Item 8 - Refunding 1970,1972 and 1975 General Obligation Water Bonds
- j.!J~ #-/C ~
AGENDA JU;PORT SUMM-\BI
TO: Honorable Mayor and Members of the City Council
~ James L. Bowersox, City ~
'" FROM:
INITIATED BY: John D. Fitch, Assistant City ~
Peggy A, Stewart, Director of Ad .. 've Serviccvy
DATE: October 17, 1995
SUBJECf: Refunding 1970, 1972 and 1975 General Obligation Water bonds and 1978 General
Obligation Fire Protection Improvement bonds.
ABSTRACT
In order to proceed with the 1995 General Obligation Refunding Bonds, it is nect'~sllry for the City
Council to adopt two Resolutions authorizing the issuance of the bonds, and approve the Escrow
Agreement, the Purchase Agreement, the Bond Counsel Services Agreement and the Preliminary
Official Statement.
ENVIRONMENTAL REVIEW
Environmental review not required for this agenda item according to CEQA guidelines.
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, FISCAL IMPACT -
The maximum annual debt service is anticipated to be approximately S500,000. General property tax
rates to cover the general obligation bond debt service is expected to drop from .06022 to less than
.02000 beginning in FY 1996/97.
ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE
No additional public notification or correspondence.
RECOMMENDATION
It is recommended that the City Council approve the authorizing resolutions and the corresponding
documents for issuance of the 1995 General Obligation Refunding Bonds.
ACTION
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AGENDA REPORT
CITY OF POW A Y
TO: Honorable Mayor and Members of the City Council
FROM: James L. Bowersox, City ~
INITIATED BY: John D. FilCh, Assistant City Manager f
Peggy A. Stewart, Director of Adminis 've Services
DATE: October 17, 1995
SUBJECT: Refunding 1970, 1972 and 1975 General Obligation Water bonds and 1978
General Obligation Fire Protection Improvement bonds.
BACKGROUND
The City has three outstanding general obligation water bonds and one outstanding general
obligation fire protection improvement bond. as follows:
$3,200,000 General Obligation 1970 Water Bonds
$1,400,000 General Obligation 1972 Water Bonds
$6,300,000 General Obligation 1975 Water Bonds
$1,900,000 1978 General Obligation Fire Protection Improvement Bonds -
These bonds have combined outstanding principal of $7,445,000 and an additional sinking fund
balance of $1,215,000. They mature between 1991 and 2006. Interest rates on the outstanding
bonds range from 5.75% to 7.5%.
FINDINGS
A refunding plan with substantial savings to taxpayers can be achieved through two actions.
The City has adequate funds in the debt service and sinking fund reserves to redeem the 1970 and
1972 general obligation water bonds and the 1978 fire protection bonds. This will result in an
average annual debt service savings of $525,000 over the next six years.
ACTION:
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- Agenda Report
October 17, 1995
Page 2
The outstanding 1975 general obligation water bonds with an outstanding principal of $5.1 million
and an interest rate of 7.5" would be refunded through the issuance of general obligation refunding
bonds. Net present value savings are estimated at $428,000 or 8.7".
Given that the 1995/96 tax rate has already been set at .06022 to cover the normal debt service
payment, the City will collect more tax revenue this fiscal year than needed. To remedy this and
return the City to a stable tax rate next fiscal year, the 1995 Refunding Bonds will be structured
with a large principal payment on June I, 1995. This has the effect of applying the 1995/96 over-
collection to the cheapest part of the refunding in the same fiscal year it is received.
It is anticipated that beginning in fiscal year 1996/97, debt service on the 1995 Refunding Bonds
will drop to a level annual debt service through final maturity in 2005/06. Given the current bond
market the estimated tax rate to cover the new debt service would be .02000 or below. This would
mean that the taxes on a S200,OOO home for the combined general obligation bonds would drop from
S120 to $40.
In order to proceed with the issuance of the refunding bonds and to provide instructions to the
Trustee, it is nect',my for the City Council to adopt the following resolutions and approve the
following documents: . -
Issuance Resolution: This resolution authorizes the issuance of the refunding bonds, designates
the Paying Agent, and describes the terms of the transaction and the sources
of funds for repayment.
Resolution of the This resolution approves the financing documents and authorizes staff
City of Poway: to proceed with the documentation and execution of the transaction.
Escrow Agreement: The agreement basically describes that Bank of America National Trust and
Savings Association will hold the proceeds of the new issue and how and
when those proceeds will be used to retire the previous bond issues.
Bond Purchase The BPA is the contract between Grigsby Brandford &. Co., Inc.
Agreement: and the City describing how and when the money is paid in exchange for
the specified bonds.
Bond Counsel This agreement is between the City and Stradling, Yocca, Carlson
Agreement: &. Rauth describing the services to be performed on behalf of the City in the
issuance of the bonds.
Preliminary Official The POS is the sales document that is distributed to all interested buyers at
Statement: the time of sale of the bonds.
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Agenda Report
October 17, 1995
Page 3
ENVIRONMENTAL REVIEW
Environmental review is not required for this agenda item according to CEQA guidelines.
FISCAL IMPACT
The maximum annual debt service is anticipated to be approximately $500,000. General property
tax rates to cover the general obligation bond debt service is expected to drop from .06022 to less
than .02000 beginning in FY 1996197.
ADDmONAL PUBLIC NOTIFICATION AND CORRF.C;l'ONDENCE
No additional public notification and correspondence.
RECOMMENDATION
It is recommended that:
1. The City Council adopt the attached Bond Resolution providing for the issuance of the 1995
General Obligation Refunding Bonds. ~
2, The City Council adopt the attached Bond Resolution for the City and approve the
Preliminary Official Statement, the Bond Purchase Agreement, the Escrow Agreement, the
Purchase Agreement, and the Bond Counsel Services Agreement.
3. Staff be directed to proceed with the issuance of the 1995 General Obligation Refunding
Bonds.
ILB:IDF:PAS
Attachments:
A, Bond Issuance Resolution
B. Bond Resolution, City of Poway
C. Escrow Agreement (Limited distribution)
. "
D. Bond Purchase Agreement
E. Bond Counsel Services Agreement "
F. Preliminary Official Statement "
C:bonds\ wtrrev .ald
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RESOLUTION NO. -
"- RESOLUTION OF THE CITY COUNCIL OF CITY OF POWAY PROVIDING FOR
THE ISSUANCE OF I99S GENERAL OBLIGATION REFUNDING BONDS OF SAID
CITY (POWAY MUNICIPAL WATER DISTRICT IMPROVEMENT AREA) IN THE
APPROXIMATE AMOUNT OF $6,300,000
WHEREAS, pursuant to the Municipal Water District Law of 1911, as amended, and pursuant to
an order of the Board of Supervisors of the County of San Diego, the Poway Municipal Water District
was formed for the purpose of the acquisition, construction, completion, repair and improvement of
facilities useful and necessary for the acquisition, storage, distribution and of water, for the lands and
inhabitants within the exterior boundaries of the Poway Municipal Water District and including expenses
of all proceedings for the authorization, issuance and sale of bonds, and bonds in the amount of
$6,300,000 were authorized for said purpose; and
WHEREAS, the Board of Directors of the Poway Municipal Water District was authorized and
empowered to provide for the form of bonds and for the issuance of any part thereof for the purpose
provided for in the aforesaid resolution, payable, as to principal and interest, from taxes levied
exclusively upon the taxable property within said Poway Municipal Water District except to the extent
that such principal and interest may be paid from water revenues as permitted or required by law; and
WHEREAS, the Poway Municipal Water District has issued $6,300,000 of said authorized bonds
designated "1975 Water Bonds" (the "1975 Water Bonds"); and
WHEREAS, effective February I, 1981, the Poway Municipal Water District was dissolved and
the City of Poway (the "City") succeeded to all rights, duties and obligations of the extinguished water
district with respect to enforcement, performance or payment of any outstanding voter-approved bonds,
and implied or expressed contracts and obligations of Poway Municipal Water District pursuant to that
certain "Poway Reorganization" certified by the Local Agency Formation Commission on November 25,
1980 (the "Reorganization Document").
WHEREAS, this City Council (the "Council") finds and determines that prudent management of
the fiscal affairs of the City requires that it issue refunding bonds to refund the outstanding 1975 Water
Bonds; and
WHEREAS, pursuant to Articles 9 and 11 (commencing at Sections 53550 and 53580,
respectively) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of
California (the "Refunding Law") the City has the authority to issue refunding bonds without an election
and at private sale; and
WHEREAS, it is proper and the necessity therefor appears that refunding bonds in the amount of
$ be issued for the purpose hereinabove stated, and in the form and manner hereinafter
provided; and
WHEREAS, pursuant to Section 53552 of the Government Code of the State of California the
principal amount of refunding bonds may be more than the principal amount of the bonds to be refunded
and therefore the City is authorized to issue a principal amount of bonds in excess of the 1975 Water
Bonds to be refunded; and
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RESOLUTION NO. -
WHEREAS, Grigsby Brandford & Co., Inc. (the "Underwriter") has offered to purchase the
refunding bonds on the terms and conditions set forth in the Contract of Purchase by and between the
City and Underwriter, a copy of which is appended hereto (the "Bond Purchase Agreement");
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF POWAY DOES HEREBY
RESOLVE, DETERMINE AND ORDER as follows:
SECTION I. Definitions. Unless the context otherwise requires, the terms defmed 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 defmed herein, the following definitions
to be equally applicable to both the singular and plural forms of any of the terms defmed herein.
Authorized Officer of the City. The term "Authorized Officer of the City" means the City
Manager of the City or another official designated by the City Council of the City to act on behalf of the
City under or with respect to this Resolution and all other agreements related hereto.
Bond Counsel. The term "Bond Counsel" means an attorney at law or a flnn of attorneys selected
by the City of nationally recognized standing in matters pertainin& to the tax-exempt nature of interest on
bonds issued by states and their political subdivisions duly admitted to the practice of law before the
highest court of any state of the United States of America or the District of Columbia.
Bond Year. The term "Bond Year" means the period begiMing on the Delivery Date and ending
on any date during the one-year period begiMing on the Delivery Date, selected by the City in the Tax
Certificate, and each successive twelve month (or shorter) period thereafter unti1 there are no longer any
bonds outstanding.
~. The term "bonds" means the 1995 General Obligation Refunding Bonds of City of Poway
(Poway Municipal Water District Improvement Area issued pursuant to this Resolution.
Business Dav. The term "Business Day" means a day which is not a Saturday or Sunday or a day
on which banking institutions are authorized or required by law to be closed in the State of New York or
the State of California for commercial banking purposes.
~. The term "Code" means the Internal Revenue Code of 1986, as amended, and any
regulations, rulings, judicial decisions, notices, announcements, and other releases of the United States
Department of the Treasury or Internal Revenue Service interpreting and construing it.
Costs of Issuance. The term "Costs of Issuance" means all items of expense directly or indirectly
payable by or reimbursable to the City and related to the authorization, execution and delivery of the
bonds and the establishment of a fund to provide for the refunding of the 1975 Water Bonds including,
but not limited to, municipal bond insurance, costs of preparation and reproduction of documents, costs
of rating agencies and costs to provide information required by rating agencies, filing fees, initial fees
and charges of the Paying Agent and the Escrow Bank, fees and charges of the City, legal fees and
charges, fees and expenses of consultants and professionals, fees and expenses of the fmancial advisor,
fees and charges for preparation, execution and safekeeping of the bonds and any other charge, cost or
fee in connection with the original sale, execution and delivery of the bonds.
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RESOLUTION NO. -
CounlY. The term "County" means the County of San Diego, State of California.
Defeasance Securities. The term "Defeasance Securities" means and includes, if and to the extent
the same are permitted by law, only such securities as are described in clauses (i), (ii) and (iii) below
which shall not be subject to redemption prior to their maturity other than at the option of the holder
thereof, or as to which an irrevocable notice of redemption of such securities on a specified redemption
date has been given and such securities are not otherwise subject to redemption prior to such specified
date other than at the option of the holder thereof, as follows:
(i) any bonds or other obligations which as to principal and interest constitute direct
obligations of, or are unconditionally guaranteed by, the United States of America, including
obligations of any of the federal agencies to the extent unconditionally guaranteed by the United
States of America, including obligations issued pursuant to paragraph 21(B)(d)(3) of the Federal
Home Loan Bank Act, as amended by paragraph SHea) of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, or any successor provisions to paragraph 21 (B) of the
Federal Home Loan Bank, as so amended;
(ii) any bonds or other obligations of any state of the United States of America or of any
agency, instrumentality or local governmental unit of any such state which are secured as to
principal and interest and redemption premium, if any, by a fund consisting only of cash or bonds
or other obligations of the character described in clause (i) hereof, which fund may be applied only
to the payment of such principal of and interest and redemption premium, if any, on such bonds or
other obligations on the maturity date or dates thereof or the redemption date or dates specified in
the irrevocable instructions referred to in the introductory clause of this defmition, as appropriate,
and (c) as to which the principal of and interest on the bonds and obligations of the character
described in clause (i) hereof which have been deposited in such fund along with any cash on
deposit in such fund are sufficient to pay principal of and interest and redemption premium, if any,
on the bonds or other obligations described in this clause (ii) on the maturity date or dates thereof
or on the redemption date or dates specified in the aforesaid irrevocable instructions, as
appropriate; and
(iii) certificates that evidence ownership of the right to payments of principal or interest
on obligations described in clause (i), provided that such obligations shall be held in trust by a bank
or trust company or a national banking association.
Delivery Date. The term "Delivery Date" means, with respect to the bonds, the date on which
such bonds were initially issued and delivered to the purchaser thereof.
Escrow Bank. The term "Escrow Bank" means Bank of America National Trust and Savings
Association
Information Services. The term "Information Services" means Financial Information, Inc. 's "Daily
Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention:
Editor; KeMY Information Services, "Called Bond Service," 65 Broadway, 16th Floor, New York, New
York 10006; Moody's Investors Service "Municipal and Government," 525077 Center Drive, Suite ISO,
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RESOLUTION NO. -
Charlotte, North Carolina 28217, Attention: Municipal News Reports; Standard and Poor's Rating Group
"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 City may designate.
Insurer or Bond Insurer. The term "Insurer" or "Bond Insurer" means a,
company.
Interest PlIYment Date. The term "Interest Payment Date" means March 1 and September 1 of
each year commencing March 1, 1996.
Outstandinl!. The term "outstanding" when used as of any particular time with reference to the
bonds means all bonds theretofore issued by the City except:
(l) Bonds theretofore cancelled by the Paying Agent or surrendered to the Paying Agent
for cancellation;
(2) Bonds for the payment or redemption of which moneys or securities in the necessary
amount (as provided in Section 19 hereof) shall have been theretofore deposited in trust (whether
upon or prior to the maturity or the redemption date of such bonds, provided that, if such bonds
are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given
as provided in this Resolution; and
(3) Bonds in lieu of, or in substitution for which, other bonds shall have been issued by
the City. -
Owner. Except as otherwise provided in Section 22 hereof the term "owner" or "bondowner" or
"owner of bonds" or any similar term, when used with respect to the bonds, means any person who shall
be the registered owner of any outstanding bond.
Pavin!! A!!ent. The term "Paying Agent" means the entity or entities from time to time appointed
as Paying Agent for the bonds pursuant to Section 16 hereof.
Policv or Municioal Bond Insurance Policy. The term "Policy" or "Municipal Bond Insurance
Policy" means the municipal bond insurance policy issued by the Insurer insuring the payment of
principal of and interest on the bonds as provided therein.
Rebate Re!!ulations. The term "Rebate Regulations" means the Regulations issued under Section
148(f) of the Code.
Record Date. The term "Record Date" means, with respect to any Interest Payment Date for the
bonds, the fifteenth (l5th) day of the calendar month preceding such Interest Payment Date, whether or
not such Record Date is a Business Day.
Resolution. The term "Resolution" means this resolution authorizing the issuance of the bonds and
any amendments hereof.
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RESOLUTION NO. -
- Reauest of the Citv. The term "Request of the City" means a certificate of the City executed by an
Authorized Officer of the City.
Securities Denositories. The term "Securities Depositories" means: The Depository Trust
Company, 711 Stewart Avenue, Garden City, New York 11530, FAX-516-227-4039 or 4190; Midwest
Securities Trust Company, Capital Structures Call Notification, 440 South LaSalle Street, Chicago,
lIIinois 60605, FAX-312-663-2343; Philadelphia Depository Trust Company, Reorganization Division,
1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department,
FAX-215-496-5058; and, in accordance with then current guidelines of the Securities and Exchange
Commission, such other addresses as such depositories may specify and/or such other securities
depositories as the City may designate.
Tax Certificate. The term "Tax Certificate" means that certain Tax Certificate executed on the
Delivery Date by the City with respect to the bonds.
Treasurer. The term "Treasurer" means the Treasurer of the City.
SECTION 2. Authority for the Issuance of the Bonds. This City Council hereby authorizes the
issuance of approximately $ of 1995 general obligation refunding bonds of City of Poway
(Poway Municipal Water District Improvement Area) for the purpose of refunding the outstanding 1975
Water Bonds. The precise amount of such bonds shall be the amount specified in the Bond Purchase
Agreement. Said refunding bonds are issued pursuant to the Municipal Water District Law of 1911 and
the Refunding Law. This City Council fmds and determines that the total net interest cost to maturity on
the refunding bonds plus the principal amount of the refunding bonds does not exceed ihe total net
interest cost to maturity on the outstanding 1975 Water Bonds plus the principal amount of the -
outstanding 1975 Water Bonds to be refunded. Based on said finding this Council determines that as
provided in Section 53552 of the Government Code, the refunding bonds may be issued without
submitting the question of the issuance of the refunding bonds to a vote of the qualified electors within
the improvement area created by the City within the former boundaries of the Poway Municipal Water
District pursuant to the Reorganization Document (the "Improvement Area").
