Each further notice of redemption shall be sent at least two days before notice of redemption is mailed to the Bondowners pursuant to the first paragraph of this Section by registered or certified mail, overnight delivery service or any other means acceptable to the registered securities depository listed below and to any other registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds and Parity Bonds as shall be specified by the Trustee and to any national information services that disseminate notice of redemption of obligations such as the Bonds and Parity Bonds as determined by the Trustee:
Registered Securities Depositories
The Depository Trust Company
55 Water Street
New York, New York 10041
Attention: Redemption Area
Telecopy: (212) 855-7232 or (212) 855-7233
Any notice of optional redemption shall 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 shall not constitute an Event of Default under this Indenture. The District and the Trustee shall have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent.
Upon the payment of the redemption price of any Bonds and Parity Bonds being redeemed, each check or other transfer of funds issued for such purpose shall to the extent practicable bear the CUSIP number identifying, by issue and maturity, the Bonds and Parity Bonds being redeemed with the proceeds of such check or other transfer.
Section 4.4. Partial Redemption of Bonds or Parity Bonds. Upon surrender of any Bond or Parity Bond to be redeemed in part only, the District shall execute and the Trustee shall authenticate and deliver to the Bondowner, at the expense of the District, a new Bond or Bonds or a new Parity Bond or Parity Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity or, in the case of surrender of a Parity Bond, a new Parity Bond or Parity Bonds subject to the foregoing limitations.
Section 4.5. Effect of Notice and Availability of Redemption Money. Notice of redemption having been duly given, as provided in Section 4.3 hereof, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption:
(a) The Bonds and Parity Bonds, or portions thereof, designated for redemption shall, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in this Indenture or in any Supplemental Indenture with respect to any Parity Bonds, anything in this Indenture or in the Bonds or the Parity Bonds to the contrary notwithstanding; (b) Upon presentation and surrender thereof at the office of the Trustee, the redemption price of such Bonds and Parity Bonds shall be paid to the Owners thereof; provided that 27 4907-1641-4514v2/022599-0039
so long as the Authority or the Authority Trustee on the Authority's behalf is the registered owner of the Bonds no such presentment is required;
(c) As of the redemption date the Bonds or the Parity Bonds, or portions thereof so designated for redemption shall be deemed to be no longer Outstanding and such Bonds or Parity Bonds, or portions thereof, shall cease to bear further interest; and (d) As of the date fixed for redemption no Owner of any of the Bonds, Parity Bonds or portions thereof so designated for redemption shall be entitled to any of the benefits of this Indenture or any Supplemental Indenture, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available.
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1. Warranty. The District shall preserve and protect the security pledged hereunder to the Bonds and any Parity Bonds against all claims and demands of all persons.
Section 5.2. Covenants. So long as any of the Bonds or Parity Bonds issued hereunder are Outstanding and unpaid, the District makes the following covenants with the Bondowners under the provisions of the Act and this Indenture (to be performed by the District or its proper officers, agents or employees), which covenants are necessary and desirable to secure the Bonds and Parity Bonds and tend to make them more marketable; provided, however, that said covenants do not require the District to expend any funds or moneys other than the Special Taxes and other amounts deposited to the Special Tax Fund:
(a) Punctual Payment; Against Encumbrances. The District covenants that it will receive all Special Taxes in trust for the Owners and will cause to be deposited all Special Taxes with the Trustee immediately upon their apportionment to the District, and the District shall have no beneficial right or interest in the amounts so deposited except as provided by this Indenture. All such Special Taxes shall be disbursed, allocated and applied solely to the uses and purposes set forth herein, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the District.
The District covenants that it will duly and punctually pay or cause to be paid the principal of and interest on every Bond and Parity Bond issued hereunder, together with the premium, if any, thereon on the date, at the place and in the manner set forth in the Bonds and the Parity Bonds and in accordance with this Indenture to the extent that Net Special Taxes and other amounts pledged hereunder are available therefor, and that the payments into the Funds and Accounts created hereunder will be made, all in strict conformity with the terms of the Bonds, any Parity Bonds, and this Indenture, and that it will faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and all Supplemental Indentures and of the Bonds and any Parity Bonds issued hereunder.
The District will not mortgage or otherwise encumber, pledge or place any charge upon any of the Net Special Taxes except as provided in this Indenture, and will not issue any obligation or security having a lien or charge upon the Net Special Taxes superior to or on a parity 28 4907-1641-4514v2/022599-0039
with the Bonds, other than Parity Bonds. Nothing herein shall prevent the District from issuing or incurring indebtedness which is payable from a pledge of Net Special Taxes which is subordinate in all respects to the pledge of Net Special Taxes to repay the Bonds and the Parity Bonds. (b) Levy of Special Tax. So long as any Bonds or Parity Bonds issued under this Indenture are Outstanding, the legislative body of the District covenants to levy the Special Tax in an amount sufficient, together with other amounts on deposit in the Special Tax Fund and available for such purpose, to pay (1) the principal of and interest on the Bonds and any Parity Bonds when due, (2) the Administrative Expenses, (3) any amounts required to maintain the Reserve Account of the Special Tax Fund at the Reserve Requirement, (4) any amounts required to replenish the CFD No. 93-1 IA 16 Reserve Account to the Proportionate Share and pay all Policy Costs resulting from the delinquency in the payment of scheduled debt service on the Bonds or any Parity Bonds, and (5) any amounts due to the Bond Insurer not included in (1) through (4) above. The District further covenants that it will take no actions that would discontinue or cause the discontinuance of the Special Tax levy or the District's authority to levy the Special Tax for so long as the Bonds and any Parity Bonds are Outstanding.
