Item 7 - Sale of 1995 Water Revenue Bonds to Finance Water Treatment Projects
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- AGENDAREPORTS~Y
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TO: Honorable Mayor and Members of the City Council
Honorable Chairman and Members of the Poway Public Financing
Authority
FROM: James L, Bowersox, City Manager and Exl\ecUtive ~
INITIATED BY: John 0, Fitch, Assistant City Manager1?t
Peggy A, Stewart, Director of Administrative Servi~
DATE: October 17, 1995
SUBJECf: Sale of 1995 Water Revenue Bonds to finance water treatment projects,
ABSTRACf
The Water Revenue Bonds will finance a portion of the water treatment plant upgrade, In order to
proceed with the issuance of the bonds, it is necessary for the City Council and the Poway Public
Financing Authority to adopt their respective resolutions and to approve the Installment Purchase
Agreement, the Indenture of Trust, the Purchase Contract, the Bond Counsel Services Agreement, and
- the Preliminary Official Statement. _
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ENVIRONMENTAL REVIEW
Environmental review not required for this agenda item according to CEQA guidelines.
FISCAL IMPACf
The maximum annual debt service is anticipated to be approximately $280,000. Water rates for FY
1995/96 were set anticipating a debt service payment of $250,000, which is $,056 per unit of water.
The rate to cover $280,000 in debt service will be approximately $.062 per unit of water.
ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE
No additional public notification or correspondence.
RECOMMENDATION
It is recommended that the City Council and the Poway Public Financing Authority approve the
issuance of the 1995 Water Revenue Bonds and the corresponding documents,
ACfION
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1 of 11 OCT 1 7 1995 ITEM 7 I
AGENDA REPORT
CITY OF POWAY
TO: Honorable Mayor and Members of the City Council
Chairman and Members of the Poway Public Financing Authority
FROM: James L. Bowersox, City ~
INITIATED BY: John D. Fitch, Assistant City Manager1
Peggy A, Stewart, Director of Adminis tive Services
DATE: October 17, 1995
SUBJECT: Approval of Resolutions Authorizing the Sale of Poway Public
Financing Authority Water Revenue Bonds, Series 1995 to Finance the
Water Treatment Plant Upgrade,
BACKGROUND
On April 19, 1994, the Council received a report outlining the Water Treatment Plant
Improvement Program. That report outlined a financing plan for the $8,1 million project,
includ~g the sale of water revenue bonds,
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On April 18, 1995 the City awarded a contract to Wylie Construction for the water treatment
plant upgrade and approved Resolution No, 95-020 authorizing the future issuance of water
revenue bonds which could be used to reimburse city funds expended on the project,
The FY 95/96 Capital Improvement Program approved a total project budget of $9.7 million
for this project, including $2,915, 300 from revenue bond proceeds.
FINDINGS
The financing team has completed its analysis and preparation of the bond documents to yield
the authorized revenue bond proceeds, The bond documents authorize a bond size not to
exceed $4 million. Under the current bond market conditions, it is anticipated that the bond
size will be approximately $3.32 million with an interest rate between 5,5% and 6,0%.
.Maximum annual debt service will be approximately $280,000. The water rate for FY 95/96
was set anticipating an annual debt service payment of $250,000, which is approximately
$.056 per unit of water,
ACTION:
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Agenda Report
October 17, 1995
Page 2
On Friday, October 13, the City received final bids for bond insurance for this financing,
AMBAC Indemnity Corp. gave the City a very competitive premium of 0,36%, They
agreed to the rate covenant as described in the bond documents, but will require changes to
the . Additional Bonds. test contained in the Installment Purchase Agreement (see
Attachment G).
In order to proceed with the issuance of the bonds and to provide instructions to the Trustee,
it is nectss~ry for the City Council to adopt the following:
Bond Resolution The resolution approves the issuance of the bonds
of the City of Poway the installment purchase agreement and the indenture of trust, and
authorizes staff to proceed with the documentation and execution of
the transaction,
- The Poway Public Financing Authority needs to adopt its attached bond resolution and
approve the following documents: -
Bond Resolution of The resolution approves the issuance of the bonds
the Poway Redevelop and authorizes staff to proceed with the documentation
ment Agency: and execution of the transaction,
Both the City of Poway and the Poway Public Financing Authority need to approve the
following documents: .
Installment Purchase Provides for the sale and repurchase of the water
Agreement: treatment plant between the City and the Poway Public Financing
Authority. This transaction allows the City to make installment
payments to the Authority, which are passed through to the
bondholders to pay for the financing of the improvements to the
water treatment plant.
DCT 1 7 1995 rrEII 7 . .
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Agenda Report
October 17, 1995
Page 3
Indenture of Trust: The Indenture of Trust Agreement is the contract between Bank of
America as Trustee for the bondowners and the City and the
Financing Authority describing the tenns of the transaction and
the sources of funds for repayment,
Preliminary Official The POS is the sales document that is distributed to all
Statement: interested buyers at the time of sale of the bonds,
Bond Purchase The BPA is the contract between Grigsby Brandford & Co" Inc,
Agreement: and the City and the Financing Authority describing how and when
the money is paid in exchange for the specified bonds,
Bond Counsel This Agreement is between the City and Stradling,
Services Agreement: Yocca, Carlson & Rauth describing the services to be performed
on behalf of the City in the issuance of the bonds,
~O~ALREVffiW
Environmental review is not required for this agenda item according to CEQA guidelineit.
FISCAL IMPACT
The maximum annual debt service is anticipated to be approximately $280,000. Water rates
for FY 1995/96 were set anticipating a debt service payment of $250,000, which is $,056 per
unit of water. The rate to cover $280,000 in debt service will be approximately $.062 per
unit of water,
ADDmONAL PUBLIC NOTIF1CATION AND CORRESPONDENCE
No additional public notification and correspondence,
RECOMMENDATION
It is recommended that:
1. The City Council adopt the attached Bond Resolution for the City of Poway and
approve the Preliminary Official Statement, the Bond Purchase Agreement, the
Indenture of Trust Agreement, the Purchase Agreement, and the Bond Counsel
Services Agreement.
4 of 11 OCT 1 7 1995 ITEM 7
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- Agenda Report
October 17, 1995
Page 4
2. The Poway Public Financing Authority adopt the attached Bond Resolution for the
Authority and approve the Preliminary Official Statement, the Bond Purchase
Agreement, the Indenture of Trust Agreement, the Purchase Agreement, and the Bond
Counsel Services Agreement.
3. Staff be directed to proceed with the issuance of the 1995 Water Revenue Bonds.
JLB:JDF:PAS
Attachments:
A, Bond Resolution, City of Poway
B, Bond Resolution, Poway Public Financing Authority
C, Installment Purchase Agreement (Limited Distribution)
D, Indenture of Trust Agreement (Limited Distribution)
E, .Preliminary Official Statement (Limited Distribution)
F, Bond Purchase Agreement (Limited Distribution) -
G. Bond Counsel Services Agreement (Limited Distribution)
H. Summary of Bond Insurance Bid Results (Limited Distribution)
C:bonds\ wtrrev .agd
OCT 1 7 1995 ITEM 7'"
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RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY
APPROVING AN INSTALLMENT PURCHASE AGREEMENT AND AN
INDENTURE OF TRUST, AUTHORIZING THE SALE, EXECUTION AND
DELIVERY OF NOT MORE THAN $4,000,000 PRINCIPAL AMOUNT OF
POWAY PUBLIC FINANCING AUTHORITY REVENUE BONDS, SERIES
1995 AND APPROVING CERTAIN OTHER AGREEMENTS AND
DOCUMENTS AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION
THEREWITH
WHEREAS, the Poway Public Financing Authority (the" Authority") has determined to
issue, pursuant to an Indenture of Trust, by and between the Authority and the Bank of America
National Trust and Savings Association, as Trustee (the "Trustee") (the "Indenture"), its Poway
Public Financing Authority Revenue Bonds, Series 1995 (Water Services Capitallmprovement
Program) (the "Bonds"), in the aggregate principal amount of not to exceed $4,000,000 for the
purpose of financing the acquisition and construction of certain public improvements; and
WHEREAS, the Authority, as a joint exercise of powers agency duly organized and
existing under and by virtue of the laws of the State of California, has the authority to issue
revenue bonds to provide public capital improvements, including, without limitation, water
supply., storage and treatment facilities, and to acquire and to finance the acquisition of public
capital improvements necessary or convenient for the operation of the City of Poway (the -
"City"); and
WHEREAS, to accomplish the acquisition and construction of certain public
improvements, the City and the Authority desire to enter into an Installment Purchase Agreement
by and between the Authority and the City, (the "Installment Purchase Agreement") pursuant to
which the City will sell to the Authority (i) certain improvements to water facilities located in the
City of Poway and (ii) certain additional water improvements to be financed through the issuance
of Series 1995 Bonds (collectively, the "Project") and the City will repurchase the Project from
the Authority; and
WHEREAS, the Authority desires to cause the sale and issuance of not more than
$4,000,000 in principal amount of Bonds to be secured by the installment payments to be made
by the City pursuant to the Installment Purchase Agreement (the "Bonds"); and
WHEREAS, the City and the Authority desire to enter into the Indenture for the issuance
of the Bonds; and
WHEREAS, substantially all right, title and interest of the Authority under the Installment
Purchase Agreement will be assigned to the Trustee pursuant to the Indenture; and
WHEREAS, Grigsby Brandford & Co., Inc. (the "Underwriter") desires to purchase the
Bonds and, in connection therewith, has presented for consideration a Bond Purchase Contract by
and among the Authority, the City and the Underwriter (the "Purchase Contract"); and
ATTACHMENT A tlCT 1 7 '995 ITEM 7
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WHEREAS, there has been prepared a preliminary official statement with respect to the
Bonds (the "Preliminary Official Statement"); and
WHEREAS, copies of each of the aforementioned documents have been presented to and
considered by this City Council;
NOW, THEREFORE, the City Council of the City does hereby fmd, determine, resolve
and order as follows:
SECTION 1. The foregoing recitals, and each of them, are true and correct.
SECTION 2. The Installment Purchase Agreement is approved in substantially the
form presented at this meeting. The Mayor and the Clerk of this City are hereby authorized and
directed, for and in the name of the City, to execute and deliver the Installment Purchase
Agreement with such changes, insertions and omissions as said officers may approve, such
approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 3. The Indenture is approved in substantially the form presented at this
meeting. The Mayor and the Clerk of this City are hereby authorized and directed, for and in
the name of the City, to execute and deliver said agreement with such changes, insertions and
omissions as said officers may approve, such approval to be conclusively evidenced by the
execution and delivery thereof.
_ SECTION 4. The Purchase Contract hereby is approved in substantially the form
presented at this meeting. Upon receipt of a complete Purchase Contract from the Underwriter
the Mayor of the City or the City Manager of the City is hereby authorized and directed, for and
in the name of the City, to execute and deliver the Purchase Contract attached hereto with such
changes, insertions and omissions as said officer may approve, such approval to be conclusively
evidenced by the execution and delivery thereof, provided that the interest rates or yields to
maturity are such that the net interest cost does not exceed 8.00 % and the underwriting fee
payable to the Underwriter with respect to the Bonds does not exceed 3.00% of the principal
amount of the Bonds, exclusive of original issue discount.
SECTION 5. The preparation and distribution of the Preliminary Official Statement
in substantially the form presented at this meeting, with such changes, insertions and omissions as
may be approved by the Mayor or the City Manager, is hereby approved. The Mayor or the
City Manager of the City is hereby authorized to sign a Continuing Disclosure Certificate or
Agreement and a "deemed fmal" certificate, all pursuant to Rule 15c2-12 promulgated under the
Securities Exchange Act of 1934, relating to the Preliminary and Final Official Statements. The
Mayor or City Manager is further authorized and directed to approve, execute and deliver the
final Official Statement with respect to the Bonds, which fmal Official Statement shall be in the
form of the Preliminary Official Statement with such changes, insenions and omissions as may be
approved by the Mayor or the City Manager, such approval to be conclusively evidenced by the
execution and delivery thereof. The Underwriter is hereby authorized to distribute copies of the
Preliminary Official Statement to persons who may be interested in the initial purchase of the
Bonds, and is directed to deliver copies of the final Official Statement to all acruaI initial
purchasers of the Bonds, as applicable.
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7 of 11 tlCT 17 1995 ITEM 7
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SECTION 6. The Bonds, in an aggregate principal amount not to exceed
$4,000,000, are hereby authorized to be executed, sold and delivered in accordance with the
terms and provisions of the Indenture and the Purchase Contract.
SECTION 7. Bank of America National Trust and Savings Association is hereby
appointed as Trustee under and pursuant to the Indenture with the powers and duties of said
office as set forth in said agreement. The Trustee is hereby requested and directed to execute
and deliver the Bonds to the Underwriter in accordance with written instructions to be executed
on behalf of the Authority by the Executive Director. Stradling, Yocca, Carlson & Rauth, a
Professional Corporation, is hereby engaged to act as Bond Counsel with respect to the Bonds
pursuant to the terms of that certain Agreement re Bond Counsel Services, dated October 12,
1995 regarding the Bonds, the form of which is on file with the City Clerk, and the City
Manager is hereby authorized to execute and deliver said Agreement.
SECTION 8. The proceeds from the sale of the Bonds shall be deposited as provided
in the Indenture to pay Project Costs and Costs of Issuance (as such terms are defined in the
Indenture) .
SECTION 9. The Mayor, the City Manager, the Finance Director, the Clerk and
any other proper officer of the City are hereby authorized and directed, jointly and severally, to
do any and all things and to execute and deliver any and all documents necessary or proper for
carrying out the transactions contemplated by the Installment Purchase Agreement, the Trust
Agreement, the Purchase Contract and this Resolution.
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SECTION 10. Any document the execution of which by the Mayor of this City is
authorized by this Resolution shall, in the absence or inability to act of the Mayor, be executed
by the City Manager of this City.
SECTION 11. All actions previously taken by this City Council and by the officers
and staff of the City with respect to the matters addressed by this Resolution hereby are
approved, ratified and confirmed. All terms set forth in this Resolution are defmed in the
Installment Purchase Agreement.
SECTION 12, This Resolution shall take effect from and after its date of adoption.
ADOPTED, SIGNED AND APPROVED this _ day of , 1995.
, Mayor of the City of Poway
ATTEST:
, City Clerk
of the City of Poway
~468.00009 3 10/12/95
8 of 11 OCT 1 7 1995 ITEU 7
RESOLUTION NO.
RESOLUTION OF THE BOARD OF DIRECTORS OF THE POW A Y PUBLIC
FINANCING AUTHORITY APPROVING AN INSTALLMENT PURCHASE
AGREEMENT AND AN INDENTURE OF TRUST AUTHORIZING THE
SALE, EXECUTION AND DELIVERY OF NOT MORE THAN $4,000,000
PRINCIPAL AMOUNT OF REVENUE BONDS, SERIES 1995 AND
APPROVING CERTAIN OTHER AGREEMENTS AND DOCUMENTS AND
AUTHORIZING CERTAIN ACTIONS IN CONNECTION THEREWITH
WHEREAS, the Poway Public Financing Authority (the "Authority") has determined to
issue, pursuant to an Indenture of Trust, dated as of November 1, 1995, by and between the
Authority and Bank of America National Trust and Savings Association as Trustee (the
"Trustee") (the "Indenture"), its Poway Public Financing Authority Revenue Bonds, Series 1995
(Water Services Capital Improvement Program) (the "Bonds"), in the aggregate principal amount
of not to exceed $4,000,000 for the purposes of fmancing the acquisition and construction of
certain public improvements; and
WHEREAS, the Authority, as a joint exercise of powers agency duly organized and
existing under and by virtue of the laws of the State of California, has the authority to issue _
revenue bonds to provide public capital improvements, including, without limitation, water
supply, storage and treatment facilities, and to acquire and to fmance the acquisition of public
capital improvements necessary or convenient for the operation of the City of Poway (the
"City"); and
WHEREAS, to accomplish the acquisition and construction of certain public
improvements, the Authority desires to enter into an Installment Purchase Agreement by and
between the Authority and the City, dated as of November 1,1995, (the "Installment Purchase
Agreement") pursuant to which the City will sell to the Authority (i) certain improvements to
water facilities located in the City of Poway and (ii) certain additional water improvements to be
financed through the issuance of Series 1995 Bonds (collectively, the "Project") and the City will
repurchase the Project from the Authority; and
WHEREAS, the Authority desires to cause the sale and issuance of not more than
$4,000,000 in principal amount of Bonds to be secured by the installment payments to be made
by the City pursuant to the Installment Purchase Agreement (the "Bonds"); and
WHEREAS. the Authority desires to enter into the Indenture for the issuance of the
Bonds; and
WHEREAS, substantially all right, title and interest of the Authority under the Installment
Purchase Agreement will be assigned to the Trustee pursuant to the Indenture; and
9 of 11 ATTACHMENT B DCI 17 1995 ITEM 7
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WHEREAS, Grigsby Brandford & Co., Inc. (the .Underwriter.) desires to purchase the
Bonds and, in connection therewith, has presented for consideration a Bond Purchase Contract by
and among the Authority, the City and the Underwriter (the .Purchase Contract.); and
WHEREAS, there has been prepared a preliminary official statement with respect to the
Bonds (the .Preliminary Official Statement.); and
WHEREAS, copies of each of the aforementioned documents have been presented to and
considered by this Board of Directors;
NOW, THEREFORE, the Board of Directors of the Authority does hereby fmd,
determine, resolve and order as follows:
SECTION 1. The foregoing recitals, and each of them, are true and correct.
SECTION 2. The Installment Purchase Agreement is approved in substantially the
form presented at this meeting. The Chairman and the Secretary of this Board of Directors are
hereby authorized and directed, for and in the name of the Authority, to execute and deliver the
Installment Purchase Agreement with such changes, insertions and omissions as said officers may
approve, such approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 3. The Indenture is approved in substantially the form presented at this
meeting. The Chairman and the Secretary of this Board of Directors are hereby authorized and
directed, for and in the name of the Authority, to execute and deliver said agreement with such
changes, insertions and omissions as said officers may approve, such approval to be conclusively
evidenced by the execution and delivery thereof.
SECTION 4. The Purchase Contract hereby is approved in substantially the form
presented at this meeting. Upon receipt of a complete Purchase Contract from the Underwriter
the Chairman of the. Board of Directors or the Executive Director of the Authority is hereby
authorized and directed, for and in the name of the Authority, to execute and deliver the
Purchase Contract with such changes, insertions and omissions as said officer may approve, such
approval to be conclusively evidenced by the execution and delivery thereof, provided that the
interest rates or yields to maturity are such that the net interest cost does not exceed 8.00% and
the underwriting fee payable to the Underwriter with respect to the Bonds does not exceed 3.00%
of the principal amount of the Bonds, exclusive of original issue discount.
SECTION 5. The preparation and distribution of the Preliminary Official Statement in
substantially the form presented at this meeting, with such changes, insertions and omissions as
may be approved by the Chairman of the Board of Directors or the Executive Director of the
Authority, is hereby approved. The Chairman of the Board of Directors and the Mayor of the
City, or the designee of either such party, are hereby authorized to sign a Continuing Disclosure
Certificate or Agreement and a .deemed final. certificate, all pursuant to Rule 15c2-12
promulgated under the Securities Exchange Act of 1934, relating to the Preliminary and Final
Official Statements. The Chairman of the Board of Directors is further authorized and directed
to approve, execute and deliver the fmal Official Statement with respect to the Bonds, which final
Official Statement shall be in the form of the Preliminary Official Statement with such changes,
insertions and omissions as may be approved by the Chairman of the Board of Directors, such
. n -..--., ""82468.00009 10/12/95
10 of 11 OCT 1 7 1995 ITEM 7
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approval to be conclusively evidenced by the execution and delivery thereof. The Underwriter is
- hereby authorized to distribute copies of the Preliminary Official Statement to persons who may
be interested in the initial purchase of the Bonds, and is directed to deliver copies of the fmal
Official Statement to all actual initial purchasers of the Bonds, as applicable.
SECTION 6. The Bonds, in an aggregate principal amount not to exceed $4,000,000,
are hereby authorized to be executed, sold and delivered in accordance with the terms and
provisions of the Indenture and the Purchase Contract,
SECTION 7. Bank of America National Trust and Savings Association is hereby
appointed as Trustee under and pursuant to the Indenture with the powers and duties of said
office as set forth in said agreement, The Trustee is hereby requested and directed to execute
and deliver the Bonds to the Underwriter in accordance with written instructions to be executed
on behalf of the Authority by the Executive Director. Stradiing, Yocca, Carlson & Rauth, a
Professional Corporation, is hereby engaged to act as Bond Counsel with respect to the Bonds
pursuant to the terms of that certain Agreement re Bond Counsel Services, daled October 12,
1995 regarding the Bonds, the form of which is on file with the City Clerk.
SECTION 8. The proceeds from the sale of the Bonds shall be deposited as provided
in the Indenture to pay Project Costs and Costs of Issuance (as such terms are defmed in the
Indenture).
SECTION 9. The Chairman, the Vice Chairman, the Executive Director, the Secretary
and any other proper officer of the Authority are hereby authorized and directed, jointly and
severally, to do any and all things and to execute and deliver any and all documents necessary 'or
proper for carrying out the transactions contemplated by the Installment Purchase Agreement,-the
Indenture, the Assignment Agreement, the Purchase Contract and this Resolution.
SECTION 10. Any document the execution of which by the Chairman of this Board of
Directors is authorized by this Resolution shall, in the absence or inability to act of the
Chairman, be executed by the Vice Chairman or Executive Director of this Board of Directors.
SECTION 11. All actions previously taken by this Board of Directors and by the
officers and staff of the Authority with respect to the matters addressed by this Resolution hereby
are approved, ratified and confirmed, All terms set forth in this Resolution are defmed in the
Installment Purchase Agreement,
SECTION 12. This Resolution shall take effect from and after its date of adoption.
ADOPTED. SIGNED AND APPROVED this _ day of ,1995.
,
Chairman of the Poway Public Financing Authority
A 1TEST:
, Secretary nCT 1 7 1995 ITEM 7
nf the Pnwav Financing Authority
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RECORDING REQUESTED BY )
AND WHEN RECORDED MAIL TO: )
)
STRADLING, YOCCA. CARLSON & RAUTH )
660 Newport Center Drive )
Suite 1600 )
Newport Beach, California 92660 )
AM: Denise E. Hering, Esq. )
[Space above for recorder.]
This document is recorded
for the benefit of the City
of Poway, under
Section 6103 of the
Government Code.
INSTALLMENT PURCHASE AGREEMENT
by and between -
CITY OF POW A Y
and
POW A Y PUBLIC FINANCING AUTHORITY
Dated as of November I, 1995
relating to
$
POW A Y PUBLIC FINANCING AUTHORITY
REVENUE BONDS, SERIES 1995
(WATER SERVICES CAPITAL IMPROVEMENT PROGRAM)
ATTACHMENT C neT 1 7 1995 ITEM 7 flw
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Definitions , . , . . . . . . . . . , . , , , . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE n
REPRESENTATIONS AND WARRANTIES:
OPINIONS OF COUNSEL
Section 2.01. Representations by the City .., . . . , . . . . . . . . . . . . . . . . . . . . . 9
Section 2.02. Representations and Warranties by the Authority . , . . . . . . . . . . . . . 9
Section 2.03. Opinion of Counsel for the City ...........,...,....... 10
Section 2.04. Opinion of Counsel for the Authority . . . . . . . . . . . . . . . . . . . . 10
ARTICLE ill
ACQUIsmON AND CONSTRUCTION OF THE PROJECT
Section 3.01. Sale and Purchase of Project . , . . , . . , . . . . . . . . , . . . . . . . 11
- Section 3.02. Purchase and Sale of the Project 11
. . . . . . . . . . . . . . . . . . . . 4-
Section 3.03. Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II
Section 3.04. Substitution and Release of Project ... . . . . . . . . . . . . . . . . . II
Section 3.05. Construction of the Project . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV
INSTALLMENT PAYMENTS
Section 4.01. Purchase Price ............................... . 13
Section 4.02. Installment Payments. . . . . . . . . . . . . . . . . . . . . , . . . . . . . 13
ARTICLE V
SECURITY
Section 5.01. Pledge of Revenues ............................ . 14
Section 5.02. Allocation of Revenues .......................... . 14
Section 5.03. Additional Contracts and Bonds ,. . . . . . . . . . . . . . , . . . . . . 15
Section 5.04. Investments ................................. . 16
pvadoa50_1I 1381B2468.9 i 1011 om
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- ARTICLE VI
COVENANTS OF THE CITY
Section 6.01. Compliance with Installment Purchase Agreement and Ancillary
Agreements ................................. . 17
Section 6.02. Amount of Rates and Charges ....."................ 17
Section 6.03. Collection of Rates and Charges , . . . . . . . . . . . . . , . . . . . . . 17
Section 6.04. Against Encumbrances. . . . . . . . . . , , . . . . . . . . . . . , , . . . 18
Section 6.05. Against Sale or Other Disposition of Property ........,.... 18
Section 6.06. Against Competitive Facilities ...,..".......,..,.... 18
Section 6.07. Tax Covenants ............................... . 18
Section 6.08. Maintenance and Operation of the Water System. . . , , . , . . . . , 19
Section 6.09. Payment of Claims ...,.........,..,....,..,..... 19
Section 6.10. Compliance with Contracts . . . . , . , , , , . . . . . . , . . . . . . . . 19
Section 6.11. Insurance , . . . . . . . . . , . . . , , . , . . , . . , . . . . . . . . . . , . 19
Section 6.12. Accounting Records; Financial Statements and Other Reports . . . . 20
Section 6.13. Protection of Security and Rights of the Authority . . . . . . , . . . . 21
Section 6.14. Payment of Taxes and Compliance with Governmental
Regulations ................................. . 21
Section 6.15. EminentDomainProceeds ......................... 21
Section 6.16. Further Assurances ....,..,......"..,.........,. 21
Section 6.17. Enforcement of Contracts . . , , , . . . , , . , , , , . . . . . . . . , , . 22
- Section 6.18. Annual Information to be Provided to Bond Insurer . . . . . . . . . . 22
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ARTICLE Vll
PREPAYMENT OF INSTALLMENT PAYMENTS
Section 7.01. Prepayment ................................. . 23
Section 7.02. Method of Prepayment .......................... . 23
ARTICLE VllI
EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY
Section 8.01. Events of Default and Acceleration of Maturities .......... . 24
Section 8.02. Application of Funds Upon Acceleration . . . . . . . . . . . . , . . . . 25
Section 8.03. Other Remedies of the Authority .................... . 25
Section 8.04. Non-Waiver ., . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.05. Remedies Not Exclusive ......................... . 26
Section 8.06. Notices . . . . , . . . . . , . . . . . . . . . . . . , . . . . . . . . . . . . . 26
ARTICLE IX
.- DISCHARGE OF OBLIGATIONS
Section 9.01. Discharge of Obligations .......................... 27
PUBc,30150_1I 1381B2468.9 ii 10/10/95
ARTICLE X
MISCELLANEOUS
Section 10.OI. Liability of City Limited to Revenues ................. . 28
Section 10.02. Benefits of Installment Purchase Agreement Limited to Parties ... 28
Section 10.03. Successor Is Deemed Included in all References to Predecessor . . 28
Section 10.04. Waiver of Personal Liability .. . . . , , . . , . . . . . . . . . . . . . . 28
Section 10.05. Article and Section Headings, Gender and References ....... . 28
Section 10.06. Partial Invalidity .............................. . 28
Section 10.07. Assignment ................................. . 29
Section 10.08. Net Contract . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . 29
Section 10.09. California Law ................................ 29
Section 10.10. Notices .. . . . . . . . . . . . , . . , . . . . . . . . . . . . . . . . . . . . 29
Section 10.II. Effective Date . , . . . . . . . . . . . . . . . , . . . , . . . , . . . . . . . 30
Section 10.12. Execution in Counterparts ........................ . 30
Section 10.13. Indemnification of Authority . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 10.14. Amendments Permitted .......................... . 30
Section 10.15. Notice to Rating Agencies ........................ . 31
EXHIBIT A DESCRIPTION OF THE PROJECT, , . . , . . . . . . . . . . . . . . EXHIBIT A-I
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-
EXHIBIT B PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT B-1
EXHIBIT C LEGAL DESCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . EXHIBIT C-l
PUBL,30ISO _111311 82461.9 iii 10110195
INSTALLMENT PURCHASE AGREEMENT
This INSTALLMENT PURCHASE AGREEMENT, made and entered into as of
November I, 1995, by and between CITY OF POWAY, a municipality duly organized and
existing under and by virtue of the laws of the State of California (the "City"), and POW A Y
PUBLIC FINANCING AUTHORITY, a joint exercise of powers agency duly organized and
existing under and by virtue of the laws of the State of California (the" Authority").
WITNESSETH:
WHEREAS, the City proposes to finance certain facilities within its water system
described in Exhibit A to this Installment Purchase Agreement (the "Project");
WHEREAS, the Authority has agreed to assist the City in refinancing the Project;
WHEREAS, the Authority is authorized by the Marks-Roos Local Bond Pooling Act of
1985 (constituting Article 4 of Chapter 5 of Division 7 of Title I of the California Government
Code) to issue bonds to finance the provision of facilities and acquisition of property for its water
supply;
WHEREAS. the City and the Authority have duly authorized the execution of this
Agreement; -
WHEREAS, all acts, conditions and things required by law to exist, to have happened
and to have been performed precedent to and in connection with the execution and delivery of
this Installment Purchase Agreement do exist, have happened and have been performed in regular
and due time, form and manner as required by law, and the parties hereto are now duly
authorized to execute and enter into this Installment Purchase Agreement;
NOW, THEREFORE, IN CONSIDERATION OF THESE PREMISES AND OF THE
MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER
VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS
FOLLOWS:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context otherwise requires, the tenns defined in
this section shall for all purposes hereof and of any amendment hereof or supplement hereto and
of any report or other document mentioned herein or therein have the meanings defined herein,
the following definitions to be equally applicable to both the singular and plural fonns of any of
the tenns defined herein. Unless the context other requires, all capitalized terms used herein and
not defined herein shall have the meanings ascribed thereto in the Indenture.
Accountant's Reoort
The term" Accountant's Report" means a report signed by an Independent Certified
Public Accountant.
Al!reement
The term "Agreement" means this Agreement, by and between the City and the
Authority, dated as of November I, 1995, as originally executed and as it may from time to time
be amended or supplemented in accordance herewith.
Annual Debt Service
-
The term "Annual Debt Service" means, for any Bond Year, the sum of (1) the interest
payable on all Outstanding Bonds in such Bond Year, assuming that all Outstanding Serial Bonds
are retired as scheduled (except to the extent that such interest is to be paid from the proceeds of
the sale of any Bonds), and (2) the principal amount of all Outstanding Bonds maturing by their
terms in such Bond Year (which shall include sinking fund payments due in such Bond Year).
Authority
The term "Authority" means Poway Public Financing Authority, a joint exercise of
powers agency duly organized and existing under and by virtue of the laws of the State of
California.
Bond Insurance Policv
The term "Bond Insurance Policy" means the municipal bond new issue insurance policy
issued by the Bond Insurer that guarantees payment of principal of and interest on the Bonds.
Bond Insurer
The term "Bond Insurer" means , a
, or any successor thereto.
\
puadOISO_1113! I 82461.9 2 10110/95
-
D.wIlI1
The term "Bonds" means the $ aggregate principal amount of Poway Public
Financing Authority Revenue Bonds, Series 1995 (Water Services Capital Improvement Program)
issued by the Authority, and at any time Outstanding pursuant to the Indenture.
Business Dav
"Business Day" means a day other than: a Saturday or Sunday or a day on which (i)
banks located in the city in which the principal corporate trust office of the Trustee is located are
not required or authorized to remain closed, and (ii) on which The New York Stock Exchange is
not closed.
QIy
The term "City" means City of Poway. a municipality duly organized and existing under
and by virtUe of the laws of the State of California.
Construction Fund
The term "Construction Fund" means the fund established pursuant to Section 3.03 of the
Indenture.
Contracts
-
The term "Contracts" means this Installment Purchase Agreement and any amendments
and supplements hereto and other Contracts secured by or payable from Net Revenues on a parity
with this Installment Purchase Agreement.
Date of Ooeration
The term "Date of Operation" means, with respect to any uncompleted component of the
Project, the estimated date by which such uncompleted component will have been completed and,
in the opinion of an engineer, will be ready for operation by or on behalf of the City.
Debt Service
The term "Debt Service" means, for any period of calculation, the sum of:
(I) the interest accruing during such period on all outstanding Bonds, assuming that
all outstanding serial Bonds are retired as scheduled and that all outstanding term
Bonds are prepaid or paid from sinking fund payments as scheduled (except to the
extent that such interest is capitalized);
(2) those portions of the principal amount of all outstanding serial Bonds maturing in
such period and in the next succeeding period of calculation accruing during such
period, in each case computed as if such principal amounts were deemed to accrue
daily during such period in equal amounts;
>08L,30150_11131182468.9 3 10/10/95
--- --- -"--------~
(3) those portions of the principal amount of all outstanding term Bonds required to
be prepaid or paid in such period and during the next succeeding period of
calculation accruing during such period, in each case computed as if such principal
amounts were deemed to accrue daily during such period in equal amounts: and
(4) those portions of the Installment Payments required to be made during such period
and during the next succeeding period of calculation accruing during such period,
in each case computed as if such Installment Payments were deemed to accrue
daily during such period in equal amounts (except to the extent the interest
evidenced and represented thereby is capitalized);
orovided that, as to any such Bonds or Installment Payments bearing or comprising interest at
other than a fixed rate, the rate of interest used to calculate Debt Service shall be assumed to
bear interest at the highest of: (i) the actual rate on the date of calculation, or if the Bonds or
Installment Payments are not yet outstanding, the initial rate (if established and binding), (ii) if
the Bonds or Installment Payments have been outstanding for at least twelve months, the average
rate over the twelve months immediately preceding the date of calculation, and (iii)(l) if interest
on the Bonds or Installment Payments is excludable from gross income under the applicable
provisions of the Internal Revenue Code, the most recently published Bond Buyer 25 Bond
Revenue Index (or comparable index if no longer published) plus fifty (50) basis points, or (2) if
interest is not so excludable, the interest rate on direct United States Treasury obligations with
comparable maturities plus fifty (50) basis points;
and provided further that if any series or issue of such Bonds or Installment Payments not -
exceeding 25 % of Revenues as of the most recent Fiscal Year for which audited fmancial
statements are available have twenty-five percent (25 %) or more of the aggregate principal
amount of such series or issue due in anyone year, Debt Service shall be determined for the
period of determination as if the principal of and interest on such series or issue of such Bonds or
Installment Payments were being paid from the date of incurrence thereof in substantially equal
annual amounts over a period of twenty-five (25) years from the date of calculation;
and orovided further that, as to any such Bonds or Installment Payments or portions thereof
bearing no interest but which are sold at a discount and which discount accrete5 with respect to
such Bonds or Installment Payments or portions thereof, such accreted discount shall be treated
as interest in the year paid in the calculation of Debt Service;
and orovided further that the amount on deposit in a debt service reserve fund on any date of
calculation of Debt Service shall be deducted from the amount of principal due at the final
maturity of the Bonds and Contracts for which such debt service reserve fund was established and
to the extent the amount in such debt service reserve fund is in excess of such amount of
principal, such excess shall be applied to the full amount of principal due, in each preceding
year, in descending order, until such amount is exhausted;
and orovided further that Debt Service shall be reduced by the amount of investment earnings
cred ited to any debt service reserve fund created with respect to Contracts or Bonds, provided
such investment earnings are held on deposit in the interest account therefor;
PUBU0850_1I 1381B2<68.9 4 10/10/95
,
-- and nrovided further that the maximum purchase price of all Bonds subject to tender for purchase
shall be included as Debt Service unless such purchase price is available under a liquidity facility
from an entity rated in one of the two highest long term rating categories by Moody's and S&P.
Event of Default
The term "Event of Default" means an event described in Section 8.01.
Fiscal Year
The term "Fiscal Year" means the period beginning on July 1 of each year and ending on
the last day of June of the next succeeding year, or any other twelve-month period selected and
designated as the official Fiscal Year of the City.
Indenture
The term "Indenture" means the Indenture of Trust dated as of November 1, 1995 by and
among the Authority, the City and the Trustee, relating to the Bonds, as originally executed and
as it may from time to time be amended or supplemented in accordance with its terms.
Indeoendent Certified Public Accountant
The term "Independent Certified Public Accountant" means any firm of certified public
accountants appointed by the City, each of whom is independent of the City and the Authorlty
pursuant to the Statement on Auditing Standards No. I of the American Institute of Certified
Public Accountants.
Indenendent Financial Consultant
The term "Independent Financial Consultant" means a financial consultant or firm of such
consultants appointed by the City, and who, or each of whom:
(1) is in fact independent and not under domination of the City;
(2) does not have any substantial interest, direct or indirect, with the City; and
(3) is not connected with the City as an officer or employee thereof, but who may be
regularly retained to make reports thereto.
Installment Pavment Date
The term "Installment Payment Date" means June I and December I of each year,
commencing June 1, 1996, or if said date is not a Business Day, then the preceding Business
Day.
PlJOL:3OI5O_1 1 131182461.9 5 10/10195
Installment ~ments
The term "Installment Payments" means the Installment Payments of interest and
principal scheduled to be paid by the City under and pursuant hereto and under Additional
Contracts .
Interest Pavmelll Date
The term "Interest Payment Date" means June 15 and December 15 of each year.
commencing June 15, 1996.
~
The term "Law" means the Marks-Roos Local Bond Pooling Act of 1985 (constituting
Article 4 of Division 7 of Title I of the California Government Code) and Article 5 of Division 3
of Title 4 of the California Government Code and in each case all laws amendatory thereof or
supplemental thereto.
Manl:\~er
The term "Manager" means the City Manager of the City, or any other person designated
by the City Manager to act on behalf of the City Manager.
Net Proceeds -
The term "Net Proceeds" means, when used with respect to any casualty insurance or
condemnation award, the proceeds from such insurance or condemnation award remaining after
payment of all expenses (including attorneys fees) incurred in the collection of such proceeds.
Net Revenues
The term "Net Revenues" means, for any Fiscal Year, the Revenues for such Fiscal Year
less the Operation and Maintenance Costs for such Fiscal Year.
Ooeration and Maintenance Costs
The term "Operation and Maintenance Costs" means reasonable and necessary costs spent
or incurred for maintenance and operation of the Water System (including payments for water
purchases) calculated in accordance with generally accepted accounting principles, including
(among other things) the reasonable expenses of management and repair and other expenses
necessary to maintain and preserve the Water System in good repair and working order, and
including administrative costs of the City that are charged directly or apportioned to the Water
System, including but not limited to salaries and wages of employees, payments to the Public
Employees Retirement System, overhead, insurance, taxes (if any), fees of auditors, accountants,
attorneys, consultants or engineers and insurance premiums, and including all other reasonable
and necessary costs of the City or charges (but excluding debt service payments or other similar
payments on Parity Obligations (as defined in the Indenture) or other obligations (other than
obligations for water purchases)) required to be paid by it to comply with the terms of this
PUBC,30850 _11138182468.9 6 10/10/95
..
Agreement or any other Contract or of any resolution or indenture authorizing the issuance of
any bonds or obligations or of the Bonds, but excluding in all cases depreciation, replacement
and obsolescence charges or reserves therefor and amortization of intangibles or other
bookkeeping entries of a similar nature.
Proiect
The term "Project" means the additions, betterments, extensions and improvements to the
Water System described in Exhibit A to this Installment Purchase Agreement, dated as of
November 1, 1995, by and between the poway Public Financing Authority and the City and as
modified in conformance with Section 3.04 hereof.
Purchase Price
The term "Purchase Price" means the principal amount plus interest thereon owed by the
City to the Authority under the terms hereof as provided in Section 4.01.
Rebate Fund
The term "Rebate Fund" means the fund by that name established pursuant to Section
5.09 of the Indenture.
Revenue Fund
-
-
The term "Revenue Fund" means the fund held by the City by that name described in
Section 5.02 hereof.
Revenues
The term "Revenues", as used herein. means all gross income, rents, rates, fees, charges
and other moneys derived from the ownership or operation of the Water System calculated in
accordance with GAAP, including, without limiting the generality of the foregoing,
(1) all income, rents, rates, fees, charges, business interruption insurance
proceeds or other moneys derived by the City from the sale, furnishing and supplying of
the water or other services, facilities. and commodities sold, furnished or supplied
through the facilities of or in the conduct or operation of the business of the Water
System. plus
(2) the earnings on and income derived from the investment of such income,
rents, rates, fees, charges, or other moneys, including City Water System reserves, plus
(3) the proceeds of any stand-by or water availability charges collected by t\1e
City,
but excluding in all cases customer deposits or any other deposits or advances subject to refund
until such deposits or advances have become the property of the City, and excluding any
proceeds of taxes restricted by law to be used by the City to pay bonds hereafter issued.
puaL:30ISO _1 : 1311 82468.9 7 10110/95
Trustee
The term .Trustee. means [TRUSTEE TO COME] acting in its capacity as Trustee under
and pursuant to the Indenture, and its successors and assigns.
Water Service
The term .Water Service. means the water distribution service made available or
provided by the Water System.
Water Svstem
The term .Water System. means the whole and each and every part of the water system
of the City, including the portion thereof existing on the date hereof, and including all additions,
betterments, extensions and improvements to such water system or any part thereof hereafter
acquired or constructed and all contracted rights to receive water, easements and rights of way.
Written Consent of the Authority or City. Written Order of the Authority or City. Written
Reouest of the Authority or City, Written Reouisition of the Authority or City
The terms .Written Consent of the Authority or City,. .Written Order of the Authority or
City,. .Written Request of the Authority or City,. and .Written Requisition of the Authority or
City. mean, respectively, a written consent, order, request or requisition signed by or on behalf
of (i)" the Authority by its Authorized Representative or (ii) the City by the Mayor or its City
Manager or by any two persons (whether or not members of the City Council of the City) who
are specifically authorized by resolution of the City to sign or execute such a document on its
behalf.
""IUOISO_11131182461.9 8 10/10/95
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ARTICLE n
REPRESENTA nONS AND WARRANTIES:
OPINIONS OF COUNSEL
Section 2.01. ReDresentations bv the City. The City makes the following
representations :
(a) The City is a municipality duly organized and existing under and pursuant to the
laws of the State of California.
(b) The City has full legal right, power and authority to enter into this Agreement and
carry out its obligations hereunder, to carry out and consummate all other transactions
contemplated by this Agreement, and the City has complied with the provisions of the Law in all
matters relating to such transactions.
(c) By proper action, the City has duly authorized the execution, delivery and due
performance of this Agreement.
(d) The City will not take or, to the extent within its power, permit any action to be
taken which results in the interest paid for the installment purchase of the Project under the terms
of this Agreement being included in the gross income of the Authority or its assigns for purposes
of federal or State of California income taxation.
-
-
(e) The City has determined that it is necessary and proper for City uses and purposes
within the terms of the Law that the City finance the acquisition of the Project in the manner
provided for in this Agreement.
Section 2.02. ReDresentations and Warranties by the Authoritv. The Authority makes
the following representations and warranties:
(a) The Authority is a joint exercise of powers agency duly organized and in good
standing under the laws of the State of California, has full legal right, power and authority to
enter into this Agreement and to carry out and consummate all transactions contemplated by this
Agreement and by proper action has duly authorized the execution and delivery and due
performance of this Agreement,
(b) The execution and delivery of this Agreement and the consummation of the
transactions herein contemplated will not violate any provision of law, any order of any court or
other agency of government, or any indenture, material agreement or other instrument to which
the Authority is now a party or by which it or any of its properties or assets is bound, or be in
conflict with. result in a breach of or constitute a default (with due notice or the passage of time
or both) under any such indenture, agreement or other instrument, or result in the creation or
imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of
the properties or assets of the Authority.
.-
PUBL,30150_II131 i 82461.9 9 10110/95
(c) The Authority will not take or permit any action to be taken which results in
interest paid for the installment purchase of the Project under the terms of this Agreement being
included in the gross income of the Authority or its assigns for purposes of federal or State of
California income taxation.
Section 2.03. Ooinion of Counsel for the City. Concurrently with the execution and
delivery of this Agreement, the City shall provide the Authority with an opinion of counsel for
the City, satisfactory in form and substance to the Authority, to the same effect as the
representations of the City set forth in subsections (a), (b) and (c) of Section 2.01 hereof and to
the effect that this Agreement has been duly authorized, executed and delivered by the City and
that assuming this Agreement constitutes a legal, valid and binding obligation of the Authority, it
is a legal, valid and binding obligation of the City enforceable in accordance with its terms except
as such enforceability may be limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors remedies generally or the application of equitable principles when equitable
remedies are sought, or except as rights of indemnity may be limited by principles of public
policy.
Section 2.04. Ooinion of Counsel for the Authoritv. Concurrently with the execution
and delivery of this Agreement, the Authority shall provide the City an opinion of counsel for the
Authority, satisfactory in form and substance to the City, to the same effect as the representations
of the Authority set forth in subsections (a) and (b) of Section 2.02 hereof and to the effect that
this Agreement has been duly authorized, executed and delivered by the Authority and that
assuming this Agreement constitutes a legal, valid and binding obligation of the City, it is a legal,
valid -and binding obligation of the Authority enforceable in accordance with its terms except as
such enforceability may be limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors remedies generally or the application of equitable principles when equitable
remedies are sought, or except as rights of indemnity may be limited by principles of public
policy.
PUBc:30ISO _111311 82461.9 10 10110195
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ARTICLE m
ACQUlSmON AND CONSTRUCTION OF THE PROJECT
Section 3.01. Sale and Purchase of Proiect. In consideration for the Authority's
assistance in financing the Project, the City, as owner of the Project, agrees to sell, and hereby
sells, to the Authority. and the Authority agrees to purchase and hereby purchases, from the
City, the Project at the purchase price specified in Section 4.01 hereof and otherwise in the
manner and in accordance with the provisions of this Agreement.
Section 3.02. Purchase and Sale of the Proiect. In consideration for the Installment
Payments as set forth in Section 4.02, the Authority agrees to sell, and hereby sells, to the City,
and the City agrees to purchase, and hereby purchases, from the Authority, the Project at the
purchase price specified in Section 4.01 hereof, which price includes costs of constructing the
Project, and otherwise in the manner and in accordance with the provisions of this Agreement.
Section 3.03. Iilk. All right, title and interest in the Project shall vest in the City
immediately upon execution and delivery of this Agreement.
Section 3.04. Substitution and Release of Proiect. The City shall have, and is hereby
granted, the option at any time and from time to time during the term of this Installment
Purchase Agreement, to substitute other land, facilities and improvements (a "Substitute
Property") for any project described in Exhibit A hereto or any portion thereof (a "Former
Property"), provided that the City shall satisfy all of the following requirements which are hereby
declared to be conditions precedent to such substitution:
(a) The City shall file with the Authority and the Trustee and cause to be
recorded an amended Exhibit A hereto which adds thereto a description of such Substitute
Property and deletes therefrom the description of such Former Property, provided the value of
the Substitute Property described in such amended Exhibit A at least equals the value of the
Former Property in the deleted Exhibit A;
(b) The City shall certify in writing to the Authority and the Trustee that the
estimated fair market value of such Substitute Property are at least equal to the principal amount
of the Bonds then Outstanding;
(c) The City shall certify in writing to the Authority and the Trustee that such
Substitute Property serves the public purposes of the City and constitutes property which the City
is permitted to sell and purchase under the laws of the State of California;
(d) The City shall certify in writing to the Authority and the Trustee that the
estimated useful life of such Substitute Property at least extends to the date on which the final
Installment Payment becomes due and payable hereunder;
(e) Such Substitution shall not cause the City to violate any of its covenants,
- representations and warranties made herein or in the Indenture;
PU8dOISO_1I 1311B2461.9 II 10110195
(f) In the opinion of the City Attorney, the City has the authority to sell and
purchase the Substitute Property.
From and after the date on which all of the foregoing conditions precedent to such
substitution are satisfied, the term of this Installment Purchase Agreement shall cease with respect
to the Former Property and shall be continued with respect to the Substitute Property, and all
references herein to the Former Properly shall apply with full force and effect to the Substitute
Property. The City shall not be entitled to any reduction, diminution, extension or other
modification of the Installment Payments whatsoever as a result of such substitution.
Section 3.0S. Construction of the Proiect. The Authority hereby agrees to cause the
Project to be constructed, acquired and installed and hereby designates the City as its agent for
the purpose of such construction, acquisition and installation. The City shall enter into contracts
and provide for, as agent for the Authority, the complete construction, acquisition and installation
of the Project. The City hereby agrees that it will cause the construction, acquisition and
installation of the Project to be diligently performed, and that it will use its best efforts to cause
the construction, acquisition and installation of the Project to be completed by ,
_, unforeseeable delays beyond the reasonable control of the City only excepted. It is
hereby expressly understood and agreed that the Authority shall be under no liability of any kind
or character whatsoever for the payment of any cost of the Project and that all such costs and
expenses shall be paid by the City, regardless of whether the funds deposited in the Construction
Fund are sufficient to cover all such costs and expenses. If there is money in the Construction
Fund after the completion of the Project, the City may direct the Authority and the Trustee that
the money be spent for additional projects or be transferred to the Revenue 'Fund. -
PUBL,30aSO_1I 13alB2461.9 12 10/10/95
ARTICLE IV
INSTALLMENT PAYMENTS
Section 4.01. Purchase Price.
(a) The Purchase Price to be paid by the City hereunder to the Authority is the sum
of the principal amount of the City's obligations hereunder plus the interest to accrue on the
unpaid balance of such principal amount from the effective date hereof over the term hereof,
subject to prepayment as provided in Article VII.
(b) The principal amount of the payments to be made by the City hereunder is set
forth in Exhibit B hereto.