SECTION 3. Desilmation Maturity Schedule and Interest Provisions. Said refunding bonds shall
be designated "1995 General Obligation Refunding Bonds of City of Poway (Poway Municipal Water
District Improvement Area)." The bonds shall be dated as set forth in the Bond Purchase Agreement.
The bonds shall be issued in the form of fully registered bonds in the denomination of $5,000 each or
any whole multiple thereof and shall mature on March 1 in the amounts for each of the years and bear
interest at the respective rates set forth in the Bond Purchase Agreement.
The bonds shall be initially registered in the name of "Cede & Co. ", as nominee of The
Depository Trust Company, New York, New York, and shall be evidenced by one bond for each of the
maturities in the principal amounts set forth above, and The Depository Trust Company, New York,
New York, is hereby appointed depository for the bonds, and registered ownership may not thereafter be
transferred except as set forth in Section 9. The interest and principal and prepayment premiums, if any,
evidenced and represented by the bonds shall be payable in lawful money of the United States of
America.
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RESOLUTION NO. -
The bonds shall bear interest from their date payable on each Interest Payment Date. Each bond
shall bear interest until its principal sum has been paid; provided, however, that if funds have been
deposited with the Paying Agent for the payment of the principal amount of such bonds in full
accordance with the terms of this Resolution, such bond shall then cease to bear interest.
Interest on bonds shall be paid by the Paying Agent by check mailed on the Interest Payment
Date to the registered owner as hislher name and address appear on the register kept by the Paying
Agent at the close of business on the Record Date. Each bond shall bear interest from the Interest
Payment Date next preceding the date of authentication (unless (i) the date of authentication is on or
prior to the first Record Date, in which event from their date, (i1) the date of authentication is after a
Record Date and before the following Interest Payment Date, and if the City shall not default in the
payment of interest due on such Interest Payment Date, in which event it shall bear interest from such
Interest Payment Date or (Hi) it is authenticated as of an Interest Payment Date, in which event it shall
bear interest from such date) or provided for in accordance with this Resolution.
SECTION 4. Place of Pavment The bonds and any premiums upon the redemption thereof
prior to maturity shall be payable in lawful money of the United States of America and shall be payable
at the principal corporate trust office of the Paying Agent.
SECTION 5. Form of Bond. Temoorary Bonds. The bonds shall be substantially in the form
annexed hereto as Exhibit . A . . Such form is hereby approved and adopted as the form of the bonds and
of the registration and assignment provisions pertaining to them, with necessary or appropriate
variations, omissions, and insertions, as permitted or required by this Resolution.
SECTION 6. Execution and Authentication of the Bonds. The bonds shall be signed on behalf
of the City by its Mayor and by its Treasurer by manual or facsimile signatures and countersigned by its
Secretary by manual or facsimile signature, and the seal of the City shall be impressed, imprinted or
reproduced thereon. The foregoing officers are hereby authorized and directed to sign the bonds in
accordance with this Section. If any City member or officer whose facsimile signature appears on the
bonds ceases to be a member or officer before delivery of the bonds, hislher signature is as effective as
if he or she had remained in office.
The Paying Agent shall authenticate the bonds on registration and/or exchange to effectuate the
registration and exchange provisions set forth in Sections 5 and 7 hereof, and only those bonds that have
endorsed on them a certificate of authentication, substantially in the form set forth in the form of bond,
duly executed by the Paying Agent, shall be entitled to any rights, benefits or security under this
Resolution. No bonds shall be valid or obligatory for any purpose unless and until the certificate of
authentication has been duly executed by the Paying Agent. The certificate of the Paying Agent upon
any bond shall be conclusive and the only evidence required that the bond has been duly authenticated
and delivered under this Resolution. The Paying Agent's certificate of authentication on any bond shall
be deemed to have been duly executed if signed by an authorized officer of the Paying Agent, but it shall
not be necessary that the same officer sign the certificate of authentication on all of the bonds that may
be issued hereunder.
SECTION 7. Transfer and Exchanl!e of the Bonds. Except as provided in Section 9 hereof, any
bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to
the provisions of Section 8, by the person in whose name it is registered, in person or by his duly
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RESOLUTION NO. -
-. authorized attorney, upon surrender of such bond for cancellation, accompanied by delivery of a written
instrument of transfer in a fonn approved by the Paying Agent, duly executed.
Whenever any bond or bonds shall be surrendered for transfer, the Paying Agent shall
authenticate and deliver a new bond or bonds of the same series and maturity, for the like aggregate
principal amount of bond or bonds surrendered.
The bonds may be exchanged at the principal corporate trust office of the Paying Agent for a like
aggregate principal amount of bonds of other authorized denominations of the same series and maturity.
Except as provided in Section 9 hereof, the person, flCll1 or corporation requesting the transfer or
exchange shall pay any costs or charges in connection with the transfer or exchange as are established by
the Paying Agent, in addition to paying any tax or governmental charge that may be imposed in
cOMection with the transfer or exchange.
SECTION 8. RelZistration Book. The Paying Agent will keep at its principal corporate trust
office, or at such other place in California as the City may approve, sufficient books for the registration
and transfer of the bonds. The books shall at all times be open to inspection by the City; and, upon
presentation for such purpose, the Paying Agent shall under such reasonable regulations as it may
prescribe, register or transfer, or cause to be registered or transferred, on the register, the bonds as
hereinbefore provided.
SECTION 9. Use of Deoository. (a) The bonds shall be initially registered as provided in
~- Section 3. Registered ownership of the bonds, or any portion thereof, may not thereafter be transferred
except: .
(i) To any successor of Cede & Co., as nominee of The Depository Trust Company, or its
nominee, or to any substitute depository designated pursuant to clause (ii) of this section (a "substitute
depository"); provided, that any successor of Cede & Co., as nominee of The Depository Trust
Company or a substitute depository, shall be qualified under any applicable laws to provide the services
proposed to be provided by it;
(ii) To any substitute depository upon (1) the resignation of The Depository Trust Company
or its successor (or any substitute depository or its successor) from its functions as depository, or (2) a
detennination by the City to substitute another depository for The Depository Trust Company (or its
successor) because The Depository Trust Company or its successor (or any substitute depository 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
(Hi) To any person as provided below, upon (1) the resignation of The Depository Trust
Company or its successor (or substitute depository or its successor) from its functions as depository, or
(2) a determination by the City to remove The Depository Trust Company or its successor (or any
substitute depository or its successor) from its functions as depository.
(b) In the case of any transfer pursuant to clause (i) or clause (ii) of subsection (a) hereof,
upon receipt of the outstanding bonds by the Paying Agent, together with a Request of the City to the
Paying Agent, a new bond for each maturity shall be executed and delivered in the aggregate principal
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RESOLUTION NO. -
amount of the 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 Request of the City.
(c) In the case of any transfer pursuant to clause (iii) of subsection (a) hereof, upon receipt of
the outstanding bonds by the Paying Agent, together with a Request of the City to the Paying Agent,
new bonds shall be executed and delivered in such denominations numbered in the manner determined by
the Paying Agent and registered in the names of such persons as are requested in such a Request of the
City; provided, the Paying Agent shall not be required to deliver such new bonds within a period less
than sixty (60) days from the date of receipt of such a Request of the City. After any transfer pursuant
to this subsection, the bonds shall be transferred pursuant to Section 7.
(d) The City and the Paying Agent shall be entitled to treat the person in whose name any
bond is registered as the owner thereof for all purposes of the Resolution and any applicable laws,
notwithstanding any notice to the contrary received by the Paying Agent or the City; and the City and
the Paying Agent shall have no responsibility for transmitting payments to, communication with,
notifying, or otherwise dealing with any beneficial owners of the bonds, and neither the City nor the
Paying Agent will have any responsibility or obligations, legal or otherwise, to the beneficial owners or
to any other party, including The Depository Trust Company or its successor (or substitute depository or
its successor), except for the owner of any bonds.
(e) So long as the outstanding bonds are registered in the name of Cede & Co. or its
registered assigns, the City and the Paying Agent shall cooperate with Cede & Co., as sole registered
owner, or its registered assigns in effecting payment of the principal of and interest on the bonds by
arranging for payment in such manner that funds for such payments are properly identified and are made
immediately available on the date they are due.
SECTION 10. Redemotion Provisions. The bonds maturing on or before March 1,2005, are
not subject to call and redemption prior to maturity. The bonds maturing on or after March 1, 2006,
may be called before maturity and redeemed at the option of the City, in whole or in part from any
source of funds, on March 1, 2005 or on any date thereafter, prior to maturity, in the order of maturity
directed by the City and by lot within a maturity, in integral multiples of five thousand dollars ($5,000).
The date on which bonds are to be presented for redemption is sometimes referred to as the "redemption
date". Bonds called for redemption shall be redeemed at a redemption price for each redeemed bond
equal to its principal amount, plus accrued interest to the redemption date, plus a premium (expressed as
a percentage of the principal amount of the bonds) as set forth below.
Redemption Period Redemption Premium
March 1,2005 through February 28, 2006 1.0%
March 1, 2006 through February 28, 2007 0.5%
March 1, 2007 and thereafter 0.0%
Notwithstanding the foregoing, if different redemption provisions are set forth in the Bond Purchase
Agreement, those provisions shall control over the provisions set forth above.
The City may by resolution direct the call and redemption prior to maturity of bonds by the
Paying Agent in such amounts as there are funds available for use in redemption and shall give notice to
the Paying Agent of the redemption at least sixty (60) days prior to the redemption date.
---. ........... "'I '''81B2468.0c)()12 8 1011619S
12 0 f 27
.-
RESOLUTION NO. -
-. Notice of redemption prior to maturity (except as provided below) shall be given by f1l"st class
mailing, postage prepaid not less than thirty (30) nor more than sixty (60) days prior to the redemption
date, (i) to the registered owner of each such bond at the address shown on the registration books of the
Paying Agent, (ii) to the Infonnation Services, and (iii) to the Securities Depositories by registered or
certifi6d or overnight mail. Neither the failure to mail the notice nor any defect in any notice mailed
shall affect the sufficiency of the proceedings for the redemption of any bonds. Each notice of
redemption shall state the date of notice, the redemption date, the place or places of redemption and the
redemption price, shall designate the maturities, CUSIP numbers, and, if less than all of any such
maturity is to be prepaid, the serial numbers of the bonds of such maturity to be prepaid by giving the
individual number of each bond or by stating that all bonds between two stated numbers, both inclusive,
have been called for redemption and, in the case of bonds to be prepaid in part only, the respective
portions of the principal amount thereof to be prepaid. Each such notice shall also state that on said date
there will become due and payable on each of said bonds the redemption price thereof or of said
specified portion of the principal represented thereby in the case of a bond to be prepaid in part only,
together with interest accrued with respect thereto to the redemption date, and that (provided that moneys
for redemption have been deposited with the Paying Agent from and after such redemption date interest
with respect thereto shall cease to accrue, and shall require that such bond be then surrendered to the
Paying Agent. Any defect in the notice or the mailing will not affect the validity of the redemption of
any bond.
A certificate filed with the City by the Paying Agent that notice of redemption has been given in
accordance with this Resolution shall be conclusive as against all parties, and no bondowner whose bond
is called for redemption may object to the redemption or the cessation of interest on the redemption date
by claiming or showing that he failed to recei ve actual notice of call and redemption.
-
Prior to the mailing of notice as required above, the Paying Agent shall establish, maintain and
hold in trust a separate fund which is hereby created for the purpose of this Resolution designated
"Redemption Fund for 1995 General Obligation Refunding Bonds of City of Poway" (the "Redemption
Fund") and there shall be set aside in the Redemption Fund, or in an escrow fund as provided in
Section 18 hereof, money or Defeasance Securities for the purpose of and sufficient to redeem, at the
premiums, if any, payable as provided in this Resolution, the bonds designated in the notice of
redemption. The money must be set aside in the Redemption Fund solely for that purpose and shall be
applied on or after the redemption date to the payment (principal, interest and premium, if any) of the
bonds to be redeemed upon presentation and surrender of the bonds.
Upon surrender of any bond redeemed in part only, the City shall execute and the Paying Agent
shall authenticate and deliver to the registered owner, at the expense of the City, a new bond or bonds of
authorized denominations equal in aggregate principal amount to the unredeemed portion of the bond
surrendered and of the same interest rate and same maturity.
Notice of redemption having been duly given as provided above, and moneys for payment of the
principal of, premium, if any, and interest payable upon redemption of the bonds being set aside as
provided above, the bonds, or parts thereof, called for redemption shall, on the redemption date, become
due and payable at the redemption price specified in the notice. Interest on the bonds, or parts thereof,
as the case may be, called for redemption shall cease to accrue. The bonds, or parts thereof redeemed,
P\J8L:31521 21131182461.00012 9 10116/95
13 0 f 27
RESOLUTION NO. -
shall cease to be entitled to any lien, benefit or security under this Resolution, and the owners of the
bonds shall have no rights except to receive payment of the redemption price, and, in the case of panial
redemption of bonds, also to receive a new bond or bonds for the unredeemed balance as provided
above.
In lieu of redemption or otherwise, the Paying Agent, at the direction of and on behalf of the
City, is hereby authorized to purchase bonds on the open market at any time at a price not to exceed the
principal amount of the bonds plus the applicable premium and accrued interest, if any, to the date of
purchase plus brokerage fees, if any.
SECTION I I. Bonds Mutilated. Lost. Destroyed or Stolen. If any bond shall become mutilated,
the Paying Agent shall authenticate and deliver a new bond of like tenor, maturity and principal amount
in exchange and substitution for the bond so mutilated, but only upon surrender to the Paying Agent of
the bond so mutilated.
Every mutilated bond so surrendered to the Paying Agent shall be cancelled by it. If any bond
shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the
Paying Agent, and, if such evidence is satisfactory to the Paying Agent and indemnity satisfactory to the
Paying Agent shall be given indemnifying the Paying Agent and the City, the Paying Agent, at the
expense of the bondowner, shall authenticate and deliver a new bond of like tenor and maturity, and
numbered as the Paying Agent shall determine, in lieu of and in substitution for the bond so lost,
destroyed or stolen. The Paying Agent may require payment of a sum not exceeding the actual cost of
preparing each new bond executed under this Section 11 and of the expenses which may be incurred by
the Paying Agent under this Section 11. Any bond executed under the provisions of this Section 11 in
lieu of any bond alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the
benefits of this Resolution with all other bonds secured by this Resolution. The Paying Agent shall not
be required to treat both the original bond and any replacement bond as being outstanding for the
purpose of determining the principal amount of bonds which may be executed hereunder or for the
purpose of determining any percentage of bonds outstanding hereunder, but both the original and
replacement bond shall be treated as one and the same. Notwithstanding any other provision of this
Section II, in lieu of delivering a new bond for a bond which has been mutilated, lost, destroyed or
stolen and which has matured, the Paying Agent may make payment of such bond upon receipt of
indemnity satisfactory to the Paying Agent.
SECTION 12. Escrow Al!reement. The City approves the escrow agreement titled "Escrow
Agreement for the 1975 Refunded Bonds of the Poway Municipal Water District" heretofore presented to
the City Council and authorizes the completion, execution and delivery thereof as contemplated in the
Bond Purchase Agreement.
SECTION 13. Use of Bond Proceeds. Except as otherwise provided in the Tax Certificate, the
proceeds of the sale of the bonds shall be deposited to the following funds: (1) any accrued interest
shall be deposited into the Bond Interest and Sinking Fund, hereinafter established, (2) if so specified in
the Tax Certificate, any premium shall be transferred to the Escrow Bank and deposited into the Escrow
Fund created by the Escrow Bank, (3) the amount specified in the Tax Certificate shall be transferred to
the Escrow Bank and deposited in the Escrow Fund created by the Escrow Bank, and (4) the balance of
the proceeds shall be deposited in a fund hereby established in the Treasury of the City and designated
"1995 General Obligation Refunding Bonds of City of Poway Cost of Issuance Fund" (the "Cost of
u__ ..... ."'8182468.00012 10 10116/95
14 0 f 27
--
RESOLUTION NO.
-
Issuance Fund"). The moneys in said Cost of Issuance Fund shalI be applied to the payment of the
Costs of Issuance. Any money remaining in the Costs of Issuance Fund after all Costs of Issuance have-
been paid shall be transferred to the Bond Interest and Sinking Fund.
