@poway.org CITY COUNCIL SUBJECT: Provide Information Regarding Pension Obligation Bonds and Adopt a Resolution Authorizing Judicial Validation Proceedings for the Proposed Pension Debt Refinancing and Related Bond Financing Agreements Summary: Due to historically low interest rates, the City has an opportunity to potentially generate future savings by refinancing certain pension obligations with the California Public Employees Retirement System (CalPERS) using pension obligation bonds (POBs). This report will be structured as follows: 1. History of City of Poway pensions, a. Options for managing pensions, 2. Review of Pension Obligation Bonds, a. Pension obligation bonds, b. Pension obligation bonds team, c. Potential benefits, d. Potential risks, e. Objectives of a potential pension obligation bonds issuance, and f. Use of pension obligation bond savings 3. Pension obligation bonds financial analysis, 4. Pension obligation bonds risk analysis, 5. The judicial valuation process, and 6. Recommendations a. Next steps Recommended Action: It is recommended that the City Council adopt the Resolution authorizing the issuance of bonds to refund certain pension obligations of the city, approving the form and authorizing the execution of a trust agreement and purchase contract, authorizing judicial validation proceedings relating to the issuance of such bonds, and approving additional actions related thereto. IMPORTANT This recommendation does not obligate the Council to issue debt and does not authorize the issuance of debt. By law, Council must approve the issuance of debt. Staff will return to Council for their consideration of any debt issuances related to Pension Obligation Bonds. 1 of 134
August 3, 2021, Item #8Discussion: Due to historically low interest rates, the City has an opportunity to potentially generate future savings by refinancing certain pension obligations with CalPERS using POBs. To help Council make an informed decision staff will systematically approach the POB topic starting with Poway's pension history. Section 1: History of City of Poway Pensions Employee salaries and benefits represent approximately 36 percent of the total FY 2021-22 operating budget at $35.5 million. Of that $35.5 million, approximately 23 percent, or $8.2 million, is projected to be attributable to retirement benefits. The City makes payments to Cal PERS as part of the retirement benefits provided to employees for the City's pension plans. These payments are comprised of the normal cost and unfunded accrued liability (UAL). The normal cost represents the value/cost DUE TO HISTORICALLY LOW INTEREST RATES, THE CITY HAS AN OPPORTUNITY TO REFINANCE A PORTION OF ITS (ALPERS PENSION OBLIGATIONS. of benefits earned during the current year. The UAL represents the difference between all contributions to date and the benefits accrued/owed (i.e. how much the City needs to have when people retire) to current and former employees. Since the City's incorporation in 1980 it has contracted with CalPERS to provide defined-benefit retirement pension plans for the City's Safety, Non-Safety, and Management-Confidential groups. The Non-Safety and Management-Confidential groups are referred to as "Miscellaneous" in Cal PERS group plans. In the late 1990's and early 2000's CalPERS was realizing significant success with its investment returns. As of 1999 their investment returns had averaged 13.5 percent for a decade and plan funding for most plans was often more than 100 percent. Funded status in excess of 100 percent is referred to as "super-funded." These earnings helped bolster support for two pension related bills: Senate Bill 400 and Assembly Bill 616. Senate Bill 400, passed in September 1999, created a new enhanced retirement formula for public safety that provided a 3 percent at 50 level, among other things. Assembly Bill 616, passed in September 2001, created new enhanced retirement formulas for non-safety miscellaneous such as the 3 percent at 60 formula, among other things. Both bills allowed CalPERS member agencies the opportunity to provide employees with enhanced retirement formulas. In San Diego County, every city that contracts with Cal PERS approved one of the new enhanced retirement formulas for their employees. To remain competitive with other cities Poway approved a 3 percent at 50 formula for the Safety group at the July 18, 2000 Council meeting which took effect in June 2001. At the May 24, 2005 Council meeting, a supplemental retirement benefit for the Non-safety and Management-Confidential groups was approved. The supplemental retirement benefit was provided through the Public Agency Retirement Services (PARS) program. This supplemental benefit took the City's existing retirement formula of 2 percent at 55 to 2.7 percent at 55 for eligible employees within the Non-safety and Management-Confidential groups. The PARS plan is a closed plan not open to new members/employees and is not part of this POB discussion. As a result of the great recession (generally occurring in the United States between 2007 and 2009) the city managers in the San Diego City/County Managers Association (CCMA) began studying pension programs offered to local government employees in the state and county beginning January 2009. The goal of this research was to offer recommendations for regional pension reform. At the October 6, 2009 Council meeting, the results of this research were presented to Council to help inform Council prior to a League of California Cities meeting later that month. While pension reform discussions were 2 of 134
August 3, 2021, Item #8still taking place statewide over the next several years, a statewide approach had not yet been adopted. Poway chose to pursue pension management strategies and reform at the local level during this time via two separate actions. First, the City Council had set aside $1.42 million in a Pension Stabilization Fund to help pay for an increase in CalPERS pension costs anticipated to be phased in over the following five years. The idea was to use the funds to help mitigate increases while replenishing the fund whenever possible from budgetary savings. On January 19, 2010 the City Council used the funding previously set aside in the Pension Stabilization Fund along with several hundred thousand dollars in General Fund unassigned fund balance to pay down the City's unfunded Safety pension liability with CalPERS. This was anticipated to save the City approximately $330,000 per year. Second, through labor negotiations in 2011, the City and Miscellaneous and Safety Groups (approved July 5, 2011) agreed to a second-tier retirement plan. Subsequently, as approved at the September 6, 2011 Council meeting, the City amended its contract with CalPERS to create a second-tier retirement plan effective January 1, 2012. Employees hired after that date are not eligible for the PARS program because of that City Council action. In 2012 a statewide approach to pension reform had been approved under the Public Employees' Pension Reform Act (PEPRA). PEPRA took effect for all new employees hired after January 1, 2013. PEPRA made broad prospective changes to pensions in California with the goal to create a more sustainable pension system by reducing employer's pension liabilities and increasing employee contributions towards their pension benefits. The most notable changes for new members to the pension system were: 1. New retirement formulas with increased retirement age and reduced benefit factors, 2. Caps on pensionable compensation, 3. A three-year averaging to determine final compensation, 4. A new definition of "pensionable compensation," and 5. Employee cost-sharing of at least 50% of the normal cost. Since Poway had enacted a second retirement tier for the Miscellaneous and Safety groups in 2011, PEPRA effectively created a third retirement tier for the City's employees. This was formalized during the 2013 labor negotiations with Council approving the Miscellaneous plan on June 18, 2013 and Safety plan on July 16, 2013. The information described above is summarized in the table below for reference. 2.7% at 57 (FAE 3) Tier 2 employees are employees that have actively worked for a participating CalPERS agency or agency with a reciprocity agreement with Cal PERS and have not had a break in Cal PERS service greater than 6 months. 2. The PARS supplemental benefit increased the Miscellaneous benefit to 2.7%@ 55 for eligible employees. 3. FAE 1 means the single highest year of earnings (typically final) is used to calculate the employee's salary pursuant to the applicable benefit formula. 4. FAE 3 means the highest three years (typically the final three) of average earnings is used to calculate the salary used in the applicable benefit formula. [Remainder of page intentionally left blank] 3 of 134
August 3, 2021, Item #8The City and its employees contribute to the Miscellaneous and Safety Plans. The current contribution rates as a percentage of salary are shown in the table below. Tier 1 "Classic" Employees Tier 2 "Classic" Employees1 Tier 3 "PEPRA" New CalPERS Group Plan (Hired prior to 1/9/12) (Hired prior to 1/9/12) Employees (Hired on/after 1/1/13) Miscellaneous 2%@ 55 2%@ 60 2%@ 62 Employer1•2 9.25% 12.10% 7.03% Employee2·3 7.00% 7.00% 7.00% UAL4 21.73% 21.73% 21.73% Total 37.98% 40.83% 35.76% Safety 3%@ so 3%@55 2.7%@ 57 Employer2 22.48% 20.64% 13.13% Employee2 9.00% 9.00% 13.00% UAL4 23.91% 23.91% 23.91% Total 55.39% 53.55% 50.04% Source: Cal PERS actuarial valuations, the most recent being as of June 30, 2019. 1. Miscellaneous employer rates are blended at 8.74% per the actuarial report and estimated at the rates shown based on the Normal Cost by Benefit Group detail in the actuarial report. 2. The employee rates are the contracted Cal PERS rates and do not reflect the additional 1.00% employee pickup agreed to through the labor bargaining process for Tier 1 and Tier 2 employees. Each Tier 1 and Tier 2 employee currently contributes an additional 1.00% towards the cost of the Cal PERS retirement benefits. 3. Miscellaneous Tier 1 and Tier 2 employees will begin contributing an additional 1.00% towards the cost of the Cal PERS retirement benefits beginning the first full pay period in July 2024. 4. The UAL represents a blended rate for the three retirement tiers and is an employer only cost. As of June 14, 2021, the Safety and Miscellaneous plans have 232 approved positions. The 212 filled positions are summarized by retirement plan in the table below for reference. Tier 1 "Classic" Employees Tier 2 "Classic" Employees Tier 3 "PEPRA" New CalPERS Group Plan (Hired prior to 1/9/12) (Hired prior to 1/9/12) Employees (Hired on/after 1/1/13) Miscellaneous1 47 N/A N/A Miscellaneous 12 13 96 Safety 24 2 18 Total 83 15 114 1. Represent miscellaneous employees also eligible for the PARS supplemental benefit formula. The City is responsible for the retirement costs related to more than the 212 filled, or active members, positions shown in the previous table. In addition to paying the costs of active members, the City is also responsible for the costs associated with: 1. Transferred members, Former City employees still employed with a CalPERS employer. 2. Separated/terminated members, and Former City employees not employed with a CalPERS employer but also not retired. 3. Retired members. Former employees that are now retired from the CalPERS system that could have retired as an active member, transferred, or separated/terminated member. The City is responsible for the costs associated with these member types until a member passes or their elected survivor(s)/beneficiary(ies), as applicable, passes. The following table shows the makeup of these Cal PERS classifications as of the June 30, 2019 actuarial valuations: 4 of 134
August 3, 2021, Item #8Member Type Miscellaneous Plan Safety Plan Total Active 51 184 235 Transferred 29 113 142 Separated/Terminated 15 105 120 Retired 50 270 320 Total 145 672 817 As of the June 30, 2019 Cal PERS and PARS actuarial valuations (actuarial valuations lag by two years) the table below provides the funded status of each plan: Plan Funded Status CalPERS -Miscellaneous Plan 69.53% CalPERS -Safety Plan 73.52% PARS -Supplemental Plan 85.15% Subsequent to PEPRA, CalPERS has taken additional steps to increase the health of the pension system. For example, in November 2015 CalPERS adopted its Funding Risk Mitigation Policy. This policy uses investment returns that outperform the discount rate by at least 2 percentage points to change the investment asset allocations to lessen the impact of future market downturns and also offset the costs to employers of lowering the discount, or target earnings, rate. Since adoption Cal PERS has not implemented this policy, in part due to the changes they made during 2016. In December 2016 CalPERS also made two substantial changes to help increase pension fund health. This included reducing Cal PERS discount rate from 7.5% to 7.0% over a three-year period that began with the June 30, 2016 valuation. Without any offsetting action, reducing the discount rate does increase costs to member agencies in the short-term. In the long-term it lowers the costs to member agencies as CalPERS is more likely to achieve the investment earnings target. CalPERS also shortened the period over which actuarial gains and losses are amortized from 30 years to 20 years and changed the payments to level dollar amounts instead of a ramp up/down. They removed the five-year ramp-up/ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses. For investment gains/losses CalPERS kept the 5-year ramp up but removed the ramp-down. These actions are similar to reducing the loan term on a home mortgage, as they increase the short-term costs but increase the savings long-term. These changes will also help make the pension system more sustainable. CalPERS reported a preliminary June 30, 2021 21.3% return on Public Employees Retirement Fund (PERF) on July 12, 2021. Coinciding with the PERF returns, CalPERS elected to implement its Funding Risk Mitigation Policy for the first time since adoption and is using the investment returns to offset the impacts of lowering the discount rate from 7.0%. Cal PERS is lowering the discount rate from 7.0% to 6.80% based on the PERF investment returns as of June 30, 2021. This change should have minimal impact to member agencies as the excess investment earnings under the policy would be used to offset the cost of lowering the discount rate. Lowering the discount rate helps increase the financial sustainability of the pension system. The actions discussed above were put in place to help reduce pension costs to public agencies over the long-term, though they will cause significant increases in the short-term. As the 10-year chart on the following page shows, Poway's pension payments to Cal PERS have increased over-time; 105% over the last 10 years. These will continue to increase in the near-term until the actions taken above start to reduce pension costs. The information presented in the 10-year chart includes the employer and employee contributions for both the Miscellaneous and Safety plans and is separated by the normal cost and UAL. As shown, 5 of 134
August 3, 2021, Item #8the City was paying for the UAL in FY 2011-12 consistent with the pension reform discussed previously. The City has always paid its CalPERS pension obligations, as invoiced by CalPERS, in full. Prior to pension reform, agencies were not invoiced for UAL obligations because of a number of factors, such as accounting standards and high PERF returns, among others. The City's payments to PARS are not reflected as the data was not available in time for this staff report. Ten Year History of Poway's Pension Contributions to Cal PERS $8,000,000.00 $7,000,000.00 $6,000,000.00 $5,000,000.00 $4,000,000.00 $3,000,000.00 $2,000,000.00 $1,000,000.00 $0.00 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17 /18 FY 18/19 FY 19/20 FY 20/21 ■ Normal Cost ■ Unfunded Accrued Liability Note: The normal cost and UAL split was estimated for FY 11 /12 through FY 16/17 based on the associated actuarial reports as the MyCalPERS system did not reflect payments between the two cost types until FY 17/18. The tables below and at the top of the next page show more detailed information about the employer contributions to CalPERS for the Miscellaneous and Safety Plans over the last five years. Since it only reflects the employer contributions the amounts shown will not tie to the previous chart. As the table reflects, the normal cost for the Miscellaneous and Safety Plans have increased 29% and 26%, respectively, over the last five years. The UAL for the Miscellaneous and Safety Plans have increased 80% and 117%, respectively, over the same time period. For reference, General Fund revenues increased 11.8% over the last five years of audited financials Uune 30, 2016 through June 30, 2020). UAL Balance 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 5-Year Increase Miscellaneous Plan $32,284,316 $37,858,596 $37,862,343 $38,161,265 $38,098,445 $5,814,129 18% Safety Plans $15,188,201 $17,619,912 $18,659,611 $18,982,012 $19,090,825 $3,902,624 26% Total $47,472,517 $55,478,508 $56,521,954 $57,143,277 $57,189,270 $9,716,753 20% [Remainder of page intentionally left blank] 6 of 134
August 3, 2021, Item #8UAL & Normal Cost 2017-18 2018-19 2019-20 2020-21 2021-22 Annual Payments 5-Year Increase UAL Miscellaneous Plan $1,603,752 $1,950,836 $2,339,449 $2,643,161 $2,890,493 $1,286,741 80% Safety Plans $643,147 $823,801 $1,024,473 $1,179,349 $1,394,617 $751,470 117% UAL Total: $2,246,899 $2,774,637 $3,363,922 $3,822,510 $4,285,110 $2,038,211 91% Normal Cost Miscellaneous Plan $904,392 $984,422 $1,058,935 $1,179,779 $1,162,383 $257,991 29% Safety Plans $905,523 $907,517 $1,014,462 $1,135,518 $1,141,660 $236,137 26% Normal Cost Total: $1,809,915 $1,891,939 $2,073,397 $2,315,297 $2,304,043 $494,128 27% Total $4,056,814 $4,666,576 $5,437,319 $6,137,807 $6,589,153 $2,532,339 62% Source: Cal PERS actuarial valuations, the most recent being as of June 30, 2019. The chart below shows the current CalPERS amortization schedule for the Miscellaneous and Safety Plans broken out by the normal cost and UAL. While CalPERS rates are projected to peak in FY 2024-25, the payments are not projected to peak until the early 2030's. This is due in large part to an assumption of year over year salary increases. Once the UAL has been fully funded as currently projected in 2047, ongoing pension related costs are expected to total $5 million per year. Combined (1) "' $10 -~ $9 ~ $8 $7 $6 $5 $4 $3 $2 $1 $0 Safety Normal Cost ■ Safety UAL Payments Miscellaneous Normal Cost ■ Miscellaneous UAL Payments I I I I I M N M ~ ~ ~ ~ 00 ~ 0 M N M ~ ~ ~ ~ 00 ~ 0 M N M ~ ~ ~ ~ N N N N N N N N N M M M M M M M M M M ~ ~ ~ ~ ~ ~ ~ ~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N N N N N N N N N N Source: Cal PERS actuarial valuations, the most recent being as of June 30, 2019. 1. Miscellaneous normal cost projections are based on the 8.74% of total Miscellaneous salaries and assuming an annual growth rate of 2.75%. Safety normal cost projections are based on the 22.48% of total Safety salaries and assuming an annual growth rate of 2.75%. This information is subject to change based on actual salary increases, PERF investment earnings, actuarial assumption changes, etc. While PEPRA and CalPERS actions subsequent to PEPRA will reduce the City's pension liabilities, the annual budgetary effects of this reform will not materially be realized by the City until the late 2020's or early 2030's. As a result, staff contracted with Bartel Associates, LLC (Bartel) to perform an independent actuarial evaluation to help the City better understand the cost drivers behind the near-term increasing CalPERS employer rates and the options Council had to help mitigate some of the rising pension costs. On September 18, 2018 staff provided Council information on several options for managing the City's rising pension costs with Cal PERS. These included committing additional funds to CalPERS, establishing a Section 115 Trust, and leaving the CalPERS pension system. Leaving the pension system was determined to be financially infeasible as it was estimated to cost between $170 and $200 million in 2018. Additionally, pursuant to Government Code Sections 20281 and 20479 the City is precluded from placing new employees in a retirement system outside of CalPERS. The only way to do that is for the City to leave the pension system entirely and that is financially infeasible. 7 of 134
August 3, 2021, Item #8Since that Council meeting staff has been analyzing the most fiscally prudent approach to help manage the City's pension obligations. This staff report represents one potential option for the Council to consider. Options for Managing Pensions: CalPERS and the League of California Cities have detailed various options available to help manage pensions. There is no perfect solution to managing a City's pension obligations and many agencies employ multiple methods to manage their pension obligations. The most typical options include: 1. Identify new sources of revenue, New sources of revenue could help defray the costs of the City's pensions. This could be a new general tax or a special tax. For example, the City of Monrovia has a Retirement Tax adopted to specifically help fund the City's obligations under its CalPERS contract. New revenue could also come from new development or fee increases. 2. Review services and staffing models looking for a regional approach to service delivery, The City participates with other agencies for San Diego County Sheriffs services which affords a regional approach to law enforcement service delivery. The City could look for other opportunities to participate in regional service delivery. 3. Establish Section 115 Trust, Funds could be invested with an irrevocable trust provider such as CalPERS California Employers' Pension Prefunding Trust (CEPPT) or PARS Pension Rate Stabilization Program (PRSP), among others to help stabilize yearly fluctuations in pension rates. Section 115 Trusts typically offer more aggressive investment strategies than normal City investments which, if successful in their investment return goals, provide additional funding for pension costs. 4. Make additional discretionary payments towards the UAL, Funds could be remitted directly to CalPERS in excess of the City's annual obligations to increase the paydown rate of the City's UAL. An example of this discussed above was when the City used previously set aside Pension Stabilization funds and unassigned fund balance to pay down the City's unfunded Safety pension liability with CalPERS. 5. Pursue a Cal PERS Fresh Start, A CalPERS Fresh Start allows an agency to consolidate multiple amortization bases (different components of the UAL) into one base paid off over a shorter period. It is like refinancing a 30-year mortgage into a 15-year mortgage. While annual payments will increase, the UAL can be paid off earlier and it would save the City money over the long-term. A Fresh Start is irrevocable (i.e. cannot be modified). An alternative option CalPERS encourages is following the Fresh Start payment schedule without a formal agreement. 6. Reprogram capital reserves towards UAL pay-down, and Funds previously set aside for capital asset management (asset rehabilitation and replacement) could instead be used towards paying down the City's UAL. This would leave less 8 of 134
August 3, 2021, Item #8funding available for capital asset management and could require the issuance of debt to fund capital needs. As an example, school districts often fund capital using debt. 7. Pension Obligation Bonds. POBs allow an agency the ability to "refinance" some or all of their UAL with Cal PERS that has an effective interest rate of 7 percent with taxable bonds at a lower market rate. The overall strategy of POBs is to achieve interest rate savings (i.e. arbitrage) between the 7 percent and market rate bond issuance. POBs will be discussed in more detail below. Section 2: Review of Pension Obligation Bonds As mentioned above, POBs allow an agency the ability to "refinance" some or all of their UAL with Cal PERS (the City still needs to pay 100% of the normal cost) that has an effective interest rate of 7 percent with taxable bonds at a lower market rate. The overall strategy of POBs is to achieve interest rate savings (i.e. arbitrage) between the 7 percent and market rate bond issuance. A POB issuance refinances the City's UAL obligation to CalPERS into an obligation to investors. The issuance provides a lump sum that is remitted to CalPERS which reduces or temporarily eliminates the City's UAL obligation to CalPERS and replaces it with an obligation POBS DO NOT ELIMINATE THE CITY'S UAL, THEY ONLY REFINANCE IT. THE CITY CAN NEVER PERMANENTLY ELIMINATE THE UAL, ONLY TEMPORARILY. to investors. Instead of paying Cal PERS 7% (now reduced to 6.8%) on the obligation, POBs are currently being sold to investors at or below 4% and in many cases less than 3%. The City will always have some version of a UAL with CalPERS because PERF investment earnings will never exactly hit the CalPERS target (currently 7%), actuarial assumptions will change, etc. So even if the City paid off the current UAL with Cal PERS or issued POBs and paid those off, it does not prevent the addition of some level of UAL in the future. However, once the current UAL or POBs are paid off, the amount of the UAL that arises in the future should generally, absent large investment losses, be able to be remedied annually, or shortly thereafter, because it would be significantly less. While POBs carry potential benefits and risks, the current low interest rate environment helps mitigate several of their risks. As such, staff has retained and contracted with a specialized POB team to help Council make an informed decision on whether POBs are the right decision for the City at this time. POB Team: The City has contracted with Bartel Associates, LLC. (Bartel) given their prior work on the City's pensions to provide specialized expertise important for the POB analysis presented in this staff report. THE CITY HAS RETAINED INDUSTRY EXPERTS TO PROVIDE OBJECTIVE INFORMATION ON POBS. Consistent with authorization provided November 4, 2020, staff has also selected and contracted with a financing team from the California State Treasurer's debt issuance pool lists based on their expertise with POBs. Assisting staff with the POB analysis and potential debt issuance are Fieldman, Rolapp & Associates, Inc. (Fieldman) as municipal advisor, Stradling Yocca Carlson & Rauth (Stradling) as judicial validation and bond counsel, and Stifel, Nicolaus & Company, Inc. (Stifel) as underwriters. Fieldman, Stradling and Stifel are on the approved California State Treasurer's Municipal Advisor Pool list, Bond Counsel Pool list, and Underwriter's Pool list, respectively. Additionally, the firms producing the analyses and information in 9 of 134
August 3, 2021, Item #8this staff report do not have a vested interest in the sale of bonds. They are paid regardless of whether a bond sale takes place. More information about each firm follows. Bartel is an actuarial consulting firm specializing in providing California public agencies with actuarial consulting services including retiree medical valuations and CalPERS retirement consulting. Founded in 2003, Bartel has served over 450 public agencies in the past 10 years. John Bartel, the firm's founder, is on the California Actuarial Advisory Panel. He and the firm's other actuaries are recognized as thought leaders in the area of pension funding strategies and analysis and are frequent speakers on the topic at statewide meetings such as CALPELRA and CSMFO. In the past 3 years, the firm completed rate projection and funding studies for 136 California agencies and assisted 16 with pension obligation bond analyses. Fieldman was founded in 1966 and works solely with public agencies in providing financial advice and services. Fieldman is a founding member of the National Association of Municipal Advisors, the trade association that provides education and resources for municipal advisors. Fieldman is also a Registered Municipal Advisor with the Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB). Fieldman has been ranked in the Top Five of Municipal Advisors in California based on numbers of deals according to REFINITIV, an independent bond market news service, in each of the last 5 years. In 2020 alone, the firm has served as a Municipal Advisors on 93 transactions totaling approximately $3.7 Billion. Stradling was founded in 1975, has had a municipal finance practice since 1978, and has approximately 100 attorneys in ten offices across California, Colorado, Nevada and Washington. Stradling consistently ranks among the top bond counsel and disclosure counsel firms in California, often being ranked among the top two or three in terms of dollar volume and number of transactions. For each of 2015 through 2019 Stradling participated in more bond issuances in California as bond counsel, disclosure counsel, or underwriter's counsel than any other law firm. Stradling has also served as counsel on some of the City's previous debt issuances. Stifel was founded in 1890 and is one of the nation's leading independent full-service investment banking firms with over 8,000 employees located in 370 offices around the globe. Stifel has one of the largest Public Finance practices in the country as measured by number of professionals. The firm is consistently the top national and top California municipal bond underwriter as measured by number of issues underwritten. In 2020, Stifel senior-managed 206 California issues totaling over $4.8 billion in par. Stifel has assisted a number of communities similar to the City with the underwriting of pension obligation bonds, including recent POBs for the Cities of Chula Vista, Orange, Huntington Beach, Manhattan Beach and El Segundo. Potential Benefits: There are several potential benefits the City could realize by issuing POBs. These potential benefits include: 1. A tool for fiscal sustainability, POBs provide the ability to alter the City's UAL payments in a way that could support long-term financial sustainability, help provide budget predictability and minimize the year over year variability in payments, and provide enhanced resiliency to economic shocks. 10 of 134
August 3, 2021, Item #82. Budgetary savings, Using POBs to modify the current CalPERS UAL payment schedule's peak (currently projected in FY 2024-25) in projected payments to a more predictable or level structure can create cash flow savings. 3. Interest rate savings from arbitrage, Issuing POBs at market rates with a timing cushion (currently 3.70% -3.90% depending on term and credit, among other things) that are lower than what CalPERS charges on the UAL at 7% creates interest savings through arbitrage. In this example, arbitrage is created by taking advantage of the difference between the Cal PERS rate of 7% and current market rates in the 3.40% -3.75% range. All else being equal, the City would realize a lower cost of debt which in turn would save money. 4. Market timing, A well-timed POB issuance can have a positive impact on the long-term economics of a POB issuance. Investment gains above the bond yield early in the term of a POB issuance result in a pension system "surplus" that provides a hedge against future market declines. 5. Time value of money, A POB issuance accelerates the investment of funds since the issuance proceeds are "immediately'' remitted to CalPERS who in turn "immediately'' invests them. This increases the compounding of earnings helping the issuance's chances for a positive outcome. 6. Maturity modification, and A POB may have a shorter or longer repayment period based on market conditions and the financial objectives of the issuer. However, if the POBs are structured with deferred principal amortization or repayment longer than the actuarial amortization period the overall cost of debt may increase. Further lengthening the debt repayment period adds risks and is specifically noted in the Government Finance Officers Association advisory against POBs. 7. Preservation of reserve and service levels. Potential savings achieved through a POB issuance could reduce the need to use reserves to fund ongoing expenditures or reduce service levels. Potential Risks: The Government Finance Officers Association (GFOA) Advisories identify policies and procedures necessary to minimize a government's exposure to potential loss in connection with its financial management activities. The GFOA has issued an Advisory that recommends state and local governments do not issue POBs as there are several risks associated with issuing POBs. These potential risks include: 11 of 134
August 3, 2021, Item #81. It turns a "variable" obligation into a "fixed" obligation, The City's UAL obligation to CalPERS will change year over year. It could increase or decrease based on a variety offactors such as investment returns or actuarial assumption changes. This allows the City to benefit from UAL decreases (i.e. lower payments to CalPERS) but does also mean the City is negatively impacted by increases (i.e. higher payments to CalPERS). Issuing a POB transfers and refinances the obligation due to CalPERS into a fixed obligation due to investors. An obligation due to investors will not increase or decrease over time which can be beneficial under the right conditions as it limits downside risk associated with an increasing UAL. However, it also carries risk as a fixed obligation because it cannot take advantage of a consistently decreasing UAL. 2. Future UAL can still change, The City will always have some UAL or the potential for some UAL. Issuing POBs does not eliminate the City's UAL obligations; it merely refinances the City's UAL obligations as of a point in time. This will occur as a result of things such as Cal PERS investment returns, future changes in the Cal PERS discount rate, changes in actuarial assumptions, etc. 3. Investment risk (Arbitrage risk), If Cal PERS PERF earns below the bond rate over the life of the bonds, then the POBs become a net cost to the City (i.e. the City would have been better off not issuing POBs). The lower the yield on the bonds, the less likely it is that CalPERS will earn less than the bond rate over a 20+/-year timeframe. 4. Low pension fund returns, If CalPERS investment earnings are below its current discount rate of 7% in a given year, the City's UAL will increase from the addition of a new amortization base to reflect the investment earnings shortfall. This investment shortfall is applied to the City's Market Value of Assets (MVA) which will be higher after the issuance of POBs. The new amortization base from the investment shortfall will be larger given the MVA is higher resulting in a larger amortization base than the City would have had before issuing POBs. The City's funded ratio would still be higher, however. 5. ''Too much of a good thing," If Cal PERS investment returns consistently exceed 7% after the City issues a POB, the City's pension plan could become super-funded (i.e. has placed more money with CalPERS than is necessary to cover its pension obligations). Because the POBs become a fixed obligation, the City would not benefit from these surpluses (required contributions would not decrease as the Normal Cost must always be paid) which means the City loses the benefits of cash it could have used on other city services. 6. Market timing risks, Market timing risk is related to the timing of the investment of the bond proceeds. A POB issuance produces a lump sum of proceeds which must be remitted to CalPERS immediately after issuance. This lump sum concentrates market timing risks rather than spreading it. This is especially a consideration in the current economic environment as equity markets are at all-12 of 134
August 3, 2021, Item #8time highs. If a market crash occurred between the bond sale and Cal PERS investment of the bond proceeds, which is typically two weeks apart, the initial investment cost would be lower and could potentially provide higher future returns. However, if a market crash occurred after the initial investment of bond proceeds, it would negatively impact future earnings given the decreased potential for compounded earnings. It would also likely result in a new amortization base and increase in UAL all else being equal. 7. Increased bonded debt and credit risk, Issuing POBs would reduce the City's UAL but increase its bonded debt. Having more bonded debt could impact credit rating. S&P Global Ratings views POBs in environments of fiscal distress or as a mechanism for short-term budget relief as a negative credit factor. That being said, S&P also identifies a large liability to CalPERS as a credit negative and there have been many POB issuers, Chula Vista and Huntington Beach are two recent examples, that have come to market in recent months and none of them have received a downgrade in rating associated with the issuance. 8. Judicial validation process, and The City must proceed through a judicial validation process to issue POBs. This legal filing may be challenged in court proceedings and, if a challenge was successful, prevent the issuance of POBs. 9. Political process. POBs can be controversial because, among other things, some view them as gambling on future market returns and they've received a negative reputation due to well publicized bankruptcies (Detroit, Stockton, and San Bernardino). Stakeholders, constituents, and interest groups may be critical of using POBs as an option for managing the City's pension obligations. Objectives of a Potential Pension Obligation Bond Issuance: The City is considering the issuance of POBs to refinance all or a portion of its UAL to primarily and potentially: 1. Increase financial sustainability, 2. Achieve savings, and 3. Increase funding ratio with CalPERS. Since February 2019 36 cities throughout California have issued POBs totaling almost $4.35 billion to refinance their UAL in an attempt to accomplish similar goals. The City of Chula Vista and City of El Cajon are two San Diego County cities that issued POBs earlier this year for $350 million and $147 million respectively. Use of Potential Pension Obligation Bond Savings: The City has a number of options on using any realized savings from a POB issuance. For example, the savings could be used to further reduce or eliminate any remaining UAL obligations, help stabilize CalPERS normal costs, help fund other City budget priorities, etc. As issuing bonds to refinance all or a portion of the City's current UAL is only part of a solution to help increase the long-term financial sustainability of the City, staff will propose a policy to help set guidelines for the management of any 13 of 134
August 3, 2021, Item #8realized POB savings. If Council approves the recommendations in this report, staff will include the proposed policy when they return for Council's consideration of a POB issuance later this year. Section 3: Pension Obligation Bond Financial Analysis As the City's municipal advisor for the potential POB issuance, Fieldman provided an analysis for two different UAL refinancing levels, an 85% funded scenario and a 100% funded scenario, along with various structuring options, for a total of six possible ways to approach the issuance. Additional information on all six possibilities are included in Attachment D for reference. This staff report will focus on two of the six scenarios as staff believes these two scenarios are most consistent with the objectives stated above. 85% Funded Scenario, Proportional Savings Profile: In an 85% funded scenario, the City's UAL is refinanced to a level sufficient to create an 85% funding level with CalPERS. A portion of the UAL is refinanced into POBs due to investors while a portion of the UAL remains an obligation to CalPERS. There are two primary benefits derived from partially refunding the City's UAL. First, it allows the City to continue benefiting from PERF investment earnings in excess of 7% (discussed in more detail below). In a 100% funded scenario, the City's UAL is fully refinanced, thereby "fixing" the value of the UAL. There are no opportunities to adjust the overall UAL liability anymore. Second, it helps ensure the City does not overcommit funds for its pension obligations that could have been used on other City services. A 100% funded scenario increases the likelihood the City's pension plans become super-funded. A super-funded pension plan ties up money that could have been used on other City services. There are a variety of different structuring options when issuing POBs. The three most common are to structure the POBs to have a proportional debt service, and level debt service, or to use a hybrid approach. The POB structuring options are in relation to the current CalPERS UAL amortization curve. A proportional debt service structure will adjust the annual debt service payments to mirror the shape of the current Cal PERS UAL amortization curve. This helps spread the savings out over the life of the POB debt. A level debt service structure provides even debt service payments over the life of the debt. While this creates a consistent expense for budgeting, it can create inconsistent savings over the life of the debt or result in having a debt service payment that was larger than the CalPERS UAL amortization payment would have been. The hybrid structure combines these approaches to increase savings at a particular point in the debt service life in order to pursue higher savings at the beginning, middle, or end. Visual representations of each method can be seen in Attachment D for reference. The proportional structure was selected as the savings profile because it most closely aligns to the objectives stated previously. In the 85% funded scenario individual amortization bases are selected and refinanced. Amortization bases are different components of the UAL and are created every time an event occurs that changes the pension obligation of the City with Cal PERS. They can either increase or decrease the City's pension obligations with CalPERS. For example, if CalPERS earns less than 7% on the PERF, the investment shortfall is made up from member agencies. In this case, the City would receive a new amortization base that represents the dollar value of the City's portion of that investment shortfall. This type of amortization base increases the pension costs to the City. Conversely, if Cal PERS earns more than 7% on the PERF, a negative amortization base is created helping reduce the City's UAL costs. Additionally, each amortization base also has a certain amortization period based on the reason the amortization base was created, how long the amortization base has existed, etc. In an 85% funded scenario, the specific amortization bases to refinance are selected based on the goals of the 14 of 134