(c) Commence Foreclosure Proceedings. The District covenants for the benefit of the Owners of the Bonds and any Parity Bonds that it will review the public records of the County of Riverside, California, in connection with the collection of the Special Tax not later than July 1 of each year to determine the amount of Special Tax collected in the prior Fiscal Year; and with respect to individual delinquencies within the Improvement Area, if the District determines that any single property owner subject to the Special Tax is delinquent in the payment of Special Taxes in the aggregate of $2,500 or more or as to any single parcel the delinquent Special Taxes represent more than 5% of the aggregate Special Taxes within the Improvement Area, then the District will send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 45 days of such determination, and (if the delinquency remains uncured) the District will cause judicial foreclosure proceedings to be filed in the Superior Court within ninety (90) days of such determination against all properties for which the Special Taxes remain delinquent; provided that, notwithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the amount in the Reserve Account is at least equal to the Reserve Requirement and the amount in the CFD No. 93-1 IA 16 Reserve Account is at least equal to the District's Proportionate Share. The District may, but shall not be obligated to, advance funds from any source of legally available funds in order to maintain the Reserve Account and the CFD No. 93-1 IA 16 Reserve Account. The District may treat any delinquent Special Tax sold to an independent third -party or to any funds of the City for at least 100% of the delinquent amount as having been paid. Proceeds of any such sale up to 100% of the delinquent amount will be deposited in the Special Tax Fund.
The District covenants that it will deposit the net proceeds of any foreclosure and any other Delinquency Proceeds in the Special Tax Fund and will apply such proceeds remaining after the payment of Administrative Expenses to pay any delinquent installments of principal or interest due on the Bonds and any Parity Bonds, to make current payments of principal and interest on the Bonds and any Parity Bonds and to replenish any draw on the Reserve Account and the CFD No. 93- 1 IA 16 Reserve Account, and to pay its proportionate share of Policy Costs resulting from the delinquency in the payment of scheduled debt service on the Bonds or any Parity Bonds.
The City Attorney is hereby authorized to employ counsel to conduct any such foreclosure proceedings. The fees and expenses of any such counsel and costs and expenses of the City Attorney 29 4907-1641-4514v2/022599-0039
(including a charge for City or District staff time) in conducting foreclosure proceedings shall be an Administrative Expense hereunder.
(d) Payment of Claims. The District will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the Net Special Taxes or other funds in the Special Tax Fund, or which might impair the security of the Bonds or any Parity Bonds then Outstanding; provided that nothing herein contained shall require the District to make any such payments so long as the District in good faith shall contest the validity of any such claims.
(e) Books and Accounts. The District will keep proper books of records and accounts, separate from all other records and accounts of the District, in which complete and correct entries shall be made of all transactions relating to the levy of the Special Tax and the deposits to the Special Tax Fund. Such books of records and accounts shall at all times during business hours be subject to the inspection of the Trustee or of the Owners of not less than 10% of the principal amount of the Bonds or the Owners of not less than 10% of any issue of Parity Bonds then Outstanding or their representatives authorized in writing.
(f) Federal Tax Covenants. Notwithstanding any other provision of this Indenture, absent an opinion of Bond Counsel that the exclusion from gross income of interest on the Authority Bonds issued on a tax-exempt basis for federal income tax purposes will not be adversely affected for federal income tax purposes, the District covenants to comply with all applicable requirements of the Code necessary to preserve such exclusion from gross income and specifically covenants, without limiting the generality of the foregoing, as follows:
(1) Private Activity. The District will take no action or refrain from taking any action or make any use of the proceeds of the Bonds or any Parity Bonds or of any other moneys or property which would cause the Authority Bonds issued on a tax-exempt basis for federal income tax purposes to be "private activity bonds" within the meaning of Section 141 of the Code; (2) Arbitrage. The District will make no use of the proceeds of the Bonds or any Parity Bonds or of any other amounts or property, regardless of the source, or take any action or refrain from taking any action which will cause the Authority Bonds issued on a tax-exempt basis for federal income tax purposes to be "arbitrage bonds" within the meaning of Section 148 of the Code;
(3) Federal Guaranty. The District will make no use of the proceeds of the Bonds or any Parity Bonds or take or omit to take any action that would cause the Authority Bonds issued on a tax-exempt basis for federal income tax purposes to be "federally guaranteed" within the meaning of Section 149(b) of the Code;
(4) Hedge Bonds. The District will make no use of the proceeds of the Bonds or any Parity Bonds or any other amounts or property, regardless of the source, or take any action or refrain from taking any action that would cause the Authority Bonds issued on a tax-exempt basis for federal income tax purposes to be considered "hedge bonds" within the meaning of Section 149(g) of the Code unless the District takes all necessary action to assure compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income for federal income tax purposes of interest on the Authority Bonds; and 30 4907-1641-4514v2/022599-0039
(5) Other Tax Exempt Issues. The District will not use proceeds of other tax exempt securities to redeem any Bonds or Parity Bonds without first obtaining the written opinion of Bond Counsel that doing so will not impair the exclusion from gross income for federal income tax purposes of interest on the Authority Bonds issued on a tax-exempt basis. (g) Reduction of Maximum Special Taxes. The District hereby fords and determines that, historically, delinquencies in the payment of special taxes authorized pursuant to the Act in community facilities districts in Southern California have from time to time been at levels requiring the levy of special taxes at the maximum authorized rates in order to make timely payment of principal of and interest on the outstanding indebtedness of such community facilities districts.
