Agenda packet — Barstow City Council, March 21, 2022

BARSTOW CITY COUNCIL

CITY COUNCIL CHAMBERS
220 EAST MOUNTAIN VIEW STREET
BARSTOW, CA 92311
MARCH 21, 2022
7:00 PM
(HANDICAPPED ACCESSIBLE)
AGENDA

REGULAR MEETING
Agenda-March 21, 2022

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MAYOR
Paul Anthony Courtney

COUNCILMEMBERS
Barbara Mae Rose
James M. Noble
Marilyn Dyer Kruse
Timothy R. Silva

ELECTED CITY CLERK
Andrea Flores

ELECTED CITY TREASURER
Michael Lewis

PLANNING COMMISSIONERS
Andrew Ziemer
Beatrice Lint
Miguel Morales
Rodney Brand Jr.

Juanantonio Delucas

BARSTOW FIRE PROTECTION

DISTRICT
A Subsidiary District of the City of
Barstow
Paul Anthony Courtney
Barbara Mae Rose
James M. Noble
Marilyn Dyer Kruse
Timothy R. Silva
CALL TO ORDER:

INVOCATION:

PLEDGE OF ALLEGIANCE:

ROLL CALL:
 Council Member Timothy Silva
 Council Member Barbara Rose
 Council Member Marilyn Kruse
 Mayor Pro Tem James Noble
 Mayor Paul Courtney
PARTICIPATION IS INVITED: IF YOU WISH TO BE HEARD ON

ANY ITEM ON THE AGENDA INCLUDING ANY ITEM ON THE

CONSENT CALENDAR, PLEASE SO INDICATE BY FILLING

OUT A SPEAKER REQUEST CARD AND HAND TO THE CITY
CLERK PRIOR TO THE AGENDA ITEM BEING ADDRESSED.

IF SPECIAL ACCOMMODATIONS ARE REQUIRED, 48 HOURS
NOTICE MUST BE GIVEN TO THE CITY CLERK.

CODE OF ETHICS: AS YOUR ELECTED GOVERNING BOARD
WE WILL REMEMBER THE "CODE OF ETHICS" THAT WE
VOLUNTARILY AND UNANIMOUSLY APPROVED. DURING

THIS MEETING WE WILL TREAT EACH OTHER AND THE
PUBLIC WITH PATIENCE, CIVILITY AND COURTESY. THE

DECISIONS MADE TONIGHT WILL BE FOR THE BENEFIT OF

THE BARSTOW COMMUNITY AND NOT FOR PERSONAL
GAIN.

Agenda-March 21, 2022

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REVIEW AND APPROVAL OF AGENDA: THIS IS THE TIME FOR MEMBERS OF THE GOVERNING BOARD TO CALL FOR REARRANGING THE ORDER OF THE AGENDA; ADDING ITEMS TO OR REMOVING ITEMS FROM THE AGENDA; OR REMOVING ITEMS FROM THE CONSENT CALENDAR FOR DISCUSSION AND/OR SEPARATE ACTION.

PRESENTATIONS:

1. PRESENTATION OF RESOLUTION FROM THE COUNTY OF SAN BERNARDINO BOARD OF

SUPERVISORS TO BARSTOW FIRE PROTECTION DISTRICT AND MCLB FIRE Recommended Action:

Presentation only.

2. AFTER-EVENT REPORT AND PRESENTATION BY BARSTOW HIGH SCHOOL ASB Recommended Action:

After-event report and presentation only.

3. TREASURER'S REPORT - JANUARY 2022
Recommended Action:

Presentation only.

CONSENT CALENDAR PUBLIC COMMENT: THIS IS THE TIME AND PLACE FOR THE GENERAL PUBLIC TO ADDRESS THE GOVERNING BOARD ON ALL MATTERS ON THE CONSENT CALENDAR.

SPEAKERS ARE ASKED TO LIMIT THEIR COMMENTS ON ALL CONSENT ITEMS TO THREE MINUTES OR LESS. ALL REQUESTS TO SPEAK MUST BE RECEIVED PRIOR TO THE AGENDA ITEM BEING ADDRESSED. IF SPECIAL ACCOMMODATIONS ARE REQUIRED, 48 HOURS NOTICE MUST BE GIVEN TO THE CITY CLERK.

MINUTES ALL AGENCIES:

4. MINUTES JOINT SPECIAL MEETING - MARCH 7, 2022 7:00 P.M.

Recommended Action:

Approve minutes as presented.

CITY COUNCIL:

5. COMMUNITY PROMOTIONAL FUND APPLICATION FROM THE BARSTOW POLICE DEPARTMENT/2022 BAKER TO VEGAS RELAY RACE
Recommended Action:

Approve Community Promotional Fund donation in the amount of $500.

6. BARSTOW YOUTH SPORTS COALITION - LONG TERM TEMPORARY USE PERMIT & FEE WAIVER
Recommended Action:

Staff recommends granting a long term Temporary Use Permit for the Farmer’s Market beginning in April of 2022, along with waiving fees associated with the Temporary Use Permit. In addition, Staff recommends granting the City Manager permissions to approve any modifications to dates and/or frequency of the Farmer’s Market.

7. FIRST READING AND INTRODUCTION OF AN ORDINANCE OF THE CITY OF BARSTOW

REQUIRING E-FILING OF STATEMENT OF ECONOMIC INTERESTS AND CAMPAIGN

FINANCE FORMS
Recommended Action:

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economic interest (Form 700). The adoption of the proposed ordinance is exempt from review under the California Environmental Quality Act, per CEQA Guidelines Sections 15305 and 15378.

DISCUSSION / ACTION ON DEFERRED ITEMS: (ITEMS PREVIOUSLY TABLED OR PULLED FROM

CONSENT CALENDAR BY COUNCIL WILL BE CONSIDERED BY THE GOVERNING BOARD AT THIS TIME).

PUBLIC HEARINGS:

GENERAL, NON-AGENDA PUBLIC COMMENT: THIS IS THE TIME AND PLACE FOR THE GENERAL

PUBLIC TO ADDRESS THE GOVERNING BOARD ON MATTERS NOT ON THE AGENDA AND WITHIN THE CITY’S JURISDICTION. SPEAKERS ARE ASKED TO LIMIT THEIR COMMENTS TO THREE MINUTES OR LESS. ALL REQUESTS TO SPEAK MUST BE RECEIVED PRIOR TO THE AGENDA ITEM BEING ADDRESSED. IF SPECIAL ACCOMMODATIONS ARE REQUIRED, 48 HOURS NOTICE MUST BE GIVEN TO THE CITY CLERK.

BUSINESS OF THE COUNCIL/COUNCIL COMMITTEE REPORTS:

STAFF REPORTS:

POLICE CHIEF COMMENTS:

FIRE CHIEF COMMENTS:

CITY MANAGER / DISTRICT MANAGER COMMENTS:

BUSINESS / ACTION ITEMS:

CITY COUNCIL:

8. CONSIDERATION OF A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BARSTOW

CONFIRMING THE ISSUANCE OF PENSION OBLIGATION BONDS PURSUANT TO AN

INDENTURE OF TRUST TO REFINANCE THE OUTSTANDING OBLIGATIONS OF THE CITY TO THE CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM, CONFIRMING AND

APPROVING THE FINAL FORM OF INDENTURE OF TRUST AND THE BOND PURCHASE

AGREEMENT, APPROVING AN OFFICIAL STATEMENT, AND APPROVING AND DIRECTING

RELATED MATTERS
Recommended Action:

Adopt Resolution Number ___- 2022 confirming approval of Pension Obligation Bonds and related documents.

ADJOURNMENT:

Individuals electing to later challenge any items listed herein will be limited to addressing only those issues raised at any public hearing or in written correspondence received by the Governing Board prior to the meeting.

Materials related to an item on this Agenda submitted to the Governing Board after distribution of the agenda packet area available for public inspection in the City Clerk's Office at 220 East Mountain View Ste. A, Barstow, CA 92311 during normal business hours.

The City of Barstow, in complying with the Americans with Disabilities Act (ADA), requests individuals who require special accommodations to access, attend and/or participate in the City Agenda-March 21, 2022

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meeting due to disability, to please contact the City Clerk’s Office (760) 255-5122, at least one business day prior to the scheduled meeting to ensure that we may assist you.

I hereby certify, UNDER PENALTY OF PERJURY that this agenda has been posted 72 hours prior to the stated meeting in a place accessible to the public.

Posted on the 17th day of March, 2022.

Regular Meeting
03/21/22 07:00 PM
City Manager Department
Maribel Hernandez
Presentation
Doc ID: 4960

AGENDA ITEM
AGENDA MATTER:

PRESENTATION OF RESOLUTION FROM THE COUNTY OF SAN BERNARDINO BOARD OF

SUPERVISORS TO BARSTOW FIRE PROTECTION DISTRICT AND MCLB FIRE EXECUTIVE SUMMARY:

A resolution from the County of San Bernardino Board of Supervisors will be presented to the Barstow Fire Department and MCLB Fire staff for their heroic actions in rescuing a woman and her son from a vehicle fire along eastbound Interstate 40 on November 6, 2021.

DISCUSSION:

FISCAL IMPACT:

None. Presentation only.

RECOMMENDED ACTION:

Presentation only.
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Regular Meeting
03/21/22 07:00 PM
City Manager Department
Maribel Hernandez
Community Promotion
Doc ID: 4964

AGENDA ITEM
AGENDA MATTER:

AFTER-EVENT REPORT AND PRESENTATION BY BARSTOW HIGH SCHOOL ASB EXECUTIVE SUMMARY:

Representative from Barstow High School ASB will be providing an after-event report and presentation on their Winter Formal that was held on January 29, 2022.

DISCUSSION:

At the December 6, 2021, City Council meeting, Council waived the fees for use of the Cora Harper Fitness Center (Community Promotional Fund donation) to help offset the costs of a Winter Formal held on January 29, 2022. The Community Promotional Fund donation was included in the FY 2021/22 budget.

Per the Community Promotional Fund Policy, applicants who are awarded a promotional fund grant or inkind services must commit to providing an after-event report and presentation to the City Council outlining how the group used the funding provided by the City of Barstow for benefit of the community. The Barstow High School ASB, as a recipient of a Community Promotional Fund, will be providing its afterevent report and presentation.

FISCAL IMPACT:

None
RECOMMENDED ACTION:

After-event report and presentation only.
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Regular Meeting
03/21/22 07:00 PM
Finance
Gianna Peña
Presentation
Doc ID: 4971

AGENDA ITEM
AGENDA MATTER:

TREASURER'S REPORT - JANUARY 2022
EXECUTIVE SUMMARY:

City Treasurer Michael Lewis will be presenting the January 2022 Treasurer's Report and an update on the City's cash and investments.

DISCUSSION:

See above.

FISCAL IMPACT:

None.

RECOMMENDED ACTION:

Presentation only.
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Regular Meeting
03/21/22 07:00 PM
City Clerk / Records
Maria Chavez
Other
Doc ID: 4958

AGENDA ITEM
AGENDA MATTER:

MINUTES JOINT SPECIAL MEETING - MARCH 7, 2022 7:00 P.M.

EXECUTIVE SUMMARY:

DISCUSSION:

FISCAL IMPACT:
none
RECOMMENDED ACTION:

Approve minutes as presented.
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BARSTOW CITY COUNCIL /

BARSTOW FIRE PROTECTION DISTRICT

CITY COUNCIL CHAMBERS
220 EAST MOUNTAIN VIEW STREET
BARSTOW, CA 92311
MARCH 7, 2022
7:00 PM
(HANDICAPPED ACCESSIBLE)

MINUTES

JOINT SPECIAL MEETING
Minutes-March 7, 2022

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CALL TO ORDER:

MAYOR COURTNEY called the meeting to order at 7:01 P.M.

INVOCATION:

PASTOR WILLIE LEE SMITH from HIGH DESERT COMMUNITY OUTREACH led the invocation.

PLEDGE OF ALLEGIANCE:

MAYOR PRO TEM NOBLE led the pledge of allegiance.

ROLL CALL:

Attendee Name Title Status Arrived
James M. Noble Mayor Pro Tem Present
Marilyn Dyer Kruse Council Member Present
Barbara Mae Rose Council Member Present
Paul Anthony Courtney Mayor Present
Timothy Silva Council Member Present
PARTICIPATION IS INVITED: IF YOU WISH TO BE HEARD ON ANY ITEM ON THE AGENDA INCLUDING

ANY ITEM ON THE CONSENT CALENDAR, PLEASE SO INDICATE BY FILLING OUT A SPEAKER REQUEST CARD AND HAND TO THE CITY CLERK. IF SPECIAL ACCOMMODATIONS ARE REQUIRED, 48 HOURS NOTICE MUST BE GIVEN TO THE CITY CLERK.

CODE OF ETHICS: AS YOUR ELECTED GOVERNING BOARD WE WILL REMEMBER THE "CODE OF ETHICS" THAT WE VOLUNTARILY AND UNANIMOUSLY APPROVED. DURING THIS MEETING WE WILL TREAT EACH OTHER AND THE PUBLIC WITH PATIENCE, CIVILITY AND COURTESY. THE DECISIONS

MADE TONIGHT WILL BE FOR THE BENEFIT OF THE BARSTOW COMMUNITY AND NOT FOR PERSONAL GAIN.

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Minutes-March 7, 2022

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RESULT: APPROVED [UNANIMOUS]
MOVER: Timothy Silva, Council Member
SECONDER: James M. Noble, Mayor Pro Tem
AYES: Noble, Kruse, Rose, Courtney, Silva
PRESENTATIONS:

1. AFTER-EVENT REPORT AND PRESENTATION BY THE GEM & MINERAL SOCIETY Recommended Action:

After-event report and presentation only.

JUDY LIVINGSTON OF THE MOJAVE DESERT GEM AND MINERAL SOCIETY - Provided an after-event report and presentation on the organization's Annual Gem & Mineral Show held December 3 - 5, 2021.
- Thanked the City of Barstow for their continued support.

RESULT: PRESENTATION ONLY

2. AFTER -EVENT AND PRESENTATION BY ON THE RISE INC.

Recommended Action:

After-event report and presentation only.

CATHY WILLIAMS, ON THE RISE
- Provided an after-event report and presentation on the organization's Toy Giveaway held on December 16, 2021.
- Thanked the City of Barstow for their continued support.

RESULT: PRESENTATION ONLY

3. AFTER-EVENT REPORT AND PRESENTATION BY BARSTOW YOUTH SPORTS AWARD

COALITION
Recommended Action:

After-event report and presentation only.

LEONARD WILLIAMS, BARSTOW YOUTH SPORTS COALITION
- Provided an after-event report and presentation on the Youth Sport Banquet, held on January 22, 2022.
- Thanked the City of Barstow and staff for their support.

RESULT: PRESENTATION ONLY
CONSENT CALENDAR PUBLIC COMMENT: THIS IS THE TIME AND PLACE FOR THE GENERAL PUBLIC TO ADDRESS THE GOVERNING BOARD ON ALL MATTERS ON THE CONSENT CALENDAR.

NO PUBLIC COMMENTS

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Minutes-March 7, 2022

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MINUTES ALL AGENCIES:

4. MINUTES JOINT SPECIAL MEETING - FEBRUARY 22, 2022 7:00 P.M.

Recommended Action:

Approve minutes as presented.

RESULT: APPROVED [UNANIMOUS]
MOVER: Timothy Silva, Council Member
SECONDER: Marilyn Dyer Kruse, Council Member
AYES: Noble, Kruse, Rose, Courtney, Silva
ACCOUNTS PAYABLE ALL AGENCIES:

5. RATIFICATION OF ACCOUNTS PAYABLE EXPENDITURES
Recommended Action:

Approve and ratify expenses, as audited, for check #86627-86948 totaling $3,611,667.10 and wires #788-791 totaling $147,142.76, per the Agency breakdown below:

City: $3,563,399.10
Fire: $195,410.76
Successor Agency: $0.00
Grand Total: $3,758,809.86

COUNCIL MEMBER SILVA
- Asked if there was an update on the Spanish Trails project since there were payables for that project.

CONSULTING CITY ENGINEER BRAD MERRELL
- Stated that Caltrans is taking the lead on the property transfer near the freeway which will go to the State Land Commission for approval.

RESULT: APPROVED [UNANIMOUS]
MOVER: Timothy Silva, Council Member
SECONDER: Marilyn Dyer Kruse, Council Member
AYES: Noble, Kruse, Rose, Courtney, Silva
CITY COUNCIL:

6. RESOLUTION AUTHORIZING SUBMITTAL OF APPLICATIONS FOR CALRECYCLE GRANTS (REPEALING RESOLUTION NO. 5015-2021)
Recommended Action:

That the City Council approve Resolution No. 5078-2022 authorizing submittal of applications for CalRecycle grants and related authorizations, repealing Resolution 5015-2021 and waive the full reading.

RESULT: APPROVED [UNANIMOUS]
MOVER: Timothy Silva, Council Member
SECONDER: Marilyn Dyer Kruse, Council Member
AYES: Noble, Kruse, Rose, Courtney, Silva

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Minutes-March 7, 2022

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7. CITY AND FIRE PROTECTION DISTRICT PURCHASING AND CONTRACT POLICY ADDENDUM FOR SB 1383 PROCUREMENT
Recommended Action:

Staff recommends that:

1. The City Council adopt Resolution No. 5079-2022 amending the Purchasing and Contract Policy adding Addendum A: SB 1383 Recovered Organic Waste Procurement Policy.

2. The Fire Board adopt Resolution No. 65-2022 amending the Purchasing and Contract Policy adding Addendum A: SB 1383 Recovered Organic Waste Procurement Policy.

RESULT: APPROVED [UNANIMOUS]
MOVER: Timothy Silva, Council Member
SECONDER: Marilyn Dyer Kruse, Council Member
AYES: Noble, Kruse, Rose, Courtney, Silva

8. 2022 PLANNING COMMISSIONERS ACADEMY
Recommended Action:

Requesting City Council approval to send three (3) Planning Commissioners and (1) staff member to attend the 2022 League of California Cities Planning Commissioners Academy.

RESULT: APPROVED [UNANIMOUS]
MOVER: Timothy Silva, Council Member
SECONDER: Marilyn Dyer Kruse, Council Member
AYES: Noble, Kruse, Rose, Courtney, Silva
DISCUSSION / ACTION ON DEFERRED ITEMS: (ITEMS PREVIOUSLY TABLED OR PULLED FROM

CONSENT CALENDAR BY COUNCIL WILL BE CONSIDERED BY THE GOVERNING BOARD AT THIS TIME).

PUBLIC HEARINGS:

9. CONDUCT A FIFTH PUBLIC HEARING ADOPTING A CITY COUNCIL ELECTION DISTRICT MAP UNDER ELECTIONS CODE SECTIONS 21600–21609
Recommended Action:

That the City Council conduct the fifth public hearing to adopt a Resolution adopting the new City Council Election District Map.

MAYOR COURTNEY OPENED THE PUBLIC HEARING AT 7:16 P.M.

CITY ATTORNEY MATTHEW SUMMERS
- Presented the staff report as filed with the City Clerk.

MAYOR COURTNEY CLOSED THE PUBLIC HEARING AT 7:19 P.M.

RESULT: APPROVED [UNANIMOUS]
MOVER: Timothy Silva, Council Member
SECONDER: Barbara Mae Rose, Council Member
AYES: Noble, Kruse, Rose, Courtney, Silva

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Minutes-March 7, 2022

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GENERAL, NON-AGENDA PUBLIC COMMENT: THIS IS THE TIME AND PLACE FOR THE GENERAL

JOHN "TEX' WILLIAMS, BARSTOW, CALIFORNIA
- Discussed concerns with the shortage of parks maintenance staff, the Mayor and City Attorney. - Asked for the status of the response to his questions from the February 22, 2022 meeting regarding EC Barstow.
- Commended ACTING FIRE CHIEF DINAPOLI and POLICE CHIEF ESPINOZA.

ET SNELL, NEWBERRY SPRINGS, CALIFORNIA
- Discussed concerns with MAYOR COURTNEY and CONSULTANT ANTHONY RILEY. - Stated local cannabis regulations should align with State regulations. - Discussed proposed bingo program and providing assistance to foster children.

CATHY WILLIAMS, BARSTOW, CALIFORNIA
- Encouraged the community to attend and support Caleb's Super Hero Run on March 26, 2022 at the Sports Park.

CRAIG HARRIS, BARSTOW, CALIFORNIA
- Discussed safety concerns due to gopher holes on the fields at Foglesong Park, Stringham Park and H Street Park.
- Thanked CITY MANAGER WILLIE HOPKINS, JR. and staff for the addressing the issue.

PERRY PACK, BARSTOW, CALIFORNIA
- Expressed appreciation for the City Council and staff for their hard work. - Discussed concerns with MAYOR COURTNEY and CITY ATTORNEY MATTHEW SUMMERS. - Asked for a written response on if MAYOR COURTNEY'S actions were civilly and criminally legal.

JANE BROCKHURST, MAIN STREET MURALS/DESERT DISCOVERY CENTER - Asked the City Council to reinstate the City mural program. - Requested a meeting with the City Manager and Council to discuss the program.

EUGENE BUTTICCI, BARSTOW AREA CHAMBER OF COMMERCE
- Expressed support for the Main Street Mural program.
- Stated that the Chamber receives inquiries from tourists interested in viewing the murals.

CARMEN HERNANDEZ, BARSTOW, CALIFORNIA
- Asked when the third-party investigation would conclude. Stated there are citizens interested in being interviewed.
- Requested a copy of the letter from the City Attorney to the Mayor regarding repayment of mileage reimbursements.
- Asked for a presentation on Burrtec rates as they related to SB 1383 organics recycling. - Asked how the Council would be handling the censure of MAYOR COURTNEY.

JOHN CHRISTIANA, BARSTOW, CALIFORNIA
- Discussed concerns with his court case with the San Bernardino County Superior Court.

MIKE HERNANDEZ, BARSTOW, CALIFORNIA
- Stated he never received responses to his questions from the February 7, 2022 and February 22, 2022 Council meetings.

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Minutes-March 7, 2022

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JIM BROWN, BARSTOW, CALIFORNIA
- Discussed concerns with CITY ATTORNEY MATTHEW SUMMERS.

BUSINESS OF THE COUNCIL/COUNCIL COMMITTEE REPORTS:

COUNCIL MEMBER ROSE
- Stated the next Homeward Bound Committee meeting was scheduled for March 9, 2022. - Provided an update on the 2022 Homeless Point and Time Count held on February 24, 2022. - Stated the Rules and Policy Town Hall would be March 23, 2022 at the Cora Harper Center. - Addressed the demand letter for MAYOR COURTNEY's repayment of ineligible mileage reimbursements.
- Asked staff to follow-up on responding to Mr. Williams' questions regarding EC Barstow and Mr.

Hernandez's questions.
- Requested that the Main Street Mural program be funded in the Fiscal Year 2022-2023 budget.

MAYOR PRO TEM NOBLE
- Stated the next Military Affairs Committee meeting was scheduled for March 8, 2022 and the next Victor Valley Transit Authority meeting was scheduled for March 21, 2022. - Asked the community to pray for all members of the military. - Requested an update on the Indian casino.
- Asked staff to continue to follow-up on the parks maintenance issues.

COUNCIL MEMBER DYER KRUSE
- No committee reports.
- Stated that the March Streets Committee meeting was cancelled. - Thanked staff for composing the letter that the Council sent to the fire agencies who assisted with David Spink's memorial.
- Expressed support for the Main Street Mural program resuming. - Thanked staff for always providing information and clarification on agenda items.

COUNCIL MEMBER SILVA
- Requested that the Main Street Mural program be funded in the Fiscal Year 2022-2023 budget. - Asked that the student pledge leader program for Council meetings be reinstated. - Stated that AB1749 was discussed at the February Mojave Desert Air Quality Management District board meeting. Stated he would provide more information to the City Manager on how the legislation would impact Barstow.

MAYOR COURTNEY
- Stated he attended the grand openings of Sliderz and Mo', Dutch Brothers Coffee and Apple Valley Tax service.
- Discussed the March San Bernardino County Transportation Authority board meeting. - Also discussed other events including the High Desert Mayor's meeting, Reaching our Kids event, Dreamers Visionaries and Leaders event and Skyline School Family Night. - Expressed support for the Main Street Mural program resuming.

STAFF REPORTS:

None
POLICE CHIEF COMMENTS:

POLICE CHIEF ANDREW ESPINOZA JR.
- Thanked the community for attending the March 1st Coffee with a Cop event. - Stated the Barstow Police Activities League Softball Tournament was scheduled for March 12, 2022.
- Stated the new Police K-9 has completed training.

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- Thanked police and fire personnel for their efforts with handling recent arson incidents.

FIRE CHIEF COMMENTS:

ACTING FIRE CHIEF NICK DINAPOLI
- Thanked police and fire personnel for their efforts with handling recent arson incidents. - Thanked the Mayor and Council for their support.
- Discussed concerns with personnel and equipment shortages.

CITY MANAGER / DISTRICT MANAGER COMMENTS:

CITY MANAGER WILLIE HOPKINS, JR.
- Stated that PARKS AND RECREATION SUPERINTENDENT KYLE WOOLEY was working on an assessment of all City parks.
- Stated that the First Street Bridge would be addressed. - Addressed concerns with recent citizen public comments about not receiving a response to questions asked. Stated that staff has provided responses.

BUSINESS / ACTION ITEMS:

CITY COUNCIL:

10. FISCAL YEAR 2021-22 MID-YEAR BUDGET STATUS REPORT & PROPOSED BUDGET

ADJUSTMENTS
Recommended Action:

1. Staff recommends that the City Council / Fire Board approve the budget adjustments and related transfers within the Budget Adjustments contained within the "Attachment 2” as discussed herein.

2. Staff recommends that the City Council / Fire Board approve the Capital Improvement Plan (CIP), Capital Equipment, and Special Revenue carryforwards, and related transfers in conjunction with the aforementioned carryforward budgets, contained in "Attachment 2" of this staff report.

INTERIM FINANCE DIRECTOR MARC PUCKETT
- Presented the staff report as filed with the City Clerk. - Provided an overview of General Fund revenues and expenditures along with an overview of the Measure Q and Barstow Fire Protection District funds.

SPEAKERS

LEONARD WILLIAMS, BARSTOW, CALIFORNIA
- Asked if the overtime costs for the Police ($225K) and Fire ($450K) departments were ever approved publicly by the Council.

MIKE HERNANDEZ, BARSTOW, CALIFORNIA
- Stated that he has repeatedly requested the amount of interest earned in the Measure Q fund and has not received a response.
- Asked how the interest earned in the Measure Q fund was allocated.

RESULT: APPROVED [UNANIMOUS]
MOVER: Timothy Silva, Council Member
SECONDER: Paul Anthony Courtney, Mayor
AYES: Noble, Kruse, Rose, Courtney, Silva

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11. DECLARATION OF LOCAL EMERGENCY WITHIN THE CITY OF BARSTOW Recommended Action:

Call a State of Emergency within the City of Barstow as a result of damage sustained to the First Street Bridge caused by a single-vehicle collision that occurred on February 19, 2022.

CITY MANAGER WILLIE HOPKINS, JR.
- Stated that Items 11, 12 and 13 would be considered together. - Presented the staff reports as filed with the City Clerk.

GENERAL MANAGER OF ENVIRONMENTAL SERVICES KODY TOMPKINS - Provided an update on the repairs of the First Street Bridge.

RESULT: APPROVED [UNANIMOUS]
MOVER: Timothy Silva, Council Member
SECONDER: Barbara Mae Rose, Council Member
AYES: Noble, Kruse, Rose, Courtney, Silva

12. APPROVE RESOLUTION 5081-2022 CONFIRMING THE CITY MANAGER/DIRECTOR OF EMERGENCY SERVICES’ DECLARATION OF THE EXISTENCE OF A LOCAL EMERGENCY

FOR THE CITY OF BARSTOW
Recommended Action:

Approve Resolution 5081-2022 confirming the City Manager/Director of Emergency Services’ declaration of the existence of a local emergency for the City of Barstow.

RESULT: APPROVED [UNANIMOUS]
MOVER: Timothy Silva, Council Member
SECONDER: Barbara Mae Rose, Council Member
AYES: Noble, Kruse, Rose, Courtney, Silva

13. APPROVE RESOLUTION NO. 5082-2022 AUTHORIZING THE CITY ENGINEER, WITH THE

APPROVAL OF THE CITY MANAGER, TO ENGAGE THE SERVICES OF CONTRACTORS TO

CONSTRUCT URGENT AND NECESSARY REPAIRS TO THE FIRST STREET BRIDGE PURSUANT TO PUBLIC CONTRACTS CODE SECTION 22050
Recommended Action:

Approve Resolution 5082-2022 authorizing the City Engineer, with the approval of the City Manager, to engage the services of contractors to construct urgent and necessary repairs to the First Street Bridge pursuant to Public Contracts Code Section 22050 in an amount not to exceed $250,000.

SPEAKERS

MIKE HERNANDEZ, BARSTOW, CALIFORNIA
- Asked why the source of funding was not included in the agenda item. - Asked if the City would be reimbursed for repairs.

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RESULT: APPROVED [UNANIMOUS]
MOVER: Timothy Silva, Council Member
SECONDER: Barbara Mae Rose, Council Member
AYES: Noble, Kruse, Rose, Courtney, Silva

14. POTENTIAL TRANSITION TO FIVE VOTING DISTRICTS: CONSIDERATION OF ADOPTION OF RESOLUTION NO. 5083-2022 SUBMITTING BALLOT MEASURE TO REPEAL MEASURE

G AND CONVERT DIRECTLY ELECTED OFFICE OF MAYOR INTO AN APPOINTED MAYOR

POSITION FROM AMONG FIVE CITY COUNCIL MEMBERS ELECTED BY-DISTRICT TO THE CITY’S VOTERS AT THE NOVEMBER 8, 2022 GENERAL MUNICIPAL ELECTION Recommended Action:

Staff recommends the City Council consider whether to adopt a Resolution ordering the submission to the qualified electors of the City a measure regarding whether to transition from an election system with four by-district councilmembers and a mayor elected at-large to an election system with five by-district councilmembers at the general municipal election to be held on Tuesday, November 8, 2022.

CITY ATTORNEY MATTHEW SUMMERS
- Presented the staff report as filed with the City Clerk. - Stated voter approval would be needed to transition to five districts and the ballot measure could be on the November 8, 2022 ballot with the change being effective upon expiration of the Mayor's term in 2024.

MAYOR PRO TEM NOBLE
- Asked if election costs had been determined by the County Registrar of Voters.

CITY ATTORNEY MATTHEW SUMMERS
- Noted that the cost of the election had not been determined.

CITY MANAGER WILLIE HOPKINS, JR.
- Stated that staff would get the election costs from the County.

COUNCIL MEMBER ROSE
- Expressed support for the transition especially to ensure the position is represented by someone concerned with Barstow's best interest.

COUNCIL MEMBER DYER KRUSE
- Stated that approximately 35-40 community members she polled were in support of directly electing the Mayor.
- Discussed the responsibilities of the Mayor and the time commitment involved.

MAYOR COURTNEY
- Thanked COUNCIL MEMBER DYER KRUSE for the information. - Discussed the responsibilities of the Mayor and the time commitment involved.

SPEAKERS

MIKE HERNANDEZ, BARSTOW, CALIFORNIA
- Discussed concerns with prior Mayors dictating policy and discussed the importance of having a different Mayor and perspective each year.

MOTION BY COUNCIL MEMBER SILVA, SECONDED BY COUNCIL MEMBER ROSE, TO OPEN THE ITEM FOR DISCUSSION.

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Page 10 of 10 ends

COUNCIL MEMBER SILVA
- Discussed the threat of litigation that resulted in the City transitioning to by-district voting and he would support electing the Mayor if the Council seats were elected at-large. - Stated the voters should decide whether to elect or appoint the Mayor.

RESULT: APPROVED [3 TO 2]
MOVER: Timothy Silva, Council Member
SECONDER: Barbara Mae Rose, Council Member
AYES: Noble, Rose, Silva
NAYS: Kruse, Courtney
ADJOURNMENT:

By the consensus of the City Council and without objection, the meeting was adjourned at 9:15 P.M.

Respectfully Submitted: Approved:
_______________________________ _______________________________ Andrea Flores, City Clerk Paul Anthony Courtney, Dr. B.A. Mayor Notice: Signed Minutes are filed with the City Clerk’s office

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Regular Meeting
03/21/22 07:00 PM
City Manager Department
Maribel Hernandez
Community Promotion
Doc ID: 4963

AGENDA ITEM
AGENDA MATTER:

COMMUNITY PROMOTIONAL FUND APPLICATION FROM THE BARSTOW POLICE DEPARTMENT/2022 BAKER TO VEGAS RELAY RACE
EXECUTIVE SUMMARY:

The Barstow Police Department is asking for a cash grant of $500 to assist with the expense for the 2022 Baker 2 Vegas Relay Race.

DISCUSSION:

The Barstow Police Department is requesting a cash grant of $500 to help offset the costs of the 2022 Baker 2 Vegas Relay Race that will occur on April 9, 2022. All proceeds from the event will go to the Barstow Police Activities League (P.A.L.).

Attached is the Community Promotional Fund Application along with supporting documents for Council review
FISCAL IMPACT:

Request for cash grant award of $500. Year-to-date for Fiscal Year 2021-2022 total of $1,000 charged to 102.150.542.07.755 and in-kind donations of fee waivers totaling $54,650.

RECOMMENDED ACTION:

Approve Community Promotional Fund donation in the amount of $500. 5 Packet Pg. 22

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Regular Meeting
03/21/22 07:00 PM
Parks and Recreation
Kyle Woolley
Temporary Use Permit
Doc ID: 4962

COUNCIL AGENDA ITEM
AGENDA MATTER:

BARSTOW YOUTH SPORTS COALITION - LONG TERM TEMPORARY USE PERMIT & FEE WAIVER EXECUTIVE SUMMARY:

The Barstow Youth Sports Coalition is a non-profit organization. This organization is currently the hosting the Farmer’s Market in Barstow. Farmers markets facilitate personal connections and bonds of mutual benefits between farmers, shoppers, and communities. It also creates an opportunity where farmers can simultaneously sell fresh, local food and serve as food educators, revitalizing the way consumers shop and eat.

The Farmers Market is a monthly occurrence in the City of Barstow. The goal is to build a farmers market that would benefit the local residents within the community, provide access to fresh foods, encourage entrepreneurship, and build community pride.

DISCUSSION:

FISCAL IMPACT:

Waiving the Temporary Use Permit for the Barstow Youth Sports Coalition will have a fiscal impact of $27 in foregone fees for the permit. If there are multiple events associated with the Youth Sports Coalition's hosting of the Farmer's Market, the fiscal impact would be $27 per event.

RECOMMENDED ACTION:

AGENDA ITEM
AGENDA MATTER:

FIRST READING AND INTRODUCTION OF AN ORDINANCE OF THE CITY OF BARSTOW

REQUIRING E-FILING OF STATEMENT OF ECONOMIC INTERESTS AND CAMPAIGN FINANCE FORMS
EXECUTIVE SUMMARY:

California Government Code Section 84615 provides that a legislative body of a local government agency may adopt an ordinance that requires an elected officer, candidate, committee, or other person required to file statements, reports, or other documents required by Chapter 4 of the Political Reform Act to file such statements, reports, or other documents online or electronically with the City Clerk. The City of Barstow has entered into an agreement with Netfile, a vendor approved by the California Secretary of State that meets the requirements set by Government Code Section 84615, to provide an online electronic filing system (System) for California Fair Political Practices Commission campaign statements and Statements of Economic Interests. The Fair Political Practices Commission is in the process of approving the City as an e-filing agency based on the contract with Netfile. The System will operate securely and effectively and will not unduly burden filers. Specifically: (1) the System will ensure the integrity of the data and includes safeguards against efforts to tamper with, manipulate, alter, or subvert the data; (2) the System will only accept a filing in the standardized record format developed by the Secretary of State and compatible with the Secretary of State's system for receiving an online or electronic filing; and (3) the System will be available free of charge to filers and to the public for viewing filings.

DISCUSSION:

The City of Barstow is currently a paper-filing agency for statutory Fair Political Practices Commission (FPPC) campaign disclosure forms and statements of economic interest, commonly referred to as Form 460s and Form 700s, respectively. The City Clerk’s Office proposes moving to an electronic filing system (e-filing) using NetFile, a web-based, vendor-hosted application that utilizes “industry best practices” for securing data, using the same data encryption for online filings used by banks for online banking.

Implementation of the NetFile system will promote transparency and provide convenience for committees, individuals, and the public. It provides 24-hour filing and viewing accessibility of campaign finance information from any computer, anywhere. In certain instances, the NetFile program will also increase the accuracy of filed campaign statements by prohibiting any filings that may have inadvertently omitted required information under the Act (e.g. missing addresses or the stated occupation of individual donors).

Campaign Finance Disclosure Statements (Form 460, Form 496, Form 497) Adoption of the proposed ordinance is required to implement electronic filings of the campaign finance component of the NetFile system, and will only apply to those filers that exceed a threshold of $2,000 for expending or receiving campaign funds. This threshold is consistent with the Political Reform Act (the “Act”), which recognizes campaigns that spend or raise more than $2,000 as “Controlled Committees.” Under the Act, these types of committees are obligated to file detailed campaign finance disclosure statements, also known as Form 460s. For those smaller campaigns that do not exceed the $2,000 threshold, they may continue to file paper versions of the Form 470 disclosure forms. It should be noted that the NetFile system is able to accommodate the online filing of several types of required forms by the FPPC, including Forms 460, 470, 496, and 497, which are the most commonly used forms in the City of 7 Packet Pg. 26
Regular Meeting
03/21/22 07:00 PM
City Clerk / Records
Christina Rudsell
Ordinance
Doc ID: 4969

AGENDA ITEM
Barstow’s local election campaigns.

Statement of Economic Interest (Form 700)
The FPPC is currently in the process of certifying the City as an e-filing agency for its “Statement of Economic Interest” Form 700, clearing the way for filers within the City to use the online system. The Form 700 component of NetFile does not require an ordinance; however, staff recommends that all designated Form 700 filers identified in the City’s and Barstow Fire Protection District Conflict of Interest Codes also be required to file electronically, to fully transition the City to electronic, paperless filing pursuant to Government Code 84615.

There are about 55 employees, board members and contractors currently required to file an annual SEI.

Some filers, such as the City Manager, City Attorney, Councilmembers and Planning Commissioners (GC 87200 filers) already have the option of using the FPPC's e-filing system. A distinction between NetFile and the FPPC e-filing system is that the FPPC system requires users to create separate forms for each outside agency that requires a Form 700 from the official. In NetFile they can add any number of outside boards, commissions, or JPAs, so all of the reports are created in one filing. The filer can print and sign and forward the report to those agencies for which they must file a Form 700, but who do not have FPPC approval for e-filing. Adopting the ordinance would make e-filing consistent among all filers in the City of Barstow. An added benefit of the system is that the Form 700 electronic filing incorporates an initial review process and alerts the filer of errors at the time they are entering information, thereby minimizing the need for the City Clerk to request amendments. In addition to increased efficiency, electronic filing will eliminate the need for wet signatures, will redact statements posted online, and will automatically link to the FPPC’s system. If approved, all filers will be required to submit their statutory filings through the automated system, and paper filings will no longer be accepted. However, to support the City’s efforts towards diversity, equity and inclusion, the City Clerk, as the City’s filing officer, will have the right to accept a paper filing in lieu of an electronic filing at the City Clerk’s discretion, under certain circumstances, and to accommodate an Americans with Disabilities Act (ADA) request. Examples of exceptions may include limited access to an electronic device or internet connection. To ensure a smooth transition, and as part of the agreement and acquisition of the system, NetFile and the City Clerk’s Office will offer extensive training to filers and campaign committees. Staff can schedule one-on-one training with NetFile staff and individual filers and treasurers that will cover the entire electronic filing process including the set-up of filer accounts, explanation of the online filing process, demonstration of the data input and saving reports, preparation of statements for e-signature, and finalizing statements for electronic filing. A local government agency may require an elected officer, candidate, committee, or other person required to file statements, reports, or other documents required by Chapter 4 (commencing with Section 84100) to file online or electronically, unless the officer, candidate, or committee receive less than $2,000 in contributions and have less than $2,000 in expenditures in a calendar year.

The following is a summary of requirements that local government agencies must meet:

1. Local legislative bodies must adopt an ordinance approving such online filing and include a legislative finding that the online or electronic filing system will operate securely and effectively and would not unduly burden filers;

2. Electronic systems used must accept filings that are compatible with the format developed by the Secretary of State, must ensure security and integrity of data, and must provide a way for electronic filers to sign under penalty of perjury;

3. No charge to file;
7 Packet Pg. 27
Regular Meeting
03/21/22 07:00 PM
City Clerk / Records
Christina Rudsell
Ordinance
Doc ID: 4969

AGENDA ITEM

4. File date will be the date received by the local filing officer;

5. Specifies that a timely electronic confirmation along with a copy of the filing kept by the filer constitute a rebuttable presumption that the filing was timely;

6. Filings must be made available on the Internet, with certain information removed, and requires local filing officers to make complete and unredacted copies of electronic filings available to any person upon request;

7. Data shall be maintained for at least 10 years for audit purposes and then may then be archived in a secure format;

8. Notwithstanding any other provision of law, any statement, report, or other document filed online or electronically pursuant to this section shall not be required to be filed with the local filing officer in paper format.

In order to comply with state law, the requirements from Government Code Section 84615 have been incorporated in the proposed ordinance for the City to transition to an electronic filing system (Attachment A). The ordinance is also flexible in that it allows, if Netfile and the City ever discontinue their contract, the City can move to another vendor who meets the Secretary of State’s requirements.

FISCAL IMPACT:

The contract amount for the NetFile system is $3,700 per year for up to five years, for a total of $18,500 through FY 2026-27. NetFile is providing free use of service on both systems through June 30, 2022.

Funds will be included in the City Clerk's Recommended Budget for FY 2022-23. The FPPC requires a fee of $1,000 to register as an electronic filing agency, however, NetFile has agreed to pay this cost on behalf of the City.

RECOMMENDED ACTION:

Waive first reading and introduce Ordinance ___- 2022 to mandate electronic and paperless filing of Fair Political Practices Commission campaign disclosure statements and statements of economic interest (Form 700). The adoption of the proposed ordinance is exempt from review under the California Environmental Quality Act, per CEQA Guidelines Sections 15305 and 15378. 7 Packet Pg. 28
277218.3 Page 1 of 3
ORDINANCE NO. ____ - 2022

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BARSTOW ADDING CHAPTER 2.56 TO THE CITY OF BARSTOW MUNICIPAL CODE

RELATED TO ELECTRONIC AND PAPERLESS FILING OF FAIR

POLITICAL PRACTICES COMMISSION CAMPAIGN DISCLOSURE

STATEMENTS AND STATEMENTS OF ECONOMIC INTEREST
WHEREAS, California Government Code Section 84615 provides that a legislative body of a local government agency may adopt an ordinance that requires an elected officer, candidate, committee, or other person required to file statements, reports, or other documents required by Chapter 4 of the Political Reform Act to file such statements, reports, or other documents online or electronically with the City Clerk; and WHEREAS, the City of Barstow (“City”) has entered into an agreement with Netfile, a vendor approved by the California Secretary of State that meets the requirements set by Government Code Section 84615, to provide an online electronic filing system (“System”) for the California Fair Political Practices Commission campaign statements; and WHEREAS, the System will operate securely and effectively and will not unduly burden filers. Specifically: (1) the System will ensure the integrity of the data and includes safeguards against efforts to temper with, manipulate, alter, or subvert the data; (2) the System will only accept a filing in the standardized record format developed by the Secretary of State and compatible with the Secretary of State's system for receiving an online or electronic filing; and (3) the System will be available free of charge to filers and to the public for viewing filings; and
WHEREAS, the City and Netfile will operate the electronic filing system in compliance with the requirements of California Government Code Section 84615 and any other applicable laws; and
WHEREAS, the City intends that, if Netfile and City ever discontinue their contract for any reason, then the City shall contract with another vendor for these services who meets the Secretary of State’s requirements for an online filing system or will develop its own compliant online filing system.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BARSTOW DOES ORDAIN AS FOLLOWS:

SECTION 1. FINDINGS.