August 3, 2021, Item #8government. For example, choosing to refinance a shorter amortization period will result in a lower POB interest expense, but the shorter time period decreases the chance of realized savings. Conversely, choosing to refinance a longer amortization base will have a higher POB interest expense, but the longer time period increases the chance of realized savings. The amortization bases selected for the 85% funded scenario were generally selected to increase the chance of realized savings for the City, consistent with the objectives stated previously. The two charts, shown below and at the top of the next page, visually represent the different amortization bases for the Miscellaneous and Safety Plans. As the charts show they are made of multiple amortization bases that both increase costs (the positive amounts) and decrease costs (the negative amounts) for the City's pensions. V) $5 C 0 ~ $4 $3 $2 $1 $0 I I -$1 -$2 15 of 134 City of Poway Miscellaneous Plan UAL Payments by Amortization Bases . I I [Remainder of page intentionally left blank] • • • I ■ -
August 3, 2021, Item #8City of Poway Safety Plans UAL Payments by Amortization Bases V) $3 C 0 $3 ~ $2 $2 • $1 $1 $0 i I • -$1 -$1 To determine the estimated interest rate on the potential POB issuance, current market rates plus a timing cushion was used. The 30-year Treasury (i.e. market) rate as of July 20, 2021 was 1.88%. The all-in true interest cost ("TIC") has generally ranged from 3.37% to 3.90% depending on term and credit, among other things, as they are sold at a spread to treasuries. The rate used is instrumental in determining the overall cost of the debt which in turn in used to estimate the potential savings. If POBs are issued at a rate less than the rate used for analysis purposes, it increases the chance the City will realize savings and vice versus. Other assumptions include a Standard & Poor's "AA" category underlying rating (the most recent Issuer Comment from Moody's Investors Service on July 2, 2021 affirmed the City's Aa1 General Obligation rating), that the POBs are optionally callable in 10 years, there is no reserve fund, and no extension of final maturity. The chart on the next page visualizes the proportional debt service structure for the 85% funded scenario. As the chart shows, the annual payments for the potential 2021 POB vary year over year to attempt to spread the savings out over the life of the debt issuance. In the 85% funded scenario, a portion of the UAL with Cal PERS still remains, as the chart shows. The distance between the bars and line graph represent the potential savings each year. [Remainder of page intentionally left blank] 16 of 134
August 3, 2021, Item #8Proportional Debt Service VI $7 C 0 ~ $6 $5 $4 $3 $2 I I I I I I I I I I I I I I I I I I $1 $0 N m ~ Ln U) ,..... 00 °' 0 •••••➔ N m ~ Ln U) ,..... 00 °' 0 •....➔NM~ Ln U) N N N N N N N N m m m m m m m m m m g g g g g g g -$1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N N N N N N N N -2021 POB Payments Remaining UAL Payments -Current Amortization The table below summarizes the key metrics for the 85% funded scenario. 85% Funded Scenario Metrics Proportional Structure Bonds Bond Issuance Amount $33,150,000 UAL Payoff $32,681,167 CalPERS Funded Ratio 85% Term Final Maturity 2045 (24 Years) Average Life 13 Years Debt Service Maximum Annual Debt Service $2,418,460 Average Annual Debt Service $2,065,750 Potential Savings All-in True Interest Cost 3.85% Gross Savings $19,480,087 Present Value Savings1 $13,221,481 Average Annual Savings $799,594 1. Savings represented in today's dollars. [Remainder of page intentionally left blank] 17 of 134
August 3, 2021, Item #8Issuing POBs for the 85% funded scenario is projected to save the city as a whole over $19.5 million dollars over the life of the POB and approximately $800,000 per year as compared to the current ACTUAL SAVINGS WILL DIFFER. CalPERS amortization schedule. Actual savings will differ. This will occur because CalPERS will earn more or less than its 7% target for PERF, actuarial assumptions will change, CalPERS could change the discount rate, among other reasons. This information is representative of the potential savings the City may realize. Later in the staff report, the Pension Obligation Bonds Risk Analysis section will discuss the likelihood the City will be better off for issuing POBs than not. 100% Funded Scenario, Proportional Savings Profile: In a 100% funded scenario, the City's UAL is refinanced to a level sufficient to create a 100% funding level with CalPERS. The City's entire current UAL is refinanced into POBs due to investors instead of an obligation to Cal PERS. A 100% funded scenario does increase the risk of super-funding, or over committing funds to the City's pension obligations that could have been used on other City services. Additionally, the City is unable to benefit from advantageous amortization bases resulting from PERF investment earnings in excess of Cal PERS 7% target that would reduce the City's pension liabilities. However, there are also benefits to a 100% funded scenario. The primary benefit is the potential total gross savings increases and the average annual savings increase over the 85% funded scenario. The potential for increased savings more significantly supports the City's objectives with a potential POB issuance helping promote the long-term financial sustainability of the organization. The chart on the next page visualizes the proportional debt service structure for the 100% funded scenario. As the chart shows, the annual payments for the potential 2021 POB vary year over year to attempt to spread the savings out over the life of the debt issuance. As the chart shows in the 100% funded scenario, only the debt service exists as the full current UAL with Cal PERS has been refinanced. The distance between the bars and line graph represent the potential savings each year. The gaps, or potential savings each year, are much larger than the 85% funded scenario because you are refinancing the entire current UAL to a lower rate. [Remainder of page intentionally left blank] 18 of 134
August 3, 2021, Item #8V, $7 C 0 ~ $6 ~ $5 $4 $3 $2 $1 $0 N M "'" N N N 0 0 0 N N N Proportional Debt Service I Ln 1..0 ,..... 00 O"I 0 f'"-4 N M "'" Ln 1..0 ,..... 00 O"I 0 f'"-4 N N N N N N M M M M M M M M M M g g g 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N -2021 POB Payments -current Amortization The table below summarizes the key metrics for the 100% funded scenario. 100% Funded Scenario Metrics Proportional Structure Bonds Bond Issuance Amount $61,490,000 UAL Payoff $60,880,668 CalPERS Funded Ratio 100% Term Final Maturity 2045 (24 Years) Average Life 11 Years Debt Service Maximum Annual Debt Service $4,909,029 Average Annual Debt Service $3,701,100 Potential Savings All-in True Interest Cost 3.73% Gross Savings $25,567,228 Present Value Savings1 $17,929,886 Average Annual Savings $1,041,169 1. Savings represented in today's dollars. I I M "'" Ln 1..0 g g g g N N N N Issuing POBs for the 100% funded scenario is projected to save the city as a whole almost $25.6 million dollars over the life of the POB and approximately $1.04 million per year as compared to the current CalPERS amortization schedule. Actual savings will differ. This will occur because CalPERS will earn more or less than its 7% target for PERF, actuarial assumptions will change, 19 of 134 ACTUAL SAVINGS WILL DIFFER.
August 3, 2021, Item #8Cal PERS could change the discount rate, among other reasons. This information is representative of the potential savings the City may realize. Section 4: Pension Obligation Bonds Risk Analysis As the City's actuary for the potential POB issuance, Bartel performed several risk analyses. This Pension Obligation Bonds Risk Analysis section will discuss the likelihood the City will be better off for issuing POBs than not and if the City is not better off for having issued POBs, how much worse off will it be. POBs are not guaranteed to decrease the City's pension costs because there are too many variables impacting pension costs that will change each year. As previously discussed in the report, these include PERF investment earnings other than CalPERS target (currently 7%), changes in actuarial assumptions, among others. Of the various factors that can impact the City's UAL, PERF investment earnings are the most significant. As such, a stochastic analysis of CalPERS PERF investment returns was performed. Stochastic modeling is an approach that forecasts the probability of various outcomes under different conditions using random variables within certain boundaries. There are a number of different ways to approach stochastic modeling, but the Monte Carlo simulation is one of the most common approaches. For the potential POB issuance, a Monte Carlo simulation using 1,000 trials were performed to forecast the potential Cal PERS returns over the life of the POB issuance. The following table shows the capital market assumptions for investments in CalPERS PERF used in the simulation. Capital Market Assumptions for Investments in CalPERS PERF1•2 Asset Class PERF Policy Geometric Real Standard Geometric Nominal Target Average Return Deviation Average Return Public Equity 50% 4.82% 17.84% 7.44% Fixed Income 28% 1.47% 4.24% 4.01% Real Assets 13% 4.81 o/o 12.55% 7.43% Private Equity 8% 6.19% 25.50% 8.84% Liquidity 1 o/o 0.06% 0.97% 2.56% Total 100% 1. Based on study of investment consultant and investment bank 2017 short and long-term capital market assumptions adjusted for long-term trends in investment returns. 2. Inflation at 2.5%. Since it was a strong possibility CalPERS would adjust the discount rate in the near future, Bartel performed a risk analysis using CalPERS current discount rate, or target rate, of 7% and a 6.5% discount rate. As discussed previously in this report, Cal PERS just decreased the discount rate, or their target rate, from 7% to 6.80% as part of their Funding Risk Mitigation Policy, or within the study bounds. Cal PERS is continuing to review the discount rate as part of their Asset Liability Management process and may lower it again. Analyzing the two discount rate levels will help provide information on the sensitivity of the outcomes to changes in CalPERS' discount rate. The following chart shows how varying investment return levels impact the potential for savings or for losses. The greater the difference between the All-in True Interest Cost of the POB issuance and CalPERS discount rate, the greater the savings will be. [Remainder of page intentionally left blank] 20 of 134
August 3, 2021, Item #8(B) Achieve Expected Savings (A) Earn Additional Savings -------------· (C) Generate Savings (not as high as Expected Savings) (A) If CalPERS' average earnings is more than the discount rate, City's savings from issuance are greater than expected. (B) If CalPERS' average earnings is exactly equal to the discount rate, City's savings exactly equals projections. (C) If CalPERS' average earnings is less than expected but higher than the bond rate, savings are positive but not as much as projected. (D) The City breaks even if Cal PERS average earnings is exactly equal to the bond rate (not better or worse off from issuing POBs). (E) If CalPERS' average earnings is less than the bond rate, then the City is worse off having issued POBs. Since PERF investment earnings are critical in helping determine the success of the POB issuance, understanding CalPERS historical returns is important. The chart below shows CalPERS historical rates of return over the last 30 years. The average earnings has been 8%. The orange line reflects their current assumed rate of 6.8%. The PERF average 8% performance over the last 30 years suggests future performance will be beneficial to a POB issuance. [Remainder of page intentionally left blank] 21 of 134
August 3, 2021, Item #825.0% 20.00/4 15.00/4 13 10.00/4 50% 0.0% -5.00/4 -10.0% -15.0% -20.0% -25.0% -30.0% 14.6% .9% CalPERS PERF 30-Year Historical Earnings Rate 16.4% 20.2% 19.6% 15.4% 12.6% 10.8% 191% 16.7% 12.6% 12.3% 20.9% 18 4'¾ 0 11.6% 12.5% 11.2% 8.6\_n~.7 j.~70 2.0% I I I I I I -6.0% -4.9% -7.1% ~ <:t ~ ~ I'-00 rl 0 0 0 0 0 -23.4% <:t ~ r--. 00 0 0 0 0 0 0 0 0 0 0 I 1.0% 2.4% -Io.:% I rlN~<:t 00 rl rl rl rl rl rl rl rl rl rl rl rl rl rl rl rl rl N N N N 0 rl 0 0 N 0 0 0 0 0 0 0 0 0 0 N N N N N -current Actuarial Earnings Rate Discount Rate of 7%: The following chart shows the outcomes of 1,000 trials for Cal PERS PERF investment returns using a 7% discount rate. C .... :::s -+,-J (1) ei:::: "O (1) "O C :::s 0 0.. r C 0 u v (1) N 31.0% 28.0% 25.0% 22.0(% 19.0°/41 16.01;;;> 13.0% 10.{)l½, 7.0% 4.01~;;) I . ()<% ~ Annualized Compound Return of 1000 Trials 7(1/o Discount Rate ~ -2.0% 20, 2 :j C 35/36 40/41 45/46 r -5 .0110 < -8.0% -I 1.0% Number of Years ---------5th Percentile -15th Percentik -25th Percentile -50th Percentik -s.-rh Perct>nrde -75th Percentile 22 of 134 50/5 l
August 3, 2021, Item #8The chart shows that in the near-term PERF investment returns can deviate significantly from the 7% target but that over time, they tend to normalize towards the 7% target. For example, in FY 2020-21 the 5th percentile returns (i.e. 95% of potential returns are higher) shows a loss of about 11 % while the 95th percentile (i.e. 95% of potential returns are lower) returns show a gain of over 28%. Over the 24-year amortization period for the estimated POB issuance the 50th percentile compounded annualized return is exactly 7%. In other words, the stochastic model forecasts the 7% return is exactly achievable over the longer term, though actual results will differ given this is a forecast. After modeling the potential PERF investment returns over the POB amortization period, Bartel used the financial analysis from Fieldman for the 85% and 100% funded structure to determine how likely the City would be better off than not for having issued POBs. It should be noted that "better off" is defined as $1 better off. Funded Structure of 85% (7.0% Discount Rate): The following chart shows there is a 71 % chance the City will be better off than not if they issue POBs to achieve an 85% UAL funded status with CalPERS. As the chart shows, there is a 50% chance the City would realize almost $5 million in savings while there is a 5% chance the City could be worse off and end up paying over $8.7 million more. Present Value of Contributions Without POB Less With POB Combined Miscellaneous & Safety Plans -85% Funding & 7.0% Discount Rate $100.000.000 J :::::71 % Likelihood of success I $80.000.000 $60.000,000 !-------------------------------------$40,000.000 $10.000.000 $0 Percentile -$20.000,000 Funded Structure of 100% (7.0% Discount Rate): The following chart shows there is a 72% chance the City will be better off than not if they issue POBs to achieve an 100% UAL funded status with Cal PERS. As the chart shows, there is a 50% chance the City would realize almost $9 million in savings while there is a 5% chance the City could be worse off and end up paying over $16.6 million more. 23 of 134
August 3, 2021, Item #8Present Value of Contributions Without POB Less With POB Combined Miscellaneous & Safety Plans -100% Funding & 7.0% Discount Rate $200.000.000 I ::::::72% Likelihood of success I $160.000.000 $120.000.000 $80.000,000 $40.000.000 $0 Percentile -$40.000,000 Discount Rate of 6.5%: The following chart shows the outcomes of 1,000 trials for CalPERS PERF investment returns using a 6.5% discount rate. 31.0% -8.0% -11.0% 24 of 134 Annualized Compound Return of 1000 Trials 6.5% Discount Rate 30/31 35/36 40/41 Number of Years -5th Pen.:entile -l 5th Percentile -25th Percentile -951.h Percentile -85th Percentile -75tii Percentile 45/46 50/51 -50th Percentile
August 3, 2021, Item #8While this chart does look very similar to the 7% discount rate chart, there is a slight improvement over the 7% discount rate. Over the 24-year amortization period for the estimated POB issuance the 50th percentile compounded annualized return is 6.6%, or slightly better than the 6.5% discount rate. In other words, the stochastic model forecasts the investment returns will exceed the 6.5% target over the longer term. This outcome of exceeding the targeted return when the targeted return is lower is a larger part of why CalPERS lowered the discount rate from 7.5% to 7% and is considering doing it again. The lower the discount rate, the easier it is to achieve that level of PERF investment returns. Funded Structure of 85% (6.5% Discount Rate): The following chart shows there is a 75% chance the City will be better off than not if they issue POBs to achieve a 85% UAL funded status with CalPERS. As the chart shows, there is a 50% chance the City would realize almost $4.6 million in savings while there is a 5% chance the City could be worse off and end up paying over $6.6 million more. While there is a higher chance of success (the lower the discount rate the easier it is for Cal PERS to achieve PERF investment returns at that level), the potential savings does decrease over the 7% discount rate scenario. This is visualized and described above in the section with the chart that shows the savings impacts from various investment returns. Present Value of Contributions Without POB Less With POB Combined Miscellaneous & Safety Plans -85% Funding & 6.5% Discount Rate $100.000.000 I :::::75% Likelihood of success J $80.000.000 $60.000.000 $40.000.000 $20.000.000 $0 ~ 25% I Percentile -$20.000.000 I,,_ -----------------------------------j Funded Structure of 100% (6.5% Discount Rate): The following chart shows there is a 75% chance the City will be better off than not if they issue POBs to achieve a 100% UAL funded status with Cal PERS. As the chart shows, there is a 50% chance the City would realize over $8.5 million in savings while there is a 5% chance the City could be worse off and end up paying over $11.6 million more. While the chance of success is similar to an 85% funded structure at a 6.5% discount rate, the potential savings increases given the full amount of the current UAL has been refinanced. 25 of 134
August 3, 2021, Item #8Present Value of Contributions Without POB Less With POB Combined Miscellaneous & Safety Plans -100% Funding & 6.5% Discount Rate $200.000.000 I ~75% Likelihood of success I $160.000.000 $120.000.000 $80.000.000 $40.000.000 f---------------------------------$0 Percentile -$40.000.000 Risk Analysis Summary: Based on the stochastic modeling and risk analysis, the City has between a 71 % and 75% chance to be better off than not for having issued POBs. As a reminder, this is $1 better off. However, if the City is worse off, understanding the potential dollar magnitude of that loss is important for evaluating risk tolerance. The full analysis is provided in Attachment E for reference. The following tables are provided to clearly show the most likely impacts at different funding structures and discount rate scenarios. To help readers interpret the tables the first one will be THERE IS A GREATER THAN 70% CHANCE THE POBS WILL PROVIDE A BENEFIT TO THE CITY. discussed. As the data shows in the 85% funding and 7% Discount Rate table, the 2sth percentile shows the potential of a $1.1 million loss while the 75th percentile shows the potential of $12.1 million gain or savings with an overall average savings potential of $7 million. To say it another way, there is a 75% likelihood that issuing POBs at an 85% funded level will result in no more than a $1.1 million loss, result in almost $5 million in savings 50% of the time, and result in $7 million in savings on average. [Remainder of page intentionally left blank] 26 of 134
August 3, 2021, Item #8Summary: 85% Funding & 7.0% Discount Rate Average 30-Year Present Value Impact Plan Miscellaneous Safety Combined Miscellaneous Safety Total Likelihood of Success 72% 69% 71% 25th Percentile $ (589,790) (484,927) (1,074,717) • • I Trials Trials $8,000,000 $ (3,000,000) 4,000,000 (2,000,000) 12,000,000 (5,000,000) 1,347,002 4,985,316 Summary: 100% Funding & 7.0% Discount Rate Overall Average $5,000,000 2,000,000 7,000,000 3,799,537 12,126,403 Average 30-Year Present Value Impact Plan Miscellaneous Safety Combined Miscellaneous Safety Total Likelihood of Success 73% 69% 71% Average of Successful Trials $1 5,000,000 8,000,000 23,000,000 Average of Unsuccessful Trials $ (6,000,000) (4,000,000) (10,000,000) 25th Percentile $ (651,581) (1,049,354) 2,584,235 (1,700,934) 8,914,697 Summary: 85% Funding & 6.5% Discount Rate Average of Unsuccessful Trials Trials Miscellaneous 77% $6,000,000 $ (3,000,000) Safety 73% 3,000,000 (1,000,000) Combined 75% 9,000,000 (4,000,000) 25th Percentile Miscellaneous $ 153,140 Safety (129,856) 1,320,621 Total 23,284 4,587,184 27 of 134 Overall Average $10,000,000 5,000,000 14,000,000 7,586,489 22,587,612 Overall Average $4,000,000 2,000,000 6,000,000 3,078,405 9,910,458
August 3, 2021, Item #8Summary: 100% Funding & 6.5% Discount Rate Average 30-Year Present Value Impact Plan Miscellaneous Safety Combined Miscellaneous Safety Likelihood of Success Trials Average of Unsuccessful Trials 77% $11,000,000 $ (5,000,000) 74% 6,000,000 (3,000,000) 75% 17,000,000 (7,000,000) 25th Percentile $392,581 (238,615) 2,631,185 Overall Average $8,000,000 4,000,000 11,000,000 6,211,509 Total 153,966 8,512,292 18,620,437 The data from those four tables is summarized visually in the chart below. In the chart, the $0 axis represents the break-even point (i.e. the City was no better or worse off for having issued POBs). The colored boxes in each scenario represents the bounds for what is statistically most likely to occur. This provides a good visual representation of the potential for savings and loss as a result of issuing POBs. As the colored boxes show, the potential for savings is significantly greater than the potential for loss. The sth and 95th percentiles provide information on the outer boundaries of potential savings and losses but should be viewed as statistically improbable events (i.e. very unlikely to occur). 95th Percentile! $50 $40 $30 $20 $10 Ix= Average 25th Percentile so -$10 -$20 -$30 5th Percentile! -$40 ■ 100% Funding & 7.mo Discount Rate a 85~,o Funding & 7.0% Discounr Rate ■ 100% Funding & 6.5°0 Discount Rate ■ 85% Funding & 6.5% Discount Rate ----···------------------·------···----------··--·---------·--·---------·----------------------------28 of 134
August 3, 2021, Item #8As the chart shows, the 100% funded structure provides the opportunity for the greatest potential savings. Under a 7% discount rate scenario the potential for loss (i.e. the downside risk) is reasonably capped at $1.7 million, 2.8% of the POB debt issuance, over the life of the POB issuance while under the 6.5% discount rate scenario there is no reasonable potential for loss; instead the downside is approximately $159 thousand in savings. Conversely, the potential upside is on average $14 million under a 7% discount rate scenario and $11 million under a 6.5% discount rate scenario. Section 5: ludicial Validation Process Authorizing the judicial validation process is the first step in issuing POBs. While this is the first step in the POB issuance process, it does not obligate or authorize the City to issue POBs. California public entities do not have specific authority to refinance pension debt by issuing bonds. Pursuant to the judicial validation process, the Court will issue a judgment confirming that the contract with CalPERS and the pension UAL are each an "obligation imposed by law" under the State Constitution which can be refunded under the provisions of the Government Code. This ruling allows local agencies to refund outstanding debt without additional voter approval. Unless challenged, the judicial validation proceedings are largely administrative and managed by special legal counsel. The City has contracted with SYCR for these proceedings as discussed above. Under normal circumstances, the validation proceedings take approximately 90 -120 days. The proceedings typical include the following: 1. File Validation Action with San Diego County Superior Court 2. Receive Order for Publication of Summons from the Court 3. Legal publication for 21 consecutive days 4. Waiting period for ex parte (a decision decided by a judge that doesn't require all parties to the dispute to be present) application to file default judgment 5. Clerk enters default judgement and schedules a hearing (hearing for default judgement and entry of judgment 6. Appeal Period (30 days) Although the issue has not been litigated extensively in California, dozens of prior default (i.e. uncontested) validation judgments have determined that pension liabilities are obligations imposed by law and therefore exempt from the debt limitation requirements set forth in Article XVI, Section 18 of the California Constitution. Staff does not anticipate a judicial validation process for the City of Poway will proceed differently. Section 6: Recommendations As a result of the analyses prepared by Fieldman and Bartel, staff recommends Council proceed with the judicial validation process and elect to refinance 100%, not 85%, of the City's current UAL with Cal PERS through the issuance of a POB. While there are drawbacks to refinancing 100% of the City's current UAL, the potential for savings increases over the 85% funded structure and this directly supports the three primary objectives listed earlier in the staff report: 1. Increase financial sustainability, 2. Achieve savings, and 3. Increase funding ratio with CalPERS. 29 of 134
August 3, 2021, Item #8IMPORTANT This recommendation does not obligate the Council to issue debt and does not authorize the issuance of debt. By law, Council must approve the issuance of debt. Staff will return to Council for their consideration of any debt issuances related to Pension Obligation Bonds. Next Steps: If Council adopts the resolution, the judicial validation process will commence. Based on the current timeline, staff will return to Council on November 16, 2021 for their consideration to approve the issuance of POBs. The graphic below provides the high-level overview of the POB issuance process. Assemble Key Financing Team Members • Financial Advisor • Actuarial Consultant • Bond Counsel • Bond Underwriter Engage Policy Makers and Stakeholders with Plan of Finance 90-Day Validation Process Affirm the City's Pension Structuring Goals and Finalize Pro Forma Model 30-Day Protest Period Sell POBs The table below provides a detailed overview of the POB issuance process that has been outlined for the City if Council chooses to commence judicial validation proceedings and ultimately issuance POBs. Estimated Judicial Validation and POB Issuance Timeline: Estimated Document/Event Date Comment Adoption of Bond Resolution 08/03/21 Resolution adopted prior to validation action Beginning of validation Summons and Complaint 08/10/21 proceedings to occur within 60 days of the adoption of the Resolution Application for Order of 08/10/21 Filed same day as summons and Publication complaint Clerk Declaration in Support of Filed same day as application for Application for Order of 08/10/21 order of publication Publication Court will grant after review of Order of Publication 08/20/21 summons, complaint, application for order of publication, and clerk declaration in support 30 of 134
August 3, 2021, Item #8Estimated Document/Event Date Comment Publication to begin once order of publication is received. Publication 1st Publication 08/30/21 must occur once a week for three successive weeks pursuant to GC §6063 2nd publication 09/06/21 Week two 3rd publication 09/13/21 Week three Jurisdiction is complete 17 days 17 days period after final 09/30/21 after the completion of publication publication to answer complaint of the summons pursuant to GC §6063 Declaration of Publication 10/04/21 Filed once jurisdiction is complete Attorney Declarations of No 10/04/21 Filed once jurisdiction is complete Opposition Memorandum of Points and Authorities in Support of Entry of 10/04/21 Filed once jurisdiction is complete Default Judgment Proposed Judgment 10/04/21 Filed once jurisdiction is complete Court grants Judgment after review Signed Judgment 10/18/21 of memorandum of points and authorities and a hearing City Council considers and The Council meeting when the 11 /16/21 decision to issue debt or not issue approves POB debt issuance debt is made Passive Validation 11/17/21 30 days after Judgment is entered Mail/Print Preliminary Official 11 /18/21 Bond ~rospectus sent to Statement prospective investors POB Sale Nov. 2021 /Dec. 2021 POB interest rates locked in POB Closing Dec. 2021" Funds delivered to CalPERS Environmental Review: This action is not subject to review under the California Environmental Quality Act (CEQA). Fiscal Impact: City Council authorization to initiate the judicial validation process will cost $25,000 in legal fees. Typically, these costs are included in the debt issuance costs. However, if the City Council ultimately chooses not to pursue POBs the legal costs cannot be included with the debt issuance. Staff requests a conditional appropriation of $25,000 from General Fund unassigned balance to cover the legal costs associated with pursuing the judicial validation process that will only be appropriated in the event Council does not authorize the issuance of debt later this year. Public Notification: Not applicable. [Remainder of page intentionally left blank] 31 of 134
August 3, 2021, Item #8Attachments: A. Resolution authorizing the issuance of bonds to refund certain pension obligations of the City, approving the form and authorizing the execution of a trust agreement and purchase contract, authorizing judicial validation proceeding relating to the issuance of such bonds, and approving additional actions related thereto. B. Trust Agreement by and between City of Poway and U.S. Bank National Association, as Trustee C. City of Poway Pension Obligation Bonds, Series 2021 (Federally Taxable) Bond Purchase Agreement D. Fieldman Financial Analysis E. Bartel Risk Analysis F. Pension Obligation Bonds Good Faith Estimates Reviewed/ Approved By: Wendyaserman Assistant City Manager 32 of 134 Reviewed By: Alan Fenstermacher City Attorney Approved By: c~ City Manager
August 3, 2021, Item #8RESOLUTION NO. 21-A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY, CALIFORNIA AUTHORIZING THE ISSUANCE OF BONDS TO REFUND CERTAIN PENSION OBLIGATIONS OF THE CITY, APPROVING THE FORM AND AUTHORIZING THE EXECUTION OF A TRUST AGREEMENT AND PURCHASE CONTRACT, AUTHORIZING JUDICIAL VALIDATION PROCEEDINGS RELATING TO THE ISSUANCE OF SUCH BONDS AND APPROVING ADDITIONAL ACTIONS RELATED THERETO WHEREAS, the City of Poway (the "City") has previously adopted a retirement plan pursuant to the Public Employees' Retirement Law, commencing with Section 20000 of the Government Code of the State of California, as amended (the "Retirement Law") and elected to become a contracting member of the California Public Employees' Retirement System ("PERS"); WHEREAS, the Retirement Law and the contract (the "PERS Contract") effective February 1, 1981 between the Board of Administration of PERS and the City Council of the City (the "City Council") obligates the City: (i) to make contributions to PERS to fund pension benefits for certain City employees; (ii) to amortize the unfunded accrued actuarial liability with respect to such pension benefits; and (iii) to appropriate funds for the foregoing purposes; WHEREAS, the City desires to authorize the issuance of its City of Poway Pension Obligation Bonds, Series 2021 (Federally Taxable) (the "Bonds") pursuant to the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code (the "Bond Law"), in a maximum principal amount not to exceed that required for the purpose of refunding all or a portion of the City's current obligation to PERS for fiscal year 2021-22, pursuant to the PERS Contract, to pay all or a portion of the unfunded accrued actuarial liability of the City (the "Unfunded Liability") with respect to pension benefits under the Public Employees' Retirement Law and the PERS Contract, to pay capitalized interest on the Bonds and to pay the costs of issuance of such Bonds, including the underwriter's discount and any original issue discount on such Bonds; WHEREAS, the City expects that the need may arise in the future to issue additional refunding bonds (the "Additional Bonds") pursuant to the Bond Law to amortize the accrued and Unfunded Liability of the City to PERS as required by the Retirement Law and the PERS Contract and to fund all or a portion of the normal contributions required by the PERS Contract; WHEREAS, the Bonds will be issued under and secured by a Trust Agreement (such Trust Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Trust Agreement") by and between the City and a trustee to be selected by the City (the "Trustee"); and WHEREAS, the City has determined the advisability of filing an action to determine the validity of the Bonds, the Additional Bonds and the Trust Agreement, and the actions proposed to be taken in connection therewith; and WHEREAS, all acts, conditions and things required by the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the financing authorized hereby do exist, have happened and have been 4836-1134-0017v3/022468-0021 33 of 134 ATTACHMENT A
August 3, 2021, Item #8Resolution No. 21-Page 2 performed in regular and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such financing for the purpose, in the manner and upon the terms herein provided. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway as follows: SECTION 1: The City Council does hereby find and declare that the above recitals are true and correct. SECTION 2: The issuance of the Bonds on the terms and conditions set forth in, and subject to the limitations specified in, the Trust Agreement, is hereby authorized and approved. The Bonds shall be dated, shall bear interest at the rates, shall mature on the dates, shall be issued in the form and shall have terms as provided in the Trust Agreement, as the same shall be completed in accordance with this Resolution. The title of the Bonds may be changed to reflect the year in which the Bonds are issued, and to reflect the appropriate series designation, as directed by the City Manager of the City. SECTION 3: The Trust Agreement, in substantially the form on file with the City Clerk, is hereby approved. The Mayor, the Deputy Mayor, the City Manager or the Director of Finance, and their authorized designees (the "Designated Officers") are, and each of them is, hereby authorized and directed, for and in the name of the City, to execute and deliver the Trust Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Designated Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Trust Agreement by such Designated Officer. The City Clerk is hereby authorized and directed to attest the Trust Agreement for and in the name and on behalf of the City. The City Manager and the Director of Finance are each hereby authorized to work with the Municipal Advisor (as identified in Section 8) to select the Trustee for the Bonds. SECTION 4: The City hereby authorizes and approves the issuance of Additional Bonds pursuant to the Bond Law, as authorized by the Trust Agreement, from time to time, to refund all or a portion of the Unfunded Liability and the City's obligation to PERS pursuant to the PERS Contract for the then-current fiscal year, provided that the City Manager, or the designee thereof, first certifies to the City Council in writing that such actions will result in cost savings to the City. The City Council authorizes any one of the Designated Officers, or their designees, to execute and deliver one or more other trust agreements and/or one or more supplemental agreements supplementing or amending the Trust Agreement and providing for the issuance of Additional Bonds (each, an "Additional Trust Agreement"); provided, however, that: (i) each series of Additional Bonds shall be in a principal amount not to exceed the sum of: (a) the Unfunded Liability of the City to PERS under the PERS Contract and the Retirement Law remaining unpaid on the date of issuance of such Additional Bonds; plus (b) the obligation to PERS for the current or subsequent fiscal year pursuant to the PERS Contract; plus ( c) the costs of issuing the Additional Bonds; (ii) the stated interest rate on the Additional Bonds shall not exceed the discount rate assumed by PERS with respect to the amortization of the Unfunded Liability at the time such Additional Bonds are issued; and (iii) the Additional Bonds issued pursuant to such Additional Trust Agreement shall mature not later than 30 years from the date of their issuance. Each Unfunded Liability refunded by the Bonds and each series of Additional Bonds pursuant to the Trust Agreement and each Additional Trust Agreement constitutes an obligation imposed by law, pursuant to the Constitution and laws of the State of California and an obligation 4836-1134-0017v3/022468-0021 34 of 134
August 3, 2021, Item #8Resolution No. 21-Page 3 of the City not limited as to payment from any special source of funds. The Unfunded Liability refunded by the Bonds pursuant to the Trust Agreement and each series of Additional Bonds pursuant to an Additional Trust Agreement shall not, however, constitute an obligation of the City for which the City is obligated or permitted to levy or pledge any form of taxation or for which the City has levied or pledged or will levy or pledge any form of taxation. SECTION 5: The form of the Bond Purchase Agreement (the "Purchase Contract") by and between the City and an underwriter or underwriters to be selected by the City (the "Underwriter") in substantially the form on file with the City Clerk, and the sale of the Bonds to the Underwriter pursuant thereto upon the terms and conditions set forth therein, are hereby approved. Subject to such approval and to the provisions hereof, the Designated Officers are each hereby authorized and directed to evidence the City's acceptance of the offers made by the Purchase Contract by executing and delivering the Purchase Contract in said form with such changes therein as the Designated Officer or Designated Officers executing the same may approve and such matters as are authorized by this Resolution, such approval to be conclusively evidenced by the execution and delivery thereof by any one of the Designated Officers. The City Manager and the Director of Finance are each hereby authorized to work with the Municipal Advisor to select the Underwriter for the Bonds. SECTION 6: Terms of the Bonds. The Designated Officers are each authorized, on behalf of the City, to establish and determine: (i) the final principal amount of the Bonds, provided that the aggregate initial principal amount of the Bonds shall not be greater than the lesser of: (a) $65,000,000; or (b) sum of: (1) the City's obligation to PERS for the remainder of fiscal year 2021-22, as evidenced by the PERS Contract; plus (2) the Unfunded Liability as calculated by PERS or another actuary selected by the Designated Officer; plus (3) the costs of issuing the Bonds as approved by such Designated Officer; (ii) the final interest rates on various maturities of the Bonds, provided that the total estimated principal and interest on the Bonds through maturity shall be less than the estimated sum of the Unfunded Liability to be refunded together with the payments with respect to such Unfunded Liability at the then current discount rate required by PERS through maturity of such Unfunded Liability and that the maturity date of the Bonds shall not be later than the last date determined by PERS for the amortization of the Unfunded Liability of the City in accordance with its current procedures; and (iii) the Underwriter's discount for the purchase of the Bonds, not to exceed 0.80% of the principal amount of the Bonds. The net present value savings shall be calculated by comparing present value of the payments required to amortize the Unfunded Liability at the discount rate assumed by PERS to the present value of the principal and interest payments on the Bonds. SECTION 7: The Designated Officers are hereby authorized to negotiate and execute an insurance policy and debt service reserve fund insurance policy for the Bonds (and such other agreements that may be required by the insurer in connection therewith) if it is determined that the policies will result in interest rate savings for the City, and to pay the insurance premium of such policies from the proceeds of the issuance and sale of the Bonds. SECTION 8: In order to determine the validity of the Bonds, the Additional Bonds, the Trust Agreement and the Additional Trust Agreements, and the actions authorized hereby to be taken in connection therewith, the City Council hereby authorizes the City Attorney, in concert with SYCR, to prepare and cause to be filed and prosecuted to completion all proceedings required for the judicial validation of the Bonds, the Additional Bonds, the Trust Agreement and the Additional Trust Agreements in the Superior Court of San Diego County, under and pursuant to the provisions of Sections 860 et seq. of the California Code of Civil Procedure. The City Council further authorizes the Designated Officers and all other officers, employees and agents 4836-1134-0017v3/022468-0021 35 of 134