SECTION 14. Security for the Bonds. The City Council, so far as practicable, shall fIX such
rate or rates for the acquisition, transmission, storage and treatment of water in the City and in the
Improvement Area as will result in revenues which will pay the operating expenses of the City and of the
Improvement Area, provide for repairs and depreciation of works, provide a reasonable surplus for
improvements, extensions and enlargements, pay the interest on any bonded debt (including the interest
on bonds herein provided for), and provide a sinking or other fimd for the payment of the principal of
such debt as it may become due (including the bonds herein provided for). If the revenues of the
Improvement Area are, or in the judgment of the City Council will probably be, inadequate for any
cause to pay the principal of or interest on the bonds herein provided for as said principal and interest
become due, and the amounts above set forth, the City Council must cause a tax to be levied, as
provided in the Municipal Water District Law of 1911, in the Improvement Area sufficient to provide for
such deficit and to pay the amount of such principal and interest as will become due before the proceeds
of a tax levied at the next general tax levy will be available. The City Council shall determine the fiscal
year for all of the amounts above set forth, and shall fIX the rate or rates of tax to be levied which will
raise the amounts of money required by the City for such purposes, and as required by the Municipal
Water District Law of 1911, the City Council shall certify to the Board of Supervisors of the County and
to the County Auditor the rate or rates so fixed and shall furnish to the Board of Supervisors of the
County and the County Auditor a statement in writing containing the following: (a) an estimate of the
minimum amount of money required to be raised by taxation during the fiscal year for the payment of
the principal of and interest on the bonds herein provided for, as will become due before the proceeds of
a tax levied at the next general tax levy will be available; (b) an estimate of the minimum amount of
money required to be raised by taxation in the Improvement Area during the fiscal year for all other
purposes of the City, including the payment of the principal and interest on any other outstanding bonds
of the Improvement Area; and (c) any other items required by the Municipal Water District Law of
1911. The County Auditor shall compute and enter in the County assessment rolI the respective sums to
be paid as a City tax on the property within said Improvement Area using the rate or rates of levy as
fixed by the Council and the assessed value as found on the assessment roll for the property subject to
the tax.
It shall be the duty of all County officers charged with the duty of collecting taxes to collect such
tax in time, form and manner as County taxes are collected and when collected to pay the same to the
City.
All such rates and taxes for the payment of principal and interest on such bonds shall be
established, levied and collected as provided in the Municipal Water District Law of 1911 (Division 20
of the Water Code of the State of California).
All moneys derived from such taxes and all other moneys allocated and designated for payment
of said bonds and the interest thereon shall be placed in a fund of the City designated "General
Obligation Bonds of City of Poway, Bond Interest and Sinking Fund, " and until all of said bonds and all
interest thereon have been fully paid the moneys in said fund shall be used for no other purpose than the
payment of said bonds and the interest thereon.
--......... "'10"8182468.00012 11 10/16/95
15 of 27
RESOLUTION NO. -
SECTION 15. Investment Earninl!s. Any earnings received from any moneys placed in any
fund herein established shall inure to the benefit of and shall become a pan of such fund. Any losses so
incurred shall be treated in like manner. Any Rebatable Arbitrage (as hereinafter defined) shall be
transferred to the Excess Investment Earnings Fund as provided in Section 18 hereof.
SECTION 16. Pavinl! Al!ents. Bank of America National Trust and Savings Association is
hereby appointed Paying Agent for the bonds. The Paying Agent upon written consent of the City, may
appoint such other paying agents with respect to the bonds as it may deem advisable. Any successor
paying agent appointed shall be a bank or trust company, having a combined capital (exclusive of
borrowed capital) and surplus of at least S50,OOO,OOO and shall be subject to supervision or examination
by a federal or state banking authority.
The City may at any time and for any reason, remove the Paying Agent and any successor
thereto, but any such successor shall be a bank or trust company, having a combined capital (exclusive
of borrowed capital) and surplus of at least S50,OOO,OOO and shall be subject to supervision or
examination by a federal or state banking authority. If such bank or trust company publishes a report of
condition at least annually, pursuant to law or to the requirements of any supervising or examining
authority above referred to, then for the purposes of this Section 16 the combined capital and surplus of
such bank or trust company shall be deemed to be its combined capital and surplus set forth in its most
recent report of condition so published. Any removal of the Paying Agent shall become effective upon
acceptance of appointment by the successor Paying Agent occurs.
The Paying Agent or any successor may at any time resign by giving written notice to the City
and by giving mailed notice to the owners of its intention to resign and of the proposed date of
resignation, which shall be a date not less than 45 days after mailing of such notice, unless an earlier
resignation date and the appointment of a successor Paying Agent.
Upon receiving such notice of resignation, the City shall promptly appoint a successor Paying
Agent by an instrument in writing; provided, however, that in the event the City fails to appoint a
successor Paying Agent within 30 days following receipt of such written notice of resignation, the
resigning Paying Agent may petition the appropriate court having jurisdiction to appoint a successor
paying agent. Any resignation of the Paying Agent shall become effective upon acceptance of
appointment by the successor Paying Agent.
Any successor Paying Agent approved by the City or any court shall satisfy the qualifications set
forth in this Section 16.
SECTION 17. Tax Covenants. Notwithstanding any other provision of this Resolution, absent
an opinion of Bond Counsel that non-compliance therewith will not adversely affect the exclusion of the
interest on the bonds from gross income for federal income tax purposes, the City 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 Activitv. The City 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 an "industrial development bond" within the meaning of Section 103(b) of the
Internal Revenue Code of 1954, as amended (the "Prior Code"), or private loan bonds within the
meaning of Section 103(0) of the Prior Code;
--. .~u..., .... ''1''18'2468.00012 12 10l1619S
16 of 27
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RESOLUTION NO. -
(b) Arbitralle. The City 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 an "arbitrage bond" within the meaning of Section 148 of the Code;
(c) Federal Guarantee. The City 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 103(h) of the Prior Code;
(d) Information Renortinll. The City will take or cause to be taken all necessary
action to comply with the informational reporting requirement of Section 149(e) of the Code; and
(e) Miscellaneous. The City 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.
SECTION 18. Excess Investment Earnin~s Fund. Except as otherwise provided in the Tax
Certificate:
(a) Establishment of Excess Investment Earninn Fund. With respect to the issuance
of the bonds, the Treasurer shall establish a special fund with respect to the bonds designated as
the "Excess Investment Earnings Fund" (the "Excess Investment Earnings Fund"), and the City
shall comply with the requirements of this Section 18. All money at any time deposited in the
Excess Investment Earnings Fund shall be held by the Treasurer in trust, for payment to the
United States Treasury. All amounts on deposit in the Excess Investment Earnings Fund shall be
governed by this Section 18 and the Tax Certificate, unless the City obtains an opinion of Bond
Counsel that the exclusion from gross income of the interest on the bonds will not be adversely
affected for federal income tax purposes if such requirements are not satisfied.
(i) Annual Comoutation. Within 55 days of the end of each Bond Year, the City
shall calculate or cause to be calculated the amount of rebatable arbitrage, in accordance with
Section 148(f) of the Code and Section 1.148-3 of the Rebate Regulations, 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 City 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 Bond Year, an amount
shall be deposited in the Excess Investment Earnings Fund by the Treasurer from any legally
available funds if and to the extent required, so that the balance in the Excess Investment
Earnings Fund shall equal the amount of Rebatable Arbitrage so calculated in accordance with
subsection (a)(i). In the event that immediately following the transfer required by the previous
sentence, the amount then on deposit to the credit of the Excess Investment Earnings Fund
exceeds the amount required to be on deposit therein, the Treasurer shall withdraw the excess
from the Excess Investment Earnings Fund and then credit the excess to the Bond Interest and
Sinking Fund.
(iii) Payment to the Treasurv. The Treasurer shall pay to the United States
Treasury, out of amounts in the Excess Investment Earnings Fund,
.-... .. "182468.00012 13 10/1619S
17 0 f 27
RESOLUTION NO. -
(X) Not later than 60 days after the end of (A) the fifth Bond Year, and
(8) each 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 bonds, an amount
equal to 100% of the Rebatable Arbitrage calculated as of the end of such Bond Year, and any
income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(t) of the
Code.
In the event that, prior to the time of any payment required to be made from the
Excess Investment Earnings Fund, the amount in the Excess Investment Earnings Fund is not
sufficient to make such payment when such payment is due, the City 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 in the Excess Investment Earnings Fund prior to the
time such payment is due. Each payment required to be made pursuant to this subsection 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.
(b) DisDOsition of Unexpended Funds. Any funds remaining in the Excess Investment Earnings
Fund after the repayment of the bonds and the payments described in subsection (a)(iii), may be
withdrawn by the City and utilized in any manner by the City.
(c) Survival of Defeasance. Notwithstanding anything in this Section 18 to the contrary, the
obligation to comply with the requirements of this Section 18 shall survive the defeasance of the-
obligation represented by the bonds.
SECTION 19. Defeasance. When the City has deposited with the Paying Agent or an escrow
bank the amount in money or Defeasance Securities, which together with interest earnings thereon, will
be sufficient to fully pay the principal of and interest on the outstanding bonds, then and in that case the
obligations created by this Resolution shall thereupon cease, terminate and become void except for the
right of the owners of the bonds and the obligations of the Paying Agent to (i) apply such moneys and
Defeasance Securities to the payment of the bonds as herein set forth, which moneys and Defeasance
Securities shall continue to be held by the Paying Agent or the escrow bank in trust for the benefit of the
owners and shall be applied by the Paying Agent to the payment, when due, of the principal of, the
interest on and the premium, if any, represented by the bonds, and (ii) return to the City any unclaimed
moneys as provided in Section 20 hereof.
If moneys or Defeasance Securities are deposited with and held by the Paying Agent or an
escrow bank as hereinabove provided, the Paying Agent shall within thirty (30) days after such moneys
or Defeasance Securities shall have been deposited with it, mail a notice, first class postage prepaid, to
the owners of the bonds at the addresses listed on the registration books kept by the Paying Agent
pursuant to Section 8, setting forth (a) the date fixed for redemption of the bonds, (b) a description of
the moneys or Defeasance Securities described so held by it, and (c) that this Resolution has been
released in accordance with the provisions of this Section 19.
P1rDl.1:1<')' .,1 nlj, 1 82468.00012 14 10/16195
18 of 27
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RESOLUTION NO. -
Notwithstanding anything herein to the contrary, in the event that the principal and/or interest due
on the bonds shall be paid by the Bond Insurer pursuant to the Municipal Bond Insurance Policy, the
bonds shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be
considered paid by the City, and all covenants, agreements and other obligations of the City to the
Owners shall continue to exist and shall run to the benefit of the Bond Insurer, and the Bond Insurer
shall be subrogated to the rights of such City Owners.
SECTION 20. Vnclaimed Moneys. Anything contained herein to the contrary notwithstanding,
any moneys held by the Paying Agent in trust for the payment and discharge of the interest or principal
represented by any of the bonds which remain unclaimed for two (2) years (or one day prior to the
escheat period established by the laws of the State of California if said period is less than two (2) years)
after the date of deposit of such moneys if deposited with the Paying Agent after the date when the
interest and principal represented by such bonds have become payable, shall be repaid by the Paying
Agent to the City as its absolute property free from trust, and the Paying Agent shall thereupon be
released and discharged with respect thereto and the owners shall look only to the City for the payment
of the interest and principal represented by such bonds; provided, however, that before being required to
make any such payment to the City, the Paying Agent shall, at the written request and expense of the
City, first mail a notice to the owners of the bonds so payable that such moneys remain unclaimed and
that after a date named in such notice, which date shall not be less than thirty (30) days after the date of
the mailing of such notice, the balance of such moneys then unclaimed will be returned to the City.
SECTION 21. Bond Insurer Payment Procedure.
[TO BE PROVIDED BY BOND INSURER]
SECTION 22. Consents of. Notices to and Other Provisions Affectinl! the Bond Insurer.
(a) Consent - City. Any provision of this Resolution expressly recognizing or granting rights
in or to the Bond Insurer may not be amended in any manner which affects the rights of the Bond
Insurer hereunder without the prior written consent of the Bond Insurer.
(b) Consent of the Bond Insurer in Addition to Bondholder Consent. Unless otherwise
provided in this Section, the Bond Insurer's consent shall be required in addition to bondowner consent,
when required, for the following purposes: (i) execution and delivery of any amendment, supplement or
change to or modification of the this Resolution, (ii) removal of the Paying Agent and selection and
appoinunent of any successor paying agent; and (Hi) initiation or approval of any action not described in
(i) or (ii) above which requires bondowner consent.
(c) Consent of the Bond Insurer in the Event of Insolvency. Any reorganization or
liquidation plan with respect to the City must be acceptable to the Bond Insurer. In the event of any
reorganization or liquidation, the Bond Insurer shall have the right to vote on behalf of all bondowners
who hold the Bond Insurer-insured bonds absent a default by the Bond Insurer under the applicable
Municipal Bond Insurance Policy insuring such bonds.
(d) Consent of the Bond Insurer Upon Default. Anything in this Resolution to the contrary
notwithstanding, upon the occurrence and continuance of an event of default, the Bond Insurer shall be
- entitled to control and direct the enforcement of all rights and remedies granted to the bondowners or the
Paying Agent for the benefit of the bondowners under this Resolution.
--. .'tU'll "'11'28182468.00012 15 10116/95
19 of 27
RESOLUTION NO. -
(e) Notices - City. While the Municipal Bond Insurance Policy is in effect, the City or the
Paying Agent (with respect to (H) and (Hi) only) shall furnish to the Bond Insurer:
(i) as soon as practicable after the filing thereof, a copy of any fmancial statement of
the City and a copy of any audit and annual report of the City;
(H) a copy of any notice to be given to the registered Owners of the bonds, including,
without limitation, notice of any redemption of or defeasance of bonds, and any certificate
rendered pursuant to this Resolution relating to the security for the bonds; and
(Hi) such additional information it may reasonably request.
(t) Notice - Certain Omissions. The Paying Agent shall notify the Bond Insurer of any
failure of the City to provide relevant notices, certificates, etc., that are required by this Resolution to be
provided to the Paying Agent.
(a) Information. The City will permit the Bond Insurer to discuss the affairs, fmances and
accounts of the City or any information the Bond Insurer may reasonably request regarding the security
for the bonds with appropriate officers of the City. The Paying Agent or City, as appropriate, will
permit the Bond Insurer to have access to and to make copies of all books and records relating to the
bonds at any reasonable time.
(b) Accounting. The Bond Insurer shall have the right to direct an accounting at the City's
expense, and the City's failure to comply with such direction within thirty (30) days after receipt of
written notice of the direction from the Bond Insurer shall be deemed a default hereunder; provtded,
however, that if compliance cannot occur within such period, then such period will be extended so long
as compliance is begun within such period and diligently pursued, but only if such extension would not
materially adversely affect the interests of any registered Owner of the bonds.
(c) Notice of Insufficiency of Funds. Notwithstanding any other provision of this Resolution,
the Paying Agent or City, as appropriate, shall immediately notify the Bond Insurer if at any time there
are insufficient moneys to make any payments of principal and/or interest as required and immediately
upon the occurrence of any Event of Default hereunder.
(d) Investments. Money held in any fund or account hereunder shall be invested only in
investments which are legal investments for the City under the laws of the State of California and which
are permitted under the terms of the Bond Insurer's commitment to issue the Policy.
(e) Paying Agent. Notwithstanding any other provision of this Resolution, the following
provisions shall apply to the Paying Agent:
(i) The Paying Agent may be removed at any time, at the request of the Bond Insurer
for any breach of the agreement set forth herein.
(H) The Bond Insurer shall receive prior written notice of any Paying Agent
resignation.
.......11~11 11138182468.00012 16 10116/9S
20 of 27
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RESOLUTION NO. -
(iii) Every successor Paying Agent shall be a trust company or bank in good standing
located in or incorporated under the laws of the State, duly authorized to exercise trust powers
and subject to examination by federal or state authority, having a reported capital and surplus of <
not less than $75,000,000 and acceptable to the Bond Insurer.
(iv) Notwithstanding any other provision of this Resolution, in determining whether
the rights of the bondholders will be adversely affected by any action taken pursuant to the terms
and provisions hereof, the Paying Agent shall consider the effect on the bondholders as if there
were no Municipal Bond Insurance Policy.
(v) Notwithstanding any other provision of this Resolution, no removal, resignation or
termination of the Paying Agent shall take effect until a successor, acceptable to the Bond
Insurer, shall be appointed.
(I) Interested Parties. To the extent that this Resolution confers upon or gives or grants to
the Bond Insurer any right, remedy or claim hereunder or by reason hereof, the Bond Insurer is hereby
explicitly recognized as being a third-party beneficiary hereunder and may enforce any such right remedy
or claim conferred, given or granted hereunder. Nothing herein expressed or implied is intended or shall
be construed to confer upon, or to give or grant to, any person or entity, other than the City, the Bond
Insurer, the Paying Agent, and the registered owners of the bonds, any right, remedy or claim under or
by reason of this Resolution or any covenant, condition or stipulation hereof, and all covenants,
stipulations, promises and agreements in this Resolution contained by and on behalf of the City shall be
for the sole and exclusive benefit of the City, the Bond Insurer, the Paying Agent, and the registered
owners of the bonds.
-
SECTION 23. Amendments to this Resolution. This Resolution may be amended if the City has
obtained an opinion of Bond Counsel that such amendment will not adversely affect the exclusion of the
interest on the bonds from gross income for purposes of federal income taxation, but no such amendment
shall become effective as to the owners of bonds then outstanding unless and until approved in writing by
the owners of a majority in aggregate principal amount of bonds then outstanding. For purposes of the
preceding sentence, as long as the Policy is in full force and effect and the Insurer is not in default
thereunder, the Insurer shall be deemed to be the owner of a majority in aggregate principal amount of
bonds then outstanding. Notwithstanding the foregoing, (i) no such amendment shall extend the fixed
maturity of any bond or reduce the principal amount thereof, the rate of interest applicable thereto or the
premium (if any) thereon or extend the time of payment of the interest thereon without the consent of the
owner thereof and (ii) this Resolution and the rights and obligations provided thereby may also be
modified or amended at any time, without the consent of the owners of the bonds, but only (1) for the
purpose of curing any ambiguity or omission relating thereto, or of curing, correcting or supplementing
any defective provision contained in such Resolution, (2) in regard to questions arising under such
Resolution which the City may deem necessary or desirable and not inconsistent with this Resolution and
which shall not materially adversely affect the interests of the owners of the bonds, or (3) for any other
reason, provided such modification or amendment does not materially adversely affect the interests of the
owners of the bonds.