The City Council of the City of Barstow finds and determines as follows:

A. California Government Code Section 84615 provides that a legislative body of a local government agency may adopt an ordinance that requires an elected officer, candidate, or committee required to file statements, reports, or other documents required by Chapter 4 of the Political Reform Act to file such statements, reports, or other documents online or electronically with the City Clerk.

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277218.3 Page 2 of 3
B. The web-based system operated by the City Clerk contains multiple safeguards to protect the integrity and security of the data, it will operate securely and effectively, and it will not unduly burden filers.

C. The City Clerk will operate the electronic filing system in compliance with the requirements of California Government Code Section 84615 and any other applicable laws.

SECTION 2. ADDITION OF CHAPTER 2.56 TO THE BARSTOW MUNICIPAL CODE
Barstow Municipal Code Title 2 (Administration and Personnel), Chapter 2.56 (Electronic Filing of Campaign Disclosure Statements and Statements of Economic Interest) is hereby added to the Barstow Municipal Code to read as follows:

CHAPTER 2.56. - ELECTRONIC FILING OF CAMPAIGN DISCLOSURE STATEMENTS

AND STATEMENTS OF ECONOMIC INTEREST
Section 2.56010. Purpose and Authority.

A. The purpose of this ordinance is to require the filing of Campaign Disclosure Statements and Statements of Economic Interest by elected officials, candidates, staff, consultants or committees to be completed electronically. The City Council enacts this ordinance in accordance with the authority granted to cities by state law. This ordinance is intended to supplement, and not conflict with, the Political Reform Act.

B. While electronic filing of statements will be mandated under this ordinance, the City Clerk, as the City’s filing officer, will have the right to accept a paper filing in lieu of an electronic filing at the City Clerk’s discretion, under certain circumstances, and to accommodate an Americans with Disabilities Act (ADA) request.

Section 2.56.020 Basic Requirement.

A. An elected officer, candidate, committee, or other person required to file statements, reports, or other documents required by Chapter 4 of the Political Reform Act or designated in the City’s local conflict of interest code adopted pursuant to Government Code Section 87300 shall file any required Statement of Economic Interests (Form 700) online or electronically with the City Clerk.

Electronic filing is mandatory unless the officer, candidate, or committee is exempt as described Government Code 8415(a).

B. Once an elected officer, candidate, committee, or other person files a statement, report, or other document electronically pursuant to subsection (a), all future statements, reports, or other documents on behalf of that filer shall be filed electronically.

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C. In any instance in which an original statement, report, or other document must be filed with the California Secretary of State and a copy of that statement, report, or other document is required to be filed with the City Clerk, the filer may, but is not required to file the copy electronically.

D. The City Clerk shall issue an electronic confirmation that notifies the filer that the Statement was received, and the notification shall include the date and the time that the Statement was received and the method by which the filer may view and print the data received by the City Clerk. The date of filing for a Statement filed online shall be the day that it is received by the City Clerk.

E. If the City Clerk's system is not capable of accepting a Statement due to technical difficulties, a Statement in paper format shall be filed with the City Clerk.

F. The City Clerk will operate the electronic filing system in compliance with the requirements of California Government Code Section 84615.

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277218.3 Page 4 of 3
SECTION 3. CEQA- EXEMPTION: This proposed ordinance has been reviewed with respect to applicability of the California Environmental Quality Act ("CEQA") and the State CEQA Guidelines (California Code of Regulations, Title 14, Sections 15000 et seq.). The ordinance is not a project under CEQA Guidelines Section 15378 because it involves administrative activities that will not result in direct or indirect physical changes in the environment.

SECTION 4. SEVERABILITY. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this ordinance or any part thereof is for any reason held to be unconstitutional or invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this ordinance or any part thereof. The City Council of the City of Barstow hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases be declared unconstitutional or invalid or ineffective.

SECTION 5. EFFECTIVE DATE. This Ordinance shall go into effect thirty (30) days after the date of its passage and adoption.

PASSED, APPROVED and ADOPTED this 4th day of April, 2022. __________________________________
Paul Anthony Courtney, Dr. B.A., Mayor
ATTEST:
______________________________
Andrea Flores, City Clerk
I, Andrea Flores, City Clerk for the City of Barstow, California, and ex-officio Clerk of the City Council, do hereby certify under penalty of perjury that the foregoing is a true and correct copy of Ordinance No. ____-2022, which was introduced at a regular meeting of the City Council of the City of Barstow held on the 21st day of March, 2022 and adopted at the regular meeting of the City Council of the City of Barstow on the 4
th day of April, 2022, by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:
__________________________________
Andrea Flores, City Clerk

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Regular Meeting
03/21/22 07:00 PM
Finance
Marc Puckett
Bond
Doc ID: 4973

AGENDA ITEM
AGENDA MATTER:

CONSIDERATION OF A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BARSTOW

CONFIRMING THE ISSUANCE OF PENSION OBLIGATION BONDS PURSUANT TO AN INDENTURE

OF TRUST TO REFINANCE THE OUTSTANDING OBLIGATIONS OF THE CITY TO THE CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM, CONFIRMING AND APPROVING THE FINAL FORM

OF INDENTURE OF TRUST AND THE BOND PURCHASE AGREEMENT, APPROVING AN OFFICIAL

STATEMENT, AND APPROVING AND DIRECTING RELATED MATTERS
EXECUTIVE SUMMARY:

Pursuant to Resolution No. 5062-2021, adopted by the City Council on October 4, 2021, the City Council previously approved the issuance of one or more series of pension obligation bonds, directed staff to institute a judicial validation action, and directed staff to submit the necessary documents for an initial series of pension obligation bonds (“Pension Obligation Bonds”) to the City Council for approval.

On February 9, 2022, the San Bernardino Superior Court issued a judgment that the pension obligation bonds are legal, valid and binding.

On March 9, 2022, S&P Global Ratings assigned a rating of “A+” with a stable outlook for the Pension Obligation Bonds.

Staff has worked with the City’s bond counsel and disclosure counsel (Jones Hall, A Professional Law Corporation), municipal advisor (Fieldman, Rolapp & Associates, Inc.) and underwriter (Hilltop Securities Inc.) to prepare the documents required to sell the Pension Obligation Bonds.

There are certain risks attached to the issuance of the Pension Obligation Bonds that arise from the uncertainty of CalPERS’ future investment returns, which are summarized below.

DISCUSSION:

Background. Currently, the City offers retirement benefits to its employees through CalPERS. Through CalPERS, the City contracts to provide pension and OPEB benefits to its Miscellaneous (non-public safety employees) and Safety-Police employee groups.

The City has contracted with CalPERS to provide pension benefits to its Miscellaneous and Safety-Police employee groups since, at least, January, 1951. CalPERS is a multi-employer pension trust with 2,890 participating employers. Currently, the City’s funded status of its CalPERS pension plan is 75.4% as of the latest actuarial valuation and its unfunded actuarially accrued liabilities are $33,330,491. These liabilities accrue interest at a rate equal to the pension system’s discount rate. In FY2021-22, the City’s UAL payment for the Miscellaneous Classic group equaled 25.24% of payroll (total payment 39.26% of payroll) and the UAL payment for the Safety Classic group equaled 42.28% of payroll (total payment

65.99% of payroll). These actuarially accrued liabilities accrued interest at a rate equal to the discount rate of the plan of 7% through June 30, 2021. In November, 2021, the discount rate was reduced to

6.8% per CalPERS’ funding risk mitigation policy enacted as a result of CalPERS achieving a 21.3% rate of return for the year ended June 30, 2021. For fiscal year 2021-22, the City’s annual required contribution (ARC) to fund the UAL equaled $2,361,632 for the Miscellaneous and Safety-Police employee groups. The City refunded this contribution for the fiscal year 2021-22 in order to achieve 8 Packet Pg. 33
Regular Meeting
03/21/22 07:00 PM
Finance
Marc Puckett
Bond
Doc ID: 4973

AGENDA ITEM
savings of over $78,000. Per the most recent actuarial valuation issued in July, 2021, the City’s ARC to fund the UAL payment for fiscal year 2022-23 will equal $2,761,339, an increase of $400,000 from the current fiscal year. CalPERS’ investment return of 21.3% in the fiscal year ended June 30, 2021 resulted in actuarial gains which will reduce the total UAL across each of the City’s pension plans. Also, the reduction in the discount rate to 6.8% will increase the total UAL across each of the City’s pension plans.

The impact of these two factors is estimated as a net reduction to the total UAL of $12.38 million. These factors will be reflected in the City’s actuarial valuation reports issued and dated July, 2022. The table below provides a summary of the City’s estimated UAL balances, as of June 30, 2021, for the City’s classic Miscellaneous and Safety Plans only.

Estimated CalPERS UAL as of June 30, 2021
Refinancing Opportunity. Due to historically low interest rates, the City has an opportunity to refund the UAL for CalPERS employee groups.

The savings and interest rates presented in this report are only estimates based on current market conditions as of the date of this report, and may change due to market movements in rates prior to the date of closing. Interest rates have been volatile in recent months as a result of inflationary pressures resulting from the COVID-19 pandemic and as a result of international events, such as the war in Ukraine.

Proposed Pension Obligation Bonds. By issuing Pension Obligation Bonds to refinance the City’s UAL for all employee groups in CalPERS, staff estimates that, based on current market conditions, the savings will amount to over $2.50 million and the average annual savings will be approximately $138,969 over the existing 16 year amortization period of the UAL. Based upon the proposed level debt service payments for the Pension Obligation Bonds, the City’s savings would be significantly higher during the first few years of the repayment schedule. Upon issuance of the Pension Obligation Bonds, staff estimates that the City’s UAL will be paid in full as of that date. The Pension Obligation Bonds would be issued for the same number of years as remain on the existing UAL amortization schedule per CalPERS. The net interest cost is projected to be approximately 4.53% and the average coupon rate is anticipated to be approximately 4.45%. The CalPERS liability continues to accrue interest at 6.80% until it is paid off.

Set forth below is a projected Pension Obligation Bonds savings analysis based on current market conditions.
8 Packet Pg. 34
Regular Meeting
03/21/22 07:00 PM
Finance
Marc Puckett
Bond
Doc ID: 4973

AGENDA ITEM
Staff previously disclosed the proposed costs of issuance for the Pension Obligation Bonds prior to the City Council’s October 4, 2021 action. As explained at that time, costs of issuing a pension obligation bond issue of this size (approximately $21.29 million) is usually approximately 2% of the par amount of the bond issue or $425,800. Staff was able to reduce the issuance costs to $386,425 in total or 1.82% plus a contingency of $23,250. Any remaining contingency funds are used to pay down debt. 8 Packet Pg. 35
Regular Meeting
03/21/22 07:00 PM
Finance
Marc Puckett
Bond
Doc ID: 4973

AGENDA ITEM
Ratings. On March 9, 2022, S&P Global Ratings assigned a rating of “A+” with a stable outlook for the Pension Obligation Bonds. A copy of the ratings report is attached.

Pension Obligation Bond Risks. It is important to understand that the actual savings that the City will realize from refinancing its CalPERS UAL through issuance of the Pension Obligation Bonds are dependent on two factors: (1) actual interest rates at the time of pricing the new bonds (the estimates in this report are based on current market conditions) and (2) future CalPERS returns, which is an unknown at the time of bond issuance and outside the City’s control. The rule of thumb for evaluating the benefit of a UAL restructuring is that the City will be better off (i.e. the UAL refunding will produce positive savings) if CalPERS earns more than the interest rate on the Pension Obligation Bonds (currently projected to be

4.52%). If CalPERS earns less than the interest rate on the Pension Obligation Bonds, then the City’s overall pension costs (debt service on the Pension Obligation Bonds plus payments to CalPERS) would be higher than they would have been if the City had not issued pension obligation bonds. While past performance does not guarantee future results, CalPERS’ historical 30-year returns are 8.0%, 6.9% for the last 20 years on average, 8.5% for last 10 years and 10.4% for the last 5 years.

Judicial Validation. On February 9, 2022, the San Bernardino Superior Court issued a judgment that the Pension Obligation Bonds are legal, valid and binding, that pension liabilities are obligations imposed by law, and, therefore, that the Pension Obligation Bonds are exempt from the debt limitation requirements set forth in Article XVI, Section 18 of the California Constitution.

Financing Documents. Staff recommends final approval of the following documents:

Bond Purchase Agreement: This agreement between the City and Hilltop Securities Inc., the underwriter of the Pension Obligation Bonds, will describe the final interest rates and bond maturities. It also details the conditions under which the underwriter will purchase the Pension 8 Packet Pg. 36
Regular Meeting
03/21/22 07:00 PM
Finance
Marc Puckett
Bond
Doc ID: 4973

AGENDA ITEM
Obligation Bonds.

Indenture of Trust: This agreement between the City and U.S. Bank Trust Company, National Association, as trustee, describes the security for the Pension Obligation Bonds (any legally available source of revenues, including amounts on deposit in the General Fund) and establishes the mechanics for payment of debt service on the Pension Obligation Bonds.

Preliminary Official Statement: The Official Statement describes (i) the Pension Obligation Bonds and related legal documents (described in the sections entitled “THE BONDS” and “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS”), (ii) the City’s finances (described in the section entitled “CITY FINANCIAL INFORMATION”), and (iii) potential risks to prospective investors in the Pension Obligation Bonds (described in the section entitled “RISK FACTORS”).

The Preliminary Official Statement (often referred to as the “POS”) is distributed by the underwriter to prospective investors prior to the bond sale so that investors can make informed purchase decisions. The POS is the equivalent of a prospectus in the private sector. The Final Official Statement is sent to purchasers after the terms of the sale are finalized.

The distribution of a POS is subject to federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require the POS to include all facts that would be material to an investor considering a purchase of the Pension Obligation Bonds.

Material information is information that there is a substantial likelihood that a reasonable investor would consider important in deciding whether to buy or sell bonds. Materiality is determined in the context of all facts and circumstances.

The Securities and Exchange Commission (the “SEC”), the agency with regulatory authority over the City’s compliance with the federal securities laws, has issued guidance as to the duties of the City Council with respect to their approval of the POS. In its “Report of Investigation in the Matter of County of Orange, California as it Relates to the Conduct of the Members of the Board of Supervisors” (Release No. 36761 / January 24, 1996) (the “Release”), the SEC stated that, if a member of the City Council has knowledge of any facts or circumstances that an investor would want to know about prior to investing in the bonds, whether relating to their repayment, taxexempt status, undisclosed conflicts of interest with interested parties, or otherwise, he or she should endeavor to discover whether such facts are adequately disclosed in the POS. In the Release, the SEC stated that the steps that a member of the City Council could take include becoming familiar with the POS and questioning staff and consultants about the disclosure of such facts.

Continuing Disclosure Certificate: The Continuing Disclosure Certificate, attached as an appendix to the Official Statement, obligates the City to provide updated information to the bond markets on an ongoing basis. Disclosure is required annually, and on an exceptional basis for certain significant listed events.

FISCAL IMPACT:

Proceeds of pension obligation bonds will be used to refund for savings the City’s unfunded accrued liability (“UAL”) to the California Public Employees’ Retirement System (“CalPERS”). By refunding 100% of CalPERS’ estimate of the UAL, staff estimates that, based on current market conditions, the City can achieve savings of over $2.50 million in total. Contributions to CalPERS for the following year will be 8 Packet Pg. 37
Regular Meeting
03/21/22 07:00 PM
Finance
Marc Puckett
Bond
Doc ID: 4973

AGENDA ITEM
reduced to fund a UAL payment related to any remaining UAL not paid off by bonds and the normal cost contributions.

RECOMMENDED ACTION:

Adopt Resolution Number ___- 2022 confirming approval of Pension Obligation Bonds and related documents.
8 Packet Pg. 38
Summary:

Barstow, California; General
Obligation
Primary Credit Analyst:

Li Yang, San Francisco + 1 (415) 371 5024; [email protected] Secondary Contact:

Alyssa B Farrell, Centennial + 1 (303) 721 4184; [email protected] Table Of Contents
Rating Action
Stable Outlook
Credit Opinion
Related Research
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Summary:

Barstow, California; General Obligation
Credit Profile
US$21.29 mil pension oblig bnds ser 2022 dtd 04/12/2022 due 06/01/2038 Long Term Rating A+/Stable New
Rating Action
S&P Global Ratings assigned its 'A+' long-term rating to Barstow, Calif.'s anticipated $21.29-million pension obligation bonds (POBs), series 2022. The outlook is stable.

Payments on the POBs are based on a pledge of legally available city funds, including the general fund, to pay debt service. We rate these obligations on par with the city's general creditworthiness given our view that the city's ability to pay is closely tied to its operations and because available revenue, including property tax revenue, is not limited in scope and not distinct and separate from its general fund. Proceeds from the series 2022 POBs will be used to increase the funding of the accrued actuarial liability with the California Public Employees' Retirement System (CalPERS) for the city's safety and miscellaneous employee plans to an estimated 100% and pay the costs of issuance.

Credit overview
The city of Barstow is connected to the Riverside-San Bernardino-Ontario Metropolitan Statistical Area (MSA) and while we believe residents have access to the MSA for employment opportunities, we note that the local economy's income and wealth indicators tend to be lower than some of its similarly rated peers. Home prices remain relatively affordable for the region, which serves as a draw for new residents, although we note that they are rising, which is contributing to continued growth in citywide assessed value (AV). While the city reported operating deficits every year from fiscal 2014 to fiscal 2020, we note that fiscal 2021 audited results reflect a strong surplus, which is a notable change in financial performance. Management attributes this surplus to a recovery in sales tax revenues in recent years, is partly due to the passage of Measure Q, which increased the general sales tax rate. General fund reserve levels have fluctuated in recent years as well. Available general fund (assigned + unassigned) reserves declined from roughly $21.4 million (114% of general fund expenditures) in fiscal 2014 to $3.9 million (16.6% of expenditures) in fiscal 2020. However, in fiscal 2021 the city restored reserves to levels it maintained in years prior to fiscal 2019, bringing general fund reserves back up to $9.6 million, or 42.8% of expenditures, which we consider very strong. Going forward, management indicates they do not have plans to materially spend down reserves and expect to keep them in compliance with its policy of 25% of expenditures.

The rating further reflects our view of the city's:
• Access to the broad and diverse Riverside-San Bernardino-Ontario MSA (although, as noted above, the local economy has below-average income and wealth indicators); • Strong management, as evidenced by what we consider a good financial management assessment; WWW.STANDARDANDPOORS.COM/RATINGSDIRECT MARCH 9, 2022 2

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• Maintenance of very strong budgetary flexibility and liquidity despite operating deficits reported in the years prior to fiscal 2021;
• Weak debt burden relative to governmental funds revenue (inclusive of the series 2022 POBs), with low pension and other postemployment benefit (OPEB) liabilities; and
• Strong institutional framework score.

Environmental, social, and governance
We analyzed the city's environmental, social, and governance (ESG) risks relative to its economy, management, financial measures, and debt and liability profile, and believe that its social and governance factors are in line with the sector standard. However, the city has exposure to elevated environmental risks related to drought, wildfire, and seismic activity, which could negatively affect housing demand activity over time if the frequency and severity increases.

Stable Outlook
Downside scenario
We could lower the ratings if the city were to underperform its current projections, resulting in a deterioration in its reserves to a level we no longer consider very strong and reflecting a return to recurring operating deficits in the general fund.

Upside scenario
Should the city's income and wealth metrics rise substantially and its major revenue streams continue to grow, reflecting balanced general fund operations without recurring deficits, then the rating could be raised. A higher rating would also be contingent on the Barstow Fire Protection District no longer being a financial burden on the city's general fund and the city continuing to maintain very strong general fund reserves.

Credit Opinion
A local economy that reflects below-average income and wealth indicators but with access to the Riverside-San Bernardino-Ontario MSA
Barstow has an estimated population of 24,205 and is located in the Inland Empire region of San Bernardino County, along the I-15 corridor. It is part of the Riverside-San Bernardino-Ontario MSA, which we consider broad and diverse.

Barstow is located midway between Los Angeles (134 miles southwest) and Las Vegas (158 miles northeast), making it an important economic and transportation hub for the region. Wealth and income metrics for the city are below-average, although the relatively affordable price of housing is a draw for new residents. Management indicates that the housing market is strong and that home prices and new construction have risen over the past several years.

The city's AV has also increased steadily, most recently by 7.4%, a trend that we expect to continue.

Strong management policies and practices
Our assessment of the city's policies and practices reflects its:
• Budget process that uses historical data related to property tax and sales tax collections, and use of an external sales WWW.STANDARDANDPOORS.COM/RATINGSDIRECT MARCH 9, 2022 3
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tax consultant to build revenue and expenditure assumptions; • Historical practice of formal budget-to-actual presentations to council midway through the fiscal year; management indicates that they also present projections for major revenue streams on a more frequent basis, ranging from quarterly to monthly;
• Use of formal long-term (at least five years) forecasts for its major revenue streams, including property taxes and sales taxes;
• Long-term capital planning, including a seven-year capital improvement plan (CIP) with funding identified; management plans to update this plan annually;
• Formal investment management policy that largely restates what we consider to be conservative state rules and requires monthly updates to the council on holdings and performance; • Formal debt management policy that includes good governance policies, although it lacks what we consider to be material quantitative constraints; and
• Policy of having a minimum reserve of 25% of expenditures to ensure continued services in the event of unanticipated financial disruptions; of this, 20% is categorized as a working capital reserve and the remaining 5% as an emergency contingency reserve.

Maintenance of a very strong reserve position despite a history of consecutive operating deficits prior to 2021
The city has historically maintained very strong general fund reserves, although these have been steadily spent down in each year since 2014. General fund reserves in fiscal 2014 were approximately $21.4 million (114% of general fund expenditures) but fell to $3.9 million (16.6% of expenditures) in fiscal 2020. However, in fiscal 2021 the city restored reserves to levels it maintained prior to fiscal 2019 and raised general fund reserves to $9.6 million, or 42.8% of expenditures, a level we consider very strong. Management indicates that the prior deficits in the general fund were related to the need to support operations for the Barstow Fire Protection District, which became part of the city in 2010. Fiscal 2021 results reflect a strong operating surplus that management indicates is due to a substantial recovery in sales tax revenues that began in fiscal 2019. Going forward, management does not anticipate a return to deficit spending but expects to report stable financial performance and keep its general fund reserves in compliance with its reserve policy of 25% of expenditures at a minimum. We consider reserves above 15% of expenditures to be very strong.

The city receives the majority of its general fund revenues from sales tax, followed by transient occupancy tax (TOT) and property tax. Management reports that the ongoing COVID-19 pandemic did not have a negative effect on the city and that its revenue streams continue to grow going into fiscal 2022. Sales tax revenues are projected to increase going forward, supported in part by continued demand and higher prices for gasoline. We do not expect the city's financial position to weaken substantially during the next two years.

City continues to support fire district operations with regular transfers from the general fund although city reserves remain very strong
We note that the Barstow Fire Protection District became part of the city on Nov. 17, 2010. Historically, the fire district was financially challenged, with operating deficits reported for several years due to rising operational costs from both salary and benefit expenses as well as pension-related costs under the San Bernardino County Employees' Retirement WWW.STANDARDANDPOORS.COM/RATINGSDIRECT MARCH 9, 2022 4
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Association (SBCERA). We note that only fire district employees participate in SBCERA. The continued deficits in the fire district required the city of Barstow to loan general fund money to the district in fiscal 2015 in order to support its operations. This outstanding loan totaled approximately $5.3 million as of fiscal 2021 and is categorized as non-spendable; it is therefore not factored into any of our general fund reserve calculations for the city. We understand that the city has taken steps to restore balance to the fire district's operations, including the passing of Measure Q, a general sales tax revenue increase that is used to pay back the loan from the district to the city and sustain its operations.

Management indicates that, with the passage of Measure Q, the city is able to regularly transfer funds to the fire district in order to support its operations. It expects the fire district to stabilize operations and begin paying back the outstanding loan to the city. The Barstow Fire Protection District fund ended fiscal 2021 with a deficit reduction of $1.3 million from fiscal 2020, resulting in an ending negative fund balance of $5.0 million, which primarily reflects the loan to the city.

Higher debt burden due to the recently issued POBs, which are estimated to reduce total pension costs and result in savings
We note that we expect total governmental fund debt service to materially increase due to the city's issuance of POBs, while the city's required pension and actual other post-employment benefit (OPEB) contributions decrease. Including the issuance of the series 2022 POBs, total governmental fund debt service is 11% of total governmental fund expenditures, and net direct debt is 83% of total governmental fund revenue.

We note that the city entered into a lease financing that was privately placed in the original par amount of $8.485 million. On review of the legal requirements, we do not consider this lease as a contingent liquidity risk as there are in our view no permissive covenants, acceleration provisions, or cross-default provisions that could result in an unanticipated call on liquidity.

Pension and OPEB liabilities
In fiscal 2021 (prior to the issuance of the series 2022 POBs), we calculate that the city's combined required pension and actual OPEB contributions totaled 12% of total governmental fund expenditures. We note that this figure includes only the pension liabilities related to CalPERS. Of that amount, nearly all are required contributions to pension obligations, and only 2.4% represented OPEB payments. The city made its full annual required pension contribution in 2021. We note also that after the issuance of the series 2022 POBs, we estimate that the city's combined required pension and OPEB contributions will fall to 5.9% of total governmental expenditures.

The pension contributions and funded ratios used in our analysis reflect pro forma figures following the issuance of the POBs. We do not view pension and OPEB liabilities as an immediate source of credit pressure for the county, given that the POBs are estimated to refinance its safety and miscellaneous pension liabilities into a fixed-debt obligation.

However, if poor investment performance or other changes generate a new liability, especially earlier in the amortization period, then the city risks having to pay both the debt service costs on the bonds and higher pension contributions, eliminating the potential payment savings from the transaction.

We do not view pension and OPEB liabilities as an immediate source of credit pressure for the city, given that the 2022 POBs are estimated to refinance all the city's pension liability outstanding under CalPERS into a fixed-debt obligation WWW.STANDARDANDPOORS.COM/RATINGSDIRECT MARCH 9, 2022 5
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to recognize interest-cost savings.

The city offers an OPEB benefit that is currently funded on a pay-as-you-go basis.

The city participates in the following plans (we note that this data reflects a measurement date of June 30, 2020):
• CalPERS safety and miscellaneous plans: 77.87% funded with a net pension liability of $29.8 million; we note that the funded ratio is projected to rise to approximately 100% after the 2022 POBs. • Single-employer defined post-employment healthcare plan benefits: $20.2 million in net liability, and 6% funded as of June 30, 2020.

We note that the Barstow Fire Protection District is a component unit of the city and that its employees participate under SBCERA. The previous pension calculations included in this report do not include SBCERA liabilities.

CalPERS has lowered its discount rate to 6.8% from 7.0% in fiscal 2022 with the aim of reducing market risk. We believe a discount rate above our pension guideline of 6% could lead to contribution volatility. For more information on our view of California pensions, see our report "Pension Spotlight: California" (published July 13, 2021 on Ratings Direct).

Barstow, Calif.: Key Credit Metrics
Most recent Historical information
2021 2020 2019
Weak economy
Projected per capita EBI % of U.S. 54.62
Market value per capita ($) 66,868.17
Population 24,205 23,732 23,798
County unemployment rate(%) 9.4
Market value ($000) 1,618,544 1,507,229 1,461,422
Ten largest taxpayers % of taxable value 20.42
Adequate budgetary performance
Operating fund result % of expenditures 16.16 (5.75) (5.05) Total governmental fund result % of expenditures 6.05 0.33 (7.30) Very strong budgetary flexibility
Available reserves % of operating expenditures 42.76 16.61 26.55 Total available reserves ($000) 9,657 3,926 5,843
Very strong liquidity
Total government cash % of governmental fund expenditures 32.12 15.82 10.82 Total government cash % of governmental fund debt service 284.83 280.72 253.77 Strong management
Financial Management Assessment Good
Weak debt & long-term liabilities
Debt service % of governmental fund expenditures 11.28 5.64 4.26 Net direct debt % of governmental fund revenue 83.40
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Barstow, Calif.: Key Credit Metrics (cont.)
Most recent Historical information
2021 2020 2019
Overall net debt % of market value 4.21
Direct debt 10-year amortization (%) 55.07
Required pension contribution % of governmental fund expenditures 2.88 9.80 OPEB actual contribution % of governmental fund expenditures 2.39 2.40 Strong institutional framework
EBI--Effective buying income. OPEB--Other postemployment benefits. Data points and ratios may reflect analytical adjustments.

Related Research
Through The ESG Lens 3.0: The Intersection Of ESG Credit Factors And U.S. Public Finance Credit Factors, March 2, 2022
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.

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RESOLUTION NO. ____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

BARSTOW CONFIRMING THE ISSUANCE OF PENSION

OBLIGATION BONDS PURSUANT TO AN INDENTURE OF

TRUST TO REFINANCE THE OUTSTANDING OBLIGATIONS
OF THE CITY TO THE CALIFORNIA PUBLIC EMPLOYEES’

RETIREMENT SYSTEM, CONFIRMING AND APPROVING THE

FINAL FORM OF THE INDENTURE OF TRUST AND THE BOND

PURCHASE AGREEMENT, APPROVING AN OFFICIAL

STATEMENT, AND APPROVING AND DIRECTING RELATED

MATTERS
WHEREAS, the City of Barstow (the “City”) is a contracting member of the California Public Employees’ Retirement System (“PERS”), and as such the City is obligated to make certain payments to PERS (the “PERS Obligations”); and WHEREAS, the City is authorized under the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code (the “Bond Law”), to issue its bonds for the purpose of refunding certain outstanding obligations of the City, including the PERS Obligations; and
WHEREAS, pursuant to Resolution No. 5062-2021, adopted by the City Council on October 4, 2021, the City Council authorized the issuance of one or more series of pension obligation bonds pursuant to the Bond Law and an Indenture of Trust between the City and a corporate trustee identified by the City Manager, as trustee (the “Bond Indenture”), for the purpose of refinancing the PERS Obligations, and authorized the sale of such pension obligation bonds pursuant to a bond purchase agreement (the “Bond Purchase Agreement”); and
WHEREAS, in Resolution No. 5062-2021, the City Council also authorized a judicial validation action with respect to the pension obligation bonds, and directed City staff, upon completion of the judicial validation action and from time to time, to cause the following to be submitted to the City Council for final approval of each series of pension obligation bonds, as applicable: (i) the final form of the Bond Purchase Agreement for such bonds, (ii) a Preliminary Official Statement relating to one or more series of the bonds, to be prepared by the City’s disclosure counsel, (iii) the final form of the Bond Indenture for such bonds and (iv) such other agreements and documents as are necessary or convenient to implement the issuance, sale and delivery of one or more series of bonds from time to time; and
WHEREAS, the judicial validation action has been successfully completed and City staff, with the aid of outside consultants, has prepared drafts of the Bond Indenture, the Preliminary Official Statement and the Bond Purchase Agreement related to an initial series of the bonds (the “Bonds”) for approval by the City Council; and WHEREAS, the City Council wishes at this time to confirm the issuance of the first series of Bonds pursuant to the Bond Indenture and approve the final forms of the Bond Indenture, the Preliminary Official Statement and Bond Purchase Agreement for the Bonds; and

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WHEREAS, pursuant to Government Code Section 5852.1 which became effective on January 1, 2018, by the enactment of Senate Bill 450, the City disclosed certain financial information relating to the Bonds in Appendix A to Resolution No. 5062- 2021; and
WHEREAS, the City Council has previously approved a debt management policy that complies with Government Code Section 8855, and the issuance of the Bonds will be in compliance with said policy;

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BARSTOW DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS:

SECTION 1. The City Council hereby confirms its actions in Resolution No. 5062-2021, authorizing the issuance of the Bonds pursuant to the Bond Indenture and the Bond Law for the purpose of refinancing the PERS Obligations, and paying the costs of issuance of the Bonds. The aggregate principal amount of the Bonds shall not exceed a portion of the aggregate amount of the unfunded accrued actuarial liability and the normal cost for the current fiscal year represented by the PERS Obligations, as reported to the City by PERS and determined by the City Manager or the Finance Director, plus an amount required to pay all costs of issuing the Bonds (including, but not limited to, underwriter’s discount), which total amount is currently estimated not to exceed $23,000,000.

The City Council hereby confirms and approves the Bond Indenture for the Bonds in substantially the form on file with the City Clerk, with such changes therein, deletions therefrom and additions thereto as the Mayor, the City Manager or the Finance Director (or an interim Finance Director) (each, an “Authorized Officer”) may approve.

An Authorized Officer is hereby authorized and directed to execute and deliver the Bond Indenture, and the City Council’s approval of the Bond Indenture shall be conclusively evidenced by the execution and delivery of the Bond Indenture.

SECTION 2. The City Council hereby approves the preliminary Official Statement for the Bonds in substantially the form on file with the City Clerk.

Distribution of the preliminary Official Statement by the City and Hilltop Securities as underwriter (the “Underwriter”), is hereby approved, and, prior to the distribution of the preliminary Official Statement, an Authorized Officer is hereby authorized and directed, on behalf of the City, to deem the preliminary Official Statement “final” pursuant to Rule 15c2-12 under the Securities Exchange Act of 1934 (the “Rule”). The execution of the final Official Statement, which shall include such changes and additions thereto deemed advisable by the Authorized Officer executing the same, and the addition of such information permitted to be excluded from the preliminary Official Statement pursuant to the Rule, is hereby approved for delivery to the purchasers of the Bonds, and each Authorized Officer, acting alone, is authorized and directed to execute and deliver the final Official Statement for and on behalf of the City, to deliver to the Underwriter a certificate with respect to the information set forth therein and to deliver to the Underwriter a continuing disclosure undertaking substantially in the form appended to the final Official Statement.

SECTION 3. The City Council hereby confirms and approves the Bond Purchase Agreement for the Bonds in substantially the form on file with the City Clerk, with such changes therein, deletions therefrom and additions thereto as an Authorized

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Officer may approve. An Authorized Officer is hereby authorized and directed to execute and deliver the Bond Purchase Agreement, and the City Council’s approval of the Bond Purchase Agreement shall be conclusively evidenced by the execution and delivery of the Bond Purchase Agreement.

SECTION 4. The Authorized Officers and any and all other officers of the City are hereby authorized and directed, for and in the name and on behalf of the City, to do any and all things and take any and all actions, which they, or any of them, may deem necessary or advisable in connection with the issuance, sale and delivery of the Bonds.

Whenever in this Resolution any officer of the City is directed to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable.

SECTION 5. This Resolution shall take effect from and after the date of approval and adoption thereof.

PASSED, APPROVED AND ADOPTED this ____ day of March, 2022.

Dr. Paul Anthony Courtney,
Mayor
ATTEST:

Andrea Flores, City Clerk

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INDENTURE OF TRUST
Dated as of April 1, 2022
between the

CITY OF BARSTOW
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
Relating to
$__________
City of Barstow
2022 Taxable Pension Obligation Bonds

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-iTABLE OF CONTENTS
ARTICLE I.......................................................................................................................2 DEFINITIONS; RULES OF CONSTRUCTION ...........................................................................2 SECTION 1.01. Definitions ...............................................................................................2 SECTION 1.02. Authorization ...........................................................................................2 SECTION 1.03. Interpretation ...........................................................................................2 ARTICLE II......................................................................................................................3 AUTHORIZATION AND TERMS OF BONDS .............................................................................3 SECTION 2.01. Authorization and Purpose of Bonds .......................................................3 SECTION 2.02. Terms of the Bonds.................................................................................3 SECTION 2.03. Redemption of Bonds..............................................................................4 SECTION 2.04. Book Entry System..................................................................................7 SECTION 2.05. Form and Execution of Bonds .................................................................9 SECTION 2.06. Transfer and Exchange of Bonds ............................................................9 SECTION 2.07. Registration Books ................................................................................10 SECTION 2.08. Bonds Mutilated, Lost, Destroyed or Stolen...........................................10 ARTICLE III...................................................................................................................11 DEPOSIT AND APPLICATION OF PROCEEDS OF BONDS.......................................................11 SECTION 3.01. Issuance of Bonds.................................................................................11 SECTION 3.02. Deposit and Application of Proceeds.....................................................11 SECTION 3.03. Costs of Issuance Fund.........................................................................11 SECTION 3.04. Validity of Bonds ...................................................................................11 ARTICLE IV ..................................................................................................................12 SECURITY OF BONDS; FLOW OF FUNDS; INVESTMENTS ....................................................12 SECTION 4.01. Security of Bonds; Equal Security .........................................................12 SECTION 4.02. Debt Service Fund; Transfer of Amounts to Trustee..............................12 SECTION 4.03. Investment of Moneys in Funds.............................................................13 ARTICLE V ...................................................................................................................14 OTHER COVENANTS OF THE CITY.....................................................................................14 SECTION 5.01. Punctual Payment .................................................................................14 SECTION 5.02. Budget and Appropriation of Debt Service; Certification to Trustee .......14 SECTION 5.03. Extension of Payment of Bonds ............................................................14 SECTION 5.04. Books and Accounts; Financial Statements; Additional Information.......14 SECTION 5.05. Continuing Disclosure ...........................................................................14 SECTION 5.06. Protection of Security and Rights of Owners .........................................15 SECTION 5.07. Further Assurances...............................................................................15 ARTICLE VI ..................................................................................................................15 THE TRUSTEE.................................................................................................................15 SECTION 6.01. Duties, Immunities and Liabilities of Trustee .........................................15 SECTION 6.02. Merger or Consolidation ........................................................................16 SECTION 6.03. Liability of Trustee.................................................................................17 SECTION 6.04. Right to Rely on Documents..................................................................18 SECTION 6.05. Preservation and Inspection of Documents ...........................................19 SECTION 6.06. Compensation and Indemnification .......................................................19 SECTION 6.07. Accounting Records and Financial Statements .....................................19 ARTICLE VII .................................................................................................................20 MODIFICATION OR AMENDMENT OF THIS INDENTURE .........................................................20 SECTION 7.01. Amendments Permitted.........................................................................20

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-iiSECTION 7.02. Effect of Supplemental Indenture ..........................................................20 SECTION 7.03. Endorsement or Replacement of Bonds After Amendment ...................21 SECTION 7.04. Amendment by Mutual Consent ............................................................21 SECTION 7.05. Trustee's Reliance.................................................................................21 ARTICLE VIII.................................................................................................................21 EVENTS OF DEFAULT AND REMEDIES ...............................................................................21 SECTION 8.01. Events of Default...................................................................................21 SECTION 8.02. Remedies on Default.............................................................................22 SECTION 8.03. Notice of Event of Default......................................................................22 SECTION 8.04. Application of Funds Upon Event of Default ..........................................23 SECTION 8.05. Power of Trustee to Control Proceedings..............................................23 SECTION 8.06. Limitation on Owners' Right to Sue .......................................................23 SECTION 8.07. Non-waiver............................................................................................24 SECTION 8.08. Actions by Trustee as Attorney-in-Fact..................................................24 SECTION 8.09. Remedies Not Exclusive .......................................................................25 ARTICLE IX ..................................................................................................................25 MISCELLANEOUS.............................................................................................................25 SECTION 9.01. Benefits Limited to Parties.....................................................................25 SECTION 9.02. Successor is Deemed Included in All References to Predecessor.........25 SECTION 9.03. Defeasance of Bonds............................................................................25 SECTION 9.04. Execution of Documents and Proof of Ownership by Owners................26 SECTION 9.05. Disqualified Bonds ................................................................................27 SECTION 9.06. Waiver of Personal Liability ...................................................................27 SECTION 9.07. Destruction of Canceled Bonds .............................................................27 SECTION 9.08. Notices..................................................................................................27 SECTION 9.09. Partial Invalidity .....................................................................................28 SECTION 9.10. Unclaimed Moneys................................................................................28 SECTION 9.11. Execution in Counterparts .....................................................................28 SECTION 9.13. Governing Law......................................................................................28

APPENDIX A - DEFINITIONS

APPENDIX B - FORM OF BOND

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INDENTURE OF TRUST
This INDENTURE OF TRUST (this “Indenture”) dated as of April 1, 2022, is between the CITY OF BARSTOW, a general law city and municipal corporation duly organized and existing under the laws of the State of California (the “City”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee (the “Trustee”).

B A C K G R O U N D :

1. The City has previously elected to become a contracting member of the California Public Employees’ Retirement System (“PERS”), and as such the City is obligated by Sections 20000 et seq. of the California Government Code (the "Retirement Law"), to make payments to PERS relating to pension benefits accruing to retired City employees who are PERS members, including retired public safety employees and retired miscellaneous employees (the “PERS Obligations”).

2. The City is authorized under the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code (the “Bond Law”), to issue its bonds for the purpose of refunding certain outstanding indebtedness of the City, including the PERS Obligations.

3. In order to refund the PERS Obligations and thereby realize substantial cash flow savings in the current and immediately succeeding fiscal years, and to refund its normal cost for fiscal year 2021-22 and accomplish a more prudent amortization of its unfunded actuarial accrued liability in respect of the PERS Obligations, the City has determined to issue its $__________ aggregate principal amount of City of Barstow 2022 Taxable Pension Obligation Bonds (the “Bonds”) under the Bond Law and this Indenture, and under a resolution adopted by the City Council of the City on October 4, 2021.

4. The principal of and interest on the Bonds are payable from any source of legally available funds of the City, including amounts on deposit in the General Fund of the City.

5. The Bonds have been determined to be the legal, valid and binding obligations of the City by judgment of the San Bernardino County Superior Court rendered on February 9, 2022 in City of Barstow v. All Persons Interested, etc., Case No.

CIVSB2127060.

6. The City has determined that all acts and proceedings required by law necessary to make the Bonds, when executed by the City, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal limited obligations of the City, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done or taken.

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2 A G R E E M E N T :

In order to secure the payment of the principal of and the interest and redemption premium (if any) on all the Outstanding Bonds under this Indenture according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable considerations, the receipt of which is hereby acknowledged, the City and the Trustee hereby covenant and agree with one another, for the benefit of the respective Owners from time to time of the Bonds, as follows:

ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.01. Definitions. Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms defined in Appendix A attached to this Indenture have the respective meanings specified in Appendix A when used in this Indenture.

SECTION 1.02. Authorization. Each of the parties represents and warrants that it has full legal authority and is duly empowered to enter into this Indenture, and has taken all actions necessary to authorize the execution hereof by the officers and persons signing it.

SECTION 1.03. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and include the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof.
(c) All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.

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3 ARTICLE II

AUTHORIZATION AND TERMS OF BONDS
SECTION 2.01. Authorization and Purpose of Bonds. The City has reviewed all proceedings heretofore taken and has found, as a result of such review, and hereby finds and determines that all things, conditions and acts required by law to exist, happen or be performed precedent to and in connection with the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the City is now duly empowered, under each and every requirement of law, to issue the Bonds in the manner and form provided in this Indenture.

The City hereby authorizes the issuance of the Bonds in the aggregate principal amount of $__________ under the Authorizing Resolution and the Bond Law for the purposes of providing funds to refinance the PERS Obligations of the City as provided herein. The Bonds are designated the “City of Barstow 2022 Taxable Pension Obligation Bonds”.

SECTION 2.02. Terms of the Bonds. The Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof. The Bonds shall be dated as of the Closing Date and mature on June 1 in the years and in the respective principal amounts and bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) at the respective rates per annum, as set forth in the following table:

Maturity Date
(June 1)
Principal
Amount
Interest
Rate
Interest on the Bonds is payable from the Interest Payment Date immediately preceding the date of authentication thereof unless:
(a) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it will bear interest from such Interest Payment Date, (b) a Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the Closing Date, or (c) interest on a Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been paid in full, payable on each Interest Payment Date.