August 3, 2021, Item #8Resolution No. 21-Page 4 of the City to take any and all actions, including the execution and delivery or appropriate documentation, as may be required to conclude such judicial validation proceedings. SECTION 9: The Designated Officers are, and each of them hereby is, authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the transactions contemplated hereby, including, but not limited to, the preparation of an Official Statement (and a Preliminary Official Statement) for use in connection with the offering and sale of the Bonds, the execution and delivery of a continuing disclosure undertaking and the execution and delivery of any documents required by PERS in order to complete the issuance of the Bonds and the refunding of the Unfunded Liability. All actions heretofore taken by the Designated Officers and by any other officers, employees or agents of the City with respect to the issuance of the Bonds, or in connection with or related to any of the agreements or documents referenced herein, are hereby approved, confirmed and ratified. SECTION 10: This Resolution shall take effect from and after the date of its passage and adoption. SECTION 11: The City Clerk shall certify to the passage and adoption thereof. PASSED, ADOPTED AND APPROVED at a Regular Meeting of the City Council of the City of Poway, California on the 3rd day of August, 2021 by the following vote, to wit: AYES: NOES: ABSENT: DISQUALIFIED: ATTEST: Deborah Harrington, Interim City Clerk 4836-1134-0017v3/022468-0021 36 of 134 Steve Vaus, Mayor
August 3, 2021, Item #8TRUST AGREEMENT by and between CITY OF POWAY and Stradling Yocca Carlson & Rauth Draft of 7 /2 6/21 U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of __ 1, 2021 Relating to $ __ CITY OF POWAY PENSION OBLIGATION BONDS, SERIES 2021 (FEDERALLY TAXABLE) 4814-2918-7057v3/022468-0021 37 of 134 ATTACHMENT B
August 3, 2021, Item #8Section 1.01 Section 1.02 Section 2.01 Section 2.02 Section 2.03 Section 2. 04 Section 2.05 Section 2.06 TABLE OF CONTENTS ARTICLE I DEFINITIONS; INTERPRETATION Page Certain Defined Terms .............................................................................................. 1 Other Definitional Provisions .................................................................................. 13 ARTICLE II THE BONDS Issuance of Bonds; Form; Dating ............................................................................ 13 Description of the Bonds ......................................................................................... 13 Interest on the Bonds ............................................................................................... 13 Medium of Payment ................................................................................................ 14 Form ......................................................................................................................... 14 Additional Bonds ..................................................................................................... 14 ARTICLE III EXECUTION, AUTHENTICATION AND EXCHANGE OF BONDS; BOOK ENTRY BONDS Section 3.01 Section 3.02 Section 3 .03 Section 3.04 Section 3.05 Section 3 .06 Section 4.01 Section 4.02 Section 4.03 Section 4.04 Section 4.05 Section 5.01 Section 5.02 Section 6.01 Section 6.02 Section 6.03 Section 6.04 Section 6.05 Execution and Authentication; Registration ............................................................ 14 Transfer or Exchange of Bonds ............................................................................... 15 Book-Entry Bonds ................................................................................................... 15 Mutilated, Lost, Stolen or Destroyed Bonds ........................................................... 1 7 Destruction of Bonds ............................................................................................... 18 Temporary Bonds .................................................................................................... 18 ARTICLE IV REDEMPTION OF BONDS Notices to Trustee; Notices to Bondholders; Notices to DTC ................................. 18 Optional Redemption of Bonds ............................................................................... 19 Mandatory Sinking Fund Redemption of Bonds ..................................................... 19 Payment of Bonds Called for Redemption; Effect of Redemption Call .................. 20 Selection of Bonds for Redemption; Bonds Redeemed in Part ............................... 20 ARTICLE V APPLICATION OF PROCEEDS; SOURCE OF PAYMENT OF BONDS Application of Proceeds and City Contribution ....................................................... 21 Sources of Payment of Bonds; Semi-Annual Payments by the City ....................... 21 ARTICLE VI CREATION OF CERTAIN FUNDS AND ACCOUNTS Creation of Costs of Issuance Fund ......................................................................... 22 Creation of Revenue Fund and Certain Accounts ................................................... 22 Creation of Redemption Fund ................................................................................. 23 Moneys Held in Redemption Fund .......................................................................... 23 Unclaimed Moneys .................................................................................................. 23 4814-2918-7057v3/022468-0021 38 of 134
August 3, 2021, Item #8Section 7.01 Section 7.02 Section 7.03 Section 7.04 Section 8.01 Section 8.02 Section 8.03 Section 8.04 Section 8.05 Section 8.06 Section 8.07 Section 8.08 Section 8.09 Section 9.01 Section 9.02 Section 9.03 Section 9.04 TABLE OF CONTENTS (continued) ARTICLE VII CONCERNING PA YING AGENT Page Paying Agent; Appointment and Acceptance of Duties .......................................... 23 Paying Agent -General Responsibilities ................................................................. 23 Certain Permitted Acts ............................................................................................. 24 Resignation or Removal of Paying Agent and Appointment of Successor ............. 24 ARTICLE VIII COVENANTS OF THE CITY Payment of Principal and Interest.. .......................................................................... 24 Performance of Covenants by City; Authority; Due Execution .............................. 25 Instruments of Further Assurance ............................................................................ 25 No Inconsistent Action ............................................................................................ 25 No Adverse Action .................................................................................................. 25 Maintenance of Powers ............................................................................................ 25 Covenants of City Binding on Successors ............................................................... 26 Trust Agreement to Constitute a Contract ............................................................... 26 City to Perform Pursuant to Continuing Disclosure Certificate .............................. 26 ARTICLE IX INVESTMENTS Investments Authorized ........................................................................................... 26 Reports ..................................................................................................................... 27 Valuation and Disposition of Investments ............................................................... 2 7 Application of Investment Earnings ........................................................................ 27 ARTICLEX DEFEASANCE Section 10.01 Discharge of Bonds; Release of Trust Agreement... ................................................ 27 Section 10.02 Bonds Deemed Paid ................................................................................................. 28 Section 11.01 Section 1 1.02 Section 11.03 Section 11.04 Section 11.05 Section 11.06 Section 11.07 Section 11.08 Section 1 1.09 Section 11.10 ARTICLE XI DEFAULTS AND REMEDIES Events of Default ..................................................................................................... 28 Remedies .................................................................................................................. 29 Restoration to Former Position ................................................................................ 29 Bondholders' Right to Direct Proceedings on their Behalf ..................................... 29 Limitation on Bondholders' Rights to Institute Proceedings ................................... 30 No Impairment of Right to Enforce Payment .......................................................... 30 Proceedings by Trustee Without Possession of Bonds ............................................ 30 No Remedy Exclusive ............................................................................................. 30 No Waiver of Remedies ........................................................................................... 30 Application of Moneys ............................................................................................ 31 ii 4814-2918-7057v3/022468-0021 39 of 134
August 3, 2021, Item #8TABLE OF CONTENTS (continued) Page Section 11.11 Severability of Remedies ......................................................................................... 3 I Section 11.12 Additional Events of Default and Remedies ............................................................ 3 I Section 12.01 Section 12.02 Section 12.03 Section 12.04 Section 12.05 Section 12.06 Section 12.07 Section 12.08 Section 12.09 Section 12.10 Section 12.11 Section 12.12 Section 12. 13 Section 12.14 Section 12.15 Section 13.01 Section 13 .02 Section 13.03 Section 13 .04 Section 13.05 Section 14.0 I Section 14.02 Section 14.03 Section 14.04 Section 14.05 Section 14.06 Section 14.07 Section 14.08 Section 14.09 Exhibit "A" Exhibit "B" ARTICLE XII TRUSTEE; REGISTRAR Acceptance of Trusts ............................................................................................... 32 Duties of Trustee ...................................................................................................... 32 Rights of Trustee ...................................................................................................... 3 3 Individual Rights of Trustee .................................................................................... 34 Trustee's Disclaimer ................................................................................................ 34 Notice of Defaults .................................................................................................... 34 Compensation of Trustee ......................................................................................... 34 Eligibility of Trustee ................................................................................................ 3 5 Replacement of Trustee ........................................................................................... 3 5 Successor Trustee or Agent by Merger .................................................................... 35 Registrar ................................................................................................................... 3 5 Other Agents ............................................................................................................ 3 5 Several Capacities .................................................................................................... 36 Accounting Records and Reports of Trustee ........................................................... 3 6 No Remedy Exclusive ............................................................................................. 36 ARTICLE XIII MODIFICATION OF THIS TRUST AGREEMENT Limitations ............................................................................................................... 36 Supplemental Agreements Not Requiring Consent of Bondholders ....................... 36 Supplemental Agreement Requiring Consent of Bondholders ................................ 3 7 Effect of Supplemental Agreements ........................................................................ 3 8 Supplemental Agreements to be Part of this Trust Agreement ............................... 3 8 ARTICLE XIV MISCELLANEOUS PROVISIONS Parties in Interest ..................................................................................................... 3 8 Severability .............................................................................................................. 3 8 No Personal Liability of City Officials; Limited Liability of City to Bondholders ............................................................................................................. 38 Execution oflnstruments; Proof of Ownership ....................................................... 39 Governing Law; Venue ............................................................................................ 39 Notices ..................................................................................................................... 39 Holidays ................................................................................................................... 40 Captions ................................................................................................................... 40 Counterparts ............................................................................................................. 41 Form of Bond ......................................................................................................... A-1 Form of Requisition ............................................................................................... B-1 lll 4814-2918-7057v3/022468-0021 40 of 134
August 3, 2021, Item #8TRUST AGREEMENT This TRUST AGREEMENT is dated as of __ 1, 2021, and is made by and between the CITY OF POWAY, a municipal corporation and general law city that is duly organized and validly existing under and pursuant to the Constitution and the laws of the State of California (the "City"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association that is organized and existing under the laws of the United States of America, as trustee (the "Trustee"). RECITALS A. The City is a member of the California Public Employees' Retirement System ("PERS") and, as such, is obligated by the Public Employees' Retirement Law, constituting Part 3 of Division 5 of Title 2 of the California Government Code (the "Retirement Law"), and the contract between the Board of Administration of PERS and the City Council of the City, effective February 1, 1981 (as amended, the "PERS Contract"), to make contributions to PERS: (a) to fund pension benefits for its employees who are members of PERS; (b) to amortize the unfunded actuarial liability with respect to such pension benefits; and ( c) to appropriate funds for the purposes described in clauses ( a) and (b). B. The City is authorized pursuant to Articles 10 and 11 ( commencing with Section 53570) of Chapter 3 of Division 2 of Title 5 of the California Government Code (the "Refunding Law") to issue bonds for the purpose of refunding certain obligations of the City, including the obligations set forth in the PERS Contract. C. For the purpose of refunding the City's unamortized, unfunded accrued actuarial liability with respect to pension benefits under the Retirement Law (the "Unfunded Liability"), and to pay costs of issuance, including underwriter's discount and any original issue discount, the City has determined to issue its$ __ aggregate principal amount of City of Poway Pension Obligation Bonds, Series 2021 (Federally Taxable) (the "Bonds"), all pursuant to and secured by this Trust Agreement providing for the issuance of the Bonds, all in the manner provided herein. The City and the Trustee hereby agree as follows, each for the benefit of the other and the benefit of holders of the Bonds (as defined below) issued in accordance with this Trust Agreement. ARTICLE I DEFINITIONS; INTERPRETATION Section 1.01 Certain Defined Terms. The terms defined in this Article I shall, for all purposes of this Trust Agreement, have the meanings that are specified below unless the context clearly requires otherwise. "Account" means any account established pursuant to this Trust Agreement. "Additional Bonds" means bonds issued in accordance with Section 2.06 hereof. "Annual Debt Service" means, for any Bond Year, the sum of the aggregate amount of principal required to be paid on Bonds during such Bond Year either at maturity or pursuant to a 4814-2918-7057v3/022468-0021 41 of 134
August 3, 2021, Item #8mandatory sinking fund payment and the interest due on the Bonds on each Interest Payment Date during such Bond Year. "Authorized City Representative" means the Mayor, the Deputy Mayor, the City Manager or the Director of Finance of the City, or their authorized designees. "Authorized Denominations" means $5,000 and any integral multiple thereof. "Beneficial Owner" means, whenever used with respect to a Bond, the person in whose name such Bond is recorded as the beneficial owner of such Bond by a Participant on the records of such Participant or such person's subrogee. "Bond" or "Bonds" means the bonds issued under this Trust Agreement and designated as "City of Poway Pension Obligation Bonds, Series 2021 (Federally Taxable)." "Bond Counsel" means: (a) Stradling Yocca Carlson & Rauth, a Professional Corporation; or (b) a firm of attorneys nationally recognized as experts in the area of municipal finance who are familiar with the transactions contemplated under this Trust Agreement and acceptable to the City. "Bond Interest Account" means the Account of that name established within the Revenue Fund pursuant to Section 6.02 hereof. "Bond Principal Account" means the Account of that name established within the Revenue Fund pursuant to Section 6.02 hereof. "Bond Year" means the twelve-month period commencing on each __ 2 and ending on the next succeeding __ 1, except that the first Bond Year shall commence on the Closing Date and end on __ l,202_. "Book-Entry Bonds" means the Bonds held by DTC ( or its nominee) as the registered owner thereof pursuant to the terms and provisions of Section 3 .03 hereof. "Business Day" means a day: (a) other than a day on which banks located in the City of New York, New York or the cities in which the Principal Office of the Trustee or any Paying Agent are located, are required or authorized by law or executive order to close; and (b) on which the New York Stock Exchange is open. "Closing Date" means ___ , 2021. "Consultant" means the accountant, attorney, consultant, municipal finance consultant or investment banker, or firm thereof, retained by the City to perform acts and carry out the duties provided for such Consultant in this Trust Agreement. Such accountant, attorney, consultant, municipal finance consultant or investment banker, or firm thereof, shall be nationally recognized within its profession for work of the character required. "Continuing Disclosure Agreement" means that certain Continuing Disclosure Agreement related to the Bonds by and between the City and the dissemination agent listed therein, dated the Closing Date, as originally executed and as it may be amended from time to time in accordance with the terms thereof. 4814-2918-7057v3/022468-0021 42 of 134 2
August 3, 2021, Item #8"Costs of Issuance" means all costs and expenses incurred by the City in connection with the issuance of the Bonds and the refunding of the Unfunded Liability, including, but not limited to, out-of-pocket expenses of the City, costs and expenses of printing and copying documents and the Bonds and the fees, costs and expenses of Rating Agencies, credit providers or enhancers, the Trustee, counsel to the Trustee, Bond Counsel, the verification agent, accountants, municipal finance consultant, disclosure counsel and other consultants and the premium for any municipal bond insurance and surety bond insurance. "Defeasance Securities" means any of the following: (a) non-callable direct obligations of the United States of America ("Treasuries"); (b) evidence of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated; and (c) pre-refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively (or any combination thereof), which shall be authorized to be used to effect defeasance of the Bonds. "DTC" means The Depository Trust Company, a limited-purpose trust company organized under the laws of the State of New York, and its successors and assigns. "Event of Default" means any occurrence or event specified in Section 11.01 hereof. "Fiduciary or Fiduciaries" means the Trustee, any Paying Agent, or any or all of them, as may be appropriate. "Fiscal Year" means the period of time beginning on July I of each given year and ending on June 30 of the immediately subsequent year, or such other period as the City designates as its fiscal year. "Fund" means any fund established pursuant to this Trust Agreement. "Holder," or "Bondholder," "owner" or "registered owner" means the registered owner of any Bonds, including DTC or its nominee as the sole registered owner of Book-Entry Bonds. "Information Services" means any one or more of the national information services that Trustee determines are in the business of disseminating notices of redemption of obligations such as the Bonds. "Interest Payment Date" means __ I and __ I of each year commencing __ 1, 202 "Mail" means by first-class United States mail, postage prepaid. "Moody's" means Moody's Investors Service, Inc., New York, New York, and its successors, and, if such corporation shall for any reason no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized rating agency designated by the City. "Opinion of Bond Counsel" means a written opinion of Bond Counsel. 4814-2918-7057v3/022468-0021 43 of 134 3
August 3, 2021, Item #8"Outstanding," with respect to the Bonds, means all Bonds which have been authenticated and delivered under this Trust Agreement, except: (a) Bonds cancelled or purchased by the Trustee for cancellation or delivered to or acquired by the Trustee for cancellation and, in all cases, with the intent to extinguish the debt represented thereby. (b) Bonds deemed to be paid in accordance with Section 10.02 hereof. ( c) Bonds in lieu of which other Bonds have been authenticated under Sections 3.02 and 3.04 hereof. (d) Bonds that have become due (at maturity, on redemption, or otherwise) and for the payment of which sufficient moneys, including interest accreted or accrued to the due date, are held by the Trustee or a Paying Agent. (e) For purposes of any consent or other action to be taken by the Holders of a specified percentage of Bonds Outstanding under this Trust Agreement, Bonds held by or for the account of the City or by any person controlling, controlled by or under common control with the City, unless such Bonds are pledged to secure a debt to an unrelated party, in which case such Bonds shall, for purposes of consents and other Bondholder action, be deemed to be Outstanding and owned by the party to which such Bonds are pledged. Nothing herein shall be deemed to prevent the City from purchasing Bonds from any party out of any funds available to the City. "Participant" means the participants of DTC, which include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. "Paying Agent" means any paying agent for the Bonds, or successor thereto, appointed by the City pursuant to Sections 7.01 or 7.02 hereof, and any successor appointed pursuant to Section 7.04 hereof. "Permitted Investments" means the following: (1) Direct obligations of the United States of America and securities fully and unconditionally guaranteed as to the timely payment of principal and interest by the United States of America ("U.S. Government Securities"). (2) Direct obligations* of the following federal agencies which are fully guaranteed by the full faith and credit of the United States of America: a. Export-Import Bank of the United States -Direct obligations and fully guaranteed certificates of beneficial interest b. Federal Housing Administration -debentures The following are explicitly excluded from the securities enumerated in 2 and 3: (i) All derivative obligations, including without limitation inverse floaters, residuals, interest-only, principal-only and range notes; (ii) Obligations that have a possibility ofreturning a zero or negative yield if held to maturity; (iii) Obligations that do not have a fixed par value or those whose terms do not promise a fixed dollar amount at maturity or call date; and (iv) Collateralized Mortgage-Backed Obligations. 4814-2918-7057v3/022468-0021 44 of 134 4
August 3, 2021, Item #8c. General Services Administration -participation certificates d. Government National Mortgage Association ("GNMAs")-guaranteed mortgage-backed securities and guaranteed participation certificates e. Small Business Administration -guaranteed participation certificates and guaranteed pool certificates f. U.S. Department of Housing & Urban Development -local authority bonds g, U.S. Maritime Administration -guaranteed Title XI financings h. Washington Metropolitan Area Transit Authority -guaranteed transit bonds (3) Direct obligations* of the following federal agencies which are not fully guaranteed by the faith and credit of the United States of America: a. Federal National Mortgage Association ("FNMAs") -senior debt obligations rated "Aaa" by Moody's and "AAA" by S&P b. Federal Home Loan Mortgage Corporation ("FHLMCs") -participation certificates and senior debt obligations rated "Aaa" by Moody's and "AAA" by S&P c. Federal Home Loan Banks -consolidated debt obligations d. Student Loan Marketing Association -debt obligations e. Resolution Funding Corporation -debt obligations ( 4) Direct, general obligations of any state of the United States of America or any subdivision or agency thereof whose uninsured and unguaranteed general obligation debt is rated, at the time of purchase, "A2" or better by Moody's and "A" or better by S&P, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose uninsured and unguaranteed general obligation debt is rated, at the time of purchase, "A2" or better by Moody's and "A" or better by S&P. (5) Commercial paper (having original maturities ofnot more than 270 days) rated, at the time of purchase, "P-1" by Moody's and "A-1" or better by S&P. ( 6) Certificates of deposit, savings accounts, deposit accounts or money market deposits in amounts that are continuously and fully insured by the Federal Deposit Insurance Corporation (the "FDIC"), including the Bank Insurance Fund and the Savings Association Insurance Fund, and including funds for which the Trustee or its affiliates provide investment advisory or other management services. (7) Certificates of deposit, deposit accounts, federal funds or bankers' acceptances (in each case having maturities of not more than 365 days following the date of purchase) of any domestic commercial bank or United States branch office of a foreign bank, provided that such bank's short-term certificates of deposit are rated "P-1" by Moody's and "A-1" or better by S&P (not considering holding company ratings). (8) Investments in money-market funds rated "AAAm" or "AAAm-G" by S&P, including funds for which the Trustee and its affiliates provide investment advisory or other management services. 4814-2918-7057v3/022468-0021 45 of 134 5
August 3, 2021, Item #8(9) Repurchase agreements that meet the following criteria: a. A master repurchase agreement or specific written repurchase agreement, substantially similar in form and substance to the Public Securities Association or Bond Market Association master repurchase agreement, governs the transaction. b. Acceptable providers shall consist of: (i) registered broker/dealers subject to Securities Investors' Protection Corporation ("SIPC") jurisdiction or commercial banks insured by the FDIC, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed rating of "A3/P-l" or better by Moody's and "A-/A-1" or better by S&P; or (ii) domestic structured investment companies rated "Aaa" by Moody's and "AAA" by S&P. c. The repurchase agreement shall require termination thereof if the counterparty's ratings are suspended, withdrawn or fall below "A3" or "P-1" from Moody's, or "A-" or "A-1" from S&P. Within ten (10) days, the counterparty shall repay the principal amount plus any accrued and unpaid interest on the investments. d. The repurchase agreement shall limit acceptable securities to U.S. Government Securities and to the obligations of GNMA, FNMA or FHLMC described in 2(d), 3(a) and 3(b) above. The fair market value of the securities in relation to the amount of the repurchase obligation, including principal and accrued interest, is equal to a collateral level of at least 104% for U.S. Government Securities and 105% for GNMAs, FNMAs or FHLMCs. The repurchase agreement shall require: (i) the Trustee or the Agent to value the collateral securities no less frequently than weekly; (ii) the delivery of additional securities if the fair market value of the securities is below the required level on any valuation date; and (iii) liquidation of the repurchase securities if any deficiency in the required percentage is not restored within two (2) business days of such valuation. e. The repurchase securities shall be delivered free and clear of any lien to the Trustee or to an independent third party acting solely as agent ("Agent") for the Trustee, and such Agent is: (i) a Federal Reserve Bank; or (ii) a bank which is a member of the FDIC and which has combined capital, surplus and undivided profits or, if appropriate, a net worth, of not less than $50 million, and the Trustee shall have received written confirmation from such third party that such third party holds such securities, free and clear of any lien, as agent for the Trustee. f. A perfected first security interest in the repurchase securities shall be created for the benefit of the Trustee, and the issuer and the Trustee shall receive an opinion of counsel as to the perfection of the security interest in such repurchase securities and any proceeds thereof. 4814-2918-7057v3/022468-0021 46 of 134 6
August 3, 2021, Item #8g. The repurchase agreement shall have a term of one year or less, or shall be due on demand. h. The repurchase agreement shall establish the following as events of default, the occurrence of any of which shall require the immediate liquidation of the repurchase securities: (i) insolvency of the broker/dealer or commercial bank serving as the counterparty under the repurchase agreement; (ii) failure by the counterparty to remedy any deficiency in the required collateral level or to satisfy the margin maintenance call under item 9( d) above; or (iii) failure by the counterparty to repurchase the repurchase securities on the specified date for repurchase. (10) Investment agreements, collateralized at 102% (also referred to as guaranteed investment contracts) that meet the following criteria: a. A master agreement or specific investment agreement governs the transaction. b. Acceptable providers of uncollateralized investment agreements shall consist of: (i) domestic FDIC-insured commercial banks, or U.S. branches of foreign banks, rated at least "Aa2" by Moody's and "AA" by S&P; (ii) domestic insurance companies rated Aaa by Moody's and "AAA" by S&P; and (iii) domestic structured investment companies rated "Aaa" by Moody's and "AAA" by S&P. c. Acceptable providers of collateralized investment agreements shall consist of: (i) registered broker/dealers subject to SIPC jurisdiction, if such broker/dealer has an uninsured, unsecured and unguaranteed rating of "Al" or better by Moody's and "A+" or better by S&P; (ii) domestic FDIC-insured commercial banks, or U.S. branches of foreign banks, rated at least "Al" by Moody's and "A+" by S&P; (iii) domestic insurance companies rated at least "Al" by Moody's and "A+" by S&P; and (iv) domestic structured investment companies rated "Aaa" by Moody's and "AAA" by S&P. Required collateral levels shall be as set forth in 1 0(f) below. d. The investment agreement shall provide that if the provider's ratings fall below "Aa3" by Moody's or "AA-" by S&P, the provider shall within ten (10) days either: (i) repay the principal amount plus any accrued and interest on the investment; or (ii) deliver Permitted Collateral as provided below. e. The investment agreement must provide for termination thereof if the provider's ratings are suspended, withdrawn or fall below "A3" from Moody's or "A-" from S&P. Within ten (10) days, the provider shall 4814-2918-7057v3/022468-0021 47 of 134 7
August 3, 2021, Item #8repay the principal amount plus any accrued interest on the agreement, without penalty to the City. f. The investment agreement shall provide for the delivery of collateral described in (i) or (ii) below ("Permitted Collateral") which shall be maintained at the following collateralization levels at each valuation date: (i) U.S. Government Securities at 104% of principal plus accrued interest; or (ii) Obligations of GNMA, FNMA or FHLMC ( described in 2( d), 3(a) and 3(b) above) at 105% of principal and accrued interest. g. The investment agreement shall require the Trustee to determine the market value of the Permitted Collateral not less than weekly and notify the investment agreement provider on the valuation day of any deficiency. Permitted Collateral may be released by the Trustee to the provider only to the extent that there are excess amounts over the required levels. Market value, with respect to collateral, may be determined by any of the following methods: (i) the last quoted "bid" price as shown in Bloomberg, Interactive Data Systems, Inc., The Wall Street Journal or Reuters; (ii) valuation as performed by a nationally recognized pricing service, whereby the valuation method is based on a composite average of various bid prices; or (iii) the lower of two bid prices by nationally recognized dealers. Such dealers or their parent holding companies shall be rated investment grade and shall be market makers in the securities being valued. h. Securities held as Permitted Collateral shall be free and clear of all liens and claims of third parties, held in a separate custodial account and registered in the name of the Trustee or the Agent. 1. The provider shall grant the Trustee a perfected first security interest in any collateral delivered under an investment agreement. For investment agreements collateralized initially and in connection with the delivery of Permitted Collateral under item 1 O(t) above, the Trustee shall receive an opinion of counsel as to the perfection of the security interest in the collateral. J. The investment agreement shall provide that moneys invested under the agreement must be payable and putable at par to the Trustee without condition, breakage fee or other penalty, upon not more than two (2) business days' notice, or immediately on demand for any reason for which the funds invested may be withdrawn from the applicable fund or account established under the authorizing document, as well as the following: 4814-2918-7057v3/022468-0021 48 of 134 8
August 3, 2021, Item #8(i) In the event of a deficiency in the debt service account; (ii) Upon acceleration after an event of default; (iii) Upon refunding of the Bonds in whole or in part; (iv) Reduction of any debt service reserve requirement for the Bonds; or (v) If a determination is later made by a nationally recognized bond counsel that investments must be yield-restricted. Notwithstanding the foregoing, the agreement may provide for a breakage fee or other penalty that is payable in arrears and not as a condition of a draw by the Trustee if the City's obligation to pay such fee or penalty is subordinate to its obligation to pay debt service on the Bonds and to make deposits to any debt service reserve fund established for the Bonds. (k) The investment agreement shall establish the following as events of default, the occurrence of any of which shall require the immediate liquidation of the investment securities: (i) Failure of the provider or the guarantor (if any) to make a payment when due or to deliver Permitted Collateral of the character, at the times or in the amounts described above; (ii) Insolvency of the provider or the guarantor (if any) under the investment agreement; (iii) Failure by the provider to remedy any deficiency with respect to required Permitted Collateral; (iv) Failure by the provider to make a payment or observe any covenant under the agreement; ( v) The guaranty ( if any) is terminated, repudiated or challenged;or (vi) Any representation of warranty furnished to the Trustee or the issuer in connection with the agreement is false or misleading. (1) The investment agreement must incorporate the following general criteria: 4814-2918-7057v3/022468-0021 49 of 134 (i) "Cure periods" for payment default shall not exceed two (2) business days; (ii) The agreement shall provide that the provider shall remain liable for any deficiency after application of the proceeds of the sale of any collateral, including costs and expenses incurred by the Trustee; (iii) Neither the agreement nor guaranty agreement, if applicable, may be assigned ( except to a provider that would otherwise be acceptable under these guidelines); 9
August 3, 2021, Item #8(iv) If the investment agreement is for a debt service reserve fund, reinvestments of funds shall be required to bear interest at a rate at least equal to the original contract rate. (v) The provider shall be required to immediately notify the Trustee of any event of default or any suspension, withdrawal or downgrade of the provider's ratings; and (vi) The agreement shall be unconditional and shall expressly disclaim any right of set-off or counterclaim. ( 11) Forward delivery agreements in which the securities delivered mature on or before each interest payment date (for debt service or debt service reserve funds) or draw down date ( construction funds) that meet the following criteria: (a) A specific written investment agreement governs the transaction. (b) Acceptable providers shall be limited to: (i) any registered broker/dealer subject to the Securities Investors' Protection Corporation jurisdiction, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed obligation rated "A3/P-1" or better by Moody's and "A-/A-1" or better by S&P; (ii) any commercial bank insured by the FDIC, if such bank has an uninsured, unsecured and unguaranteed obligation rated "A3/P-1" or better by Moody's and "A-/A-1" or better by S&P; and (iii) domestic structured investment companies rated "Aaa" by Moody's and "AAA" by S&P. ( c) The forward delivery agreement shall provide for termination or assignment (to a qualified provider hereunder) of the agreement if the provider's ratings are suspended, withdrawn or fall below "A3" or "P-1" from Moody's or "A-" or "A-1" from S&P. Within ten (10) days, the provider shall fulfill any obligations it may have with respect to shortfalls in market value. There shall be no breakage fee payable to the provider in such event. ( d) Permitted securities shall include the investments listed in items 1, 2 and 3 above. ( e) The forward delivery agreement shall include the following provisions: 4814-2918-7057v3/022468-0021 so of 134 (i) The permitted securities must mature at least one (1) business day before a debt service payment date or scheduled draw. The maturity amount of the permitted securities must equal or exceed the amount required to be in the applicable fund on the applicable valuation date. (ii) The agreement shall include market standard termination provisions, including the right to terminate for the provider's failure to deliver qualifying securities or otherwise to perform under the agreement. There shall be no breakage fee or penalty payable to the provider in such event.