For this reason, the District hereby determines that a reduction in the maximum Special Tax rates authorized to be levied on parcels in the Improvement Area below the levels provided in this Section 5.2(g) would interfere with the timely retirement of the Bonds and Parity Bonds. The District determines it to be necessary in order to preserve the security for the Bonds and Parity Bonds to covenant, and, to the maximum extent that the law permits it to do so, the District hereby does covenant, that it shall not initiate proceedings to reduce the maximum Special Tax rates for the District, unless, in connection therewith, (i) the District receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that, on the basis of the parcels of land and improvements existing in the Improvement Area as of the July 1 preceding the reduction, the maximum amount of the Special Tax which may be levied on then existing taxable property in each Bond Year for any Bonds and Parity Bonds Outstanding will equal at least the sum of the Priority Administrative Expenses for such Bond Year plus 110% of the gross debt service in such Bond Year on all Bonds and Parity Bonds to remain Outstanding after the reduction is approved, (ii) the District finds that any reduction made under such conditions will not adversely affect the interests of the Owners of the Bonds and Parity Bonds, (iii) no Policy Costs or amounts under the Insurance Policy are due and payable to the Bond Insurer and (iv) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds. For purposes of estimating Administrative Expenses for the foregoing calculation, the Independent Financial Consultants shall compute the Administrative Expenses for the current Fiscal Year and escalate that amount by two percent (2%) in each subsequent Fiscal Year. (h) Covenants to Defend. The District covenants that, in the event that any initiative is adopted by the qualified electors in the Improvement Area which purports to reduce the minimum or the maximum Special Tax below the levels specified in Section 5.2(g) above or to limit the power of the District to levy the Special Taxes for the purposes set forth in Section 5.2(b) above, it will commence and pursue legal action in order to preserve its ability to comply with such covenants.
(i) Limitation on Right to Tender Bonds. The District hereby covenants that it will not adopt any policy pursuant to Section 53344.1 of the Act permitting the tender of Bonds or Parity Bonds in full payment or partial payment of any Special Taxes unless the District shall have first received a certificate from an Independent Financial Consultant that the acceptance of such a tender will not result in the Improvement Area having insufficient Special Tax revenues to pay the principal of and interest on the Bonds and Parity Bonds when due. (j) Further Assurances. The District shall make, execute and deliver any and all such further agreements, 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 31 4907-1641-4514v2/022599-0039
and confirming unto the Owners of the Bonds and any Parity Bonds of the rights and benefits provided in this Indenture.
(k) Subordinate Debt. Any indebtedness of the District evidenced by any subordinated debt and any renewals or extensions thereof (herein called "Subordinated Indebtedness"), shall at all times be wholly subordinate and junior in right of payment to any and all indebtedness of the District under this Indenture (herein called "Superior Indebtedness"). Following an event of default under this Indenture, no Subordinated Indebtedness shall be paid prior to any Superior Indebtedness in any fiscal year of the District. If the holder of the Subordinated Indebtedness is a commercial bank, savings bank, savings and loan association or other financial institution which is authorized by law to accept and hold deposits of money or issue certificates of deposit, such holder must agree to waive any common law or statutory right of setoff with respect to any deposits of the District maintained with or held by such holder. (1) Pledged Net Special Taxes. The District represents it has not heretofore made a pledge of, granted a lien on or security interest in, or made an assignment or sale of the Net Special Taxes that ranks on a parity with or prior to the pledge granted under this Indenture. The District, except as may be provided otherwise in this Indenture, shall not hereafter make any pledge or assignment of, lien on, or security interest in the Net Special Taxes payable senior to or on a parity with the pledge of Net Special Taxes established under this Indenture.
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent.
