This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy b e accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Offic ial Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securitie s in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securi ties may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sel l or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
PRELIMINARY OFFICIAL STATEMENT DATED DECEMBER __, 2022
NEW ISSUE – BOOK ENTRY ONLY NO RATING
In the opinion of Quint & Thimmig LLP, Larkspur, California, Bond Counsel, subject however, to certain qualifications describ ed in this Official Statement, under existing law, interest on the 2022 Bonds is excludable from gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals under the Internal Revenue Code of 1986, as amended. For tax years beginning after December 31, 2022, interes t on the 2022 Bonds may affect the corporate alternative minimum tax for certain corporations. In the further opinion of Bond Counsel, interest on the 2022 Bond s is exempt from personal income taxation imposed by the State of California. See “TAX MATTERS.”
$15,000,000*
CITY OF ALAMEDA
COMMUNITY FACILITIES DISTRICT NO. 22-1
(ALAMEDA MARINA)
2022 SPECIAL TAX BONDS
(Green Bonds)
Dated: date of issuance Due: September 1, as shown on inside cover The City of Alameda, California (the “City”), for and on behalf of the City of Alameda Community Facilities District No. 22-1 (Alameda Marina) (the “District”), is issuing the above -captioned bonds (the “ 2022 Bond s”) to (i) finance costs of sea level rise resilience and adaptive improvements authorized to be funded by the District, (ii) fund a reserve fund for the 2022 Bonds, (iii) fund a capitalized interest account for the 2022 Bonds , and (iv) pay costs of issuing the 2022 Bond s. See “PLAN OF FINANCING” and “THE 2022 BONDS — Designation as Green Bonds.” The 2022 Bonds are being issued pursuant to a Fiscal Agent Agreement, dated as of December 1, 2022 , by and between the City, for and on behalf of the District, and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”).
The 2022 Bonds are payable from the proceeds of annual Special Taxes (as defined in the Fiscal Agent Agreement) to be levied on property located withi n the District (see “THE DEVELOPMENT AND THE DISTRICT— Description of the District”), and from certain funds pledged under the Fiscal Agent Agreement. The Special Taxes will be levied according to a rate and method of apportionment of Special Taxes. See “SECURITY FOR THE 2022 BONDS— Special Taxes” and Appendix B – “Rate and Method.” Interest on the 2022 Bonds is payable on March 1 and September 1 of each year, commencing on March 1, 2023. The 2022 Bonds will be issued in book -entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of the Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the 2022 Bonds. Individual purchases of the 2022 Bond s will be made in book- entry form only. Purchasers of the 2022 Bond s will not receive physical certificates representing their ownership interests in the 2022 Bond s purchased. Principal of and interest on the 2022 Bond s are payable directly to DTC by the Fiscal Agent. Upon receipt of payments of principal and interest, DTC will in turn distribute such payments to the beneficial owners of the 2022 Bonds. See “THE 2022 BOND S” and Appendix G – “DTC and the Book -Entry Only System.”
The 2022 Bonds are subject to optional and mandatory redemption prior to maturity. See “THE 2022 BONDS— Redemption.” The City may issue additional bonded indebtedness that will be secured by a lien on the Special Tax Revenues (as defined in the Fiscal Agent Agreement) and by funds pledged under the Fiscal Agent Agreement for the payment of the 2022 Bond s, on a parity with the 2022 Bonds. See “SECURITY FOR THE 2022 BONDS— Issuance of Additional Bonds.”
NONE OF THE FAITH AND CREDIT OF THE DISTRICT, THE CITY OR THE STATE OF CALIFORNIA OR OF ANY OF THEIR RESPECTIVE POLITICAL SUBDIVISIONS IS PLEDGED TO THE PAYMENT OF THE 2022 BOND S. EXCEPT FOR THE SPECIAL TAX REVENUES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE 2022 BOND S. THE 2022 BOND S
ARE NE ITHER GENERAL NOR SPECIAL OBLIGATIONS OF THE CITY NOR GENERAL OBLIGATIONS OF THE DISTRICT,
BUT ARE LIMITED OBLIGATIONS OF THE CITY FOR THE DISTRICT, PAYABLE SOLELY FROM CERTAIN AMOUNTS
PLEDGED THEREFOR UNDER THE FISCAL AGENT AGREEMENT, AS MORE FULLY DESCRI BED IN THIS OFFICIAL STATEMENT.
This cover page contains certain information for quick reference only. Investors should read the entire Official Statement to obtain information essential to the making of an informed investment decision with respect to the 2022 Bonds. The purchase of the 2022 Bonds involves significant risks, and the 2022 Bonds are not appropriate investments for all types of investors. See “SPECIAL RISK FACTORS” in this Official Statement for a discussion of certain risk factors that should be considered, in addition to the other matters set forth in this Official Statement, in evaluating the investment quality of the 2022 Bonds.
The 2022 Bonds are offered when, as and if issued, subject to approval as to their legality by Quint & Thimmig LL P, Larkspur, California, Bond Counsel, and certain other conditions. Certain legal matters with respect to the 2022 Bonds will be passed upon for the City by the City Attorney, and by Quint & Thimmig LLP, in its capacity as Disclosure Counsel to the City f or the 2022 Bonds.
Certain legal matters related to the 2022 Bond s will be passed upon for the Underwriter by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, acting as Underwriter’s Counsel. It is anticipated that th e 2022 Bond s in definitive form will be available for delivery to DTC on or about December __, 2022.
The date of this Official Statement is December __, 2022.
* Preliminary, subject to change.
$15,000,000*
CITY OF ALAMEDA
COMMUNITY FACILITIES DISTRICT NO. 22-1
(ALAMEDA MARINA)
2022 SPECIAL TAX BONDS
(Green Bonds)
Maturity Schedule
$__________ Serial Bonds, CUSIP Prefix 010780**
Maturity Date
(September 1)
Principal
Amount
Interest
Rate Yield Price
CUSIP
Suffix**
$________ ____% Term Bonds due September 1, ____ Yield ____% Price ____ CUSIP Number 010780 ____** $________ ____% Term Bonds due September 1, ____ Yield ____% Price ____ CUSIP Number 010780 ____** $________ ____% Term Bonds due September 1, ____ Yield ____% Price ____ CUSIP Number 010780 ____**
* Preliminary, subject to change.
** CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the City, the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers.
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GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
The information contained in this Official Statement has been obtained from sources that are believed to be reliable. No representation, warranty or guarantee, however, is made by the Underwriter as to the accuracy or completeness of any information in this Official Statement, including, without limitation, the information contained in the Appendices, and nothing contained in this Official Statement should be relied upon as a promise or representation by the Underwriter.
Neither the City nor the Underwriter has authorized any dealer, broker, salesperson or other person to give any information or make any representations with respect to the offer or sale of 2022 Bonds other than as contained in this Official Stateme nt. If given or made, any such information or representations must not be relied upon as having been authorized by the City or the Underwriter. The information and expressions of opinion in this Official Statement are subject to change without notice, and neither the delivery of this Official Statement nor any sale of the 2022 Bonds shall under any circumstances create any implication that there has been no change in the affairs of any party described in this Official Statement, or in the status of any prop erty described in this Official Statement, subsequent to the date as of which such information is presented.
This Official Statement and the information contained in this Official Statement are subject to amendment without notice. The 2022 Bonds may not be sold, and no offer to buy the 2022 Bonds may be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor sha ll there be any sale of, the 2022 Bond s in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
When used in this Official Statement and in any continuing disclosure by the City, in any press release and in any oral statement made with the approval of an authorized officer of the City or any other entity described or referenced in this Official Statement, the words or phrases “will likely resul t,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,” “expect,” “intend” and similar expressions identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward- looking statements. Any forecast is subject to such uncertainties.
Inevitably, some assumptions used to develop the forecasts will not be realized, and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material.
All summaries of the documents referred to in this Official Statement are qualified by the provisions of the respective documents summarized and do not purport to be complete statements of any or all of such provisions.
The Underwriter has provided the following sentence for inclusion in this Officia l Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or the completeness of such information.
In connection with the offering of the 2022 Bond s, the Underwriter may overallot or effect transactions that stabilize or maintain the market prices of the 2022 Bonds at levels above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time.
The Underwriter may offer and sell the 2022 Bonds to certain dealers, dealer banks and banks acting as agent at prices lower than the public offering prices stated on the inside cover page of this Official Statement, and those public offering prices may be changed from time to time by the Underwriter.
The 2022 Bond s have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon an exemption from the registration requirements contained in the Securities Act. The 2022 Bonds have not been registered or qualified under the securities laws of any state.
The City maintains an Internet website, but the information on the website is not incorporated in this Official Statement.
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CITY OF ALAMEDA
City Council
Marilyn Ezzy Ashcraft, Mayor
Malia Vella, Vice Mayor
Tony Daysog, Councilmember
Trish Herrera Spencer, Councilmember
[To Be Determined](1), Councilmember
City Officials
Erin Smith, Acting City Manager/ Public Works Director
Margaret O’Brien, Finance Director
Lisa Maxwell, Community Development Director
Yibin Shen, Esq., City Attorney
Lara Weisiger, City Clerk
PROFESSIONAL SERVICES
Municipal Advisor
Urban Futures Incorporated
Tustin, California
Fiscal Agent
U.S. Bank Trust Company, National Association
San Francisco, California
Special Tax Consultant and Dissemination Agent
NBS
Temecula, California
Appraiser
Integra Realty Resources Sacramento
Rocklin, California
Bond Counsel and Disclosure Counsel
Quint & Thimmig LLP
Larkspur, California
(1) To be sworn in on December 20, 2022.
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TABLE OF CONTENTS
INTRODUCTION .................................................................. 1 General ............................................................................... 1 Authority for Issuance ..................................................... 1 The 2022 Bonds ................................................................. 2 Designation as Green Bonds ........................................... 2 Security for the 2022 Bonds ............................................. 2 Reserve Fund .................................................................... 3 The Development ............................................................. 4 The District ........................................................................ 4 Land Valuation ................................................................. 5 Limited Obligation ........................................................... 5 Issuance of Additional Bonds ......................................... 6 Bondowners’ Risks ........................................................... 6 Continuing Disclosure ..................................................... 6 Other Information ............................................................ 7 PLAN OF FINANCING ....................................................... 7 Overview ........................................................................... 7 Estimated Sources and Uses of Funds ........................... 8 THE 2022 BONDS .................................................................. 8 Authority for Issuance ..................................................... 8 General Provisions ........................................................... 8 Designation as Green Bonds ........................................... 9 Redemption ..................................................................... 10 Transfer or Exchange of 2022 Bonds ........................... 13 Discontinuance of DTC Services .................................. 13 Scheduled Debt Service ................................................. 14 SECURITY FOR THE 2022 BONDS .................................. 14 General ............................................................................. 14 Limited Obligation ......................................................... 15 Special Taxes ................................................................... 15 Special Tax Fund ............................................................ 16 Summary of Rate and Method ..................................... 17 Reserve Fund .................................................................. 20 Covenant for Superior Court Foreclosure .................. 21 No Teeter Plan ................................................................ 23 No Limitation on Increases in Special Tax Levies
by Reason of Delinquencies .......................................... 23 Investment of Moneys ................................................... 23 Issuance of Additional Bonds ....................................... 23 THE DEVELOPMENT AND THE DISTRICT ................. 26
Location and Description of the Development .......... 26 History of the District .................................................... 29 The Improvements ......................................................... 30 Description of the District ............................................. 31 Land Ownership ............................................................. 32 Current Development in the District ........................... 35 Property Values .............................................................. 36 Direct and Overlapping Governmental
Obligations ...................................................................... 37 Projected Debt Service Coverage .................................. 39 SPECIAL RISK FACTORS .................................................. 41 No General Obligation of the City or the District ...... 41 Concentration of Ownership ......................................... 41 Failure to Complete or Delay in Completion of the
Townhomes ..................................................................... 41 Payment of the Special Tax is not a Personal
Obligation ........................................................................ 42 Property Value ................................................................ 43 COVID-19 Pandemic ...................................................... 43 Exempt Properties .......................................................... 44 Parity Taxes and Special Assessments ......................... 44 Insufficiency of Special Taxes ....................................... 45 Potential Early Redemption of Bonds from Special
Tax Prepayments ............................................................ 45 Tax Delinquencies ........................................................... 46 Bankruptcy Delays ......................................................... 46 Proceeds of Foreclosure Sales ....................................... 46 Natural Disasters ............................................................ 47 Risk of Sea Level Changes ............................................. 48 Hazardous Substances ................................................... 50 Increasing Mortgage Interest Rates .............................. 51 Cybersecurity .................................................................. 51 Disclosure to Future Purchasers ................................... 51 FDIC/Federal Government Interests in Properties ... 52 No Acceleration Provision ............................................. 53 Taxability Risk ................................................................. 53 Enforceability of Remedies ............................................ 54 No Secondary Market .................................................... 54 Proposition 218 ................................................................ 54 Ballot Initiatives .............................................................. 55 IRS Audit of Tax-Exempt Bond Issues ........................ 55 Court Action Involving Landowner – Voted
Special Tax District ......................................................... 56 TAX MATTERS .................................................................... 56 LEGAL MATTERS ............................................................... 59 MUNICIPAL ADVISOR ..................................................... 59 NO RATING ......................................................................... 60 LITIGATION ........................................................................ 60 UNDERWRITING ............................................................... 60 CONTINUING DISCLOSURE ........................................... 60 The City ............................................................................ 60 The Builder ...................................................................... 60 Remedies for Failures to Comply ................................. 61 MISCELLANEOUS .............................................................. 61
APPENDIX A GENERAL, ECONOMIC AND DEMOGRAPHIC INFORMATION RELATING TO THE CITY
AND THE COUNTY
APPENDIX B RATE AND METHOD
APPENDIX C SUMMARY OF THE FISCAL AGENT AGREEMENT
APPENDIX D FORM OF OPINION OF BOND COUNSEL
APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT OF THE CITY APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT – BUILDER
APPENDIX G DTC AND THE BOOK-ENTRY ONLY SYSTEM
APPENDIX H APPRAISAL REPORT
APPENDIX I ASSIGNED SPECIAL TAX FOR EACH TOWNHOME
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Area Analysis – Alameda County 16
City of Alameda CFD No. 13‐01 (Alameda Landing Public Improvements) Area Map
CITY OF ALAMEDA LOCATION MAP
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OFFICIAL STATEMENT
$15,000,000*
CITY OF ALAMEDA
COMMUNITY FACILITIES DISTRICT NO. 22-1
(ALAMEDA MARINA)
2022 SPECIAL TAX BONDS
(Green Bonds)
INTRODUCTION
This introduction is not a summary of this Official Statement and is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in this entire Official Statement and the documents summarized or described in this Official Statement. A full review should be made of this entire Official Statement by those interested in purchasing the 2022 Bonds. The sale and delivery of 2022 Bond s to potential investors is made only by means of the entire Official Statement.
Certain capitalized terms used in this Official Statement and not defined herein have the meaning s set forth in Appendix C — “Summary of the Fiscal Agent Agreement — Definitions” and in Appendix B— “Rate and Method.”
General
The purpose of this Official Statement, which includes the cover page, the inside cover page, the table of contents and the attached appendices (the “Official Statement”), is to provide certain information concerning the issuance by the City of Alameda, California (the “City”), for and on behalf of the City of Alameda Community Facilities District No. 22-1 (Alameda Marina) (the “District ”), of the City of Alameda Community Facilities District No. 22 -1 (Alameda Marina) 2022 Special Tax Bonds (the “ 2022 Bonds ”). The 2022 Bond s are being issued to (i) finance costs of sea level rise resilience and adaptive improvements authorized to be funded by the District, (ii) fund a reserve fund for the 2022 Bonds, (iii) fund a capitalized interest account for the 2022 Bonds, and (iv) pay costs of issuing the 2022 Bonds. See “PLAN OF FINANCING” and “THE 2022 BONDS— Designation as Green Bonds.”
Authority for Issuance
General. The District was formed in April 2022 under the authority of the City of Alameda Special Tax Financing Improvement Code, constituting Section 3 -70.1 of the Alameda Municipal Code (the “Law”). The Law was enacted by Ordinance No. 2498 adopted by the City Council of the City (the “ City Council”) on Septem ber 18, 1990, and has provisions similar to those of the Mello-Roos Community Facilities Act of 1982 (California Government Code Section 53311 et seq.) . The Law authorizes the City Council to establish community facilities districts with defined boundaries and, subject to approval by at least a two -thirds vote of the votes cast by the qualified electors within a district and compliance with the provisions of the Law, the City Council may issue bonds for a community facilities district established by it and may levy and collect a special tax within the community facilities district to repay the bonds.
Bond Authority . The 2022 Bond s are authorized to be issued pursuant to the Law, a Resolution adopted on December 6, 2022 by the City Council, acting as the legislative body of the District, and the Fiscal Agent Agreement , dated as of December 1, 2022 (the “Fiscal Agent Agreement”), between the City, for and on behalf of the District, and U.S. Bank Trust Company,
* Preliminary, subject to change.
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National Association, as fiscal agent (the “Fiscal Agent”). For more detailed information about the formation of the District and the authority for issuance of the 2022 Bonds, see “THE 2022 BONDS— Authority for Issuance” and “THE DEVELOPMENT AND THE DISTRICT— History of the District .” When used in this Official Statement the term “Bonds” means the 2022 Bonds and any Parity Bonds that may be issued in the future under and as such term is defined in the Fiscal Agent Agreement. See “ SECURITY FOR THE 2022 BOND S— Issuance of Additional Bonds.”
The 2022 Bonds
General. The 2022 Bonds will be issued only as fully registered bonds, in denominations of $5,000 or any integral multiple thereof, and will bear interest at the rates per annum and will mature on the dates and in the principal amounts set forth on the inside cover page of this Official Statement. The 2022 Bonds will be dated the date of their issuance and interest on the 2022 Bonds will be payable on March 1 and September 1 of each year, commencing March 1, 2023 (each an “Interest Payment Date”). The 2022 Bonds will be issued in book-entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of the Depository Trust Company, New York, New York (“ DTC”), which will act as securities depository for the 2022 Bonds. See “THE 2022 BONDS— General Provisions.”
Redemption Prior to Maturity. The 2022 Bonds are subject to optional and mandatory redemption prior to maturity. See “THE 2022 BONDS— Redemption.”
Designation as Green Bonds
The City is designating the 2022 Bonds as “green bonds” due to the benefits of the sea level rise resilience and adaptation improvements being financed with the net proceeds of the 2022 Bonds. Those improvements have been designed to provide protection for the Development against se a level rise of approximately ______ feet, an amount currently not projected to occur through the end of the century. See “THE 2022 BONDS — Designation as Green Bonds” and “THE DEVELOPMENT AND THE DISTRICT— The Improvements.”
Security for the 2022 Bonds
Pledge Under the Fiscal Agent Agreement . Pursuant to the Fiscal Agent Agreement, the 2022 Bonds are secured by a first pledge of all of the Special Tax Revenues after deducting the Minimum Administrative Expense Requirement in each Fiscal Year (referred to in this Official Statement as the “Pledged Special Tax Revenues”) and all moneys deposited in the Bond Fund, the Reserve Fund and, until disbursed in accordance with the Fiscal Agent Agreement, in the Special Tax Fund , all of which funds are held by the Fiscal Agent under the Fiscal Agent Agreement. “ Special Tax Revenues ,” as defined in the Fiscal Agent Agreement, means t he proceeds of the Special Tax es received by the City, including any scheduled payments and any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien, but does not incl ude interest and penalties, if any, collected with the Special Tax es that are in excess of the rate of interest payable on the Bonds. “Minimum Administrative Expense Requirement” is defined in the Fiscal Agent Agreement to mean (a) for Fiscal Year 2022-23, $50,000; and (b) for each Fiscal Year after Fiscal Year 2022-23, an amount equal to 102% of the Minimum Administrative Expense Requirement in effect for the immediately preceding Fiscal Year.
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The Pledged Special Tax Revenues , and all moneys on deposit in the Bond Fund, the Reserve Fund and the Special Tax Fund are dedicated to the payment of the principal of, and interest and any premium on, the 2022 Bonds in accordance with the Fiscal Agent Agreement until all of the 2022 Bond s have been paid or defeased . See “SECURITY FOR THE 2022 BONDS— Special Taxes.”
Special Taxes; Rate and Method. The Special Taxes to be used to pay debt service on the 2022 Bonds will be levied in accordance with the Rate and Method of Apportionment of Special Taxes (the “Rate and Method ”) for the District, which is described under the heading “SECURITY FOR THE 2022 BOND S— Summary of Rate and Method, ” and is set forth in its entirety in Appendix B — “Rate and Method.” “Special Taxes” as defined in the Fiscal Agen t Agreement, means the special tax levied within the District pursuant to the Law, Ordinance No. 3319 adopted by the City Council on May 3, 2022 (the “Ordinance Levying Special Taxes ”), which provides for the levy of the Special Taxes in accordance with the Rate and Method, and the Fiscal Agent Agreement. The Special Taxes are levied on “Taxable Property ,” which is defined in the Rate and Method as all of the County of Alameda Assessor’s Parcels within the District which are not exempt from the Special Tax by applicable law or the Rate and Method (which exempts (i) certain Property Owner Association Property and Public Property, as such capitalized terms are defined in the Rate and Method, (ii) up to 25 Below Market Rate Units (“BMR Units”) classified as such under the Rate and Method, and (iii) any Accessory Dwelling Units (“ADUs”), as defined in the Rate and Method). See “SECURITY FOR THE 2022 BONDS— Special Taxes” and “— Summary of Rate and Method.”
Limitations. The first Special Tax Revenues in the amount of the applicable Minimum Administrative Expense Requirement received by the City in each Fiscal Year, as well as amounts in the Administrative Expense Fund, the Improvement Fund and the Costs of Issuance Fund, each of which is established under the Fiscal Agent Agreement, are not pledged to the repayment of the 2022 Bonds. The improvements financed by the District are not pledged to pay the debt service on the 2022 Bonds. The pro ceeds of any sale, condemnation or destruction of any of the improvements financed by the District are not pledged to pay the debt service on the 2022 Bonds.
In the event that the Special Taxes are not paid when due, the only sources of funds available to repay the 2022 Bonds are amounts held by the Fiscal Agent in the Bond Fund, the Special Tax Fund and the Reserve Fund established under the Fiscal Agent Agreement, and the proceeds, if any, from foreclosure sales of Taxable Property within the District in respect of delinquent Special Taxes.
Reserve Fund
The Fiscal Agent Agreement establishes a Reserve Fund as a reserve for the payment of principal of and interest on the Bonds (which includes the 2022 Bonds and any Parity Bonds) .
The Reserve Fund is required to be funded on the Closing Date at the “Reserve Requirement,” which is defined in the Fiscal Agent Agreement as an amount equal to the least of (i) the then Maximum Annual Debt Service, (ii) one hundred twenty -five percent (125%) of the average Annual Debt Service as of the date of issuance of the 2022 Bonds, or (iii) ten percent (10%) of the initial principal amount of the 2022 Bonds. The Reserve Requirement is not subject to increase unless and until recomputed at the time, if any, that Parity Bonds ar e issued. The Reserve Fund will be available to pay the debt service on the 2022 Bonds and any Parity Bonds in the event of a shortfall in the amount in the Bond Fund for such purpose. The Reserve Requirement as of the date of issuance of the 2022 Bond s will be $ ____________. See “ SECURITY FOR THE 2022 BONDS— Reserve Fund.”
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The Development
The property initially included in the District consist ing of approximately 11 acres , constitutes a portion of the larger, approximately 44 acre development known as Alameda Marina (the “Development”), located along the Oakland Estuary in the eastern portion of the City. Approximately 17 acres, consisting primarily of the marina and shorel ine areas, is the subject of a lease (the “Tidelands Lease”) with the City. See “THE DEVELOPMENT AND THE DISTRICT— Location and Description of the Development.”
The Development is the subject of the Alameda Marina Master Plan approved by the City Council in July of 2018 in connection with the rehabilitation and improvement of a former working waterfront area, with zoning as mixed use planned development with multifamily residential, commercial uses, continued marina uses, parks and trails. The Development is planned to include 360 residential apartment units and 8 commercial work/live units , 182 townhomes, and 218 condominium units, 104 of which total units will be deed restricted as affordable. The Development also includes 55,000 square feet commercial s pace in one new building and seven rehabilitated buildings some of which have historic importance, and continues to include 530 boat slips, a 60 boat dry storage area , graving dock and a water life park. Upon completion, the Development will also include 3.45 acres of parks, shoreline access, bike paths and an extension of the Bay Trail. See “THE DEVELOPMENT AND THE DISTRICT— Location and Description of the Development” for more information regarding the Development.”
The master developer of the Developme nt, Alameda Marina, LLC (the “Master Developer”), has completed virtually all of the infrastructure improvements necessary for development and redevelopment to occur, including extensive sea level rise resili ence and adaptive improvements protecting the De velopment site, and roadway, storm drain and other site improvements, the costs of some of which are subject to financing by the District. See “THE DEVELOPMENT AND THE DISTRICT— The Improvements.” Construction is underway on a 360 unit apartment and 8 wor k/live unit complex known as “The Launch”, expected to be completed in 2023, and construction has recently just begun on the first 18 of 182 townhomes.
Full buildout of all of the Development to occur over several years. While only the portion of the Development that is in the District initially will be subject to the levy of the Special Taxes, other portions of the Development are located in a future annexat ion area of the District and may be annexed into the District at a later date. If any such annexation occurs, it is expected that Parity Bonds will be issued to finance improvements authorized to be funded by the District but not funded with proceeds of t he 2022 Bonds. See “SECURITY FOR THE 2022 BONDS— Issuance of Additional Bonds.”
The District
The District was formed by the City Council pursuant to proceedings conducted under the Law on April 19, 2022 with a maximum bonded indebtedness of $37,000,000 . See “THE DEVELOPMENT AND THE DISTRICT— History of the District .” The District includes approximately 11 acres within the Development to be improved with a total of 182 townhomes in 31 buildings, including 25 BMR Units that will not be subject to the levy of Special Taxes.
The townhomes are being constructed by Landsea Construction LLC on behalf of LS-Alameda Marina LLC, a Delaware limited liability company (the “ Builder”), both of which are affiliated with Landsea Homes Corporation, a publicly traded homebuilder (Nasdaq: LSEA) based in Newport Beach, California that has operations in several states and has been building homes in Northern California for over eight years. Construction of in -tract improvements began in March, 2022 and is approximately 50% complete as of November 14, 2022 . Building permits have been issued by the City for 3 of the buildings that are to include 18 of the townhomes, with
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construction underway and expected to be completed on these initial units by the end of July 2023. Full buildout of all 182 planned townhomes is expected to occur over the next several years. See “THE DEVELOPMENT AND THE DISTRICT— Description of the District” for a more complete description of the development occurring and to occur in the District.
Land Valuation
The firm of Integra Realty Resources Sacramento (the “Appraiser ”) has prepared an Appraisal of property in the District dated November 11, 2022 (the “Appraisal Report”) with a valuation date of September 6, 2022 , estimating the market value of the 157 townhomes being constructed in the District that will be subject to the levy of the Special Taxes (the “Taxable Property”).
The Appraiser concluded in the Appraisal Report that the market value of the Taxable Property in the District is $58,750,000, subject to certain assumptions and limiting conditions set forth in the Appraisal Report , including a hypothetical condition that proceeds of the 2022 Bonds will be available for the reimbursement of public improvement costs. The appraised value of the land in the District , as reflected in the Apprai sal Report, $58,750,000, is approximately 3.9* times the $15,000,000* initial principal amount of the 2022 Bond s. On November __, 2022 , the Appraiser provided a letter to the City (the “Update Letter”) to the effect that the value of the property in the District as of November __ 2022 was not less than the value as of the September 6, 2022 date of value in the Appraisal. The Appraisal Report and the Update Letter, copies of which are included in Appendix H, should be read in their entirety by prospective purchasers of the 2022 Bonds. See “THE DEVELOPMENT AND THE DISTRICT— Property Values” and “SPECIAL RISK FACTORS— Property Value.”
No assurance can be given that should Special Taxes levied on one or more of the completed townhomes or Taxable Property not yet improved with townhomes become delinquent, and should the delinquent parcels be offered for sale at a judicial foreclosure sale, that any bid would be received for the property or, if a bid is received , that such bid would be sufficient to pay such parcel ’s delinquent Special Taxes. See “SPECIAL RISK FACTORS— Property Value” and “SPECIAL RISK FACTORS— Insufficiency of Special Taxes.”
Limited Obligation
Although the unpaid Special Taxes constitute liens on the Taxable Property within the District on which they are levied, they do not constitute a personal indebtedness of any owners of the Taxable Property . There is no assurance that the Builder, which is the initial entity responsible for payment of the Special Taxes until townhomes are built and sold to townhome buyers, or any owner or purchaser of a townhome in the District, will be financially able to pay the Special Taxes levied on their property in th e District or that they will pay the Special Taxes even though financially able to do so.
NONE OF THE FAITH AND CREDIT OF THE DISTRICT, THE CITY OR THE STATE
OF CALIFORNIA OR OF ANY OF THEIR RESPECTIVE POLITICAL SUBDIVISIONS IS PLEDGED TO THE PAYMENT OF THE 2022 BOND S. EXCEPT FOR THE SPECIAL TAX REVENUES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE 2022 BONDS.
THE 2022 BOND S ARE NEITHER GENERAL NOR SPECIAL OBLIGATIONS OF THE CITY
NOR GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF
THE CITY FOR THE DISTRICT PAYABLE SOLELY FROM CERTAIN AMOUNTS PLEDGED
* Preliminary, subject to change.
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THEREFOR UNDER THE FISCAL AGENT AGREEMENT, AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT.
Issuance of Additional Bonds
The City may in the future incur additional bonded indebtedness that is secured by a lien on the Special Tax Revenues and on the funds pledged under the Fiscal Agent Agreement for the payment of the 2022 Bonds on a parity with the 2022 Bonds (“Parity Bonds”), subject to the applicable provisions of the Fiscal Agent Agreement , which include a valuation test and a Special Tax coverage test (except for Refunding Bonds that are to be Parity Bonds) . The Fiscal Agent Agreement allows for the issuance of Parity Bonds in a pri ncipal amount of up to $22,000,000* (which is an amount equal to the difference between the $37,000,000 bonded indebtedness limit of the District, and the initial principal amount of the 2022 Bonds) to provide additional financing for the improvements auth orized to be funded by the District (the “Improvements”), and otherwise that are Refunding Bonds . See “SECURITY FOR THE 2022 BONDS— Issuance of Additional Bonds.” It is expected that Parity Bonds, other than Refunding Bonds, will only be issued if additional property is annexed to the District. See “PLAN OF FINANCING— General.”
Bondowners’ Risks
Certain events could affect the ability of the City to pay the principal of and interest on the 2022 Bond s when d ue. Except for the Special Taxes , no other taxes are pledged to the payment of the 2022 Bonds. See “SPECIAL RISK FACTORS” for a discussion of certain factors that should be considered in evaluating an investment in the 2022 Bonds. The purchase of the 2022 Bonds involves significant risks, and the 2022 Bonds are not appropriate investments for all types of investors.
Continuing Disclosure
For purposes of complyi ng with Rule 15c2 -12(b)(5) promulgated under the Securities Exchange Act of 1934, as amended (the “ Rule”), the City has agreed to provide, or cause to be provided, to the Municipal Securities Rulemaking Board (the “MSRB ”) certain annual financial information and notice of certain significant events. These covenants have been made in order to assist the Underwriter in complying with the Rule. See “CONTINUING DISCLOSURE — The City” and Appendix E for a description of the specific nature of the annual reports an d notices of significant events, as well as the terms of the Continuing Disclosure Agreement to which the City will be a party and pursuant to which such reports and notices are to be made. Also see “CONTINUING DISCLOSURE — The City ” for a description of cer tain failures by an entity related to the City to fully comply with certain prior obligations under the Rule.
The Builder has agreed to enter into a separate Continuing Disclosure Agreement - Builder pursuant to which it will provide certain information on an annual and a semi annual basis and notice of certain events relative to property in the District it owns or is under contract to acquire. The obligation of the Builder to provide such information will terminate on the date on which the at least 146 of the townhomes constructed in the District or to be constructed are the subject of closed sales with townhome buyers . See “CONTINUING DISCLOSURE — The Builder,” and see Appendix F— “Form of Continuing Disclosure Agreement– Builder” for the complete text of the Continuing Disclosure Agreement–Builder.
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Other Information
This Official Statement speaks only as of its date, and the information containe d in this Official Statement is subject to change without notice. Except where otherwise indicated, all information contained in this Official Statement has been provided by the City on behalf of the District.
Copies of the Fiscal Agent Agreement and cert ain other documents referenced in this Official Statement are available for inspection at the office of, and (upon written request and payment to the City of a charge for copying, mailing and handling) are available for delivery from, the City’s Finance Director, c/o City of Alameda, 2263 Santa Clara Avenue, Room 220, Alameda, California 94501.
PLAN OF FINANCING
Overview
The District was formed for the purpose of providing financing for costs of the Improvements, including sea level rise resilience and adaptive improvements, and street and storm drain improvements. The sea level rise improvements include the reconstruction of 4,009 linear feet of embankments, a seawall, bulkheads and revetment slopes providing protection for the Development against projected end of the century sea level rise. The City, for and on behalf of the District, has entered into an Acquisition and Funding Agreement with the Master Developer, dated as of March 15, 2022, (the “Acquisition and Funding Agreement”), pursuant to which the City has agreed to use proceeds of Bonds issued for the District to pay a portion of the costs of the construction by the Master Developer of the Improvements . See “THE DEVELOPMENT AND THE DISTRICT— The Improvements.”
All of the Improvements constituting public infrastructure needed for the development of the property in the District have been completed , as well as all but the renovation of a promenade wharf expected to cost approximately $1,700,000 . In accordance with the Acquisition and Funding Agreement, proceeds of the 2022 Bonds deposited to the Improvement Fund will be used to make payments to the Master Developer for costs of the sea level rise improvements. See “PLAN OF FINANCING — Sources and Uses of Funds” and “THE DEVELOPMENT AND THE DISTRICT— The Improvements.” The Master Developer has advised that it expects to submit the documents required by the Acquisition and Funding Agreement for payment of costs of the Improvements that will fully utilize all of the 2022 Bond proceeds to be deposited to the Improvement Fund sometime in the next month or two.
The Fiscal Agent Agreement allows for the issuance of Parity Bonds in a principal amount of up to $22,000,000* (which is an amount equal to the difference between $ 37,000,000 bonded indebtedness limit of the District, and the init ial principal amount of the 2022 Bonds), and otherwise that are Refunding Bonds, which Parity Bonds will be secured on a parity with the 2022 Bonds. Proceeds of any Parity Bonds that are not used for refunding purposes will be available to pay additional costs of the Improvements pursuant to the Acquisition and Funding Agreement. The principal amount of the 2022 Bonds has been siz ed to leverage the annual Pledged Special Tax Revenues with at least 110% coverage of the debt service on the 2022 Bonds (see “THE DEVELOPMENT AND THE DISTRICT— Projected Debt Service Coverage”).
Additional Parity Bonds that are not Refunding Bonds are not expected to be issued unless additional property is annexed to the District or if Refunding Bonds create sufficient excess
* Preliminary, subject to change.
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pledged Special Tax Revenue capacity. See “SECURITY FOR THE BONDS — Issuance of Additional Parity Bonds.”
In addition to providing financing for the Improvements, proceeds of the 2022 Bonds will also be used to fund the Reserve Fund for the 2022 Bonds, make a deposit to a Capitalized Interest Account to pay interest on the 2022 Bonds for a limited period of time , and to pay the costs of issuance of the 2022 Bonds.
Estimated Sources and Uses of Funds
The sources and uses of funds in connection with the 2022 Bonds are expected to be as follows:
Principal of 2022 Bonds $
Plus (Less): Original Issue Premium (Discount)
Less: Underwriter’s Discount __________
Total Sources $
Deposit to Improvement Fund(1) $
Deposit to Reserve Fund(2)
Deposit to Costs of Issuance Fund(3)
Deposit to Capitalized Interest Account(4) __________
Total Uses $
(1) To be used to finance costs of the sea level rise resilience and adaptive improvements authorized to be funded by the District. See “PLAN OF FINANCING— Overview” and “THE DEVELOPMENT AND THE DISTRICT— The Improvements.”
(2) Equal to the initial Reserve Requirement. See “SECURITY FOR THE 2022 BONDS— Reserve Fund.” (3) Costs of issuance include, without limitation, Municipal Advisor fees and expenses, Fiscal Agent fees and expenses, Bond Counsel and Disclosure Counsel and other legal fees and expenses, and printing costs. (4) Equal to the interest due on the 2022 Bonds on March 1, 2023 and September 1, 2023 without accounting for any investment earnings thereon. See “SECURITY FOR THE 2022 BONDS— Capitalized Interest Account.”
THE 2022 BONDS
Authority for Issuance
Pursuant to the Law, on April 19, 2022 , the City Council adopted Resolution No. 15891 establishing the District (“Resolution of Formation”). Also on April 19, 2022, the then owner of the property in the District (being a land -banking entity – see “THE DEVELOPMENT AND THE DISTRICT— Land Ownership” ), and thereby the qualified elector for the District, authorized the issuance of bon ded indebtedness to finance specified public improvements, and approved the levy of the Special Taxes pursuant to the Rate and Method on property in the District.
The 2022 Bonds are authorized to be issued pursuant to the Law, a Resolution adopted on December 6, 2022, by the City Council, acting as the legislative body of the District, and the Fiscal Agent Agreement . The Special Taxes to be used to pay debt service on the 2022 Bonds will be levied in accordance with the Rate and Method.
General Provisions
The 2022 Bonds will be issued only as fully registered 2022 Bonds, in the denomination of $5,000 or any integral multiple thereof, and will bear int erest at the rates per annum and will
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mature on the dates set forth on the inside cover page of this Official Statement. The 2022 Bonds will be dated the date of their issuance and interest will be payable on each Interest Payment Date, commencing March 1, 2023.
Each 2022 Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it will bear interest from such Interest Payment Date; or (b) it is authenticated on or before February 15, 2023, in which event it will bear interest from the date of issuance of the 2022 Bonds; provided, however, that if, as of the date of authentication of any 2022 Bond, interest thereon is in default, such 2022 Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. The term “Record Date ” as defined in the Fiscal Agent Agreement means the fifteenth (15
th) day of the month next preceding the month of the
applicable Interest Payment Date, whether or not such fifteenth (15th) day is a Business Day.
The 2022 Bonds will be payable both as to principal and interest, and as to any premium upon the redemption thereof, in lawful money of the United States of America. The principal of the 2022 Bonds and any premium due upon the redemption thereof will be payable by check of the Fiscal Agent upon presentation and surrender of the applicable 2022 Bonds at the Principal Office of the Fiscal Agent. Interest with respect to each Bond will be computed using a year of 360 days comprised of twelve 30-day months.