(c) The interest to accrue on the unpaid balance of such principal amount is as
specified in Section 4.02 and Exhibit B hereto, and shall be paid by the City as and constitute
interest paid on the principal amount of the City's obligations hereunder.
Section 4.02. Installment Pavments. The City shall, subject to any rights of prepayment
provided in Article VII. pay the Authority the Purchase Price in installment payments of interest
and principal in the amounts and on the Installment Payment Dates as set forth in Exhibit B
hereto.
- Each Installment Payment shall be paid to the Authority in lawful money of the United
States of America. In the event the City fails to make any of the payments required to be made
by it under this section, such payment shall continue as an obligation of the City until such
amount shall have been fully paid; and the City agrees to pay the same with interest accruing
thereon at the rate or rates of interest then applicable to the remaining unpaid principal balance of
the Installment Payments if paid in accordance with their terms,
The obligation of the City to make the Installment Payments is absolute and
unconditional, and until such time as the Purchase Price shall have been paid in full (or provision
for the payment thereof shall have been made pursuant to Article 1X), the City will not
discontinue or suspend any Installment Payments required to be made by it under this section
when due, whether or not the Water System or any part thereof is operating or operable or has
been completed, or its use is suspended, interfered with, reduced or curtailed or terminated in
whole or in part, and such payments shall not be subject to reduction whether by offset or
otherwise and shall not be conditional upon the performance or nonperformance by any party of
any agreement for any cause whatsoever.
PUIL,30ISO_1I 131 I B2461.9 13 10110195
ARTICLE V
SECURITY
Section 5.01. Pledl!e of Revenues. All Revenues and all amounts on deposit in the
Revenue Fund are hereby irrevocably pledged to the payment of the Installment Payments as
provided herein and the Revenues shall not be used for any other purpose while any of the
Installment Payments remain unpaid; provided that out of the Revenues there may be apportioned
such sums for such purposes as are expressly permitted herein. This pledge, together with the
pledge created by all other ContraCts and Bonds, shall constitute a first and exclusive lien on
Revenues and, subject to application of amounts on deposit therein as permitted herein, the
Revenue Fund and other funds and accounts created hereunder for the payment of the Installment
Payments and all other ContraCts and Bonds in accordance with the terms hereof and the
Indenture.
Section 5.02. Allocation of Revenues. In order to carry out and effectuate the pledge
and lien contained herein, the City agrees and covenants that all Revenues shall be received by
the City in trust hereunder and shall be deposited when and as received in a special fund of the
City designated as the "Revenue Fund", which fund was previously established and is hereby
continued and which fund the City agrees and covenants to maintain and to hold separate and
apart from other funds so long as any ContraCts or Bonds remain unpaid. Moneys in the
Revenue Fund shall be used and applied by the City as provided in this Agreement.
- The City shall, from the moneys in the Revenue Fund, pay all Operation and Mainuonance
Costs (including amounts reasonably required to be set aside in contingency reserves for
Operation and Maintenance Costs, the payment of which is not then immediately required) as
they become due and payable. Thereafter, all remaining moneys in the Revenue Fund shall be
set aside by the City at the following times for the transfer to the following respective special
funds in the following order of priority; and all moneys in each of such funds shall be held in
trust and shall be applied, used and withdrawn only for the purposes set forth in this Section.
(a) Installment Pavments. Not later than each Installment Payment Date
(commencing on June I, 1996). the City shall, from the moneys in the Revenue Fund, transfer to
the Trustee the Installment Payment due and payable on that Installment Payment Date. The City
shall also, from the moneys in the Revenue Fund, transfer to the applicable trustee for deposit in
the respective payment fund, without preference or priority, and in the event of any insufficiency
of such moneys ratably without any discrimination or preference, any other Debt Service in
accordance with the provisions of any Bond or Contract.
(b) Reserve Fund. On or before each Installment Payment Date, the City
shall, from the remaining moneys in the Revenue Fund, thereafter, without preference or
priority, and in the event of any insufficiency of such moneys ratably without any discrimination
or preference, transfer to the Trustee as provided in Section 5.05 of the Indenture for deposit in
the Reserve Fund and to the applicable trustee for such other reserve funds and/or accounts, if
any, as may have been established in connection with Bonds or Contracts other than this
Agreement, that sum, if any, necessary to restore the Reserve Fund to an amount equal to the
Reserve Requirement and/or such other reserve funds or accounts to an amount equal to the
amount required to be maintained therein.
PUBL,30850_1I 1381B2468.9 14 10110195
No transfer of moneys for deposit to the Reserve Fund need be made if the amount
contained therein is at least equal to the Reserve Requirement.
(c) ~MOneyS on deposit in the Revenue Fund not necessary to make
any of the payments required ve, may be expended by the City at any time for any purpose
permitted by law.
Section 5,03. . . . The City shall issue or incur no
evidences of indebtedness or ther obligations (other than Operation and Maintenance Costs)
having any priority in payme t over the Installment Payments,
Bonds and Contracts. The City may at any time issue any revenue bonds ("Revenue
Bonds") or execute any Con under applicable law which are payable from the Net Revenues
in the Revenue Fund on a p ty with the payment by the City of the Installment Payments;
provided that such Revenue nds or Contacts are incurred or issued to prepay the Installment
Payments in whole or in part, but only in part if total Debt Service is lower, or that the Net
Revenues for the Fiscal Year r any consecutive 12-month period in the 18 months next
preceding the date of the ado tion by the City Council of the City of the resolution authorizing
the issuance of such Revenue Bonds or the execution of such Contract, as the case may be, as
evidenced by a calculation pr ared by the City; plus:
(i) an ano ce for Net Revenues from any additions to or improvements or
extensions of the W r System to be constructed or acquired with the proceeds of such
- additional Bonds or C ntracts, and also for Net Revenues from any such additions,
improvements or exte ions which have been constructed or acquired from moneys from
any source by which, during all or any part of such Fiscal Year or 12-month period, were
"'" m ~"'. .I, m $ """"'" _ .. .., 5...... ....""'" """" Nm ""'m~ ..
be derived from such ditions, improvements and extensions during the first fun Fiscal
Year following the co pletion thereof, as shown by a certificate of the City; and
(ii) an allo ance for Net Revenues that would have been derived from any
increase in the rates d charges fixed and prescribed for Water Service which became
effective prior to the option of such resolution or the execution of such Contract, as the
case may be, but whi h during all or any part of said Fiscal Year or 12-month period,
was not in effect, in amount equal to the estimated additional Net Revenues that would
have been derived fro such increase in rates and charges if it had been in effect prior to
the beginning of said iscal Year or 12-month period, as shown by the certificate of the
City;
shall have produced an amou t equal to at least the sum of 125 % of the Debt Service on all
Bonds and Contracts outstan ing after the issuance of such Bonds or the execution of such
Contract, as the case may be
Furthermore, in ord to issue such Bonds or enter into such Contracts the City may not
be in default with respect to its obligations under the Installment Purchase Agreement and must
provide for the funding of a Reserve Account in an amount equal to the lesser of (i) Maximum
Debt Service with respect to such Bonds or Contracts, or (ii) the maximum amount permitted by
the then applicable federal tax law.
"'8L,30150_1 1 131182461.9 15 10/10/95
A reserve account shall be funded for such Parity Obligations, with cash, Permitted
Investments or a credit facility or surety bond which meets or exceeds the criteria set forth in the
Indenture with respect to a Reserve Requirement reserve fund investment. which reserve account
shall be equal to the lesser of (a) the maximum annual debt service of such Parity Obligations and
(b) the maximum amount permitted by then applicable Federal Tax law;
Notwithstanding the foregoing, Revenue Bonds or Contracts may be issued or incurred to
refund outstanding Revenue Bonds or Contracts if, after giving effect to the application of the
proceeds thereof, total Debt Service will not be increased in any Fiscal Year in which Revenue
Bonds or Contracts (outstanding on the date of incurrence of such refunding Revenue Bonds or
Contracts, but excluding such refunding Bonds or Contracts) not being refunded are outstanding;
and
Notwithstanding the foregoing, nothing herein shall be construed as prohibiting the
issuance by the Authority of subordinated debt secured by Net Revenues.
Section 5.04. Investments. All moneys held by the Trustee in the Revenue Fund and by
the City in the Construction Fund shall be invested in Permitted Investments and the investment
earnings thereon shall remain on deposit in such fund, except as otherwise provided herein.
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ooIL,3085O_1 1 138182468.9 16 10110/95
ARTICLE VI
COVENANTS OF THE CITY
Section 6.01. Comoliance with Installment Purchase A2reement and Ancillarv
A2reements. The City will punctually pay the Installment Payments in strict conformity with the
terms hereof, and will faithfully observe and perform all the agreements, conditions, covenants
and terms contained herein required to be observed and performed by it, and will not terminate
this Agreement for any cause including, without limiting the generality of the foregoing, any acts
or circumstances that may constitute failure of consideration, destruction of or damage to the
Project, commercial frustration of purpose, any change in the tax or other laws of the United
States of America or of the State of California or any political subdivision of either or any failure
of the Authority to observe or perform any agreement, condition, covenant or term contained
herein required to be observed and performed by it, whether express or implied, or any duty,
liability or obligation arising out of or coMected herewith or the insolvency, or deemed
insolvency, or bankruptcy or liquidation of the Authority or any force majeure, including acts of
God, tempest, storm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies,
blockade or embargo, strikes, industrial disputes, lock outs, lack of transportation facilities, fire,
explosion, or acts or regulations of governmental authorities.
It is expressly understood and agreed by and among the parties to this Agreement that,
subject to Section 10.06 hereof, each of the agreements, conditions. covenants and terms
contained in this Agreement is an essential and material term of the purchase of and payment for
the Project by the City pursuant to, and in accordance with, and as authorized under the Law,
The City will faithfully observe and perform all the agreements; conditions, covenants
and terms required to be observed and performed by it pursuant to all outstanding Contracts and
Bonds as such may from time to time be executed or issued, as the case may be.
Section 6.02. Amount of Rates and Charl!es. The City shall fix, prescribe and collect
rates and charges for the Water Service which will be at least sufficient to yield Net Revenues
(including all available reserves in the Revenue Fund) equal to one hundred percent (100%) of
Debt Service coming due and payable during the next succeeding Fiscal Year. The City may
make adjustments from time to time in such rates and charges and may make such classification
thereof as it deems necessary, but shall not reduce the rates and charges then in effect unless the
Net Revenues from such reduced rates and charges will at all times be sufficient to meet the
requirements of this section.
Section 6.03. Collection of Rates and Char2es. The City will have in effect at all times
by-laws, rules and regulations requiring each customer to pay the rates and charges applicable to
the Water Service and providing for the billing thereof and for a due date and a delinquency date
for each bill. The City will not permit any part of the Water System or any facility thereof to be
used or taken advantage of free of charge by any corporation, firm or person, or by any public
agency (including the United States of America, the State of California and any city, county,
district, political subdivision, public corporation or agency of any thereof); provided, that the
City may without charge use the Water Service.
puad08SO_11138 I 112468.9 17 10110/95
Section 6.04. Al!ainst Encumbrances. The City will not make any pledge of or place any
lien on Revenues or the moneys in the Revenue Fund except as provided herein. The City may
at any time, or from time to time, issue evidences of indebtedness or incur other obligations for
any lawful purpose which are payable from and secured by a pledge of and lien on Revenues or
any moneys in the Revenue Fund as may from time to time be deposited therein (as provided in
Section 5.02); provided that such pledge and lien shall be subordinate in all respects to the pledge
of and lien thereon provided herein.
In addition, the City will pay and discharge any and all lawful claims for labor, materials
or supplies which, if unpaid, might become a lien on the Revenues, the Water System or the
funds or accounts created hereunder or on any funds in the hands of the City pledged to pay the
Installment Payments or to the Owners prior or superior to the lien of the Installment Payments
or which might impair the security of the Installment Payments or adversely affect the receipt of
Revenues. Notwithstanding the foregoing, the City may pledge, encumber or otherwise secure
its obligations with the Net Revenues; provided, that in all instances any such pledge, lien or
security is wholly subordinate and junior to the obligations of the City contained herein or
complies with the requirements of Section 5.03 hereof regarding the issuance of additional
Contracts and Revenue Bonds.
Section 6.05. Al!ainst Sale or Other Disoosition of Prooertv. The City will not enter into
any agreement or lease which impairs the operation of the Water System or any part thereof
necessary to secure adequate Revenues for the payment of the Installment Payments, or which
would otherwise impair the rights of the Authority hereunder or the operation of the Water
System. Any real or personal property which has become nonoperative or which is not needed
for the efficient and proper operation of the Water System, or any material or equipment which
has become worn out, may be sold if such sale will not impair the ability of the City to pay the
Installment Payments and if the proceeds of such sale are deposited in the Revenue Fund.
Nothing herein shall restrict the ability of the City to sell any ponion of the Water System
if such portion is immediately repurchased by the City and if such arrangement cannot by its
terms result in the purchaser of such portion of the Water System exercising any remedy which
would deprive the City of or otherwise interfere with its right to own and operate such portion of
the Water System or to transfer property pursuant to Section 3.04 hereof.
Section 6.06. Al!ainst Comoetitive Facilities. To the extent that it can so legally obligate
itself, the City covenants that it will not acquire, construct, maintain or operate and will not, to
the extent permitted by law and within the scope of its powers, permit any other public or private
agency, corporation, district or political subdivision or any person whomsoever to acquire,
construct, maintain or operate within the City any water system competitive with the Water
System.
Section 6.07. Tax Covenants. The Authority will not make any use of the proceeds of
the obligations provided herein or any other funds of the Authority or take or omit to take any
other action which will cause such obligations to be a "private activity bond" within the meaning
of Section 141 of the Code or "federally guaranteed" within the meaning of Section 149(b) of the
Code. To that end, so long as any Bonds are unpaid, the Authority, with respect to such
proceeds and such other funds, will comply with all requirements of such Sections and all
regulations of the United States Department of the Treasury issued thereunder and under Section
PUBL,308SO_11138181468.9 18 10/10/95
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_.
103 of the Internal Revenue Code of 1954, as amended, to the extent that such requirements are,
at the time, applicable and in effect.
Section 6.08. Maintenan~ and Ooeration of the Water Svstem. The City will maintain
and preserve the Water System in good repair and working order at all times and wil1 operate the
Water System in an efficient and economical manner and will pay all Operation and Maintenance
Costs as they become due and payable.
Section 6.09. ~ment of Claims. The City will pay and discharge any and all lawful
claims for labor, materials or supplies which, if unpaid, might become a lien on the Revenues or
the funds or accounts created hereunder or on any funds in the hands of the City pledged to pay
the Installment Payments or to the Owners prior or superior to the lien of the Installment
Payments or which might impair the security of the Installment Payments. Notwithstanding the
foregoing, the City may pledge, encumber or otherwise secure its obligations with the Net
Revenues; provided, that in all instances any such pledge, lien or security is wholly subordinate .
and junior to the obligations of the City contained in the Installment Purchase Agreement or
complies with the requirements of Section 5.03 hereof regarding the issuance of additional
Contracts and Revenue Bonds.
Section 6.10. Comoliance with Contracts. The City will neither take nor omit to take
any action under any contract if the effect of such act or failure to act would in any manner
impair or adversely affect the ability of the City to pay Installment Payments; and the City will
._. comply with, keep, observe and perform all agreements, conditions, covenants and terms,
express or implied, required to be performed by it contained in all other contracts affecting or
involving the Water System, to the extent that the City is a party theretO.
Section 6.11. Insurance.
(a) The City will procure and maintain or cause to be procured and maintained
insurance on the Water System with responsible insurers at reasonable cost in such amounts and
against such risks (including damage to or destruction of the Water System) as are usually
covered in connection with facilities similar to the Water System so long as such insurance is
available from reputable insurance companies.
In the event of any damage to or destruction of the Water System caused by the perils
covered by such insurance, the Net Proceeds thereof shall be applied to the reconstruction, repair
or replacement of the damaged or destroyed portion of the Water System. The City shall begin
such reconstruction, repair or replacement promptly after such damage or destruction shall occur,
and shall continue and properly complete such reconstruction, repair or replacement as
expeditiously as possible, and shall payout of such Net Proceeds all costs and expenses in
connection with such reconstruction, repair or replacement so that the same shall be completed
and the Water System shall be free and clear of all claims and liens.
If such Net Proceeds exceed the costs of such reconstruction, repair or replacement
ponion of the Water System, and/or the cost of the construction of additions, betterments,
extensions or improvements to the Water System, then the excess Net Proceeds shall be applied
in part to the prepayment of Installment Payments as provided in Article vn and in part to such
other fund or account as may be appropriate and used for the retirement of Bonds and Contracts
PUBL,308SO_11138181468.9 19 10110/95
in the same proportion which the aggregate unpaid principal balance of Installment Payments then
bears to the aggregate unpaid principal amount of such Bonds and Contracts. If such Net
Proceeds are sufficient to enable the City to retire the entire obligation evidenced hereby prior to
the final due date of the Installment Payments as well as the entire obligations evidenced by
Bonds and Contracts then remaining unpaid prior to their fmal respective due dates, the City may
elect not to reconstruct, repair or replace the damaged or destroyed portion of the Water System,
and/or not to construct other additions, betterments, extensions or improvements to the Water
System; and thereupon such Net Proceeds shall be applied to the prepayment of Installment
Payments as provided in Article vn and to the retirement of such Bonds and Contracts.
(b) The City will procure and maintain such other insurance as it shall deem advisable
or necessary to protect its interests and the interests of the Authority, which insurance shall
afford protection in such amounts and against such risks as are usually covered in connection
with municipal water systems similar to the Water System.
(c) Any insurance required to be maintained by paragraph (a) above and, if the City
determines to procure and maintain insurance pursuant to paragraph (b) above, such insurance,
may be maintained under a self-insurance program so long as such self-insurance is maintained in
the amounts and manner usually maintained in connection with Water systems similar to the
Water System and is, in the opinion of the Risk Manager of the City or of an independent
accredited actuary, actuarially sound.
All policies of insurance required to be maintained herein shall provide that the Authority
and !he Trustee shall be given thirty (30) days written notice of any intended cancellation th~eof
or reduction of coverage provided thereby.
Section 6.12. Accountinl! Records: Financial Statements and Other Renorts.
(a) The City will keep appropriate accounting records in which complete and correct
entries shall be made of all transactions relating to the Water System, which records shall be
available for inspection by the Authority and the Trustee at reasonable hours and under
reasonable conditions.
(b) The City will prepare and file with the Authority and the Trustee annually within
one hundred fifty (150) days after the close of each Fiscal Year (commencing with the Fiscal
Year ending June 30, 1996) -
(1) financial statements of the City for the preceding Fiscal Year prepared in
accordance with generally accepted accounting principles, together with an Accountant's Report
thereon; and
(2) a detailed repon as to all insurance policies maintained and self-insurance
programs maintained by the City with respect to the Water System, as of the close of such Fiscal
Year, including the names of the insurers which have issued the policies and the amounts thereof
and the property or risks covered thereby.
The Trustee makes no representation as to the sufficiency of any insurance policies or
self-insurance programs maintained by the City with respect to the Water System.
PUBL,308SO_1 I 138181468.9 20 10110/95
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(c) The City will prepare annually not more than one hundred fifty (150) days after
the close of each Fiscal Year (commencing with the Fiscal Year endini June 30, 1996) a
summary report showing in reasonable detail the Revenues and the Operation and Maintenance
Costs for such Fiscal Year and containing a general statement of the physical condition of the
Water System. The City will furnish a copy of such summary repon to the Authority and to the
Trustee and upon request to any others interested in the Installment Payments.
Section 6.13. Protection of Security and Ril!hts of the Authority. The City will preserve
and protect the security hereof and the rights of the Authority to the Installment Payments
hereunder and will warrant and defend such rights against all claims and demands of all persons.
Section 6.14. Pavment of Taxes and Comoliance with Governmental Rel!ulations. The
City will pay and discharge all taxes, assessments and other governmental charges which may
hereafter be lawfully imposed upon the Water System, or any part thereof or upon the Revenues
when the same shall become due. The City will duly observe and conform with all valid
regulations and requirements of any governmental authority relative to the operation of the Water
System, or any part thereof, but the City shall not be required to comply with any regulations Dr
requirements so long as the validity or application thereof shall be contested in good faith.
Section 6.15. Eminent Domain Prnr.....ts. If all or any part of the Water System shall be
taken by eminent domain proceedings, the Net Proceeds thereof shall be applied as follows:
(a) If (1) the City files with the Authority and the Trustee a certificate
showing (i) the estimated loss of annual Net Revenues, if any, suffered or to be suffered by_ the
City by reason of such eminent domain proceedings, (Ii) a general description of the additions,
betterments, extensions or improvements to the Water System proposed to be acquired and
constructed by the City from such Net Proceeds, and (Hi) an estimate of the additional annual Net
Revenues to be derived from such additions, betterments, extensions or improvements, and (2)
the City, on the basis of such certificate filed with the Authority and the Trustee, determines that
the estimated additional annual Net Revenues will sufficiently offset the estimated loss of annual
Net Revenues resulting from such eminent domain proceedings so that the ability of the City to
meet its obligations hereunder will not be substantially impaired (which determination shall be
final and conclusive), then the City shall promptly proceed with the acquisition and construction
of such additions, betterments, extensions or improvements substantially in accordance with such
certificate and such Net Proceeds shall be applied for the payment of the costs of such acquisition
and construction, and any balance of such Net Proceeds not required by the City for such
purpose shall be deposited in the Revenue Fund.
(b) If the foregoing conditions are not met, then such Net Proceeds shall be
applied by the City in part to the prepayment of Installment Payments as provided in Article VII
and in part to such other fund or account as may be appropriate and used for the retirement of
Bonds and Contracts in the same proportion which the aggregate unpaid principal balance of
Installment Payments then bears to the aggregate unpaid principal amount of such Bonds and
Contracts .
Section 6.16. Funher Assurances. The City will adopt, deliver, execute and make any
and all funher assurances, instruments and resolutions as may be reasonably necessary or proper
puaL,308SO _11138 I 81468.9 21 10/10/95
to carry out the intention or to facilitate the performance hereof and for the better assuring and
confIrming unto the Authority of the rights and benefits provided to it herein.
Section 6.17. Enforcement of Contracts. So long as any of the Bonds are Outstanding,
the City will not voluntarily consent to or permit any rescission of, nor will it consent to any
amendment to or otherwise take any action under or in connection with any contracts previously
or hereafter entered into if such rescission or amendment would in any manner impair or
adversely affect the ability of the City to pay Installment Payments.
Section 6.18. Annual Information to be Provided to Bond Insurer. The Bond Insurer
shall be provided by the City with the following information:
(a) Within 180 days after the end of each of the City's Fiscal Years, the
budget for the new year, annual audited fmancial statements, a statement of the amount
on deposit in the Reserve Fund as of the last valuation, and, if not presented in the
audited fmancial statements, a statement of the Net Revenues pledged to payment of
Bonds in each such Fiscal year;
(b) Simultaneously with the delivery of the annual audited financial statements:
(i) The number of Water System users as of the end of the Fiscal
Year;
- (ii) Notification of the withdrawal of any Water System user
-
comprising 4% or more of Water System sales measured in terms of revenue
dollars since the last reponing date; and
(iii) Any significant plant retirements or expansions planned or
undertaken since the last reporting date;
(c) Official statement or other disclosure, if any, prepared in connection with
the issuance of additional debt, whether or not it is on parity with the Bonds within 30
days after the sale thereof;
(d) Such additional information as the Bond Insurer may reasonably request
from time to time.
PUBL,30850_1 I 138181468.9 22 10/10/95
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ARTICLE VII
PREPAYMENT OF INSTALLMENT PAYMENTS
Section 7.01. Prenavment.
(a) The City mayor shall, as the case may be, prepay from the Net Proceeds as
provided herein on any date, all or any part on any Installment Payment Date, of the principal
amount of the unpaid Installment Payments at a prepayment price equal to the sum of the
principal amount prepaid plus accrued interest thereon to the date of prepayment.
(b) The City may prepay the Installment Payments among maturities, and by lot
within a maturity, as a whole or in part, on any date on and after December 15, 2004, from any
available funds. The principal amount of the unpaid Installment Payments is payable at a
prepayment price (expressed as a percentage of the principal amount of the Installment Payments
to be prepaid) plus accrued interest thereon to the date of prepayment as set forth below:
Preoavment Period Prenavment Price
December 15, 2004 through December 14, 2005 102%
December 15,2005 through December 14, 2006 101
December 15, 2006 and thereafter 100
- Notwithstanding any such prepayment, the City shall not be relieved of its obligations
hereunder, including its obligations under Article IV, until the Purchase Price shall have beCn
fully paid (or provision for payment thereof shall have been provided to the written satisfaction of
the Authority).
Section 7.02. Method of Preoayment. Before making any prepayment pursuant to
Section 7.01(a), the City may, within five (5) days following the event permitting the exercise of
such right to prepay or creating such obligation to prepay, give written notice to the Authority
and the Trustee describing such event and specifying the date on which the redemption of the
Bonds will be paid, which date shall be not less than sixty (60) days from the date such notice is
given, unless such redemption must occur on an Interest Payment Date, in which case such date
shall be the next Interest Payment Date with respect to which notice of redemption may be timely
given pursuant to the Indenture.
PUlL,308SO_11138181468.9 23 10/10/95
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY
Section 8.01. Events of Default and Acceleration of Maturities. If one or more of the
following Events of Default shall happen, that is to say -
(1) if default shall be made by the City in the due and punctual payment of
any Installment Payment or any Contract or Bond when and as the same shall become due and
payable;
(2) if default shall be made by the City in the performance of any of the other
agreements or covenants required herein to be performed by it, and such default shall have
continued for a period of sixty (60) days after the City shall have been given notice in writing of
such default by the Authority;
(3) if the City shall file a petition or answer seeking arrangement or
reorganization under the federal bankruptcy laws or any other applicable law of the United States
of America or any state therein, or if a court of competent jurisdiction shall approve a petition
filed with or without the consent of the City seeking arrangement or reorganization under the
federal bankruptcy laws or any other applicable law of the United States of America or any state
therein, or if under the provisions of any other law for the relief or aid of debtors any coun of
competent jurisdiction shall assume custody or control of the City or of the. whole or any
substantial part of its property; or -
(4) if payment of the principal of any Contract or Bond is accelerated in
accordance with its terms;
then and in each and every such case during the continuance of such Event of Default specified in
clauses (3) and (4) above, the Authority shall by notice in writing to the City, declare the entire
principal amount of the unpaid Installment Payments and the accrued interest thereon to be due
and payable immediately, and upon any such declaration the same shall become immediately due
and payable, anything contained herein to the contrary notwithstanding. This subsection
however, is subject to the condition that if at any time after the entire principal amount of the
unpaid Installment Payments and the accrued interest thereon shall have been so declared due and
payable and before any judgment or decree for the payment of the moneys due shall have been
obtained or entered the City shall deposit with the Authority a sum sufficient to pay the unpaid
principal amount of the Installment Payments or the unpaid payment of any other Contract or
Bond referred to in clause (1) above due prior to such declaration and the accrued interest
thereon, with interest on such overdue installments, at the rate or rates applicable to the
remaining unpaid principal balance of the Installment Payments or such Contract or Bond if paid
in accordance with their terms, and the reasonable expenses of the Authority, and any and all
other defaults known to the Authority (other than in the payment of the entire principal amount of
the unpaid Installment Payments and the accrued interest thereon due and payable solely by
reason of such declaration) shall have been made good or cured to the satisfaction of the
Authority and the Bond Insurer or provision deemed by the Authority and the Bond Insurer to be
adequate shall have been made therefor, then and in every such case the Authority and the Bond
Insurer, by written notice to the City, may rescind and annul such declaration and its
PUBL,308SO_11138181468.9 24 10/10/95
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consequences; but no such rescission and annulment shall extend to or shall affect any subsequent
default or shall impair or exhaust any right or power consequent thereon.
Section 8.02. Aoolication of Funds Uoon Acceleration. Upon the date of the declaration
of acceleration as provided in Section 8.01, all Revenues thereafter received shall be applied in
the following order -
Ei!l1, to the payment, without preference or priority, and in the event of any
insufficiency of such Revenues ratably without any discrimination or preference, of the fees,
costs and expenses of the Authority and Trustee, if any, in carrying out the provisions of this
article, including reasonable compensation to its accountants and counsel;
Second, to the payment of Operation and Maintenance Costs;
I!liI:Q, to the payment of the entire principal amount of the unpaid Installment
Payments and the unpaid principal amount of all Bonds and Contracts and the accrued interest
thereon, with interest on the overdue installments at the rate or rates of interest applicable to the
Installment Payments and such Bonds and Contracts if paid in accordance with their respective
terms; and
Section 8.03. Other Remedies of the Authoritv. The Authority shall have the right:
(a) by mandamus or other action or proceeding or suit at law or in equity to
enforce its rights against the City or any director, officer or employee thereof, and to compel the
City or any such director, officer or employee to perform and carry out its or his duties under
the Law and the agreements and covenants required to be performed by it or him contained
herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate
the rights of the Authority; or
(c) by suit in equity upon the happening of an Event of Default to require the
City and its directors, officers and employees to account as the trustee of an express trust.
Notwithstanding anything contained herein, the Authority shall have no security interest in
or mortgage on the Project, the Water System or other assets of the City or any other real
property of the City and no default hereunder shall result in the loss of the Project, the Water
System or other assets of the City or any other real property of the City.
Section 8.04. Non-Waiver. Nothing in this article or in any other provision hereof shall
affect or impair the obligation of the City, which is absolute and unconditional, to pay the
Installment Payments to the Authority at the respective due dates or upon prepayment from the
Net Revenues, the Revenue Fund and the other funds herein pledged for such payment, or shall
affect or impair the right of the Authority, which is also absolute and unconditional, to institute
suit to enforce such payment by virtUe of the contract embodied herein.
PUBL,30ISO_11138181468.9 25 10/10/95
A waiver of any default or breach of duty or contract by the Authority shall not affect any
subsequent default or breach of duty or contract or impair any rights or remedies on any such
subsequent default or breach of duty or contract. No delay or omission by the Authority to
exercise any right or remedy accruing upon any default or breach of duty or contract shall impair
any such right or remedy or shall be construed to be a waiver of any such default or breach of
duty or contract or an acquiescence therein, and every right or remedy conferred upon the
Authority by the Law or by this article may be enforced and exercised from time to time and as
often as shall be deemed expedient by the Authority.
If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned
or determined adversely to the Authority, the City and the Authority shall be restored to their
former positions, rights and remedies as if such action, proceeding or suit had not been brought
or taken.
Section 8.05. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Authority is intended to be exclusive of any other remedy, and each such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing in law or in equity or by statute or otherwise and may be exercised without exhausting
and without regard to any other remedy conferred by the Law or any other law.
Section 8.06. Notices. Notwithstanding any other provision hereof, the Trustee shall
immediately notify the Bond Insurer if at any time there are insufficient moneys to make any
Installment Payments as required and immediately upon the occurrence of any event of default
herennder.
-
PUBL,308SO_11138182468.9 26 10110/95
ARTICLE IX
DISCHARGE OF OBLIGATIONS
Section 9.01. Discharl!e of Oblil!ations. When
(a) all or any portion of the Installment Payments shall have become due and
payable in accordance herewith or a written notice of the City to prepay all or any portion of the
Installment Payments shall have been filed with the Trustee; and
(b) there shall have been deposited with the Trustee at or prior to the
Installment Payment Dates or date (or dates) specified for prepayment, in trust for the benefit of
the Authority or its assigns and irrevocably appropriated and set aside to the payment of all or
any portion of the Installment Payments, sufficient moneys and non-callable Permitted
Investments, issued by the United States of America and described in clause (i) of the definition
thereof, the principal of and interest on which when due will provide money sufficient to pay all
principal, prepayment premium, if any, and interest of such Installment Payments to their
respective Installment Payment Dates or prepayment date or dates as the case may be; and
(c) provision shall have been made for paying all fees and expenses of the
Trustee,
then and in that event, if an opinion of Bond Counsel acceptable to the Trustee is
filed with the Trustee to the effect that the actions authorized by and taken pursuant to this -
Article IX shall not adversely affect the exclusion from gross income for federal income tax purposes of the interest portion of the Installment Payments, the right,. title and interest of the
Authority herein and the obligations of the City hereunder shall, with respect to all or such
portion of the Installment Payments as have been so provided for, thereupon cease, terminate,
become void and be completely discharged and satisfied (except for the right of the Trustee and
the obligation of the City to have such moneys and such Permitted Investments applied to the
payment of such Installment Payments).
In such event, upon request of the City the Trustee shall cause an accounting for such
period or periods as may be requested by the City to be prepared and filed with the City and
shall execute and deliver to the City all such instruments as may be necessary or desirable to
evidence such total or partial discharge and satisfaction, as the case may be, and, in the event of
a total discharge and satisfaction, the Trustee shall pay over to the City, after payment of all
amounts due the Trustee pursuant to the Indenture, as an overpayment of Installment Payments,
all such moneys or such Permitted Investments held by it pursuant hereto other than such moneys
and such Permitted Investments as are required for the payment or prepayment of the Installment
Payments, which moneys and Permitted Investments shall continue to be held by the Trustee in
trust for the payment of the Installment Payments and shall be applied by the Trustee to the
payment of the Installment Payments of the City.
No discharge of Obligations shall occur under this Section 9.01 until the Bonds are no
longer outstanding under the terms of the Indenture.
PUBU08SO_1 I 138181468.9 27 10/10/95
ARTICLE X
MISCELLANEOUS
Section 10.01. Liabilitv of City Limited to Revenues. Notwithstanding anything
contained herein, the City shall not be required to advance any moneys derived from any source
of income other than the Revenues, the Revenue Fund and the other funds provided herein for
the payment of the Installment Payments or for the performance of any agreements or covenants
required to be performed by it contained herein. The City may, however, advance moneys for
any such purpose so long as such moneys are derived from a source legally available for such
purpose and may be legally used by the City for such purpose.
The obligation of the City to make the Installment Payments is a special obligation of the
City payable solely from the Net Revenues, and does not constitute a debt of the City or of the
State of California or of any political subdivision thereof in contravention of any constitutional or
statutory debt limitation or restriction.
Section 10.02. Benefits of Installment Purchase Al!reement Limited to Parties. Nothing
contained herein, expressed or implied, is intended to give to any person other than the City or
the Authority any right, remedy or claim under or pursuant heretO, and any agreement or
covenant required herein to be performed by or on behalf of the City or the Authority shall be
for the sole and exclusive benefit of the other party.
- Section 10.03. Successor Is Deemed Included in all References to Predecessor.
-
Whenever either the City or the Authority is named or referred to herein, such reference shall be
deemed to include the successor to the powers, duties and functions that are presently vested in
the City or the Authority, and all agreements and covenants required hereby to be performed by
or on behalf of the City or the Authority shall bind and inure to the benefit of the respective
successors thereof whether so expressed or not.
Section 10.04. Waiver of Personal Liabilitv. No director, officer or employee of the
City shall be individually or personally liable for the payment of the Installment Payments, but
nothing contained herein shall relieve any director, officer or employee of the City from the
performance of any official duty provided by any applicable provisions of law or hereby.
Section 10.05. Article and Section Headinl!s. Gender and References. The headings or
titles of the several articles and sections hereof and the table of contents appended hereto shall be
solely for convenience of reference and shall not affect the meaning, construction or effect
hereof, and words of any gender shall be deemed and construed to include all genders. All
references herein to "Articles," "Sections" and other subdivisions or clauses are to the
corresponding articles, sections, subdivisions or clauses hereof; and the words "hereby",
"herein," "hereof," "heretO," "herewith" and other words of similar impon refer to this
Agreement as a whole and not to any particular article, section, subdivision or clause hereof.
Section 10.06. Partial Invaliditv. If anyone or more of the agreements or covenants or
portions thereof required hereby to be performed by or on the part of the City or the Authority
shall be contrary to law, then such agreement or agreements, such covenant or covenants or such
portions thereof shall be null and void and shall be deemed separable from the remaining
PUBL,308SO_1 I 138181468.9 28 10/10/95
.
- agreements and covenants or portions thereof and shall in no way affect the validity hereof. The
City and the Authority hereby declare that they would have executed this Agreement, and each
and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof
irrespective of the fact that anyone or more articles, sections, paragraphs, subdivisions,
sentences, clauses or phrases hereof or the application thereof to any person or circumstance may
be held to be unconstitutional, unenforceable or invalid.
Section 10.07. Assil!nment. This Agreement and any rights hereunder may be assigned
by the Authority, as a whole or in part, without the necessity of obtaining the prior consent of the
City.
Section 10.08. Net Contract. This Agreement shall be deemed and construed to be a net
contract, and the City shall pay absolutely net during the term hereof the Installment Payments
and all other payments required hereunder, free of any deductions and without abatement,
diminution or set-off whatsoever.
Section 10.09. California Law. THE INSTALLMENT PURCHASE AGREEMENT
SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA.
Section 10.10. Notices. All written notices to be given hereunder shall be given by mail
to the party entitled theretO at its address set forth below, or at such other address as such party
may provide to the other party in writing from time to time, namely:
-
-
If to the City: City of Poway
13325 Civic Center Drive
Poway, California 92064
Attention: Director, Administrative Services
If to the
Authority : Poway Public
Financing Authority
13325 Civic Center Drive
Poway, California 92064
Attention: Executive Director
If to the [TRUSTEE TO COME]
Trustee:
Attention:
If to the
Bond Insurer:
Attention:
PUBL,30850_11138181468.9 29 10/10/95
Section 10.11. Effective Date. This Agreement shall become effective upon its execution
and delivery, and shall terminate when the Purchase Price shall have been fully paid (or
provision for the payment thereof shall have been made to the written satisfaction of the
Authority) .
Section 10.12. Execution in Countemarts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of which shall constitute but one
and the same instrument.
Section 10.13. Indemnification of Authoritv. The City hereby agrees to indemnify and
hold harmless the Authority if and to the extent permitted by law, from and against all claims,
advances, damages and losses, including legal fees and expenses, arising out of or in connection
with the acceptance or the performance of its duties hereunder and under the Indenture; provided
that no indemnification will be made for willful misconduct, negligence or breach of an
obligation hereunder or under the Indenture by the Authority.
Section 10.14. Amendments Permitted.
(a) This Agreement and the rights and obligations of the Authority, the City, the
Owners of the Bonds and of the Trustee may be modified or amended at any time by an
amendment hereto which shall become binding when the written consents of the Owners of a
majority in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds
disqualified as provided in Section 11.09 of the Indenture, shall have been filed with the Trustee.
No such modification or amendment shall
-
(1) extend the stated maturities of the Bonds, or reduce the rate of
interest represented thereby, or change the method of computing the rate of
interest with respect thereto, or extend the time of payment of interest, or reduce
the amount of principal represented thereby, or reduce any premium payable on
the prepayment thereof, without the consent of the Owner of each Bond so
affected, or
(2) reduce the aforesaid percentage of Owners of Bonds whose consent
is required for the execution of any amendment or modification of this Agreement
without the consent of the Owners of all Bonds then Outstanding, or
(3) modify any of the rights or obligations of the Trustee, the
Authority or the Bond Insurer without its respective written consent thereto.
(b) This Agreement and the rights and obligations of the Authority, the City and of
the Owners of the Bonds may also be modified or amended at any time with the prior written
consent of the Bond Insurer as long as the Bond Insurance Policy is in full force and effect by an
amendment hereto which shall become binding upon adoption, without the consent of the Owners
of any Bonds, but only to the extent permitted by law and only for anyone or more of the
following purposes-
(1) to add to the covenants and agreements of the Authority or the City
contained in this Agreement other covenants and agreements thereafter to be observed or to
PUBL,308SO_1 I 138181468.9 30 10/10/95
surrender any right or power herein reserved to or conferred upon the Authority or the City, and
which shall not adversely affect the interests of the Owners of the Bonds;
(2) to cure, correct or supplement any ambiguous or defective
provision contained in this Agreement or in regard to questions arising under this Agreement, as
the Authority or the City may deem necessary or desirable and which shall not adversely affect
the interests of the Owners of the Bonds; and
(3) to make such other amendments or modifications as may be in the
best interests of the Owners of the Bonds.
No amendment without consent of the Owners may modify any of the rights or
obligations of the Trustee without its written consent theretO.
Any amendments under this Section 10.14 shall be subject to the prior written consent of
the Bond Insurer. The Bond Insurer shall be provided with a full transcript of all proceedings
relating to the execution of any such supplement or amendment.
Section 10.15. Notice to Ratinl! Al!encies. Any Rating Agency rating the Bonds shall
receive notice of each amendment to this Agreement and a copy thereof at least 15 days in
advance of its execution.
... -
-
'-
PUBL,308SO_1 1 138181468.9 31 10110/95
-
IN WITNESS WHEREOF, the parties hereto have executed and attested this Agreement
by their officers thereunto duly authorized as of the day and year first written above.
CITY OF POWAY
By:
Its: Mayor
ATTEST:
City Clerk
POWAY PUBUC FINANCING AUTHORITY
By:
- Its: Chairman
-
ATTEST:
Secretary
PUBL,308SO_1 I 138181468.9 10/10/95
-
State of California )
) ss.
County of San Diego )
On November _, 1995, before me, (name, Iilu oj oifiar. ..g., JIIM Do.. NDtiJry Public")
personally appeared (name(s) of signer(s))
0 personally known to me -OR-
0 proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in hislher/their authorized capacity/ies, and that by
hislher/their signature(s) on the instrument the person(s), or the entity upon behalf of which person(s)
acted, executed the instrument.
Witness my hand and official seal.
(SigntllV1'O oj NDtiJry)
-
Capacity claimed by signer: (71IU soction is OP770NAL.)
0 Individual
0 Corporate Officer(s):
0 Partner(s) :
o General o Limited
0 Attorney-in-fact
0 Trustee( s)
0 Guardian/Conservator
0 Other:
Signer is representing: (name OJ person(s) or .....ty(.U}}
Attention Notary: Although the information requested below is OPTIONAL, it could prevent
fraudulent attachment of this cenificate to an unauthorized document.
nus CERTIFICATE Title or Type of Document
MUST BE ATIACHED
TO 11iE DOCUMENT Number of Pages Date of Document
DESCRIBED AT RIGIIT: Signer(s) Other than Named Above
-
PUBL,308SO_1 I 138181468.9 10/10/95
EXHIBIT A
DESCRIPTION OF THE PROJECT
-
-
PUBL,308SO_1 I 138181468.9 EXHIBIT A-I 10110/95
--
-
EXHIBITB
PURCHASE PRICE
I. The principal amount of payments to be made by the City hereunder is
$
2. The installment payments of principal and interest are payable in the amounts and on
the Installment Payment Dales as follows:
Amount Amount
Attributable Attributable
Installment Pavment Date to Princioal to Interest
$ $
-
-
PUBL,308SO_1 I 138181468.9 EXHIBIT B-1 10/10/95
EXHIBIT C
LEGAL DESCRIPTION
-
-
PUBL,308SO _111381 81468.9 EXHIBIT C-l 10110/95
~- -
RECORDING REQUESTED BY )
AND WHEN RECORDED MAIL TO: )
)
STRADLING, YOCCA, CARLSON & RAUTH )
660 Newpon Center Drive )
Suite 1600 )
Newport Beach, California 92660 )
Ann: Denise E. Hering, Esq. )
[Space above for recorder.] This
document is recorded for the benefit
of the City of Poway, under Section
6103 of the Government Code.
INDENTURE OF TRUST
- Dated as of November 1,1995
-
by and among
[TRUSTEE TO COME]
as trustee,
CITY OF POW A Y
and the
POW A Y PUBLIC FINANCING AUTHORITY
Relating to
$
POW A Y PUBLIC FINANCING AUTHORITY
REVENUE BONDS, SERIES 1995
. -- (WATER SERVICES CAPITAL IMPROVEMENT PROGRAM)
ATTACHMENT 0 OCT 1 7 1995 ITEM 7 III"
TABLE OF CONTENTS
Page
ARTICLE I
DEFINmONS; CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01. Definitions .......................................... 3
Section 1.02. Content of Certificates and Opinions ........................ . 12
Section 1.03. Interpretation.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE II
THE BONDS
Section 2.01. Authorization of Bonds ................................ . 13
Section 2.02. Terms of the Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.03. Transfer of Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.04. Exchange of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.05. Registration Books ................................... . 15
Section 2.06. Form and Execution of Bonds ............................. 15
Section 2.07. Temporary Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '. 16
Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. . . . . . . . . . . . . . . . . . . . . 16
Section 2.09. Book-Entry System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Section 3.01. Issuance of the Bonds ................................. . 19
Section 3.02. Application of Proceeds of the Bonds. . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.03. Establishment and Application of Construction Fund and Costs of Issuance Fund 20
Section 3.04. Validity of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV
REDEMPTION OF BONDS
Section 4.01. Terms of Redemption ................................. . 21
Section 4.02. Selection of Bonds for Redemption .......................... 22
Section 4.03. Notice of Redemption ................................. . 22
Section 4.04. Partial Redemption of Bonds .............................. 23
Section 4.05. Effect of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
puBL,30848_11138181468.00009 i 10/10/95
--
-
ARTICLE V
REVENUES, FUNDS AND ACCOUNTS
PAYMENT OF PRINCIPAL AND INTEREST
Section 5.01. Pledge and Assignment; Revenue Fund. . .: . . . . . . . . . . . . . . . . . . . . 23
Section 5.02. Allocation of Revenues ................................ . 24
Section 5.03. Application of Interest Account ........................... . 24
Section 5.04. Application of Principal Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.05. Reserve Fund ...................................... . 25
Section 5.06. Application of Redemption Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.07. Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.08. Arbitrage Covenant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.09. Rebate Fund ........................................ 30
Section 5.10. Application of Funds and Accounts When No Bonds are Outstanding ..... 32
Section 5.11. Bond Insurance Payments ............ . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI
PARTICULAR COVENANTS
Section 6.01. Punctual Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
- Section 6.02. Extension of Payment of Bonds ............................ 33
Section 6.03. Against Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : 33
Section 6.04. Power to Issue Bonds and Make Pledge and Assignment. . . . . . . . . . . . . 33
Section 6.05. Accounting Records and Financial Statements. . . . . . . . . . . . . . . . . . . . 33
Section 6.06. Tax Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.07. Amendments to Installment Purchase Agreement. . . . . . . . . . . . . . . . . . 34
Section 6.08. Waiver of Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.09. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE vn
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
Section 7.01. Events of Default .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.02. Remedies Upon Event of Default ........................... 35
Section 7.03. Application of Revenues and Other Funds After Default ............. 36
Section 7.04. Trustee to Represent Bond Owners .......................... 37
Section 7.05. Bond Owners' Direction of Proceedings ....................... 38
Section 7.06. Limitation on Bond Owners' Right to Sue . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.07. Absolute Obligation of Authority .......................... . 38
Section 7.08. Termination of Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.09. Remedies Not Exclusive. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.10. No Waiver of Default ................................. . 39
-
PUBL,30UI_II138181468.l10009 ii 10/10/95
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties, Immunities and Liabilities of Trustee .................... 39
Section 8.02. Merger or Consolidation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.03. Liability of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.04. Right to Rely on Documents ............................. . 42
Section 8.05. Preservation and Inspection of Documents . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.06. Compensation and Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE IX
MODIFICATION OR AMENDMENT OF THE INDENTURE
Section 9.01. Amendments Permitted ................................ . 43
Section 9.02. Effect of Supplemental Indenture .. 44
.......................... .