The District may from time to time, and at any time, without notice to or consent of any of the Bondowners, adopt Supplemental Indentures for any of the following purposes provided, however, that any such amendment or modification which adversely affects the rights and interests of the Bond Insurer shall require the prior written consent of the Bond Insurer:
(a) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other provision herein, or to make any other provision with respect to matters or questions arising under this Indenture or in any additional resolution or order, provided that such action is not materially adverse to the interests of the Bondowners; (b) to add to the covenants and agreements of and the limitations and the restrictions upon the District contained in this Indenture, other covenants, agreements, limitations and restrictions to be observed by the District which are not contrary to or inconsistent with this Indenture as theretofore in effect or which further secure Bond or Parity Bond payments; (c) to provide for the issuance of any Parity Bonds, and to provide the terms and conditions under which such Parity Bonds may be issued, subject to and in accordance with the provisions of this Indenture;
(d) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, or to comply with the Code or regulations issued thereunder, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, 32 4907-1641-4514v2/022599-0039
and which shall not materially adversely affect the interests of the Owners of the Bonds or any Parity Bonds then Outstanding; or
(e) to modify, alter or amend the rate and method of apportionment of the Special Taxes in any manner so long as such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the Improvement Area to an amount which is less than 110% of the sum of estimated Administrative Expenses and principal and interest due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such amendment; or
(f) to modify, alter, amend or supplement this Indenture in any other respect which is not materially adverse to the Bondowners.
Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent.
Exclusive of the Supplemental Indentures described in Section 6.1, the Owners of not less than a majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding shall have the right to consent to and approve the adoption by the District of such Supplemental Indentures as shall be deemed necessary or desirable by the District, for the purpose of waiving, modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture; provided, however, that nothing herein shall permit, or be construed as permitting, (a) an extension of the maturity date of the principal, or the payment date of interest on, any Bond or Parity Bond, (b) a reduction in the principal amount of, or redemption premium on, any Bond or Parity Bond or the rate of interest thereon, (c) a preference or priority of any Bond or Parity Bond over any other Bond or Parity Bond, or (d) a reduction in the aggregate principal amount of the Bonds and Parity Bonds the Owners of which are required to consent to such Supplemental Indenture, without the consent of the Owners of all Bonds and Parity Bonds then Outstanding.
If at any time the District shall desire to adopt a Supplemental Indenture, which pursuant to the terms of this Section shall require the consent of the Bondowners, the District shall so notify the Trustee and shall deliver to the Trustee a copy of the proposed Supplemental Indenture. The Trustee shall, at the expense of the District, cause notice of the proposed Supplemental Indenture to be mailed, by first class mail, postage prepaid, to all Bondowners at their addresses as they appear in the Bond Register (if the Authority or the Authority Trustee on the Authority's behalf is the owner of all the Bonds, such amendment may be delivered by other communication methods). Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that a copy thereof is on file at the office of the Trustee for inspection by all Bondowners. The failure of any Bondowners to receive such notice shall not affect the validity of such Supplemental Indenture when consented to and approved by the Owners of not less than a majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding as required by this Section. Whenever at any time within one year after the date of the first mailing of such notice, the Trustee shall receive an instrument or instruments purporting to be executed by the Owners of not less than a majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding, which instrument or instruments shall refer to the proposed Supplemental Indenture described in such notice, and shall specifically consent to and approve the adoption thereof by the District substantially in the form of the copy referred to in such notice as on file with the Trustee, such proposed Supplemental Indenture, when duly adopted by the District, shall thereafter become a part of the proceedings for the issuance of the Bonds and any Parity Bonds. In determining whether the Owners of a majority of the aggregate principal amount of the Bonds and Parity Bonds have consented to the adoption of any Supplemental Indenture, Bonds or Parity Bonds which are owned by the District or by any person directly or indirectly controlling or 33 4907-1641-4514v2/022599-0039
controlled by or under the direct or indirect common control with the District, shall be disregarded and shall be treated as though they were not Outstanding for the purpose of any such determination.
Upon the adoption of any Supplemental Indenture and the receipt of consent to any such Supplemental Indenture from the Owners of not less than a majority in aggregate principal amount of the Outstanding Bonds and Parity Bonds in instances where such consent is required pursuant to the provisions of this section, this Indenture shall be, and shall be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the District and all Owners of Outstanding Bonds and Parity Bonds shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such modifications and amendments.
The Trustee may in its discretion, but shall not be obligated to, enter into any such Supplemental Indenture authorized by Sections 6.1 and 6.2 which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.
Notwithstanding the foregoing, so long as the Insurance Policy is in full force and effect, any amendment, supplement, modification to, or waiver of, this Indenture pursuant to this Section 6.2 shall be subject to the prior written consent of the Bond Insurer.
Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity Bonds. After the effective date of any action taken as hereinabove provided, the District may determine that the Bonds or any Parity Bonds may bear a notation, by endorsement in form approved by the District, as to such action, and in that case upon demand of the Owner of any Outstanding Bond or Parity Bond at such effective date and presentation of his Bond or Parity Bond for the purpose at the office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, a suitable notation as to such action shall be made on such Bonds or Parity Bonds. If the District shall so determine, new Bonds or Parity Bonds so modified as, in the opinion of the District, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Owner of any Outstanding Bond or Parity Bond at such effective date such new Bonds or Parity Bonds shall be exchanged at the office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, without cost to each Owner of Outstanding Bonds or Parity Bonds, upon surrender of such Outstanding Bonds or Parity Bonds.