August 3, 2021, Item #8(iii) Any breakage fees shall be payable only on debt service payment dates and shall be subordinated to the payment of debt service and debt service reserve fund replenishments. (iv) The provider must submit at closing a bankruptcy opinion to the effect that upon any bankruptcy, insolvency or receivership of the provider, the securities will not be considered to be a part of the provider's estate. (v) The agreement may not be assigned (except to a provider that would otherwise be acceptable under these guidelines). (12) Forward delivery agreements in which the securities delivered mature after the funds may be required but provide for the right of the City or the Trustee to put the securities back to the provider under a put, guaranty or other hedging arrangement. ( 13) Maturity of investments shall be governed by the following: a. Investments of monies ( other than reserve funds) shall be in securities and obligations maturing not later than the dates on which such monies will be needed to make payments. b. Investments shall be considered as maturing on the first date on which they are redeemable without penalty at the option of the holder or the date on which the Trustee may require their repurchase pursuant to repurchase agreements. c. Investments of monies in reserve funds not payable upon demand shall be restricted to maturities of five years or less. ( 14) Any other investment which the City is permitted by law to make, including without limitation investment in the Local Agency Investment Fund of the State of California (LAIF), provided that any investment of the type authorized pursuant to paragraphs ( d), (f), (h) and (i) of Section 53601 of the California Government Code are additionally restricted as provided in the appropriate paragraph or paragraphs above applicable to such type of investment and provided further that investments authorized pursuant to paragraphs (k) and (m) of Section 53601 are not permitted. To the extent that any of the requirements concerning Permitted Investments embodies a legal conclusion, the Trustee shall be entitled to conclusively rely upon a certificate from the appropriate party or an opinion from counsel to such party, that such requirement has been met. "PERS" means the California Public Employees' Retirement System. "PERS Contract" has the meaning assigned that term in the Recitals to this Trust Agreement. "Principal Office of the Trustee" means the office of the Trustee at the address set forth in Section 14.06 of this Trust Agreement, provided for transfer, exchange, registration, surrender and payment of Bonds means care of the corporate trust operations office of U.S. Bank National Association in St. Paul, Minnesota or such other office designated by the Trustee. "Rating Agencies" means Moody's and S&P. 4814-2918-7057v3/022468-0021 51 of 134 11
August 3, 2021, Item #8"Rating Category" means: (i) with respect to any long-term rating category, all ratings designated by a particular letter or combination of letters, without regard to any numerical modifier, plus or minus sign or other modifier; and (ii) with respect to any short-term or commercial paper rating category, all ratings designated by a particular letter or combination of letters and taking into account any numerical modifier, but not any plus or minus sign or other modifier. "Record Date" means the fifteenth day of each calendar month preceding any Interest Payment Date, regardless of whether such day is a Business Day. "Redemption Fund" means the Fund of that name established pursuant to Section 6.03 hereof. "Refunding Law" has the meaning assigned that term in the Recitals to this Trust Agreement. "Registrar" means, for purposes of this Trust Agreement, the Trustee or its successor or assignee. "Representation Letter" means the Letter of Representations from the City to DTC with respect to the Bonds. "Requisition" or "Written Requisition" means a Requisition or Written Requisition, substantially in the form of Exhibit "B" hereto. "Responsible Officer" means an officer of the Trustee assigned by the Trustee to administer this Trust Agreement. "Retirement Law" has the meaning assigned that term in the Recitals to this Trust Agreement. "Revenue Fund" means the Fund of that name established pursuant to Section 6.02 hereof. "S&P" means S&P Global Ratings, LLC, a Standard & Poor's Financial Services LLC business, and its successors, and, if such company shall for any reason no longer perform the functions of a securities rating agency, "S&P" shall be deemed to refer to any other nationally recognized rating agency designated by the City. "Securities Depositories" means any of The Depository Trust Company or, in accordance with then-current guidelines of the Securities and Exchange Commission, such other securities depositories, or if no such depositories, as the City may indicate in a certificate of the City delivered to the Trustee. "State" means the State of California. "Total Bond Obligation" means, as of any date of calculation, the aggregate principal amount of the Bonds then Outstanding. "Trust Agreement" means this Trust Agreement dated as of __ 1, 2021 between the City and the Trustee, as it may be amended, supplemented or otherwise modified from time to time. "Trustee" means the entity named as such in the heading of this Trust Agreement until a successor replaces it, and thereafter means such successor. 4814-2918-7057v3/022468-0021 52 of 134 12
August 3, 2021, Item #8"Unfunded Liability" has the meaning assigned that term in the Recitals to this Trust Agreement. Section 1.02 Other Definitional Provisions. Except as otherwise indicated, references to Articles and Sections are to the Articles and Sections of this Trust Agreement. Any of the terms defined in Section 1.01 may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. ARTICLE II THE BONDS Section 2.01 Issuance of Bonds; Form; Dating. Bonds may be issued by the City under the terms of this Trust Agreement only to refund the City's Unfunded Liability under the PERS Contract and the Retirement Law and to pay the Costs of Issuance in connection with the issuance of the Bonds. The Bonds shall be designated "City of Poway Pension Obligation Bonds, Series 2021 (Federally Taxable)" and shall be issued in Authorized Denominations. The Bonds shall be issued hereunder in the aggregate principal amount of$ __ . Interest on the Bonds shall be payable on each __ land __ 1, commencing __ 1, 202_. Section 2.02 Description of the Bonds. Each Bond shall be issued in fully registered form and shall be numbered as determined by the Trustee. The Bonds shall be dated the Closing Date. The Bonds shall be issued in Authorized Denominations; provided, however, that the Bonds shall initially be Book-Entry Bonds. The Bonds shall mature on the dates, in the principal amounts, and interest thereon shall be computed at the rates, as shown below: Maturity Date C_l) 20 Principal Amount $ Interest Rate % Section 2.03 Interest on the Bonds. Interest on each Bond of each maturity shall be payable at the respective per annum rates set forth in Section 2.02 hereof and shall be payable on each Interest Payment Date until maturity or earlier redemption, computed using a year of 360 days comprised of twelve 30-day months. Interest on each Bond shall accrue from the Interest Payment Date for the Bonds next preceding the date of authentication and delivery thereof, unless: (i) such date of 4814-2918-7057v3/022468-0021 53 of 134 13
August 3, 2021, Item #8authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication; (ii) it is authenticated after a Record Date and before the close of business on the immediately following Interest Payment Date, in which event interest thereon shall be payable from such Interest Payment Date; or (iii) it is authenticated prior to the close of business on the first Record Date, in which event interest thereon shall be payable from the Closing Date; provided, however, that if at the time of authentication of any Bond interest thereon is in default, interest thereon shall be payable from the Interest Payment Date to which interest has previously been paid or made available for payment or, if no interest has been paid or made available for payment, from the Closing Date. Section 2.04 Medium of Payment. Principal, premium, if any, and interest on the Bonds shall be payable in currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. Payments of interest on any of the Bonds will be made on each Interest Payment Date by check of the Trustee sent by Mail, or by wire transfer to any Holder of $1,000,000 or more of Bonds, to the account specified by such Holder in a written request delivered to the Trustee on or prior to the Record Date for such Interest Payment Date, to the Holder thereof on the Record Date; provided, however, that payments of defaulted interest shall be payable to the person in whose name such Bond is registered at the close of business on a special record date fixed therefor by the Trustee which shall not be more than 15 days and not less than ten days prior to the date of the proposed payment of defaulted interest. Payment of the principal of the Bonds upon redemption or maturity will be made upon presentation and surrender of each such Bond, at the Principal Office of the Trustee. Section 2.05 Form. The Bonds shall be substantially in the form set forth in Exhibit "A" attached hereto and by this reference incorporated herein. The Bonds may be printed, lithographed, photocopied or typewritten and shall be in such Authorized Denominations as may be determined by the City. Section 2.06 Additional Bonds. From time to time, the City may enter into: (i) one or more other trust agreements or indentures; and/or (ii) one or more agreements supplementing and/or amending this Trust Agreement, for the purpose of providing for the issuance of Additional Bonds to refund the Bonds or to refund all or any portion of any Unfunded Liability under the PERS Contract arising subsequent to the issuance of the Bonds or any other obligations due to PERS. Such Additional Bonds may be issued on a parity with the Bonds. ARTICLE III EXECUTION, AUTHENTICATION AND EXCHANGE OF BONDS; BOOK ENTRY BONDS Section 3.01 Execution and Authentication; Registration. (a) The Bonds will be signed for the City with the manual or facsimile signature of the City Manager of the City. The City may deliver to the Trustee or its agent duly executed Bonds for authentication from time to time by the Trustee or its agent as such Bonds may be required. Bonds executed and so delivered and authenticated will be valid. In case any officer of the City whose signature or whose facsimile signature appears on any Bonds shall cease to be such officer before the authentication of such Bonds, such signature or the facsimile signature thereof shall nevertheless be valid and sufficient for all purposes as if he or she had remained in office until authentication. Also, if a person signing a Bond is the proper officer on the actual date of execution, the Bond will be valid 4814-2918-7057v3/022468-0021 54 of 134 14
August 3, 2021, Item #8even if that person is not the proper officer on the nominal date of action and even though, at the date of this Trust Agreement, such person was not such officer. (b) A Bond will not be valid until the Trustee or its agent executes the certificate of authentication on such Bond by manual signature. Such signature will be conclusive evidence that such Bond has been authenticated under this Trust Agreement. The Trustee may appoint an authenticating agent acceptable to the City to authenticate Bonds. An authenticating agent may authenticate Bonds whenever the Trustee may do so. Each reference in this Trust Agreement to authentication by the Trustee includes authentication by such agent. ( c) Bonds may be presented at the Principal Office of the Trustee, unless a different office has been designated for such purpose, for registration, transfer and exchange. The Registrar will keep a register of such Bonds and of their transfer and exchange. Section 3.02 Transfer or Exchange of Bonds. Subject to Section 3.03: (a) All Bonds shall be issued in fully registered form. Upon surrender for transfer of any Bond at the Principal Office of the Trustee, the Trustee shall deliver in the name of the transferee or transferees a new fully authenticated and registered Bond or Bonds of Authorized Denominations of the same maturity for the aggregate principal amount which the Bondholder is entitled to receive. (b) All Bonds presented for transfer, redemption or payment shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in form and with guaranty of signature satisfactory to the City, duly executed by the Bondholder or by his duly authorized attorney. The Trustee also may require payment from the Bondholder of a sum sufficient to cover any tax, or other governmental fee or charge that may be imposed in relation thereto. Such taxes, fees and charges shall be paid before any such new Bond shall be delivered. ( c) Bonds delivered upon any transfer as provided herein, or as provided in Section 3.04, shall be valid obligations of the City, evidencing the same debt as the Bond surrendered, shall be secured by this Trust Agreement and shall be entitled to all of the security and benefits hereof to the same extent as the Bond surrendered. (d) The City, the Trustee and the Paying Agent shall treat the Bondholder, as shown on the registration books kept by the Trustee, as the person exclusively entitled to payment of principal, premium, if any, and interest with respect to such Bond and to the exercise of all other rights and powers of the Bondholder, except that all interest payments will be made to the party who, as of the Record Date, is the Bondholder. ( e) The Trustee shall not be required to register the transfer or exchange of any Bond during the period in which the Trustee is selecting Bonds for redemption and any Bond that has been selected for redemption. Section 3.03 Book-Entry Bonds. (a) Except as provided in paragraph ( c) of this Section 3. 03, the registered owner of all of the Bonds shall be DTC and the Bonds shall be registered in the name of Cede & Co., as nominee for DTC. Except as provided in paragraph (d) of this Section 3.03, payment of principal, 4814-2918-7057v3/022468-0021 55 of 134 15
August 3, 2021, Item #8interest and premium, if any, for any Bonds registered in the name of Cede & Co. shall be made as provided in the Representation Letter. (b) The Bonds shall be initially issued in the form of a separate single authenticated fully registered Bond for each separate stated maturity of the Bonds. The Trustee, the Registrar and the City may treat DTC ( or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal or redemption price of, or interest on, the Bonds, selecting the Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Bondholders under this Trust Agreement, registering the transfer of Bonds, obtaining any consent or other action to be taken by Bondholders and for all other purposes whatsoever, and neither the Trustee, the Registrar nor the City shall be affected by any notice to the contrary. Neither the Trustee, the Registrar nor the City shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Bonds under or through DTC or any Participant or any other person which is not shown on the registration books as being a Bondholder, with respect to: (i) the accuracy of any records maintained by DTC or any Participant; (ii) the payment by DTC or any Participant of any amount in respect of the principal or redemption price of or interest on the Bonds; (iii) any notice which is permitted or required to be given to Bondholders under this Trust Agreement; (iv) the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds; or (v) any consent given or other action taken by DTC as a Bondholder. The Trustee shall pay, from funds held under the terms of this Trust Agreement or otherwise provided by the City, all principal or redemption price of and interest on the Bonds only to DTC as provided in the Representation Letter and all such payments shall be valid and effective to satisfy and discharge fully the City's obligations with respect to the principal or redemption price of and interest on the Bonds to the extent of the sum or sums so paid. No person other than DTC shall receive authenticated Bonds evidencing the obligation of the City to make payments of principal or redemption price and interest pursuant to this Trust Agreement. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to Record Dates, the name "Cede & Co." in this Trust Agreement shall refer to such new nominee ofDTC. ( c) In the event that the City determines that it is in the best interest of the Beneficial Owners that they be able to obtain Bond certificates and notifies DTC, the Trustee and the Registrar of such determination, then DTC will notify the Participants of the availability through DTC of Bond certificates. In such event, the Trustee shall authenticate and the Registrar shall transfer and exchange Bond certificates as requested by DTC and any other Bondholders in appropriate amounts. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and the Trustee and discharging its responsibilities with respect thereto under applicable law. Under such circumstances (if there is no successor securities depository), the City and the Trustee shall be obligated to deliver Bond certificates as described in this Trust Agreement. In the event that Bond certificates are issued, the provisions of this Trust Agreement shall apply to, among other things, the transfer and exchange of such certificates and the method of payment of principal of and interest on such certificates. Whenever DTC requests the City and the Trustee to do so, the Trustee and the City will cooperate with DTC in taking appropriate action after reasonable notice: (i) to make available one or more separate certificates evidencing the Bonds to any Participant having Bonds credited to its DTC account; or (ii) to arrange for another securities depository to maintain custody of certificates evidencing the Bonds. ( d) Notwithstanding any other provision of this Trust Agreement to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with 4814-2918-7057v3/022468-0021 56 of 134 16
August 3, 2021, Item #8respect to the principal or redemption price of and interest on such Bonds and all notices with respect to such Bonds shall be made and given, respectively, to DTC as provided in the Representation Letter. ( e) In connection with any notice or other communication to be provided to Bondholders pursuant to this Trust Agreement by the City or the Trustee with respect to any consent or other action to be taken by Bondholders, the City or the Trustee, as the case may be, shall establish a record date for such consent or other action and give DTC notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. Notice to DTC shall be given only when DTC is the sole Bondholder. (f) If the City purchases, or causes the Trustee to purchase, any of the Bonds, such purchase of Bonds shall be deemed to have occurred upon the purchase of beneficial ownership interests in the Bonds from a Participant. Upon receipt by DTC of notice from the City and a Participant that a purchase of beneficial ownership interests in the Bonds has been made by the City from such Participant, DTC shall surrender to the Trustee the Bonds referenced in such notice and, if the principal amount referenced in said notice is less than the principal amount of the Bonds so surrendered, the Trustee shall authenticate and deliver to DTC, in exchange for the Bonds so surrendered, a new Bond or Bonds, as the case may be, in Authorized Denominations and in a principal amount equal to the difference between: (i) the principal amount of the Bonds so surrendered; and (ii) the principal amount referenced in said notice. (g) Notwithstanding any provision herein to the contrary, the City and the Trustee may agree to allow DTC, or its nominee, Cede & Co., to make a notation on any Bond redeemed in part to reflect, for informational purposes only, the principal amount and date of any such redemption. (h) In the event that DTC notifies the City that it is discontinuing the book-entry system for the Bonds, the City may either appoint another entity to hold the Bonds in book-entry form or deliver Bond certificates to the beneficial owners or Participants, as directed by DTC. Section 3.04 Mutilated, Lost, Stolen or Destroyed Bonds. (a) In the event that any Bond is mutilated or defaced but identifiable by number and description, the City shall execute and the Trustee shall authenticate and deliver a new Bond of like date, maturity and denomination as such Bond, upon surrender thereof to the Trustee; provided that there shall first be furnished to the City and the Trustee proof satisfactory to the Trustee that the Bond is mutilated or defaced. The Bondholder shall accompany the above with a deposit of money required by the City for the cost of preparing the substitute Bond and all other expenses connected with the issuance of such substitute. The City shall then cause proper record to be made of the cancellation of the original, and thereafter the substitute shall have the validity of the original. (b) In the event that any Bond is lost, stolen or destroyed, the City may execute and the Trustee may authenticate and deliver a new Bond of like date, maturity and denomination as the Bond lost, stolen or destroyed; provided that there shall first be furnished to the Trustee evidence of such loss, theft or destruction satisfactory to the Trustee, together with indemnity satisfactory to it. ( c) The City and the Trustee shall charge the Holder of such Bond all transfer taxes, if any, and their reasonable fees and expenses in this connection. All substitute Bonds issued and authenticated pursuant to this Section shall be issued as a substitute and numbered, if numbering is provided for by the Trustee, as determined by the Trustee. In the event any such Bond has matured 4814-2 918-705 7v 3/022468-0021 57 of 134 17
August 3, 2021, Item #8or has been called for redemption, instead of issuing a substitute Bond, the Trustee may pay the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee. Section 3.05 Destruction of Bonds. Whenever any Outstanding Bonds shall be delivered to the Trustee for cancellation pursuant to this Trust Agreement, upon payment of the principal amount and interest represented thereby or for replacement pursuant to Section 3 .04 or transfer pursuant to Section 3.02, such Bond shall be cancelled and destroyed by the Trustee and counterparts of a certificate of destruction evidencing such destruction shall, upon the City's request, be furnished by the Trustee to the City. Section 3.06 Temporary Bonds. (a) Pending preparation of definitive Bonds, the City may execute and the Trustee shall authenticate and deliver, in lieu of definitive Bonds and subject to the same limitation and conditions, interim receipts, certificates or temporary bonds which shall be exchanged for the Bonds. (b) If temporary Bonds shall be issued, the City shall cause the definitive Bonds to be prepared and to be executed and delivered to the Trustee, and the Trustee, upon presentation to it of any temporary Bond, shall cancel the same and deliver in exchange therefor at the place designated by the Bondholder, without charge to the Bondholder thereof, definitive Bonds of an equal aggregate principal amount, of the same series, maturity and bearing interest at the same rate or rates as the temporary Bonds surrendered. Until so exchanged, the temporary Bonds shall in all respects be entitled to the same benefit and security of this Trust Agreement as the definitive Bonds to be issued and authenticated hereunder. ARTICLE IV REDEMPTION OF BONDS Section 4.01 Notices to Trustee; Notices to Bondholders; Notices to DTC. (a) Notice ofredemption shall be given by the Trustee, not less than 20 nor more than 60 days prior to the redemption date: (i) in the case of Bonds not registered in the name of a Securities Depository or its nominee, to the respective Holders of the Bonds designated for redemption at their addresses appearing on the registration books of the Trustee; (ii) in the case of Bonds registered in the name of a Securities Depository or its nominee, to such Securities Depository for such Bonds; and (iii) to the Information Services. Notice ofredemption to the Holders pursuant to clause (i) above shall be given by mail at their addresses appearing on the registration books of the Trustee, or any other method agreed upon by such Holder and the Trustee. Notice of redemption to the Securities Depositories pursuant to clause (ii) above and the Information Services pursuant to clause (iii) above shall be given by electronically secure means, or any other method agreed upon by such entities and the Trustee. (b) Each notice of redemption shall state the Bonds or designated portions thereof to be redeemed, the date of redemption, the place of redemption, the redemption price, the CUSIP number (if any) of the Bonds to be redeemed, the distinctive numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed, the original issue date, interest rate and stated maturity date of each Bond to be redeemed in whole or part. Each such notice shall also state that on said date there 4814-2918-7057v3/022468-0021 58 of 134 18
August 3, 2021, Item #8will become due and payable on each of the Bonds to be redeemed the redemption price, and redemption premium, if any, thereof, and that from and after such redemption date interest thereon shall cease to accrue. ( c) Failure to give the notices described in this Section 4.01 or any defect therein shall not in any manner affect the redemption of any Bonds. Any notice sent as provided herein will be conclusively presumed to have been given whether or not actually received by the addressee. ( d) Any notice of redemption may condition redemption of the Bonds on the availability of sufficient funds to effect the redemption, and the City shall have the right to rescind any notice of optional redemption previously sent pursuant to this Section 4.01. Any such notice of rescission shall be sent in the same manner as the notice of redemption. Neither the City nor the Trustee shall incur any liability, to Bond Owners, DTC, or otherwise, as a result of a rescission of a notice of redemption. Section 4.02 Optional Redemption of Bonds. The Bonds maturing on or after __ 1, 20 _ may be redeemed at the option of the City from any source of funds on any date on or after __ 1, 20 _ in whole or in part from such maturities as are selected by the City and by lot within a maturity at a redemption price equal to the principal amount to be redeemed, together with accrued interest to the date of redemption, without premium. In the event of an optional redemption pursuant to this Section 4.02, the City shall provide the Trustee with a revised sinking fund schedule giving effect to the optional redemption so completed. Section 4.03 Mandatory Sinking Fund Redemption of Bonds. The Bonds maturing __ 1, 20_ (the "20_ Term Bonds") are subject to mandatory sinking fund redemption at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date, without premium. The 20_ Term Bonds shall be so redeemed on the following dates and in the following amounts: * Final maturity. Redemption Date C __ l) 20 20 20-* Principal Amount $_ On or before each _ 15 next preceding any mandatory sinking fund redemption date, the Trustee shall proceed to select for redemption pro-rata from all Term Bonds subject to mandatory sinking fund redemption at that time, an aggregate principal amount of such Term Bonds equal to the amount for such year as set forth in the table above and shall call such Term Bonds or portions thereof for redemption and give notice of such redemption in accordance with the terms of Section 4.01. At the option of the City, to be exercised by delivery of a written certificate to the Trustee on or before each __ 1 next preceding any mandatory sinking fund redemption date, it may: (a) deliver to the Trustee for cancellation Term Bonds or portions thereof (in the amount of an Authorized Denomination) of the stated maturity subject to such redemption; or (b) specify a principal amount of such Term Bonds or portions thereof (in the amount of an Authorized Denomination) which prior to said date have been purchased or redeemed (otherwise than under the provisions of this Section 4.03) and cancelled by the Trustee at the request of the City and not theretofore applied as a credit against 4814-2918-7057v3/022468-0021 59 of 134 19
August 3, 2021, Item #8any mandatory sinking fund redemption requirement. Each such Term Bonds or portion thereof so delivered or previously redeemed shall be credited by the Trustee at 100% of the principal amount of the Term Bonds so delivered to the Trustee by the City against the obligation of the City on such mandatory sinking fund redemption date. Section 4.04 Payment of Bonds Called for Redemption; Effect of Redemption Call. (a) Upon surrender to the Trustee or the Trustee's agent, Bonds called for redemption shall be paid at the redemption price stated in the notice, plus interest accrued to the redemption date. (b) On the date so designated for redemption, notice having been given in the manner and under the conditions provided herein relating to such Bonds as are to be redeemed and moneys for payment of the redemption price being held in trust to pay the redemption price, the Bonds so called for redemption shall become and be due and payable on the redemption date, interest on such Bonds shall cease to accrue, such Bonds shall cease to be entitled to any lien, benefit or security under this Trust Agreement and the owners of such Bonds shall have no rights in respect thereof except to receive payment of the redemption price and accrued interest to the redemption date. ( c) Bonds which have been duly called for redemption under the provisions of this Article IV and for the payment of the redemption price of which moneys shall be deposited in the Redemption Fund or otherwise held in trust for the Holders of the Bonds to be redeemed, all as provided in this Trust Agreement, shall not be deemed to be Outstanding under the provisions of this Trust Agreement. Section 4.05 Selection of Bonds for Redemption; Bonds Redeemed in Part. If less than all of the Bonds are called for redemption, the City will designate the maturities from which the Bonds are to be redeemed. For so long as the Bonds are registered in book entry form and DTC or a successor securities depository is the sole registered owner of such Bonds, if fewer than all of such Bonds of the same maturity and bearing the same interest rate are to be redeemed, the particular Bonds to be redeemed shall be selected on a pro rata pass-through distribution of principal basis in accordance with the operational arrangements of DTC then in effect, and if the DTC operational arrangements do not allow for redemption on a pro rata pass-through distribution of principal basis, all Bonds to be so redeemed will be selected for redemption in accordance with DTC procedures by lot; provided further that any such redemption must be performed such that all Bonds remaining outstanding will be in authorized denominations. In connection with any repayment of principal of the Bonds pursuant to the pass-through distribution of principal as described above, the Trustee will direct DTC to make a pass-through distribution of principal to the owners of the Bonds. A form of Pro Rata Pass-Through Distribution of Principal Notice will be provided to the Trustee that includes a table of factors reflecting the relevant scheduled redemption payments and DTC's applicable procedures, which are subject to change. For purposes of calculating pro rata pass-through distributions of principal, "pro rata" means, for any amount of principal or interest to be paid, the application of a fraction to such amounts where: (a) the numerator is equal to the amount due to the owners of the Bonds on a payment date; and (b) the denominator is equal to the total original par amount of the Bonds. 4814-2918-7057v3/022468-0021 60 of 134 20
August 3, 2021, Item #8It is the City's intent that redemption allocations made by DTC with respect to the Bonds be made on a pro rata pass-through distribution of principal basis as described above. However, the City cannot provide any assurance that DTC, DTC' s direct and indirect participants, or any other intermediary will allocate the redemption of such Bonds on such basis. If the Bonds are not registered in book-entry form and if fewer than all of the Bonds of the same maturity and bearing the same interest rate are to be redeemed, the Bonds of such maturity and bearing such interest rate to be redeemed will be selected on a pro rata basis, and the particular Bonds of such maturity and bearing such interest rate to be redeemed will be selected by lot, provided that any such redemption must be performed such that all Bonds remaining outstanding will be in authorized denominations. Upon surrender of a Bond to be redeemed in part, the Trustee will authenticate for the registered owner a new Bond or Bonds of the same maturity and tenor equal in principal amount to the unredeemed portion of the Bond surrendered. ARTICLE V APPLICATION OF PROCEEDS; SOURCE OF PAYMENT OF BONDS Section 5.01 Application of Proceeds and City Contribution. The net proceeds of the sale of the Bonds received by the Trustee, $ __ (consisting of the __ .00 principal amount of the Bonds, less$ __ in underwriter's discount), shall be deposited by the Trustee as follows: (i) $ __ shall be deposited into the Costs of Issuance Fund; (ii) $ __ shall be transferred to PERS and used to pay the Unfunded Liability relating to the Safety Plan; and (iii) $ __ shall be transferred to PERS and used to pay the Unfunded Liability relating to the Miscellaneous Plan. The City shall provide written payment instructions to the Trustee for the above-described transfers to PERS, upon which the Trustee may conclusively rely. The Trustee may establish and maintain for so long as is necessary one or more temporary funds and accounts under this Trust Agreement, including but not limited to a temporary fund for holding the proceeds of the Bonds. Section 5.02 Sources of Payment of Bonds; Semi-Annual Payments by the City. (a) The City shall provide for payment of principal or redemption price of and interest on the Bonds from any source of legally available funds of the City. If any Bonds are Outstanding, the City shall, no later than three Business Days preceding each Interest Payment Date beginning __ 1, 20 _, deliver funds to the Trustee for deposit to the Revenue Fund in an aggregate amount equal to the portion of the Annual Debt Service coming due on such Interest Payment Date (less amounts on deposit in the Revenue Fund). 4814-2918-7057v3/022468-0021 61 of 134 21