SECTION 24. Proceedinl!S Constitute Contract. The provisions of this Resolution, and of any
other resolution supplementing or amending this Resolution, shall constitute a contract between the City
and the owners of the bonds. The provisions of any amendment shall be enforceable by any owner for
the equal benefit and protection of all owners similarly situated by mandamus, accounting, mandatory
"""."~21 21138182468.00012 17 10/16/95
21 of 27
RESOLUTION NO. -
injunction or any other suit, action or proceeding at law or in equity that is now or may hereafter be
authorized under the laws of the State of California in any court of competent jurisdiction. This contract
is made under and is to be construed in accordance with the laws of the State of California.
SECTION 25. ADDroval of the Bond Purchase Al!:reement. The Bond Purchase Agreement is
approved and the sale of the bonds to the Underwriter pursuant to the terms and conditions of the Bond
Purchase Agreement is approved. The Treasurer is authorized to deliver the bonds to the Underwriter
upon the receipt of the purchase price set forth in the Bond Purchase Agreement plus accrued interest, if
any.
SECTION 26. Authorization of Personnel. The City Manager of the City and each and every
officer of the City is authorized and directed, jointly and severally, to do any and all things and to
execute and deliver any and all documents which they may deem necessary and advisable in order to
consummate the delivery of the bonds and otherwise effectuate the purposes of this Resolution.
ADOPTED, SIGNED AND APPROVED this _ day of 1995.
Don Higginson, Mayor
City of Poway
-
A TIEST:
Marjorie K. Wahlsten, City Clerk
City of Poway
--. .'IU". ...'...~IB2468J)OO12 18 10/16/95
22 of 27
- -
-.- RESOLUTION NO.
-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POW A Y
AUTHORIZING THE PREPARATION, SALE AND DELIVERY OF NOT TO
EXCEED $6,300,000 PRINCIPAL AMOUNT OF 1995 GENERAL
OBLIGATION REFUNDING BONDS OF CITY OF POWAY AND
APPROVING CERTAIN DOCUMENTS AND AUTHORIZING CERTAIN
ACTIONS IN CONNECTION THEREWITH
WHEREAS, pursuant to the Municipal Water District Law of 1911, as amended, and
pursuant to an order of the Board of Supervisors of the County of San Diego, the Poway
Municipal Water District was formed for the purpose of the acquisition, construction,
completion, repair and improvement of facilities useful and necessary for the acquisition, storage,
distribution and of water, for the lands and inhabitants within the exterior boundaries of the
Poway Municipal Water District and including expenses of all proceedings for the authorization,
issuance and sale of bonds, and bonds in the amount of $6,300,000 were authorized for said
purpose; and
WHEREAS, the Board of Directors of the Poway Municipal Water District was
authorized and empowered to provide for the form of bonds and for the issuance of any part
thereof for the purpose provided for in the aforesaid resolution, payable, as to principal and
interest, from taxes levied exclusively upon the taxable property within said Poway Municipal
Water District except to the extent that such principal and interest may be paid from water
revenues as permitted or required by law; and
WHEREAS, the Poway Municipal Water District has issued $6,300,000 of said
authorized bonds designated "1975 Water Bonds" (the "1975 Water Bonds"); and
WHEREAS, effective February I, 1981, the Poway Municipal Water District was
- dissolved and the City of Poway (the "City") succeeded to all rights, duties and obligations of the
extinguished water district with respect to enforcement, performance or payment of any
23 of 27 ATTACHMENT B OCT 1 7 1995 ITEM B ,II'"
outstanding voter-approved bonds, and implied or expressed contracts and obligations of Poway
Municipal Water District pursuant to that certain "Poway Reorganization" certified by the Local
Agency Formation Commission on November 25, 1980 (the "Reorganization Document").
WHEREAS, this City Council (the "Council") finds and determines that prudent
management of the fiscal affairs of the City requires that it issue refunding bonds to refund the
outstanding 1975 Water Bonds; and
WHEREAS, pursuant to Articles 9 and 11 (commencing at Sections 53550 and 53580,
respectively) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the
State of California (the "Refunding Law") the City has the authority to issue refunding bonds
without an election and at private sale; and
WHEREAS, it is proper and the necessity therefor appears that refunding bonds in the
amount not to exceed $6,300,000 (the "Bonds") should be issued for the purpose hereinabove
stated, and in the form and manner hereinafter provided; and -
WHEREAS, pursuant to Section 53552 of the Government Code of the State of California
the principal amount of refunding bonds may be more than the principal amount of the bonds to
be refunded and therefore the City is authorized to issue a principal amount of bonds in excess of
the 1975 Water Bonds to be refunded; and
WHEREAS, the bonds will be issued pursuant to a resolution of issuance titled
"Resolution of the City Council of City of Poway Providing for the Issuance of Refunding Bonds
of said City (Poway Municipal Water District Improvement Area) " (the "Resolution of
Issuance"); and
WHEREAS, pursuant to Section 53583 of the Government Code of the State of California
this City Council determines that a lower interest cost may be achieved if the bonds are sold on a
........~'C'.,n 111'2QI82468.00012 2 10/12/95
24 of 27
-- -
- negotiated basis thereby permitting the underwriter and the City to price the bonds on a date
when the market is believed to be most favorable; and
WHEREAS, the City desires to negotiate a sale of the bonds with Grigsby Brandford &
Co., Inc. (the "Underwriter") pursuant to the terms of a Contract of Purchase by and between the
City and the Underwriter (the "Bond Purchase Agreement"); and
WHEREAS, in connection with the offering of the bonds for sale there has been prepared
a Preliminary Official Statement (the "Preliminary Official Statement"); and
WHEREAS, a portion of the bond proceeds will be deposited into an escrow fund to be
held by an escrow bank as provided in the proposed escrow agreement titled "Escrow Agreement
for the 1975 Refunded Bonds of the Poway Municipal Water District" (the "Escrow
Agreement"); and
WHEREAS, the City Council desires to approve the form of the Resolution of Issuance,
the Escrow Agreement, and the Bond Purchase Agreement (the "Financing Documents") with the
adoption of the Financing Documents to occur following the pricing of the bonds by the
Underwriter; and
WHEREAS, the City Council desires to approve the Preliminary Official Statement and to
authorize its distribution to prospective purchasers of the bonds; and
WHEREAS, there has been presented to this City Council at this meeting copies of the
Financing Documents and the Preliminary Official Statement;
NOW, THEREFORE, the City Council of the City of Poway does hereby RESOL VB,
DETERMINE AND ORDER as follows:
SECTION 1: The Financing Documents are approved in substantially the form presented
at this meeting.
DIIAI '~lc;,O t I nSIB2468.00012 3 10/12/95
25 0 f 27
SECTION 2: This City Council requests the Underwriter to present to it for its approval
a Bond Purchase Agreement in substantially the form approved in Section 1 hereof incorporating
the.final terms of sale of the bonds, including the sale price and the rates of interest to be paid by
the City on the unpaid principal of the bonds.
SECTION 3: The Preliminary Official Statement is approved in substantially the form
presented at this meeting and the distribution of the Preliminary Official Statement (with such
changes thereto as may be approved by either the City Manager of the City or the Assistant City
Manager of the City) to prospective purchasers of the bonds is authorized, provided that either
the City Manager of the City or the Assistant City Manager of the City shall have first approved
such distribution.
SECTION 4: Bank of America National Trust and Savings Association is hereby
appointed to act as Trustee and as Escrow Bank with respect to the issuance of the Bonds and the
refunding of the 1975 Water Bonds pursuant to the terms of the Resolution of Issuance and the
Escrow Agreement, respectively. Stradling, Yocca, Carlson & Rauth, a Professional
Corporation, is hereby engaged to act as Bond Counsel 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 5: The City Manager of the City, the Assistant City Manager and each and
every other officer of the City is authorized and directed, jointly and severally, to do any and all
things and to execute and deliver any and all documents which they may deem necessary and
advisable in order to consummate the sale of the bonds and otherwise effectuate the purposes of
this Resolution.
..'......~I....m 1!1~81B2468.00012 4 10/12/95
26 of 27
_H.~ -
SECTION 6: 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
(SEAL)
ATTEST:
City Clerk of the City of Poway
-.--' 82468.00012 5 1011 2/95
27 of 27
-. -
... ESCROW AGREEMENT FOR THE
1975 REFUNDED BONDS OF
THE POWAY MUMClPAL WATER DISTRICT
This ESCROW AGREEMENT (the" Agreement"), made and entered into as of
, 1995, by and between the City of Poway, a municipal corporation organized
and existing under the laws of the State of California (the "City"), and Bank of America National
Trust and Savings Association, a national banking association having a corporate trust office in
the State of California and being qualified to accept and administer the escrow hereby created
(the "Escrow Bank").
WITNESSETH:
WHEREAS, pursuant to the Municipal Water District Law of 1911, as amended, and
pursuant to an order of the Board of Supervisors of the County of San Diego, the Poway
Municipal Water District was formed for the purpose of the acquisition, construction,
completion, repair and improvement of facilities useful and necessary for the acquisition, storage,
distribution and of water, for the lands and inhabitants within the exterior boundaries of the
Poway Municipal Water District and including expenses of all proceedings for the authorization,
issuance and sale of bonds, and bonds in the amount of $6,300,000 were authorized for said
purpose; and
WHEREAS, the Board of Directors of the Poway Municipal Water District was -
authorized and empowered to provide for the form of bonds and for the issuance of any part
thereof for the purpose provided for in the aforesaid resolution, payable, as to principal and
interest, from taxes levied exclusively upon the taxable property within said Poway Municipal
Water District except to the extent that such principal and interest may be paid from water
revenues as permitted or required by law; and
WHEREAS, the poway Municipal Water District has heretofore issued it 1975 Water
Bonds pursuant to a Resolution of Issuance, Resolution No. 738-75 adopted on October 7, 1975
(the "Prior Resolution"), of which $ , is outstanding (the "Refunded Bonds");
WHEREAS, effective February I, 1981, the Poway Municipal Water District was
dissolved and the City of Poway (the "City") succeeded to all rights, duties and obligations of the
extinguished Water district with respect to enforcement, performance or payment of any
outstanding voter-approved bonds, and implied or expressed contracts and obligations of Poway
Municipal Water District pursuant to that certain "Poway Reorganization" certified by the Local
Agency Formation Commission on November 25, 1980 (the "Reorganization Document").
WHEREAS, the City has determined to issue pursuant to a Resolution of Issuance,
Resolution No. _ adopted on October 17, 1995 (the "Resolution"), $ 1995
General Obligation Refunding Bonds of the City of Poway (Poway Municipal Water District
Improvement Area) (the "Refunding Bonds") for the purpose of providing moneys which will,
among other things, be sufficient, together with certain other moneys relating to the Refunded
Bonds, and earnings thereon, to pay the principal and interest due with respect to the Refunded
ATTACHMENT C OCT 1 7 1995 ITEM 8 u("*'
the outstanding Refunded Bonds maturing after April 1, 1996 at the principal amount thereof plus'
the premium applicable thereto (the "Payment Price");
WHEREAS, the Resolution provides that a portion of the proceeds of the Refunding
Bonds shall be set aside in order to provide for the payment of a portion of the Payment Price of
the Refunded Bonds and that such proceeds shall be deposited, together with certain other
moneys relating to the Refunded Bonds, in a special escrow fund to be created hereunder to be
known as the Escrow Fund to be maintained by the Escrow Bank (the "Escrow Fund"); and
WHEREAS, the City has taken action to cause to be delivered to the Escrow Bank, for
deposit in the Escrow Fund, Refunding Bond proceeds and certain other moneys relating to the
Refunded Bonds for the purchase of certain securities and investments consisting of direct
noncallable obligations of the United States of America as listed on Schedule I attached hereto
and made a part hereof (the "Investment Securities"), in an amount which, together with income
or increment to accrue on such securities, and cash deposited in the Escrow Fund are intended by
the City to be sufficient to pay the Payment Price;
NOW, THEREFORE, the City and the Escrow Bank hereby agree as follows:
Section 1. Establishment. Fundi",! and Maintenance of Escrow Fund. The Escrow Bank
agrees to establish and maintain the Escrow Fund until the Payment Price of the Refunded Bonds
has been paid in full and to hold the securities, investments and moneys therein at all times as a
special and separate escrow fund (wholly segregated from all other securities, investments or
moneys on deposit with the Escrow Bank). All securities, investments and moneys in the Escrow
Fund are hereby irrevocably pledged, subject to the provisions of Section 2 hereof, to secure the
payment of the Payment Price of the Refunded Bonds.
Section 2. Investment of the Escrow Fund.
(a) The City and the Escrow Bank each shall take all remaining action, if any,
necessary to have the Investment Securities issued and registered in the name of the Escrow Bank
for the account of the Escrow Fund. Except as otherwise provided in this Section, the Escrow
Bank shall not reinvest any cash portion of the Escrow Fund and shall hold such cash portion
uninvested.
(b) Upon the written direction of the City, but subject to the conditions and
limitations herein set forth, the Escrow Bank shall sell, transfer, request the redemption or
otherwise dispose of some or all of the Investment Securities in the Escrow Fund and purchase
with the proceeds derived from such sale, transfer, redemption or other disposition noncallable
non-prepay able obligations constituting direct obligations issued by the United States Treasury or
obligations which are unconditionally guaranteed as to full and timely payment by the United
States of America (the "Substitute Investment Securities"). Such sale, transfer, redemption or
other disposition of Investment Securities and purchase of Substitute Investment Securities shall
be effected by the Escrow Bank upon the written direction of the City but only by a simultaneous
transaction and only if (i) a nationally recognized firm of independent certified public accountants
shall certify that (a) the Substitute Investment Securities, together with the Investment Securities
which will continue to be held in the Escrow Fund, will mature in such principal amounts and
earn interest in such amounts and, in each case, at such times so that sufficient moneys will be
pU8L:31522.1 1 138182468.00012 2 10111/95
--
.-
available from maturing principal and interest on such Investment Securities. and Substitute
Investment Securities held in the Escrow Fund, together with any uninvested moneys, to make all
payments required by Section 3 hereof which have not previously been made, and (b) the
amounts and dates of the anticipated payments by the Escrow Bank of the Payment Price will not
be diminished or postponed thereby, and (ii) the Escrow Bank shall receive an unqualified
opinion of nationally recognized municipal bond attorneys to the effect that the proposed sale,
transfer, redemption or other disposition and substitution of Investment Securities will not
adversely affect the exclusion of interest on the Refunding Bonds or the Refunded Bonds from
gross income for federal income tax purposes; provided, however, that the Escrow Bank shall,
without any other action by the City and without any opinion as provided above, reinvest
amounts as provided in Schedule 1lI.
(c) Upon the written direction of the City, but subject to the conditions and
limitations herein set forth, the Escrow Bank will apply any moneys received from the maturing
principal of or interest or other investment income on any Investment Securities held in the
Escrow Fund, or the proceeds from any sale, transfer, redemption or other disposition of
Investment Securities pursuant to Section 2(b) not required for the purposes of said Section, as
follows: to the extent such moneys will not be required at any time for the purpose of making a
payment required by Section 3 hereof, as certified by a nationally recognized firm of independent
certified public accountants, such moneys shall be paid upon the written direction of the City as
received by the Escrow Bank, free and clear of any trust, lien, pledge or assignment securing the
Refunded Bonds or otherwise existing hereunder or under the Prior Resolution.
Section 3. Pavment and Redemotion of the Refunded Bonds. The City hereby requests
and irrevocably instructs the Escrow Bank, and the Escrow Bank hereby agrees, to collect and
deposit in the Escrow Fund the principal of and interest on the Investment Securities held for the
account of the Escrow Fund promptly as such principal and interest become due, and to apply,
subject to the provisions of Section 2 hereof, such principal and interest, together with any other
moneys and the principal of and interest on any other securities deposited in the Escrow Fund, to
the payment of the principal of and interest on the Refunded Bonds at the places and in the
manner stipulated in the Refunded Bonds and in the Prior Resolution and to pay the Payment
Price of the Refunded Bonds on April 1, 1996. The Escrow Bank shall give notice to the Paying
Agent under the Prior Resolution of the irrevocable election of the city to cause to be paid on
April 1, 1996, all of the outstanding Refunded Bonds maturing on and after April 1, 1997, plus
interest due on said Refunded Bonds to the redemption date. The City hereby requests and
irrevocably instructs the Paying Agent under the Prior Resolution to: (i) mail, as provided in the
Prior Resolution, notice of redemption of said outstanding Refunded Bonds and (ii) publish at
least once in The Bond Buver or The Wall Street Journal, not less than thirty (30) days but not
more than sixty (60) days prior to April 1, 1996, an announcement (in the form annexed hereto
as Exhibit A) that the deposit of investment securities and moneys has been made with the
Escrow Bank and that the projected withdrawals from the Escrow Fund have been calculated to
be adequate to pay the Payment Price of the Refunded Bonds, plus interest due on said Refunded
Bonds to the redemption date. Upon payment in full of the Payment Price of, and the interest
due on, the Refunded Bonds, the Escrow Bank shall transfer any moneys or securities remaining
in the Escrow Fund to the City and this Agreement shall terminate. The Escrow Fund cash flow
is set forth in Schedule n attached hereto.
Section 4. Possible Deficiencies: Amounts in Excess of Reouired Cash Balance.
PUBL:31522.1 1 138182468.00012 3 10/11/95
(a) If at any time the Escrow Bank has actual knowledge that the moneys in
the Escrow Fund, including the anticipated proceeds of the Investment Securities, will not be
sufficient to make all payments required by Section 3 hereof, the Escrow Bank shall notify the
City in writing as soon as is reasonably practicable, of such fact, the amount of such deficiency
and the reason therefor to the extent such reason is actually known to it.