The 2022 Bond s will be issued in book -entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of DTC, which will act as securities depository for the 2022 Bonds. Individual purchases of the 2022 Bonds will be made in book- entry form only. Purchasers of the 2022 Bonds will not receive physical certificates representing their ownership interests in the 2022 Bond s purchased. Principal and interest payments represented by the 2022 Bonds are payable directly to DTC by the Fiscal Agent. Upon receipt of payments of principal and interest, DTC will in turn distribute such payments to the beneficial owners of the 2022 Bonds. See Appendix G— “DTC and the Book-Entry Only System.” So long as the 2022 Bonds are registered in the name of Cede & Co., as nominee of DTC, references in this Official Statement to the owners shall mean Cede & Co., and shall not mean the purchasers or Beneficial Owners of the 2022 Bonds.
Designation as Green Bonds
The City is designating the 2022 Bonds as “green bonds” due to the benefits of the sea level rise resilience and adaptation improvements being financed with the net proceeds of the 2022 Bonds. Those improvements have been designed to provide protection for the Development against sea level rise of approximately seven feet, an amount currently not projected to occur through the end of the century . See “THE DEVELOPMENT AND THE DISTRICT— The Improvements.”
The purpose of designating the 2022 Bonds as “green bonds” is to allow owners of the 2022 Bonds to invest directly in bonds that address the effects of climate change through the provision of resilient and adaptive improvements. The 2022 Bonds may not be a suitable investment for all investors seeking exposure to “green” assets. There currently is no market consensus on what precise attributes are required for particular improvements to be defined as “green” and therefore no assurance can be provided to investors that the sea level resilience related improvements to be financed with proceeds of the 2022 Bonds will meet and continue to meet investor expectations regarding sea level rise protection performance.
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The City has not requested any independent review or certification of the 2022 Bonds as “green” bonds, and does not intend to provide investors with continuing information on the performance of the sea level resilience improvements, although the Tidelands Lease sets forth various ongoing obligations related to those improvements. See “SPECIAL RISKS FACTORS — Risk of Sea Level Changes.” “Green bonds” is entirely a self -designated label lacking any established objective guidelines or criteria.
The term “green bonds” is not defined in the Fiscal Agent Agreement, and is solely for identification purposes and is not intended to provide or imply that the owners of the 2022 Bonds are entitled to any security other than as described under the heading “SECURITY FOR THE 2022 BONDS.”
Redemption
Optional Redemption. The 2022 Bond s maturing on and after September 1, ____ are subject to optional redemption prior to their stated maturity on any Interest Payment Date occurring on or after September 1, ____, as a whole, or in part among matur ities as determined by the Finance Director of the City and by lot within a maturity, at a redemption price (expressed as a percentage of the principal amount of the 2022 Bonds to be redeemed), as set forth below, together with accrued interest thereon to the date fixed for redemption:
Redemption Dates Redemption Prices
September 1, ____ and March 1, ____ %
September 1, ____ and March 1, ____
September 1, ____ and March 1, ____
September 1, ____ and any Interest
Payment Date thereafter
Mandatory Sinking Payment Redemption. The 2022 Bonds maturing on September 1, ____, are subject to mandatory sinking payment redemption in part on September 1, ____, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:
Redemption Date
(September 1)
Sinking Payments
The 2022 Bond s maturing on September 1, ____, are subject to mandatory sinking payment redempt ion in part on September 1, ____, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:
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Redemption Date
(September 1)
Sinking Payments
The 2022 Bond s maturing on September 1, ____, are subject to mandatory sinking payment redemption in part on September 1, ____, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:
Redemption Date
(September 1)
Sinking Payments
The amounts in the foregoing tables will be reduced as a result of any prior partial redemption of the 2022 Bonds pursuant to the optional redemption or redemption from special tax prepayments provisions of the Fiscal Agent Agreement, so as to maintain to the extent practicable the same debt ser vice profile for the Bonds as in effect prior to such redemption, as specified in writing by the City’s Finance Director to the Fiscal Agent.
Mandatory Redemption From Special Tax Prepayments. The 2022 Bonds are subject to mandatory redemption prior to th eir stated maturity on any Interest Payment Date, from the proceeds of Special Tax Prepayments and corresponding transfers of funds from the Reserve Fund (as described below under “SECURITY FOR THE 2022 BOND S— Reserve Fund”), as a whole or in part by lot and allocated among maturities of the 2022 Bonds as determined by the Finance Director so as to maintain substantially the same debt service profile for the Bonds as in effect prior to such redemption , at a redemption price (expressed as a percentage of th e principal amount of the 2022 Bonds to be redeemed), as set forth below, together with accrued interest to the date fixed for redemption:
Redemption Dates Redemption Prices
any Interest Payment Date to and including
March 1, ____
%
September 1, ____ and March 1, ____
September 1, ____ and March 1, ____
September 1, ____ and any Interest Payment
Date thereafter
No assurance can be given regarding future prepayments of Special Taxes which, if they occur, could result in a redemption of 2022 Bonds prior to ma turity. See the last paragraph under the heading “SECURITY FOR THE 2022 BONDS— Summary of Rate and Method” and “SPECIAL RISK FACTORS— Potential Early Redemption of Bonds from Special Tax Prepayments.”
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Purchase of 2022 Bonds In Lieu of Redemption . In lieu of redemption as described above, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding 2022 Bond s, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting such purchase prior to the selection of 2022 Bond s for redemption, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may provide, but in no event may 2022 Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase.
Selection of 2022 Bonds for Redemption . Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the 2022 Bonds or any given portion thereof pursuant to the optional redemption or redemption from Special Tax Prepayment provisions of the Fiscal Agent Agreement, the Fiscal Agent shall select the 2022 Bonds to be redeemed, from all 2022 Bond s or such given portion thereof not previously called for redemption among maturities as directed in writing by the Finance Director, and within a maturity by lot in any manner which the Fiscal Agent in its sole discretion shall deem appropriate and fair. For purposes of selectio n of 2022 Bonds to be redeemed, all 2022 Bonds shall be deemed to be comprised of separate $5,000 portions, and such portions shall be treated as separate 2022 Bonds that may be separately redeemed.
Notice of Redemption . The Fiscal Agent will cause notice of any redemption to be mailed by first class mail, postage prepaid, at least 30 days but not more than 60 days prior to the date fixed for redemption, to the Securities Depositories and to one or more Information Services (or by such other means as permitted by such services), and to the respective registered Owners of any 2022 Bonds designated for redemption, at their addresses appearing on the Bond registration books in the Principal Office of the Fiscal Agent; but such mailing is not a condition precedent to redemption and failure to mail or to re ceive any such notice, or any defect therein, will not affect the validity of the proceedings for the redemption of such 2022 Bonds . The redemption notice will state the redemption date and the redemption price and, if less than all of the then Outstanding 2022 Bonds are to be called for redemption, will designate the CUSIP numbers and Bond numbers of the 2022 Bonds to be redeemed by giving the individual CUSIP number and Bond number of each Bond to be redeemed or will state that all 2022 Bond s between two stated Bond numbers, both inclusive, are to be redeemed or that all of the 2022 Bonds of one or more maturities have been called for redemption, will state as to any Bond called in part the principal amount thereof to be redeemed, and will require that suc h 2022 Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and will state that further interest on such 2022 Bonds will not accrue after the redemption date.
Notwithstanding the foregoing, any notice of redemption in connection with an optional redemption or redemption from Special Tax Prepayments may state that the redemption is conditioned upon receipt by the Fiscal Agent of sufficient moneys to redeem the 2022 Bonds on the anticipated redemption date, and that the redemption will not occur if by no later than the scheduled redemption date sufficient moneys to redeem the 2022 Bonds have not been deposited with the Fiscal Agent. In the event that the Fiscal Agent does not receive sufficient funds by the scheduled redemption date to so redeem the 2022 Bonds to be redeemed, the Fiscal Agent will send written notice to the owners of the 2022 Bonds, to the Securities Depositories and to one or more of the Information Services to the effect that the redemption did not occur as anticipated, and the 2022 Bond s for which notice of redemption was given will remain Outstanding for all purposes of the Fiscal Agent Agreement.
Effect of Redemption . From and after the date fixed for redemption, if funds avail able for the payment of the principal of, and interest and any premium on, the 2022 Bonds so called for redemption have been deposited in the Bond Fund, such 2022 Bonds so called will cease to
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be entitled to any benefit under the Fiscal Agent Agreement oth er than the right to receive payment of the redemption price, and no interest will accrue thereon on or after the redemption date.
Tender of 2022 Bonds in Payment of Special Taxes. The City has covenanted in the Fiscal Agent Agreement not to permit the tender of 2022 Bond s in payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the City having insufficient Special Tax Revenues to pay the principal or and interest on the Bonds that will remain Outstanding following such tender.
Transfer or Exchange of 2022 Bonds
So long as the 2022 Bonds are registered in the name of Cede & Co., as nominee of DTC, transfers and exchanges of 2022 Bonds shall be made in accordance with DTC procedures. See Appendix G— “DTC and the Book-Entry Only System.” If the book- entry only system for the 2022 Bonds is ever discontinued, any 2022 Bond may, in accordance with its terms, be transferred or exchanged by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such 2022 Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form approved by the Fiscal Agent.
Whenever any 2022 Bond or 2022 Bonds are surrendered for transfer or exchange, the City will execute and the Fiscal Agent will authenticate and deliver a new 2022 Bond or 2022 Bonds, for a like aggregate principal amount of 2022 Bonds of authorized denominations and of the same maturity. The Fiscal Agent will collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer or exchange.
No transfers or exchanges of 2022 Bonds will be required to be made (i) within the 15 days prior to the date designated by the Fiscal Agent as the date for selecting 2022 Bonds for redemption, or (ii) with respect to any 2022 Bond after such 2022 Bond has been selected for redemption.
Discontinuance of DTC Services
DTC may determine to discontinue providing its services with respect to the 2022 Bonds at any time by giving written notice to the Fiscal Agent during any time that the 2022 Bonds are Outstanding, and discharging its responsibilities with respect to the 2022 Bonds under applicable law. The City may terminate the services of DTC with respect to the 2022 Bonds if it determines that DTC is unable to discharge its responsibilities with respect to the 2022 Bonds or that continuation of the system of book-entry transfers through DTC is not in the best interest of the Beneficial Owners. The City will mail any such notice of termination to the Fiscal Agent.
Upon the termination of the services of DTC as provided in the previous paragraph, and if no substitute Depository willing to undertake the functions can be found which is willing and able to undertake such functions upon reasonable or customary terms, or if the City determines that it is in the best interest of the Beneficial Owners of the 2022 Bond s that they obtain certificated bonds, the 2022 Bond s will no longer be restricted to being registered in the Registration Books of the Fiscal Agent in the name of Cede & Co., as nominee of DTC, but may be registered in whatever name or name the Owners designate at that time, in accordance with the Fiscal Agent Agreement.
To the extent that the Beneficial Owners are designated as the transferee by the Owners, the 2022 Bonds will be delivered to such Beneficial Owners as soon as practicable in accordance with the Fiscal Agent Agreement.
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Scheduled Debt Service
The followin g is the debt service schedule for the 2022 Bond s, assuming no optional redemption or any redemption with proceeds of Special Tax Prepayments of the 2022 Bonds:
Period Ending
September 1 Principal Interest Total
2023 $ $ $
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
Totals $ $ $
* Indicates a mandatory sinking fund payment.
SECURITY FOR THE 2022 BONDS
General
Pursuant to the Fiscal Agent Agreement, the 2022 Bonds are secured by a pledge of all of the Special Tax Revenues as described below (other than the first Special Tax Revenues in the amount of the Minimum Administrative Expense Requirement received by the City in each Fiscal Year, which are to be used to pay Administrative Expenses), and all moneys deposited in the Bond Fund, the Reserve Fund and, until disbursed in accordance with the Fiscal Agent Agreement, the Special Tax Fund. “Special Tax Revenues ,” as defined in the Fiscal Agent Agreement, means t he proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien, but does not include interest and penalties, if any, collected
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with the Special Taxes that are in excess of the rate of interest payable on the Bonds. The Special Tax Revenues and all moneys deposited into said funds (except as otherwise provided in the Fiscal Agent Agreement) are dedicated to the payment of the principal of, and interest and any premium on, the 2022 Bonds in accordance with the Fiscal Agent Agreement until all of the 2022 Bonds have been paid or defeased.
The Fiscal Agent Agreement provides for a Capitalized Interest Account within the Bond Fund established under the Fiscal Agent Agreement. The amount deposited to the Capitalized Interest Account from the proceeds of the 2022 Bonds will be an amount sufficient to pay the interest due on the 2022 Bond s on March 1, 202 3 and on September 1, 2023 . See “SECURITY FOR THE 2022 BONDS— Capitalized Interest Account.”
Amounts in the Administrative Expense Fund , in the Improvement Fund and in the Costs of Issuance Fund , and amounts in the Special Tax Fund to be retained by the City or deposited to the Administrative Expense Fund to be used to pay Administrative Expenses, are not pledged to the repayment of the 2022 Bonds. The Improvements are not pledged to pay the debt service on the 2022 Bonds. The proceeds of any funds realized following condemnation or destruction of any of the Improvements are not pledged to pay the debt service on the 2022 Bonds.
Limited Obligation
The 2022 Bond s are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues (other than the first Special Tax Revenues in the amount of the Minimum Administrative Expense Requirement received by the City in each Fiscal Year, which are to be used to pay Administrative Expenses), and the amounts in the Bond Fund, the Reserve Fund and the Special Tax Fund created pursuant to the Fiscal Agent Agreement.
In the event that the Special Taxes are not paid when due, the only sources of fun ds available to repay the 2022 Bonds are amounts held by the Fiscal Agent under the Fiscal Agent Agreement in the Bond Fund, the Special Tax Fund and the Reserve Fund, and the proceeds, if any, from foreclosure sales of parcels with delinquent Special Taxes levies.
Special Taxes
The Rate and Method is set forth in its entirety in Appendix B. The Rate and Met hod provides for the levy of “Special Taxes ” in order to fund the annual “ Special Tax Requirement,” which includes the amounts needed to pay the debt service on the Bonds, to pay the costs of administering the District, and to replenish any draws on the Reserve Fund, and to account for reasonably anticipated delinquencies in the payment of Special Taxes. The first Special Tax levy will be for fiscal year 2023 -24, for debt service due on the 2022 Bonds in calendar year 2024 and for administrative expenses of the District. The Special Taxes levied on any parcel of Taxable Property may not exceed the applicable maximum amount as provided in the Rate and Method. See “SECURITY FOR THE 2022 BOND S— Summary of Rate and Method.”
The Special Taxes levied on Taxable Property will be payable and will be collected in the same manner, at the same time and in the same installment as the County ad valorem taxes on property levied on the secured tax roll, and pursuant to the Law have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the taxes levied on the secured tax
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roll. Notwithstanding the foregoing, the Special Taxes may be collected at a different time or in a different manner if necessary to meet the District’s financial obligations.
Although the Special Taxe s will constitute a lien on parcels of Taxable Property within the District, they do not constitute a personal indebtedness of the owners of the property within the District. Pursuant to the Law, in the event of any delinquency in the payment of the Specia l Tax on a parcel of Taxable Property, the City may order the institution of a superior court action to foreclose the lien on the parcel of Taxable Property within specified time limits. In such an action, the real property subject to the unpaid amount of the Special Tax lien may be sold at judicial foreclosure sale. The Law provides that the Special Taxes are secured by a continuing lien which is subject to the same lien priority in the case of delinquency as ad valorem property taxes. See “ SECURITY FOR TH E 2022 BONDS— Summary of Rate and Method,” “SECURITY FOR THE 2022 BOND S— Covenant for Superior Court Foreclosure” and “SPECIAL RISK FACTORS— Parity Taxes and Special Assessments.”
Other liens for taxes and assessments already exist on the property located wi thin the District and others could come into existence in the future. See “THE DEVELOPMENT AND THE DISTRICT— Direct and Overlapping Governmental Obligations” and “SPECIAL RISK FACTORS— Parity Taxes and Special Assessments.” There is no assurance that any own er of a parcel subject to the Special Tax levy will be financially able to pay the annual Special Taxes or that it will pay such taxes even if financially able to do so. See “SPECIAL RISK FACTORS.”
Special Tax Fund
Deposit of Special Tax Revenues. The Special Tax Fund is established by the Fiscal Agent Agreement as a separate fund to be held by the Fiscal Agent. The Fiscal Agent Agreement provides that there shall be deposited to the Special Tax Fund all Special Tax Revenues received by the City, which the City has agreed in the Fiscal Agent Agreement to transfer, as soon as practicable following receipt by the City, to the Fiscal Agent.
Notwithstanding the foregoing,
(i) with respect to the first Special Tax Revenues collected by the City in any Fiscal Year in the amount of the Minimum Administrative Expense Requirement for such Fiscal Year ; first, the City may retain all or any portion thereof, and not remit the same to the Fiscal Agent, to the extent the City determines that it needs said amount to pay Administrative Expenses of the City (and the City shall so use such amount to pay Administrative Expenses); and second, any remaining portion of such amount shall be separately identified by the City and shall be deposited by the Fiscal Agent in the Administrative Expense Fund;
(ii) any Special Tax Revenues constituting the collection of delinquencies in payment of Special Taxes shall be separately identified by the Cit y and shall be deposited by the Fiscal Agent first, in the Bond Fund to the extent needed to pay any past due debt service on the Bonds; second, to the Reserve Fund to the extent needed to increase the amount then on deposit in the Reserve Fund up to the t hen Reserve Requirement; and third, to the Special Tax Fund for use as described below; and
(iii) any proceeds of Special Tax Prepayments shall be separately identified by the City and shall be deposited by the Fiscal Agent as follows (as directed in writ ing by the Finance Director): (a) that portion of any Special Tax Prepayment constituting the Future Facilities Costs (as defined in Section I of the Rate and Method) shall be deposited by the Fiscal Agent to the Improvement Fund so long as the Improvement
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Fund has not theretofore been closed, and if the Improvement Fund has been closed, then such amount shall be retained by the City to be used to pay costs of the Improvements; and (b) any remaining portion of any Special Tax Prepayment shall be deposited by the Fiscal Agent in the Special Tax Prepayments Account within the Bond Fund to be used to redeem Bonds pursuant to the Fiscal Agent Agreement (see “THE 2022 BONDS— Redemption – Mandatory Redemption From Special Tax Prepayments”).
Moneys in the Special T ax Fund will be held by the Fiscal Agent for the benefit of the City and the Owners of the Bonds, will be disbursed as described below and, pending disbursement, will be subject to a lien in favor of the Owners of the Bonds and the City.
Disbursements. From time to time as needed to pay the obligations of the District, but no later than the Business Day before each Interest Payment Date, the Fiscal Agent will withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority:
(i) to the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers under the Fiscal Agent Agreement from the Improvement Fund, the Reserve Fund and the Special Tax Fund to the Bond Fund, such that the amount in the Bond Fund equals the principal (including any mandatory sinking payment or principal due on the Bonds pursuant to optional or special tax prepayment redemptions), premium, if any, and interest due on the Bonds on the next Interest Payment Date, and
(ii) to the Reserve Fund an amount, taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserve Fund is equal to the Reserve Requirement;
provided that no such transfers shall exceed the amount then available to be transferred from the Special Tax Fund.
In addition to the foregoing, if in any Fiscal Year there are sufficient funds in the Special Tax Fund to make the foregoing transfers to the Bond Fund and the Reserve Fund in respect of the Interest Payment Dates occurring in the Bond Year that commences in such Fiscal Year, the Finance Director may direct the Fiscal Agent to transfer to the Administrative Expense Fund, from time to time, any amount in the Special Tax Fund in excess of th e amount needed to make such transfers to the Bond Fund and the Reserve Fund, (i) to the Administrative Expense Fund, if the Finance Director determines that monies are needed to pay Administrative Expenses in excess of the amount then on deposit in the Ad ministrative Expense Fund, or (ii) to the City , to be used for any lawful purpose under the Law.
Summary of Rate and Method
The Rate and Method is used to allocate the amount of the Special Taxes that is needed to be collected each fiscal year to fund the Special Tax Requirement among the Taxable Property within the District based upon the development status of the Taxable Property and the square footage of the applicable townhome or non -residential property, subject to specified maximum tax rate s. The Rate and Method is set forth in full in Appendix B and the following is a summary of the Rate and Method. Capitalized terms used below and not otherwise defined in this Official Statement or in the Fiscal Agent Agreement have the meanings given to them in the Rate and Method.
The Rate and Method classifies all Taxable Property, i.e., all Assessor’s Parcels in the District not exempt pursuant to law or t he Rate and Method from the levy of the Special Taxes,
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into six categories: Developed Property, Final Mapped Property , Taxable Public Property, Taxable Property Owner Association Property, Taxable Welfare Exempt Property and Undeveloped Property. Developed Property includes Taxable Property for which a building permit for new construction of a residential or non-residential building on an Assessor’s Parcels was issued after January 1, 2021 and on or before May 1 of the prior Fiscal Year . Final Mapped Property includes, in general, Taxable Property that is not Developed Property , Taxable Public Property, Taxable Property Owner Association Property, or Taxable Welfare Exempt Property for which a Final Subdivision Map (that creates individual lots for which Building Permits may be issued without further subdivision) has recorded prior to May 1 of the preceding Fiscal Year, but not earlier than January 1, 2021. All of the Taxable Property in the District is currently Final Mapped Property or Developed Property.
The amount of Special Taxes that the District may levy on each parcel of Taxable Property is limited by the Maximum Special Tax applicable to the property, which is the greater of the applicable Assigned Special Tax or Backup Special Tax . Under the Rate and Method, the Assigned Special Tax and the Backup Special Tax for Developed Property and Final Map Property increases each July 1 , commencing July 1, 2023, by an amount equal to two percent (2%) of the amount in effect for the previous fiscal year. Assigned Special Tax rates for Developed Property for Fiscal Year 2023 -24 are as set forth in Table 1 below. The Backup Special Tax applicable to an Assessor’s Parcel of Taxable Property is determined pursuant to the provisions of Section C.1.b. of the R ate and Method based on the number of expected dwelling units and the amount of special tax revenues expected to occur in each Land Use Class as set forth in Table 2 in Section C.1.b. of the Rate and Method. The Special Tax Consultant has advised that the Backup Special Tax, based on the manner in which it is computed, is less than the related Assigned Special Tax for the Taxable Property.
The Maximum Assigned Special Taxes for Fiscal Year 2023-24 for each Land Use Class of Developed Property in the District is shown in Table 1 below.
Table 1
City of Alameda
Community Facilities District No. 22-1
(Alameda Marina)
Assigned Special Taxes for Fiscal Year 2023/24
Land Use
Class Description Assigned Special Tax
1 Townhome Property – Greater Than or
Equal to 2,680 Square Feet $8,100.84 per Dwelling Unit
2 Townhome Property – 2,430 – 2,679 Square Feet 7,912.14 per Dwelling Unit 3 Townhome Property – 2,180 – 2,429 Square Feet 7,157.34 per Dwelling Unit 4 Townhome Property – 1,930 – 2,179 Square Feet 7,131.84 per Dwelling Unit 5 Townhome Property – 1,680 – 1,929 Square Feet 6,212.82 per Dwelling Unit 6 Townhome Property – Less Than 1,680 Square Feet 5,607.96 per Dwelling Unit 7 Non-Residential Property 0.765 per Square Foot of
Non-Residential Floor Area
Source: NBS.
Each Fiscal Year, commencing with Fiscal Year 2023- 24, the City determines the Special Tax Requirement and will levy the Special Taxes until the total Special Tax levy equals the Special Tax Requirement. The Special Tax Requirement is defined in the Rate and Method as the
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amount required in any Fiscal Year for the District to (i) pay the Debt Service on all outstanding 2022 Bonds and any Parity Bonds due in the Debt Year that commences in such Fiscal Year, (ii) pay Administrative Expenses , (iii) provide any amount required to establish or replenish a reserve fund in connection with any Bonds, (iv) any amount required to establish or replenish any operating reserve held by the City for Administrative Expenses, (v) provide an amount equal to reasonably anticipated delinquent Special Taxes as determined by the CFD Administrator; less in any Fiscal Year (in the City’s sole discretion) (i) interest earnings on or surplus balances in funds and accounts for Bonds to the extent that such earnings or balances are available to apply against Debt Service pursuant to the Fiscal Agent Agre ement, (ii) proceeds from the collection of penalties associated with delinquent Special Tax es, and (iii) any other revenues available to pay Debt Service on outstanding Bonds or other indebtedness as determined by the CFD Administrator. See “SECURITY FOR THE 2022 BONDS— No Limitation on Increases in Special Tax Levies by Reason of Delinquencies” for information regarding how the Law differs from the Mello-Roos Community Facilities Act of 1982 in respect of the ability of the City to increase Special Tax lev ies on parcels in the District in the event of delinquencies in the payment of Special Taxes, subject in any event to the Maximum Special Taxes described above.
The Rate and Method provides that certain property in the District will be exempt from the levy of the Special Tax, including 25 BMR Units among the townhomes being constructed in the District, certain acres of property classified as Property Owner Association Property or Public Property, and certain welfare exempt property. Unless and until additional property is annexed to the District, the Taxable Property is expected to consist of the 157 townhomes being constructed in the District that are not BMR Units.
Under the Rate and Method, the City will levy the Special Taxes in five steps, in the following order, until the amount of the levy equals the amount needed to be collected to satisfy the Special Tax Requirement. The City will:
First: The Special Tax shall be levied Proportionately on each Assessor’s Parcel of Developed Property and Taxable Welfare Exempt Property at a rate up to 100% of the applicable Maximum Special Tax to satisfy the Special Tax Requirement.
Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Final Map Property at a rate up to 100% of the Maximum Special Tax for Final Map Property to satisfy the Special Tax Requirement.
Third: If additional monies are needed to satisfy th e Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Undeveloped Property at a rate up to 100% of the Maximum Special Tax for Undeveloped Property to satisfy the Special Tax Requirement.
Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied on each Assessor’s Parcel of Taxable Property Owner Association Property at a rate up to 100% of the Maximum Special Tax for Taxable Property Owner Association Property to satisfy the Special Tax Requirement.
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Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been co mpleted, then the Special Tax shall be levied Proportionately on all Taxable Public Property at a rate up to 100% of the Maximum Special Tax for Taxable Public Property to satisfy the Special Tax Requirement.
The term “Proportionately” as used in the above steps means, for Developed Property and Final Map Property, that the ratio of the Special Tax levy to the Assigned Special Tax or the Backup Special Tax is equal within each respective Tax Zone. For Undevelop ed Property, “Proportionately” means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal within each respective Tax Zone.
The Rate and Method also provides that the Special Taxes may be levied for no more than 40 years from the initial levy of the Special Tax. In any event no Special Tax is authorized to be levied after the 2061/62 Fiscal Year.
The Special Taxes obligation applicable to a parcel of Taxable Property within the District may be prepaid and the obligation to pay any Special Taxes for such Taxable Property may be fully or partially satisfied as described in the Rate and Method. See Section I in the Rate and Method in Appendix B. No assurance can be given that partial or full prepayments of Special Taxes will not occur in the future. Prepayments of Special Taxes will result in a mandatory redemption of the 2022 Bonds. See “THE 2022 BONDS— Redemption – Mandatory Redemption From Special Tax Prepayments” and “SPECIAL RISK FACTORS — Potential Early Redemption of Bonds from Special Tax Prepayments.”
Reserve Fund
The Fiscal Agent Agreement establishes a debt service reserve fund (the “ Reserve Fund”) as a separate fund to be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds (which include the 2022 Bonds and any Parity Bonds), as a reserve for the payment of principal of, and interest and any premium on, the Bonds and moneys in the Reserve Fund are subject to a lien in favor of the Owners of the Bonds. The Reserve Fund is required by the Fiscal Agent Agreement to be funded in an amount equal to the Reserve Requirement, which amount is (a) as of any date of calculation prior to the issuance of Parity Bonds that are not Refunding Bonds, an amount equal to the least of (i) the then Maximum Annual Debt Service, (ii) one hundred twenty- five percent (125%) of the average Annual Debt Service as of the date of issuance of the 2022 Bonds, or (iii) ten percent (10%) of the initial principal amo unt of the 2022 Bonds; and (b) as of any date of calculation from and after the issuance of Parity Bonds that are not Refunding Bonds, an amount equal to the least of (i) the then Maximum Annual Debt Service, (ii) one hundred twenty-five percent (125%) of the average annual debt service as of the date of issuance of the Parity Debt , and (iii) ten percent (10%) of the then outstanding principal amount of the Bonds and the principal amount of the Parity Bonds . Once determined under (a) or (b), the Reserve Req uirement is not subject to increase . The Reserve Requirement as of the date of issuance of the 2022 Bonds will be $____________.
Except as otherwise provided in the Fiscal Agent Agreement (with respect to the use of moneys in the Reserve Fund for the paym ent of any rebate liability due to the federal government, and the use of excess moneys in the Reserve Fund to pay debt service on the Bonds), all amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds. See Appendix C— “Summary of Fiscal Agent Agreement— Funds and Accounts – Reserve Fund.”
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Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fisca l Agent will transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date, to the payment and redemption of all of the Outstanding Bonds. In the event that the amount transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund will be transferred to the City to be used for any lawful purpose under the Law. Notwithstanding the foregoing, no amounts will be transf erred from the Reserve Fund until after (i) amounts in the Reserve Fund are withdrawn, at the written request of the Treasurer, for purposes of making any rebate payment due to the federal government in accordance with the Fiscal Agent Agreement following payment of the Bonds, and (ii) payment of any fees and expenses due to the Fiscal Agent. See Appendix C— “Summary of Fiscal Agent Agreement – Funds and Accounts – Reserve Fund.”
Covenant for Superior Court Foreclosure
Foreclosure Under the Act . Pursuant to the Law, in the event of any delinquency in the payment of the Special Tax on any Taxable Property , the City may order the institution of a superior court action to foreclose the lien on the taxed parcel within specified time limits. In such an action, the real property subject to the unpaid amount of the Special Tax lien may be sold at judicial foreclosure sale.
City Foreclosure Covenant. Judicial foreclosure proceedings in the event of delinquent Special Taxes are not mandatory. However, the City has covenanted in the Fiscal Agent Agreement for the benefit of the Bondowners that it will order, and cause to be commenced as hereinafter provided, and thereafter diligently prosecute to judgment (unless such delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due as described in the following paragraphs.
On or about August 15 of each Fiscal Year, the Finance Director shall compare the amount of Special Taxes theretofore levied in the District to the amount of Special Tax Revenues theretofore received by the City. Following such comparison, or if at any other time the Finance Director becomes aware of any delinquency in the payment of any Special Tax due and owing:
(a) Individual Delinquencies. If the Finance Director determines that any single parcel subject to t he Special Tax in the District is delinquent in the payment of Special Taxes in the aggregate amount of $ 10,000 or more, or which otherwise is delinquent with respect to two (2) years of Special Tax levies, the Finance Director will send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner by the following October 1, and (if the delinquency remains uncured) foreclosure proceedings will be commenced by the City against the delinquent parcel within 90 days of the sending of such notice and shall be diligently pursued by the City to completion. Notwithstanding the foregoing, the City need not take any such action so long as the amount then in the Reserve Fund is at least equal to the Reserve Requirement.
(b) Aggregate Delinquencies. If the Finance Director determines that the aggregate amount of Special Taxes levied in the District for the preceding Fiscal Year and theretofore collected is less than ninety -five percent (95%) of the total amount of Special Taxes levied for such Fiscal Year, the Finance Director will send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to each property owner with delinquent Special Taxes by the following October 1, and (if any
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such delinquency remains uncured) foreclosure proceedings will be commenced by the City within 90 days of the sending of such notices against all such delinquent parcels.
No assurance can be given as to the time necessary to complete any foreclosure sale or that any foreclosure sale will be successful. See “SPECIAL RISK FACTORS — Proceeds of Foreclosure Sales.” The City is not required to be a bidder at any foreclosure sale.
In a foreclosure proceeding the City is entitled to recover penalties and interest o n the delinquent Special Taxes through the date that an order of sale is entered. However, under the Fiscal Agent Agreement , the Special Taxes pledged to the payment of the Bonds does not include any such penalties and interest collected by the City that a re in excess of the rate of interest payable on the Bonds. Also it should be noted that prompt commencement of foreclosure proceedings may not, in and of itself, result in a timely or complete payment of delinquent Special Taxes.
Sufficiency of Foreclosure Sale Proceeds; Foreclosure Limitations and Delays . No assurances can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of sale will be sufficient to pay any delinquent Special Tax installment. Subject to the maximum rates, the Rate and Method is designed to generate from all Taxable P roperty within the District the current year’s debt service on the 2022 Bond s, administrative expenses, and replenishment of the Reserve Fund to the Reserve Requirement. If foreclosure proceedings are necessary, however, and the Reserve Fund has been depleted, there could be a delay in payments to owners of the 2022 Bond s pending prosecution of the foreclosure proceedings and receipt by the City of the proceeds of the foreclosure sale.
The ability of the City to foreclose the lien of delinquent unpaid Special Taxes may be limited in certain instances and may require prior consent of the obligee in the event the property is owned by or in receivership of the Feder al Deposit Insurance Corporation. See “SPECIAL RISK FACTORS— FDIC/Federal Government Interests in Properties.”
No assurance can be given that a judicial foreclosure action, once commenced, will be completed or that it will be completed in a timely manner. If a judgment of foreclosure and order of sale is obtained, the judgment creditor (the City for the District) must cause a Notice of Levy to be issued. Under current law, a judgment debtor (property owner) has 120 days from the date of service of the Notic e of Levy in which to redeem the property to be sold, which period may be shortened to 20 days for parcels other than those on which a dwelling unit for not more than four persons is located. If a judgment debtor fails to redeem and the property is sold, his only remedy is an action to set aside the sale, which must be brought within 90 days of the date of sale. If, as a result of such an action, a foreclosure sale is set aside, the judgment is revived and the judgment creditor is entitled to interest on th e revived judgment as if the sale had not been made (Section 701.680 of the California Code of Civil Procedure). The constitutionality of the aforementioned legislation, which repeals the former one -year redemption period, has not been tested; and there ca n be no assurance that, if tested, such legislation will be upheld.
Section 3-70.94 of the Law requires that property sold pursuant to foreclosure under the Act be sold for not less than the amount of judgment in the foreclosure action, plus post - judgment interest and authorized costs, unless the consent of the owners of 51% of the principal outstanding Bonds is obtained. Neither the Law nor the Fiscal Agent Agreement requires the City to purchase or otherwise acquire any lot or parcel of property foreclosed upon if there is no other purchaser at such sale, and the City has no intent to be such a purchaser.
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The City will levy the Special Tax to pay the current year’s debt service on the 2022 Bonds and related administrative expenses, and to replenish the Reserve Fund to the Reserve Requirement, subject to Maximum Special Tax rates. However, if superior court foreclosure proceedings are necessary to collect delinquent Special Taxes, and if the Reserve Fund has been depleted, there could be a delay in payments of principal of and interest on the 2022 Bonds pending prosecution of the foreclosure proceed ings and receipt by the City of the proceeds of the foreclosure sale. See “SPECIAL RISK FACTORS— Bankruptcy Delays” and “ — Proceeds of Foreclosure Sales.”
No Teeter Plan
Collection of the Special Taxes is not subject to the “Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds,” as provided for in Section 4701 et seq. of the California Revenue and Taxation Code (known as the “Teeter Plan”). Accordingly, collections of Special Taxes will reflect actual delinquencies, if any.
No Limitation on Increases in Special Tax Levies by Reason of Delinquencies
While the Mello-Roos Community Facilities Act of 1982 (California Government Code Section 53311 et seq.) expressly prohibits an increase of more than ten percent (10%) in the Special Tax levy on any parcel for which an occupancy permit for residential use has been issued as a consequence of delinquency or default by the owner of any other parcel within the District, the Law has no such limitation. Thus, the City has the ability, and the obligation under the Fiscal Agent Agreement, to levy Special Taxes, up to the Maximum Special Tax rates set forth in the Rate and Method, to provide sufficient funds to pay the debt ser vice on the Bonds without any limitation of the nature described in the first sentence of this paragraph.
Investment of Moneys
Except as otherwise provided in the Fiscal Agent Agreement, all moneys in any of the funds or accounts established pursuant to the Fiscal Agent Agreement will be invested by the Fiscal Agent solely in Permitted Investments, as directed by the City. See App endix C — “Summary of the Fiscal Agent Agreement” for a definition of “ Permitted Investments” and for additional provisions regarding the investment of funds held under the Fiscal Agent Agreement.
Issuance of Additional Bonds
Parity Bonds . The Fiscal Agent Agreement authorizes the City to issue one or more series of Parity Bonds. Subject to meeting the conditions summarized below, the Parity Bonds will be secured by a lien on the Special Tax Revenues and funds pledged for the payment of the Bonds under the Fiscal Agent Agreement on a parity with all other Bonds Outstanding under the Fiscal Agreement.
The City may issue the Parity Bonds subject to the following specific conditions precedent, as set forth in the Fiscal Agent Agreement:
(A) Current Compliance. The City must be in compliance on the date of issuance of the Parity Bonds with all covenants set forth in the Fiscal Agent Agreement and all Supplemental Agreements.
(B) Payment Dates. The interest on the Parity Bonds must be payable on March 1 and September 1 , and principal of the Parity Bonds must be payable on
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September 1 in any year in which principal is payable (provided that there is no requirement that any Parity Bonds pay interest on a current basis).
(C) Funds and Accounts; Reserve Fund Deposit. The Supplemental Agreement providing for the issuance of the Parity Bo nds may provide for the establishment of separate funds and accounts, and shall provide for a deposit to the Reserve Fund (or to a separate account created for such purpose) in an amount necessary so that the amount on deposit in the Reserve Fund (together with the amount in any such separate account), following the issuance of such Parity Bonds, is equal to the Reserve Requirement.
(D) Aggregate Value-to-Lien Ratio. The District Value shall be at least three times the sum of: (i) the aggregate principal a mount of all Bonds then Outstanding, plus (ii) the aggregate principal amount of the series of Parity Bonds proposed to be issued, plus (iii) the aggregate principal amount of any fixed assessment liens on the parcels in the District subject to the levy of Special Taxes, plus (iv) a portion of the aggregate principal amount of any and all other community facilities district bonds then outstanding and payable at least partially from special taxes to be levied on parcels of land within the District (the “Other District Bonds”) equal to the aggregate principal amount of the Other District Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other District Bonds on parcels of land within the District, and the denominator of which is the total amount of special taxes levied for the Other District Bonds on all parcels of land against which the special taxes are levied to pay the Other District Bonds (such fraction to be determined based upon the maximum special taxes which could be levied in the year in which maximum annual debt service on the Other District Bonds occurs), based upon information from the most recent available Fiscal Year.
Annexed Area Value -to-Lien Ratio. With respect to any Parity Bonds that will not be Refunding Bonds and incident to property being annexed to the District in connection with such Parity Bonds, the District Value (taking into account only the property being annexed to the District) shall be at least three times the sum of: (i) the aggregate principal amount of the series of Parity Bonds proposed to be issued, plus (ii) the aggregate principal amount of any fixed assessment liens on the parcels in the property being annexed to the District subject to the levy of Special Taxes, plus (i ii) a portion of the aggregate principal amount of any and all other community facilities district bonds then outstanding and payable at least partially from special taxes to be levied on parcels of land within the property being annexed to the District (t he “Other Annex Area District Bonds”) equal to the aggregate principal amount of the Other Annex Area District Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other Annex Area District Bonds on parcels o f land within the property being annexed to the District, and the denominator of which is the total amount of special taxes levied for the Other Annex Area District Bonds on all parcels of land against which the special taxes are levied to pay the Other Annex Area District Bonds (such fraction to be determined based upon the maximum special taxes which could be levied in the year in which maximum annual debt service on the Other Annex Area District Bonds occurs), based upon information from the most recent available Fiscal Year.