Section 9.03. Endorsement of Bonds; Preparation of New Bonds ............... . 44
Section 9.04. Amendment of Particular Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.05. Notice to Rating Agencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE X
- DEFEASANCE
-
Section 10.01. Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 10.02. Discharge of Liability on Bonds .......................... . 45
Section 10.03. Deposit of Money or Securities with Trustee .................. . 46
Section 10.04. Payment of Bonds After Discharge of Indenture ................ . 46
ARTICLE XI
MISCELLANEOUS
Section 11.01. Liability of Authority Limited to Revenues. . . . . . . . . . . . . . . . . . . . . 47
Section 11.02. Successor Is Deemed Included in All References to Predecessor. . . . . . . . 47
Section 11.03. Limitation of Rights to Parties and Bond Owners. . . . . . . . . . . . . . . . . 47
Section 11.04. Waiver of Notice; Requirement of Mailed Notice . . . . . . . . . . . . . . . . . 47
Section 11.05. Destruction of Bonds .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.06. Severability of Invalid Provisions ......................... . 48
Section 11.07. Notices ......................................... . 48
Section 11.08. Evidence of Rights of Bond Owners . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.09. Disqualified Bonds .................................. . 49
Section 11.10. Money Held for Particular Bonds ......................... . 49
Section 11.11. Funds and Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 11.12. Waiver of Personal Liability.............................. 49
Section 11.13. Execution in Several Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 11.14. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
PUBL.:30a.8_1 i 138)'82461.00009 iii I 011 0/95
--
- Section 11.15. Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
EXHIBIT A Form of Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. A-I
EXHIBIT B Legal Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-J
-
-
PUIL,308'8_11138181468.00009 iv 10110/95
INDENTURE OF TRUST
THIS INDENTURE OF TRUST, made and entered into as of November 1, 1995, by and
among the POWAY PUBLIC FINANCING AUTHORITY, a public entity duly organized and
existing under the Joint Exercise of Powers Agreement, and under the Constitution and laws of
the State of California (the" Authority"), the CITY OF POW A Y and [TRUSTEE TO COME], a
state banking corporation organized and existing under the laws of the State of California, as
trUstee hereunder (the "Trustee");
WITNESSETH:
WHEREAS, the Authority has been created pursuant to a Joint Exercise of Powers
Agreement, dated as of October 8, 1991 (the "Joint Exercise of Powers Agreement") by and
betWeen the City of Poway, a municipality duly organized and existing under the Constitution and
laws of the State of California ("the City") and the Poway Redevelopment Agency, a political
subdivision of the State of California duly organized and existing under the Constitution and laws
of the State of California (" Agency"), with the power, among others, to finance the acquisition,
construction, operation and maintenance of facilities for the production, storage, transmission or
treatment of water; and
WHEREAS, the City has determined that it is in its best interest to finance the
acquisition, constrUction and improvement of cenain water treatment facilities (the "Project"~;
and
WHEREAS, the Authority is authorized pursuant to state law, including but not limited
to, the Marks-Roos Local Bond Pooling Act of 1985 (constituting Article 4 of Chapter 5 of
Division 7 of Title I of the California Government Code) and pursuant to Sections 4.01 and 4.03
of the Joint Exercise of Powers Agreement to incur indebtedness to finance the Project and to
assign and pledge to the repayment of such indebtedness amounts payable by the City to the
Authority in accordance with the Installment Purchase Agreement, dated as of November 1, 1995
by and between the Authority and the City, relating to the Bonds described below as amended
from time to time; and
WHEREAS, in order to provide funds to finance the Project the Authority has authorized
the issuance of its poway Public Financing Authority Revenue Bonds, Series 1995 (Water
Services Capital Improvement Program) (the "Bonds") in the aggregate principal amount of
S pursuant heretO payable from cenain amounts described herein; and
WHEREAS, the Authority hereby finds pursuant to Section 6586 of the Government
Code that the issuance of the Bonds to finance the Project will have demonstrable savings in
effective interest rate, bond preparation, bond underwriting or bond issuance costs and the
Authority hereby determines pursuant to Section 6588(h) of the Government Code that it is
necessay and convenient for the financing of the Project to take title to, and sell by installment
sale, the lands and structures described in Exhibits A and C to the Installment Purchase
Agreement (as hereinafter described); and
PUBL,30848_1 I 138181468.00009 I 10/10/95
--
- WHEREAS, in order to provide for the authentication and delivery of the Bonds, to
establish and declare the terms and conditions upon which the Bonds are to be issued and secured
and to secure the payment of the principal thereof and interest and premium, if any, thereon, the
Authority has authorized the execution and delivery of this Indenture; and
WHEREAS, the Authority has determined that all acts and proceedings required by law
necessary to make the Bonds, when executed by the Authority, authenticated and delivered by the
Trustee, and duly issued, the valid, binding and legal special obligations of the Authority, and to
constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth
in accordance with its terms, have been done and taken, and the execution and delivery of this
Indenture have been in all respects duly authorized;
NOW. THEREFORE, TInS INDENTURE WITNESSETH:
GRANTING CLAUSES
The Authority, in consideration of the premises and the acceptance by the Trustee of the
trusts hereby created and of the mutual covenants herein contained and of the purchase and
acceptance of the Bonds by the owners thereof, and for other valuable considerations, the receipt
whereof is hereby acknowledged, in order to secure the payment of the principal of and the
interest and premium (if any) on all Bonds at any time issued and Outstanding under this
Indenture, according to their tenor, and to secure the perfonnance and observance of all the
covenants and conditions therein and herein set forth, does hereby assign and pledge unto, and
granCa security interest in the following (the "Trust Estate") to [TRUSTEE TO COME] as _
trustee, and its successors in trust and assigns, for the securing of the perfonnance of the
obligations of the Authority hereinafter set forth:
GRANTING CLAUSE FIRST
All right, title and interest of the Authority in and to the Revenues (as defined herein),
including, but without limiting the generality of the foregoing, the present and continuing right to
make claim for, collect, receive and receipt for any Revenues payable to or receivable by the
Authority under the Constitution of this State, the Government Code of the State of California
and this Indenture and any other applicable laws of this State or otherwise, to bring actions and
proceedings thereunder for the enforcement thereof, and to do any and all things which the
Authority is or may become entitled to do thereunder, subject to the terms hereof.
GRANTING CLAUSE SECOND
All moneys and securities held in funds and accounts of the Indenture (except amounts
held in the Rebate Fund), and all other rights of every name and nature from time to time herein
or hereafter by delivery or by writing of any kind pledged, assigned or transferred as and for
additional security hereunder to the Trustee by the Authority or by anyone on its behalf, or with
its written consent, and to hold and apply the same, subject to the terms hereof.
PUIL:30148 _1)131182461.00009 2 10110/95
GRANTING CLAUSE THIRD
All of the rights, title, and interest of the Authority in the Installment Purchase
Agreement, including the right to receive all Installment Payments made by the City pursuant
thereto, and including all rights of the Authority thereunder as may be necessary to enforce
payment of amounts due from the City pursuant theretO and compliance with the provisions
thereof (including enforcement of rate covenants, if any, contained in the Installment Purchase
Agreement) or otherwise to protect the interest of the Owners of the Bonds, subject to the terms
hereof.
TO HAVE AND TO HOLD all and singular the Trust Estate, whether now owned or
hereafter acquired, unto the Trustee and its respective successors in trust and assigns forever for
the benefit of the Owners and such pledge shall constitute a lien on and security interest in such
Trust Estate;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal
and proportionate benefit, security and protection of all present and future owners of the Bonds
issued under and secured by this Indenture without privilege, priority or distinction as to the lien
or otherwise of any of the Bonds over any of the other Bonds;
PROVIDED, HOWEVER, that if the Authority, its successors or assigns shall well and
truly pay, or cause to be paid, the principal of and interest and any redemption premium on the
Bonds due or to become due thereon, at the times and in the manner provided in the Bonds
accofding to the true intent and meaning thereof, and shall well and truly keep, perform and_
observe all the covenants and conditions pursuant to the terms of this Indenture to be kept,
performed and observed by it, and shall payor cause to be paid to the Trustee all sums of money
due or to become due in accordance with the terms and provisions hereof, then upon such final
payments or deposits as herein provided, this Indenture and the rights hereby granted shall cease,
terminate and be void; otherwise this Indenture shall remain in full force and effect.
THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all
Bonds issued and secured hereunder are to be issued, authenticated and delivered, and all
property, rights and interests, including, without limitation, the Revenues hereby assigned and
pledged, are to be dealt with and disposed of, under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and purposes hereinafter expressed, and the
Authority has agreed and covenanted and does hereby covenant and agree with the Trustee, for
the benefit of the respective Owners from time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in
this Section 1.01 shall, for all purposes of this Indenture and of any indenture supplemental
hereto and of any certificate, opinion or other document herein mentioned, have the meanings
herein specified, to be equally applicable to both the singular and plural forms of any of the
terms herein defined. Unless the context otherwise requires, all capitalized terms used herein and
PUBL,308048_111381B2468.00009 3 1011 0/95
--
--. not otherwise defined herein shall have the respective meanings given to such terms in the
Installment Purchase Agreement.
"Accountant" means any firm of independent certified public accountants selected by the
Authority in its sole discretion.
. Alternate Reserve Fund Security" means one or more letters of credit, surety bonds,
bond insurance policies, or other form of guaranty from a financial institution for the benefit of
the Trustee, in substitution for or in place of all or any portion of the Reserve Requirement
which shall be approved by the Bond Insurer.
"Annual Debt Service" means, for any Bond Year, the sum of (1) the interest payable on
all Outstanding Bonds in such Bond Year, assuming that all Outstanding Serial Bonds are retired
as scheduled (except to the extent that such interest is to be paid from the proceeds of the sale of
any Bonds), and (2) the principal amount of all Outstanding Bonds maturing by their terms in
such Bond Year (which shall include sinking fund payments due in such Bond Year).
"Authorized Reoresentative" means with respect to the Authority, its Executive Director
or any other person designated as an Authorized Representative of the Authority by a Certificate
of the Authority signed by its Executive Director and f1led with the Trustee.
"Authority" means the Poway Public Financing Authority, a public body corporate and
politic duly organized and existing under the Joint Exercise of Powers Agreement and under the
Constitution and laws of the State.
-
"Bond Counsel" means a firm of nationally-recognized attorneys experienced in the
issuance of tax-exempt obligations the interest on which is excludable from gross income under
Section 103 of the Code.
"Bond Insurance Policv" means the municipal bond new issue insurance policy issued by
the Bond Insurer that guarantees payment of principal of and interest on the Bonds.
"Bond Insurer" means , a or any
successor theretO.
"~" means the $ aggregate principal amount of Poway Public
Financing Authority Revenue Bonds, Series 1995 (Water Services Capital Improvement Program)
issued by the Authority, and at any time Outstanding pursuant to this Indenture.
"Bond Year" means that certain period beginning and ending on the dates as selected by
the Authority in the Tax Certificate with respect to the Series 1995 Bonds.
"Business Dav" means a day other than: a Saturday or Sunday or a day on which (i)
banks located in the city in which the principal corporate trust office of the Trustee is located are
not required or authorized to remain closed, and (ii) on which The New York Stock Exchange is
not closed.
PUBL,30848_' I 1381 81468.00009 4 10110/95
'Certificate,' "Direction", "Reauest," and "Reauisition" of the Authority mean a written
certificate, direction, request or requisition signed in the name of the Authority by its Authorized
Representative. Any such instrument and supporting opinions or representations, if any, may,
but need not, be combined in a single instrument with any other instrument, opinion or
representation, and the two or more so combined shall be read and construed as a single
instrument. If and to the extent required by Section 1.02, each such instrument shall include the
statements provided for in Section 1.02.
"Closinl! Date" means the date on which the Bonds are delivered to the original purchaser
thereof.
"~" means the Internal Revenue Code of 1986, as amended and the United States
Treasury Regulations proposed or in effect with respect theretO.
"Costs of Issuance" means all items of expense directly or indirectly payable by or
reimbursable to the Authority or the City related to the authorization, execution and delivery of
the Indenture and the Installment Purchase Agreement and the related sale and delivery of the
Bonds, including, but not limited to, costs of preparation and reproduction of documents, costs of
rating agencies and costs to provide information required by them, filing and recording fees,
initial fees and charges of the Trustee and counsel to the Trustee, fees and charges of the
Authority, legal fees and charges, title insurance premiums, letter of credit fees, fees and
expenses of consultants and professionals, fees and expenses of any financial advisor, fees and
charges for preparation, execution, delivery and safe keeping of the Bonds, the premium for any
policy of municipal bond insurance applicable to Bonds, and any other charge, cost or fee in
connection with the original sale, execution and delivery of the Bonds.
"Costs of Issuance Fund" means the account by that name established pursuant to Section
3.03.
"Debt Service" means, for any period of calculation, the sum of:
(I) the interest accruing during such period on all outstanding Bonds, assuming that
all outstanding serial Bonds are retired as scheduled and that all outstanding term
Bonds are prepaid or paid from sinking fund payments as scheduled (except to the
extent that such interest is capitalized);
(2) those portions of the principal amount of all outstanding serial Bonds maturing in
such period and in the next succeeding period of calculation accruing during such
period, in each case computed as if such principal amounts were deemed to accrue
daily during such period in equal amounts;
(3) those portions of the principal amount of all outstanding term Bonds required to
be prepaid or paid in such period and during the next succeeding period of
calculation accruing during such period, in each case computed as if such principal
amounts were deemed to accrue daily during such period in equal amounts; and
(4) those portions of the Installment Payments required to be made during such period
and during the next succeeding period of calculation accruing during such period,
'UBL,30848_1 I 138181468.00009 5 10110/95
.
-
in each case computed as if such Installment Payments were deemed to accrue
daily during such period in equal amounts (except to the extent the interest
evidenced and represented thereby is capitalized);
orovided that, as to any such Bonds or Contracts bearing or comprising interest at other than a
fixed rate. the rate of interest used to calculate Debt Service shall be assumed to bear interest at
the highest of: (i) the actual rate on the date of calculation, or if the Bonds or Installment
Payments are not yet outstanding, the initial rate (if established and binding), (ii) if the Bonds or
Installment Payments have been outstanding for at least twelve months, the average rate over the
twelve months immediately preceding the date of calculation, and (iii)(l) if interest on the Bonds
or Installment Payments is excludable from gross income under the applicable provisions of the
Internal Revenue Code, the most recently published Bond Buyer 25 Bond Revenue Index (or
comparable index if no longer published) plus fifty (50) basis points, or (2) if interest is not so
excludable, the interest rate on direct United States Treasury obligations with comparable
maturities plus fifty (50) basis points;
and orovided further that if any series or issue of such Bonds or Contracts have twenty-five
percent (25 %) or more of the aggregate principal amount of such series or issue due in anyone
year, Debt Service shall be determined for the period of determination as if the principal of and
interest on such series or issue of such Bonds or Installment Payments were being paid from the
date of incurrence thereof in substantially equal annual amounts over a period of twenty-five (25)
years from the date of calculation;
and lJI'ovided further that, as to any such Bonds or Installment Payments or portions thereof
bearing no interest but which are sold at a discount and which discount accre!es with respect-to
such Bonds or Installment Payments or portions thereof, such accreted discount shall be treated
as interest in the year paid in the calculation of Debt Service;
and orovided further that the amount on deposit in a debt service reserve fund on any date of
calculation of Debt Service shall be deducted from the amount of principal due at the final
maturity of the Bonds and Contracts for which such debt service reserve fund was established and
to the extent the amount in such debt service reserve fund is in excess of such amount of
principal, such excess shall be applied to the full amount of principal due, in each preceding
year, in descending order, until such amount is exhausted.
and orovided further that Debt Service shall be reduced by the amount of investment earnings
credited to any debt service reserve fund created with respect to Contracts or Bonds.
"Deoositorv" or "QK" means The Depository Trust Company, New York, New York, a
limited purpose trust company organized under the laws of the State of New York in its capacity
as securities depository for the Bonds.
"Event of Default" means any of the events specified in Section 7.01.
"Federal Securities" means direct general obligations of the United States of America
(including obligations issued or held in book-entry form on the books of the Department of the
Treasury of the United States of America, and CATS and TORS), or obligations the principal of
and interest on which are unconditionally guaranteed by the United States of America.
PUBd0848_11138181468.00009 6 10/10/95
"Fiscal Year" means the twelve-month period beginning on July 1 of each year and
ending on the next succeeding June 30, both dates inclusive, or any other twelve-month period
hereafter selected and designated as the official fiscal year period of the 'Authority.
"Indenture" means this Indenture of Trust, as originally executed or as it may from time
to time be supplemented, modified or amended by any Supplemental Indenture.
"Information Services" means Financial Information, Inc. 's "Daily Called Bond Service',
30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny
Information Services' "Called Bond Service: 55 Broad Street, 28th Floor, New York. New
York 10004; Moody's Investors Service "Municipal and Government," 99 Church Street, 8th
Floor, New York, New York 10007, Attention: Municipal News Reports; Standard & Poor's
Corporation "Called Bond Record: 25 Broadway, 3rd Floor, New York, New York 10004; and,
in accordance with then current guidelines of the Securities and Exchange Commission, such
other addresses and/or such other services providing information with respect to called bonds as
the Authority may designate in a written request delivered to the Trustee.
"Installment Pavments" means the installment payments of interest and principal
scheduled to be paid by the City under and pursuant to the Installment Purchase Agreement.
"Installment Purchase Al!reement" means the Installment Purchase Agreement, dated as of
November 1, 1995, by and between the Authority and the City, relating to the Bonds, as
amended from time to time.
-
"Interest Account" means the account by that name in the Revenue Fund established-
pursuant to Section 5.01.
"Interest ~ment Date" means each June 15 and December 15, commencing June 15,
1996.
"Investment Al!reement" means an investment agreement by a provider provided that,
without limiting the foregoing, any such Agreement shall require the City or the Authority to
terminate such agreement and immediately reinvest the proceeds thereof in other Permitted
Investments if the rating assigned to the provider by S&P or Moody's falls to AA- or Aa3 or
below, and expressly permit the withdrawal, without penalty, of any amounts necessary at any
time to fund any deficiencies on account of debt service requirements due on the Bonds, together
with such amendments as may be approved by the Authority from time to time.
"J oint Exercise of Powers Al!reement" means that cenain Joint Exercise of Powers
Agreement, dated as of October 8, 1991 between the City and the Poway Redevelopment
Agency, as amended from time to time.
"Letter of Reoresentations" means the letter of the Authority and the Trustee delivered to
and accepted by the Depository on or prior to issuance of the Bonds as book-entry bonds setting
forth the basis on which the Depository serves as depository for such book-entry bonds, as
originally executed or as it may be supplemented or revised or replaced by a letter from the
Authority and the Trustee delivered to and accepted by the Depository.
'U8L,30848_1 I 138181468.00009 7 10110/95
"Maximum Annual Debt Service" means at any point in time, with respect to Bonds then
Outstanding, the maximum amount of Annual Debt Service on the Bonds for any Bond Year
prior to the maturity of the Bonds.
"Minimum Ratinl!" means a rating of "A" or better by each of the Rating Agencies then
rating the Bonds.
"Moodv's" means Moody's Investors Service, Inc. or any successor theretO.
"Nominee" means the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to Section 2.09 hereof.
"~" means with respect to the Trustee, the office of the Trustee at
or at such other or additional offices as
may be speci fied in writing by the Trustee to the Authority.
"Ooinion of Counsel" means a written opinion of counsel (including but not limited to
counsel to the Authority) selected by the Authority and acceptable to the Trustee. If and to the
extent required by the provisions of Section 1.02, each Opinion of Counsel shall include the
statements provided for in Section 1.02.
"Outstandinl!," when used as of any particular time with reference to Bonds, means
(subject to the provisions of Section 11.09) all Bonds theretOfore, or thereupon being,
authenticated and delivered by the Trustee under this Indenture except (a) Bonds theretofore
canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with respeCt to
which all liability of the Authority shall have been discharged in accordance with Section 10.02,
including Bonds (or portions thereof) described in Section 11.09; and (c) Bonds for the transfer
or exchange of or in lieu of or in substitution for which other Bonds shall have been
authenticated and delivered by the Trustee pursuant to this Indenture.
"Owner" or "Bond Owner," whenever used herein with respect to a Bond, means the
person in whose name the ownership of such Bond is registered on the Registration Books.
"Parity Oblil!ations" means indebtedness or other obligations (including leases and
installment sale agreements) hereafter issued or incurred and secured by a pledge of and lien on
Net Revenues (as defmed in the Installment Purchase Agreement) equally and ratably with the
Installment Payments.
"Particioants" means those broker-dealers, banks and other fmancial institutions from time
to time for which the Depository holds book-entry bonds as securities depository.
"Permitted Investments" means any of the following which at the time of investment are
legal investments under the laws of the State for the moneys proposed to be invested therein:
(a) Federal Securities;
(b) bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following federal agencies and provided such obligations are
PUBL,3084I_111311 81468.00009 8 10/10/95
backed by the full faith and credit of the United States of America (stripped securities are
only permitted if they have been stripped by the agency itself): (i) direct obligations or
fully guaranteed certificates of beneficial ownership of the U.S. Expon-Import Bank; (ii)
certificates of beneficial ownership of the Farmers Home Administration; (iii) obligations
of the Federal Financing Bank; (iv) debentures of the Federal Housing Administration; (v)
participation certificates of the General Services Administration; (vi) guaranteed
mortgage-backed bonds or guaranteed pass-through obligations of the Government
National Mortgage Association; (vii) guaranteed Title XI fmancings of the U.S. Maritime
Administration; (viii) project notes, local authority bonds, new communities debentures
and U. S. public housing notes and bonds of the U.S. Department of Housing and Urban
Development;
(c) bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following non-full faith and credit U.S. government agencies
(stripped securities are only permitted if they have been stripped by the agency itself): (i)
senior debt obligations of the Federal Home Loan Bank System; (ii) participation
certificates and senior debt obligations of the Federal Home Loan Mortgage Corporation;
(iii) mortgaged-backed securities and senior debt obligations of the Federal National
Mortgage Association; (iv) senior debt obligations of the Student Loan Marketing
Association; and (v) obligations of the Resolution Funding Corporation;
(d) money market funds registered under the Federal Investment Company Act
of 1940, whose shares are registered under the Federal Securities Act of 1933, and
- having a rating by S&P of "AAAm", "AAAm" or "AAAm-G" including funds for !>'hich
[TRUSTEE TO COME], its affiliates or subsidiaries provides investment advisory or
other management services;
(e) certificates of deposit secured at all times by collateral described in (a) or
(b) above, which are issued by commercial banks (including the Trustee), savings and
loan associations or mutual savings banks, such collateral must be held by a third party
and Owners must have a perfected first security interest in such collateral;
(f) certificates of deposit, savings accounts, deposit accounts or money market
deposits (including those of the Trustee) which are fully insured by the Federal Deposit
Insurance Corporation;
(g) investment agreements, including guaranteed investment contracts of
institutions whose long-term debt or claims paying ability is rated in one of the two
highest long-term rating categories by Moody's and S&P;
(h) commercial paper rated, at the time of purchase, "Prime-I" by Moody's
and "A-I" or better by S&P;
(i) bonds or notes issued by any state or municipality which are rated by
Moody's or S&P in one of the two highest long-term rating categories assigned by such
agencies;
PUBL,3OM8_11138181468.00009 9 10110/95
(j) federal funds or bankers acceptances with a maximum term of one year of
any bank which an unsecured, uninsured and unguaranteed obligation rating of "Prime-I"
or "A-3" or better by Moody's and "A-I" or "A" or better by S&P;
(k) repurchase agreements which provide for the transfer of securities from a
dealer bank or securities f1I1ll (sellerlborrower) to the Trustee and the transfer of cash
from the Trustee to the dealer bank or securities f1I1ll with an agreement that the dealer
bank or securities firm will repay the cash plus a yield to the Trustee in exchange for the
securities at a specified date, which satisfy the following criteria:
(i) repurchase agreements must be between the Trustee and (A) a
primary dealer on the Federal Reserve reporting dealer list which falls under the
jurisdiction of the Securities Investors Protection Corporation and which are rated
"A" or better by Moody's and S&P, or (B) a bank rated "A" or better by
Moody's and S&P;
(ii) the written repurchase agreement contract must include the
following: (A) securities acceptable for transfer, which may be direct U.S.
government obligations, or federal agency obligations backed by the full faith and
credit of the U.S. government; (B) the term of the repurchase agreement may be
up to 30 days; (C) the Trustee must have a perfected first priority security interest
in the collateral; (0) the collateral must be free and clear of third-party liens and,
in the case of a broker which falls under the jurisdiction of the Securities Investors
- Protection Corporation, are not subject to a repurchase agreement or .a reverse
repurchase agreement; (E) failure to maintain the requisite collateral percen~e,
after a two day restoration period, will require the Trustee to liquidate the
collateral; (F) the securities must be valued no less frequently than once every two
weeks, marked-to-market at current market price plus accrued interest and the
value of collateral must be equal to 103 % of the amount of cash transferred by the
Trustee to the dealer bank or securities firm under the repurchase agreement plus
accrued interest (unless the securities used as collateral are obligations of the
Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation, in which case the collateral must be equal to 105% of the amount of
cash transferred by the Trustee to the dealer bank or securities f1I1ll under the
repurchase agreement plus accrued interest). If the value of the securities held as
collateral falls below 104% of the value of the cash transferred by the Trustee,
then additional cash and/or acceptable securities must be transferred; and
(iii) a legal opinion must be delivered to the Trustee to the effect that
the repurchase agreement meets guidelines under state law for legal investment of
public funds;
(I) the Local Agency Investment Fund of the State of California, created
pursuant to section 16429.1 of the California Government Code, to the extent the Trustee
is authorized to register such investment in its name. The Trustee may restrict
investments in the Local Agency Investment Fund if required to keep monies available for
the purposes of the Indenture.
'I1OL,308.8_1 I 138181468.00009 10 10/10/95
"Princioal Account" means the account by that name in the Revenue Fund established
pursuant to Section 5.01.
"Proiect" means the project described in Exhibit A to the Installment Purchase
Agreement, dated as of November 1, 1995, by and between the City of Poway and the Poway
Public Financing Authority.
"Ratinl!" means any currently effective rating on the Bonds issued by a Rating Agency.
"Ratinl! Al!encies" means S&P and Moody's.
"Rebate Fund" means the fund by that name established pursuant to Section 5.09.
"Rebate Rel!ulations" shall mean the Treasury Regulations issued under Section 148(f) of
the Code.
"Record Date" means, with respect to any Interest Payment Date, the first (1st) day of the
calendar month in which such Interest Payment Date occurs.
"Redemotion Fund" means the fund by that name established pursuant to Section 5.06.
"Rel!istration Books" means the records maintained by the Trustee for the registration of
ownership and registration of transfer of the Bonds pursuant to Section 2.05.
-
-
"Reserve Fund" means the fund by that name established pursuant to Section 5.05.
"Reserve Reouirement" means an amount equal to the least of (a) 125 % of average
Annual Debt Service on the Bonds, (b) Maximum Annual Debt Service on the Bonds, and
(c) 10 % of the face amount of the Bonds (less original issue discount if in excess of two percent
(2 %) of the stated redemption amount at maturity).
"Resoonsible Officer of the Trustee" means any officer within the corporate trust division
(or any successor group or department of the Trustee) including any vice president, assistant
vice president, assistant secretary or any other officer or assistant officer of the Trustee
customarily performing functions similar to those performed by the persons who at the time shall
be such officers, respectively, and also means, with respect to a particular corporate trust matter,
any other officer of the Trustee to whom such matter is referred by the Trustee because of such
person's knowledge of and familiarity with the particular subject.
"Revenue Fund" means the fund by that name established pursuant to Section 5.01.
"Revenues" means (a) all amounts received by the Trustee as Installment Payments
pursuant to or with respect to the Installment Purchase Agreement, and assigned by the Authority
to the Trustee pursuant to Section 5.01 hereof and (b) all interest or gain derived from the
investment of amounts in any of the funds or accounts established hereunder.
"~" means Standard & Poor's Corporation, or any successor thereto.
PVIL.;30a48_1 i 138182468.00009 11 10110/95
-
- "Securities Deoositories" means The Depository Trust Company, 711 Stewart Avenue,
Garden City, New York 11530, Fax-(516) 227-4039 or 4190; Midwest Securities Trust
Company, Capital Structures-Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605,
Fax-(312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900
Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Dex-(215)
496-5058; and, in accordance with then current guidelines of the Securities and Exchange
Commission, such other addresses and/or such other securities depositories as the Authority may
designate in a Request of the Authority delivered to the Trustee.
"Serial Bonds" means the Bonds maturing on or prior to December 15,_.
"Six-Month Period' shall mean the period of time beginning on the Delivery Date and
ending six months thereafter, and each six-month period thereafter until the latest maturity date of
the Series 1995 Bonds (and any obligations that refund Series 1995 Bonds).
"~. means the State of California.
"SuDolemental Indenture" means any indenture hereafter duly authorized and entered into
between the Authority and the Trustee, supplementing, modifying or amending this Indenture; but
only if and to the extent that such Supplemental Indenture is specifically authorized hereunder.
"Tax Certificate" shall mean the certificate by that name to be executed by the Authority
on a Delivery Date to establish certain facts and expectations and which contains certain
covenants relevant to compliance with the Code. -
'Term Bonds" means the Bonds maturing on December 15, _ and December 15,
-
"'Trustee" means , a state banking corporation organized and
existing under the laws of the State of California, or its successor, as trustee hereunder as
provided in Section 8.01.
"Water Svstem" means the whole and each and every part of the water system of the
City, including the portion thereof existing on the date hereof, and including all additions,
betterments, extensions and improvements to such water system or any part thereof hereafter
acquired or constructed and all contracted rights to receive Water, easements and rights of way.
Section 1.02. Content of Certificates and Ooinions. Every cenificate or opinion
provided for in this Indenture except the certificate of destruction provided for in Section 11.05
hereof, with respect to compliance with any provision hereof shall include (1) a statement that the
person making or giving such cenificate or opinion has read such provision and the definitions
herein relating thereto; (2) a brief statement as to the nature and scope of the examination or
investigation upon which the cenificate or opinion is based; (3) a statement that, in the opinion of
such person he has made or caused to be made such examination or investigation as is necessary
to enable him to express an informed opinion with respect to the subject matter referred to in the
instrument to which his signature is affIXed; (4) a statement of the assumptions upon which such
certificate or opinion is based, and that such assumptions are reasonable; and (5) a statement as
to whether, in the opinion of such person, such provision has been complied with.
PUIL:30148 _1113 a i 82461.00009 12 10/10/95
-.-----"
Any such cenificate or opinion made or given by an officer of the Authority may be
based, insofar as it relates to legal or accounting matters, upon a certificate or opinion of or
representation by counselor an Accountant, unless such officer knows, or in the exercise of
reasonable care should have known, that the certificate, opinion or representation with respect to
the matters upon which such cenificate or statement may be based, as aforesaid, is erroneous.
Any such certificate or opinion made or given by counselor an Accountant may be based, insofar
as it relates to factual matters (with respect to which information is in the possession of the
Authority) upon a cenificate or opinion of or representation by an officer of the Authority,
unless such counselor Accountant knows, or in the exercise of reasonable care should have
known, that the certificate or opinion or representation with respect to the matters upon which
such person's certificate or opinion or representation may be based, as aforesaid, is erroneous.
The same officer of the Authority, or the same counselor Accountant, as the case may be, need
not certify to all of the matters required to be certified under any provision of this Indenture, but
different officers, counselor Accountants may cenify to different matters, respectively.
Section 1.03. Intemretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall
include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for
convenience only and shall be deemed to include the neuter, masculine or feminine gender, as
appropriate .
(b) Headings of articles and sections herein and the table of contents hereof are solely
for convenience of reference, do not constitute a part hereof and shall not affect the meaning,
construction or effect hereof. -
(c) All references herein to "Articles," "Sections" and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Indenture; the words "herein," "hereof,"
"hereby," "hereunder" and other words of similar impon refer to this Indenture as a whole and
not to any particular Article, Section or subdivision hereof.
ARTICLE II
THE BONDS
Section 2.01. Authorization of Bonds. The Authority hereby authorizes the issuance
hereunder from time to time of the Bonds, which shall constitute special obligations of the
Authority, for the purpose of financing the Project. The Bonds are hereby designated the
"Poway Public Financing Authority Revenue Bonds, Series 1995 (Water Services Capital
Improvement Program)". The aggregate principal amount of Bonds initially issued and
Outstanding under this Indenture shall equal $ . No additional Bonds may be issued
pursuant hereto. This Indenture constitutes a continuing agreement with the Owners from time to
time of the Bonds to secure the full payment of the principal of and interest and premium (if any)
on all the Bonds, subject to the covenants, provisions and conditions herein contained.
Section 2.02. Terms of the Bonds. The Bonds shall be issued in fully registered form
without coupons in denominations of $5,000 or any integral multiple thereof. The Bonds shall
PUBL,30848_1I 138 I 81468.()OOO9 13 10110/95
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mature on December 15 in each of the years and in the amounts set forth below and shall bear
interest on each Interest Payment Date at the rates set forth below:
Maturity Date Principal Interest
(December 15) Amount Rate
$
" FiDaI Maturity.
Interest on the Bonds shall be payable on each Interest Payment Date to the person whose
name appears on the Registration Books as the Owner thereof as of the Record Date immediately
preceding each such Interest Payment Date, such interest to be paid by check or draft of the
Truslee sent by first class mail to the Owner at the address of such Owner as it appears on the
Registration Books (except that in the case of an Owner of one million dollars ($I,OOO,OOOtor
more in principal amount, such payment may, at such Owner's option, be made by wire transfer
of immediately available funds in accordance with written instructions provided to the Trustee by
such Owner prior to the Record Date. Principal of and premium (if any) on any Bond shall be
paid by check or draft of the Trustee upon presentation and surrender thereof at maturity or upon
the prior redemption thereof, at the Office of the Trustee. Both the principal of and interest and
premium (if any) on the Bonds shall be payable in lawful money of the United States of America.
Each Bond shall be dated November 1, 1995, and shall bear interest from the Interest
Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated after
a Record Date and on or before the following Interest Payment Date, in which event it shall bear
interest from such Interest Payment Date, or (b) unless it is authenticated on or before June 1,
1996 in which event it shall bear interest from November 1, 1995; provided, however, that if, as
of the date of authentication of any Bond, interest thereon is in default, such Bond shall bear
interest from the Interest Payment Date to which interest has previously been paid or made
available for payment thereon. Interest on the Bonds shall be calculated on the basis of a 360-
day year composed of twelve 3O-day months.
Section 2.03. Transfer of Bonds. Any Bond may, in accordance with its terms, be
transferred on the Registration Books by the person in whose name it is registered, in person or
by his or her duly authorized attorney, upon surrender of such Bond at the Office of the Trustee
for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a
form approved by the Trustee. The Trustee shall not be required to register the transfer of any
PUBL,30848_11138181468.00009 14 10110/95
Bond during the period in which the Trustee is selecting Bonds for redemption and any Bond that
has been selected for redemption.
Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall
execute and the Trustee shall authenticate and shall deliver a new Bond or Bonds of authorized
denomination or denominations for a like aggregate principal amount and of like matUrity. The
Trustee shall require the Bond Owner requesting such transfer to pay any tax or other
governmental charge required to be paid with respect to such transfer.
Section 2.04. Exchanl!e of Bonds. Bonds may be exchanged at the Office of the Trustee
for a like aggregate principal amount of Bonds of other authorized denominations and of like
maturity. The Trustee shall not be required to exchange any Bond during the period in which the
Trustee is selecting Bonds for redemption and any Bond that has been selected for redemption.
The Trustee shall require the Bond Owner requesting such exchange to pay any tax or other
governmental charge required to be paid with respect to such exchange.
Section 2.05. Rel!istration Books. The Trustee will keep or cause to be kept, at the
Office of the Trustee, sufficient records for the registration and transfer of ownership of the
Bonds, which shall upon reasonable notice and at reasonable times be open to inspection during
regular business hours by the Authority, the City and the Owners; and, upon presentation for
such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or
transfer or cause to be registered or transferred, on such records, the ownership of the Bonds as
hereinbefore provided.
-
-
Section 2.06. Form and Execution of Bonds. The Bonds shall be in substantially the
form set forth in Exhibit A heretO. The Bonds shall be executed in the name and on behalf of
the Authority with the facsimile signature of its Chairman, attested by the manual or facsimile
signature of its Secretary. The Bonds may carry a seal, and such seal may be in the form of a
facsimile of the Authority's seal and may be reproduced, imprinted or impressed on the Bonds.
The Bonds shall then be delivered to the Trustee for authentication by it. In case any of the
officers who shall have signed or attested any of the Bonds shall cease to be such officer or
officers of the Authority before the Bonds so signed or attested shall have been authenticated or
delivered by the Trustee, or issued by the Authority, such Bonds may nevertheless be
authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as
binding upon the Authority as though those who signed and attested the same had continued to be
such officers of the Authority, and also any Bonds may be signed and attested on behalf of the
Authority by such persons as at the actual date of execution of such Bonds shall be the proper
officers of the Authority although at the nominal date of such Bonds any such person shall not
have been such officer of the Authority.
Only such of the Bonds as shall bear thereon a cenificate of authentication substantially in
the form set forth in Exhibit A hereto, manually executed by the Trustee, shall be valid or
obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of or
on behalf of the Trustee shall be conclusive evidence that the Bonds so authenticated have been
duly executed, authenticated and delivered hereunder and are entitled to the benefits of this
Indenture.
PUBL,30848_1 I 138181468.00009 IS 10/10/95
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Section 2.07. Temoorarv Bonds. The Bonds may be issued in temporary form
exchangeable for defInitive Bonds when ready for delivery. Any temporary Bonds may be
printed, lithographed or typewritten, shall be of such authorized denominations as may be
determined by the Authority, shall be in fully registered form without coupons and may contain
such reference to any of the provisions of this Indenture as may be appropriate. Every
temporary Bond shall be executed by the Authority and authenticated by the Trustee upon the
same conditions and in substantially the same manner as the defmitive Bonds. If the Authority
issues temporary Bonds it will execute and deliver defInitive Bonds as promptly thereafter as
practicable, and thereupon the temporary Bonds may be surrendered, for cancellation, at the
Office of the Trustee and the Trustee shall authenticate and deliver in exchange for such
temporary Bonds an equal aggregate principal amount of defInitive Bonds of authorized
denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits
under this Indenture as defmitive Bonds authenticated and delivered hereunder.
Section 2.08. Bonds Mutilated. Lost. Destroved or Stolen. If any Bond shall become
mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the
Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and authorized
denomination in exchange and substitution for the Bonds so muti1ated, but only upon surrender to
the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall
be canceled by it and delivered to, or upon the order of, the Authority. If any bond shall be lost,
destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Authority
and the Trustee and, if such evidence be satisfactory to them and indemnity satisfactory to them
shall be given, the Authority, at the expense of the Owner, shall execute, and the Trustee shall
thereupon authenticate and deliver, a new Bond of like tenor and authorized denomination iI) lieu
of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have
matured or shall be about to mature, instead of issuing a substitute Bond, the Trustee may pay
the same without surrender thereof). The Authority may require payment by the Owner of a sum
not exceed ing the actual cost of preparing each new Bond issued under this Section and of the
expenses which may be incurred by the Authority and the Trustee in the premises. Any Bond
issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or
stolen shall constitute an original additional contractual obligation on the pan of the Authority
whether or not the Bond so alleged to be lost, destroyed, or stolen be at any time enforceable by
anyone, and shall be entitled to the benefits of this Indenture with all other Bonds secured by this
Indenture.
Section 2.09. Book-Entrv System.
(a) Election of Book-Entrv Svstem. Prior to the issuance of the Bonds, the Authority
may provide that such Bonds shall be initially issued as book-entry Bonds. If the Authority shall
elect to deliver any Bonds in book-entry form, then the Authority shall cause the delivery of a
separate single fully registered bond (whiCh may be typewritten) for each maturity date of such
Bonds in an authorized denomination corresponding to that total principal amount of the Bonds
designated to mature on such date. Upon initial issuance, the ownership of each such Bond shall
be registered in the Bond register in the name of the Nominee, as nominee of the Depository and
ownership of the Bonds, or any portion thereof, may not thereafter be transferred except as
provided in Section 2.09(e).
ruIL:30141_1 i 131: 82468.00009 16 10/10/95
With respect to book-entry Bonds, the Authority and the Trustee shall have no
responsibility or obligation to any Participant or to any person on behalf of which such a
Participant holds an interest in such book-entry Bonds. Without limiting the immediately
preceding sentence, the Authority and the Trustee shall have no responsibility or obligation with
respect to (i) the accuracy of the records of the Depository, the Nominee, or any Participant with
respect to any ownership interest in book-entry Bonds, (ii) the delivery to any Participant or any
other person, other than an Owner as shown in the Bond Registration Books, of any notice with
respect to book-entry Bonds, including any notice of redemption, (iii) the selection by the
Depository and its Participants of the beneficial interests in book -entry Bonds to be redeemed in
the event the Authority redeems the Bonds in part, or (iv) the payment by the Depository or any
Participant or any other person, of any amount of principal of, premium, if any, or interest on
book -entry Bonds. The Authority and the Trustee may treat and consider the person in whose
name each book-entry Bond is registered in the Bond Registration Books as the absolute Owner
of such book-entry Bond for the purpose of payment of principal of, premium and interest on
such Bond, for the purpose of giving notices of redemption and other matters with respect to
such Bond, for the purpose of registering transfers with respect to such Bond, and for all other
purposes whatsoever. The Trustee shall pay all principal of, premium, if any, and interest on the
Bonds only to or upon the order of the respective Owner, as shown in the Bond Registration
Books, or his respective attorney duly authorized in writing, and all such payments shall be valid
and effective to fully satisfy and discharge the Authority's obligations with respect to payment of
principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid.
No person other than an Owner, as shown in the Bond Registration Books, shall receive a Bond
evidencing the obligation to .make payments of principal of, premium, if any, and interest on the
Bonds. Upon delivery by the Depository to the Owner and the Trustee, of wrinen notice to_the
effect that the Depository has determined to substitute a new nominee in place of the Nominee,
and subject to the provisions herein with respect to Record Dates, the word Nominee in this
Indenture shall refer to such nominee of the Depository.
(b) Deliverv of Lener of ReDresentations. In order to qualify the book-entry Bonds
for the Depository's book-entry system, the Authority and the Trustee shall execute and deliver
to the Depository a Letter of Representations. The execution and delivery of a Letter of
Representations shall not in any way impose upon the Authority or the Trustee any obligation
whatsoever with respect to persons having interests in such book-entry Bonds other than the
Owners, as shown on the Bond Registration Books. By executing a Letter of Representations,
the Trustee shall agree to take all action necessary at all times so that the Authority will be in
compliance with all representations of the Authority in such Letter of Representations. In
addition to the execution and delivery of a Letter of Representations, the Authority and the
Trustee shall take such other actions, not inconsistent with this Indenture, as are reasonably
necessary to qualify book-entry Bonds for the Depository's book-entry program.
(c) Selection of Dl:oository. In the event (i) the Depository determines not to
continue to act as securities depository for book-entry Bonds, or (ii) the Authority determines
that continuation of the book-entry system is not in the best interest of the beneficial owners of
the Bonds or the Authority, then the Authority will discontinue the book-entry system with the
Depository. If the Authority determines to replace the Depository with another qualified
securities depository, the Authority shall prepare or direct the preparation of a new single,
separate, fully registered Bond for each of the maturity dates of such book-entry Bonds,
registered in the name of such successor or substitute qualified securities depository or its
PUBL,308<l8_'I 1381 81468.00009 17 10/10/95
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Nominee as provided in subsection (e) hereof. If the Authority fails to identify another qualified
securities depository to replace the Depository, then the Bonds shall no longer be restricted to
being registered in such Bond register in the name of the Nominee, but shall be registered in
whatever name or names the Owners transferring or exchanging such Bonds shall designate, in
accordance with the provisions of Sections 2.03 and 2.04 hereof.
(d) Pavments To Deoository. Notwithstanding any other provision of this Indenture
to the contrary, so long as all Outstanding Bonds are held in book-entry and registered in the
name of the Nominee, all payments of principal of, redemption premium, if any, and interest on
such Bond and all notices with respect to such Bond shall be made and given, respectively to the
Nominees, as provided in the Letter of Representations or as otherwise instructed by the
Depository and agreed to by the Trustee notwithstanding any inconsistent provisions herein.
(e) Transfer of Bonds to Substitute Deoository.
(i) The Bonds shall be initially issued as provided in Section 2.01 hereof.
Registered ownership of such Bonds, or any portions thereof, may not thereafter be
transferred except;
(A) to any successor of DTC or its nominee, or of any substitute
depository designated pursuant to clause (B) of subsection (i) of this Section
2.09(e) ("Substitute Depository"); provided that any successor of DTC or
Substitute Depository shall be qualified under any applicable laws to provide the
- service proposed to be provided by it; .
-
(B) to any Substitute Depository, upon (1) the resignation of DTC or
its successor (or any Substitute Depository or its successor) from its functions as
depository, or (2) a determination by the Authority that DTC (or its successor) is
no longer able to carry out its functions as depository; provided that any such
Substitute Depository shall be qualified under any applicable laws to provide the
services proposed to be provided by it; or
(C) to any person as provided below, upon (1) the resignation of DTC
or its successor (or any Substitute Depository or its successor) from its functions
as depository, or (2) a determination by the Authority that DTC or its successor
(or Substitute Depository or its successor) is no longer able to carry out its
functions as depository.
(ii) In the case of any transfer pursuant to clause (A) or clause (B) of subsection (i) of
this Section 2.09(e), upon receipt of all Outstanding Bonds by the Trustee, together with a
written request of the Authority to the Trustee designating the Substitute Depository, a
single new Bond, which the Authority shall prepare or cause to be prepared, shall be
issued for each maturity of Bonds then Outstanding, registered in the name of such
successor or such Substitute Depository or their Nominees, as the case may be, all as
specified in such written request of the Authority. In the case of any transfer pursuant to
clause (C) of subsection (i) of this Section 2.09(e), upon receipt of all Outstanding Bonds
by the Trustee, together with a written request of the Authority to the Trustee, new
Bonds, which the Authority shall prepare or cause to be prepared, shall be issued in such
PUBL,30848 _111381 81468.00009 18 10/10/95
denominations and registered in the names of such persons as are requested in such
written request of the Authority, subject to the limitations of Section 2.01 hereof,
provided that the Trustee shall not be required to deliver such new Bonds within a period
of less than sixty (60) days from the date of receipt of such written request from the
Authority .
(iii) In the case of a partial redemption or an advance refunding of any Bonds
evidencing a portion of the principal maturing in a particular year, DTC or its successor
(or any Substitute Depository or its successor) shall make an appropriate notation on such
Bonds indicating the date and amounts of such reduction in principal, in form acceptable
to the Trustee, all in accordance with the Letter of Representations. The Trustee shall not
be liable for such Depository's failure to make such notations or errors in making such
notations .
(iv) The Authority and the Trustee shall be entitled to treat the person in whose name
any Bond is registered as the Owner thereof for all purposes of this Indenture and any
applicable laws, notwithstanding any notice to the contrary received by the Trustee or the
Authority; and the Authority and the Trustee shall not have responsibility for transmitting
payments to, communicating with, notifying, or otherwise dealing with any beneficial
owners of the Bonds. Neither the Authority nor the Trustee shall have any responsibility
or obligation, legal or otherwise, to any such beneficial owners or to any other party,
including DTC or its successor (or Substitute Depository or its successor), except to the
Owner of any Bonds, and the Trustee may rely conclusively on its records as to the
- identity of the Owners of the Bonds. -
ARTICLE m
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Section 3.01. Issuance of the Bonds. At any time after the execution of this Indenture,
the Authority may execute and the Trustee shall authenticate and, upon Request of the Authority,
deliver Bonds in the aggregate principal amount of $
Section 3.02. Aoolication of Proceeds of the Bonds. The proceeds received from the
sale of the Bonds shall be deposited in trust with the Trustee who shall forthwith set aside such
proceeds and funds as follows:
(a) The Trustee shall deposit in the Interest Account accrued interest received
on the sale of the Bonds in the amount of $
(b) The Trustee shall deposit the sum of $ in the Costs of Issuance
Fund.
(c) The Trustee shall transfer to the City the sum of $ for deposit
in the Construction Fund, Project Account.
(d) The Trustee shall deposit the sum of $ in the Reserve Fund.
PUBL,30848 _111381 81468.00009 19 10110/95
Section 3.03. Establishment and Aoolication of Construction Fund and Costs of Issuance
fwlg. The City shall establish, maintain and hold in trust a separate fund designated as the
"Construction Fund" and, within such Fund, an account designated the "Project Account.. The
Construction Fund shall be held in trust for the benefit of the Authority, the City and the
Owners. The City shall deposit in the Construction Fund from the proceeds of sale of the Bonds
the amount described in Sections 3.02(b) and (c). Such amount deposited in the Project Account
of the Construction Fund shall be retained in the Construction Fund and applied as follows:
(a) On any date or dates, the Authority may file with the City a Request which
identifies the amount proposed to be released from the Construction Fund.
Upon receipt of the Request described above, the City shall withdraw from the
Construction Fund the amount identified in such Request and transfer such amount as
directed pursuant to the Request.
(b) Unless the City has prepared a detailed list of projects with related costs in
an amount at least equal to any excess monies remaining in the Construction Fund three
(3) years after the Delivery Date, such excess monies shall be, at the direction of the
City, (i) transferred to the Principal Account of the Revenue Fund and applied to pay
principal on any Outstanding Bonds, and/or (il) transferred to the Interest Account of the
Revenue Fund and applied to the next Interest Payment on any Outstanding Bonds.
The Trustee shall establish, maintain and hold in trust a separate Fund designated as the
"COSlS of Issuance Fund". The moneys in the Costs of Issuance Fund shall be used and
withdrawn by the Trustee to pay the Costs of Issuance upon submission of Requisitions of life
Authority stating the person to whom payment is to be made, the amotint to be paid, the purpose
for which the obligation was incurred, that such payment is a proper charge against said fund and
that payment for such charge has not previously been made. On December 15, 1996, or upon
the earlier Request of the Authority, all amounts remaining in the Costs of Issuance Fund shall be
transferred by the Trustee to the Revenue Fund. The Trustee shall, to the extent there are no
other available funds held under the Indenture, use the remaining funds in the Construction Fund
to pay principal and interest on the Bonds in the event of a payment default.
Section 3.04. Validity of Bonds. The validity of the authorization and issuance of the
Bonds is not dependent on and shall not be affected in any way by any proceedings taken by the
Authority, the City or the Trustee with respect to or in connection with the Installment Purchase
Agreement. The recital contained in the Bonds that the same are issued pursuant to the
Constitution and laws of the State shall be conclusive evidence of the validity and of compliance
with the provisions of law in their issuance.
PUBL,30848 _11138181468.00009 20 10/10/95
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ARTICLE IV
REDEMPTION OF BONDS
Section 4.01. Terms of Redemotion.
(a) Sinkinl! Fund Redemotion. The Term Bonds maturing on December 15, _
are subject to mandatory redemption, in part by lot, from sinking fund payments set forth in the
following schedule on December 15, _ and on December 15 in each year thereafter at a
redemption price equal to the principal amount thereof to be redeemed (without premium),
together with interest accrued thereon to the date fIXed for redemption:
Redemption Date Principal
(December 15) Amount
$
..
. Final maturity.
- The Term Bonds maturing on December 15, _ are subject to mandatory redemption,
in part by lot, from sinking fund payments set forth in the following schedule on December -15,
_ and on December 15 in each year thereafter at a redemption price equal to the principal
amount thereof to be redeemed (without premium), together with interest accrued thereon to the
date fixed for redemption:
Redemption Date Principal
(December 15) Amount
$
..
" Final maturity.
orovided, however, that if some but not all of the Term Bonds have been redeemed pursuant to
subsection (b) or (c) below, the total amount of sinking fund payments to be made subsequent to
such redemption shall be reduced in an amount equal to the principal amount of the Term Bonds
so redeemed by reducing each such future sinking fund payment on a pro rata basis (as nearly as
practicable) in integral multiples of $5,000, as shall be designated pursuant to written notice filed
by the Authority with the Trustee received by the Trustee prior to selection of Bonds for
redemption.