(b) The Escrow Bank shall in no manner be responsible for the City's failure
to make up any such deficiency if the Escrow Bank shall have notified the City as soon as is
reasonably practicable of such deficiency.
Section 5. Fees and Costs.
(a) The City shall pay to the Escrow Bank from time to time reasonable
compensation for all services rendered under this Agreement.
(b) The Escrow Bank shall also be entitled to additional fees and
reimbursements for costs incurred, including but not limited to legal and accountants' services, in
connection with any litigation which may at any time be instituted involving this Agreement.
(c) The fees of and the costs incurred by the Escrow Bank shall in no event be
deducted or payable from, or constitute a lien against, the Escrow Fund.
Section 6. Menzer or Consolidation. Any company into which the Escrow Bank may be
merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which t1ie
Escrow Bank may sell or transfer all or substantially all of its corporate trust business, provided
such company shall be eligible under this Agreement, shall be the successor to such Escrow Bank
without the execution or filing of any paper or any further act, notwithstanding anything herein to
the contrary.
Section 7. Indemnitv. To the maximum extent permitted by law, the City hereby
assumes liability for, and hereby agrees (whether or not any of the transactions contemplated
hereby are consummated) to indemnify, protect, save and keep harmless the Escrow Bank and its
respective successors, assigns, agents, employees and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and
disbursements (including reasonable legal fees and disbursements) of whatsoever kind and nature
which may be imposed on, incurred by, or asserted against, the Escrow Bank at any time
(whether or not also indemnified against the same by the City or any other person under any
other agreement or instrument, but without double indemnity) in any way relating to or arising
out of the execution, delivery and performance of this Agreement, the establishment hereunder of
the Escrow Fund, the acceptance of the funds and securities deposited therein, the purchase of
the Investment Securities, the retention of the Investment Securities or the proceeds thereof and
any payment, transfer or other application of moneys or securities by the Escrow Bank in
accordance with the provisions of this Agreement; provided, however, that the City shall not be
required to indemnify the Escrow Bank against the Escrow Bank's own negligence or willful
misconduct or the negligent or willful misconduct of the Escrow Bank's respective successors,
assigns, agents and employees or the breach by the Escrow Bank of the terms of this Agreement.
In no event shall the City or the Escrow Bank be liable to any person by reason of the
PUBL:31522.1 1 138182468.00012 4 10111195
-
- transactions contemplated hereby other than to each other as set forth in this section. The
indemnities contained in this section shall .survive the termination of this Agreement.
Section 8. Resoonsibilities of the Escrow Bank. The Escrow Bank and its respective
suecessors, assigns, agents and servants shall not be held to any personal liability whatsoever, in
tort, contract, or otherwise, in connection with the execution and delivery of this Agreement, the
establishment of the Escrow Fund, the acceptance of the moneys or securities deposited therein,
the purchase of the Investment Securities, the retention of the Investment Securities or the
proceeds thereof, the sufficiency of the Investment Securities to accomplish the defeasance of the
Refunded Bonds or any payment, transfer or other application of moneys or obligations by the
Escrow Bank in accordance with the provisions of this Agreement or by reason of any
non-negligent act, non-negligent omission or non-negligent error of the Escrow Bank made in
good faith in the conduct of its duties. The recitals of fact contained in the "Whereas" clauses
herein shall be taken as the statements of the City and the Escrow Bank assumes no responsibility
for the correcmess thereof. The Escrow Bank makes no representation as to the sufficiency of
the Investment Securities to accomplish the defeasance of the Refunded Bonds or to the validity
of this Agreement as to the City and, except as otherwise provided herein, the Escrow Bank shall
incur no liability with respect thereto. The Escrow Bank shall not be liable in connection with
the performance of its duties under this Agreement except for its own negligence, willful
misconduct or default, and the duties and obligations of the Escrow Bank shall be determined by
the express provisions of this Agreement. The Escrow Bank may consult with counsel, who may
or may not be counsel to the City, and in reliance upon the written opinion of such counsel shall
have full and complete authorization and protection with respect to any action taken, suffered or
omitted by it in good faith in accordance therewith. Whenever the Escrow Bank shall deem it
necessary or desirable that a matter be proved or established prior to taking, suffering, or -
omitting any action under this Agreement, such matter may be deemed to be conclusively
established by a certificate signed by an authorized officer of the City.
Section 9. Amendments. This Agreement is made for the benefit of the City and the
owners from time to time of the Refunded Bonds and it shall not be repealed, revoked, altered or
amended without the written consent of all such owners, the Escrow Bank and the City;
provided, however, that if the City and the Escrow Bank receive an opinion of nationally
recognized bond attorneys to the effect that the exclusion from gross income for federal income
tax purposes of the interest on the Refunded Bonds and the Refunding Bonds will not be
adversely affected thereby, they may, without the consent of, or notice to, such owners, amend
this Agreement or enter into such agreements supplemental to this Agreement as shall not
adversely affect the rights of such owners and as shall not be inconsistent with the terms and
provisions of this Agreement, for anyone or more of the following purposes: (i) to cure any
ambiguity or formal defect or omission in this Agreement; (ii) to grant to, or confer upon, the
Escrow Bank for the benefit of the owners of the Refunded Bonds any additional rights,
remedies, powers or authority that may lawfully be granted to, or conferred upon, such owners
or the Escrow Bank; and (Hi) to include under this Agreement additional funds, securities or
properties (but only if the sufficiency of the Escrow Fund for the purpose herein set forth is
verified by a nationally recognized public accounting firm). The Escrow Bank shall be entitled to
rely conclusively upon an unqualified opinion of nationally recognized municipal bond attorneys
with respect to compliance with this Section 9, including the extent, if any, to which any change,
modification, addition or elimination affects the rights of the owners of the Refunded Bonds or
PU8L:31522.11138182468.00012 5 10/11/95
that any instrument executed hereunder complies with the conditions and provisions of this
Section 9.
Section 10. Resil!nation or Removal of Escrow Bank.
(a) The Escrow Bank may resign by giving notice in writing to the City,
which notice shall be mailed to the owners of the Refunded Bonds remaining unpaid. The
Escrow Bank may be removed (1) by (i) filing with the City of an instrument or instruments
executed by the owners of at least 51 % in aggregate principal amount of the Refunded Bonds
then remaining unpaid, (ii) mailing the notice to the owners of the Refunding Bonds remaining
unpaid at least 60 days prior to the effective date of said removal, and (iii) the delivery of a copy
of the instruments filed with the City to the Escrow Bank, or (2) by a court of competent
jurisdiction for failure to act in accordance with the provisions of this Agreement upon allocation
by the City or the owners of 5 % in aggregate principal amount of the Refunded Bonds then
remaining unpaid.
(b) If the position of Escrow Bank becomes vacant due to resignation or removal of
the Escrow Bank or any other reason, a successor Escrow Bank may be appointed by the City.
Notice of such appointment shall be mailed in accordance with the requirements more specifically
set forth in clause (1 )(ii) of subsection (a) of this Section. Within one year after a vacancy, the
owners of a majority in principal amount of the Refunded Bonds then remaining unpaid may, by
an instrument or instruments filed with the City, appoint a successor Escrow Bank who shall
supersede any Escrow Bank theretofore appointed by the City. If no successor Escrow Bank is
appointed by the City or the owners of such Refunded Bonds then remaining unpaid, within 45
days after any such resignation or removal, the Escrow Bank may petition the appropriate Court
having jurisdiction for the appointment of a successor Escrow Bank. The responsibilities of the
Escrow Bank under this Escrow Agreement will not be discharged until a new Escrow Bank is
appointed and until the cash and investments held under this Escrow Agreement are transferred to
the new Escrow Bank.
Section 11. Severabilitv. If any section, paragraph, sentence, clause or provision of this
Agreement shall for any reason be held to be invalid or unenforceable, the invalidity or
unenforceability of such section, paragraph, sentence, clause or provision shall not affect any of
the remaining provisions of this Agreement.
Section 12. Execution of Countemarts. This Agreement may be executed in any number
of counterparts, each of which shall for all purposes be deemed to be an original and all of which
shall together constitute but one and the same instrument.
Section 13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
Section 14. Definitions. Any capitalized term used but not otherwise defmed in this
Agreement shall have the meaning assigned to such term in the Resolution.
,
Section 15. Assil!nment. This Agreement shall not be assigned by the Escrow Bank or
any successor thereto without the prior written consent of the City.
PU8L:31522.1 1 138182468.00012 6 10111/95
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Section 16. Holidavs. If the date for making any payment or the last date for
performance of any act or the exercising of any right, as provided in this Agreement, shall be a
legal holiday or a day on which banking institutions in the city in which is located the principal
office of the Escrow Bank are authorized by law to remain closed, such payment may be made or
act performed or right exercised on the next succeeding day not a legal holiday or a day on
which such banking institutions are authorized by law to remain closed, with the same force and
effect as if done on the nominal date provided in this Agreement; and no interest shall accrue for
the period from and after such nominal date.
Section 17. MoodV'S and Standard and Poor's. The City agrees to provide to Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10007, Attention: Public
Finance Rating Desk/Refunded Bonds, and Standard & Poor's Rating Group, 25 Broadway,
New York, New York 10004, prior notice of each amendment entered into pursuant hereto and a
copy of such proposed amendment, and to forward a copy (as soon as possible) of each
amendment hereto entered into.
-
-
-
PU8L:31522.1 1 138182468.00012 7 10/11/95
IN WITNESS WHEREOF, the City of Poway and Bank of America National Trust and
Savings Association, have caused this Agreement to be executed each on its behalf as of the day
and year first above written.
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:
Authorized Officer
CITY OF POWAY
By:
.o8L:31522.1 1 138182468.00012 10/1l/95
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SCHEDULE I
INVESTMENT SECURITIES
Principal Interest Purchose Maturity Purchose
Type Amount Rate Date Date Price
-
PU8L:31522.1 1 138182468.00012 SCHEDULE 1-1 10/11/95
SCHEDULE II
ESCROW CASH FLOW
Total Receipts from Payment Price
Debt Service Beginning the Investment of the Cash
Payment Dare Cash Balance Securities Refunded Bonds Balance
PU8L:31522.1 1 138182468.00012 SCHEDULE n-l 10/11/95
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- SCHEDULE III
REINVESTMENT
[NOT APPLICABLE]
.-
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PU8L:31522.1 1 138182468.00012 SCHEDULE Ill-I 10/11/95
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EXlUBIT A
NOTICE OF REFUNDING OF 1975 BONDS OF
POWAY MUMCIPAL WATER DISTRICT
Notice is hereby given to the owners of the outstanding bonds designated 1975 Water Bonds of
Poway Municipal Water District (collectively, the "Refunded Bonds") (i) that there has been
deposited with Bank of America National Trust and Savings Association, as Escrow Bank,
moneys and investment securities the principal of and the interest on which when due will
provide moneys which, together with such other moneys deposited with the Escrow Bank, shall
be sufficient and available (a) to pay on and prior to April 1, 1996 the principal of and interest
on the Refunded Bonds scheduled to be paid on and prior to April 1, 1996 and (b) to redeem the.
Refunded Bonds on April 1, 1996 at a redemption price (expressed as a percentage of the
principal amount of the Refunded Bonds to be prepaid) equal to 100% and (ii) that the Escrow
Bank has been irrevocably instructed to redeem the Refunded Bonds on April 1, 1996.
Dated this _ day of ,199_.
CITY OF POW A Y
-
By:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Escrow Bank
By:
Authorized Officer
-,
PU8L:31522.1 1 138182468.00012 EXHIBIT A-I 10/11/95
-
CITY OF POW A Y
..- 1995 GENERAL OBLIGATION REFUNDING BONDS
(POWAY MlJNICIPAL WATER DISTRICT IMPROVEMENT AREA)
PURCHASE AGREEMENT
, \995
City of Po way
13325 Civic Center Drive
Poway, California 92064
Ladies and Gentlemen:
The undersigned (the "Underwriter") hereby offers to enterinto this Purchase
Agreement with you, the City of Poway (the "City"), for the purchase by the Underwriter and the
delivery by the City of the Bonds specified below. The proceeds of the Bonds will be used to
refund the outstanding General Obligation 1975 Water Bonds (the "Prior Bonds") of the Poway
Municipal Water District, the City's predecessor in interest (the "District"). 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 Resolution (defmed below).
I. Upon the terms and conditions and upon the basis of the representations
herein set forth, the Underwriter hereby agrees to purchase from the City for offering to the
public, and the City hereby agrees to execute and deliver to the Underwriter, all (but not less than
all) of the $ aggregate principal amount of the City's1995 General Obligation
Refunding Bonds (Poway Municipal Water District Improvement Area) (the "Bonds") to be
dated as of November \, 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 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
I.
LA\9l28S0068
ATTACHMENT 0 OCT 1 7 1995 ITEM 8
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
Resolution No. _ of the City, adopted October 17, 1995 (the "Resolution"). Pursuant to the
Resolution, the City has designated Bank of America National Trust and Savings Association as
paying agent for the Bonds (the "Paying Agent.
2. The City has authorized the Underwriter to use and distribute, in cOMection
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." The City hereby certifies such Preliminary
Official Statement to be final as of its date for purposes ofSEC Rule l5c2-12 adopted by the
Securities and Exchange Commission on November 28, 1989 ("Rule l5c2-l2"), with the
exception of certain final pricing and related information referred to in Rule l5c2-12. The
Underwriter will distribute a single copy of the Preliminary Official Statement to any potential
customer on request.
3. The City shall deliver to the Underwriter five (5) copies of the Official
Statement manually executed by authorized officers thereof. The City 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 begiMing when the Official Statement becomes
available and ending on the End Date (defined below). The City 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 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:
(a) ninety (90) days after the end of the underwriting period (as defined in Rule
l5c2-12; 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 defined in Rule 15c2-
12) ends.
. 2.
LA\9l28l0068 .
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The City has 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.Moo 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 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 City and the Underwriter. The Underwriter will
pay the purchase price of the Bonds as set forth in Section I 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 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
Resolution, the Escrow Agreement, dated as of November 1,1995 (the "Escrow Agreement")
between the City and the Trustee, acting as tscrow Agent (the "Escrow Agent"), 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 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 provi~ed 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.
3.
LA\952850068
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(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 Resolution, 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 perfonn 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 Improvement Area contained in the Official Statement was and will be
complete. The information relating to the City, the Bonds and the Improvement Area contained
in the Official Statement under the headings "INTRODUCTION," 'THE BONDS," "THE
CITY,"and "CITY FINANCIAL INFORMATION" and "APPENDIX A" (excluding financial
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.
(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
4.
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.- of the City or with respect to an obligation guaranteed by the City as guarantor or successor ofa
guarantor.
U> Ifbetween 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 Improvement Area 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 Improvement Area, 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.
(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 financial information relating to the Improvement Area 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 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 refund the Prior Bonds 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
5.
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LA\9S2850068
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sale of the Bonds to be applied in a manner contrary to that provided in the Resolution. as
amended from time to time. .
(p) The City will deliver all opinions. Bonds. letters and other
in.struments 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) 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.
6. 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 and counsel to the City 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, the City Documents all as described inlhe
Official Statement, shall be in full force and effect as valid and binding agreements between or
among the various parties thereto and the City 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, Yocca. 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;
(1) The unqualified approving opinion of Bond Counsel, dated
the date of Closing, addressed to the City and the Underwriter (or a reliance letter to the
Underwriter), in substantially the form attached as APPENDIX C to the Official 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
6.
LA\9S28S0068
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- EXEMPTION" and "APPENDIX c." to the extent they purport to summarize
information concerning the Bonds and certain provisions of the City 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 Resolution is exempt
from qualification as an indenture pursuant to the Trust Indenture Act of 1939, as
amended; and
(c) The Purchase Agreement has been duly authorized,
executed and delivered by the City, and, assuming due authorization, execution and
delivery by the other parties thereto, constitutes the legal, valid and binding
agreement of the City enforceable against it 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
7.
LA\9S2850068
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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 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 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 City 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 City or the Improvement Area
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) The opinion of counsel to Bank of America National Trust
and Savings Association (the "Bank"), 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 Bank 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
Escrow Agreement, and to authenticate the Bonds; and
8.
LA\952850068
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(ii) the Escrow Agreement has been duly authorized.
- executed and delivered by the Bank constitutes the valid and binding obligation of
the Bank in accordance with its 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.
(5) 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) certifying that the
City has authorized and consented to the inclusion in the Official Statement of the City's
financial report and accountant's opinion for the year ended June 30, 1994, and no further
consent of any party is required for such inclusion.
(6) Two executed or certified copies of the City Documents.
(7) Five executed copies of the Official Statement. --
(8) Two certified copies of the general resolution of the Escrow
Agent authorizing the execution and delivery of the Escrow Agreement.
(9) A Certificate of Public Financial Management, Inc.
calculating the net interest cost of the Bonds and the Prior Bonds.
(10) 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.
(11) Arbitrage certifications by the City in form and substance
acceptable to Bond Counsel.
(12) A Certificate of the Bank, dated the Closing Date to the
effect that:
(i) the Bank 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 Resolution
9.