(E) The Special Tax Coverage . The City shall obtain a certificate of a Tax Consultant to the effect that (i) the amount of the maximum Special Taxes that may be levied in each Fiscal Year shall be at least one hundred ten percent (1 10%) of the total Annual Debt Service for each such Fiscal Year on the Bonds and the proposed Parity
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Bonds plus estimated Administrative Expenses, and (ii) based upon the Special Taxes that may be levied under the Rate and Method of Apportionment of the Sp ecial Taxes for the District, the aggregate Special Tax Prepayments that could occur after the issuance of the Parity Bonds is not less than the Outstanding principal amount of the Bonds and such Parity Bonds.
(F) Officer’s Certificate. The City must certify to the Fiscal Agent that the conditions for the issuance of Parity Bonds described above in the Fiscal Agent Agreement have been satisfied . The City can conclusively rely on certificates of the Fiscal Agent, the Tax Consultant and others in providing the certification.
Refunding Bonds . The City may issue Refunding Bonds as Parity Bonds without the need to satisfy the requirements of paragraphs (D) or (E) above, and, in connection therewith, the Officer’s Certificate referred to in paragraph (F) ab ove need not make reference to said paragraphs (D) and (E).
The term “District Value” referred to in (D) above and as used in the Fiscal Agent Agreement means the market value as determined by reference to (i) an appraisal performed within six (6) months of the date of issuance of any proposed Parity Bonds by an MAI appraiser selected by the City , of the parcels of real property in the District (or, as applicable, in the area being annexed to the District) subject to the levy of the Special Taxes and not d elinquent in the payment of any Special Taxes then due and owing, including with respect to such nondelinquent parcels the value of the then existing improvements and any facilities to be constructed or acquired with any amounts then on deposit in the Impr ovement Fund and with the proceeds of any proposed series of Parity Bonds, or (ii), in the alternative as to some or all of the parcels, the assessed value of all such nondelinquent parcels and improvements thereon as shown on the then current County real property tax roll available to the Finance Director.
Neither the City nor the Finance Director shall be liable to the Owners, the Original Purchaser or any other person or entity in respect of any appraisal provided for purposes of the foregoing definition or by reason of any exercise of discretion made by any appraiser pursuant to the foregoing definition.
Because the principal amount of the 2022 Bonds was determined based on projected 110% coverage of annual Special Taxes, after deduction of the Minimum Administrative Expense Requirement, over the scheduled debt service on the 2022 Bonds (see “THE DEVELOPMENT AND THE DISTRICT — Projected Debt Service Coverage”) , it is not expected that any new money Parity Bonds will be issued unless additional property is annexed to the District. While the boundary map for the District includes a “future annexation area,” and the Master Developer has indicated an intent to annex all or some of such area to the District in the future, no assurance can be given with respect to the future annexation of property to the District.
Subordinate Bonds. The provisions of the Fiscal Agent Agreement do not in any way prohibit the City from issuing bonds or otherwise incurring debt secured by a pledge of Special Tax Revenues subordinate to the pledge of such Special Tax Revenues un der the Fiscal Agent Agreement.
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THE DEVELOPMENT AND THE DISTRICT
Location and Description of the Development
The property in the District includes approximately 11 acres in the larger Alameda Marina development (referred to herein as the “Development”) , which inc ludes a total of approximately 44 acres in the eastern portion of the City. The Development is located on Clement Avenue between Marina Drive and Willow Street, and is bounded on the north by the Oakland Estuary, on the west by the Alameda Municipal Power offices, on the east by the Navy Operations Support Center and on the south by light industrial, retail and residential properties. The Development is located near several transit facilities, including the Fruitvale BART Station (1.8 miles away), the Alameda Ferry Terminal (3.3 miles away) , and the AC transit Transbay O Line (5 blocks away).
The property was a working waterfront for many years but encountered structural deterioration and failure along the shoreline with aging infrastructure and unstable soil. The shoreline improvements, built in the early 1940s, had exceeded their useful life and needed to be rebuilt.
In 2007, Pacific Shops Inc. purchased approximately 27 acres of property included in the Development. On May 16, 2012, the Master Developer entered into a long -term lease of approximately 17 acres included in the Development, consisting primarily of the marina and shoreline areas (the “ Tidelands Lease”). Pacific Shops, Inc. transferred fee simple title, and its position as tenant under the Tidelands Lease, to the Master Developer that assumed Pacific Shops, Inc.’s secured loan obligation, as consideration for the transfer.
In July of 2018, the City Council approved the Alameda Marina Mast er Plan that provided for mixed use planned development and multifamily residential zoning and for the rebuilding of the shoreline improvements. It is currently anticipated that the Development will be developed in several phases . A pproximately 17 acres in the Development , consisting primarily of the marina and shoreline areas, are the subject of a Tidelands Lease, dated as of May 16, 2012, between the City and the Master Developer. The term of the Tidelands Lease, as currently amended, extends to May 11, 2078. The Master Developer has various obligations under the Tidelands Lease, including the payment of annual rent to the City, and ongoing reporting related to and the ongoing rehabilitation of the shoreline improvements . Those obligations include the funding of a Capital Replacement Fund in an annual amount, beginning in the tenth year of the Tidelands Lease , of at least $50,000, and updated marina engineering reports each 15th year of the Tidelands Lease, with any capital replacement and rehabilitation work to be completed by the Master Developer. Under the provisions of a Master Declaration of Covenants, Conditions and Restrictions of Alameda Marina recorded against the property in the Development , the Master Developer, as owner or the “commercial core” portion of the Development, is obligated, among the other owners of property in the Development, to satisfy all requirements of the Tidelands Lease.
The Development, at buildout, is expected to include:
• The 182 townhomes to be constructed in the Dis trict (as described under the subheading “Description of the District” below);
• A 360-unit apartment complex and 8 commercial work/live units, with a 496 stall parking facility that is currently under construction and is expected to be completed in the third quarter of 2023 being constructed on 4.08 acres of land owned by PRII/BWG The Launch Owner LLC (the “Launch Owner”);
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• A “commercial co re” consisting of 9.32 acres owned by the Master Developer involving the construction of a new building and the reh abilitation of 7 existing buildings, some of which have historical importance, expected to be completed in the second quarter of 2025;
• 218 residential condominium units and a 280 stall parking facility on 2.3 acres owned by the Master Developer expected to be completed, subject to market conditions, in the second quarter of 2026;
• Continued operation of the existing marina, including 530 boat slips, a 60 boat dry storage area, and a parking area; and
• 3.45 acres of parks, shoreline access and an extension of the Bay Trail.
The Master Developer has advised that it expects to annex the commercial co re and the condominiums into the District at some future date, but no assurance can be given that any such annexation will occur. The next page has the current site plan for the Development.
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Alameda Marina Development Site Plan
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In May of 2021, the Master Developer sold the property in the District to a land bank entity for $51,900,000, as further described under “THE DEVELOPMENT AND THE DISTRICT— Land Ownership” below.
All discretionary environmental and land use approvals needed for the construction to occur in the Development have been secured, including permits from the San Francisco Bay Conservation and Development Commission other than an amendment to such permit that is required prior to occupancy of the buildings and is being processed by the Master Developer (see “SPECIAL RISK FACTORS — Failure to Complete or Delay in Completion of the Townhomes”), the San Francisco Regional Water Quality Control Board and the City, and only building permits and certificates of occupancy from the City for specific buildings to be constructed or rehabilitated need to be obtained for the planned construction in the Development.
The Master Developer has advised that it has expended over $76,000,000 on development costs to date, funded with equity contributions, and the Launch Owner has spent an additional over $105,000,000 on the apartment complex and commercial work/live units described above. All site improvements necessary for development of the property in the Development, including the sea level rise resilience and adaptive improvements, have been completed by the Master Developer, except for (i) approximately $1,7 00,000 of wharf promenade improvements to be completed in 2023 , and (ii) completion of domestic and fire water service (laterals), joint trench, pad grading, curb, gutter, paving, stripping, signage, park and Bay Trail improvements.
The Master Developer has advised that it has execu ted a lease with a local Bay Area brewery for the buildout of one of the historic buildings located in the commercial core. The City approved an Administrative Use Permit for the brewery with tasting room, restaurant/tavern use, and an outdoor dining and waterfront beer garden on September 19, 2022. The Master Developer is working with the City Building Department on the applicable permits required to fit out the interior tenant improvements and historic exterior modifications, and it is anticipated that the tenant will occupy the building in the third quarter of 2023.
There currently are websites that contain certain information regarding the Development (at https://alamedamarina.com) and the marina located in the Development (at https://alamedamarina.net), but the foregoing internet websites are included for reference only and the information on these internet sites is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such internet websites.
History of the District
Pursuant to the Law, the City Council of the City, acting in its capacity as the legislative body for the District, adopted Resolution No. 15871 (the “Resolution of Intention”) on March 15, 2022, stating its intention to est ablish the District and to levy the special tax within the District.
On April 19, 2022 , the City Council formed the District and adopted Resolution No. 15893, authorizing a special election with respect to the incurrence of indebtedness and the levy of the Special Tax. Also on April 19, 2022 , the then sole landowner in the District, the Landbank (see “THE DEVELOPMENT AND THE DISTRICT— Land Ownership”), and thereby the sole qualified elector for the District, voted in favor of the incurrence of up to $ 37,000,000 principal amount of bonded indebtedness to finance the Improvements and approved the Rate and Method and an appropriations limit for the District.
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On May 3, 2022, the City Council adopted Ordinance No. 3319 providing for the levy of the Special Taxes on property in the District. On June 3, 202 2, the City recorded a Notice of Special Tax Lien as Document No. 2022106135 in the Alameda County Recorder’s Office, with respect to the lien securing the payment of the Special Taxes to be levied on property in the District.
Pursuant to the Law, on December 6 , 2022 , the City Council, acting as the legislative body of the District, adopted a Resolution authorizing the issuance of the 2022 Bonds, and approving related documents (including the Fiscal Agent Agreement) and actions. The net proceeds of the 2022 Bonds will be used to reimburse the Master Developer for costs of the Improvements constructed by it in accordance with the Acquisition and Funding Agreement, consisting of seawall improvements and related work . See “PLAN OF FINANCING — Overview.”
The Improvements
The District is authorized to fund various public infrastructure improvements, including the following facilities constructed in and for the Development:
• Sea level rise resilience and adaptive improvements, including but not limited to the reconstruction of approximately 4,009 linear feet of shoreline embankments, seawall, bulkheads and revetment slopes. The improvements include, but are not limited to overwater demolition of existing structural features, re -grading and installation of riprap (including earth removal and grading), removal of existing seawall and pile driving steel members along with backfill ( including lava rock) and lagging installation, construction of cast -in-place concrete walls, placement of new cast -in- place deadman anchor, installation of tie rods, installation of interlocking steel sheets and including related appurtenances.
The design and service life of the sea wall improvements as currently constructed is anticipated to be 75 years with minimal ongoing maintenance. The design allows for future adaptive capacity strategies without the need to reconstruct the improvements. The improve ments provide built -in protection from over 7 feet of sea level rise above the current mean higher water and 6 feet sea level rise above current King Tide (2-year occurrence).
• Outfall construction, including but not limited to acquisition and installation of stormwater out- fall improvements consisting of reinforced concrete piping and related headwall and related appurtenances, as well as construction of temporary cofferdam to control seawater during construction (including a concrete headwall and storm drain piping).
• Promenade wharf retrofit, including but not limited to structural retrofit of existing promenade, consisting of installation of precast concrete piles, steel girders, overwater demolition of deteriorated wood piles and seismic jacketing of wood piles, and related appurtenances.
• Boat hoist construction, including but not limited to pile driving precast concrete and steel piles, installation of an elevated cast-in-place concrete platform, and related appurtenances.
• Graving dock construction , inclu ding but not limited to excavation, removal of deteriorated lagging, installation of steel sheets and precast concrete piles, backfill and compaction, and related appurtenances.
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• Clement Avenue improvements, including but not limited to the reconstruction o f approximately 4,450 linear feet of Clement Avenue for the frontage from Alameda Marina Drive to Willow Avenue and including but not limited to demolition of existing improvements, grinding and overlay of new asphalt paving, upgrading of underground conduits, upgrading of storm and sewer drain catch basins and manholes, removal of existing water service, installation of street lights, sidewalks, curb and gutter and landscaping and irrigation system, and fencing, construction of dedicated bike lane and striping and signage, and related appurtenances.
The budget for the reimbursement to the Master Developer for the costs of the Improvements in the Acquisition and Funding Agreement includes $3,886,532 for various land improvements (including site work related to the seawall), $1,843,623 for the stormwater outfalls, $11,324,218 for sea level rise resilience and ad aptive improvements, and $6,518,067 for street and roadway improvements including the Clement Avenue improvements. It is expected that the proceeds of the 2022 Bonds available to pay costs of the Improvements will be used to pay for costs of the sea level rise resilience and ad aptive improvements, including related costs of abatement, demolition of an existing seawall (including overwater and surface de molition), ground improvements and raising grades.
The Improvements completed to date have been constructed under the supervision of the Master Developer pursuant to the Acquisition and Funding Agreement. The Improvements needed for the development of the District have been completed , a s well as all of the other Improvements, except for approximately $ 1,700,000 of promenade wharf improvements expected to be completed in 2023.
Description of the District
LS-Alameda Marina LLC (referred to in this Official Statement as the “Builder”) intends to build 182 townhomes in 31 different buildings in the District, with 157 of the townhomes to be Taxable Property under the Rate and Method and 25 of the townhomes to be below market rate or “BMR” Units not subject to the levy of the Special Taxes. The BMR Units are the subject of an Affordable Housing Agreement, dated August 1, 2022, between the City and th e Builder, which requires that 7 townhomes be designated and deed restricted for sale to very low income buyers, 7 for low income buyers and 11 for moderate income buyers, with sales prices limited as set forth in the Affordable Housing Agreement. The first floor of each of the 31 buildings will provide for parking for two cars for each of the units in the respective building.
The townhomes are being constructed in two product lines: Waterside units located in buildings on the waterfront and Island View units with views of the marina. Waterside units will be offered with four floor plans ranging from 2,189 square feet to 2,744 square feet, some with rooftop decks, and 3- 4 bedrooms and 3.5 bathrooms. Island View units will be offered, with seven floor plans ranging from 1,459 square feet to 2,389 square feet, 2-3 bedrooms and 2.5 to 3.5 bathrooms. A complete listing of the 182 townhomes and their respective Assigned Special Tax for Fiscal Year 2023 -24, can be found in Appendix I. Monthly homeowners’ association dues are projected to be $500 or so per month.
There will be three model homes including one to be used as a sales office located in building 11, which is currently under construction. The Builder expects that sales activities will commence in January of 2023. Initial base pricing for the units has not yet been determined.
The townhomes are being constructed by Landsea Construction LLC as the general contractor, although the actual construction work will be performed by subcontractors. A list of -32-
other residential projects which Landsea Construction LLC, or its affiliates, have completed as a general contractor in Northern California include:
• Jordan Ranch, Dublin – 123 Units
• Siena, Milpitas – 73 Units
• Sanctuary, Newark – 108 Units
• Verandah, Novato – 16-80 Units
• Catalina, Santa Clara – 93 Units
• Lavender, Sunnyvale – 128 Units
• The Vale, Sunnyvale – 171 Units
• Ellis, Tracy – 308 Units
• Stoneyridge, Walnut Creek – 30 Units
See “SPECIAL RISK FACTORS — Failure to Complete or Delay in Completion of the Townhomes” for a description of an amendment to a permit tha t needs to be obtained, and a description of electric service to the townhome site that must be completed, before certificates of occupancy can be provided by the City for completed townhomes.
Land Ownership
The land in the District was acquired by Arroyo CAP II -5, LLC, a Delaware limited liability company (the “Landbank”) from the Master Developer on May 5, 2021 for $51,900,000.
Concurrently with its acquisition of the property in the District, the Landbank and the Builder entered into an Option Agreement dated as of May 5, 2021 (“Option Agreement” ), and the Landbank and Landsea Construction LLC entered into a Construction Agreement (“Construction Agreement”), pursuant to which Landsea Construction LLC, among other things, agreed to cause certain horizontal site improvements to be completed on the property for a cost not to exceed a fixed sum. The Master Developer has an option to repurchase the land in the District if the Builder fails to diligently develop the land in compliance with its agreements with the Master De veloper. If the Master Developer exercises this repurchase option, the Builder would no longer own the repurchased property and development of the land would be delayed.
The Landbank's sole member is Arroyo Capital II, LLC, a Delaware limited liability company, which was formed in 2016 by Oaktree Capital Management, LP, an affiliate of Oaktree Capital Management (“Oaktree”), and provides structured lot options to homebuilders throughout the United States. The Landbank funded a portion of the acquisition cost of the land in the District with its own capital and a portion through a lo an. Oaktree is a global asset management firm headquartered in Los Angeles, California. The firm was founded in 1995 and as of June 30, 2022, Oaktree managed $159 billion in assets for its clients. Oaktree Capital Group LLC is listed on the New York Stock Exchange at OAK -PA and maintains a website at https://www.oaktreecapital.com. The foregoing internet website is included for reference only and the information on the internet site is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such internet website.
Pursuant to the Option Agreement, the Landbank granted to the Builder the right and option (the “Option”) to acquire the property in accordance with the terms of the Option Agreement. The term of the Option (“Option Term”), unless sooner terminated, expires on the earlier of (a) July 31, 2024, or (b) the date the Builder acquires all of the property (“Expiration Date”). The Option was granted in consideration of the Builder delivering to the Landbank a non-refundable sum of $15,712,331 (the “Option Payment”), which was paid at the time the Option Agreement was executed. The Builder also pays the Landbank a monthly fee (“Option
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Fee”) calculated on the daily “Unreturned Owner’s Costs” at an annual percentage rate, with a minimum total Option Fee. After the Expiration Date or any termination of the Option Agreement, the Builder shall have no further right to acquire the property or any of the lots not already acquired.
The Option Agreement includes a “Takedown Schedule” that sets forth the outside date for the acquisition of each group of lots (“Takedown Group’) and the number of lots in each Takedown Group. If the Builder fails to purchase a Takedown Group within each of the time periods required by the Takedown Schedule, the Option Agreement automatically terminates.
The Builder has the right to extend the Closing Date on the Takedown Schedule for all of the lots in any subsequent Takedown Group(s) for up to a tot al of three (3) one month periods (which may be exercised all on one Takedown Group or on different Takedown Groups, at the Builder’s election) beyond the dates otherwise set forth in the Takedown Schedule (each, an “Extension Option” and collectively, the “Extension Options”), which exercise of an Extension Option also extends the deadline date by one month for the acquisition of all subsequent Takedown Groups (but in no event shall the Takedown Schedule for any Takedown Group be extended beyond the end of the Option Term), provided that (a) the Builder shall not be in default of its obligations under the Option Agreement, (b) no event or circumstance has occurred which, with notice and the passage of time, would constitute a default by the Builder, (c) the Builder must give the Landbank not less than ten (10) business days’ prior written notice of the Builder’s intention to exercise any such Extension Option, (d) during any extension period, the Builder shall continue paying the Option Fee to the Landbank, and (e) the exercise of an Extension Option cannot be split between or among lots with different product types. The Takedown Schedule is not adjusted due to any delays due to strikes, unavailability of materials, governmental delays, inability to obtain required governmental permits, acts of God or any other matters regardless of whether such matters can or cannot be anticipated and/or which are outside of the reasonable control of the Builder. In the event of a default by the Builder or a default by Lan dsea Construction LLC under the Construction Agreement, the Landbank is entitled to terminate the Option Agreement and the Construction Agreement and, in addition to any other right or remedy available at law or equity, the Landbank has the right to retain the unapplied portion of the Option Payment and any other unapplied Option consideration paid by the Builder.
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Set forth below is the current takedown plan for the townhomes:
At any time, the Builder may elect to exercise the Option to purchase all of the unpurchased lots in a single bulk transaction for the Bulk Purchase Price set forth in the Option Agreement (“Bulk Purchase”). The Builder must give written notice to the Landbank (“Bulk Purchase Notice”) of such election before the Expiration Date or termination of the Option Agreement, including during any notice and cure periods provided for a default.
Table 1 below sets forth additional detail regarding the current Takedown Schedule for the Property, including the takedown prices, the number of units for each takedown, and the 2023/24 fiscal year Assigned Special Taxes for the townhome units being taken down.
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Table 1
City of Alameda
Community Facilities District No. 22-1
Building Takedown Schedule and Fiscal Year 2023-24
Assigned Special Taxes per Building
Cumulative Takedowns Cumulative
Takedown
Schedule
Building
#s
Takedown
Price
# of
Market
Rate
Units
# of
Total
Units(1)
# of
Units
Percentage
of Total
Units
2023/24
Assigned
Special Tax
Percentage
of Assigned
Special
Taxes
3/31/22 11 $ 1,904,184 3 4 4 2% $ 23,170.32 2%
8/2/22 1-4 11,808,300 26 30 34 19 163,592.70 17
8/31/22 6, 7 5,611,546 11 13 47 26 74,810.88 24
10/31/22 5, 8 6,005,156 12 14 61 34 81,024.72 32
3/31/23 18, 19 4,723,320 10 12 73 40 62,830.98 38
5/31/23 20 3,542,490 8 9 82 45 50,091.18 42
6/30/23 16, 17 4,348,280 8 10 92 51 57,382.14 48
7/31/23 14, 15 4,760,460 10 10 102 56 74,970.00 55
8/31/23 12, 13 4,760,460 9 10 112 62 67,057.86 61
9/30/23 22, 23 5,510,540 13 14 126 69 81,809.10 68
10/31/23 21 3,148,880 7 8 134 74 45,402.24 73
1/31/24 24, 25 4,348,280 8 10 144 79 57,382.14 78
4/30/24 26, 27 4,760,460 9 10 154 85 67,057.86 84
5/31/24 28, 29 4,760,460 9 10 164 90 67,057.86 90
6/30/24 30, 31 4,760,460 8 10 174 96 58,957.02 96
7/31/24 9, 10 3,808,368 6 8 182 100 44,642.34 100
31 $78,61,644 157 182 $1,077,239.34
(1) Buildings 1, 2, 3, 4, 5, 6, 7, 8, 11, 13, 16, 17, 18, 19, 20, 21, 22, 24, 25, 26, 29, 30 and 31 each include one Below Market Rate townhome, and building 10 has two such units. See APPENDIX I.
Sources: The Builder, NBS.
So long as the Option Agreement is in effect, the Builder is obligated to pay property taxes (including any Special Taxes) on property not yet taken down by the Builder . To date, the Builder has purchased property in the District in accordance with the Takedown Schedule , without any extensions.
Current Development in the District
Pursuant to the Construction Agreement, Landsea Construction LLC has been constructing in-tract improvements necessary for vertical construction to proceed.
As described in Table 1, above, through November 14, 2022, the Builder has acq uired from the Landbank property planned for 6 buildings designed to include a total of 61 units, of which 52 will be market rate units subject to the Special Tax. The construction schedule for the buildings on property that has been conveyed to the Builder, is as follows:
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Building No. Building Permit(1) Construction Start Expected Completion 11 7/27/2022 8/8/2022 7/31/2023
2 8/24/2022 9/1/2022 7/31/2023
3 9/20/2022 9/20/2022 7/31/2023
1 5/15/2023 6/5/2023 2/26/2024
4 4/15/2023 5/15/2023 2/5/2025
5 8/15/2023 9/15/2023 6/7/2024
6 1/15/2023 1/15/2023 9/29/2023
7 12/15/2023 1/15/2023 10/3/2023
8 6/15/2023 7/15/2023 3/31/2024
(1) Dates in italics indicate anticipated building permit issuance dates. No assurance can be given that the Builder will request or that the City will provide, building permits as currently projected.
The Builder is financing its acquisition and construction activities with funds provided by Landsea Homes Corporation from a senior unsecured revolving line of credit provided by Western Alliance Bank. The credit line was originated on October 6, 2021, and has an expiration date of October 6, 2024 with a possible 1 year extension. The total amount currently available under the line of credit is $675 million, with an outstanding balance of $594.3 million as of September 30, 2022 . The Builder also expects to finance part of the costs of its acquisition and construction activities from the sale of townhomes being constructed in the District.
The Builder and Landsea Construction LLC are both affiliates of Landsea Homes Corporation, a publicly traded homebuilder (Nasdaq: LSEA) that has operations in several states a nd has been building homes in Northern California for over eight years. Landsea Homes Corporation maintains a website at https://www.landseahomes.com.
The foregoing internet website is included for reference only and the information on the internet site is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such internet website.
Property Values
The value of property within the District is an important factor in determining the investment quality of the 2022 Bonds. If a property owner defaults in the payment of the Special Tax, the City’s primary remedy is to foreclose on the delinquent property i n an attempt to obtain funds with which to pay the delinquent Special Tax. The Special Tax is not a personal obligation of the owners of the property. A variety of economic, political, and natural occurrences incapable of being accurately predicted can aff ect property values. See “SPECIAL RISK FACTORS— Property Value.”
The City has commissioned the Appraisal Report, dated November 11 , 2022 , for the property in the District. The Appraiser concluded in the Appraisal Report that, as of September 6, 2022 , the m arket value of the property in the District is $58,750,000. The Appraiser’s conclusion of value is subject to certain assumptions and limiting conditions set forth in the Appraisal Report, including a hypothetical condition that proceeds of the 2022 Bonds will be available for the reimbursement of public improvement costs. On November __, 2022, the Appraiser provided a letter to the City (the “Update Letter”) to the effect that the value of the property in the District as of November __ 2022 was not less than the value as of the September 6, 2022 date of value in the Appraisal.
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The appraised value of the land in the District as reflected in the Appraisal Report, is approximately 3.9* times the $1 5,000,000* initial principal amount of the 2022 Bond s. The Appraisal Report and the Update Letter are included in Appendix H to this Official Statement and should be read in their entirety, including in the Appraisal Report an explanation of the methodology and the assumptions underlying and the conditions limiting the valuation conclusions contained in the Appraisal Report. Neither the City nor the Underwriter makes any representation as to the accuracy or completeness of the Appraisal Report or the Update Letter.
The Appraisal Report does not take into accou nt possible future liens or indebtedness which may be imposed by the City or by other public entities on Taxable Property in the District. The City has not covenanted, and in many instances does not have the legal ability, to restrict other entities from i mposing indebtedness which may be secured by a lien on the Taxable Property in the District which is on a parity with the Special Tax. See “THE DEVELOPMENT AND THE DISTRICT— Direct and Overlapping Governmental Obligations” and “SPECIAL RISK FACTORS — Parity T axes and Special Assessments.” A number of economic, political, and natural occurrences may adversely affect the value of the property as expressed in the Appraisal Report. See “SPECIAL RISK FACTORS.”
Direct and Overlapping Governmental Obligations
General. Presently, land within the District is subject to approximately $934,514 of total direct and overlapping tax and assessment debt, in addition to the $15,000,000* initial principal amount of the 2022 Bonds. To repay direct and overlapping debt the owners of the land within the District must pay the annual Special Taxes and the general property tax levy. The ability of the City to collect the Special Taxes could be adversely affected if additio nal debt is issued with respect to the Taxable Property in the District. The land, at any time, could become subject to additional debt with a parity claim on property values in the event of foreclosure either by the formation of additional community facil ities districts or the imposition of other taxes and assessments by public agencies other than the City on behalf of the property owners within the District. The imposition of additional liens on a parity with the Special Taxes may reduce the ability or wi llingness of the landowners to pay the Special Taxes and may increase the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Taxes.
Direct and overlapping indebtedness , tax and assessment debt as of October 1, 2022 is shown in the following Table 2 compiled by California Municipal Statistics, Inc . Neither the City nor the Underwriter has independently verified the information in the Table and they make no representation as to its completeness or accuracy.
* Preliminary, subject to change.
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Table 2
City of Alameda
Community Facilities District No. 22-1
Direct and Overlapping Debt Summary
2022-23 Local Secured Assessed Valuation: $52,938,000
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 10/1/22 Alameda County General Obligation Bonds 0.014% $ 72,869 Bay Area Rapid Transit District General Obligation Bonds 0.006 138,062 East Bay Regional Park District General Obligation Bonds 0.009 15,562 Peralta Community College District General Obligation Bonds 0.038 137,046 Alameda Unified School District General Obligation Bonds 0.297 554,281 City of Alameda General Obligation Bonds 0.297 16,694
City of Alameda Community Facilities District No. 22-1 100. - (1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $934,514
OVERLAPPING GENERAL FUND DEBT:
Alameda County General Fund Obligations 0.014% $104,904 Alameda-Contra Costa Transit District Certificates of Participation 0.017 1,871 Peralta Community College District Pension Obligation Bonds 0.038 46,404 Alameda Unified School District Certificates of Participation 0.297 15,050 City of Alameda Certificates of Participation 0.297 14,910 TOTAL OVERLAPPING GENERAL FUND DEBT $183,139
COMBINED TOTAL DEBT $1,117,653 (2)
(1) Excludes the 2022 Bonds.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Ratios to 2022-23 Local Secured Assessed Valuation:
Direct Debt ($0) .............................................................................................. 0.00% Total Direct and Overlapping Tax and Assessment Debt ........................ 1.77% Combined Total Debt ..................................................................................... 2.11%
Source: California Municipal Statistics, Inc.
CFD 22- 2. At the time the City formed the District, it also formed a Community Facilities District No. 22 -2 (Alameda Marina – Shoreline Improvements Maintenance and Adaptive Measures) (“ CFD 22-2”) that includes all of the property in the Development, other than the property subject to the Tidelands Lease. However, the rate and method of apportionment of special taxes for CFD 22 -2 explicitly provides, in effect, that no special taxes will be levied on property in CFD 22-2 earlier than the date on which any debt obligations of the District have been paid in full or otherwise have been f ully discharged and the special tax lien with respect to the District has been terminated. See “SPECIAL RISK FACTORS — Risk of Sea Level Changes” for additional information regarding CFD 22-2.
Other Potential Debt . The City has no control over the amount of additional debt payable from taxes or assessments levied on all or a portion of the Taxable Property within the District which may be incurred in the future by other governmental agencies having jurisdiction over all or a portion of the Taxable P roperty within the District. Furthermore, nothing prevents the owners of Taxable Property within the District from consenting to the issuance of additional debt by other governmental agencies which would be secured by taxes or assessments on a parity with the Special Taxes. To the extent such indebtedness is payable from assessments, other special taxes levied pursuant to the Act or taxes, such assessments, special taxes and taxes
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will be secured by liens on the Taxable Property within the District on a par ity with the lien of the Special Taxes.
Accordingly, the debt on the property within the District could increase, without any corresponding increase in the value of the property therein, and thereby severely reduce the estimated value-to-lien ratio that exists at the time the Bonds are issued. The imposition of such additional indebtedness could reduce the willingness and ability of the owners of the Taxable Property within the District to pay the Special Taxes when due. See “SPECIAL RISK FACTORS— Parity Taxes and Special Assessments.”
Moreover, in the event of a delinquency in the payment of Special Taxes, no assurance can be given that the proceeds of any foreclosure sale of Taxable Property with delinquent Special Taxes would be sufficient to pay the del inquent Special Taxes. See “SPECIAL RISK FACTORS— Property Value.”
Projected Debt Service Coverage
The Maximum Special Taxes that can be levied on Taxable Property in the District in any fiscal year increase s by two percent (2%) over the Maximum Special Taxes for the prior fiscal year. See “SECURITY FOR THE 2022 BONDS— Special Taxes” and “— Summary of Rate and Method.”
Set forth in Table 3 below is the projected Maximum Special Taxes from the 157 townhomes to be b uilt in the District that will to be subject to the levy of Special Taxes , assuming no delinquencies in the payment of Special Taxes, that could be available to pay the debt service on the 2022 Bonds.
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Table 3
City of Alameda
Community Facilities District No. 22-1
Estimated Maximum Taxing Capacity
Bond Year
Ending
Maximum
Assigned
Special Taxes(1)
Priority
Administrative
Expenses(2)
Pledged Special
Tax Revenues
2022 Bond
Debt Service(3)
Estimated
Debt Service
Coverage(3)
9/1/23 $1,077,239 $(50,000) $1,027,239 $933,854 N/A(4)
9/1/24 1,098,784 (51,000) 1,047,784 952,531 110%
9/1/25 1,120,760 (52,020) 1,068,740 971,582 110
9/1/26 1,143,175 (53,060) 1,090,115 991,013 110
9/1/27 1,166,039 (54,122) 1,111,917 1,010,834 110
9/1/28 1,189,359 (55,204) 1,134,155 1,031,050 110
9/1/29 1,213,146 (56,308) 1,156,838 1,051,671 110
9/1/30 1,237,409 (57,434) 1,179,975 1,072,704 110
9/1/31 1,262,158 (58,583) 1,203,575 1,094,159 110
9/1/32 1,287,401 (59,755) 1,227,646 1,116,042 110
9/1/33 1,313,149 (60,950) 1,252,199 1,138,363 110
9/1/34 1,339,412 (62,169) 1,277,243 1,161,130 110
9/1/35 1,366,200 (63,412) 1,302,788 1,184,353 110
9/1/36 1,393,524 (64,680) 1,328,844 1,208,040 110
9/1/37 1,421,394 (65,974) 1,355,420 1,232,200 110
9/1/38 1,449,822 (67,293) 1,382,529 1,256,844 110
9/1/39 1,478,819 (68,639) 1,410,180 1,281,982 110
9/1/40 1,508,395 (70,012) 1,438,383 1,307,621 110
9/1/41 1,538,563 (71,412) 1,467,151 1,333,773 110
9/1/42 1,569,334 (72,841) 1,496,493 1,360,449 110
9/1/43 1,600,721 (74,297) 1,526,424 1,387,658 110
9/1/44 1,632,735 (75,783) 1,556,952 1,415,411 110
9/1/45 1,665,390 (77,299) 1,588,091 1,443,719 110
9/1/46 1,698,698 (78,845) 1,619,853 1,472,594 110
9/1/47 1,732,672 (80,422) 1,652,250 1,502,046 110
9/1/48 1,767,325 (82,030) 1,685,295 1,532,086 110
9/1/49 1,802,672 (83,671) 1,719,001 1,562,728 110
9/1/50 1,838,725 (85,344) 1,753,381 1,593,982 110
9/1/51 1,875,500 (87,051) 1,788,449 1,625,863 110
9/1/52 1,913,010 (88,792) 1,824,218 1,658,380 110
9/1/53 1,951,270 (90,568) 1,860,702 1,691,547 110
$45,652,800 ($2,118,972) $43,533,828 $39,576,207
(1) Based on the Assigned Special Tax that can be levied on parcels in the District for the respective Bond Year. See “SECURITY FOR THE 2022 BONDS— Summary of Rate and Method.” (2) Based on the Minimum Administrative Expense Requirement; not pledged to the repayment of the 2022 Bonds. (3) Preliminary, subject to change.
(4) Debt service on the 2022 Bonds for the Bond Year ending 9/1/23 will be paid from 2022 Bond proceeds deposited to the Capitalized Interest Account. See “PLAN OF FINANCING— Sources and Uses of Funds.” Source: NBS, the Underwriter.
See “SECURITY FOR THE 2022 BONDS — No Limitation on Increases in Special Tax Levies by Reason of Delinquencies” for information regarding how the Law differs from the Mello-Roos Community Facilities Act of 1982 in respect of the ability of the City to increase Special Tax levies on parcels in the District in the event of delinquencies in the payment of Special Taxes, subject in any event to the Maximum Special Taxes described under the heading “SECURITY FOR THE 2022 BONDS— Summary of Rate and Method.”
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SPECIAL RISK FACTORS
The following is a description of certain risk factors affecting the District, the property owners in the District, the parcels subject to the levy of Special Taxes and the payment of and security for the 2022 Bonds. The following discussion of risks is no t meant to be a complete list of the risks associated with the purchase of the 2022 Bonds and does not necessarily reflect the relative importance of the various risks.
Potential investors are advised to consider the following factors along with all other information in this Official Statement in evaluating the investment quality of the 2022 Bonds. There can be no assurance that other risk factors will not become material in the future.
No General Obligation of the City or the District
The City’s obligations under the 2022 Bonds and under the Fiscal Agent Agreement are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Reve nues and amounts in the Special Tax Fund, the Bond Fund and the Reserve Fund. The 2022 Bond s are neither general or special obligations of the City nor general obligations of the District, but are limited obligations of the City for the District payable solely from the revenues and funds pledged therefor and under the Fiscal Agent Agreement.
Neither the faith and credit nor the taxing power of the City or the State of California or of any of their respective political subdivisions is pledged to the payment of the 2022 Bonds.
Concentration of Ownership
Based on lot takedowns to date, Taxable Property in the District responsible for approximately 32% of the Special Tax levy is currently owned by the Builder, with the balance owned by the Landbank; however, the Builder has advised that its contract with the Landbank requires it to pay Special Taxes on property owned by the Landbank and not yet conveyed to the Builder so long as the Option Agreement remains in effect . See “THE DEVELOPMENT AND THE DISTRICT— Land Ownership.” Accordingly, until it sells townhomes to townhome buyers, the Builder will be responsible for the payment of any Special Taxes levied on the Taxable Property in the District . The lack of diversity in ownership of property in the District, and the consequent lack of diversity in the obligation to pay the Special Taxes levied in the District, represents significant risk to the owners of the 2022 Bond s in that the ability of the Builder to pay the Special Taxes levied on property it or the Landbank owns may depend, in part, on the successful sales of townhomes in the District.
Failure of the Builder to pay the annual Special Tax es when due on the property not yet sold to townhome buyers could result in the rapid, total depletion of the Reserve Fund prior to replenishment from the resale of the delinquent parcels of land upon a foreclosure or otherwise.
In that event, there could be a default in payments of the princip al of, and interest on, the 2022 Bonds. See “SPECIAL RISK FACTORS— Insufficiency of Special Tax Revenues.”
Failure to Complete or Delay in Completion of the Townhomes
Construction of the Townhomes. The completion of the development of the planned 157 townhomes that are the Taxable Property in the District requires the completion of certain on- site and off -site improvements and the construction of townhomes. The Builder currently estimates all in -tract horizontal improvements will be completed by December, 2026 . The Builder has advised that it currently expects the schedule for vertical construction of each of the buildings to be approximately eight months from the time construction commences, and that construction of all of the buildings is currently estimated to be complete by December, 2026 .
See “THE DEVELOPMENT AND THE DISTRICT — Land Ownership .” No assurance can be given that the Builder will complete the takedown of the property in the District from the
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Landbank, or that Landsea Construction LLC will complete the construction of all of the 182 townhomes, including the 157 to be subject to the levy of Special Taxes, as currently expected or at all.