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4 Interest is payable on each Interest Payment Date to the persons in whose names the ownership of the Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest on a Bond which is not punctually paid or duly provided for on any Interest Payment Date is payable to the person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which is given to such Owner by first-class mail not less than ten days prior to such special record date.

The Trustee will pay interest on the Bonds by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. At the written request of the Owner of Bonds in an aggregate principal amount of at least $1,000,000, which written request is on file with the Trustee as of any Record Date, the Trustee will pay interest on such Bonds on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account of a financial institution within the United States of America as specified in such written request, which written request will remain in effect until rescinded in writing by the Owner. The Trustee will pay principal of the Bonds in lawful money of the United States of America by check of the Trustee upon presentation and surrender thereof at the Office of the Trustee.

SECTION 2.03. Redemption of Bonds.
(a) Optional Redemption.
(a)_ Optional Redemption Beginning June 1, 20__.The Bonds maturing on or before June 1, ____, are not subject to redemption prior to their respective stated maturities. The Bonds maturing on or after June 1, ____, are subject to redemption in whole, or in part among maturities on such basis as set forth in a Request of the City, and within a maturity on a pro rata basis among the Beneficial Owners of the Bonds of such maturity, at the option of the City, on any date on or after June 1, ____, from any available source of funds, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium. (b) Optional Redemption Prior to June 1, 20__. Prior to June 1, 20__, the Bonds are subject to redemption prior to their respective stated maturity dates, at the option of the City, from any source of available funds, in whole or in part on any date, at a redemption price equal to the Make-Whole Redemption price.

The “Make-Whole Redemption Price” is equal to the greater of:
(i) 100% of the principal amount of the Bonds to be redeemed; or (ii) the sum of the present value of the remaining scheduled payments of principal and interest to the maturity date of the Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which the Bonds are to be redeemed, discounted to the date on which the Bonds are to be redeemed on a semi-annual basis, assuming a 360-day year

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5 consisting of twelve 30-day months, at the Treasury Rate, plus the Applicable Spread,
plus, in each case, accrued interest on the Bonds to be redeemed to the redemption date.

The “Treasury Rate” is, with respect to any redemption date for a particular Bond, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity, excluding inflation indexed securities (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the redemption date or, if such Statistical Release is no longer published, any publicly available source of similar market date) most nearly equal to the period from the redemption date to the maturity date of the bond to be redeemed; provided, however, that if the period from the redemption date to such maturity date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

The “Applicable Spread” is, (i) with respect to the Bonds maturing in years 2021 through 2025, 0 basis points; (ii) with respect to the Bonds maturing in years 2026 through 2031, 5 basis points; (iii) with respect to the Bonds maturing in years 2032 through 2035, 10 basis points; and (iv) with respect to the Bonds maturing in years 2041 through 2045, 15 basis points.

The redemption price of Bonds to be redeemed pursuant to the make-whole optional redemption provision described above will be determined by an independent accounting firm, investment banking firm or financial advisor retained by the District at the District’s expense to calculate such redemption price. The Paying Agent and the District may conclusively rely on such determination of redemption price by such independent accounting firm, investment banking firm or financial advisor and will not be liable for such reliance.

The City shall give the Trustee written notice of its intention to redeem Bonds under this subsection (a), and the manner of selecting such Bonds for redemption from among the maturities thereof and the amount of the redemption premium thereon, at least 45 days prior to the date fixed for redemption.
(b) Mandatory Sinking Fund Redemption. The Term Bonds are subject to mandatory redemption, within a maturity on a pro rata basis among the Beneficial Owners of the Term Bonds of such maturity, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts and on June 1 in the respective years as set forth in the following tables. If some but not all of the Term Bonds have been redeemed under subsection (a) of this Section, the total amount of all future sinking fund payments will be reduced by the aggregate principal amount of the Term Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral multiples of $5,000, or as determined by the City (as set forth in a schedule provided by the City to the Trustee).

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6 Term Bonds Maturing
June 1, ____
Sinking Fund
Redemption Date
(June 1)
Principal Amount
To Be Redeemed
Term Bonds Maturing
June 1, ___
Sinking Fund
Redemption Date
(June 1)
Principal Amount
To Be Redeemed
(c) Notice of Redemption. The Trustee on behalf and at the expense of the City will mail (by first class mail) notice of any redemption to the respective Owners of Bonds designated for redemption at their respective addresses appearing on the Registration Books, to the Securities Depositories and the Municipal Securities Rulemaking Board, at least 20 but not more than 60 days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice must state the date of the notice, the redemption date, the redemption place and the redemption price and must designate the CUSIP numbers, the Bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and must require that such Bonds be then surrendered at the Office of the Trustee identified in such notice for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. (d) Right to Rescind Notice of Optional Redemption. The City may send a conditional notice of an optional redemption of Bonds under subsection (a) of this Section.

The City may rescind any notice of the optional redemption of Bonds under subsection (a) of this Section by written notice to the Trustee on or prior to the dated fixed for redemption.

Any notice of optional redemption will be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation will not constitute an Event of Default. The City and the Trustee have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee will mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent under subsection (c) of this Section.
(e) Manner of Redemption. Whenever provision is made in this Section 2.03 for the redemption of less than all of the Bonds of a maturity, the Trustee shall select the

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7 Bonds of such maturity to be redeemed on a pro rata basis among the Beneficial Owners of the Bonds of such maturity. For purpose of such selection, all Bonds will be deemed to be comprised of separate $5,000 denominations and such separate denominations will be treated as separate Bonds which may be separately redeemed.

So long as the Bonds are registered in book-entry-only form and so long as the Depository or a successor securities depository is the sole registered Owner of the Bonds, partial redemptions will be done in accordance with procedures of the Depository. It is the City’s intent that redemption allocations made by the Depository be made in accordance with the proportional provisions described herein. However, neither the City nor the Trustee has a duty to assure, and can provide no assurance, that DTC will allocate redemptions among Beneficial Owners on such a proportional basis, and neither the City nor the Trustee shall have any liability whatsoever to Beneficial Owners in the event redemptions are not done on a proportionate basis for any reason. The portion of any registered Bonds of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or any integral multiple thereof. (f) Partial Redemption of Bonds. If only a portion of a Bond is called for redemption, then upon surrender of such Bond the City will execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the City, a new Bond or Bonds of the same series and maturity date, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed. (g) Effect of Redemption. From and after the date fixed for redemption, if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption have been duly provided, such Bonds so called shall cease to be entitled to any benefit under this Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date specified in such notice. Unless otherwise directed in writing by the City, the Trustee shall cancel and destroy all Bonds redeemed under this Section 2.03.

SECTION 2.04. Book Entry System.
(a) Original Delivery. The Bonds will be initially delivered in the form of a separate single fully registered bond (which may be typewritten) for each maturity of the Bonds. Upon initial delivery, the Trustee shall register the ownership of each Bond on the Registration Books in the name of the Nominee. Except as provided in subsection (c), the ownership of all of the Outstanding Bonds will be registered in the name of the Nominee on the Registration Books.

With respect to Bonds the ownership of which is registered in the name of the Nominee, the City and the Trustee has no responsibility or obligation to any Depository System Participant or to any person on behalf of which the Nominee holds an interest in the Bonds. Without limiting the generality of the immediately preceding sentence, the City and the Trustee has no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Depository System Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Depository System Participant or any other person, other than a Bond Owner as shown in the Registration Books, of any notice with respect to the Bonds, including any notice of redemption, (iii) the selection by the Depository of the beneficial interests in the Bonds to be redeemed if the

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8 City elects to redeem the Bonds in part, (iv) the payment to any Depository System Participant or any other person, other than a Bond Owner as shown in the Registration Books, of any amount with respect to principal, premium, if any, or interest on the Bonds or (v) any consent given or other action taken by the Depository as Owner of the Bonds.

The City and the Trustee may treat and consider the person in whose name each Bond is registered as the absolute owner of such Bond for the purpose of payment of principal of and premium, if any, and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers of ownership of such Bond, and for all other purposes whatsoever. The Trustee shall pay the principal of and the interest and premium, if any, on the Bonds only to the respective Owners or their respective attorneys duly authorized in writing, and all such payments will be valid and effective to fully satisfy and discharge all obligations with respect to payment of principal of and interest and premium, if any, on the Bonds to the extent of the sum or sums so paid. No person other than a Bond Owner shall receive a Bond evidencing the obligation of the City to make payments of principal, interest and premium, if any, under this Indenture. Upon delivery by the Depository to the City of written notice to the effect that the Depository has determined to substitute a new Nominee in its place, and subject to the provisions herein with respect to Record Dates, such new nominee will become the Nominee hereunder for all purposes; and upon receipt of such a notice the City will promptly deliver a copy of the same to the Trustee. (b) Representation Letter. In order to qualify the Bonds for the Depository’s book-entry system, the City will execute and deliver to such Depository a letter representing such matters as necessary to so qualify the Bonds. The execution and delivery of such letter shall not in any way limit the provisions of subsection (a) above or in any other way impose upon the City or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than the Bond Owners. Upon the written acceptance by the Trustee, the Trustee shall agree to take all action reasonably necessary for all representations of the Trustee in such letter with respect to the Trustee to at all times be complied with. In addition to the execution and delivery of such letter, the City may take any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry program.
(c) Transfers Outside Book-Entry System. If either (i) the Depository determines not to continue to act as Depository for the Bonds, or (ii) the City determines to terminate the Depository as such, then the City will thereupon discontinue the book-entry system with such Depository. In such event, the Depository shall cooperate with the City and the Trustee in the issuance of replacement Bonds by providing the Trustee with a list showing the interests of the Depository System Participants in the Bonds, and by surrendering the Bonds, registered in the name of the Nominee, to the Trustee on or before the date such replacement Bonds are to be issued. The Depository, by accepting delivery of the Bonds, agrees to be bound by the provisions of this subsection (c). If, prior to the termination of the Depository acting as such, the City fails to identify another Securities Depository to replace the Depository, then the Bonds shall no longer be required to be registered in the Registration Books in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging Bonds shall designate, in accordance with the provisions hereof.

If the City determines that it is in the best interests of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the City may notify the Depository System Participants of the availability of such certificated Bonds through the Depository.

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9 In such event, the Trustee will issue, transfer and exchange Bonds as required by the Depository and others in appropriate amounts; and whenever the Depository requests, the Trustee and the City will cooperate with the Depository in taking appropriate action (a) to make available one or more separate certificates evidencing the Bonds to any Depository System Participant having Bonds credited to its account with the Depository, or (b) to arrange for another Securities Depository to maintain custody of a single certificate evidencing such Bonds, all at the City’s expense. (d) Payments to the Nominee. Notwithstanding any other provision of this Indenture to the contrary, so long as a Bond is registered in the name of the Nominee, all payments with respect to principal of and interest and premium, if any, on that Bond and all notices with respect to that Bond shall be made and given, respectively, as provided in the letter described in subsection (b) of this Section or as otherwise instructed by the Depository.

SECTION 2.05. Form and Execution of Bonds. The Bonds, the form of Trustee’s certificate of authentication, and the form of assignment to appear thereon, are set forth in Appendix B attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture.

The City Manager shall execute, and the City Clerk of the City shall attest each Bond. Any or all of such signatures may be made manually or may be affixed by facsimile thereof. If any officer whose signature appears on a Bond ceases to be such officer before the Closing Date, such signature will nevertheless be as effective as if the officer had remained in office until the Closing Date. A Bond may be signed and attested on behalf of the City by such persons as at the actual date of the execution of that Bond are the proper officers of the City, duly authorized to execute debt instruments on behalf of the City, although on the date of that Bond any such person was not an officer of the City.

Only those Bonds bearing a certificate of authentication in the form set forth in Appendix B, manually executed and dated by the Trustee, are valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee is conclusive evidence that such Bonds have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture.

SECTION 2.06. Transfer and Exchange of Bonds.
(a) Transfer. A Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of that Bond to the Trustee at its Office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. The Trustee shall collect any tax or other governmental charge on the transfer of any Bonds under this Section 2.06. Whenever any Bond or Bonds are surrendered for transfer, the City will execute and the Trustee shall authenticate and deliver to the transferee a new Bond or Bonds of like series, interest rate, maturity and aggregate principal amount. The City will pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any transfer of Bonds.

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10 (b) Exchange. The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of other authorized denominations and of the same series, interest rate and maturity. The Trustee shall collect any tax or other governmental charge on the exchange of Bonds under this subsection (b). The City will pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any exchange of Bonds.
(c) Limitations. The Trustee may refuse to transfer or exchange, under the provisions of this Section 2.06, any Bonds selected by the Trustee for redemption under Section 2.03, or any Bonds during the period established by the Trustee for the selection of Bonds for redemption.

SECTION 2.07. Registration Books. The Trustee will keep or cause to be kept, at its Office, sufficient records for the registration and registration of transfer of the Bonds, which shall at all times during normal business hours, and upon reasonable notice, be open to inspection by the City. The Trustee will register the ownership and transfer of the Bonds on the Registration Books under such reasonable regulations as it may prescribe.

SECTION 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If a Bond is mutilated, the City, at the expense of the Owner of that Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange and substitution for the Bond so mutilated, upon surrender to the Trustee of the Bond so mutilated. The Trustee shall cancel every mutilated Bond surrendered to it and deliver such mutilated Bond to or upon the order of the City. If a Bond is lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence is satisfactory to the Trustee and if indemnity satisfactory to the Trustee is given, the City, at the expense of the Owner, will execute, and the Trustee will thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen. The Trustee may require payment of a sum not exceeding the actual cost of preparing each new Bond issued under this Section and of the expenses which may be incurred by the Trustee in connection therewith. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen will constitute an original additional contractual obligation on the part of the City whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and are equally and proportionately entitled to the benefits of this Indenture with all other Bonds issued under this Indenture.

Notwithstanding any other provision of this Section 2.08, in lieu of delivering a new Bond for which principal has become due for a Bond which has been mutilated, lost, destroyed or stolen, the Trustee may make payment of such Bond in accordance with its terms upon receipt of indemnity satisfactory to the Trustee.

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11 ARTICLE III

DEPOSIT AND APPLICATION OF PROCEEDS OF BONDS
SECTION 3.01. Issuance of Bonds. Upon the execution and delivery of this Indenture, the City shall execute and deliver Bonds in the aggregate principal amount of $__________ to the Trustee and the Trustee shall authenticate and deliver the Bonds to the Original Purchaser upon receipt of a Request of the City therefor.

SECTION 3.02. Deposit and Application of Proceeds. Upon receipt of the proceeds of the Bonds on the Closing Date, the Trustee shall deposit the proceeds into a special fund to be held by the Trustee and known as the Bond Proceeds Account which the Trustee shall establish and hold in trust hereunder, to be applied as follows:
(a) The Trustee shall deposit the amount of $_______ in the Costs of Issuance Fund.
(b) The Trustee shall apply the amount of $_______, constituting the remainder of the proceeds of sale of the Bonds, to the satisfaction of the City’s obligations under the PERS Contracts by effecting a wire transfer of such proceeds to PERS, in accordance with a Request of the City.

After making the foregoing transfers, the Trustee shall close the Bond Proceeds Account.

SECTION 3.03. Costs of Issuance Fund. There is hereby established a separate fund to be known as the “Costs of Issuance Fund,” to be held by the Trustee. The Trustee shall disburse moneys in the Costs of Issuance Fund from time to time to pay Costs of Issuance upon submission of a Request of the City stating (a) the person to whom payment is to be made, (b) the amounts to be paid, (c) the purpose for which the obligation was incurred, (d) that such payment is a proper charge against the Costs of Issuance Fund, and (e) that such amounts have not been the subject of a prior Request of the City; in each case together with a statement or invoice for each amount requested thereunder.

OnOctober 1, 2022, the Trustee shall transfer any amounts remaining in the Costs of Issuance Fund to the Debt Service Fund, and the Costs of Issuance Fund shall be closed.

SECTION 3.04. Validity of Bonds. The validity of the authorization and issuance of the Bonds is not dependent upon the expenditure of the proceeds thereof to pay PERS Obligations, or upon the performance by any person of its obligation with respect to the PERS Obligations.

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12 ARTICLE IV
SECURITY OF BONDS; FLOW OF FUNDS;

INVESTMENTS
SECTION 4.01. Security of Bonds; Equal Security. The obligations of the City under the Bonds, including the obligation to make all payments of principal of and interest on the Bonds when due and the obligation of the City to make the deposits required hereunder for the security of the Bonds, are obligations of the City imposed by law and are absolute and unconditional, without any right of set-off or counterclaim.

The Bonds do not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation. Neither the Bonds nor the obligations of the City to make payments on the Bonds constitute an indebtedness of the City, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.

In consideration of the acceptance of the Bonds by those who hold the same from time to time, this Indenture constitutes a contract between the City and the Owners from time to time of the Bonds, and the covenants and agreements herein set forth to be performed on behalf of the City are for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reason of the number or date thereof or the time of sale, execution and delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein.

SECTION 4.02. Debt Service Fund; Transfer of Amounts to Trustee. There is hereby established a separate fund to be known as the “Debt Service Fund” which shall be held by the Trustee in trust for the benefit of the Bond Owners. The Trustee will hold the Debt Service Fund for the uses and purposes set forth herein, so long as any of the Bonds remain Outstanding. The City will transfer an amount of legally available funds to the Trustee in the following amounts at the following times, for deposit by the Trustee in the following respective special accounts within the Debt Service Fund, which accounts are hereby established with the Trustee with respect to the Bonds, in the following order of priority:
(a) Interest Account. On or before the 5th Business Day preceding each date on which interest on the Bonds is due and payable, the City will transfer to the Trustee for deposit in the Interest Account an amount which, when added to the amount then on deposit in the Interest Account, equals the aggregate amount of the interest coming due and payable on the Outstanding Bonds on that date. The Trustee will apply amounts in the Interest Account solely for the purpose of paying the interest on the Bonds when due and payable.

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13 (b) Principal Account. On or before the 5th Business Day preceding each date on which principal of the Bonds is due and payable at maturity or upon mandatory sinking fund redemption, the City will transfer to the Trustee for deposit in the Principal Account an amount which, when added to the amount then on deposit in the Principal Account, equals the amount of principal coming due and payable on that date on the Outstanding Bonds, including the principal amount of the Term Bonds which are subject to mandatory sinking fund redemption on that date under Section 2.03(b). The Trustee will apply amounts in the Principal Account solely for the purpose of paying the principal of the Bonds at the maturity thereof and the principal of the Term Bonds upon the mandatory sinking fund redemption thereof.

SECTION 4.03. Investment of Moneys in Funds. The Trustee shall invest moneys in the funds and accounts established and held by it hereunder in Permitted Investments specified in the Request of the City (which Request will be deemed to include a certification that the specified investment is a Permitted Investment) delivered to the Trustee at least two Business Days in advance of the making of such investments. In the absence of any direction from the City concerning the investment of amounts held by the Trustee hereunder, the Trustee shall invest any such amounts solely in Permitted Investments described in subsection (e) of the definition thereof. The City shall ensure that all Permitted Investments mature not later than the date on which the funds invested therein are required to be expended.

Obligations purchased as an investment of moneys in any fund or account will be deemed to be part of such fund or account. Whenever in this Indenture the City is required to transfer any moneys to the Trustee, such transfer may be accomplished by transferring a like amount of Permitted Investments. All interest or gain derived from the investment of amounts in any of the funds or accounts held by the Trustee hereunder will be retained in the respective fund or account from which such investment was made. For purposes of acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder upon receipt by the Trustee of the Request of the City. The Trustee may act as principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor. The Trustee shall incur no liability for losses arising from any investments made under this Section.

The Trustee shall provide the City with periodic cash transaction statements which include detail for all investment transactions effected by the Trustee or brokers selected by the City. Upon the City’s election, such statements will be delivered via the Trustee’s online service and upon electing such service, paper statements will be provided only upon request. The City waives the right to receive brokerage confirmations of security transactions effected by the Trustee as they occur, to the extent permitted by law. The City further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker.

The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made by the Trustee hereunder.

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14 ARTICLE V

OTHER COVENANTS OF THE CITY
SECTION 5.01. Punctual Payment. The City shall, from any legally available source of funds of the City, including amounts on deposit in the General Fund of the City, punctually pay or cause to be paid the principal, premium (if any) and interest to become due in respect of all the Bonds in strict conformity with the terms of this Indenture. The City shall faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and all Supplemental Indentures.

SECTION 5.02. Budget and Appropriation of Debt Service; Certification to Trustee.

The City covenants to take such action as may be necessary to include in each of its annual budgets the payments required to be made by the City under Section 4.02, and to make the necessary annual appropriations for all such payments. If any payment of Debt Service requires the adoption by the City of a supplemental budget or appropriation, the City will promptly adopt the same. The covenants on the part of the City herein contained constitute duties imposed by law and it is the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Indenture agreed to be carried out and performed by the City.

SECTION 5.03. Extension of Payment of Bonds. The City may not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and if the maturity of any of the Bonds or the time of payment of any such claims for interest is extended, such Bonds or claims for interest are not entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Outstanding Bonds and of all claims for interest thereon which have not been so extended. Nothing in this Section limits the right of the City to issue bonds for the purpose of refunding any Outstanding Bonds, and such issuance does not constitute an extension of maturity of the Bonds.

SECTION 5.04. Books and Accounts; Financial Statements; Additional Information.

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. Such books of record and accounts shall at all times during business hours be subject, upon prior written request, to the reasonable inspection of the Trustee (who has no duty to inspect) or the Owners of not less than 10% in aggregate principal amount of the Bonds then Outstanding, or their representatives authorized in writing.

The City will cause to be prepared annually, within nine months after the close of each Fiscal Year so long as any of the Bonds are Outstanding, complete audited financial statements with respect to such Fiscal Year, as of the end of such Fiscal Year. The City will furnish a copy of such statements, upon reasonable request, to the Trustee. The Trustee has no duty to review any such financial statement.

SECTION 5.05. Continuing Disclosure. The City will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision hereof, failure of the City to comply with the Continuing Disclosure Certificate

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15 does not constitute an Event of Default hereunder; provided, however, that any Participating Underwriter (as such term is defined in the Continuing Disclosure Certificate) or any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the City to comply with its obligations under this Section 5.05.

SECTION 5.06. Protection of Security and Rights of Owners. The City shall preserve and protect the security of the Bonds and the rights of the Owners. From and after the date of issuance of the Bonds, the City shall not contest the validity or enforceability of the Bonds or this Indenture.

SECTION 5.07. Further Assurances. The City shall adopt, make, execute and deliver 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 this Indenture, and for the better assuring and confirming unto the Bond Owners the rights and benefits provided in this Indenture.

ARTICLE VI

THE TRUSTEE
SECTION 6.01. Duties, Immunities and Liabilities of Trustee. (a) The Trustee shall, prior to the occurrence of an Event of Default, and after the curing or waiving of all Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or duties will be read into this Indenture against the Trustee. The Trustee shall, during the existence of any Event of Default (which has not been cured or waived), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a reasonable corporate trustee would exercise or use.
(b) The City may remove the Trustee at any time, and shall remove the Trustee (i) if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing) or (ii) if at any time (A) the Trustee ceases to be eligible in accordance with subsection (e) of this Section

6.01, (B) becomes incapable of acting, (C) is adjudged a bankrupt or insolvent, (D) a receiver of the Trustee or its property is appointed, or (E) any public officer takes control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation. The City may accomplish such removal by giving 30 days written notice to the Trustee, whereupon the City will appoint a successor Trustee by an instrument in writing.
(c) The Trustee may at any time resign by giving written notice of such resignation to the City, and by giving notice of such resignation by first class mail, postage prepaid, to the Bond Owners at their respective addresses shown on the Registration Books. Upon receiving such notice of resignation, the City will promptly appoint a successor Trustee by an instrument in writing.

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16 (d) Any removal or resignation of the Trustee and appointment of a successor Trustee becomes effective upon acceptance of appointment by the successor Trustee. If no successor Trustee has been appointed and accepted appointment within 45 days following giving notice of removal or notice of resignation as aforesaid, the resigning Trustee, at the expense of the City, or any Owner (on behalf of such Owner and all other Owners) may petition any federal or state court for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture shall signify its acceptance of such appointment by executing and delivering to the City and to its predecessor Trustee a written acceptance thereof, and to the predecessor Trustee an instrument indemnifying the predecessor Trustee for any costs or claims arising during the time the successor Trustee serves as Trustee hereunder, and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless, upon the receipt by the predecessor Trustee of the Request of the City or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, the City will execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the City will mail or cause the successor Trustee to mail, by first class mail postage prepaid, a notice of the succession of such Trustee to the trusts hereunder to each rating agency which then maintains a rating on the Bonds and to the Owners at the addresses shown on the Registration Books. If the City fails to mail such notice within 15 days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the City. (e) Any Trustee appointed under the provisions of this Section in succession to the Trustee shall (i) be a company or bank having trust powers, (ii) have a corporate trust office in the State of California, (iii) have (or be part of a bank holding company system whose bank holding company has) a combined capital and surplus of at least $50,000,000, and (iv) be subject to supervision or examination by federal or state authority.

If such bank or company publishes a report of condition at least annually, under law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this subsection the combined capital and surplus of such bank or company is deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (e), the Trustee shall resign immediately in the manner and with the effect specified in subsection (c) of this Section.

SECTION 6.02. Merger or Consolidation. Any bank or company into which the Trustee may be merged or converted or with which either of them may be consolidated or

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17 any bank or company resulting from any merger, conversion or consolidation to which it shall be a party or any bank or company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such bank or company shall be eligible under subsection (e) of Section 6.01, shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.

SECTION 6.03. Liability of Trustee.
(a) The recitals of facts herein and in the Bonds contained shall be taken as statements of the City, and the Trustee assumes no responsibility for the correctness of the same, nor does it have any liability whatsoever therefor, nor does it make any representations as to the validity or sufficiency of this Indenture or of the Bonds nor does it incur any responsibility in respect thereof, other than as expressly stated herein. The Trustee is, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee is not liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee is not liable for the acts of any agents of the Trustee selected by it with due care. The Trustee may become the Owner of Bonds with the same rights it would have if they were not Trustee and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of the Owners, whether or not such committee shall represent the Owners of a majority in principal amount of the Bonds then Outstanding. The Trustee, either as principal or agent, may engage in or be entrusted in any financial or other transaction with the City.
(b) The Trustee is not liable with respect to any action taken or omitted to be taken by it in accordance with the direction of the Owners of a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture. (c) The Trustee is not liable for any action taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture, except for actions arising from the negligence or willful misconduct of the Trustee. The permissive right of the Trustee to do things enumerated hereunder shall not be construed as a mandatory duty.
(d) The Trustee will not be deemed to have knowledge of any Event of Default hereunder unless and until a responsible officer of the Trustee has actual knowledge thereof, or unless and until a responsible officer of the Trustee has received written notice thereof at its Office. Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or of any of the documents executed in connection with the Bonds, or as to the existence of an Event of Default hereunder or thereunder. The Trustee shall not be responsible for the City’s payment of principal and interest on the Bonds, the City’s observance or performance of any other covenants, conditions or terms contained herein, or the validity or effectiveness of any collateral given to or held by it. Without limiting the generality of the foregoing, and notwithstanding anything herein to the contrary, the Trustee is not responsible for reviewing the contents of any financial statements furnished to the Trustee under Section 5.05 and may rely

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18 conclusively on the Certificate of the City accompanying such financial statements to establish the City’s compliance with its financial covenants hereunder. (e) No provision in this Indenture requires the Trustee to risk or expend its own funds or otherwise incur any financial liability hereunder. The Trustee is entitled to receive interest on any moneys advanced by it hereunder, at the maximum rate permitted by law. (f) The Trustee may establish additional accounts or subaccounts of the funds established hereunder as the Trustee deems necessary or prudent in furtherance of its duties under this Indenture.
(g) The Trustee has no responsibility or liability whatsoever with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds, nor shall the Trustee have any obligation to review any such material, and any such review by the Trustee will not be deemed to create any obligation, duty or liability on the part of the Trustee.
(h) Before taking any action under Article VIII hereof the Trustee may require indemnity satisfactory to the Trustee be furnished to it to hold the Trustee harmless from any expenses whatsoever and to protect it against any liability it may incur hereunder. (i) The immunities extended to the Trustee also extend to its directors, officers, employees and agents.
(j) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty.
(k) The Trustee may execute any of the trusts or powers hereof and perform any of its duties through attorneys, agents and receivers and shall not be answerable for the conduct of the same if appointed by it with reasonable care. (l) The Trustee will not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of delay in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to any project refinanced with the proceeds of the Bonds, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Trustee.

SECTION 6.04. Right to Rely on Documents. The Trustee is protected in acting upon any notice, resolution, requisition, request, consent, order, certificate, report, opinion or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, including, without limitation, Bond Counsel or other counsel of or to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and

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19 protection in respect of any action taken or suffered by the Trustee hereunder in accordance therewith.

The Trustee is not bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and such person’s title thereto is established to the satisfaction of the Trustee.

Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee deems it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Certificate of the City, which shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such Certificate, but in its discretion the Trustee may (but has no duty to), in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may deem reasonable. The Trustee may conclusively rely on any certificate or report of any Independent Accountant appointed by the City.

SECTION 6.05. Preservation and Inspection of Documents. The Trustee shall retain in its possession all documents received by it under the provisions of this Indenture, which are subject during normal business hours, and upon reasonable prior written notice, to the inspection of the City and any Owner, and their agents and representatives duly authorized in writing.

SECTION 6.06. Compensation and Indemnification. Absent any agreement to the contrary, the City shall pay to the Trustee from time to time compensation for all services rendered under this Indenture and also all expenses, charges, legal and consulting fees and other disbursements and those of its attorneys (including any allocated costs of internal counsel), agents and employees, incurred in and about the performance of its powers and duties under this Indenture.

The City further covenants to indemnify the Trustee and its officers, directors, agents and employees, against any loss, expense and liabilities, whether or not litigated, which it may incur arising out of or in the exercise and performance of its powers and duties hereunder, including the costs and expenses of defending against any claim of liability and of enforcing any remedies hereunder and under any related documents, but excluding any and all losses, expenses and liabilities which are due to the negligence or willful misconduct of the Trustee, its officers, directors, agents or employees. The obligations of the City under this Section 6.06 shall survive resignation or removal of the Trustee under this Indenture and payment of the Bonds and discharge of this Indenture.

SECTION 6.07. Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with industry standards, in which complete and accurate entries shall be made of all transactions made by it relating to the proceeds of the Bonds and all funds and accounts established and held by the Trustee under this Indenture. Such books of record and account shall be available for inspection by the City at reasonable hours, during regular business hours, with reasonable prior notice and under reasonable circumstances.

The Trustee shall furnish to the City, at least semiannually, an accounting (which may be in the form of its customary statements) of all transactions relating to the proceeds of the Bonds and all funds and accounts held by the Trustee under this Indenture.

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20 ARTICLE VII

MODIFICATION OR AMENDMENT OF THIS INDENTURE
SECTION 7.01. Amendments Permitted.
(a) Amendment With Bond Owner Consent. This Indenture and the rights and obligations of the City and of the Owners of the Bonds may be modified or amended by the City and the Trustee upon Request of the City at any time by the execution of a Supplemental Indenture, with the written consents of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 9.05. Any such Supplemental Indenture becomes effective upon the execution and delivery thereof by the parties thereto and upon consent of the requisite Bond Owners. No such modification or amendment may:
(i) extend the maturity of a Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the principal thereof, or interest thereon, or any premium payable on the redemption thereof, at the time and place and at the rate and in the currency provided therein, without the written consent of the Owner of that Bond; or
(ii) modify any of the rights or obligations of the Trustee without its written consent.
(b) Amendment Without Bond Owner Consent. This Indenture and the rights and obligations of the City and of the Owners of the Bonds may also be modified or amended at any time by a Supplemental Indenture, without the consent of any Owners of the Bonds, for any one or more of the following purposes:
(i) to add to the covenants and agreements of the City contained in this Indenture, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power herein reserved to or conferred upon the City;
(ii) to provide additional security for the Bonds; or
(iii) to cure any ambiguity, or to cure, correct or supplement any defective provision contained in this Indenture, or in any other respect whatsoever as the City deems necessary or desirable, provided under any circumstances that such modifications or amendments do not materially adversely affect the interests of the Owners in the opinion of Bond Counsel filed with the City and the Trustee.

SECTION 7.02. Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective under this Article VII, this Indenture shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all

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21 respects to such modification and amendment, and all the terms and conditions of any Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

SECTION 7.03. Endorsement or Replacement of Bonds After Amendment. After the effective date of any amendment or modification hereof under this Article VII, the City may determine that any or all of the Bonds shall bear a notation, by endorsement in form approved by the City, as to such amendment or modification and in that case upon demand of the City the Owners of such Bonds shall present such Bonds for that purpose at the Office of the Trustee, and thereupon a suitable notation as to such action shall be made on such Bonds. In lieu of such notation, the City may determine that new Bonds shall be prepared and executed in exchange for any or all of the Bonds and in that case upon demand of the City the Owners of the Bonds shall present such Bonds for exchange at the Office of the Trustee without cost to such Owners.

SECTION 7.04. Amendment by Mutual Consent. The provisions of this Article VII do not prevent any Owner from accepting any amendment as to the particular Bond held by such Owner.

SECTION 7.05. Trustee’s Reliance. The Trustee may conclusively rely, and is protected in relying, upon a Certificate of the City and an opinion of counsel stating that all requirements of this Indenture relating to the amendment or modification hereof have been satisfied and that such amendments or modifications do not materially adversely affect the interests of the Bond Owners.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01. Events of Default. Each of the following events constitutes an Event of Default hereunder:
(a) Failure to pay any installment of the principal of any Bonds when due, whether at maturity as therein expressed, by proceedings for redemption, by acceleration, or otherwise.
(b) Failure to pay any installment of interest on the Bonds when due. (c) Failure by the City to observe and perform any of the other covenants, agreements or conditions on its part contained in this Indenture or in the Bonds, if such failure has continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, has been given to the City by the Trustee er; provided, however, if in the reasonable opinion of the City the failure stated in the notice can be corrected, but not within such 30-day period, such failure will not constitute an Event of Default if corrective action is instituted by the City and thereafter diligently and in good faith cures the failure in a reasonable period of time.

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22 (d) The City commences a voluntary case under Title 11 of the United States Code or any substitute or successor statute.

SECTION 8.02. Remedies on Default. If an Event of Default occurs under Section

8.01 and is continuing, the Trustee may, and at the written direction of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding the Trustee must, (a) declare the principal of the Bonds, together with the accrued interest thereon, to be due and payable immediately, and upon any such declaration the same will become immediately due and payable, anything in this Indenture or in the Bonds to the contrary notwithstanding, and (b) subject to the provisions of Sections 8.07 and 8.09, exercise any other remedies available to the Trustee and the Bond Owners in law or at equity to enforce the rights of the Bond Owners under this Indenture. Without limiting the generality of the foregoing, the Trustee shall have the right by mandamus, suit, action or proceeding, to compel the City and its members, officers, agents or employees to perform each and every term, provision and covenant contained in this Indenture and in the Bonds, and to require the carrying out of any or all such covenants and agreements of the City and the fulfillment of all duties imposed upon it.

This provision, however, is subject to the condition that if, at any time after the principal of the Bonds has been so declared due and payable, and before any judgment or decree for the payment of the moneys due has been obtained or entered, the City deposits with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest on such overdue installments of principal and interest at an interest rate equal to the highest rate borne by the Outstanding Bonds, and the reasonable fees and expenses of the Trustee, including fees and expenses of its attorneys, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) has been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate has been made therefor, then, and in every such case, the Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the City and to the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences. However, no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon.

SECTION 8.03. Notice of Event of Default. Immediately upon becoming aware of the occurrence of an Event of Default, but in no event later than five Business Days following becoming aware of such occurrence, the Trustee shall give notice of such Event of Default to the City by telephone confirmed in writing. Such notice must also state whether the principal of the Bonds has been declared to be or have immediately become due and payable as provided in Section 8.02(a). With respect to any Event of Default described in Section 8.01(a) or (b), the Trustee shall, and with respect to any Event of Default described in Section 8.01(c) the Trustee in its sole discretion may, also give such notice to the Bond Owners in the same manner as provided herein for notices of redemption of the Bonds, which must include the statement that interest on the Bonds will cease to accrue from and after the date, if any, on which the Trustee declares the Bonds to become due and payable under Section 8.02 (but only to the extent that principal and any accrued, but unpaid, interest on the Bonds is actually paid on such date).

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23 SECTION 8.04. Application of Funds Upon Event of Default. All of the sums in the funds and accounts established and held by the Trustee hereunder upon the occurrence of an Event of Default, and all sums thereafter received by the Trustee hereunder, shall be applied by the Trustee as follows and in the following order:
(a) First, to the payment of any fees, costs and expenses incurred by the Trustee to protect the interests of the Owners of the Bonds; payment of the fees, costs and expenses of the Trustee (including fees and expenses of its counsel, including any allocated costs of internal counsel) incurred in and about the performance of its powers and duties under this Indenture and the payment of all fees, costs and expenses owing to the Trustee under Section 6.06, together with interest on all such amounts advanced by the Trustee at the maximum rate permitted by law.
(b) Second, to the payment of the whole amount then owing and unpaid upon the Bonds for interest and principal, with interest on such overdue amounts at the respective rates of interest borne by those Bonds, and in case such moneys are insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and interest on overdue amounts without preference or priority among such interest, principal and interest on overdue amounts ratably to the aggregate of such interest, principal and interest on overdue amounts.

SECTION 8.05. Power of Trustee to Control Proceedings. If the Trustee, upon the happening of an Event of Default, takes any action, by judicial proceedings or otherwise, in the performance of its duties hereunder, whether upon its own discretion, with the consent or upon the request of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, it has full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action. The Trustee may not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in principal amount of the Outstanding Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.

SECTION 8.06. Limitation on Owners’ Right to Sue. No Owner of a Bond has the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless:
(a) said Owner has previously given to the Trustee written notice of the occurrence of an Event of Default;
(b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding have requested the Trustee in writing to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name;

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24 (c) said Owners have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and
(d) the Trustee has failed to comply with such request for a period of 60 days after such written request has been received by, and said tender of indemnity has been made to, the Trustee.

Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder; it being understood and intended that no one or more Owners has any right in any manner whatever by his or their action to enforce any right under this Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds.

The right of any Owner of any Bond to receive payment of the principal of and premium, if any, and interest on such Bond as herein provided, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.

SECTION 8.07. Non-waiver. Nothing in this Article VIII or in any other provision of this Indenture or in the Bonds, affects or impairs the obligation of the City, which is absolute and unconditional, to pay from any source of legally available funds of the City, the principal of and interest and redemption premium (if any) on the Bonds to the Bond Owners when due and payable as herein provided, or affects or impairs the right of action, which is also absolute and unconditional, of the Bond Owners to institute suit to enforce such payment by virtue of the contract embodied in the Bonds.

A waiver of any default by any Owner does not affect any subsequent default or impair any rights or remedies on the subsequent default. No delay or omission of the Bond Owner or any Owner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owners by the Bond Law or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Bond Owners.

If a suit, action or proceeding to enforce any right or exercise any remedy is abandoned or determined adversely to the Bond Owners, the City and the the Bond Owners will be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.

SECTION 8.08. Actions by Trustee as Attorney-in-Fact. Any suit, action or proceeding which any Owner has the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners similarly situated and the Trustee is hereby appointed (and the successive respective Owners by taking and holding the Bonds shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective Owners for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners as a class or classes, as may be

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25 necessary or advisable in the opinion of the Trustee as such attorney-in-fact, subject to the provisions of Article VI. Notwithstanding the foregoing provisions of this Section 8.08, the Trustee has no duty to enforce any such right or remedy unless it has been indemnified to its satisfaction for any additional fees, charges and expenses of the Trustee related thereto, including without limitation, fees and charges of its attorneys and advisors.

SECTION 8.09. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Bond Law or any other law.

ARTICLE IX

MISCELLANEOUS
SECTION 9.01. Benefits Limited to Parties. Nothing in this Indenture, expressed or implied, gives any person other than the City, the Trustee and the Owners, any right, remedy, claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of the City are for the sole and exclusive benefit of the Trustee and the Owners.

SECTION 9.02. Successor is Deemed Included in All References to Predecessor.

Whenever in this Indenture or any Supplemental Indenture either the City or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the City or the Trustee binds and inures to the benefit of the respective successors and assigns thereof whether so expressed or not.

SECTION 9.03. Defeasance of Bonds. If the City pays and discharges the entire indebtedness on any Bonds in any one or more of the following ways:
(a) by paying or causing to be paid the principal of and interest on such Bonds, as and when the same become due and payable;
(b) by irrevocably depositing with the Trustee or an escrow bank, in trust, at or before maturity, an amount of cash which, together with the available amounts then on deposit in the funds and accounts established under this Indenture, in the opinion or report of an Independent Accountant is fully sufficient to pay such Bonds, including all principal, interest and redemption premium, if any; (c) by irrevocably depositing with the Trustee or an escrow bank, in trust, Federal Securities in such amount as an Independent Accountant determines will, together with the interest to accrue thereon and available moneys then on deposit in any of the funds and accounts

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26 established under this Indenture, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premium, if any) at or before maturity; or (d) by purchasing such Bonds prior to maturity and tendering such Bonds to the Trustee for cancellation;
and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption has been duly given or provision satisfactory to the Trustee has been made for the giving of such notice, then, at the election of the City, and notwithstanding that any such Bonds have not been surrendered for payment, all obligations of the Trustee and the City under this Indenture with respect to such Bonds shall cease and terminate, except only:
(a) the obligation of the Trustee to transfer and exchange Bonds hereunder,
(b) the obligation of the City to pay or cause to be paid to the Owners of such Bonds, from the amounts so deposited with the Trustee, all sums due thereon, and
(c) the obligations of the City to compensate and indemnify the Trustee under Section 6.06.

The City must file notice of such election with the Trustee. The Trustee shall pay any funds thereafter held by it, which are not required for said purpose, to the City.

To accomplish defeasance, the City shall cause to be delivered (i) a report of an Independent Accountant verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity or redemption date ("Verification"), (ii) an Escrow Deposit Agreement, (iii) an opinion of Bond Counsel to the effect that the Bonds are no longer Outstanding and (iv) a certificate of discharge of the Trustee with respect to the Bonds.

Each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the City and the Trustee.

In the case of a defeasance or payment of all of the Bonds Outstanding in accordance with this Section 9.03, the Trustee shall pay all amounts held by it in any funds or accounts hereunder, which are not required for said purpose or for payment of amounts due the Trustee under Section 6.06, to the City.

SECTION 9.04. Execution of Documents and Proof of Ownership by Owners. Any request, consent, declaration or other instrument which this Indenture may require or permit to be executed by any Owner may be in one or more instruments of similar tenor, and shall be executed by such Owner in person or by their attorneys appointed in writing.

Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, consent, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other

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27 instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer.

The ownership of Bonds and the amount, maturity, number and date of ownership thereof are conclusively proved by the Registration Books.

Any request, declaration or other instrument or writing of the Owner of any Bond binds all future Owners of such Bond in respect of anything done or suffered to be done by the City or the Trustee in good faith and in accordance therewith.

SECTION 9.05. Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are owned or held by or for the account of the City shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. The Trustee will not be deemed to have knowledge that any Bond is owned or held by the City unless the Trustee has received written notice to that effect.

SECTION 9.06. Waiver of Personal Liability. No member, officer, agent or employee of the City is individually or personally liable for the payment of the principal of or interest or any premium on the Bonds. However, nothing contained herein relieves any such member, officer, agent or employee from the performance of any official duty provided by law.

SECTION 9.07. Destruction of Canceled Bonds. Whenever in this Indenture provision is made for the surrender to the City of any Bonds which have been paid or canceled under the provisions of this Indenture, a certificate of destruction duly executed by the Trustee shall be deemed to be the equivalent of the surrender of such canceled Bonds and the City is entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Bonds therein referred to. The City will pay all costs of any microfilming of Bonds to be destroyed.