LA\952850068
and the Escrow Agreement and to authenticate and deliver the Bonds to the
Underwriter pursuant to this Purchase Agreement;
(ii) the Bank is duly authorized to enter into the Escrow
Agreement. and when the Resolution and the Escrow Agreement are duly executed
and delivered by the respective parties thereto. to authenticate and deliver the
Bonds to the Underwriter pursuant to the Resolution and this Purchase Agreement;
(iii) to the best of the knowledge of the Bank, no consent.
approval. authorization or other action by any governmental or regulatory agency
having jurisdiction over the Bank that has not been obtained is or will be required
for the performance by the Bank of its duties under the Resolution or the Escrow
Agreement, except as such may be required under the state securities or blue sky
laws in connection with the distribution of the Bonds by the Underwriter;
(iv) to the best of the knowledge of the Bank, the
execution and delivery by the Paying Agent of the Bonds, the Escrow Agreement
and compliance with the terms thereof and of the Resolution 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 Bank 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 Bank or any of its activities or properties (except that no
representation, warranty or agreement is made by the Bank with respect to any
Federal or state securities or blue sky laws or regulations), or (except with respect
to the lien of the Resolution) 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 Bank;
(v) to the best of the knowledge of the Bank, 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 Bank 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 Resolution or the Escrow
Agreement or contesting the powers of the Bank 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 Resolution, the
Escrow Agreement or any agreement or instrument to which the Bank is a party and
which is used or contemplated for use in the consummation of the transactions
contemplated hereby; and
10.
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LA\9S28S0068
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_.
(vi) subject to the provisions of the Resolution. the
Paying Agent will apply the proceeds from the Bonds to the pUrposes specified in
the Resolution.
(13) 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.
(14) Evidence as of the Closing satisfactory to the Underwriter that
the Bonds have received, at a minimum, a rating of"_" from Standard & Poor's Rating
Group ("S&P") and a rating of"_" from Moody's Investors 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.
(15) 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 form attached as APPENDIX E of the Official Statement.
(16) An opinion of counsel to the Insurer, dated as of the date of the
Closing, addressed to the Underwriter and in the form 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 terms, 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 information 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.
(17) A verification report, dated the Closing Date, from
, to the effect that amounts on deposit under the Escrow Agreement will be
sufficient to pay principal of, premium, if any, and interest on the Prior Bonds until such Prior
Bonds are redeemed in whole.
(18) Evidence that the federal tax information form 8038-G has
been prepared for filing.
11.
LA\952850068
(l9) 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.
(20) 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 performance or satisfaction by the Paying Agent and the City 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 City 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 City shall have any further obligation hereunder.
7. The Underwriter shall have the right to terminate this Purchase Agreel!1.ent,
without liability therefor, by written notification to the City if at anytime 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 of legislation 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) of legislation 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 of legislation 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 of legislation to either House of the Congress of the United States by a
12.
LA\952850068
.-
_. Committee of such House to which such legislation has been referred for consideration. or any
decision of any Federal or state coun 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
(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 Resolution needs to be qualified under the Resolution Act of I 93~ 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, financial or otherwise, the effect of
such outbreak, calamity or crisis on the financial 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
13.
LA\952850068
(ix) there shall be in force a general suspension of trading on the New
York Stock Exchange: or
(x) an event described in Section 5(j) 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
(xi) any rating of the Bonds by a national rating agency shall have
been withdrawn or downgraded.
8. Performance by the City of its 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 certificates to be delivered at Closing by
persons and entities other than the City.
9. After the Closing and until the End Date (a) the City will not 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 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 City 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 City 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 City will furnish such information with respect
to itself as the Underwriter may from time to time request.
10. 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 Paying Agent; (c) any fees charged by any
rating agency for rating the Bonds; (d) the fees and disbursements of Bond Counsel, Underwriter
Counsel, and any financial advisor or independent certified public accountant; and (e) any out-of-
pocket disbursements of the City to be paid from the proceeds of the Bonds. All out-of-pocket
expenses of the Underwriter, including 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.
14.
LA\952850068
II. 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 1112.
Los Angeles, California 90071. Any notice or other communication to be given to the City may
be given by delivering the same to the City of Po way, 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.
12. This Purchase Agreement is made solely for the benefit of the City and the
Underwriter (including the successors or assigns thereof) and no other person shall acquire or
have any right hereunder or by virtue hereof.
13. 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.
14. This Purchase Agreement shall be governed by the laws of the State of
California.
GRIGSBY BRANDFORD & CO., INC.
-
By:
Title:
Accepted:
CITY OF POW A Y
By:
Title:
15.
.
LA\9528l0068
EXHIBIT A
MATURITY SCHEDULE
Maturity Date Princi pal Interest
I Amount ~ ~
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A-I
LA\9528S0068
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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:
1. 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 refund its 1975 $6,300,000 Poway Municipal Water District General Obligation
Bonds. Such services will be divided into two phases: (a) program planning and development of
a fInancing plan; and (b) implementation of the fmancing plan.
In the fIrst 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 fInancial advisors,
underwriters, developers, lenders and other experts retained by the City in
structuring the fmancing; and
(iii) to consult with other fIrms 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;
ATTACHMENT E OCT 1 7 1995 ITEM 8 .,
c. preparing documents relating to the financing, including the
Resolution of Intention, Resolution of Issuance and Escrow
Agreement;
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 financial 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 secut'lties
laws and other matters related to the issuance of the Bonds.
(Ii) to render a final 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 RESPONSIBLE 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
PU8L:31635_11138182468.00012 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 actuaI 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) document production charges, 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:3163S.1 I 138182468.00012 3
EXHIBIT 1
Refundinl! General Oblil!ation 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 $15,000 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-of-Pocket EXDenses: In addition to the Basic Fee, Bond Counsel shall be reimb1.lI'sed
for out-of'pocket expenses incurred pursuant to Section 3(b) of the Agreement.
PUBL:3163S.11138182468.00012 4
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PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER-, 1995
In the opinion of Stradling, Y occa, Carlson & Rauth, a Professional Corporation ("Bond
Counsel"), under existing statutes, regulations, rulings, and judicial decisions and asswning
certain representations and compliance with certain covenants and requirements described herein,
interest on the Bonds is excluded from gross income for federal income tax purposes and is not a
specific item of tax preference for purposes of calculating the federal alternative minimum tax
imposed on individuals and corporations. In the further opinion of Bond Counsel, interest on the
Bonds is exempt from State of California personal income tax. See "TAX EXEMPTION"
herein.
NEW ISSUE -- BOOK-ENTRY ONLY RATING:
(See "RATING" herein.)
S *
CITY OF POWAY
(SAN DIEGO COUNTY, CALIFORNIA)
1995 GENERAL OBLIGATION REFUNDING BONDS
(pOW A Y MUNICIPAL WATER DISTRICT IMPROVEMENT AREA)
Dated: November 1, 1995 Due: March 1, As Shown Below
The Bonds will be issued as fully registered bonds in book-entry form only, initially -
registered in the name of Cede & Co., New York, New York, as nominee of The Depository
Trust Company ("DTC"), New York, New York. Purchasers will not receive certificates
representing their interest in the Bonds. Individual purchases of the Bonds will be in principal
amounts of$5,OOO or in any integral multiples of $5,000.
Interest on the Bonds will be payable on March 1 and September 1 of each year,
commencing March I, 1996, and principal payable on the Bonds will be paid on the dates set
forth in the Maturity Schedule below. Payments of principal of and interest on the Bonds will be
paid by Bank of America National Trust and Savings Association, Los Angeles, California, as
paying agent (the "Paying Agent"), to DTC for subsequent disbursement to DTC Participants
who will remit such payments to the Beneficial Owners of the Bonds.
The Bonds are being sold, executed and delivered by the City of Po way (the "City") (i) to
provide funds to refund the outstanding General Obligation 1975 Water Bonds (the "Prior
Bonds") of the Poway Municipal Water District, the City's predecessor in interest (the "District")
and (ii) to pay certain costs of issuing the Bonds.
The Bonds are subject to redemption prior to maturity as described herein.
The Bonds are general obligations of the City and the City has the power and is obligated
to levy annual ad valorem taxes for payment of the Bonds and the interest thereon upon all
property within the City's Poway Municipal Water District Improvement Area (the
LA\952800005 OCT 1 7 1995 ITEM 8 "l'
ATTACHMENT F
-
.
"Improvement Area") subject to taxation by the City (except certain personal property which is
taxable at limited rates) without limitation as to rate or amount.
This cover page contains information for general reference only. It is not a
summary of the security or terms of this issue, Investors must read the entire Official
Statement for a discussion of special factors which should be considered, in addition to the
other matters set forth herein, in considering the investment quality of the Bonds.
Capitalized terms used on this cover page and not otherwise dermed shall have the
meanings set forth herein.
MATURITY SCHEDULE
$ Serial Bonds
Maturity Maturity
Date Principal Interest Price or Date Principal Interest Price or
(March 1) Amount Rate Yield (March I) Amount Rate Yield
$_ _ % Term Bonds Due March 1, _ - Price or Yield: _%
-
The Bonds are offered when, as and if sold, executed and delivered, subject to the approval as to
their legality by Stradling, Y occa, Carlson & Rauth, a Professional Corporation, Newport Beach,
California, Bond Counsel. Certain legal matters will be passed upon for the City by the City
Attorney, and for the Underwriter by its counsel, Nossaman, Guthner, Knox & Elliott, Los
Angeles, California. 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.
GRIGSBY BRANDFORD & CO., INC.
Date:
· Preliminary, subject to change.
LA\952800005
.
.- -
- No dealer, salesperson or other person has been authorized by the City of Poway to give
any information or to make any representation other than as contained in this Official Statement
in connection with the offering described in it and, if given or made, such other information or
represc'ltation must not be relied upon as having been authorized by the City of Po way. lIDs
Official Statement does not constitute an offer to sell or the solicitation of an offer to buy any
securities other than those described on the cover page, nor shall there be any offer to sell,
solicitation of any offer to buy or sale of such securities by a person in any jurisdiction in which
it is unlawful for such person to make such offer, solicitation or sale. lIDs Official Statement is
not to be construed as a contract with the purchasers of the Bonds.
The information contained in this Official Statement was reviewed for the City of Poway
by Public Financial Management, Inc. who is employed by the City as financial advisor in
connection with the offering of the Bonds (which fIrm will receive compensation from the City
contingent upon the sale and delivery of the Bonds).
All of the following summaries of the statutes, resolutions, and project reports are made
subject to all of the provisions of such documents. These summaries do not purport to be
complete statements of such provisions and reference is made to such documents for further
information.
The information contained in this Official Statement has been obtained from official
sources deemed reliable. No representation is made, however, as to the accuracy or
completeness of such information, and nothing contained in this Official Statement is, or shall be
relied upon as, a promise or representation by the City of Poway or the Underwriter. The -
Official Statement is submitted in connection with the sale of the securities described in it and
may not be reproduced or used, in whole or in part, for any other purposes. The information and
expression of opinions contained in this Official Statement are subject to change without notice
and neither delivery of this Official Statement nor any sale made by means of it shall, under any
circumstances, create any implication that there have not been changes in the affairs of the City
since the date of this Official Statement.
The City has 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 Exchange Commission.
LA\952800005
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CITY OF POWAY
SAN DIEGO COUNTY, CALIFORNIA
CITY OF POWAY, CALIFORNIA
City Council
Don Higginson, Mayor
Susan Callery, Deputy Mayor
Michael P. Cafagna, Counci/member
Robert C. Emery, Counci/member
Betty Rexford, Counci/member
City Staff
James L. Bowersox, Executive Director/City Manager
John D. Fitch, Assistant Executive Director/Assistant City Manager
Stephen M. Edris, City Attorney
Marjorie K. Wahlsten, Secretary/City Clerk
Peggy A. Stewart, Director of Administrative Services -
James R. Williams, Director of Public Services
SPECIAL SERVICES
Stradling, Y occa, Carlson & Rauth
Los Angeles, California
Bond Counsel
Public Financial Management, Inc.
Newport Beach, California
Financial Advisor
Los Angeles, California
Registrar, Transfer and Paying Agent
)
LA\9S280000S
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TABLE OF CONTENTS
INTRODUCTION ...............................................................................................................1
General.................................................................................................................... .1
The City and The Improvement Area ......................................................................1
Authority for Issuance of the Bonds ........................................................................2
Summaries Not Defmitive .......................................................................................2
THE BONDS .......................................................................................................................3
Authority for Issuance..............................................................................................3
Description of the Bonds ......................................................................................... 3
Redemption.. ............................................................................................................3
Notice of Redemption ..............................................................................................4
Security and Source of Payment ..............................................................................4
The Book Entry System ...........................................................................................4
Covenant to Provide Ongoing Disclosure................................................................7
ANNUAL DEBT SERVICE................................................................................................7
THE REFUNDING PLAN .................................................................................................. 7
ESTIMATED SOURCES AND USES OF FUNDS ...........................................................8
THE CITY ...........................................................................................:...............................9 ~
General................. ....................................................................................................9
City Government......................................................................................................9
Members ................................. .................................................................................9
Population ..............................................................................................................1 0
Housing and Income ......................................................... .....................................1 0
Climate .......................................................................................................... .........11
Transportation....................................................................................................... .11
Services and Facilities. ...... ..................................................... ................................11
CITY FINANCIAL DA T A................................................................................................11
City Assessed V aluations........................................... ............................................11
Tax Rates ...............................................................................................................14
Tax Levies and Delinquencies ...............................................................................15
Limitations on Taxes and Expenditures................................................................. 19
Budgetary Process................................................................................................. .19
Audits 20
Investments in County Investment Poo1................................................................21
Summary of Revenues and Expenditures ..............................................................21
Direct and Overlapping Debt .................................................................................23
[TO COME] .......................................................................................................................23
I
LA\952800005
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CERTAIN LEGAL MA TTERS ........................................................................................24
TAX EXEMPTION ...........................................................................................................24
ABSENCE OF LITIGA TION ...........................................................................................25
RATING 25
UNDER WRITING ............................................................................................................25
FINANCIAL ADVISOR ...................................................................................................26
PROFESSIONAL FEES ....................................................................................................26
[VERIFICATION OF MA THEMA TICAL ACCURACY ...............................................26
MISCELLANEOUS ..........................................................................................................27
APPENDIX A CITY OF POW A Y GENERAL DEMOGRAPlllC AND
FINANCIAL INFORMA TION .......................................................................... A-I
APPENDIX B FORM OF BOND COUNSEL OPINION ..............................................B-l
APPENDIX C AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR
1993/94 ................................................................................................................ C-l
,
I
.
ii
LA\952800005
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AREA MAP
[TO COME)
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,
LA\952800005
$ *
CITY OF POWAY
(SAN DIEGO COUNTY, CALIFORNIA)
1995 GENERAL OBLIGATION REFUNDING BONDS
(pOW A Y MUNICIPAL WATER DISTRICT IMPROVEMENT AREA)
INTRODUCTION
General
The purpose of this Official Statement (which includes the cover page and the
Appendices attached hereto) is to provide information concerning the sale and delivery of the
City of Poway 1995 General Obligation Refunding Bonds (Poway Municipal Water District
Improvement Area) (the "Bonds") in the aggregate principal amount of $ . . The
Bonds are being issued by the City of Po way (the "City"), (i) to provide funds to refund the
outstanding General Obligation 1975 Water Bonds (the "Prior Bonds") of the Poway Municipal
Water District, the City's predecessor in interest (the "District"), in the remaining outstariding
principal amount of $ and (ii) to pay certain costs of issuing the Bonds. (See "THE
REFUNDING PLAN" herein)
The City and The Improvement Area
,
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. Prior to incorporation, the District provided water
service to the residents of the area. In November, 1986, the City annexed an additional 1,325
acres, for a total area of about 40 square miles. The City encompasses approximately
acres of land, composed of assessable parcels.
Poway is located inland about three miles east ofInterstate Highway 15, and is
surrounded on three sides by the City of San Diego. Driving distarice 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. The current population of the City is 46,579 residents.
See "THE CITY" and "APPENDIX A -- CERTAIN DEMOGRAPlllC AND ECONOMIC
INFORMATION" herein.
The Poway Municipal Water District Improvement Area (the "Improvement Area")
constitutes the parcels of the City which were originally within the boundaries of the District,
and which were subject to the levy of ad valorem property taxes to pay debt service on the prior
Bonds. The boundaries of the Improvement Area encompass approximately % of the
. Preliminary, subject to change.
LA \952800005 1
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assessable acreage within the City, and constitute approximately % of the total assessed
value of property within the City.
The Fiscal Year 1994/95 secured assessed valuation for the City was $ ,
and the secured assessed valuation for the Improvement Area was $ The City
will cause the COWlty to include an estimated _% tax rate on the secured assessed value of
property in the Improvement Area in the 1995/96 Fiscal Year to pay for the first year debt service
on the Bonds. The gross total direct and overlapping debt of the Improvement Area, including
the Bonds, is estimated to be $ , and the net direct and overlapping debt, including the
Bonds, is $ ,which is _% and _% of the Fiscal Year 1994/95 assessed
valuation, respectively.
Authority for Issuance of the Bonds
On November 5, 1974, the voters in the District, pursuant to the Municipal Water District
Act of 1911 (Section 71000 ~~. of the Water Code of the State of California), authorized the
issuance of not to exceed $6,300,000 principal amount of general obligation bonds. The Prior
Bonds, in the principal amoWlt of $6,300,000, were issued on ,1975. Currently,
$ principal amoWlt of the Prior Bonds remain outstanding. The sale of the Bonds is
authorized under Section 53550 ~~. of the California Government Code.
The Bonds are general obligations of the City and the City has the power and is obligated
to levy annual ad valorem taxes for payment of the Bonds and the interest thereon upon all
property within the Improvement Area subject to taxation by the City (except certain persoll8l
property which is taxable at limited rates) without limitation as to rate or amoWlt.