As described under the heading “THE DEVELOPMENT AND THE DISTRICT— Land Ownership,” the Builder has the right to extend the Takedown Schedule. In addition, economic and other conditions, including changes to mortgage interest rates and increases in development costs, may affect the Builder's decision whether or not to acquire any additional land pursuant to the Option Agreement, whether or not to proceed with construction of additional townhomes and whether or not to delay the schedule for the construction and sale of the townhouses.
Amendment to BCDC Permit. The Development has been issued a Major Permit by the San Francisco Bay Conservation and Development Commission (Permit No. 2018.003.00) on September 30, 2020, as amended through February 16, 2022. The construction phasing plan, as proposed by the Builder , requires an amendment to the Major Permit in order to adjust the phasing and timing of delivery of certain public open space improvements within the Development site. The amendment is needed to revise the permit to allow for park and Bay Trail improvements to be constructed at a later phase of the townhome construction, as a safety matter to not have public use adjacent to the area where building construction is ongoing. The Master Developer must submit the request for the amendment and expects to do so by ____________.
Certificates of occupancy for completed townhomes cannot be issued until BCDC has approved the amendment. It is anticipated that once the request for the amendment has been submitted, and after a sixty-day comment period, the amendment may be approved at a BCDC staff level, but no assurance can be given as to the timing of approval of the amendment. If approval of the amendment is delayed, there may be a delay in obtaining certificates of occupancy for completed townhomes.
Electric Service. The Builder has advised that it needs Alameda Municipal Power (“AMP”) to provide electricity to the site on which the townhomes are being constructed before certificates of occupancy can be provided for completed townhomes. It has been informed by AMP that AMP cannot provide the needed electrical connection until it has received necessary transformers, and that there currently is a several month delay in AMP obtaining the transformers. No assurance can be given as to the timing of delivery of th e transformers to AMP, and AMP’s connection of the site to its electric grid.
Human Remains and Artifacts. The Master Developer has advised that human remains and artifacts were found on the Development site. It is possible that additional remains and artifacts will be found that could prevent or delay development. An Archaeological Resource Management Plan (the “Plan”) for the Development was submitted to the City in March 2020. It documented extensive testing on the Development site and documented the human remains that were found. The Master Developer has advised that it has proceeded with site development as recommended in the Plan.
Payment of the Special Tax is not a Personal Obligation
The Builder and the purchasers of townhomes in the District are not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation that is secured only by a lien against the Taxable Property on which it is levied. If the value of a Taxable Property is not sufficient to secure fully the payment of the Special Tax levied and to be levied on it , the City has no recourse against the owners of the Taxable Property.
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Property Value
If the Builder, or a to wnhome owner, defaults in the payment of the Special Tax, the only legal remedy is the institution of a superior court action to foreclose on the delinquent Taxable Property in an attempt to obtain funds with which to pay the Special Tax. The value of the Taxable Property in the District could be adversely affected by economic factors beyond the City’s control, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of residential property in the event of sale or foreclosure; (ii) changes in real estate tax rates and other expenses of owning Taxable Property , governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; and (iii) natural disasters (including, without limitation, wildfire, earthquakes, tsunamis and floods), which may result in uninsured losses. See “SPECIAL RISK FACTORS — Natural Disasters and Potential Drought Conditions.”
No assurance can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay the delinquent Special Tax installment. Although the Law authorizes the City to cause such an action to be commenced and diligently pursued to complet ion, the Law does not specify any obligation of the City with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the foreclosure sale in any such action if there is no other purchaser at such sale. The City is not obligated and does not expect to be a bidder at any such foreclosure sale. See “SECURITY FOR THE BONDS— Covenant for Superior Court Foreclosure” and “SPECIAL RISK FACTORS — Proceeds
of Foreclosure Sales.”
COVID-19 Pandemic
General. Information about the State’s current status can be found at the State’s website, www.covid19.ca.gov. Also see the County’s websit e http://covid-19.acgov.org for up to date information regarding COVID -19 restrictions in place in the County. Reference to the State’s and the County’s website is included in this Official Statement for general information only and information on such webs ite is not included in this Official Statement by reference to such website.
Effect on the Property in the District . Generally, homebuilders have experienced material increases in certain construction costs, supply chain delays and increased cycle time fo r home deliveries, and have experienced significant development delays resulting from work stoppages, reduced attendance of workers, and the ability to obtain necessary inspections and approvals for homes, which may be attributed, d irectly or indirectly, to the COVID -19 pandemic. The Builder has advised that it has encountered delays with the delivery of various supplies, materials and equipment , and there are likely to be additional delays in the procurement of concrete and other supplies, m aterials and equipment needed for the construction of the townhomes . While the cost increases and delays may have been and may continue to be intermittently affected by COVID -19, the majority of ongoing cost increases and delays can primarily be attributable to the strength of the housing market and the result of vendors not anticipating the scale of the demand for housing materials.
The recent material cost increases and construction delays have and are expected to continue to have a significant impact on the overall development of the town homes in the District. In addition, the impacts caused by the outbreak are evolving and no prediction can be made with respect to the ultimate effects of the COVID-19 outbreak and related public health
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and governmental authorities’ orders and actions. Such effects, if and as they arise, could have a material adverse effect on the ability to construct and sell townhomes in the District as planned, and no assurance can be provided that the Builder will be able to (a) complete in whole or in any part, or within any particular time, the construction of the townhomes within the District; (b) avoid additional material increases in development costs or delays res ulting from work stoppages, reduced attendance of workers, shortages or delays in the delivery of building materials, and/or delays in obtaining necessary inspections and approvals; or (c) sell townhomes, and close townhome sales, due to in each case to pu blic health or governmental restrictions, further spread of COVID -19, an economic downturn driven by the pandemic, or otherwise.
It should be noted that the Special Taxes are expected to be collected on ad valorem property tax bills delivered by the Coun ty. Property tax delinquencies may increase as a consequence of economic difficulties of property owners.
Exempt Properties
Certain properties are exempt from the Special Tax in accordance with the Rate and Method. In addition, the Law provides that properties or entities of the state, federal or local government are exempt from the Special Tax; provided, however, that property within the District acquired by a public entity through a negotiated transaction, or by gift or devise, that is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax. It is possible that property acquired by a public entity following a tax sale or foreclosure based upon failure to pay taxes could become exempt from the Special Tax. In addition, the Act provides that if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property, for outstanding 2022 Bonds, is to be treated as if it were a special assessment. The constitutionality and operation of these provisions of the Act have not been tested. See “ SECURITY FOR THE 2022 BONDS— Special Taxes.”
In particular, insofar as the Law requires payment of the Special Tax by a federal entity acquiring property within the District, it may be unconstitutional. See “SPECIAL RISK FACTORS— FDIC/Federal Government Interests in Properties.” If for any reason property within the District becomes exempt from taxation by reason of ownership by a nontaxable entity such as the federal government or another public agency, subject to the limitation of the Maximum Special Taxes, the Special Tax will be reallocated to the remaining taxable properties within the District. This would result in the owners of such property paying a greater amount of the Special Taxes and could have an adverse impact upon the timely payment of the Special Taxes. Moreover, if a substantial portion of land within the District bec omes exempt from the Special Taxes because of public ownership, or otherwise, the maximum rate that could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the 2022 Bonds when due and a default would occur wit h respect to the payment of such principal and interest.
The Law further provides that no other properties or entities are exempt from the Special Tax unless the properties or entities are expressly exempted in a resolution of consideration to levy a new special tax or to alter the rate or method of apportionment of an existing special tax.
Parity Taxes and Special Assessments
The Special Taxes and any penalties thereon will constitute liens against the ta xable parcels in the District until they are paid. Such lien is on a parity with all special taxes and
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special assessments levied by other agencies and is coequal to and independent of the lien for general property taxes regardless of when they are imposed upon the taxable parcel. The Special Taxes have priority over all existing and future private liens imposed on the property.
The Special Taxes and the special taxes levied by the City for CFD 22- 2 have the same lien priority with respect to the Taxable Pr operty. See “THE DEVELOPMENT AND THE DISTRICT— Direct and Overlapping Governmental Obligations” for a description of existing overlapping liens on the Taxable Property.
The City has no control over the ability of other entities and districts to issue indebtedness secured by special taxes or assessments payable from all or a portion of the taxable property within the District subject to the levy of Special Taxes. In addition, the landowners within the District may, without the consent or knowledge of the City, petition other public agencies to issue public indebtedness secured by special taxes or assessments, and any such special taxes or assessments may have a lien on such property on a parity with the Special Taxes. The imposition of additional indebtedness could reduce the willingness and the ability of the property owners within the District to pay the Special Taxes when due.
Insufficiency of Special Taxes
In order to pay debt service on the 2022 Bonds , it is necessary that the Special Taxes levied against Taxable Property within the District be paid in a timely manner. The City has established the Reserve Fund in an amount equal to the Reserve Requirement to pay debt service on the 2022 Bonds and any Parity Bonds to the extent Special Taxes are not paid on time and other funds are not available. See “SECURITY FOR THE 2022 BONDS— Reserve Fund” and Appendix C — “Summary of the Fiscal Agent Agreement – Funds and Accounts – Reserve Fund.” Under the Fiscal Agent Agreement, the City has covenanted to maintain in the Reserve Fund an amount equal to the Reserve Requirement; subject, however, to the limitation that the City may not levy the Special Tax in any fiscal year at a rate in excess of the Maximum Special Taxes rates permitted under the Rate and Method. Consequently, if a delinquency occurs, the City may be unable to replenish the Reserve Fund to the Reserve Requirement due to the limitation of the Maximum Special Tax rates. If such defaults were t o continue in successive years, the Reserve Fund could be depleted and a default on the 2022 Bond s would occur if proceeds of a foreclosure sale did not yield a sufficient amount to pay the delinquent Special Taxes.
The City has made certain covenants reg arding the institution of foreclosure proceedings to sell any property with delinquent Special Taxes in order to obtain funds to pay debt service on the 2022 Bond s. See “SECURITY FOR THE 2022 BOND S— Covenant for Superior Court Foreclosure.” If foreclosure p roceedings were ever instituted, any mortgage or deed of trust holder could, but would not be required to, advance the amount of delinquent Special Taxes to protect its security interest.
Potential Early Redemption of Bonds from Special Tax Prepayments
Property owners within the District are permitted to prepay their Special Taxes at any time. Any such prepayments will first be used to redeem outstanding 2016 Bonds before they are used to redeem 2022 Bonds; and when there are no longer any 2016 Bonds outstanding such prepayments will result in a mandatory redemption of 2022 Bonds on the next Interest Payment Date for whi ch timely notice may be given under the Fiscal Agent Agreement following the receipt of the Special Tax prepayment. Any resulting redemption of 2022 Bond s that were purchased at a price greater than par could reduce the otherwise expected yield on such 2022 Bonds. While to date there have been no prepayments of Special Taxes, the Authority cannot
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predict whether and if so when Special Tax prepayments will occur in the future. See “THE 2022 BONDS— Redemption – Mandatory Redemption from Special Tax Prepayments.”
Tax Delinquencies
Under provisions of the Law, the Special Taxes, from which funds necessary for the payment of pr incipal of, and interest on, the 2022 Bonds are derived, are being billed to the Taxable Property within the District on the regular property tax bills sent to owners of the parcels. Such Special Tax installments are due and payable, and bear the same pena lties and interest for non -payment, as do regular property tax installments. Special Tax installment payments cannot be made separately from property tax payments. Therefore, the unwillingness or inability of a property owner to pay regular property tax bi lls as evidenced by property tax delinquencies may also indicate an unwillingness or inability to make regular property tax payments and Special Tax installment payments in the future. See “ SECURITY FOR THE 2022 BONDS— Reserve Fund” and “ -Covenant for Super ior Court Foreclosure” for a discussion of the provisions which apply, and procedures which the District is obligated to follow under the Fiscal Agent Agreement, in the event of delinquency in the payment of Special Tax installments.
See also “THE DEVELOPMENT AND THE DISTRICT— Special Tax Levies and Delinquencies” for historical Special Tax delinquency history.
Bankruptcy Delays
The payment of the Special Tax and the ability of the City to commence a superior court action to foreclose the lien of a delinquent unpaid Special Tax, as discussed in “SECURITY FOR THE 2022 BONDS— Covenant for Superior Court Foreclosure ,” may be limited b y bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the State of California relating to judicial foreclosure. Any legal opinion to be delivered concurrently with the delivery of the 2022 Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.
Although bankruptcy proceedings would not cause the Special Taxes to become extinguished, bankruptcy of a property owner or any other person claiming an interest in the property could result in a delay in superior court foreclosure proceedings and could result in the possibility of Special Tax installments not being paid in part or in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and int erest on the 2022 Bonds.
Proceeds of Foreclosure Sales
Pursuant to the Law, in the event of any delinquency in the payment of any Special Tax, the City Council , as the legislative body of the District, may order that the Special Taxes be collected by a superior court action to foreclose the lien within specified time limits. The City has covenanted in the Fiscal Agent Agreement that it will, under certain circumstances, commence such a foreclosure action. See “SECURITY FOR THE 2022 BONDS— Covenant for Superior Court Foreclosure.”
No assurances can be given that a taxable parcel in the District that would be subject to a judicial foreclosure sale for delinquent Special Taxes will be sold or, if sold, that the procee ds of such sale will be sufficient to pay the delinquent Special Tax installment. Although the Law authorizes the City to cause such an action to be commenced and diligently pursued to completion, the Law does not specify any obligation of the City with regard to purchasing or
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otherwise acquiring any lot or parcel of property sold at the foreclosure sale in any such action if there is no other purchaser at such sale and the City has not in any way agreed nor does it expect to be such a bidder.
In a foreclosure proceeding, a judgment debtor (i.e., the property owner) has 140 days from the date of service of the notice of levy in which to redeem the property to be sold and may have other redemption rights afforded by law. If a judgment debtor fails to so rede em and the property is sold, his only remedy is an action to set aside the sale, which must be brought within 90 days of the date of sale if the purchaser at the sale was the judgment creditor. If a foreclosure sale is thereby set aside, the judgment is re vived and the judgment creditor is entitled to interest on the revived judgment as if the sale had not been made.
If foreclosure proceedings were ever instituted, any holder of a mortgage or deed of trust on the affected property could, but would not be required to, advance the amount of tie delinquent Special Tax installment to protect its security interest.
In the event such superior court foreclosure or foreclosures are necessary, there could be a delay in principal and interest payments to the owners of the 2022 Bonds pending prosecution of the foreclosure proceedings and receipt by the District of the proceeds of the foreclosure sale, if any. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions and other factors beyond the control of the City, including delay due to crowded local court calendars or legal tactic s and, in any event could take several years to complete. In particular, bankruptcy proceedings involving the Landowner or any other owner of a taxable parcel in the District could cause a delay, reduction or elimination in the flow of Special Tax Reve nues to the Fiscal Agent. See “SPECIAL RISK FACTORS— Bankruptcy Delays.”
Natural Disasters
The value of the Taxable Property in the future can be adversely affected by a variety of natural occurrences, particularly those that ma y affect infrastructure and other public improvements and private improvements on the Taxable Property and the continued habitability and enjoyment of such private improvements. Such occurrences include, without limitation, wildfire, earthquakes and floods.
As reported in the Appraisal, a ccording to information from the California Geological Survey (formerly known as the Division of Mines and Geology), the District is not located within an Alquist-Priolo Special Studies Zone. The District is located in a liquefaction zone, an area “where historical occurrence of liquefaction, or local geological, geotechnical and ground water conditions indicate a potential for permanent ground displacements such that mitigation in Public Resources Code Section 2693(c) wou ld be required.” The Master Developer has advised that it partnered with design experts that specialize in the analysis and design of solutions to mitigate the subsurface conditions at the Development site. Rockridge Geotechnical Engineers and SGH Maritim e Engineers performed thorough on -site sampling and detailed design parameters to respond to the subsurface conditions of the Development. The design solutions, which are based upon the current Seismic Code, were thoroughly reviewed by all public agencies, including but not limited to BCDC and the City. The construction of the design solutions were completed by construction experts and all facets of the work were thoroughly inspected by the corresponding public agencies. The Builder has advised that it is following the advice of its design engineers in connection with the construction of the townhomes in the District.
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In addition to possible earthquakes and flooding , other natural disasters could occur and could result in damage to improvements o f varying seriousness. The damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost, or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances, the value of the Taxable Property may well depreciate or disappear.
Risk of Sea Level Changes
General. Numerous scientific studies on global climate change suggest that sea levels are expected to continue to rise in the future due to the increasing temperature of the oceans causing thermal expansion and growing ocean volume from glaciers and ice caps melting into the ocean. Between 1854 and 2016, sea level in San Francisco Bay rose about nine inches according to the tidal gauge at Fort Point, a location underneath the Golden Gate Bridge.
Weather and tidal patterns, including 100 -year or more storms and king tides, m ay exacerbate the effects of climate related sea level rise. Coastal areas like the City are at risk of substantial flood damage over time.
In April 2017, the Working Group of the California Ocean Protection Council Science Advisory Team (in collaboration with several state agencies, including the California Natural Resource Agency, the Governor’s Office of Planning and Research, and the California Energy Commission) published a report, that was formally adopted in March 2018, entitled “Rising Seas in Cal ifornia: An Update on Sea Level Rise Science” (the “Sea Level Rise Report”) to provide a new synthesis of the state of science regarding sea level rise. The Sea Level Rise Report provides the basis for State guidance to state and local agencies for incorp orating sea level rise into design, planning, permitting, construction, investment and other decisions.
Among many findings, the Sea Level Rise Report indicates that the effects of sea level rise are already being felt in coastal California with more exten sive coastal flooding during storms, exacerbated tidal flooding, and increased coastal erosion. In addition, the report notes that the rate of ice sheet loss from Greenland and Antarctic ice sheets poses a particular risk of sea level rise for the Californ ia coastline. The City has incorporated the projections from the 2018 report into its Guidance for Incorporating Sea Level Rise Guidance into ongoing Capital Planning.
In March 2020, a consortium of State and local agencies, led by the Bay Area Conservation and Development Commission (the “BCDC”), released a detailed study entitled, “Adapting to Rising Tides Bay Area: Regional Sea Level Rise Vulnerability and Adaptation Study,” on how sea level rise could alter the Bay Area. The study states that a 48 -inch increase in the bay’s water level in coming decades could cause more than 100,000 Bay Area jobs to be relocated, nearly 30,000 lower-income residents to be displaced, and 68,000 acres of ecologically valuable shoreline habitat to be lost. The study furthe r argues that without a far -sighted, nine county response, the region’s economic and transportation systems could be undermined along with the environment. Runways at SFO could largely be under water.
The Development. The property in the District is subject to the San Francisco Bay Plan and Bay Policies Guidelines set and administered by the BCDC. The City and Alameda Marina, LLC were co-applicants under the BCDC and related agencies for permits for development of the property in the District. BCDC guidelines require compliance under the McAteer-Petris Act, Policies for a Rising Bay. The issuance of the BCDC permit is subject to the State of California Sea-Level Rise Guidance (2018 Update) which reviews project specific criteria, risk assessment and provides policy recommendations for near term and long-term adaptation for sea-level-rise protections.
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Development plans for the District were designed for resilience in the event of sea level rise projected through the end of the century and adaptive to potential sea level rise as projected through 2100, consistent with the regulatory requirements on the BCDC . On September 30, 2020, the BCDC issued Permit No. 2018.003.00 providing permission for Alameda Marina, LLC to conduct activities related to the planned construction and rehabilitation to occur in the Development.
The BCDC Permit recognized that the measures implemented with the construction activities described in the Permit would satisfy the permit special conditions for flooding and adaptation for medium term and long- term scenarios. The permit details specific notifications and additional planning efforts that would precede any requirement for future adaptive measures under the 2100 scenario.
Approximately 17 acres of the property in the Development, consisting primarily of the marina and shoreline areas, are the subject of a Tidelands Lease, dated as of May 16, 2012, between the City and the Master Developer. The term of the Tidelands Lease, as currently amended, extends to May 11, 2078. The Master Developer has various obligations under the Tidelands Lease, including the payment of annual rent to the City, and ongoing reporting related to and the ongoing rehabilitation of the shoreline improvemen ts. Those obligations include the funding of a Capital Replacement Fund in an annual amount, beginning in the tenth year of the Tidelands Lease, of at least $50,000, and updated marina engineering reports each 15th year of the Tidelands Lease, with any capital replacement and rehabilitation work to be completed by the Master Developer. Under the provisions of a Master Declaration of Covenants, Conditions and Restrictions of Alameda Marina recorded against the property in the Development, the Master Developer is obligated, among the other owners of property in the Development, to satisfy all requirements of the Tidelands Lease.
CFD 22- 2. At the time the City formed the District, it also formed a Community Facilities District No. 22 -2 (Alameda Marina – Shoreline Improvements Maintenance and Adaptive Measures) (“ CFD 22-2”) that includes all of the property in the Development, other than the property subject to the Tidelands Lease.
CFD 22-2 is authorized to levy special taxes on property in the District, as w ell as on property in the Development that is not within the District, only when a “Trigger Event” occurs, as such term is defined in the Rate and Method of Apportionment of Special Taxes for CFD 22 - 2, generally including (1) a Tenant Default under (as suc h capitalized term is defined in) the Tidelands Lease to perform its obligations under certain provisions of the Tidelands Lease; or (2) the approval of certain forms of an adaptation plan by the San Francisco Bay Conservation and Development Commission; o r (3) upon the expiration of the Tidelands Lease, or of any subsequent lease of the Property (as defined in the Tidelands Lease), without the coterminous execution of a new lease pursuant to which the tenant thereunder is obligated to provide adaptive measures and maintenance and repair services substantially similar, in the judgment of the City’s Director of Public Works, to the CFD 22 -2 authorized adaptive measures and maintenance services. The Rate and Method of Apportionment of Special Taxes explicitly provides, however, that the Trigger Event shall not occur earlier than the date on which any debt obligations of the District, including the Bonds, have been paid in full or otherwise have been fully discharged and the special tax lien with respect to the District has terminated. In other words no special taxes will be levied for CFD 22-2 on property in the District so long as any Bonds are outstanding.
Proceeds of special taxes levied for CFD 22 -2 will be used to pay administrative expenses and certain adaptive measures and maintenance services authorized to be funded by CFD 22-2, including:
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(a) The following adaptive measures: capital improvements determined by the City to be implemented to provide protection to the property in the District fro m flooding due to sea level rise, including inland public access and recreation areas from the periodic inundation that may occur in extreme tide events as the sea levels rise beyond elevation 13.5 (NAVD 88). The adaptive measure improvements are to also provide protection for the interior areas of the site, including buildings and streets.
• The improvements may include implementation of floodwalls, earth berms, elevated and/or replaced Bay Trail, elevated wharf, elevated footbridge and other storm drain system enhancements and that are deemed necessary by the City to manage elevated groundwater.
• The District may also fund costs of commissioning periodic condition assessments of the shoreline adjacent to the District by a licensed engineer to document the physical effects of sea level rise and life expectancy of the shoreline protection measures funded by the City’s Community Facilities District No. 20-1 (Alameda Marina).
(b) The following maintenance services to the extent that the services are not otherwise being provided by or on behalf of one or more owners of property within, adjacent to or in the vicinity of the District:
• The maintenance, repair and replacement of any of the improvements authorized to be funded by the City of Alameda Community Facilities District No. 22 -1 (Alameda Marina) (“CFD 22 -1”), other than Clement Avenue roadway improvements.
CFD 22- 1 is expected to provide, when and if a Trigger Event occurs, to provide sufficient special tax revenues to be able to pay the debt service on as much as $90,600,000 in bonded indebtedness that would not be needed, if at all, until 50-70 years from now.
Hazardous Substances
The presence of hazardous substances on a parcel may result in a reduction in the value of a parcel. In general, the owners and operators of a parcel may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The Federal Comprehensive Environmental Response, Compensatio n and Liability Act of 1980, sometimes referred to as “CERCLA ” or the “ Superfund Act ,” is the most well -known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these l aws, the owner or operator is obligated to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the Taxable Property be affected by a hazardous substance, is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.
The Development site was a working waterfront for many years. During the preparation of the Development site for vertical construction, certain toxic substances were discovered. The Master Developer and the Builder report that they have worked directly with Alameda County Department of Environmental Health (“ACDEH”), who is the lead agency for all environmental soil remediation, in the conduct of needed site remedial actions . The Master Developer reports that the property in the Development has been fully characterized and remediated so that the
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site is developable per strict residential standards as set forth by ACDEH. This includes the off - haul of contaminated soils and mitigation measures consistent with the Co unty’s residential standards. ACDEH has issued a No Further Action for the property in the Development.
Increasing Mortgage Interest Rates
Since approximately November, 2021 mortgage interest rates have inc reased significantly. Mortgage interest rates may continue to increase in the near term. Increases in mortgage interest rates could have a negative impact on the acquisition of additional land by the Builder under the Option Agreement, the construction of the townhomes, and the sale of the townhomes being built and to be built in the District. Increased mortgage interest rates adversely impact the affordability of the townhomes as they increase mortgage payment levels, and may impact the desire of current homeowners to purchase townhomes due to the fact that their present home likely has a relatively low mortgage interest rate. In addition, the new townhome would likely have a higher interest rate on a new mortgage loan as well as higher property taxes. Suc h considerations may decrease the desire for households to purchase a townhome. The foregoing factors could reduce demand for the townhomes that are the Taxable Property in the District.
Cybersecurity
The City has cybersecurity policies that include matters related to perimeter security, e - mail security, internal security, annual mandatory training, availability and remote access. The City, however, is reliant on other entities and service providers in connection with the administration of the District and the 2022 Bonds, including without limitation the Special Tax Consultant, the County tax collector for the levy and collection of Special Taxes and the Fiscal Agent. No assurance can be given that the City and these other entities will not be affected by cyber threats and attacks in a manner that may affect the 2022 Bond owners.
Disclosure to Future Purchasers
The willingness or ability of an owner of a parcel to pay the Special Tax, even if the value of the property is sufficient to justify payment, may be affected by whether or not the owner was given due notice of the Special Tax authorization at the t ime the owner purchased the parcel, was informed of the amount of the Special Tax on the parcel should the Special Tax be levied at the maximum tax rate and, at the time of such a levy, has the ability to pay it as well as pay other expenses and obligation s. The City has caused a notice of the Special Tax to be recorded in the Office of the Recorder for the County against the Taxable Property in the District. Although title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation when purchasing a Taxable Property within the District or lending money thereon, as applicable.
California Civil Code Section 1 102.6b requires that, in the case of transfers, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due.
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FDIC/Federal Government Interests in Properties
General. The ability of the City to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the Fede ral Deposit Insurance Corporation (the “ FDIC”), the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest.
Federal courts have held that, based on the supremacy clause of the United States Constitution, in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. The supremacy clause of the United States Constitution reads as follows: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound there by, anything in the Constitution or Laws of any State to the contrary notwithstanding.” This means that, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Ta xes within the District but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.
Moreover, unless Con gress has otherwise provided, if the federal government has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sol d for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government’s mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Cir cuit held that the Federal National Mortgage Association (“ FNMA”) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an e xercise of state power over property of the United States.
The City has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels subject to the Special Taxes within the District, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the 2022 Bonds are outstanding.
FDIC. In the event that any financial institution making any loan which is secured by real property within the District is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, resulting in ownership of the property by the FDIC, then the ability of the City to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited.
The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement”) provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property’s value, and that the FDIC is immune from real property taxes assessed on any basis other than property value.
According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution’s affairs, unless abandonment of the FDIC’s interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law,
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to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC -owned property ar e secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC’s consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC’s consent.
The Policy Statement states that the FDIC generally will not pay non -ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure t he payment of any such amounts. Special taxes imposed under the Mello- Roos Act and a special tax formula which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC’s federal immunity. The Ninth Circuit has issued a ruling on August 28, 2001 in which it determined that the FDIC, as a federal agency, is exempt from Mello-Roos special taxes.
The City is unable to predict what effect the application of the Poli cy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within the District in which the FDIC has or obtains an interest, although prohibiting the lien of the Special Taxes to be extinguished at a judicial foreclos ure sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome could cause a draw on the Reserve Fund and perhaps, ultimately, if enough property were to become owned by the FDIC, a default in payment on the 2022 Bonds.
No Acceleration Provision
The 2022 Bonds and the Fiscal Agent Agreement do not contain a provision allowing for the acceleration of the 2022 Bonds in the event of a payment default or other default under the terms of the 2022 Bond s or the Fiscal Agent Agreement or in the event interest on the 2022 Bonds becomes included in gross income for federal income tax purposes.
Taxability Risk
As discussed herein under the caption “TAX MATTERS,” interest on the 2022 Bond s could become includable in gross income for purposes of federal income taxation retroactive to the date the 2022 Bond s were issued, as a result of future acts or omissions of t he City in violation of its covenants in the Fiscal Agent Agreement. There is no provision in the 2022 Bonds or the Fiscal Agent Agreement for special redemption or acceleration or for the payment of additional interest should such an event of taxability o ccur, and the 2022 Bonds will remain outstanding until maturity or until redeemed under one of the redemption provisions contained in the Fiscal Agent Agreement.
In addition, as discussed under the caption “TAX MATTERS,” Congress is or may be considering in the future legislativ e proposals, including some that carry retroactive effective dates, that, if enacted, would alter or eliminate the exclusion from gross income for federal income tax purposes of interest on municipal bonds, such as the 2022 Bond s. Prospective purchasers of the 2022 Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. The City can provide no assurance that federal tax law will not change while the 2022 Bonds are outstanding or that any such changes will not a dversely affect the exclusion of interest on the 2022 Bonds from gross income for federal income tax purposes.
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If the exclusion of interest on the 2022 Bonds from gross income for federal income tax purposes were amended or eliminated, it is likely that th e market price for the 2022 Bond s would be adversely impacted.
Enforceability of Remedies
The remedies available to the Fiscal Agent and the registered owners of the 2022 Bonds upon a default under the Fiscal Agent Agreement or any other document described in this Official Statement are in many respects dependent upon regulatory and judicial actions that are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documents may not be readily available or may be limited. Any legal opinions to be delivered concurrently with the issuance of the 2022 Bonds will be qualified to the extent that the enforceability of the legal documents with respect to the 2022 Bonds is subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally.
Judicial remedies, such as foreclosure and enforcement of covenants, are subject to exercise of judicial discretion. A California court may not strictly apply certain remedies or enforce certain covenants if it concludes that application or enforcement would be unreasonable under the circumstances and it may delay the application of such remedies and enforcement.
No Secondary Market
No representation is made concerning any secondary market for the 2022 Bonds. There can be no assurance that any secondary market will develop for the 2022 Bond s. Investors should understand the long-term and economic aspects of an investment in the 2022 Bonds and should assume that they will have to bear the economic risks of their investment to maturity.
An investment in the 2022 Bonds may be unsui table for any investor not able to hold the 2022 Bonds to maturity.
Proposition 218
An initiative measure entitled the “Right to Vote on Taxes Act” (the “ Initiative”) was approved by the voters of the State at the November 5, 1996 general election. The Initiative added Article XIIIC and Article XIIID to the California Constitution. According to the “Title and Summary” of the Initiative prepared by the California Attorney General, the Initiative limits “the authority of local governments to impose taxes and property-related assessments, fees and charges.” Provisions of the Initiative have been and will continue to be interpreted by the courts. The Initiative could potentially impact the Special Taxes otherwise available t o the District to pay the principal of and interest on the 2022 Bonds as described below.
Among other things, Section 3 of Article XIIIC states, “…the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any lo cal tax, assessment, fee or charge.” The Act provides for a procedure, which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax.
However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax w ould not interfere with the timely retirement of that debt. On July 1, 1997, the Governor of the State signed a bill into law enacting Government Code Section 5854, which states that:
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Section 3 of Article XIIIC of the California Constitution, as adopted a t the November 5, 1996, general election, shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States Constitution.
Accordingly, although the matter is not free from doubt, it is likely that Article XIIIC has not conferred on the voters the power to repeal or reduce the Special Taxes if such reduction would interfere with the timely retirement of the 2022 Bonds.
It may be possible, however, for voters or the City Council acting as the legislative body of the District to reduce the Special Taxes in a manner that does not interfere with the timely repayment of the 2022 Bonds, but which does reduce the maximum amount of Sp ecial Taxes that may be levied in any year below the existing levels. Furthermore, no assurance can be given with respect to the future levy of the Special Taxes in amounts greater than the amount necessary for the timely retirement of the 2022 Bonds. Therefore, no assurance can be given with respect to the levy of Special Taxes for Administrative Expenses (as defined in the Fiscal Agent Agreement). Nevertheless, the City has covenanted that it will not consent to, or conduct proceedings with respect to, a reduction in the maximum Special Taxes that may be levied in the District below an amount, for any fiscal year, equal to 110% of the aggregate of the debt service due on the 2022 Bonds in such fiscal year, plus a reasonable estimate of Administrative Expenses for such fiscal year. However, no assurance can be given as to the enforceability of the foregoing covenant.
The interpretation and application of Article XIIIC and Article XIIID will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See “— Enforceability of Remedies.”
Ballot Initiatives
Articles XIIIC and XIIID of the California Constitution were adopted pursuant to measures qualified for the ballot pursuant to California’s constitutional initiative process, and the State Legislature has in the past enacted legislation which has altered the spending limitations or established minimum funding provisions for particular activities. On March 6, 1995 in the case of Rossi v. Brown , the State Supreme Court held that an initiative can repeal a tax ordinance and prohibit the imposition of further such taxes and that the exemption from the referendum requirements does not apply to initiatives. From time to time, other initiative measures could be adopted by California voters or legislation enacted by the legislature. The adoption of any such initiative or legislation might place limitations on the ability of the State, the City, or local districts to increase revenues or to increase appropriations.
IRS Audit of Tax-Exempt Bond Issues
The Internal Revenue Service has initiated an expanded program for the auditing of tax - exempt bond issues, including both random and targeted audits. It is possible that the 2022 Bonds will be selected for audit by the Internal Revenue Service. It is also poss ible that the market value of the 2022 Bonds might be affected as a result of such an audit of the 2022 Bonds (or by an audit of similar bonds).
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Court Action Involving Landowner – Voted Special Tax District
On August 1, 2014, in a decision in City of San Diego. v. Melvin Shapiro, an Appellate Court invalidated an election held by the City of San Diego (the term “City” as used in this paragraph and the next paragraph means t he City of San Diego) to authorize the levying of special taxes on hotels City -wide pursuant to a City charter ordinance creating a convention center facilities district (the “CCFD”) much like a community facilities district established under the provisions of the Act. While the CCFD is comprised of all of the real property in the entire City, the special tax was to be levied only on hotel properties located within the CCFD. At the election to authorize such special tax, the electorate was defined to consis t solely of (a) the owners of real property in the City on which a hotel is located, and (b) the lessees of real property owned by a governmental entity on which a hotel is located. Such approach to determining who would constitute the qualified electors o f the CCFD was based on Section 53326(c) of the California Government Code, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the land owners of the proposed district whose property would be subject to the special tax. The Court held that such landowners and lessees are neither “qualified electors” of the City for purposes of Articles XIII A, Section 4 of the California Constitution, nor a proper “electorate” under Article XIIIC, Section 2(d) of the California Constitution.
The Court specifically noted that the decision did not require the Court to consider the distinct question of whether landowner voting to impose special taxes under Section 53326(b) of the California Government Code (which was the nature of the voter approval pursuant to the Law through which the District was formed, as the Landbank was the sole owner of the land in the District at the time of the District formation) vi olates the California Constitution in districts that lack sufficient registered voters to conduct an election among registered voters. In the case of the CCFD, at the time of the election all of the registered voters in the City were within the CCFD. With respect to the District, there were no registered voters within the District at the time of the election to authorize the Special Tax and issuance of bonds by the District. Thus, by its terms, the Court’s holding does not apply to the formation and Special Tax election in the District.
Moreover, Section 3-70.72 of the Law provides that any “action or proceeding to attack, review, set aside, void, or annul the levy of a special tax… , or bonded indebtedness authorized to be incurred pursuant to this Code shall be commenced within 30 days after the special tax or the bonded indebtedness, as applicable, is approved by the voters.” Section 3-70.98 of the Law contains a similar time limitation. The Landbank, as the sole qualified elector in the District at the time, approved the Special Tax and the bonded indebtedness for the District on April 19, 2022.The City is not aware of any action being filed challenging the formation of the District, or the authority to levy the Special Tax on property in the District or for the District to incur bonded indebtedness. See “NO LITIGATION.” Given the foregoing, the City believes that no successful challenge to the levy of the Special Tax in the District or the issuance of the 2022 Bonds may now be brought.
TAX MATTERS
Federal tax law contains a number of requirements and restrictions which apply to the 2022 Bond s, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the pr oper use of bond proceeds and the facilities financed therewith, and certain other matters. The City has covenanted in the Fiscal Agent Agreement to comply with all requirements that must be satisfied in order for the interest on
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the 2022 Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the 2022 Bond s to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the 2022 Bonds.
Subject to the City’s compliance with the above -referenced covenants, under present law, in the opinion of Quint & Thimmig LLP, Bond Counsel, interest on the 2022 Bond s is excludable from gross income of the owners thereof for federal income tax purposes , and is not included as an item of tax preference in computing the alternative minimum tax for individuals under the Internal Revenue Code of 1986, as amended. For tax years beginning after December 31, 2022, interest on the Bonds may affect the corporate alternative minimum tax for certain corporations.
In rendering its opinion, Bond Counsel will rely upon certifications of the City with respect to certain material facts within the City’s knowledge. Bond Counsel’s opinion represents its legal judgment based upon its review of the law and the facts that it deems relevant to render such opinion and is not a guarantee of a result.
The Internal Revenue Code of 1986, as amended (the “Code”), includes provisions for an alternative minimum tax (“ AMT”) for corporations in addition to the corporate regular tax i n certain cases. The AMT, if any, depends upon the corporation’s alternative minimum taxable income (“AMTI”), which is the corporation’s taxable income with certain adjustments. One of the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is an amount equal to 75% of the excess of such corporation’s “adjusted current earnings” over an amount equal to its AMTI (before such adjustment item and the alternative tax net operating loss deduction). “Adjusted current earnings ” w ould include certain tax -exempt interest, including interest on the 2022 Bonds.
Ownership of the 2022 Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch pr ofits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax exempt obligations. Prospective purchasers of the 2022 Bonds should consult their tax advisors as to applicability of any such collateral consequences.
The issue price (the “ Issue Price”) for each maturity of the 2022 Bonds is the price at which a substantial amount of such maturity of the 2022 Bonds is first sold to the public. The Issue Price of a maturity of the 2022 Bonds may be different from the price set forth, or the price corresponding to the yield set forth, on the inside cover page of this Official Statement.
If the Issue Price of a maturity of the 2022 Bond s is less than the principal amount payable at maturity, the difference between the Issue Price of each such maturity, if any, of the 2022 Bonds (the “OID 2022 Bonds”) and the principa l amount payable at maturity is original issue discount.
For an investor who purchases an OID 2022 Bond in the initial public offering at the Issue Price for such maturity and who holds such OID 2022 Bond to its stated maturity, subject to the condition that the City comply with the covenants discussed above, (a) the full amount of original issue discount with respect to such OID 2022 Bond constitutes interest which is excludable from the gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gain or market discount upon payment of such OID 2022 Bond at its stated maturity; (c) such original issue discount is not included as an item of tax
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preference in computing the alternative minimum tax for ind ividuals and corporations under the Code, but is taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations under the Code, as described above; and (d) the accretion of original issue discount in each year may result in an alternative minimum tax liability for corporations or certain other collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. Owners of OID 2022 Bonds should consult their own tax advisors with respect to the state and local tax consequences of original issue discount on such OID 2022 Bonds.