SECTION 9.08. Notices. All written notices under this Indenture shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice is effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) upon actual receipt after deposit in the United States mail, postage prepaid, or (c) in any other case, upon actual receipt. The City or the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are given hereunder.

If to the City: City of Barstow
220 E Mountain View St # A
Barstow, CA 92311
Attention: City Manager
Fax:

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28 If to the Trustee: U.S. Bank Trust Company, National Association Attn.: Global Corporate Trust
633 West Fifth Street, 24th Floor
Los Angeles, CA 90071
Fax: 213-615-6063
SECTION 9.09. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Indenture is for any reason held illegal, invalid or unenforceable, such holding will not affect the validity of the remaining portions of this Indenture. The City and the Trustee hereby declare that they would have entered into this Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Indenture may be held illegal, invalid or unenforceable.

SECTION 9.10. Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of the interest or premium (if any) on or principal of the Bonds which remains unclaimed for two years after the date when the payments of such interest, premium and principal have become payable, if such money was held by the Trustee at such date, or for two years after the date of deposit of such money if deposited with the Trustee after the date when the interest and premium (if any) on and principal of such Bonds have become payable, shall be repaid by the Trustee to the City as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the City for the payment of the principal of and interest and redemption premium (if any) on such Bonds.

SECTION 9.11. Execution in Counterparts. This Indenture 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.

SECTION 9.12. Governing Law. This Indenture shall be construed and governed in accordance with the laws of the State of California.

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29 IN WITNESS WHEREOF, the CITY OF BARSTOW has caused this Indenture to be signed in its name by its City Manager and attested to by its City Clerk, and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written.

CITY OF BARSTOW
By
City Manager
Attest:

City Clerk
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, as Trustee
By
Authorized Officer

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A-1

APPENDIX A

DEFINITIONS
“Authorizing Resolution” means the Resolution adopted by the City Council of the City on October 4, 2021, authorizing the issuance of the Bonds. “Beneficial Owner” means the beneficial owner of each such Bond, determined under the rules of DTC.
“Bond Counsel” means (a) Jones Hall, A Professional Law Corporation, or (b) any other attorney or firm of attorneys appointed by or acceptable to the City of nationallyrecognized experience in the issuance of obligations issued by public agencies. “Bond Law” means the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code, as in effect on the Closing Date or as thereafter amended. “Bond Year” means any twelve-month period beginning on June 2 in any year and extending to the next succeeding June 1, both dates inclusive; except that the first Bond Year begins on the Closing Date and ends on June 1, 2022. “Bonds” means the City of Barstow 2022 Taxable Pension Obligation Bonds issued by the City in the aggregate principal amount of $__________ under the Bond Law, the Authorizing Resolution and this Indenture.
“Business Day” means a day of the year (other than a Saturday or Sunday) on which banks in California are not required or permitted to be closed, and on which the New York Stock Exchange is open.
“Certificate of the City” means a certificate in writing signed by the Mayor, City Manager or Finance Director of the City, or any other officer of the City duly authorized by the City for that purpose.
“City” means the City of Barstow, a municipal corporation organized and existing under the laws of the State of California.
“Closing Date” means the date on which the Bonds are delivered by the City to the Original Purchaser.
“Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the City relating to the authorization, issuance, sale and delivery of the Bonds, including but not limited to: printing expenses; rating agency fees; filing and recording fees; initial fees, expenses and charges of the Trustee and its counsel, including the Trustee’s first annual administrative fee; fees, charges and disbursements of attorneys, financial advisors, accounting firms, consultants and other professionals; Bond Insurance Policy premium; and any other cost, charge or fee in connection with the original issuance of the Bonds.

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“Debt Service Fund” means the fund by that name established and held by the Trustee under Section 4.02.
“Depository” means (a) initially, DTC, and (b) any other Securities Depository acting as Depository under Section 2.04.
“Depository System Participant” means any participant in the Depository’s bookentry system. “DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.
“Event of Default” means any of the events described in Section 8.01. “Federal Securities” means: (a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), for which the full faith and credit of the United States of America are pledged; (b) obligations of any agency, department or instrumentality of the United States of America, the timely payment of principal and interest on which are directly or indirectly secured or guaranteed by the full faith and credit of the United States of America.
“Fiscal Year” means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30, both dates inclusive, or any other twelve-month period selected and designated by the City as its official fiscal year period under a Certificate of the City filed with the Trustee.
“Indenture” means this Indenture of Trust between the City and the Trustee, as amended or supplemented from time to time under any Supplemental Indenture entered into under the provisions hereof.
“Independent Accountant” means any accountant or firm of such accountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State of California, appointed by or acceptable to the City, and who, or each of whom: (a) is in fact independent and not under domination of the City; (b) does not have any substantial interest, direct or indirect, with the City; and (c) 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.
“Interest Account” means the account by that name established and held by the Trustee under Section 4.02(a).
“Interest Payment Date” means December 1, 2022, and each June 1 and December 1 thereafter so long as any of the Bonds remain unpaid. “Nominee” means (a) initially, Cede & Co. as nominee of DTC, and (b) any other nominee of the Depository designated under Section 2.04(a). “Office” means, with respect to the Trustee, the corporate trust office of the Trustee at the address set forth in Section 9.08, or at such other or additional offices as may be specified by the Trustee in writing to the City.

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“Original Purchaser” means, collectively, the original purchaser of the Bonds upon the negotiated sale thereof.
“Outstanding”, when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 9.05) all Bonds except: (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and (c) Bonds in lieu of or in substitution for which other Bonds have been authorized, executed, issued and delivered by the City hereunder.
“Owner” means, with respect to any Bond, the person in whose name the ownership of such Bond is registered on the Registration Books. “Permitted Investments” means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein:
(a) Federal Securities;
(b) Federal Housing Administration debentures.
(c) The listed obligations of government-sponsored agencies which are not backed by the full faith and credit of the United States of America:
(i) Federal Home Loan Mortgage Corporation participation certificates (excluding stripped mortgage securities which are purchased at prices exceeding their principal amounts) or senior debt obligations; (ii) Farm Credit Banks (formerly: Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives) consolidated system-wide bonds and notes;
(iii) Federal Home Loan Banks consolidated debt obligations; and (iv) Federal National Mortgage Association senior debt obligations or mortgage-backed securities (excluding stripped mortgage securities which are purchased at prices exceeding their principal amounts); (d) Unsecured certificates of deposit, time deposits, and bankers’ acceptances (having maturities of not more than 30 days) of any bank, including the Trustee or its affiliates, the short-term obligations of which are rated “A-1” or better by S&P and "Prime1" or better by Moody's at the time of initial investment. (e) Deposits the aggregate amount of which are insured by the Federal Deposit Insurance Corporation (FDIC), in banks, including the Trustee or its affiliates, which have capital and surplus of at least $15 million.
(f) Commercial paper (having original maturities of not more than 270 days) rated “A-1+” by S&P and “Prime-1” by Moody’s.

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(g) Money market funds rated “AAm” or “AAm-G” by S&P, or better, including funds for which the Trustee or its affiliates or subsidiaries provide investment or other advisory services.
(h) “State Obligations”, which means:
(i) Direct general obligations of any state of the United States of America or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated “A3” by Moody’s and “A” by S&P, or better, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated; (ii) Direct general short-term obligations of any state agency or subdivision or agency thereof described in (i) above and rated “A-1+” by S&P and “Prime-1” by Moody’s; and
(iii) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state, state agency or subdivision described in (i) above and rated “AA” or better by S&P and “Aa” or better by Moody’s. (i) Pre-refunded municipal obligations rated “AAA” by S&P and “Aaa” by Moody’s meeting the following requirements:
(i) the municipal obligations are (1) not subject to redemption prior to maturity or (2) the trustee for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions; (ii) the municipal obligations are secured by cash or Federal Securities described in clause (a) of the definition thereof (“United States Treasury Obligations”) which may be applied only to payment of the principal of, interest and premium on such municipal obligations; (iii) the principal of and interest on the United States Treasury Obligations (plus any cash in the escrow) has been verified by the report of independent certified public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on the municipal obligations (“Verification”);
(iv) the cash or United States Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations;
(v) no substitution of a United States Treasury Obligations shall be permitted except with another United States Treasury Obligation and upon delivery of a new Verification; and

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(vi) the cash or United States Treasury Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent.
(j) Investment agreements with a domestic or foreign bank or corporation the longterm debt of which, or, in the case of a guaranteed corporation the long-term debt, or, in the case of a monoline financial guaranty insurance company, claims paying ability, of the guarantor is rated at least "AA-" by S&P or "Aa3" by Moody's at the time of initial investment. (k) The Local Agency Investment Fund which is administered by the California Treasurer for the investment of funds belonging to local agencies within the State of California.
"PERS" means the Public Employees’ Retirement System.
"PERS Contracts" means the contracts, as amended from time to time, entered into by the City and PERS pursuant to the Retirement Law obligating the City to make contributions to PERS in exchange for PERS providing retirement benefits to certain City employees.
“PERS Obligations” means the obligation of the City under the Retirement Law and the PERS Contracts to make payments to PERS with respect to benefits accruing to retired City employees who are PERS members, including retired public safety employees and retired miscellaneous employees.
“Principal Account” means the account by that name established and held by the Trustee under Section 4.02(b).
“Record Date” means, with respect to any Interest Payment Date, the close of business on the 15th calendar day of the month preceding such Interest Payment Date, whether or not such 15th calendar day is a Business Day. “Registration Books” means the records maintained by the Trustee under Section

2.07 for the registration and transfer of ownership of the Bonds. “Request of the City” means a request in writing signed by the Mayor, City Manager or Finance Director of the City, or any other officer of the City duly authorized by the City for that purpose.
“S&P” means S&P Global Ratings, and its successors.
“Securities Depositories” means DTC; 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 a Request of the City delivered by the City to the Trustee.
“Supplemental Indenture” means any indenture, agreement or other instrument which amends, supplements or modifies this Indenture and which has been duly entered into between the City and the Trustee; but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder.

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“Term Bonds” means the Bonds maturing on June 1 in each of the years ___ and ____.
“Trustee” means U.S. Bank Trust Company, National Association, as Trustee hereunder, or any successor thereto appointed as Trustee hereunder in accordance with the provisions of Article VI.

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B-1

APPENDIX B

FORM OF BOND
No. ***$ ***

UNITED STATES OF AMERICA

STATE OF CALIFORNIA

CITY OF BARSTOW
2022 TAXABLE PENSION OBLIGATION BOND
RATE OF INTEREST: MATURITY DATE: ORIGINAL ISSUE DATE: CUSIP:

June 1, ______, 2022
REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: THOUSAND DOLLARS
The CITY OF BARSTOW, a municipal corporation duly organized and existing under the laws of the State of California (the “City”), for value received, hereby promises to pay to the Registered Owner identified above or registered assigns (the “Registered Owner”), on the Maturity Date identified above, the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Rate of Interest identified above in like lawful money from the date hereof, which date shall be the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the first calendar day of the month in which such Interest Payment Date occurs (a “Record Date”), in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or before November 15, 2022, in which event it shall bear interest from the Original Issue Date identified above; provided, however, that if, at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the Interest Payment Date to which interest hereon has previously been paid or made available for payment), payable semiannually on June 1 and December 1 in each year, commencing December 1, 2022 (the “Interest Payment Dates”) until payment of such Principal Amount in full.

The Principal Amount hereof is payable upon presentation hereof at the corporate office of U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), in Los Angeles, California, or such other place as designated by the Trustee. Interest hereon is payable by check of the Trustee mailed by first class mail on each Interest Payment Date to the Registered Owner hereof at the address of such Registered Owner as it appears

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on the registration books of the Trustee as of the preceding Record Date; provided that at the written request of the owner of at least $1,000,000 aggregate principal amount of Bonds which written request is on file with the Trustee prior to the Record Date immediately preceding any Interest Payment Date, interest on such Bonds shall be paid on such Interest Payment Date by wire transfer to such account within the United States of America as shall be specified in such written request.

This Bond is one of a duly authorized issue of bonds of the City designated as the “City of Barstow 2022 Taxable Pension Obligation Bonds” (the “Bonds”) of an aggregate principal amount of $__________, all of like tenor and date (except for such variation, if any, as may be required to designate varying numbers, maturities or interest rates) and all issued under the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code (the “Bond Law”) and under an Indenture of Trust, dated as of April 1, 2022, between the City and the Trustee (the “Indenture”). The Bonds have been authorized to be issued by the City under a resolution adopted by the City Council of the City on October 4, 2021.

Reference is hereby made to the Indenture (copies of which are on file at the office of the City) and all supplements thereto and to the Bond Law for a description of the terms on which the Bonds are issued, and the rights thereunder of the owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the City thereunder, to all of the provisions of which the Registered Owner of this Bond, by acceptance hereof, assents and agrees.

The Bonds have been issued by the City to refinance obligations of the City owing to the Public Employees Retirement System of the State of California. This Bond and the interest hereon and all other parity obligations and the interest thereon (to the extent set forth in the Indenture) are payable from any source of legally available funds of the City.

The rights and obligations of the City and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture, but no such modification or amendment shall permit a change in the terms of maturity of the principal of any outstanding Bond or of any installment of interest thereon or a reduction in the rate of interest thereon without the consent of the owner of such Bond, or shall reduce the percentages of the owners required to effect any such modification or amendment.

The Bonds maturing on or before June 1, ____, are not subject to redemption prior to their respective stated maturities. The Bonds maturing on or after June 1, ____, are subject to redemption in whole, or in part among maturities on such basis as set forth in a Request of the City, and within a maturity on a pro rata basis among the Beneficial Owners of the Bonds of such maturity, at the option of the City, on any date on or after June 1, ____, from any available source of funds, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium.
[add make-whole redemption language]
The Bonds maturing on June 1 in each of the years ____ and ____ (the “Term Bonds”) are subject to mandatory redemption, within a maturity on a pro rata basis among the Beneficial Owners of the Term Bonds of such maturity, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate

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respective principal amounts and on June 1 in the respective years as set forth in the following tables. If some but not all of the Term Bonds have been redeemed pursuant to optional redemption described in the preceding paragraph, the total amount of all future sinking fund payments will be reduced by the aggregate principal amount of the Term Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral multiples of $5,000, or as otherwise directed by the City (as set forth in a schedule provided by the City to the Trustee).

Term Bonds Maturing
June 1, ____
Sinking Fund
Redemption Date
(June 1)
Principal Amount
To Be Redeemed
Term Bonds Maturing
June 1, ____
Sinking Fund
Redemption Date
(June 1)
Principal Amount
To Be Redeemed
As provided in the Indenture, the Trustee is required to mail notice of redemption of any Bonds by first class mail, postage prepaid, not less than 20 nor more than 60 days before the redemption date, to the registered owners of the Bonds to be redeemed, but neither failure to receive such notice nor any defect in the notice so mailed affects the sufficiency of the proceedings for prepayment or the cessation of accrual of interest thereon. Any notice so given by the Trustee with respect to the optional redemption of Bonds may be rescinded under the circumstances and with the effect set forth in the Indenture. If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest hereon will cease to accrue from and after the date fixed for redemption.

Whenever provision is made in the Indenture for the redemption of less than all of the Bonds of a maturity, the Trustee will select the Bonds of such maturity to be redeemed on a pro rata basis among the Beneficial Owners of the Bonds of such maturity. For purpose of such selection, all Bonds will be deemed to be comprised of separate $5,000 denominations and such separate denominations will be treated as separate Bonds which may be separately redeemed.

So long as the Bonds are registered in book-entry-only form and so long as DTC (as defined below) or a successor securities depository is the sole registered Owner of the Bonds, partial redemptions will be done in accordance with procedures of the DTC. It is the City’s intent that redemption allocations made by DTC be made in accordance with the proportional provisions described in the Indenture. However, neither the City nor the Trustee has a duty to assure, and can provide no assurance, that DTC will allocate redemptions among Beneficial Owners (as defined in the Indenture) on such a proportional basis, and neither the City nor the Trustee shall have any liability whatsoever to Beneficial Owners in the event redemptions are not done on a proportionate basis for any reason.

If an Event of Default occurs under and as defined in the Indenture, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and

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with the effect provided in the Indenture, but such declaration and its consequences may be rescinded and annulled as further provided in the Indenture.

This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at said corporate trust office of the Trustee in Los Angeles, California, or such other place as designated by the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon registration of such transfer a new Bond or Bonds, of authorized denomination or denominations, for the same aggregate principal amount and of the same maturity will be issued to the transferee in exchange herefor.

The City and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the City and the Trustee shall not be affected by any notice to the contrary.

It is hereby certified that all of the things, conditions and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time, form and manner as required by the laws of the State of California and that the amount of this Bond, together with all other indebtedness of the City, does not exceed any limit prescribed by any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.

Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Trustee for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

This Bond is not entitled to any benefit under the Indenture and is not valid or obligatory for any purpose until the certificate of authentication hereon endorsed has been signed by the Trustee.

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B-5
IN WITNESS WHEREOF, the CITY OF BARSTOW has caused this Bond to be executed in its name and on its behalf with the facsimile signature of its City Manager and to be attested to by the facsimile signature of its City Clerk, all as of the Original Issue Date specified above.

CITY OF BARSTOW
By
City Manager
Attest:

City Clerk
TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture.

Dated:

U.S. BANK TRUST COMPANY,

NATIONAL ASSOCIATION,
as Trustee
By
Authorized Signatory

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B-6

ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto __________________________________ whose address and social security or other tax identifying number is ____________________, the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s)
________________________________________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises.

Dated:

Signature Guaranteed:

Note: Signature(s) must be guaranteed by an
eligible guarantor institution.

Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever.

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This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell 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.

Jones Hall Draft 2-28-2022
PRELIMINARY OFFICIAL STATEMENT DATED ___________, 2022
NEW ISSUE–BOOK-ENTRY ONLY S&P: “___”
See “RATING.”
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, interest on the Bonds is exempt from State of California personal income taxes. Bond Counsel observes that interest on the Bonds is not excluded from gross income for federal income tax purposes. Bond Counsel expresses no opinion regarding any other tax consequences caused by the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. See “TAX MATTERS.”
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CITY OF BARSTOW
2022 TAXABLE PENSION OBLIGATION BONDS
Dated: Date of Delivery Due: June 1, as shown on inside cover The City of Barstow (the “City”) is issuing the bonds captioned above (the “Bonds”) under an Indenture of Trust, dated as of [April 1, 2022] (the “Indenture”), by and between the City and U.S. Bank Trust Company, National Association, as trustee. The net proceeds of the Bonds will be used to refund a portion of the City’s obligations to the California Public Employee’s Retirement System (“CalPERS”) under the CalPERS Contracts, evidencing all of the City’s obligation to pay the City’s unfunded accrued actuarial liability to CalPERS.

The Bonds will bear interest at the rates shown on the inside cover page, payable semiannually on June 1 and December 1 of each year, commencing on December 1, 2022, and will be issued in fully registered form, and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”) in the United States. DTC will act as Securities Depository for the Bonds. Individual purchases of Bonds will be made in book-entry form only in integral multiples of $5,000. Purchasers will not receive certificates representing their beneficial ownership interest in the Bonds purchased. See “THE BONDS.” The Bonds are subject to redemption prior to maturity as described herein. See “THE BONDS – Redemption Provisions.”
The obligations of the City under the Bonds, including the obligation to make all payments of the principal and interest on are obligations of the City imposed by law and are absolute and unconditional, without any right of set-off or counterclaim. The Bonds will be payable from any source of legally available funds of the City, including amounts on deposit in the General Fund. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein.

THE BONDS DO NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION. NEITHER THE BONDS NOR THE

OBLIGATION OF THE CITY TO MAKE PAYMENTS ON THE BONDS CONSTITUTE AN INDEBTEDNESS OF

THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.

This cover page contains information for general reference only. It is not intended to be a summary of the security or terms of this issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used on this cover page not otherwise defined will have the meanings set forth herein.

The Bonds will be offered when, as and if issued and received by the Underwriter, subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, and certain other conditions. Certain matters will be passed upon for the City by Colantuono, Highsmith & Whatley, PC, Pasadena, California, as City Attorney, and by Jones Hall, A Professional Law Corporation, as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, Law Offices of Rossi A.

Russel, Los Angeles, California. It is anticipated that the Bonds in definitive form will be available for delivery to DTC in New York, New York on or about _______, 2022.
[HILLTOP SECURITIES LOGO]
Dated: _______, 2022.

* Preliminary; subject to change.

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MATURITY SCHEDULE
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CITY OF BARSTOW
2022 TAXABLE PENSION OBLIGATION BONDS
Base CUSIP†: ______
Maturity
(June 1)
Principal
Amount
Interest
Rate Yield CUSIP†
$_________ _____% Term Bonds due June 1, 20__ Yield _____% CUSIP† _______

† 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 take any responsibility for the accuracy of such numbers. * Preliminary; subject to change.

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CITY OF BARSTOW

CITY COUNCIL
Dr. Paul Anthony Courtney, Mayor
James Noble, Mayor Pro Tem
Marilyn Dyer-Kruse, Council Member
Barbara M. Rose, Council Member
Tim Silva, Council Member

CITY OFFICIALS
Willie A. Hopkins, Jr., City Manager
Marc Puckett, Interim Finance Director
Andrea Flores, City Clerk
Colantuono, Highsmith & Whatley, PC, City Attorney

BOND COUNSEL AND DISCLOSURE COUNSEL
Jones Hall, A Professional Law Corporation
San Francisco, California

MUNICIPAL ADVISOR
Fieldman, Rolapp & Associates, Inc.

Irvine, California

TRUSTEE
U.S. Bank Trust Company, National Association
Los Angeles, California

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No dealer, broker, salesperson or other person has been authorized by the City to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers or Owners of the Bonds.

Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact.

The Underwriter has provided the following sentence for inclusion in this Official Statement:

The Underwriter has reviewed the information in this Official Statement in accordance with, and as a 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 completeness of such information.

This Official Statement and the information that is contained herein are subject to completion or amendment without notice, and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or any other parties that are described herein since the date hereof. These securities may not be sold, nor may an offer to buy them be accepted, prior to the time that the Official Statement is delivered in final form. This Official Statement is being submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the City. All summaries of documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions.

Certain statements which are included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used, such as “plan,” “expect,” “estimate,” “project,” “budget,” “intend” or similar words. Such forward-looking statements include, but are not limited to, certain statements contained under the captions “THE CITY” and “CITY FINANCIAL INFORMATION.” As described under this Official Statement, the COVID-19 pandemic is expected to materially adversely impact the City’s financial condition. Historical information set forth in the Official Statement is not intended to be predictive of future results.

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH

FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER

FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE

MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY

UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. IN EVALUATING SUCH STATEMENTS, POTENTIAL INVESTORS SHOULD SPECIFICALLY

CONSIDER THE VARIOUS FACTORS WHICH COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.

IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR

EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE

BONDS TO CERTAIN DEALERS, DEALER BANKS, BANKS ACTING AS AGENT AND OTHERS AT PRICES

LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER PAGE HEREOF, AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,

IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT, AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

The City maintains a website; however, information presented there is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds.

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-iTABLE OF CONTENTS
Page Page
INTRODUCTION................................................1 Authority for the 2021 Bonds..........................1 Purpose ..........................................................1 Security and Sources of Payment for the 2021
Bonds .........................................................2 No Debt Service Reserve Fund......................2
The City ..........................................................2 Validation........................................................2 Redemption ....................................................2 Professionals Involved in the Offering............2
Forward-Looking Statements .........................3
Risk Factors Associated with Purchasing the
Bonds .........................................................3 Summaries Not Definitive...............................3 REFINANCING PLAN ........................................3 Refinancing of CalPERS Contracts................3
Estimated Sources and Uses of Funds ..........4
THE BONDS.......................................................4 Redemption Provisions...................................5 Book-Entry System.........................................7 Transfer and Exchange of Bonds...................7

SECURITY AND SOURCES OF PAYMENT FOR
THE BONDS...................................................8 Sources of Payment .......................................8 Debt Service Fund; Transfer of Amounts to
Trustee .......................................................8 No Debt Service Reserve Fund......................9
DEBT SERVICE SCHEDULE ............................9
THE CITY .........................................................10 General.........................................................10 City Government and Administration............10
Public Health Emergency – COVID-19 ........11
CITY FINANCIAL INFORMATION ...................14
Accounting Policies and Financial Reporting14
Fiscal Policies...............................................14 General Economic Condition and Outlook of the
City ...........................................................15 Budget Procedure, Current Budget and Historical
Budget Information ...................................17 City Financial Statements.............................20 General Fund Major Tax Revenues By Source23
Sales and Use Taxes ...................................23 Property Taxes .............................................27 Transient Occupancy Tax ............................31
Franchise Taxes ...........................................31 Charges for Services ....................................32 Long-Term General Fund Obligations..........32
Overlapping Debt Statement ........................33
Employee Retirement System......................34
Other Post-Employment Benefits (OPEB)....40
Employee Relations ..................................... 41 Risk Management ........................................ 42 Investment Policies and Procedures ........... 42
State Budget ................................................ 43

CONSTITUTIONAL AND STATUTORY

LIMITATIONS ON TAXES AND
APPROPRIATIONS ..................................... 44 Article XIIIA of the State Constitution........... 44
Legislation Implementing Article XIIIA ......... 45
Article XIIIB of the State Constitution........... 45
Articles XIIIC and XIIID of the State Constitution
................................................................. 46 Statutory Revenue Limitations - Proposition 62
................................................................. 47 Proposition 1A; Proposition 22..................... 48
Proposition 19 .............................................. 48 Possible Future Initiatives ............................ 49 RISK FACTORS .............................................. 49 Limitations on Remedies Available; Bankruptcy
................................................................. 49 Certain Risks Associated with Sales Tax and
Other Local Tax Revenues ...................... 50
Increasing Retirement Related Costs .......... 50
City Obligations ............................................ 51 Dependence on State for Certain Revenues51
No Reserve Fund......................................... 51 Public Health Emergencies.......................... 51
Natural Calamities........................................ 53 Potential Impact of Climate Change ............ 54
Hazardous Substances................................ 54 State Law Limitations on Appropriations ..... 54
Limitations on Taxes and Fees .................... 54
Assessed Value of Taxable Property........... 55
Concentration of Property Ownership.......... 56
Cybersecurity ............................................... 56 Changes in Law ........................................... 56 Litigation....................................................... 56 Limitation on Trustee’s Obligations.............. 57
Secondary Market for Bonds ....................... 57
VALIDATION.................................................... 57 TAX MATTERS................................................ 57 CERTAIN LEGAL MATTERS .......................... 58
CONTINUING DISCLOSURE.......................... 58
MUNICIPAL ADVISOR .................................... 58 FINANCIAL STATEMENTS OF THE CITY ..... 59
ABSENCE OF LITIGATION............................. 59
RATING............................................................ 59 UNDERWRITING............................................. 60 MISCELLANEOUS .......................................... 60

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-iiTABLE OF CONTENTS
(Continued)

APPENDIX A DEMOGRAPHIC AND ECONOMIC INFORMATION FOR THE CITY OF BARSTOW

APPENDIX B THE CITY OF BARSTOW AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2021

APPENDIX C BOOK-ENTRY ONLY SYSTEM

APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE

APPENDIX E PROPOSED FORM OF OPINION OF BOND COUNSEL

APPENDIX F FORM OF CONTINUING DISCLOSURE CERTIFICATE

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1 OFFICIAL STATEMENT
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CITY OF BARSTOW
2022 TAXABLE PENSION OBLIGATION BONDS
The purpose of this Official Statement, which includes the cover page and appendices hereto, is to set forth certain information concerning the issuance and sale by the City of Barstow (the “City”) of its 2022 Taxable Pension Obligation Bonds (the “Bonds”)

INTRODUCTION
This Introduction is subject in all respects to the more complete information contained elsewhere in this Official Statement, and the offering of the Bonds to potential investors is made only by means of the entire Official Statement. Terms used in this Introduction and not otherwise defined will have the respective meanings assigned to them elsewhere in the Indenture.

Authority for the Bonds
The Bonds are being issued pursuant to Articles 10 and 11 (commencing with Sections 53570 and 53580) of Chapter 3 of Division 2 of Title 5 of the Government Code (the “Bond Law”) of the State of California (the “State”) and an Indenture of Trust, dated as of [April 1, 2022] (the “Indenture”), by and between the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), and a resolution adopted by the City Council of the City on October 4, 2021.

Purpose
The City is obligated to make payments to the Board of Administration of the California Public Employee’s Retirement System (“CalPERS”) arising as a result of retirement benefits accruing to members of CalPERS pursuant to one or more contracts (as amended to date, and as may further be amended from time to time, the “CalPERS Contracts”) with CalPERS and the Public Employees’ Retirement Law, constituting Part 3 of Division 5 of Title 2 of the California Government Code (the “Retirement Law”). The City’s obligations under the Retirement Law include, among others, the requirement to amortize the unfunded accrued actuarial liability (the “UAL”) with respect to such retirement benefits.

The City is issuing the Bonds to (i) refund a portion] of the City’s obligations to CalPERS under the CalPERS Contracts evidencing the City’s UAL, and (ii) to pay the costs of issuance related to the Bonds. See also “REFINANCING PLAN” and “ESTIMATED SOURCES AND USES OF FUNDS” herein.

* Preliminary, subject to change.

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2 Security and Sources of Payment for the Bonds
The obligations of the City under the Bonds, including the obligation to make all payments of principal of and premium, if any, and interest on the Bonds when due and the obligation of the City to make the deposits required under the Indenture for the payment of the Bonds, are obligations of the City imposed by law and are absolute and unconditional, without any right of set-off or counterclaim. The Bonds will be payable from any source of legally available funds of the City, including amounts on deposit in the General Fund. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein.

THE BONDS DO NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION. NEITHER THE

BONDS NOR THE OBLIGATION OF THE CITY TO MAKE PAYMENTS ON THE BONDS

CONSTITUTE AN INDEBTEDNESS OF THE CITY, THE STATE OR ANY OF ITS POLITICAL

SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.

No Debt Service Reserve Fund
The City has not and will not establish a debt service reserve fund for the Bonds.

The City
See the captions “THE CITY” and “CITY FINANCIAL INFORMATION,” as well as Appendices A and B for information with respect to the City and the General Fund, respectively, including other obligations which are payable from general revenues of the City.

Validation
The authorization by the City of the issuance of the Bonds under the Indenture as obligations of the City imposed by law, and as to the validity and conformity of the Bonds with all applicable provisions of law, were validated by a judgment of the Superior Court of the State of California in and for the City entered on February 9, 2022. The time period for the filing of appeals with respect to the judgment has expired. No appeals were filed and therefore, the judgment is final. See “VALIDATION” herein.

Redemption
The Bonds are subject to redemption as described herein. See “THE BONDS – Redemption Provisions” herein.

Professionals Involved in the Offering
Fieldman, Rolapp & Associates, Inc., Irvine, California, has acted as municipal advisor to the City (the “Municipal Advisor”). U.S. Bank Trust Company, National Association, Los Angeles, California, will act as Trustee with respect to the Bonds. Hilltop Securities, Inc. (the “Underwriter”), is underwriting the Bonds.

All proceedings in connection with the issuance of the Bonds are subject to the approval of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel to the City. A copy of the proposed form of Bond Counsel’s final approving opinion with respect to the

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3 Bonds is attached hereto as Appendix E. Certain legal matters will be passed upon for the City by Colantuono, Highsmith & Whatley, PC, as City Attorney, and by Jones Hall, A Professional Law Corporation, as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by Law Offices of Rossi A. Russell, Los Angeles, California, as Underwriter’s Counsel. Payment of the fees and expenses of Bond Counsel, Disclosure Counsel, the Municipal Advisor and Underwriter’s Counsel is contingent upon the sale and delivery of the Bonds.

Forward-Looking Statements
Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements.” Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “budget” or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Although such expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The City is not obligated to issue any updates or revisions to the forward-looking statements if, or when, its expectations, or events, conditions or circumstances on which such statements are based change.

Risk Factors Associated with Purchasing the Bonds
Investment in the Bonds involves risks that may not be appropriate for some investors.

See “RISK FACTORS” for a discussion of certain risk factors which should be considered, including the potential impact of the COVID-19 pandemic, in addition to the other matters set forth in this Official Statement, in considering the investment quality of the Bonds.

Summaries Not Definitive
Brief descriptions of the Bonds, the City and the Indenture are included in this Official Statement and appendices related thereto. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Bonds and the Indenture are qualified in their entirety by reference to the actual documents, or with respect to the Bonds, the forms thereof included in the Indenture, copies of all of which are available for inspection by written request mailed to the City of Barstow, 220 East Mountain View Street, Suite A, Barstow, California, 92311, Attention:

City Manager, and will be available upon request and payment of duplication costs from the Trustee.

REFINANCING PLAN
Refinancing of CalPERS Contracts
The City is obligated to make payments to CalPERS arising as a result of retirement benefits accruing to members of CalPERS pursuant the CalPERS Contracts and the Retirement Law. The City’s obligations under the Retirement Law include, among others, the requirement to amortize the UAL with respect to such retirement benefits.

According to the most recent actuarial valuations performed by CalPERS for the City’s pension plans dated as of June 30, 2020, the City’s UAL with respect to its pension plans totaled

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4 approximately $33.3 million. CalPERS has provided the City with a pay-off amount with respect to the City’s pension plans of $_______ as of _________, 2022 (the “Payoff Date”). Such amount is based on the most recent actuarial valuations performed by CalPERS with respect to the City’s pension plans dated as of June 30, 2020 rolled forward to June 30, 2022 and discounted back to the Payoff Date. Upon issuance of the Bonds, the City will apply proceeds thereof in the approximate amount of $_____ to refund a portion of its current obligations under the CalPERS Contracts. The City projects that immediately after the refunding of the CalPERS Contract with such proceeds, the funding level of the City’s pension plans will be approximately ___%.

It is possible that CalPERS will determine at a future date that additional UAL exists attributable to the City, including in part with respect to the UAL being refunded, if actual plan experience differs from the current actuarial estimates, including any variance from projections.

See “CITY FINANCIAL INFORMATION – Employee Retirement System” for additional information regarding the City’s pension plans.

Estimated Sources and Uses of Funds
The estimated sources and uses of funds with respect to the Bonds are set forth below:

Sources Amount
Principal Amount $
Less: Underwriter’s Discount
Total Sources $
Uses
Refund CalPERS Contracts
(1) $
Costs of Issuance (2)
Total Uses $
____________________
(1) See “REFINANCING PLAN – Refinancing of CalPERS Contracts.” (2) Includes, among other things, the fees and expenses of Bond Counsel, Disclosure Counsel, the Trustee, the Municipal Advisor, rating agency fees, and printing the preliminary and final Official Statements.

THE BONDS
Description of the Bonds
The Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof. The Bonds shall be dated as of the Closing Date and mature on June 1 in the years and in the respective principal amounts and bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) at the respective rates per annum, set forth on the inside front cover of this Official Statement.

Interest on the Bonds will be payable semiannually on June 1 and December 1 of each year, commencing December 1, 2022 (each, an “Interest Payment Date”). The Bonds will bear interest from the Interest Payment Date immediately preceding the date of authentication, unless:
(a) Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it will bear interest from such Interest Payment Date, (b) a Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the Closing Date, or (c) interest on a Bond is in default as of the date

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5 of authentication thereof, in which event interest thereon will be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. “Record Date” is defined in the Indenture to mean, with respect to any Interest Payment Date, the close of business on the 15th calendar day of the month preceding such Interest Payment Date, whether or not such 15th calendar day is a Business Day.

Interest is payable on each Interest Payment Date to the persons in whose names the ownership of the Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest on a Bond which is not punctually paid or duly provided for on any Interest Payment Date is payable to the person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which is given to such Owner by first-class mail not less than ten days prior to such special record date.

The Bonds, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository of the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only.

Purchasers will not receive securities certificates representing their interests in the Bonds purchased. Payments of principal and interest on the Bonds will be paid by the Trustee to DTC, which is obligated in turn to remit such principal and interest to its DTC Participants for subsequent disbursement to the beneficial owners of the Bonds. So long as the Bonds are held in the bookentry system of DTC, payments of principal of and interest on the Bonds will be governed by the rules and procedures which are applicable to such book-entry system. See “APPENDIX C – BOOK-ENTRY ONLY SYSTEM.”
Redemption*
Optional Redemption. The Bonds maturing on or before June 1, 20__, are not subject to redemption prior to their respective stated maturities. The Bonds maturing on or after June 1, 20__, are subject to redemption in whole, or in part among maturities on such basis as set forth in a Request of the City, and within a maturity on a pro rata basis among the Beneficial Owners of the Bonds of such maturity, at the option of the City, on any date on or after June 1, 20__, from any available source of funds, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium.

* Preliminary; subject to change.

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6 Mandatory Sinking Fund Redemption. The Bonds maturing on June 1, 20__ (the “Term Bonds”) are subject to mandatory redemption, within a maturity on a pro rata basis among the Beneficial Owners of the Term Bonds, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts and on June 1 in the respective years as set forth in the following table.

Sinking Fund
Redemption Date
(June 1)
Principal Amount
To Be Redeemed
(Maturity)
If some but not all of the Term Bonds have been optionally redeemed ad described above, the total amount of all future sinking fund payments will be reduced by the aggregate principal amount of the Term Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral multiples of $5,000 (as set forth in a schedule provided by the City to the Trustee).

Manner of Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Bonds of a maturity, the Trustee shall select the Bonds of such maturity to be redeemed on a pro rata basis among the Beneficial Owners of the Bonds of such maturity.

For purpose of such selection, all Bonds will be deemed to be comprised of separate $5,000 denominations and such separate denominations will be treated as separate Bonds which may be separately redeemed.

The portion of any registered Bonds of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or any integral multiple thereof.

Notice of Redemption. The Trustee on behalf and at the expense of the City will mail (by first class mail) notice of any redemption to the respective Owners of Bonds designated for redemption at their respective addresses appearing on the Registration Books, to the Securities Depositories and the Municipal Securities Rulemaking Board, at least 20 but not more than 60 days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice must state the date of the notice, the redemption date, the redemption place and the redemption price and must designate the CUSIP numbers, the Bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and must require that such Bonds be then surrendered at the Office of the Trustee identified in such notice for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. DTC, the procedures

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7 for giving notice of redemption of the Bonds will be governed by the rules and procedures which are applicable to such book-entry system. See “APPENDIX C – BOOK-ENTRY ONLY SYSTEM.” Right to Rescind Notice of Optional Redemption. The City may send a conditional notice of an optional redemption of Bonds under the Indenture. The City may rescind any notice of the optional redemption of Bonds by written notice to the Trustee on or prior to the dated fixed for redemption. Any notice of optional redemption will be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation will not constitute an Event of Default.

The City and the Trustee have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee will give notice of such rescission of redemption in the same manner as the original notice of redemption was given.

Effect of Redemption. From and after the date fixed for redemption, if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption have been duly provided, such Bonds so called shall cease to be entitled to any benefit under the Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date specified in such notice. Unless otherwise directed in writing by the City, the Trustee shall cancel and destroy all Bonds which have been redeemed.

Book-Entry System
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully registered bonds registered in the name of Cede & Co. (DTC’s partnership nominee). One fully registered Bond will be issued for each maturity of the Bonds. See “APPENDIX C – BOOKENTRY ONLY SYSTEM.” The City and the Trustee cannot and do not give any assurances that DTC, DTC Participants or others will distribute payments of principal of and interest on the Bonds paid to DTC or its nominee as the registered 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 City and the Trustee are not responsible or liable for the failure of DTC or any DTC Participant to make any payment or give any notice to beneficial owner with respect to the Bonds or an error of delay relating thereto.

Transfer and Exchange of Bonds
Transfer. A Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of that Bond to the Trustee at its Office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. The Trustee shall collect any tax or other governmental charge on the transfer of any Bonds under the Indenture. Whenever any Bond or Bonds are surrendered for transfer, the City will execute and the Trustee shall authenticate and deliver to the transferee a new Bond or Bonds of like series, interest rate, maturity and aggregate principal amount. The City will pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any transfer of Bonds.

Exchange of Bonds. The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of other authorized denominations and of the same series, interest rate and maturity. The Trustee shall collect any tax or other governmental charge

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8 on the exchange of Bonds. The City will pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any exchange of Bonds.

Limitations. The Trustee may refuse to transfer or exchange, under the Indenture, any Bonds selected by the Trustee for redemption under the Indenture, or any Bonds during the period established by the Trustee for the selection of Bonds for redemption.

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
Sources of Payment
The obligations of the City under the Bonds, including the obligation to make all payments of principal of and interest on the Bonds when due and the obligation of the City to make the deposits required under the Indenture for the security of the Bonds, are obligations of the City imposed by law and are absolute and unconditional, without any right of set-off or counterclaim.

The City agrees to pay from any legally available source of revenues of the City, including amounts on deposit in the General Fund of the City, all amounts due and owing with respect to Bonds issued under the Indenture, including principal and interest thereon and the redemption price thereof. The Bonds do not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation. Neither the Bonds nor the obligations of the City to make payments on the Bonds constitute an indebtedness of the City, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.

In consideration of the acceptance of the Bonds by those who hold the same from time to time, the Indenture constitutes a contract between the City and the Owners from time to time of the Bonds, and the covenants and agreements therein set forth to be performed on behalf of the City are for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reason of the number or date thereof or the time of sale, execution and delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or in the Indenture.

Debt Service Fund; Transfer of Amounts to Trustee
Under the Indenture, a separate fund is established to be known as the “Debt Service Fund” which shall be held by the Trustee in trust for the benefit of the Bond Owners. The Trustee will hold the Debt Service Fund for the uses and purposes set forth in the Indenture, so long as any of the Bonds remain Outstanding. The City will transfer an amount of legally available funds to the Trustee in the following amounts at the following times, for deposit by the Trustee in the following respective special accounts within the Debt Service Fund, which accounts are established with the Trustee under the Indenture with respect to the Bonds, in the following order of priority:
(a) Interest Account. On or before the 5
th Business Day preceding each date on which
interest on the Bonds is due and payable, the City will transfer to the Trustee for deposit in the Interest Account an amount which, when added to the amount then on deposit in the Interest Account, equals the aggregate amount of the interest coming due and payable on the Outstanding Bonds on that date. The Trustee will

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9 apply amounts in the Interest Account solely for the purpose of paying the interest on the Bonds when due and payable.
(b) Principal Account. On or before the 5
th Business Day preceding each date on which
principal of the Bonds is due and payable at maturity or upon mandatory sinking fund redemption, the City will transfer to the Trustee for deposit in the Principal Account an amount which, when added to the amount then on deposit in the Principal Account, equals the amount of principal coming due and payable on that date on the Outstanding Bonds, including the principal amount of the Term Bonds which are subject to mandatory sinking fund redemption on that date under the Indenture. The Trustee will apply amounts in the Principal Account solely for the purpose of paying the principal of the Bonds at the maturity thereof and the principal of the Term Bonds upon the mandatory sinking fund redemption thereof.

No Debt Service Reserve Fund
The City has not and will not establish a debt service reserve fund for the Bonds.

DEBT SERVICE SCHEDULE
The following table shows the debt service schedule with respect to the Bonds, assuming no optional redemptions.

Fiscal Year
Ending June 30
Bonds
Principal
Bonds
Interest
Total Debt
Service
Total
Source: Hilltop Securities, Inc.

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10 THE CITY
General
The City encompasses approximately forty square miles and is located in the northern part of San Bernardino County (the “County”). The City is a major transportation hub for the Inland Empire with several major highways, including Interstate 15, Interstate 40, and California State Route 58, converging in the City. As of January 1, 2021, the population of the City was estimated to be 24,205.

The City provides a full range of services, including police and fire protection services, economic development, construction and maintenance of roadways, parks, streets, and other infrastructure, recreational and cultural activities, utility services of sewer and solid waste collection, and general administrative services.