August 3, 2021, Item #8(b) The Bonds shall be obligations of the City payable from any lawfully available funds, shall not be limited as to payment to any special source of funds of the City, and shall be subject to appropriation in accordance with Section 8.01 hereof. The Bonds do not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. ARTICLE VI CREATION OF CERTAIN FUNDS AND ACCOUNTS Section 6.01 Creation of Costs of Issuance Fund. There is hereby created a Fund to be held by the Trustee designated "City of Poway 2021 Taxable Pension Obligation Bonds Costs of Issuance Fund" (the "Costs oflssuance Fund"). Funds on deposit in the Costs oflssuance Fund shall be used to pay or to reimburse the City for the payment of Costs oflssuance. Amounts in the Costs of Issuance Fund shall be disbursed by the Trustee upon Written Requisition in the form of Exhibit "B" executed by an Authorized City Representative. At such time as the City delivers to the Trustee written notice that all Costs of Issuance have been paid or otherwise notifies the Trustee in writing that no additional amounts from the Costs of Issuance Fund will be needed to pay Costs of Issuance, the Trustee shall transfer all amounts then remaining in the Costs of Issuance Fund to the Bond Interest Account unless otherwise directed by the City. At such time as no amounts remain in the Costs oflssuance Fund, such Fund shall be closed. Section 6.02 Creation of Revenue Fund and Certain Accounts. There is hereby created a Fund to be held by the Trustee designated "City of Poway 2021 Taxable Pension Obligation Bonds Revenue Fund" (the "Revenue Fund"). There are hereby created in the Revenue Fund two separate Accounts designated "Bond Interest Account" and "Bond Principal Account". (a) All amounts received by the Trustee from the City in respect of interest payments on the Bonds shall be deposited in the Bond Interest Account and shall be disbursed to the applicable Bondholders to pay interest on the Bonds. All amounts held at any time in the Bond Interest Account (including amounts deposited pursuant to Section 6.03) shall be held for the security and payment of interest on the Bonds pursuant to this Trust Agreement. If at any time funds on deposit in the Bond Interest Account are insufficient to provide for the payment of such interest, the City shall promptly deposit funds to such Account to cure such deficiency. On __ 2 of each year beginning __ 2, 20 _, so long as no Event of Default has occurred and is continuing, the Trustee shall transfer all amounts on deposit in the Bond Interest Account to the Revenue Fund to be used for any lawful purpose. (b) All amounts received by the Trustee from the City in respect of principal payments on the Bonds shall be deposited in the Bond Principal Account and all amounts in the Bond Principal Account will be disbursed to pay principal on the Bonds pursuant to this Trust Agreement. If at any time funds on deposit in the Bond Principal Account are insufficient to provide for the payment of such principal, the City shall promptly deposit funds to such Account to cure such deficiency. ( c) The moneys in such Funds and Accounts shall be held by the Trustee in trust and applied as herein provided and, pending such application, shall be subject to a lien and charge in 4814-2918-7057v3/022468-0021 62 of 134 22
August 3, 2021, Item #8favor of the holders of the Bonds issued and Outstanding under this Trust Agreement and for the further security of such holders until paid out or transferred as hereinafter provided. Section 6.03 Creation of Redemption Fund. A Fund to be held by the Trustee is hereby created and designated the "City of Poway 2021 Taxable Pension Obligation Bonds Redemption Fund" (the "Redemption Fund"). All moneys deposited by the City with the Trustee for the purpose of redeeming Bonds shall be deposited in the Redemption Fund. All amounts deposited in the Redemption Fund shall be used and withdrawn by the Trustee solely for the purpose of redeeming Bonds in the manner, at the times and upon the terms and conditions specified in this Trust Agreement; provided that, at any time prior to giving such notice of redemption, the Trustee shall, upon receipt of written instructions from an Authorized City Representative, apply such amounts to the purchase of Bonds at public or private sale, as and when and at such prices (including brokerage and other charges) as directed by the City. Section 6.04 Moneys Held in Redemption Fund. All moneys which shall have been withdrawn from the Revenue Fund and deposited in the Redemption Fund for the purpose of paying any of the Bonds hereby secured, either at the maturity thereof or upon call for redemption, shall be held in trust for the respective Holders of such Bonds. Section 6.05 Unclaimed Moneys. Any moneys which shall be set aside or deposited in the Redemption Fund, the Bond Principal Account, the Bond Interest Account or any other Fund or Account for the benefit of Holders of Bonds and which shall remain unclaimed by the Holders of such Bonds for a period of one year after the date on which such Bonds shall have become due and payable (or such longer period as shall be required by State law) shall be paid to the City, and thereafter the Holders of such Bonds shall look only to the City for payment and the City shall be obligated to make such payment, but only to the extent of the amounts so received without any interest thereon, and the Trustee and any Paying Agent shall have no responsibility with respect to any of such moneys. ARTICLE VII CONCERNING PAYING AGENT Section 7.01 Paying Agent; Appointment and Acceptance of Duties. The City hereby appoints the Trustee as the Paying Agent for the Bonds. Section 7.02 Paying Agent -General Responsibilities. (a) The City may at any time or from time to time appoint a different Paying Agent or Paying Agents for the Bonds, and each Paying Agent, if other than the Trustee, shall be a commercial bank with trust powers and shall designate to the City and the Trustee its principal office and signify its acceptance of the duties and obligations imposed upon it hereunder by a written instrument of acceptance delivered to the City under which each such Paying Agent will agree, particularly: (i) to hold all sums held by it for the payment of the principal of, and premium or interest on, Bonds in trust for the benefit of the Bondholders until such sums shall be paid to such Bondholders or otherwise disposed of as herein provided; 4814-2918-7057v3/022468-0021 63 of 134 23
August 3, 2021, Item #8(ii) to keep such books and records as shall be consistent with industry practice, to make such books and records available for inspection by the City and the Trustee at all reasonable times upon reasonable prior notice; and (iii) upon the request of the Trustee, to forthwith deliver to the Trustee all sums so held by such Paying Agent. (b) The Paying Agent shall perform the duties and obligations set forth in this Trust Agreement, and in particular shall hold all sums delivered to it by the Trustee for the payment of principal or premium of and interest on the Bonds for the benefit of the Bondholders until such sums shall be paid to such Bondholders or otherwise disposed of as herein provided. ( c) In performing its duties hereunder, the Paying Agent shall be entitled to all of the rights, protections and immunities accorded to the Trustee under the terms of this Trust Agreement. Section 7.03 Certain Permitted Acts. Any Fiduciary may become the owner of any Bonds, with the same rights it would have if it were not a Fiduciary. To the extent permitted by law, any Fiduciary may act as depository for, and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Bondholders or to effect or aid in any reorganization growing out of the enforcement of the Bonds or this Trust Agreement, whether or not any such committee shall represent the owners of a majority in Total Bond Obligation of the Bonds then Outstanding. Section 7.04 Resignation or Removal of Paying Agent and Appointment of Successor. (a) Any Paying Agent may at any time resign and be discharged of the duties and obligations created by this Trust Agreement in accordance with the provisions set forth in this Trust Agreement for the removal of the Trustee by giving at least 60 days' written notice to the City and the other Fiduciaries. Any Paying Agent may be removed at any time upon 30 days prior written notice by an instrument filed with such Paying Agent and the Trustee and signed by an Authorized City Representative. Any successor Paying Agent shall be appointed by the City with the approval of the Trustee and shall be a commercial bank with trust powers or trust company organized under the laws of any state of the United States, having capital stock and surplus aggregating at least $100,000,000, and willing and able to accept the office on reasonable and customary terms and authorized by law to perform all the duties imposed upon it by this Trust Agreement. (b) In the event of the resignation or removal of any Paying Agent, such Paying Agent shall assign and deliver any moneys and Bonds, including authenticated Bonds, held by it to its successor, or if there be no successor, to the Trustee. In the event that for any reason there shall be a vacancy in the office of any Paying Agent, the Trustee shall act as such Paying Agent. ARTICLE VIII COVENANTS OF THE CITY Section 8.01 Payment of Principal and Interest. The City covenants and agrees that it will duly and punctually pay or cause to be paid the principal, premium, if any, and interest on every Bond at the place and on the dates and in the manner specified herein and in the Bonds, according to the true intent and meaning thereof, and that it will faithfully do and perform all covenants and agreements 4814-2 918-705 7v 3/022468-0021 64 of 134 24
August 3, 2021, Item #8contained herein and in the Bonds. The City agrees that time is of the essence in this Trust Agreement. The obligations of the City under the Bonds, including the obligation to make all payments of principal, premium, if any, and interest when due, are absolute and unconditional, without any right of set-off or counterclaim. The City shall in each Fiscal Year include in its budget a provision to provide funds in an amount that is sufficient to pay the principal, premium, if any, and interest on the Bonds coming due in such Fiscal Year, but only to the extent that such amounts exceed the amount of available funds then on deposit in the Revenue Fund, and shall make annual appropriations for all such amounts. If the amount of such principal, premium, if any, and interest on the Bonds coming due in any Fiscal Year exceeds the sum of amounts budgeted in respect thereof together with amounts then on deposit in the Revenue Fund, then the City shall amend or supplement the budget to provide for such excess amounts. The covenants contained in this Section shall be deemed to be and shall be duties imposed by law and it shall be the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Trust Agreement agreed to be carried out and performed by the City. Section 8.02 Performance of Covenants by City; Authority; Due Execution. The City covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Trust Agreement, in any and every Bond executed, authenticated and delivered hereunder and in all of its proceedings pertaining hereto. The City covenants that it is duly authorized under the Constitution and laws of the State to issue the Bonds. Section 8.03 Instruments of Further Assurance. The City covenants that it will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered such further acts, instruments and transfers as the Trustee may reasonably request for the better assuring and confirming to the Trustee all of the rights and obligations of the City under and pursuant to this Trust Agreement. The City shall, upon the reasonable request of the Trustee, from time to time execute and deliver such further instructions and take such further action as may be reasonable and as may be required to effectuate the purposes of this Trust Agreement or any provisions hereof; provided, however, that no such instruments or actions shall pledge the full faith and credit or the taxing powers of the State. Section 8.04 No Inconsistent Action. The City covenants that no contract or contracts will be entered into or any action taken by the City which shall be inconsistent with the provisions of this Trust Agreement. Section 8.05 No Adverse Action. The City covenants that it will not take any action which will have a material adverse effect upon the rights of the Holders of the Bonds. Section 8.06 Maintenance of Powers. The City covenants that it will at all times use its best efforts to maintain the powers, functions, duties and obligations now reposed in it pursuant to applicable law and will not at any time voluntarily do, suffer or permit any act or thing the effect of which would be to hinder, delay or imperil either the payment of the indebtedness evidenced by any of the Bonds or the performance or observance of any of the covenants herein contained. 4814-2918-7057v3/022468-0021 65 of 134 25
August 3, 2021, Item #8Section 8.07 Covenants of City Binding on Successors. (a) All covenants, stipulations, obligations and agreements of the City contained in this Trust Agreement shall be deemed to be covenants, stipulations, obligations and agreements of the City to the full extent authorized or permitted by law. If the powers or duties of the City shall hereafter be transferred by amendment of any provision of the Constitution or any other law of the State or in any other manner there shall be a successor to the City, and if such transfer shall relate to any matter or thing permitted or required to be done under this Trust Agreement by the City, then the entity that shall succeed to such powers or duties of the City shall act and be obligated in the place and stead of the City as provided in this Trust Agreement, and all such covenants, stipulations, obligations and agreements herein shall be binding upon such successor or successors thereof from time to time and upon any officer, board, body, district, authority or commission to whom or to which any power or duty affecting such covenants, stipulations, obligations and agreements shall be transferred by or in accordance with law. (b) Except as otherwise provided in this Trust Agreement, all rights, powers and privileges conferred and duties and liabilities imposed upon the City by the provisions of this Trust Agreement shall be exercised or performed by the City or by such officers, board, body, district, authority or commission as may be required by law to exercise such powers or to perform such duties. Section 8.08 Trust Agreement to Constitute a Contract. This Trust Agreement is executed by the City for the benefit of the Bondholders and constitutes a contract with the Bondholders. Section 8.09 City to Perform Pursuant to Continuing Disclosure Agreement. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of this Trust Agreement, failure of the City to Agreement with the Continuing Disclosure Agreement shall not be considered an Event of Default under this Trust Agreement; provided, however, that the obligations of the City to comply with the provisions of the Continuing Disclosure Agreement shall be enforceable by any Participating Underwriter or any Holder of Outstanding Bonds, or by the Trustee on behalf of the Holders of Outstanding Bonds; provided, further, that the Trustee shall not be required to take any enforcement action whatsoever except at the written direction of the Holders of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding who shall have provided the Trustee with security and indemnity to its satisfaction, including without limitation, attorney's fees and expenses. The Participating Underwriters', Holders' and Trustee's rights to enforce the provisions of the Continuing Disclosure Agreement shall be limited solely to a right, by action in mandamus or for specific performance, to compel performance of the City's obligations under the Continuing Disclosure Agreement. Notwithstanding the foregoing, the City shall be entitled to amend or rescind the Continuing Disclosure Agreement to the extent permitted by law. ARTICLE IX INVESTMENTS Section 9.01 Investments Authorized. Money held by the Trustee in any fund or account hereunder shall be invested by the Trustee in Permitted Investments pending application as provided herein solely at the prior written direction of an Authorized City Representative, shall be registered in the name of the Trustee where applicable, as Trustee, and shall be held by the Trustee. The City shall direct the Trustee prior to 12:00 p.m. Pacific time on the last Business Day before the date on which a 4814-2918-7057v3/022468-0021 66 of 134 26
August 3, 2021, Item #8Permitted Investment matures or is redeemed as to the reinvestment of the proceeds thereof. In the absence of such direction, the Trustee shall invest in investments authorized under clause (8) contained in the definition of "Permitted Investments." The Trustee may rely on the City's certification in such investment instructions that such investments are permitted by law and by any policy guidelines promulgated by the City. Money held in any fund or account hereunder may be commingled for purposes of investment only. The Trustee may, with the prior written approval of an Authorized City Representative, purchase from or sell to itself or any affiliate, as principal or agent, investments authorized by this Section 9.01. Any investments and reinvestments shall be made after giving full consideration to the time at which funds are required to be available hereunder and to the highest yield practicably obtainable giving due regard to the safety of such funds and the date upon which such funds will be required for the uses and purposes required by this Trust Agreement. The Trustee or any of its affiliates may act as agent in the making or disposing of any investment and may act as sponsor or advisor with respect to any Permitted Investment. For investment purposes, the Trustee may commingle the funds and accounts established hereunder, but shall account for each separately. The City acknowledges that to the extent that regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the City with periodic cash transaction statements which shall include details for all investment transactions made by the Trustee hereunder. Section 9.02 Reports. The Trustee shall furnish at least quarterly to the City a report (which may be in the form of its regular statements) of all investments made by the Trustee and of all amounts on deposit in each fund and account maintained hereunder. Section 9.03 Valuation and Disposition of Investments. For the purpose of determining the amount in any fund or account hereunder, all Permitted Investments shall be valued at the market value thereof not later than July 1 of each year. With the prior written approval of an Authorized City Representative, the Trustee may sell at the best price obtainable or present for redemption, any Permitted Investment so purchased by the Trustee whenever it shall be necessary in order to provide money to meet any required payment, transfer, withdrawal or disbursement from any fund or account hereunder, and the Trustee shall not be liable or responsible for any loss resulting from such investment or sale, except any loss resulting from its own negligence or willful misconduct. Section 9.04 Application of Investment Earnings. Investments in any Fund or Account shall be deemed at all times to be a part of such Fund or Account, and any profit realized from such investment shall be credited to such Fund or Account and any loss resulting from such investment shall be charged to such Fund or Account. Interest earnings on investments in any Fund or Account shall be deposited in the Bond Interest Account of the Revenue Fund. ARTICLEX DEFEASANCE Section 10.01 Discharge of Bonds; Release of Trust Agreement. Bonds or portions thereof (such portions to be in an Authorized Denomination) which have been paid in full or which are deemed to have been paid in full shall no longer be entitled to the benefits of this Trust Agreement except for 4814-2918-7057v3/022468-0021 67 of 134 27
August 3, 2021, Item #8the purposes of payment from moneys and Defeasance Securities. When all Bonds which have been issued under this Trust Agreement have been paid in full or are deemed to have been paid in full, and all other sums payable hereunder by the City, including all necessary and proper fees, compensation and expenses of the Trustee and any Paying Agents, have been paid or are duly provided for, then the Trustee shall cancel, discharge and release this Trust Agreement, shall execute, acknowledge and deliver to the City such instruments of satisfaction and discharge or release as shall be requisite to evidence such release and such satisfaction and discharge and shall assign and deliver to the City any amounts at the time subject to this Trust Agreement which may then be in the Trustee's possession, except funds or securities in which such funds are invested and held by the Trustee or the Paying Agents for the payment of the principal, premium, if any, and interest on the Bonds. Section 10.02 Bonds Deemed Paid. (a) A Bond shall be deemed to be paid within the meaning of this Article X and for all purposes of this Trust Agreement when: (i) payment with respect thereto of the principal, interest and premium, if any, either: (1) shall have been made or caused to be made in accordance with the terms of the Bonds and this Trust Agreement; or (2) shall have been provided for, as certified to the Trustee by a Consultant who is a certified public accountant, by irrevocably depositing with the Trustee in trust and irrevocably setting aside exclusively for such payment: (x) moneys sufficient to make such payment; and/or (y) Defeasance Securities maturing as to principal and interest in such amounts and at such times as will insure the availability of sufficient moneys to make such payment; and (ii) all necessary and proper fees, compensation and expenses of the Trustee and any Paying Agents pertaining to the Bonds with respect to which such deposit is made shall have been paid or provision made for the payment thereof. At such times as Bonds shall be deemed to be paid hereunder, such Bonds shall no longer be secured by or entitled to the benefits of this Trust Agreement, except for the purposes of payment from such moneys and Defeasance Securities. (b) Notwithstanding the foregoing paragraph, no deposit under clause (i)(2) of the immediately preceding paragraph shall be deemed a payment of such Bonds until: (i) proper notice of redemption of such Bonds shall have been given in accordance with Section 4.01, or in the event that such Bonds are not to be redeemed within the next succeeding 60 days, until the City shall have given the Trustee irrevocable instructions to notify, as soon as practicable, the holders of the Bonds in accordance with Section 4.01, that the deposit required by clause (a)(i)(2) above has been made with the Trustee and that such Bonds are deemed to have been paid in accordance with this Article X and stating the maturity or redemption date upon which moneys are to be available for the payment of the principal of, premium, if any, and unpaid interest on such Bonds; or (ii) the maturity of such Bonds. ARTICLE XI DEFAULTS AND REMEDIES Section 11.01 Events ofDefault. Each of the following events shall constitute and is referred to in this Trust Agreement as an "Event of Default": (a) a failure to pay the principal or premium, if any, on any of the Bonds when the same shall become due and payable at maturity or upon redemption; (b) a failure to pay any installment of interest on any of the Bonds when such interest shall become due and payable; 4814-2918-7057v3/022468-0021 68 of 134 28
August 3, 2021, Item #8( c) a failure by the City to observe and perform any covenant, condition, agreement or provision ( other than as specified in clauses (a) and (b) of this Section 11.01) contained in the Bonds or in this Trust Agreement on the part of the City to be observed or performed, which failure shall continue for a period of 60 days after written notice, specifying such failure and requesting that it be remedied, shall have been given to the City by the Trustee; provided, however, that the Trustee shall be deemed to have agreed to an extension of such period if corrective action is initiated by the City within such period and is being diligently pursued; or ( d) if the City files a petition in voluntary bankruptcy, for the composition of its affairs or for its corporate reorganization under any state or federal bankruptcy or insolvency law, or makes an assignment for the benefit of creditors, or admits in writing to its insolvency or inability to pay debts as they mature or consents in writing to the appointment of a trustee or receiver for itself. Upon its actual knowledge of the occurrence of any Event of Default, the Trustee shall immediately give written notice thereof to the City. Section 11.02 Remedies. (a) Upon the occurrence and continuance of any Event of Default, the Trustee in its discretion may, and shall upon the written direction of the holders of a majority of the Total Bond Obligation of the Bonds then Outstanding and, in each case, receipt of indemnity to its satisfaction, in its own name and as the Trustee of an express trust: (1) by mandamus, or other suit, action or proceeding at law or in equity, enforce all rights of the Bondholders hereunder, as the case may be, and require the City to carry out any agreements with or for the benefit of the Bondholders and to perform its or their duties under the Refunding Law or any other law to which it is subject and this Trust Agreement; provided that any such remedy may be taken only to the extent permitted under the applicable provisions of this Trust Agreement; (2) bring suit upon the defaulted Bonds; (3) commence an action or suit in equity to require the City to account as if it were the trustee of an express trust for the Bondholders; or ( 4) by action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Bondholders hereunder. (b) The Trustee shall be under no obligation to take any action with respect to any Event of Default unless the Trustee has actual knowledge of the occurrence of such Event of Default. Section 11.03 Restoration to Former Position. In the event that any proceeding taken by the Trustee to enforce any right under this Trust Agreement shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then the City, the Trustee and the Bondholders shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies and powers of the Trustee shall continue as though no such proceeding had been taken. Section 11.04 Bondholders' Right to Direct Proceedings on their Behalf. Anything in this Trust Agreement to the contrary notwithstanding, Holders of a majority in Total Bond Obligation shall have the right, at any time, by an instrument in writing executed and delivered to the Trustee, to direct 4814-2918-7057v3/022468-0021 69 of 134 29
August 3, 2021, Item #8the time, method and place of conducting all remedial proceedings on their behalf available to the Trustee under this Trust Agreement to be taken in connection with the enforcement of the terms of this Trust Agreement or exercising any trust or power conferred on the Trustee by this Trust Agreement; provided that such direction shall not be otherwise than in accordance with the provisions of the law and this Trust Agreement and that there shall have been provided to the Trustee security and indemnity satisfactory to the Trustee against the costs, expenses and liabilities to be incurred as a result thereof by the Trustee; provided further that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Bondholders not parties to such direction. Section 11.05 Limitation on Bondholders' Rights to Institute Proceedings. No owner of any Bond shall have the right to institute any suit, action or proceeding at law in equity, for the protection or enforcement of any right or remedy under this Trust Agreement, or applicable law with respect to such Bond, unless: (a) such owner shall have given to the Trustee written notice of the occurrence of an Event of Default; (b) the owners of not less than a majority in Total Bond Obligation shall have made written request upon the Trustee to exercise the powers heretofore granted or to institute such suit, action or proceeding in its own name; ( c) such owner or said owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; ( d) the Trustee shall have refused or failed to comply with such request for a period of 60 days after such written request shall have been received by and said tender of indemnity shall have been made to, the Trustee; and ( e) the Trustee shall not have received contrary directions from the owners of a majority in aggregate principal amount of the Total Bonds Obligation. Section 11.06 No Impairment of Right to Enforce Payment. Notwithstanding any other provision in this Trust Agreement, the right of any Bondholder to receive payment of the principal of and interest on such Holder's Bond, on or after the respective due dates expressed therein, or to institute suit for the enforcement of any such payment on or after such respective date, shall not be impaired or affected without the consent of such Bondholder. Section 11.07 Proceedings by Trustee Without Possession of Bonds. All rights of action under this Trust Agreement or under any of the Bonds secured hereby which are enforceable by the Trustee may be enforced by it without the possession of any of the Bonds, or the production thereof at the trial or other proceedings relative thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in its name for the equal and ratable benefit of the Bondholders, as the case may be, subject to the provisions of this Trust Agreement. Section 11.08 No Remedy Exclusive. No remedy herein conferred upon or reserved to the Trustee or to Bondholders is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given hereunder, or now or hereafter existing at law or in equity or by statute; provided, however, that any conditions set forth herein to the taking of any remedy to enforce the provisions of this Trust Agreement or the Bonds shall also be conditions to seeking any remedies under any of the foregoing pursuant to this Section 11.08. Section 11.09 No Waiver of Remedies. No delay or omission of the Trustee or of any Bondholder to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default, or an acquiescence therein and every power and remedy given by this Article XI to the Trustee and to the Bondholders, respectively, may be exercised from time to time and as often as may be deemed expedient. 4814-2918-7057v3/022468-0021 70 of 134 30
August 3, 2021, Item #8Section 11.10 Application of Moneys. (a) Any moneys received by the Trustee for the benefit of Bondholders, by any receiver or by any Bondholder pursuant to any right given or action taken under the provisions of this Article XI, after payment of the costs and expenses of the proceedings resulting in the collection of such moneys and of the fees, expenses, liabilities and advances incurred or made by the Trustee (including without limitation reasonable fees and reasonable expenses of its attorneys), shall be deposited in the Revenue Fund and all moneys so deposited in the Revenue Fund during the continuance of an Event of Default shall be applied: (i) first, to the payment to the persons entitled thereto of all installments of interest then due on the Bonds, with interest on overdue installments, if lawful, at the rate per annum borne by the Bonds, as the case may be, in the order of maturity of the installments of such interest (if the amount available for such interest installments shall not be sufficient to pay in full any particular installment of interest, then to the payment ratably, according to the amounts due on such installment), and if the amount available for such interest shall not be sufficient to make payment thereof, then to the payment thereof ratably according to the respective aggregate amounts due; and (ii) second, to the payment to the persons entitled thereto of the unpaid principal, as applicable, of any of the Bonds which shall have become due with interest on such Bonds at their respective rate from the respective dates upon which they became due (if the amount available for such unpaid principal and interest shall not be sufficient to pay in full Bonds due on any particular date, together with such interest, then to the payment ratably, according to the amount of principal and interest due on such date, in each case to the persons entitled thereto, without any discrimination or privilege among Holders of Bonds), and, if the amount available for such principal and interest shall not be sufficient to make full payment thereof, then to the payment thereof ratably according to the respective aggregate amounts due. (b) Whenever moneys are to be applied pursuant to the prov1s1ons of this Section 11.10, such moneys shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such funds, it shall fix the date (which shall be an Interest Payment Date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest on the amounts to be paid on such date shall cease to accrue. The Trustee shall give notice of the deposit with it of any such moneys and of the fixing of any such date by Mail to all Bondholders and shall not be required to make payment to any Bondholder until such Bonds shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid. Section 11.11 Severability of Remedies. It is the purpose and intention of this Article XI to provide rights and remedies to the Trustee and the Bondholders which may be lawfully granted under the provisions of applicable law, but should any right or remedy herein granted be held to be unlawful, the Trustee and the Bondholders shall be entitled, as above set forth, to every other right and remedy provided in this Trust Agreement and by applicable law. Section 11.12 Additional Events of Default and Remedies. So long as any Bonds are Outstanding, the Events of Default and remedies as set forth in this Article XI may be supplemented with additional Events of Default and remedies as set forth from time to time in a supplemental agreement. 4814-2918-7057v3/022468-0021 71 of 134 31
August 3, 2021, Item #8ARTICLE XII TRUSTEE; REGISTRAR Section 12.01 Acceptance of Trusts. The Trustee hereby accepts and agrees to execute the trusts specifically imposed upon it by this Trust Agreement, but only upon the additional terms set forth in this Article XII, to all of which the City agrees and the respective Bondholders agree by their acceptance of delivery of any of the Bonds. Section 12.02 Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise its rights and powers and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) Except during the continuance of an Event of Default: (i) the Trustee need perform only those duties that are specifically set forth in this Trust Agreement and no others; and (ii) in the absence of negligence on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Trust Agreement. ( c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section 12.02; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless the Trustee was negligent in ascertaining the pertinent facts; (iii) the Trustee shall not be liable with respect to any action it takes or fails to take in good faith in accordance with a direction received by it from Bondholders or the City in the manner provided in this Trust Agreement; and (iv) no provision of this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers. ( d) Every provision of this Trust Agreement that in any way relates to the Trustee is subject to all the paragraphs of this Section 12.02. (e) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity reasonably satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any cash held by it except as the Trustee may agree with the City. 4814-2918-7057v3/022468-0021 72 of 134 32
August 3, 2021, Item #8Section 12.03 Rights of Trustee. (a) The recitals of facts contained herein and in the Bonds shall be taken as statements of the City, and the Trustee assumes no responsibility for the correctness of the same (other than the certificate of authentication of the Trustee on each Bond), and makes no representations as to the validity or sufficiency of this Trust Agreement or of the Bonds or of any Permitted Investment and shall not incur any responsibility in respect of any such matter, other than in connection with the duties or obligations expressly assigned to or imposed upon it herein or in the Bonds. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence, willful misconduct or breach of the express terms and conditions hereof. The Trustee and its directors, officers, employees or agents may in good faith buy, sell, own, hold and deal in any of the Bonds and may join in any action which any Holder of a Bond may be entitled to take, with like effect as if the Trustee was not the Trustee under this Trust Agreement. (b) The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder, and the opinion of such counsel shall be authorization for any action taken or not taken in reliance on such opinion, but the Trustee shall be answerable for the negligence or misconduct of any such attorney, agent or receiver selected by it. (c) No permissive power, right or remedy conferred upon the Trustee hereunder shall be construed to impose a duty to exercise such power, right or remedy. ( d) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, coupon or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the City, personally or by agent or attorney. ( e) The Trustee shall not be responsible for the application or handling by the City of any moneys transferred to or pursuant to any requisition or request of the City in accordance with the terms and conditions hereof. (f) Whether or not therein expressly so provided, every provision of this Trust Agreement relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article XII. (g) The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, facsimile transmission, electronic mail, opinion, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. (h) The Trustee shall not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of delay in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government, acts of the other 4814-2918-7057v3/022468-0021 73 of 134 33