Owners of 2022 Bonds who dispose of 2022 Bonds prior to the stated maturity (whether by sale, redemption or othe rwise), purchase 2022 Bonds in the initial public offering, but at a price different from the Issue Price or purchase 2022 Bonds subsequent to the initial public offering should consult their own tax advisors.
If a 2022 Bond is purchased at any time for a price that is less than the 2022 Bond’s stated redemption price at maturity or, in the case of an OID 2022 Bond, its Issue Price plus accreted original issue discount reduced by payments of interest included in the computati on of original issue discount and previously paid (the “Revised Issue Price”), the purchaser will be treated as having purchased a 2022 Bond with market discount subject to the market discount rules of the Code (unless a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when a 2022 Bond is disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser’s election, as it accrues. Such treatment would apply to any purchaser who purchases an OID 2022 Bond for a price that is less than its Revised Issue Price even if the purchase price exceeds par. The applicability of the market discount rules may adversely affect the liquidity or secondary market price of such 2022 Bond. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the 2022 Bonds.
An investor may purchase a 2022 Bond at a price in excess of its stated principal amount.
Such excess is characterized for federal income tax purposes as “ bond premium” and must be amortized by an investor on a constant yield basis over the remaining term of the 2022 Bond in a manner that takes into account potential call dates and call prices. An investor ca nnot deduct amortized bond premium relating to a tax -exempt bond. The amortized bond premium is treated as a reduction in the tax -exempt interest received. As bond premium is amortized, it reduces the investor’s basis in the 2022 Bond . Investors who purcha se a 2022 Bond at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the 2022 Bond’s basis for purposes of computing gain or loss in connection with the sale, exchange, redemption or early retirement of the 2022 Bond.
There are or may be pending in the Congress of the United States legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to above or affect t he market value of the 2022 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior to enactment. Prospective purchasers of the 2022 Bonds should consult their ow n tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation.
The Internal Revenue Service (the “ Service”) has an ongoing program of auditing tax - exempt obligations to determine whether, in the view of the Service, interest on such tax - exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commenc e an audit of the 2022 Bonds. If an audit is commenced, under current procedures the Service may treat the City
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as a taxpayer and the 2022 Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect t he market value and liquidity of the 2022 Bonds until the audit is concluded, regardless of the ultimate outcome.
Payments of interest on, and proceeds of the sale, redemption or maturity of, tax exempt obligations, including the 2022 Bonds, are in certain cases required to be reported to the Service.
Additionally, backup withholding may apply to any such payments to any 2022 Bond owner who fails to provide an accurate Form W -9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any 2022 Bond owner who is notified by the Service of a failure to report any interest or d ividends required to be shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes.
In the further opinion of Bond Counsel, interest on the 2022 Bonds is exempt from California personal income taxes.
Ownership of the 2022 Bond s may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the 2022 Bonds. Prospective purchasers of the 2022 Bonds should consult their tax advisors regarding the applicability of any such state and local taxes.
The complete text of the final opinion that Bond Counsel expects to deliver upon issuance of the 2022 Bonds is set forth in Appendix D.
LEGAL MATTERS
Concurrent with the issuance of the 2022 Bond s, Quint & Thimmig LLP, Larkspur, California, Bond Counsel, will render its opinion substantially in the form set forth in Appendix D to this Official Statement. Quint & Thimmig LLP also is acting as Disclosure Counsel to the City with respect to the 2022 Bonds. Certain legal matters will be passed upon for the City by the City Attorney. Certain legal matters related to the 2022 Bonds will be passed upon for the Underwriter by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California. Payment of the fees and e xpenses of Bond and Disclosure Counsel , and of Underwriter’s Counsel, is contingent on the issuance of the 2022 Bonds.
MUNICIPAL ADVISOR
The City has retained Urban Futures Incorporated , Tustin, California, as municipal advisor (the “Municipal Advisor”) in connection with the offering of the 202 2 Bonds. All financial and other information presented in this Official Statement has been provided by the City and others from their records. Unless otherwise footnoted, the Municip al Advisor takes no responsibility for the accuracy or completeness of the data provided by the City or others and has not undertaken to make an independent verification or does not assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement.
The Municipal Advisor has assisted the City with the structure, timing and terms for the sale of the 2022 Bonds. The Municipal Advisor provides municipal advisory services only and does not engage in the u nderwriting, marketing, or trading of municipal securities or other negotiable instruments. The fee of the Municipal Advisor is contingent upon the successful closing of the 2022 Bonds.
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NO RATING
The City has not made, and does not intend to make, any application to any rating agency for the assignment of a rating to the 2022 Bonds.
LITIGATION
The City is not aware of any pending or threatened litigation challenging the validity of the 2022 Bonds, the Special Taxes securing the 2022 Bonds, or any action taken by the City in connection with the formation of the District, the levying of the Special Taxes or the issuance of the 2022 Bonds.
UNDERWRITING
The 2022 Bond s are being purchased through negotiation by Stifel, Nicolaus & Company, Incorporated (the “Underwriter ”). The Bond Purchase Agreement for the 2022 Bonds provides that the Underwriter will purchase all of the 2022 Bonds, if any are purchased.
The Underwriter agreed to purchase the 2022 Bonds at a price of $____________ (which is equal to the par amount of the 2022 Bond s, plus (minus) an original issue premium (discount) of $____________, and less an underwriter’s discount of $____________). The initial public offering prices of the 2022 Bonds set forth on the inside cover page may be changed by the Underwriter.
The Underwriter may offer and sell the 2022 Bonds to certain dealers and others at prices lower than the public offering prices set forth on the inside cover page hereof.
CONTINUING DISCLOSURE
The City
The City has covenanted in a Continuing Disclosure Agreement for the benefit of the Owners of the 2022 Bonds to provide certain annual financial information and operating data, and to provide notices of the occurrence of certain enumerated events. The City agreed in its certificate to file, or cause to be filed, with the MSRB such report and notices. See Appendix E — “Form of Continuing Disclosure Agreement of the City ” for the complete text of the City’s Continuing Disclosure Agreement. The covenants of the City have been made in order to assist the Underwriter in complying with the Rule.
During the past five years the City has complied in all material respects with its previous continuing disclosure undertakings pursuant to Rule 15c2-12(b)(5) promulgated under the Securities and Exchange Act of 1934, as amended. However, the Alameda Public Financing Authority (the “Authority”), a joint exercise of powers entity formed by the City and the former Community Improvement Commission of the City of Alameda , failed to provide all of the operating information required by a Continuing Disclosure Agreement to which the Authority was a party commencing with fiscal year 2016 -17. The bonds to which that Continuing Disclosure Agreement pertained matured on September 2, 2019 and are no longer outstanding.
The Builder
The Builder has agreed for the benefit of the owners of the 2022 Bonds in a Continuing Disclosure Agreement— Builder to provide certain information on an annual and a semiannual basis, and notice of the occurrence of certain events with respect to it and the property in the
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District it owns , or the Landbank owns and the Builder has not yet acquired from the Landbank. Nevertheless, the Underwriter does n ot consider the Builder to be an “obligated person” for purposes of the Rule. The complete text of the Continuing Disclosure Agreement — Builder is set forth in Appendix F. The Builder’s obligation to provide continuing annual, semiannual and event disclosure will terminate if and when at least 146 townhomes being constructed in the District have been sold to townhome buyers unrelated to the Builder.
Remedies for Failures to Comply
A failure by the City or the Builder to comply with its respective continuing disclosure obligations will not constitute a default under the Fiscal Agent Agreement. However, the Continuing Disclosure Agreements provide that, in the event of a failure of the City or the Builder, as applicable, to comply with any provision of their respective Continuin g Disclosure Agreement, any 2022 Bond owner, any Beneficial Owner of the 2022 Bonds or the Underwriter may seek specific performance by court order to cause it to comply with its obligations under its respective Continuing Disclosure Agreement.
MISCELLANEOUS
Included herein are brief summaries of certain documents and reports, which summaries do not purport to be complete or definitive, and reference is made to such documents and reports for full and complete statements of the contents thereof. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the City or the District and the purchasers or Owners of any of the 2022 Bonds.
The execution and delivery of this Official Statement has been duly authorized by the City Council.
CITY OF ALAMEDA, CALIFORNIA for and
on behalf of the CITY OF ALAMEDA
COMMUNITY FACILITIES DISTRICT NO.
22-1 (ALAMEDA MARINA)
By:
Finance Director
01019.37:J18599
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APPENDIX A
GENERAL, ECONOMIC AND DEMOGRAPHIC INFORMATION
RELATING TO THE CITY AND THE COUNTY
The information in this Appendix A is presented as general background data. The 2022 Bonds are payable solely from the Special Tax Revenues and amounts held in certain funds under the Fiscal Agent Agreement, as described in the Official Statement.
Although reasonable efforts have been made to include up-to-date information in this Appendix A, some of the information is not current due to delays in reporting of information by various sources. It should not be assumed that the trends indicated by the following data would continue beyond the specific periods reflected herein.
Introduction
The City. The City of Alameda (the “City”) is a charter city, incorporated in 1854. The City is located in Alameda County (the “County”) just west of the City of Oakland and approximately 12 miles east of San Francisco. The City is an island in the eastern portion of the San Francisco Bay approximately six miles long by one and half miles wide and is part of a peninsula adjacent to Oakland Airport. The island portion is connected to the East Bay Area by three bridges and a v ehicular underwater double barrel tube.
The City is a major marine recreational area for Northern California with seven marinas and a private seaport. The City is part of the highly urbanized East Bay, which consists of Alameda and Contra Costa counties.
The County. Located on the east side of the San Francisco Bay, Alameda County encompasses 813 square miles and extends from Albany in the North to Fremont in the South and Livermore in the East.
The population of Alameda County exceeds 1.5 million making it the seven th most populous county in California according to U.S. Census Bureau data. Population growth in Alameda County has been fairly consistent during the last forty years making it a desirable place to live and work.
The County was established in 1853 and is governed by a five -member Board of Supervisors elected by popular vote. Other elected officials include the Auditor-Controller/Clerk-Recorder, Assessor, Treasurer-Tax Collector, District Attorney, and Sheriff/Coroner. The Board of Supervisors is responsibl e for providing policy direction, approving the County budget, and representing the County in a number of areas including special districts. The County Administrator reports to the Board and is responsible for delivering County services.
The County posses ses a large and diverse economic base, consisting of research and high technology, professional services, manufacturing, farming, finance, transportation, wholesale and retail trade, higher education, medical and health services, and government services. T he County also has a diversified industrial base that provides well-paying jobs to its residents.
In international trade, Alameda County has a long history of strong cultural and business ties with Pacific Rim trading partners. Because of its central loca tion and state-of-the-art port facilities, it is a major port for the Pacific Rim trade. The County’s extensive network of air, sea, highway and rail facilities have made the County a major transportation hub for regional, national, and international trade.
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Population
The table below summarizes population of the City, the County, and the State for the last five years.
CITY OF ALAMEDA, ALAMEDA COUNTY, and CALIFORNIA
Population
Year
City of
Alameda
Alameda
County
State of
California
2018 81,195 1,651,760 39,519,535
2019 81,457 1,659,608 39,605,361
2020 81,135 1,663,114 39,648,938
2021 78,262 1,662,370 39,303,157
2022 77,784 1,651,979 39,185,605
Source: California Department of Finance, E-4 Population Estimate for Cities, Counties, and the State, 2010-22, with 2010 Census Benchmark.
Employment
The following table summarizes historical employment and unemployment for the County, the State, and the United States:
ALAMEDA COUNTY, CALIFORNIA, and UNITED STATES
Civilian Labor Force, Employment, and Unemployment
(Annual Averages)
Unemployment
Year Area Labor Force Employment Unemployment Rate (1)
2017 Alameda County 848,500 817,600 30,900 3.6%
California 19,312,000 18,393,100 918,900 4.8
United States 160,320,000 153,337,000 6,982,000 4.4
2018 Alameda County 848,200 822,800 25,400 3.0
California 19,398,200 18,582,800 815,400 4.2
United States 162,075,000 155,761,000 6,314,000 3.9
2019 Alameda County 844,400 819,700 24,700 2.9
California 19,411,600 18,627,400 784,200 4.0
United States 163,539,000 157,538,000 6,001,000 3.7
2020 Alameda County 813,800 742,400 71,400 8.8
California 18,821,200 16,913,100 1,908,100 10.1
United States 160,742,000 147,795,000 12,947,000 8.1
2021(2) Alameda County 810,000 760,900 49,100 6.1
California 18,923,200 17,541,900 1,381,200 7.3
United States 161,204,000 152,581,000 8,623,000 5.3
Source: California Employment Development Department, Monthly Labor Force Data for Counties, Annual Average 2010- 21, and US Department of Labor.
(1) The unemployment rate is computed from unrounded data ; therefore, it may differ from rates computed from rounded figures available in this table.
(2) Latest available full-year data.
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Major Employers in the City and Industries in the County
The following table lists the top 10 employers within the City for the 2021 calendar year.
CITY OF ALAMEDA
Top 10 Employers
For the 2021 Calendar Year(1)
% of
Employer Employees Total
Penumbra, Inc. 2,244 2.76%
Alameda Unified School District 1,018 1.25
The North Face 859 1.06
Alameda County Medical Center 746 .92
Telecare Corp 695 .85
Abbott Diabetes Care 600 .74
City of Alameda 538 .66
Exelixis 484 .60
Kaiser Foundation Health Plan 448 .55
U.S. Department of Transportation 368 .45
Total Top 10 8,000 9.84
Source: City of Alameda 2020-21 Annual Comprehensive Financial Report. (1) Latest available full-year data.
The following table lists the top 10 employers within the County for the 2021 calendar year.
COUNTY OF ALAMEDA
Top 10 Employers
For the 2021 Calendar Year(1)
% of
Employer Employees Total
Kaiser Permanent Medical Group Inc. 34,666 4.62%
Tesla 13,000 1.73
Safeway Inc. 9,731 1.30
County of Alameda 9,424 1.26
Sutter Health 9,377 1.25
John Muir Health 6,300 .84
PG&E 5,100 .68
Workday 5,098 .68
Chevron Corp. 4,700 .63
Wells Fargo & Co. 4,354 .58
Total Top 10 101,750 13.55
Source: County of Alameda 2020-21 Annual Comprehensive Financial Report. (2) Latest available full-year data.
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Construction Activity
The following table reflects the five-year history of building permit valuation for the City and the County:
CITY OF ALAMEDA
Building Permits and Valuation
(Dollars in Thousands)
2017 2018 2019 2020 2021(2)
Permit Valuation:
New Single-family $ 17,176 $ 1,629 $ 10,863 $ 16,099 $ 41,345 New Multi-family 11,587 2,426 138,636 74,836 33,038
Res. Alterations/Additions 20,997 36,408 30,007 23,848 8,873 Total Residential 49,761 40,464 179,507 114,785 83,258 Total Nonresidential 78,184 70,299 65,110 137,306 56,221 Total All Building 127,945 110,764 244,618 252,092 139,479
New Dwelling Units:
Single Family 59 18 50 80 199
Multiple Family 63 11 622 249 445
Total 122 29 672 329 644
ALAMEDA COUNTY
Building Permits and Valuation
(Dollars in Thousands)
2017 2018 2019 2020 2021(2)
Permit Valuation:
New Single-family $ 763,677 $ 689,529 $ 675,129 $ 394,500 $ 407,584 New Multi-family 1,307,093 1,431,985 782,536 722,038 829,822 Res. Alterations/Additions 501,276 469,158 512,409 293,866 222,971 Total Residential 2,572,048 2,590,673 1,970,076 1,410,405 1,460,378 Total Nonresidential 1,587,834 1,762,395 1,794,925 998,193 1,316,988 Total All Building 4,159,882 4,353,068 3,765,001 2,408,599 2,777,366
New Dwelling Units:
Single Family 2,175 1,867 1,871 1,152 1,589
Multiple Family 6,889 6,540 4,145 2,610 4,494
Total 9,064 8,407 6,016 3,762 6,083
Source: Construction Industry Research Board: “Building Permit Summary.” Note: Columns may not sum to totals due to independent rounding. (1) Latest available full year data.
Household Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after- tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner -occupants of non - farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). De ducted from this total are personal taxes (federal, State and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance.
According to U.S. government definitions, the resultant figure is commonly known as “dispos able personal income.”
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The following table summarizes the median household effective buying income for the City, the County, the State and the nation for the past five years.
CITY OF ALAMEDA, ALAMEDA COUNTY,
STATE OF CALIFORNIA AND UNITED STATES
Median Household Effective Buying Income
2018 2019 2020 2021 2022
City of Alameda $ 82,542 $ 86,699 $ 91,487 $ 104,380 $ 99,969 Alameda County 79,446 84,435 88,389 99,940 98,721
California 62,637 65,870 67,956 77,058 77,175
United States 52,841 55,303 56,790 64,448 65,326
Source: Nielsen, Inc.
City of Alameda April 20, 2022
CFD No. 22-1 (Alameda Marina) Page B-1
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APPENDIX B
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR
CITY OF ALAMEDA
COMMUNITY FACILITIES DISTRICT NO. 22-1
(ALAMEDA MARINA)
A Special Tax, as hereinafter defined, shall be levied on all Assessor’s Parcels in the City of Alameda (the “City”) Community Facilities District No. 22 -1 (Alameda Marina) (“CFD No. 22 -1”) and collected each Fiscal Year commencing in Fiscal Year 2022/23, in an amount deter mined by the CFD Administrator, through the application of the Rate and Method of Apportionment of Special Taxes as set forth below. All of the real property in CFD No. 22-1, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
“Accessory Dwelling Unit” or “ADU” means a secondary residential unit of limited size, as defined in California Government Code Section 65852.2, as may be amended from time to time, that is accessory to a single -unit dwelling. The ADU may be on the same Assessor’s Parcel as the single- unit dwelling or on a separate Assessor’s Parcel. For purposes of clarification, where an ADU and primary Dwelling Unit are on the same Assessor’s Parcel, the ADU located on such Assessor’s Parcel is not considered a separate Dwelling Unit from the primary Dwelling Unit on such Assessor’s Parcel for purposes of the Special Tax. Should an Assessor’s Parcel contain only an ADU, such Assessor’s Parcel will not be subject to the levy of the Special Tax.
“Acre” or “Acreage” means that acreage shown on the Assessor’s Parcel Map or in the Assessor’s Data for each Assessor’s Parcel. In the event that the Assessor’s Parcel Map or Assessor’s Data shows no acreage, the Acreage for any Assessor’s Parcel may be determined by the CFD Administrator based upon the applicable Fi nal Subdivision Map or parcel map, or by using available spatial data and GIS.
“Act” means the City of Alameda Special Tax Financing Improvement Code, Section 3 -
70.1 et seq. of the City’s Municipal Code, as in effect at the time of formation of CFD No. 22-1. “Administrative Expenses” means the following actual or reasonably estimated costs directly related to the administration of CFD No. 22 -1: the costs of any paying agents/fiscal agents/trustees related to CFD No. 22 -1 Bond payments (including the fees a nd expenses of related counsel); the costs of computing the Special Tax Requirement, the Special Taxes and of preparing the collection schedules for the Special Taxes; the costs of collecting the Special Taxes, including any charges levied by the County Auditor’s Office, County Tax Collector’s Office or County Treasurer’s Office; the costs of the City or designee in complying with the disclosure requirements of the California Government Code and federal securities laws, or otherwise related to CFD No. 22 -1 or CFD No. 22 -1 Bonds; costs of responding to public inquiries regarding the Special Taxes; the costs of the City or designee related to an appeal of the Special Taxes or interpretation of this Rate and Method of Apportionment of Special Taxes; amounts nee ded to pay rebate to the federal government related to CFD No. 22 -1 Bonds; and the costs of commencing and pursuing to completion any foreclosure action arising from delinquent Special Taxes in CFD No. 22 -1. Administrative Expenses shall also include amoun ts estimated or advanced by the City or CFD No. 22-1 for any other administrative purposes of CFD No. 22-1.
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“Apartment Property” means an Assessor’s Parcel of Developed Property on which all or any portion of a structure or structures with multiple for -rent Dwelling Units are located. If Apartment Property is subsequently reclassified as Residential Property, Special Taxes levied on such reclassified Assessor’s Parcels shall be modified to match those of Residential Property. “Assessor’s Data” means the property characteristic data compiled and maintained by the County Assessor for each Assessor’s Parcel, including, but not limited to, Assessor’s Parcel Number, Acreage, and Dwelling Units.
“Assessor’s Parcel” means a lot or parcel shown in an Assessor’s Par cel Map with an assigned Assessor’s Parcel Number.
“Assessor’s Parcel Map” means an official map of the County Assessor designating parcels by Assessor’s Parcel Number.
“Assessor’s Parcel Number” or “APN” means, with respect to an Assessor’s Parcel, that number assigned to such Assessor’s Parcel by the County for purposes of identification. “Assigned Special Tax” means the Assigned Special Tax determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor’s Parcel of Ta xable Property.
“Authorized Facilities” means the public facilities authorized to be financed, in whole or in part, by CFD No. 22-1.
“Backup Special Tax” means the Backup Special Tax applicable to each Assessor’s Parcel of Developed Property, as determined in accordance with the applicable subsection of Section C below.
“Below Market Rate Units” or “BMR Units” means Dwelling Units located on one or more Assessor’s Parcels of Residential Property or Townhome Property that are subject to affordable housing restrictions pursuant to City Municipal Code Section 30 -16. Units constructed within CFD No. 22 -1 shall be designated as BMR Units by the CFD Administrator in the chronological order in which the Building Permits for such BMR Units are issued. “Building Permit” means a permit issued by the City for new construction of a residential or non-residential building on an Assessor’s Parcel. “Buildout” means the state of maximum development of CFD No. 22-1 and any property annexed thereto, based on plans and anticipated development. “CFD Administrator” means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement, and otherwise providing for the levy and collection of the Special Taxes.
“CFD No. 22-1” means City of Alameda Community Facilities District No. 22-1 (Alameda Marina), established by the City Council pursuant to the Act. “CFD No. 22-1 Bonds” means bonds or other Debt (as defined in section 3.70.14 of the Act), whether in one or more series, issued or assumed by or on behalf of the City for CFD No. 22-1 under the Act, and secured by pledge of the Special Taxes. “City” means the City of Alameda, California.
“City Council” means the City Council of the City, acting as the legislative body of CFD No. 22-1.
“County” means the County of Alameda.
“Debt Service” means for each Debt Year, the total amount of principal and interest due on any outstanding CFD No. 22-1 Bonds.
City of Alameda April 20, 2022
CFD No. 22-1 (Alameda Marina) Page B-3
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“Debt Year” means the twelve (12) month period ending on the second debt service payment date of each calendar year.
“Developed Property” means, for each Fiscal Year, all Taxable Property for which a Building Permit was issued after January 1, 2021 and on or before May 1 st of the prior Fiscal Year.
“Dwelling Unit” means one residential unit of any configuration, including, but not limited to, a single family attached or detached dwelling, townhome, condominium, or otherwise. The number of Dwelling Units assigned to each Assessor’s Parcel may be determined by the CFD Administrator (i) referencing Assessor’s Data, (ii) site surveys and physical unit counts, and/or (iii) reviewing City building permit data. An Accessory Dwelling Unit shall not be considered a Dwelling Unit for the purposes of the Special Tax.
“Exempt Property” means all property located within the boundaries of CFD No. 22 -1 which is exempt from the Special Tax pursuant to Section E below. “Expected Dwelling Units” means the number of Dwelling Units anticipated to be developed in each Land Use class as shown in Table 2.
“Expected Revenue” means the Special Tax revenue expected to be generated by each Land Use Class as shown in Table 2.
“Final Map Property” means, in any Fiscal Year, all Taxable Property, exclusive of Developed Property, Taxable Property Owner Association Property, and Taxable Public Property, for which a Final Subdivision Map has recorded prior to May 1 st of the preceding Fiscal Year, but no earlier than January 1, 2021.
“Final Subdivision Map” means a final subdivision map, parcel map or lot line adjustment, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 4285, that creates individual lots for which Building Permits may be issued without further subdivision of such property.
“Fiscal Year” means the period starting July 1 and ending on the following June 30. “GIS”, or geographic information system, means a system designed to capture, store, manipulate, analyze, manage, and present spatial or geographic data. “Indenture” means the indenture, fiscal agent agreement, resolution, or other instrument pursuant to which CFD No. 22-1 Bonds are issued, as modified, amended, and/or supplemented from time to time, and any instrument replacing or supplementing the same. “Land Use Class” means any of the classes listed in Table 1 and Table 2. “Maximum Special Tax” means the Maximum Special Tax, determined in accordance with Section C below, that can be levied in any Fiscal Year on any Asses sor’s Parcel of Taxable Property.
“Non-Residential Floor Area” means the total building square footage of the non - residential building(s) or the non -residential portion of a building with both residential and non - residential areas located on an Assessor’s Parcel of Developed Property, measured from outside wall to outside wall, not including space devoted to stairwells, public restrooms, lighted courts, vehicle parking and areas incident thereto, and mechanical equipment incidental to the operation of such building. The determination of Non -Residential Floor Area shall be made by the CFD Administrator by reference to the Building Permit(s) issued for such Assessor’s Parcel and/or the records of the City’s building division.
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“Non-Residential Property” means a ll Assessor’s Parcels of Developed Property for which a Building Permit permitting the construction of one or more non -residential buildings or facilities has been issued.
“Outstanding CFD No. 22 -1 Bonds” means all CFD No. 22 -1 Bonds which are outstanding under and in accordance with the provisions of the Indenture. “Property Owner Association Property” means, for each Fiscal Year, any property within the boundaries of CFD No. 22 -1 that is owned by a property owner association, including any master or sub-association, but not including any such property that is located directly under a residential structure.
“Proportionately” means, for Developed Property and Final Map Property, that the ratio of the Special Tax levy to the Assigned Special Tax or the Back up Special Tax is equal within each respective Tax Zone. For Undeveloped Property, “Proportionately” means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal within each respective Tax Zone.
“Public Property” means property within the boundaries of CFD No. 22 -1 owned by, irrevocably offered or dedicated to, or for which an easement for purposes of public right -of-way has been granted to the federal government, the State, the County, the City, or any local government or other public agency, provided that any property leased by a public agency to a private entity shall be taxed and classified according to its use. “Residential Property” means all Assessor’s Parcels of Developed Property that is not Townhome Property or Apartment Property for which a Building Permit has been issued for purposes of constructing one or more Dwelling Units.
“Special Tax(es)” means the special tax or special taxes to be levied in each Fiscal Year on each Assessor’s Parcel of Taxable Property within CFD No. 22-1 to fund the Special Tax Requirement.
“Special Tax Requirement” means that amount required in any Fiscal Year for CFD No. 22-1 to (1) pay Debt Service on all Outstanding CFD No. 22 -1 Bonds which is due in the Debt Year that comm ences in such Fiscal Year; (2) pay Administrative Expenses; (3) provide any amount required to establish or replenish a reserve fund in connection with any CFD No. 22 -1 Bonds; (4) provide any amount required to establish or replenish any operating reserve held by the City for Administrative Expenses; (5) provide an amount equal to reasonably anticipated Special Tax delinquencies based on the delinquency rate for Special Taxes levied in the previous Fiscal Year as determined by the CFD Administrator, as limi ted by the Act, and without duplicating any amounts described in clauses (3) or (4). The amounts referred to in clauses (1) through (5) of the preceding sentence may be reduced in any Fiscal Year (in the City’s sole discretion) by (i) interest earnings on or surplus balances in funds and accounts for CFD No. 22-1 Bonds to the extent that such earnings or balances are available to apply against Debt Service pursuant to the Indenture, (ii) proceeds from the collection of penalties associated with delinquent Special Tax, and (iii) any other revenues available to pay Debt Service on the Outstanding CFD No. 22-1 Bonds or other indebtedness as determined by the CFD Administrator. “State” means the State of California.
“Tax Zone” means a mutually exclusive geograph ic area within which the Special Tax may be levied pursuant to this Rate and Method of Apportionment. All the Taxable Property within CFD No. 22-1 at the time of its formation is within Tax Zone No. 1. Additional Tax Zones may be created when property is a nnexed to CFD No. 22 -1, and a separate Maximum Special Tax shall be identified for property within each new Tax Zone at the time of such annexation. The Assessor’s Parcels included within a new Tax Zone when such Parcels are annexed to CFD No. 22-1 shall be identified by Assessor’s Parcel number in the annexation documents at the time of annexation.
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“Taxable Property” means all of the Assessor’s Parcels within the boundaries of CFD No. 22-1 which are not exempt from the Special Tax pursuant to law or Section E below. “Taxable Property Owner Association Property” means all Assessors Parcels of Property Owner Association Property that are not exempt pursuant to Section E herein. “Taxable Public Property” means all Assessors Parcels of Public Property that are not exempt pursuant to Section E herein.
“Taxable Welfare Exempt Property” means all Assessors Parcels of Welfare Exempt Property that are not exempt pursuant to Section E herein. “Townhome Property” means Residential Property generally characterized as having a direct ground floor private entry where living space occurs on multiple levels of roughly the same proportion and having at least one vertical wall extending from ground to roof dividing it from the adjoining Dwelling Unit.
“Trustee” means the trustee or fiscal agent acting as such under the Indenture. “Undeveloped Property” means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Map Property, Taxable Property Owner Association Property, Welfare Exempt Property, or Taxable Public Property. “Welfare Exempt Property” means all Assessor’s Parcels within the boundaries of CFD No. 22 -1 that have been granted a welfare exemption by the County under subdivision (g) of Section 214 of the Revenue and Taxation Code.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, the CFD Administrator shall determine the valid Assessor’s Parcel Numbers for all Taxable Property within CFD No. 22-1. If any Assessor’s Parcel Numbers are no longer valid from the previous Fiscal Year, the CFD Administrator shall determine the new Assessor’s Parcel Number or Numbers that are in effect for the current Fiscal Year. To the extent an Assessor’s Parcel(s) of Taxable Property are subdivided, consolidated or otherwise reconfigured, the Special Tax rates shall be assigned to the new Assessor’s Parcel(s) pursuant to Section C.
Each Fiscal Year, all Assessor’s Parcels within CFD No. 22 -1 shall be classified as follows:
1. Each Assessor’s Parcel shall be determined to be Taxable Property or Exempt Property.
2. Each Assessor’s Parcel of Taxable Property shall further be classified as Developed Property, Final Map Property, Taxable Public Property, Taxable Property Owner Association Property, Taxable Welfare Exempt Property, or Undeveloped Property. Taxable Property shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment of Special Taxes determined pursuant to Sections C and D below.
3. Each Assessor’s Parcel of Developed Property, Taxable Public Property and Taxable Welfare Exempt Property shall further be c lassified as Townhome Property, or Non- Residential Property.
C. MAXIMUM SPECIAL TAX RATES – TAX ZONE NO. 1
1. Developed Property and Final Map Property
The Maximum Special Tax for each Assessor’s Parcel of Developed Property and Final Map Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax.
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a. Assigned Special Tax
The Assigned Special Tax for each Assessor’s Parcel of Developed Property and Final Map Property is shown in Table 1.
TABLE 1
ASSIGNED SPECIAL TAX FOR DEVELOPED PROPERTY AND FINAL MAP PROPERTY FISCAL YEAR 2022/23
Land Use
Class Description Assigned Special Tax
1 Townhome Property – Greater Than or Equal to
2,680 Square Feet $7,942 per Dwelling Unit
2 Townhome Property – 2,430 – 2,679 Square Feet 7,757 per Dwelling Unit 3 Townhome Property – 2,180 – 2,429 Square Feet 7,017 per Dwelling Unit 4 Townhome Property – 1,930 – 2,179 Square Feet 6,992 per Dwelling Unit 5 Townhome Property – 1,680 – 1,929 Square Feet 6,091 per Dwelling Unit 6 Townhome Property – Less Than 1,680 Square Feet 5,498 per Dwelling Unit 7 Non-Residential Property 0.75 per Square Foot of Non- Residential Floor Area
Taxable Public Property and Taxable Welfare Exempt Property shall continue to be assigned to the same land use class as the property was assigned to before becoming Taxable Public Property or Taxable Welfare Exempt Property. Taxable Property Owner Association Property shall be assigned to land use class 7. b. Backup Special Tax
The Backup Special Tax per Land Use Class for each Assessor’s Parcel of Developed Property and Final Map Property, is calculated as follows:
Backup Special Tax = Expected Revenue / Dwelling Units or Non-Residential Floor Area on Developed Property and/or Dwelling Units or Non-Residential Floor Area expected on Final Map Property For each Land Use Class, by reference to Ta ble 2, should the number of Dwelling Units or Non-Residential Floor Are be less than the Expected Dwelling Units or Non-Residential Floor Area when all Assessor’s Parcels are classified as Developed Property and Final Map Property, the Backup Special Tax p er Dwelling Unit or Square Foot of Non-Residential Floor Area shall be adjusted so that the Backup Special Tax per Dwelling Unit or Non -Residential Floor Area is sufficient to generate the Expected Revenue from the levy of Special Taxes on Assessor’s Parce ls in each Land Use Class in any Fiscal Year. The CFD Administrator shall update Table 2 with the revised Dwelling Units or Non -Residential Floor Area and Expected Revenue to be derived from each Land Use Class.
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TABLE 2
EXPECTED DWELLING UNITS AND EXPECTED REVENUE
FISCAL YEAR 2022/23
Land Use
Class
Expected Dwelling Units/Square Feet of
Non-Residential Floor Area
Expected
Revenue
1 13 $103,246
2 13 100,841
3 21 147,357
4 58 405,536
5 14 85,274
6 38 208,924
7 3,000 2,250
Prior to a sale of CFD No. 22-1 Bonds, if a Land Use Class change for an Assessor’s Parcel or Assessor’s Parcels is proposed or identified that will result in a change in the Expected Revenues, no action will be needed pursuant to this Section. Each Fiscal Year, the CFD Administrator shall update Table 2 to show the revised Units and Expected Revenues if a Land Use Class change has been approved.
After a sale of CFD No. 22 -1 Bonds, if a Land Use Class change for an Assessor’s Parcel or Assessor’s Parcels is proposed or identified, the following must be applied:
If the Special Tax revenue from the levy of Special Taxes on Assessor’s Parcels in each respective Land Use Class calculated based on the Land Use Class change is greater than the respective revenue reflected in Table 2 or less than the respective revenue calculated in Table 2, but the reduction in Expected Revenues does not reduce debt service coverage below any minimum debt service coverage assumed in connection with the sale of CFD No. 22 -1 Bonds, no further action is needed, and the CFD Administrator shall update Table 2 to show the revised Expected Revenues.
If the Special Tax revenue from the levy of Special Taxes on Assessor’s Parcels in each respective Land Use Class calculated based on the Land Use Class change are less than the respective revenue reflected in Table 2, and the CFD Administrator determines that the reduction in Expected Revenues would reduce debt service coverage below any minimum debt service coverage assumed in connection with the sale of CFD No. 22 -1 Bonds, the Special Tax that can be levied on the Assessor’s Parcel subject to a Land Use Class change will be subject to one of the following: (i) the landowner requesting the Land Use Class change may make a partial prepayment of Special Taxes for the Assessor’s Parcel or Assessor’s Parcels subject to the Land Use Class change in an amount that will ensure that the reduced Expected Revenues are sufficient to meet any minimum debt service coverage assumed in connection with the sale of CFD No. 22 -1 Bonds or (ii) if a prepayment is not selected, the Assigned Special Tax on the Assessor’s Parcel or Assessor’s Parcels subject to the Land Use Class change shall be increased proportionately until the Expected Revenues are sufficient to maintain any minimum debt service coverage assumed in connection with the sale of CFD No. 22- 1 Bonds.
c. Increase in the Assigned Special Tax and Backup Special Tax On each July 1, commencing on July 1, 2023, the Assigned Special Tax and the Backup Special Tax for Developed Property and Final Map Property shall be increased by an amount equal to two percent (2%) of the am ount in effect for the previous Fiscal Year.
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d. Multiple Land Use Classes
In some instances, an Assessor’s Parcel of Developed Property and Final Map Property may contain more than one Land Use Class. The Special Tax levied on an Assessor’s Parcel shall be th e sum of the Special Tax for all Land Use Classes located on that Assessor’s Parcel.
2. Undeveloped Property
a. Maximum Special Tax
The Maximum Special Tax for each Assessor’s Parcel of Undeveloped Property shall be $166,589.23 per Acre in Fiscal Year 2022/23.
b. Increase in the Maximum Special Tax
On each July 1, commencing on July 1, 2023, the Maximum Special Tax for Undeveloped Property shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAXES
Commencing with Fiscal Year 2022/23 and for each following Fiscal Year, the CFD Administrator shall determine the Special Tax Requirement, and shall levy the Special Tax until the amount of the Special Tax levied equals the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows:
First: The Special Tax shall be levied Proportionately on each Assessor’s Parcel of Developed Property and Taxable Welfare Exempt Property at a rate up to 100% of the applicable Maximum Special Tax to satisfy the Special Tax Requirement.
Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Final Map Property at a rate up to 100% of the Maximum Special Tax for Final Map Property to satisfy the Special Tax Requirement.
Third: If additional monies are needed to satisfy the Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Undeveloped Property at a rate up to 100% of the Maximum Special Tax for Undeveloped Property to satisfy the Special Tax Requirement.
Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied on each Assessor’s Parcel of Taxable Property Owner Association Property at a rate up to 100% of the Maximum Special Tax for Taxable Property Owner Association Property to satisfy the Special Tax Requirement.
Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proporti onately on all Taxable Public Property at a rate up to 100% of the Maximum Special Tax for Taxable Public Property to satisfy the Special Tax Requirement.
E. EXEMPTIONS
1. No Special Tax shall be levied on up to 4.4 Acres of Property Owner Association Propert y, and up to 0.25 Acres of Public Property. Tax -exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes Property Owner Association Property, or Public Property.
2. No Special Tax shall be levied on up to 25 BMR Units. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes BMR Units.
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3. Any property that is granted a welfare exemption pursuant to Section 53340(c) under the Act under subdivision (g) of Section 214 of the Revenue and Taxation Code prior to the issuance of the first series of CFD No. 22 -1 Bonds shall thereafter be exempt from the levy of the Special Tax. Any property that is granted a welfare exemption under subdivision (g) of Section 214 of the Revenue and Taxation Code after the first series of CFD No. 22 -1 Bonds have been issued shall not be considered Welfare Exempt Property and shall not be exempt from the levy of the Special Tax.
4. Property Owner Association Property, that is not exempt from the Special Tax under this section, or pursuant to the Act, shall be classified as Taxable Property Owner Association Property. Taxable Property Owner Association Property shall be subject to the levy of the Special Tax and shall be taxed Proportionately as part of the fifth step in Section D above, at up to 100% of the applicable Maximum Special Tax for Taxable Property Owner Association Property.