City Government and Administration
General. The City was incorporated in 1947 as a general law city. The City operates under a council-manager form of government. The City Council consists of five representatives, which includes the Mayor. The council is elected on a non-partisan basis. Council members serve fouryear terms and elections are staggered every two years. The Mayor is elected to serve a fouryear term. The Mayor is elected at large while the council members are elected by districts.

The current City Council members and their respective term expiration dates are as follows:

Name and Office Term Expires
Dr. Paul Anthony Courtney, Mayor November, 2024
James Noble, Mayor Pro Tem November, 2022
Tim Silva, Council Member November, 2022
Barbara M. Rose, Council Member November, 2024
Marilyn Dyer-Kruse, Council Member November, 2024
The City Council sets policy, enacts legislation, and adopts the budget under which the City operates. The City Manager is responsible for carrying out the policies and ordinances of the governing council, for overseeing the day-to-day operations of the City government, and working with the directors and managers of City departments.

Key Personnel. Brief biographies of the City Manager and Interim Finance Director follow below.

Willie A. Hopkins, Jr., City Manager. Prior to coming to Barstow, Mr. Hopkins served as the director of Alameda County’s General Services Agency. With extensive experience in the United States Army, private sector and local government, he is a seasoned senior manager with a successful track record in managing large capital projects, procurement and other support services. He also served as the Director of the Support Services Agency for Cobb County, Georgia, the Assistant City Manager of Pompano Beach, Florida, and, prior to that, as Director of General Services in Fulton County, Atlanta, Georgia. Mr. Hopkins has been providing executive management services to local governments for over 18 years, building on previous management service in the military and corporate worlds. Mr. Hopkins is a graduate of Alcorn State University

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11 where he obtained a degree in business administration and was a member of the Reserve Officer Training Corps. He also served in the U.S. Army from September 1985 until April of 1996.

Marc Puckett, Interim Finance Director. Mr. Puckett has extensive experience as a Finance Director. His public service spans over 34 years as a Finance Director serving cities in both Michigan and California. Prior to coming to Barstow, Mr. Puckett served as the Assistant Town Manager in charge of Fiscal and Administrative Services for the Town of Apple Valley. He has also served the City of Costa Mesa, California, as Director of Finance/City Treasurer and, prior to that, served as the Director of Finance for the City of Flint, Michigan. Mr. Puckett is a graduate of Ferris State University where he obtained a degree in accounting.

Public Health Emergency – COVID-19
The spread of the novel strains of coronavirus collectively called SARS-CoV-2, which cause the disease known as COVID-19 (“COVID-19”), and local, State and federal actions in response to COVID-19, have impacted the City’s operations and finances. In response to the increasing number of COVID-19 infections and fatalities, health officials and experts recommended, and some governments mandated, a variety of responses ranging from travel bans and social distancing practices to complete shutdowns of certain services and facilities. The World Health Organization has declared the COVID-19 outbreak to be a pandemic and, on March 4, 2020, as part of the State’s response to address the outbreak, the Governor declared a state of emergency. On March 13, 2020, the President declared a national emergency, freeing up funding for federal assistance to state and local governments. The City also declared a local emergency on March 16, 2020 in response to the COVID-19 outbreak. The City closed municipal facilities to the public through June 2020. Since that time, City facilities have reopened with health and safety precautions in place in compliance with State and federal guidelines. Many school districts across the State temporarily closed some or all school campuses (including schools within the City) in response to local and State directives or guidance.

On March 19, 2020, the Governor issued Executive Order N-33-20, a mandatory Statewide shelter-in-place order applicable to all non-essential services. Certain aspects of the shelter-in-place directives were extended indefinitely until indicators for modifying the stay-athome order were met. The County also declared a state of emergency in response to the COVID19 outbreak. On May 4, 2020, the Governor issued an executive order informing local health jurisdictions and industry sectors that they could gradually re-open under new modifications and guidance provided by the State. A phased re-opening of various sectors was underway since mid-2020 in accordance with a four-stage re-opening plan that ended with a full reopening of the economy on June 15, 2021. Although pursuant to the re-opening plan certain restrictions on activities were eased, restrictions were also re-imposed in various jurisdictions (including Los Angeles County to the southwest of the City) as local conditions warranted, and such restrictions may be renewed as the pandemic continues.

In addition, the Governor extended the deadline to file and pay spring 2020 property taxes for residential and certain commercial property owners and first quarter 2020 sales and use tax returns by 90 days for all but the very largest taxpayers. As a result of the extended deadline to file sales and use tax returns, it is estimated that up to 361,000 California businesses with less than $5 million in taxable annual sales were permitted to defer up to $50,000 in sales tax and enter into 12-month payment plans at zero interest. These actions resulted in delays in the receipt by the City of some sales tax revenues. Sales tax revenues declined by $1.2 million in Fiscal Year 2019-20 due to the combined impact of the extended filing deadline and the shelter in place order.

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12 On March 27, 2020, the President signed the $2.2 trillion Coronavirus Aid, Relief, and Economic Stabilization Act (the “CARES Act”) which provides, among other measures, $150 billion in financial aid to states, tribal governments and local governments to provide emergency assistance to those most significantly impacted by COVID-19. Under the CARES Act, local governments are eligible for reimbursement of certain costs which were expended to address the impacts of the pandemic. The City has received a total reimbursement of approximately $899,000 under the CARES Act, of which $881,000 has been received by the City to date. The City anticipates receiving an additional approximate $18,000 in CARES Act funding in Fiscal Year 2021-22. The funds received by the City under the CARES Act are not available for payment of the Bonds and cannot be used to backfill any City revenue losses related to COVID-19.

On December 27, 2020, the President signed the $900 billion Coronavirus Response and Relief Supplemental Appropriations Act. Although the act did not provide additional financial assistance to state and local governments, it did extend the deadline (to October 2021) for them to use unspent funds that were previously approved under the CARES Act.

On March 11, 2021, the President signed the American Rescue Plan Act of 2021 (the “ARP Act”), a $1.9 trillion economic stimulus package designed to help the United States’ economy recover from the adverse impacts of the COVID-19 pandemic. The ARP Act includes approximately $350 billion in aid to state and local governments such as the City, consisting of both direct funding from the United States Department of Treasury and program moneys that will flow from other federal agencies. Half of the aid to state and local governments was distributed in spring 2021, with the other half following in 2022. The City was awarded a total of $5,720,976 under the ARP Act, $2,860,488 (or 50%) of which was received in July 2021. The City anticipates receiving the remaining $2,860,488 in July 2022. This funding is available for a broad range of uses, including responding directly to the health emergency, addressing its negative economic impacts with assistance to households and small businesses, restoring government services that were reduced in response to pandemic-related revenue losses and making certain necessary infrastructure improvements. Under the Department of Treasury’s “Final Rule” for utilization of the Coronavirus State and Local Fiscal Recovery Funds, the City may elect a “standard allowance” of $10 million to determine the amount of the City’s revenue loss. The City has elected to utilize this approach to calculate the City’s amount of revenue loss. Therefore, the total amount of the City’s award, $5.7 million, is considered revenue loss and may be used for revenue replacement.

The effects of the COVID-19 outbreak and governmental actions responsive to it have altered the behavior of businesses and people in a manner that has had significant negative impacts on global and local economies. In addition, financial markets in the United States and globally have experienced significant volatility attributed to COVID-19 concerns. Volatility in the financial markets caused CalPERS’ earnings to fall below its investment targets in Fiscal Year 2019-20, which will result in increases in the City’s unfunded pension liability and future pension costs commencing in Fiscal Year 2022-23. See the caption “CITY FINANCIAL INFORMATION – Employee Retirement System.” The outbreak resulted in increased pressure on State finances as budgetary resources were directed towards containing the pandemic and tax revenues sharply declined in early 2020. Identified cases of COVID-19 and deaths attributable to the COVID-19 outbreak continue to occur throughout the United States, including the County.

Potential impacts to the City associated with the COVID-19 outbreak include, but are not limited to, increasing costs and challenges to the public health system in and around the City, cancellations of public events and disruption of the regional and local economy with corresponding decreases in General Fund revenues, including as a result of reduced sales which are subject to sales taxes, reduced hotel occupancy, which is subject to transient occupancy

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13 taxes, fewer business license applications and potential declines in property values. See the captions “CITY FINANCIAL INFORMATION – Sales and Use Taxes,” “– Property Taxes” and “– Transient Occupancy Tax.”
In response to the COVID-19 outbreak, the City proclaimed a local state of emergency on March 16, 2020, modified its operations to implement remote work opportunities for employees and provide City services online, closed many City facilities to the public, cancelled many programs, rentals and community events and deferred several non-essential capital improvement projects. In order to transition City employees to working from home, the City procured additional hardware, established secure access to City computer systems and remote access to City telephone systems and deployed tele-conferencing applications. With improvements in local case rates, the City has phased in the resumption of normal operations and activities while complying with public health orders and California Occupational Safety and Health Administration COVID19 Prevention Plan mandates.

The City has not experienced and does not at this time foresee a future negative impact on the execution of City services as a result of the COVID 19 outbreak. The City has worked diligently to provide its employees with personal protective equipment and voluntary access to screening and vaccinations. However, there can be no assurance that absences of employees or City leadership due to COVID-19 will not adversely impact City operations.

The City Council adopted a balanced budget for Fiscal Year 2020-21 and 2021-22 on June 15, 2020. The budget included reductions in revenue projections of $2.8 million and reductions in appropriations of $2.3 million for Fiscal Years 2020-21 and 2021-22. Budgetary actions included a freeze in wages and certain benefits for two years, a reduction in workforce of

7.5 full-time equivalent employees, the elimination of 4 vacant funded positions, temporary elimination of recreation programs, and closure of recreation facilities.

As the shelter-in-place orders and other travel restrictions due to the epidemic eased, increased transient travel had an unanticipated positive impact on the City’s key revenue sources.

The City’s sales tax revenues were $2.8 million higher than projected for Fiscal Year 2020-21 and Transient Occupancy Taxes were $635,000 higher than projected for Fiscal Year 2020-21. In aggregate, the City’s actual revenues for Fiscal Year 2020-21 were $5 million greater than what was projected in the amended budget for such Fiscal Year. Expenditures for Fiscal Year 2020- 21 were $542,000 lower than the amended budget for such Fiscal Year.

The improvement in the City’s financial condition has been further supported by the diversity of the City’s tax base. In particular, between the Outlets at Barstow, the number of hotels in the Lenwood area of the City, surrounding restaurants and four truck stops representing all four major chains, 38% of the City’s revenues for Fiscal Year 2020-21 were derived from transient travelers through the community. Barstow is located at the juncture of the I-40 and I-15 freeways.

As such, freeway traffic through the community has been a significant source of revenue for the City.

The COVID-19 pandemic is ongoing, and its dynamic nature leads to uncertainties. There are many variables that will continue to contribute to the economic impact of the COVID-19 pandemic and the recovery therefrom, including the length of time social distancing measures are in place, the effectiveness of State and Federal governments’ relief programs and the timing for the containment and treatment of COVID-19. Certain of the information in this Official Statement is dated prior to the onset of the COVID-19 pandemic, which has had a significant adverse impact on the nation, State and local economy, including, but not limited to, a dramatic increase in

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14 unemployment levels. Accordingly, such information is not necessarily indicative of the current financial condition or future prospects of the City and the region. The ultimate impact of COVID19 on the City’s operations and finances is not fully known, and it may be some time before the full impact of the COVID-19 pandemic is known. See “RISK FACTORS – Public Health Emergencies.”

CITY FINANCIAL INFORMATION
Accounting Policies and Financial Reporting
The City maintains its accounting records in accordance with Generally Accepted Accounting Principles (“GAAP”) and the standards established by the Governmental Accounting Standards Board (“GASB”). The City Council and City staff review fiscal performance against the budget at the mid-point of each Fiscal Year. Combined financial statements of the City and its component units are produced following the close of each fiscal year of the City ended June 30 (each, a “Fiscal Year”).

The City Council employs an independent certified public accountant who examines at least annually the financial statements of the City in accordance with GAAP, including tests of the accounting records and other auditing procedures as such accountant considers necessary. As soon as practicable, after the end of the Fiscal Year, a final audit and report is submitted by the independent accountant to the City Council. The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate.

Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The budget is adopted in accordance with GAAP. Revenues are recognized on the accrual basis (i.e., when they are earned). Expenditures are recorded when the related fund liability is incurred. See “APPENDIX B – Comprehensive Annual Financial Report of the City for the Year Ended June 30, 2021 – Note (1)” for a description of the significant accounting policies of the City. See the caption “— City Financial Statements” for a discussion of the City’s audited financial statements for Fiscal Year 2020-21.

The General Fund is the general operating fund of the City. It is used to account for all financial resources except those that are required to be accounted for in another fund because there are legal restrictions on their use. It is expected that debt service on the Bonds will be paid from amounts in the General Fund. Information on the remaining governmental funds of the City as of June 30, 2021, is set forth in Appendix B.

Fiscal Policies
Fund Balance Policy. In June, 2010, the City Council adopted Resolution No. 4548-2010 approving Policy Memorandum No. 2010-15 – Fund Balance Policy (the “Fund Balance Policy”).

The Fund Balance Policy aims to help reduce the negative impact on the City in times of economic uncertainty and potential loses of funding from other governmental agencies. Under the Fund Balance Policy, City reserves are restricted for one-time purposes. The Fund Balance Policy establishes minimum requirements for General Fund non-department reserves and provides

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15 guidelines for the use of these funds. Appropriation for contingencies is maintained at 20 percent of total General Fund net appropriations for one-time emergencies and economic uncertainties.

Excess fund balance at year-end must first be used to replenish the reserve amount at the 20 percent level.

At June 30, 2021 the City had an assigned fund balance of $887,681 for emergency contingency and $3,550,723 for working capital reserve. Such fund balances are maintained by the City as part of the assigned fund balance of the General Fund Balance Sheet. The Fund Balance Policy can be changed only by a resolution of the City Council. The City cannot provide any assurance that the City Council will not in the future amend its Fund Balance Policy so as to reduce or eliminate the reserves thereunder.

Pension Funding Policy. In February 2022, the City Council adopted Resolution No. 5077-2022 approving Policy Memorandum No. 2022-01 – Pension Funding Policy (the “Pension Funding Policy”). The Pension Funding Policy is intended to immediately address any new pension liabilities, or amortization bases, that arise in the future. Under the Pension Funding Policy, any new pension liabilities will be paid off over specific designated timeframes based on the amount of the UAL. Also, 50% of the cash flow savings arising from the issuance of a pension obligation bond are to be budgeted on an annual basis for deposit into a separate Pension Trust Fund. The City is also considering creation of a Section 115 Trust to further stabilize pension funding. The City cannot provide any assurance that the City Council will not in the future amend its Pension Funding Policy to reduce or eliminate the policy objectives or targets.

General Economic Condition and Outlook of the City
Financial Condition. As of June 30, 2021, the General Fund had a year-end surplus of approximately $6.1 million prior to transfers in and out, reflecting revenues of approximately $28.7 million and expenditures of approximately $22.6 million. The budget for Fiscal Year 2020-21, which was adopted after the COVID-19 outbreak in June 2020, had anticipated a year-end General Fund deficit of approximately $1.5 million, with revenues expected to total approximately $22.8 million and expenditures expected to total $24.3 million prior to transfers in and out.

Variances from the original budget for Fiscal Year 2020-21 consisted primarily of higher tax revenues in the amount of approximately $6 million. Actual General Fund expenditures were lower than budgeted in Fiscal Year 2020-21 primarily due to a decrease in public safety expenditures of approximately $3 million, offset by an increase in general governmental expenditures of approximately $1.2 million. See “– Budget Procedure, Current Budget and Historical Budget Information – Adopted Budget for Fiscal Year 2021-22” and “– Comparison of Budget to Actual Performance.”
For Fiscal Year 2021-22, the mid-year General Fund operating budget projects revenues of approximately $28.3 million prior to transfers in. In addition, the mid-year Fiscal Year 2021 General Fund operating budget projects expenditures of approximately $27.1 million prior to transfers out, which results in a projected excess of revenues over expenditures of approximately $1.2 million prior to transfers in of $3.4 million. The projected increase in General Fund fund balance is $4.6 million for Fiscal Year 2021-22. The City believes that the projections in the midyear General Fund for Fiscal Year 2021-22 are conservative.

Potential Future Revenues. The City is in the process of, or has competed, certain projects that are currently projected by the City to increase revenues in future fiscal years. Below is a summary of such projects. There can be no assurance that actual revenues to the City from

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16 the projects described below, if any, will prove to be correct, and such actual revenues may materially different than current projections.
 Marriott Hotels. The City Council has approved the construction of two hotels branded Fairfield Inn by Marriott and Towne Place Suites by Marriott, respectively. Together, the hotels are anticipated to add 181 hotel rooms within the City. The hotels are under construction and are expected to open in July 2022. These hotels are anticipated to be located in the vicinity of the Outlets at Barstow, with more than 35 retail shops, an official California State Welcome Center and dining options. Under an agreement with the developer of the hotels, the City would remit to the developer $40,000 per month for 60 months. In exchange, the developer has agreed to remit all transient occupancy taxes from the hotels to the City. If transient occupancy tax collections fall below $40,000 in any month during the 60-month period, the amount remitted by the City to the developer will be reduced to an amount equal to actual transient occupancy tax collections for that month. The City estimates that it will receive approximately $1 million in additional revenues annually commencing after the completion of the hotels in the form of additional property taxes, transient occupancy taxes and sales taxes.  Fort Irwin Service Agreements. The City has entered into two service agreements with United States Army for services to be provided by the City relating to the sampling of water and wastewater and the sale by the City of liquified petroleum gas at Fort Irwin.

Fort Irwin is located approximately 37 miles northeast of the City, midway between the City of Los Angeles, California, and Las Vegas, Nevada. The City is also in the process of completing negotiations on three additional agreements with the U.S. Army relating to services to be provided by the City. Such agreements are pending final approvals from the U.S. Army, which the City expects to receive by June 30, 2022. The City projects that collectively these agreements will generate approximately $800,000 annually in additional revenues to the City in the future.  Green Zone. On October 4, 2021, the City Council of the City adopted comprehensive regulations for commercial cannabis businesses. These regulations establish permit requirements, operational standards, and separation and zoning criteria, for any commercial cannabis business operating in the City. All commercial cannabis businesses (including dispensary, manufacturing, cultivation, delivery, distribution, and testing and research) are required to obtain approval of a conditional use permit from the City’s Planning Commission, a cannabis license issued by the City's Community Development Department, and obtain a State issued license from the Bureau of Cannabis Control prior to operating in the City. The application fee is approximately $18,645 per use and is non-refundable, with an annual renewal fee of approximately $14,108. Before applying, applicants must secure property within the City in one of the approved “green” zones.

Based upon a cannabis fee study completed for the City by HdL Coren & Cone, the City expects to receive over $250,000 in new revenues in Fiscal Year 2020-21.

Thereafter, the City projects receiving over $70,000 annually in regulatory fees plus 3% of gross sales (above the City’s existing 2%) per approved development agreements commencing in Fiscal Year 2022-23. Annual revenues received pursuant to approved development agreements is expected to be approximately $250,000 annually commencing in Fiscal Year 2022-23. To date, the City has received 6 applications for cannabis retail operations, of which two have been approved by the City and received all necessary approvals to operate in the City as of the date of this

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17 Official Statement. At two of the proposed retail locations, there are a total of 22 buildings totaling 30,000 square feet of usable space each that are anticipated to be used for cannabis cultivation and manufacturing. In total, the City currently projects that such cannabis operations will generate more than $3 million in additional revenue to the City after such facilities are fully built-out, in the form of additional property taxes, development agreement fees, application fees and other fees. The City cannot currently predict if or when any such facilities will be fully built-out and operational, nor any assurance that such facilities will receive all necessary approvals from the City and the State to operate in the future.

In addition to the anticipated development described above, other residential and commercial developments are expected to occur in the future. The city is currently working on two residential tracts, one a 147 lot subdivision, and another 57 lot subdivision that is underway.

The first 21 homes of the 147 lot subdivision are under construction. Grading of the remaining lots is underway. The City anticipates that this development will be built out in 18 months. Final approvals of the 57 lot subdivision is expected within the next two months. Once final approvals have been received, the developer anticipates that the 57 homes will be built out within 18 months There are also numerous residential in-fill projects throughout the City. In addition, Starbucks, Burger King, Panda Express, Wienerschnitzel, Freddy's Steak Burgers branded stores are under construction or have recently opened in the City. The City cannot provide any assurance that such pending development will be completed as currently anticipated.

See “RISK FACTORS,” including “– Assed Value of Taxable Property” and “– Certain Risks Associated with Sales Tax and Other Local Revenues.” Budget Procedure, Current Budget and Historical Budget Information General. The annual budget serves as the foundation for the City’s financial planning and policy making. The budget is prepared according to fund, function (e.g., public safety), and department (e.g., police). The City adopts two separate annual budgets for each respective Fiscal Year. The items for consideration for the second Fiscal Year are limited to an exception basis.

Prior to the beginning of the first Fiscal Year of the two year budget cycle, the City Manager communicates the priorities, goals, and outlook for the upcoming two Fiscal Years to all the Department Directors and their managers. Based on these objectives, the Departments prepare revenue estimates and expenditure requests. These requests are reviewed by the City Manager and the Director of Finance. Meetings are conducted with the City Manager, the Director of Finance, and each individual Department to analyze and revise, as necessary, all budget requests. The City Manager’s recommendations are compiled into a Preliminary Budget document and submitted to the City Council in May. The City Council then holds one or more Study Session workshops to study and approve any revisions to the City Manager’s recommendations. A public hearing is held in June for budget adoption. In the second year ofthe two year budget cycle, review and analysis is limited to revisions to the adopted budget.

Adopted Budget for Fiscal Year 2021-22. The City Council adopted a balanced budget for Fiscal Year 2020-21 and 2021-22 on June 15, 2020. The portion of the such budget relating to Fiscal Year 2021-22 is sometimes referred to herein as the “2021-22 Adopted Budget.” Budgeted expenditures for the General Fund total approximately $17.5 million for Fiscal Year 2021-22, an increase of approximately $257,000 (or 1%) above Fiscal Year 2020-21 budgeted expenditures.

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18 Budgeted revenues for the General Fund total approximately $17.8 million for Fiscal Year 2021-22, an increase of approximately $700,000 (or 4%) above Fiscal Year 2021 budgeted revenues. The City’s Fiscal Year 2021-22 General Fund budget reflects increases in sales tax receipts and other revenues and includes approximately $2.85 million in ARP Act funds.

The original adopted budgeted revenues for the General Fund totaled approximately $24.6 million for Fiscal Year 2021-22, an increase of approximately $1.8 million (or 7%) above Fiscal Year 2021 budgeted revenues. The City’s Fiscal Year 2021-22 General Fund budget as presented in the table below, reflects increases in sales tax receipts and other revenues and includes approximately $2.85 million in ARP Act funds received after budget adoption.

The City adopted a biennial budget as part of its budget strategy to address COVID impacts. Revenues were budgeted to decrease by $2.8 million for Fiscal Year 2020-2021 and by $2.1 million for Fiscal Year 2021-2022. Appropriations were budgeted to decrease by $2.3 million for Fiscal Year 2020-2021 and by $2.2 million for Fiscal Year 2021-2022. The City is currently in the second year of the biennial budget.

Significant assumptions reflected in the Fiscal Year 2021-22 General Fund budget with respect to revenue included the following (resulting in a total reduction in budgeted revenues of $2.1 million for such Fiscal Year):
 Property Tax revenues were projected to decrease by 4%  Sales & Use Tax revenues were projected to decrease by 20%  Transient Occupancy Taxes were projected to decrease by 20%  Business License Taxes were projected to decrease by 6%  Construction Permits were projected to decrease by 7% Significant assumptions reflected in the Fiscal Year 2021-22 General Fund budget with respect to expenditures included the following (resulting in a total reduction of approximately 10% in total budgeted expenditures for such Fiscal Year):
 Wage freeze for all employees for two Fiscal Years
 Benefits freeze (elimination) for all benefits resulting in direct cash payments  Reduction in workforce of 7.5 full time equivalent positions  Elimination of 4 vacant funded positions
 Elimination of all part-time staff
 Temporary elimination of recreation programs and closure of recreation facilities  Hiring freeze for two Fiscal Years
 Voluntary furloughs for all employees
 No capital purchase appropriations for two Fiscal Years Comparison of Budget to Actual Performance. Set forth in the table below are the General Fund budgets for Fiscal Years 2018-19 through 2020-21 (as originally adopted and not reflecting any mid-Fiscal Year budget adjustments), the General Fund Budget for Fiscal Year 2021-22 (reflecting mid-Fiscal Year budget adjustments as of March 7, 2022) and the audited General Fund results for Fiscal Years 2018-19 through 2020-21.

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19 Table 1

CITY OF BARSTOW
General Fund Budgets and Results
Fiscal Years 2018-19 through 2021-22
Adopted
Budget
2018-19
Audited
2018-19
Adopted
Budget
2019-20
Audited
2019-20
Adopted
Budget
2020-21
Audited
2020-21
Adopted
Mid-Year
Budget
2021-22(2)
Revenues:

Taxes $17,067,000 $18,432,758 $22,398,857 $22,401,483 $20,786,874 $26,139,094 $26,268,396 Licenses and permits 477,500 207,183 380,300 381,774 343,975 436,500
455,886 328,775
Intergovernmental 522,400 560,936 504,955 519,075 436,500 487,333 436,500 Charges for services 732,000 1,052,223 544,750 444,041 602,375 312,200
328,465 389,275
Use of money and property 375,200 422,299 426,700 298,331 312,200 604,102 305,000 Fines and forfeitures 144,650 114,564 83,000 132,885 130,000 89,923 100,000 Miscellaneous 93,200 107,557 214,600 351,785 170,200 589,610 508,200 Total Revenues $19,411,950 $20,897,520 $24,553,162 $24,529,374 $22,782,124 $28,694,413 $28,336,146 Expenditures:

Current:

General government $2,464,816 $3,909,039 $3,657,099 $3,271,395 $3,968,878 $5,164,979 $4,521,968 Public safety 9,630,175 10,252,480 13,177,541 11,392,014 13,586,750 10,535,542 15,060,104 Community development 2,314,206 2,512,082 2,268,757 2,203,600 1,378,834 1,497,209 1,778,718 Parks and recreation 2,511,338 2,428,174 2,182,705 2,188,112 969,546 1,006,800 1,244,496 Public works 2,909,594 2,762,468 3,278,228 3,118,227 3,514,341 3,353,690 4,201,103 Capital outlay 112,000 146,096 855,262 979,726 108,500 207,816 -- Debt service:

Principal retirement -- -- - 486,578 - 719,295 --
Interest and fiscal charges -- -- - -- 777,868 101,118 297,859 Total Expenditures $19,942,129 $ 22,010,399 $25,419,592 $23,639,652 $24,304,717 $22,586,449 27,104,248 Excess (Deficiency) of Revenues
Over (Under) Expenditures (530,179) (1,112,819) (866,430) 889,722 (1,522,593) 6,107,964 1,231,898 Other Financing Sources (uses)
Transfers in $ - $ -- $ 1,333,572 $ -- $ 1,540,000 $1,039,760 3,387,000 Transfers out -- (100,000) (2,249,369) (500,000) (3,497,562) -- Proceeds from capital assets -- 720,188 220,000 318,414 - 126,938 -- Total other sources (uses) $ - $ 720,188 $ 1,453,572 $(1,930,955) $ 1,040,000 $(2,330,864) 3,387,000 Net Change in Fund Balance $ (530,179) $ (392,631) $ 587,142 $(1,041,233) $ (482,593) $3,777,100 4,618,898 Fund Balance-beginning of year 14,347,231 14,347,231 13,954,591 14,923,287(1) 13,882,054 13,882,054 $17,659,154 Fund Balance-end of year $13,817,052 13,954,591 $14,541,733 $13,882,054 $13,399,461 $17,659,154 $22,278,052 (1) Reflects restated fund balance as of the beginning of Fiscal Year 2019-20 after restatements resulting an increase thereof of $968,696. (2) As of March 7, 2022.

Source: City of Barstow budgets for Fiscal Years 2018-19 through 2021-22; City of Barstow audited financial statements for Fiscal Years 2019-20 and 2020-21.

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20 City Financial Statements
A copy of the most recent audited financial statements of the City (the “Financial Statements”) for the Fiscal Year ended June 30, 2021, prepared by Lance, Soll & Lunghard, LLP, Brea, California (the “Auditor”), is included as Appendix B to this Official Statement. The Auditor’s letter dated December 17, 2021 is set forth therein. The Financial Statements are public documents and are included within this Official Statement without the prior approval of the Auditor.

Accordingly, the Auditor has not performed any post-audit analysis of the financial condition of the City, nor has the Auditor reviewed or audited this Official Statement.

Certain financial information that is set forth in this Official Statement is derived from the Financial Statements and the City’s audited financial statements for prior years (excluding certain non-cash items and after certain other adjustments) and is qualified in their entirety by reference to such statements, including the notes thereto. The Auditor has not reviewed or audited such financial information or any other portion of this Official Statement.

In the Financial Statements, data relating to governmental funds such as the General Fund focus on current financial resources, which emphasize near-term inflows and outflows of expendable resources as well as balances of expendable resources at the end of each Fiscal Year.

The City’s accounting and budgeting records for general governmental operations are maintained on a modified accrual basis. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Accordingly, revenues are recorded when received in cash, except that revenues subject to accrual (generally received within 90 days after year-end).

The primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, sales tax, intergovernmental revenues, and other taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred.

The following table shows the City’s audited General Fund balance sheets for Fiscal Years 2016-17 through 2020-21.

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21 Table 2

CITY OF BARSTOW
General Fund Balance Sheets
Fiscal Years 2016-17 through 2020-21
Audited
2016-17
Audited
2017-18
Audited
2018-19
Audited
2019-20
Audited
2020-21
Assets:

Pooled cash and investments(1) $4,922,552 $3,333,483 $581,603 $1,544,186 $5,978,552 Receivables:

Accounts 394,092 282,580 284,640 245,751 251,786
Taxes 809,838 802,459 855,084 -- --
Accrued Interest 11,662 7,157 -- 3,182 1,557
Prepaid costs 51,117 61,446 74,974 845,654 43,240
Deposits 726,154 519,754 932,355 1,066,216 591,564
Due from other governments(2) 1,532,644 1,642,944 3,079,796 2,556,222 4,925,605 Due from other funds 4,160,933 4,812,346 2,968,634 1,545,454 924,442 Advances to other funds 6,169,863 4,467,144 7,066,183 7,991,579 7,301,063 Inventories 97,206 97,709 38,074 51,762 66,692
Total Assets $18,576,061 $16,027,022 $15,881,343 $15,850,006 $20,084,501 Liabilities, Deferred Inflow of Resources
and Fund Balance
Liabilities:

Accounts payable $ -- $ -- $ -- $ 470,763 $ 645,905
Accrued liabilities 1,343,278 1,349,337 1,605,454 1,152,820 1,410,055 Unearned revenues -- 2,531 -- -- --
Deposits payable 53,196 5,560 14,318 3,712 42,625
Due to other governments -- -- -- 45,461 50,575
Retentions payable -- -- -- 3,617 --
Total Liabilities $1,396,474 $1,357,428 $1,619,772 $1,676,373 $2,149,160 Deferred Inflows of Resources
Unavailable Revenue 337,755 322,363 306,971 291,579 276,187 Total Deferred Inflows of Resources 337,755 322,363 306,971 291,579 276,187 Fund Balances
Nonspendable $7,619,282 $5,183,492 $8,111,586 $9,955,211 $8,002,559 Restricted -- -- -- -- --
Assigned -- -- -- 4,406,560 4,438,404
Unassigned 9,222,550 9,163,739 5,843,014 (479,717) 5,218,191 Total Fund Balances $16,841,832 $14,347,231 $13,954,600 $13,882,054 $17,659,154 Total Liabilities, Deferred Inflow of
Resources and Fund Balances $18,576,061 $16,027,022 $15,881,343 $15,850,006 $20,084,501 (1) General Fund revenues exceeded expenditures by $6.1 million which correlated directly to the increase in pooled cash and investments.
(2) Year-end adjustments for accrued revenues from State subventions in the amount of $2.9 million accounted for the increase in due from other governments in Fiscal Year 2020-21.

Source: City of Barstow audited financial statements for Fiscal Years 2016-17 through 2020-21.

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22 The following table shows City’s audited General Fund statements of revenues, expenditures and changes in fund balance for Fiscal Years 2016-17 through 2020-21.

Table 3

CITY OF BARSTOW
Statements of Revenues, Expenditures and Changes in General Fund Balance Fiscal Years 2016-17 through 2020-21
Audited
2016-17
Audited
2017-18
Audited
2018-19
Audited
2019-20
Audited
2020-21
Revenues:

Taxes 15,444,964 16,302,262 18,432,758 $22,401,483 $26,139,094 Licenses and permits 292,084 264,997 207,183 381,774 455,886 Intergovernmental 1,070,672 583,084 560,936 519,075 487,333 Charges for services(1) 700,514 655,742 1,052,223 444,041 328,465 Use of money and property 393,451 305,552 422,299 298,331 604,102 Fines and forfeitures 216,117 78,862 114,564 132,885 89,923 Miscellaneous 52,186 136,635 107,557 351,785 589,610
Total Revenues $18,169,988 $18,327,134 $20,897,520 $24,529,374 $28,694,413 Expenditures:

Current:

General government(2) $3,627,594 $3,197,895 $3,909,039 $3,271,395 $5,164,979 Public safety 9,518,993 9,712,654 10,252,480 11,392,014 10,535,542 Community development 2,580,387 2,465,055 2,512,082 2,203,600 1,497,209 Parks and recreation(3) 2,567,524 2,627,928 2,428,174 2,188,112 1,006,800 Public works 2,947,892 2,791,076 2,762,468 3,118,227 3,353,690 Capital outlay 389,095 679,405 146,096 979,726 207,816
Debt service:

Principal retirement -- -- -- 486,578 719,295
Interest and fiscal charges 60 (46) -- -- 101,118
Total Expenditures $21,631,545 $21,473,967 $22,010,339 $23,639,652 $22,586,449 Other Financing Sources (uses)
Transfers in $ -- $ 9,236 $ -- $ -- $1,039,760
Transfers out (564,619) -- -- (2,249,369) (3,497,562)
Proceeds from capital assets 124,130 642,996 720,188 318,414 126,938 Total other sources (uses) $(440,489) $652,232 $720,188 $(1,930,955) $(2,330,864) Revenues Over (Under) Expenditures (3,461,557) (3,146,833) (1,112,819) 889,722 6,107,964 Net Change in Fund Balance $(3,902,046) $(2,494,601) $(392,631) $(1,041,233) $3,777,100 Fund Balance-beginning of year(4) 20,743,878 16,841,832 14,347,231 14,923,287 13,882,054 Fund Balance-end of year $16,841,832 $14,347,231 $13,954,600 $13,882,054 $17,659,154 (1) Reflects increases in Fiscal Yar 2018-19 rental income due to assumption of operation of the Harvey House and increased participation in recreational programs. Decreases in the following Fiscal Years were caused by the shutdown of all recreational facilities and programming as part of the City’s response to managing the COVID-19pandemic. (2) Increase in Fiscal Year 20-2021 General Government expenditures due to an increase in funding for Fire District operations. (3) Decreases in FY 2020-21 Parks and recreation expenditures were due to the closure of Parks and Recreation facilities. Parks and Recreation facilities are expected to resume normal operations in Fiscal Year 2022-23. (4) Reflects restated fund balance as of the beginning of Fiscal Year 2019-20 after restatements resulting an increase thereof of $968,696.

Source: City of Barstow audited financial statements for Fiscal Years 2016-17 through 2020-21.

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23 General Fund Major Tax Revenues By Source
A summary of major sources of General Fund taxes received by the City in the last five Fiscal Years is set forth in the following table. Certain general fund taxes currently imposed by the City are affected by Proposition 218. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Article XIIIC and Article XIIID.” Table 4

CITY OF BARSTOW
General Fund Major Tax Revenues by Source
Revenue Source
Audited
FY 2016-17
Audited
FY 2017-18
Audited
FY 2018-19
Audited
FY 2019-20
Audited
FY 2020-21
% of
Total(2)
Adopted
Mid-Year
Budget
2021-22 (3)
Sales taxes(1) $7,166,274 $7,382,198 $9,383,362 $13,709,117 $16,580,582 57.8% $16,831,625 Property taxes 3,947,325 4,451,142 4,399,249 4,573,390 4,791,350 16.7 4,720,000 Transient occupancy tax 3,056,078 3,147,207 3,320,952 2,855,796 3,436,464 12.0 3,650,000 Franchise fees 1,011,945 1,050,192 1,023,994 1,077,372 1,175,998 4.1 1,066,771 Charges for services 700,514 655,742 1,052,223 444,041 328,465 1.1 389,275 Totals $15,882,136 $16,686,481 $19,179,780 $22,656,717 $26,312,859 91.7% $26,657,671 (1) Reflects percentage of total Fiscal Year 2020-21 General Fund revenues of $28,694,413. (2) Sales tax figures include sales tax revenues received by the City pursuant to Measure Q commencing in April 2019. Increase in Fiscal Years 2019-20 and 2020-21 were due to the passage, and receipt, of Measure Q. See “– Sales and Use Taxes – Measure Q” below. (3) As of March 7, 2022.

Source: City of Barstow.

Sales and Use Taxes
General. A sales and use tax is imposed on retail sales or consumption of personal property in the City. As shown in Table 4, sales and use tax revenues represented the top source of tax revenues for the City’s General Fund in each of Fiscal Years 2016-17 through 2020-21, comprising approximately 58% of the City’s total General Fund revenues for Fiscal Year 2020-

21. In Fiscal Year 2020-21, the City’s sales tax revenues totaled approximately $16.6 million, an increase of approximately 21% compared to sales tax revenues of approximately $13.7 million in Fiscal Year 2019-20.

For Fiscal Year 2021-22, the City’s sales tax revenues are projected at approximately $16.8 million based on the budget for Fiscal Year 2021-22 (after mid-year adjustments as of March 7, 2022). The phased re-opening under the Blueprint for a Safer Economy ended with a full reopening of the economy on June 15, 2021. Such budgeted revenues take into account the reopening of the economy. See “PUBLIC HEALTH EMERGENCY – COVID-19.” The City’s sales tax revenue represents the City’s share of the sales and use tax imposed on taxable transactions occurring within the City’s boundaries. The sales tax is governed by the Bradley-Burns Uniform Local Sales and Use Tax Law, set forth in California Revenue and Taxation Code Section 7200 et seq. The local sales tax rate in the City is 8.75%, of which the City is allocated 1%. The State collects and administers the tax, and makes distributions on taxes collected within the City as follows:

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24 Table 5

CITY OF BARSTOW
Sales Tax Rates
Rate
State 6.00%
City of Barstow – Measure Q 1.00
County of San Bernardino 1.75
Total 8.75%
(1) See “– Measure Q” below.

Source: California Department of Tax and Fee Administration.

The State’s actual administrative costs with respect to the portion of sales taxes allocable to the City are deducted before distribution and are determined on a quarterly basis. Sales tax revenue collected by the State is directly deposited monthly to the City’s General Fund. For a summary of historical taxable transactions in the City, see “– History of Taxable Transactions.” Certain transactions are exempt from the State sales tax, including sales of the following products:
• food products for home consumption;
• prescription medicine;
• newspapers and periodicals;
• edible livestock and their feed;
• seed and fertilizer used in raising food for human consumption; and • gas, electricity and water when delivered to consumers through mains, lines and pipes.

This is not an exhaustive list of exempt transactions. A comprehensive list can be found in the CDTFA’s March 2018 publication entitled “Sales and Use Taxes: Exemptions and Exclusions,” which can be found on the CDTFA’s website at http://www.cdtfa.ca.gov. The reference to this Internet website is shown for reference and convenience only; the information contained within the website may not be current and has not been reviewed by the City and is not incorporated in this Official Statement by reference.

In June 2018, the United States Supreme Court published its decision in South Dakota v.

Wayfair (the “Wayfair Decision”), in which the Supreme Court held that sales to a customer in a particular state alone are sufficient to create a nexus for purposes of determining whether a seller is required to collect sales taxes of the applicable state. Prior to the Wayfair Decision, courts had interpreted the dormant Commerce Clause of the United States Constitution to require that a company have physical nexus in a state in order for the seller to be liable for the collection of that state’s sales tax. Physical nexus is defined as having either property or payroll in the state, including a resident employee working from home or inventory stored in that state. The State of California has issued guidance in response to the Wayfair Decision. Under such guidance, beginning April 1, 2019, retailers located outside of the State are required to register with the California Department of Tax and Fee Administration (the “CDTFA”), collect the California use tax, and pay the tax to the CDTFA based on the amount of their sales into California, even if they do not have a physical presence in the state. The new collection requirements apply to retailers if during the preceding or current calendar year certain sales thresholds are met. The new collection requirements apply to taxable sales of tangible personal property to California consumers on and after April 1, 2019, and are not retroactive. Additionally, the State’s passage

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25 of Assembly Bill 147, signed by the Governor on April 25, 2019, provides the implementation rules for the Wayfair Decision in California. The City is unable to predict the impact that the Wayfair Decision will have on its sales tax revenues.

Sales Tax Collection Procedures. Collection of the sales and use tax is administered by the CDTFA. This process was formerly administered by the State Board of Equalization. The Taxpayer Transparency and Fairness Act of 2017, which took effect July 1, 2017, restructured the State Board of Equalization and separated its functions among three separate entities: the State Board of Equalization, the CDTFA, and the Office of Tax Appeals. The State Board of Equalization will continue to perform the duties assigned to it by the state Constitution, while all other duties will be transferred to the newly established CDTFA and the Office of Tax Appeals.

CDTFA will handle most of the taxes and fees previously collected by the State Board of Equalization, including sales and use tax.

Under the Sales and Use Tax Law, all sales and use taxes collected by the CDTFA under a contract with any city, city and county, or county are required to be transmitted by the CDTFA to such city, city and county, or county periodically as promptly as feasible. These transmittals are required to be made at least twice in each calendar quarter.

Under its procedures, the CDTFA projects receipts of the sales and use tax on a quarterly basis and remits an advance of the receipts of the sales and use tax to the City on a monthly basis. The amount of each monthly advance is based upon the CDTFA’s quarterly projection.

During the last month of each quarter, the CDTFA adjusts the amount remitted to reflect the actual receipts of the sales and use tax for the previous quarter.

According to the CDTFA, it distributes quarterly tax revenues to cities, counties, and special districts using the following method. Using the prior year’s quarterly tax allocation as a starting point, the CDTFA first eliminates nonrecurring transactions such as fund transfers, audit payments, and refunds, and then adjusts for growth, to establish the estimated base amount. The CDTFA disburses 90% to each local jurisdiction in three monthly installments (advances) prior to the final computation of the quarter’s actual receipts. Ten percent is withheld as a reserve against unexpected occurrences that can affect tax collections (such as earthquakes, fire, or other natural disaster) or distributions of revenue such as unusually large refunds or negative fund transfers.

The first and second advances each represent 30% of the 90% distribution, while the third advance represents 40%. One advance payment is made each month, and the quarterly reconciliation payment (clean-up) is distributed in conjunction with the first advance for the subsequent quarter. Statements showing total collections, administrative costs, prior advances, and the current advance are provided with each quarterly clean-up payment.

Effective April 2, 2020, pursuant to Executive Order N-40-20, the State is allowing small business taxpayers (i.e., those with less than $5 million in taxable annual sales), to participate in a 12-month, interest-free, payment plan for up to $50,000 of sales and use tax liability. See “RISK FACTORS – Public Health Emergencies– Collection of Taxes” for a discussion of Executive Order N-40-20. However, to date, the City has not experienced any significant delays in the receipt of sales tax revenues resulting from this order.

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26 History of Taxable Transactions. A summary of historic taxable sales within the City for calendar years 2016 through 2020 is shown in the following table.