August 3, 2021, Item #8party, fires, floods, epidemics, quarantine restnct10ns, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to the project, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Trustee. (i) The Trustee agrees to accept and act upon facsimile transmission of written instructions and/or directions pursuant to this Trust Agreement provided, however, that: (x) subsequent to such facsimile transmission of written instructions and/or directions the Trustee shall forthwith receive the originally executed instructions and/or directions; (y) such originally executed instructions and/or directions shall be signed by a person as may be designated and authorized to sign for the party signing such instructions and/or directions; and (z) the Trustee shall have received a current incumbency certificate containing the specimen signature of such designated person. Section 12.04 lndivid ual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Bonds and may otherwise deal with the City with the same rights it would have if it were not Trustee. Any Paying Agent or other agent may do the same with like rights. Section 12.05 Trustee's Disclaimer. The Trustee makes no representations as to the validity or adequacy of this Trust Agreement or the Bonds, it shall not be accountable for the City's use of the proceeds from the Bonds paid to the City and it shall not be responsible for any statement in any official statement or other disclosure document or in the Bonds other than its certificate of authentication. Section 12.06 Notice of Defaults. Ifan event occurs which with the giving of notice or lapse of time or both would be an Event of Default, and if the event is continuing and if it is actually known to the Trustee, the Trustee shall mail to each Bondholder notice of the event within 90 days after it occurs. Except in the case of a default in payment or purchase on any Bonds, the Trustee may withhold the notice to Bondholders if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Bondholders. Section 12.07 Compensation of Trustee. The City shall from time to time, but only in accordance with a written agreement in effect with the Trustee, pay to the Trustee reasonable compensation for its services and shall reimburse the Trustee for all its reasonable advances and expenditures, including but not limited to advances to and fees and expenses of independent appraisers, accountants, consultants, counsel, agents and attorneys-at-law or other experts employed by it in the exercise and performance of its powers and duties hereunder. The Trustee shall not otherwise have any claims or lien for payment of compensation for its services against any other moneys held by it in the funds or accounts established hereunder, except as provided in Section 11.10, but may take whatever legal actions are lawfully available to it directly against the City. To the extent permitted by applicable law, the City agrees to indemnify and save the Trustee, its officers, employees, directors and agents, harmless against any costs, expenses, claims or liabilities whatsoever, including, without limitation, fees and expenses of its attorneys, that 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 agreement contained in this Section shall survive the payment of the Bonds, the discharge of this Trust Agreement and the appointment of a successor trustee. 4814-2918-7057v3/022468-0021 74 of 134 34
August 3, 2021, Item #8Section 12.08 Eligibility of Trustee. This Trust Agreement shall always have a Trustee that is a trust company, a bank or an association having trust powers and is organized and doing business under the laws of the United States or any state or the District of Columbia, is subject to supervision or examination by United States, state or District of Columbia authority and has a combined capital and surplus of at least $100,000,000 as set forth in its most recent published annual report of condition. Section 12.09 Replacement of Trustee. (a) The Trustee may resign as trustee hereunder by notifying the City in writing prior to the proposed effective date of the resignation. The Holders of a majority in Total Bond Obligation of the Bonds may remove the Trustee by notifying the removed Trustee and may appoint a successor Trustee with the City's consent. The City may remove the Trustee, by notice in writing delivered to the Trustee 30 days prior to the proposed removal date; provided, however, that the City shall have no right to remove the Trustee during any time when an Event of Default has occurred and is continuing unless: (i) the Trustee fails to comply with the foregoing Section; (ii) the Trustee is adjudged a bankrupt or an insolvent; (iii) the Trustee otherwise becomes incapable of acting; or (iv) the City determines that the Trustee's services are no longer satisfactory to the City. No resignation or removal of the Trustee under this Section shall be effective until a new Trustee has taken office. If the Trustee resigns or is removed or for any reason is unable or unwilling to perform its duties under this Trust Agreement, the City shall promptly appoint a successor Trustee. (b) A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the City. Immediately thereafter, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee, the resignation or removal of the retiring Trustee shall then (but only then) become effective and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Trust Agreement. If a successor Trustee does not take office within 60 days after the retiring Trustee delivers notice of resignation or the City delivers notice of removal, the retiring Trustee, the City or the Holders of a majority in Total Bond Obligation of the Bonds may petition any court of competent jurisdiction for the appointment of a successor Trustee. Section 12.10 Successor Trustee or Agent by Merger. If the Trustee, any Paying Agent or Registrar consolidates with, merges or converts into, or transfers all or substantially all its assets ( or, in the case of a bank or trust company, its corporate trust business) to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee, Paying Agent or Registrar. Section 12.11 Registrar. The City shall appoint the Registrar for the Bonds and may from time to time remove a Registrar and name a replacement upon notice to the Trustee. The City hereby appoints the Trustee as Registrar. Each Registrar, if other than the Trustee, shall designate to the Trustee, the Paying Agent, and the City its principal office and signify its acceptance of the duties imposed upon it hereunder by a written instrument of acceptance delivered to the City and the Trustee under which such Registrar will agree, particularly, to keep such books and records as shall be consistent with prudent industry practice and to make such books and records available for inspection by the City, the Trustee, and the Paying Agent at all reasonable times. Section 12.12 Other Agents. The City or the Trustee may from time to time appoint other agents to perform duties and obligations under this Trust Agreement which agents may include, but not be limited to, authenticating agents all as provided by resolution of the City. 4814-2918-7057v3/022468-0021 75 of 134 35
August 3, 2021, Item #8Section 12.13 Several Capacities. Anything in this Trust Agreement to the contrary notwithstanding, the same entity may serve hereunder as the Trustee, Registrar and any other agent as appointed to perform duties or obligations under this Trust Agreement or an escrow agreement, or in any combination of such capacities, to the extent permitted by law. Section 12.14 Accounting Records and Reports of Trustee. (a) The Trustee shall at all times keep, or cause to be kept, proper books of record and account in which complete and accurate entries shall be made of all transactions made by it relating to the proceeds of the Bonds and all Funds and Accounts established pursuant to this Trust Agreement and held by the Trustee. Such books of record and account shall be available for inspection by the City and any Bondholder, or his agent or representative duly authorized in writing, upon prior reasonable notice, at reasonable hours and under reasonable circumstances. (b) The Trustee shall file and furnish to the City and to each Bondholder who shall have filed his name and address with the Trustee for such purpose (at such Bondholder's cost), on an annual basis ( or, with respect to the City, such other interval that the City may request), a complete financial statement (which may be its regular account statements and which need not be audited) covering receipts, disbursements, allocation and application of moneys in any of the funds and accounts established pursuant to this Trust Agreement for the preceding year. Section 12.15 No Remedy Exclusive. No remedy herein conferred upon or reserved to the City is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given hereunder, or now or hereafter existing at law or in equity or by statute. ARTICLE XIII MODIFICATION OF THIS TRUST AGREEMENT Section 13.01 Limitations. This Trust Agreement shall not be modified or amended in any respect subsequent to the first delivery of fully executed and authenticated Bonds except as provided in and in accordance with and subject to the provisions of this Article XIII. Section 13.02 Supplemental Agreements Not Requiring Consent of Bondholders. (a) The City may, from time to time and at any time, without the consent of or notice to the Bondholders, execute and deliver supplemental agreements supplementing and/or amending this Trust Agreement as follows: (i) to cure any defect, omission, inconsistency or ambiguity in this Trust Agreement; (ii) to add to the covenants and agreements of the City in this Trust Agreement other covenants and agreements, or to surrender any right or power reserved or conferred upon the City, and which shall not adversely affect the interests of the Bondholders; (iii) to confirm, as further assurance, any interest of the Trustee in and to the Funds and Accounts held by the Trustee or in and to any other moneys, securities or funds of the City provided pursuant to this Trust Agreement or to otherwise add security for the Bondholders; 4814-2918-7057v3/022468-0021 76 of 134 36
August 3, 2021, Item #8(iv) to comply with the requirements of the Trust Indenture Act of 1939, as from time to time amended; (v) to modify, alter, amend or supplement this Trust Agreement in any other respect which, in the judgment of the City, is not materially adverse to the Bondholders; ( vi) to qualify the Bonds for a rating or ratings by any Rating Agency; and (vii) to authorize the issuance of Additional Bonds in accordance with this Trust Agreement. (b) Before the City shall, pursuant to this Section 13.02, execute any supplemental agreement, there shall have been delivered to the City an opinion of Bond Counsel to the effect that such supplemental agreement: (i) is authorized or permitted by this Trust Agreement and the Refunding Law; and (ii) will, upon the execution and delivery thereof, be valid and binding upon the City in accordance with its terms, subject to the typical exceptions. Section 13.03 Supplemental Agreement Requiring Consent of Bondholders. (a) Except for any supplemental agreement entered into pursuant to Section 13.02, the Holders of not less than a majority in Total Bond Obligation shall have the right from time to time to consent to and approve the execution by the City of any supplemental agreement deemed necessary or desirable by the City for the purposes of modifying, altering, amending, supplementing or rescinding, in any particular, any of the terms or provisions contained in this Trust Agreement or in a supplemental agreement; provided, however, that, unless approved in writing by the Holders of all the Bonds then Outstanding, nothing contained herein shall permit or be construed as permitting: (i) a change in the times, amounts or currency of payment of the principal of or interest on any Outstanding Bonds; or (ii) a reduction in the principal amount or redemption price of any Outstanding Bonds or the rate of interest thereon; and provided that nothing contained herein, including the provisions of Section 13.03(b) below, shall, unless approved in writing by the Holders of all the Bonds then Outstanding, permit or be construed as permitting: (1) a preference or priority of any Bond or Bonds over any other Bond or Bonds; or (2) a reduction in the aggregate principal amount of Bonds the consent of the Holders of which is required for any such supplemental agreement. Nothing herein contained, however, shall be construed as making necessary the approval by Holders of the execution of any supplemental agreement as authorized in Section 13.02. (b) If at any time the City shall desire to enter into any supplemental agreement for any of the purposes of this Section 13.03, the City shall cause notice of the proposed execution of the supplemental agreement to be given by Mail to all Holders. Such notice shall briefly set forth the nature of the proposed supplemental agreement and shall state that a copy thereof is on file at the office of the City for inspection by all Holders. (c) Within two weeks after the date of the first mailing of such notice, the City may execute and deliver such supplemental agreement in substantially the form described in such notice, but only if there shall have first been delivered to the City: (i) the required consents, in writing, of Holders; and (ii) an opinion of Bond Counsel stating that such supplemental agreement is authorized or permitted by this Trust Agreement and other applicable law, complies with their respective terms and, upon the execution and delivery thereof, will be valid and binding upon the City in accordance with its terms. 4814-2918-7057v3/022468-0021 77 of 134 37
August 3, 2021, Item #8( d) If Holders of not less than the percentage of Bonds required by this Section 13 .03 shall have consented to and approved the execution and delivery thereof as herein provided, no Holders shall have any right to object to the adoption of such supplemental agreement, or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the execution and delivery thereof, or to enjoin or restrain the City from executing the same or from taking any action pursuant to the provisions thereof. Section 13.04 Effect of Supplemental Agreements. Upon execution and delivery of any supplemental agreement pursuant to the provisions of this Article XIII, this Trust Agreement and all supplemental agreements shall be, and shall be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Trust Agreement and all supplemental agreements of the City, the Trustee, the Registrar, any Paying Agent and all Holders shall thereafter be determined, exercised and enforced under this Trust Agreement and all supplemental agreements, subject in all respects to such modifications and amendments. Section 13.05 Supplemental Agreements to be Part of this Trust Agreement. Any supplemental agreement adopted in accordance with the provisions of this Article XIII shall thereafter form a part of this Trust Agreement or the supplemental agreement which they supplement or amend, and all of the terms and conditions contained in any such supplemental agreement as to any provision authorized to be contained therein shall be and shall be deemed to be part of the terms and conditions of this Trust Agreement which they supplement or amend for any and all purposes. ARTICLE XIV MISCELLANEOUS PROVISIONS Section 14.01 Parties in Interest. Except as herein otherwise specifically provided, nothing in this Trust Agreement expressed or implied is intended or shall be construed to confer upon any person, firm or corporation other than the City, the Paying Agent, the Trustee, and the Bondholders any right, remedy or claim under or by reason of this Trust Agreement, this Trust Agreement being intended to be for the sole and exclusive benefit of the City, the Paying Agent, the Trustee and the Bondholders. Section 14.02 Severability. In case any one or more of the provisions of this Trust Agreement, or of any Bonds issued hereunder shall, for any reason, be held to be illegal or invalid, such illegality or invalidity shall not affect any other provisions of this Trust Agreement or of Bonds, and this Trust Agreement and any Bonds issued hereunder shall be construed and enforced as if such illegal or invalid provisions had not been contained herein or therein. Section 14.03 No Personal Liability of City Officials; Limited Liability of City to Bondholders. (a) No covenant or agreement contained in the Bonds or in this Trust Agreement shall be deemed to be the covenant or agreement of any present or future official, officer, agent or employee of the City in their individual capacity, and neither the members of the City Council of the City nor any person executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof. 4814-2918-7057v3/022468-0021 78 of 134 38
August 3, 2021, Item #8(b) Except for the payment when due of the payments and the observance and performance of the other agreements, conditions, covenants and terms required to be performed by it contained in this Trust Agreement, the City shall not have any obligation or liability to the Bondholders with respect to this Trust Agreement or the preparation, execution, delivery, transfer, exchange or cancellation of the Bonds or the receipt, deposit or disbursement of the payments by the Trustee, or with respect to the performance by the Trustee of any obligation required to be performed by it contained in this Trust Agreement. Section 14.04 Execution of Instruments; Proof of Ownership. (a) Any request, direction, consent or other instrument in writing required or permitted by this Trust Agreement to be signed or executed by Bondholders or on their behalf by an attorney-in-fact may be in any number of concurrent instruments of similar tenor and may be signed or executed by such Bondholders in person or by an agent or attorney-in-fact appointed by an instrument in writing or as provided in the Bonds. Proof of the execution of any such instrument and of the ownership of Bonds shall be sufficient for any purpose of this Trust Agreement and shall be conclusive in favor of the Trustee with regard to any action taken by it under such instrument if made in the following manner: (i) the fact and date of the execution by any person of any such instrument may be proved by the certificate of any officer in any jurisdiction who, by the laws thereof, has power to take acknowledgments within such jurisdiction, to the effect that the person signing such instrument acknowledged before him the execution thereof, or by an affidavit of a witness to such execution; and (ii) the ownership of Bonds shall be proved by the registration books kept under the provisions of Section 3.01 hereof; (b) Nothing contained in this Section 14.04 shall be construed as limiting the Trustee to such proof. The Trustee may accept any other evidence of matters herein stated which it may deem sufficient. Any request, consent of, or assignment by any Bondholder shall bind every future Bondholder of the same Bonds or any Bonds issued in lieu thereof in respect of anything done by the Trustee or the City in pursuance of such request or consent. Section 14.05 Governing Law; Venue. This Trust Agreement is made in the State under the Constitution and laws of the State and is to be so construed. If any party to this Trust Agreement initiates any legal or equitable action to enforce the terms of this Trust Agreement, to declare the rights of the parties under this Trust Agreement or which relates to this Trust Agreement in any manner, each such party agrees that the place of making and for performance of this Trust Agreement shall be the City, and the proper venue for any such action is the Superior Court of the State of California, County of San Diego. Section 14.06 Notices. (a) Any notice, request, direction, designation, consent, acknowledgment, certification, appointment, waiver or other communication required or permitted by this Trust Agreement or the Bonds must be in writing except as expressly provided otherwise in this Trust Agreement or the Bonds. 4814-2918-7057v3/022468-0021 79 of 134 39
August 3, 2021, Item #8(b) The Trustee shall give written notice to the Rating Agencies if at any time: (i) a successor Trustee is appointed under this Trust Agreement; (ii) there is any amendment to this Trust Agreement; (iii) Bonds are to be redeemed pursuant to Section 4.02; (iv) Bonds are defeased prior to maturity pursuant to Article X; or (v) the Bonds shall no longer be Book-Entry Bonds. Notice in the case of an event referred to in clause (ii) hereof shall include a copy of any such amendment. ( c) Except as otherwise required herein, all notices required or authorized to be given to the City, the Trustee and Paying Agent, and the Rating Agencies pursuant to this Trust Agreement shall be in writing and shall be sent by registered or certified mail, postage prepaid, to the following addresses: 1. if to the City, to: City of Poway 13325 Civic Center Drive Poway, California 92064 Attention: Director of Finance Telephone: (858) 668-4411 2. ifto the Trustee and Paying Agent, to: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Global Corporate Trust 3. if to S&P, to: S&P Global Ratings 5 5 Water Street New York, New York 10041 or to such other addresses as may from time to time be furnished to the parties, effective upon the receipt of notice thereof given as set forth above. Section 14.07 Holidays. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Trust Agreement, shall not be a Business Day, such payment may, unless otherwise provided in this Trust Agreement be made or act performed or right exercised on the next succeeding Business Day with the same force and effect as if done on the nominal date provided in this Trust Agreement, and no interest shall accrue for the period from and after such nominal date. Section 14.08 Captions. The captions and table of contents in this Trust Agreement are for convenience only and do not define or limit the scope or intent of any provisions or Sections of this Trust Agreement. 4814-2918-7057v3/022468-0021 80 of 134 40
August 3, 2021, Item #8Section 14.09 Counterparts. This Trust Agreement may be signed in several counterparts, each of which will be an original, but all of them together constitute the same instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 4814-2 918-705 7v 3/022468-0021 81 of 134 41
August 3, 2021, Item #8IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement by their officers thereunto duly authorized as of the date first above written. ATTEST: City Clerk 4814-2918-7057v3/022468-0021 82 of 134 CITY OF POWAY By: City Manager U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer S-1
August 3, 2021, Item #8No. EXHIBIT "A" FORM OF BOND Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC''), to the City or its agent for registration of transfer, exchange, or payment, and any Bond issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. CITY OF POWAY PENSION OBLIGATION BONDS, SERIES 2021 (FEDERALLY TAXABLE) $ ___ _ Neither the faith and credit nor the taxing power of the State of California or any public agency is pledged to the payment of the principal of, or interest on, this Bond Maturity 1,20_ Interest Rate Per Annum % Dated Date ___ ,2021 CUSIP REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: AND NO/100 DOLLARS --------THE CITY OF POWAY, a municipal corporation and general law city duly that is organized and validly existing under and pursuant to the Constitution and the laws of the State of California ( the "City"), for value received, hereby promises to pay to the registered owner named above or registered assigns, on the maturity date specified above, the principal sum specified above together with interest on such principal sum at the rates determined as herein provided on each Interest Payment Date (hereinafter defined) from the Interest Payment Date next preceding the date of authentication and delivery thereof, unless: (i) such date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication; (ii) it is authenticated after a Record Date and before the close of business on the immediately following Interest Payment Date, in which event interest thereon shall be payable from such Interest Payment Date; or (iii) it is authenticated prior to the close of business on the first Record Date, in which event interest thereon shall be payable from its Dated Date; provided, however, that if at the time of authentication of any Bond interest thereon is in default, interest thereon shall be payable from the Interest Payment Date to which interest has 4814-2918-7057v3/022468-0021 83 of 134 A-1
August 3, 2021, Item #8previously been paid or made available for payment or, if no interest has been paid or made available for payment, from its Dated Date. The principal hereof and premium, if any, hereon are payable when due upon presentation hereof at the Principal Office of U.S. Bank National Association, as trustee (together with any successor as trustee under the Trust Agreement (hereinafter defined), the "Trustee"), in lawful money of the United States of America. This Bond is one of a duly authorized issue of City of Poway Pension Obligation Bonds, Series 2021 (Federally Taxable) (the "Bonds") of the designation indicated on the face hereof. Said authorized issue of Bonds is limited in aggregate principal amount as provided in the Trust Agreement and consists or may consist of one or more series of varying denominations, dates, maturities, interest rates and other provisions, as provided in the Trust Agreement, all issued and to be issued pursuant to the provisions of Articles 10 and 11 (commencing with Section 53570 of Chapter 3 of Division 2 of Title 5 of the California Government Code (the "Refunding Law"). This Bond is issued pursuant to the Trust Agreement dated as of __ 1, 2021 by and between the City and U.S. Bank National Association, as trustee, providing for the issuance of the Bonds and setting forth the terms and authorizing the issuance of the Bonds (said Trust Agreement as amended, supplemented or otherwise modified from time to time being the "Trust Agreement"). Reference is hereby made to the Trust Agreement and to the Refunding Law for a description of the terms on which the Bonds are issued and to be issued, and the rights of the registered owners of the Bonds; and all the terms of the Trust Agreement and the Refunding Law are hereby incorporated herein and constitute a contract between the City and the registered owner from time to time of this Bond, and to all the provisions thereof the registered owner of this Bond, by its acceptance hereof, consents and agrees. All capitalized terms that are used herein and not otherwise defined shall have the meanings given such terms in the Trust Agreement. The City is required under the Trust Agreement to make payments on the Bonds from any source of legally available funds. The City has covenanted to make the necessary annual appropriations for such purpose. The obligation of the City to make payments on the Bonds does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. This Bond is one of the Bonds described in the Trust Agreement. Interest on Bonds Interest shall be computed on the basis of a 360-day year consisting of twelve 30-day months. The Bonds or the principal portion thereof called for redemption will cease to bear interest after the specified redemption date, provided that notice has been given pursuant to the Trust Agreement and sufficient funds for redemption are on deposit at the place of payment on the redemption date. Redemption of Bonds Optional Redemption. The Bonds maturing on or after __ 1, 20_ may be redeemed at the option of the City from any source of funds on any date on or after __ 1, 20 _ in whole or in part from such maturities as are selected by the City and by lot within a maturity at a redemption price equal to the principal amount to be redeemed, together with accrued interest to the date of redemption, 4814-2918-7057v3/022468-0021 84 of 134 A-2
August 3, 2021, Item #8without premium. In the event of an opinion redemption of the Bonds, the City will provide the Trustee with a revised sinking fund schedule giving effect to the optional redemption so completed. Mandatory Sinking Fund Redemption of Bonds. The Bonds maturing __ I, 20_ (the "20 _ Term Bonds") are subject to mandatory sinking fund redemption at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date, without premium. The 20 _ Term Bonds shall be so redeemed on the following dates and in the following amounts: * Final maturity. Certain Defined Terms Redemption Date C __ l) 20 20 20-* Principal Amount $_ "Interest Payment Date" means __ 1 and __ 1 of each year, commencing __ 1, 20 "Record Date" means the fifteenth day of each calendar month preceding any Interest Payment Date, regardless of whether such day is a Business Day. Other Provisions The rights and obligations of the City and of the holders and registered owners of the Bonds may be modified or amended at any time in the manner, to the extent, and upon the terms provided in the Trust Agreement, which provide, in certain circumstances, for modifications and amendments without the consent of or notice to the registered owners of the Bonds. It is hereby certified and recited that any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by this Bond, and in the issuing of this Bond, do exist, have happened and have been performed in due time, form and manner, as required by the Constitution and statutes of the State of California, and that this Bond is within every debt and other limit prescribed by the Constitution and the statutes of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Trust Agreement or the Refunding Law. This Bond shall not be entitled to any benefit under the Trust Agreement, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been manually signed by the Trustee. 4814-2918-7057v3/022468-0021 85 of 134 A-3
August 3, 2021, Item #8IN WITNESS WHEREOF, THE CITY OF POWAY, a municipal corporation and general law city that is duly organized and validly existing under and pursuant to the Constitution and the laws of the State of California, has caused this Bond to be executed in its name and on its behalf by the City Manager, and attested by the City Clerk, and this Bond to be dated as of the Dated Date. CITY OF POWAY By: Its: City Manager ATTEST: City Clerk [FORM OF CERTIFICATE OF AUTHENTICATION AND REGISTRATION] This is one of the Bonds described in the within-mentioned Trust Agreement and authenticated the date set forth below. Dated: ___ , 2021 4814-2918-7057v3/022468-0021 86 of 134 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Signatory A-4
August 3, 2021, Item #8[FORM OF LEGAL OPINION] The following is a true copy of the opinion rendered by Stradling Y occa Carlson & Rauth, a Professional Corporation, Newport Beach, California, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office. 4814-2918-7057v3/022468-0021 87 of 134 City Clerk of the City of Poway A-5
August 3, 2021, Item #8[FORM OF ASSIGNMENT] For value received __________ hereby sells, assigns and transfers unto ________ (Tax I.D. No.: -------~ the within Bond and hereby irrevocably constitute and appoints _________ attorney, to transfer the same on the books of the City at the office of the Trustee, with full power of substitution in the premises. Dated: Signature Guaranteed by: 4814-2918-7057v3/022468-0021 88 of 134 NOTE: The signature to this Assignment must correspond with the name on the face of the within Registered Bond in every particular, without alteration or enlargement or any change whatsoever. NOTE: Signature must be guaranteed by an eligible guarantor institution. A-6
August 3, 2021, Item #8EXHIBIT "B" FORM OF REQUISITION TO: U.S. Bank National Association City of Poway Use Only Request No._ DISBURSEMENT REQUEST: REGARDING$ CITY OF POWAY PENSION OBLIGATION BONDS, SERIES 2021 (FEDERALLY TAXABLE) You are hereby requested to pay from the Costs of Issuance Fund established by the Trust Agreement with respect to the above-referenced bonds, to the person, corporation or other entity designated below as Payee, the sum set forth below such designation, in payment of all ( ) or a portion ( ) of the Costs of Issuance described below. Name of Payee: Address: Amount: $ -----Method of Payment: Service Provided: The undersigned hereby certifies that: (i) s/he is an Authorized City Representative; (ii) this requisition for payment is in accordance with the terms and prov1s1ons of Section 6.01 of the Trust Agreement; (iii) each item to be paid with the requisitioned funds represents either incurred or due and payable Costs of Issuance; (iv) such Costs of Issuance have not been paid from other funds withdrawn from the Costs of Issuance Fund; and (v) to the best of the signatory's knowledge no Event of Default has occurred and is continuing under the Trust Agreement. Dated: _____ CITY OF POWAY 4814-2918-7057v3/022468-0021 89 of 134 By: _____________ _ Name: Title: B-1
August 3, 2021, Item #8$[PAR] CITY OF POWAY PENSION OBLIGATION BONDS, SERIES 2021 (FEDERALLY TAXABLE) City of Poway 13325 Civic Center Drive Poway, California 92064 Ladies and Gentlemen: BOND PURCHASE AGREEMENT [Pricing Date] Jones Hall Draft 7-15-2021 The undersigned Stifel, Nicolaus & Company, Incorporated (the "Underwriter") offers to enter into this Bond Purchase Agreement (this "Purchase Agreement") with the City of Poway, California (the "City"), which, upon the acceptance by the City, will be binding upon the City and the Underwriter. This offer is made subject to acceptance by the City by the execution of this Purchase Agreement and delivery of the same to the Underwriter prior to 11 :59 P.M., California time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the City at any time prior to the acceptance hereof by the City. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Trust Agreement ( defined herein). Section 1. Purchase and Sale. Upon the terms and conditions and on the basis of the representations, warranties and agreements herein set forth, the Underwriter hereby agrees to purchase from the City, and the City hereby agrees to issue, sell and deliver to the Underwriter all (but not less than all) of the City of Poway Pension Obligation Bonds, Series 2021 (Federally Taxable) (the "Bonds") in the aggregate principal amount of $[PAR]. The Bonds shall be dated as of their date of delivery. Interest on the Bonds shall be payable semiannually on_ 1 and_ 1 in each year, commencing_ 1, 20_(each an "Interest Payment Date"), will bear interest at the rates and on the dates as set forth in Exhibit A hereto. The Bonds shall be subject to redemption as set forth in Exhibit A hereto. The purchase price for the Bonds shall be $ ____ (which represents the principal amount of the Bonds in the amount of $[PAR], less an Underwriter's discount of $ ____ . On the Closing Date ( as hereinafter defined), at the request of the City, the Underwriter will wire the total premium for the Policy ( as hereinafter defined) in the amount of $ ____ directly to ____ (the "Insurer"). As a result, on the Closing Date, the net amount to be sent to the City by the Underwriter for the purchase of the Bonds shall be $ ___ _ The Underwriter agrees to make a bona fide public offering of the Bonds at the initial offering yields set forth in the Official Statement ( defined herein); however, the Underwriter reserves the right to make concessions to dealers and to change such initial offering yields as the Underwriter shall deem necessary in connection with the marketing of the Bonds. The Underwriter agrees that, in connection with the public offering and initial delivery of the Bonds to the purchasers thereof from 90 of 134 ATTACHMENT C