5. Public Property, that is not exempt from the Special Tax under this section, or pursuant to the Act, shall be classified as Taxable Public Property. Taxable Public Property shall be subject to the levy of the Special Tax and shall be taxed Proportionately as part of the sixth step in Section D above, at up to 100% of the applicable Maximum Special Tax for Tax able Public Property.
6. Dwelling Units that are ADUs shall not be subject to the levy of the Special Tax.
F. APPEALS
Any property owner may file a written appeal of the Special Taxes with the CFD Administrator claiming that the amount or application of the S pecial Taxes is not correct. The appeal must be filed not later than one calendar year after having paid the Special Taxes that are disputed, and the appellant must be current in all payments of Special Taxes, including the disputed Special Taxes. In addit ion, during the term of the appeal process, all Special Taxes levied must be paid on or before the payment date established when the levy was made.
The appeal must specify the reasons why the appellant claims the Special Taxes are in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination.
If the property owner disagrees with the CFD Administrator’s decision relative to the appeal, the owner may then file a written appeal with the City Council whose subsequent decision shall be final and binding on all interested parties. If the decision of the CFD Administrator or subsequent decision by the City Council requires the Special Taxes to be modified or changed in favor of the property owner, the CFD Administrator shall determine if sufficient Special Tax revenue is available to make a cash refund. If a cash refund cannot be made, then an adjustment shall be made to credit future Special Taxes.
This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to filing any legal action by such owner.
G. INTERPRETATIONS
The City may, by resolution or ordinance, interpret, clarify and/or revise this Rate and Method of Apportionment of Special Taxes to correct any inconsistency, vagueness, or ambiguity as it relates to the Special Taxes, method of apportionment, classification of Assessor’s Parcels, or any definition used herein, as long as once CFD No. 22 -1 Bonds h ave been issued such correction does not materially adversely affect the levy and collection of Special Taxes needed to repay the CFD No. 22- 1 Bonds. In addition, the interpretation and application of any section of this document shall be at the City’s discretion.
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H. MANNER OF COLLECTION
The Special Taxes shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that the CFD Administrator may, directly bill the Special Tax, may collect the Special T ax at a different time or in a different manner as necessary to meet the financial obligations of CFD No. 22 -1, and may covenant to foreclose and may actually foreclose or cause an action for foreclosure to be prosecuted in respect of Assessor’s Parcels of Taxable Property that are delinquent in the payment of the Special Tax.
I. PREPAYMENT OF SPECIAL TAX
The following definition applies to this Section I:
“Future Facilities Costs” means, as of the date of prepayment, the costs, as estimated by the CFD Adm inistrator of all Authorized Facilities financed or anticipated by the City to be financed by CFD No. 22-1, minus (i) the proceeds of any Previously Issued CFD No. 22-1 Bonds which were, at the time of issuance, available to the City for Authorized Facilities.
“Maximum Special Tax Percentage to be Prepaid” means the percentage of the Maximum Special Tax prepaid as determined by the CFD Administrator after application of the prepayment calculation set forth below.
“Previously Issued CFD No. 22-1 Bonds” means all Outstanding CFD No. 22-1 Bonds that have been issued by CFD No. 22-1 prior to the date of prepayment.
1. Prepayment in Full
The Special Tax obligation of an Assessor’s Parcel of Developed Property, Taxable Public Property, Taxable Welfare Exempt Property, Final Map Property, or Undeveloped Property, may be prepaid and permanently satisfied as described herein; provided that there are no delinquent installments of the Special Tax with respect to such Assessor’s Parcel at the time of prepayme nt. An owner of an Assessor’s Parcel intending to prepay the Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 45 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount for such Assessor’s Parcel. Prepayment must be made not less than 75 days prior to the next occurring date that notice of redemption of Outstanding CFD No. 22 -1 Bonds, if any, from the proceeds of such prepayment may be given to the Trustee pursuant to the Indenture. If a prepayment is made prior to the issuance of CFD No. 22 -1 Bonds, the Redemption Premium, Defeasance Amount, and Reserve Fund Credit as calculated below, shall be zero. The CFD Administrator may charge the property owner requesting a prepayment calculation a fee for providing this service.
The Special Tax Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below):
Bond Redemption Amount
plus Redemption Premium
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
less Capitalized Interest Credit
Total: equals Special Tax Prepayment Amount
As of the proposed date of prepayment, the Special Tax Prepayment Amount (define d below) shall be calculated by the CFD Administrator as follows:
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Step Number:
1. Confirm that no Special Tax delinquency apply to such Assessor’s Parcel, and if delinquencies are applicable compute all amounts due, including interest and penalties.
2. For Asses sor’s Parcels of Developed Property, Taxable Public Property and Taxable Welfare Exempt Property compute the Assigned Special Tax and Backup Special Tax.
For Assessor’s Parcels of Final Map Property, and Undeveloped Property to be prepaid, compute the Assigned Special Tax and Backup Special Tax for that Assessor’s Parcel as though it was already designated as Developed Property, based upon the building permits expected to be issued for that Assessor’s Parcel.
3. a. Divide the Assigned Special Tax computed pursuant to Step 2 by the total estimated Assigned Special Tax for CFD No. 22- 1 based on the Developed Property Special Tax which could be charged in the current Fiscal Year on all expected development through Buildout of CFD No. 22-1.
b. Divide the Backup Special Tax computed pursuant to Step 2 by the total estimated Backup Special Tax for CFD No. 22 -1 based on the Developed Property Special Tax which could be charged in the current Fiscal Year on all expected development through Buildout of CFD No. 22-1.
c. Determine which quotient computed pursuant to Step 3.a or 3.b is larger (the “Maximum Special Tax Percentage”).
4. Multiply the Maximum Special Tax Percentage by the Outstanding CFD No. 22 -1 Bonds to compute the principal amount of Outstanding CFD No. 22 -1 Bonds to be redeemed (the “Bond Redemption Amount”).
5. Compute the Future Facilities Costs.
6. Multiply the Maximum Special Tax Percentage by the total Future Facilities Costs to compute the Future Facilities amount to be prepaid (the “Future Facilities Amount”).
7. Multiply the Bond Redemption Amount computed pursuant to Step 4 by the applicable redemption premium (e.g., the redemption price -100%, not including accrued interest), if any, on the Outstanding CFD No. 22 -1 Bonds to be redeemed (the “Redemption Premium”) determined by reference to the Indenture.
8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding CFD No. 22 -1 Bonds (the “Defeasance Amount”).
9. Verify the administrative fees and expenses, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming the Outstanding CFD No. 22-1 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the “Administrative Fees and Expenses”).
10. If reserve funds for the Outstanding CFD No. 22 -1 Bonds held under the Indenture, if any, are at or above 100% of the then reserve requirement (as required by the Indenture) on the prepayment date, a reserve fund credit shall be calculated as a reduction in the applicable reserve requirement for the Outstanding CFD No. 22-1 Bonds to be redeemed pursuant to the prepayment (the “ Reserve Fund Credit”). No Reserve Fund Credit shall be granted if reserve funds are below 100% of the applicable reserve requirement on the prepayment date.
11. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Steps 4, 6, 7, 8 and 9 less the amount computed pursuant to Step 10 (the “ Prepayment Amount”).
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12. From the Prepayment Amount, the amounts computed pursuant to Step 6 shall be used by the City to pay for Future Facilities Costs. The amounts computed pursuant to Step 9, shall be deposited into the appropriate fund as established u nder the Indenture and be used to redeem Outstanding CFD No. 22 -1 Bonds or make Debt Service payments. The amount computed pursuant to Step 8 shall be retained by the City for the payment of Administrative Fees and Expenses.
The Special Tax Prepayment Amou nt may be sufficient to redeem other than a $5,000 increment of Outstanding CFD No. 22 -1 Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of Outstanding CFD No. 22 -1 Bonds or to make Debt Service payments.
Current year Special Taxes that are not yet paid will remain outstanding and will be collected in the manner billed. With respect to any Assessor’s Parcel that is prepa id, the CFD Administrator shall cause a suitable notice to be recorded in compliance with the Act to indicate the prepayment of the Special Tax and the obligation of such Assessor’s Parcel satisfied.
Notwithstanding the foregoing, no prepayment will be allowed unless the Maximum Special Tax that may be levied on Taxable Property both prior to and after the proposed prepayment is at least 1.1 times the maximum annual Debt Service on all Outstanding CFD No. 22-1 Bonds plus annual Administrative Expenses, a s reasonably estimated by the CFD Administrator.
2. Prepayment in Part
The Special Tax may be partially prepaid, provided that a partial prepayment may be made after all authorized CFD No. 22-1 Bonds have been issued and only for Assessor’s Parcels of Developed Property, Taxable Public Property and Taxable Welfare Exempt Property and only if there are no delinquent Annual Special Taxes with respect to such Assessor’s Parcel at the time of partial prepayment. The amount of the prepayment shall be calculated as in Section I.1; except that a partial prepayment shall be calculated by the CFD Administrator according to the following formula:
PP = P
E x F.
These terms have the following meaning:
PP = the partial prepayment
P
E = the Special Tax Prepayment Amount calculated according to Section I.1 F = the Maximum Special Tax Percentage To Be Prepaid
The Special Tax partial prepayment amount must be sufficient to redeem at least a $5,000 increment of Bonds.
The owner of any Assessor’s Parcel who desires such partial prepayment shall notify the CFD Administrator of such owner’s intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid . The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax - Facilities for an Assessor’s Parcel within 45 days of the request and may charge a fee for providing this service.
With respect to any Assessor’s Parcel that is partially prepaid, the CFD A dministrator shall (i) distribute the prepayment funds remitted according to Section I.1, and (ii) indicate in the records of CFD No. 22-1 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to suc h Assessor’s Parcel, equal to the outstanding percentage
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(1.00 - F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor’s Parcel pursuant to Section D.
J. TERM
The Special Tax shall be levied and collected as needed to fund the Special Tax Requirement for up to 40 years from the initial levy of the Special Tax. In any event no Special Tax shall be levied for CFD. No. 22-1 after the 2061/62 Fiscal Year.
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APPENDIX C
SUMMARY OF THE FISCAL AGENT AGREEMENT
The following is a summary of certain provisions of the Fiscal Agent Agreement not otherwise described in the text of this Official Statement. This summary does not purport to be comprehensive or definitive and is subject to all of the complete terms and provisions of the Fiscal Agent Agreement, to which reference is hereby made.
Definitions
“Acquisition Agreement” means the Acquisition and Funding Agreement, dated as of March 15, 2022, between the City and Alameda Marina, LLC, as originally executed and as it may thereafter be amended or supplemented in accordance with its terms.
“Administrative Expenses” means any or all of the following: the fees and expens es of the Fiscal Agent (including any fees or expenses of its counsel), the expenses of the City in carrying out its duties under the Fiscal Agent Agreement (including, but not limited to, the levying and collection of the Special Taxes, and the foreclosur e of the liens of delinquent Special Taxes) including the fees and expenses of its counsel, an allocable share of the salaries of City staff related thereto and a proportionate amount of City general administrative overhead related thereto, any amounts paid by the City from its general funds pursuant to the Fiscal Agent Agreement, any amounts paid or payable to any persons or entities employed by the City in connection with the discharge of any of the City’s obligations under the Fiscal Agent Agreement (including, but not limited to, the calculation of the levy of the Special Taxes, foreclosures with respect to delinquent taxes, and the calculation of amounts subject to rebate to the United States), , and all other costs and expenses of the City or the Fisca l Agent incurred in connection with the discharge of their respective duties under the Fiscal Agent Agreement or in connection with the 2022 Bonds and, in the case of the City, in any way related to the administration of the Bonds or the District. Adminis trative Expenses will include any such expenses incurred in prior years but not yet paid.
“Administrative Expense Fund ” means the fund by that name established by the Fiscal Agent Agreement.
“Agreement” means the Fiscal Agent Agreement, as it may be amen ded or supplemented from time to time by any Supplemental Agreement adopted pursuant to the provisions of the Fiscal Agent Agreement.
“Annual Debt Service ” means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Ye ar, assuming that the Outstanding Bonds are retired as scheduled (including by reason of the provisions of the Fiscal Agent Agreement) providing for mandatory sinking payments), and (ii) the principal amount of the Outstanding Bonds due in such Bond Year (including any mandatory sinking payment due in such Bond Year pursuant to the Fiscal Agent Agreement).
“Auditor” means the auditor/controller of the County, as such other official at the County who is responsible for preparing property tax bills.
“Authorized Officer ” means the City Manager (including any Interim City Manager), the Finance Director, the City Clerk, or any other officer or employee of the City authorized by the City Council of the City or by an Authorized Officer to undertake the action ref erenced in the Fiscal Agent Agreement as required to be undertaken by an Authorized Officer.
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“Bond Counsel ” means (i) Quint & Thimmig LLP, or (ii) any attorney or other firm of attorneys acceptable to the City and nationally recognized for expertise in re ndering opinions as to the legality and tax-exempt status of securities issued by public entities.
“Bond Fund” means the fund by that name established by the Fiscal Agent Agreement.
“Bond Register” means the books for the registration and transfer of Bonds maintained by the Fiscal Agent under the Fiscal Agent Agreement.
“Bond Year” means the one -year period beginning on September 2 in each year and ending on September 1 in the following year except that the first Bond Year will begin on th e Closing Date and end on September 1, 2023.
“Bonds” means, collectively, the 2022 Bonds, and, if the context requires, any Parity Bonds, at any time Outstanding under the Fiscal Agent Agreement or any Supplemental Agreement.
“Business Day” means any day other than (i) a Saturday or a Sunday, or (ii) a day on which banking institutions in the state in which the Principal Office is located are authorized or obligated by law or executive order to be closed.
“Capitalized Interest Account” means the account by that name established under the Fiscal Agent Agreement.
“CDIAC” means the California Debt and Investment Advisory Commission of the office of the State Treasurer of the State of California or any successor agency or bureau thereto.
“City” means the City of Alameda, California.
“Closing Date” means the date upon which there is a physical delivery of the 2022 Bonds in exchange for the amount representing the purchase price of the 2022 Bonds by the Original Purchaser.
“Code” means the Internal Revenue C ode of 1986 as in effect on the date of issuance of the 2022 Bonds or (except as otherwise referenced in the Fiscal Agent Agreement) as it may be amended to apply to obligations issued on the date of issuance of the 2022 Bonds, together with applicable temporary and final regulations promulgated, and applicable official public guidance published, under the Code.
“Continuing Disclosure Agreement” means the Continuing Disclosure Agreement, executed by the City and NBS as the initial Dissemination Agent, as o riginally executed and as it may be amended from time to time in accordance with the terms thereof.
“Costs of Issuance” means items of expense payable or reimbursable directly or indirectly by the City and related to the authorization, sale and issuance o f the 2022 Bonds, which items of expense will include, but not be limited to, printing costs, costs of reproducing and binding documents, closing costs, filing and recording fees, initial fees and charges of the Fiscal Agent including its first annual admi nistration fee, fees and expenses of Fiscal Agent’s counsel, expenses incurred by the City in connection with the issuance of the 2022 Bonds, special tax consultant fees and expenses, municipal advisor fees and expenses, Bond (underwriter’s) discount, appr aisal fees, legal fees and charges, including bond counsel and disclosure counsel, charges for execution, transportation and safekeeping of the 2022 Bonds and other costs, charges and fees in connection with the foregoing.
“Cost of Issuance Fund ” means the fund by that name established by the Fiscal Agent Agreement.
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“County” means the County of Alameda, California.
“DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.
“Debt Service ” means the scheduled amount of interest and amortization of principal (including principal payable by reason of the mandatory sinking payment provisions of the Fiscal Agent Agreement) on the Bonds and the scheduled amount of interest and amortization of principal payable on an y Parity Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period.
“Depository” means (a) initially, DTC, and (b) any other Securities Depos itory acting as Depository pursuant to the Fiscal Agent Agreement.
“District” means the City of Alameda Community Facilities District No. 22 -1 (Alameda Marina), formed pursuant to the Law and the Resolution of Formation.
“District Value” means the market value as determined by reference to (i) an appraisal performed within six (6) months of the date of issuance of any proposed Parity Bonds by an MAI appraiser (the “Appraiser”) selected by the City, of the parcels of real property in the District subject to the levy of the Special Taxes and not delinquent in the payment of any Special Taxes then due and owing, including with respect to such nondelinquent parcels the value of the then existing improvements and any facilities to be constructed or acquired wit h any amounts then on deposit in the Improvement Fund and with the proceeds of any proposed series of Parity Bonds, or (ii), in the alternative, as to some or all of the parcels, the assessed value of all such nondelinquent parcels and improvements thereon as shown on the then current County real property tax roll available to the Finance Director. Neither the City nor the Finance Director will be liable to the Owners, the Original Purchaser or any other person or entity in respect of any appraisal provide d for purposes of this definition or by reason of any exercise of discretion made by any Appraiser pursuant to this definition.
“Fair Market Value ” means the price at which a willing buyer would purchase the investment from a willing seller in a bona fid e, arm’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Code) and, otherwise, the term “Fair Market Value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in acc ordance with applicable regulations under the Code, or (iii) the investment is a United States Treasury Security--State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt.
“Federal Securities” means any of the following which are non -callable and which at the time of investment are legal investments under the laws of the State of California for funds held by the Fiscal Agent:
(i) direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the United States Department of the Treasury) and obligations, the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America, including, without limitation, such of the foregoing which are commonly referred to as “stripped” obligations and coupons; or
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(ii) any of the following obligations of the following agencies of the United States of America: (a) direct obliga tions of the Export -Import Bank, (b) certificates of beneficial ownership issued by the Farmers Home Administration, (c) participation certificates issued by the General Services Administration, (d) mortgage- backed bonds or pass- through obligations issued and guaranteed by the Government National Mortgage Association, (e) project notes issued by the United States Department of Housing and Urban Development, and (f) public housing notes and bonds guaranteed by the United States of America.
“Finance Director” means the Finance Director of the City or any person otherwise acting as the chief financial officer of the City, or such person’s written designee.
“Fiscal Agent” means the Fiscal Agent appointed by the City and acting as an independent fiscal agent with the duties and powers provided in the Fiscal Agent Agreement, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in the Fiscal Agent Agreement.
“Fiscal Year” means the twe lve-month period extending from July 1 in a calendar year to June 30 of the succeeding year, both dates inclusive.
“Improvement Fund” means the fund by that name established pursuant to the Fiscal Agent Agreement.
“Independent Financial Consultant” means any consultant or firm of such consultants appointed by the City or any Authorized Officer, and who, or each of whom: (i) is judged by the person or entity that approved them to have experience in matters relating to the issuance and/or administration of bonds under the Law; (ii) is in fact independent and not under the domination of the City; (iii) does not have any substantial interest, direct or indirect, with or in the City, or any owner of real property in the District, or any real pr operty in the District; and (iv) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make reports to the City.
“Information Services” means the Electronic Municipal Market Access System (referred to as “EMMA”), a facility of the Municipal Securities Rulemaking Board, (at http://emma.msrb.org); and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such services providing information with r espect to called bonds as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.
“Interest Payment Dates” means March 1 and September 1 of each year, commencing March 1, 2023.
“Law” means the City of Alameda Special Tax Financi ng Improvement Code, constituting Section 3-70.1 et seq. of the Alameda Municipal Code.
“Maximum Annual Debt Service” means the largest Annual Debt Service for any Bond Year after the calculation is made through the final scheduled maturity date for any Outstanding Bonds.
“Minimum Administrative Expense Requirement ” means (a) for Fiscal Year 2022 -2023, $50,000; and (b) for each Fiscal Year after Fiscal Year 2022 -2023, an amount equal to 102% of the Minimum Administrative Expense Requirement in effect for the immediately preceding Fiscal Year.
“Moodys” means Moody’s Investors Service, New York, New York, or its successors.
“Officer’s Certificate” means a written certificate of the City signed by an Authorized Officer of the City.
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“Ordinance” means Ordinance No. 3319, adopted by the City Council of the City on May 3, 2022, and any other ordinance of the City levying the Special Taxes.
“Original Purchaser” means the first purchaser of the 2022 Bonds from the City, being Stifel, Nicolaus & Company, Incorporated.
“Outstanding”, when used as of any particular time with reference to Bonds, means (subject to the provisions of the Fiscal Agent Agreement) all Bonds except: (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for c ancellation; (ii) Bonds paid or deemed to have been paid within the meaning of the Fiscal Agent Agreement; and (iii) Bonds in lieu of or in substitution for which other Bonds will have been authorized, executed, issued and delivered by the City pursuant to the Fiscal Agent Agreement or any Supplemental Agreement.
“Owner” or “Bondowner ” means any person who will be the registered owner of any Outstanding Bond.
“Parity Bonds” means bonds issued by the City for the District payable and secured on a parity with any then Outstanding Bonds, pursuant to the Fiscal Agent Agreement.
“Participating Underwriter ” will have the meaning ascribed thereto in the Continuing Disclosure Agreement.
“Permitted Investments ” means the following, but only to the extent that the same are acquired at Fair Market Value and are otherwise legal investments for funds of the City:
(a) Federal Securities.
(b) Registered state warrants or treasury notes or bonds of the State, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the State or by a department, board, agency, or authority of the State, which are rated in one of the two highest short -term or long-term rating categories by either Moody’s or S&P, and which have a maximum term to maturity not to exceed three years.
(c) Time certificates of deposit or negotiable certificates of deposit issued by a state or nationally chartered bank or trust company, or a state or federal savings and loan association which may include the Fiscal Agent and its affiliates; provided, that the certificates of deposit will be one or more of the following: continuously and fully insured by the Federal Deposit Insurance Corporation and/or continuously and fully secured by securitie s described in subdivision (a) or (b) of the definition of Permitted Investments which will have a market value, as determined on a marked -to-market basis calculated at least weekly, and exclusive of accrued interest, or not less than 102 percent of the pr incipal amount of the certificates on deposit.
(d) Commercial paper which at the time of purchase is of “prime” quality of the highest ranking or of the highest letter and numerical rating as provided by either Moody’s or S&P, which commercial paper is li mited to issuing corporations that are organized and operating within the United States of America and that have total assets in excess of five hundred million dollars ($500,000,000) and that have an “A” or higher rating for the issuer’s debentures, other than commercial paper, by either Moody’s or S&P, provided that purchases of eligible commercial paper may not exceed 180 days’ maturity nor represent more than 10 percent of the outstanding commercial paper of an issuing corporation.
Purchases of commercial paper may not exceed 20 percent of the total amount invested pursuant to the definition of Permitted Investments.
(e) A repurchase agreement with a state or nationally charted bank or trust company or a national banking association or government bond dealer reporting to, trading with, and
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recognized as a primary dealer by the Federal Reserve Bank of New York, provided that all of the following conditions are satisfied: (1) the agreement is secured by any one or more of the securities described in subd ivision (a) of the definition of Permitted Investments, (2) the underlying securities are required by the repurchase agreement to be held by a bank, trust company, or primary dealer having a combined capital and surplus of at least one hundred million dollars ($100,000,000) and which is independent of the issuer of the repurchase agreement, and (3) the underlying securities are maintained at a market value, as determined on a marked -to-market basis calculated at least weekly, of not less than 103 percent of the amount so invested.
(f) An investment agreement or guaranteed investment contract with, or guaranteed by, a financial institution the long -term unsecured obligations of which are rated Aa2 and “AA” or better, respectively, by Moody’s and S&P at the time of initial investment. The investment agreement will be subject to a downgrade provision with at least the following requirements: (1) the agreement will provide that within five business days after the financial institution’s long-term unsecured cre dit rating has been withdrawn, suspended, other than because of general withdrawal or suspension by Moody’s or S&P from the practice of rating that debt, or reduced below “AA -” by S&P or below “Aa3” by Moody’s (these events are called “rating downgrades”) the financial institution will give notice to the City and, within the five-day period, and for as long as the rating downgrade is in effect, will deliver in the name of the City or the Fiscal Agent to the City or the Fiscal Agent Federal Securities allowe d as investments under subdivision (a) of the definition of Permitted Investments with aggregate current market value equal to at least 105 percent of the principal amount of the investment agreement invested with the financial institution at that time, an d will deliver additional allowed federal securities as needed to maintain an aggregate current market value equal to at least 105 percent of the principal amount of the investment agreement within three days after each evaluation date, which will be at le ast weekly, and (2) the agreement will provide that, if the financial institution’s long -term unsecured credit rating is reduced below “A3” by Moody’s or below “A-” by S&P, the Fiscal Agent or the City may, upon not more than five business days’ written notice to the financial institution, withdraw the investment agreement, with accrued but unpaid interest thereon to the date, and terminate the agreement
(g) The Local Agency Investment Fund of the State of California.
(h) Investments in a money market m utual fund (including any funds of the Fiscal Agent or its affiliates and including any funds for which the Fiscal Agent or its affiliates provides investment advisory or other management services) rated in the highest rating category (without regard to plus (+) or minus (-) designations) by Moody’s or S&P.
(i) Money market deposit accounts, time deposits and certificates of deposits, issued by commercial banks (including those of the Fiscal Agent, its parent and its affiliates), savings and loan associat ions or mutual savings banks whose short -term obligations of which are rated on the date of purchase “A-1” or better by S&P and “P-1” by Moody’s.
(j) Any other lawful investment for City funds.
“Principal Office” means the corporate trust office of the Fiscal Agent as identified pursuant to the Fiscal Agent Agreement; provided, however, for the purpose of maintenance of the Registration Books and surrender of Bonds for payment, transfer or exchange such term means the office at which the Fiscal Agent con ducts its corporate agency business, or such other or additional offices as may be designated by the Fiscal Agent.
“Project” means the facilities eligible to be funded by the District, as specified by the Resolution of Formation.
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“Rate and Method of Apportionment” means the Rate and Method of Apportionment of Special Tax for the District, as approved by the Resolution of Formation, and as it may be amended from time to time in accordance with the provisions of the Law.
“Record Date” means the fifteenth (15th) day of the month next preceding the month of the applicable Interest Payment Date, whether or not such fifteenth (15th) day is a Business Day.
“Refunding Bonds” means bonds issued by the City for the District the net proceeds of which are used t o refund all or a portion of the then Outstanding Bonds; provided that the debt service on the Refunding Bonds in any Bond Year is not in excess of the debt service on the Bonds being refunded, and the final maturity of the Refunding Bonds is not later tha n the final maturity of the Bonds being refunded.
“Registration Books ” means the records maintained by the Fiscal Agent pursuant to the Fiscal Agent Agreement for the registration and transfer of ownership of the Bonds.
“Regulations” means temporary and permanent regulations promulgated under the Code.
“Reserve Fund” means the fund by that name established pursuant to the Fiscal Agent Agreement.
“Reserve Requirement” means, (a) as of any date of calculation prior to the issuance of Parity Bonds that are not Refunding Bonds, an amount equal to the least of (i) the then Maximum Annual Debt Service, (ii) one hundred twenty -five percent (125%) of the average Annual Debt Service as of the Closing Date, or (iii) ten percent (10%) of the initial principal amount of the 2022 Bonds; and (b) as of any date of calculation from and after the issuance of Parity Bonds that are not Refunding Bonds, an amount equal to the least of (i) the then Maximum Annual Debt Service, (ii) one hundred twenty-five percent (125%) of the average annual debt service as of the date of issuance of the Parity Debt, and (iii) ten percent (10%) of the then outstanding principal amount of the Bonds and the principal amount of the Parity Bonds. Once determined under (a) or (b), th e Reserve Requirement is not subject to increase.
“Resolution” means the Resolution adopted by the City Council of the City on December 6, 2022, authorizing the issuance of the 2022 Bonds.
“Resolution of Formation” means Resolution No. 15891, adopted by the City Council of the City on April 19, 2022.
“S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, New York, New York, or its successors.
“Securities Depositories” means The Depository Trust Company, 55 Water Street, 1SL , New York, New York 10041 -0099, Fax (212) 855 -7232; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.
“Special Tax Fund ” means the fund by that name established by the Fiscal Agent Agreement.
“Special Tax Prepayments ” means the proceeds of any prepayments of Special Taxes received by the City, as calculated pursuant t o the Rate and Method of Apportionment, less any administrative fees or penalties collected as part of any such prepayment.
“Special Tax Prepayments Account” means the account by that name within the Bond Fund established by the Fiscal Agent Agreement.
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“Special Tax Revenues ” means the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien, but will not include interest and penalties, if any, collected with the Special Taxes that are in excess of the rate of interest payable on the Bonds.
“Special Taxes” means the special tax levied within the District pursuant to the Law, the Ordinance and the Fiscal Agent Agreement.
“State” means the State of California.
“Supplemental Agreement” means an agreement the execution of which is authorized by a resolution which has b een duly adopted by the City under the Law and which agreement is amendatory of or supplemental to the Fiscal Agent Agreement, but only if and to the extent that such agreement is specifically authorized under the Fiscal Agent Agreement.
“Tax Consultant” means NBS, or another independent financial or tax consultant retained by the City for the purpose of computing the Special Taxes.
“2022 Bonds” means the City of Alameda Community Facilities District No. 22- 1 (Alameda Marina) 2022 Special Tax Bonds, issued and outstanding under the Fiscal Agent Agreement.
Pledge of Special Tax Revenues
The Bonds are secured by a first pledge of all of the Special Tax Revenues (other than the Special Tax Revenues to be retained by the City or deposited to the Administrati ve Expense Fund pursuant to the Fiscal Agent Agreement, and all moneys deposited in the Bond Fund, the Reserve Fund and, until disbursed as provided in the Fiscal Agent Agreement, in the Special Tax Fund. The Special Tax Revenues and all moneys deposited into said funds (except as otherwise provided in the Fiscal Agent Agreement) are dedicated in the Fiscal Agent Agreement to the payment of the principal of, and interest and any premium on, the Bonds as provided therein and in the Law until all of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in accordance with the Fiscal Agent Agreement.
Amounts in the Improvement Fund, the Administrative Expense Fund, the Costs of Issuance Fund and the Special Tax Revenues to be retained by the City or deposited to the Administrative Expense Fund pursuant to the Fiscal Agent Agreement or deposited to the Improvement Fund pursuant to the Fiscal Agent Agreement, are not pledged to the repayment of the Bonds. The facilities financed by the District are not in any way pledged to pay the debt service on the Bonds.
Any proceeds of the sale, condemnation or destruction of any facilities financed by the District are not pledged to pay the debt service o n the Bonds and are free and clear of any lien or obligation imposed under the Fiscal Agent Agreement.
Funds and Accounts
Special Tax Fund. There is established under the Fiscal Agent Agreement as a separate fund to be held by the Fiscal Agent, the Speci al Tax Fund. There will be deposited to the Special Tax Fund all Special Tax Revenues received by the City, which the City is obligated to transfer, as soon as practicable following receipt by the City, to the Fiscal Agent. In addition, the Fiscal Agent will deposit in the Special Tax Fund amounts to be transferred thereto pursuant to The Fiscal Agent Agreement.
Notwithstanding the foregoing,
(i) with respect to the first Special Tax Revenues collected by the City in any Fiscal Year in the amount of the Minimum Administrative Expense Requirement for such Fiscal
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Year; first, the City may retain all or any portion thereof, and not remit the same to the Fiscal Agent, to the extent the City determines that it needs said amount to pay Administrative Expenses of the City (and the City will so use such amount to pay Administrative Expenses); and second, any remaining portion of such amount will be separately identified by the City and will be deposited by the Fiscal Agent in the Administrative Expense Fund;
(ii) any Special Tax Revenues constituting the collection of delinquencies in payment of Special Taxes will be separately identified by the City and will be deposited by the Fiscal Agent first, in the Bond Fund to the extent needed to pay any past due debt s ervice on the Bonds; second, to the Reserve Fund to the extent needed to increase the amount then on deposit in the Reserve Fund up to the then Reserve Requirement; and third, to the Special Tax Fund for use as described in the Fiscal Agent Agreement; and
(iii) any proceeds of Special Tax Prepayments will be separately identified by the City and will be deposited by the Fiscal Agent as follows (as directed in writing by the Finance Director): (a) that portion of any Special Tax Prepayment constituting the Future Facilities Costs (as defined in the Rate and Method of Apportionment) will be deposited by the Fiscal Agent to the Improvement Fund so long as the Improvement Fund has not theretofore been closed pursuant to the Fiscal Agent Agreement, and if the Im provement Fund has been closed, then such amount will be retained by the City to be used to pay Project costs; and (b) any remaining portion of any Special Tax Prepayment will be deposited by the Fiscal Agent in the Special Tax Prepayments Account establis hed pursuant to the Fiscal Agent Agreement.
Moneys in the Special Tax Fund will be held by the Fiscal Agent for the benefit of the City and the Owners of the Bonds, will be disbursed as provided below and, pending and disbursement, will be subject to a lien in favor of the Owners of the Bonds and the City.
From time to time as needed to pay the obligations of the District, but no later than the Business Day before each Interest Payment Date, the Fiscal Agent will withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority (i) to the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers from the Improvement Fund, the Reserve Fund, the Special Tax Fund and the Capitalized Interest Account to the Bond Fund pursuant to the Fiscal Agent Agreement, such that the amount in the Bond Fund equals the principal (including any sinking payment, or principal due pursuant to optional or special tax prepayment redemptions), premium, if any, and interest due on the Bonds on the next Interest Payment Date, and (ii) to the Reserve Fund an amount, taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserve Fund is equal to the Reserve Requirement; provided that no such transfers will exceed the amount then available to be transferred from the Special Tax Fund.
In addition to the foregoing, if in any Fiscal Year there are sufficient funds in the Special Tax Fund to make the foregoing tr ansfers to the Bond Fund and the Reserve Fund in respect of the Interest Payment Dates occurring in the Bond Year that commences in such Fiscal Year, the Finance Director may direct the Fiscal Agent to transfer, from time to time, any amount in the Special Tax Fund in excess of the amount needed to make transfers to the Bond Fund and the Reserve Fund referred to in the prior paragraph, (i) to the Administrative Expense Fund, if the Finance Director determines that monies are needed to pay Administrative Expenses in excess of the amount then on deposit in the Administrative Expense Fund, or (ii) to the City, to be used for any lawful purpose under the Law.
Moneys in the Special Tax Fund will be invested in accordance with the Fiscal Agent Agreement. Interes t earnings and profits resulting from investment of amounts in the Special Tax Fund will be retained in the Special Tax Fund to be used for the purposes thereof.
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Administrative Expense Fund. There is established under the Fiscal Agent Agreement as a separate fund to be held by the Fiscal Agent, the Administrative Expense Fund, to the credit of which deposits will be made as required by the Fiscal Agent Agreement. Moneys in the Administrative Expense Fund are to be held by the Fiscal Agent for the benefit of the City, and will be disbursed as provided in the Fiscal Agent Agreement. Moneys in this fund are not pledged as security for the 2022 Bonds.
Amounts in the Administrative Expense Fund will be withdrawn by the Fiscal Agent and paid to the City or its order upon receipt by the Fiscal Agent of an Officer’s Certificate stating the amount to be withdrawn, that such amount is to be used to pay an Administrative Expense, and the nature of such Administrative Expense.
Annually, on the last day of each Fisc al Year, the Fiscal Agent will withdraw any amounts then remaining in the Administrative Expense Fund in excess of $25,000.00 that have not otherwise been allocated to pay Administrative Expenses incurred but not yet paid, and which are not otherwise encumbered, and transfer such amounts to the Special Tax Fund.
Moneys in the Administrative Expense Fund will be invested in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from said investment will be retained in the Administrative Expense Fund to be used for the purposes of such fund.
Costs of Issuance Fund. There is established under the Fiscal Agent Agreement as a separate fund to be held by the Fiscal Agent, the Costs of Issuance Fund, to the credit of which a deposit will be made as required by the Fiscal Agent Agreement. Moneys in the Costs of Issuance Fund will be held by the Fiscal Agent and will be disbursed as provided in the Fiscal Agent Agreement. Moneys in this fund are not pledged as security for the 2022 Bonds.
Amounts in the Costs of Issuance Fund will be disbursed from time to time to pay Costs of Issuance, as set forth in a requisition containing respective amounts to be paid to the designated payees, signed by an Authorized Officer and delivered to the Fiscal Agent concurrently with the delivery of the 2022 Bonds. The Fiscal Agent will pay all Costs of Issuance upon receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with resp ect to such payee in such requisition, or upon receipt of an Officer’s Certificate requesting payment of a Cost of Issuance not listed on the initial requisition delivered to the Fiscal Agent on the Closing Date. Each such Officer’s Certificate will be su fficient evidence to the Fiscal Agent of the facts stated therein and the Fiscal Agent will have no duty to confirm the accuracy of such facts. The Fiscal Agent will maintain the Cost of Issuance Fund for a period of 90 days from the Closing Date and then will transfer any moneys remaining therein, including any investment earnings thereon, to the Special Tax Fund, and following such transfer the Fiscal Agent will close the Cost of Issuance Fund.
Moneys in the Cost of Issuance Fund will be invested in acco rdance with the Fiscal Agent Agreement. Interest earnings and profits resulting from said investment will be retained by the Fiscal Agent in the Cost of Issuance Fund to be used for the purposes of such fund.
Bond Fund. There is established under the Fi scal Agent Agreement as a separate fund to be held by the Fiscal Agent, the Bond Fund to the credit of which deposits will be made as required by the Fiscal Agent Agreement, and any other amounts required to be deposited therein by the Fiscal Agent Agreement or the Law. There are also separate accounts created in the Bond Fund held by the Fiscal Agent, consisting of (i) the Capitalized Interest Account and (ii) the Special Tax Prepayments Account t. Moneys in the Bond Fund and the accounts therein will be held by the Fiscal Agent for the benefit of the Owners of the Bonds, will be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as provided below, and, pending such disbursement, will be subject to a lien in favor of the Owners of the Bonds.
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On each Interest Payment Date, and following any transfers required pursuant to the Fiscal Agent Agreement in connection with such Interest Payment Date, the Fiscal Agent will withdraw from the Bond Fund and pay to the Owners of the Bonds the principal of, and interest and any premium, then due and payable on the Bonds, including any amounts due on the Bonds by reason of the sinking payments set forth in the Fiscal Agent Agreement, or a redemption of the Bonds required by the Fisc al Agent Agreement, such payments to be made in the priority listed in the second succeeding paragraph. Notwithstanding the foregoing, amounts in the Bond Fund as a result of a transfer described in clause (ii) of the second paragraph under “Special Tax Fund” above will be immediately disbursed by the Fiscal Agent to pay past due amounts owing on the Bonds. In the event that amounts in the Bond Fund are insufficient for the purpose set forth in the preceding sentence, the Fiscal Agent will withdraw from the Reserve Fund to the extent of any funds therein amounts to cover the amount of such Bond Fund insufficiency. Amounts so withdrawn from the Reserve Fund will be deposited by the Fiscal Agent in the Bond Fund.
If, after the foregoing transfers, there are insufficient funds in the Bond Fund to make the payments provided for in the Fiscal Agent Agreement, the Fiscal Agent will apply the available funds first to the payment of interest on the Bonds, then to the payment of principal due on the Bonds other than by reason of sinking payments, and then to payment of principal due on the Bonds by reason of sinking payments. Each such payment will be made ratably to the Owners of the Bonds based on the then Outstanding principal amount of the Bonds, if there are insufficient funds to make the corresponding payment for all of the then Outstanding Bonds. Any sinking payment not made as scheduled will be added to the sinking payment to be made on the next sinking payment date.