Table 6

CITY OF BARSTOW
Taxable Sales by Category
(in thousands)
Business 2016 2017 2018 2019 2020
Motor Vehicle and Parts Dealers $ --* $35,061 $32,233 $29,086 $32,681 Home Furnishings and Appliance Stores --* 5,800 5,861 4,927 5,212 Building Material, Garden Equip & Supplies --* --* --* --* --* Food and Beverage Stores --* 43,717 47,304 43,353 39,731 Gasoline Stations --* 254,177 251,555 227,102 188,688
Clothing and Clothing Accessories Stores --* 131,902 123,347 107,466 55,776 General Merchandise Stores --* --* --* --* --*
Food Services and Drinking Places 85,926 88,589 89,213 92,965 78,384 Other Retail Group 542,915** 84,898 89,599** 88,996** 114,391** Total Retail and Food Services 628,841 644,144 639,111 593,895 514,867 All Other Outlets 15,534 15,197 18,460 25,855 21,040
Total All Outlets $644,374 $659,341 $657,571 $619,750 $535,907 * Sales omitted because publication would result in disclosure of confidential information. ** Adjusted for disclosures.

Source: California Department of Tax and Fee Administration.

Measure Q. In November 2018, the voters of the City approved Measure Q (“Measure Q”), which established a one-cent sales tax as a general revenue source for public safety and citywide services (“Measure Q Sales Tax”), effective April 1, 2019. Under Measure Q, Measure Q Sales Tax revenues were approved to be used by the City for the following purposes: to maintain local fire protection and paramedic services provide police services, including neighborhood police patrols, crime prevention and investigations; maintain streets and parks, and repair potholes; improve response times to 9-1-1 emergencies; help fund senior and youth programs; and reduce gang activity and drug-related crimes. Under Measure Q, the City is authorized to levy the Measure Q Sales Tax unless local police or fire services are transferred to another agency. Currently, the City has no plans to transfer such services to another agency.

The following table shows Measure Q Sales Tax revenues for Fiscal Year 2018-19 through 2020-21.

Table 7

CITY OF BARSTOW
Measure Q Sales Tax Revenues
Fiscal
Year
Measure Q Sales
Tax Revenues
2018-19 (1) $2,058,112
2019-20 7,427,250
2020-21 8,851,984
Total $18,337,346
(1) The Measure Q Sales Tax became effective April 1, 2019; represents revenues for April 1, 2019 through June 30, 2019.

Source: City of Barstow.

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27 Measure Q Sales Tax revenues represent a source of funds that are legally available to the City to pay debt service on the Bonds. The City has budgeted approximately $8.6 million in Measure Q Sales Tax revenues for Fiscal Year 2021-22 (after mid-year adjustments as of March 7, 2022).

Property Taxes
General. As shown in Table 4, property tax revenues represented the second largest source of tax revenues for the City’s General Fund in each of Fiscal Years 2016-17 through 2020- 21, comprising approximately 17% of the City’s total General Fund revenues for Fiscal Year 2020-

21. The figures shown in Table 4 for property tax revenues do not include property tax that the City received in lieu of vehicle license taxes. Based on the 2021-22 Adopted Budget (after midyear adjustments as of March 7, 2022), the City’s property tax revenues are estimated at approximately $4.7 million for Fiscal Year 2021-22, representing approximately 17% of the City’s total budgeted General Fund revenues for such Fiscal Year. Since Fiscal Year 2012-13, assessed values within the City have increased 35%.

Property taxes have been the primary revenue source affected by voter initiatives and legislative actions. With approval of Proposition 13, property tax revenues were first curtailed over 35 years ago when they were reduced by two-thirds and thereafter limited to 2% annual increases or the consumer price index, whichever was less. In addition, if unemployment and reduced economic activity generally is a sustained consequence of the COVID-19 pandemic through multiple fiscal years, a combination of property tax payment delinquencies and property tax assessment appeals could depress property tax revenue growth over time.

Levy and Collection. Property taxes are levied for each fiscal year on taxable real and personal property as of the preceding January 1. For assessment and collection purposes, property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing Stateassessed public utilities property and real property the taxes on which are a lien sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.”
Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year, and become delinquent on December 10 and April 10, respectively.

A penalty of 10% attaches immediately to all delinquent payments. Property on the secured roll with respect to which taxes are delinquent become tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of a penalty of 1% per month to the time of redemption, plus costs and a redemption fee. If taxes are unpaid for a period of five years or more, the property is deeded to the State of California and may be sold at public auction.

Property taxes on the unsecured roll are due as of the January 1 lien dates and become delinquent on August 31. A 10% penalty attaches to delinquent unsecured taxes. If unsecured taxes are unpaid at 5:00 p.m. on October 31, an additional penalty of 1% attaches to them on the first day of each month until paid. The County has four ways of collecting delinquent unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a judgment in the office of the County Clerk specifying certain facts in order to obtain a lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Recorder’s office in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. Beginning in 1978- 79, Proposition 13 and its implementing legislation shifted the function of property tax allocation

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28 to the counties, except for levies to support prior voted debt, and prescribed how levies on countywide property values are to be shared with local taxing entities within each county.

In response to the COVID-19 pandemic, Governor Newsom issued Executive Order N61-20 on May 6, 2020. Executive Order N-61-20 waives penalties and interest on taxes on property on the secured or unsecured roll through May 6, 2021 under certain conditions. The waiver of late payment penalties and resulting property tax delinquencies could have an adverse impact on the timely payment of property taxes with respect to property in the City. The City cannot predict whether the COVID-19 pandemic will have an effect on the remittance by the County of the City’s property tax revenues. However, to date, the City has not experienced any significant declines in property tax revenues resulting from the County’s potential waiver of late payment penalties. See “RISK FACTORS – Public Health Emergencies” for a discussion of Executive Order N-61-20.

ERAF Shift Legislation. Certain property taxes have been shifted from local government agencies to schools by the State Legislature for deposit in the Education Revenue Augmentation Fund (“ERAF”), a shift that has resulted in diversion of City property taxes since Fiscal Year 1992-

93. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Proposition 1A; Proposition 22.” There can be no assurance that the State will not undertake future ERAF shifts.

Assessed Valuation. All property is assessed using full cash value as defined by Article XIIIA of the State Constitution. State law provides exemptions from ad valorem property taxation for certain classes of property such as churches, colleges, non-profit hospitals, and charitable institutions. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.” Future assessed valuation growth allowed under Article XIIIA (new construction, certain changes of ownership, 2% inflation) will be allocated on the basis of “situs” among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and schools will share the growth of “base” revenues from the tax rate area. Each year’s growth allocation becomes part of each agency’s allocation in the following year.

Assessed Valuation History. The following table shows the City’s assessed valuation for Fiscal Years 2012-13 through 2021-22.

Table 7

CITY OF BARSTOW
Assessed Value of Property
Fiscal Years 2012-13 through 2021-22
Fiscal Year Local Secured Utility Unsecured Total % Change 2012-13 $1,092,408,332 $2,165,193 $104,914,213 $1,199,487,738 --% 2013-14 1,039,983,380 677,094 102,817,129 1,143,477,603 (4.7) 2014-15 1,051,514,240 562,232 103,609,217 1,155,685,689 1.1 2015-16 1,075,574,231 1,091,097 100,176,764 1,176,842,092 1.8 2016-17 1,099,863,617 1,090,047 92,848,517 1,193,802,181 1.4 2017-18 1,199,023,057 1,174,083 87,038,753 1,287,235,893 7.8 2018-19 1,277,320,622 1,100,258 97,633,037 1,376,053,917 6.9 2019-20 1,364,148,974 1,041,131 96,231,522 1,461,421,627 6.2 2020-21 1,406,623,300 986,567 99,619,193 1,507,229,060 3.1 2021-22 1,519,793,070 891,005 97,859,589 1,618,543,664 7.4 Source: California Municipal Statistics, Inc.

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29 Proposition 13 and Proposition 8 Property Value Adjustments. Proposition 13, passed in 1978, established the base year value concept for property tax assessments. Under Proposition 13, the 1975-76 fiscal year serves as the original base year used in determining the assessment for real property. Thereafter, annual increases to the base year value are limited to the inflation rate, as measured by the California Consumer Price Index, or 2%, whichever is less.

A new base year value, however, is established whenever a property, or portion thereof, has had a change in ownership or has been newly constructed.

Proposition 8, enacted in 1978, allows for a temporary reduction in assessed value when a property suffers a “decline-in-value.” As of the January 1st (lien date) each year, the Assessor must enroll either a property’s Proposition 13 value (adjusted annually for inflation by no more than 2%) or its current market value, whichever is less. When the current market value replaces the higher Proposition 13 value, the lower value is commonly referred to as a “Proposition 8 Value.” “Proposition 8 values” are temporary and, once enrolled, must be reviewed annually by the assessor until the Proposition 13 adjusted base year value is enrolled.

County Teeter Plan. The County has implemented the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”), which applies to property taxes levied for the City. Under the Teeter Plan, the County guarantees that the City will receive 100% of the property taxes levied for it. Any delinquencies are borne by the County, which in return collects and retains all penalties and interest which accrue on the delinquent taxes.

Consequently, the City’s tax receipts do not reflect any delinquencies. If, however, the County Board of Supervisors were to determine to discontinue the Teeter Plan, substantial delinquencies in the payment of property taxes in the City could have an adverse effect on the City’s ability to make timely payments on the Bonds.

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30 Major Property Taxpayers. The top 20 property taxpayers, based on assessed values of taxable property in the City, as shown on the 2021-22 tax roll, are set forth in the following table.

See “RISK FACTORS – Concentration of Property Ownership.” Table 8

CITY OF BARSTOW
Top 20 Taxpayers Based on Assessed Value
Fiscal Year 2021-22
Property Owner
Primary
Land Use
Assessed
Valuation
% of
Total(1)

1. FRO2MO Barstow LLC Outlet Stores $116,637,362 5.25%

2. Golden State Water Company Water Company 68,374,850 3.08

3. Hospital of Barstow Inc. Hospital 44,116,553 1.99

4. Walmart Inc. Commercial Store 28,376,666 1.28

5. TVL Properties LLC Supermarket 13,592,402 0.61

6. Hospitality Express II LLC Hotel 12,134,910 0.55

7. Desert Heights LP Apartments 12,000,000 0.54

8. Lee Family Trust Hotel 11,946,835 0.54

9. Fred & Robin Rosenberg LP Commercial
Properties
11,924,523 0.54

10. Ayres Hotel-Barstow LP Hotel 11,336,239 0.51

11. Montara 158 LP Apartments 10,305,671 0.46

12. Home Depot USA Inc. Commercial Store 10,186,773 0.46

13. Pilot Travel Centers LLC Travel Center 9,913,337 0.45

14. TT Group Inc. Shopping Center 9,819,044 0.44

15. Elite Experience Inc. Hotel 9,804,055 0.44

16. Roberts Group II LLC Hotel 9,434,780 0.42

17. HPT TA Properties Trust Travel Center 8,040,000 0.36

18. Loves Country Stores of
California
Travel Center 7,755,829 0.35

19. Bedford Hospitality Group LLC Hotel 7,072,520 0.32

20. Villa Vista Apartments 6,737,769 0.30
$419,510,118 18.88%
(1) 2021-22 Local Secured Assessed Valuation: $1,519,793,070 Source: California Municipal Statistics, Inc.

Redevelopment Dissolution Act. The State’s Community Redevelopment Law (codified in Part 1 of Division 24 of the California Health and Safety Code) authorized the redevelopment agency of any city or county to receive an allocation of tax revenues resulting from increases in assessed values of properties within designated redevelopment project areas (the “incremental value”) occurring after the year the project area is formed. In effect, local taxing agencies, such as the City, realize tax revenues only in the assessed value of such property at the time the redevelopment project is created for the duration of such redevelopment project. Although Assembly Bill No. 26 (“AB X1 26”), enacted on June 29, 2011 as Chapter 5 of Statutes of 2011, statutorily dissolved redevelopment agencies as of February 1, 2012, the enforceable obligations of dissolved redevelopment agencies, continue to be paid from property taxes derived from such incremental value until the enforceable obligations are paid in full in accordance with Parts 1.8 (commencing with Section 34161) and 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code of the State, as amended on June 27, 2012 by Assembly Bill No.

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31 1484 (“AB 1484”), enacted as Chapter 26, Statutes of 2012, and as such statutory provisions have and may further be amended from time to time (as amended, the “Dissolution Act”).

Under the Dissolution Act, taxing entities, such as the City, are to receive distributions (in proportion to such taxing entity’s share of property tax revenues in the tax rate area for the applicable fiscal year) of residual amounts of property taxes attributable to incremental value on each June 1 and January 2, commencing June 1, 2012, after payment of (i) tax sharing obligations established previously pursuant to the Community Redevelopment Law, (ii) enforceable obligations of the successor agency to the former redevelopment agency, and (iii) an administrative cost allowance to such successor agency. As enforceable obligations of the former redevelopment agency and its successor agency are paid and retired, residual amounts of property tax revenues attributable to redevelopment project area incremental value are expected to increase over time.

Transient Occupancy Tax
The City assesses a transient occupancy tax as a percentage of the rental price for transient lodging charged when the period of occupancy is 30 days or less. The current rate of the transient occupancy tax is 12.5%. The City’s Finance Director serves as the tax administrator, and proprietors of properties subject to the City’s transient occupancy tax remit the tax directly to the tax administrator, together with completed reporting forms, on or before the last day of the month following the close of each calendar quarter. A delinquent penalty of 10% attaches to delinquent transient occupancy taxes on the first day of each month after the tax is due. Interest accrues on delinquent transient occupancy taxes at the rate of 1.5% per month or fraction thereof on the amount of the unpaid tax, exclusive of penalties, until paid.

In Fiscal Year 2020-21, the City received transient occupancy tax revenues totaling approximately $3.4 million, representing approximately 12% percent of the City’s General Fund revenues for Fiscal Year 2020-21. Compared to Fiscal Year 2019-20, the City’s transient occupancy tax revenues for Fiscal Year 2020-21 increased approximately 581,000, or 20%. As of the date hereof, there were 42 hotels in the City. In addition, a 181 room Marriott hotel is currently under construction. The Marriott hotel is expected to open in August, 2022.

Based on the 2021-22 Adopted Budget (after mid-year adjustments as of March 7, 2022), the City’s transient occupancy tax revenues are projected at approximately $3.6 million, representing approximately 13% of the City’s total budgeted General Fund revenues for Fiscal Year 2021-22 and a decrease of approximately 10% when compared to Fiscal Year 2020-21.

However, this revenue estimate was prepared prior to the recent easing of travel restrictions and re-opening of entertainment venues. As a result, the City anticipates a steady rebound in revenues and will update projections during the mid-year budget review.

Franchise Taxes
The City has franchise agreements with a number of companies delivering services to the community. Franchise Fees include revenues from electricity, gas and water utility services, and commercial solid waste.

As shown in Table 4, franchise tax revenues represented the fourth largest single source of tax revenues for the City’s General Fund in each of Fiscal Years 2016-17 through 2020-21, comprising approximately 4.1% of the City’s total General Fund revenues for Fiscal Year 2020-

21. Based on the 2021-22 Adopted Budget (after mid-year adjustments as of March 7, 2022), the

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32 City’s franchise tax revenues are projected at approximately $1.1 million, representing approximately 4% of the City’s total budgeted General Fund revenues for Fiscal Year 2021-22 (after mid-year adjustments as of March 7, 2022).

Charges for Services
The City provides various services which generate revenue for the General Fund.

Services provided by the City include building construction and planning fees, engineering encroachment inspections, police fees such as fingerprinting, police reports, and towing, as well ambulance services and the administration of local assessment districts. In Fiscal Year 2020-21, charges for services accounted for approximately 1% of General Fund revenues. Based on the 2021-22 Adopted Budget (after mid-year adjustments as of March 7, 2022), the City’s charges for services are projected at $390,000, representing approximately 1% of the City’s total budgeted General Fund revenues for Fiscal Year 2021-22 (after mid-year adjustments as of March 7, 2022).

Long-Term General Fund Obligations
The City makes scheduled periodic payments pursuant to certain other outstanding long term agreements. Below are descriptions of the City’s outstanding long-term agreements, in connection with which General Fund appropriations are made annually. This excludes obligations payable by the City or its related entities from special revenues. For additional information, see the notes to the City’s 2020-21 audited financial statements included in Appendix B.

Vehicle Replacement Lease. The City entered into a multi-year capital lease program for vehicle replacement. The City makes an annual payment based on the leased vehicles in the fleet. In fiscal year 2020-21, the City leased one new vehicle for governmental activities at a cost of $343,408 and made annual lease payment of $284,602. The City made an annual lease payment of $23,945.

Refurbish Fire Engine. In fiscal year 2020-2021, the City entered into a lease agreement to finance the cost to refurbish a fire engine, and purchase a new fire apparatus, and hydraulic lift to service the fire apparatus. The City is required to make semiannual lease payments of $83,601, including principal and interest at a rate of 2.45% until the year 2030. As of December 31, 2021, the outstanding principal component of the lease payments payable by the City under such lease totaled $1,383,426.

SBCERA Lease Agreement. In November 2021, the City entered into a lease agreement (the “SBCERA Lease Agreement”) between the City and the Barstow Fire Protection District (the “District”) for the purpose of assisting the District to refinance its payment obligations to the San Bernardino County Employees’ Retirement Association (the “SBCERA”) relating retirement benefits provided by SBCERA to District employees. Under the SBCERA Lease Agreement, the City is required to make semiannual lease payments, which payments were assigned by the District to Capital One Public Funding, LLC in consideration of the receipt of funds for such purpose. As of December 31, 2021, the outstanding principal component of the lease payments payable by the City under the SBCERA Lease Agreement totaled $8,245,878.

Employee Leave Benefits. Employee leave benefits are payable to employees upon termination, in accordance with the City’s policies as discussed in the notes to the financial statements set forth in Appendix B. The employee leave benefits liability as of June 30, 2021, in the amount of $1,856,949, is expected to be paid primarily by General Fund transfers to the

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33 accrued leave internal service fund in future years. There is no fixed schedule for the employee leave benefits liability.

For additional information regarding the City’s long-term General Fund obligations as of June 30, 2021, see the note 6 to the City’s Fiscal Year 2020-21 audited financial statements included in Appendix B.

Overlapping Debt Statement
Set forth below is a direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc. and dated February 1, 2022. This Debt Report is included for general information purposes only. The City has not reviewed the Debt Report for completeness or accuracy.

Table 9

CITY OF BARSTOW
Direct and Overlapping Debt
2021-22 Assessed Valuation: $1,618,543,664
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 2/1/22 Barstow Unified School District 66.871% $22,637,410
Mojave Water Agency 3.836 64,637
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $22,702,047
DIRECT AND OVERLAPPING GENERAL FUND DEBT:

San Bernardino County General Fund Obligations 0.608% $1,143,253 San Bernardino County Pension Obligation Bonds 0.608 728,597 San Bernardino County Flood Control District General Fund Obligations 0.608 272,262 Barstow Unified School District Certificate of Participation 66.871 9,809,976 City of Barstow SBCERA Lease Agreement 100.000 8,245,878(1) TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $20,199,966 OVERLAPPING TAX INCREMENT DEBT (Successor Agency): 100.000% $815,000 COMBINED TOTAL DEBT $43,717,013(2)
Ratios to 2021-22 Assessed Valuation:

Total Direct and Overlapping Tax and Assessment Debt....... 1.40% Combined Direct Debt ($8,245,878) .................................... 0.51% Combined Total Debt ............................................................. 2.70% Ratios to Redevelopment Successor Agency Incremental Valuation ($700,958,962):

Total Overlapping Tax Increment Debt .................................. 0.12% (1) Excludes the Bonds. See “– Long-Term General Fund Obligations” above. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Source: California Municipal Statistics, Inc.

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34 Employee Retirement System
This section contains certain information relating to CalPERS. The information is primarily derived from information produced by CalPERS, its independent accountants and actuaries. The City has not independently verified the information provided by CalPERS and makes no representations and expresses no opinion as to the accuracy of the information provided by CalPERS.

The comprehensive annual financial reports of CalPERS are available on its Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information concerning benefits and other matters. Such information is not incorporated by reference in this Official Statement. Neither the City nor the Underwriter can guarantee the accuracy of such information. Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or may be changed in the future. Actuarial assessments will change with the future experience of the pension plans.

As previously described, the City will use the net proceeds of the Bonds to prepay a portion of the City’s UAL with respect to its pension plans. See “REFINANCING PLAN.” The following information does not reflect the refunding of such obligations. In addition, it is possible that CalPERS will determine at a future date that an additional unfunded liability exists that is attributable to the City if actual plans experience differs from the current actuarial estimates. See “– Funded Status” below for additional information regarding the refunding of the UAL with proceeds of the Bonds.

Description of Plans. All qualified permanent and probationary employees are eligible to participate in in the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (the “CalPERS Plan”) administered by CalPERS. The CalPERS Plan consists of individual rate plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool (all other). Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous risk pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools. The City sponsors four rate plans (collectively, the “Plans”) consisting of the following: (i) the Miscellaneous Plan (“Classic Miscellaneous”); (ii) the PEPRA Miscellaneous Plan (“PEPRA Miscellaneous”); (iii) the Safety Plan (“Classic Safety”); and (iv) PEPRA Safety Police Plan (“PEPRA Safety”). Benefit provisions under the Plans are established by State statute and City resolution.

Benefits Provided. CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service.

The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the California Public Employees’ Retirement Law. The provisions and benefits of the Plans that were in effect at June 30, 2021, are summarized as follows:

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35 Miscellaneous Plans
Classic
Miscellaneous
PEPRA
Miscellaneous
Hire Date
Prior to
January 1, 2013
On or after
January 1, 2013
Benefit Vesting Schedule 5 Years Service 5 Years Service Benefit Payments Monthly For Life Monthly For Life
Retirement Age 55 62
Monthly Benefits, as % of Annual Salary 2.7% 2.00%
Required Employee Contribution Rates 8.000% 6.250%
Required Employer Contributions Rates 13.182% 6.985%
Required Unfunded Liability Payment $827,964 $13,931
Source: City of Barstow audited financial statements for the Fiscal Year Ended June 30, 2021.

Safety Plans
Classic
Safety
PEPRA
Safety
Hire Date
Prior to
January 1, 2013
On or after
January 1, 2013
Benefit Vesting Schedule 5 Years Service 5 Years Service Benefit Payments Monthly For Life Monthly For Life
Retirement Age 50 57
Monthly Benefits, as % of Eligible Compensation 3% 2.70% Required Employee Contribution Rates 9.000% 11.500%
Required Employer Contributions Rates 21.927% 13.034%
Required payment for unfunded liability $813,069 $1,674 Source: City of Barstow audited financial statements for the Fiscal Year Ended June 30, 2021.

Employees Covered. At the June 30, 2020 measurement date, the following employees were covered by the benefit terms for each Plan:

Classic
Miscellaneous
PEPRA
Miscellaneous
Classic
Safety
PEPRA
Safety
Inactive employees or beneficiaries
currently receiving benefits 210 0 70 0
Inactive employees entitled to but
not yet receiving benefits 67 16 20 3
Active employees 53 46 21 24
Total 230 62 111 27
Source: City of Barstow.

California Public Employees’ Pension Reform Act of 2013. Employees hired prior to January 1, 2013 and have remained under continuous employment with a CalPERS agency are considered “Classic” employees. California Public Employees’ Pension Reform Act of 2013 (“PEPRA”), which was signed by the State Governor on September 12, 2012, established a new pension benefit tier for employees who were hired on and after January 1, 2013, who were not previously CalPERS members or have left employment with a CalPERS agency for more than 6 months.

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36 PEPRA adjusted the benefit formulas, required employee contribution, calculation of benefits and maximum pay, as well as other benefits. PEPRA employees receive the following benefit formulas: (i) 2.0% at age 62 formula for Miscellaneous employees; and (ii) 2.7% at age 57 for Safety employees. Employees are required to pay at least 50% of the total (annual) normal cost rate, and are required to make the full amount of required employee contributions themselves under PEPRA. Retirement benefits for such employees are calculated on the highest average annual compensation over a consecutive 36-month period. Accordingly, retirement benefits for PEPRA miscellaneous employees are calculated as 2% of the average final 36 months compensation and retirement benefits for PEPRA safety employees are calculated as 2.7% of the average final 36 months of compensation. Retirement benefits for Classic miscellaneous employees are calculated as 2% of the average final 12 months of compensation and retirement benefits for Classic safety employees are calculated as 3% of the average final 12 months compensation. Retroactive benefits increases are also prohibited, as are contribution holidays, and purchases of additional non-qualified service credit.

PEPRA also capped pensionable income as noted below. Maximum amounts are set annually, subject to adjustment in accord with the Consumer Price Index.

CalPERS Pension Compensation Limits for
Calendar Year 2022 (Classic and PEPRA members)
Classic PEPRA
Maximum Pensionable Income $305,000 $161,969(1)
(1) The Maximum Pensionable income for PEPRA members employed at agencies that participate in Social Security is $134,974.

Source: CalPERS Payroll Circular Letter dated January 3, 2022.

Additional employee contributions, limits on pensionable compensation and higher retirement ages for new members as a result of the passage of PEPRA are expected to reduce the City’s unfunded pension lability and potentially reduce City contribution levels in the long term.

Required Contributions. Section 20814(c) of the Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through the CalPERS annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of the employees. The City’s contributions to the Plans for the measurement period ended June 30, 2020, recognized as a reduction to the net pension liability, were $3,124,739.

Beginning in Fiscal Year 2017-18, CalPERS collects employer contributions for each plan as a percentage of payroll for the normal cost portion and as a dollar amount for contributions toward the UAL. The dollar amounts are billed on an annual basis. The actuarially determined normal cost rates and UAL contribution amounts for each Plan for the Fiscal Years ended June 30, 2020, through June 30, 2022, are as follows:

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37 Fiscal Year 2019-20 Fiscal Year 2020-21 Fiscal Year 2021-22 Employer
Normal
Cost Rate
Employer
Payment
of UAL
Employer
Normal
Cost Rate
Employer
Payment
of UAL
Employer
Normal
Cost Rate
Employer
Payment
of UAL
Classic Miscellaneous 13.182% $827,964 14.194% $993,616 14.02% $1,236,601 PEPRA Miscellaneous 6.985 13,931 7.732 15,137 7.59 17,010 Safety Classic 21.927 813,069 23.674 933,897 23.71 1,102,174 PEPRA Safety 13.034 1,674 13.044 3,434 13.13 5,847
Source: CalPERS Actuarial Reports dated July 2018, July 2019, and July 2020.

The City’s estimated total contribution amounts (including the required normal cost and UAL contributions) and as a percentage of estimated covered payroll for the Plans in Fiscal Years 2019-20, 2020-21, and 2021-22 are as follows:

Fiscal Year 2019-20 Fiscal Year 2020-21 Fiscal Year 2021-22 Total
Employer
Contribution
% of
Covered
Payroll
Total
Employer
Contribution
% of
Covered
Payroll
Total
Employer
Contribution
% of
Covered
Payroll
Classic Miscellaneous $1,624,887 26.877% $1,791,711 31.865% $1,923,627 39.26% PEPRA Miscellaneous 117,387 7.926 146,655 8.622 162,232 8.48 Safety Classic 1,529,546 46.810 1,604,205 56.657 1,720,289 65.99 PEPRA Safety 98,003 13.261 130,456 13.397 179,166 13.57 Source: CalPERS Actuarial Reports dated, July 2018, July 2019, and July 2020.

Projected Employer Contributions. The following tables show the City’s actuariallydetermined required employer contribution for Fiscal Year 2022-23 and projected employer contributions (before cost sharing) for Fiscal Years 2023-24 through 2027-28 for each Plan by normal cost (expressed as a percentage of total active payroll) and amortization of the unfunded accrued liability (expressed as a dollar amount). The projections assume a 7.00% annual rate of return for Fiscal Year 2020-21 but do not include any reductions in the normal cost that will occur over time as new employees are hired into PEPRA or other lower cost benefit tiers. See “– Potential Impacts on Future Required Contributions” below for discussion regarding recent change in discount rate to 6.8%.

Classic Miscellaneous
Required
Contribution
Projected Future Employer Contributions
(Assumes 7.00% Return for Fiscal Year 2020-21)
Fiscal Year 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 Normal Cost % 14.03% 14.0% 14.0% 14.0% 14.0% 14.0%
UAL Payment $1,470,741 $1,600,000 $1,740,000 $1,827,000 $1,907,000 $1,952,000 PEPRA Miscellaneous
Required
Contribution
Projected Future Employer Contributions
(Assumes 7.00% Return for Fiscal Year 2020-21)
Fiscal Year 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 Normal Cost % 7.47% 7.5% 7.5% 7.5% 7.5% 7.5%
UAL Payment $19,715 $22,000 $8,600 $9,600 $10,000 $11,000

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38 Classic Safety
Required
Contribution
Projected Future Employer Contributions
(Assumes 7.00% Return for Fiscal Year 2020-21)
Fiscal Year 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 Normal Cost % 23.75% 23.8% 23.8% 23.8% 23.8% 23.8%
UAL Payment $1,262,233 $1,361,000 $1,460,000 $1,523,000 $1,583,000 $1,622,000 PEPRA Safety
Required
Contribution
Projected Future Employer Contributions
(Assumes 7.00% Return for Fiscal Year 2020-21)
Fiscal Year 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 Normal Cost % 12.78% 12.8% 12.8% 12.8% 12.8% 12.8%
UAL Payment $8,650 $11,000 $13,000 $14,000 $15,000 $16,000 Source: CalPERS Actuarial Reports dated July 2021.

Funded Status. The following table sets forth the schedule of funding for the Plans for the valuation dates of June 30, 2018, 2019, and 2020.

Valuation Date
Ended June 30
Accrued
Liability
Market Value
of Assets
Unfunded
Accrued
Liability
Funded
Ratio
Annual
Covered
Payroll
Miscellaneous Plan
2018 $75,056,011 $60,885,969 $14,170,042 81.1% $5,183,274 2019 78,029,393 62,904,821 15,124,572 80.6 4,517,308
2020 79,690,563 62,594,448 17,096,115 78.5 4,083,958
PEPRA Miscellaneous
2018 $708,232 $638,410 $69,822 90.1% $1,568,001
2019 989,856 886,391 103,465 89.5 1,763,788
2020 1,365,627 1,223,630 141,997 89.6 2,320,876
Safety (Classic) Plan
2018 $49,005,166 $35,082,543 $13,922,623 71.6% $2,610,102 2019 51,066,063 36,372,014 14,694,049 71.2 2,403,213
2020 53,136,278 37,180,461 15,955,817 70.0 2,568,061
PEPRA Safety Police Plan
2018 $678,942 $626,344 $52,598 92.3% $897,679
2019 969,104 882,825 86,279 91.1 1,216,850
2020 1,369,645 1,233,083 136,562 90.0 1,616,571
(1) Based on the market value of assets.

Source: CalPERS Actuarial Reports Dated July 2021.

There is a two-year lag between the valuation date and the start of the contribution Fiscal Year. The UAL was determined in the June 30, 2019 actuarial valuation, but the corresponding UAL payments commence two years after the valuation date in Fiscal Year 2021-22. This twoyear lag is necessary due to the amount of time needed to extract and test the membership and financial data, and the need to provide public agencies with their required employer contribution well in advance of the start of the Fiscal Year.

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39 The City will apply the net proceeds of the Bonds in the amount of $_________ to refund the respective UAL of the Plans as shown in the following table. [Hilltop/FRA to provide] Refunded UAL
Classic Miscellaneous $
PEPRA Miscellaneous
Safety Classic
PEPRA Safety
Total $
Source: City of Barstow.

It is possible that CalPERS will determine at a future date that an additional UAL exists with respect to plans if actual plan experience differs from the current actuarial estimates.

Net Pension Liability. As of June 30, 2021, the City reported a net pension liability for its proportionate share of the net pension liability of the CalPERS Plan of $29,751,671. The City’s net pension liability for the CalPERS Plan is measured as the proportionate share of the total net pension liability of the CalPERS Plans. The net pension liability of the CalPERS Plan is measured as of June 30, 2020, and the total pension liability for the CalPERS Plan used to calculate net pension liability was determined by actuarial valuations as of June 30, 2019 rolled forward to June 30, 2019 using standard update procedures. The City’s proportionate share of the net pension liability was based on the City’s plan liability and asset-related information where available, and proportional allocations of individual plan amounts as of the valuation date where not available.

Sensitivity to Changes in Discount Rate. The discount rate used to measure the total pension liability at June 30, 2020 with respect to the CalPERS Plan was 7.15%. The following tables present the City’s proportionate share of the net pension liability for the CalPERS Plan, calculated using the discount rate for the CalPERS Plan, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 100 basis points higher or 100 basis points lower than the current rate:
1% Decrease (6.15%) Discount Rate (7.15%) 1% Increase (8.15%) Net Pension Liability $47,786,201 $29,751,671 $14,891,260 Source: City of Barstow Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021.

Potential Impacts on Future Required Contributions. The CalPERS Board of Administration has adjusted and may in the future further adjust certain assumptions used in the CalPERS actuarial valuations, which adjustments may increase the City’s required contributions to CalPERS in future years. Accordingly, the City cannot provide any assurances that the City’s required contributions to CalPERS in future years will not significantly increase (or otherwise vary) from any past or current projected levels of contributions.

Change in Assumptions/Discount Rate. On December 21, 2016, the CalPERS Board of Administration voted to lower its discount rate from the rate of 7.50% to 7.00% over a three-year period. The change was reflected in the June 30, 2016 actuarial report, which lowered the discount rate from 7.50% to 7.375%; in the June 30, 2017 actuarial report, which lowered the discount rate from 7.375% to 7.25%; and in the June 30, 2018 actuarial report, which lowered the discount rate from 7.25% to 7.00 On November 15, 2021, the CalPERS Board of Administration

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40 voted to lower its discount rate from 7.00% to 6.80% for the June 30, 2021 actuarial report. On November 15, 2021, the CalPERS Board of Administration voted to lower its discount rate from

7.00% to 6.80% for the June 30, 2021 actuarial report.

Investment Performance. CalPERS earnings reports for Fiscal Years 2010 through 2020 report investment gains of approximately 13.3%, 21.7%, 0.1%, 13.2%, 18.4%, 2.4%, 0.6%,

11.2%, 8.6%, 6.7% and 4.7%, respectively. The CalPERS Fiscal Year 2019-20 investment gain of 4.7% is not included as an amortization base in the most recent CalPERS valuation report and is not reflected in the numbers included herein. Future earnings performance may increase or decrease future contribution rates for plan participants, including the District. CalPERS has reported a 21.3% investment return for Fiscal Year 2020-21.

See “APPENDIX B – COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR FISCAL YEAR ENDED JUNE 30, 2021 – Note 10” for additional information regarding the Plans, including a description of the actuarial methods and assumptions used to measure the City’s net pension liability as of the June 30, 2020 measurement date.

Other Post-Employment Benefits(OPEB)
Plan Description. The City provides retiree medical benefits under the CalPERS health plan which provides medical insurance benefits to eligible retirees and their spouses in accordance with various labor agreements. The CalPERS health plan is an agent multiple employer defined benefit plan. As of June 30, 2021, there were 114 inactive employees or beneficiaries currently receiving benefits, 32 inactive employees entitled to but noy yet receiving benefits, and 135 active employees.

Contributions. The contribution requirements of plan members and the City are established and may be amended by the City Council. The City must agree to make a defined monthly payment towards the cost of each retiree’s coverage. The required contribution is based on projected prefunding financing requirements. For the measure period 2019-20, the City contributed $851,272 which were in the form of benefit payments during the period. The City did not make additional contributions to the California Employer’s Retiree Benefit Trust Fund (the “CERBT”).

CERBT is a tax qualified irrevocable trust, organized under Section 115 of the Internal Revenue Code, established to prefund OPEB. The CERBT issues a publicly available financial report that included financial statements and required supplementary information for the City, not individualizing, but in aggregate with the other CERBT participants. That report may be obtained by contacting CalPERS.

Net OPEB Liability. As of the June 30, 2020 measurement date, the City’s total OPEB liability and the net OPEB liability was approximately $21.6 million and $20.2 million, respectively.

The following presents the net OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, as of the June 30, 2020 measurement date:

Discount Rate – 1%

1.66%
Current Discount Rate

2.66%
Discount Rate + 1%

3.66%
Net OPEB Liability $23,286,197 $20,236,016 $17,735,950
Source: City of Barstow Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021.

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41 Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual requires contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future.

OPEB Funded Status. The status of the health plan as of the June 30, 2019 and June 30, 2020 measurement dates is as follows:

June 30, 2019 June 30, 2020
Total OPEB Liability – Beginning $18,448,986 $20,861,858 Total OPEB Liability – Ending (a) $20,861,858 $21,574,407 Plan Fiduciary Net Position – Beginning 1,218,373 1,293,319 Plan Fiduciary Net Position – Ending (b) 1,293,319 1,338,391 Net OPEB Liability (a) – (b) 19,568,539 20,236,016
Plan Fiduciary Net Position as a % of the total OPEB liability 6% 6% Covered employee payroll $12,153,938 $13,389,701
Net OPEB Liability as a percentage of covered‐employee payroll 161.01% 151.13% Source: City of Barstow Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021.

See “APPENDIX B – COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR FISCAL YEAR ENDED JUNE 30, 2021 – Note 11” for additional information regarding the City’s OPEB liabilities, including a description of the actuarial methods and assumptions used to measure the City’s net OPEB liability as of the June 30, 2020 measurement date.

Employee Relations
The City had 171 authorized positions at the beginning of Fiscal Year 2020-21. The City’s employees are represented by the following labor groups. In the previous five years, there have not been any work stoppages by City employees. City management has initiated collective bargaining discussions with each of its labor groups. It is anticipated that the City will conclude discussions with each labor group and enter into new multi-year contracts prior to June 30, 2022.

Table 10

CITY OF BARSTOW
City Employee Labor Groups
Labor Group
Number of
Budgeted
Employees
Contract
Expiration
Date
Teamsters Local 1932 - Unit #1 34 June 30, 2022
Teamsters Local 1932 - Unit #2 37 June 30, 2022
The Barstow Police Officers' Association 31 June 30, 2022 The Barstow Fire Protection District and Professional
Firefighters Association (BPFA) 25 June 30, 2022
The Barstow Management Employees’ Association 21 June 30, 2022 The Barstow Police Department Management Association 7 June 30, 2022 Source: City of Barstow.

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42 Risk Management
The City is a member of the Public Entity Risk Management Authority (“PERMA”), a joint powers insurance authority formed under Section 990 of the California Government Code for the purpose of jointly funding programs for insurance coverage for its members. PERMA is comprised of 31 participating member agencies: 21 cities, four transit agencies, and six special districts.

PERMA is governed by a Board of Directors which consists of one director from each member agency. The City participates in the Liability, Workers’ Compensation, Employment Practices Liability, Property Insurance, Auto Physical Damage, Cyber Liability, and Crime Coverage insurance programs of PERMA.

The Liability program provides coverage up to $50 million per occurrence for personal injury, bodily injury, property damage and public officials' errors and omissions. The City selfinsures up to $125,000 per occurrence and participates in risk sharing pools for losses up to $1 million followed by PERMA's membership in the Public Risk Innovation, Solutions, and Management (“PRISM”) for $49 million excess liability coverage. PERMA administers the City’s liability claims.

The Workers' Compensation program provides statutory limits per accident for workers' compensation and $5 million each accident for employers' liability. The City self-insures up to $250,000 per accident or employee and participates in a risk sharing pool for losses up to $500,000 followed by PERMA's membership in the Local Agency Workers' Compensation Excess Joint Powers Authority for excess coverage. A third-party administrator administers the City’s workers’ compensation claims.

The Employment Practices Liability program provides up to $1 million coverage for employment related lawsuits, such as wrongful termination and discrimination. The City selfinsures up to $25,000 per occurrence and participates in the Employment Risk Management Authority for losses up to $1 million. Coverage above $1 million and up to $50 million is available through PERMA’s membership in PRISM for excess liability coverage.

The Property Insurance program is group purchased under a master property insurance policy with accumulated values from all participants effecting lower rates and broader coverage for members. The program covers real property, business personal property, inland marine coverage for special mobile equipment and business interruption. Commercial property coverage is written on a replacement cost basis and all risk, eliminating the traditional commercial "named peril" policy.

Investment Policies and Procedures
The City’s current investment policy (the “Investment Policy”), rendered annually to the City Council by the City Treasurer pursuant to Section 53646 of the Government Code of the State was approved by the City Council on June 21, 2021. The City amends or update its Investment Policy annually, as permitted by State law.

The purpose of the Investment Policy is to provide the City Council, and those involved in servicing the investment requirements of the City, and any other interested party, an understanding of the regulations and internal guidelines that will be observed in maintaining and investing those pooled funds deemed temporarily excess. The Investment Policy is intended to provide guidelines for the prudent investment of the City's temporary idle cash, and outline the

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43 procedures for maximizing the efficiency of the City's cash management system. The ultimate goal is to enhance the economic status of the City while safeguarding its assets.

Under the Investment Policy, the criteria for selecting investments and the order of priority are:

1. Safety: The safety and risk associated with an investment refers to the potential loss of principal, interest, or a combination of these amounts. The City only operates in those investments that are considered very safe.

2. Liquidity: This refers to the ability to "cash in" at any moment in time with a minimal chance of losing some portion of principal or interest.

3. Yield: Yield is the potential dollar earnings an investment can provide, and sometimes is referred to as the rate of return.

4. Safekeeping: Securities purchased shall be held in third party safekeeping in the Trust Department of a financial institution, in the City's name and control. The account established shall be protected from seizure by creditors should the financial institution holding the City's securities file for bankruptcy protection. The basic premise underlying the City's investment philosophy is and continues to be, to insure that surplus funds are always safe and available when needed.

As of December 31, 2021, the City’s investments consisted solely of investments in the Local Agency Investment Fund with a par value, market value and cost value of approximately $7,174,311. In addition, approximately $6.7 million in cash was on deposit with Union Bank of California. See Note 2 in Appendix B for further information with respect to City investments.

State Budget
General. Although the City does not receive a significant portion of its annual revenues directly from the State, the State’s financial condition and budget policies affect communities and local public agencies throughout the State. At various times, the State has experienced significant financial and budgetary stress. The following information describes the State budget process and the current State budget.

Information about the State budget is regularly available at various State-maintained websites. Text of proposed and adopted budgets may be found at the website of the State Department of Finance (the “DOF”), http://www.dof.ca.gov, under the heading “California Budget.” An impartial analysis of the budget is posted by the Legislative Analyst’s Office (the “LAO”) at http://www.lao.ca.gov. In addition, various State Official Statements, many of which contain a summary of the current and past State budgets and the impact of those budgets on cities in the State, may be found at the website of the State Treasurer, http://www.treasurer.ca.gov. The information referred to is prepared by the respective State agency maintaining each website and not by the City, and the City takes no responsibility for the continued accuracy of these Internet addresses or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated herein by these references.

State 2021-22 Budget. On July 16, 2021, the Governor signed a series of bills representing the State budget for State fiscal year 2021-22 (the “2021-22 Budget”). The Governor’s signing followed negotiations between the Governor and the State Legislature

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44 regarding the final provisions of the 2021-22 Budget, including the expenditure of a large projected State general fund surplus. The State Legislature passed temporary budgetary legislation in June 2021 to meet the required State Constitutional budget deadline. The following is drawn from the DOF summary of the 2021-22 Budget.

The 2021-22 Budget indicates that revenues are up significantly from the forecast included in the Governor’s proposed State budget for State fiscal year 2021-22, resulting in a large budgetary surplus. This is a result of strong cash trends, two major federal relief bills since the beginning of 2021 (as discussed under the caption “THE CITY—COVID-19 Outbreak”), continued stock market appreciation and a significantly upgraded economic forecast from the prior State fiscal year. The 2021-22 Budget also reports that the State has received approximately $285 billion in federal COVID-19 stimulus funding for State programs. Although the 2021-22 Budget acknowledges that building reserves and paying down debts are critical, the 2021-22 Budget allocates approximately 85% of discretionary funds to one-time spending. The multi-year forecast reflects a budget roughly in balance, although the 2021-22 Budget assumes that risks remain to the economic forecast, including a stock market decline that could reduce State revenues.