August 3, 2021, Item #8the Underwriter, the Underwriter will deliver or cause to be delivered to each purchaser a copy of the final Official Statement prepared in connection with the Bonds, for the time period required under Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended ("Rule 15c2-12"). Terms defined in the Preliminary Official Statement, and to be set forth in the final Official Statement are used herein as so defined. The City acknowledges and agrees that: (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm's-length commercial transaction between the City and the Underwriter; (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as a principal and is not acting as a municipal advisor (as defined in Section 15B of the Securities Exchange Act of 1934, as amended), financial advisor or fiduciary; (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the City with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the City on other matters); (iv) the only obligations the Underwriter has to the City with respect to the transaction contemplated hereby expressly are set forth in this Purchase Agreement; and (v) the City has consulted its own financial and/or municipal, legal, accounting, tax, financial and other advisors, as applicable, to the extent it has deemed appropriate. Section 2. The Bonds. The Bonds are being issued pursuant to Articles 10 and 11 (commencing with Section 53570) of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the "Refunding Law"), the Trust Agreement, dated as of ____ 1, 202l(the "Trust Agreement"), between the City and [U.S. Bank National Association], as trustee (together with any successor as trustee under the Trust Agreement, the "Trustee"), and Resolution Nos._ and __ , adopted by a majority of the City Council of the City (the "City Council") on __ , 2021 and on __ , 2021, respectively (collectively, the "Resolutions"). The principal of and interest on the Bonds shall be payable from any source of legally available funds of the City, including amounts on deposit in the General Fund. The Bonds shall be obligations of the City payable from any lawfully available funds, shall not be limited as to payment to any special source of funds of the City and the payment thereof shall not be subject to appropriation. The Bonds do not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The Bonds otherwise shall be as described in the Preliminary Official Statement and the Official Statement, the Refunding Law and the Legal Documents. The Underwriter's agreement to purchase the Bonds from the City is made in reliance upon the City's representations, covenants and warranties and on the terms and conditions set forth in this Purchase Agreement. The City is obligated by the Public Employees' Retirement Law, constituting Part 3 of Division 5 of Title 2 of the California Government Code (the "Retirement Law"), and the contract between the Board of Administration of the California Public Employees' Retirement System ("PERS"), established under Government Code sections 20000 through 21500 of (the "Retirement Law"), and the City Council of the City, effective [February 1, 1981] (as amended, the "PERS Contract"), to make contributions to PERS to (a) fund pension benefits for its employees who are members of PERS, (b) amortize the unfunded actuarial liability with respect to such pension benefits, and (c) appropriate funds for the purposes described in (a) and (b). The City participates in two retirement plans under the PERS Contract. 2 91 of 134
August 3, 2021, Item #8The proceeds of the Bonds will be used to: (i) refund [all][a portion of] the City's obligations to PERS evidenced by the two retirement plans in which the City participates pursuant to the PERS Contract and representing the current unfunded accrued liability (the "Unfunded Liability") with respect to certain pension benefits under the Retirement Law, (ii) purchase a municipal bond insurance policy (the "Policy") from the Insurer to guarantee payment of principal of and interest on the Bonds maturing on __ 1 of the years 20_ and 20_ (the "Insured Bonds"), and (iii) pay certain costs associated with the issuance and delivery of the Bonds. Section 3. Public Offering. The Underwriter agrees to make an initial public offering of all the Bonds at the public offering prices ( or yields) set forth on Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices ( or yields) as it deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. Section 4. The Official Statement. By its acceptance of this Purchase Agreement, the City ratifies, confirms and approves of the use and distribution by the Underwriter prior to the date hereof of the Preliminary Official Statement relating to the Bonds, dated [POS Date] (including the cover page, all appendices and all information incorporated therein and any supplements or amendments thereto and as disseminated in its printed physical form or in electronic form in all respects materially consistent with such physical form, the "Preliminary Official Statement") that the City has deemed "final" as of its date, for purposes of Rule 15c2-12 except for certain omissions permitted to be omitted therefrom by Rule 15c2-12. The City hereby agrees to deliver or cause to be delivered to the Underwriter, within seven (7) business days of the date hereof, copies of the final official statement, dated the date hereof, relating to the Bonds (including all information previously permitted to have been omitted by Rule 15c2-12, the cover page, all appendices, all information incorporated therein and any amendments or supplements as have been approved by the City and the Underwriter (the "Official Statement")) in such quantity as the Underwriter shall reasonably request to comply with Rule 15c2-12(b)(4) and the rules of the Municipal Securities Rulemaking Board (the "MSRB"). To the extent required by applicable MSRB Rules, the City hereby confirms that it does not object to distribution of the Official Statement in electronic form. Section 5. Closing. At 8:00 a.m., California time, on [Closing Date] (the "Closing Date"), or at such other time or date as the City and the Underwriter mutually agree upon, the City shall deliver or cause to be delivered to the Trustee, and the Trustee shall deliver or cause to be delivered through the facilities of The Depository Trust Company, New York, New York ("DTC"), the Bonds in definitive form, duly executed and authenticated. Concurrently with the delivery of the Bonds, the City shall deliver the documents hereinafter mentioned at the offices of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California ("Bond Counsel") or another place to be mutually agreed upon by the City and the Underwriter. The Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof by wire transfer in immediately available funds. This payment for and delivery of the Bonds, together with the delivery of the aforementioned documents referenced herein, is called the "Closing." The Bonds shall be registered in the name of Cede & Co., as nominee of DTC in denominations of $5,000 and any integral multiple thereof as provided in the Trust Agreement, and shall be made available to the Underwriter at least one (1) business day before the Closing for purposes of inspection and packaging. The City acknowledges that the services of DTC will be used 3 92 of 134
August 3, 2021, Item #8initially by the Underwriter to permit the issuance of the Bonds in book-entry form, and agrees to cooperate fully with the Underwriter in employing such services. Section 6. Representations, Warranties and Covenants of the City. The City represents, warrants and covenants to the Underwriter as follows. (a) The City is a municipal corporation and general law city of the State of California (the "State"), duly organized and validly existing pursuant to the Constitution and laws of the State. (b) The City had full legal right, power and authority to adopt the Resolutions, and the City has, and at the Closing Date will have, full legal right, power and authority (i) to execute and deliver the Trust Agreement, the Continuing Disclosure Agreement dated as of __ 1, 2021, by and between the City and _____ , as dissemination agent, relating to the Bonds (the "Continuing Disclosure Agreement") and this Purchase Agreement ( collectively, the "Legal Documents"), to perform its obligations under the Legal Documents, and has by official action duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained in the Legal Documents, (ii) to issue, sell and deliver the Bonds to the Underwriter as provided herein, and (iii) to carry out, give effect to and consummate the transactions contemplated by the Legal Documents and the Resolutions. ( c) The City Council has duly and validly adopted the Resolutions at meetings of the City Council duly noticed and at which a quorum was present, and the Resolutions have not been modified or amended and are in full force and effect, and has duly approved the execution and delivery of the Bonds and the other Legal Documents, and the performance by the City of its obligations contained therein, 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 said documents. ( d) The Bonds and the other Legal Documents have been, on or before the Closing Date will be, duly executed and delivered by the City, and, on the Closing Date, the Bonds, when authenticated and delivered to the Underwriter in accordance with the Trust Agreement, and the Legal Documents will constitute legally valid and binding obligations, enforceable against the City in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws or equitable principles relating to or limiting creditors' rights generally. ( e) The City is, and at the Closing Date will be, in compliance, in all respects, with the Legal Documents. (f) The City is not in breach of or default under any applicable law or administrative regulation of the State or the United States of America or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument, in each case which breach or default has or may have a material adverse effect on the ability of the City to perform its obligations under the Legal Documents. (g) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the City that has not been obtained is or will be required 4 93 of 134
August 3, 2021, Item #8for the issuance and delivery of the Bonds or the consummation by the City of the other transactions contemplated by the Trust Agreement. (h) The adoption of the Resolutions and the execution and delivery by the City of the Legal Documents and the approval by the City of the Official Statement and compliance with the provisions on the City's part contained in the Legal Documents, will not conflict with, or result in a violation or breach of, or constitute a default under, any law, administrative regulation, judgment, decree, loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject to, which conflict, breach or default has or may have a material adverse effect on the ability of the City to carry out its obligations under the Legal Documents, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any material lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of City under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument, except as provided by the Legal Documents. (i) Prior to the date hereof, the City has provided to the Underwriter for its review the Preliminary Official Statement, that the City has deemed final for purposes of Rule 15c2-12, has approved the distribution of the Preliminary Official Statement and the Official Statement, and has duly authorized the execution and delivery of the Official Statement (including in electronic form). The Preliminary Official Statement, at the date thereof, and as of the date hereof, did not and does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein ( other than the information relating to DTC, its book-entry system, the Insurer, the Policy, and information provided by the Underwriter, as to which no view is expressed), in light of the circumstances under which they were made, not misleading. As of the date hereof and on the Closing, the Official Statement did not and will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein ( other than the information relating to DTC, its book-entry system, the Insurer, the Policy, and information provided by the Underwriter, as to which no view is expressed), in light of the circumstances under which they were made, not misleading. (j) By official action of the City prior to or concurrently with the acceptance hereof, the City has duly approved the distribution of the Preliminary Official Statement and the distribution of the Official Statement (including in electronic form), and has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained, in the Legal Documents. (k) The City will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The City will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental authority prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. (1) The financial statements relating to the receipts, expenditures and cash balances of the City as of [June 30, 2021] as set forth in the Preliminary Official Statement and in the Official Statement fairly represent the financial position and results of operations of the City as of the dates and for the periods therein set forth in accordance with generally accepted accounting principles. Except as disclosed in the Preliminary Official Statement, the Official Statement or otherwise 5 94 of 134
August 3, 2021, Item #8disclosed in writing to the Underwriter, there has not been any materially adverse change in the financial position and results of operations of the City or in its operations since [June 30, 2021] and, except as disclosed in the Preliminaiy Official Statement or the Official Statement, there has been no occurrence, circumstance or combination thereof which is reasonably expected to result in any such materially adverse change. (m) As of the time of acceptance hereof and as of the date of Closing, no action, suit, proceeding, inquiiy or investigation, at law or in equity, before or by any court, government agency, public board or body, is pending or, to the knowledge of the City, threatened (i) in any way questioning the corporate existence of the City or the titles of the officers of the City to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the execution or deliveiy of any of the Bonds, or in any way contesting or affecting the validity of the Bonds or the Legal Documents or the consummation of the transactions contemplated thereby or contesting the power of the City to enter into the Legal Documents; (iii) which may result in any material adverse change to the financial condition of the City or to its ability to make payment of principal or redemption price of and interest on the Bonds when due; or (iv) contesting the completeness or accuracy of the Preliminaiy Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminaiy Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessaiy to make the statements therein, in the light of the circumstances under which they were made, not misleading, and there is no basis for any action, suit, proceeding, inquiiy or investigation of the nature described in clause (i) through (iv) of this sentence. (n) To the extent required by law, the City will undertake, pursuant to the Continuing Disclosure Agreement, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Preliminaiy Official Statement and will also be set forth in the Official Statement. Except as otherwise disclosed in the Preliminaiy Official Statement, the City has not failed to comply in all material respects with any previous undertakings with regard to Rule l 5c2-l 2 to provide annual reports or notices of enumerated events in the past five years and, the City has been in material compliance during the past five years with its continuing disclosure obligations in accordance with Rule l 5c2-12. ( o) Any certificate signed by any officer of the City authorized to execute such certificate in connection with the issuance, sale and deliveiy of the Bonds and delivered to the Underwriter shall be deemed a representation and warranty of the City to the Underwriter as to the statements made therein but not of the person signing such certificate. (p) The City will promptly apply the proceeds of the Bonds to refund the Unfunded Liability as of the date of issuance of the Bonds and to pay costs associated with the issuance and deliveiy of the Bonds. ( q) During the period from the date hereof until the Closing Date, the City agrees to furnish the Underwriter with copies of any documents it files with any regulatoiy authority which are reasonably requested by the Underwriter. (r) The City is not in material default, nor has the City been in material default at any time, as to the payment of principal or interest with respect to a material obligation issued by the City or with respect to a material obligation guaranteed by the City as guarantor. 6 95 of 134
August 3, 2021, Item #8(s) As of the date hereof, the City does not have any revenue bonds, capital lease obligations, installment payment obligations or other material financial obligation, nor other material obligations secured by payments from the general fund of the City, except as disclosed in the Preliminary Official Statement and the Official Statement. (t) The default judgment dated ____ , 2021, entered in favor of the City in connection with City of Poway v. All Persons Interested, et. al. Case No. ______ filed in the Superior Court of California, County of San Diego (the "Default Judgment") was duly entered, the appeal period has run without any appeal having been filed, and the default judgment is in full force and effect. (u) The City had, prior to the adoption of the Resolutions, and has, in full force and effect, a Debt Management Policy that complies with Government Code Section 8855(i). Section 7. Conditions to the Obligations of the Underwriter. The Underwriter has entered into this Purchase Agreement in reliance upon the representations and warranties of the City contained herein. The obligations of the Underwriter to accept delivery of and pay for the Bonds on the date of the Closing shall be subject, at the option of the Underwriter, to the accuracy in all respects of the statements of the officers and other officials of the City, as well as authorized representatives of the City Attorney, Bond Counsel, Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California ("Disclosure Counsel") and the Trustee 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 date of the Closing, and to the following additional conditions: (a) The representations, warranties and covenants of the City contained herein shall be true, complete and correct at the date hereof and at the time of the Closing, as if made on the date of the Closing; (b) At the time of Closing, the Legal Documents shall be in full force and effect as valid and binding agreements between or among the various parties thereto, and the Legal Documents and the Preliminary Official Statement and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter, and all such reasonable actions as, in the opinion of Bond Counsel, shall reasonably deem necessary in connection with the transactions contemplated hereby; ( c) At the time of the Closing, no default shall have occurred or be existing under the Legal Documents, or any other agreement or document pursuant to which any of the City's financial obligations were executed and delivered, and the City shall not be in default in the payment of principal or interest with respect to any of its financial obligations, which default would result in any material adverse change to the financial condition of the City or adversely impact its ability to make payment of principal or redemption price of and interest on the Bonds when due; ( d) In recognition of the desire of the City and the Underwriter to effect a successful public offering of the Bonds, and in view of the potential adverse impact of any of the following events on such a public offering, this Purchase Agreement shall be subject to termination in the reasonable judgment of the Underwriter by notification, in writing, to the City prior to delivery of and payment for the Bonds, if at any time prior to such time: 7 96 of 134
August 3, 2021, Item #8(i) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of America of a national emergency or war or other calamity or crisis the effect of which on financial markets is materially adverse such as to make it, in the reasonable judgment of the Underwriter, impractical to proceed with the purchase or delivery of the Bonds as contemplated by the Official Statement ( exclusive of any amendment or supplement thereto); or (ii) a general banking moratorium shall have been declared by federal, State or New York authorities, or the general suspension of trading on any national securities exchange; or (iii) an event occurs which in the reasonable opinion of the Underwriter requires a supplement or amendment to the Official Statement and: (i) the City refuses to prepare and furnish such supplement or amendment; or (ii) in the reasonable judgment of the Underwriter, the occurrence of such event materially and adversely affects the marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or (iv) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the State, or a decision by any court of competent jurisdiction within the State shall be rendered which materially adversely affects the market price of the Bonds; or (v) the marketability of the Bonds or the market price thereof, in the reasonable opm10n of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States of America or by any legislation in or by the Congress of the United States of America or by the State, or the amendment of legislation pending as of the date of this Purchase Agreement in the Congress of the United States of America, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the President of the United States of America, the Treasury Department of the United States of America, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States of America, or the favorable reporting for passage of legislation to either House of the Congress of the United States of America by a Committee of such House to which such legislation has been referred for consideration; or (vi) an order, decree or injunction shall have been issued by any court of competent jurisdiction, or order, ruling, regulation (final, temporary or proposed), official statement or other form of notice or communication 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: (i) obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Trust Agreement is not exempt from qualification under the Trust Indenture Act of 1939; or (ii) the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including any or all underlying obligations, as contemplated hereby or by the Preliminary Official Statement and the Official Statement, is or would be in violation of the federal securities laws as amended and then in effect; or 8 97 of 134
August 3, 2021, Item #8(vii) legislation shall be introduced, by amendment or otherwise, or be enacted by the House of Representatives or the Senate of the Congress of the United States of America, or a decision by a court of the United States of America shall be rendered, or a stop order, ruling, regulation or official statement by or on behalf of the Securities and Exchange Commission or other governmental agency having jurisdiction of the subject matter shall be made or proposed, to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, as contemplated hereby or by the Preliminary Official Statement and the Official Statement, is or would be in violation of any provision of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 193 9, as amended and as then in effect, or with the purpose or effect of otherwise prohibiting the issuance, offering or sale of the Bonds or obligations of the general character of the Bonds, as contemplated hereby or by the Preliminary Official Statement and the Official Statement; or (viii) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange, which, in the Underwriter's reasonable opinion, materially adversely affects the marketability or market price of the Bonds; or (ix) the Comptroller of the Currency, the New York Stock Exchange, or other national securities exchange or association or any governmental authority, shall impose as to the Bonds, or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by or the charge to the net capital requirements or financial responsibility requirements of broker dealers; or (x) trading in securities on the New York Stock Exchange or other major exchange shall have been suspended or limited or minimum prices have been established on either such exchange which, in the Underwriter's reasonable judgment, materially adversely affects the marketability or market price of the Bonds; or (xi) any rating of the Bonds or the rating of any general fund obligations of the City shall have been downgraded, withdrawn or placed on negative watch by a national rating service, which, in the reasonable judgment of the Underwriter, materially adversely affects the market price of the Bonds; or (xii) any action shall have been taken by any government in respect of its monetary affairs which, in the reasonable opinion of the Underwriter, has a material adverse effect on the United States securities market, rendering the marketing and sale of the Bonds, or enforcement of sale contracts with respect thereto impracticable; or (xiii) the commencement of any action, suit or proceeding described m Section 6(m). ( e) at or prior to the Closing, the Underwriter shall receive or have received the following documents, in each case to the reasonable satisfaction, in form and substance, of the Underwriter and Jones Hall, A Professional Law Corporation ("Underwriter's Counsel"): (i) a copy of the Default Judgment; 9 98 of 134
August 3, 2021, Item #8(ii) all resolutions relating to the Bonds adopted by the City and certified by an authorized official of the City, authorizing the execution and delivery of the Legal Documents and the delivery of the Bonds and the Official Statement; (iii) the Legal Documents duly executed and delivered by the respective parties thereto, with only such amendments, modifications or supplements as may have been agreed to in writing by the Underwriter; (iv) the approving opm10n of Bond Counsel, dated the date of Closing and addressed to the City, in substantially the form attached as [Appendix E] to the Preliminary the Official Statement and the Official Statement, together with a reliance letter thereon addressed to the Underwriter; (v) a supplemental opm1on of Bond Counsel dated the date of Closing and addressed to the Underwriter, to the effect that: (A) the statements on the cover of the Official Statement and in the Official Statement under the captions ["INTRODUCTION," "THE BONDS," "SECURITY AND SOURCE OF PAYMENT FOR THE BONDS," "VALIDATION," and "TAX MATTERS," and in APPENDIX C -"SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT," APPENDIX D -"PROPOSED FORM OF BOND COUNSEL OPINION" and APPENDIX E -"FORM OF CONTINUING DISCLOSURE CERTIFICATE,"] and excluding any material that may be treated as included under such captions and appendices by any cross-reference, insofar as such statements expressly summarize provisions of the Bonds, the Trust Agreement, and Bond Counsel's final opinion relating to the Bonds, are accurate in all material respects as of the date of Closing; (B) the Continuing Disclosure Agreement and the Purchase Agreement have been duly authorized, executed and delivered by the City and are the valid, legal and binding agreements of the City enforceable in accordance with their terms, except that the rights and obligations under the Continuing Disclosure Agreement and the Purchase Agreement are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State, and provided that no opinion is expressed with respect to any indemnification or contribution provisions contained therein; and (C) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended; (vi) the Official Statement, executed on behalf of the City; (vii) evidence that the ratings on the Bonds are as described m the Official Statement; (viii) a certificate, dated the date of Closing, signed by a duly authorized officer of the City satisfactory in form and substance to the Underwriter to the effect that: (i) the representations, warranties and covenants of the City contained in this Purchase Agreement are true and correct in all material respects on and as of the date of Closing with the same effect as if made on 99 of 134
August 3, 2021, Item #8the date of the Closing by the City, and the City has complied with all of the terms and conditions of the Purchase Agreement required to be complied with by the City at or prior to the date of Closing; (ii) to the best of such officer's knowledge, no event affecting the City has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purposes for which it is to be used or which is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; (iii) the information and statements contained in the Preliminary Official Statement and the Official Statement ( other than information relating to DTC, its book-entry system, the Insurer, the Policy, and information provided by the Underwriter) did not as of their date and do not as of the Closing contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect; (iv) the City is not in breach of or default under any applicable law or administrative regulation of the State or the United States of America or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, which would have a material adverse impact on the City's ability to perform its obligations under the Legal Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute such a default or an event of default under any such instrument; and (v) no further consent is required for inclusion of its audited financial statements in the Preliminary Official Statement and the Official Statement; (ix) an opinion dated the date of Closing and addressed to the Underwriter, the Trustee, and the Insurer, of the City Attorney of the City of Poway, substantially in the form attached as Exhibit B hereto; (x) a letter of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Disclosure Counsel to the City dated the date of Closing and addressed to the Underwriters substantially to the effect that, on the basis of the information made available to them in the course of their participation in the preparation of the Official Statement as disclosure counsel, but without having undertaken to determine or verify independently, or assuming any responsibility for, the accuracy, completeness or fairness of any of the statements contained in the Official Statement, no facts have come to the attention of the personnel in such firm directly involved in rendering legal advice and assistance to the City in connection with the preparation of the Official Statement which caused them to believe that (A) the Preliminary Official Statement as of its date or as of the Closing Date (excluding therefrom financial, demographic and statistical data; forecasts, projections, estimates, assumptions and expressions of opinions; statements relating to OTC, Cede & Co. and the operation of the book-entry system; statements relating to the treatment of the Bonds or the interest, discount or premium, if any, thereon or therefrom for tax purposes under the law of any jurisdiction; and the statements contained in the Preliminary Official Statement under the captions "TAX MATTERS," and in Appendix A and Appendices C through F to the Preliminary Official Statement; as to all of which they express no view) contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading, except for such information as is permitted to be excluded from the Preliminary Official Statement pursuant to Rule l 5c2-l 2 of the Securities Exchange Act of 1934, as amended, including but not limited to information as to pricing, yields, interest rates, maturities, amortization, redemption provisions, debt service requirements, Underwriters' discount and CUSIP numbers or (B) the Official Statement as of its date or as of the Closing Date ( excluding therefrom financial, demographic and statistical data; forecasts, projections, estimates, assumptions and expressions of opinions; statements relating to DTC, Cede & Co. and the operation of the book-entry system, statements relating to the treatment of the Bonds or the interest, discount or premium, if any, thereon or therefrom for tax purposes under the law of any jurisdiction; and the statements contained in the Official Statement under the 11 100 of 134
August 3, 2021, Item #8captions "TAX MATTERS," and in Appendix A and Appendices C through F to the Official Statement; as to all of which they express no view) contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; (xi) an opinion of counsel to the Trustee, addressed to the Underwriter, the City, and the Insurer, dated the date of the Closing, to the effect that: (A) the Trustee is a national banking association duly organized and validly existing under the laws of the United States of America, having full corporate power to undertake the trust created under the Trust Agreement; (B) the Trust Agreement has been duly authorized, executed and delivered by the Trustee and, assuming due authorization, execution and delivery by the other parties thereto, the Trust Agreement constitutes the valid, legal and binding obligations of the Trustee enforceable in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles, if equitable remedies are sought; (C) the Trustee has duly authenticated the Bonds upon the order of City; (D) the Trustee's actions in executing and delivering the Trust Agreement are in full compliance with, and do not conflict with any applicable law or governmental regulation and, to the best of such counsel's knowledge, after reasonable inquiry with respect thereto, do not conflict with or violate any contract to which the Trustee is a party or any administrative or judicial decision by which the Trustee is bound; (E) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the banking or trust powers of the Trustee that has not been obtained is or will be required for the execution and delivery of the Bonds or the consummation by the Trustee of its obligations under the Trust Agreement; and (F) there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or public body pending or, to the best of such counsel's knowledge, threatened against or affecting the Trustee, which would materially adversely impact the Trustee's ability to complete the transactions contemplated by the Trust Agreement. (xii) a certificate, dated the date of Closing, signed by a duly authorized officer of the Trustee satisfactory in form and substance to the Underwriter, to the effect that: (A) the Trustee is duly organized and existing as a national banking association under the laws of the United States of America, having the full corporate power and authority to enter into and perform its duties under the Trust Agreement; (B) the Trustee is duly authorized to enter into the Trust Agreement and has duly executed and delivered the Trust Agreement, and assuming due authorization and execution by the other parties thereto, the Trust Agreement is legal, valid and binding upon the Trustee and enforceable against such party in accordance with its terms; 12 101 of 134