Moneys in the Special Tax Prepayment s Account will be transferred by the Fiscal Agent to the Bond Fund on the next date for which notice of redemption of Bonds can timely be given by the Fiscal Agent under the Fiscal Agent Agreement, and will be used (together with any amounts transferred pursuant to the Reserve Fund provisions of the Fiscal Agent Agreement) to redeem Bonds on the redemption date selected in accordance with the Fiscal Agent Agreement.
All moneys in the Capitalized Interest Account will be transferred to the Bond Fund (a) on the Business Day prior to March 1, 2023 in the amount due on the 2022 Bonds on such date to be used for the payment of Debt Service on the 2022 Bonds due on the immediately succeeding Interest Payment Date, and (b) on the Business Day prior to September 1, 2023 any then remaining amount in the Capitalized Interest Account. When no amounts remain on deposit in the Capitalized Interest Account, the Capitalized Interest Account will be closed.
Moneys in the Bond Fund and the Special Tax Prepayments Account an d the Capitalized Interest Account will be invested in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from investment of amounts in the Bond Fund and the Special Tax Prepayments Account and the Capitalized Interest Acc ount will be retained in the Bond Fund and the Special Tax Prepayments Account and the Capitalized Interest Account, respectively, to be used for the purposes of such fund and accounts as applicable.
If at any time the Fiscal Agent fails to pay principal and interest due on any scheduled payment date for the Bonds, or if funds are withdrawn from the Reserve Fund to pay principal and/or interest on the Bonds, the Fiscal Agent will notify the Finance Director in writing of such failure or withdrawal, and (in addition to any notice required under the Continuing Disclosure Agreement) the Finance Director will notify CDIAC of such failure or withdrawal within 10 days of the failure to make such payment or the date of such withdrawal.
Reserve Fund. There is est ablished under the Fiscal Agent Agreement as a separate fund to be held by the Fiscal Agent, the Reserve Fund to the credit of which a deposit will be made on the Closing Date as required by the Fiscal Agent Agreement, which deposits, in the aggregate, wil l be equal to the initial Reserve Requirement, and deposits will be made as provided in the Fiscal Agent Agreement. Moneys in the Reserve Fund will be held by the Fiscal Agent for the benefit of the
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Owners of the Bonds as a reserve for the payment of principal of, and interest and any premium on, the Bonds and will be subject to a lien in favor of the Owners of the Bonds.
Except as otherwise provided in the Fiscal Agent Agreement, all amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds or, in accordance with the provisions of the Fiscal Agent Agreement, for the purpose of redeeming Bonds from the Bond Fund.
Whenever, on the Business Day before any Interest Payment Date, or on any other date at the request of an Authorized Officer, the amount in the Reser ve Fund exceeds the Reserve Requirement, the Fiscal Agent will provide written notice to the City of the amount of the excess and will transfer an amount equal to the excess from the Reserve Fund to the Bond Fund to be used for the payment of interest on the Bonds on the next Interest Payment Date in accordance with the Fiscal Agent Agreement.
Amounts in the Reserve Fund will be withdrawn, at the written request of an Authorized Officer, for purposes of making payment to the federal government to comply with the Fiscal Agent Agreement.
Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fisca l Agent will transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date to the payment and redemption, in accordance with the Fiscal Agent Agreement, of all of the Outstanding Bonds. In the event t hat the amount so transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund will be transferred to the City to be used for any lawful purpose under the Law. Notwi thstanding the foregoing, no amounts will be transferred from the Reserve Fund pursuant to the Fiscal Agent Agreement until after (i) the calculation, of any amounts due to the federal government following payment of the Bonds and withdrawal of any such am ount under the Fiscal Agent Agreement for purposes of making such payment to the federal government, and (ii) payment of any fees and expenses due to the Fiscal Agent.
Whenever Special Taxes are prepaid and Bonds are to be redeemed with the proceeds of such prepayment pursuant to the Fiscal Agent Agreement, a proportionate amount in the Reserve Fund (determined by the Finance Director on the basis of the principal of Bonds to be redeemed and the then original principal of the Bonds) will be transferred on the Business Day prior to the redemption date by the Fiscal Agent to the Bond Fund to be applied to the redemption of the Bonds pursuant to the Fiscal Agent Agreement.
Moneys in the Reserve Fund will be invested in accordance with the Fiscal Agent Agreement. One Business Day before each Interest Payment Date, interest earnings and profits resulting from said investment will be transferred by the Fiscal Agent to the Bond Fund to be used by the Fiscal Agent for the purposes of such fund, but any such transf er will be made only to the extent that following such transfer the amount on deposit in the Reserve Fund equals the then Reserve Requirement.
Certain Covenants of the City
The City will punctually pay or cause to be paid the principal of and interest and any premium on, the Bonds when and as due in strict conformity with the terms of the Fiscal Agent Agreement and any Supplemental Agreement, and it will faithfully observe and perform all of the conditions, covenants and requirements of the Fis cal Agent Agreement and all Supplemental Agreements and of the Bonds.
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The Bonds are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Bond Fund (incl uding the Capitalized Interest Account and the Special Tax Prepayments Account therein), the Reserve Fund and the Special Tax Fund created under the Fiscal Agent Agreement.
In order to prevent any accumulation of claims for interest after maturity, the Ci ty will not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and will not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest will be extended or funded, whether or not with the consent of the City, such claim for interest so extended or funded will not be entitled, in case of default under the Fiscal Agent Agreement, to the benefits of the Fiscal Agent Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which will not have been so extended or funded.
The City will not encumber, pledge or place any charge or lien upon any of the Special Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien created in the Fiscal Agent Agreement for the benefit of the Bonds, except as permitted by the Fiscal Agent Agreement.
The City will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City, in which complete and correct entries will be made of all transactions relating to the Special Tax Revenues. Such books of record and accounts will at all times during City business hours and following reasonable prior written notice be subject to the inspection of the Owners of not less than ten percent (10%) of the princ ipal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.
The City will preserve and protect the security of the Bonds and the rights of the Owners and will warrant and defend their rights against all claims and deman ds of all persons. From and after the delivery of any of the Bonds by the City, the Bonds will be incontestable by the City.
The City will comply with all applicable provisions of the Law in administering the District; provided that the City will have no obligation to advance any of its own funds for any purpose whatsoever under the Fiscal Agent Agreement.
The City will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of the Fisca l Agent Agreement, failure of the City to comply with the Continuing Disclosure Agreement will not be considered a default on the Bonds or a breach of any other provision of the Fiscal Agent Agreement; however the Participating Underwriter or any 2022 Bondholder may take such actions as may be necessary and appropriate to compel performance by the City of its obligations under the Continuing Disclosure Agreement, including seeking mandate or specific performance by court order.
The City will not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the 2022 Bonds to be “federally guaranteed” within the meaning of section 149(b) of the Code.
The City will comply with all requirements of the Law so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes.
On or about July 1 of each year, the Fiscal Agent will provide the Finance Director with a notice stating the amounts then o n deposit in the Bond Fund and the accounts therein and the Reserve Fund. The receipt of such notice by the Finance Director will in no way affect the obligations of the City under the following three paragraphs. Upon receipt of such notice, the Finance Director will communicate with the Auditor or other appropriate official of the County to
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ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year. In comp uting the amount of Special Taxes to be levied, the City will take into account funds available in the Bond Fund and the accounts therein and the Special Tax Fund to make the payment of debt service on the Bonds due on the Interest Payment Dates occurring in the next calendar year, along with any transfers of investment earnings on amounts in the Reserve Fund pursuant to the Fiscal Agent Agreement to the Bond Fund expected to occur on such Interest Payment Date.
The City will effect the levy of the Special Taxes from time to time during each Fiscal Year in accordance with the Ordinance and the Rate and Method of Apportionment. Specifically, the City will compute the amount of Special Taxes to be so levied each Fiscal Year before the final date on which the Auditor will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next secured or unsecured, as applicable, real property tax roll. Upon the completion of the computation of the amounts of the levy, the City will prepare or cause to be prepared, and will transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next real property tax roll. The Special Taxes so levied will be payable and be collected i n the same manner and at the same time and in the same installment as the taxes on property levied on the tax roll are payable, and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proporti onate penalties and interest after delinquency as do the general ad valorem taxes levied on the County tax roll.
In the event that the City determines to levy all or a portion of the Special Taxes by means of direct billing of the property owners within the District, and to the extent permitted by the Ordinance, the City will, not less than forty-five (45) days prior to the first Interest Payment Date for which the levy is being made, send bills to the property owners in the District for Special Taxes necessary to meet the financial obligations of the District due on the Interest Payment Dates for which the levy is being made, said bills to specify that the amounts so levied will be due and payable in two equal installments with each installment due not le ss than thirty (30) days prior to the related Interest Payment Date and each installment will be delinquent if not paid when due.
In any event, the City will fix and levy the amount of Special Taxes within the District required for the timely payment of p rincipal of and interest on any outstanding Bonds becoming due and payable, including any necessary replenishment of the Reserve Fund to the amount of the then Reserve Requirement and an amount estimated to be sufficient to pay the Administrative Expenses, and will take into account any prepayments of Special Taxes theretofore received by the City. The Special Taxes so levied will not exceed the maximum amounts as provided in the Rate and Method of Apportionment.
The Finance Director is authorized in the Fiscal Agent Agreement to employ consultants to assist in computing the levy of the Special Taxes under the Fiscal Agent Agreement and any reconciliation of amounts levied to amounts received. The fees and expenses of such consultants and the costs and expenses of the Finance Director (including a charge for City staff time) in conducting its duties under the Fiscal Agent Agreement will be an Administrative Expense under the Fiscal Agent Agreement.
The City will adopt, make, execute and d eliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Fiscal Agent Agreement, and for the better assuring and confirming unto the Owners of the rights and benefits provided in the Fiscal Agent Agreement.
The City will not take or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with respect to the proceeds of the 2022 Bonds which, if such action had been rea sonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the 2022 Bonds would have caused the 2022 Bonds to be “arbitrage bonds” within the meaning of section 148 of the Code.
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The City will take all actions necessary to assure the exclusion of interest on the 2022 Bonds from the gross income of the owners of the 2022 Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issu ance of the 2022 Bonds.
The City will order, and cause to be commenced and thereafter diligently prosecute to judgment (unless such delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any Special Tax or in stallment thereof not paid when due as provided in the following paragraph. The Finance Director will notify legal counsel of any such delinquency of which it is aware, and such legal counsel will commence, or cause to be commenced, such proceedings.
On or about August 15 of each Fiscal Year, the Finance Director will compare the amount of Special Taxes theretofore levied in the District to the amount of Special Tax Revenues theretofore received by the City. Following such comparison, or if at any other time the Finance Director becomes aware of any delinquency in the payment of any Special Tax due and owing:
(A) Individual Delinquencies . If the Finance Director determines that any single parcel subject to the Special Tax in the District is delinquen t in the payment of Special Taxes in the aggregate amount of $10,000 or more, or which otherwise is delinquent with respect to two (2) years of Special Tax levies, the Finance Director will send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner by the following October 1, and (if the delinquency remains uncured) foreclosure proceedings will be commenced by the City against the delinquent parcel within 90 days of the sending of such notice and will be diligently pursued by the City to completion. Notwithstanding the foregoing, the City need not take any such action so long as the amount then in the Reserve Fund is at least equal to the Reserve Requirement.
(B) Aggregate Delinquencies. If the Finan ce Director determines that the aggregate amount of Special Taxes levied in the District for the preceding Fiscal Year and theretofore collected is less than ninety-five percent (95%) of the total amount of Special Taxes levied for such Fiscal Year, the Fi nance Director will send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to each property owner with delinquent Special Taxes by the following October 1, and (if any such delinquency remains uncured) foreclosure proceedings will be commenced by the City within 90 days of the sending of such notices against all such delinquent parcels.
The Finance Director is authorized to employ counsel to conduct any such foreclosure proceedings. The fees and expenses of any such c ounsel (including a charge for City staff time) in conducting foreclosure proceedings will be an Administrative Expense under the Fiscal Agent Agreement.
Except as expressly permitted by the Fiscal Agent Agreement, the City will not issue any additional bonds secured by (A) a pledge of Special Taxes on a parity with or senior to the pledge thereof under the Fiscal Agent Agreement; or (B) any amounts in any funds or accounts established under the Fiscal Agent Agreement.
In determining the yield of the 2022 Bonds to comply with the Fiscal Agent Agreement, the City will take into account redemption (including premium, if any) in advance of maturity based on the reasonable expectations of the City, as of the Closing Date, regarding prepayments of Special Taxes and use of prepayments for redemption of the 2022 Bonds, without regard to whether or not prepayments are received or 2022 Bonds redeemed.
The City will assure that the proceeds of the 2022 Bonds are not so used as to cause the 2022 Bonds to satisfy the private business tests of section 141(b) of the Code or the private loan financing test of section 141(c) of the Code.
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The City covenants and agrees in the Fiscal Agent Agreement to not consent or conduct proceedings with respect to a reduction in the max imum Special Taxes that may be levied in the District below an amount, for any Fiscal Year, equal to 110% of the aggregate of the debt service due on the Bonds in such Fiscal Year, plus a reasonable estimate of Administrative Expenses for such Fiscal Year. The Fiscal Agent Agreement acknowledges that Bondowners are purchasing the Bonds in reliance on the foregoing covenant, and that said covenant is necessary to assure the full and timely payment of the Bonds.
The following requirements will apply to the 2022 Bonds, in addition to those requirements under the Fiscal Agent Agreement:
(A) Annual Reporting. Not later than October 30 of each calendar year, beginning with the October 30, 2023, and in each calendar year thereafter until the October 30 following the final maturity of the Bonds, the City will cause the information required by Government Code Section 53359.5(b) to be supplied to CDIAC. The annual reporting will be made using such form or forms as may be prescribed by CDIAC.
No later than January 31 of each calendar year, the City agrees to provide to CDIAC the annual report information required by Section 8855(k)(1) of the California Government Code. Such annual report will be made using such form or forms as may be prescribed by CDIAC.
Additionally, no later than January 31 of each calendar year, the City agrees to provide to the California State Controller, Division of Accounting and Reporting, the annual report information required by Section 12463.2 of the California Government Code.
(B) Other Reporting . If at any time the Fiscal Agent fails to pay principal and interest due on any scheduled payment date for the Bonds, or if funds are withdrawn from the Reserve Fund to pay principal and interest on the Bonds, the Fiscal Agent will noti fy the City of such failure or withdrawal in writing. The City will notify CDIAC and the Original Purchaser of such failure or withdrawal within 10 days of such failure or withdrawal, and the City will provide notice under the Continuing Disclosure Agreem ent of such event as required thereunder.
(C) Special Tax Reporting . The Finance Director will file, or cause to be filed, a report with the City no later than January 1, 2024, and at least once a year thereafter, which annual report will contain: (i) t he amount of Special Taxes collected and expended with respect to the District, (ii) the amount of Bond proceeds collected and expended with respect to the District, and (iii) the status of the Project. It is acknowledged that the Special Tax Fund and the Special Tax Prepayments Account are the accounts into which Special Taxes collected on the District will be deposited for purposes of Section 50075.1(c) of the California Government Code, and the funds and accounts listed in the Fiscal Agent Agreement are the funds and accounts into which Bond proceeds will be deposited for purposes of Section 53410(c) of the California Government Code, and the annual report described in the preceding sentence is intended to satisfy the requirements of Sections 50075.1(d), 50075.3(d) and 53411 of the California Government Code.
(D) Amendment. The reporting requirements of the Fiscal Agent Agreement will be amended from time to time, without action by the City or the Fiscal Agent (i) with respect to subparagraphs (A) and (B) above, to reflect any amendments to Section 53359.5(b) or Section 53359.5(c) of the California Government Code, or Section 8855(k)(1) or Section 12463.2 of the California Government Code, and (ii) with respect to subparagraph (C) above, to reflect any amendments to Section 50075.1, 50075.3, 53410 or 53411 of the California Government Code.
Notwithstanding the foregoing, any such amendment will not, in itself, affect the City’s obligations under the Continuing Disclosure Agreement. The City will notify the Fiscal
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Agent in writing of any such amendments which affect the reporting obligations of the Fiscal Agent under the Fiscal Agent Agreement.
(E) No Liability. None of the City and its officers, agents and employees (including but not limited to the Finance Director), or the Fiscal Agent, will be liable for any inadvertent error in reporting the information required by the Fiscal Agent Agreement.
The Finance Director will provide, or cause to be provided, copies of any reports prepared pursuant to the above described provisions to any Bondowner upon the written request of a Bondowner and payment by the person requesting the information of the cost of the City to produce such information and pay any postage or other delivery cost to provide the same, as determined by the Finance Director. The term “Bondowner” for purposes of the foregoing will include any beneficial owner of the Bonds.
The City covenants not to exercise any rights it may have under the Law to waive delinquency and redemption penalties related to the Special Taxes or to declare Special Tax penalties amnesty program if to do so would materially and adversely affect the interests of the owners of the Bonds. The City further covenants not to permit the tender of Bonds in payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the City having insufficient Special Tax Revenues to pay the principal of and interest on the Bonds that will remain Outstanding following such tender.
The City will not bid at a foreclosure sale of property in respect of delinquent Special Taxes unless it expressly agrees to take the property subject to the lien for Special Taxes imposed by the District and that the Special Taxes levied on the property are payable while the City owns the property.
Deposit and Investment of Moneys in Funds
Moneys in any fund or account created or established by the Fiscal Agent Agreement and held by the Fiscal Agent will be invested by the Fiscal Agent in Permitted Investments, as directed pursuant to an Officer’s Certificate filed with the Fiscal Agent at least two (2) Business Days in advance of the making of such investments. The Officer’s Certificate will contain a certification to the Fiscal Agent that the investments being directed are Permitted Investments as required under the Fiscal Agent Agreement. In the absence of any such Officer’s Certificate, the Fiscal Agent will invest any such moneys in Permitted Investments describ ed in clause (h) of the definition thereof; provided, however, that any such investment will be made by the Fiscal Agent only if, prior to the date on which such investment is to be made, the Fiscal Agent will have received an Officer’s Certificate specifying a specific money market fund into which the funds will be invested and, if no such Officer’s Certificate is so received, the Fiscal Agent will hold such moneys uninvested.
Moneys in any fund or account created or established by the Fiscal Agent Agreement and held by the City will be invested by the City in any lawful investments that the City may make or in any Permitted Investment, which in any event by their terms mature prior to the date on which such moneys are required to be paid out under the Fiscal Agent Agreement. Obligations purchased as an investment of moneys in any fund will be deemed to be part of such fund or account, subject, however, to the requirements of the Fiscal Agent Agreement for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts. Whenever in the Fiscal Agent Agreement any moneys are required to be transferred by the City to the Fiscal Agent, such transfer may be accomplished by transferring a like amount of Permitted Investments.
The Fiscal Agent or the Finance Director may act as principal or agent in the acquisition or disposition of any investment, and all investments may be made through the Fiscal Agent’s investment department or that of its affiliates. The Fiscal Agen t or its affiliates may act as sponsor, agent manager or depository with regard to any Permitted Investment. Neither the Fiscal Agent nor
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the Finance Director will incur any liability for losses arising from any investments made pursuant to the applicable provisions of the Fiscal Agent Agreement.
Except as otherwise provided in the next sentence, the City will direct or make investments under the Fiscal Agent Agreement such that all investments of amounts deposited in any fund or account created by or pu rsuant to the Fiscal Agent Agreement, or otherwise containing gross proceeds of the Bonds (within the meaning of section 148 of the Code) will be acquired, disposed of, and valued (as of the date that valuation is required by the Fiscal Agent Agreement or the Code) at Fair Market Value. The City will direct or make investments under the Fiscal Agent Agreement such that investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Code and (unless valuation is undertaken at least annually) investments in the Reserve Fund will be valued at their present value (within the meaning of section 148 of the Code). The Fiscal Agent will have no duty in connection with the determination of the Fair Market Value of any investment other than to follow: (A) its normal practices in the purchase, sale and determining the value of Permitted Investments; and (B) the investment directions of the City.
Investments in any and all funds and accounts may be comm ingled in a separate fund or funds for purposes of making, holding and disposing of investments, notwithstanding provisions in the Fiscal Agent Agreement for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent or the Finance Director under the Fiscal Agent Agreement, provided that the Fiscal Agent or the Finance Director, as applicable, will at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in the Fiscal Agent Agreement.
The Fiscal Agent will sell or present for redemption, any investment security whenever it will be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and neither the Fiscal Agent nor the Finance Director will be liable or responsible for any loss resulting from the acquisition or disposition of such investment secur ity in accordance with the Fiscal Agent Agreement.
The City acknowledges that regulations of the Comptroller of the Currency grant the City the right to receive brokerage confirmations of security transactions to be effected by the Fiscal Agent under the Fiscal Agent Agreement as they occur. The City specifically waives the right to receive such notification to the extent permitted by applicable law and agrees that it will instead receive monthly cash transactions statements which include detail for the i nvestment transactions effected by the Fiscal Agent under the Fiscal Agent Agreement; provided, however, that the City retains its rights to, upon written request to the Fiscal Agent, receive brokerage confirmation on any investment transaction requested by the City and effected by the Fiscal Agent at no additional cost.
Rebate of Excess Investment Earnings to the United States
The City will take any and all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the 2022 Bonds.
The City will direct the Fiscal Agent to withdraw such amounts from the Reserve Fund as necessary to make any required rebate payments, and pay such amounts to the federal government as required by the Code and the Regulations. In the event of any shortfall in amounts available to make such payments, the City will make such payment from any amounts available in the Administrative Expense Fund or from any other lawfully available funds of the District. Any fees or expenses incurred by the City under or pursuant to the foregoing provisions of the Fiscal Agent Agreement are Administrative Expenses.
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In order to provide for the ad ministration of the actions described in the preceding paragraph, the Finance Director may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the Finance Director may deem appropriate an d in addition, and without limitation of the provisions of the Fiscal Agent Agreement, the Finance Director may rely conclusively upon and be fully protected from all liability in relying upon the opinions, determinations, calculations and advice of such a gents, attorneys and consultants employed under the Fiscal Agent Agreement. The Fiscal Agent may rely conclusively upon the City’s determinations, calculations and certifications required by the Fiscal Agent Agreement. The Fiscal Agent will have no respons ibility to independently make any calculation or determination or to review the City’s calculations.
Liability of City
The City will not incur any responsibility in respect of the Bonds or the Fiscal Agent Agreement other than in connection with the duti es or obligations explicitly in the Fiscal Agent Agreement or in the Bonds assigned to or imposed upon it. The City will not be liable in connection with the performance of its duties under the Fiscal Agent Agreement, except for its own negligence or will ful default. The City will not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions covenants or agreements of the Fiscal Agent in the Fiscal Agent Agreement or of any of the documents executed by the Fiscal Agent in connection with the Bonds, or as to the existence of a default or event of default thereunder.
In the absence of bad faith, the City, including the Finance Director, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the City and conforming to the requirements of the Fiscal Agent Agreement. The City, including the Finance Director, will not be liable for any error of judgment made in good faith unless it will be proved that it was negligent in ascertaining the pertinent facts.
No provision of the Fiscal Agent Agreement will require the City to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Special Tax Revenues) in the performance of any of its obligations under the Fiscal Agent Agreement, or in the exercise of any of its rights or powers, if it will have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
The City may rely and will be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The City may consult with counsel, who may be the City Attorney, with regard to legal questions, and the opinion of such counsel will be f ull and complete authorization and protection in respect of any action taken or suffered by it under the Fiscal Agent Agreement in good faith and in accordance therewith.
The City will not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactory established, if disputed.
Whenever in the administration of its duties under the Fiscal Agent Agreement the City will deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action under the Fiscal Agent Agreement, such matter (unless other evidence in respect thereof be specifically prescribed in the Fiscal Agent Agreement) may, in the absence of willful misconduct o n the part of the City, be deemed to be conclusively proved and established by a certificate of the Fiscal Agent or other appropriate agent or consultant, and such certificate will be full warrant to the City for any action taken or suffered under the prov isions of the Fiscal Agent Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the City may, in lieu thereof,
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accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.
In order to perform its duties and obligations under the Fiscal Agent Agreement, the City and/or the Finance Director may employ such persons or entities as it deems necessary or advisable.
The City will not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and will be entitled to rely, and will be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities.
Fiscal Agent
U.S. Bank Trust Company, National Association, at its corporate trust office in San Francisco, California is appointed Fiscal Agent and paying agent for the Bonds. The Fiscal Agent undertakes to perform such duties, and only such duties, as are specifically set forth in th e Fiscal Agent Agreement, and no implied covenants or obligations will be read into the Fiscal Agent Agreement against the Fiscal Agent.
Any company or association into which the Fiscal Agent may be merged or converted or with which it may be consolidated or any company or association resulting from any merger, conversion or consolidation to which it will be a party or any company or association to which the Fiscal Agent may sell or transfer all or substantially all of its corporate trust business, provided such company or association will be eligible under the following paragraph of this Section, will be the successor to such Fiscal Agent without the execution or filing of any paper or any further act, anything in the Fiscal Agent Agreement to the contrary notwithstanding. The Fiscal Agent will give the Finance Director written notice of any such succession under the Fiscal Agent Agreement.
The City may remove the Fiscal Agent initially appointed, and any successor thereto, and may appoint a successor or successors thereto, but any such successor will be a bank, association or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision or examination by fede ral or state authority. If such bank, association 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 the Fiscal A gent Agreement, combined capital and surplus of such bank, association or trust company will be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
The Fiscal Agent may at any time resign by giving written notice to the City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the City will promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of th e Fiscal Agent will become effective only upon acceptance of appointment by the successor Fiscal Agent. Upon such acceptance, the successor Fiscal Agent will be vested with all rights and powers of its predecessor under the Fiscal Agent Agreement without any further act.
If no appointment of a successor Fiscal Agent will be made pursuant to the foregoing provisions of the Fiscal Agent Agreement within forty-five (45) days after the Fiscal Agent will have given to the City written notice or after a vacancy in the office of the Fiscal Agent will have occurred by reason of its inability to act, the Fiscal Agent or any Bondowner may apply to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent.
If, by reason of the judgment of any court, or reasonable agency, the Fiscal Agent is rendered unable to perform its duties under the Fiscal Agent Agreement, all such duties and all o f the rights and powers of the Fiscal Agent under the Fiscal Agent Agreement will be assumed by and vest in the Finance Director for the benefit of the Owners. The City covenants for the direct benefit of the Owners that its Finance Director in such case will be vested with all of the rights and powers of the Fiscal Agent under the Fiscal Agent Agreement, and will assume all of the responsibilities and
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perform all of the duties of the Fiscal Agent under the Fiscal Agent Agreement, in trust for the benefit of the Owners of the Bonds. In such event, the Finance Director may designate a successor Fiscal Agent qualified to act as Fiscal Agent under the Fiscal Agent Agreement.
The recitals of facts, covenants and agreements in the Fiscal Agent Agreement and in the Bonds contained will be taken as statements, covenants and agreements of the City, and the Fiscal Agent assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of the Fiscal Agent Agree ment or of the Bonds, or will incur any responsibility in respect thereof, other than in connection with the duties or obligations in the Fiscal Agent Agreement or in the Bonds assigned to or imposed upon it. The Fiscal Agent will not be liable in connection with the performance of its duties under the Fiscal Agent Agreement, except for its own negligence or willful misconduct. The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or o ther disclosure material prepared or distributed with respect to the issuance of the Bonds.
In the absence of negligence or willful misconduct on its part, the Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of th e opinions expressed therein, upon certificates or opinions furnished to the Fiscal Agent and conforming to the requirements of the Fiscal Agent Agreement; but in the case of any such certificates or opinions by which any provisions of the Fiscal Agent Agr eement are specifically required to be furnished to the Fiscal Agent, the Fiscal Agent will be under a duty to examine the same to determine whether or not they conform to the requirements of the Fiscal Agent Agreement. Except as provided above in this paragraph, Fiscal Agent will be protected and will incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith, reasonably and in accordance with the terms of the Fiscal Agent Agreement, upon any resolution, order, notice, r equest, requisition, Officer’s Certificate, consent or waiver, certificate, statement, affidavit, or other paper or document which it will in good faith reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of the Fiscal Agent Agreement, and the Fiscal Agent will not be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument.
The Fiscal Agent will not be liable for any error of judgment made in good faith by a responsible officer unless it will be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts.
No provision of the Fiscal Agent Agreement will require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties under the Fiscal Agent Agreement, or in the exercise of any of its rights or powers.
The Fiscal Agent may become the owner of the Bonds with the same rights it would have if it were not the Fiscal Agent.
The Fiscal Agent will have no duty or obligation whatsoever to enforce the collection of Special Taxes or other funds to be deposited with it under the Fiscal Agent Agreeme nt, or as to the correctness of any amounts received, and its liability will be limited to the proper accounting for such funds as it will actually receive.
The Fiscal Agent may consult with counsel, who may be counsel of or to the City, with regard to le gal questions, and the opinion of such counsel will be full and complete authorization and protection in respect of any action taken or suffered by it under the Fiscal Agent Agreement in good faith and in accordance therewith.
In order to perform its duti es and obligations under the Fiscal Agent Agreement, the Fiscal Agent may employ such persons or entities as it deems necessary or advisable. The Fiscal Agent will not be liable for any of the acts or omissions of such persons or entities employed by it i n good
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faith under the Fiscal Agent Agreement, and will be entitled to rely, and will be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities.
The Fiscal Agent agrees to accept and act upo n instructions or directions pursuant to the Fiscal Agent Agreement sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods; provided, however, that the Fiscal Agent will have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate will be amended and replaced whenever a person is to be added or deleted from the listing. If the City elects to give the Fiscal Agent e-mail or facsimile instructions (or instructions by a similar electronic method) and the Fiscal Agent in its discretion elects to act upon such instructions, the Fiscal Agent’s reasonable understanding of such instruc tions will be deemed controlling. The Fiscal Agent will not be liable for any losses, costs or expenses arising directly or indirectly from the Fiscal Agent’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The City agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Fiscal Agent, including without limitation the risk of interception and misuse by third parties.
The Fiscal Agent will not be considered in breach of or in default in its obligations under the Fiscal Agent Agreement or progress in respect thereto in the event of delay (“unavoidable delay”) in the performance of such obl igations due to unforeseeable causes beyond its control and without its own fault or negligence, including, but not limited to, acts of God or of the public enemy or terrorists, acts of a government, fires, floods, pandemics, epidemics, recognized public e mergencies, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, war, civil or military disturbances, nuclear or natural catastophes, inability to procure or general sabotage or rationing of labor, equipment, fac ilities, sources of energy, material or supplies in the open market, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes, interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services, and hacking, cyber -attacks, or other use or infiltration of the Fiscal Agent’s technological infrastructure exceeding authorized access or any similar event and/or occurrences beyond the control of the Fiscal Agent.
The Fiscal Agent will provide to the City such information relating to the Bonds and the funds and accounts maintained by the Fiscal Agent under the Fiscal Agent Agreement as the City will reasonably request, including but not limited to periodic cash transaction statements which include detail for all investment transactions effected by the Fiscal Agent or brokers selected by the City. Upon the City’s election, such statements will be delivered via the Fiscal Agent’s online service and upon electing such service, paper statements will be provided only upon request.
The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correct entries will be made of all transactions relating to the expenditure of amounts disbursed from the Improvement Fund, the Special Tax Fund, the Bond Fund, the Special Tax Prepayments Account, the Capitalized Interest Account, the Reserve Fund, the Administrative Expense Fund and the Costs of Issuance Fund. Such books of record and accounts will upon reasonable prior notice at all times during business hours be subject to the inspection of the City and the Owners of not less than ten percent (10%) of the princ ipal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.
The Fiscal Agent may rely and will be protected in acting or refraining from acting upon any notice, resolution, request, requisition, Officer’s Certificate, c onsent, order, certificate, report, warrant, Bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties.
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The Fiscal Agent will not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed.
Whenever in the administration of its duties under the Fiscal Agent Agreement the Fiscal Agent will deem it neces sary or desirable that a matter be proved or established prior to taking or suffering any action under the Fiscal Agent Agreement, such matter (unless other evidence in respect thereof be specifically prescribed in the Fiscal Agent Agreement) may, in the a bsence of willful misconduct on the part of the Fiscal Agent, be deemed to be conclusively proved and established by a certificate of the City, and such certificate will be full warrant to the Fiscal Agent for any action taken or suffered under the provisi ons of the Fiscal Agent Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.
The City will pay to the Fiscal Agent from time to time, promptly upon written request, reasonable compensation for all services rendered as Fiscal Agent under the Fiscal Agent Agreement, and also all reasonable expenses, charges, counsel fees and other d isbursements, including those of their attorneys, agents and employees, incurred in and about the performance of their powers and duties under the Fiscal Agent Agreement, but the Fiscal Agent will not have a lien therefor on any funds at any time held by it under the Fiscal Agent Agreement. The City further agrees, to the extent permitted by applicable law, to indemnify and save the Fiscal Agent, its officers, employees, directors and agents harmless against any liabilities which it may incur in the exerc ise and performance of its powers and duties hereunder (including legal fees and expenses) which are not due to its negligence or willful misconduct. The obligation of the City under this Section will survive resignation or removal of the Fiscal Agent und er the Fiscal Agent Agreement and payment of the Bonds and discharge of the Fiscal Agent Agreement, but any monetary obligation of the City arising under this Section will be limited solely to amounts on deposit in the Administrative Expense Fund.
Amendment of the Fiscal Agent Agreement
The Fiscal Agent Agreement and the rights and obligations of the City and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting o f Owners, or with the written consent without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in the Fiscal Agent Agreement. No such modification or amendment will (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on, any Bond, without the express consent of t he Owner of such Bond, or (ii) permit the creation by the City of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Law, the laws of the State of California or the Fiscal Agent Agreement), or reduce the percentage of Bonds required for the amendment of the Fiscal Agent Agreement. Any such amendment may not modify any of the rights or obligations of the Fiscal Agent without its written consent.
The Fiscal Agent Agreement and the rights and obligations of the City and of the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes:
(A) to add to the covenants and agreements of the City in the Fiscal Agent Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power reserved to or c onferred upon the City in the Fiscal Agent Agreement;
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(B) to make modifications not adversely affecting any outstanding series of Bonds of the City in any material respect;
(C) to make such provisions for the purpose of curing any ambiguity, or of curi ng, correcting or supplementing any defective provision contained in the Fiscal Agent Agreement, or in regard to questions arising under the Fiscal Agent Agreement, as the City may deem necessary or desirable and not inconsistent with the Fiscal Agent Agreement, and which will not adversely affect the rights of the Owners of the Bonds;
(D) to make such additions, deletions or modifications as may be necessary or desirable to assure the exclusion from gross income, for purposes of federal income taxation, of interest on the 2022 Bonds; and
(E) in connection with the issuance of Parity Bonds under and pursuant to the Fiscal Agent Agreement.
The Fiscal Agent may in its discretion, but will not be obligated to, enter into any such Supplemental Agreement authorized by the Fiscal Agent Agreement which materially adversely affects the Fiscal Agent’s own rights, duties or immunities under the Fiscal Agent Agreement or otherwise with respect to the Bonds or any agreements related thereto. The Fiscal Agent may request and will be fully protected in relying upon, an opinion of Bond Counsel that any proposed Supplemental Agreement complies with the applicable requirements of the Fiscal Agent Agreement.
The City may at any time call a meeting of the Owners. In such event the City is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof, and to fix and adopt rules and regulations for the conduct of said meeting.
The City and the Fiscal Agent may at any time adopt a Supp lemental Agreement amending the provisions of the Bonds or of the Fiscal Agent Agreement or any Supplemental Agreement, to the extent that such amendment is permitted by the Fiscal Agent Agreement, to take effect when and as provided below. The City or the Fiscal Agent may obtain an opinion of Bond Counsel that such Supplemental Agreement complies with the provisions of the Fiscal Agent Agreement, and the City and Fiscal Agent may rely conclusively upon such opinion. A copy of such Supplemental Agreement, together with a request to Owners for their consent thereto, will be mailed by first class mail, by the Fiscal Agent to each Owner of Bonds Outstanding, but failure to mail copies of such Supplemental Agreement and request will not affect the validity of the Supplemental Agreement when assented to as provided in the Fiscal Agent Agreement.
Such Supplemental Agreement will not become effective unless there will be filed with the Fiscal Agent the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in the Fiscal Agent Agreement) and a notice will have been mailed as provided in the Fiscal Agent Agreement.
Each such consent will be effective onl y if accompanied by proof of ownership of the Bonds for which such consent is given. Any such consent will be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice provided for in the Fiscal Agent Agreement has been mailed.
After the Owners of the required percentage of Bonds will have filed their consents to the Supplemental Agreement, the City will mail a notice to the Owners in the manner provided in the Fiscal Agent Agreement for the mailing of the Supplemental Agreement, stating in substan ce that the Supplemental Agreement has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in the Fiscal Agent Agreement (but failure to mail copies of said notice will not affect the validity of the Supple mental Agreement or consents thereto). Proof of the mailing of such notice will be filed with the Fiscal Agent. The Supplemental Agreement will
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become effective upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement will be deemed conclusively binding (except as otherwise specifically provided in the Fiscal Agent Agreement) upon the City and the Owners of all Bonds at the expiration of sixty (60) days after such filing, except in the event of a final d ecree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period.
From and after the time any Supplemental Agreement becomes effective, the Fiscal Agent Agreement will be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations under the Fiscal Agent Agreement of the City and all Owners of Bonds Outstanding will thereafter be determined, exercised and e nforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Agreement will be deemed to be part of the terms and conditions of the Fiscal Agent Agreement for any and all purposes.
Discharge of Agreement
The City will have the option to pay and discharge the entire indebtedness on all or any portion of the Bonds Outstanding in any one or more of the following ways:
(A) by well and truly paying or causing to be paid the principa l of, and interest and any premium on, such Bonds Outstanding, as and when the same become due and payable;
(B) by depositing with the Fiscal Agent, in trust, at or before maturity, money which, together with the amounts then on deposit in the funds and accounts provided for in the Fiscal Agent Agreement is fully sufficient to pay such Bonds Outstanding, including all principal, interest and redemption premiums; or
(C) by irrevocably depositing with the Fiscal Agent, in trust, cash and Federal Securities in such amount as the City will determine as confirmed by Bond Counsel, an Independent Financial Consultant or an independent certified public accountant will, together with the interest to accrue thereon and moneys then on deposit in the fund and accounts provided for in the Fiscal Agent Agreement, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates.
If the City will have taken an y of the actions specified in (A), (B) or (C) above, and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption will have been given as in the Fiscal Agent Agreement provided or provision satisfactory to the Fiscal Agent w ill have been made for the giving of such notice, then, at the election of the City, and notwithstanding that any Bonds will not have been surrendered for payment, the pledge of the Special Taxes and other funds provided for in the Fiscal Agent Agreement a nd all other obligations of the City under the Fiscal Agent Agreement with respect to such Bonds Outstanding will cease and terminate.