For State fiscal year 2020-21, the 2021-22 Budget projects total general fund revenues and transfers of $188.8 billion and authorizes expenditures of $166.1 billion. The State is projected to end State fiscal year 2020-21 with total available reserves of $39.8 billion, including $25.1 billion in the traditional general fund reserve, $12.3 billion in the State’s basic reserve fund, known as the Budget Stabilization Account (the “BSA”), $1.9 billion in the Public School System Stabilization Account and $450 million in the Safety Net Reserve Fund. For State fiscal year 2021-22, the 2021-22 Budget projects total general fund revenues and transfers of $175.3 billion and authorizes expenditures of $196.4 billion. The State is projected to end State fiscal year 2021-22 with total available reserves of $25.2 billion, including $4 billion in the traditional general fund reserve, $15.8 billion in the BSA, $4.5 billion in the Public School System Stabilization Account and $900 million in the Safety Net Reserve Fund.

For additional information regarding the 2021-22 Budget, see the DOF and LAO websites.

The information presented on such websites is not incorporated herein by reference.

None of the websites or webpages that are referenced above is in any way incorporated into this Official Statement. They are cited for informational purposes only. Neither the City nor the Underwriter make any representation whatsoever as to the accuracy or completeness of any of the information on such websites.

There can be no assurance that additional legislation will not be enacted in the future to implement provisions relating to the State budget, address the COVID-19 outbreak or otherwise that may affect the City or its General Fund revenues.

CONSTITUTIONAL AND STATUTORY

LIMITATIONS ON TAXES AND APPROPRIATIONS
Article XIIIA of the State Constitution
On June 6, 1978, California voters approved Proposition 13, which added Article XIIIA to the State Constitution. Article XIIIA, as amended, limits the amount of any ad valorem tax on real property to one percent of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service (i) on indebtedness approved by the voters prior to

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45 July 1, 1978, (ii) on bonded indebtedness approved by a two-thirds vote on or after July 1, 1978, for the acquisition or improvement of real property or (iii) bonded indebtedness incurred by a school district, community college district or county office of education for the construction, reconstruction, rehabilitation or replacement of school facilities, including the furnishing and equipping of school facilities or the acquisition or lease of real property for school facilities, approved by 55 percent of the voters voting on the proposition. Article XIIIA defines full cash value to mean “the county assessor’s valuation of real property as shown on the 1975-76 tax bill under “full cash value,” or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” This full cash value may be increased at a rate not to exceed two percent per year to account for inflation.

Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster, and in other minor or technical ways.

Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The one percent property tax is automatically levied by the County and distributed according to a formula among taxing agencies.

The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1989.

Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the two percent annual adjustment are allocated among the various jurisdictions in the “taxing area” based upon their respective “situs.” Any such allocation made to a local agency continues as part of its allocation in future years.

All taxable property is shown at full market value on the tax rolls. Consequently, the tax rate is expressed as $1 per $100 of taxable value. All taxable property value included in this Official Statement is shown at 100 percent of market value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value.

Article XIIIB of the State Constitution
In addition to the limits Article XIIIA imposes on property taxes that may be collected by local governments, certain other revenues of the State and most local governments are subject to an annual “appropriations limit” imposed by Article XIIIB which effectively limits the amount of such revenues those entities are permitted to spend. Article XIIIB, approved by the voters in June 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each government entity applies to “proceeds of taxes,” which consist of tax revenues, State subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed “the cost reasonably borne by such entity in providing the regulation, product or service.” “Proceeds of taxes” excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the appropriation of funds which are not “proceeds of taxes,” such as reasonable user charges or fees, and certain other non-tax funds. Article XIIIB also does not limit appropriation of local revenues to pay debt service on Bonds existing or authorized by January 1, 1979, or subsequently

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46 authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990, levels. The appropriations limit may also be exceeded in case of emergency; however, the appropriations limit for the next three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two-thirds of the legislative body of the local government.

The State and each local government entity has its own appropriations limit. Each year, the limit is adjusted to allow for changes, if any, in the cost of living, the population of the jurisdiction, and any transfer to or from another government entity of financial responsibility for providing services. Proposition 111 requires that each agency’s actual appropriations be tested against its limit every two years.

If the aggregate “proceeds of taxes” for the preceding two-year period exceeds the aggregate limit, the excess must be returned to the agency’s taxpayers through tax rate or fee reductions over the following two years.

The City has never exceeded its appropriations limit.

Articles XIIIC and XIIID of the State Constitution
General. On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 adds Articles XIIIC and XIIID to the California Constitution and contains a number of interrelated provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges.

On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. The amendments to Article XIIIC define “taxes” that are subject to voter approval as “any levy, charge, or exaction of any kind imposed by a local government,” with certain exceptions.

Taxes. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City (“general taxes”) require a majority vote; taxes for specific purposes (“special taxes”), even if deposited in the City’s General Fund, require a two-thirds vote. The voter approval requirements of Article XIIIC reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase such taxes in the future to meet increased expenditure needs.

Property-Related Fees and Charges. Article XIIID also adds several provisions making it generally more difficult for local agencies to levy and maintain property-related fees, charges, and assessments for municipal services and programs. These provisions include, among other things, (i) a prohibition against assessments which exceed the reasonable cost of the proportional special benefit conferred on a parcel, (ii) a requirement that assessments must confer a “special

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47 benefit,” as defined in Article XIIID, over and above any general benefits conferred, (iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party, and (iv) a prohibition against fees and charges which are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners.

Reduction or Repeal of Taxes, Assessments, Fees and Charges. Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund. If such repeal or reduction occurs, the City’s ability to pay debt service on the Bonds could be adversely affected.

Burden of Proof. Article XIIIC provides that local government “bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.” Similarly, Article XIIID provides that in “any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance” with Article XIIID.

Judicial Interpretation of Proposition 218. The interpretation and application of Articles XIIIC and XIIID will ultimately be determined by the courts, and it is not possible at this time to predict with certainty the outcome of such determination.

Impact on City’s General Fund. The City does not believe that any material source of General Fund revenue is subject to challenge under Proposition 218 or Proposition 26.

The approval requirements of Articles XIIIC and XIIID reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase the taxes, fees, charges or taxes in the future that it may need to meet increased expenditure needs.

Statutory Revenue Limitations - Proposition 62
Proposition 62 was adopted by the voters at the November 4, 1986, general election and (a) requires that any new or higher taxes for general governmental purposes imposed by local governmental entities such as the City be approved by a two-thirds vote of the governmental entity’s legislative body and by a majority vote of the voters of the governmental entity voting in an election on the tax, (b) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a twothirds vote of the voters of the governmental entity voting in an election on the tax, (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was imposed, (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA, (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities, and (f) requires that any tax imposed by a local governmental entity on or after August 1, 1985, be ratified by a majority vote of the voters voting in an election on the tax within two years of the adoption of the initiative or be terminated by November 15, 1988.

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48 Following its adoption by the voters, various provisions of Proposition 62 were declared unconstitutional at the appellate court level. On September 28, 1995, however, the California Supreme Court, in Santa Clara City Local Transportation Authority v. Guardino, upheld the constitutionality of the portion of Proposition 62 requiring a two–thirds vote in order for a local government or district to impose a special tax and, by implication, upheld a parallel provision requiring a majority vote in order for a local government or district to impose any general tax. The Guardino decision did not address whether it should be applied retroactively. In response to Guardino, the California Legislature adopted Assembly Bill 1362, which provided that Guardino should apply only prospectively to any tax that was imposed or increased by an ordinance or resolution adopted after December 14, 1995. Assembly Bill 1362 was vetoed by the Governor; hence the application of the Guardino decision on a retroactive basis remains unclear.

Proposition 62, as an initiative statute, does not have the same level of authority as a constitutional initiative. It is analogous to legislation adopted by the State Legislature, except that it may be amended only by a vote of the State’s electorate. However, Proposition 218, as a constitutional amendment, is applicable to cities and supersedes many of the provisions of Proposition 62.

Proposition 1A; Proposition 22
Proposition 1A. Proposition 1A, proposed by the Legislature in connection with the State’s Fiscal Year 2004-05 Budget, approved by the voters in November 2004 and generally effective in Fiscal Year 2006-07, provided that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibited the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any Fiscal Year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county had to be approved by two-thirds of both houses of the Legislature.

Proposition 22. Proposition 22, entitled “The Local Taxpayer, Public Safety and Transportation Protection Act,” was approved by the voters of the State in November 2010.

Proposition 22 eliminates or reduces the State’s authority to (i) temporarily shift property taxes from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for State-mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues.

Proposition 19
Proposition 19, entitled “Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” was approved by the voters of the State in November 2020.

Proposition 19 amends Article XIIIA to: (i) expand special rules that give property tax savings to homeowners that are over the age of 55, severely disabled, or whose property has been impacted by wildfire or natural disaster, when they buy a different home; (ii) narrow existing special rules for inherited properties; and (iii) dedicate most of the potential new State revenue generated from Proposition 19 toward fire protection.

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49 The City cannot predict the impact that Proposition 19 might have on assessed values or property tax revenues in the City, or any other impacts on the local economy or the City’s financial condition.

Possible Future Initiatives
Articles XIIIA, XIIIB, XIIIC and XIIID and Propositions 62, 111, 218 and 1A were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time other initiative measures could be adopted, further affecting revenues of the City or the City’s ability to expend revenues. The nature and impact of these measures cannot be anticipated by the City.

RISK FACTORS
The following describes certain special considerations and risk factors affecting the payment of and security for the Bonds. The following discussion is not meant to be an exhaustive list of the risks associated with the purchase of any Bonds and does not necessarily reflect the relative importance of the various risks. Potential investors in the Bonds are advised to consider the following special factors along with all other information in this Official Statement in evaluating the Bonds. There can be no assurance that other considerations will not materialize in the future.

Limitations on Remedies Available; Bankruptcy
The enforceability of the rights and remedies of the Owners and the obligations of the City may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the Federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State of California and its governmental bodies in the interest of servicing a significant and legitimate public purpose.

In addition to the limitation on remedies contained in the Indenture, the rights and remedies provided in the Indenture may be limited by and are subject to the provisions of federal bankruptcy laws. The City is a governmental unit and therefore cannot be the subject of an involuntary case under the United States Bankruptcy Code (the “Bankruptcy Code”); however, the City is a municipality and therefore may seek voluntary protection from its creditors pursuant to Chapter 9 of the Bankruptcy Code for purposes of adjusting its debts. If the City were to become a debtor under the Bankruptcy Code, the City would be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 case. Such a bankruptcy could adversely affect the payments under the Indenture. Among the adverse effects might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the City or the commencement of any judicial or other action for the purpose of recovering or collecting a claim against the City and could prevent the Trustee from making payments from funds in its possession; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or secured debt which may have priority of payment superior to that of the Owners of the Bonds; and (iv) the possibility of the adoption of a plan (the “Bankruptcy Plan”) for the adjustment of the City's debt without the consent of the Trustee or all of the Owners of the

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50 Bonds, which Bankruptcy Plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court finds that the Bankruptcy Plan is fair and equitable and in the best interests of creditors.

Past bankruptcies in the City of Stockton, the City of San Bernardino and the City of Detroit brought scrutiny to municipal securities. Specifically, in the San Bernardino bankruptcy, the Court held that in the event of a municipal bankruptcy, payments on pension obligation bonds, such as the Bonds, were unsecured obligations and not entitled to the same priority of payments made to the related pension system. A variety of events including, but not limited to, additional rulings adverse to the interests of bond owners in the Stockton, San Bernardino and Detroit bankruptcy cases or additional municipal bankruptcies, could prevent or materially adversely affect the rights of Owners to receive payments on the Bonds in the event the City files for bankruptcy.

Accordingly, in the event of bankruptcy, it is likely that Owners may not recover their principal, as applicable, and interest.

The opinions of counsel, including Bond Counsel, delivered in connection with the issuance and delivery of the Bonds will be so qualified. Bankruptcy proceedings, or the exercising of powers by the federal or state government, if initiated, could subject the Owners to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification of their rights.

Certain Risks Associated with Sales Tax and Other Local Tax Revenues For fiscal year 2020-21, sales tax revenues were the largest source of revenue to the City. See “CITY FINANCIAL INFORMATION – Sales and Use Taxes.” Sales tax revenues are based upon the gross receipts of retail sales of tangible goods and products by retailers with taxable transactions in the City, which could be impacted by a variety of factors. For example, in times of economic recession, the gross receipts of retailers often decline, and such a decline would cause the sales tax revenues received by the City to also decline. Most recently, the City’s sales tax revenues were impacted by the COVID-19 pandemic. See “RISK FACTORS – Public Health Emergencies – Collection of Taxes” below for a discussion of Executive Order N-40-20.

In addition, changes or amendments in the laws applicable to the City’s receipt of sales tax revenues or other local taxes, whether implemented by State legislative action or voter initiative, could have an adverse effect on sales tax revenues received by the City. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Article XIIIC and Article XIIID.”
For example, many categories of transactions are exempt from the statewide sales tax, and additional categories could be added in the future. Currently, most sales of food products for human consumption are exempt; this exemption, however, does not apply to liquor or to restaurant meals. The rate of sales tax levied on taxable transactions in the City or the fee charged by the California Department of Tax and Fee Administration for administering the City’s sales tax could also be changed. See “CITY FINANCIAL INFORMATION.” Increasing Retirement Related Costs
The City is required to make contributions to CalPERS and to the OPEB Plan for City employees and retirees. Such obligations are a significant financial obligation of the City and could increase in the future. Many factors influence the amount of the City’s pension benefit liability, including, without limitation, inflationary factors, changes in statutory provisions of the

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51 Retirement Law, changes in the levels of benefits provided or in the contribution rates of the City, increases or decreases in the number of covered employees, changes in actuarial assumptions or methods, and differences between actual and anticipated investment performance of CalPERS. Any of these factors could give rise to additional liability of the City to CalPERS as a result of which the City would be obligated to make additional payments to CalPERS over the amortization schedule for full funding of the City’s obligation to CalPERS.

City Obligations
The City has other obligations payable from its General Fund and other lawfully available funds of the City, including but not limited to lease obligations and certain other liabilities. The Indenture does not prohibit the City from incurring debt or additional lease or other obligations payable from the City’s General Fund and other lawfully available funds in the future, which may reduce City moneys available to pay the Bonds.

In addition, although the Bonds are payable from all lawfully available funds of the City, the City has no obligation to levy taxes in order to raise sufficient revenues to pay the Bonds. See the caption “CITY FINANCIAL INFORMATION – Long-Term General Fund Obligations” for a description of the City’s current long-term obligations that are payable from the City’s General Fund.

To the extent that additional obligations are incurred by the City, the funds available to pay the Bonds may be decreased. In the event that the City’s revenue sources are less than its total obligations, the City could choose to fund other activities before paying the Bonds. The same result could occur if, because of State Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues. However, to the best of the City’s knowledge, the City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB of the State Constitution. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Article XIIIB of the State Constitution.” Dependence on State for Certain Revenues
A number of the City’s revenues are collected and dispersed by the State (such as sales taxes) or allocated in accordance with State law (most importantly, property taxes). Therefore, State budget decisions can have an impact on City finances. In the event of a material economic downturn in the State, including as a result of the COVID-19 outbreak, there can be no assurance that any resulting revenue shortfalls to the State will not reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of the State’s efforts to address any such related State financial difficulties. See the caption “CITY FINANCIAL INFORMATION – State Budget” and “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Proposition 1A; Proposition 22.” No Reserve Fund
The City has and will not fund a debt service reserve fund in connection with the issuance of the Bonds.

Public Health Emergencies
General. In recent years, public health authorities have warned of threats posed by outbreaks of disease and other public health threats. On February 11, 2020, the WHO announced

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52 the official name for the outbreak of COVID-19, an upper respiratory tract illness. COVID-19 has since spread across the globe. The spread of COVID-19 is having significant adverse health and financial impacts throughout the world, including the City. The WHO has declared the COVID-19 outbreak to be a pandemic, and states of emergency have been declared by the Governor of the State and the President of the United States.

The COVID-19 outbreak is ongoing, and its duration and severity and its economic effects are uncertain in many respects. Uncertain too are the additional actions, if any, that may be taken by federal and State governmental authorities to contain or mitigate the effects of the outbreak.

The ultimate impact of COVID-19 on the City’s operations and finances and the economy, real estate market and development within the City is not fully known, and it may be some time before the full adverse impact of the COVID-19 outbreak is known. Certain reports providing preliminary information regarding the impact of the COVID-19 pandemic are described in this Official Statement. Further, there could be future COVID-19 outbreaks or other public health emergencies that could have material adverse effects on the City’s operations and finances.

Collection of Taxes. On March 30, 2020, the Governor issued Executive Order N-40- 20, which delayed the deadline for the filing and payment of sales and use taxes by 90 days for all but the largest taxpayers. Under Executive Order N-40-20 and a subsequent notice form the California Department of Tax and Fee Administration, businesses with less than $5 million in taxable annual sales are authorized to defer up to $50,000 in sales tax and enter into a 12-month, zero interest payment plan. The Governor has also issued an Executive Order for waivers of late penalties on property taxes. Such efforts to relieve the financial impact of the COVID-19 pandemic on taxpayers have not resulted in significant delays in revenue collection by the City.

On May 6, 2020 in response to the COVID-19 pandemic, the Governor issued Executive Order N-61-20 to allow qualified taxpayers to request relief of penalties on property taxes for owner occupied residential real property and real property owned and operated by a taxpayer that qualifies as a small business under the Small Business Administration’s Regulations, Code of Federal Regulations Title 13, section 121.201. To be eligible for penalty relief taxpayers must fall into one of two categories: (i) owner occupied residential real property; or (ii) real property owned and operated by a taxpayer qualified as a small business. For homeowners requesting penalty relief on property taxes for a residential real property that the homeowner occupies, the homeowner may qualify for penalty relief if all of the following are true: (i) taxes on real property were current as of March 4, 2020; (ii) the homeowner was unable to pay on time and that inability was due to a COVID-19 pandemic related impact; (iii) the homeowner was able to submit payment of the original tax amount due with the request for relief; and (iv) the homeowner’s request is received by the Treasurer-Tax Collector within 30 days after the circumstances that prevented payment have concluded. If the homeowner satisfies all of the criteria, they may submit a Request for Penalty Cancellation – COVID-19 Impact Form to request penalty relief and must provide documentation to support the request.

To be eligible for penalty relief for real property owned and operated by a taxpayer as a qualified small business, the taxpayer may qualify for penalty relief if all of the following are true:
(i) taxes on the real property were current as of March 4, 2020; (ii) the business was unable to pay on time and that inability was due to a COVID-19 related impact; (iii) the taxpayer is able to submit payment of the original tax amount due with the request for relief; and (iv) the taxpayer’s request is received by the Treasurer-Tax Collector within 30 days after the circumstances that prevented payment have concluded. If the taxpayer satisfies all of the criteria, they may submit a Request for Penalty Cancellation – COVID-19 Impact Form to request penalty relief and will need to provide documentation to support their request.

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53 The negative impacts from the COVID-19 pandemic on the City’s revenues in Fiscal Year 2019-2020 and 2020-2021 are anticipated to continue into Fiscal Year 2021-2022 and potentially several Fiscal Years beyond for some revenue sources depending on the pace of recovery of the local economy to the levels which existed prior to the outbreak of the COVID-19 pandemic.

However, in total, City revenues are projected to exceed pre-pandemic levels in Fiscal Year 2022-

23. See “CITY FINANCIAL INFORMATION” herein.

Natural Calamities
General. From time to time, the City is subject to natural calamities, including, but not limited to, earthquake, flood, drought or wildfire, that may adversely affect economic activity in the City, and which could have a negative impact on City finances.

Seismic. The City, like most regions in the State, is located in an area of seismic activity and, therefore, could be subject to potentially destructive earthquakes. Numerous active and inactive fault lines pass through, or near, the area in which the City is located. The San Andreas Fault Zone is located approximately 50 miles southwest of the City. The City is located in one of the most fault-fractured regions of the State. There are 12 known surface faults within 50 miles of the center of the City. Seismic hazards encompass ground rupture, shaking, lurching, blind thrust faults that lack surface breaks, liquefaction, and ground failure. The occurrence of one or more natural disasters could occur and could result in damage to improvements and property within the City of 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.

Flood. The City contains flood plain areas, identified by the Federal Emergency Management Agency (“FEMA”), indicating that several areas of the City are subject to 100-year floods including: the Mojave River Channel, the Lenwood area, and the southeastern section of South Barstow.

Wildfire. In recent years, wildfires have caused extensive damage throughout the State, including within the County. Certain of these fires have burned thousands of acres and destroyed hundreds and in some cases thousands of homes. In some instances entire neighborhoods have been destroyed. Several fires which occurred in recent years damaged or destroyed property in areas that were not previously considered to be at risk from such events. There is a risk of property within the City being destroyed by wildfires and no assurance can be given as to the severity or frequency of wildfires within the City or its vicinity. In addition to their direct impact on health and safety and property damage in California, the smoke from wildfires has impacted the quality of life in Southern California and the City and may have short-term and future impacts on commercial activity in the City. The fires have been driven in large measure by drought conditions and low humidity. Experts expect that California will continue to be subject to wildfire conditions year over year as a result in changing weather patterns due to climate change.

Some commentators believe that climate change will lead to even more frequent and more damaging wildfires in the future. Property damage due to wildfire could result in a significant decrease in the market value of property in City and in the ability or willingness of property owners to pay property taxes.

Drought. On October 19, 2021, the Governor declared a Statewide drought state of emergency and requested that all water users voluntarily reduce water use by 15%. The

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54 declaration encouraged water agencies to draw upon supplies other than groundwater and to implement their water shortage contingency plans and authorized the State Water Resources Control Board to adopt regulations that prohibit wasteful water use (such as the use of potable water to wash paved surfaces or to irrigate landscaping during the two days following rainfall).

There can be no assurance that subsequent declarations will not impose mandatory water use restrictions should dry conditions persist in 2021 or future years.

Potential Impact of Climate Change
Climate change caused in part by human activities may have adverse effects on the City.

Climate change can also result in more variable weather patterns throughout the State, which can lead to longer and more severe droughts as well as increased risk of flooding. Projections of the impacts of global climate change on the State are complex and depend on many factors that are outside the City’s control. The various scientific studies that forecast the amount and timing of adverse impacts of climate change are based on assumptions contained in such studies, but actual events may vary materially. Also, the scientific understanding of climate change and its effects continues to evolve. Accordingly, the City is unable to forecast with certainty when adverse impacts of climate change will occur or the extent of such impacts. While the impacts of climate change may be mitigated by the City’s past and future investment in adaptation strategies, the City can give no assurance about the net effects of those strategies and whether the City will be required to take additional adaptive mitigation measures.

Hazardous Substances
The discovery of hazardous substances on parcels of property within the City may limit the beneficial use of taxable property within the City and may result in the reduction in the assessed value of such property. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances 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 property within the City be affected by a hazardous substance, could be to reduce the marketability and value of the property by the costs of remedying the condition. Reduction in the value of property in the City could reduce property tax revenues received by the City and deposited in the General Fund, which could significantly and adversely affect the ability of the City to make payments on the Bonds.

State Law Limitations on Appropriations
Article XIIIB of the California Constitution limits the amount that local governments can appropriate annually. The ability of the City to make debt service payments on the Bonds may be affected if the City should exceed its appropriations limit. The State may increase the appropriation limit of its counties by decreasing its own appropriation limit. The City does not anticipate exceeding its appropriations limit. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Article XIIIB of the State Constitution.” Limitations on Taxes and Fees
Certain taxes, assessments, fees and charges presently imposed by the City could be subject to the voter approval requirements of Article XIIIC and Article XIIID of the State Constitution. Based upon the outcome of an election by the voters, such fees, charges, assessments and taxes might no longer be permitted to be imposed, or may be reduced or eliminated and new taxes, assessments fees and charges may not be approved. The City has

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55 assessed the potential impact on its financial condition of the provisions of Article XIIIC and Article XIIID of the State Constitution respecting the imposition and increase of taxes, fees, charges and assessments and does not believe that an election by the voters to reduce or eliminate the imposition of certain existing fees, charges, assessments and taxes would substantially affect its financial condition. However, the City believes that if the initiative power was exercised so that all local taxes, assessments, fees and charges that may be subject to Article XIIIC and Article XIIID of the State Constitution are eliminated or substantially reduced, the financial condition of the City, including its General Fund, could be materially adversely affected.

Although the City does not currently anticipate that the provisions of Article XIIIC and Article XIIID of the State Constitution would adversely affect its ability to pay debt service on the Bonds and its other obligations payable from the General Fund, no assurance can be given regarding the ultimate interpretation or effect of Article XIIIC and Article XIIID of the State Constitution on the City’s finances. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.”
Assessed Value of Taxable Property
Property taxes account for a significant portion of General Fund revenues. Natural and economic forces can affect the assessed value of taxable property within the City. As previously described, the City is located in a seismically active region, and damage from an earthquake in or near the area could cause moderate to extensive damage to taxable property. In addition to seismic, topographic and climatic conditions, other natural or manmade disasters, such as flood, fire, ongoing drought, toxic dumping or acts of terrorism, could cause a reduction in the assessed value of taxable property within the City. Economic and market forces, such as a downturn in the regional economy generally, can also affect assessed values, particularly as these forces might reverberate in the residential housing and commercial property markets. In addition, the total assessed value can be reduced through the reclassification of taxable property to a class exempt from taxation, whether by ownership or use (such as exemptions for property owned by State and local agencies and property used for qualified educational, hospital, charitable or religious purposes).

Reductions in the market values of taxable property may cause property owners to appeal assessed values and may also be associated with an increase in delinquency rates for taxes.

Section 2(b) of Article XIIIA of the California Constitution and Section 51 of the Revenue and Taxation Code, which follow from “Proposition 8,” require the County assessor to annually enroll either a property’s adjusted base year value (its “Proposition 13 Value”) or its current market value, whichever is less. When the current market value replaces the higher Proposition 13 Value on the assessor's roll, that lower value is referred to as its “Proposition 8 Value.” Although the annual increase for a Proposition 13 Value is limited to no more than 2%, the same restriction does not apply to a Proposition 8 Value. The Proposition 8 Value of a property is reviewed annually as of January 1; the current market value must be enrolled as long as the Proposition 8 Value falls below the Proposition 13 Value. Thus, any subsequent increase or decrease in market value is enrolled regardless of any percentage increase or decrease. Only when a current Proposition 8 Value exceeds its Proposition 13 Value attributable to a piece of property (adjusted for inflation), does the County assessor reinstates the Proposition 13 Value.

Decreases in the aggregate value of taxable property within the City resulting from natural disaster or other calamity, reclassification by ownership or use, or as a result of the operation of Proposition 8 all may have an adverse impact on the General Fund revenues available to make debt service payments on the Bonds. In addition, failure by large property owners to pay property

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56 taxes when due may also cause a decrease in General Fund revenues available to make debt service payments on the Bonds.

See “RISK FACTORS – Natural Calamities” and “CITY FINANCIAL INFORMATION – Property Taxes.”
Concentration of Property Ownership
The risk of reduction in assessed value of taxable property as a result of factors described herein may generally increase where the assessed value within a city is concentrated among a relatively few property owners.

Within the City, the aggregate Fiscal Year 2021-22 taxable value for the 20 largest taxpayers totals approximately $419.5 million which is approximately 19% of the total assessed value within the City of approximately $1.5 billion for such Fiscal Year. See “CITY FINANCIAL INFORMATION – Property Taxes.”
Significant reduction in the assessed values of the largest taxpayers in the City could, by itself or in combination with other factors, have a material adverse effect on the City’s ability to pay debt service on the Bonds as such payments become due and payable.

Cybersecurity
The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. As a recipient and provider of personal, private or other sensitive electronic information, the City is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks. No assurance can be given that the City’s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City. The City is also reliant on other entities and service providers in connection with the administration of the Bonds, including without limitation the County tax collector for the levy and collection of property taxes, and the Trustee. 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 Bond owners.

Changes in Law
The State Legislature may in the future enact legislation that will amend or create laws resulting in a reduction of moneys securing or available to pay the Bonds. Similarly, the State electorate could adopt initiatives or the State Legislature could adopt legislation with the approval of the electorate amending the State Constitution which could have the effect of reducing moneys securing or available to pay the Bonds.

Litigation
The City may become a party to litigation that has an impact on the General Fund.

Although the City maintains certain insurance policies that provide liability coverage under certain circumstances and with respect to certain types of incidents (see “CITY FINANCIAL INFORMATION – Risk Management”), the City cannot predict what types of liabilities may arise in the future. See the caption “ABSENCE OF LITIGATION.”

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57 Limitation on Trustee’s Obligations
The Trustee has no obligation to advance its own funds to pursue any remedies. As a consequence, the Trustee’s willingness and ability to pursue any of the remedies provided in the Indenture may be dependent upon the availability of funds from an interested party. There can be no assurance that the Trustee will be willing and able to perform its duties under the Indenture.

Secondary Market for Bonds
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that any Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then-prevailing circumstances. Such prices could be substantially different from the original purchase price.

VALIDATION
In November 2021, the City, acting pursuant to the provisions of Section 860 et seq. of the California Code of Civil Procedure and Section 53511 et seq. of the California Government Code, filed a complaint in the Superior Court of the State of California for the County of San Bernardino seeking judicial validation of the Bonds. The Bonds have been determined to be valid and enforceable obligations of the City which are exempt from and not subject to the debt limitations set forth in Article XVI, Section 18 of the California Constitution, all pursuant to a judgment rendered on February 9, 2022, by the San Bernardino County Superior Court in Case No. CIVSB2127060 (the “Validation Judgment”).

The time period for the filing of appeals with respect to the judgment has expired. No appeals were filed and therefore, the judgment is final. In issuing its opinion as to the validity of the Bonds, Bond Counsel will rely upon the entry of the Validation Judgment.

TAX MATTERS
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, interest on the Bonds is exempt from State of California personal income taxes.

Bond Counsel observes that interest on the Bonds is not excluded from gross income for federal income tax purposes. Bond Counsel expresses no opinion regarding any other tax consequences caused by the ownership or disposition of, or the accrual or receipt of interest on, the Bonds.

The proposed form of opinion of Bond Counsel with respect to the Bonds to be delivered on the date of issuance of the Bonds is set forth in Appendix E.

Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Other than as expressly described above, Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the Bonds, the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds.

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58 CERTAIN LEGAL MATTERS
Certain legal matters incident to the authorization, issuance, sale and delivery by the City of the Bonds are subject to the approving opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, as Bond Counsel. A copy of the proposed form of Bond Counsel opinion is set forth in Appendix E hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the City by Colantuono, Highsmith & Whatley, PC, Pasadena, California, as City Attorney, and by Jones Hall, A Professional Law Corporation, San Francisco, California, as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, Law Offices of Rossi A. Russell, Los Angeles, California. All of the fees of Bond Counsel, Disclosure Counsel and Underwriter’s Counsel with respect to the issuance of the Bonds are contingent upon the issuance and delivery of the Bonds.

CONTINUING DISCLOSURE
The City will covenant for the benefit of owners of the Bonds to provide certain financial information and operating data relating to the City by not later than nine months after the end of each Fiscal Year of the City (currently June 30), commencing not later than March 31, 2023 with the report for the 2021-22 Fiscal Year (the “Annual Report”), and to provide notices of the occurrence of certain listed events. The Annual Report and the notices of enumerated events will be filed by the City with the Municipal Securities Rulemaking Board through the Electronic Municipal Access System (“EMMA”). The specific nature of the information to be contained in the Annual Report or the notices of enumerated events is summarized below under the caption “APPENDIX F – FORM OF CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made in order to assist the Underwriter in complying with Securities Exchange Commission Rule 15c2-12(b)(5) (the “Rule”).

The City and its related entities previously entered into certain disclosure undertakings under the Rule in connection with the issuance of long-term obligations. In the past five years, the City and its related entities have not failed to comply with their continuing disclosure undertakings. [To be confirmed; Hilltop to share results of compliance review] The City has adopted continuing disclosure policies and procedures to ensure that it will comply with all material provisions of its continuing disclosure undertakings in the future.

A failure by the City to comply with the provisions of the Continuing Disclosure Certificate is not an event of default under the Indenture (although the holders and beneficial owners of the Bonds do have remedies at law and in equity). Nevertheless, such a failure to comply must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds.

MUNICIPAL ADVISOR
The City retained Fieldman, Rolapp & Associates, Inc., Irvine, California,, as Municipal Advisor in connection with the preparation of this Official Statement and with respect to the issuance of the Bonds. The Municipal Advisor is not obligated to undertake, and has not

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59 undertaken to make, an independent verification or assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. The Municipal Advisor is an independent registered municipal advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. The Municipal Advisor’s compensation is contingent upon the delivery of the Bonds.

FINANCIAL STATEMENTS OF THE CITY
The general purpose financial statements of the City, which are included in Appendix B to this Official Statement, have been audited by the Auditor, as stated in their report appearing in Appendix B. The Auditor has not consented to the inclusion of its report as Appendix B and has not undertaken to update its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by the Auditor, with respect to any event subsequent to its report dated December 17, 2021.

ABSENCE OF LITIGATION
To the best knowledge of the City, there is no action, suit or proceeding pending or threatened either restraining or enjoining the execution or delivery of the Bonds or the Indenture, or in any way contesting or affecting the validity of the foregoing, or any proceedings of the City taken with respect to any of the foregoing.

There are a number of lawsuits and claims pending against the City. In the opinion of the City, such other lawsuits and claims presently pending will not have a material adverse effect on the ability of the City to pay the principal of and interest on the Bonds.

RATING
S&P Global Ratings (“S&P”) has assigned an underlying rating of “___” to the Bonds.

A rating is not a recommendation to buy, sell or hold securities. Future events, including the impacts of the COVID-19 pandemic on the City, could have an adverse impact on the rating of the Bonds, and there is no assurance that any credit rating that is given to the Bonds will be maintained for any period of time or that a rating may not be qualified, downgraded, lowered or withdrawn entirely by S&P if, in the judgment of S&P circumstances so warrant, nor can there be any assurance that the criteria required to achieve the rating on the Bonds will not change during the period that the Bonds remain outstanding.

Any qualification, downward revision, lowering or withdrawal of the ratings on the Bonds may have an adverse effect on the market price of the Bonds. Such rating reflects only the current view of S&P (which could change at any time), and an explanation of the significance of such ratings may be obtained from S&P. Generally, S&P bases its ratings on information and materials furnished to them (which may include information and material from the City that is not included in this Official Statement) and on investigations, studies and assumptions by S&P.

The City has covenanted in the Continuing Disclosure Certificate to file notices of any rating changes on the Bonds with the Municipal Securities Rulemaking Board’s Electronic

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60 Municipal Market Access System. See the caption “CONTINUING DISCLOSURE” and Appendix E. Notwithstanding such covenant, information relating to rating changes on the Bonds may be publicly available from S&P prior to such information being provided to the City and prior to the date by which the City is obligated to file a notice of rating change. Purchasers of the Bonds are directed to S&P and its website and official media outlets for the most current ratings with respect to the Bonds after the initial issuance of the Bonds.

UNDERWRITING
The Bonds are being purchased by the Underwriter. The Underwriter will purchase the Bonds from the City at an aggregate purchase price of $_________ (representing the principal amount of the Bonds, less $________ of Underwriter’s discount). The Underwriter will purchase all of the Bonds if any are purchased.

The initial public offering prices stated on the inside front cover of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into investment trusts), dealer banks, banks acting as agents and others at prices lower than said public offering prices.

MISCELLANEOUS
This Official Statement does not constitute a contract with the purchasers of the Bonds.

Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized.

The execution and delivery of this Official Statement have been duly authorized by the City.

CITY OF BARSTOW
By:

Willie A. Hopkins, Jr
Interim City Manager

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APPENDIX A

DEMOGRAPHIC AND ECONOMIC INFORMATION FOR THE CITY OF BARSTOW The following information is presented as general background data. The Bonds are payable solely from moneys of the City of Barstow as described in the Official Statement. The taxing power of the City, the County of San Bernardino, the State of California or any political subdivision thereof is not pledged to the payment of the Bonds.

The City also notes that the below information is the latest available but does not in any instance reflect the impact of the COVID-19 pandemic. See the Official Statement under the caption “THE CITY – Public Health Emergency – COVID-19.” Accordingly, the historical information below does not necessarily reflect present economic conditions and future information could be significantly different from the historical information below.

General
The City encompasses approximately forty square miles and is located in the northern part of County. The City is a major transportation hub for the Inland Empire with several major highways, including Interstate 15, Interstate 40, and California State Route 58, converging in the City. The City provides a full range of services, including police and fire protection services, economic development, construction and maintenance of roadways, parks, streets, and other infrastructure, recreational and cultural activities, utility services of sewer and solid waste collection, and general administrative services.

Population
As of January 1, 2021, the population of the City was estimated to be 24,205. The following table presents population data for the last five years for the City, County and State.

CITY OF BARSTOW,

COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA
Population
Year City County State
2017 24,030 2,139,520 39,398,702
2018 24,158 2,150,017 39,586,646
2019 24,290 2,165,876 39,695,376
2020 24,315 2,175,424 39,782,870
2021 24,205 2,175,909 39,466,855
Source: California State Department of Finance, Demographic Research Unit.

Government Services and Community Facilities
The City provides park and recreation services, public safety protection, highway and street maintenance, public improvements, planning and zoning, and general administrative services. The Barstow Fire Protection District became a component unit of the City on November 17, 2020 and provides fire protection services to the City.

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Cultural facilities include a series of murals along the City’s main street, a library, a drivein theater, a six-screen movie theater at the Hollywood Theatre Barstow Cinema, and a number of museums including the Mojave River Valley Museum, Route 66 Mother Road Museum, the Western America Rail Museum, and the Desert Discovery Center.

Employment and Industry
The Riverside-San Bernardino-Ontario Metropolitan Statistical Area (“MSA”) encompasses the City. The unemployment rate in the Riverside-San Bernardino-Ontario MSA was 7.6% in August 2021, down from a revised 7.9% in July 2021, and below the year-ago estimate of 11.5%. This compares with an unadjusted unemployment rate of 7.5% for the State and 5.3% for the nation during the same period. The following table lists employment by industry group for the Riverside-San Bernardino-Ontario MSA for the years 2016 to 2020.

RIVERSIDE-SAN BERNARDINO-ONTARIO METROPOLITAN STATISTICAL AREA (San Bernardino County)
Annual Averages Civilian Labor Force, Employment and Unemployment, Employment by Industry
(March 2020 Benchmark)
2016 2017 2018 2019 2020
Civilian Labor Force (1) 1,981,900 2,014,300 2,045,200 2,070,700 2,073,900 Employment 1,863,600 1,910,800 1,957,200 1,986,100 1,872,600 Unemployment 118,300 103,500 88,000 84,600 201,300
Unemployment Rate 6.0% 5.1% 4.3% 4.1% 9.7%
Wage and Salary Employment: (2)
Agriculture 14,600 14,500 14,500 15,400 13,900
Mining, Logging and Construction 92,900 98,400 106,400 108,400 106,200 Manufacturing 97,500 98,000 99,800 100,600 94,300
Wholesale Trade 61,600 62,600 65,500 67,100 64,600
Retail Trade 178,300 180,900 181,200 180,700 168,800
Transportation, Warehousing and Utilities 106,400 119,900 132,100 146,600 170,500 Information 11,800 11,600 11,400 11,500 9,400
Finance and Insurance 27,100 26,300 25,300 24,800 24,500 Real Estate and Rental and Leasing 17,900 18,400 19,300 20,200 19,100 Professional and Business Services 145,100 147,300 152,000 158,700 154,000 Educational and Health Services 215,700 226,700 239,500 250,300 248,700 Leisure and Hospitality 160,200 166,300 170,600 175,900 139,200 Other Services 44,600 45,400 45,800 46,200 39,600
Federal Government 20,400 20,600 20,700 21,100 22,200
State Government 29,700 30,400 30,600 31,100 31,100
Local Government 192,200 200,100 205,900 209,000 195,900 Total, All Industries (3) 1,416,000 1,467,300 1,520,500 1,567,500 1,501,800 (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(3) Totals may not add due to rounding.

Source: Labor Division of the California State Employment Development Department.

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Principal Employers
The following table shows the principal employers in the City, listed from greatest to fewest number of employees.

CITY OF BARSTOW
Principal Employers
As June 30, 2021
Employer
Number of
Employees
Percent of Total
Employment
Ft. Irwin National Training Center(1) 8,900 60.3%
Marine Corps Logistic Base(2) 1,700 11.5
BNSF Railroad 1,000 6.8
Barstow Unified School District 958 6.5
Outlets at Barstow 480 3.3
Raytheon Technical Services Co, LLC(1) 400 2.7
Barstow Community College 377 2.6
Barstow Community Hospital 348 2.4
Wal-Mart 305 2.1
Silver Valley School District(1) 300 2.0
Total Employment Listed 14,768 100%
(1) Employers outside of City Limits.
(2) Total civilian employee headcount includes Marine Corps Logistics Base, Barstow.

Source: City of Barstow.

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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).

Deducted 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 “disposable personal income.” The following table summarizes the total effective buying income for the City, the County, the State and the United States for the period 2018 through 2022:

CITY OF BARSTOW, COUNTY OF SAN BERNARDINO

STATE OF CALIFORNIA AND THE UNITED STATES
Effective Buying Income
2018 through 2022
Year Area
Total Effective
Buying Income
(000’s Omitted)
Median Household
Effective Buying
Income
2018 City of Barstow $380,977 $38,373
County of San Bernardino 40,600,305 50,226
California 1,113,648,181 59,646
United States 8,640,770,229 50,735
2019 City of Barstow $393,003 $38,342
County of San Bernardino 42,984,313 52,631
California 1,183,264,399 62,637
United States 9,017,967,563 52,841
2020 City of Barstow $394,364 $38,549
County of San Bernardino 46,025,841 56,502
California 1,243,564,816 65,870
United States 9,487,165,436 55,303
2021 City of Barstow $416,809 $40,489
County of San Bernardino 48,859,973 59,285
California 1,290,894,604 67,956
United States 9,809,944,764 56,790
2022 City of Barstow $470,397 $44,351
County of San Bernardino 54,797,008 66,785
California 1,452,426,153 770,58
United States 11,208,582,541 64,448
Source: The Nielsen Company (US), Inc for 2018; Claritas, LLC for 2019 through 2022.

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Commercial Activity
Summaries of the historic taxable sales within the City and the County during the past five years in which data is available are shown in the following tables.

Total taxable sales during the first quarter of calendar year 2021 in the City were reported to be $143,977,153, an 11.21% increase from the total taxable sales of $129,455,437 reported during the first quarter of calendar year 2020.

CITY OF BARSTOW
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2016 420 $628,841 592 $644,374
2017 417 644,144 586 659,341
2018 426 639,111 610 657,571
2019 426 593,611 627 619,457
2020 469 514,487 695 535,907
Source: State Department of Tax and Fee Administration.

Total taxable sales during the first quarter calendar year 2021 in the County were reported to be $11,985,501,520, a 23.04% increase from the total taxable sales of $9,741,132,031 reported during the first quarter of calendar year 2020.

COUNTY OF SAN BERNARDINO
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2016 38,366 $24,242,145 57,542 $36,981,694
2017 39,067 25,341,773 58,956 38,137,915
2018 39,837 26,905,784 61,838 40,554,024
2019 40,964 27,564,216 64,771 41,770,309
2020 44,330 28,745,277 71,145 43,265,512
Source: State Department of Tax and Fee Administration.

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Construction Activity
The following tables show a five-year summary of the valuation of building permits issued in the City and the County.