August 3, 2021, Item #8(C) the Trustee has duly authenticated the Bonds under the Trust Agreement and delivered the Bonds to or upon the order of the Underwriters; (D) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the banking or trust powers of the Trustee that has not been obtained is required for the execution and delivery of the Bonds or the consummation by the Trustee of its obligations under the Trust Agreement; and (E) there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or public body pending or, to the best of such counsel's knowledge, threatened against or affecting the Trustee, which would materially adversely impact the Trustee's ability to complete the transactions contemplated by the Trust Agreement. (xiii) the preliminary and final forms required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 53583 of the Government Code of the State of California and Section 8855(i) and (j) of the Government Code; (xiv) a copy of the executed Blanket Issuer Letter of Representations by and between the City and DTC relating to the book-entry system; (xv) an opinion of Underwriter's Counsel addressed to the Underwriter, in form and substance acceptable to the Underwriter; (xvi) a Rule 15c2-12 certificate, dated the date of the Preliminary Official Statement and executed by the City; (xvii) a certificate of the PERS actuary setting forth the amount of the discounted prepayment of the City to the System for Fiscal Year __ ; (xviii) a certificate of Fieldman, Rolapp & Associates, Inc. ("FRA") satisfactory in form and substance to the Underwriter, to the effect that: (A) the undersigned is an authorized officer of FRA, which has acted as municipal advisor to the City in connection with the issuance of the Bonds, and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; (B) Official Statement; and FRA has reviewed the Preliminary Official Statement and the final (C) nothing has come to the attention of FRA which would lead it to believe that the Preliminary Official Statement as of the date of the pricing of the Bonds or its date or the Official Statement as of its date or the Closing Date contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; (xix) evidence satisfactory to the Underwriter that the Bonds shall have received the Policy from the Insurer that unconditionally guarantees the timely payments of all debt service on the Insured Bonds; 13 102 of 134
August 3, 2021, Item #8(xx) an opm1on of counsel to the Insurer, addressed to the City and the Underwriter in form and substance satisfactory to Bond Counsel and Underwriter's Counsel; (xxi) a certificate of the Insurer, signed by an authorized officer of the Insurer, in form and substance satisfactory to Bond Counsel and Underwriter's Counsel; and (xxii) such additional legal opinions, Bonds, proceedings, instruments or other documents as the Underwriter or Underwriter's Counsel may reasonably request. 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 Purchase Agreement, this Purchase Agreement shall terminate, and except as set forth in Section 9 hereof, neither the Underwriter nor the City shall be under further obligation hereunder. Section 8. Changes in Official Statement. Within 90 days after the Closing or within 25 days following the "end of the underwriting period" (as defined in Rule 15c2-12), whichever occurs first, if any event relating to or affecting the Bonds, the Trustee, or the City shall occur as a result of which it is necessary, in the reasonable opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in any material respect in the light of the circumstances existing at the time it is delivered to a purchaser, the City will forthwith prepare and furnish to the Underwriter an amendment or supplement that will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to purchaser, not misleading. The City shall cooperate with the Underwriter in the filing by the Underwriter of such amendment or supplement to the Official Statement with the MSRB. The Underwriter acknowledges that the "end of the underwriting period" will be the date of Closing unless the Underwriter otherwise notifies the City in writing that it still owns some or all of the Bonds. Section 9. Expenses. (a) Whether or not the Underwriter accepts delivery of and pays for the Bonds as set forth herein, the Underwriter shall be under no obligation to pay, and the City shall pay out of the proceeds of the Bonds or any other legally available funds of the City, all expenses incidental to the performance of the City's obligations hereunder, including but not limited to the cost of printing and delivering the Legal Documents to the Underwriter, the costs of printing and shipping and electronic distribution of the Preliminary Official Statement and the Official Statement in reasonable quantities, the fees and disbursements of the City, the Trustee and its counsel, Bond Counsel, Disclosure Counsel, City Attorney, the City's actuary, accountants, engineers, appraisers, economic consultants and any other experts or consultants retained by the City in connection with the issuance and sale of the Bonds, rating agency fees, advertising expenses, and any other expenses not specifically enumerated in paragraph (b) of this section incurred in connection with the issuance and sale of the Bonds. The City shall pay out of the proceeds of the Bonds, for any expenses incurred by the Underwriter on behalf of the City's employees and representatives which are incidental to implementing this Purchase Agreement, including meals, transportation, and lodging (but not entertainment expenses) of those employees and representatives. (b) Whether or not the Bonds are delivered to the Underwriter as set forth herein, the City shall be under no obligation to pay, and the Underwriter shall be responsible for and pay (which may be included as an expense component of the Underwriter's discount), MSRB, CUSIP Bureau and CDIAC fees and expenses to qualify the Bonds for sale under any "blue sky" laws, and all other 14 103 of 134
August 3, 2021, Item #8expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds not specifically enumerated in paragraph (a) of this section, including the cost of preparing this Purchase Agreement and other Underwriter documents, travel expenses and the fees and disbursements of Underwriter's Counsel. Section 10. Notices. Any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, One Montgomery Street, 35th Floor, San Francisco, California 94104, Attention: Sara Brown. Any notice or communication to be given to the City under this Purchase Agreement may be given by delivering the same in writing to the City of Poway, at the address first set forth above, Attention: City Manager. All notices or communications hereunder by any party shall be given and served upon each other party. Section 11. Parties in Interest. This Purchase Agreement is made solely for the benefit of the City and the Underwriter (including the successors or assigns thereof) and no other person shall acquire or have any right hereunder or by virtue hereof. All representations, warranties and agreements of the City in this Purchase Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriter and shall survive the delivery of and payment for the Bonds. Section 12. Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 15 104 of 134
August 3, 2021, Item #8Section 13. Governing Law. This Purchase Agreement shall be governed by and construed in accordance with the laws of the State. Accepted: CITY OF POWAY By: _____________ _ Authorized Officer Time of Execution: California time ----105 of 134 S-1 STIFEL, NICOLAUS & COMPANY, INCORPORATED By: ____________ _ Authorized Officer
August 3, 2021, Item #8Maturity Date (_1) EXHIBIT A MATURITY SCHEDULE Principal Amount Interest Rate Redemption Provisions Yield Price Optional Redemption. The Bonds maturing on or after __ 1, 20_ may be redeemed at the option of the City from any source of funds on any date on or after __ 1, 20 _ in whole or in part from such maturities as are selected by the City and by lot within a maturity at a redemption price equal to the principal amount to be redeemed, together with accrued interest to the date of redemption, without premium. Mandatory Sinking Fund Redemption. The Bonds maturing __ 1, 20_ (the "20_ Term Bonds") are subject to mandatory sinking fund redemption at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date, without premium. The 20 Term Bonds shall be so redeemed on the following dates and in the following amounts: * Final maturity. 106 of 134 Redemption Date ( __ 1) 20 20 20 • A-1 Principal Amount $_
August 3, 2021, Item #8On or before each _ 15 next preceding any mandatory sinking fund redemption date, the Trustee shall proceed to select for redemption pro-rata from all Term Bonds subject to mandatory sinking fund redemption at that time, an aggregate principal amount of such Term Bonds equal to the amount for such year as set forth in the table above and shall call such Term Bonds or portions thereof for redemption and give notice of such redemption in accordance with the terms of Section 4.01 of the Trust Agreement. At the option of the City, to be exercised by delivery of a written certificate to the Trustee on or before each __ 1 next preceding any mandatory sinking fund redemption date, it may: (a) deliver to the Trustee for cancellation Term Bonds or portions thereof (in the amount of an Authorized Denomination) of the stated maturity subject to such redemption; or (b) specify a principal amount of such Term Bonds or portions thereof (in the amount of an Authorized Denomination) which prior to said date have been purchased or redeemed ( otherwise than under the provisions of Section 4.03 of the Trust Agreement) and cancelled by the Trustee at the request of the City and not theretofore applied as a credit against any mandatory sinking fund redemption requirement. Each such Term Bonds or portion thereof so delivered or previously redeemed shall be credited by the Trustee at I 00% of the principal amount of the Term Bonds so delivered to the Trustee by the City against the obligation of the City on such mandatory sinking fund redemption date. B-2 107 of 134
August 3, 2021, Item #8EXHIBITB FORM OF CITY ATTORNEY OPINION City of Poway Poway, California Stifel, Nicolaus & Company, Incorporated, San Francisco, California [Closing Date] [INSURER] New York, New York City of Poway Pension Obligation Bonds, Series 2021 (Federally Taxable) Ladies and Gentlemen: We have acted as counsel to the City of Poway (the "City") in connection with the issuance and sale by the City of $[PAR] aggregate principal amount of its City of Poway Pension Obligation Bonds, Series 2021 (Federally Taxable) (the "Bonds"). We have examined and relied upon originals ( or copies certified or otherwise identified to our satisfaction) of such documents, records and other instruments as we deem necessary or appropriate for the purposes of this opinion, including, without limitation: (i) those documents relating to the existence, organization and operation of the City; (ii) Resolution Nos. _ and __ , adopted by a majority of the City Council of the City (the "City Council") on ____ ., 2021 ____ , 2021; (iii) all necessary documentation of the City relating to the authorization, execution and delivery of the Trust Agreement, dated as of ____ 1, 2021(the "Trust Agreement"), between the City and [U.S. Bank National Association], as trustee; (iii) the default judgment dated _____ , 2021, entered in favor of the City in connection with City of Poway v. All Persons Interested, et. al., Case No. _____ filed in the Superior Court of California, County of San Diego; (iv) the Bond Purchase Agreement, dated [Pricing Date] (the "Purchase Agreement"), executed by Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), and accepted by the City; (v) the Preliminary Official Statement, dated [POS Date] (the "Preliminary Official Statement"), relating to the Bonds; (vi) the Official Statement, dated [Pricing Date] (the "Official Statement"), relating to the Bonds; (vii) the Continuing Disclosure Agreement, dated as ___ 1, 2021 (the "Continuing Disclosure Agreement"), by and between the City and ___ _ as dissemination agent; and ( viii) such other records, documents, certificates, opinions, and other matters as are in our judgment necessary or appropriate to enable us to render the opinions expressed herein. All capitalized terms used herein and not otherwise defined shall have the meaning given to such terms as set forth in the Trust Agreement. Based on the foregoing, and with regard to State of California (the "State") law and United States federal law, we are of the opinion that: B-1 108 of 134
August 3, 2021, Item #8(a) The City is a municipal corporation and general law city of the State, duly organized and validly existing pursuant to the Constitution and laws of the State. (b) The resolutions of the City approving and authorizing the execution and delivery of the Bonds, the Trust Agreement, the Purchase Agreement, and the Continuing Disclosure Agreement ( collectively, the "Legal Documents") and approving and authorizing the issuance of the Bonds and the delivery of the Official Statement and other actions of the City were duly adopted at meetings of the governing body of the City which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the resolutions are now in full force and effect and have not been amended or superseded in any way. ( c) Except as disclosed in the Preliminary Official Statement and in the Official Statement, there is no action, suit or proceeding pending, or to the best of our knowledge, threatened against the City to (i) restrain or enjoin the execution or delivery of the Legal Documents (ii) in any way contesting or affecting the validity of the Legal Documents, the Resolutions or the authority of the City to enter into the Legal Documents, or (iii) in any way contesting or affecting the powers of the City in connection with any action contemplated by the Official Statement, the Resolutions or the Legal Documents. ( d) The execution and delivery of the Legal Documents and compliance with the provisions thereof, do not and will not in any material respect conflict with or constitute on the part of the City a breach of or default under any agreement or other instrument to which the City is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the City is subject, which breach or default has or may have a material adverse effect on the ability of the City to perform its obligations under the Legal Documents. ( e) No authorization, approval, consent, or other order of the State or any other governmental body within the State is required for the valid authorization, execution and delivery of the Legal Documents or the consummation by the City of the transactions on its part contemplated therein, except such as have been obtained and except such as may be required under state securities or blue sky laws in connection with the purchase and distribution of the Bonds by the Underwriter. Very truly yours, B-2 109 of 134
August 3, 2021, Item #885% Funded Scenario Metrics Bonds Bond Issuance Amount UAL Payoff CalPERS Funded Ratio Term Final Maturity Average Life Debt Service Maximum Annual Debt Service Average Annual Debt Service Potential Savings All-in True Interest Cost Gross Savings Present Value Savings1 Average Annual Savings C/1 $7 C: .2 $6 ~ $5 $4 $3 $2 $1 $0 -$1 Fieldman Financial Analysis 85% Funded Scenarios Proportional Level Structure Structure $33,150,000 $33,150,000 $32,681, 1 67 $32,681, 167 85% 85% 2045 (24 Years) 2045 (24 Years) 13 Years 13 Years $2,418,460 $2,090,605 $2,065,750 $2,125,908 3.85% 3.90% $19,480,087 $19,549,499 $13,221,481 $13,61 8,220 $799,594 $742,866 Proportional Debt Service -2021 POB Payments Remaining UAL Payments -Current Amortization 110 of 134 ATTACHMENT D Combination Structure $33, 150,000 $32,681,167 85% 2045 (24 Years) 13 Years $2,399,843 $1,984,724 3.78% $21,286,264 $13,540,064 $876,003
August 3, 2021, Item #8Level Debt Service II) $7 C: .2 $6 ~ $5 $4 $3 $2 $1 $0 N m 111:t L/'I 1.0 ...... 00 O'\ 0 ~ N m 111:t L/'I 1.0 ...... 00 O'\ 0 ~ N m 111:t L/'I 1.0 -$1 N N N N N N N N m m m m m m m m m m 111:t 111:t 111:t 111:t 111:t 111:t 111:t 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N N N N N N N N -2021 POB Payments Remaining UAL Payments -Current Amortization Level and Proportional Debt Service II) $7 C: .2 $6 ~ $5 $4 $3 $2 $1 $0 N m 111:t L/'I 1.0 ...... 00 O'\ 0 ~ N m 111:t L/'I 1.0 ...... 00 O'\ 0 ~ N m 111:t L/'I 1.0 -$1 N N N N N N N N m m m m m m m m m m 111:t 111:t 111:t 111:t 111:t 111:t 111:t 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N N N N N N N N -2021 POB Payments Remaining UAL Payments -current Amortization 111 of 134
August 3, 2021, Item #8100% Funded Scenario Metrics Bonds Bond Issuance Amount UAL Payoff Cal PERS Funded Ratio Term Final Maturity Average Life Debt Service Maximum Annual Debt Service Average Annual Debt Service Potential Savings All-in True Interest Cost Gross Savings Present Value Savings1 Average Annual Savings II) $7 C: § $6 ~ $5 $4 $3 $2 $1 $0 100% Funded Scenarios Proportional Level Combination Structure Structure Structure $61,490,000 $61,490,000 $61,490,000 $60,880,668 $60,880,668 $60,880,668 100% 100% 100% 2045 (24 Years) 2045 (24 Years) 2045 (24 Years) 11 Years 13 Years 12 Years $4,909,029 $3,875,796 $4,289,974 $3,701,100 $3,943,400 $3,727,993 3.73% 3.86% 3.76% $25,567,228 $23,131,945 $25, 104,871 $17,929,886 $18,341,577 $17,778,131 $1,041,169 $812,680 $1,015,809 Proportional Debt Service I II I II I -2021 POB Payments -current Amortization 112 of 134
August 3, 2021, Item #8V, $7 C: ~ $6 ~ $5 $4 $3 $2 $1 $0 V, $7 C: .2 $6 ~ $5 113 of 134 $4 $3 $2 $1 $0 Level Debt Service -2021 POB Payments -Current Amortization Level and Proportional Debt Service -2021 POB Payments -Current Amortization
August 3, 2021, Item #8n l I CITY OF POWAY MISCELLANEOUS AND SAFETY PLANS CalPERS Actuarial Analysis -6/30/19 Valuation Proposed Pension Obligation Bonds (POB) Study Mary Elizabeth Redding, Vice President Bianca Lin, Assistant Vice President Matthew Childs, Actuarial Analyst Bartel Associates, LLC July 20, 2021 Contents Topic Page Pension Obligation Bond Analysis Assumptions 1 Proposed Pension Obligation Bond 9 Proposed POB Success Analysis 16 Summary 33 Actuarial Certification 3 8 1 o:lclientslcity of poway\projects\calpers\6-30-19\poblba powayci 21-07-20 calpers misc & safety 19 pension obligation bond analysis final.docx 114 of 134 ATTACHMENT E
August 3, 2021, Item #8POB ANALYSIS ASSUMPTIONS ■ Capital Market Assumptions for investments in CalPERS PERF: Geometric Geometric PERF Real Nominal Policy Average Standard Average Asset Class Target Return Deviation Return • Public Equity 50% 4.82% 17.84% 7.44% • Fixed Income 28% 1.47% 4.24% 4.01% • Real Assets 13% 4.81% 12.55% 7.43% • Private Equity 8% 6.19% 25.50% 8.84% • Liquidity 1% 0.06% 0.97% 2.56% 100% ■ Based on study of investment consultant and investment bank 201 7 short and long-term capital market assumptions adjusted for long-term trends in investment returns. ■ Inflation -2.5% ~ July 20, 2021 31.0% -11.0°0 C'\ {. \:' '. 1 July 20, 2021 115 of 134 POB ANALYSIS ASSUMPTIONS Annualized Compound Return of 1000 Trials 7% Discount Rate -~th Percentile -l~th Percentile 2~th Percentile -9~th Percentile -S5ti' Percentil,; 2
August 3, 2021, Item #8POB ANALYSIS ASSUMPTIONS ■ 12 Year Compounded Annualized returns 1: • 12 years is the average life of the 100% of UAL Payoff POB • 50th Percentile2 6.64% • 33th Percentile 5.17 • 30th Percentile 4.89 • 25th Percentile 4.34 • 20th Percentile 3.81 • 15th Percentile 3 .14 ■ 24 Year Compounded Annualized returns: • 24 years is the repayment period for the debt service of the POB • 50th Percentile 7.00% • 33th Percentile 6.02 • 30th Percentile 5.87 • 25th Percentile 5.54 • 20th Percentile 5 .22 • 15th Percentile 4.68 1 Based on capital market assumptions shown previously net of 0.15% adjustment for administrative expenses. 2 Nth percentile means N percentage of our trials result in returns lower than the indicated rates. ~ July 20, 2021 3 POB ANALYSIS ASSUMPTIONS This page intentionally blank n . · July 20, 2021 4 116 of 134
August 3, 2021, Item #8POB ANALYSIS ASSUMPTIONS Alternative: 6.5% ■ Assume CalPERS discount rate immediately changes to 6.5% ■ Assume long term expected asset return is 6.5% • Following CalPERS risk mitigation strategy • Asset allocation assumed modified to lower risk portfolio with 6.5% expected return ~ · July 20, 2021 31.0°0 ~ 19.0% § 16.0°-o o 13.0~o 0-, :::: 10.0% 0 v 7.0% -11. 0°-o {,;) ' July 20, 2021 117 of 134 5 POB ANALYSIS ASSUMPTIONS Annualized Compound Return of 1000 Trials 6.5% Discount Rate 30'3 l 35.'36 Number of Years -5th Percentile -l"til Percentile -9~th Percentile -s:th Percentile 75th Percs"1 tik 6
August 3, 2021, Item #8POB ANALYSIS ASSUMPTIONS ■ 12 Year Compounded Annualized returns3: • 12 years is the average life of the 100% of UAL Payoff POB • 50th Percentile4 6.19% • 33th Percentile 5.05 • 30th Percentile 4.82 • 25th Percentile 4.35 • 20th Percentile 3.90 • 15th Percentile 3 .34 ■ 24 Year Compounded Annualized returns: • 24 years is the repayment period for the debt service of the POB • 50th Percentile 6.60% • 33th Percentile 5.79 • 30th Percentile 5.63 • 25th Percentile 5 .3 7 • 20th Percentile 5 .11 • 15th Percentile 4.70 3 Based on capital market assumptions shown previously net of 0.15% adjustment for administrative expenses. 4 Nth percentile means N percentage of our trials result in returns lower than the indicated rates. ~ · I July 20, 2021 7 POB ANALYSIS ASSUMPTIONS ■ POB cost reduction (success) or increase calculated as the present value of: • Employer CalPERS contributions without POB for 30 years, minus • Employer CalPERS contributions with POB & debt service for 30 years, plus • CalPERS assets with POB minus assets without POB after 30 years ■ Discount rate for cash flow differences 3.0% ■ Discount rate for asset difference at 30 years equal to Discount Rate for Scenario (6.5% or 7%) ■ Investment return assumptions include lower (than expected) returns for next 8 years followed by higher (than expected) returns ■ PEPRA requires employer contributions be not less than Normal Cost ■ CalPERS Risk Mitigation Strategy not included /,""':\ l . : ' July 20, 2021 118 of 134 8
August 3, 2021, Item #8PROPOSED PENSION OBLIGATION BONDS Proposed 2021 Pension Obligation Bonds -85% Funding ■ Par Amount: $33,150,000 ■ Use of Funds • UAL Payoff Miscellaneous 22,144,524 • UAL Payoff Safety 10,536,643 • Cost of Issuance 300,000 • Total Underwriter's Discount 165,750 • Additional Proceeds 3~083 • Total 33,150,000 ■ Average Life 12.5 years ■ Duration of Issue: 9.7 years ■ Average POB Interest Rate: 3.85% ■ Delivery date: November 4, 2021 ~ ' July 20, 2021 9 PROPOSED PENSION OBLIGATION BONDS Proposed 2021 Pension Obligation Bonds -100% Funding ■ Par Amount: $61,490,000 ■ Use of Funds • UAL Payoff Miscellaneous 40,460,940 • UAL Payoff Safety 20,419,728 • Cost of Issuance 300,000 • Total Underwriter's Discount 307,450 • Additional Proceeds 1~882 • Total 61,490,000 ■ Average Life 11.4 years ■ Duration of Issue: 9.1 years ■ Average POB Interest Rate: 3.73% ■ Delivery date: November 4, 2021 n July 20, 2021 119 of 134
August 3, 2021, Item #8PROPOSED PENSION OBLIGATION BONDS Proposed 2021 Pension Obligation Bonds ■ 85% Funding Payoff CalPERS Projected June 30, 2021 UAL Bases Remaining Balance Selected Balance Miscellaneous $ 38,098,445 $ 22,144,524 $15,953,921 Safety 19,090,825 10,536,643 8,554,182 Total 57,189,270 32,681,167 24,508103 ■ Assume funds transferred to CalPERS on June 30, 2021 for this analysis ~ ) I. July 20, 2021 11 PROPOSED PENSION OBLIGATION BONDS Proposed 2021 Pension Obligation Bonds ■ 85% Funding Payoff ( continued) Amortization 6/30/21 Miscellaneous Bases Selected5 Years Balance 2003 Assumption Change 4 $ 1,317,935 2009 Special (Gain)/Loss 20 1,742,601 2012 Payment (Gain)/Loss 23 614,643 2013 (Gain)/Loss 24 12,551,674 2016 Assumption Change 17 2,016,752 2018 Assumption Change 19 3,900,919 Total 22,144,524 5 Selected by Fieldman, Rolapp & Associates, Inc. n 1 July 20, 2021 12 120 of 134 6/30/21 Balance Paid $ 1,317,935 1,742,601 614,643 12,551,674 2,016,752 3,900,919 22,144,524
August 3, 2021, Item #8PROPOSED PENSION OBLIGATION BONDS Proposed 2021 Pension Obligation Bonds ■ 85% Funding Payoff ( continued) Safety Bases Selected6 Amortization (All Tier 1 Plan) Tl 2013 Investment (Gain)/Loss T 1 2014 Assumption Change T 1 2016 Assumption Change Tl 2019 Investment (Gain)/Loss Total 6 Selected by Fieldman, Rolapp & Associates, Inc. fl) July 20, 2021 Years 24 15 17 20 13 6/30/21 Balance $ 6,293,863 2,886,750 1,098,063 257,967 10,536,643 PROPOSED PENSION OBLIGATION BONDS Proposed 2021 Pension Obligation Bonds ■ 100% Funding Payoff UAL Bases Balance Selected Miscellaneous UAL Projected to $ 38,098,445 $ 38,098,445 6/30/21 Miscellaneous 19/20 Asset Loss 2,362,495 2,362,495 ( estimated) Safety UAL Projected 6/30/21 19,090,825 19,090,825 Safety 19/20 Asset Loss 1,328,903 1,328,903 ( estimated) Total 60,880,668 60,880,668 6/30/21 Balance Paid $ 6,293,863 2,886,750 1,098,063 257,967 10,536,643 Remaining Balance $0 0 0 0 0 ■ Assume funds transferred to CalPERS on June 30, 2021 for this analysis n · July 20, 2021 14 121 of 134
August 3, 2021, Item #8~ n S"' .000,000 $6,000,000 S ,000,000 S ,000,000 $3,000.000 S .000.000 so PROPOSED PENSION OBLIGATION BONDS Proposed 2021 Pension Obligation Bonds Debt Service -85% Funding Debt Sen•ice Allocation ····················· ··••. ··········· ······· lli<Kdl:anto Pl:in,\llonrfd D(b1 Stn-ict --Currm1 ·,u. P:aymmt~ -$:af('(y Pl:an .\D0<::irfd D(bt Sen-ict ·.u. 'p:iymm1 for B:a tP:aid OffbyPOB July 20, 2021 7,000.000 S6,000,000 S~,000.000 ,000.000 S3.000.00J S~.000.000 S ,000.000 so 15 PROPOSED PENSION OBLIGATION BONDS Proposed 2021 Pension Obligation Bonds Debt Service -100% Funding Debt Se1Tice Allocation \li tlltnto Pl:inAUoc:md Dfbt Serfr -... f~· Pln .-\llocmd Debi Smrt -C rml L\.I. P ~-meoc July 20, 2021 16 122 of 134
August 3, 2021, Item #8PROPOSED POB SUCCESS ANALYSIS -7.0% DISCOUNT RA TE Present Value of Contributions Without POB Less With POB Miscellaneous Plan-85% Funding & 7.0% Discount Rate s~o.o 0.000 I ::::72% Likelihood of success S-t0.000.000 S.30.000.000 s.::o.o .000 S!0.000.000 SS,326,966 0 75~o ·SI 0.000.000 ~ July 20, 2021 17 R PROPOSED POB SUCCESS ANALYSIS-7.0% DISCOUNT RATE Present Value of Contributions Without POB Less With POB Safety Plan -85% Funding & 7.0% Discount Rate 50.000.000 ---I ::::69% Likelihood of success .tO.O 0.0 0 S30.000.000 · _Q,000.000 SI0.000.000 ·· · fil'.!?.2-~ so Pt>l'CC'l.llilt' ·SI 0,000.0 0 July 20, 2021 18 123 of 134 20,999.lt.1 ·
August 3, 2021, Item #8PROPOSED POB SUCCESS ANALYSIS-7.0% DISCOUNT RATE Present Value of Contributions Without POB Less With POB Combined Miscellaneous & Safety Plans -85% Funding & 7.0% Discount Rate Sl 00.000.00 I :::::71 % Likelihood of success SS0.000.000 60.000.000 S--10.000.000 so -$2().Q00.000 . (G7,I . July 20, 2021 19 PROPOSED POB SUCCESS ANALYSIS-7.0% DISCOUNT RATE 0) July 20, 2021 124 of 134 This page intentionally blank 20
August 3, 2021, Item #8PROPOSED POB SUCCESS ANALYSIS-7.0% DISCOUNT RATE Present Value of Contributions Without POB Less With POB Miscellaneous Plan -100% Funding - 7 .0% Discount Rate SI 00. 00.000 I z73% Likelihood of success SS0.000.000 S60.000.00 S-10.000.000 S20.000.000 -so ~S~Q,000._ 00 (hD l July 20, 2021 21 PROPOSED POB SUCCESS ANALYSIS-7.0% DISCOUNT RATE Present Value of Contributions Without POB Less With POB Safety Plan -100% Funding -7.0% Discount Rate SI 00.000.000 I z69% Likelihood of success SS0.000,000 i S60.000.000 · $40.000.000 S!0.000.000 so n 1 July 20, 2021 22 125 of 134
August 3, 2021, Item #8PROPOSED POB SUCCESS ANALYSIS-7.0% DISCOUNT RATE Present Value of Contributions Without POB Less With POB Combined Miscellaneous & Safety Plans -100% Funding-7.0% Discount Rate S200.000.00 -I ::::::72% Likelihood of success Sl60.000.000 SI 0.000.000 S 0.000.000 S~0.000.000 ~ so • ~0.000,000 (r:"i) July 20, 2021 23 PROPOSED POB SUCCESS ANALYSIS-7.0% DISCOUNT RATE This page intentionally blank ~ July 20, 2021 24 126 of 134
August 3, 2021, Item #8PROPOSED POB SUCCESS ANALYSIS -6.5% DISCOUNT RATE Present Value of Contributions Without POB Less With POB Miscellaneous Plan -85% Funding & 6.5% Discount Rate 50.000.000 I -:::;77% Likelihood of success -10.000.000 S.lO.O 0.000 S.20.000.000 lm.0-01,n,I Sl0.000.000 so Pe1·ceutilr -s 10.()00.000 . ([) July 20, 2021 25 n PROPOSED POB SUCCESS ANALYSIS-6.5% DISCOUNT RATE Present Value of Contributions Without POB Less With POB Safety Plan -85% Funding & 6.5% Discount Rate 50.000.000 I -:::;73% Likelihood of success -10. 0.000 J.0.0 0.000 S.!0.000.000 I 0.000. 00 ··· so Perceulilt> · 10,000.00 July 20, 2021 26 127 of 134
August 3, 2021, Item #8PROPOSED POB SUCCESS ANALYSIS -6.5% DISCOUNT RATE Present Value of Contributions Without POB Less With POB Combined Miscellaneous & Safety Plans -85% Funding & 6.5% Discount Rate I 00.000.000 I z75% Likelihood of success S 0.000.000 $60.000.000 -10.000.000 S.20.000.000 -so ·$20.000,000 ~ . July 20, 2021 27 PROPOSED POB SUCCESS ANALYSIS-6.5% DISCOUNT RATE This page intentionally blank ~ 1 July 20, 2021 28 128 of 134
August 3, 2021, Item #8PROPOSED POB SUCCESS ANALYSIS -6.5% DISCOUNT RATE Present Value of Contributions Without POB Less With POB Miscellaneous Plan -100% Funding & 6.5% Discount Rate Sl00.000.000 I ::::.77% Likelihood of success S 0.000.000 $60.000 .000 S-10.000 .000 S-0.000.000 so ~S.20.000.000 (K1) July 20, 2021 29 PROPOSED POB SUCCESS ANALYSIS -6.5% DISCOUNT RATE Present Value of Contributions Without POB Less With POB Safety Plan -100% Funding & 6.5% Discount Rate SI00.000.000 I ::::.74% Likelihood of success S 0.000.000 60.000.000 S-10.000.000 95q,g ISI5.20i.992 · ..!0. 00.000 ~ July 20, 2021 30 129 of 134
August 3, 2021, Item #8PROPOSED POB SUCCESS ANALYSIS-6.5% DISCOUNT RATE Present Value of Contributions Without POB Less With POB Combined Miscellaneous & Safety Plans-100% Funding & 6.5% Discount Rate S.200.000.000 I ::::75% Likelihood of success S.160.000.00-0 SI 20.000.000 SS0.000.000 S4J,J90,Jt5 S-W .. 000.000 -S-t0.000.000 (h1) July 20, 2021 31 PROPOSED POB SUCCESS ANALYSIS-6.5% DISCOUNT RATE This page intentionally blank n July 20, 2021 32 130 of 134
August 3, 2021, Item #8SUMMARY Summary 85% Funding & 7.0% Discount Rate Average 30-Y ear Present Value Impact Average of Average of Likelihood Successful Unsuccessful Overall Plan of Success Trials Trials Average Miscellaneous 72% $ 8,000,000 $ (3,000,000) $ 5,000,000 Safety 69% 4,000,000 (2,000,000) 2,000,000 Combined 71% 12,000,000 (5,000,000) 7,000,000 30-Y ear Present Value Impact Plan 25th Percentile 50th Percentile 75th Percentile Miscellaneous $ (589,790) $3,638,314 $ 8,326,866 Safety (484,927) 1,347,002 3,799,537 Total (1,074,717) 4,985,316 12,126,403 (,"i) July 20, 2021 33 SUMMARY Summary 100% Funded Ratio & 7.0% Discount Rate Average 30-Y ear Present Value Impact Average of Average of Likelihood Successful Unsuccessful Overall Plan of Success Trials Trials Average Miscellaneous 73% $ 15,000,000 $ (6,000,000) $10,000,000 Safety 69% 8,000,000 (4,000,000) 5,000,000 Combined 71% 23,000,000 (10,000,000) 14,000,000 30-Year Present Value Impact Plan 25th Percentile 50th Percentile 75th Percentile Miscellaneous $ (651,581) $6,330,462 $ 15,001,123 Safety (1,049,354) 2,584,235 7,586,489 Total (1,700,934) 8,914,697 22,587,612 R July 20, 2021 34 131 of 134
August 3, 2021, Item #8SUMMARY Summary 85% Funding & 6.5% Discount Rate Average 30-Year Present Value Impact Average of Average of Likelihood Successful Unsuccessful Overall Plan of Success Trials Trials Average Miscellaneous 77% $ 6,000,000 $ (3,000,000) $ 4,000,000 Safety 73% 3,000,000 (1,000,000) 2,000,000 Combined 75% 9,000,000 (4,000,000) 6,000,000 30-Year Present Value Impact Plan 25th Percentile 50th Percentile 75th Percentile Miscellaneous $ 153,140 $3,266,563 $6,832,053 Safety (129,856) 1,320,621 3,078,405 Total 23,284 4,587,184 9,910,458 ~ I July 20, 2021 35 SUMMARY Summary 100% Funding & 6.5% Discount Rate Average 30-Year Present Value Impact Average of Average of Overall Likelihood Successful Unsuccessful Average Plan of Success Trials Trials Miscellaneous 77% $ 11,000,000 $ (5,000,000) $ 8,000,000 Safety 74% 6,000,000 (3,000,000) 4,000,000 Combined 75% 17,000,000 (7,000,000) 11,000,000 30-Year Present Value Impact Plan 25th Percentile 50th Percentile 75th Percentile Miscellaneous $ 392,581 $5,881,107 $12,408,928 Safety (238,615) 2,631,185 6,211,509 Total 153,966 8,512,292 18,620,437 ~ July 20, 2021 36 132 of 134
August 3, 2021, Item #8SUMMARY Summary 1,0 95th Percentile S:-0 -to JO 75th Percentile . !O ~,o 1 50th Percentile X x =Average ,o 25th Percentile -,10 .. -10 5th Percentile 100", Ft111d111g -..\: 7Jl', l)i~ "\Hill! lbt • ■ :-,5••., Funding ... \: 7.0'',, 1)1 ·1nant IC1tt' a 100" Fundin!! & /1 :-' .. l)i.;c,1u111 K,llC S5" .. run,lin!,' ~·· 6.5" .. l)j. ·111 flt I ,Ill.' ~ July 20, 2021 37 ACTUARIAL CERTIFICATION This report presents analysis of the City of Poway's CalPERS pension plans and the related impact of the City potentially issuing a Pension Obligation Bond. The calculations and projections in this report are based on information contained in the City's June 30, 2019 and earlier CalPERS actuarial valuation reports. We reviewed this information for reasonableness, but do not make any representation on the accuracy of the CalPERS reports. Future investment returns and volatility are based on Bartel Associates Capital Market model which results in long term returns summarized on page I and 2. Future results may differ from our projections due to differences in actual experience as well as changes in plan provisions, CalPERS actuarial assumptions or methodology. Other than variations in investment return, this study does not analyze these. To the best of our knowledge, this report is complete and accurate and has been conducted using generally accepted actuarial principles and practices. As members of the American Academy of Actuaries meeting the Academy Qualification Standards, we certify the actuarial results and opinions herein. Respectfully submitted, Mary Elizabeth Redding FSA, EA, FCA, MAAA Vice President Bartel Associates, LLC July 20, 2021 ~ . ' July 20, 2021 133 of 134 Bianca Lin FSA, EA, FCA, MAAA Assistant Vice President Bartel Associates, LLC July 20, 2021 38
August 3, 2021, Item #8Pension Obligation Bonds Good Faith Estimates SB 450 Summary/ Government Code 5852.1 * Estimated Principal Amount $61,490,000 Estimated True Interest Cost (TIC) of 3.67% the Bonds Estimated Sum of All Fees and Charges $609,332 Paid to 3rd Parties Estimated Costs of Issuance $301,882 Estimated Underwriting Fee $307,450 Estimated Total Bond Proceeds Net of $60,271,336 3rd Party Fees and Charges Total Payment Amount $87,253,432 *Summary reflects good faith estimates as of 07/20/21 and all costs associated with the financing; subject to change based on interest rates, market conditions, and other factors. 134 of 134 ATTACHMENT F
1 of 1August 3, 2021, Item #9M EMQRAN DLJ M City of Poway DATE: TO: FROM: SUBJECT: Summary: August 3, 2021 Members of the City Council Deputy Mayor Barry Leonard Council member Caylin Frank Town Center Arch Entry Sign Poway is home to many civic and service organizations that take pride in being an important part of our community. Recently, the Poway Valley Garden Club began discussing the formation of a community fundraising campaign to build a welcome arch across Poway Road. We believe this is very compatible with the goals set forth in the Poway Road Specific Plan, which was created to re-envision Poway Road as a thriving destination for residents and visitors alike. Bringing a welcome arch to the heart of Poway Road is an opportunity to showcase our city's civic pride and philanthropic nature. The Town Center, identified as the areas around Civic Center Drive and Poway Road, would be an ideal location to welcome drivers, cyclists and pedestrians to our city. This is also the gateway to our brand new Mickey Cafagna Community Center, Poway Swim Center and Community Park, the heart of our parks system. Recommended Action: We are asking for council consensus to support the concept of a Poway welcome arch and the community fundraising effort. We are also asking the mayor to create a council subcommittee to work with the Poway Valley Garden Club and other organizations to bring this vision to fruition. Attachments: None Reviewed/ Approved By We~d7aserman Assistant City Manager Reviewed By: Alan Fenstermacher City Attorney City Manager