Notice of such election will be filed with the Fiscal Agent. Notwithstanding the foregoing, the obligations of the City to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon, to pay all amounts owing to the Fiscal Agent pursuant to the Fiscal Agent Agreement, and otherwise to assure that no action is taken or failed to be ta ken if such action or failure adversely affects the exclusion of interest on the Bonds from gross income for federal income tax purposes, will continue in any event.
Upon compliance by the City with the foregoing with respect to all Bonds Outstanding, any funds held by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent, which are not required for the purposes of the preceding paragraph, will be paid over to the City and any Special Taxes thereafter received by the City will not be remitted to the Fiscal Agent but will be retained by the City to be used for any purpose permitted under the Law.
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APPENDIX D
FORM OF OPINION OF BOND COUNSEL
December __, 2022
City Council
City of Alameda, California
2263 Santa Clara Avenue
Alameda, California 94501
OPINION: $____________ City of Alameda Community Facilities District No. 22 -1 (Alameda Marina) 2022 Special Tax Bonds
Members of the City Council:
We have acted as bond counsel to the City of Alameda, California (the “City”) in connection with the issuance by the City, for and on behalf of the City of Alameda Community Facilities District No. 22 -1 (Alameda Marina) (the “District”), of its $__________ __ City of Alameda Community Facilities District No. 22-1 (Alameda Marina) 2022 Special Tax Bonds (the “Bonds”), pursuant to the City of Alameda Special Tax Financing Improvement Code, constituting Section 3 -70.1 of the Alameda Municipal Code (the “Law”), a Fiscal Agent Agreement, dated as of December 1, 2022, by and between the City, for and on behalf of the District, and U.S. Bank Trust Company, National Association, as fiscal agent ( the “Fiscal Agent Agreement”), and Resolution No. _____ adopted by the City Council of the City on December 6, 2022 (the “Resolution”).
In connection with this opinion, we have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Resolution and in the Fiscal Agent Agreement, and in the certified proceedings and certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation.
Based upon the foregoing, we are of the opinion, under existing law, as follows:
1. The City is a municipal corporation and chartered city organized and existing under its charter and the laws of the State of California, with the power to enter into the Fiscal Agent Agreement and perform the agreements on its part contained therein and issue the Bonds.
2. The Fiscal Agent Agreement has been duly entered into by the City and constitutes a valid and binding obligation of the City enforceable upon the City in accordance with its terms.
3. Pursuant to the Law, the Fiscal Agent Agreement creates a valid lien on the funds pledged by the Fiscal Agent Agreement for the security of the Bonds, on a parity with the pledge thereof with respect to any future Parity Bonds that may be issued under, and as such capitalized term is defined in, the Fiscal Agent Agreement.
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4. The Bonds have been duly authorized, executed and delivered by the City and are valid and binding limited obligations of the City for the District, payable solely from the sources provided therefor in the Fiscal Agent Agreement.
5. Subject to the City’s compliance with certain covenants, interest on the Bonds is excludable from gross income of the owner s thereof for federal income tax purposes , and is not included as an item of tax preference in computing the alternative minimum tax for individuals under the Internal Revenue Code of 1986, as amended. For tax years beginning after December 31, 2022, interest on the Bonds may affect the corporate alternative minimum tax for certain corporations. Failure by the City to comply with certain of such covenants could cause interest on the Bonds to be includable in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds.
6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California.
Ownership of the Bonds may result in other tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.
The rights of the owners of the Bonds and the enforceability of the Bonds, the Resolution and the Fiscal Agent Agreement may be subject to bankruptcy, insolvency, reorga nization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and also may be subject to the exercise of judicial discretion in accordance with general principles of equity.
In rendering this opinion, we have reli ed upon certifications of the City and others with respect to certain material facts. Our opinion represents our legal judgment based upon such review of the law and facts that we deem relevant to render our opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.
Respectfully submitted,
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APPENDIX E
FORM OF CONTINUING DISCLOSURE AGREEMENT OF THE CITY
THIS CONTINUING DISCLOSURE AGREEMENT (the “Disclosure Agreement”), dated as of December 1, 2022, is by and between NBS, as dissemination agent (the “Dissemination Agent”), and the City of Alameda, California (the “City”).
RECITALS:
WHEREAS, the City has issued, for and on behalf of the City of Alameda Community Facilities District No. 22-1 (Alameda Marina) (the “District”), its City of Alameda Community Facilities District No. 22-1 (Alameda Marina), 2022 Special Tax Bonds (the “Bonds”) in the initial principal amount of $____________; and
WHEREAS, the Bonds have been issued pursuant to a Fiscal Agent Agreement, dated as of December 1, 2022, by and between U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”), and the City, for and on behalf of the District (the “Fiscal Agent Agreement”); and
WHEREAS, this Disclosure Agreement is being executed and delivered by the City and the Dissemination Agent for the benefit of the owners and beneficial owners of the Bonds and in order to assist the underwriter of the Bonds in complying with S.E.C. Rule 15c2-12(b)(5).
AGREEMENT:
NOW, THEREFORE, for and in consideration of the premises and mutual covenants herein contained, and for other consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. In addition to the definitions of capitalized terms set forth in Section s
1.03 of the Fiscal Agent Agreement, which apply to any capitalized term us ed in this Disclosure Agreement unless otherwise defined in this Section or in the Recitals above, the following terms shall have the following meanings when used in this Disclosure Agreement:
“Annual Report” means any Annual Report provided by the City p ursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. “Beneficial Owner ” shall mean any person who (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bond (including persons holding any Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bond for federal income tax purposes. “Disclosure Representative ” means the Finance Director of the City, or the Finance Director’s designee, or such other officer or employee as the City shall designate as the Disclosure Representative hereunder in writing to the Dissemination Agent from time to time.
“Dissemination Agent ” means NBS, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. “EMMA” or “Electronic Municipal Market Acces s” means the centralized on- line repository for documents to be filed with the MSRB, such as official statements and
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disclosure information relating to municip al bonds, notes and other securities as issued by state and local governments.
“MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information which may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.
“Official Statement” means the Official Statement, dated December __, 2022 , relating to the Bonds.
“Participating Underwriter ” means Stifel, Nicolaus & Company, Incorporated, the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.
“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
“Significant Event” means any of the events listed in Section 5(a) of th is Disclosure Agreement.
Section 2. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the City and the Dissemination Agent for the benefit of the owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule.
Section 3. Provision of Annual Reports.
(a) Delivery of Annual Report . The City shall, or shall cause the Dissemination Agent to, not later than the March 31 occurring after the end of each fi scal year of the City, commencing with the report for the 2022-23 fiscal year, which is due not later than March 31, 2023, file with EMMA, in a readable PDF or other electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package and may cross - reference other information as provided in Section 4 of this Disclosure Agreement; p rovided that any audited financial statements of the City may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date.
(b) Change of Fiscal Year. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Significant Event under Section 5(b), and subsequent Annual Report filings shall be made no later than seven months after the end of such new fiscal year end.
(c) Delivery of Annual Report to Dissemination Agent . Not later than fifteen (15) Business Days prior to the date specified in subsection (a) (or, if applicable, subsection (b) of this Section 3 for providing the Annual Report to EMMA), the C ity shall provide the Annual Report to the Dissemination Agent (if other than the City). If by such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall notify the City.
(d) Report of Non- Compliance. If the City is the Dissemination Agent and is unable to file an Annual Report by the date required in subsection (a) (or, if applicable, subsection (b)) of this Section 3, the City in a timely manner shall send a notice to EMMA substantially in the form attached hereto as Exhibit A. If the City is not the Dissemination Agent and is unable to provide an Annual Report to the Dissemination Agent by the date required in subsection (c) of this Section 3, the Dissemination
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Agent in a timely manner shall send a notice to EMMA in substantially the form attached hereto as Exhibit A.
(e) Annual Compliance Certification . The Dissemination Agent shall, if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has bee n filed with EMMA pursuant to Section 3 of this Disclosure Agreement, stating the date it was so provided and filed.
Section 4. Content of Annual Reports. It is acknowledged that the Closing Date for the Bonds occurred after the end of the 2022-23 fiscal year of the City. In light of the foregoing, submission of the Official Statement shall satisfy the City’s obligation to file an Annual Report for fiscal year 2022-
23. The Annual Report for each fiscal year commencing with the Annual Report for the 2023- 2024 fiscal year, shall contain or incorporate by reference the following:
(a) Financial Statements . Audited financial statements of the City for the most recently completed fiscal year, prepared in accordance generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) Other Annual Information. The Annual Report for each fiscal year commencing with fiscal year 2023-24 shall also include the following information:
(i) The principal amount of Bonds and any Parity Bonds Outstanding as of the September 30 next preceding the date of the Annual Report. (ii) The balance in the Reserve Fund, and a statement of the Reserve Requirement, as of the September 30 next preceding the date of the Annual Report. (iii) The balance in the Improvement Fund, if any, as of th e September 30 next preceding the date of the Annual Report.
(iv) The Special Tax aggregate delinquency rate for all parcels within the District on which the Special Taxes are levied, the aggregate number of parcels within the District on which the Special Taxes are levied and which are delinquent in payment or Special Taxes, and the percentage of the most recent annual Special Tax levy that is delinquent, for the most recent fiscal year.
(v) The status of foreclosure proceedings for any parcels within the District on which the Special Taxes are levied and a summary or the results of any foreclosure sales, or other collection efforts with respect to delinquent Special Taxes, as of the September 30 next preceding the date of the Annual Report.
(vi) The identity of any property owner representing more than five percent (5%) of the annual Special Tax levy who is delinquent in payment of such Special Taxes, as shown on the assessment roll of the City Assessor last equalized prior to the September 30 next preceding the date of the Annual Report, the number of parcels so delinquent, and the total dollar amount of all such delinquencies.
(vii) The principal amount of any Parity Bonds outstanding during the Fiscal Year to which the Annual Report pertains, and if Parity Bonds have been so issued, an update to the debt service table under the heading “THE 2022 BONDS – Scheduled Debt Service” in the Official Statement that includes the debt service on the outstanding 2022 Bonds and such Parity Bonds for the remaining years that the Bonds are scheduled to be outstanding.
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(viii) A statement as to any property in the Future Annexation Area of the District annexed to the District, including the date that annexation occurred, the entity that owned the property annexed, the number of acres annexed and the tax zone into which the property was annexed.
(ix) The most recent annual information required to be provided to the California Debt and Investment Advisory Commission pursuant to Section 5.19 of the Fiscal Agent Agreement.
(c) Cross References. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on EMMA. The City shall clearly identify each such other document so included by reference.
If the document included by reference is a final official statement, it must be available from EMMA.
(d) Further Information . In addition to any of the information expressly required to be provided under paragraph (b) of this Section 4, the City shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
Section 5. Reporting of Significant Events.
(a) The City shall, or shall cause the Dissemination Agent (if not the City) to, give notice of the occurrence of any of the following events with respect to the Bonds:
(i) Principal and interest payment delinquencies;
(ii) Non–payment related defaults, if material;
(iii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701–TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; (vii) Modifications to rights of security holders, if material; (viii) Bond calls, if material, and tender offers;
(ix) Defeasances;
(x) Release, substitution, or sale of property securing repayment of the securities, if material;
(xi) Rating changes;
(xii) Bankruptcy, insolvency, receivership or similar event of the obligated person;
(xiii) The consummation of a merger, consolidation, or acquisition involving the obligated person, or the sale of all or substantially all of the assets of the obligated
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person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (xiv) Appointment of a successor or additional trustee or the change of name of a trustee, if material;
(xv) The incurrence of a financial obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affec t security holders, if material; or
(xvi) A default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.
(b) Whenever the City obtains knowledge of the occurrence of a Significant Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB , in a timely manner not in excess of 10 business days after the occurrence of the Significant Event.
Notwithstanding the foregoing, notice of Significant Events described in subsection (a)(viii) above need not be given under this subsection any earlier th an the notice (if any) of the underlying event is given to owners of affected Bonds under the Fiscal Agent Agreement.
(c) The City acknowledges that the events described in subparagraphs (a)(ii), (a)(vii), (a)(viii) (if the event is a bond call), (a)(x), (a)(xiii), (a)(xiv) and (a)(xv) of this Section 5 contain the qualifier “if material.” The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that the City determines the event’s occurrence is material for purposes of U.S. federal securities law. The City intends that the words used in paragraphs (xv) and (xvi) and the definition of “financial obligation” to have the meanings ascribed thereto in SEC Release No. 34-83885 (August 20, 2018).
(d) For purposes of this Disclosure Agreement, any event described in paragraph (a)(xii) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assum ed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City.
Section 6. Identifying Information for Filings with EMMA . All documents provided to EMMA under this Disclosure Agreement shal l be accompanied by identifying information as prescribed by the MSRB.
Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Agreement shall terminate upon the defeasance, prior redemption or payment in full of all o f the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Significant Event under Section 5(b).
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Section 8. Dissemination Agent.
(a) Appointment of Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement and may discharge any such agent, with or without appointing a successor Disseminatio n Agent. The initial Dissemination Agent shall be NBS.
If the Dissemination Agent is not the City, the Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Agre ement. It is understood and agreed that any information that the Dissemination Agent may be instructed to file with EMMA shall be prepared and provided to it by the City. The Dissemination Agent has undertaken no responsibility with respect to the content of any reports, notices or disclosures provided to it under this Disclosure Agreement and has no liability to any person, including any Bond owner, with respect to any such reports, notices or disclosures. The fact that the Dissemination Agent or any affiliate thereof may have any fiduciary or banking relationship with the City shall not be construed to mean that the Dissemination Agent has actual knowledge of any event or condition, except as may be provided by written notice from the City.
(b) Compensation of Dissemination Agent . The Dissemination Agent shall be paid compensation by the City for its services provided hereunder as agreed to between the Dissemination Agent and the City from time to time and all expenses, legal fees and expenses an d advances made or incurred by the Dissemination Agent in the performance of its duties hereunder, with payment to be made from any lawful funds of the District. The Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the City, the owners of the Bonds, the Beneficial Owners, or any other party. The Dissemination Agent may rely, and shall be protected in acting or refraining from acting, upon any written direction from the City or a written opinion of nationally recognized bond counsel. The Dissemination Agent may at any time resign by giving written notice of such resignation to the City. The Dissemination Agent shall not be liable hereunder except for its negligence or willful misconduct.
(c) Responsibilities of Dissemination Agent. In addition of the filing obligations of the Dissemination Agent set forth in Sections 3(e) and 5, the Dissemination Agent shall be obligated, and hereby agrees, to provide a request to the City to compile the information required for its Annual Report at least 30 days prior to the date such information is to be provided to the Dissemination Agent pursuant to subsection (c) of Section 3. The failure to provide or receive any such request shall not affect the obligations of the City under Section 3.
Section 9. Amendment; Waiver . Notwithstanding any other provision of this Disclosure Agreement, the City may amend this Disclosure Agreement (and the Dissemination Agent shall agree to any amendment so requested by the City that does not impose any greate r duties or risk of liability on the Dissemination Agent), and any provision of this Disclosure Agreement may be waived, provided that all of the following conditions are satisfied:
(a) Change in Circumstances. If the amendment or waiver relates to the pr ovisions of Sections 3(a), 4 or 5(a) or (b), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or the type of business conducted.
(b) Compliance as of Issue Date . The undertaking, as amended or taking into account such waiver, would, in the opinion of a nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances.
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(c) Consent of Holders; Non-impairment Opinion. The amendment or waiver either (i) is approved by the Bond owners in the same manner as provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of Bond owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Bond owners or Beneficial Owners.
If this Disclosure Agreement is amended or any provision of this Disclosure Agreement is waived, the City shall describe such amendment or waiver in the next following Annual Report and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Significant Event under Section 5(b), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.
Section 10. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Significant Event, in addition to that which is required by this Disclosure Agreement. If the City chooses to include any information in any Annual Report or notice of occurrence of a Significant Event in addition to that which is specifically required by this Disclosure Agreement, the City shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or future notice of occurrence of a Significant Event.
Section 11. Default. In the event of a failure of the City to comply with any provision of this Disclosure Agreement, any Bond owner, any Beneficial Owner, the Fiscal Agent or the Participating Underwriter may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Agreement. The sole remedy un der this Disclosure Agreement in the event of any failure of the City to comply with this Disclosure Agreement shall be an action to compel performance.
Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and the owners and the Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 13 . Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date first above written.
CITY OF ALAMEDA, CALIFORNIA
By:
Its:
NBS, as Dissemination Agent
By:
Its:
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EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Obligor: City of Alameda, California
Name of Bond Issue: City of Alameda Community Facilities District No. 22-1 (Alameda Marina), 2022 Special Tax Bonds
Date of Issuance: December __, 2022
NOTICE IS HEREBY GIVEN that the Obligor has not provided an Annual Report with respect to the above-named Bonds as required by Section 5.08 of the Fiscal Agent Agreement, dated as of December 1, 2022, between the Obligor and U.S. Bank Trust Company, National Association, as fiscal agent. The Obligor anticipates that the Annual Report will be filed by ____________________.
Date:
By: NBS, as Dissemination Agent
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APPENDIX F
FORM OF CONTINUING DISCLOSURE AGREEMENT – BUILDER
This Continuing Disclosure Agreement – Builder (the “Disclosure Agreement”) dated as of December 1, 2022, is executed and delivered by LS-Alameda Marina LLC,, a Delaware limited liability company (the “Builder”), and NBS, as dissemination agent (the “Disse mination Agent”), in connection with the issuance by the City of Alameda, California (the “City”), for and on behalf of the City of Alameda Community Facilities District No. 22 -1 (Alameda Marina) (the “District”), of its City of Alameda Community Facilities District No. 22-1 (Alameda Marina) 2022 Special Tax Bonds (the “Bonds”). The Bonds are being issued pursuant to a Fiscal Agent Agreement, dated as of December 1, 2022, by and between U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”), and the City, for and on behalf of the District (the “Fiscal Agent Agreement”).
The Builder covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Agreement . This Disclosure Agreement is being executed and delivered by the Bu ilder for the benefit of the Participating Underwriter, the Bondowners and Beneficial Owners.
SECTION 2. Definitions. In addition to the definitions set forth in Section 1.03 of the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings when used herein:
“Affiliate” means, any person directly (or indirectly through one or more intermediaries) and currently under managerial control of the Builder, and about whom information could be material to potential investors in their investment decision regarding the Bonds, including without limitation information relevant to the development of the Property or the Builder’s ability to pay Special Taxes levied and to be levied on the Property.
“Annual Report” means any Annual Report provided by the Builder pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.
“Beneficial Owner” means any person w ho (a) has or shares the power, directly or indirectly, to make investment decisions concerning ownership of the Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bond for federal income tax purposes.
“Builder Improvements” means those improvements being constructed for the Builder in the District by Landsea Construction LLC or any other entity under contract with the Builder, including site improvements and all or any of the 31 buildings with townhomes under construction and to be constructed in the District by or on behalf of the Builder.
“Business Day” means any day other than (a) a Saturday or a Sunday or (b) a day which is a federal or State of California holiday.
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“Disclosure Representative” means the _______________ of the Builder, or his or her designee, or such other officer or employee as the Builder shall designate in writing to the Dissemination Agent from time to time.
“Dissemination Agent” means NBS, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Builder and which has filed with the Builder, the Fiscal Agent and the City a written acceptance of such designation.
“District” means the City of Alameda Community Facilities District No. 22 -1 (Alameda Marina).
“EMMA” means the Electronic Municipal Market Access system of the MSRB, currently located at http://emma.msrb.org.
“Listed Event” means any of the events listed in Section 5(a) of this Disclosure Agreement.
“MSRB” means the Municipal Securities Rulemaking Board.
“Official Statement” means the Official Statement, dated December __, 2022, relating to the Bonds.
“Participating Underwriter” means Stifel, Nicolaus & Company, Incorpora ted, the original underwriter of the Bonds.
“Person” means any natural person, corporation, partnership, firm, association, Government Authority or any other Person whether acting in an individual fiduciary, or other capacity.
“Property” means the real property within the boundaries of the District that is owned by (a) Arroyo CAP II-5, LLC, or (b)the Builder or any Affiliate, as of the date that an Annual Report, Semiannual Report or Listed Event disclosure is provided.
“Rule” means Rule 15c2 -12(b)(5) ad opted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
“Semiannual Report” means any report to be provided by the Builder on or prior to December 15 of each year pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.
SECTION 3. Provision of Annual Reports and Semiannual Reports.
(a) The Builder shall, or shall cause the Dissemination Agent to, not later than June 15 of each year, commencing June 15 , 2023, provide to EMMA an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. If, in any year, June 15 does not fall on a Business Day, then such deadline shall be extended to the following Business Day.
The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement.
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In addition, the Builder shall, or shall cause the Dis semination Agent to, not later than December 15 of each year, commencing December 15, 2023, provide to EMMA a Semiannual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. If, in any year, December 15 does not fall on a Business Day, then such deadline shall be extended to the following Business Day.
(b) Not later than fifteen (15) calendar days prior to the date specified in subsection (a) for providing the Annual Report and Semiannual Report to EMMA, the Builder shall provide the Annual Report or the Semiannual Report, as applicable, to the Dissemination Agent or shall provide notification to the Dissemination Agent that the Builder is preparing, or causing to be prepared, the Annual Report or the Semiannual Report, as applicable, and the date which the Annual Report or the Semiannual Report, as applicable, is expected to be available. If by such date, the Dissemination Agent has not received a copy of the Annual Report or the Semiannual Report, as applicable, or no tification as described in the preceding sentence, the Dissemination Agent shall notify the Builder of such failure to receive the report.
(c) If the Dissemination Agent is unable to provide an Annual Report or Semiannual Report to EMMA by the date requir ed in subsection (a) or to verify that an Annual Report or Semiannual Report has been provided to EMMA by the date required in subsection (a), the Dissemination Agent shall send in a timely manner a notice to EMMA in a form that is accepted by EMMA.
(d) Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report and the Semiannual Report the name and address of EMMA; and
(ii) promptly file a report with the Builder and the City certifying that the Annual Report or the Semiannual Report, as applicable, has been provided pursuant to this Disclosure Agreement, stating the date it was provided to EMMA.
(e) Notwithstanding any other provision of this Disclosure Agreement, any of the required filings hereunder shal l be made in accordance with the MSRB’s EMMA system or in another manner approved under the Rule.
SECTION 4. Content of Annual Report and Semiannual Report.
(a) The Builder’s Annual Report and Semiannual Report shall contain or include by reference the information which is available as of the date of the filing of the Annual Report or the Semiannual Report, as applicable, relating to the following:
1. To the extent different from what is disclosed in the Official Statement or in a prior Annual Report or Semiannual Report, a discussion of any change in the sources of funds to finance the acquisition of the Property by the Builder or an Affiliate from Arroyo CAP II -5, LLC and the development of the Property, and whether any material defaults exist under any contractual arrangement related to such financing.
2. A summary of development activity conducted by the Builder or any Affiliate with respect to the Property since the later of the date of issuance of the Bonds or the date of the last Annual Report or Semiannual Report, including any property taken down by the Builder or Affiliate, the number of completed townhomes under construction (and the expected completion date or dates of the townhomes under construction), and the number of units in the Project f or which sales to town
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homebuyers have closed, all since the date of the Official Statement or if later the most recent Annual Report or Semiannual Report.
3. Any major legislative, administrative and judicial challenges known to the Builder to or affect ing the development of the Property or the time for construction of any townhomes to be constructed on the Property by the Builder or any Affiliate (the “Builder Improvements”).
4. Information regarding any failure by the Builder or any of its Affiliate s to pay any real property taxes (including Special Taxes) levied on any Property owned by the Builder or any Affiliates.
(b) In addition to any of the information expressly required to be provided under paragraph (a) above, the Builder shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
(c) Any and all of the items listed above may be included by specific reference to other documents, including official statements of debt issues which have been submitted to EMMA or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Builder shall clearly identify each such other document so included by reference.
SECTION 5. Reporting of Significant Events.
(a) So long as the Builder’s obligations under this Disclosure Agreement have not terminated pursuant to Section 7 below, pursuant to the provisions of this Section 5, the Builder shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material under clauses (b) and (c) in a timely manner within 10 Business Days after the Builder obtains knowledge of the occurrence of any of the following events:
1. Failure by the Builder or any Affiliate to pay any real property taxes, special taxes or assessments levied on the Property prior to the delinquency date therefor.
2. Damage to or destruction of any of the Builder Improvements which has a material adverse effect on the value of the Property.
3. Material default by the Builder or any Affiliate of the Builder under the agreement with Arroyo CAP II -5, LLC with respect to the acquisition of Property from Arroyo CAP II-5, LLC, or on any loan or line of credit with respect to the acquisition of the Property or the construction financing of the Builder Improvements.
4. Material default by the Builder or any Affiliate of the Builder on any loan or line of credit secured by the Property.
5. The filing of any proceedings with respect to the Builder, in which the Builder may be adjudicated as bankrupt or discharged from any or all of their respective debts or obligations or gra nted an extension of time to pay debts or a reorganization or readjustment of debts.
6. The filing of any proceedings with respect to an Affiliate of the Builder, in which such Affiliate of the Builder may be adjudicated as bankrupt or discharged from any or all of its respective debts or obligations or granted an extension of time to pay
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debts or a reorganization or readjustment of debts if such adjudication could materially adversely affect the completion of the Builder Improvements or the development of the Property (including the payment of special taxes of the District).
7. The filing of any lawsuit against the Builder or any of its Affiliates (with service of process on the Builder or its Affiliates having occurred) which, in the reasonable judgment of the Builder, if successful, will (i) materially adversely affect the completion of the Builder Improvements, or (ii) materially adversely affect the financial condition of the Builder or its Affiliates in a manner that would materially adversely affect the completion of the Builder Improvements.
8. A sale or transfer of all or substantially all of the Builder’s assets or a sale of a majority of the partnership interests, membership interests or outstanding stock of the Builder.
(b) Whenever the Builder obtains knowledge of the occurrence of a Significant Event occurs under Section 5(a), subsection (2), (3), (4), (6) or (7), the Builder shall as soon as possible determine if such event would be material under applicable federal securities laws. The Dissemination Agent shall have no responsibility to determine the materiality of any of the Significant Events.
(c) If an event described in Section 5(a), subsection (1), (5) or (8) occurs, or if the Builder determines that knowledge of the occurrence of an ev ent described in Section 5(a), subsection (2), (3), (4), (6) or (7) would be material under applicable federal securities laws, the Builder shall file in a timely manner within 10 Business Days after the Builder obtains knowledge of the occurrence of the r espective event a notice of such occurrence with EMMA or with the Dissemination Agent which shall then distribute such notice to EMMA in a timely manner within the 10 Business Day period, with a copy to the City and to the Participating Underwriter.
SECTION 6. Format for Filings with MSRB . Any report or filing with the MSRB pursuant to this Disclosure Agreement must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB.
SECTION 7. Termination of Repor ting Obligation. The Builder’s obligations under this Disclosure Agreement shall terminate upon the earliest to occur of the following events:
(a) the legal defeasance, prior redemption or payment in full of all of the Bonds, or
(b) the date on which the at least 146 of the townhomes constructed or to be constructed on the Property were the subject of closed sales with townhome buyers (other than with any Affiliate), or
(c) with respect to Property transferred to another Person, the assumption o f the Builder’s obligations under this Disclosure Agreement in accordance with Section 13 below.
If such termination occurs prior to the final maturity of the Bonds, the Builder shall give notice of such termination in the same manner as for an Annual Report hereunder.
SECTION 8. Dissemination Agent . The initial Dissemination Agent under this Disclosure Agreement shall be NBS. The Dissemination Agent shall not be responsible in any manner for the form or content of any notice or report prepared by the Bu ilder pursuant to this
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Disclosure Agreement. The Dissemination Agent may resign by providing (i) thirty days written notice to the Builder and the City and (ii) upon appointment of a new Dissemination Agent hereunder.
SECTION 9. Amendment; Waiver . Notwith standing any other provision of this Disclosure Agreement, the Builder may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the Builder with respect to the Bonds, or the type of business conducted;
(b) The amendment or waiver either (i) is approved by the Bondowners in the same manner as provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of Bondowners, o r (ii) does not, in the opinion of nationally recognized bond counsel addressed to the City and the Fiscal Agent, materially impair the interests of the Bondowners or Beneficial Owners of the Bonds; and
(c) The Builder, or the Dissemination Agent, shall h ave delivered copies of the amendment and any opinions delivered under (b) and (c) above.
If the financial information or operating data to be provided in an Annual Report or Semiannual Report is amended pursuant to the provisions of this Disclosure Agree ment, the Builder shall describe such amendment in the next Annual Report or Semiannual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type of financial information or opera ting data being presented by the Builder.
SECTION 10. Additional Information . Nothing in this Disclosure Agreement shall be deemed to prevent the Builder from disseminating any other information, using the means of dissemination set forth in this Disclos ure Agreement or any other means of communication, or including any other information in any Annual Report, Semiannual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Builder chooses to include any information in any Annual Report, Semiannual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Builder shall have no obligation under this Disclosure Agr eement to update such information or include it in any future Annual Report, Semiannual Report or notice of occurrence of a Listed Event.
The Builder acknowledges and understands that other state and federal laws, including but not limited to the Securiti es Act of 1933 and Rule 10b -5 promulgated under the Securities Exchange Act of 1934, may apply to the Builder, and that under some circumstances compliance with this Disclosure Agreement, without additional disclosures or other action, may not fully discharge all duties and obligations of the Builder under such laws.
SECTION 11. Default. In the event of a failure of the Builder to comply with any provision of this Disclosure Agreement, the Participating Underwriter or any Bondowner or Beneficial Owner of t he Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Builder or the Dissemination Agent to comply with its obligations under this Disclosure Agreement. A default
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under this Disclosure Agreement shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the Builder to comply with this Disclosure Agreement shall be an a ction to compel performance.
SECTION 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement and the Builder agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding losses, expenses and liabilities due to the Dissemination Agent’s or its officers’, directors’, employees’ or agents’ negligence or willful misconduct, or its f ailure to perform its duties hereunder. The Dissemination Agent shall be paid by the City, from available funds of the District, for the performance of its duties hereunder in accordance with the Dissemination Agent’s schedule of fees, as amended from time to time. The Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the Builder, the Participating Underwriter, Bondowners or Beneficial Owners or any other party. The Dissemination Agent may rely and shall be protected in acti ng or refraining from acting upon a direction from the Builder or an opinion of nationally recognized bond counsel. The obligations of the Builder under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination Agent may conclusively rely upon the Annual Reports and Semiannual Reports provided to it by the Builder as constituting an Annual Report or Semiannual Report, as applicable, required of the Builder in accordance with this Disclosure Agreement and shall have no duty or obligation to review any such Annual Report or Semiannual Report. The Dissemination Agent shall have no duty to prepare any Annual Report or Semiannual Report nor shall the Dissemination Agent be responsible for filing any Annual Report or Semiannual Report not provided to it by the Builder in a timely manner in a form suitable for filing with the Repository. Any company succeeding to all or substantially all of the Dissemination Agent’s corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act.
SECTION 13. Reporting Obligation of Builder’s Transferees. If a portion of the Property owned by the Builder on which 36 or more of the townhomes not yet sold to townhome buyers (not including sales to any affiliate) is conveyed to a Person, the obligations of the Builder hereunder with respect to the property conveyed may be assumed by such Person and the Builder’s obligations hereunder with respect to the property conveyed will be terminated. In order to effect such assumption, such Person shall enter into an assumption agreement in form and substance equivalent to this Disclosure Agreement or as otherwise satisfactory to the City and the Participating Underwriter. However, such Person shall not be required to enter into an assumption agreement if they are already a party to a continuing disclosure agreement in form and substance similar to this Disclosure Agreement with respect to the Bonds, and under which the property conveyed to such Person will become subject to future reporting.
SECTION 14. Builder as Independent Contractor . In performing under this Disclosure Agreement, it is understood that the Builder is an independent contractor and not an agent of the City or the District.
SECTION 15. Notices. Notices should be sent in writing by regular mail or overnight mail to the following addresses. The following information may be conclusive ly relied upon until changed in writing.
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Builder and Disclosure
Representative:
LS-Alameda Marina LLC
c/o Landsea Homes
3130 Crow Canyon Place, Suite 325
San Ramon, CA 94503
Attention: ____________
Email: ____________
Dissemination Agent: NBS Financial Services
32605 Temecula Parkway, Suite 100
Temecula, CA 92592
Attention: Sara Mares
Fiscal Agent: U.S. Bank Trust Company, National Association One California Street, Suite 1000
San Francisco, CA 94111
Attention: Corporate Trust
Participating Underwriter: Stifel, Nicolaus & Company, Incorporated One Montgomery Street, Suite 3700
San Francisco, CA 94104
Attention: Eileen Gallagher
City or District: City of Alameda
Alameda City Hall - Finance
2263 Santa Clara Avenue, Room 220
Alameda, CA 94501
Attention: Finance Director
SECTION 16. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Builder, the City, the Dissemination Agent, the Fiscal Agent, the Participating Underwriter and Bondowners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
SECTION 17. Assignability. The Builder shall not assign this Disclosure Agreement or any right or obligation hereunder except to the extent permitted to do so under the provisions of Section 13 hereof. The Dissemination Agent may, with prior written notice to the Builder and the City, assign this Disclosure Agreement and the Dissemination Agent’s rights and obligations hereunder to a successor Dissemination Agent.
SECTION 18. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof.
SECTION 19. Governing Law . The validity, interpretation and performance of this Disclosure Agreement shall be governed by the laws of the State of California applicable to contracts made and performed in California.
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SECTION 20. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
LS- ALAMEDA MARINA LLC, a Delaware
limited liability company
By:
Name:
Its:
NBS, as Dissemination Agent
By:
Its:
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APPENDIX G
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The information in this Appendix G has been provided by The Depository Trust Company (“DTC”), New York, NY, for use in securities offering documents, and the City does not take responsibility for the accuracy or completeness thereof. The City cannot and does not give any assurances that DT C, DTC Participants or Indirect Participants will distribute the Beneficial Owners either (a) payments of interest, principal or premium, if any, with respect to the 2022 Bonds or (b) certificates representing ownership interest in or other confirmation of ownership interest in the 2022 Bonds, or that they will so do on a timely basis or that DTC, DTC Direct Participants or DTC Indirect Participants mill act in the manner described in this Official Statement.
The following description of DTC, the procedure s and record keeping with respect to beneficial ownership interests in the 2022 Bonds, payment of principal, interest and other payments on the 2022 Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the 2022 Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Par ticipants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.
Neither the issuer of the 2022 Bonds (the “Issuer”) nor the trustee, fiscal agent or paying agent appointed with respect to the 2022 Bonds (the “Agent”) take any responsibility for the information contained in this Appendix.
No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the 2022 Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the 2022 Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the 2022 Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the 2022 Bonds (the “Securities”). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC.
2. DTC, the world’s largest securities depository, 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 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC.
DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a
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Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about D TC can be found at www.dtcc.com . The information contained on this Internet site is not incorporated herein by reference.
3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial O wner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, 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 interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorize d representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governe d by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events wit h respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents.
For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue 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.
THE FISCAL AGENT, AS LONG AS A BOOK -ENTRY-ONLY SYSTEM IS USED FOR THE 2022 BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES ONLY TO CEDE & CO., OR ITS SUCCESSOR AS DTC’S PARTNERSHIP NOMINEE. ANY FAILURE OF CEDE & CO., OR ITS SUCCESSOR AS DTC’S PARTNERSHIP NOMINEE TO ADVISE ANY PARTICIPANT, OR OF ANY
PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER OF ANY NOTICE AND ITS CONTENT OR
EFFECT WILL NOT AFFECT THE VALIDITY OR SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE 2022 BOND S CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Is suer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s
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practice is to credit Direct Participants’ accounts up on DTC’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instruction s and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issue r or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.
10. The Issuer may decide to discontinue use of the system of book -entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.
11. The information in this section concerning DTC and DTC’s book -entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.
12. THE DISTRICT, THE CITY AND THE UNDERWRITER CANNOT AND DO NOT GIVE ANY
ASSURANCES THAT DTC, THE PARTICIPANTS OR OTHERS WILL DISTRIBUTE PAYMENTS OF PRINCIPAL, INTEREST OR PREMIUM, IF ANY, WITH RESPECT TO THE 2022 BONDS PAID TO DTC
OR ITS NOMINEE AS THE R EGISTERED OWNER, OR WILL DISTRIBUTE ANY REDEMPTION
NOTICES 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 DISTRICT, THE CITY AND THE UNDERWRITER ARE NOT RESPONSIBLE OR
LIABLE FOR THE FAILURE OF DTC OR ANY PARTICIPANT TO MAKE ANY PAYMENT OR GIVE ANY NOTICE TO A BENEFICIAL OWNER WITH RESPECT TO THE 2022 BONDS OR AN ERROR OR DELAY RELATING THERETO.
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APPENDIX H
APPRAISAL REPORT
Integra Realty Resources
Sacramento
Appraisal of Real Property
City of Alameda CFD No. 22‐1 (Alameda Marina)
157 Townhome Units
NWQ Clement Ave. & Willow St.
Alameda, Alameda County, California 94501
Prepared For:
City of Alameda
Date of the Report:
November 11, 2022
Report Format:
Appraisal Report
IRR ‐ Sacramento
File Number: 193‐2022‐04 07
Subject Photographs
City of Alameda CFD No. 22‐1 (Alameda Marina)
NWQ Clement Ave. & Willow St.
Alameda, California
Aerial Photograph
Integra Realty Resources 590 Menlo Drive T 916.435.3883 Sacramento Suite 1 F 916.435.4774
Rocklin, CA 95765 www.irr.com
November 11, 2022
Margaret L. O'Brien
Finance Director
City of Alameda
2263 Santa Clara Avenue
Alameda, CA 94501
SUBJECT: Market Value Appraisal
City of Alameda CFD No. 22‐1 (Alameda Marina)
NWQ Clement Ave. & Willow St.
Alameda, Alameda County, California 94501
IRR ‐ Sacramento File No. 193‐2022‐0407
Dear Ms. O'B
rien:
Integra Realty Resources – Sacramento is pleased to submit the accompanying appraisal of the referenced property. The purpose of the appraisal is to develop an opinion of the market value, subject to a hypothetical condition, pertaining to the fee simple interest of certain taxable properties within the boundaries of the City of Ala meda Community Facilities District (CFD) No. 22‐1 (Alameda Marina) (“CFD No. 22‐1”). The client for the assignment is City of Alameda and the intended use of the report is for bond underwriting purposes.
This subject represents an approximately 10.96‐acre parcel within the City of Alameda Community Facilities District No. 22‐1 (Alameda Marina). The subj ect property is proposed
for a total of 182 single family residences (including 25 BMR units) across two product lines.
Both product lines, Island View and Waterside, will be constructed by Landsea Homes.
Island View will comprise a total of 98 to wnhomes with marina views, with seven floor plans ranging from 1,462 to 2,386 square feet, and select homes will include rooftop decks.
Waterside is located on the waterfront; these 84 townhomes will include four floor plans ranging from 2,161 to 2,689 square feet with rooftop decks. The Special Tax will not be levied on th
e 25 BMR units, and tax‐exempt status will be assigned by the CFD Administrator in the chronological order in which the building permits for such BMR units are issued.
Therefore, the analysis herein considers only the 157 taxable (market rate) units. Site Margaret L. O'Brien
City of Alameda
November 11, 2022