PUBL,30848_1 I 138181468.00009 21 10/10/95
In lieu of such redemption and prior to the selection of Bonds for redemption, the
Authority may direct the Trustee to apply amounts on deposit in the Principal Account of the
Revenue Fund to the purchase of Term Bonds at public or private sale, as and when and at such
pri~s (including brokerage and other charges, but excluding accrued interest, which is payable
from the Interest Account of the Revenue Fund) as may be directed by the Authority, except that
the purchase price (exclusive of accrued interest) may not exceed the redemption price then
applicable to the Term Bonds, as set forth in a Request of the Authority.
(b) Ootional Redemotion. The Bonds maturing on or after December 15,2005, shall
be subject to redemption at the election of the Authority, selected among maturities as designated
by the Authority at the direction of the City, and by lot within a maturity, as a whole or in part,
on any date on or after December 15, 2004, at the following redemption prices (expressed as a
percentage of the principal amount of Bonds called for redemption), plus accrued interest to the
date fixed for redemption:
Redemotion Dates Redemotion Price
December 15,2004 through December 14, 2005 102%
December 15,2005 through December 14,2006 101
December 15, 2006 and thereafter 100
(c) Redernotion from Net Proceeds of Insurance. The Bonds shall be subject to
redemption, as a whole or in pan on any date prior to maturity, among maturities as designated
by the Authority at the direction of the City and by lot within a maturity in integral multiples of
$5,000 from prepaid Installment Payments made by the City from Net Proceeds, upon the terms
and conditions of, and as provided for in, Sections 6.11 and 6.15 of the Installment Purchase
Agreement, at a redemption price equal to the principal amount thereof, without premium,
together with accrued interest to the redemption date.
No later than sixty (60) days prior to a redemption date, the Authority shall deliver a
written election to the Trustee specifying the redemption date and manner of selection of Bonds
for redemption.
Section 4.02. Selection of Bonds for Redemotion. Whenever provision is made in this
Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds for
redemption at the direction of the City among maturities and by lot within a maturity in any
manner which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of
such selection, the Trustee shall treat each Bond as consisting of separate $5,000 portions and
each such portion shall be subject to redemption as if such ponion were a separate Bond.
Section 4.03. Notice of Redemotion. Notice of redemption shall be mailed by fll'st class
mail not less than thirty (30) nor more than sixty (60) days before any redemption date, to the
respective registered Owners of any Bonds designated for redemption at their addresses appearing
on the Registration Books, and to the Securities Depositories and to one or more Infonnation
Services. In the case of notice of optional redemption not related to an advance or current
refunding or a redemption from net proceeds of insurance, such notice may be given only if
sufficient funds have been deposited with the Trustee to pay the applicable redemption price of
pUBd0848_J 1138181468.00009 22 10/10/95
the Bonds to be redeemed. Each notice of redemption shall state the redemption date, the place
or places of redemption, whether less than all of the Bonds are to be redeemed, the distinctive
numbers of the Bonds to be redeemed, and in the case of Bonds to be redeemed in part only, the
respective portions of the principal amount thereof to be redeemed. Each such notice shall also
state that on the redemption date there will become due and payable on each of said Bonds or
parts thereof designated for redemption the redemption price thereof, and that from and after
such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be
surrendered. Neither the failure to receive any notice nor any defect therein shall affect the
validity of the proceedings for such redemption or the cessation of accrual of interest from and
after the redemption date. Notice of redemption of Bonds shall be given by the Trustee, at the
expense of the Authority, for and on behalf of the Authority.
Section 4.04. Partial Redemotion of Bonds. Upon surrender of any Bonds redeemed in
part only, the Authority shall execute and the Trustee shall authenticate and deliver to the
registered Owner thereof, at the expense of the Authority, a new Bond or Bonds of authorized
denominations equal in aggregate principal amount to the unredeemed portion of the Bonds
surrendered.
Section 4.05. Effect of Redemotion. Notice of redemption having been duly given as
aforesaid, and moneys for payment of the redemption price of, together with interest accrued to
the date fixed for redemption on, the Bonds (or portions thereof) so called for redemption being
held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions
thereof) so called for redemption shall become due and payable, interest on the Bonds so called
for redemption shall cease to accrue, said Bonds (or ponions thereof) shall cease to be entit~ to
any benefit or security under this Indenture, and the Owners of said Bonds shall have no rights in
respect thereof except to receive payment of the redemption price thereof. The Trustee shall,
upon surrender for payment of any of the Bonds to be redeemed on their redemption dates, pay
such Bonds at the redemption price.
All Bonds redeemed pursuant to the provisions of this Article shall be canceled upon
surrender thereof.
ARTICLE V
REVENUES, FUNDS AND ACCOUNTS
PAYMENT OF PRINCIPAL AND INTEREST
Section 5.01. Pledl!e and Assil!nment: Revenue Fund. (a) All of the Revenues and any
other amounts (including proceeds of the sale of the Bonds) held in any fund or account
established pursuant to this Indenture (except the Rebate Fund, the Construction Fund and the
Costs of Issuance Fund) are hereby irrevocably pledged to secure the payment of the principal of
and interest on, and the premium, if any, on the Bonds in accordance with their terms and the
provisions of this Indenture subject only to the provisions of this Indenture permitting the
application thereof for the purposes and on the terms and conditions set forth herein. Said pledge
shall constitute a first and exclusive lien on and security interest in such amounts and shall attach,
be perfected and be valid and binding from and after the Closing Date, without any physical
delivery thereof or further act and shall be valid and binding against all parties having claims of
PUBL,30848 _111381 81468.00009 23 10110/95
.-
any kind in tort, contract or otherwise against the Authority, irrespective of whether such parties
have notice hereof.
(b) The Authority, for good and valuable consideration in hand received, does hereby
irrevocably sell, assign and transfer to the Trustee without recourse, for the benefit of the
Owners of the Bonds as set fonh herein, all of its rights, title, and interest in the Installment
Purchase Agreement, including the right to receive all Installment Payments made by the City
pursuant thereto, and including all rights of the Authority thereunder as may be necessary to
enforce payment of amounts due from the City pursuant theretO and compliance with provisions
thereof (including enforcement of rate covenants, if any, contained in the Installment Purchase
Agreement) or otherwise to protect the interest of the Owners of the Bonds. Such assigrunent
shall be subject to and limited by the terms of this Indenture.
(c) All Revenues received by the Trustee shall be promptly deposited by the Trustee
upon receipt thereof in a special fund designated as the "Revenue Fund" which the Trustee shall
establish, maintain and hold in trust; except that all moneys received by the Trustee and required
hereunder to be deposited in the Redemption Fund shall be promptly deposited therein. All
Revenues deposited with the Trustee shall be held, disbursed, allocated and applied by the
Trustee only as provided in this Indenture. The Trustee shall establish and maintain an Interest
Account and a Principal Account within the Revenue Fund.
Section 5.02. Allocation of Revenues. Not later than the Business Day preceding each
date on which the principal of or interest or premium (if any) on the Bonds shall become due and
payable hereunder, the Trustee shall transfer from the Revenue Fund and deposit into the -
following respective accounts, the following amounts in the following order of priority, the
requirements of each such account (including the making up of any deficiencies in any such
account resulting from lack of Revenues sufficient to make any earlier required deposit) at the
time of deposit to be satisfied before any transfer is made to any account subsequent in priority:
(a) The Trustee shall deposit in the Interest Account an amount required to
cause the aggregate amount on deposit in the Interest Account to be at least equal to the
amount of interest coming due and payable on such date on all Bonds then Outstanding.
(b) The Trustee shall deposit in the Principal Account an amount required to
cause the aggregate amount on deposit in the Principal Account to equal the principal
amount of the Bonds coming due and payable on such date and the principal amount of
the Term Bonds to be redeemed on such date pursuant to Section 4.01(a).
(c) The Trustee shall deposit into the Reserve Fund an amount, if
any, required to maintain on deposit in the Reserve Fund an amount equal to the
Reserve Requirement.
Section 5.03. Aoolication of Interest Account. All amounts in the Interest Account shall
be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it
shall become due and payable (including accrued interest on any Bonds purchased or redeemed
prior to maturity pursuant to this Indenture).
PUBL,30848_1 I 138181468.00009 24 10/10/95
Section 5.04. Aoolication of Princioal Account. All amounts in the Principal Account
shall be used and withdrawn by the Trustee solely to pay the principal amount of the Serial
Bonds at maturity and to pay the principal amount of the Term Bonds at maturity and upon the
mandatory sinking fund redemption thereof pursuant to Section 4.01(a).
Section 5.05. Reserve Fund. The Trustee shall establish and maintain and hold in trust a
separate fund designated as the "Reserve Fund." All amounts in the Reserve Fund shall be used
and withdrawn by the Trustee solely for the purpose of (a) paying interest on or principal of the
Bonds, including the principal amount of any Term Bonds, subject to mandatory sinking fund
redemption pursuant to Section 4.01(a), when due and payable to the extent that moneys
deposited in the Interest Account or Principal Account, respectively, are not sufficient for such
purpose; and (b) making the fmal payments of principal of and interest on the Bonds.
Any money in the Reserve Fund in excess of the Reserve Requirement after the Authority
acquires the alternate security and pays the appropriate costs as herein provided shall be
deposited into the Rebate Fund or the Redemption Fund at the direction of the Authority.
If at any time cash plus the Value of investments in the Reserve Fund fall below the
Reserve Requirement, then the insufficiency shall be made up pursuant to Section 5.02(b) of the
Installment Purchase Agreement.
The term "~", as applied to investments under this Indenture, means that the value of
such investments shall be calculated as follows:
-
a) as to investments the bid and asked prices of which are published on a regular
basis in The Wall Street Journal (or, if not there, then in The New York Times):
the average of the bid and asked prices for such investments so published on or
most recently prior to such time of determination;
b) as to investments the bid and asked prices of which are not published on a regular
basis in The Wall Strut Journal or The New York Tunes: the average bid price at
such time of determination for such investments by any two nationally recognized
government securities dealers (selected by the Trustee in its absolute discretion) at
the time making a market in such investments or the bid price published by a
nationally recognized pricing service;
c) as to certificates of deposit and bankers acceptances:
the face amount thereof, plus accrued interest; and
d) as to any investment not specifically identified in (a), (b) and (c) above, market
value exclusive of accrued interest.
Anything to the contrary herein notwithstanding, the Authority may at any time substi~te
an Alternate Reserve Fund Security, with the consent of the Bond Insurer and upon such
substitution, the Authority shall be entitled to receive all moneys then held in the Reserve Fund
which are not required to meet the Reserve Requirement free and clear of the lien of this
Indenture.
PUBL,308<08_1 I 131181461.00009 25 10110195
-
-- In the event the Authority delivers an Alternate Reserve Fund Security, the Trustee shall
hold and apply such instrument pursuant to this Indenture so as to have moneys available
thereunder for the purposes and at the times required under this Indenture.
Any Alternate Reserve Fund Security shall conform to the following requirements:
The Issuer may satisfy the requirement (the "Reserve Fund Requirement") to deposit a
specified amount in the debt service reserve fund (the "Reserve Fund") by the deposit of a surety
bond, insurance policy or letter of credit as set forth below. The following requirements shall be
incorporated in the Indenture (the "Authorizing Document") in the event the Reserve Fund
Requirement is fulfilled by a deposit of a credit instrument (other than a credit instrument issued
by Financial Guaranty) in lieu of cash:
I. A surety bond or insurance policy issued to the entity serving as trustee or paying
agent (the "Fiduciary"), as agent of the bondholders, by a company licensed to
issue an insurance policy guaranteeing the timely payment of debt service on the
Bonds (a "municipal bond insurer") may be deposited in the Reserve Fund to meet
the Reserve Fund Requirement if the claims paying ability of the issuer thereof
shall be rated "AAA" or "Aaa" by S&P or Moody's, respectively.
2. A surety bond or insurance policy issued to the Fiduciary, as agent of the
bondholders, by an entity other than a municipal bond insurer may be deposited in
the Reserve Fund to meet the Reserve Fund Requirement if the form and
- substance of such instrument and the issuer thereof shall be approved by Fi~cial
Guaranty .
3. An unconditional irrevocable letter of credit issued to the Fiduciary, as agent of
the bondholders, by a bank may be deposited in the Reserve Fund to meet the
Reserve Fund Requirement if the issuer thereof is rated at least "AA" by S&P.
The letter of credit shall be payable in one or more draws upon presentation by
the beneficiary of a sight draft accompanied by its cenificate that it then holds
insufficient funds to make a required payment of principal or interest on the
bonds. The draws shall be payable within two days of presentation of the sight
draft. The letter of credit shall be for a term of not less than three years. The
issuer of the letter of credit shall be required to notify the Issuer and the
Fiduciary, not later than 30 months prior to the stated expiration date of the letter
of credit, as to whether such expiration date shall be extended, and if so, shall
indicate the new expiration date.
If such notice indicates that the expiration date shall not be extended, the Issuer
shall deposit in the Reserve Fund an amount sufficient to cause the cash or
permitted investments on deposit in the Reserve Fund together with any other
qualifying credit instruments, to equal the Reserve Fund Requirement on all
outstanding Bonds, such deposit to be paid in equal installments on at least a semi-
annual basis over the remaining term of the letter of credit, unless the Reserve -
Fund credit instrument is replaced by a Reserve Fund credit instrument meeting
the requirements in any of 1-3 above. The letter of credit shall permit a draw in
full not less than two weeks prior to the expiration or termination of such letter of
PUBL,30848_1 1 138181468.00009 26 10/10/95
credit if the letter of credit has not been replaced or renewed. The Authorizing
Document shall, in turn, direct the Fiduciary to draw upon the letter of credit
prior to its expiration or termination unless an acceptable replacement is in place
or the Reserve Fund is fully funded in its requirement amount.
4. The use of any Reserve Fund credit instrument pursuant to this Paragraph shall
be subject to receipt of an opinion of counsel acceptable to Financial Guaranty and
in form and substance satisfactory to Financial Guaranty as to the due
authorization, execution, delivery and enforceability of such instrument in
accordance with its terms, subject to applicable laws affecting creditors' rights
generally, and, in the event the issuer of such credit instrument is not a domestic
entity, an opinion of foreign counsel in form and substance satisfactory to
Financial Guaranty. In addition, the use of an irrevocable letter of credit shall be
subject to receipt of an opinion of counsel acceptable to Financial Guaranty to the
effect that payments under such letter of credit would not constitute avoidable
preferences under Section 547 of the U. S. Bankruptcy Code or similar state laws
with avoidable preference provisions in the event of the filing of a petition for
relief under the U.S. Bankruptcy Code or similar state laws by or against the
issuer of the bonds (or any other account party under the letter of credit).
5. The obligation to reimburse the issuer of a Reserve Fund credit instrument for any
fees, expenses, claims or draws upon such Reserve Fund credit instrument shall
be subordinate to the payment of debt service on the bonds. The right of the
- issuer of a Reserve Fund credit instrument to payment or reimbursement of i!S
fees and expenses shall be subordinated to cash replenishment of the Reserve
Fund, and, subject to the second succeeding sentence, its right to reimbursement
for claims or draws shall be on a parity with the cash replenishment of the
Reserve Fund. The Reserve Fund credit instrument shall provide for a revolving
feature under which the amount available thereunder will be reinstated to the
extent of any reimbursement of draws or claims paid. If the revolving feature is
suspended or terminated for any reason, the right of the issuer of the Reserve
Fund credit instrument to reimbursement will be funher subordinated to cash
replenishment of the Reserve Fund to an amount equal to the difference between
the full original amount available under the Reserve Fund credit instrument and
the amount then available for funher draws or claims. If (a) the issuer of a
Reserve Fund credit instrument becomes insolvent or (b) the issuer of a Reserve
Fund credit instrument defaults in its payment obligations thereunder or (c) the
claims-paying ability of the issuer of the insurance policy or surety bond falls
below a S&P "AA", the obligation to reimburse the issuer of the Reserve Fund
credit instrument shall be subordinate to the cash replenishment of the Reserve
Fund.
6. If (a) the revolving reinstatement feature described in the preceding paragraph is
suspended or terminated or (b) the rating of the claims paying ability of the issuer
of the surety bond or insurance policy falls below a S&P "AAA" or a Moody's
"Aaa" or (c) the rating of the issuer of the letter of credit falls below a S&P
" AA", the Issuer shall either (i) deposit into the Reserve Fund an amount
sufficient to cause the cash or permitted investments on deposit in the Reserve
PUBL,30848 _11138181468.00009 27 10110/95
--
Fund to equal the Reserve Fund Requirement on all outstanding bonds, such
amount to be paid over the ensuing five years in equal installments deposited at
least semi-annually or (ii) replace such instrument with a surety bond, insurance
policy or letter of credit meeting the requirements in any of 1-3 above within six
months of such occurrence. In the event (a) the rating of the claims-paying ability
of the issuer of the surety bond or insurance policy falls below "A" or (b) the
rating of the issuer of the letter of credit falls below" A" or (c) the issuer of the
Reserve Fund credit instrument defaults in its payment obligations or (d) the issuer
of the Reserve Fund credit instrument becomes insolvent, the Issuer shall either
(i) deposit into the Reserve Fund an amount sufficient to cause the case or
permitted investments on deposit on all outstanding Bonds, such amount to be paid
over the ensuing year in equal installments on at least a monthly basis or
(il) replace such instrument with a surety bond, insurance policy or letter of credit
meeting the requirements in any of 1-3 above within six months of such
occurrence.
7. Where applicable, the amount available for draws or claims under the Reserve
Fund credit instrument may be reduced by the amount of cash or permitted
investments deposited in the Reserve Fund pursuant to clause (i) of the preceding
subparagraph 6.
8. If the Issuer chooses the above described alternatives to a cash-funded Reserve
Fund, any amounts owed by the Issuer to the issuer of such credit instrument as a
- result of a drawn thereon or a claim thereunder, as appropriate, shall be inctuded
in any calculation of debt service requirements required to be made pursuant to
the Authorizing Document for any purpose, e.g., rate covenant or additional
bonds test.
9. The Authorizing Document shall require the Fiduciary to ascenain the necessity
for a claim or draw upon the Reserve Fund credit instrument and to provide notice
to the issuer of the Reserve Fund credit instrument in accordance with its terms
not later than three days (or such longer period as may be necessary depending on
the permitted time period for honoring a draw under the Reserve Fund credit
instrument) prior to each interest payment date.
10. Cash on deposit in the Reserve Fund shall be used (or investments purchased with
such cash shall be liquidated and the proceeds applied as required) prior to any
drawing on any Reserve Fund credit instrument. If and to the extent that more
than one Reserve Fund credit instrument is deposited in the Reserve Fund,
drawings thereunder and repayments of costs associated therewith shall be made
on a pro rata basis, calculated by reference to the maximum amounts available
thereunder.
Section 5.06. AODlication of Redemotion Fund. The Trustee shall establish and maintain
the Redemption Fund, amounts in which shall be used and withdrawn by the Trustee solely for
the purpose of paying the principal of and premium (if any) on the Bonds to be redeemed
pursuant to Section 4.0 I (b) and (c); orovided, however, that at any time prior to selection for
redemption of any such Bonds, upon written direction of the Authority the Trustee shall apply
PUBL,30848 _111381 81468.00009 28 10/10/95
such amounts to the purchase of Bonds at public or private sale, as and when and at such prices
(including brokerage and other charges, but excluding accrued interest, which is payable from the
Interest Account) as shall be directed pursuant to a Request of the Authority, except that the
purchase price (exclusive of accrued interest) may not exceed the redemption price then
applicable to the Bonds.
Section 5.07. Investments. All moneys in any of the funds or accounts established with
the Trustee or the City, as the case may be, pursuant to this Indenture shall be invested by the
Trustee or the City, as the case may be, solely in Permitted Investments. Investments held by
the Trustee shall be directed by the Authority pursuant to a Request of the Authority filed with
the Trustee at least two (2) Business Days in advance of the making of such investments. In the
absence of any such directions from the Authority, the Trustee shall invest any such moneys in
Permitted Investments described in clause (0) of the definition thereof. Obligations purchased as
an investment of moneys in any fund shall be deemed to be part of such fund or account. The
Trustee or the City, as applicable, shall give timely notice of any withdrawal from any
Investment Agreement to the provider of the Investment Agreement in accordance with the terms
thereof.
For purposes of acquiring any investments hereunder, the Trustee may commingle funds
(other than the Rebate Fund) held by it hereunder. The Trustee may act as principal or agent in
the acquisition or disposition of any investment and may impose its customary charges therefor;
provided, however, that the Authority may request other parties to act as principal or agent in the
acquisition or disposition of any investment and in connection therewith shall not be required to
pay any charges to the Trustee with respect thereto. The Trustee shall incur no liability for
losses arising from any investments made pursuant to this Section.
All interest or gain received from the investment of amounts in any of the funds or
accounts established hereunder shall be deposited in the Interest Account not later than five
Business Days before June 15 and December 15 of each year, except that interest earnings on the
Construction Fund shall remain in such Fund until expended on costs of the Project. The Trustee
shall transfer such amounts to the Interest Account pursuant to this paragraph as a credit against
the amount to be deposited therein pursuant to Section 5.02(a) from Installment Payments paid by
the City.
All investments shall be valued by the Trustee as of August 1 of each year at the market
value thereof. Deficiencies in the amount on deposit in the Reserve Fund resulting from a
decline in market value shall be restored no later than the succeeding valuation date.
Notwithstanding anything contained herein, the Trustee may invest in Permitted
Investments which include funds for which [TRUSTEE TO COME], its affiliates or subsidiaries
provide investment advisory or other management services.
Section 5.08. Arbitral!e Covenant. The Authority hereby covenants with the Trustee, for
the benefit of the Owners, that, notwithstanding any other provision of this Indenture, it will
make no use of the proceeds of the Bonds which would cause the Bonds to be "arbitrage bonds"
subject to federal income taxation by reason of Section 148 of the Code. The Trustee hereby
covenants with the Authority, for the benefit of the Owners, that it will comply with the
PUBL,30848_11138181468.ll0009 29 10110/95
.- -
provisions of this Indenture and will follow the written directions of the Authority with respect to
the use of proceeds of the Bonds.
Section 5.09. Rebate Fund.
(a) Establishment. A special fund is hereby created and designated the "poway Public
Financing Authority Revenue Bonds Series 1995 Rebate Fund" (the "Series 1995 Bonds Rebate
Fund") which is to be held by the Trustee and in which there shall be established two separate
accounts designated the "Series 1995 Rebate Account" and the "Series 1995 Alternative Penalty
Account.. Absent an opinion of Bond Counsel that the exclusion from gross income for federal
income tax purposes of interest on the Series 1995 Bonds will not be adversely affected, the
Authority shall cause to be deposited in each such account of the Series 1995 Bonds Rebate Fund
such amounts as are required to be deposited therein pursuant to this Section and the Tax
Certificate. All money at any time deposited in the Series 1995 Rebate Account or the Series
1995 Alternative Penalty Account shall be held by the Trustee in trust for payment to the United
States Treasury. All amounts on deposit in the Series 1995 Bonds Rebate Fund shall be
governed by this Section and the Tax Certificate, unless and to the extent that the Authority
delivers to the Trustee an opinion of Bond Counsel that the exclusion from gross income for
federal income tax purposes of interest on the Bonds will not be adversely affected if such
requirements are not satisfied.
(1) Rebate Account. The following requirements shall be satisfied with
respect to the Series 1995 Rebate Account:
-
(i) Annual Computation. Within 55 days of the end of each Bond
Year, the Authority shall calculate or cause to be calcurated the amount of
rebatable arbitrage, in accordance with Section 148(f)(2) of the Code and
Section 1.148-3 of the Rebate Regulations (taking into account any applicable
exceptions with respect to the computation of the rebatable arbitrage, described, if
applicable, in the Tax Certificate ~, the temporary investments exceptions of
Section 148(f)(4)(B) and (C) of the Code), and taking into account whether the
election pursuant to Section 148(f)(4)(C)(vii) of the Code (the "Ph % Penalty")
has been made), for this purpose treating the last day of the applicable Bond Year
as a computation date, within the meaning of Section 1.148-1(b) of the Rebate
Regulations (the "Rebatable Arbitrage"). The Authority shall obtain expert advice
as to the amount of the Rebatable Arbitrage to comply with this Section.
(ii) Annual Transfer. Within 55 days of the end of each applicable Bond
Year, upon the written direction of an Authorized Authority Representative, an
amount shall be deposited to the Rebate Account by the Trustee from any
Revenues legally available for such purpose (as specified by the Authority in the
aforesaid written direction), if and to the extent required so that the balance in the
Series 1995 Rebate Account shall equal the amount of Rebatable Arbitrage so
calculated in accordance with (i) of this Subsection (a)(1). In the event that
immediately following the transfer required by the previous sentence, the amount
then on deposit to the credit of the Series 1995 Rebate Account exceeds the
amount required to be on deposit therein, upon written instructions from an
Authorized Authority Representative, the Trustee shall withdraw the excess from
PUBL,30848 _11131181468.(10009 30 10110/95
the Series 1995 Rebate Account and then credit the excess to the Series 1995
Revenue Fund.
(jji) Payment to the Treasury. The Trustee shall pay, as directed by an
Authorized Authority Representative, to the United States Treasury, out of
amounts in the Series 1995 Rebate Account,
(X) Not later than 60 days after the end of (A) the fifth Bond Year, and
(B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of
the Rebatable Arbitrage calculated as of the end of such Bond Year; and
(Y) Not later than 60 days after the payment of all the Bonds, an
amount equal to l()()% of the Rebatable Arbitrage calculated as of the end of such
applicable Bonds Year, and any income attributable to the Rebatable Arbitrage,
computed in accordance with Section 148(f) of the Code.
In the event that, prior to the time of any payment required to be made
from the Series 1995 Rebate Account, the amount in the Rebate Account is not
sufficient to make such payment when such payment is due, the Authority shall
calculate or cause to be calculated the amount of such deficiency and deposit an
amount received from any legally available source equal to such deficiency prior
to the time such payment is due. Each payment required to be made pursuant to
this Subsection (a)(1) shall be made to the Internal Revenue Service Center,
Philadelphia, Pennsylvania 19255 on or before the date on which such payment is
due, and shall be accompanied by Internal Revenue Service Form 8038-T, or- shall
be made in such other manner as provided under the Code.
(2) Alternative PenallY Account.
(i) Six-Month Computation. If the Ilh % Penalty has been elected, within
85 days of each particular Six-Month Period, the Authority shall determine or
cause to be determined whether the Ilh % Penalty is payable (and the amount of
such penalty) as of the close of the applicable Six-Month Period. The Authority
shall obtain expert advice in making such determinations.
(ii) Six-Month Transfer. Within 85 days of the close of each Six-Month
Period, upon the written direction of an Authorized Authority Representative, the
Trustee shall deposit in the Series 1995 Alternative Penalty Account from any
legally available source of funds (as specified by the Authority in the aforesaid
written direction), if and to the extent required, so that the balance in the Series
1995 Alternative Penalty Account equals the amount of Ph % Penalty due and
payable to the United States Treasury determined as provided in
Subsection (a)(2)(i) above. In the event that immediately following the transfer
provided in the previous sentence, the amount then on deposit to the credit of the
Series 1995 Alternative Penalty Account exceeds the amount required to be on
deposit therein to make the payments required by Subsection (a)(2)(iii) below, the
Trustee, at the written direction of an Authorized Authority Representative, may
PUBL,30848_1 1 138181468.00009 31 10110/95
- --
withdraw the excess from the Series 1995 Alternative Penalty Account and credit
the excess to the Series 1995 Revenue Fund.
(iii) Payment to the Treasury. The Trustee shall pay, as directed in
writing by an Authorized Authority Representative, to the United States Treasury,
out of amounts in the Series 1995 Alternative Penalty Account, not later than
90 days after the close of each Six-Month Period the I1h % Penalty, if applicable
and payable, computed in accordance with Section 148(f)(4) of the Code. In the
event that, prior to the time of any payment required to be made from the Series
1995 Alternative Penalty Account, the amount in such account is not sufficient to
make such payment when such payment is due, the Authority shall calculate the
amount of such deficiency and direct the Trustee to deposit an amount received
from any legally available source of funds equal to such deficiency into the Series
1995 Alternative Penalty Account prior to the time such payment is due. Each
payment required to be made pursuant to this Subsection (a)(2) shall be made to
the Internal Revenue Service, Philadelphia, Pennsylvania 19255 on or before the
date on which such payment is due, and shall be accompanied by Internal Revenue
Service Form 8038-T or shall be made in such other manner as provided under
the Code.
(b) Disoosition of UnexDended Funds. Any funds remaining in the Series 1995 Bonds
Rebate Fund after redemption and payment of the Series 1995 Bonds and the payments described
in Subsection (a)(1)(iii) or (a)(2)(iii) (whichever is applicable) may be withdrawn by the Authority
and lIlilized in any manner by the Authority. -
(c) Survival of Defp".,,"ce. Notwithstanding anything in this Section or this
Indenture to the contrary, the obligation to comply with the requirements of this Section shall
survive the defeasance of the Series 1995 Bonds.
Section 5.10. ADolication of Funds and Accounts When No Bonds are Outstandinl!. On
the date on which all Bonds shall be retired hereunder or provision made therefor pursuant to
Article X and after payment of all amounts due the Trustee hereunder, all moneys then on
deposit in any of the funds or accounts (other than the Rebate Fund) established with the Trustee
pursuant to this Indenture shall be withdrawn by the Trustee and paid to the Authority for
distribution to the City.
Section 5.11. Bond Insurance Pavments.
[TO BE PROVIDED BY BOND INSURER]
puIL,30848_11 1381 81468.()OOO9 32 10/10/95
ARTICLE VI
PARTICULAR COVENANTS
Section 6.01. Punctual Pavment. The Authority shall punCtually payor cause to be paid
the principal and interest to become due in respect of all the Bonds, in strict conformity with the
terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, but
only out of Revenues and other assets pledged for such payment as provided in this Indenture.
Section 6.02. Extension of Pavment of Bonds. The Authority shall not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of
payment of any claims for interest by the purchase of such Bonds or by any other arrangement,
and in case the maturity of any of the Bonds or the time of payment of any such claims for
interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any
default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of
the principal of all of the Bonds then Outstanding and of all claims for interest thereon which
shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the
Authority to issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance
shall not be deemed to constitute an extension of maturity of Bonds.
Section 6.03. Al!ainst Encumbrances. The Authority shall not create, or permit the
creation of, any pledge, lien, charge or other encumbrances upon the Revenues and other assets
pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the
pledg~ and assignment created by this Indenture and as permitted in the Installment Purchase:.
Agreement. Subject to this limitation, the Authority expressly reserves the right to enter into one
or more other indentures for any of its corporate purposes, including other programs under the
Joint Exercise of Powers Agreement, and reserves the right to issue other obligations for such
purposes .
Section 6.04. Power to Issue Bonds and Make Pledl!e and Assil!nment. The Authority is
duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to pledge
and assign the Revenues and other assets purponed to be pledged and assigned under this
Indenture in the manner and to the extent provided in this Indenture. The Bonds and the
provisions of this Indenture are and will be the legal, valid and binding special obligations of the
Authority in accordance with their terms, and the Authority and the Trustee shall at all times,
subject to the provisions of Article VIII and to the extent permitted by law, defend, preserve and
protect said pledge and assignment of Revenues and other assets and all the rights of the Bond
Owners under this Indenture against all claims and demands of all persons whomsoever.
Section 6.05. Accountinl! Records and Financial Statements. The Trustee shall at all
times keep, or cause to be kept, proper books of record and account, prepared in accordance with
industry standards, in which complete and accurate entries shall be made of all transactions
relating to the proceeds of Bonds, the Revenues and all funds and accounts established pursuant
to this Indenture. Such books of record and account shall be available for inspection by the
Authority and the City upon reasonable prior notice during business hours and under reasonable
circumstances .
PUBL,30UB _111381 81468.00009 33 10110/95
.
_.0-
-.
Section 6.06. Tax Covenants. Notwithstanding any other provision of this Indenture,
absent an opinion of Bond Counsel that the exclusion from gross income of interest on the Bonds
will not be adversely affected for federal income tax purposes, the Authority covenants to comply
with all applicable requirements of the Code necessary to preserve such exclusion from gross
income and specifically covenants, without limiting the generality of the foregoing, as follows:
(a) Private Activity. The Authority will not take or omit to take any action or make
any use of the proceeds of the Bonds or of any other moneys or property which would cause the
Bonds to be "private activity bonds" within the meaning of Section 141 of the Code.
(b) Arbitral!e. The Authority will make no use of the proceeds of the Bonds or of
any other amounts or property, regardless of the source, or take or omit to take any action which
would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code.
(c) Federal Guarantee. The Authority will make no use of the proceeds of the Bonds
or take or omit to take any action that would cause the Bonds to be "federally guaranteed" within
the meaning of Section 149(b) of the Code.
(d) Information Reooninl!. The Authority will take or cause to be taken all necessary
action to comply with the informational reporting requirement of Section 149(e) of the Code.
(e) Miscellaneous. The Authority will take no action inconsistent with its
expectations stated in the Tax Certificate and will comply with the covenants and requirements
stated therein and incorporated by reference herein. -
This Section and the covenants set fonh herein shall not be applicable to, and nothing
contained herein shall be deemed to prevent the Authority from issuing Bonds the interest on
which has been determined by the Board of Directors of the Authority to be subject to federal
income taxation.
Section 6.07. Amendments to Installment Purchase Al!reement. The Authority shall not
enter into any amendments to the Installment Purchase Agreement except as permitted therein.
Section 6.08. Waiver of Laws. The Authority shall not at any time insist upon or plead
in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension
law now or at any time hereafter in force that may affect the covenants and agreements contained
in this Indenture or in the Bonds, and all benefit or advantage of any such law or laws is hereby
expressly waived by the Authority to the extent permitted by law.
Section 6.09. Funher Assurances. The Authority will make, execute and deliver any and
all such funher indentures, instruments and assurances as may be reasonably necessary or proper
to carry out the intention or to facilitate the performance of this Indenture and for the better
assuring and confirming unto the Owners of the Bonds of the rights and benefits provided in th is
Indenture.
PUBL,30848_1I 138 I 81468.l10009 34 10110/95
"--
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
Section 7.01. Events of Default. The following events shall be Events of Default
hereunder:
(a) Default by the Authority in the due and punctual payment of the principal
of any Bonds when and as the same shall become due and payable, whether at maturity as
therein expressed, by proceedings for redemption, by acceleration, or otherwise.
(b) Default by the Authority in the due and punctual payment of any
installment of interest on any Bonds when and as the same shall become due and payable.
(c) Default by the Authority in the observance of any of the other covenants,
agreements or conditions on its part in this Indenture or in the Bonds contained, if such
default shall have continued for a period of sixty (60) days after written notice thereof,
specifying such default and requiring the same to be remedied, shall have been given to
the Authority by the Trustee or by the Owners of not less than 25 percent in aggregate
principal amount of Bonds Outstanding; provided, however, that if in the reasonable
opinion of the Authority the default stated in the notice can be corrected, but not within
such sixty (60) day period and corrective action is instituted by the Authority within such
sixty (60) day period and diligently pursued in good faith until the default is corrected
- such failure shall not become an Event of Default.
-
(d) The Authority or the City shall file a petition or answer seeking
arrangement or reorganization under the federal bankruptcy laws or any other applicable
law of the United States of America or any state therein, or if a court of competent
jurisdiction shall approve a petition filed with or without the consent of the Authority or
the City, as applicable, seeking arrangement or reorganization under the federal
bankruptcy laws or any other applicable law of the United States of America or any state
therein, or if under the provisions of any other law for the relief or aid of debtors any
court of competent jurisdiction shall assume custody or control of the Authority or the
City, as applicable, or of the whole or any substantial part of its property.
In determining whether a payment default has occurred or whether a payment on the
Bonds has been made under the Indenture, no effect shall be given to payments made under the
Bond Insurance Policy.
The Bond Insurer shall receive immediate notice of any payment default and notice of any
other default known to the Trustee within 30 days of the Trustee's knowledge thereof.
Any waiver of an Event of Default shall be subject to the prior written consent of the
Bond Insurer.
Section 7.02. Remedies Uoon Event of Default. If any Event of Default shall occur,
then, and in each and every such case during the continuance of such Event of Default, the
Trustee, may, and at the written direction of the Owners of not less than a majority in aggregate
PUBI..:30&48_11138182468.00009 35 10110/95
principal amount of the Bonds at the time Outstanding shall, upon notice in writing to the
Authority and the City, declare the principal of all of the Bonds then Outstanding, and the
interest accrued thereon, to be due and payable immediately, and upon any such declaration the
same shall become and shall be immediately due and payable, anything in this Indenture or in the
Bonds contained to the contrary notwithstanding.
Any such declaration is subject to the condition that if, at any time after such declaration
and before any judgment or decree for the payment of the moneys due shall have been obtained
or entered, the Authority or the City shall deposit with the Trustee a sum sufficient to pay all the
principal of and installments of interest on the Bonds payment of which is overdue, with interest
on such overdue principal at the rate borne by the respective Bonds to the extent permitted by
law, and the reasonable charges and expenses of the Trustee, and any and all other Events of
Default known to the Trustee (other than in the payment of principal of and interest on the Bonds
due and payable solely by reason of such declaration) shall have been made good or cured to the
satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been
made therefor, then, and in every such case the Trustee shall, on behalf of the Owners of all of
the Bonds, rescind and annul such declaration and its consequences and waive such Event of
Default; but no such rescission and annulment shall extend to or shall affect any subsequent
Event of Default, or shall impair or exhaust any right or power consequent thereon.
The Trustee may request that a coun of proper jurisdiction appoint a receiver to arrange
for the payment of principal and interest on the Bonds.
- Remedies shall be cumulative with respect to the Trustee, Bondholdtrs and the Bond
Insurer. If any remedial action is discontinued or abandoned, the Trustee, Bondholders ana Bond
Insurer shall be restored to their former positions.
Notwithstanding anything herein to the contrary, any acceleration of the Bonds or
annulment thereof shall be subject to the prior written consent of the Bond Insurer and the Bond
Insurer, acting alone, shall be able to direct an acceleration (if it has not failed to comply with its
payment obligations under the Bond Insurance Policy).
Bondholders' direction or institution of remedies upon default shall be subject to the prior
written consent of the Bond Insurer, and the Bond Insurer, acting alone, shall have the right to
direct all remedies upon default, if it has not failed to comply with its payment obligations under
the Bond Insurance Policy.
Section 7.03. Aoolication of Revenues and Other Funds After Default. If an Event of
Default shall occur and be continuing, all Revenues and any other funds then held or thereafter
received by the Trustee under any of the provisions of this Indenture shall be applied by the
Trustee as follows and in the following order:
(a) To the payment of any expenses necessary in the opinion of the Trustee to
protect the interests of the Owners of the Bonds and payment of reasonable fees, charges
and expenses of the Trustee (including reasonable fees and disbursements of its counsel)
incurred in and about the performance of its powers and duties under this Indenture;
PUaL,3084l1_1 1 138181468.00009 36 10110/95
(b) To the payment of the principal of and interest then due on the Bonds
(upon presentation of the Bonds to be paid, and stamping or otherwise noting thereon of
the payment if only partially paid, or surrender thereof if fully paid) in accordance with
the provisions of this Indenture, in the following order of priority:
Eim: To the payment to the persons entitled thereto of all installments of interest
then due in the order of the maturity of such installments, and, if the amount available
shall not be sufficient to pay in full any installment or installments maturing on the same
date, then to the payment thereof ratably, according to the amounts due thereon, to the
persons entitled theretO, without any discrimination or preference; and
Second: To the payment to the persons entitled thereto of the unpaid principal of
any Bonds which shall have become due, whether at maturity or by acceleration or
redemption, with interest on the overdue principal at the rate of interest on the Bonds per
annum, and, if the amount available shall not be sufficient to pay in full all the Bonds,
together with such interest, then to the payment thereof ratably, according to the amounts
of principal due on such date to the persons entitled theretO, without any discrimination or
preference.
Section 7.04. Trustee to Reoresent Bond Owners. The Trustee is hereby irrevocably
appointed (and the successive respective Owners of the Bonds, by taking and holding the same,
shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful
attorney-in-fact of the Owners of the Bonds for the purpose of exercising and prosecuting on their
behalf such rights and remedies as may be available to such Owners under the provisions of the
Bonds or this Indenture and applicable provisions of any other law. Upon the occurrence ai\d
continuance of an Event of Default or other occasion giving rise to a right in the Trustee to
represent the Bond Owners, the Trustee in its discretion may, and upon the written request of the
Owners of a majority in aggregate principal amount of the Bonds then Outstanding, and upon
being indemnified to its satisfaction therefor, shall proceed to protect or enforce its rights or the
rights of such Owners by such appropriate action, suit, mandamus or other proceedings as it shall
deem most effectual to protect and enforce any such right, at law or in equity, either for the
specific performance of any covenant or agreement contained herein, or in aid of the execution of
any power herein granted, or for the enforcement of any other appropriate legal or equitable
right or remedy vested in the Trustee or in such Owners under the Bonds or this Indenture or any
other law; and upon instituting such proceeding, the Trustee shall be entitled, as a matter of
right, to the appointment of a receiver of the Revenues and other assets pledged under this
Indenture, pending such proceedings. All rights of action under this Indenture or the Bonds or
otherwise may be prosecuted and enforced by the Trustee without the possession of any of the
Bonds or the production thereof in any proceeding relating theretO, and any such suit, action or
proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit
and protection of all the Owners of such Bonds, subject to the provisions of this Indenture.
Notwithstanding anything contained herein, the Authority shall have no security interest in
or mortgage on the Project, the Water System of the City or other assets of the City or any other
real property of the City and no default hereunder shall result in the loss of the Project, the
Water System of the City, other assets of the City or any other real property of the City;
provided, however, that a receiver appointed by the coun may take over financial management of
the Water System.
PUBL,30848_1 1 138181468.00009 37 10/10/95
--
.-.
For all purposes of this Section 7.04, the Bond Insurer shall be deemed to be the sole
holder of the Bonds it has insured for so long as it has not failed to comply with its payment
obligations under the Bond Insurance Policy.
Section 7.05. Bond Owners' Direction of Prtv'-.!inl!s. Anything in this Indenture to the
contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding shall have the right, by an instrument or concurrent instruments in writing
executed and delivered to the Trustee, and upon indemnification of the Trustee to its reasonable
satisfaction to direct the method of conduct in all remedial proceedings taken by the Trustee
hereunder, provided that such direction shall not be otherwise than in accordance with law and
the provisions of this Indenture, and that the Trustee shall have the right to decline to follow any
such direction which in the opinion of the Trustee would be unjustly prejudicial to Bond Owners
not parties to such direction.
Section 7.06. Limitation on Bond Owners' Ril!ht to Sue. No Owner of any Bonds shall
have the right to institute any suit, action or proceeding at law or in equity, for the protection or
enforcement of any right or remedy under this Indenture, the Installment Purchase Agreement,
the Joint Exercise of Powers Agreement or any other applicable law with respect to such Bonds,
unless (a) such Owners shall have given to the Trustee written notice of the occurrence of an
Event of Default; (b) the Owners of not less than twenty-five percent (25 %) in aggregate
principal amount of the Bonds then Outstanding shall have made written request upon the Trustee
to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its
own name; (c) such Owner or Owners shall have tendered to the Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred in compliance with such request; (dtthe
Trustee shall have failed to comply with such request for a period of sixty (60) days after such
written request shall have been received by, and said tender of indemnity shall have been made
to, the Trustee; (e) no direction inconsistent with such written request shall have been given to
the Trustee during such sixty (60) day period by the Owners of a majority in aggregate principal
amount of the Bonds then Outstanding; and (f) such suit, action or proceeding is instituted subject
to this Indenture.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any
remedy hereunder or under law; it being understood and intended that no one or more Owners of
Bonds shall have any right in any manner whatever by his or their action to affect, disturb or
prejudice the security of this Indenture or the rights of any other Owners of Bonds, or to enforce
any right under the Bonds, this Indenture, the Installment Purchase Agreement, the Joint Exercise
of Powers Agreement or other applicable law with respect to the Bonds, except in the manner
herein provided, and that all proceedings at law or in equity to enforce any such right shall be
instituted, had and maintained in the manner herein provided and for the benefit and protection of
all Owners of the Outstanding Bonds, subject to the provisions of this Indenture.
Section 7.07. Absolute Oblil!ation of Authoril)'. Nothing in Section 7.06 or in any other
provision of this Indenture or in the Bonds contained shall affect or impair the obligation of the
Authority, which is absolute and unconditional, to pay the principal of and interest on the Bonds
to the respective Owners of the Bonds at their respective dates of maturity, or upon call for
redemption, as herein provided, but only out of the Revenues and other assets herein pledged
PUBL,3O&48_1 I 138181468.00009 38 10110/95
therefor, or affect or impair the right of such Owners, which is also absolute and unconditional,
to enforce such payment by virtUe of the contract embodied in the Bonds.
Section 7.08. Termination of Proceedinl!s. In case any proceedings taken by the Trustee
or anyone or more Bond Owners on account of any Event of Default shall have been
discontinued or abandoned for any reason or shall have been determined adversely to the Trustee
or the Bond Owners, then in every such case the Authority, the Trustee and the Bond Owners,
subject to any determination in such proceedings, shall be restored to their former positions and
rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the
Authority, the Trustee and the Bond Owners shall continue as though no such proceedings had
been taken.
Section 7.09. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Trustee or to the Owners of the Bonds is intended to be exclusive of any other remedy or
remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative
and in addition to any other remedy given hereunder or now or hereafter existing at law or in
equity or otherwise.
Section 7.10. No Waiver of Default. No delay or omission of the Trustee or of any
Owner of the Bonds to exercise any right or power arising upon the occurrence of any Event of
Default shall impair any such right or power or shall be construed to be a waiver of any such
Event of Default or an acquiescence therein.
-
-
ARTICLE VIll
THE TRUSTEE
Section 8.01. Duties. Immunities and Liabilities of Trustee. (a) The Trustee shall, prior
to an Event of Default, and after the curing of all Events of Default which may have occurred,
perform such duties and only such duties as are expressly and specifically set forth in this
Indenture and no implied covenants shall be read into this Indenture against the Trustee. The
Trustee shall, during the existence of any Event of Default (which has not been cured), exercise
such of the rights and powers vested in it by this Indenture, and use the same degree of care and
skill in their exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) The Authority may remove the Trustee at any time unless an Event of Default shall
have occurred and then be continuing, and shall remove the Trustee if at any time requested to
do so by an instrument or concurrent instruments in writing signed by the Owners of not less
than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys
duly authorized in writing) or if at any time the Trustee shall cease to be eligible in accordance
with subsection (e) of this Section, or shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any
public officer shall take control or charge of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of
such removal to the Trustee and thereupon shall promptly appoint a successor Trustee by an
instrument in writing.
PUBL,3OU8_1I 138 I 81468.ClOO09 39 10110/95
-.
(c) The Trustee may at any time resign by giving written notice of such resignation to
the Authority and by giving the Bond Owners notice of such resignation by mail at the addresses
shown on the Registration Books. Upon receiving such notice of resignation, the Authority shall
promptly appoint a successor Trustee by an instrument in writing.
(d) Any removal or resignation of the Trustee and appointment of a successor Trustee
shall become effective upon acceptance of appointment by the successor Trustee. If no successor
Trustee shall have been appointed and have accepted appointment within forty-five (45) days of
giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Bond
Owner (on behalf of himself and all other Bond Owners) may petition any coun of competent
jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such
notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee
appointed under this Indenture shall signify its acceptance of such appointment by executing and
delivering to the Authority and to its predecessor Trustee a written acceptance thereof, and
thereupon such successor Trustee, without any funher act, deed or conveyance, shall become
vested with all the moneys, estates, propenies, rights, powers, trusts, duties and obligations of
such predecessor Trustee, with like effect as if originally named Trustee herein; but,
nevenheless at the Request of the Authority or the request of the successor Trustee, such
predecessor Trustee shall execute and deliver any and all instruments of conveyance or funher
assurance and do such other things as may reasonably be required for more fully and certainly
vesting in and confirming to such successor Trustee all the right, title and interest of such
predecessor Trustee in and to any property held by it under this Indenture and shall pay over,
transfer, assign and deliver to the successor Trustee any money or other property subject to the
trustS and conditions herein set fonh. Upon request of the successor Trustee, the Authority .shall
execute and deliver any and all instruments as may be reasonably required for more fully and
certainly vesting in and confirming to such successor Trustee all such moneys, estates,
properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a
successor Trustee as provided in this subsection, the Authority shall mail or cause the successor
trustee to mail a notice of the succession of such Trustee to the trusts hereunder to each rating
agency which is then rating the Bonds and to the Bond Owners at the addresses shown on the
Registration Books. If the Authority fails to mail such notice within fifteen (15) days after
acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice
to be mailed at the expense of the Authority.
(e) Any Trustee appointed under the provisions of this Section in succession to the
Trustee shall be a trust company or bank in good standing having the powers of a trust company
having a corporate trust office in San Francisco or Los Angeles, California, having a combined
capital and surplus of at least Seventy-Five Million Dollars ($75,000,000), and subject to
supervision or examination for federal or state authority. If such bank or trust company
publishes a report of condition at least annually, pursuant to law or to the requirements of any
supervising or examining authority above referred to, then for the purpose of this subsection the
combined capital and surplus of such bank or trust company shall be deemed to be its combined
capital and surplus as set fonh in its most recent report of condition so published. In case at aJ:1y
time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (e),
the Trustee shall resign immediately in the manner and with the effect specified in this Section.
The Bond Insurer shall be furnished with written notice of the resignation or removal of
the Trustee and the appointment of any successor thereto.