ARTICLE VII
TRUSTEE
Section 7.1. Trustee. Zions Bancorporation, National Association, shall be the Trustee for the Bonds and any Parity Bonds unless and until another Trustee is appointed by the District hereunder. The District may, at any time, appoint a successor Trustee satisfying the requirements of Section 7.2 below for the purpose of receiving all money which the District is required to deposit with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture; provided, however, that the Trustee shall be at all times the same entity as the Authority Trustee.
The Trustee is hereby authorized to and shall mail by first class mail, postage prepaid, or wire transfer in accordance with Section 2.5 above, interest payments to the Bondowners, to select Bonds and Parity Bonds for redemption, and to maintain the Bond Register. The Trustee is hereby authorized to pay the principal of and premium, if any, on the Bonds and Parity Bonds when the same are duly presented to it for payment at maturity or on call and redemption, to provide for the 34 4907-1641-4514v2/022599-0039
registration of transfer and exchange of Bonds and Parity Bonds presented to it for such purposes, to provide for the cancellation of Bonds and Parity Bonds all as provided in this Indenture, and to provide for the authentication of Bonds and Parity Bonds, and shall perform all other duties assigned to or imposed on it as provided in this Indenture. The Trustee shall keep accurate records of all funds administered by it and all Bonds and Parity Bonds paid, discharged and cancelled by it.
The Trustee is hereby authorized to redeem the Bonds and Parity Bonds when duly presented for payment at maturity, or on redemption prior to maturity. The Trustee shall cancel all Bonds and Parity Bonds upon payment thereof in accordance with the provisions of Section 10.1 hereof.
The District shall from time to time, subject to any agreement between the District and the Trustee then in force, pay to the Trustee compensation for its services, reimburse the Trustee for all its advances and expenditures, including, but not limited to, advances to and fees, costs and expenses of independent accountants or counsel employed by it in the exercise and performance of its powers and duties hereunder, and indemnify and save the Trustee, its officers, officials, directors, employees and agents, harmless from and against any losses, costs, damages, claims, expenses and liabilities, including, without limitation fees, costs and expenses of its attorneys, not arising from its own negligence or willful misconduct which it may incur in the exercise and performance of its powers and duties hereunder. In no event shall the Trustee be responsible or liable for any consequential, punitive, indirect, incidental or special damages or loss of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. The foregoing obligation of the District to indemnify the Trustee shall survive the removal or resignation of the Trustee and the discharge of the Bonds.
Section 7.2. Removal of Trustee. The District may at any time at its sole discretion remove the Trustee initially appointed, and any successor thereto, by delivering to the Trustee a written notice of its decision to remove the Trustee and may appoint a successor or successors thereto; provided that any such successor shall be a bank, association or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least $75,000,000, and subject to supervision or examination by federal or state authority. Any removal shall become effective only upon acceptance of appointment by the successor Trustee. If any bank, association or trust company appointed as a successor publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this section the combined capital and surplus of such bank, association or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Any removal of the Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee and notice being sent by the successor Trustee to the Bondowners of the successor Trustee's identity and address.
Section 7.3. Resignation of Trustee. The Trustee may at any time resign and discharged from its duties and obligations hereunder by giving written notice to the District and by giving to the Owners notice of such resignation, which notice shall be sent to the Owners at their addresses appearing in the registration books in the office of the Trustee. Upon receiving such notice of resignation, the District shall promptly appoint a successor Trustee satisfying the criteria in Section
7.2 above by an instrument in writing. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed and have accepted appointment within thirty (30) calendar days of giving notice of removal or notice of resignation as aforesaid, the 35 4907-1641-4514v2/022599-0039
resigning Trustee or any Owner (on behalf of itself and all other Owners) may, at the sole expense of the District petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee.
Section 7.4. Liability of Trustee. The recitals of fact and all promises, covenants and agreements contained herein and in the Bonds and any Parity Bonds shall be taken as statements, promises, covenants and agreements of the District, and the Trustee assumes no responsibility for the correctness of the same and makes no representations as to the validity or sufficiency of this Indenture, the Bonds or any Parity Bonds, and shall incur no responsibility in respect thereof, other than in connection with its duties or obligations specifically set forth herein, in the Bonds and any Parity Bonds, or in the certificate of authentication assigned to or imposed upon the Trustee. The Trustee shall be under no responsibility or duty with respect to the issuance of the Bonds or any Parity Bonds for value. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee shall not be liable for any action taken or omitted by it or any of its officers, employees or agents in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
The Trustee shall be entitled to request and receive written instructions from the District and/or Owners and shall have no responsibility or liability for any losses or damages of any nature that may arise from any action taken or not taken by the Trustee in accordance with the written direction of any such party. The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in accordance with the written direction of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture.
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of an Owner and/or the District, pursuant to the provisions of this Indenture, unless such party shall have offered to the Trustee security or indemnity (satisfactory to the Trustee in its sole and absolute discretion) against the costs, expenses and liabilities which may be incurred by it in compliance with such request or direction.