The Bonds are being issued pursuant to the provisions of a Resolution No. _ of the
City, adopted October 17, 1995 (the "Resolution"). Pursuant to the Resolution, Bank of America
National Trust and Savings Association, Los Angeles, California has been designated as
registrar, transfer agent and paying agent (the "Paying Agent").
Summaries Not Definitive
The summaries and references of documents, statutes, reports and other instruments
referred to herein do not purport to be complete, comprehensive or definitive, and each such
summary and reference is qualified in its entirety by reference to each document, statute, report,
or instrument. The capitalization of any word not conventionally capitalized, or otherwise
- defined herein, indicates that such word is defined in a particular agreement or other document
and, as used herein, has the meaning given it in such agreement or document.
LA\952800005 2
THE BONDS
Authority for Issuance
The $ . principal amount of City of Poway 1995 General Obligation
Refunding Bonds (poway Municipal Water District Improvement Area), are general obligation
bonds to be issued pursuant to the provisions of the Resolution. The Bonds are to refund the
$6,300,000 principal amount of bonds authorized by more than two-thirds of the registered
voters at a special election on November 5,1975. The sale of the Bonds is authorized under
Section 53550 ~ s.cQ. of the California Government Code.
Description of the Bonds
The Bonds consist of $ · aggregate principal amount, each Bond in the
denomination of $5,000 or any integral multiple thereof, and all dated November 1, 1995.
Interest is payable semiannually on each September I and March 1 commencing March 1, 1996.
The Bonds are to mature and become payable on March I of each year in the amounts, and shall
bear interest at the rates, provided on the cover hereof.
The Bonds will be initially registered in the name of "Cede & Co.", as nominee of The
Depository Trust Company, New York, New York, ("DTC") which has been appointed securities
depository for the Bonds, and registered ownership may not thereafter be transferred except as
provided in the Resolution. The Bonds are being issued in Book Entry form only. Purchasers
will not receive certificates representing their interests in the Bonds. Principal of and interest on
the Bonds will be paid by the Paying Agent to DTC, which in turn is obligated to remit such
principal and interest to its participants for subsequent disbursement to beneficial owners of the
Bonds as described herein. See "The Book-Entry System" herein.
Redemption
The Bonds maturing on or before March 1, , are not redeemable prior to their fixed
maturity dates. The Bonds maturing on or after March 1, _' are redeemable, at the option of
the City, in whole or in part on any date on or after March 1, _' in inverse order for maturity
and by lot within a maturity at the following prices (expressed as a percentage of the total
principal amount redeemed) for the respective periods set forth below, together with accrued
interest to the date fixed for redemption, from any monies that may be available to the City for
such purposes:
Redemption
(Dates Inclusive) Redemption Price
March 1, _ to February 28, _ 101%
March 1, _ to February 28,_ 100.5
March 1, _ and thereafter 100
· Preliminary, subject to change.
LA \952800005 3
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- Notice of Redemption
The Paying Agent shall cause notice of any redemption to be mailed, first class mail,
postage prepaid, at least thirty (30) days but not more than sixty (60) days prior to the date fixed
for redemption, to the respective Owners of any Bonds designated for redemption, at their
addresses appearing on the Bond registration books maintained by the Paying Agent; but such
mailing shall not be a condition precedent to such redemption and failure to mail or to receive
any such notice shall not affect the validity of the proceedings for the redemption of such Bonds.
Such notice shall state the redemption date and the redemption price and, if less than all
of the then Outstanding Bonds are to be called for redemption, shall designate the serial numbers
of the Bonds to be redeemed, and shall require that such Bonds be then surrendered at the
Principal Office of the Paying Agent for redemption at the said redemption price, giving notice
also that further interest on such Bonds will not accrue from and after the redemption date.
From and after the date fixed for redemption, if notice of such redemption shall have been
duly given, such Bonds shall cease to be entitled to any benefit under the Resolution other than
the right to receive payment of the redemption price, and no interest shall accrue thereon on or
after the redemption date specified in such notice.
Security and Source of Payment
The Bonds are general obligations of the City and the City Council has the power and is
obligated to levy annual ad valorem taxes for payment of the Bonds and the interest thereon.upon
all property within the Improvement Area subject to taxation by the City (except certain personal
property which is taxable at limited rates) without limitation as to rate or amount. See "CITY
FINANCIAL DATA" herein. The City cannot levy any ad valorem tax on property outside the
Improvement Area to pay principal of or interest on the Bonds.
The Book Entry System
General. 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
LA \952800005 4
----- ---"
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 ofDTC'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.
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 City 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
LA\95280000S 5
- -
- will be governed by standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form of registered in "street name," and will be the
responsibility of such Participant and not ofDTC, the Paying Agent or the City, 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 City and the Paying Agent, disbursement of such
payments to Direct Participants shall be the responsibility ofDTC, and disbursement of such
payments to the Beneficial Owners shall be responsibility of Direct and Indirect Participants.
The Paying Agent and the City 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 Paying Agent and the City are not
responsible or liable for the failure ofDTC 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 mattes 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. ,
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
Paying Agent and discharging its responsibilities with respect thereto under applicable law, or
the City 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 system is discontinued,
the Paying Agent will authenticate and make available for delivery, replacement Bonds in the
form of registered certificates. In addition, the following provisions would apply: the principal
of and redemption premium, if any, on the Bonds will be payable at the corporate trust office of
the Paying Agent, and interest on the Bonds will be payable by check mailed on each Payment
Date to the registered Owners thereof as shown on the registration books of the Paying Agent as
described above. Bonds will be transferable and exchangeable on the terms and conditions
provided in the Resolution.
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 Paying
Agent, DTC or the DTC Participant in connection with such transfers or exchanges.
LA\9S2800005 6
Covenant to Provide Ongoing Disclosure
The City has 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 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
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 with 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 _ - 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).
ANNUAL DEBT SERVICE
The following illustrates the annual debt service for the Bonds as of October 1 of each
year.
Total
~ Principal Interest Debt Service
THE REFUNDING PLAN
The proceeds of the Bonds will be used for the purpose of refunding the Prior Bonds and
to pay costs of issuance of the Bonds. Concurrent with the issuance of the Bonds, the City will
enter into an escrow agreement, dated as of November 1, 1995 (the "Escrow Agreement") with
Bank of America National Trust and Savings Association, acting as escrow bank (the "Escrow
Bank"). A portion of the proceeds from the sale of the Bonds will be deposited in the escrow
fund (the "Escrow Fund") established under the Escrow Agreement. Amounts deposited into the
Escrow Fund will be invested solely in direct, non-callable general obligations of the United
LA\952800005 7
-
- States Department of the Treasury, the principal of and interest on which, together with any
available cash to be held uninvested, have been verified by * , independent
accountants, to be sufficient to pay the principal of and interest on the Prior Bonds to and
including the dates of redemption thereof and to redeem the Prior Bonds on their respective
redemption date. See "CONCLUDING INFORMATION -- Verification of Mathematical
Accuracy" herein. [In addition to the proceeds of the Bonds deposited in the Escrow Fund, there
will also be deposited therein certain funds remaining on deposit under the resolution adopted in
connection with the issuance of the Prior Bonds.] See "ESTIMATED SOURCES AND USES
OF FUNDS" below.
Upon deposit of such moneys and securities in the Escrow Fund, the lien of the Prior
Bonds on the ad valorem property tax will be economically defeased, but will not be legally
defeased until the Prior Bonds are called for redemption on April 1, 1996.
The moneys and securities held in the Escrow Fund are pledged to the payment of the
Prior Bonds. Neither the moneys or the principal of the escrow securities deposited with the
Escrow Bank, nor the interest thereon, will be available for the payment of the Bonds.
ESTIMATED SOURCES AND USES OF FUNDS
The proceeds to be received from the sale of the Bonds, and moneys relating to
the Prior Bonds, are anticipated to be applied as follows:
,
SOURCES:
Principal Amount of Bonds ........................... $
Proceeds Relating to Prior Bonds .........
Accrued Interest .............................................
TOTAL SOURCES ....................................... $
USES:
Deposit in Escrow Fund................................. $
Costs ofIssuance (1)......................................
Debt Service Fund (2)....................................
TOTAL USES................................................
(1) Includes Underwriter discount [and Bond insurance premium].
(2) Accrued interest.
* Will the Escrow be gross funded?
LA\952800005 8
THE CITY
General
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. Prior to incorporation, the District provided water
service to the residents of the area. In November, 1986, the City annexed an additional 1,325
acres, for a total area of about 40 square miles. The City encompasses approximately
acres of land, composed of assessable parcels, of which (or %)
are within the Improvement Area.
Poway is located inland about three miles east oflnterstate 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. The current population of the City is 46,579 residents.
See "APPENDIX A -- CERTAIN DEMOGRAPHIC AND ECONOMIC INFORMATION"
herein.
Assessed valuation of the City for Fiscal Year 1993/94 was $3,033,967,197, and for the
Improvement Area was $ . The assessed valuation for 1994/95 for the City was
$ , and for the Improvement Area was $ The assessed valuation of
the City for Fiscal Year 1995/96 is currently estimated to be $ , and for the -
Improvement Area to be $
City Government
The City has, since incorporation, been governed and operated under the Council-
Manager form of government. The City Manager directs a work force of216 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 no 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 Western 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.
LA\952800005 9
"---- ------- --- -._-- ~_.-- ---~
.--
Deputy Mayo,. Susan Callery was elected to the City Council and appointed to the Board
of the Agency in November, 1992. After graduating from V.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.
Councilmembe,. Roben C. Emery is employed as a middle school teacher. He holds a
BA in Political Science from San Diego State University and a MA in psychology from the
University of San Diego. He was first elected to the City Council at the time of incorporation of
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.
Councilmembe,. 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 alternate 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 Powa~ Taxpayers'
Association. ,
Councilmembe,. Betty Rexfo,.d 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 Po way 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.
LA \9528??oo5 10
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 ofrain,
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 IS which runs north/south several miles to the west of Po way.
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 Po way 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 Po way 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.
CITY FINANCIAL DATA
City Assessed Valuations
The County Assessor of San Diego County assesses all real and personal property in the
City of Poway for tax purposes, except public utility property which is assessed by the State
LA \952800005 11
--,.-.-- - ---
-
.- Board of Equalization. California law exempts $7,000 of the assessed valuation of an owner
occupied dwelling. Effective with the 1980/81 fiscal year, State law has also exempted 100% of
the value of business inventories from taxation, rather than 50% as in prior years. The law
provides for reimbursements to local agencies based on their share of the revenues derived from
the' application of the maximum tax rate applied to business inventories in 1979/80 Fiscal Year,
with adjustments to reflect increases in population and the consumer price index.
Revenue estimated to be lost to local agencies due to such exemptions is reimbursed from
State sources. Such reimbursement is based upon total taxes due upon such exempt values and is
not reduced by any amount for estimated delinquencies. The summary below presents the City's
Fiscal Year 1993/94 net taxable valuation and the amount of reimbursable exemptions by
assessment roll and the table on the following page presents a ten year history of secured
assessed valuations.
[Are Historical Assessed Values available for the Improvement Area?)
-
-
LA \952800005 12
CITYOFPOWAY
ASSESSED VALUATION
(Fiscal Year ending June 30)
Percent Change
Fiscal Total Total Total Assessed From Previous
~ Secured Unsecured Value 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 18,0 I 0,665 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
1995
(I )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
-
The following table indicates by type of property the source of the net assessed valuation
in 1994/95 in the City.
CITY OF POWAY
SOURCE OF SECURED ASSESSED VALUATION
(Fiscal Year 1994/95)
Type of Property Assessed V a1uation % of Total
Single-family unimproved lots
Single-family homes
Multi-family homes & lots
Industrial improved
Commercial/retail improved
Other
TOTAL 100%
Source: County of San Diego Assessor's Office.
LA \952800005 13
~ -.. --- -.------
.
The following table indicates by property owner the 1993/94 Fiscal Year assessed
valuation for the ten largest property taxpayers in the City:
CITY OF POWAY
TOP TEN PROPERTY TAX PAYERS
(Fiscal Year 1993/94).
~ Assessed Valuation
Burnham Pacific Properties, Inc. $30,352,000
JMP Advisors Inc. 30,094,858
Stoneridge 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
$1&5702170
$185,702,170 is 6.12% of the total assessed value in Fiscal Year 1993/94 of
$3,033,967,197. See Table _ 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
Tax Rates
The base tax rate for all taxing entities within a particular tax code area is $1 per $100 of
assessed valuation in accordance with Article XIIIA of the State Constitution. To this may be
added whatever tax rates are necessary to meet debt service on indebtedness duly authorized by
the voters.
.. Numerous Tax Rate Areas are located within the Improvement Area. Tax rates within
these areas is applied against full-market value. Various agencies within San Diego County will
receive their portion of the $1.00 general tax rate for each Fiscal Year pursuant to the provisions
of Assembly Bill 8 (Statutes of 1979) and Senate Bill 180 (Statutes of 1980).
· To be updated if available.
.. V 'f
en y.
LA\95280000S 14
The largest tax code area in the Improvement Area is Tax Rate Code . The five
year tax rate history for this code area is composed of the rates shown in the following table.
CITY OF POW A Y
POWAYMUNlCIPAL WATER DISTRICT IMPROVEMENT AREA
TOTAL TAX RATES (1)
TAX RATE AREA
(Year Ending June 30)
Taxini Entity ~ l22Z ~ .l221 l222
General Tax
General Local GoV!. 1.000000% I. 000000% 1.000000% 1.000000% 1.000000%
Total General Tax
,
(1) All rates shown at full market value.
Source: San Diego County Auditor-Controller
Tax Levies and Delinquencies
Taxes are collected by the San Diego County Tax Collector. Taxes and assessments on
the secured roll are payable in two installments on November 1 and February 1 of each fiscal
year, and become delinquent after December 10 and April 10, respectively. A penalty of 10% is
added to the first installment if not paid on or before December 10, and 10%, along with $10.00
for costs, is added to the second installment ifnot paid on or before April 10. At the end of the
first year of delinquency, property is sold to the State.
When property is redeemed after sale for delinquent taxes, penalties are added at the rate
of 1.5% per month, with a $15.00 redemption fee on each separately valued parcel sold to the
State. If not redeemed at the end of five years from July 22 of the year first becoming
delinquent, the property will be deeded to the State of California, and may thereafter be sold at
public auction.
Property deeded to the State for delinquent tax may be purchased at public auction by
individuals. The County Tax Collector shall auction such property within two years after such
property has been deeded to the State.
LA\952800005 15
-
.- Taxes on property assessed on the unsecured roll are billed as soon as assessed. Taxes on
the roll as of July 31, if unpaid, become delinquent on August 31. Taxes added to the roll after
July 31, if unpaid become delinquent the last day of the month following the amount in which
they were added. A 10% penalty attaches to the taxes when they become delinquent, and if
unpaid at the end of the second succeeding month a 1.5% penalty is added on the first day of
each month.
The County has four ways of collecting delinquent unsecured personal property taxes:
(1) a civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk
specifying certain facts in order to obtain a lien on certain property of the taxpayer; (3) filing a
certificate of delinquency for record in the County Recorder's office in order to obtain a lien on
certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or
possessory interest belonging or assessed to the assessee.
[* The Board of Supervisors of the County has adopted the Alternative Method of
Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan"), as
provided for in Section 4701 ~ Sl:Q. of the California Revenue and Taxation Code, "to
accomplish a simplification of the tax-levying and tax apportioning process and an increased
flexibility in the use of available cash resources."
Pursuant to the Teeter Plan, each entity may draw on the amount of uncollected taxes and
assessments credited to its fund, in the same manner as if the amount credited had been collected.
Under the Teeter Plan, the County establishes a tax losses reserve fund and a tax resources
account. -
The City will be responsible for determining the amount of the ad valorem levy on each
parcel, which will be entered onto the tax roll. Upon completion of the tax roll, the County's Tax
Collector determines the total amount of taxes and assessments actually extended on the roll for
each fund for which a tax levy has been included, and apportions 100% of the tax and assessment
levies to that fund's credit. Such moneys may thereafter be drawn against in the same manner as
if the amount credited had been collected. The Board of Supervisors determines which moneys
in the County treasury (including those credited to the tax losses reserve fund) shall be available
to be drawn on to the extent of the amount of uncollected taxes credited to each fund for which a
levy has been included. When amounts are received on the secured tax roll for the current year
or for redemption oftax-clefaulted property, Teeter Plan moneys are undistributed to the
apportioned tax resources accounts.
The tax losses reserve fund is used exclusively to cover losses occurring in the amount of
tax liens as a result of sales of tax-defaulted property. Moneys in this fund are derived from
several sources. Amounts collected as costs are distributed to the County's general fund, but
delinquent penalty collections are distributed to the tax losses reserve fund.
* Verify
LA\952800005 16
_._- ~--
When tax-defaulted property is sold, the taxes and assessments which constitute the
amount required to redeem the property are prorated between apportioned (Teeter) levies and
unapportioned (or non-Teeter) levies. Amounts apportioned to the funds at the time of the levy
are distributed to the apportioned tax resources accounts. The pro rata share of redemption
penalties or interest collected on amounts levied but not apportioned to funds at the time of the
levy is distributed to the respective funds. The balance of redemption penalties or interest,
together with delinquency penalties is apportioned to the tax losses reserve fund.
If the tax losses reserve fund exceeds 4% of the total taxes and assessments levied for that
year, the amounts coming in after it reaches 4% are credited to the County's general fund. If the
secured tax delinquency rate stays below 3% for three consecutive fiscal years, then the amounts
received thereafter are credited to the County's general fund.