PUBL,30848.1 I 138181468.00009 40 10110/95
Section 8.02. Merl!er or Consolidation. Any bank or trust company into which the
Trustee may be merged or convened or with which it may be consolidated or any bank or trust
company resulting from any merger, conversion or consolidation to which it shall be a party or
any bank or trust company to which the Trustee may sell or transfer all or substantially all of its
corporate trust business, provided such bank or trust company shall be eligible under subsection
(e) of Section 8.01 shall be the successor to such Trustee, without the execution or filing of any
paper or any further act, anything herein to the contrary notwithstanding.
Section 8.03. Liabilil)' of Trustee. (a) The recitals of facts herein and in the Bonds
contained shall be taken as statement of the Authority, and the Trustee shall not assume
responsibility for the correctness of the same, or make any representations as to the validity or
sufficiency of this Indenture, the Installment Purchase Agreement or the Bonds, nor shall the
Trustee incur any responsibility in respect thereof, other than as expressly stated herein in
connection with the respective duties or obligations herein or in the Bonds assigned to or imposed
upon it. The Trustee shall, however, be responsible for its representations contained in its
certificate of authentication on the Bonds. The Trustee shall not be liable in connection with the
performance of its duties hereunder, except for its own negligence or willful breach. The
Trustee may become the Owner of Bonds with the same rights it would have if it were not
Trustee, and, to the extent permitted by law, may act as depository for and permit any of its
officers or directors to act as a member of, or in any other capacity with respect to, any
committee formed to protect the rights of Bond Owners, whether or not such committee shall
represent the Owners of a majority in principal amount of the Bonds then Outstanding.
- (b) The Trustee shall not be liable for any error of judgment made in good faith by _a
,
responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts.
(c) The Trustee shall not be liable with respect to any action taken or omitted to be taken
by it in good faith in accordance with the direction of the Owners of not less than a majority in
aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee under this Indenture.
(d) The Trustee shall not be liable for any action taken by it in good faith and believed
by it to be authorized or within the discretion or rights or powers conferred upon it by this
Indenture.
(e) No provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any fmancial liability in the performance of its duties hereunder, or in
the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that
the repayment of such funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(f) The Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of Owners pursuant to this Indenture,
unless such Owners shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with such request or
PUBL,30148_1 I 138181468.00009 41 10/10/95
-
- direction. No permissive power, right or remedy conferred upon the Trustee hereunder shall be
construed to impose a duty to exercise such power, right or remedy.
(g) Whether or not herein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Article VDI.
Section 8.04. Ril!ht to Relv on Documents. The Trustee shall be protected in acting
upon any notice, resolution, request, consent, order, certificate, repon, opinion, bonds or other
paper or document believed by them to be genuine and to have been signed or presented by the
proper party or parties. The Trustee may consult with counsel, who may be counsel of or to the
Authority, with regard to legal questions, and the opinion of such counsel shall be full and
camp lete authorization and protection in respect of any action taken or suffered by it hereunder in
good faith and in accordance therewith.
The Trustee may treat the Owners of the Bonds appearing in the Trustee's Registration
Books as the absolute owners of the Bonds for all purposes and the Trustee shall not be affected
by any notice to the contrary.
Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee
shall deem it necessary or desirable that a matter be proved or established prior to taking or
suffering any action hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established by a
Certificate, Request or Requisition of the Authority, and such Cenificate, Request or Requis!tion
shall be full warrant to the Trustee for any action taken or suffered in good faith under the
provisions of this Indenture in reliance upon such Cenificate, Request or Requisition, but in its
discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require
such additional evidence as it may deem reasonable.
Section 8.05. Preservation and InsDection of Documents. All documents received by the
Trustee under the provisions of this Indenture shall be retained in their respective possession and
shall be subject at all reasonable times to the inspection of the Authority, the City and any Bond
Owner, and their agents and representatives duly authorized in writing, at reasonable hours and
under reasonable conditions.
Section 8.06. Comoensation and Indemnification. The Authority shall pay to the Trustee
from time to time all reasonable compensation for all services rendered under this Indenture, and
also all reasonable expenses, charges, legal and consulting fees and other disbursements and those
of their attorneys, agents and employees, incurred in and about the performance of their powers
and duties under this Indenture.
The Authority shall indemnify, defend and hold harmless the Trustee against any loss,
liability or expense incurred without negligence or willful breach on its part, arising out of or in
connection with the acceptance or administration of this trust, including costs and expenses of
defending itself against any claim or liability in connection with the exercise or performance of
- any of its powers hereunder. The rights of the Trustee and the obligations of the Authority under
this Section 8.06 shall survive the discharge of the Bonds and this Indenture.
puaL,30848_11138181468.00009 42 10110/95
ARTICLE IX
MODIFICATION OR AMENDMENT OF THE INDENTURE
Section 9.01. Amendments Permitted. (a) This Indenture and the rights and obligations
of the Authority and of the Owners of the Bonds and of the Trustee may be modified or amended
from time to time and at any time by an indenture or indentures supplemental thereto, which the
Authority and the Trustee may enter into when the written consent of the Owners of a majority in
aggregate principal amount of all Bonds then Outstanding, shall have been filed with the Trustee.
No such modification or amendment shall (1) extend the fixed maturity of any Bonds, or reduce
the amount of principal thereof or premium (if any) thereon, or extend the time of payment, or
change the method of computing the rate of interest thereon, or extend the time of payment of
interest thereon, without the consent of the Owner of each Bond so affected, (2) reduce the
aforesaid percentage of Bonds the consent of the Owners of which is required to affect any such
modification or amendment, or permit the creation of any lien on the Revenues and other assets
pledged under this Indenture prior to or on a parity with the lien created by this Indenture except
as permitted herein, or deprive the Owners of the Bonds of the lien created by this Indenture on
such Revenues and other assets (except as expressly provided in this Indenture), without the
consent of the Owners of all of the Bonds then Outstanding, or (3) modify any of the rights or
obligations of the Trustee or the Authority or the without its respective written consent thereto.
It shall not be necessary for the consent of the Bond Owners to approve the particular form of
any Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance
thereof. Promptly after the execution by the Authority and the Trustee of any Supplemental
Indellture pursuant to this subsection (a), the Trustee shall mail a notice, setting fonh in general
terms the substance of such Supplemental Indenture, to each Rating Agency and the Owners of
the Bonds at the respective addresses shown on the Registration Books. Any failure to give such
notice, or any defect therein, shall not, however, in any way impair or affect the validity of any
such Supplemental Indenture.
(b) This Indenture and the rights and obligations of the Authority, of the Trustee and
the Owners of the Bonds may also be modified or amended from time to time and at any time by
a Supplemental Indenture, which the Authority and the Trustee may enter into without the
consent of any Bond Owners, if the Trustee shall receive an opinion of Bond Counsel to the
effect that the provisions of such Supplemental Indenture shall not materially adversely affect the
interests of the Owners of the Outstanding Bonds, including, without limitation, for anyone or
more of the following purposes:
(1) to add to the covenants and agreements of the Authority in this Indenture
contained other covenants and agreements thereafter to be observed, to pledge or assign
additional security for the Bonds (or any portion thereof), or to surrender any right or
power herein reserved to or conferred upon the Authority;
(2) to make such provisions for the purpose of curing any ambiguity,
inconsistency or omission, or of curing, correcting or supplementing any defective
provision, contained in this Indenture, or in regard to matters or questions arising under
this Indenture, as the Authority may deem necessary or desirable;
PUBL,30848_11138181468.00009 43 10/10/95
- -
- (3) to modify, amend or supplement this Indenture in such manner as to
permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any
similar federal statute then in effect, and to add such other terms conditions and
provisions as may be permitted by said act or similar federal statute; or
(4) to modify, amend or supplement this Indenture in such manner as to cause
interest on the Bonds to remain excludable from gross income under the Code.
(c) The Trustee may in its discretion, but shall not be obligated to, enter into any
such Supplemental Indenture authorized by subsections (a) or (b) of this Section which materially
adversely affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
(d) Prior to the Trustee entering into any Supplemental Indenture hereunder, there
shall be delivered to the Trustee an opinion of Bond Counsel stating, in substance, .that such
Supplemental Indenture has been adopted in compliance with the requirements of this Indenture
and that the adoption of such Supplemental Indenture will not, in and of itself, adversely affect
the exclusion of interest on the Bonds from federal income taxation and from Stale income
taxation.
Any amendment or supplement to the Indenture or Installment Purchase Agreement shall
be subject to the prior written consent of the Bond Insurer. Any rating agency rating the Bonds
must receive notice of each such amendment and a copy thereof at least 15 days in advance of its
execotion or adoption. The Bond Insurer shall be provided with a full tranScript of all -
proceedings relating to the execution of any such supplement or amendment.
Section 9.02. Effect of Suoolemental Indenture. Upon the execution of any
Supplemental Indenture pursuant to this Article, this Indenture shall be deemed to be modified
and amended in accordance therewith, and the respective rights, duties and obligations under this
Indenture of the Authority, the Trustee and all Owners of Bonds Outstanding shall thereafter be
determined, exercised and enforced thereunder subject in all respects to such modification and
amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed
to be part of the terms and conditions of this Indenture for any and all purposes.
Section 9.03. Endorsement of Bonds: PreDaration of New Bonds. Bonds delivered after
the execution of any Supplemental Indenture pursuant to this Article may, and if the Trustee so
determines shall, bear a notation by endorsement or otherwise in form approved by the Authority
and the Trustee as to any modification or amendment provided for in such Supplemental
Indenture, and, in that case, upon demand on the Owner of any Bonds Outstanding at the time of
such execution and presentation of his or her Bonds for the purpose at the Office of the Trustee
or at such additional offices as the Trustee may select and designate for that purpose, a suitable
notation shall be made on such Bonds. If the Supplemental Indenture shall so provide, new
Bonds so modified as to conform, in the opinion of the Authority and the Trustee, to any
modification or amendment contained in such Supplemental Indenture, shall be prepared and
executed by the Authority and authenticated by the Trustee, and upon demand on the Owners of
any Bonds then Outstanding shall be exchanged at the Office of the Trustee, without cost to any
Bond owner, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in
equal aggregate principal amount of the same maturity.
PUBL,30"'_1 I 138181468.00009 44 10110/95
Section 9.04. Amendment of Panicular Bonds. The provisions of this Article shall not
prevent any Bond Owner from accepting any amendment as to the particular Bonds held by him.
Section 9.05. Notice to Ratinl! Al!encies. Any Rating Agency rating the Bonds shall
receive notice of each amendment to the Indenture and a copy thereof at least 15 days in advance
of its execution.
ARTICLE X
DEFEASANCE
Section 10.01. Discharl!e of Indenture. The Bonds may be paid by the Authority in any
of the following ways, provided that the Authority also pays or causes to be paid any other sums
payable hereunder by the Authority.
(a) by paying or causing to be paid the principal of and interest and
redemption premiums (if any) on the Bonds, as and when the same become due and
payable;
(b) by depositing with the Trustee, in trust, at or before maturity, money or
securities in the necessary amount (as provided in Section 10.03) to payor redeem all
Bonds then Outstanding; or
-
(c) by delivering to the Trustee, for cancellation by it, all of the Bonds then
Outstanding.
If the Authority shall also payor cause to be paid all other sums payable hereunder by the
Authority, then and in that case, at the election of the Authority (evidenced by a Certificate of the
Authority, filed with the Trustee, signifying the intention of the Authority to discharge all such
indebtedness and this Indenture), and notwithstanding that any Bonds shall not have been
surrendered for payment, this Indenture and the pledge of Revenues and other assets made under
this Indenture and all covenants, agreements and other obligations of the Authority under this
Indenture shall cease, terminate, become void and be completely discharged and satisfied. In
such event, upon the Request of the Authority, the Trustee shall execute and deliver to the
Authority all such instruments as may be necessary or desirable to evidence such discharge and
satisfaction, and the Trustee shall pay over, transfer, assign or deliver all moneys or securities or
other property held by them pursuant to this Indenture which are not required for the payment or
redemption of Bonds not theretOfore surrendered for such payment or redemption to the
Authority .
Only non-callable Federal Securities shall be used to effect defeasance of the Bonds. In
the event of an advance refunding, the Authority shall cause to be delivered a verification report
of an independent nationally recognized certified public accountant.
Section 10.02. Discharl!e of Liability on Bonds. Upon the deposit with the Trustee, in
trust, at or before maturity, of money or securities in the necessary amount (as provided in
Section 10.03) to payor redeem any Outstanding Bonds (whether upon or prior to the maturity
PUBL,30848_1 I 138181468.00009 45 10/10/95
--
or the redemption date of such Bonds), provided that, if such Outstanding Bonds are to be
redeemed prior to maturity, notice of such redemption shall have been given as provided in
Article IV or provisions satisfactory to the Trustee shall have been made for the giving of such
notice, then all liability of the Authority in respect of such Bonds shall cease, terminate and be
completely discharged. and the Owners thereof shall thereafter be entitled only to payment out of
such money or securities deposited with the Trustee as aforesaid for their payment, subject
however, to the provisions of Section 10.04.
The Authority may at any time surrender to the Trustee for cancellation by it any Bonds
previously issued and delivered, which the Authority may have acquired in any manner
whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid
and retired.
Section 10.03. Deoosit of Money or Securities with Trustee. Whenever in this Indenture
it is provided or permitted that there be deposited with or held in trust by the Trustee money or
securities in the necessary amount to payor redeem any Bonds, the money or securities so to be
deposited or held may include money or securities held by the Trustee in the funds and accounts
established pursuant to this Indenture and shall be:
(a) lawful money of the United States of America in an amount equal to the
principal amount of such Bonds and all unpaid interest thereon to maturity, except that, in
the case of Bonds which are to be redeemed prior to maturity and in respect of which
notice of such redemption shall have been given as provided in Article IV or provisions
. satisfactory to the Trustee shall have been made for the giving of such notice, the llII!ount
to be deposited or held shall be the principal amount of such Bonds and all unpaid interest
and premium, if any, thereon to the redemption date; or
(b) Federal Securities the principal of and interest on which when due will, in
the written opinion of an Accountant filed with the Authority and the Trustee, provide
money sufficient to pay the principal of and all unpaid interest to maturity, or to the
redemption date (with premium, if any), as the case may be, on the Bonds to be paid or
redeemed, as such principal, interest and premium, if any, become due, provided that in
the case of Bonds which are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as provided in Article IV or provision satisfactory to the
Trustee shall have been made for the giving of such notice;
provided, in each case, that (i) the Trustee shall have been irrevocably instructed (by the terms of
this Indenture or by Request of the Authority) to apply such money to the payment of such
principal of, interest and premium, if any, on such Bonds and (ii) the Authority shall have
delivered to the Trustee an opinion of Bond Counsel addressed to the Authority and the Trustee
to the effect that such Bonds have been discharged in accordance with this Indenture (which
opinion may rely upon and assume the accuracy of the Accountant's opinion referred to above).
Section 10.04. Pavment of Bonds After Discharl!e of Indenture. Notwithstanding any
provisions of this Indenture, any moneys held by the Trustee in trust for the payment of the
principal of, or interest on, any Bonds and remaining unclaimed for two (2) years after the
principal of all of the Bonds has become due and payable (whether at maturity or upon call for
redemption or by acceleration as provided in this Indenture), if such moneys were so held at such
PUBL:3OI48_11131 :B2468.00009 46 10/10/95
date, or two (2) years after the date of deposit of such moneys if deposited after said date when
all of the Bonds became due and payable, shall be repaid to the Authority free from the trusts
created by this Indenture upon receipt of an indemnification agreement acceptable to the
Authority and the Trustee indemnifying the Trustee with respect to claims of Owners of Bonds
which have not yet been paid, and all liability of the Trustee with respect to such moneys shall
thereupon cease; provided, however, that before the repayment of such moneys to the Authority
as aforesaid, the Trustee shall at the written direction of the Authority (at the cost of the
Authority) first mail to the Owners of Bonds which have not yet been paid, at the addresses
shown on the Registration Books, a notice, in such form as may be deemed appropriate by the
Trustee with respect to the Bonds so payable and not presented and with respect to the provisions
relating to the repayment to the Authority of the moneys held for the payment thereof.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Liability of Authority Limited to Revenues. NotWithstanding anything in
this Indenture or in the Bonds contained, the Authority shall not be required to advance any
moneys derived from any source other than the Revenues and other assets pledged under this
Indenture for any of the purposes in this Indenture mentioned, whether for the payment of the
principal of or interest on the Bonds or for any other purpose of this Indenture. Nevertheless,
the Authority may, but shall not be required to, advance for any of the purposes hereof any funds
of the Authority which may be made available to it for such purposes. The Bonds are not a ~ebt
of the members of the Authority, the State of California or any of its political subdivisions.
Section 11.02. Successor Is Deemed Included in All References to Predecessor.
Whenever in this Indenture either the Authority or the Trustee is named or referred to, such
reference shall be deemed to include the successors or assigns thereof, and all the covenants and
agreements in this Indenture contained by or on behalf of the Authority or the Trustee shall bind
and inure to the benefit of the respective successors and assigns thereof whether so expressed or
not.
Section 11.03. Limitation of Ril!hts to Parties and Bond Owners. Nothing in this
Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any
person other than the Authority, the Trustee, the Bond Insurer, the City and the Owners of the
Bonds, any legal or equitable right, remedy or claim under or in respect of this Indenture or any
covenant, condition or provision therein or herein contained; and all such covenants, conditions
and provisions are and shall be held to be for the sole and exclusive benefit of the Authority, the
Trustee, the Bond Insurer, the City and the Owners of the Bonds.
The Bond Insurer shall be included as a party in interest under this Section 11.03 and as a
party entitled to (i) notify the Trustee of the occurrence of an event of default and (ii) request the
Trustee to intervene in judicial proceedings that affect the Bonds or the security therefor. The
Trustee shall be required to accept notice of default from the Bond Insurer.
Section 11.04. Waiver of Notice: Reauirement of Mailed Notice. Whenever in this
Indenture the giving of notice by mail or otherwise is required, the giving of such notice may be
PUBL,30848 _111381 81468.00009 47 10/10/95
--
--- waived in writing by the person entitled to receive such notice and in any such case the giving or
receipt of such notice shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver. Whenever in this Indenture any notice shall be required to be given
by mail, such requirement shall be satisfied by the deposit of such notice in the United States
mail, postage prepaid, by first class mail.
Section 11. 05. Destruction of Bonds. Whenever in this Indenture provision is made for
the cancellation by the Trustee and the delivery to the Authority of any Bonds, the Trustee shall
destroy such Bonds as may be allowed by law, and deliver a cenificate of such destruction to the
Authority .
Section 11.06. Severability of Invalid Provisions. If anyone or more of the provisions
contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or
unenforceable in any respect, then such provision or provisions shall be deemed severable from
the remaining provisions contained in this Indenture and such invalidity, illegality or
unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be
construed as if such invalid or illegal or unenforceable provision had never been contained
herein. The Authority hereby declares that it would have entered into this Indenture and each
and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance
of the Bonds pursuant theretO irrespective of the fact that anyone or more Sections, paragraphs,
sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable.
Section 11.07. Notices. Any notice to or demand upon the Authority, the Trustee or the
Fisca1 Agent shall be deemed to have been sufficiently given or served for all purposes by ~ing
sent by telex or by being deposited, first class mail, postage prepaid, in a post office letter box,
addressed, as the case may be, to the Authority, at 13325 Civic Center Drive, Poway, California
92064, Attention: Executive Director (or such other address as may have been filed in writing
by the Authority with the Trustee), to the Trustee at its Office. Notwithstanding the foregoing
provisions of this Section 11.07, the Trustee shall not be deemed to have received, and shall not
be liable for failing to act upon the contents of, any notice unless and until the Trustee actually
receives such notice. The notice addresses for the Bond Insurer and the Fiscal Agent,
respectively, shall be as follows: ,
Attention: Managing Counsel; ,
Attention: Corporate Trust Department.
Section 11.08. Evidence of Ril!hts of Bond Owners. Any request, consent or other
instrument required or permitted by this Indenture to be signed and executed by Bond Owners
may be in any number of concurrent instruments of substantially similar tenor and shall be signed
or executed by such Bond Owners in person or by an agent or agents duly appointed in writing.
Proof of the execution of any such request, consent or other instrument or of a writing appointing
any such agent, or of the holding by any person of Bonds transferable by delivery, shall be
sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and
the Authority if made in the manner provided in this Section.
The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the certificate of any notary public or other officer of
any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that
the person signing such request, consent or other instrument acknowledged to him the execution
PUIL,30848_111381B2468.00009 48 10110/95
~..-
thereof, or by an affidavit of a wimess of such execution duly sworn to before such notary public-
or other officer.
The ownership of Bonds shall be proved by the Registration Books.
Any request, consent, or other instrument or writing of the Owner of any Bond shall bind
every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor
or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the
Authority in accordance therewith or reliance thereon.
Section 11.09. Disqualified Bonds. In determining whether the Owners of the requisite
aggregate principal amount of Bonds have concurred in any demand, request, direction, consent
or waiver under this Indenture, Bonds which are known by the Trustee to be owned or held by or
for the account of the Authority, or by any other obligor on the Bonds, or by any person directly
or indirectly controlling or controlled by, or under direct or indirect common control with, the
Authority or any other obligor on the Bonds, shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination. Bonds so owned which have been
pledged in good faith may be regarded as Outstanding for the purposes of this Section if the
pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vOte such Bonds
and that the pledgee is not a person directly or indirectly controlling or controlled by, or under
direct or indirect common control with, the Authority or any other obligor on the Bonds. In case
of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall
be full protection to the Trustee. Upon request the Authority shall cenify to the Trustee those
Bonds that are disqualified pursuant to this Section 11.09.
-
Section 11.10. Monev Held for Panicular Bonds. The money held by the Trustee for
the payment of the interest on, principal of or premium due on any date on particular Bonds (or
portions of Bonds in the case of registered Bonds redeemed in part only) shall, on and after such
date and pending such payment, be set aside on its books and held in trust by it for the Owners
of the Bonds entitled theretO, subject, however, to the provisions of Section 10.04 hereof but
without any liability for interest thereon.
Section 11.11. Funds and Accounts. Any fund or account required by this Indenture to
be established and maintained by the Trustee may be established and maintained in the accounting
records of the Trustee, either as a fund or an account, and may, for the purposes of such
records, any audits thereof and any reports or statements with respect thereto, be treated either as
a fund or as an account; but all such records with respect to all such funds and accounts shall at
all times be maintained in accordance with industry standards to the extent practicable, and with
due regard for the requirements of Section 6.05 and for the protection of the security of the
Bonds and the rights of every Owner thereof.
Section 11.12. Waiver of Personal Liabilitv. No member, officer, agent or employee of
the Authority or the City shall be individually or personally liable for the payment of the
principal of or premium or interest on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof; but nothing herein contained shall relieve any
such member, officer, agent or employee from the performance of any official duty provided by
law or by this Indenture.
PUBL,30848.11138181468.00009 49 10/10/95
--
._,
Section 11.13. Execution in Several CounterDarts. This Indenture may be executed in
any number of counterparts and each of such counterparts shall for all purposes be deemed to be
an original; and all such counterparts, or as many of them as the Authority, the City and the
Trustee shall preserve undestroyed, shall together constitute but one and the same instrument.
Section 11.14. CUSIP Numbers. Neither the Trustee nor the Authority shall be liable
for any defect or inaccuracy in the CUSIP number that appears on any Bond or in any
redemption notice. The Trustee may, in its discretion, include in any redemption notice a
statement to the effect that the CUSIP numbers on the Bonds have been assigned by an
independent service and are included in such notice solely for the convenience of the Bondholders
and that neither the Authority nor the Trustee shall be liable for any inaccuracies in such
numbers.
Section 11.15. Choice of Law. TInS INDENTURE SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF CALIFORNIA.
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-
PUBL,3Os.48_11138181468.00009 50 10110/95
IN WITNESS WHEREOF, the POWAY PUBLIC FINANCING AUTHORITY has
caused this Indenture to be signed in its name with the manual or facsimile signature of its
President and attested by the manual or facsimile signature of its Secretary, the CITY OF
POWAY and [TRUSTEE TO COME], in token of its acceptance of the trusts created hereunder,
has caused this Indenture to be signed in its corporate name by its officer thereunto duly
authorized, all as of the day and year first above written.
POW A Y PUBLIC FINANCING AUTHORITY
By:
Its: Chairman
ATTEST:
Secretary
[TRUSTEE TO COME], as trustee
-
-
By:
Its:
CITY OF POWAY
By:
Its: Mayor
ATTEST:
City Clerk
PUBd0848_111381B1468.00009 10/10/95
-
State of California )
) ss.
County of San Diego )
On December _, 1995, before me, (........ titk of officer. e.g.. Jt!IIIe Do<. NOlQry Public")
personally appeared (.......(,) of Ii_(,))
a personally known to me -OR-
a proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in hislher/their authorized capacity lies , and that by
hislher/their signature(s) on the instrument the person(s), or the entity upon behalf of which person(s)
acted, executed the instrument.
Wimess my hand and official seal.
(Signalllre of NOlQry)
-.
-
Capacity claimed by signer: (17lis ,eelion i.s OP770NAL.)
a Individual
a Corporate Officer(s):
a Partner(s) :
a General a Limited
a Attorney-in-fact
a Trustee(s)
a Guardian/Conservator
a Other:
Signer is representing: ,....... oJ perlon,,) or _ty'leI))
Attention Notary: Although the information requested below is OPTIONAL, it could prevent
fraudulent attachment of this cenificate to an unauthorized document.
TIllS CERTIF1CATE Title or Type of Document
MUST BE ATIACHED
TO THE DOCUMENI' Number of Pages Date of Document
DESCRIBED AT RIGHT: Signer(s) Other than Named Above
puaL,308ol8_1 1 138181468.00009 10/10/95
EXHIBIT A
FORM OF BOND
No. R- $
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
POWAY PUBLIC FINANCING AurHORITY
REVENUE BONDS, SERIES 1995
(WATER SERVICES CAPITAL IMPROVEMENT PROGRAM)
INTEREST RATE MATURITY DATE DATED DATE CUSIP
December 15, November 1, 1995
REGISTERED OWNER: CEDE & CO. -
PRINCIPAL AMOUNT: DOLLARS
The POWAY PUBLIC FINANCING AUTHORITY, an agency duly organized and
existing under the laws of the State of California (the" Authority"), for value received, hereby
promises to pay to the Registered Owner specified above or registered assigns (the "Registered
Owner"), on the Maturity Date specified above (subject to any right of prior redemption
hereinafter provided for), the Principal Amount specified above, in lawful money of the United
States of America, and to pay interest thereon in like lawful money from the Interest Payment
Date (as hereinafter defmed) next preceding the date of authentication of this Bond (unless (i) this
Bond is authenticated after the flI'st day of the calendar month in which such Interest Payment
Date occurs (the "Record Date") and on or before the following Interest Payment Date, in which
event it shall bear interest from such Interest Payment Date, or (ii) this Bond is authenticated on
or before June 1, 1996, in which event it shall bear interest from the Dated Date identified
above; provided, however, that if as of the date of authentication of this Bond, interest is in
default on this Bond, this Bond shall bear interest from the Interest Payment Date to which
interest has previously been paid or made available for payment on this Bond), at the Interest
Rate per annum specified above, payable semiannually on each June 15 and December 15,
commencing June 15, 1996, calculated on the basis of a 36O-day year composed of twelve 3<H1ay
months. Principal hereof and premium, if any, upon early redemption hereof are payable by
check or draft of the Trustee upon presentation and surrender hereof at maturity or upon prior
redemption at the corporate trust office of [TRUSTEE TO COME], as trustee (the "Trustee"), in
","L,30848 _111381 81468.110ClO9 A-I 10110/95
.- --
- Los Angeles, California, or at such other or additional offices as may be specified in writing by
the Trustee to the Authority (the "Office"). Interest hereon is payable by check or draft of the
Trustee sent by first class mail to the Registered Owner hereof at the Registered Owner's address
as it appears on the registration booles of the Trustee as of the close of business on the Record
Date immediately preceding each Interest Payment Date (except that in the case of a registered
owner of One Million Dollars ($1,000,000) or more in principal amount, such payment may, at
such registered owner's option, be made by wire transfer of inunediately available funds in
accordance with written instructions provided to the Trustee by such registered owner prior to the
Record Date).
This Bond is one of a duly authorized issue of bonds of the Authority designated as the
"Poway Public Financing Authority Revenue Bonds, Series 1995 (Water Services Capital
Improvement Program)" (the "Bonds"), of an aggregate principal amount of
Dollars ($ ), all of like tenor and date (except for such
variation, if any, as may be required to designate varying numbers, maturities or interest rates)
and all issued pursuant to the provisions of the laws of the State of California and pursuant to the
Indenture of Trust, dated as of November 1, 1995, by and among the Authority, the City of
Poway (the "City") and the Trustee (the "Indenture"), and the Resolution authorizing the issuance
of the Bonds. Reference is hereby made to the Indenture (copies of which are on file at the
office of the Authority) and all supplements theretO for a description of the terms on which the
Bonds are issued, the provisions with regard to the nature and extent of the Revenues, and the
rights thereunder of the owners of the Bonds and the rights, duties and immunities of the Trustee
and the rights and obligations of the Authority hereunder, to all of the provisions of which the
Registered Owner of this Bond, by acceptance hereof, assents and agrees. -
The Bonds have been issued in fully registered form without coupons in denominations of
$5,000 or any integral multiple thereof.
The Bonds have been issued by the Authority to finance the acquisition, construction and
improvement of certain water reclamation facilities of the City, as more fully described in the
Indenture.
This Bond and the interest and premium, if any, hereon and all other Bonds and the
interest and premium, if any, thereon (to the extent set forth in the Indenture) are special
obligations of the Authority, and are payable from, and are secured by a pledge and a first and
exclusive lien on the Revenues (as defined in the Indenture), including amounts paid by the City
in accordance with the Installment Purchase Agreement, dated as of November 1, 1995, by and
between the Authority and the City relating to the Bonds (the "Installment Purchase Agreement"),
certain investment earnings described more fully in the Indenture and certain amounts on deposit
in funds and accounts created under the Indenture. As and to the extent set forth in the
Indenture, all of the Revenues and any other amounts (including proceeds of the sale of the
Bonds) held in any fund or account established pursuant to the Indenture (except the Rebate
Fund) are exclusively and irrevocably pledged in accordance with the terms and provisions of the
Indenture, to secure the payment of the principal of and interest and premium, if any, on the
Bonds.
The City may at any time execute any Contracts or issue any Bonds (as such terms are
defined in the Installment Purchase Agreement), as the case may be, the payments or installment
PUBL,30841_11138181468.()OO09 A-2 10110/95
payments under which are payable on a parity with Installment Payments, all in accordance with
the Installment Purchase Agreement.
The Indenture and the rights and obligations of the Authority and the owners of the Bonds
and the Trustee may be modified or amended at any time with the written consent of the
registered owners of a majority in aggregate principal amount of all Bonds then Outstanding in
the manner, to the extent and upon the terms provided in the Indenture, but no such modification
or amendment shall (i) extend the fixed maturity of any Bonds, or reduce the amount of principal
thereof or premium, if any, thereon, or extend the time of payment, or change the method of
computing the rate of interest thereon, or extend the time of payment of interest thereon, without
the consent of the registered owner of each Bond so affected, or (ii) reduce the aforesaid
percentage of Bonds the consent of the registered owners of which is required to affect any such
modification or amendment, or permit the creation of any lien on the Revenues and other assets
pledged under the Indenture prior to or on a parity with the lien created by the Indenture except
as permitted in the Indenture or deprive the Owners of the Bonds of the lien created by the
Indenture on such Revenues and other assets (except as expressly provided in the Indenture),
without the consent of the registered owners of all of the Bonds then Outstanding, or (iii) modify
any of the rights or obligations of the Trustee or the Authority without its respective written
consent thereto.
The Indenture and the rights and obligations of the Authority, of the Trustee and the
Owners of the Bonds may also be modified or amended for cenain purposes described more fully
in the Indenture at any time .in the manner, to the extent and upon the terms provided in the
Indenture, without the consent of any registered owners, if the Trustee shall receive an opin~on of
Bond Counsel (as defined in the Indenture) to the effect that the provisions of such supplemental
indenture will not materially adversely affect the interests of the registered owners of the
outstanding Bonds.
Bonds maturing on or after December 15, 2005, are subject to redemption prior to
maturity at the election of the Authority, in such maturities as are designated by the Authority at
the direction of the City, and by lot within a maturity, as a whole or in part, on any date on or
after December 15, 2004, at the following redemption prices (expressed as a percentage of the
principal amount of Bonds called for redemption), plus accrued interest to the date fixed for
redemption:
Redemotion Period (Dales Inclusive) Redemotion Price
December 15, 2004 through December 14, 2005 102%
December 15,2005 through December 14,2006 101%
December 15,2006 and thereafter 100%
The Bonds maturing on December 15, , are also subject to mandatory redemption or
- .
purchase in lieu thereof, in part by lot, from sinking fund payments made by the Authority on
December 15, _ and on December 15 in each year thereafter, at a redemption price equal to
the principal amount thereof to be redeemed together with interest accrued thereon to the date
fixed for redemption, without premium, as set fonh in the Indenture.
PUBd0848_J 1138181468.00009 A-3 10/10/95
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The Bonds maturing on December 15, _, are also subject to mandatory redemption or
purchase in lieu thereof, in part by lot, from sinking fund payments made by the Authority on
December 15, _ and on December 15 in each year thereafter, at a redemption price equal to
the principal amount thereof to be redeemed together with interest accrued thereon to the date
fixed for redemption, without premium, as set forth in the Indenture.
The Bonds are also subject to extraordinary redemption, as a whole or in part on any date
prior to maturity, upon notice as provided in the Indenture, among maturities as designated by
the Authority at the direction of the City and by lot within a maturity from prepaid Installment
Payments made by the City from net proceeds of insurance or condemnation, upon the terms and
conditions of, and as provided for in, the Installment Purchase Agreement and the Indenture, at a
redemption price equal to the principal amount thereof, without premium, together with accrued
interest to the redemption date.
As provided in the Indenture, notice of redemption shall be mailed by the Trustee by first
class mail not less than thirty (30) nor more than sixty (60) days prior to the redemption date to
the respective registered owners of any Bonds designated for redemption at their addresses
appearing on the registration books of the Trustee, but neither failure to receive such notice nor
any defect in the notice so mailed shall affect the validity of the proceedings for redemption or
the cessation of accrual of interest thereon from and after the redemption date.
If this Bond is called for redemption and payment is duly provided therefor as specified in
the Indenture, interest shall cease to accrue hereon from and after the date fIXed for redemption.
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If an Event of Default, as defined in the Indenture, shall occur, the principal of all Bonds
may be declared due and payable upon the conditions, in the manner and with the effect provided
in the Indenture, but such declaration and its consequences may be rescinded and annulled as
further provided in the Indenture.
This Bond is transferable by the Registered Owner hereof, in person or by his or her duly
authorized attorney, at the Office of the Trustee but only in the manner, subject to the limitations
and upon payment of the taxes and charges provided in the Indenture and upon surrender and
cancellation of this Bond. Upon registration of such transfer, a new Bond or Bonds, of
authorized denomination or denominations, for a like aggregate principal amount and of like
maturity will be issued to the transferee in exchange therefor.
Bonds may be exchanged at said Office of the Trustee for a like aggregate principal
amount of Bonds of other authorized denominations and of like maturity, but only in the manner,
subject to the limitations and upon payment of the taxes and charges provided in the Indenture.
The Trustee shall not be required to register the transfer of 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.
The Authority and the Trustee may treat the Registered Owner hereof as the absolute
owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any
- notice to the contrary.
PUBL,30ll4l_1I 138 I 81468.()OOO9 A-4 10110/95
This Bond is not a debt of the members of the Authority, the State of California, or any
of its political subdivisions, and neither the members of the Authority or said State, nor any of its
political subdivisions, is liable hereon, nor in any event shall this Bond be payable out of any
funds or propenies of the Authority other than the Revenues (as such term is defined in the
Indenture) and other amounts pledged therefor under the Indenture. The Bonds do not constitute
an indebtedness in contravention of any constitutional or statutory debt limitation or restriction.
It is hereby cenified that all of the things, conditions and acts required to exist, to have
happened or to have been performed precedent to and in the issuance of this Bond do exist, have
happened or have been performed in due and regular time, form and manner as required by the
Resolution described below, the Indenture and the laws of the State of California, and that the
amount of this Bond, together with all other indebtedness of the Authority, does not exceed any
limit prescribed by Resolution No. _ adopted by the Board of Directors of the Authority on
, 1995 (the "Resolution"), or any laws of the State of California, and is not in
excess of the amount of Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture or become valid or
obligatory for any purpose until the Trustee's Cenificate of Authentication hereon endorsed shall
have been signed by the Trustee.
IN WITNESS WHEREOF, the Poway Public Financing Authority has caused this Bond
to be executed in its name and on its behalf with the facsimile signature of its Chairman and
attested to by the facsimile signature of its Secretary, all as of this day of ,
-.
1995: -
POW A Y PUBUC FINANCING AUTHORITY
By:
Its: Chairman
ATTEST:
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture.
Dated: ,1995 [TRUSTEE TO COME], as Trustee
By:
Authorized Signatory
PUBL,30848.1I 138 I 81468.l10009 A-5 10110/95
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LEGAL OPINION
I hereby cenify that the foregoing is a correct copy of the signed legal opinion of
Stradling, Yocca, Carlson & Rauth, a Professional Corporation, dated as of the date of delivery
of and payment for this Bond.
Secretary of the Poway Public
Financing Authority
STATEMENT OF INSURANCE
-."
-
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PUBL,3OM8_11138181468.00009 A-6 10/10/95
ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer unto
(typewrite name, address and federal tax identification number)
the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s)
attorney, to transfer the same on
the books of the Trustee with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible guarantor institution.
Note: The signature(s) on this assignment must correspond with the name(s) as written on the
face of the within Bond in every particular without alteration or enlargement or any
change whatsoever.
-
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PUBL,30848_1 I 138181468.00009 A-7 10/10/95
- EXHIBIT B
LEGAL DESCRIPI'ION
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-
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PUBL,30U8_11138181468.00009 EXHIBIT B-1 10110/95
.-
PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER -,1995
NEW ISSUE BOOK-ENTRY ONLY RATINGS:
(See "RATINGS" herein.)
In the opinion of Stradling, Yocca, Carlson & Rauth, Bond Counsel, based upon an
analysis of existing laws, regulations, rulings and court decisions and assuming, among other
matters, compliance with certain covenants, interest on the Bonds is excluded from gross
income for federal income tax purposes and is exempt from State of California personal income
taxes. In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference
item for purposes of the federal individual or corporate alternative minimum taxes, although
Bond Counsel observes that such interest is included in adjusted current earnings in calculating
corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding
any other tax consequences relating to the ownership or disposition of, or the accrual or receipt
of interest on, the Bonds. See "TAX EXEMPTION" herein.
S "
POWAY PUBLIC FINANCING AUTHORITY
REVENUE BONDS
SERIES 1995
(WATER SERVICES CAPITAL IMPROVEMENT PROGRAM)
Dated: November 1, 1995 Due: December 15, As Shown Belo~
The Bonds are being issued pursuant to an Indenture of Trust between the Poway
Public Financing Authority (the "Issuer"), the City of poway (the .City") and
, California (the "Trustee"), and will be secured as
described herein. The Bonds are being issued (i) to provide funds to construct certain water
facility improvements (the "Project") for the City, (ii) to fund in whole or in part, a Reserve Fund
for the Bonds (or, at the option of the District, to purChase a reserve fund surety bond or
insurance policy as described herein), and (iii) to pay certain costs of issuing the Bonds. (See
"THE PROJECT' and "ESTIMATED SOURCES AND USES OF THE BONDS. herein.)
The Bonds will be issued in book-entry form, initially registered in the name of Cede &
Co., New York, New York, as nominee of The Depository Trust Company ("DTC"), New York,
New York. Interest on the Bonds will be payable on June 15 and December 15 of each year,
commencing June 15, 1996. Purchasers will not receive certificates representing their interest
in the Bonds. Individual purchases will be in principal amounts of $5,000 or in any integral
multiples of $5,000. Payments of principal and interest will be paid by the Trustee to DTC for
subsequent disbursement to DTC Participants who will remit such payments to the beneficial
owners of the Bonds.
The Bonds are payable from Revenues of the Issuer, consisting principally of
Installment Payments by the City pursuant to an Installment Purchase Agreement (the
"Installment Purchase Agreement") between the City and the Issuer. The Issuer has assigned,
. Preliminary, subject to change.
LA\952490097 DCT 17 1995 ITEM 7 ..
ATTACHMENT E I
-
among other things, its right to receive Installment Payments to the Trustee. The Installment
Payments are a special limited obligation of the City, payable from and secured by a pledge of
and first lien on (i) all Net Revenues, subject to the parity lien, if any, of any additional
obligations as provided for in the Installment Purchase Agreement, and (ii) all moneys in the
funds and accounts established pursuant to the Indenture.
The Bonds are subject to redemption prior to maturity as set forth herein. (See
"THE BONDS -- Redemption of the Bonds" herein.)
THE BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY
FROM AND SECURED SOLELY BY THE REVENUES PLEDGED THEREFOR IN THE
INDENTURE. THE BONDS ARE NOT A DEBT OF THE CITY, THE STATE OF CALIFORNIA
OR ANY OF ITS POLITICAL SUBDIVISIONS AND NEITHER THE FAITH AND CREDIT OF
THE CITY, THE STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS ARE PLEDGED TO
THE PAYMENT OF THE BONDS, AND NEITHER THE CITY, THE STATE NOR ANY OF ITS
POLITICAL SUBDIVISIONS IS LIABLE THEREFOR, NOR IN ANY EVENT SHALL THE
BONDS OR ANY INTEREST OR REDEMPTION PREMIUM THEREON BE PAYABLE OUT OF
ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE ISSUER AS SET FORTH IN
THE INDENTURE. NEITHER THE BONDS NOR THE OBLIGATION TO MAKE
INSTALLMENT PAYMENTS CONSTITUTES AN INDEBTEDNESS OF THE CITY, THE STATE
OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.
MATURITY SCHEDULE"
S_ Serial Bonds
Maturity Principal Interest Price or Maturity Principal Interest Price or
lDec 15) Amount ~ ~ (Dee 15) Amount ~ ~
$_ _% Term Bonds Due December 15, _, Price or Yield:_%
(Plus accrued interest from November 1, 1995)
The Bonds are offered when, as and if sold, executed and delivered, subject to
the approval as to their legality by Stradling, Yocca, Carlson & Rauth, Newport Beach,
California, Bond Counsel. Certain legal matters will be passed upon for the Underwriter by its
counsel, Nossaman, Guthner, Knox & Elliott, Los Angeles, California, and for the City by the
City Attorney. It is anticipated that the Bonds in book-entry form, will be available for delivery to
DTC in New York, New York, on or about November _: 1995.
Date:
GRIGSBY BRAND FORD & CO., INC.
. Preliminary, subject to change.
LA\952490097
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POWAY PUBLIC FINANCING AUTHORITY
Don Higginson, Chairman
Susan Callery, Vice Chairman
Michael P. Cafagna, Director
Robert C. Emery, D/rector
Betty Rexford, Director
CITY OF POWAY, CALIFORNIA
City Council
Don Higginson, Mayor
Susan Callery, Deputy Mayor
Michael P. Cafagna, Councilmember
Robert C. Emery, Counci/member
Betty Rexford, Councilmember
City/Authority Staff
James L. Bowersox, Executive Director/City Manager
John D. Fitch, Assistant Executive Director/Assistant City Manager
Stephen M. Eckis, City Attorney - -
Ma~orie K. Wahlsten, Secretary/City Clerk
Peggy A. Stewart, Director of Administrative SeNices
James R. Williams, Director of Public Services
SPECIAL SERVICES
Stradling, Yocca, Carlson & Rauth
Los Angeles, California
Bond Counsel
Los Angeles, California
Trustee
Public Financial Management, Inc.
Newport Beach, California
Financial Advisor
LA\952490097
TABLE OF CONTENTS
~
INTRODUCTION ......................................................... ........ .......... .............................................1
THE PROJECT........................................................................................................................ ...2
THE BONDS......................................................................................................................... ...... 2
Description of the Bonds ...... ... ................ ........................ ........ ........ .............................. .......... 2
Redemption of the Bonds.. ............................................................. ...... ................ ........... ........3
Exchange of Bonds................................................................................................................. 4
Issuance of Additional Bonds.................................................................................................. 4
Book-Entry Only System .......... ........ ................ ...... ................ ........ ........... ................ ........ ...... 6
ESTIMATED SOURCES AND USES OF FUNDS....................................................................... 8
DEBT SERViCE......................................................... ................................................................ 9
SECURITY FOR THE BONDS ...................................................................................................9
General................................................................................................................................... 9
I nstallment Payments............................................................................................................ 11
Rate Covenant...................................... ......... ....................................... ................................ 12
Reserve Fund........................................................................................................................ 12
Application of Revenues ............................ ....................... ........... ......................... .......... ....... 13
Covenant to Provide Ongoing Disclosure .............................................................................. 13
Additional Covenants............................................................................................................. 14
THE CiTY......................... ~....................................................................................................... 17
History and Location ..... ...... ......................................... ........... ......................................... ...... 17
City Organization............................................................................................................. .-.~... 17
Members..................................... ........................... ............................................................... 17
Population........................................... .................................................................................. 18
Housing and Income.............................................................................................................. 18
Climate........................................................................................................................ .......... 18
Transportation....................................................................................................................... 18
Services and Facilities........................................................................................................... 19
Investments in County Investment Pool..................................................................................19
THE WATER SYSTEM ........... ............................................ ............. ..... ...... ........................ ...... 20
Water System........................................................................................................................ 20
Service Area.......................................................................................................................... 21
Water Quality Compliance ............................................ ................ ........ ............................. .... 21
Water System Rates and Charges ........................................................................................21
Collection Procedure............................................................................................................. 25
Future Water System Improvements..................................................................................... 26
Outstanding Water System Indebtedness .............................................. ............................... 26
City Water Rights...................................... ........ .................................................................... 26
Current Water Supply Conditions .. ......................................... ................... ............................ 27
Water Demand.......................................... ............................................................................ 28
Service Connections.............................................................................................................. 29
Largest Customers................................................................................................................ 30
Projected Water Deliveries.... ........ ...... ........ ............................ ................ ................ ..............31
Historic Water Sale Revenues ............. ...... .............................. ..... .................. ....................... 31
Projected Water Sales Revenues.......................................................................................... 32
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LA\952490097
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- Historic Operating Results and Debt Service Coverage......................................................... 32
Projected Operating Results and Debt Service Coverage .....................................................34
RISK FACTORS .......................................................................................................................35
Water System Demand and Growth ...................................................................................... 35
Water System Expenses ....................................................................................................... 35
Constitutional Limit on Fees and Charges ............................................................................. 35
Limited Recourse on Default .................................................................................................35
Limitations on Remedies Available ........ ................................................................................35
No Obligation to Tax.............................................................................................................. 36
Constitutional Limitations on Appropriations and Fees .......................................................... 36
THE ISSUER............................................................................................................................ 36
TAX EXEMPTION.. .............. ................ .................... ................................................. ............. ...37
NO LITIGATION .................... ............................................................................... ................. ...38
RATING......................................................................... ........................................................... 38
FINANCIAL ADVISOR .............. ................................................................................................38
PROFESSIONAL FEES............................................................................................................ 38
APPROVAL OF LEGALITY ......................................................................................................39
UNDERWRITING .................... ........ .........................................................................................39
ADDITIONAL INFORMATION ....................... ........................................................................... 40
APPENDIX A - SUMMARY OF CERTAIN DEFINED TERMS AND PRINCIPAL LEGAL
DOCUMENTS
APPENDIX B - COMBINED FINANCIAL STATEMENTS OF THE CITY OF POWAY FOR THE
FISCAL YEAR ENDING OCTOBER 30,1994 - -
APPENDIX C - FORM OF FINAL OPINION OF BOND COUNSEL
APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE
-ii-
LA\952490097
No dealer, broker, salesperson or other person has been authorized by the Issuer or the
City to give any information or to make any representations other than those contained herein
and, if given or made, such other information or representations other than those contained
herein and, if given or made, such other information or representations must not be relied upon
as having been authorized by the Issuer or the City.
The Official Statement is not to be construed as a contract with the purchasers of the
Bonds. Statements contained in this Official Statement which involve estimates, forecasts or
matters of opinion, whether or not expressly so described herein, are intended solely as such
and are not to be construed as a representation of facts.
The information set forth in this Official Statement has been obtained from official
sources which are believed to be reliable, but it is not guaranteed as to accuracy or
completeness, and is not to be construed as a representation by the Issuer or the City. The
information and expressions of opinion herein are subject to change without notice, and neither
the delivery of this Official Statement nor any sale made hereunder shall under any
circumstances create any implication that there has been no change in the affairs of the Issuer
or the City since the date hereof.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF
THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
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The Issuer and the City have certified that this Preliminary Official Statement has been
"deemed final" as of its date, except for the omission of certain final pricing and related
information, as required by Rule 15c2-12 of the Securities and Exchange Commission.
. Preliminary, subject to change.
LA\952490097
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OFFICIAL STATEMENT
$ .
POWAY PUBLIC FINANCING AUTHORITY
REVENUE BONDS
SERIES 1995
(WATER SERVICES CAPITAL IMPROVEMENT PROGRAM)
INTRODUCTION
The purpose of this Official Statement of the Poway Public Financing Authority (the
"Issuer") is to furnish information regarding the issuance and sale of $ principal
amount of Poway Public Financing Authority Revenue Bonds, Series 1995 (Water Services
Capital Improvement Program) (the "Bonds") pursuant to the provisions of an Indenture of
Trust, dated as of November 1, 1995 (the "Indenture") between the Issuer, the City of poway
(the "City") and (the "Trustee"). The Bonds will be issued pursuant
to the Marks-Roos Local Bond Pooling Act of 1985 (Article 4, Chapter 5, Division 7, Title 1 of
the California Government Code) (the "Bond Law").