Neither the Trustee nor any of its directors, officers, employees, agents or affiliates shall be responsible for nor have any duty to monitor the performance or any action of the District or any of its directors, members, officers, agents, affiliates or employee, nor shall it have any liability in connection with the malfeasance or nonfeasance by such party. The Trustee may assume performance by all such persons of their respective obligations. The Trustee shall have no enforcement or notification obligations relating to breaches of representations or warranties of any other person. The Trustee shall be conclusively protected in acting upon any notice, resolution, request, direction, consent, order, certificate, opinion, report, bond, debenture, note, other evidence of indebtedness (including any Bond or Parity Bond) or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper person or persons, not only as to due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein. The Trustee may consult with counsel, who may be counsel to the District, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization 36 4907-1641-4514v2/022599-0039
and protection in respect of any action taken or suffered hereunder in good faith and in accordance therewith.
The Trustee shall not be bound to recognize any person as the Owner of a Bond or Parity Bond unless and until such Bond or Parity Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed.
Whenever in the administration of its duties under this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, be deemed to be conclusively proved and established by a written certificate of the District, and/or opinion of counsel, and such certificate or opinion shall be full warrant to the Trustee for any action taken or suffered under the provisions of this Indenture upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.
The Trustee shall have no duty or obligation whatsoever to enforce the collection of Special Taxes or other funds to be deposited with it hereunder, or as to the correctness of any amounts received, but its liability shall be limited to the proper accounting for such funds as it shall actually receive. No provision in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of its rights or powers.
The Trustee shall not be deemed to have knowledge of (A) any events of other information, or (B) any default or event of default until an officer at the Trustee's corporate trust officer responsible for the administration of its duties hereunder shall have actual knowledge thereof or the Trustee shall have received written notice thereof at its corporate trust office.
The Trustee shall not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of enforced delay ("unavoidable 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, war, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, loss or malfunctions of utilities, computer (hardware or software) or communications service, accidents, labor disputes, the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to the project, malicious mischief, condemnation, and unusually severe weather or delays of supplies or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Trustee.
The Trustee shall have no responsibility or liability with respect to any information, statements or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds.
The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty or in any way expand or impliedly expand the scope of the Trustee's duties 37 4907-1641-4514v2/022599-0039
hereunder, and, with respect to such permissive rights, the Trustee shall not be answerable for other than its negligence or willful misconduct.
The Trustee shall be entitled to rely on and shall not be liable for any action taken or omitted to be taken by the Trustee in accordance with the advice of counsel or other professionals retained or consulted by the Trustee. 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.
The Trustee may become the Owner or pledgee of the Bonds and Parity Bonds with the same rights it would have if it were not Trustee.
The Trustee shall perform such duties and only such duties as are specifically set forth in this Indenture and no implied duties or obligations shall be read into this Indenture against the Trustee.
These duties shall be deemed purely ministerial in nature, and the Trustee shall not be liable except for the performance of such duties, and no implied covenants or obligations shall be read into this Indenture against the Trustee.
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Owners pursuant to the provisions of this Indenture unless such Owners shall have offered to the Trustee security or indemnity satisfactory to the Trustee in its sole and exclusive direction against the costs, expenses and liabilities which may be incurred therein or thereby.
The Trustee, prior to the occurrence of an Event of Default and after the curing or waiver of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default has occurred (which has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs.
The Trustee agrees to accept and act upon facsimile or electronic transmission of written instructions and/or directions pursuant to this Indenture provided, however, that: (a) such originally executed instructions and/or directions shall be signed by a person as may be designated and authorized to sign for the party signing such instructions and/or directions, and (b) the Trustee shall have received a current incumbency certificate containing the specimen signature of such designated person. Any such instructions and directions furnished by electronic transmission shall be in the form of attachments in PDF format.
Notwithstanding anything to the contrary herein, the Trustee shall have no duty to prepare or file any Federal or state tax report or return with respect to any funds held pursuant to this Indenture or any income earned thereon, except for the delivery and filing of tax information reporting forms required to be delivered and filed with the Internal Revenue Service.
Section 7.5. Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, shall be the successor to the 38 4907-1641-4514v2/022599-0039
Trustee without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding.
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default. Any one or more of the following events shall constitute an "event of default":
(a) Default in the due and punctual payment of the principal of or redemption premium, if any, on any Bond or Parity Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; (b) Default in the due and punctual payment of the interest on any Bond or Parity Bond when and as the same shall become due and payable; or (c) Except as described in (a) or (b), default shall be made by the District in the observance of any of the agreements, conditions or covenants on its part contained in this Indenture, the Bonds or any Parity Bonds, and such default shall have continued for a period of 30 days after the District shall have been given notice in writing of such default by the Trustee or the Owners of 25% in aggregate principal amount of the Outstanding Bonds and Parity Bonds; provided, however, that if in the reasonable opinion of the District the default stated in the notice can be corrected, but not within such thirty (30) day period, and corrective action is instituted by the District, with the written approval of the Bond Insurer (so long as the Bond Insurer has not defaulted on any obligation under the Insurance Policy), within such thirty (30) day period and diligently pursued in good faith until the default is corrected, such default shall not be an Event of Default hereunder.