CITY OF BARSTOW
Building Permit Valuation
(Valuation in Thousands of Dollars)
2016 2017 2018 2019 2020
Permit Valuation
New Single-family $510.0 $140.0 $150.0 $955.5 $0.0
New Multi-family 0.0 0.0 0.0 0.0 0.0
Res. Alterations/Additions 653.6 381.1 1,213.5 572.1 659.4 Total Residential 1,163.6 521.1 1,363.5 1,527.6 659.4
New Commercial 7,254.0 1,882.8 2,765.0 17,832.9 125.0
New Industrial 1,300.0 0.0 0.0 9,856.5 0.0
New Other 315.5 503.1 321.3 276.8 713.8
Com. Alterations/Additions 7,807.5 4,549.0 2,933.4 5,908.5 4,532.0 Total Nonresidential 16,677.0 6,934.9 6,019.7 33,874.7 5,370.8 New Dwelling Units
Single Family 3 1 1 5 0
Multiple Family 0 0 0 0 0
TOTAL 3 1 1 5 0
Source: Construction Industry Research Board, Building Permit Summary.

COUNTY OF SAN BERNARDINO
Building Permit Valuation
(Valuation in Thousands of Dollars)
2016 2017 2018 2019 2020
Permit Valuation
New Single-family $706,601.8 $1,009,450.8 $1,114,777.8 $1,078,797.7 $934,304.4 New Multi-family 119,497.6 287,760.5 268,564.9 232,079.3 143,366.2 Res. Alterations/Additions 62,042.4 77,811.9 71,937.8 139,761.1 61,788.5 Total Residential 888,141.8 1,375,023.2 1,455,280.5 1,450,638.1 1,139,459.1 New Commercial 189,230.5 324,540.4 230,518.8 449,998.5 274,080.5 New Industrial 426,747.9 543,462.7 387,108.6 476,322.3 330,960.1 New Other 96,402.8 86,981.8 74,356.9 85,651.8 123,121.9 Com. Alterations/Additions 308,269.9 330,612.1 388,145.5 365,127.0 336,533.1 Total Nonresidential 1,020,651.1 1,285,597.0 1,080,129.8 1,377,099.6 1,064,695.6 New Dwelling Units
Single Family 2,896 4,253 3,311 4,096 3,631
Multiple Family 976 2,578 1,775 1,884 910
TOTAL 3,872 6,831 5,086 5,980 4,541
Source: Construction Industry Research Board, Building Permit Summary.

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Education
Public education in the City is provided by the Barstow Unified School District and has eight elementary schools, one intermediate school, one middle school, one junior high school, two high schools, and one adult evening school. There are two private elementary schools within the City as well.

The Barstow Community College offers community college courses for those seeking to go onto a four-year degree program as well as those seeking further education in trade-specific fields.

Transportation
The City is approximately 75 minutes from the second largest international airport in the greater Los Angeles area. The area also includes two major transcontinental railroads, two major interstates, and is within close proximity to the West Coast’s two largest harbors.

Below is a summary of local transportation infrastructure in the County.

Highways: The transportation route in the Inland Empire North includes major portions of Southern California’s transit hub to major markets. Those freeways and interstates intersecting the City include Interstate 15, Interstate 40, Highway 58, and Highway 395.

Rail: Two major transcontinental railroads move through the City, the BNSF and the Union Pacific. In a normal 24-hour period, the railroads move roughly 175,890 tons of freight into and out of, or through the County. The railroads have 1,080 route miles of track and approximately 4,000 rail employees within the County.

Air: The Southern California Logistics Airport, formerly George Air Force Base, is located 30 miles from the City and 100 miles from Los Angeles in the center of an established shipping and distribution hub. Ontario International Airport is currently served by 14 airlines providing 183 flights per day to destinations that include every major city in America. Airlines such as TWA, American, Delta, Southwest and United provide daily non-stop service to every airline.

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APPENDIX B

THE CITY OF BARSTOW AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021

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APPENDIX C

BOOK-ENTRY ONLY SYSTEM
The information in this Appendix concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy or completeness thereof. The City does not give any assurances 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 Bonds; (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds; or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the 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 Official Statement. 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.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds. The Bonds 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 Bond certificate will be issued for each maturity of the Bonds in the aggregate principal amount of such issue, and will be deposited with DTC.

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 posttrade 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 Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a rating from S&P Global Ratings of: “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission.

More information about DTC can be found at www.dtcc.com.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) 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

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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 Bonds 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 Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by 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 authorized representative of DTC. The deposit of Bonds 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 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds 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.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Redemption notices shall be sent to DTC. If less than all of the Bonds 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.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal, premium (if any), and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or the Trustee, 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 instructions 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, the Trustee or the City, 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 City or the Trustee, 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.

DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.

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The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Series Bond certificates will be printed and delivered to DTC.

The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.

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APPENDIX D

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE

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APPENDIX E

PROPOSED FORM OF OPINION OF BOND COUNSEL

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APPENDIX F

FORM OF CONTINUING DISCLOSURE CERTIFICATE
$[PAR]

CITY OF BARSTOW
2022 TAXABLE PENSION OBLIGATION BONDS
This Continuing Disclosure Certificate (this “Disclosure Certificate”) is executed and delivered by the CITY OF BARSTOW (the “City”), in connection with its issuance of the bonds captioned above (the “Bonds”) pursuant to an Indenture of Trust, dated as of [April 1, 2022] (the “Indenture”), by and between the City and U.S. Bank Trust Company, National Association (the “Trustee”).

The City covenants and agrees as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2- 12(b)(5).

Section 2. Definitions. In addition to the definitions set forth above and in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the following meanings:
“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Annual Report Date” means the date that is no later than 9 months after the end of the City’s fiscal year (currently March 31 based on the City’s fiscal year end of June 30). “Dissemination Agent” means U.S. Bank Trust Company, National Association, or any successor Dissemination Agent designated in writing by the City and which has filed with the City and the Trustee a written acceptance of such designation. “Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate. “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 that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. “Official Statement” means the final official statement executed by the City in connection with the issuance of the Bonds.
“Participating Underwriter” means any of the original purchasers of the Bonds required to comply with the Rule in connection with the 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 it may be amended from time to time.

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Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing March 31, 2023, with the report for the 2021-22 fiscal year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 5 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 5 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. 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 Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder. The Dissemination Agent may conclusively rely upon such certification of the Issuer and shall have no duty or obligation to review such Annual Report. (b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) in a timely manner to the MSRB, in an electronic format as prescribed by the MSRB, a notice thereof.
(c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.

Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following:
(a) The City’s audited financial statements prepared in accordance with 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 Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) Unless otherwise provided in the audited financial statements filed on or before the Annual Report Date, financial information and operating data with respect to the City for the preceding fiscal year, substantially similar to that provided in the corresponding tables in the Official Statement:

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(i) Table 2 (General Fund Balance Sheets);
(ii) Table 3 (Statements of Revenues, Expenditures and Changes in General Fund Balance); and
(iii) Table 4 (General Fund Major Tax Revenues By Source); (c) Information for the most recent year provided by CalPERS for the net pension liability of the City’s Plans, in the format provided by CalPERS (which format may change from time to time).
(d) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material 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.
(e) 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 the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.

Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) 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.
(7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers.
(9) Defeasances.

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(10) Release, substitution, or sale of property securing repayment of the securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the City. (13) The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, 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. (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.
(15) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material.
(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties.
(b) Upon the occurrence of a Listed 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 Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsection (a)(8) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Indenture.
(c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), (a)(14) and (a)(15) of this Section 5 contain the qualifier “if material” and that subparagraph (a)(6) also contains the qualifier “material” with respect to certain notices, determinations or other events affecting the tax status of the Bonds.

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 it determines the event’s occurrence is material for purposes of U.S. federal securities law. Whenever the City obtains knowledge of the occurrence of any of these Listed Events, the City will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the City will cause a notice to be filed as set forth in paragraph (b) above. (d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) 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 assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or

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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. (e) For purposes of Section 5(a)(15) and (16), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule.

Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds.

Section 8. 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 Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be U.S. Bank Trust Company, National Association. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate 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(a), 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 type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.

If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first Annual Report filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

If an amendment is made to this Disclosure Certificate modifying the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the

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change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.

A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Listed Event under Section 5(b).

Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.

Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City 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 its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct.

The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond holders or any other party. The Dissemination Agent shall have the same rights, privileges and immunities hereunder as are afforded to the Trustee under the Indenture. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
(b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.

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Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.

Section 15. Governing Law. This Disclosure Certificate shall be governed by and construed in accordance with the laws of the State of California.

Date: _______, 2022

CITY OF BARSTOW
By:

Willie A. Hopkins, Jr
Interim City Manager
AGREED AND ACCEPTED:

U.S. BANK TRUST COMPANY,

NATIONAL ASSOCIATION,
as Dissemination Agent
By:

Name:

Title:

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Draft of February 9, 2022
$__________

CITY OF BARSTOW
2022 TAXABLE PENSION OBLIGATION BONDS

BOND PURCHASE AGREEMENT
___________, 2022
City of Barstow
220 East Mountain View Street, Ste. A
Barstow, California 92311
Ladies and Gentlemen:

The undersigned, Hilltop Securites, Inc. (the “Underwriter”), offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with the City of Barstow, California (the “City”), which, upon the acceptance by the City, will be binding upon the City and the Underwriter. This offer is made subject to acceptance by the City by the execution of this Purchase Agreement and delivery of the same to the Underwriter prior to 11:59 P.M., California time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the City at any time prior to the acceptance hereof by the City. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Indenture, as defined herein.

Section 1. Purchase and Sale. Upon the terms and conditions and on the basis of the representations, warranties and agreements herein set forth, the Underwriter hereby agrees to purchase from the City, and the City hereby agrees to issue, sell and deliver to the Underwriter all (but not less than all) of the City of Barstow 2022 Taxable Pension Obligation Bonds (the “Bonds”) in the aggregate principal amount of $_________. The Bonds shall be dated as of their date of delivery. Interest on the Bonds shall be payable semiannually on June 1 and December 1 in each year, commencing December 1, 2022 (each an “Interest Payment Date”) and will bear interest at the rates and on the dates as set forth in Exhibit A hereto. The purchase price for the Bonds shall be $________ (which represents the principal amount of the Bonds in the amount of $_________, less an Underwriter’s discount of $_________).

The Underwriter agrees to make a bona fide public offering of the Bonds at the initial offering yields set forth in the Official Statement, as defined herein; however, the Underwriter reserves the right to make concessions to dealers and to change such initial offering yields as the Underwriter shall deem necessary in connection with the marketing of the Bonds. The Underwriter agrees that, in connection with the public offering and initial delivery of the Bonds to the purchasers thereof from the Underwriter, the Underwriter will deliver or cause to be delivered to each purchaser a copy of the final Official Statement prepared in connection with the Bonds, for the time period required under Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 15c2-12”).

Terms defined in the Preliminary Official Statement and to be set forth in the final Official Statement are used herein as so defined.

The City acknowledges and agrees that: (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s-length commercial transaction between the City and the Underwriter;

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2 (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as a principal and is not acting as a municipal advisor (as defined in section 15B of the Securities Exchange Act of 1934, as amended), financial advisor or fiduciary; (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the City with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the City on other matters); (iv) the only obligations the Underwriter has to the City with respect to the transaction contemplated hereby expressly are set forth in this Purchase Agreement; and (v) the City has consulted its own financial and/or municipal, legal, accounting, tax, financial and other advisors, as applicable, to the extent it has deemed appropriate.

Section 2. The Bonds. The Bonds are being issued pursuant to Articles 10 and 11 (commencing with section 53570 and 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the “Refunding Law”) and the Indenture of Trust, dated as of April 1, 2022 (the “Indenture”), between the City and ________________________, as trustee (together with any successor as trustee under the Indenture, the “Trustee”), and a resolution adopted by the City Council of the City on October 4, 2021. The Bonds shall be obligations of the City payable from any lawfully available funds, shall not be limited as to payment to any special source of funds of the City and the payment thereof shall not be subject to appropriation. The Bonds do not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The Bonds otherwise shall be as described in the Preliminary Official Statement and the Official Statement, the Refunding Law and the Legal Documents, as defined herein. The Underwriter’s agreement to purchase the Bonds from the City is made in reliance upon the City’s representations, covenants and warranties and on the terms and conditions set forth in this Purchase Agreement.

The City is obligated by the Public Employees’ Retirement Law, constituting Part 3 of Division 5 of Title 2 of the California Government Code (the “Retirement Law”), and the contract between the Board of Administration of the California Public Employees’ Retirement System (“PERS”), established under Government Code sections 20000 through 21500 of (the “Retirement Law”), and the City Council of the City, effective _________ (as amended, the “PERS Contract”), to make contributions to PERS to (a) fund pension benefits for its employees who are members of PERS, (b) amortize the unfunded actuarial liability with respect to such pension benefits, and (c) appropriate funds for the purposes described in (a) and (b). The City participates in ___ retirement plans (with tiers within such plans) under the PERS Contract.

The proceeds of the Bonds will be used to: (i) refund the City’s obligations to PERS evidenced by the plans in which the City participates pursuant to the PERS Contract and representing the current unfunded accrued liability (the “Unfunded Liability”) with respect to certain pension benefits under the Retirement Law, and (ii) pay certain costs associated with the issuance and delivery of the Bonds.

Section 3. Public Offering. The Underwriter agrees to make an initial public offering of all the Bonds at the public offering prices (or yields) set forth on Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices.

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3 Section 4. The Official Statement. By its acceptance of this Purchase Agreement, the City ratifies, confirms and approves of the use and distribution by the Underwriter prior to the date hereof of the Preliminary Official Statement relating to the Bonds, dated ___________, 2022 (including the cover page, all appendices and all information incorporated therein and any supplements or amendments thereto and as disseminated in its printed physical form or in electronic form in all respects materially consistent with such physical form, the “Preliminary Official Statement”) that the City has deemed “final” as of its date, for purposes of Rule 15c2-12 except for certain omissions permitted to be omitted therefrom by Rule 15c2-12. The City hereby agrees to deliver or cause to be delivered to the Underwriter, within seven (7) business days of the date hereof, copies of the final official statement, dated the date hereof, relating to the Bonds (including all information previously permitted to have been omitted by Rule 15c2-12, the cover page, all appendices, all information incorporated therein and any amendments or supplements as have been approved by the City and the Underwriter (the “Official Statement”)) in such quantity as the Underwriter shall reasonably request to comply with Rule 15c2-12(b)(4) and the rules of the Municipal Securities Rulemaking Board (the “MSRB”). To the extent required by applicable MSRB Rules, the City hereby confirms that it does not object to distribution of the Official Statement in electronic form.

Section 5. Closing. At 8:00 a.m., California time, on _________ 2022, or at such other time or date as the City and the Underwriter mutually agree upon, the City shall deliver or cause to be delivered to the Trustee, and the Trustee shall deliver or cause to be delivered through the facilities of The Depository Trust Company, New York, New York (“DTC”), the Bonds in definitive form, duly executed and authenticated. Concurrently with the delivery of the Bonds, the City shall deliver the documents hereinafter mentioned at the offices of Jones Hall, A Professional Law Corporation, San Francisco, California (“Bond Counsel”) or another place to be mutually agreed upon by the City and the Underwriter. The Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof by wire transfer in immediately available funds. This payment for and delivery of the Bonds, together with the delivery of the aforementioned documents referenced herein, is called the “Closing.”
The Bonds shall be registered in the name of Cede & Co., as nominee of DTC in denominations of $5,000 and any integral multiple thereof as provided in the Indenture, and shall be made available to the Underwriter at least one (1) business day before the Closing for purposes of inspection and packaging. The City acknowledges that the services of DTC will be used initially by the Underwriter to permit the issuance of the Bonds in book-entry form, and agrees to cooperate fully with the Underwriter in employing such services.

Section 6. Representations, Warranties and Covenants of the City. The City represents, warrants and covenants to the Underwriter as follows. (a) The City is a general law city and municipal corporation of the State of California (the “State”), duly organized and validly existing pursuant to the Constitution and laws of the State. (b) The City had full legal right, power and authority to adopt the resolution authorizing the issuance of the Bonds (the “Resolution”) and the resolution authorizing the preparation and distribution of the Preliminary Official Statement (the “POS Resolution”), and the City has, and at the Closing Date will have, full legal right, power and authority (i) to execute and deliver the Indenture, the Continuing Disclosure Certificate relating to the Bonds (the “Continuing Disclosure Certificate”) and this Purchase Agreement (collectively, the “Legal Documents”), to perform its obligations under the Legal Documents, and has by official action duly authorized and approved the execution and

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4 delivery of, and the performance by the City of the obligations on its part contained in the Legal Documents, (ii) to issue, sell and deliver the Bonds to the Underwriter as provided herein, and (iii) to carry out, give effect to and consummate the transactions contemplated by the Legal Documents, the Resolution and the POS Resolution.
(c) The City Council has duly and validly adopted the Resolution and the POS Resolution at meetings of the City Council duly noticed and at which quorum were present, and the Resolution and the POS Resolution have not been modified or amended and are in full force and effect, and has duly approved the execution and delivery of the Bonds and the other Legal Documents, and the performance by the City of its obligations contained therein, and the taking of any and all action as may be necessary to carry out, give effect to and consummate the transactions contemplated by each of said documents.
(d) The Bonds and the other Legal Documents have been, on or before the Closing Date, duly executed and delivered by the City, and, on the Closing Date, the Bonds, when authenticated and delivered to the Underwriter in accordance with the Indenture, and the other Legal Documents will constitute legally valid and binding obligations, enforceable against the City in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws or equitable principles relating to or limiting creditors’ rights generally.
(e) The City is, and at the Closing Date will be, in compliance, in all respects, with the Legal Documents.
(f) To the best of its knowledge, the City is not in breach of or default under any applicable law or administrative regulation of the State or the United States of America or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument, in each case which breach or default has or may have a material adverse effect on the ability of the City to perform its obligations under the Legal Documents.
(g) After due inquiry, except as may be required under blue sky or other securities laws of any state, there is no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the City, other than the City Council, that has not been obtained is or will be required for the issuance and delivery of the Bonds or the consummation by the City of the other transactions contemplated by the Indenture.
(h) The adoption of the Resolution and the POS Resolution, and the execution and delivery by the City of the Legal Documents and the approval by the City of the Official Statement and compliance with the provisions on the City’s part contained in the Legal Documents, will not conflict with, or result in a violation or breach of, or constitute a default under, any law, administrative regulation, judgment, decree, loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject to, which conflict, breach or default has or may have a material adverse effect on the ability of the City to carry out its obligations under the Legal Documents, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any material lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of City under the terms of any such law,

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5 administrative regulation, judgment, decree, loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument, except as provided by the Legal Documents. (i) Prior to the date hereof, the City has provided to the Underwriter for its review the Preliminary Official Statement, that the City has deemed final for purposes of Rule 15c2-12, has approved the distribution of the Preliminary Official Statement and the Official Statement, and has duly authorized the execution and delivery of the Official Statement (including in electronic form).

The Preliminary Official Statement, at the date thereof, and as of the date hereof, did not and does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein (other than the information relating to DTC and its book-entry system, as to which no view is expressed), in light of the circumstances under which they were made, not misleading. As of the date hereof and on the Closing, the Official Statement did not and will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein (other than the information relating to DTC and its book-entry system, as to which no view is expressed), in light of the circumstances under which they were made, not misleading. (j) By official action of the City prior to or concurrently with the acceptance hereof, the City has duly approved the distribution of the Preliminary Official Statement and the distribution of the Official Statement (including in electronic form), and has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained, in the Legal Documents.
(k) The City will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The City will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental authority prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds.
(l) The financial statements relating to the receipts, expenditures and cash balances of the City as of June 30, 2021 as set forth in the Preliminary Official Statement and in the Official Statement fairly represent the financial position and results of operations of the City as of the dates and for the periods therein set forth in accordance with generally accepted accounting principles. Except as disclosed in the Preliminary Official Statement, the Official Statement or otherwise disclosed in writing to the Underwriter, there has not been any materially adverse change in the financial position and results of operations of the City or in its operations since June 30, 2021 and, except as disclosed in the Preliminary Official Statement, the Official Statement or otherwise disclosed in writing to the Underwriter, there has been no occurrence, circumstance or combination thereof which is reasonably expected to result in any such materially adverse change. (m) As of the time of acceptance hereof and as of the date of Closing, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, is pending or, to the knowledge of the City, threatened (i) in any way questioning the corporate existence of the City or the titles of the officers of the City to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the execution or delivery of any of the Bonds, or in any way contesting or affecting the validity of the Bonds or the Legal Documents or the consummation of the transactions contemplated thereby or contesting the power of the City to enter into the Legal Documents; (iii) which may result in any material adverse change to the financial condition of the City or to its ability to make payment of principal or redemption price of and interest

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6 on the Bonds when due; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clause (i) through (iv) of this sentence.
(n) To the extent required by law, the City will undertake, pursuant to the Continuing Disclosure Certificate, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Official Statement. Except as otherwise disclosed in the Preliminary Official Statement, the City has not failed to comply in all material respects with any previous undertakings with regard to Rule 15c2-12 to provide annual reports or notices of enumerated events in the past five years and, the City has been in material compliance during the past five years with its continuing disclosure obligations in accordance with Rule 15c2-12.
(o) Any certificate signed by any officer of the City authorized to execute such certificate in connection with the issuance, sale and delivery of the Bonds and delivered to the Underwriter shall be deemed a representation and warranty of the City to the Underwriter as to the statements made therein but not of the person signing such certificate. (p) The City will promptly apply the proceeds of the Bonds to refund the Unfunded Liability as of the date of issuance of the Bonds and to pay costs associated with the issuance and delivery of the Bonds.
(q) During the period from the date hereof until the Closing Date, the City agrees to furnish the Underwriter with copies of any documents it files with any regulatory authority which are reasonably requested by the Underwriter.
(r) The City is not in material default, nor has the City been in material default at any time, as to the payment of principal or interest with respect to a material obligation issued by the City or with respect to a material obligation guaranteed by the City as guarantor. (s) As of the date hereof, the City does not have any revenue bonds, capital lease obligations, installment payment obligations or other material financial obligation, nor other material obligations secured by payments from the general fund of the City, except as disclosed in the Preliminary Official Statement and the Official Statement. (t) The default judgment of the San Bernardino Superior Court, dated February 9, 2022, Case No. CIVSB2127060, entered in favor of the City in connection with the approval of the issuance of the Bonds (the “Judgment”) was duly entered, the appeal period has run without any appeal having been filed, and the Judgment is in full force and effect. (u) The City had, prior to the date hereof, and has, in full force and effect, a Debt Management Policy that complies with Government Code section 8855(i).

Section 7. Conditions to the Obligations of the Underwriter. The Underwriter has entered into this Purchase Agreement in reliance upon the representations and warranties of the City

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7 contained herein. The obligations of the Underwriter to accept delivery of and pay for the Bonds on the date of the Closing shall be subject, at the option of the Underwriter, to the accuracy in all respects of the statements of the officers and other officials of the City, as well as authorized representatives of the City Attorney, Bond Counsel, Disclosure Counsel and the Trustee made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the City of its obligations to be performed hereunder at or prior to the date of the Closing, and to the following additional conditions:
(a) The representations, warranties and covenants of the City contained herein shall be true, complete and correct at the date hereof and at the time of the Closing, as if made on the date of the Closing;
(b) At the time of Closing, the Legal Documents shall be in full force and effect as valid and binding agreements between or among the various parties thereto, and the Legal Documents and the Preliminary Official Statement and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter, and all such reasonable actions as, in the opinion of Bond Counsel, shall reasonably deem necessary in connection with the transactions contemplated hereby;
(c) At the time of the Closing, no default shall have occurred or be existing under the Legal Documents, or any other agreement or document pursuant to which any of the City’s financial obligations were executed and delivered, and the City shall not be in default in the payment of principal or interest with respect to any of its financial obligations, which default would result in any material adverse change to the financial condition of the City or adversely impact its ability to make payment of principal or redemption price of and interest on the Bonds when due; (d) In recognition of the desire of the City and the Underwriter to effect a successful public offering of the Bonds, and in view of the potential adverse impact of any of the following events on such a public offering, this Purchase Agreement shall be subject to termination in the absolute discretion of the Underwriter by notification, in writing, to the City prior to delivery of and payment for the Bonds, if at any time prior to such time, regardless of whether any of the following statements of fact were in existence or known of on the date of this Purchase Agreement:
(i) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of America of a national emergency or war or other calamity or crisis (including a pandemic) the effect of which on financial markets is materially adverse such as to make it, in the sole judgment of the Underwriter, impractical to proceed with the purchase or delivery of the Bonds as contemplated by the Official Statement (exclusive of any amendment or supplement thereto); or (ii) a general banking moratorium shall have been declared by federal, State or New York authorities, or the general suspension of trading on any national securities exchange; or (iii) any event shall occur which makes untrue any statement or results in an omission to state a material fact necessary to make the statements in the Preliminary Official Statement and the Official Statement, in the light of the circumstances under which they were made, not misleading, which event, in the reasonable opinion of the Underwriter would materially or adversely affect the ability of the Underwriter to market the Bonds; or

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8 (iv) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the State, or a decision by any court of competent jurisdiction within the State shall be rendered which materially adversely affects the market price of the Bonds; or
(v) the marketability of the Bonds or the market price thereof, in the reasonable opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States of America or by any legislation in or by the Congress of the United States of America or by the State, or the amendment of legislation pending as of the date of this Purchase Agreement in the Congress of the United States of America, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the President of the United States of America, the Treasury Department of the United States of America, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States of America, or the favorable reporting for passage of legislation to either House of the Congress of the United States of America by a Committee of such House to which such legislation has been referred for consideration; or
(vi) an order, decree or injunction shall have been issued by any court of competent jurisdiction, or order, ruling, regulation (final, temporary or proposed), official statement or other form of notice or communication issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that: (i) obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under the Trust Indenture Act of 1939; or (ii) the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including any or all underlying obligations, as contemplated hereby or by the Preliminary Official Statement and the Official Statement, is or would be in violation of the federal securities laws as amended and then in effect; or
(vii) legislation shall be introduced, by amendment or otherwise, or be enacted by the House of Representatives or the Senate of the Congress of the United States of America, or a decision by a court of the United States of America shall be rendered, or a stop order, ruling, regulation or official statement by or on behalf of the Securities and Exchange Commission or other governmental agency having jurisdiction of the subject matter shall be made or proposed, to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, as contemplated hereby or by the Preliminary Official Statement and the Official Statement, is or would be in violation of any provision of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect, or with the purpose or effect of otherwise prohibiting the issuance, offering or sale of the Bonds or obligations of the general character of the Bonds, as contemplated hereby or by the Preliminary Official Statement and the Official Statement; or (viii) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national

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9 securities exchange, which, in the Underwriter’s reasonable opinion, materially adversely affects the marketability or market price of the Bonds; or
(ix) the New York Stock Exchange, or other national securities exchange or association or any governmental authority, shall impose as to the Bonds, or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by or the charge to the net capital requirements of broker dealers; or
(x) trading in securities on the New York Stock Exchange or the American Stock Exchange shall have been suspended or limited or minimum prices have been established on either such exchange which, in the Underwriter’s reasonable opinion, materially adversely affects the marketability or market price of the Bonds; or
(xi) any rating of the Bonds or the rating of any general fund obligations of the City shall have been downgraded or withdrawn by a national rating service, which, in the reasonable opinion of the Underwriter, materially adversely affects the market price of the Bonds; or (xii) any action shall have been taken by any government in respect of its monetary affairs which, in the reasonable opinion of the Underwriter, has a material adverse effect on the United States securities market, rendering the marketing and sale of the Bonds, or enforcement of sale contracts with respect thereto impracticable; or
(xiii) the commencement of any action, suit or proceeding described in Section 6(m); or
(xiv) a material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred, which, in the reasonable opinion of the Underwriter, materially adversely affects the market price of the Bonds. (e) at or prior to the Closing, the Underwriter shall receive or have received the following documents, in each case to the reasonable satisfaction, in form and substance, of the Underwriter and the law offices of Rossi A. Russell, Esq., Los Angeles, California (“Underwriter’s Counsel”):
(i) a copy of the Judgment;
(ii) all resolutions relating to the Bonds adopted by the City and certified by an authorized official of the City, authorizing the execution and delivery of the Legal Documents and the delivery of the Bonds and the Official Statement;
(iii) the Legal Documents duly executed and delivered by the respective parties thereto, with only such amendments, modifications or supplements as may have been agreed to in writing by the Underwriter; and
(iv) the approving opinion of Bond Counsel, dated the date of Closing and addressed to the City, in substantially the form attached as Appendix E to the Preliminary the Official Statement and the Official Statement, together with a reliance letter thereon addressed to the Underwriter;

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10 (v) a supplemental opinion of Bond Counsel dated the date of Closing and addressed to the Underwriter, to the effect that:
(A) the statements on the cover of the Official Statement and in the Official Statement under the captions “INTRODUCTION,” “THE BONDS,” “SECURITY FOR THE BONDS,” “TAX MATTERS,” and “LEGAL MATTERS — Validation Action,” and in APPENDIX D — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE,” and APPENDIX E — “PROPOSED FORM OF FINAL OPINION” and excluding any material that may be treated as included under such captions and appendices by any cross-reference, insofar as such statements expressly summarize provisions of the Bonds, the Legal Documents, and Bond Counsel’s final opinion relating to the Bonds, are accurate in all material respects as of the date of Closing; (B) this Purchase Agreement has been duly authorized, executed and delivered by the City and is the valid, legal and binding agreement of the City enforceable in accordance with its terms, except that the rights and obligations under the Purchase Agreement are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State, and provided that no opinion is expressed with respect to any indemnification or contribution provisions contained therein; and (C) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended;
(vi) the Official Statement, executed on behalf of the City; (vii) evidence that the rating on the Bonds is as described in the Official Statement; (viii) a certificate, dated the date of Closing, signed by a duly authorized officer of the City satisfactory in form and substance to the Underwriter to the effect that: (i) the representations, warranties and covenants of the City contained in this Purchase Agreement are true and correct in all material respects on and as of the date of Closing with the same effect as if made on the date of the Closing by the City, and the City has complied with all of the terms and conditions of the Purchase Agreement required to be complied with by the City at or prior to the date of Closing; (ii) to the best of such officer’s knowledge, no event affecting the City has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purposes for which it is to be used or which is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; (iii) the information and statements contained in the Official Statement (other than information relating to DTC and its book entry system) did not as of its date and do not as of the Closing contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect; (iv) the City is not in breach of or default under any applicable law or administrative regulation of the State or the United States of America or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, which would have a material adverse impact on the City’s ability to perform its obligations under the Legal Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute such a default or an event of default under any such instrument; and (v) no further

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11 consent is required for inclusion of its audited financial statements in the Preliminary Official Statement and the Official Statement;
(ix) an opinion dated the date of Closing and addressed to the Underwriter, the Trustee and the Bond Counsel, of the City Attorney of the City of Barstow, substantially in the form attached as Exhibit B hereto;
(x) a letter of Jones Hall, A Professional Law Corporation, San Francisco, California, Disclosure Counsel to the City, dated the date of Closing and addressed to the Underwriter substantially to the effect that, on the basis of the information made available to them in the course of their participation in the preparation of the Official Statement as disclosure counsel, but without having undertaken to determine or verify independently, or assuming any responsibility for, the accuracy, completeness or fairness of any of the statements contained in the Official Statement, no facts have come to the attention of the personnel in such firm directly involved in rendering legal advice and assistance to the City in connection with the preparation of the Official Statement which caused them to believe that (A) the Preliminary Official Statement as of its date or as of _________, 2022 (excluding therefrom financial, demographic and statistical data; forecasts, projections, estimates, assumptions and expressions of opinions; statements relating to DTC, Cede & Co. and the operation of the bookentry system; statements relating to the treatment of the Bonds or the interest, discount or premium, if any, thereon or therefrom for tax purposes under the law of any jurisdiction; and the statements contained in the Preliminary Official Statement under the caption “TAX MATTERS,” and in Appendices [__ and __] to the Preliminary Official Statement; as to all of which they express no view) contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading, except for such information as is permitted to be excluded from the Preliminary Official Statement pursuant to Rule 15c2-12 of the Securities Exchange Act of 1934, as amended, including but not limited to information as to pricing, yields, interest rates, maturities, amortization, redemption provisions, debt service requirements, Underwriter’s discount and CUSIP numbers or (B) the Official Statement as of its date or as of the Closing Date (excluding therefrom financial, demographic and statistical data; forecasts, projections, estimates, assumptions and expressions of opinions; statements relating to DTC, Cede & Co. and the operation of the book-entry system, statements relating to the treatment of the Bonds or the interest, discount or premium, if any, thereon or therefrom for tax purposes under the law of any jurisdiction; and the statements contained in the Official Statement under the caption “TAX MATTERS,” and in Appendices [__ and __] to the Official Statement; as to all of which they express no view) contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; (xi) an opinion of counsel to the Trustee, addressed to the Underwriter and the City, dated the date of the Closing, to the effect that:
(A) the Trustee is a [national banking association duly organized and validly existing under the laws of the United States of America], having full corporate power to undertake the trust created under the Indenture;
(B) the Indenture has been duly authorized, executed and delivered by the Trustee and, assuming due authorization, execution and delivery by the other parties thereto, the Indenture constitutes the valid, legal and binding obligations of the Trustee enforceable in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws

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12 affecting the enforcement of creditors’ rights generally and by the application of equitable principles, if equitable remedies are sought;
(C) the Trustee has duly authenticated the Bonds upon the order of City; (D) the Trustee’s actions in executing and delivering the Indenture are in full compliance with, and do not conflict with any applicable law or governmental regulation and, to the best of such counsel’s knowledge, after reasonable inquiry with respect thereto, do not conflict with or violate any contract to which the Trustee is a party or any administrative or judicial decision by which the Trustee is bound;
(E) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the banking or trust powers of the Trustee that has not been obtained is or will be required for the execution and delivery of the Bonds or the consummation by the Trustee of its obligations under the Indenture; and (F) there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or public body pending or, to the best of such counsel’s knowledge, threatened against or affecting the Trustee, which would materially adversely impact the Trustee’s ability to complete the transactions contemplated by the Indenture. (xii) a certificate, dated the date of Closing, signed by a duly authorized officer of the Trustee satisfactory in form and substance to the Underwriter, to the effect that:
(A) the Trustee is duly organized and existing as a [national banking association under the laws of the United States of America], having the full corporate power and authority to enter into and perform its duties under the Indenture; (B) the Trustee is duly authorized to enter into the Indenture and has duly executed and delivered the Indenture, and assuming due authorization and execution by the other parties thereto, the Indenture is legal, valid and binding upon the Trustee and enforceable against such party in accordance with its terms;
(C) the Trustee has duly authenticated the Bonds under the Indenture and delivered the Bonds to or upon the order of the Underwriter; (D) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the banking or trust powers of the Trustee that has not been obtained is required for the execution and delivery of the Bonds or the consummation by the Trustee of its obligations under the Indenture; and (E) there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or public body pending or, to the best of such counsel’s knowledge, threatened against or affecting the Trustee, which would materially adversely impact the Trustee’s ability to complete the transactions contemplated by the Indenture. (xiii) the preliminary and final forms required to be delivered to the California Debt and Investment Advisory Commission pursuant to section 53583 of the Government Code of the State of California and section 8855(i) and (j) of the Government Code;

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13 (xiv) a copy of the executed Blanket Issuer Letter of Representations by and between the City and DTC relating to the book-entry system;
(xv) an opinion of Rossi A. Russell, Underwriter’s Counsel, in form and substance acceptable to the Underwriter;
(xvi) a Rule 15c2-12 certificate, dated the date of the Preliminary Official Statement and executed by the City;
(xvii) a certificate of the PERS actuary setting forth the amount of the discounted prepayment of the annual contribution of the City to PERS for Fiscal Year 202_-2_ together with acknowledgment of payment of the Unfunded Liability;
(xviii) such additional legal opinions, Bonds, proceedings, instruments or other documents as the Underwriter or Underwriter’s Counsel may reasonably request.

If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, this Purchase Agreement shall terminate, and except as set forth in Section 9 hereof, neither the Underwriter nor the City shall be under further obligation hereunder.

Section 8. Changes in Official Statement. Within 90 days after the Closing or within 25 days following the “end of the underwriting period” (as defined in Rule 15c2-12), whichever occurs first, if any event relating to or affecting the Bonds, the Trustee, or the City shall occur as a result of which it is necessary, in the reasonable opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in any material respect in the light of the circumstances existing at the time it is delivered to a purchaser, the City will forthwith prepare and furnish to the Underwriter an amendment or supplement that will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to purchaser, not misleading. The City shall cooperate with the Underwriter in the filing by the Underwriter of such amendment or supplement to the Official Statement with the MSRB. The Underwriter acknowledges that the “end of the underwriting period” will be the date of Closing unless the Underwriter otherwise notifies the City in writing that it still owns some or all of the Bonds.

Section 9. Expenses.
(a) Whether or not the Underwriter accepts delivery of and pays for the Bonds as set forth herein, it shall be under no obligation to pay, and the City shall pay out of the proceeds of the Bonds or any other legally available funds of the City, all expenses incidental to the performance of the City’s obligations hereunder, including but not limited to the cost of printing and delivering the Legal Documents to the Underwriter, the costs of printing and shipping and electronic distribution of the Preliminary Official Statement and the Official Statement in reasonable quantities, the fees and disbursements of the City, the Trustee and its counsel, Bond Counsel, Disclosure Counsel, City Attorney, the City’s actuary, accountants, engineers, appraisers, economic consultants and any other experts or consultants retained by the City in connection with the issuance and sale of the Bonds, rating agency fees, advertising expenses, and any other expenses not specifically enumerated in paragraph (b) of this section incurred in connection with the issuance and sale of the Bonds. The City shall pay

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14 out of the proceeds of the Bonds, for any expenses incurred by the Underwriter on behalf of the City’s employees and representatives which are incidental to implementing this Purchase Agreement, including meals, transportation, and lodging of those employees and representatives. (b) Whether or not the Bonds are delivered to the Underwriter as set forth herein, the City shall be under no obligation to pay, and the Underwriter shall be responsible for and pay (which may be included as an expense component of the Underwriter’s discount), MSRB, CUSIP Bureau and CDIAC fees and expenses to qualify the Bonds for sale under any “blue sky” laws, and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds not specifically enumerated in paragraph (a) of this section, including the cost of preparing this Purchase Agreement and other Underwriter documents, travel expenses and the fees and disbursements of Underwriter’s Counsel.

Section 10. Notices. Any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Hilltop Securities, Inc., 50 California Street, Suite 2650, San Francisco, CA 94111, Attention: Municipal Capital Markets Group. Any notice or communication to be given to the City under this Purchase Agreement may be given by delivering the same in writing to the City of Barstow, at the address first set forth above, Attention: City Manager. All notices or communications hereunder by any party shall be given and served upon each other party.

Section 11. Parties in Interest. This Purchase Agreement is made solely for the benefit of the City and the Underwriter (including the successors or assigns thereof) and no other person shall acquire or have any right hereunder or by virtue hereof. All representations, warranties and agreements of the City in this Purchase Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriter and shall survive the delivery of and payment for the Bonds.

Section 12. Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

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S-1
Section 13. Governing Law. This Purchase Agreement shall be governed by and construed in accordance with the laws of the State.

HILLTOP SECURITIES, INC.

By:

Authorized Officer
Accepted:

CITY OF BARSTOW
By:

City Manager
Time of Execution: ____:____

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A-1

EXHIBIT A

MATURITY SCHEDULE
Maturity Date
(June 1) Principal Amount Interest Rate Yield
$_______ ___% Term Bond due June 1, 20__; Yield _____%; Price ____% $_______ ___% Term Bond due June 1, 20__; Yield _____%; Price ____%

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EXHIBIT B

FORM OF CITY ATTORNEY OPINION
________, 2022
City of Barstow
220 East Mountain View Street, Suite A
Barstow, California 92311
Re: City of Barstow 202_Taxable Pension Obligation Bonds Ladies and Gentlemen:

I am the duly appointed City Attorney for the City of Barstow (the “City”) and I have represented the City in connection with the issuance and sale by the City of $________ aggregate principal amount of its City of Barstow 2022 Taxable Pension Obligation Bonds (the “Bonds”). I have examined and relied upon originals (or copies certified or otherwise identified to our satisfaction) of such documents, records and other instruments as I deem necessary or appropriate for the purposes of this opinion, including, without limitation: (i) those documents relating to the existence, organization and operation of the City; (ii) resolutions adopted by a majority of the City Council of the City (the “City Council”) on October 4, 2021, approving the issuance of the Bonds and authorizing the preparation and distribution of the below-defined Preliminary Official Statement (collectively, the “Resolutions”); (iii) all necessary documentation of the City relating to the authorization, execution and delivery of the Indenture of Trust, dated as of April 1, 2022 (the “Indenture”), between the City and ____________, as trustee; (iv) the default judgment dated February 9, 2022, entered in favor of the City in connection with approval of the issuance of the Bonds, Case No. CIVSB2127060, filed in the Superior Court of California, County of San Bernardino; (v) the Bond Purchase Agreement, dated ___________, 2022 (the “Purchase Agreement”), executed by Hilltop Securities, Inc. (the “Underwriter”), and accepted by the City; (vi) the Preliminary Official Statement, dated __________, 2022 (the “Preliminary Official Statement”), relating to the Bonds; (vii) the Official Statement, dated __________, 2022 (the “Official Statement”), relating to the Bonds; (viii) the Continuing Disclosure Certificate, dated _________, 2022 (the “Continuing Disclosure Certificate”), of the City appointing _________, as dissemination agent; and (ix) such other records, documents, certificates, opinions, and other matters as are in our judgment necessary or appropriate to enable us to render the opinions expressed herein. All capitalized terms used herein and not otherwise defined shall have the meaning given to such terms as set forth in the Indenture.

Based on the foregoing, and with regard to State of California (the “State”) law and United States federal law, I am of the opinion that:

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(a) The City is a general law city and municipal corporation of the State, duly organized and validly existing pursuant to the Constitution and laws of the State. (b) The Resolutions approving and authorizing execution and delivery of the Indenture, the Purchase Agreement, and the Continuing Disclosure Certificate (collectively, the “Legal Documents”) and approving and authorizing the issuance of the Bonds and the delivery of the Official Statement and other actions of the City were duly adopted at meetings of the governing body of the City which were called and held pursuant to law and with all public notice required by law and at which quorums were present and acting throughout, and the Resolutions are now in full force and effect and have not been amended or superseded in any way.
(c) Except as disclosed in the Preliminary Official Statement and in the Official Statement, there is no action, suit or proceeding pending and served on the City, or to the best of my knowledge, threatened against the City to (i) restrain or enjoin the execution or delivery of the Legal Documents or the issuance of the Bonds, (ii) in any way contest or affect the validity of the Legal Documents, the Bonds, the Resolutions or the authority of the City to enter into the Legal Documents, or (iii) in any way contest or affect the powers of the City in connection with any action contemplated by the Official Statement, the Resolutions, the Bonds or the Legal Documents.
(d) The issuance of the Bonds and the execution and delivery of the Legal Documents and compliance with the provisions thereof, do not and will not in any material respect conflict with or constitute on the part of the City a breach of or default under any agreement or other instrument to which the City is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the City is subject, which breach or default has or may have a material adverse effect on the ability of the City to perform its obligations under the Legal Documents.
(e) No authorization, approval, consent, or other order of the State or any other governmental body within the State is required for the valid authorization, execution and delivery of the Legal Documents, the issuance of the Bonds or the consummation by the City of the transactions on its part contemplated therein, except such as have been obtained and except such as may be required under state securities or blue sky laws in connection with the purchase and distribution of the Bonds by the Underwriter, as to which I express no opinion.

Very truly yours,

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Barstow City CouncilMarch 21, 2022

Barstow City Council
March 21, 2022