The Bonds are being issued (i) to provide funds to finance the acquisition and
construction of certain water system improvements (the "Project") for the City, (ii) to fund, in
whole or in part, a Reserve Fund for the Bonds, and (iii) to pay certain costs of issuance of the
Bonds. See ''THE PROJECT' and "ESTIMATED SOURCES AND USES OF FUNDS" herein.
See "THE WATER SYSTEM" herein for a description of the City's water facilities.
The Bonds are payable from Revenues of the Issuer, consisting principally of
Installment Payments by the City pursuant to an Installment Purchase Agreement, dated as of
November 1, 1995 (the "Installment Purchase Agreement") between the City and the Issuer.
The Issuer has assigned to the Trustee, pursuant to an Assignment Agreement dated as of
November 1,1995 (the "Assignment Agreement"), among other things, its right to receive
Installment Payments. The Installment Payments are a special limited obligation of the City,
payable from and secured by a pledge of and first lien on (i) all Net Revenues, subject to the
parity lien, if any, of any additional obligations as provided for in the Installment Purchase
Agreement, and (ii) all moneys in the funds and accounts established pursuant to the Indenture.
See "SECURITY FOR THE BONDS" herein. The Installment Payments are calculated to be an
amount sufficient to permit the Issuer to pay all scheduled debt service on the Bonds when due.
See "SUMMARY OF CERTAIN PROVISIONS OF THE INSTALLMENT PURCHASE
AGREEMENT' herein.
THE BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY
FROM AND SECURED SOLELY BY THE REVENUES PLEDGED THEREFOR IN THE
INDENTURE. THE BONDS ARE NOT A DEBT OF THE CITY, THE STATE OF CALIFORNIA
OR ANY OF ITS POLITICAL SUBDIVISIONS AND NEITHER THE FAITH AND CREDIT OF
THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS ARE PLEDGED TO THE
PAYMENT OF PRINCIPAL OR INTEREST ON THE BONDS AND NEITHER THE CITY, THE
STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS IS LIABLE THEREFOR, NOR IN ANY
EVENT SHALL THE BONDS OR ANY INTEREST OR REDEMPTION PREMIUM THEREON
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LA\952490097
BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE
ISSUER AS SET FORTH IN THE INDENTURE. NEITHER THE BONDS NOR THE
OBLIGATION TO MAKE INSTALLMENT PAYMENTS CONSTITUTES AN INDEBTEDNESS
OF THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE
MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR
RESTRICTION.
Definitions of certain capitalized terms herein are contained in APPENDIX A hereto, and
are incorporated herein by reference. Definitions of certain terms used in this Official
Statement, and the summaries of and references contained herein to the Indenture, the Bonds,
the Installment Purchase Agreement, the Assignment Agreement, statutes and other
documents do not purport to be comprehensive or definitive and are qualified by reference to
each such document, instrument or statute. Additional copies of this Official Statement and
copies of the Indenture and the Installment Purchase Agreement may be obtained during the
initial offering period from the Financial Advisor. After delivery of the Bonds, copies of these
documents may be obtained from the Trustee or the City.
THE PROJECT
The Project involves improvements to the Water Treatment Plant of the City, originally
completed in 1971. Components of the Project include: (i) replacing existing filters with new
deep-bed filters; (i1) rehabilitating existing filters and washwater system and replacing valves,
controllers and surface wash systems; (Iii) installing a new chlorinator, emergency chlorine
scrubber, new chemical storage tanks and pipelines; (iv) improving existing sedimentation .
base and sledge removal systems; (v) improving stand-by power capacitY; (vi) replacing __
telemetry systems and controllers for the plant and distribution systems; (vii) improving the
existing plant pressure reducing station; and (viii) replacing the clealWell floating cover. The
total cost of the Project is estimated to be $8,700,000, of which $2,915,000 will be paid from
the proceeds of the Bonds, and the remaining portion paid from contributions made from the
Redevelopment Agency and replacement fund reserves. The City awarded contracts for the
Project on April 19, 1995. Construction of the Project commenced on May 15,1995, with
completion expected by November 1996.
THE BONDS
Description of the Bonds
The Bonds will be issued in an aggregate principal amount of $ . The Bonds
will be issued as fully registered bonds in the denomination of $5,000 (an "Authorized
Denomination"), or any integral multiple of $5,000. The Bonds will be dated November 1, 1995.
The Bonds will bear or accrue interest at the rates per annum and will mature, subject to the
redemption proviSions set forth below, on the dates and in the principal amounts, all as set forth
on the cover page hereof.
Interest on the Bonds is payable semiannually on June 15 and December 15 of each
year (commencing June 15, 1996) (each, an "Interest Payment Date") to the person whose
name appears on the Bond registration books of the Trustee as the registered owner thereof on
the Record Date. Such interest will be paid by check mailed by the Trustee on such Interest
Payment Date, by first class mail, to such registered owner at the address which appears on
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LA\952490097
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- such books; provided, that upon the written request of an Owner of $1,000,000 or more in
aggregate principal amount of the Bonds received by the Trustee prior to the applicable Record
Date, interest shall be paid by wire transfer in immediately available funds. Interest on the
Bonds shall be payable in lawful money of the United States of America and shall be calculated
on the basis of a 360-day year consisting of twelve 30-day months.
Principal of and redemption premium, if any, on the Bonds will be payable at the
Corporate Trust Office of the Trustee in Los Angeles, California. Principal of, redemption
premium, if any, and interest on the Bonds shall be paid in lawful money of the United States of
America.
Redemption of the Bonds
Cotional Redemotion
The Bonds maturing on or after December 15, shall be subject to optional
redemption prior to maturity, in whole or in part on any Interest Payment Date on or after
December 15, , at the option of the Issuer in the event the City elects to exercise its
option to prepay Installment Payments, at the following redemption prices (expressed as
percentages of the principal of Bonds called for redemption) plus interest due with respect
thereto to the redemption date:
Redemption Redemption
Dates Prices
December 15, _ and June 15, _ 102%
--
December 15, _ and June 15, _ 101
December 15, _ and thereafter 100
Mandatory SinkinQ Fund Redemotion
The Term Bonds maturing on December 15, _ shall be subject to mandatory
redemption, in part, without premium, in an amount equal to the principal amount, together with
accrued interest thereon to the date fixed for redemption, on the dates and in the amounts as
follows:
Redemption Date Redemption
December 15 Amount
Extraordinarv Redemotion
The Bonds are subject to extraordinary redemption on any Interest Payment Date (but
not in a total redemption amount of less than $20,000 in principal amount at anyone time), as a
whole or in part in integral multiples of $5,000, from funds paid to the Issuer by the City due to a
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LA\952490097
casualty loss or governmental taking of the Water System or portions thereof by eminent
domain proceedings, under the circumstances and upon the conditions and terms prescribed in
the Installment Purchase Agreement, in inverse order of maturities and by lot within a maturity,
at a redemption price equal to the sum of the principal amount to be redeemed plus accrued
interest accrued to the date fixed for redemption of the Bonds, without premium.
General Redemotion Provisions
Notice of redemption is to be mailed by first class mail by the Trustee, not less than
thirty (30) nor more than sixty (60) days prior to the redemption date to (i) the respective owners
of Bonds designated for redemption at their addresses appearing on the Bond registration
books of the Trustee. (ii) the Information Services. and (iii) the Securities Depositories. Each
notice of redemption will state the date of such notice, the redemption price, if any, the name
and appropriate address of the Trustee, the CUSIP number (if any) of the maturity or maturities.
and. if less than all of any such maturity is to be redeemed, the distinctive certificate number of
the Bonds of such maturity to be redeemed and. in the case of Bonds to be redeemed in part
only. the respective portions of the principal amount thereof to be redeemed. Each such notice
shall also state that on said date there will become due and payable on each of said Bonds
thereof and in the case of a Bond to be redeemed in part only, the specified portion of the
principal amount thereof to be redeemed, together with interest accrued thereon to the
redemption date. and that from and after such redemption date interest thereon shall cease to
accrue, and shall require that such Bonds be then surrendered at the address of the Trustee
specified in the redemption notice. Failure by the Trustee to give notice pursuant to the
Indenture to anyone or more of the Information Services or the Securities Depositories, or the
insufficiency of any such notice. shall not affect the sufficiency of the proceedings for
redemption. Failure by the Trustee to mail notice of redemption pursuant to the Indenture-to
anyone or more of the Owners of any Bonds designated for redemption shall not affect the
sufficiency of the proceedings for redemption with respect to the Owners to whom such notice
was mailed.
All Bonds redeemed pursuant to the provisions of the Indenture shall be canceled by the
Trustee and shall be destroyed and shall not be reissued.
Exchange of Bonds
Bonds may be exchanged at the Corporate Trust Office of the Trustee for a like
aggregate principal amount of Bonds of other Authorized Denominations of the same maturity.
The Trustee shall require the payment by the Owner requesting such exchange of any tax or
other governmental charge required to be paid with respect to such exchange. The Trustee
shall not be required to register the transfer or exchange of any Bond (i) during the period
commencing on the day five (5) Business Days before the date on which Bonds are to be
selected for redemption and ending on such date of selection, or (ii) which has been selected
for redemption in whole or in part.
Issuance of Additional Bonds
The City has covenanted in the Installment Purchase Agreement not to issue or incur
evidences of indebtedness or other obligations (other than Operation and Maintenance Costs)
having any priority in payment over the Installment Payments.
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LA\952490097
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The City may at any time issue any revenue bonds ("Revenue Bonds') or execute any
Contracts under applicable law which are payable from Net Revenues on a parity with the
payment by the City of the Installment Payments; provided that such Revenue Bonds or
Contracts are incurred or issued to prepay the Installment Payments in whole or in part, but
only in part if total Debt Service is lower, or that the Net Revenues for the Fiscal Year or any
consecutive 12-month period in the 18 months next preceding the date of the adoption by the
City Council of the City of the resolution authorizing the issuance of such Revenue Bonds or the
execution of such Contract, as the case may be, as evidenced by a calculation prepared by the
City; plus:
(i) an allowance for Net Revenues from any additions to or improvements or
extensions of the Water System to be constructed or acquired with the proceeds of such
additional Reserve Bonds or Contracts, and also for Net Revenues from any such
additions, improvements or extensions which have been constructed or acquired from
moneys from any source by which, during all or any part of such Fiscal Year of 12-
month period, were not in service, all in any amount equal to the estimated additional
annual Net Revenues to be derived from such additions, improvements and extensions
during the first full Fiscal Year following the completion thereof, as shown by a certificate
of the City; and
(ii) an allowance for Net Revenues that would have been derived from any
increase in the rates and charges fixed and prescribed for Water Service which became
effective prior to the adoption of such resolution or the execution of such Contract, as
the case may be, but which during all or any part of said Fiscal Year or 12-month period,
was not in effect, in any amount equal to the estimated additional Net Revenues that
would have been derived from such increase in rates and charges if it had been in effect
prior to that beginning of said Fiscal Year or 12-month period, as shown by the
certificate of the City;
shall have produced an amount equal to at least 110% of the Debt Service on all Bonds,
Revenue Bonds and Contracts outstanding after the issuance of such Revenue Bonds or the
execution of such Contract, as the case may be.
Furthermore, in order to issue such Revenue Bonds or enter into such Contracts the
City may not be in default with respect to its obligations under the Installment Purchase
Agreement and must provide for the funding of a reserve account in an amount equal to the
lesser of (i) Maximum Debt Service with respect to such Revenue Bonds or Contracts, or
(ii) the maximum amount permitted by the then applicable federal tax law.
A reserve account shall be funded for such Revenue Bonds or Contracts with cash,
Permitted Investments or a credit facility or surety bond which meets or exceeds the criteria
set forth in the Indenture with respect to a Reserve Requirement reserve fund investment,
which reserve account shall be equal to the lesser of (a) the maximum annual debt service of
such Revenue Bonds or Contracts and (b) the maximum amount permitted by then applicable
federal tax law;
Notwithstanding the foregoing, Revenue Bonds or Contracts may be issued or incurred
to refund outstanding Revenue Bonds or Contracts if, after giving effect to the application of
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the proceeds thereof, total Debt Service will not be increased in any Fiscal Year in which
Revenue Bonds or Contracts (outstanding on the date or incurrence of such refunding
Revenue Bonds or Contracts, but excluding such refunding Bonds or Contracts) not being
refunded are outstanding.
Notwithstanding the foregoing, nothing herein shall be construed as prohibiting the
issuance by the Authority of subordinated debt secured by Net Revenues.
Book-Entry Only System
General. The Depository Trust Company, New York, New York ("DTC") will act as
securities depository for the Bonds. The Bonds will be issued as fully-registered certificates
registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered Bond
will be issued for each maturity of the Bonds, each in the aggregate principal amount of such
maturity, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A
of the Securities Exchange Act of 1934. DTC holds securities that its participants (the
"Participants") deposit with DTC. DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby eliminating the
need for physical movement of securities certificates. Direct Participants include securities
brokers and dealers. banks, trust companies, clearing corporations. and certain other ~
organizations. DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc.. the American Stock Exchange, Inc. and the National Association of Securities
Dealers. Inc. Access to the DTC system is also available to others such as securities brokers
and dealers. banks. and trust companies that clear through or maintain a custodial relationship
with a Direct Participant. either directly or indirectly (the "Indirect Participants"). The Rules
applicable to DTC and its Participants are on file with the Securities and Exchange
Commission.
Purchases of the Bonds under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest
of each actual purchaser of each Bond (the "Beneficial Owner") is in turn recorded on the Direct
and Indirect Participants' records. Beneficial Owners will not receive written confirmation from
DTC of their purchase. but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their holdings, from the
Direct or Indirect Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interest in the Bonds are to be accomplished by entries made on the
books of Participants acting on behalf of the Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in the Bonds, except in the event that
use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Bonds with
DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership.
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LA\952490097
DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only
the identity of the Direct Participants to whose accounts such securities are credited, which may
or may not be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the Bonds are being
redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the Bonds. Under its
usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the
record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Bonds are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Principal, mandatory redemption and interest payments on the Bonds will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on payment dates in accordance
with their respective holdings shown on DTC's records unless DTC has reason to believe that it
will not receive payment on.the date payable. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is the case with sec,!Jrities
held for the accounts of customers in bearer form of registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Trustee or the Issuer, subject to any
statutory or regulatory requirements as may be in effect from time to time. Payment of principal
and interest to DTC is the responsibility of the Issuer and the Trustee, disbursement of such
payments to Direct Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be responsibility of Direct and Indirect Participants.
The Trustee and the Issuer cannot and do not give any assurances that DTC, DTC
Participants or others will distribute payments of principal, interest or and premium with respect
to the Bonds paid to DTC or its nominee as the registered owner, or any redemption or other
notices, to the Beneficial Owners, or that they will do so on a timely basis or will serve and act
in the manner described in this Official Statement. The Trustee and the Issuer are not
responsible or liable for the failure of DTC or any DTC Participant to make any payment or give
any notice to a Beneficial Owner with respect to the Bonds or an error or delay relating thereto.
The foregoing description of the procedures and record-keeping with respect to
beneficial ownership interests in the Bonds, payment of principal, interest and other payments
on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial
ownership interests in such Bonds and other related transactions by and between DTC, the
DTC Participants and the Beneficial Owners is based solely on information provided by DTC.
Accordingly, no representations can be made concerning these matters and neither the DTC
Participants nor the Beneficial Owners should rely on the foregoing information with respect to
such matters, but should instead confirm the name with DTC or the DTC Participants, as the
case may be.
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Discontinuance of Book-Entry. DTC may discontinue providing its services as
securities depository with respect to the Bonds at any time by giving reasonable notice to the
Trustee and discharging its responsibilities with respect thereto under applicable law, or the
Issuer may terminate participation in the system of book-entry transfers through DTC or any
other securities depository at any time. In the event that the book-entry only system is
discontinued, payments of principal and interest with respect to the Bonds shall be payable as
described herein under the caption "THE BONDS - Description of the Bonds."
Transfer Fees. For every transfer and exchange of Bonds, Beneficial Owners may be
charged a sum sufficient to cover any tax, governmental charge or transfer fees that may be
imposed in relation thereto, which charge may include transfer fees imposed by the Trustee,
DTC or the DTC Participant in connection with such transfers or exchanges.
ESTIMATED SOURCES AND USES OF FUNDS
The proceeds received from the sale of the Bonds are to be applied as follows:
SOURCES OF FUNDS
Principal Amount of Bonds $ .
Accrued Interest
TOTAL SOURCES:
USES OF FUNDS
Interest Account(1)
Reserve Fund (2) --
Construction Fund
Cost of Issuance Fund
Underwriter's Discount
TOTAL USES:
(1) Represents accrued interest and capitalized interest until 1,199_.
(2) Equals the Reserve Requirement.
. Preliminary, subject to change.
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DEBT SERVICE
The Installment Purchase Agreement requires the City to make Installment Payments
December 1 and June 1 of each year, beginning June 1, 1996, and continuing until the end of
the term of the Installment Purchase Agreement.
The following is a schedule of debt service on the Bonds for each year until maturity:
Period
Ending Total
(December 15) Princioal Interest Debt Service
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SECURITY FOR THE BONDS
General
THE BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY
FROM AND SECURED SOLELY BY THE REVENUES PLEDGED THEREFOR IN THE
INDENTURE. THE BONDS ARE NOT A DEBT OF THE CITY, THE STATE OF CALIFORNIA
OR ANY OF ITS POLITICAL SUBDIVISIONS AND NEITHER THE FAITH AND CREDIT OF
THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS ARE PLEDGED TO THE
PAYMENT OF PRINCIPAL NOR INTEREST ON THE BONDS, AND NEITHER THE CITY, THE
STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS IS LIABLE THEREFOR, NOR IN ANY
EVENT SHALL THE BONDS OR ANY INTEREST OR REDEMPTION PREMIUM THEREON
BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE
ISSUER AS SET FORTH IN THE INDENTURE. NEITHER THE BONDS NOR THE
OBLIGATION TO MAKE INSTALLMENT PAYMENTS CONSTITUTES AN INDEBTEDNESS
OF THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE
MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR
RESTRICTION.
"Revenues" consist primarily of Installment Payments paid by the City to the Issuer
pursuant to the Installment Purchase Agreement. Revenues are defined in the Indenture to
mean all Installment Payments made pursuant to the Installment Purchase Agreement, and
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interest or profits from the investment of money in any fund or account created under the
Indenture (other than the Rebate Fund).
The Issuer shall pay to the Trustee all Revenues, which the Trustee shall deposit in the
Revenue Fund to be used: ti!i1, for payment of debt service (including mandatory sinking fund
redemptions), and second, for replenishment of the Reserve Fund in the event its balance is
less than the Reserve Requirement, as and to the extent required by the Indenture. See
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE - "Allocation of Revenues"
herein. The Issuer, pursuant to the Assignment Agreement, has assigned to the Trustee its
right to receive all Installment Payments from the City under the Installment Purchase
Agreement and, effective immediately on default by the City under the Installment Purchase
Agreement and without any further act on the part of the Issuer, any and all of the other rights
of the Issuer under the Installment Purchase Agreement as may be necessary to enforce
payment of such Installment Payments when due or otherwise to protect the interests of the
Owners of the Bonds.
All Net Revenues (defined below) are irrevocably pledged by the City to the payment
of the Installment Payments and debt service on Parity Debt as provided in the Installment
Purchase Agreement, and the Net Revenues shall not be used for any other purpose while
any of the Installment Payments remain unpaid; provided, however, that out of the Net
Revenues there may be apportioned such sums for such purposes as are expressly permitted
by the Installment Purchase Agreement, including payment of debt service on any Parity Debt.
This pledge shall constitute a first lien on the Net Revenues for the payment of the Installment
Payments and debt service on any Parity Debt in accordance with the Installment Purchase
Agreement. The Bonds are not secured by a direct lien on the Water System. ~
The City is authorized to issue additional Revenue Bonds or execute Contracts
secured by Net Revenues with a lien on a parity basis with the lien of Installment Payments,
provided it complies with certain provisions in the Installment Purchase Agreement. See "THE
BONDS--Issuance of Additional Bonds" herein. Such additional Contracts or Revenue Bonds
shall be referred to herein as "Parity Debt."
"Net Revenues" are Water Revenues less the Operation and Maintenance Costs of the
Water System, as such terms are defined below. The ''Water System" is the City's water
system, including the portion thereof existing on the date hereof, and including all additions,
betterments, extensions and improvements to such water system or any part thereof hereafter
acquired or constructed and all contracted rights to receive water, easements and rights of
way.
The City has covenanted to fix, prescribe and collect rates and charges for Water
Service (as defined in APPENDIX B hereto) sufficient to annually provide Net Revenues equal
to 100% of the Installment Payments and the payment of debt service on any Parity Debt.
See "Rate Covenant" below.
"Operation and Maintenance Costs" means reasonable and necessary costs spent or
incurred for operation and maintenance of the Water System (including payments for water
purchases) calculated in accordance with generally accepted accounting principles, including
(among other things) the reasonable expenses of management and repair and other
expenses necessary to maintain and preserve the Water System in good repair and working
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order, and including administrative costs of the City that are charged directly or apportioned to
the Water System, including but not limited to salaries and wages of employees, payments to
the Public Employees Retirement System, overhead, insurance, taxes (if any), fees of
auditors, accountants, attomeys, consultants or engineers and insurance premiums, and
including all other reasonable and necessary costs of the City or charges (but excluding debt
service payments or other similar payments on Parity Debt) or other obligations (other than
obligations for water purchases) required to be paid by it to comply with the terms of the
Installment Purchase Agreement or any other Contract or of any resolution or indenture
authorizing the issuance of any bonds or obligations or of the Bonds, but excluding in all cases
depreciation, replacement and obsolescence charges or reserves therefor and amortization of
intangibles or other bookkeeping entries of a similar nature.
''Water Revenues" means all gross income, rents, rates fees, charges and other
moneys derived from the ownerShip or operation of the Water System calculated in
accordance with GAAP, including, without limiting the generality of the foregoing, (i) all
income, rents, rates, fees, charges, business interruption insurance proceeds or other moneys
derived by the City from the sale, fumishing and supplying of the water or other services,
facilities, and commodities sold, furnished or supplied through the facilities of or in the conduct
or operation of the business of the Water System; plus (ii) the earnings on and income derived
from the investment of such income, rents, rates, fees, charges, or other moneys, including
Water System reserves; plus (iii) the proceeds of any stand-by or water availability charges
collected by the City; but excluding in all cases customer deposits or any other deposits or
advances subject to refund. until such deposits or advances have become the property of the
City, and excluding any proceeds of taxes restricted by law to be used by. the City to pay
bonds hereafter issued. - -
In the Installment Purchase Agreement, the City covenants that, so long as any Bonds
are outstanding, the City will not issue or incur any obligations payable from Net Revenues
superior to the payment of the Installment Payments. The City has the right to issue or incur
indebtedness or other obligations on a parity with the Installment Payments. (See ''THE
BONDS - Issuance of Additional Bonds" herein).
Installment Payments
The Installment Purchase Agreement requires the City to make Installment Payments
on June 1 and December 1 of each year, commencing June 1, 1996, and continuing
thereafter during the term of the Bonds, in amounts as specified in the Installment Purchase
Agreement (see "Application of Revenues" below). The Installment Payments shall be paid
directly to the Trustee, and if received by the Issuer shall be deposited with the Trustee within
one (1) Business Day thereof.
The City's obligation to make Installment Payments is a special obligation of the City
payable solely from the Net Revenues and other funds provided for in the Installment
Purchase Agreement. Neither the Bonds nor the obligation of the City to make Installment
Payments constitutes a debt of the Issuer, the City or of the State of California or of any
political subdivision thereof within the meaning of any constitutional or statutory debt limit or
restriction or an obligation for which the Issuer, the City or the State of California is obligated
to levy or pledge any form of taxation or for which the Issuer, the City or the State of Califomia
has levied or pledged any form of taxation.
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Rate Covenant
The City will fix, prescribe and collect fees, rates and charges for the Water System
which will be at least sufficient to yield during each Fiscal Year Net Revenues equal to the
sum of (a) one-hundred percent (100%) of the Debt Service for such Fiscal Year plus (b) the
amount by which the amount on deposit in the Revenue Fund (including available reserves)
on the last day of the immediately preceding Fiscal Year was less than ten percent (10%) of
Maximum Annual Debt Service as of such day. The City may make adjustments from time to
time in such rates and charges and may make such classification thereof as it deems
necessary, but may not reduce the rates and charges then in effect unless the Net Revenues
from such reduced rates and charges will at all times be sufficient to meet the requirements
set forth in this paragraph.
Reserve Fund
The Issuer has agreed to establish and maintain so long as any Bonds are outstanding
a separate fund, to be held by the Trustee for and on behalf of the Issuer, to be known as the
Reserve Fund. The Issuer is initially funding the Reserve Fund from proceeds of the Bonds.
All money on deposit in the Reserve Fund in excess of the Reserve Requirement shall be
deposited in the Rebate Fund or the Redemption Fund at the direction of the City. The Issuer
has pledged and granted a first and exclusive lien on and a security interest in the money in
the Reserve Fund to the Trustee for the benefit of the Owners, and the Trustee is authorized
and directed to withdraw any money on deposit in the Reserve Fund solely for the payment of
principal of or interest on the Bonds due and payable by the Issuer if and when money has not
been provided by the Issuer to make such payments. At any time when the combined
balance of money in the Revenue Fund and in the Reserve Fund equals all unpaid payments
of principal of and interest on the Bonds, the Trustee shall (upon receipt of a Written Request
of the Issuer) transfer all money on deposit in the Reserve Fund to the Revenue Fund to be
applied to the payment of such payments as they become due and payable. See "APPENDIX
B-Reserve Fund" herein.
"Reserve Requirement" means, as of any date of calculation by the Issuer, the lesser
of (i) 10% of the principal amount of the Bonds, (ii) an amount equal to maximum annual Debt
Service payable by the Issuer between the date of such calculation and the final maturity of
the Bonds, or (iii) 125% of average annual Debt Service payable under the Indenture, all as
computed by the Issuer; provided, that such requirement (or any portion thereof) may be
provided by one or more policies of municipal bond insurance or surety bonds issued by a
municipal bond insurer or by a letter of credit issued by a bank, the obligations insured by
which insurer or issued by which bank, as the case may be, have ratings at the time of
issuance of such policy or surety bond or letter of credit equal to "Aaa" assigned by Moody's
or "AAA" assigned by S&P. The initial deposit into the Reserve Fund is $
The moneys in the Reserve Fund shall be applied solely for the purpose of paying the
principal of, interest on or redemption premium, if any, or interest on the Bonds as it shall
become due and payable, but only to the extent that no other money of the Issuer is available
therefor. The Indenture requires the Reserve Fund to be initially funded from the proceeds of
the Bonds in an amount equal to the Reserve Requirement. See "SUMMARY OF CERTAIN
PROVISIONS OF THE INDENTURE - Allocation of Revenues" and "ESTIMATED SOURCES
AND USES OF FUNDS" herein. I
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-"-,
Application of Revenues
The City has covenanted that all Water Revenues, when and as received, will be
received and held by the City in trust for the benefit of Bondholders and payments with
respect to Parity Debt, and will be deposited by the City with the Treasurer in the Water Fund,
which the City has covenanted to establish and maintain throughout the term of the Bonds.
All Net Revenues, whether held by the City as trustee or deposited with the Treasurer or the
Trustee, shall nevertheless be disbursed, allocated and applied solely to the uses and
purposes set forth in the Indenture, and shall be accounted for separately and apart from all
other money. funds, accounts or other resources of the City.
All Net Revenues in the Water Fund shall be set aside by the Treasurer or deposited
by the Treasurer with the Trustee, or the trustee or fiscal agent with respect to Parity Debt, as
the case may be, as follows and in the following order of priority:
(1) Operation and Maintenance Costs. The City has covenanted to pay all
Operation and Maintenance Costs of the Water System (including amounts reasonably
required to be set aside in contingency reserves for Operation and Maintenance Costs
of the Water System, the payment of which is not then immediately required) from the
Water Fund as they become due and payable.
(2) Debt Service Funds. Payment of Debt Service and all other payments
relating to principal and interest on or with respect to Parity Debt, shall be paid in
accordance with the terms of the Indenture and of such Parity Debt, without preference
or priority, and in the event of any insufficiency of such moneys, ratably without any
discrimination or preference.
(3) Reserve Funds. Payments to replenish debt service reserve funds
established for the Bonds or Parity Debt shall be made in accordance with the terms of
the Indenture and such Parity Debt, without preference or priority, and in the event of
any insufficiency of such moneys, ratably without any discrimination or preference.
(4) General Expenditures. All Water Revenues not required to be
withdrawn pursuant to the provisions of (1) through (3) above shall be paid to the
Treasurer for expenditure for any lawful purpose of the City, including deposit in the
Rebate Fund or for payment of any obligation subordinate to the Bonds or Parity Debt.
Covenant to Provide Ongoing Disclosure
The City and the Issuer have covenanted, pursuant to a Continuing Disclosure
Agreement, dated as of November, 1, 1995, for the benefit of holders and beneficial owners of
the Bonds to provide certain financial information and operating data relating to the City and
the Issuer by not later than 180 days following the end of the City's Fiscal Year (which
currently would be June 30), commencing with the report for the 1996 Fiscal Year (the
"Annual Report"), and to provide notices of the occurrence of certain enumerated events, if
material. The Annual Report will be filed by the City and the Issuer with each Nationally
Recognized Municipal Securities Information Repository (a "NRMSIR") or the Municipal
Securities Rulemaking Board (the "MSRB"), and with the appropriate State information
depository, if any. The notices of material events will be filed by the City and the Issuer with
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LA\952490097
the MSRB or with each NRMSIR (and with the appropriate State information depository, if
any). The specific nature of the information to be contained in the Annual Report or the
notices of material events is summarized below under the caption "APPENDIX D - Form of
Continuing Disclosure Certificate." These covenants have been made in order to assist the
Underwriter in complying with S.E.C. Rule 15c2-12(b)(5).
Additional Covenants
Additional covenants of the City contained in the Installment Purchase Agreement
include, but are not limited to, the following:
Collection of Rates and Charges. The City will have in effect at all times by-laws,
rules and regulations requiring each customer to pay the rates and charges applicable to the
Water Service and providing for the billing thereof and for a due date and a delinquency date
for each bill. The City will not permit any part of the Water System or any facility thereof to be
used or take advantage of free of charge by any corporation, firm or person, or by any public
agency (including the United State of America, the State of California and any city, county,
district, political subdivision, public corporation or agency of any thereof); provided, that the
City may without charge use the Water Service.
Against Encumbrances. The City will not make any pledge of or place any lien on
Net Revenues or the moneys in the Revenue Fund except as provided in the Installment
Purchase Agreement. The City may at any time, or from time to time, issue evidences of
indebtedness or incur other obligations for any lawful purpose which are payable from and
secured by a subordinate pledge of and lien on Net Revenues or any moneys in the Reveo_ue
Fund.
Against Sale or Other Disposition of Property. The City will not enter into any
agreement or lease which impairs the operation of the Water System or any part thereof
necessary to secure adequate Net Revenues for the payment of the Installment Payments.
Any real or personal property which has become nonoperative or which is not needed for the
efficient and proper operation of the Water System, or any material or equipment which has
become wom out, may be sold if such sale will not impair the ability of the City to pay the
Installment Payments and if the proceeds of such sale or deposited in the Revenue Fund.
Against Competitive Facilities. The City will not acquire, construct, maintain or
operate and will not permit any other public or private agency, corporation, district or political
subdivision or any person whomsoever to acquire, construct, maintain or operate within the
City any water system competitive with the Water System.
Tax Covenants. The City will not make any use of the proceeds of the Bonds or any
other funds of the City or take or omit to take any other action which will cause such
obligations to be a "private activity bond" within the meaning of Section 141 of the Code or
'federally guaranteed" within the meaning of Section 149(b) of the Code.
Maintenance and Operation of the Water System. The City will maintain and
preserve the Water System in good repair and working order at all times and will operate the
Water System in an efficient and economical manner and will pay all Operation and
Maintenance Costs as they become due and payable.
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LA\952490097
Payment of Claims. The City will pay and discharge any and all lawful claims for
labor, materials or supplies which, if unpaid, might become a lien on the Net Revenues or on
any funds in the hands of the City pledged to pay the Installment Payments or to the Owners
prior or superior to the lien of the Installment Payments or which might impair the security of
the Installment Payments.
Compliance with Contracts. The City will neither take nor omit to take any action
under any contract if the effect of such act or failure to act would in any manner impair or
adversely affect the ability of the City to pay Installment Payments; and the City will comply
with, keep, observe and perform all agreements, conditions, covenants and terms, express or
implied, required to be performed by it contained in all other contracts affecting or involving
the Water System.
Insurance. (a) The City will procure and maintain or cause to be procured and
maintained insurance on the Water System with responsible insurers at reasonable cost in
such amounts and against such risks (including damage to or destruction of the Water
System) as are usually covered in connection with facilities similar to the Water System so
long as such insurance is available from reputable insurance companies.
In the event of any damage to or destruction of the Water System cause by the perils
covered by such insurance, the Net Proceeds thereof shall be applied to the reconstruction,
repair or replacement of the damaged or destroyed portion of the Water System. If such Net
Proceeds exceed the costs of such reconstruction, repair or replacement portion of the Water
System, and/or the cost of the construction of addition, betterments, extensions or
improvements to the Water System, then the excess Net Proceeds shall be applied in partJo
the prepayment of Installment Payments and the retirement of Parity Debt. If such Net
Proceeds are sufficient to enable the City to retire the Bonds in whole as well as outstanding
Revenue Bonds and Contracts, the City may elect to apply such Net Proceeds to the
prepayment of Installment Payments and to the retirement of such Revenue Bonds and
Contracts.
(b) Any insurance may be maintained under a self-insurance program so long as
such self-insurance is maintained in the amounts and manner usually maintained in
connection with water systems similar to the Water System.
Accounting Records; Financial Statements and Other Reports.
(a) The City will keep appropriate accounting records in which complete and
correct entries shall be made of all transactions relating to the Water System.
(b) The City will prepare and file with the Issuer and the Trustee annually within
one hundred fifty (150) days after the close of each Fiscal Year (i) financial statements of the
City for the preceding Fiscal Year prepared in accordance with generally accepted accounting
principles, together with an Accountant's Report thereon; and (ii) a detailed report as to all
insurance pOlicies maintained and self-insurance programs maintained by the City with
respect to the Water System.
,-' (c) The City will prepare annually not more than one hundred fifty (150) days after
the close of each Fiscal year a summary report showing in reasonable detail the Water
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LA\952490097
Revenues and the Operation and Maintenance Costs for such Fiscal Year and containing a
general statement of the physical condition of the Water System.
Protection of Security and Rights of the Issuer. The City will preserve and protect
the security hereof and the rights of the issuer to the Installment Payments and will warrant
and defend such rights against all claims and demands of all persons.
Payment of Taxes and Compliance with Governmental Regulations. The City will
pay and discharge all taxes, assessments and other govemmental charges which may
hereafter be lawfully imposed upon the Water System, or any part thereof or upon the Water
Revenues when the same shall become due. The City will duly observe and conform with all
valid regulations and requirements of any govemmental authority relative to the operation of
the Water System, or any part thereof, but the City shall not be required to comply with any
regulations or requirements so long as the validity or application thereof shall be contested in
good faith.
Eminent Domain Proceeds. If all or any part of the Water System shall be taken by
eminent domain proceedings, the Net Proceeds thereof shall be applied as follows:
(a) If (1) the City files with the Issuer and the Trustee a certificate showing (i) the
estimated loss of annual Net Revenues, if any, suffered or to be suffered by the City by
reason of such eminent domain proceedings, (ii) a general description of the additions,
betterments, extensions or improvements to the Water System proposed to be acquired and
constructed by the City from such Net Proceeds, and (iii) an estimate of the additional annual
Net Revenues to be derived from such additions, betterments, extensions or improvemen~,
and (2) the City, on the basis of such certificate files with the Issuer and the Trustee,
determines that the estimated additional annual Net Revenues will sufficiently offset the
estimated loss of annual Net Revenues resulting from such eminent domain proceedings so
that the ability of the City to meet its obligations will not be substantially impaired, then the City
shall promptly proceed with the acquisition and construction of such additions, betterments,
extensions or improvements substantially in accordance with such certificate and such Net
Proceeds shall be applied for the payment of the costs of such acquisition and construction,
and any balance of such Net Proceeds not required by the City for such purpose shall be
deposited in the Revenue Fund.
(b) If the foregoing conditions are not met, then such Net Proceeds shall be
applied by the City in part to the prepayment of Installment Payments and used for the
retirement of Parity Debt.
Further Assurances. The City will adopt, deliver, execute and make any and all
further assurances, instruments and resolutions as may be reasonably necessary or proper to
carry out the intention or to facilitate the performance hereof and for the better assuring and
confirming unto the Issuer of its rights and benefits.
Enforcement of Contracts. So long as any of the Bonds are Outstanding, the City
will not voluntarily consent to or permit any rescission of, nor will it consent to any amendment
to or otherwise take any action under or in connection with any contracts if such rescission or
amendment would in any manner impair or adversely affect the ability of the City to pay
Installment Payments.
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THE CITY
The following material is descriptive of the City of Poway. It has been prepared by or
excerpted from sources as noted herein and has not been reviewed by Bond Counselor the
Underwriter. For further information, see "APPENDIX B-CITY OF POWAY GENERAL
DEMOGRAPHIC AND FINANCIAL INFORMATION" attached hereto.
History and Location
Poway developed as an unincorporated community until November 1980, when its
33,500 residents voted to incorporate an area of about 38 square miles. It began its formal
existence as a City on December 1, 1980. In November, 1986, the City annexed an additional
1,325 acres, for a total area of about 40 square miles. Poway is located inland about three
miles east of Interstate Highway 15, and is surrounded on three sides by the City of San Diego.
Driving distance southerly to downtown San Diego or the San Diego Intemational Airport is
about 25 miles. The terrain is hilly and steep in some areas with gentle slopes in the center of
the City. Poway is relatively new in that over 70% of the housing stock postdates 1970.
City Organization
The City has, since incorporation, been govemed and operated under the Council-
Manager form of govemment. The City Manager directs a work force of 216 full-time
employees and appoints department heads on the basis of specialized knowledge, experience
and education in their area of responsibility. The City employees are members of the State
Public Employees Retirement System. The contributions to the System are current and np
unfunded contractual liability exists for past services.
Members
Mayor Don Higginson graduated from Brigham Young University in 1979 with a B.A. in
Political Science. He received his J.D. from Westem State Law School in 1982, and served for
two years as legal liaison with the San Diego County Sheriff's Department. For the past five
years Mr. Higginson has served as Corporate Counsel for Mail Boxes Etc. And is currently Vice
President of FranX, Ltd. He is an active member of the San Diego Bar Association and is a
current member of Antitrust and Trade Regulation Section of the State Bar of California.
Mr. Higginson sits on the Franchise Tax Force of the Senate Select Committee on Small
Business. He currently serves as Vice Chairman of the Hospice Foundation.
Deputy Mayor Susan Callery was elected to the City Council and appointed to the
Board of the Agency in November, 1992. After graduating from U.C.L.A., Ms. Callery spent
nine years in medical administration and research. Ms. Callery has been involved in numerous
volunteer organizations in Poway, and served as Community Protection Chairman for Green
Valley Community Association. Prior to her election, Ms. Callery served on the City's Migrant
Worker Housing Committee from March to August, 1991, and the Redevelopment Committee
from January, 1991, until her election to Council in November, 1992.
- Councilmember Robert C. Emery is employed as a middle school teacher. He holds a
B.A. in Political Science from San Diego State University and a M.A. in psychology from the
University of San Diego. He was first elected to the City Council at the time of incorporation of
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the City in 1980. He has previously served as Mayor in 1982, 1985 and 1988. Mr. Emery has
also served as an elected member to the Poway Planning and Development Program, an
advisory group to the San Diego Planning Commission.
Councilmember Michael P. Cafagna was appointed to a two-year term to the City
Council and Agency Board of Directors in December, 1993. In addition to these duties,
Mr. Cafagna also serves on the Mid-County Transportation Committee of the San Diego
Association of Governments ("SANDAG") and is an altemate member of the San Diego
Wastewater Management District, the SANDAG board of directors and the Metropolitan Transit
Development Board. Mr. Cafagna owned and operated Square One, Inc., a diversified real
estate firm, since 1974 and is a founding director and Vice President of the Poway Taxpayers'
Association.
Councilmember Setty Rexford was elected to the Poway City Council in November
1994. She is a 26 year Poway resident. Councilmember Rexford has an academic degree in
Social Science and a certificate of Continuing Education in Alcohol and Drug Studies from
UCSD. Ms. Rexford has served the City on several advisory committees, including the Budget
Review, Transportation Task Force, Migration Workers Housing, Redevelopment & Housing,
and General Plan. She is also involved in many community activities, having served as Board
of Director Vice President "For Parents and Kids Sake" and President for the Creek Road
Homeowners Association. Currently, Ms. Rexford serves as Poway's representative on the
ADAPT Board, the SANDAG Housing Advisory Committee, and the Senior Issues Committee.
Population
-.
At incorporation in 1980, there were about 33,500 people in the City limits. Poway has
grown to a population of 46,579, and expects to be built out according to general plan estimates
a population of 52,000. poway is a low density community predominately of single family
homes.
Housing and Income
The average selling price for new and existing single family homes is about $261,000.
1988 median income for Poway was $45,837, the highest of incorporated cities in the County.
The median age of Poway residents is 30.6, and the family/household size was 3.21 in 1988.
Owner occupancy is high, and Poway is predominantly a single family community.
Climate
Poway, as part of San Diego County, has a relatively dry climate and its inland location
spares it much of the summer fog experienced along the coast. Temperatures are frost-free
over 350 days per year, and the City receives on the average approximately 11 inches of rain,
principally between the months of October and April.
Transportation
Poway is served by a variety of transportation modes. Commercial air travel is supplied
by Lindbergh Field, approximately 25 miles south in San Diego, and is supplemented by private
and charter plan service from the Palomar Airport, about 20 minutes to the west. Automobile
travel is facilitated by Interstate 15 which runs north/south several miles to the west of Poway.
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- Bus travel is supplied by the San Diego County Regional Transit District and is supplemented
by commuter service from Poway to downtown San Diego.
Services and Facilities
The City of Poway supplies its residents with water and sewer service. Power is
supplied by San Diego Electric and Gas, and telephone service by Pacific Bell. The City has its
own parks and community services departments and provides fire protection service, but
contracts for police service from the County. The City currently has 197 full and part-time
employees.
Health care facilities are provided by Pomerado Hospital, a 130-bed, full-service facility.
Educational facilities in the Poway Unified School District include 17 elementary schools (12
public and 5 private), 3 middle schools and 3 high schools, one of which is a continuation
school. These educational facilities serve the populace of Poway as well as the neighboring
communities of Rancho Bernardo and Rancho Penasquitos. Several schools within the
Authority have recently been awarded national honors for excellence.
The community is served by four savings and loan associations and six banks.
Recreational facilities in the City of poway include two community parks, one at the
Community Center and one surrounding Lake Poway, a man-made lake. The Community
Center also includes lighted softball/baseball fields and a swimming pool. Golfing is available at
local nonmembership country clubs. A new 815-seat Poway Center for the Performing Arts
opened in 1990, and features professional touring artists, entertainers and community
programs. Residents of Poway have excellent access to cultural and recreational facilities"in
the metropolitan San Diego area as well.
Investments in County Investment Pool
As of May 31,1995, City, as a voluntary depositor, had invested approximately $62.5
million with the San Diego County Treasurer (the 'Treasurer") in the San Diego County
Investment Pool (the 'Pool"). Of that amount, $23 million represented general operating
reserve moneys of the City (out of a total City operating reserve of approximately $73 million)
and $39.5 million represents a portion of bond proceeds of the Redevelopment Agency (out of
a total of $43.5 million of proceeds).
Based on reports from the County, as of May 31, 1995 the total deposits in the Pool
were approximately $2.82 billion. The market value of the deposits as of May 31,1995 was
approximately $2.65 billion for an unrealized loss of approximately $174.4 million, or 6.3%.
This unrealized loss compares to unrealized losses of approximately $284 million (or 9.1 %) as
of March 31,1995 and $374 million or (11.35%) as of December 31,1994. As the result of
the market value loss of the investments within the Pool, the City estimates its share
(including the Agency) of the unrealized loss to be approximately $3.6 million, or 3% of its total
investment portfOlio (as of May 31, 1995). The continuing market value of the Pool will
depend upon, among other factors, the maturity and type of investments in the Pool and
general market conditions.
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While State law provides that depositors in the Pool are permitted to withdraw funds
which they have deposited on 30 days' notice, due to the market value loss of the various
investments within the Pool if a significant number of depositors requested withdrawal of their
moneys at the same time the Treasurer would currently be unable to honor all withdrawal
requests without liquidating investments in the Pool at a significant loss. In order to prevent
this liquidity problem, the County, together with an oversight committee and a pool participant
committee, approved a Phased Withdrawal Plan (the "Withdrawal Plan"). The Withdrawal
Plan is structured to take advantage of the periods of projected high liquidity in the Pool,
thereby avoiding the sale of investments at a loss to create liquidity. While voluntary
depositors in the Pool are not legally required to participate in the Withdrawal Plan,
approximately two-thirds of the voluntary depositors have agreed to participate. The City has
elected to withdraw its moneys invested in the Pool over an approximately three-year time
period under what is known as the Phased Withdrawal Plan. The City does not anticipate that
it will lose any of the money it has invested in the Pool by withdrawing its moneys from the
Pool under the Phased Withdrawal Plan.
There can be no guarantee that the City's and the County's expectations regarding the
Withdrawal Plan will be realized. In addition, the effect of interest rates and other market
conditions may also result in negative consequences to the Pool and City's financial conditions.
THE WATER SYSTEM
Water System
The City's Water System provides treated water for municipal, commercial and ind~strial
use to residents and businesses within the City. Additionally, the City has entered into an
agreement with the Ramona Municipal Water District, an adjacent water district ("Ramona"),
pursuant to which the City has agreed to provide Ramona with up to 4,000,000 gallons per day
of treated water upon request by Ramona during periods of interruption of Ramona's treated
water supply, plus such excess treated water capacity as the City has available at the time of
such request. In return, Ramona has agreed to provide the City with 1,000 acre feet per year of
untreated water stored in Lake Ramona during periodS of interruption of the City's raw water
supply, plus such excess storage capacity as Ramona has available at the time of such
requests by the City. The City purchases nearly all of its untreated water from the San Diego
County Water Authority rSDCWA"), which is a wholesaler for all water agencies in the County
of San Diego. SDCWA receives its water from the Metropolitan Water District of Southern
California ("MWD"). See "City Water Rights" and "Current Water Supply Conditions" below for a
fuller description of the City's water supply and rights. The City primarily receives untreated
water which is treated at the City-owned treatment plant. The City and SDCWA are currently
working on an agreement to connect to SDCWA's treated water pipeline, which will provide the
City with an emergency source of treated water in the event the City's treatment plant is
incapacitated.
The City's distribution system includes approximately 147 miles of primary transmission
and distribution pipelines in excess of 8 inches in diameter. The Water System also includes 14
storage tanks with a capacity of approximately 23.5 million gallons and a surface reservoir with
a capacity of 3,200 acre feet.
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Service Are.
The City is the sole provider of water service for residential, commercial, agricultural and
industrial enterprises within the City. The City's current population is 46,689. The Water
System currently includes a total of 12,295 connections, including 11,561 residential service
connections, 161 agricultural service connections and 573 industrial and commercial service
connections. The following table illustrates estimated use of the Water System.
CITY OF POWAY WATER SYSTEM
ESTIMATED WATER USE
(Fiscal Year 1994/95)
Tvoes of Use Percentage of Total
Residential 72%
Industrial 1
Agricultural 6
Commercial 9
Public, Other 12
Source: City of Poway.
Water Quality Compliance
.-
The kind and degree of water treatment which is affected through the Water Syste!!1 is
regulated, to a large extent, by the Federal government. Clean water standards set forth in the
Safe Drinking Water Act and the Environmental Protection Act continue to set standards for the
operations of the Water system and to mandate its use of technology. In the event that the
Federal government, either acting through the Environmental Protection Agency or by adoption
of additional legislation, should impose stricter quality standards upon the Water System, its
expenses would increase accordingly and rates and charges would have to be increased to
offset those expenses. It is not possible to predict the direction which Federal regulation will
take with respect to water treatment.
Water System Rates and Charges
General. In accordance with California law, the City Council may, from time to time and
at its discretion, fix, alter or change fixed monthly services fees, commodity charges and other
fees related to the Water System. Consequently, the City periodically reviews water rates. In
accordance with Califomia law, the City reviews such charges and fees to determine if they are
sufficient to cover operation and maintenance costs, capital improvement expenditures and
debt service requirements. Such charges and fees are set by the City for the services provided
by the Water System after a public hearing is held, generally at the time of adoption of the
annual budget. Neither the City nor the Water System is subject to the jurisdiction of, or
regulation by, the California Public Utilities Commission or any other regulatory body in
connection with the establishment of charges and fees related to the Water System.
The City staff annually determines the adequacy of the Water System service charge
structure after full consideration of expected operations, maintenance and capital costs. In
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accordance with City policy, operating surpluses may be added to City water fund reserves or
returned to ratepayers through mitigation of future rate increases.
The City Council adopted Resolution No. 95-073 on June 27, 1995, which provides for
charges and fees for Water System services for Fiscal Year 1995/96 and thereafter. The City is
permitted to approve additional increases in charges and fees for Water System services as it
deems necessary after a public hearing.