The Trustee agrees to give notice to the Owners immediately upon the occurrence of an event of default under (a) or (b) above and within 30 days of the Trustee's knowledge of an event of default under (c) above.
Section 8.2. Remedies of Owners. Upon the occurrence of an Event of Default, the Trustee may pursue any available remedy at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Outstanding Bonds and Parity Bonds, and to enforce any rights of the Trustee under or with respect to this Indenture, including:
(a) By mandamus or other suit or proceeding at law or in equity to enforce its rights against the District and any of the members, officers and employees of the District, and to compel the District or any such members, officers or employees to perform and carry out their duties under the Act and their agreements with the Owners as provided in this Indenture; (b) By suit in equity to enjoin any actions or things which are unlawful or violate the rights of the Owners; or
(c) By a suit in equity to require the District and its members, officers and employees to account as the trustee of an express trust.
If an Event of Default shall have occurred and be continuing and if requested so to do by the Owners of at least twenty-five percent (25%) in aggregate principal amount Outstanding Bonds and 39 4907-1641-4514v2/022599-0039
Parity Bonds and is indemnified to its satisfaction, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Article VIII, as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Owners of the Bonds and Parity Bonds.
No remedy herein conferred upon or reserved to the Trustee or 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 Act or any other law.
The Bonds and any Parity Bonds are not subject to acceleration prior to maturity.
Section 8.3. Application of Revenues and Other Funds After Default. All amounts received by the Trustee pursuant to any right given or action taken by the Trustee under the provisions of this Indenture relating to the Bonds and Parity Bonds shall be applied by the Trustee in the following order upon presentation of the several Bonds and Parity Bonds:
First, to the payment of the fees, costs and expenses of the Trustee in declaring such Event of Default and in carrying out the provisions of this Article VIII, including reasonable compensation to its agents, attorneys and counsel, and to the payment of all other outstanding fees and expenses of the Trustee; and
Second, to the payment of the whole amount of interest on and principal of the Bonds and Parity Bonds then due and unpaid, with interest on overdue installments of principal and interest to the extent permitted by law at the net effective rate of interest then borne by the Outstanding Bonds and Parity Bonds; provided, however, that in the event such amounts shall be insufficient to pay in full the full amount of such interest and principal, then such amounts shall be applied in the following order of priority:
(a) first to the payment of all installments of interest on the Bonds and Parity Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing, (b) second, to the payment of all installments of principal, including Sinking Fund Payments, of the Bonds and Parity Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing, and
(c) third, to the payment of interest on overdue installments of principal and interest on the Bonds and Parity Bonds on a pro rata basis based on the total amount then due and owing.
Section 8.4. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of twenty-five percent (25%) in aggregate principal amount of the Bonds and Parity Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds and Parity Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall 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 40 4907-1641-4514v2/022599-0039
there has been filed with it a written request signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds and Parity Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement or other such litigation. Any suit, action or proceeding which any Owner of Bonds or Parity Bonds shall have 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 of Bonds and Parity Bonds similarly situated and the Trustee is hereby appointed (and the successive respective Owners of the Bonds and Parity Bonds issued hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney in fact of the respective Owners of the Bonds and Parity Bonds for the purposes 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 of the Bonds and Parity Bonds as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney -in -fact.
Section 8.5. Appointment of Receivers. Upon the occurrence of an Event of Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Owners of the Bonds and Parity Bonds under this Indenture, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Net Special Taxes and other amounts pledged hereunder, pending such proceedings, with such powers as the court making such appointment shall confer.
Section 8.6. Non -Waiver. Nothing in this Article VIII or in any other provision of this Indenture, or in the Bonds or the Parity Bonds, shall affect or impair the obligation of the District, which is absolute and unconditional, to pay the interest on and principal of the Bonds and Parity Bonds to the respective Owners of the Bonds and Parity Bonds at the respective dates of maturity, as herein provided, out of the Net Special Taxes and other moneys herein pledged for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any Owners shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of the Trustee or any Owner of any of the Bonds or Parity Bonds 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 Trustee or the Owners by the Act or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Owners, as the case may be.
Section 8.7. Limitations on Rights and Remedies of Owners. No Owner of any Bond or Parity Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless (a) such Owner shall have 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 and Parity Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall 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 shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds and Parity Bonds of 41 4907-1641-4514v2/022599-0039
any remedy hereunder; it being understood and intended that no one or more Owners of Bonds and Parity Bonds shall have 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 and Parity Bonds.
The right of any Owner of any Bond and Parity Bond to receive payment of the principal of and interest and premium (if any) on such Bond and Parity Bond as herein provided or to institute suit for the enforcement of any such payment, 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 8.8. Termination of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case, the District, the Trustee and the Owners shall be restored to their former positions and rights hereunder, respectively, with regard to the property subject to this Indenture, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken.