The amount of taxes extended on a tax-defaulted property determines the cost of
redeeming the property. Ifvaluations of tax-defaulted property entered on the roll exceed 1 % of
the total roll, they are not included in any statement of equalized assessed valuations that are the
basis for determining bond debt limitations.
The Teeter Plan is to remain in effect unless the Board of Supervisors orders its
discontinuance or unless, prior to the commencement of any fiscal year of the County (which
commences on July 1), the Board of Supervisors shall receive a petition for its discontinuance
joined in by resolutions adopted by two-thirds of the participating revenue Cities in the County,
in which event the Board of Supervisors is to order discontinuance of the Teeter Plan effective at
the commencement of the subsequent fiscal year. The County has never received a petition 'from
any governing board to discontinue the Teeter Plan.
The Board of Supervisors may, by resolution adopted not later than July 15 of the fiscal
year for which it is to apply after holding a public hearing of the matter, discontinue the
procedure under the Teeter Plan with respect to any tax levying agency or assessment levying
agency in the County if the rate of secured tax delinquency in that agency in any year exceeds
3 % of the total of all taxes and assessments levied on the secured rolls in that agency.
In the event that the Teeter Plan or its application to the City were terminated, the amount
of the levy of the property tax received by the City would depend upon the collections of the
property tax and delinquency rates experienced with respect to the parcels within the City.
So long as the Teeter Plan remains effective, the City's receipt of property tax will not be
dependent upon actual collections by the County. However, under the statute creating the Teeter
Plan, the Board of Supervisors could under certain circumstances terminate the Teeter Plan in its
entirety and, in addition, the Board of Supervisors could terminate the Teeter Plan as to the City
if the delinquency rate for all taxes levied by the City in any year exceeds 3%.]
LA \952800005 17
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--.-,-.-
Limitations on Taxes and Expenditures
Article XIIIA of the California Constitution limits the taxing powers of California public
agencies. Article XIIIA provides that the maximum ad valorem tax on real property cannot
exceed one percent of the "full cash value" of the property, and effectively prohibits the levying
of any other ad valorem property tax except for taxes above that level required to pay debt
service on voter approved general obligation bonds. "Full cash value" is defined as "the County
Assessor's valuation of real property as shown on the 1975/76 tax bill under "full cash value" or,
thereafter, the appraisal value of real property when purchased, newly constructed, or a change in
ownership has occurred after the 1975 assessment". The "full cash value" is subject to annual
adjustment to reflect inflation at a rate not to exceed two percent, or a reduction in the consumer
price index or comparable local data, or declining property value caused by damage, destruction
or other factors.
The foregoing limitation does not apply to ad valorem taxes or special assessments to pay
the interest and redemption charges on any indebtedness approved by the voters before July 1,
1978 or any bonded indebtedness for the acquisition or improvement of real property approved
by two-thirds of the votes cast by the voters voting on the proposition.
Article XIIIB of the California Constitution limits the amount of appropriations of the
State and of local governments for "proceeds of taxes" to the amount of appropriations of the
entity for the prior year, adjusted for changes in the cost of living, population and services
provided. -
On November 4, 1986, the voters approved a proposition that amends certain California
statutory provisions to increase legislative approval and voter approval requirements required to
increase taxes imposed by local governments. The initiative adds provisions to California
statutes requiring the following: (i) two-thirds approval of the legislative body followed by
majority approval of the electorate voting in an election in order to permit local governments to
impose any general tax (defmed as any tax for general governmental purposes); and (ii) two-
thirds approval of the electorate voting in an election in order to permit local governments to
impose any special tax (defmed as any tax other than a general tax). The initiative further
imposes provisions regarding the conduct of the elections requires to be held. In addition, the
initiative requires that the revenues from a special tax be used only for the purposes or service for
which it was imposed. Furthermore, the initiative contains restrictions on the imposition of ad
valorem taxes and sales taxes on real property. Finally, the initiative requires that any tax
imposed by any local government on or after August 1, 1985 be ratified by a majority vote of the
electorate within two years after the effective date of the initiative in order to be continued on
and after November 15, 1988. The initiative does not affect the City's ability to raise property
taxes sufficient to repay the Bonds.
Budgetary Process
The fiscal year of the City begins on the first day of July each year and ends on the
thirtieth day of July of the following year.
LA\952800005 19
,
-
- At such date as the City Manager determines, such department head must furnish to the
City Manager an estimate of Revenues and expenditures for such department for the ensuing
fiscal year, detailed in such manner as may be predescribed by the City Manager. In preparing
the proposed budget, the City Manager reviews the estimates, holds conferences thereon with the
respective department heads, and revises the estimates as he deems advisable.
At least thirty days prior to the beginning of each fiscal year, the City Manager submits to
the City Council the proposed budget. After reviewing and making such revisions as it deems
advisable, the City Council determines the time for the holding of a public hearing thereon and
causes to be published a notice thereof not less than ten days prior to the hearing date. Copies of
the proposed budget are available for inspection by the public in the office of the City Clerk at
least ten days prior to the hearing.
At the conclusion of the public hearing, the City Council further considers the proposed
budget and makes any revision thereof that it deems advisable. On or before July 30 it adopts the
budget with revisions, if any, by the affirmative vote of at least a majority of the total members
of the City Council.
From the effective date of the budget, the several amounts stated as proposed
expenditures become appropriated to the several department, offices and agencies for the objects
and purposes named, provided that the City Manager may transfer the appropriations of a fund
from one object or purpose to another within the same department, office or agency. All
appropriations lapse at the end of the fiscal year to the extent that they have not been amended or
lawfully encumbered. -
At the public meeting after the adoption of the budget, the City Council may amend or
supplement the budget by motion adopted by the affirmative vote of at least three members of the
five member City Council.
The City Council employs, at the beginning of each fiscal year, an independent public
accountant who, at such time or times as specified by the City Council, at least annually, and at
such other times as he shall determine, examines the books, records, inventories and reports of all
officers an employees who receive, control, handle or disburse public funds and of all such other
officers, employees or departments as the City Council may direct. As soon a practicable after
the end of the fiscal year, a final audit and report is submitted by such accountant to the City
Council and a copy of the financial statements as of the close of the fiscal year is published.
Audits
The City, all its funds and the Poway Redevelopment Agency are audited annually by the
certified public accounting firm of Moreland & Associates, Inc. of 61 0 Newport Center Drive,
Suite 500, Newport Beach, California 92660.
A copy of the audited fmancial statements of the City for Fiscal Year 1993/94 is attached
hereto as APPENDIX C. It is anticipated that the audited fmancial statement of the City for
Fiscal Year 1994/95 will be available by ,1995.
LA\952800005 20
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 ofa total City operating reserve of approximately $73 million) and $39.5
million represents a portion of bond proceeds of the 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.
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, and believes that there will be adequate cash from all available sources to meet both the
operating and the capital needs of the City through the fmal withdrawal date of February 2,1998.
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 fmancial conditions.
Summary of Revenues and Expenditures
The following table summarizes General Fund revenues, expenditures, transfers, and
ending fund balances for the City for Fiscal Years 1989/90 through 1993/94. See APPENDIX C
herein for the complete audit report of the City for the year ended July 30,1994.
LA\95280000S 21
.- -
. CITYOFPOWAY
STATEMENT OF GENERAL FUND
REVENUES, EXPENDITURES AND BALANCES
(Fiscal Year Ending July 30)
122ll 122l l2.2Z l22l 1221
REVENUES
Taxes 56,707.247 $6.784,227 56,956,653 57,425,204 57,889,870
Licenses and Permits 398.748 394,812 352,341 340,884 335,037
Intergovernmental 1.876.714 1,907.774 1,737,463 1,636,092 1,566,910
Charges for Services 5.696,519 5,294,671 3,963,179 4,098,276 4,453,428
Fines and Forfeitures 139.312 146,838 95,080 71,747 91,593
Interest and Rentals 1,033,822 1,306.988 1.033,443 1,070,136 869,443
Other 315391 1 000430 1316961 1 102 932 551830
Total Revenues 516167753 516935740 515455120 515745271 515758111
EXPENDITURES
Current:
General Government 54.561,589 53,909,534 53,011,399 53,738,172 52,531,457
Public Safety 5,563,163 8.212.765 8,019.225 8,322,611 8,371,953
Public Works 2,988,005 1,166,729 1,121,208 1,211,792 1,404,125
Community Services 3.080,322 2,656,274 2,5t9,556 2,666,515 2,496,504
Capital Expenditures 569.140 776,145 222,302 788,767 755,107
Debt Service 0 0 0 0 35 805
- Total Expenditures 516.789219 516721447 5 14 893 690 516727857 515594951
Excess (Deficiency) of
Revenue Over Expenses (5illM2) 5mm 5~ (5982 586) Sill.12Q
Other Financing Sources
(Uses) S1380805 51 776237 (S21Q,lli) SBJ.MH (5ill..621)
Excess (Deficiency) of
Revenues and Other
Sources Over Expend~
itures and Other Uses 5759,339 51.990,530 (SI09,029) (5lli.21l) (55,537)
Fund Balance,
Beginning 523 773 305 524 360 708 526 511 895 526 402 866 526238 894
Fund Balance. Ending S24 532 644 S26 351 238 S26 402 866 S26 238 894 526 233 357
SOURCE: Annual City Audits
LA \952800005 22
.-- - ---..-- -- - - --..- ----"
Direct and Overlapping Debt
The direct and overlapping bonded debt of the City [Improvement Area] as of ,
1995 is shown below.
CITY OF POW A Y
STATEMENT OF DIRECT AND OVERLAPPING BONDED DEBT
[TO COME]
,
LA\952800005 23
-
~. CERTAIN LEGAL MA TIERS
Upon the delivery of the Bonds, Stradling, Yocca, Carlson & Rauth, a Professional
Corporation, Newport Beach, California, Bond Counsel, will issue its opinion approving the
validity of the Bonds, the form of which opinion is set forth in APPENDIX _ hereto. Certain
legal matters will be passed upon for the City by the City Attorney, and for the Underwriter by
its counsel, Nossaman, Guthner, Knox & Elliott, Los Angeles, California.
TAX EXEMPTION
In the opinion of Stradling, Y occa, Carlson & Rauth, a Professional Corporation,
Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and
judicial decisions, interest on the Bonds is excluded from gross income for federal income tax
purposes, and is not an item of tax preference for purposes of calculating the federal alternative
minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel,
interest on the Bonds is exempt from present State of California personal income tax. Bond
Counsel notes that with respect to corporations, interest on the Bonds may be included as an
adjustment in the calculation of alternative minimum taxable income which may affect the
alternative minimum tax liability of such corporations.
Bond Counsel's opinion as to the exclusion from gross income for federal income tax
.-- purposes of the interest on the Bonds is based upon certain representations of fact and
certifications made by the City, the Underwriter and others and is subject to the condition ~t the
City comply with all requirements of the Internal Revenue Code of 1986, as amended (the
"Code"), that must be satisfied subsequent to the issuance of the Bonds to assure that the interest
on the Bonds will not become includable in gross income for federal income tax purposes.
Failure to comply with such requirements of the Code might cause interest on the Bonds to be
included in gross income for federal income tax purposes retroactive to the date of execution and
delivery of the Bonds. The City has covenanted to comply with all such requirements.
Should the interest on the Bonds become includable in gross income for federal income
tax purposes, the Bonds are not subject to early redemption and will remain outstanding until
maturity or until redeemed in accordance with the Resolution.
Bond Counsel's opinions may be affected by actions taken (or not taken) or events
occurring (or not occurring) after the date hereof. Bond Counsel has not undertaken to
determine, or to inform any person, whether any such actions or events are taken or do occur.
Although Bond Counsel has rendered an opinion that the on the Bonds is excluded from gross
income for federal income tax purposes provided that the City continues to comply with certain
requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest on the
Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no
opinion regarding any such tax consequences. Accordingly, before purchasing any of the Bonds,
all potential purchasers should consult their tax advisors with respect to collateral tax
consequences with respect to the Bonds.
LA\952800005 24
--- _0'_'.
Certain agreements, requirements and procedures contained or referred to in the
Resolution, the Tax Certificate and other relevant documents may be changed, and certain
actions (including, without limitation, the defeasance of the Bonds) may be taken, 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 upon the advice or approval of bond counsel other than Stradling, Y occa, Carlson
& Rauth.
ABSENCE OF LITIGATION
To the best knowledge of the City there is 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 authorization, execution or delivery of the Bonds, or the
collection of ad valorem taxes for payment of the Bonds pursuant to the Resolution, or in any
way contesting or affecting validity of the Bonds, the Resolution or the agreement for the sale of
the Bonds.
RATING
[Standard & Poor's Ratings Group, a division of McGraw-Hill, ("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.
TIlls 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 oftime 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 City 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.]
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 1, 1995, which prices or yields may
subsequently change without any requirement of prior notice.
LA \952800005 25
-..- -.-.--.-.
.. -.
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.
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 fairness 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 Paying Agent are contingent upon the issuance of the Bonds.
[VERIFICATION OF MATHEMATICAL ACCURACY
Upon delivery of the Bonds, , , , will deliver its
independent certified public accountants verification report on the mathematical accuracy of
certain computations, contained in schedules provided to them which were prepared on behalf of
the City by the Underwriter, relating to (a) the sufficiency of the anticipated receipts from the
securities deposited with the Escrow Agent (the "Escrow Securities") to pay, when due, the
principal whether at maturity or upon prior redemption, interest and redemption premium
requirements of the Prior Bonds and, (b) the "yield" on the Escrow Securities and on the Bonds
considered by Bond Counsel in connection with the tax opinion rendered by such firm. See
"TAX EXEMPTION" above.
The report of will include the statement that the scope of their engagement is
limited to verifying the mathematical accuracy of the computations contained in such schedules
provided to them, and that they have no obligation to update their report because of events
occurring, or data or information coming to their attention, subsequent to the date of their report.]
LA\952800005 26
MISCELLANEOUS
All of the descriptions of the California Government Code, the Act, the Internal Revenue
Code of 1986, other applicable legislation, the Resolution, the City, agreements and other
documents are made subject to the provisions of such documents respectively and do not purport
to be complete statements of any or all of such provisions. Reference is hereby made to such
documents on file with the City for further information in connection therewith.
This Official Statement does not constitute a contract with the purchasers of the Bonds.
Any statements made in this Official Statement involving matters of opinion or estimates,
whether or not so expressly stated, are set forth as such and not as representations of fact, and no
representation is made that any of the estimates will realize.
The execution and delivery of this Official Statement has been duly authorized by the
Board of Directors of the City.
CITY OF POW A Y
By:
Title:
-
LA\952800005 27
__no
.. -
-
APPENDIX A
CITY OF POWAY
GENERAL DEMOGRAPIDC AND FINANCIAL INFORMATION
The following material is descriptive of the City of Po way 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 ofInterstate 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.
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 ofrain,
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.
-
A-I
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- 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 2
CITYOFPOWAY
NUMBER OF PERMITS AND V ALUA TION OF TAXABLE TRANSACTIONS
($ in thousands)
Retail Stores Total All Outlets
No. Of Taxable No of Taxable
Yw Permits Transactions % Chana:e Permits Transactions % Chana:e
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: California State Board of Equalization
TABLE 3
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
Yw Permits Transactions % Chana:e Permits Transactions % Chana:e
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
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Construction Activity
Residential and commercial construction values for Fiscal Years 1985/86 through
1993/94 are shown in Table 4.
TABLE 4
CITYOFPOWAY
RESIDENTIAL AND COMMERCIAL CONSTRUCTION ACTIVITY
(As of June 30)
Value of Value of
Fiscal Number Dwelling Residential Commercial
~ 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 -
1992/93 1,183 40 12,870,944 13,887,733
1993/94 1,210 81 19,829,254 915,093
Source: City of Po way Planning Department
Income
The following table compares effective buying income ("EBI") on an aggregate and
median household basis for the years 1990 to 1993 for San Diego County, the State of California
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 ofnon-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. I
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.- TABLES
SAN DIEGO COUNTY
EFFECTIVE BUYING INCOME
(Yearly Average for Calendar Years 1990 through 1993)
Median Household
Buying Income Effecting
Year and Area (OOO's Omitted) Buyini 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
California 509,152,667 37,686
U ni ted 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 Po way 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 Po way 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.
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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 6
COUNTY OF SAN DIEGO
EMPLOYMENT BY MAJOR INDUSTRY GROUP
(1990 - 1994)
Maior Indusl!:y Group
.l22ll l22l. ll22 .l22l .l.22d
Government 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 60,900
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 700 700 500 400 - 400
Total 995,100 998,450 958,500 957,900 960,400
Source: State of California Employment Development Department as compiled by the
Economic Research Bureau of San Diego.
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...
TABLE7
COUNTY OF SAN DIEGO
CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT
(1985 - 1994)
Unemployment
Yw Labor Force Employed(2) Unemployed Ration)
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 ) U nad j usted for season.
(2) Does not equal totals in Table 10 due to Bureau of Labor Statistics method of calculation.
(3) Estimated.
Source: State of California Employment Development Department
TABLE 8
CITY OF POW A Y
TEN PRINCIPAL EMPLOYERS
(June, 1995)
Number of
~ Txpe of Business Employees () )
Poway Unified School District School 3,500
Pomerado Hospital Hospital 700
Anacomp Inc. Manufactures micrographic equipment 671
Wal-Mart Retail department store 300
City of Po way Government 230
Executone Information Systems Business telephone systems 200
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 Po way
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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 Po way 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 Po way 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. Golfmg 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.
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APPENDIX B
FORM OF BOND COUNSEL OPINION
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LA \952800005
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APPENDIX C
AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR 1993/94
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LA\952800005