The City charges a flat rate for treated water, for all types of use, of $1.663 per 100
cubic feet ("HCF"). Untreated water for industrial and commercial use is provided at the cost of
such water from SDCWA, plus a surcharge of $28.30 per acre foot per billing period.
Additionally, the City charges a bi-monthly basic water service charge based on meter size.
The current schedule of basic water service charges, in effect since July 1, 1995, is set forth
below.
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CITY OF POWA Y WATER SYSTEM
BASIC WATER SERVICE CHARGE
(BI-Monthly)
Meter Size(l) Water Service Charoe(2)
5/8" $13.98
3/4" 14.30
1" 15.33
1.5" 18.57
2" 24.27
2.5" 27.28
3" 30.28
4" 37.74
6" 56.18
8" 96.47
Source: City of Poway.
(1) The City prepares its billing statements for Water System basic service on a bi-monthly
basis, and the rates set forth above represent charges for such period.
The table below sets forth a comparison of a minimum bi-monthly bill for a single family
residential unit to those of surrounding communities.
CITY OF POWA Y WATER SYSTEM
COMPARABLE WATER SYSTEM CHARGES --
(BI-Monthly)
Water Water Service Total Bi-Monthly
Community Chanjle (1) Charce Charge
Poway $16.63 $13.08 $29.71
Del Mar 14.20 41.00 55.20
Escondido 8.60 13.50 22.10
Fallbrook PUD 12.64 33.00 45.64
Oceanside 13.80 18.26 32.06
Olivenhain MWD 12.20 15.40 27.60
Padre Dam MWD 13.17 11.00 24.17
Rainbow MWD 14.30 32.88 47.18
Ramona MWD 15.99 26.96 42.95
San Diego 12.93 6.24 19.17
Source: City of Poway.
(1) For 1000 cubic feet.
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Pumping Charges. In addition to the water rates charged to all customers, the City
charges additional pumping rates to customers who are served from certain reservoirs within
the City. The City's policy is to adjust these pumping rates so that the cost continues to be self
funding. The pumping rates are added to the bi-monthly bill of residents within the applicable
areas described below.
CITY OF POWAY WATER SYSTEM
AREA PUMPING RATES
(BI-Monthly)
PumoinQ Area PumpinQ Rate(1)
Improvement District NO.1 $0.200
Improvement District NO.4 0.055
Orchard A-73, Silver Saddle 0.082
Donart 0.150
Service Area VI 0.130
Assessment District 79-1 0.100
Community Pump Station 0.150
Source: City of Poway.
(1) Per 100 cubic feet.
There are approximately 1,529 connections located within these seven pumping areas.
Raw Water Surcharge. The Stoneridge Golf Course within the City is presently served
with raw water taken directly from SDCWA's aqueduct. In addition to the City's actual cost for
the raw water (currently $432 per acre foot), a surcharge to recover the cost of administration
and telemetry for the pumping stations is billed for delivery of such raw water to any customer
receiving this service. Resolution No. 95-073 established the surcharge, commencing July 1,
1995, at $28.30 per acre foot.
Connection Fees. The Water System connection fees are comprised of two
components: (1) the cost of new metered service connection and lateral line installations, and
(2) a capital charge to pay for improvement or expansion of the Water System to meet the
requirements of community growth, fire protection and other needs by cash flow or debt
financing.
The City can approve additional increases in connection fees for Water System hook-up
permits as it deems necessary after a public hearing. The current Water System connection
fee is a sliding scale tied to meter size, and is $3,710 for a typical single family home.
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The table below sets forth a comparison of Water System connection fees for a single
family residential unit to those surrounding communities:
CITY OF POWAY WATER SYSTEM
COMPARABLE CONNECTION FEE CHARGES
(As of July 1, 1995)
Community Residential Connection Fee 11\
Poway $3,710
Del Mar 1,140
Escondido 4,380 (plus $350 "off set" fee)
Fallbrook PUD 2,830
Oceanside 1,095
Olivenhain MWD 3,490
Padre Dam MWD 3,961
Rainbow MWD 1,500
San Diego 4,012
Source: City of Poway.
(1) Typical single family residence.
Standby Charge. SDCWA levies a standby charge, which has been in effect since
January 1, 1989. The current stand-by charge is (1) $10 for all parcels of one acre or less, and
(2) $10 for all un subdivided and subdivided land of more than one acre. This Stand-by ch~rges
includes the "ready-to-serve" charge levied by MWD.
Collection Procedure
The City is on a bi-monthly billing cycle, and sends bills out by the fifth and thirtieth day
of the month following the end of the billing cycle. Payment is due within 35 days following
delivery of the original bill. If payment is not received by that time, a past due notice is mailed,
including a delinquency charge equal to the lessor of 10% of the unpaid balance or $25. This
delinquency notice is payable within 15 days. A final notice is mailed eight days after the past
due notice is sent, reminding the account holder of the final payment date. On the day following
the final payment day, the City makes a reasonable attempt to contact an adult residing at the
residence. If contacted is made, the customer is advised of the impending turnoff of water
service, and is given an additional 48 hour extension. A red door hanger explaining the tum off
procedures is given to the customer. If no contact is made, the red door hanger is left on the
door knob of the residence. If payment is not received within that 48 hour extension, service is
turned off. Service is reinstated only after the customer pays the total amount past due plus a
service charge of $20.00 and any additional deposit required. For closed accounts, the City
sends a closing bill within one week of the closing date, and a second notice after 21 days of
such date. Accounts which remain unpaid are submitted to the City's collection agency after 60
days.
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Future Water System Improvements
The current population of the City is 46,689, with a master plan 'billed our population of
55,000. It is anticipated that most of the remaining growth in the City will occur on vacant
parcels scattered throughout the City, which will not require significant improvements to the
Water System. To the extent larger projects are developed, the City anticipates that necessary
Water System improvements will be constructed by the developer. Once the Project is
completed, the City does not anticipate any significant improvements to the Water System in
the near future, other than improvements, if any, dictated by federal or state regulations.
Outstanding Water System Indebtedness
The City does not currently have any outstanding short- or long-term indebtedness
secured by Net Revenues.
City Water Rights
The City purchases nearly all of its untreated water from SDCWA, which in turn receives
its water from the MWD. (See 'Current Water Supply Conditions' below). In addition to
receiving its raw water from SDCWA, the City is currently negotiating for a connection to
SDCWA's treated water pipeline, which will provide the City with an emergency supply of
treated water in the event the City's treatment plant is incapacitated. This connection is
anticipated to be completed by late 1996.
Currently, water delivered by SDCWA is processed at the City's treatment plant, which
was constructed in 1971. See 'THE PROJECr herein for a description of planned
improvements to the treatment plant. Certain of the City's raw water deliveries are diverted
from the treatment plant and are delivered directly to the Stoneridge Golf Course.
During periods of natural rain run-off, small quantities of water are collected in the City's
Lake Poway. However, since the City of San Diego claims watershed rights to a large area
which includes Lake Poway, for its Lake Hodges reservoir, the City has agreed to reimburse the
City of San Diego for water captured in Lake Poway. The City is not obligated to reimburse the
City of San Diego when water is captured in Lake Poway due to spillover from Lake Hodges
during the same run-off period. In Fiscal Year 1994/95, the City collected approximately
acre feet of water in Lake Poway. The last time the City was obligated to
reimburse the City of San Diego for such captured water was in Fiscal Year 1992/93, when it
paid the City of San Diego $
The City has begun exploring altemate local water sources, and has undertaken a
search for ground water supplies at various City owned properties. So far four test wells have
been drilled with unacceptable results. The City has also required developers to construct
reclaimed water infrastructure for irrigating the landscape in the City's 800-acre business park.
This infrastructure has been completed and is awaiting construction by the City of San Diego of
a connecting pipeline for delivery of reclaimed water from San Diego to the City. It is
anticipated that construction of this pipeline will commence in mid-1997.
In April, 1992, the City and the Ramona Municipal Water District ('Ramona') entered
into an agreement for delivery of treated and raw water. Pursuant to the agreement, the City
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has agreed to provide Ramona with up to 4 million gallons per day of treated water upon
request by Ramona during periods of interruption of Ramona's treated water supply, plus such
excess treated water capacity as available to the City at the time of such request by Ramona.
Ramona has agreed to provide the City with 1,000 acre feet per year of raw water stored in
Lake Ramona during periods of interruption in Poway's raw water supply, plus such excess
storage capacity as Ramona has available at the time of a request by the City. The agreement
extends through Fiscal Year 2001/02. In Fiscal Year 1994/95, Ramona paid the City $14,725
for approximately 175 acre feet of treated water. The City has not yet taken delivery of raw
water from Ramona pending completion of a retum connection anticipated to be completed by
,199_.
Current Water Supply Conditions
As stated above, the City purChases nearly all of its untreated water from SDCWA,
which in tum receives its water from the MWD. MWD is a public agency and quasi-municipal
corporation created in 1928 by vote of the electorates of several Southern California cities.
MWD's charges for water sales and availability are fIXed by its Board, and are not subject to
regulation by the Califomia Public Utilities Commission or any other state or federal agency.
MWD imports water from the Colorado River and the State Water Project. In general,
approximately two-thirds of the total water supply of MWD's service area is imported. The
balance is produced locally, primarily from groundwater supplies and runoff.
MWD's primary purpose is to provide a supplemental supply of water for domestic and
municipal uses at wholesale rates to its member public agencies, which includes SDCWA.
MWD's service area comprises 5,211 square miles and includes portions of the six counties of
Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura. Administration of
MWD is under the direction of the 51 members of the Board who are appointed by the member
public agencies. Member agencies request water from MWD at various delivery points within
MWD's system, and pay for such water at uniform rates established by the Board for each class
of service.
The Colorado River Aqueduct transports water from the Colorado River 242 miles to its
terminus at Lake Mathews in Riverside County. MWD's other major source of water is the
State Water Project, which is owned by the State and operated by the State Department of
Water Resources (the "DWR"). This project transports unregulated water directly from the
Sacramento-San Joaquin Delta (the "Delta") and Feather River water released from Oroville
Dam that has traveled to the Delta, south via the Califomia Aqueduct to four delivery points
near the northern and eastern boundaries of MWD. The total length of the California Aqueduct
is 444 miles. MWD is one of 29 agencies which have contracts for water service from DWR,
but is by far the largest in terms of the number of people its serves (more than 16 million) and
the quantity of SWP water to which it is entitled (approximately 48% of total SWP entitlement.
Local water resources include runoff captured in reservoirs or natural replenishment of
groundwater basins. The projected SWP supply available to MWD, combined with the
projected availability of Colorado River water and water produced through storage, transfer,
reclamation and conservation programs, is projected by MWD to meet the demands of MWD in
normal water supply years to the end of the century.
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Since the six year drought ended in 1992, existing local and imported water supplies
have been sufficient to meet demands within MWD's service area. However, MWD projects
that with continuing population growth in Southern Califomia, existing supplies and
infrastructure will not be sufficient to meet projected demands. The projected supply
deficiencies during dry years and prolonged droughts are expected to be approximately 1.1
million acre-feet ("MAF") by the year 2000, and 2.4 MAF by the year 2020. MWD has
developed and continues to design plans to meet these projected deficiencies, which are
designed to ensure that MWD will be able to satisfy projected demands.
Water Demand
The City records the volume of water delivered by the Water System. Over the past ten
years, the City has delivered, on average, 10,865 acre-feet of treated water. The following
table summarizes treated water deliveries for the most recent ten calendar years.
CITY OF POWA Y WATER SYSTEM
HISTORIC TREATED WATER DELIVERIES
(Calendar Year)
Percent
Total Acre Percent of Ten Change Over
Yur Feet Delivered Year AveraV8 Previous Year
1994 10,466 96.3% (3.7)%
1993 10,854 99.9 . 1.4
--
1992 10,701 98.5 6.8
1991 (1) 10,016 92.2 (22.8)
1990 12,980 119.5 (1.2)
1989 13,143 121.0 13.6
1988 11,572 106.5 11.5
1987 10,381 95.5 5.8
1986 9,810 90.3 12.4
1985 8,729 80.3 -
Source: City of Poway.
(1) Reflects implementation of water conservation measures by City as a result of a 20%
mandatory reduction in deliveries by MWD due to continuing drought.
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- -
,
Service Connections
The following tables present a summary of service connections to the Water System for
the most recent five calendar years, and a projection of service connections for the current and
next five calendar years:
CITY OF POWA Y WATER SYSTEM
HISTORiC SERVICE CONNECTIONS
(Calendar Year)
Yur Service Connection Percent Increase
1995 12,572 0.08%
1994 12,562 0.08
1993 12,550 0.24
1992 12,520 0.08
1991 12,510 2.70
1990 12,175 3.50
1989 11,743 4.60
Source: City of Poway.
- .
CITY OF POWAY WATER SYSTEM
PROJECTED SERVICE CONNECTIONS
(Calendar Year)
Yur Service Connection Percent Increase
1996 12,634 0.5%
1997 12,698 0.5
1998 12,761 0.5
1999 12,825 0.5
2000 12,889 0.5
Source: City of Poway.
-
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Largest Customers
The following table presents certain information relating to the fifteen largest customers
of the Water System based on annual payments as of June 30, 1995:
CITY OF POWA Y WATER SYSTEM
FIFTEEN LARGEST CUSTOMERS
(As of June 30,1995)
Customer Annual Pavment
Poway Unified School District $182,414.48
Stoneridge Golf Course 145,410.03
Landscaping/Maintenance District 87-1 (1) 97,498.75
Hidden Valley Ranch 93,591.34
Landscaping/Maintenance District 86-1A (1) 68,032.22
Countryview Condo Association 56,490.99
Poway Royal Estates 51,304.87
CF Poway Ltd. 46,418.31
Landscaping/Maintenance District 83-1A (1) 33,465.09
The Rreef Funds 33,052.01
Silver Oak Apartments 29,209.97
Poinsettia Mobilehome Park 28,804.21
J. Countryside Apartments 21,086.84
Stoneridge Chateau 16,040.20 ..
The Gateway 14,792.81
Source: City of Poway
(1) Assessment districts formed pursuant to the Landscaping and Lighting Act of 1972.
Costs are annually spread among property owners within each district.
The fifteen largest customers of the Water System accounted for approximately 11.5%
of water sales in Fiscal Year 1994/95.
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_._~.- -_.._-~
Projected Water Deliveries
The City estimates that water delivered by the Water System for the current and next
five Fiscal Years will be as follows (See 'Service Connections' above for projections of Water
Service connections):
CITY OF POWA Y WATER SYSTEM
PROJECTED ANNUAL WATER DELlVERy(1)
(As of June 30)
Water Deliveries Percent
Yur (acre.feetl ChanC}e
1995 10,480 0.1%
1996 10,662 1.7
1997 10,722 0.6
1998 10,782 0.6
1999 10,843 0.6
2000 10,903 0.5
Source: City of Poway
(1) Projected water sales assumed to increase by 3% annually based upon 182 new residential hook-
up permits in Fiscal Year 1995196, and 64 new hook-ups thereafter. See Footnote (2) under
"Projected Operatin9 Results and Debt Service Coverage' herein. -
Historic Water Sale Revenues
The following table shows the City's annual Water Revenues for the five most recent
Fiscal Years. All figures shown below are excerpted from the audited financial statements of
the City.
CITY OF POWAYWATER SYSTEM
HISTORIC WATER SALES REVENUES
(As of June 30)
Water
Yur Sales Revenues Percent ChanQe
1990 $6,714,326 -
1991(1) 6,384,405 (4.9)%
1992(1) 6,128,900 (4.0)
1993(2) 7,382,857 20.5
1994 7,746,559 4.9
Source: City of Poway
(1) Significant drop in water sales due to ongoing drought in Califomia, implementation (and later
recission) of a tiered water rate structure and City conservation measures due to a mandatory
20% reduction in MWD water deliveries.
(2) Substantial increase reflects 16% rate increase due to 17% increase in MWD costs.
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LA\952490097
Projected Water Sale. Revenues
The following table projects annual water sales revenues of the Water System for the
current and next five Fiscal Years. The projection of water sales revenues set forth below are
based on the assumptions and increases in projected water deliveries described under
"Projected Operating Results and Debt Service Coverage" below and may vary from actual
water sales revenues for the reasons described thereunder. In the event that the City
increases or decreases rates and charges, actual sales revenues will vary from those projected
below.
CITY OF POWAY WATER SYSTEM
PROJECTED SALES REVENUES
(As of June 30)
Water
Xu.r Sales Revenues(l) Percent Increase
1995 $7,968,165 2.7%
1996 8,832,106 10.8
1997 9,428,949 6.8
1998 10,046,980 6.5
1999 10,766,526 7.2
2000 11,431,984 6.2
Source: City of Poway
(1) Assumes pass through of increased costs from MWD, and increased water purchase/sale 013%
per annum.
Historic Operating Results and Debt Service Coverage
The City has historically transferred fund balances to maintain operating and capital
replacement reserves. The following table illustrates the balance of these reserves for the past
six Fiscal Years.
CITY OF POWAY WATER SYSTEM
HISTORIC FUND BALANCE RESERVES
(Fiscal Year Ended June 30)
ml2 .19i1 19.9.2 ma ~ ~(2)
Operating
Reserve $2,769,751 $3,702,016 $4,007,162 $4,278,683 $2,551,893(1) $3,763,380
Replacement
Reserve $2,080,162 $3,378,936 $3,318,458 $3,425,339 $3,362,639 $3,021,230
Source: City of poway
(1) Reflects reallocation of Operating Reserve funds to construction of the Project.
(2) Unaudited.
The City is using $3,000,000 which had been transferred from the Operating Reserve in
1994 and set aside in a restricted account to provide funds for the Project.
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- -
.- The following table is a summary of audited operating results of the Water System for
the last five Fiscal Years, excluding amounts received and payable with respect to outstanding
general obligation bonds of the City (and its predecessor in interest). A copy of the most recent
audited financial statements of the City which include the Water System are included as
APPENDIX C hereto and the following summary operating results are qualified in their entirety
by reference to such statements, including the notes thereto.
CITY OF POWAY WATER SYSTEM
HISTORIC OPERATING RESULTS
(Fiscal Year Ended June 30)
1iS 1U1 11IZ nn ~
Operating Revenues $7,382,85i3l
Water Sales $6.714,326 $6,384.405 $6,128.900 $7,852.787
Connection Fees 1,533,987 1.306,437 73,202 349.305 118,453
Other ~ ~ ~ ~ 1Ull!l
Total Operating Revenues $8.284,467 $7.737.001 $6,246,187 $7.766,975 $7,988,048
Operating Expenses
General and Administration!' l $1,184,299 $1,418,179 $1,665,427 $1.598.969 $1,554,871
Maintenance and Operation 5114753 4822311 4 848 300 5 201 206 6000481
Total Operating Expenses $6,299,052 $6,240,490 $6,513,727 $6,800,175 $7.555,352
Net Operating Revenue $1,985,415 $1.496,511 ($267,540) $966,800 5432.696
-
Non Operating Revenue (Expense)
Interest Earned $500,475 $569,041 $665.398 $635,796 $642,503
Other') 3Z.lli. 3Z.lli. ~ ~ 3Z.lli.
Total Other Revenue $537,616 $606,182 $697,539 $662,037 $679,644
Net Revenues $2,523.031 $2,102,693 5429,999 $1.628,837 $1,112.340
SOURCE: City of Poway
(1) Includes overhead amounts allocated from City general fund
(2) From miscellaneous sources (e.g. assignments and penalties).
(3) See "Historic Water Sale Revenues" above for explanation of significant inaease in Water Revenues.
-
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Projected Operating Results and Debt Service Coverage
The City's estimated projected operating results for the Water System for the Fiscal
Years ending June 30, 1995 through June 30, 2000 are set forth below, excluding amounts
received and payable with respect to outstanding obligation bonds of the City (and its
predecessors in interest).
CITY OF POWA Y WATER SYSTEM
PROJECTED OPERATING RESULTS
(Fiscal Year Ended June 30)
~ UU 1UI UU 1DI ZQllll
Operating Revenues
Water Sales(2) $7,968.165 $8,832,106 $9,428,949 $10,048,980 $10,766.526 $11,431.984
Connection Fees(3) 78,196 400,400 129,850 132,450 135.100 137.800
Other''' ~ ~ ~ M.Q6!l ~ ~
Total Operating Revenues $8.100.029 $9,283,466 $9,611,289 $10,233,490 $10,957,316 $11.627.144
Operating Expenses'"
General and Administration $1,441,081 $1,434,167 $1,477,192 $1,521,508 $1,567,153 $1.614,198
Maintenance and Operation 6119886 6 704 866 6 732 988 7319276 7926743 8 520 054
Total Operating Expenses $7,560.972 $8,139.033 $8,210,180 $8,840,784 $9,493,896 $10,134,222
Net Operating Revenues $539.057 $1,144,433 $1,401,109 $1.392,706 $1.463,420 $1,492,922
Net Operating Revenue (Expense) $415,000(5)
Interest Earned $494.521 $517,450 $425,000 $435,000 -. $445.Q()(,
Other 3Z..M1 ~ .zaJlll ~ ~ ~
Total Other Revenues $531.662 $845,770 $444,170 $455,045 $465,950 $476.870
Net Revenues $1,070,719 $1,690,203 $1,845.279 $1,847,751 $1.929,370 $1.969,792
Debt Service-Bonds") N/A $86.097 $275.225 $276,084 $276,584 $271,752
Net Revenues After
Debt Service'.) $1,070,719 $1,604,106 $1,570,054 $1,571,668 $1,652,817 $1,698,040
Coverage of total Debt by
Net Revenues(e) N/A 19.63 6.70 6.69 6.98 7.25
SOURCE: City Poway
(1) Unaudited actual resuRs for July 1, 1994 through July 30, 1995.
(2) Projected water sales at current rates, etfective July 1, 1995. Assumes water purchase/sales in Fiscal Year
1994/95 increasing by 3% per annum, plus a 0.5% increase in projected new water connections each year. See
the caption "THE WATER SYSTEM - Projected Water Deliveries' above.
(3) Increase in Fiscal Year 1995196 reflects approval of development of 140 unns, expected to commence in such
year. Thereafter, number of connections projected to increase by 64 connedions in Fiscal Year 1996/97
through 1999/00. See "THE WATER SYSTEM - Water System Rates and Charges - Connection Fees' herein.
(4) General and Administrative Expenses projected to increase by estimated 3% per annum from 1995 levels and
Maintenance and Operation Expenses projected to increase by estimated 3% per annum plus anticipated
increases in MWD pass-through charges.
(5) Reflects reduction in reserves due to allocation to Project costs. Assumes return of 6% per annum on remaining
reserves.
(6) Preliminary, subject to change.
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_. -
- RISK FACTORS
The following factors, along with other information in this Official Statement, should be
considered by potential investors in evaluating the risks in the purchase of the Bonds.
Water System Demand and Growth
There can be no assurance that the local demand for Water Service will be maintained
at levels described in this Official Statement under the heading ''THE WATER SYSTEM."
Reduction in the level of demand could require an increase in rates or charges in order to
produce Net Revenues sufficient to comply with the City's rate covenant in the Indenture.
There can be no assurance that any other entity with regulatory authority over the Water
System will not adopt further restrictions on operation of the Water System.
Water System Expenses
There can be no assurance that the City's expenses for the Water System will be
consistent with the levels described in this Official Statement. Changes in technology, new
regulatory requirements, increases in the cost of energy or other expenses would reduce Net
Revenues, and could require substantial increases in rates or charges in order to comply with
the rate covenant. Such rate increases could increase the likelihood of nonpayment, and
could also decrease demand.
Constitutional Limit on Fees and Charges
..
If a portion of the Water System rates or connection charges were determined by a
court to exceed the reasonable costs of providing service, any fee which the City charges may
be considered to be a "special tax," which under Article XIIIA of the California Constitution
must be authorized by a two-thirds vote of the affected electorate. This requirement is
applicable to the City's rates for Water Service and connection charges. The reasonable cost
of providing the Water Service has been determined by the State Controller to include
depreciation and allowance for the cost of capital improvements. In addition, the Califomia
courts have determined that fees such as connection fees (capacity charges) will not be
special taxes if they approximate the reasonable cost of constructing Water System
improvements contemplated by the local agency imposing the fee. Such court determinations
have been codified in the Govemment Code of the State of California (Section 66000 e1 ~.).
Limited Recourse on Default
If the City defaults on its obligation to make payments under the Installment Purchase
Agreement, the Trustee, has the right to accelerate the total unpaid principal amount of the
Bonds. However, in the event of a default and such acceleration there can be no assurance
that the City will have sufficient Net Revenues to pay the accelerated Installment Payments.
Limitations on Remedies Available
- The enforceability of the rights and remedies of the Owners and the obligations of the
City may become subject to the following: the federal bankruptcy code and applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the
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- --
enforcement of creditors' rights generally, now or hereafter in effect; usual equitable principles
which may limit the specific enforcement under state law of certain remedies; the exercise by
the United States of America of the powers delegated to it by the Federal Constitution; and the
reasonable and necessary exercise, in certain exceptional situations, of the police power
inherent in the sovereignty of the State of Califomia and its governmental bodies in the
interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings, or
the exercising of powers by the federal or state government, if initiated, could subject the
Owners to judicial discretion and interpretation of their rights in bankruptcy or otherwise and
consequently may entail risks of delay, limitation, or modification of their rights.
No Obligation to Tax
The obligation of the Issuer to pay the principal of and interest on the Bonds does not
constitute an obligation of the Issuer for which the Issuer is obligated to levy or pledge any
form of taxation or for which the Issuer has levied or pledged any form of taxation. The
obligation of the Issuer to pay principal of and interest on the Bonds does not constitute a debt
or indebtedness of any Issuer, the City, the State of California or any of its political
subdivisions, within the meaning of any constitutional or statutory debt limitation or restriction.
Constitutional Limitations on Appropriations and Fees
Under Article XIIIB of the California Constitution, state and local government entities
have an annual "appropriations limit" which limits their ability to spend certain moneys called
"appropriations subject to 'limitation," which consists of tax revenues, certain state subventions
and certain other moneys, including user charges to the extent they exceed the costs
reasonably bome by the entity in providing the service for which it is levying the charge. In
general terms, the "appropriations limit" is to be based on certain fiscal year 1978179
expenditures, and is to be adjusted annually to reflect changes in the consumer price index,
population, and expenditures, and is to be adjusted annually to reflect changes in the
consumer price index, population, and services provided by these entities. Among other
provisions of Article XIIIB, if an entity's revenues in any year exceed the amount permitted to
be spend, the excess would have to be returned by revising tax rates or fee schedules over
the subsequent two years. The City is of the opinion that the Water Service rates and use
charges imposed by the City do not exceed the costs it reasonably bears in providing such
service.
THE ISSUER
The Issuer is a joint powers authority, organized pursuant to a Joint Exercise of Powers
Agreement, dated as of October 8,1991 (the "Agreement"), between the City and the poway
Redevelopment Agency (the 'Agency'). The Agreement was entered into pursuant to the
Government Code of the State of California, commencing with Section 6500. The Issuer is a
separate entity constituting a public instrumentality of the State of California and was formed for
the public purpose of assisting in financing and refinancing projects for the benefit of the City
and the Agency.
The Issuer is govemed by a board of five directors. The City Council of the City
constitutes the Board of Directors of the Issuer. The Issuer is specifically granted all of the
powers specified in the Bond Law, including but not limited to the power to issue bonds and to
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LA\952490097
.- sell such bonds to pUblic or private purchasers at public or by negotiated sale. The Issuer is
entitled to exercise the powers common to its members and necessary to accomplish the
purposes for which it was formed. These powers include the power to make and enter into
contracts; to employ agents and employees; to acquire, construct, manage, maintain and
operate buildings, works or improvements; to acquire, hold or dispose of property within the
City; and to incur debts, liabilities or obligations.
TAX EXEMPTION
In the opinion of Stradling, Yocca, Carlson & Rauth ("Bond Counsel"), based upon an
analysis of existing laws, regulations, rulings and court decisions, and assuming, among other
matters, compliance with certain covenants, interest on the Bonds is excluded from gross
income for federal income tax purposes under Section 103 of the Internal Revenue Code of
1986 (the "Code") and is exempt from State of California personal income taxes. Bond Counsel
is of the further opinion that interest on the Bonds is not a specific preference item for purposes
of the federal individual or corporate alternative minimum taxes, although Bond Counsel
observes that such interest is included in adjusted current eamings in calculating corporate
alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond
counsel is set forth in APPENDIX C hereto.
The Code imposes various restrictions, conditions and requirements relating to the
exclusion from gross income for federal income tax purposes of interest on obligations such as
the Bonds. The Issuer and the City have covenanted to comply with certain restrictions
designed to insure that interest on the Bonds will not be included in federal gross income.
Failure to comply with these covenants may result in interest on the Bonds being included in
federal gross income, possibly from the date of issuance of the Bonds. The opinion of Bond
Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to
determine (or to inform any person) whether any actions taken (or not taken) or events
occurring (or not occurring) after the date of issuance of the Bonds may adversely affect the tax
status of interest on the Bonds.
Certain requirements and procedures contained or referred to in the Indenture, the
Installment Purchase Agreement, the Tax Certificate and other relevant documents may be
changed and certain actions (including, without limitation, defeasance of the Bonds) may be
taken or omitted, under the circumstances and subject to the terms and conditions set forth in
such documents. Bond Counsel expresses no opinion as to any Bond or the interest thereon if
any such change occurs or action is taken or omitted upon the advice or approval of bond
counsel other than Stradling, Yocca, Carlson & Rauth.
Although Bond Counsel is of the opinion that interest on the Bonds is excluded from
gross income for federal income tax purposes and is exempt for State of California personal
income taxes, the ownership or disposition of, or the accrual or receipt of interest on the Bonds
may otherwise affect a Bond Owner's federal or state tax liability. The nature and extent of
these other tax consequences will depend upon the particular tax status of the Bond Owner and
the Bond Owner's other items of income or deduction. Bond Counsel expresses no opinion
regarding any such other tax consequences.
See APPENDIX C hereto for the form of Bond Counsel's opinion.
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I
NO LITIGATION
There is no proceeding or litigation of any nature now pending to restrain or enjoin the
issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the
validity of the Bonds, the proceedings of the Issuer taken with respect to the issuance or sale
thereof, the pledge or application of any moneys or securities provided for the payment of the
Bonds, the existence or powers of the Issuer or the title of any officers of the Issuer to their
respective positions. A certificate of the Issuer to this effect will be delivered on the date of
delivery of the Bonds.
RATING
[Standard & Poor's Ratings Group, a division of McGraw-Hili, ("Standard & Poor's")
and Moody's Investors Service ("Moody's) have assigned their municipal bond rating of "_"
and "_" respectively, to the Bonds with the understanding that upon delivery of the Bonds,
a policy insuring the payment when due of the principal of and interest with respect to the
Bonds will be issued by the Insurer.
This rating reflect only the views of such organization and an explanation of the
significance of the rating may be obtained from Standard & Poor's, 25 Broadway, New York,
New York 10004 and Moody's, 99 Church Street, New York, New York 10007. There is no
assurance that either rating will continue for any given period of time or that it will not be
revised downward or withdrawn entirely by such rating agency, if, in the judgment of such
rating agency, circumstances so warrant. The District and the Insurer undertake no
responsibility either to bring to the attention of the Owners the downward revision or --
withdrawal of any rating obtained or to oppose any such revision or withdrawal. Any such
downward revision or withdrawal of such rating may have an adverse effect on the market
price of the Bonds.]
FINANCIAL ADVISOR
The City has retained Public Financial Management, Inc., Newport Beach, California
as Financial Advisor for the sale of the Bonds. The Financial Advisor is not obligated to
undertake, and has not undertaken to make, an independent verification or to assume any
responsibility for the accuracy, completeness of faimess of the information contained in this
Official Statement.
Public Financial Management, is an independent advisory firm and is not engaged in
the business of underwriting, trading, or distributing municipal or other public securities.
Public Financial Management is a wholly-owned subsidiary of Marine Midland Bank, N.A.,
Buffalo, New York.
PROFESSIONAL FEES
In connection with the issuance of the Bonds, fees payable to Public Financial
Management, Inc. as Financial Advisor, Stradling, Yocca, Carlson & Rauth as Bond Counsel
and as Trustee are contingent upon the issuance of the Bonds.
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- APPROVAL OF LEGALITY
All legal matters in connection with the issuance of the Bonds are subject to the
approval of Stradling, Yocca, Carlson & Rauth, Newport Beach, California, Bond Counsel. A
copy of the approving opinion of Bond Counsel will be provided to the registered owners of the
Bonds, and the form of such opinion is attached hereto as APPENDIX C. Bond Counsel
undertakes no responsibility for the accuracy, completeness or fairness of this Official
Statement. Certain legal matters will be passed upon for the Issuer by , and
for the City by the City Attorney.
UNDERWRITING
The original purchase price to be paid for the Bonds, upon execution and delivery
thereof, is $ , being the principal amount of the Bonds less an Underwriter's
discount of $ , plus accrued interest of $ . The Underwriter intends to
offer the Bonds to the public initially at the prices and/or yield set forth on the cover page of this
Official Statement, plus accrued interest from October 1, 1995, which prices or yields may
subsequently change without any requirement of prior notice.
The Underwriter reserves the right to join with dealers and other underwriters in offering
the Bonds to the public. The Underwriter may offer and sell Bonds to certain dealers (including
dealers depositing Bonds into investment trusts) at prices lower than the public offering prices,
and such dealers may reallow any such discounts on sales to other dealers.
In reoffering Bonds to the public, the underwriter may overallocate or effect transactions
which stabilize or maintain the market prices for Bonds at levels above those which might ~
otherwise prevail. Such stabilization, if commenced, may be discontinued at any time.
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ADDITIONAL INFORMATION
Any statements in this Official Statement involving matters of opinion, whether or not
expressly so stated, are intended as such and not as representations of fact. This Official
Statement is not to be construed as a contract or agreement between the Issuer and the
purchasers or Owners of any of the Bonds.
The execution and delivery of this Official Statement have been authorized by the
members of the Issuer.
POWA Y PUBLIC FINANCING AUTHORITY
By
Chairman
*
.
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-
- APPENDIX A
SUMMARY OF CERTAIN DEFINED TERMS
AND PRINCIPAL LEGAL DOCUMENTS
-
A-1
LA\952490097
APPENDIX B
CITY OF POWA Y
GENERAL DEMOGRAPHIC AND FINANCIAL INFORMATION
The following material is descriptive of the City of poway and the surrounding
areas of San Diego County. It has been prepared by or excerpted from sources as noted
herein and has not been reviewed by Bond Counselor the Underwriter.
History and Location
poway developed as an unincorporated community until November 1980, when
its 33,500 residents voted to incorporate an area of about 38 square miles. It began its formal
existence as a City on December 1,1980. In November, 1986, the City annexed an additional
1,325 acres, for a total area of about 40 square miles. poway is located inland about three
miles east of Interstate Highway 15, and is surrounded on three sides by the City of San Diego.
Driving distance southerly to downtown San Diego or the San Diego International Airport is
about 25 miles. The terrain is hilly and steep in some areas with gentle slopes in the center of
the City. Poway is relatively new in that over 70% of the housing stock postdates 1970.
City Organization
The City has, since incorporation, been govemed and operated under the
Council-Manager form of government. The City Manager directs a work force of 197 full and
part-time employees and appoints department heads on the basis of specialized knowledge,
experience and education in their area of responsibility. The City employees are member5'of
the State Public Employees Retirement System. The contributions to the System are current
and no unfunded contractual liability exists for past services.
Climate
Poway, as part of San Diego County, has a relatively dry climate and its inland
location spares it much of the summer fog experienced along the coast. Temperatures are
frost-free over 350 days per year, and the City receives on the average approximately 11
inches of rain, principally between the months of October and April.
Population
At incorporation in 1980, there were about 33,500 in the City limits. Poway has
grown to 46,579 and expects to be built out according to general plan estimates at 52,000.
Poway is a low density community predominately of single family homes. Table 1 illustrates
comparative population figures,
B-1
~ - -- -
--
TABLE 1
SAN DIEGO COUNTY
TOTAL POPULATION BY JURISDICTION
1980-1994
% Change
1i8O 1m 199.1 1i9..2 1ii3
1. Carlsbad 35,490 63,451 64,300 65,700 67,200
2. Chura Vista 83,927 131,603 138,700 142,200 146,400
3. Coronado 18,790 26,934 26,600 26,700 23,350
4. Del Mar 5,017 5,215 4,880 4,980 5,050
5. EI Cajon 73,892 86,494 89,300 90,300 91,200
6. Encinitas N/A 55,017 56,000 56,600 57,600
7. Escondido 64,355 104,213 110,800 112,900 115,300
8. Imperial Beach 22,689 26,573 26,650 27,150 27,800
9. La Mesa 50,308 53,976 53,300 54,100 55,800
10. Lemon Grove 20,780 23,379 24,300 24,650 24,950
11. National City 48,772 56,649 55,700 58,700 56,600
12. Oceanside 76,698 125,823 33,700 138,300 141,900
13. Poway 44,368 44,450 45,400 46,350
14. San Diego 875,538 1,118,282 1,130,000 1,150,600 1,171,600
15. San Marcos 17,479 37,020 40,250 42,800 44,550
16. Santee 40,182 53,737 53,200 53,900 -- 54,600
17. Solana Beach N/A 14,761 13,000 13,200 13,400
18. Vista 35,834 67,832 74,200 75,800 78,100
19. Unincorporated 358917 414587 409 300 420 700 426 700
TOTAL 1,861,846 2,509,914 2,448,630 2,604,500 2,648,600
Source: California State Department of Finance. 1980 Census figures represent data as of
April 1 st 1980; all other data points are January 1 st estimates.
B-2
Assessed Valuation and Collections
The following Tables set forth assessed valuation growth in Poway, along with
historical collections and delinquencies. The City receives only a portion of the total tax
collections shown on Table 3. A portion of the basic 1 % property tax rate is received by other
taxing entities. After deducting such amounts, the City's share equals approximately 17% of
the 1% general tax levy or, for Fiscal Year 1993/94, approximately $3.2 million. This amount
may fluctuate from year to year due to growth in the Agency's redevelopment project area.
Approximately 33% of the City is within the Agency's project area. Assessed valuation
attributable to the Agency is approximately 42% of the total assessed valuation of the City.
TABLE 2
CITY OF POWAY
ASSESSED VALUATION
(As of June 30)
Total Percent
Fiscal Total Total Assessed Change From
::rDJ: Secured Unsecured Value Previous Year
1982(1) $ 883.493,134 $ 0 $ 883,493,134 -
1983 966,571,050 14,845,839 981,416,889 11.08%
1984 1,019,953,883 16,685,712 1,036,639,595 5.63
1985 1,109,674,392 18,010,665 1,127,685,057 8.78
1986 1,224,261,949 19,624,399 1,243,886,348 10.30 -
1987 1,371,840,241 18,277,448 1,390,117,689 11.76
1988 1,546,330,363 24,897,449 1,571,227,812 13.03
1989 1,744,013,209 27,045,506 1,771,058,715 12.72
1990 2,052,405,447 30,240,937 2,082,646,384 17.59
1991 2.413,737,613 37,219,612 2,450,957,225 17.68
1992 2,684,903,547 44,186,797 2,729,090,344 11.35
1993 2,858,029,834 54,214,861 2,912,244,695 6.71
1994 2,964,014,503 69,952,694 3,033,967,197 4.18
(1) The first year that general property tax assessments were first applied to the City
was in 1982.
Source: County of San Diego Assessor's Office
B-3
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TABLE 4
CITY OF POWAY
TEN LARGEST TAXPAYERS
(June 3D, 1994)
~ Assessed Valuation
Burnham Pacific Properties, Inc. $30,352,000
JMP Advisors Inc. 30,094,858
Stone ridge County Club Corp. 26,954,274
C.F. Poway Ltd. 25,351,104
Tech Business Center 17,147,015
R&R Partners - Poway 15,779,609
Beecroft, Joseph N. & Lois M. 11,923,832
Gateway Medical Building - Joint Venture 10,710,964
Poway Creekside Partners 9,136,744
Standard Pacific LP 8 251 770
$ 185 702170
$185,702,170 is 6.12% ofthe total assessed value in Fiscal Year 1993/94 of
$3,033,967,197. See Table 3 herein for a discussion of delinquencies in connection with the
payment of property taxes.
Source: San Diego County Assessor's Office and City Finance Division --
Audits
The City, all its funds and the Poway Redevelopment Agency are audited
annually by the certified public accounting firm of Moreland & Associations, Inc. of 610 Newport
Center Drive, Suite 600, Newport Beach, California 92660.
Copies of the audited financial statements for the respective fiscal years
1984/1985 through 1993/94 are on file with the City.
B-5
- -
- Retail and Total Taxable Sales
Retail sales in the City increased over 31.4% in the period of 1988 to 1993.
Total sales in the City increased over 40% in the same period. The following table present the
retail taxable transactions of the City of Poway and San Diego County for the calendar years
1988 through 1993.
TABLE 5
CITY OF POWA Y
NUMBER OF PERMITS AND VALUATION OF TAXABLE TRANSACTIONS
($ In thousands)
Retail Stores Total All Outlets
No. Of Taxable No of Taxable
Yur Permits Transactions %Change Permits Transactions % Change
1988 306 $ 202,885 - 957 $ 221,795 -
1989 298 222,549 9.7% 962 246,122 11.0%
1990 334 208,483 (6.3) 1,049 235,356 (4.4)
1991 341 198,701 (4.7) 1,084 233,083 (1.0)
1992 376 227,383 14.4 1,124 271,986 16.7
1993 382 226,616 17.2 1,169 310,603 14.2
Source: Califomia State Board of Equalization
-.
TABLE 6
COUNTY OF SAN DIEGO
NUMBER OF PERMITS AND VALUATION OF TAXABLE TRANSACTIONS
($ In thousands)
Retail Stores Total All Outlets
No. Of Taxable No of Taxable
Yur Permits Transactions % Chan!jle Permits Transactions % Change
1988 24,065 $13,734,895 - 67,412 $19,381,882 -
1989 25,305 14,883,857 8.4% 70,500 21,271,346 9.7%
1990 27,659 15,099,328 1.4 74,464 21,751,246 2.3
1991 27,695 14,599,366 (3.3) 73,092 20,836,975 (4.2)
1992 27,997 15,083.222 3.3 73,969 21,357,857 2.5
1993 29,119 15,241,382 1.0 75,046 21,576,327 1.0
Source: California State Board of Equalization
B-6
- --
Construction Activity
Residential and commercial construction values for Fiscal Years 1985/86
through 1993/94 are shown in Table 7.
TABLE 7
CITY OF POWAY
RESIDENTIAL AND COMMERCIAL CONSTRUCTION ACTIVITY
(As of June 30)
Value of Value of
Fiscal Number Dwelling Residential Commercial
YeiL of Permits Units Construction Construction
1985/86 1,303 579 $ 68,636,940 $ 2,544,400
1986/87 1,287 607 107,298,476 2,128,201
1987/88 1,948 626 91,244,133 20,778,035
1988/89 1,716 391 89,449,956 8,960,829
1989/90 1,619 325 70,107,550 1,343,125
1990/91 1,286 218 53,810,212 1,082,843
1991/92 1,273 50 17,152,028 16,157,812
1992193 1,183 40 12,870,944 13,887,733
1993/94 1,210 81 19,829,254 915,093 -
Source: City of Poway Planning Department
Income
The following table compares effective buying income ("EBI") on an aggregate
and median household basis forthe years 1990 to 1993 for San Diego County, the State of
Califomia and the United States. EBI is a classification developed exclusively by Sales &
Marketing Management to distinguish it from other sources reporting income statistics. EBI is
defined as person income less personal tax and non-tax payments - a number often referred to
as "disposable" or "after-tax" income.
Personal income is the aggregate of wages and salaries, other labor related
income (such as employer contributions to private pension funds), proprietor's income, rental
income (which includes imputed rental income of owner-occupants of non-farm dwellings),
dividends paid by corporations, interest income from all sources, and transfer payments (such
as pensions and welfare assistance).
Deducted from this total are personal taxes (federal, state, and local), non-tax
payments (fines, fees, penalties, etc.), and personal contributions to social insurance.
B-7
.
-
TABLE 8
SAN DIEGO COUNTY
EFFECTIVE BUYING INCOME
(Yearly Average for Calendar Years 1990 through 1993)
Median Household
Buying Income Effecting
Year and Area 1000's Omitted) Buying Income
1990
San Diego County $ 41,179,182 $32,013
California 477,784,771 33,342
United States 3,499,365,237 27,912
1991
San Diego County 40,840,447 35,776
California 490,749,649 36,943
United States 3,728,967,043 32,073
1992
San Diego County 42,282,698 36,502
Califomia 509,152,667 37,686
- United States 3,916,947,023 33,178
~
1993
San Diego County 43,795,963 38,082
California 528,958,745 39,330
United States 4,169,724,052 35,056
Source: Bill Publications - Sales & Marketing Management Survey of Buying Power.
Housing
The average selling price for new and existing single family homes is
approximately $281,000. 1990 median income for Poway was to be $53,252, highest of
incorporated cities in the County. The median age of Poway residents is 32.6 years, and the
family/household size was 3.14 in 1995. Owner occupancy is high, and Poway is
predominantly a single family community.
Employment
The City of Poway is primarily a residential community, thus, there are few major
employers in the community. The City itself, the Pomerado Hospital District, and the Poway
Unified School District are the largest employers in the area. Numerous small businesses
make up the rest of the employment base in the community. In addition, there are plans in
place to add to the employment base by developing the South Poway Industrial Park. Civilian
labor force statistics for the City are unavailable.
B-8
.' ..-"--
- _' _~_ '-. Poway is part of the Metropolitan Statistical Area (MSA) comprised of San Diego
-"-.
County. The two tables which follow set forth information with respect to employment by
industry groups and the labor force in general in the County of San Diego.
TABLE 9
COUNTY OF SAN DIEGO
EMPLOYMENT BY MAJOR INDUSTRY GROUP
(1990 - 1994)
Maior Industrv Grouo
19iQ .1.9i1 .1m 1m ~
Govemment 176,800 178,700 179,300 179,100 180,600
Services 275,700 281,200 283,600 287,300 294,500
Retail Trade 193,800 191,100 179,100 185,800 184,100
Manufacturing 136,500 131,700 124,100 117,500 112,300
Finance, Insurance,
Real Estate 67,900 66,000 61,100 62,200 - ro,900
Transportation and
Public Utilities 37,100 36,500 34,800 35,700 35,800
Construction 62,300 58,100 43,100 39,500 40,000
Wholesale Trade 44,300 43,900 42.300 39,700 41,300
Agriculture N/A 10,550 10,600 10,700 10,500
Mineral Extraction 700 -1QQ 500 . 400 ~
-
Total 995,100 998,450 958,500 957,900 960,400
Source: State of Califomia Employment Development Department as compiled by the
Economic
Research Bureau of San Diego.
B-9
-
.- TABLE 10
COUNTY OF SAN DIEGO
CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT
(1985 -1994)
Unemployment
Yur Labor Force Emoloved(2) Unemoloyed Ratiol1 )
1985 967,200 915,900 51,300 5.3%
1986 1,010,900 960,500 50,400 5.0
1987 1,059,100 1,011,400 47,700 4.5
1988 1,126,500 1,078,300 48,200 4.3
1989 1,173,400 1,127,200 46,200 3.9
1990 1,174,400 1,121,600 52,800 4.5
1991 1,176,200 1,104,100 72,100 6.1
1992 1,213,300 1,124,6700 88,700 7.3
1993 1,218,400 1,123,700 94,700 7.8
1994 1,234,500 1,146,000 88,500 7.2
1995 (3) 1,203,800 1,123,800 80,000 6.6
(1) Unadjusted for season.
(2) Does not equal totals in Table 10 due to Bureau of Labor Statistics method of calculation.
(3) Estimated.
-. Source: State of Califomia Employment Development Department
- .
TABLE 11
CITY OF POWA Y
TEN PRINCIPAL EMPLOYERS
(June, 1995)
Type of Number of
t:ia.lne Business Emplovees (1)
poway Unified School District School 3,500
Pomerado Hospital Hospital 700
Anacomp Inc. Manufactures micrographic 671
equipment
Wal-Mart Retail department store 300
City of Poway Govemment 230
Executone Information Systems Business telephone 200
systems
Lucky's Grocery store 134
Target Retail department store 125
New Poway Ford Automobile dealer 80
Vons Grocery store 74
-- (1) Includes part-time employees.
Source: City of Poway
B-10
Transportation
Poway is served by a variety of transportation modes. Commercial air travel is
supplied by Lindbergh Field, approximately 25 miles south in San Diego, and is supplemented
by. private and charter plane service from the Palomar Airport, about 20 minutes to the west.
Automobile travel is facilitated by Interstate 15 which runs north/south several miles to the
west of Poway. Bus travel is supplied by the San Diego County Regional Transit District and
is supplemented by commuter service from poway to downtown San Diego.
Services and Facilities
The City of Poway supplies its residents with water and sewer service. Power
is supplied by San Diego Electric and Gas, and telephone service by Pacific Bell. The City
has its own parks and community services departments and provides fire protection service,
but contracts for police service from the County.
Health care facilities are provided by Pomerado Hospital, a 130-bed, full-
service facility. Educational facilities in the Poway Unified School District include 17
elementary schools (12 public and 5 private), 3 middle schools and 3 high schools, one of
which is a continuation school. These educational facilities serve the populace of Poway as
well as the neighboring communities of Rancho Bemardo and Rancho Penasquitos. Several
schools within the Authority have recently been awarded national honors for excellence.
The community is served by four savings and loan associations and six banks.
Recreational facilities in the City of Poway include two community parks, one at
the Community Center and one surrounding Lake Poway, a man-made lake. The Community
Center also includes lighted softball/baseball fields and a swimming pool. Golfing is available
at local nonmembership country clubs. A new 815-seat Poway Center for the Performing Arts
opened in 1990, and features professional touring artists, entertainers and community
programs. residents of Poway have excellent access to cultural and recreational facilities in
the metropolitan San Diego area as well.
B-11
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-
APPENDIX C
FORM OF FINAL OPINION OF BOND COUNSEL
-
--
,.,-
C-1
LA\952490097
~- -.- -
APPENDIX D
FORM OF CONTINUING DISCLOSURE CERTIFICATE
..
D-1
LA\952490097
.-
- POWAY PUBLIC FINANCING AUTHORITY
WATER REVENUE BONDS
SERIES 1995
PURCHASE AGREEMENT
,1995
Poway Public Financing Authority
13325 Civic Center Drive
Poway, California 92064
City of Poway
13325 Civic Center Drive
Poway, California 92064
Ladies and Gentlemen:
"
The undersigned (the "Underwriter") hereby offers to enter into this Purchase
Agreement with you, the Poway Public Financing Authority (the "Authority") and the CIty of
Poway (the ("City"), for the purchase by the Underwriter and the delivery by the Authority
of the Bonds specified below. The proceeds of the Bonds will be used to fmance certain
improvements to the water system of the City (the "Water System"). This offer is made
subject to acceptance by you prior to 11 :59 p.m., Los Angeles time, on the date hereof. Upon
such acceptance, this Purchase Agreement shall be in full force and effect in accordance with
its terms and shall be binding upon you and the Underwriter. All terms not defined herein
shall have the meanings set forth in the Trust Agreement (defmed below).
L Upon the terms and conditions and upon the basis of the representations
herein set forth, the Underwriter hereby agrees to purchase from the Authority for offering to
the public, and the Authority hereby agrees to execute and deliver to the Underwriter, all (but
not less than all) of the $ aggregate principal amount of the Authority's Water
Revenue Bonds, Series 1995 (the "Bonds") to be dated as of October 1, 1995 (and more fully
described in the Official Statement), at a price of $ , being the principal amount
of the Bonds ($ ) less original issue discount of $ , plus accrued
interest of $ and less an Underwriter's discount of $
The Underwriter agrees to make a bona fide public offering of all the Bonds at
the initial public offering price or prices (or yields) set forth on Exhibit A attached hereto and
made a part hereof; provided, however, the Underwriter reserves the right to change such
95269004.LA I L
LA\952690080 7
ATTACHMENT F nCT 17 1995 ITEM I
initial public offering price as the Underwriter deems necessary or desirable, in its sole
discretion in connection with the marketing of the Bonds, and to sell the Bonds to certain
dealers (including dealers depositing the Bonds into investment trusts) and others at prices
lower than the initial offering prices or higher than the yields set forth in the Official
Statement. The Underwriter also reserves the right (a) to over-allot or effect transactions that
stabilize or maintain the market price of the Bonds at a level above that which might
otherwise prevail in the open market, and (b) to discontinue such stabilizing, if commenced,
at any time. A "bona fide public offering" shall include an offering to institutional investors
or registered investment companies, regardless of the number of such investors to which the
Bonds are sold.
The Bonds shall be as described in and shall be secured under and pursuant to
the Trust Agreement, dated as of October 1, 1995 (the "Trust Agreement"), between the
Authority, the City and Bank of America National Trust and Savings Association (the
"Trustee"), substantially in the form previously submitted to the Underwriter with only such
changes therein as shall be mutually agreed upon by the Authority, the Trustee and the
Underwriter.
2. The Authority and the City have authorized the Underwriter to use and
distribute, in connection with the offer and sale of the Bonds, the Preliminary Official
Statement dated , 1995 relating to the Bonds, which, together with the cover
page and all appendices thereto, is herein called the "Preliminary Official Statement." J"!:1e
Authority and the City hereby certify such Preliminary Official Statement to be fmal as of its
date for purposes ofSEC Rule 15c2-12 adopted by the Securities and Exchange Commission
on November 28, 1989 ("Rule 15c2-12"), with the exception of certain fmal pricing and
related information referred to in Rule 15c2-12. The Underwriter will distribute a single
copy of the Preliminary Official Statement to any potential customer on request.
3. The Authority shall deliver to the Underwriter five (5) copies of the
Official Statement manually executed by authorized officers thereof. The Authority shall
also deliver a sufficient number of copies of the Official Statement to enable the Underwriter
to distribute a single copy of each Official Statement to any potential customer of the
Underwriter requesting an Official Statement during the time period beginning when the
Official Statement becomes available and ending on the End Date (defmed below). The
Authority shall deliver these copies to the Underwriter within seven (7) business days after
the execution of this Purchase Agreement and in sufficient time to accompany or precede any
sales confirmation that requests payment from any customer of the Underwriter. The
Underwriter shall inform the Authority and the City in writing of the End Date, and
covenants to file the Official Statement with a nationally recognized municipal securities
information repository ("NRMSIR") on a timely basis.
"End Date" as used herein is that date which is the earlier of:
95269004.LAl 2.
LA \952690080
.
-
(a) ninety (90) days after the end of the underwriting period (as defmed in Rule
15c2-12; or
(b) the time when the Official Statement becomes available from a NRMSIR,
but in no event less than twenty-five (25) days after the underwriting period (as defmed in
Rule 15c2-12) ends.
The Authority and the City have authorized the use of the Official Statement in
connection with the public offering of the Bonds. The Underwriter has distributed a single
copy of each Preliminary Official Statement to potential customers on request.
4. At 9:00 A.M., California time, on , 1995, or at such other
time or on such earlier or later business day as shall have been mutually agreed upon by the
Authority, the City and the Underwriter, the Authority and the City will deliver (i) the Bonds
to The Depository Trust Company ("DTC") in New York, New York, and (ii) the closing
documents hereinafter mentioned at the offices of Stradling, Y occa, Carlson & Rauth,
Newport Beach, California, or another place to be mutually agreed upon by the Authority and
the Underwriter. The Underwriter will pay the purchase price of the Bonds as set forth in
Section 1 hereof by wire transfer of immediately available funds. This payment and delivery,
together with the delivery of the aforementioned documents, is herein called the "Closing."
5. The Authority represents, warrants and covenants to the Underwrite~
that:
(a) The Authority is a joint powers authority duly organized and
validly existing pursuant to the laws of the State of California and has all necessary power
and authority to enter into and perform its duties under the Trust Agreement, the Installment
Purchase Agreement, dated as of October I, 1995, between the Authority and the City (the
"Installment Purchase Agreement"), the Assignment Agreement, dated as of October I, 1995
(the "Assignment Agreement"), between the Authority and the Trustee, the Ongoing
Disclosure Agreement, dated as of October I, 1995 (the "Ongoing Disclosure Agreement")
among the Authority, the City and the Trustee and this Purchase Agreement (collectively, the
"Authority Documents") and, when executed and delivered by the respective parties thereto,
the Authority Documents will constitute the legal, valid and binding obligations of the
Authority in accordance with their respective terms.
(b) Neither the execution and delivery of the Authority Documents,
or the approval and execution of the Official Statement or this Purchase Agreement, and
compliance with the provisions on the Authority's part contained therein, nor the
consummation of any other of the transactions herein and therein contemplated, nor the
fulfillment of the terms hereof and thereof, conflicts with or constitutes a breach of or default
under nor contravenes any law, administrative regulation, judgment, decree, loan agreement,
indenture, bond, note, resolution, agreement or other instrument to which the Authority is a
95269004.LAl 3.
LA \952690080
party or is othetwise subject, nor does any such execution, delivery, adoption or compliance
result in the security interest or encumbrance of any nature whatsoever upon any of the
properties or assets of the Authority under the terms of any such law, administrative
regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or
other instrument, except as provided by the Authority Documents.
(c) Except as may be required under blue sky or other securities laws
of any state, there is no consent, approval, authorization or other order of, or filing with, or
certification by, any regulatory authority having jurisdiction over the Authority required for
the execution and delivery of the Bonds or the consummation by the Authority of the other
transactions contemplated by the Official Statement and this Purchase Agreement.
(d) To the best of the knowledge of the Authority, there is, and on the
Closing there will be, no action, suit, proceeding or investigation at law or in equity before or
by any court or governmental agency or body pending or threatened against the Authority to
restrain or enjoin the delivery of any of the Bonds, or the payments to be made pursuant to
the Trust Agreement, or in any way contesting or affecting the validity of the Authority
Documents or the authority of the Authority to approve this Purchase Agreement, or enter
into the Authority Documents or contesting the powers of the Authority to enter into or
perform its obligations under any of the foregoing or in any way contesting the powers of the
Authority in connection with any action contemplated by this Purchase Agreement, nor is
there any basis for any such action, suit, proceeding or investigation. -
(e) The Preliminary Official Statement provided to the Underwriter
has been deemed final by the Authority, as required by Rule 15c2-12. As of the date thereof
and at all times subsequent thereto up to and including the End Date, the information relating
to the Authority contained in the Official Statement was and will be complete. The
information relating to the Authority and the Bonds contained in the Official Statement under
the headings "THE BONDS" and "THE AUTHORITY" is true and correct in all material
respects and such information does not contain any untrue or misleading 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.
(f) The Authority agrees to cooperate with the Underwriter in
endeavoring to qualify the Bonds for offering and sale under the securities or blue sky laws
of such jurisdictions of the United States as the Underwriter may request; provided, however,
that the Authority will not be required to execute a special or general consent to service of
process in any jurisdiction in which it is not now so subject or to qualify to do business as a
foreign Authority in any jurisdiction where it is not so qualified.
(g) By official action of the Authority prior to or concurrently with
the execution hereof, the Authority has duly approved the distribution of the Official
Statement, and has duly authorized and approved the execution and delivery of, and the
95269004.LAI 4.
LA \952690080
.-.
- performance by the Authority of the obligations on its part contained in the Authority
Documents and the consummation by it of all other transactions contemplated by the Official
Statement and this Purchase Agreement.
(h) The Authority is not in breach of or default under any applicable
law or administrative regulation of the State of California or the United States or any
applicable judgment or decree or any loan agreement, indenture, bond, note, resolution,
agreement or other instrument to which the Authority is a party or is otherwise subject, and
no event has occurred and is continuing which, with the passage oftime or the giving of
notice, or both, would constitute a default or an event of default under any such instrument.
(i) The Authority is not in default, nor has been in default at any
time, as to the payment of principal or interest with respect to an obligation issued by the
Authority or successor of the Authority or with respect to an obligation guaranteed by the
Authority as guarantor or successor of a guarantor.
G) If between the date of this Purchase Agreement and the End Date
an event occurs, of which the Authority has knowledge, which might or would cause the
information relating to the Authority or the Authority's functions, duties and responsibilities
contained in the Official Statement, as then supplemented or amended, to contain an untrue
statement of a material fact or to omit to state a material fact required to be stated therein or
necessary to make such information therein, in the light of the circumstances under which it
was presented, not misleading, the Authority will notify the Underwriter, and if, in the
opinion of the Underwriter, such event requires the preparation and publication of a
supplement or amendment to the Official Statement, the Authority will cooperate with the
Underwriter in the preparation of an amendment or supplement to the Official Statement in a
form and in a manner approved by the Underwriter, provided all expenses thereby incurred
will be paid for by the Authority.
(k) If the information relating to the Authority, its functions, duties
and responsibilities contained in the Official Statement is amended or supplemented pursuant
to the immediately preceding subparagraph, at the time of each supplement or amendment
thereto and (unless subsequently again supplemented or amended pursuant to such
subparagraph) at all times subsequent thereto up to and including the date of the Closing, the
portions of the Official Statement so supplemented or amended (including any fmancial and
statistical data contained therein) will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make such
information therein, in the light of the circumstances under which it was presented, not
misleading.
(I) No consent, approval, authorization or other action by an
governmental or regulatory authority that has not been obtained is or will be required of the
Authority for the delivery and sale of the Bonds or the consummation of the other
95269004.LAI 5.
LA\952690080
transactions contemplated by this Purchase Agreement and the Official Statement, except as
may be required under the state securities or blue sky laws in connection with the sale of the
Bonds by the Underwriter.
(m) Substantially all the proceeds from the sale of the Bonds (after
deducting the expenses of issuance and sale of the Bonds and any interest during construction
paid for from such proceeds) will be used to construct and acquire the Project and the
Authority will not take or omit to take any action which action or omission will in any way
cause the proceeds from the sale of the Bonds to be applied in a manner contrary to that
provided in the Trust Agreement, as amended from time to time.
(n) The Authority will deliver all opinions, Bonds, letters and other
instruments and documents reasonably required by the Underwriter and this Purchase
Agreement.
(0) Any certificate of the Authority delivered to the Underwriter shall
be deemed a representation and warranty by the Authority to the Underwriter as to the
statements made therein.
(P) Other than as described in the Official Statement, as of the time of
acceptance hereof and as of the Closing the Authority does not and will not have outstanding
any indebtedness which is secured by a lien on the Revenues superior to or on a parity with
the lien of the Bonds thereon.
(q) Between the date of this Purchase Agreement and the date of
Closing, the Authority will not, without the prior written consent of the Underwriter, and
except as disclosed in the Official Statement, offer or issue any Bonds, notes or other
obligations for borrowed money, or incur any material liabilities, direct or contingent.
6. The City represents, warrants and covenants to the Underwriter that:
(a) The City is a general law city and municipal corporation, duly
organized and validly existing pursuant to the Constitution and laws of the State of California
and has all necessary power and authority to enter into and perform its duties under the Trust
Agreement, the Installment Purchase Agreement, the Ongoing Disclosure Agreement and
this Purchase Agreement (collectively, the "City Documents") and, when executed and
delivered by the respective parties thereto, the City Documents will constitute the legal, valid
and binding obligations of the City in accordance with their respective terms.
(b) Neither the execution and delivery of the City Documents, or the
approval and execution of the Official Statement or this Purchase Agreement, and
compliance with the provisions on the City's part contained therein, nor the consummation of
any other of the transactions herein and therein contemplated, nor the fulfillment of the terms
95269004.LAl 6.
LA \952690080
hereof and thereof, conflicts with or constitutes a breach of or default under nor contravenes
any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note,
resolution, agreement or other instrument to which the City is a party or is otherwise subject,
nor does any such execution, delivery, adoption or compliance result in the security interest
or encumbrance of any nature whatsoever upon any of the properties or assets of the City
under the terms of any such law, administrative regulation, judgment, decree, loan
agreement, indenture, bond, note, resolution, agreement or other instrument, except as
provided by the City Documents.
(c) Except as may be required under blue sky or other securities laws
of any state, there is no consent, approval, authorization or other order of, or filing with, or
certification by, any regulatory authority having jurisdiction over the City required for the
execution and delivery of the Bonds or the consummation by the City of the other
transactions contemplated by the Official Statement and this Purchase Agreement.
(d) To the best of the knowledge of the City, there is, and on the
Closing there will be, no action, suit, proceeding or investigation at law or in equity before or
by any court or governmental agency or body pending or threatened against the City to
restrain or enjoin the delivery of any of the Bonds, or the payments to be made pursuant to
the Trust Agreement, or in any way contesting or affecting the validity of the City
Documents or the authority of the City to approve this Purchase Agreement, or enter into the
City Documents or contesting the powers of the City to enter into or perform its obligations
under any of the foregoing or in any way contesting the powers of the City in connection
with any action contemplated by this Purchase Agreement, nor is there any basis for any such
action, suit, proceeding or investigation.
(e) The Preliminary Official Statement provided to the Underwriter
has been deemed final by the City, as required by Rule 15c2-12. As of the date thereof and at
all times subsequent thereto up to and including the End Date, the information relating to the
City, the Bonds and the Water System contained in the Official Statement was and will be
complete. The information relating to the City, the Bonds and the Water System contained in
the Official Statement under the headings "THE BONDS," "THE CITY," and "THE
WATER SYSTEM" (excluding fmancial and statistical data) is true and correct in all
material respects and such information does not contain any untrue or misleading 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.
(f) The City agrees to cooperate with the Underwriter in endeavoring
to qualify the Bonds for offering and sale under the securities or blue sky laws of such
jurisdictions of the United States as the Underwriter may request; provided, however, that the
City will not be required to execute a special or general consent to service of process in any
jurisdiction in which it is not now so subject or to qualify to do business as a foreign City in
any jurisdiction where it is not so qualified.
95269004.LAI 7.
LA \952690080
(g) By official action of the City prior to or concurrently with the
execution hereof, the City has duly approved the distribution of the Official Statement, 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 City Documents and the consummation by
it of all other transactions contemplated by the Official Statement and this Purchase
Agreement.
(h) The City is not in breach of or default under any applicable law or
administrative regulation of the State of California or the United States or any applicable
judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement 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.
(i) The City is not in default, nor has been in default at any time, as
to the payment of principal or interest with respect to an obligation issued by the City or
successor of the City or with respect to an obligation guaranteed by the City as guarantor or
successor of a guarantor.
G) If between the date of this Purchase Agreement and the End Date
an event occurs, of which the City has knowledge, which might or would cause the .
information relating to the City, the Water System or the City's functions, duties and
responsibilities contained in the Official Statement, as then supplemented or amended, to
contain an untrue statement of a material fact or to omit to state a material fact required to be
stated therein or necessary to make such information therein, in the light of the circumstances
under which it was presented, not misleading, the City will notify the Underwriter, and if, in
the opinion of the Underwriter, such event requires the preparation and publication of a
supplement or amendment to the Official Statement, the City will cooperate with the
Underwriter in the preparation of an amendment or supplement to the Official Statement in a
form and in a manner approved by the Underwriter, provided all expenses thereby incurred
will be paid for by the City.
(k) If the information relating to the Water System, the City, its
functions, duties and responsibilities contained in the Official Statement is amended or
supplemented pursuant to the immediately preceding subparagraph, at the time of each
supplement or amendment thereto and (unless subsequently again supplemented or amended
pursuant to such subparagraph) at all times subsequent thereto up to and including the date of
the Closing, the portions of the Official Statement so supplemented or amended (including
any financial and statistical data contained therein) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to make
such information therein, in the light of the circumstances under which it was presented, not
misleading.
95269004.LAI 8.
LA \952690080
--
(I) The City covenants that it will comply with all tax covenants
relating to it in the City Documents, the Tax Certificate of the City and this Purchase
Agreement.
(m) The written information supplied by the City to the Underwriter
with respect to the fmancial information relating to the Water System is true, correct and
complete in all material respects for the purposes for which it was supplied.
(n) No consent, approval, authorization or other action by an
governmental or regulatory City that has not been obtained is or will be required of the City
for the delivery and sale of the Bonds or the consummation of the other transactions
contemplated by this Purchase Agreement and the Official Statement, except for such
licenses, Bonds, approvals, variances or permits which may be necessary for the construction
or operation of the Water System which the City has applied for (or will apply for in the
ordinary course of business) and expects to receive, and except as may be required under the
state securities or blue sky laws in connection with the sale of the Bonds by the Underwriter.
(0) Substantially all the proceeds from the sale of the Bonds (after
deducting the expenses of issuance and sale of the Bonds and any interest during construction
paid for from such proceeds) will be used to construct and acquire the Project and the City
will not take or omit to take any action which action or omission will in any way cause the
proceeds from the sale of the Bonds to be applied in a manner contrary to that provided in the
Trust Agreement, as amended from time to time.
(P) The City will deliver all opinions, Bonds, letters and other
instruments and documents reasonably required by the Underwriter and this Purchase
Agreement.
(q) Any certificate of the City delivered to the Underwriter shall be
deemed a representation and warranty by the City to the Underwriter as to the statements
made therein.
(r) Other than as described in the Official Statement, as of the time of
acceptance hereof and as of the Closing the City does not and will not have outstanding any
indebtedness which is secured by a lien on the Net Water Revenues superior to or on a parity
with the lien of the Bonds thereon.
(s) Between the date of this Purchase Agreement and the date of
Closing, the City will not, without the prior written consent of the Underwriter, and except as
disclosed in the Official Statement, offer or issue any Bonds, notes or other obligations for
borrowed money, or incur any material liabilities, direct or contingent.
95269004.LA I 9.
LA \952690080
- --
7. The Underwriter has entered into this Purchase Agreement in reliance
upon the representations, warranties and agreements of the Authority and the City contained
herein, and the opinions of Bond Counsel, Counsel to the Trustee, counsel to the City and
Counsel to the Authority required hereby. The Underwriter's obligations under this Purchase
Agreement are and shall be subject to the following further conditions:
(a) At the time of Closing, this Purchase Agreement, the Trust
Agreement, the Installment Purchase Agreement the Assignment Agreement and the
Ongoing Disclosure Agreement (collectively the "Legal Documents") all as described in the
Official Statement, 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 Official Statement
shall not have been amended, modified or supplemented except as may have been agreed to
in writing by the Underwriter, and there shall be in full force and effect such resolutions as,
in the opinion of Stradling, Y occa, Carlson & Rauth (herein called "Bond Counsel"), shall be
necessary in connection with the transactions contemplated hereby.
(b) At or prior to the Closing, the Underwriter shall receive the
following documents, in each case satisfactory in form and substance to them:
(I) The unqualified approving opinion of Bond Counsel, dated
the date of Closing, addressed to the Authority and the Underwriter (or a reliance letter
to the Underwriter), in substantially the form attached as APPENDiX C to the Om~ial
Statement;
(2) A supplemental opinion of Bond Counsel, addressed to the
underwriter, in form and substance to the effect that;
(a) The statements and information contained in the
Official Statement on the cover page relating to tax exemption, the description
of the Bonds and security for the Bonds, and statements under the captions
"INTRODUCTION," "THE BONDS," "SECURITY FOR THE BONDS,"
"TAX EXEMPTION" and "APPENDIX A" and "APPENDIX C," to the extent
they purport to summarize information concerning the Bonds and certain
provisions of the Legal Documents and the opinion of such counsel, present a
fair and accurate summary of such information and such provisions for purposes
of use in the Official Statement;
(b) The Bonds are exempt from registration under the
Securities Act of 1933, as amended (the "1933 Act"), and the Trust Agreement
is exempt from qualification as an Trust Agreement pursuant to the Trust
Agreement Act of 1939, as amended; and
\
9S269004.lA I 10.
lA\9S2690080
(c) The Purchase Agreement has been duly authorized,
- executed and delivered by the Authority and the City, and, assuming due
authorization, execution and delivery by the other parties thereto, constitutes
legal, valid and binding agreement of the Authority and the City enforceable
against each in accordance with its terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency or other laws affecting the enforcement of
creditors' rights generally and equitable remedies if equitable remedies are
sought, and except as the enforceability of the indemnification provisions
contain in the Purchase Agreement may be limited by applicable securities laws
or public policy.
(3) An opinion of the Stephen M. Eckis, Esq., Counsel to the
City, dated the date of Closing in form and substance satisfactory to the Underwriter
and its counsel, addressed to the Underwriter, to the effect that:
(i) the City is a municipal corporation and general law
city, duly organized and validly existing under the Constitution and the laws of
the State of California;
(ii) the preparation and distribution of the Preliminary
Official Statement and the Official Statement and this Purchase Agreement have
been duly approved by the City;
.
(iii) the resolution of the City approving and
authorizing the execution and delivery of the Official Statement, this Purchase
Agreement and the City Documents has been duly adopted at a meeting of the
governing body of the City which was called and held pursuant to law and with
all public notice required by law and at which a quorum was present and acting
throughout;
(iv) to the best knowledge of such counsel, after
reasonable investigation, there is no action, suit, proceeding or investigation at
law or in equity before or by any court, public board or body, pending or, to the
best knowledge of such counsel, threatened against or affecting the City, which
would adversely impact the City's ability to complete the transactions described
in and contemplated by the Official Statement, to restrain or enjoin the
payments under, or in any way contesting or affecting the validity of the City
Document, or the transactions described and defined in the Official Statement
wherein an unfavorable decision, ruling or finding would adversely affect the
validity and enforceability of the City Documents;
(v) the execution and delivery of the City Documents
and the approval of the Official Statement, and compliance with the provisions
95269004.LAl 11.
LA \952690080
thereof and hereof, under the circumstances contemplated thereby, 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;
(vi) City Documents have been duly authorized,
executed and delivered by the City, and, assuming due authorization, execution
and delivery by the other parties thereto, constitute legal, valid and binding
agreements of the City enforceable in accordance with their respective terms,
except as the 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 sought and by the limitations on legal
remedies imposed on actions against public agencies in the State ofCalifomia;
(vii) no authorization, approval, consent, or other order
of the State of California or any other governmental authority or agency within
the State of California is required for the valid authorization, execution and
delivery of the City Documents and the approval of the Official Statement;
(viii) the water availability charges and monthly water
usage fees were duly approved and adopted by the City, and are valid and
enforceable at the current levels levied by the City; and .
(ix) nothing has come to their attention which would
lead them to believe that the information relating to the City or the Water
System contained in the Official Statement contains an untrue statement or
omits to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(4) An opinion of the , Counsel to the
Authority, dated the date of Closing in form and substance satisfactory to the
Underwriter and its counsel, addressed to the Underwriter, to the effect that:
(i) the Authority is a joint powers authority duly
organized and validly existing under the laws of the State of California;
(ii) the preparation and distribution of the Preliminary
Official Statement and the Official Statement and this Purchase Agreement have
been duly approved by the Authority;
(iii) the resolution of the Authority approving and
authorizing the execution and delivery of the Official Statement, this Purchase
95269004.LAI 12.
LA \952690080
Agreement and the Authority Documents has been duly adopted at a meeting of
the governing body of the Authority which was called and held pursuant to law
and with all public notice required by law and at which a quorum was present
and acting throughout;
(iv) to the best knowledge of such counsel, after
reasonable investigation, there is no action, suit, proceeding or investigation at
law or in equity before or by any court, public board or body, pending or, to the
best knowledge of such counsel, threatened against or affecting the Authority,
which would adversely impact the Authority's ability to complete the
transactions described in and contemplated by the Official Statement, to restrain
or enjoin the payments under, or in any way contesting or affecting the validity
of the Authority Document, or the transactions described and defmed in the
Official Statement wherein an unfavorable decision, ruling or fmding would
adversely affect the validity and enforceability of the Authority Documents;
(v) the execution and delivery of the Authority
Documents and the approval of the Official Statement, and compliance with the
provisions thereof and hereof, under the circumstances contemplated thereby, do
not and will not in any material respect conflict with or constitute on the part of
the Authority a breach of or default under any agreement or other instrument to
which the Authority is a party or by which it is bound or any existing law,
regulation, court order or consent decree to which the Authority is subject; .
(vi) the Authority Documents have been duly
authorized, executed and delivered by the Authority, and, assuming due
authorization, execution and delivery by the other parties thereto, constitute
legal, valid and binding agreements of the Authority enforceable in accordance
with their respective terms, except as the 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 sought and by
the limitations on legal remedies imposed on actions against public agencies in
the State of California;
(vii) no authorization, approval, consent, or other order
of the State of California or any other governmental authority or agency within
the State of California is required for the valid authorization, execution and
delivery of the Authority Documents and the approval of the Official Statement;
(viii) nothing has come to their attention which would
lead them to believe that the information relating to the Authority contained in
the Official Statement contains an untrue statement or omits to state a material
95269004.LAl 13.
LA\95269Q080
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(5) The opinion of counsel to the Trustee, dated the date of
Closing in form and substance satisfactory to the Underwriter and its counsel, and
addressed to the Underwriter, to the effect that:
(i) the Trustee is a national banking association duly
organized and validly existing under the laws of the United States having full
power and being qualified to enter, accept and administer the trust created under
the Trust Agreement, and to authenticate the Bonds; and
(ii) the Trust Agreement and the Assignment
Agreement have been duly authorized, executed and delivered by the Trustee
and constitute the valid and binding obligations of the Trustee in accordance
with their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
equitable principles relating to or limiting creditors' rights generally.
(6) A certificate, dated the date of Closing, signed by a duly
authorized official of the Authority satisfactory in form and substance to the
Underwriter and counsel to the Underwriter, (a) confirming as of such date the
representations and warranties of the Authority contained in this Purchase Agreement;
(b) certifying that the Authority has complied with all agreements, covenants and
conditions to be complied with by the Authority at or prior to the Closing under the
Authority Documents; and (c) certifying that to the best of such official's knowledge,
no event affecting the Authority has occurred since the date of the Official Statement
which either makes untrue or incorrect in any material respect as of the Closing the
statements or information contained in the Official Statement or is not reflected in the
Official Statement but should be reflected therein in order to make the statements and
information therein not misleading in any material respect.
(7) A certificate, dated the date of Closing, signed by a duly
authorized official of the City satisfactory in form and substance to the Underwriter and
counsel to the Underwriter, (a) confirming as of such date the representations and
warranties of the City contained in this Purchase Agreement; (b) certifying that the City
has complied with all agreements, covenants and conditions to be complied with by the
City at or prior to the Closing under the City Documents; (c) certifying that to the best
of such official's knowledge, no event affecting the City has occurred since the date of
the Official Statement which either makes untrue or incorrect in any material respect as
of the Closing the statements or information contained in the Official Statement or is
not reflected in the Official Statement but should be reflected therein in order to make
the statements and information therein not misleading in any material respect; and (d)
95269004.LAl 14.
LA \952690080
-
certifying that the City has authorized and consented to the inclusion in the Official
Statement of the City's fmancial report and accountant's opinion for the year ended June
30, 1994, and no further consent of any party is required for such inclusion.
(8) Two executed or certified copies of the Legal Documents.
(9) Five executed copies of the Official Statement.
(10) Two certified copies of the general resolution of the
Trustee authorizing the execution and delivery of certain documents by certain officers
of the Trustee, which resolution authorizes the execution and delivery of documents
such as the Bonds, the Trust Agreement and the Assignment Agreement.
(11) Copies of the resolution adopted by the Authority and
certified by the Secretary of the Authority authorizing the execution and delivery of the
Authority Documents and the Official Statement.
(12) Copies of the resolution adopted by the City and certified
by the City Clerk, authorizing the execution and delivery of the City Documents and
the Official Statement.
-. Arbitrage certifications by the City in form and substance
(13)
acceptable to Bond Counsel.
(14) A Certificate of the Trustee, dated the Closing Date to the
effect that:
(i) the Trustee is duly organized and existing as a
national banking association in good standing under the laws of the United
States having the full power and authority to enter into and perform its duties
under the Trust Agreement and the Assignment Agreement and to execute and
deliver the Bonds to the Underwriter pursuant to this Purchase Agreement;
(ii) the Trustee is duly authorized to enter into the
Trust Agreement and the Assignment Agreement, and when the Trust
Agreement and the Assignment Agreement are duly executed and delivered by
the respective parties thereto, to authenticate and deliver the Bonds to the
Underwriter pursuant to the Trust Agreement and this Purchase Agreement;
(iii) to the best of the knowledge of the Trustee, no
consent, approval, authorization or other action by any governmental or
~- regulatory agency having jurisdiction over the Trustee that has not been
obtained is or will be required for the performance by the Trustee of its duties
95269004.LAl 15.
LA \952690080
under the Trust Agreement or the Assignment Agreement, except as such may
be required under the state securities or blue sky laws in connection with the
distribution of the Bonds by the Underwriter;
(iv) to the best of the knowledge of the Trustee, the
execution and delivery by the Trustee of the Trust Agreement, the Bonds, the
Assignment Agreement imd compliance with the terms thereof will not conflict
with, or result in a violation or breach of, or constitute a default under, any loan
agreement, indenture, bond, note, resolution or any other agreement or
instrument to which the Trustee is a party or by which it is bound, or any law or
any rule, regulation, order or decree of any court or governmental agency or
body having jurisdiction over the Trustee or any of its activities or properties
(except that no representation, warranty or agreement is made by the Trustee
with respect to any Federal or state securities or blue sky laws or regulations), or
(except with respect to the lien of the Trust Agreement) result in the creation or
imposition of any lien, charge or other security interest or encumbrance of any
nature whatsoever upon any of the property or assets of the Trustee;
(v) to the best of the knowledge of the Trustee, there is
no action, suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court or governmental agency, public board or body served upon or
threatened against or affecting the existence of the Trustee or seeking to
prohibit, restrain or enjoin the execution and delivery of the Bonds, or in any
way contesting or affecting the validity or enforceability of the Bonds, the Trust
Agreement or the Assignment Agreement or contesting the powers of the
Trustee to enter into and perform its obligation under any of the foregoing,
wherein an unfavorable decision, ruling or finding would adversely affect the
transactions contemplated hereby, or which, in any way, would adversely affect
the validity of the Bonds, the Trust Agreement, the Assignment Agreement or
any agreement or instrument to which the Trustee is a party and which is used or
contemplated for use in the consummation of the transactions contemplated
hereby; and
(vi) subject to the provisions of the Trust Agreement,
the Trustee will apply the proceeds from the Bonds to the purposes specified in
the Trust Agreement.
(15) If required in the opinion of the City, the written consent
of the City's auditing firm to the inclusion of its opinions relating to the City's financial
statements in the Preliminary Official Statement and the Official Statement.
(16) Evidence as of the Closing satisfactory to the Underwriter
that the Bonds have received, at a minimum, a rating of" " from Standard & Poor's ,
9S269004.LAl 16.
LA\9S2690080
-
- Rating Group ("S&P") and a rating of" " from Moody's IilVestors Service, Inc.
("Moody's") (or such other equivalent ratings as S&P and Moody's shall issue), and that such
ratings have not been revoked or downgraded.
(17) An executed municipal bond insurance policy (the "Policy")
of (the "Insurer") insuring the scheduled payment of principal of and
interest on the Bonds, substantially in the fonn attached as APPENDIX E of the Official
Statement.
(18) An opinion of cO\U1Sel to the Insurer, dated as of the date of
the Closing, addressed to the Underwriter and in the fonn and substance acceptable to
counsel to the Underwriter, substantially to the following effect:
(i) the Insurer has been duly incorporated and is validly
existing and in good standing under the laws of the State of ,
(ii) The Policy was issued in the ordinary course of
business and constitutes the legal, valid and binding obligations of the Insurer enforceable in
accordance with its tenns, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, rehabilitation, and other similar laws of general applicability relating to or
affecting creditors' and/or claimants' rights against insurance companies and to general equity
principles.
.
(iii) the infonnation contained in the Official Statement
under the heading "BOND INSURANCE" does not, insofar as it relates to the Policy and the
Insurer, contain any untrue statement of a material fact or, insofar as it relates to the Policy,
intentionally omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were made, not
misleading.
(19) Evidence that the federal tax infonnation fonn 8038-G
has been prepared for filing.
(20) A copy of the Notice of Final Sale required to be delivered
to the California Debt Advisory Commission pursuant to Section 8855 of the California
Government Code.
(21) Such additional legal opinions, certificates, proceedings,
instruments and other documents as Bond Counsel, the Underwriter and counsel to the
Underwriter may reasonably request to evidence compliance with legal requirements,
the truth and accuracy, as of the time of Closing, of the representations contained herein
and in the Official Statement and the due perfonnance or satisfaction by the Trustee
95269004.LAl 17.
LA \952690080
and the Authority at or prior to such time of all agreements then to be performed and all
conditions then to be satisfied.
(c) All matters relating to this Purchase Agreement, the Bonds and
the sale thereof, the Legal Documents and the consummation of the transactions
contemplated by this Purchase Agreement shall have been approved by the Underwriter, such
approval not to be unreasonably withheld.
If the conditions to the Underwriter's obligations contained in this Purchase
Agreement are not satisfied or if the Underwriter's obligations shall be terminated for any
reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and
neither the Underwriter nor the Authority shall have any further obligation hereunder.
8. The Underwriter shall have the right to terminate this Purchase
Agreement, without liability therefor, by written notification to the Authority and the City if
at any time at or prior to the Closing:
(i) any event shall occur which causes any statement contained in the
Official Statement to be materially misleading or results in a failure of the Official Statement
to state a material fact necessary to make the statements in the Official Statement, in the light
of the circumstances under which they were made, not misleading; or
.
(ii) the marketability of the Bonds or the market price thereof, in the
opinion of the Underwriter, has been materially adversely affected by an amendment to the
Constitution of the United States or by any legislation in or by the Congress of the United
States or by the State, or the amendment oflegislation pending as of the date of this Purchase
Agreement in the Congress of the United States, or the recommendation to Congress or
endorsement for passage (by press release, other form of notice or otherwise) oflegislation
by the President of the United States, the Treasury Department of the United States, 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 oflegislation by either
such Committee, 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, or the favorable reporting for passage oflegislation to either House of the
Congress of the United States by a Committee of such House to which such legislation has
been referred for consideration, or any decision of any Federal or state court or any ruling or
regulation (final, temporary or proposed) or official statement on behalf of the United States
Treasury Department, the Internal Revenue Service or other Federal or State authority
materially adversely affecting the Federal or State tax status of the Authority, or the interest
on the Bonds or notes or obligations of the general character of the Bonds; or
95269004.LAl 18.
LA\952690080
---
~ (iii) any legislation, ordinance, rule or regulation shall be introduced
in, or be enacted by any governmental body, department or agency of the States or a decision
by any court of competent jurisdiction within the State or any court of the United States shall
be rendered which, in the reasonable opinion of the Underwriter, materially adversely affects
the market price of the Bonds; or
(iv) legislation shall be enacted by the Congress of the United States,
or a decision by a court of the United States shall be rendered, or a stop order, ruling,
regulation or official statement by, or on behalf of, the Securities and Exchange Commission
or any other governmental agency having jurisdiction of the subject matter shall be issued or
made to the effect that the issuance, offering or sale of obligations of the general character of
the Bonds, or the issuance, offering or sale of the Bonds, including all underlying obligations,
as contemplated hereby or by the Official Statement, is in violation or would be in violation
of, or that obligations of the general character of the Bonds, or the Bonds, are not exempt
from registration under, any provision of the federal securities laws, including the Securities
Act of 1933, as amended and as then in effect, or that the Trust Agreement needs to be
qualified under the Trust Agreement Act of 1939, as amended and as then in effect; or
(v) additional material restrictions not in force as of the date
hereof shall have been imposed upon trading in securities generally by any governmental
authority by any national securities exchange which restrictions materially adversely affect
the Underwriter's ability to market the Bonds; or -
(vi) a general banking moratorium shall have been established by
federal or State authorities; or
(vii) the United States has become engaged in hostilities which have
resulted in a declaration of war or a national emergency or there has occurred any other
outbreak of hostilities or a national or international calamity or crisis, fmancial or otherwise,
the effect of such outbreak, calamity or crisis on the fmancial markets of the United States,
being such as, in the reasonable opinion of the Underwriter, would affect materially and
adversely the ability of the Underwriter to market the Bonds; or
(viii) the commencement of any action, suit or proceeding which, in
the judgment of the Underwriter, materially adversely affects the market price of the Bonds;
or
(ix) there shall be in force a general suspension of trading on the
New York Stock Exchange; or
(x) an event described in Section 50) or 60) hereof shall have
occurred which, in the reasonable professional judgment of the Underwriter, requires the
preparation and publication of a supplement or amendment to the Official Statement; or
95269004.LAl 19.
LA \952690080
(xi) any rating of the Bonds by a national rating agency shall have
been withdrawn or downgraded.
9. Performance by the Authority and the City of their respective
obligations under this Purchase Agreement is conditioned upon (i) performance by the
Underwriter of its obligations hereunder and (ii) receipt by the Underwriter of all opinions
and Bonds to be delivered at Closing by persons and entities other than the Authority or the
City.
10. After the Closing and until the End Date (a) neither the Authority nor
the City will adopt any amendment of or supplement to the Official Statement to which the
Underwriter shall object in writing or which shall be disapproved by counsel for the
Underwriter, and (b) if any event relating to or affecting the Authority or the City shall occur
as a result of which it is necessary, in the opinion of counsel for the Underwriter, to amend or
supplement the Official Statement in order to make the Official Statement not misleading in
the light of the circumstances existing at the time it is delivered to an initial purchaser of the
Bonds, and the Authority will forthwith prepare and furnish to the Underwriter a reasonable
number of copies of an amendment of or supplement to the Official Statement (in form and
substance satisfactory to counsel for the Underwriter) which will amend or supplement the
Official Statement so that it will not contain an untrue statement of 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 an initial purchaser of the Bonds, not misleading. The
costs of preparing any necessary amendment or supplement to the Official Statement to be
utilized until the End Date shall be borne by the Authority and any costs incurred thereafter
incident to amending or supplementing the Official Statement shall be borne by the
Underwriter. For the purposes of this section the Authority will furnish such information
with respect to itself as the Underwriter may from time to time request.
11. In connection with the initial placement and underwriting, the
Authority shall pay the following expenses (a) the cost of preparation, printing, engraving,
execution and delivery of the Bonds; (b) the acceptance fees of the Trustee and any fees and
expenses of the Trustee's counsel; (c) any fees charged by any rating agency for rating the
Bonds; (d) the fees and disbursements of Bond Counsel, Counsel to the Authority, and any
financial advisor or independent certified public accountant; and (e) any out-of-pocket
disbursements of the Authority to be paid from the proceeds of the Bonds. All out-of-pocket
expenses of the Underwriter, including Underwriter counsel fees and expenses, the cost of
preparation, distribution, delivery, amendment or supplement of the Official Statement, the
Blue Sky and Legal Investment Survey and this Purchase Agreement and expenses to qualify
the Bonds for sale under any Blue Sky laws, shall be paid by the Underwriter.
12. Any notice or other communication to be given to the Underwriter may
be given by delivering the same to Grigsby Brandford & Co., Inc., 601 West 5th Street, Suite
95269004.LAl 20.
LA \952690080
1112, Los Angeles, California 90071. Any notice or other communication to be given to the
Authority may be given by delivering the same to Poway Public Financing Authority, 13325
Civic Center Drive, Poway, California 92064, Attention: Director of Administrative
Services. The approval of the Underwriter when required hereunder or the determination of
satisfaction as to any document referred to herein shall be in writing signed by Grigsby
Brandford & Co., Inc. and delivered to you.
13. This Purchase Agreement is made solely for the benefit of the Authority,
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.
14. This Purchase Agreement may be executed by the parties hereto in
separate counterparts, each of which such counterparts shall together constitute but one and
the same instrument.
15. This Purchase Agreement shall be governed by the laws of the State of
California.
GRIGSBY BRANDFORD & CO., INC.
-
By:
Title:
Accepted:
POW A Y PUBLIC FINANCING AUTHORITY
By:
Title:
CITY OF POW A Y
By:
-.-- Title:
95269004.LAI 21.
LA\952690080
-
EXHIBIT A
MATURITY SCHEDULE
Maturity Date Principal Interest
I Amount ~ Yicld
-
A-I
9S269004.LAl
.- AGREEMENT RE
BOND COUNSEL SERVICES
October 12, 1995
The City of Poway (hereinafter referred to as the "City") and Stradling, Yocca,
Carlson & Rauth, a Professional Corporation, (hereinafter referred to as "Bond Counsel") hereby
agree as follows:
l. SERVICES
The City retains Bond Counsel to provide, and Bond Counsel agrees to provide,
legal services in connection with the City's issuance of bonds (hereinafter referred to as the
"Bonds") to fmance improvements to its water treatment plant through the issuance of 1995 City
of Poway Water Revenue Bonds in an approximate principal amount of $3,500,000. Such
services will be divided into two phases: (a) program planning and development of a fmancing
plan; and (b) implementation of the fmancing plan.
In the frrst phase - the planning stage - we would expect:
(i) to research applicable laws and ordinances relating to the proposed
- program, including federal and state tax laws, securities laws and other
laws that may be applicable; --
(ii) to attend conferences and consult with the City ICity staff and counsel
regarding such laws, to participate with any fmancial advisors,
underwriters, developers, lenders and other experts retained by the City in
structuring the fmancing; and
(iii) to consult with other fU11lS active in the bond practice when necessary to
ensure that any novel approaches being considered would be generally
accepted in the bond community.
In the second phase - the implementation stage - we would expect:
(i) to supervise and prepare documentation of all steps to be taken through the
issuance of the Bonds including:
a. drafting all resolutions, rules and regulations of the City and all
other basic documents relating to the security of the Bonds, in
consultation with the City, its counsel and fmancial advisors,
underwriters and other experts;
b. preparing the record of proceedings for the authorization, sale and
issuance of the Bonds;
OCT 1 7 1995 ITEM 7 ..
ATTACHMENT G
.---
c. preparing documents relating to the fmancing, including the Trust
Indenture, the Installment Purchase Agreement and the Authorizing
Resolutions;
d. assisting in the preparation or review of any description in the
official statement or placement memorandum of California and
federal law pertinent to the validity of the Bonds and tax treatment
of interest paid thereon, the terms of the Bonds and our opinion;
e. reviewing the Bond purchase contract or the bidding documents and
participating in the related negotiations;
f. attending information meetings and other conferences scheduled by
the City, the fmancial advisors or the underwriters;
g. consulting with counsel to the City concerning any legislation or
litigation during the course of the financing;
h. consulting with the trustee and counsel to the trustee;
i. preparing the form of the Bonds, and, if printed, supervising their
production or printing, signing, authentication and delivery; and
j. rendering any necessary collateral legal opinions as to the
inapplicability of the registration requirements of federal securities
laws and other matters related to the issuance of the Bonds.
(ii) to render a ftnal legal opinion pertaining to the issuance of the Bonds to
the effect that:
a. the Bonds have been properly authorized and issued and are valid
and binding obligations;
b. the essential sources of security for the Bonds have been legally
provided; and
c. all interest with respect to the Bonds is exempt from federal and
California income taxation.
2. INDIVIDUAL RESPONSffiLE FOR PROVIDING SERVICES
The City agrees to accept and Bond Counsel agrees to provide the aforementioned
services primarily through Denise E. Hering and Carol L. Lew.
Should the above attorney be unable to provide such services due to death,
disability, or similar event, Bond Counsel reserves the right to substitute unilaterally another of
PUBL,31636_111311B2468.l10009 2
its attorneys to provide such services, and such substitution shall not alter or affect in any way
Bond Counsel's other obligations under this agreement.
3. a, Bond Fee
The City agrees to pay Bond Counsel a fee in accordance with the schedule
attached hereto as Exhibit 1, provided that payment of such fee is entirely contingent upon the
successful sale of the Bonds, and payment thereof is to be made from the proceeds of the Bonds.
b. Out-of Pocket Exoenses
The City also agrees to reimburse Bond Counsel for the actua1 cost of
out-of-pocket expenses reasonably incurred, excluding any indirect cost such as Bond Counsel's
overhead, in connection with the provision of the aforementioned services, including
(i) telephone, telex, and telegram charges,
(ii) messenger and delivery charges,
(iii) traveling expenses, for travel at the City's request,
(iv) d~memproou~wnc~ges,and
(v) similar out-of-pocket expenses.
--
4. FOLLOW-UP SERVICES
Bond counsel agrees to provide without additional cost normal follow-up
consultation and related services following the sale of the Bonds, Should the City require Bond
Counsel to provide extraordinary services after the sale of the Bonds, such services shall be
provided at an additional fee to be agreed upon at a later date.
Date: City of Poway
By
STRADLING, YOCCA, CARLSON & RAUTH
a Professional Corporation
By
Denise E. Hering
-
PUBL,31636_111311B246I.00009 3
EXHIBIT 1
Water Revenue Bonds
Basic Fee: The fee for the services described in the Agreement to which this Schedule is
attached shall be based upon the total principal amount of certificates authorized and sold and will
be computed in accordance with the following schedule:
Princioal Amount of Bonds m
$1,000,000 or less $15,000
$1,000,001 to $5,000,000 $25,000 plus 1/4 of 1 % of the
excess over $1,000,000
$5,000,001 to $15,000,000 $38,000
$15,000,001 to $35,000,000 $48,000
Out-<lf-Pocket Exoenses: In addition to the Basic Fee, Bond Counsel shall be reimbursed
for out-<lf-pocket expenses incurred pursuant to Section 3(b) of the Agreement.
PUBL,31636_1 I 138182468.00009 4
SENJ: By:a B ""1-i3-SS : 4:0e"" : 2'36/'"jS4~ oil ;46 '455:# 2
City of Poway
Water ReveDue BODdl
. . Serin 1995
Boad IDluruce Bid Resalb
'-1'unidnal Bond In,,'..uo", A.~urallce Corn.
Prcmlwn: 0.455"1.
Rate Covenant: Net Revenues must cqual1.10 times AMual Debt Service. Fund:! Cln t''<It... lYlay!WI be
included in calculation of Net Revenues.
.\dditional Bonds: I.) !lemove Section 5.03 (i) of Insallment Purchase Agreement. Z.) Mo!t,l) ;ic~lion 5.03 (ii)
as folloW$: Will rcqUiR a certificate ofa CPA starin, that the historical Net \(e\enuc,
adjusted for effective rate incReses are at leut equal to 1.10 times profm ,J" l\)t;mwn
annual debt service.
~J\.fRAC Indemnity Corp.
Premium: 0,36%
_ Rate Covena..,t: As described in P.O.S.
Additional Bonds: A. described in P.O.S. With the following chlnges to the Installment Purchase _
Agreement:
1.) Section 5.03 (i) Estimated additional annual Net Revenues must be ;/...", , bv .
certificate of an "Independent Consultant".
2.) Section 5.03 (ii) Limited to 80% of additional Net Revenues as shown ill a certificlllA: of
an "Independent Consultant".
Financial GUSlrfn'~ ID.Dran~. Company
Premium: 'S/A Quote available only in the ovent that "other quotes are deemed unacceptabl,,".
Rate Covenant: 1.15 times non-reoccurring Net Revenues.
I\dditional Bonds: 1.20 to 1.25 timCll maximum annual debt service.
e.pital Guaran\1' Tn.uranu CtUftp.'O'
':"r interested due to current policy of not accepting transactions where issuers have a hiih level "f involvement with
the S&ll DICSl) County InvestTllent Pool.
''''inand.1 SKUrity A.tlUNftC.
- Premium: 0.45%
Kate Covenant: As described in P.O.S.
Additional Bond:!: As described in P.O.S.
Grll ATTACHMENT H"' Inc. OCT 17 1995 ITEM 7