ARTICLE IX
DEFEASANCE AND PARITY BONDS
Section 9.1. Defeasance. If the District shall pay or cause to be paid, or there shall otherwise be paid, to the Owner of an Outstanding Bond or Parity Bond the interest due thereon and the principal thereof, at the times and in the manner stipulated in this Indenture or any Supplemental Indenture, then the Owner of such Bond or Parity Bond shall cease to be entitled to the pledge of Net Special Taxes, and, other than as set forth below, all covenants, agreements and other obligations of the District to the Owner of such Bond or Parity Bond under this Indenture and any Supplemental Indenture relating to such Parity Bond shall thereupon cease, terminate and become void and be discharged and satisfied. In the event of a defeasance of all Outstanding Bonds and Parity Bonds pursuant to this Section, the Trustee shall execute and deliver to the District all such instruments as may be desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the District's general fund all money or securities held by it pursuant to this Indenture which are not required for the payment of the principal of, premium, if any, and interest due on such Bonds and Parity Bonds.
Any Outstanding Bond or Parity Bond shall be deemed to have been paid within the meaning expressed in the first paragraph of this Section if such Bond or Parity Bond is paid in any one or more of the following ways:
(a) by paying or causing to be paid the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same become due and payable; (b) by depositing with the Trustee, in trust, at or before maturity, money which, together with the amounts then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Fund) and available for such purpose, is fully sufficient to pay the principal of, premium, if 42 4907-1641-4514v2/022599-0039
any, and interest on such Bond or Parity Bond, as and when the same shall become due and payable on and prior to the maturity date or redemption date thereof, as applicable; or (c) by depositing with the Trustee or another escrow bank appointed by the District, in trust, Defeasance Securities, in which the District may lawfully invest its money, in such amount as will be sufficient, together with the interest to accrue thereon and moneys then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Fund) and available for such purpose, together with the interest to accrue thereon, to pay and discharge the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same shall become due and payable on and prior to the maturity date or redemption date thereof, as applicable; then, at the election of the District, and notwithstanding that any Outstanding Bonds and Parity Bonds shall not have been surrendered for payment, all obligations of the District under this Indenture and any Supplemental Indenture with respect to such Bond or Parity Bond shall cease and terminate, except for the obligation of the Trustee to pay or cause to be paid to the Owners of any such Bond or Parity Bond not so surrendered and paid, all sums due thereon. Notice of such election shall be filed with the Trustee not less than ten days prior to the proposed defeasance date, or such shorter period of time as may be acceptable to the Trustee. In connection with a defeasance under (c) above, there shall be provided to the District and the Bond Insurer a verification report from an independent nationally recognized certified public accountant, stating its opinion as to the sufficiency of the moneys or securities deposited with the Trustee or the escrow bank to pay and discharge the principal of, premium, if any, and interest on all Outstanding Bonds and Parity Bonds to be defeased in accordance with this Section, as and when the same shall become due and payable, an escrow agreement with respect to the deposits under (b) and (c) above (which shall be acceptable in form and substance to the Bond Insurer, so long as the Bond Insurer has not defaulted on any obligation under the Insurance Policy), and an opinion of Bond Counsel (which may rely upon the opinion of the certified public accountant) to the effect that the Bonds or Parity Bonds being defeased have been legally defeased in accordance with this Indenture and any applicable Supplemental Indenture. The Bond Insurer shall be provided with final drafts of the above -referenced documentation not less than five Business Days prior to the funding of the escrow.
The Bonds shall be deemed Outstanding under this Indenture unless and until they are in fact paid and retired or the above criteria are met.
Upon a defeasance, the Trustee, upon request of the District, shall release the rights of the Owners of such Bonds and Parity Bonds which have been defeased under this Indenture and any Supplemental Indenture and execute and deliver to the District all such instruments as may be desirable to evidence such release, discharge and satisfaction. In the case of a defeasance hereunder of all Outstanding Bonds and Parity Bonds, the Trustee shall pay over or deliver to the District any funds held by the Trustee at the time of a defeasance, which are not required for the purpose of paying and discharging the principal of or interest on the Bonds and Parity Bonds when due. The Trustee shall, at the written direction of the District, send a notice to the Bondowners whose Bonds or Parity Bonds have been defeased, in the form directed by the District, stating that the defeasance has occurred.
This Indenture shall not be discharged until Policy Costs due to the Bond Insurer (to the extent the responsibility of the District as a result of the District's failure to pay principal of, or interest on the Bonds when due) shall have been paid in full. The District's obligation to pay such 43 4907-1641-4514v2/022599-0039
amounts shall expressly survive payment in full of the payments of principal of and interest on the Bonds.
Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness. The District may at any time after the issuance and delivery of the Bonds hereunder issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund and secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds theretofore issued hereunder or under any Supplemental Indenture; provided, however, that Parity Bonds may only be issued for the purpose of refunding all or a portion of the Bonds or Parity Bonds then Outstanding subject to the following specific conditions, which are hereby made conditions precedent to the issuance of any such Parity Bonds:
(a) The District shall be in compliance with all covenants set forth in this Indenture and any Supplemental Indenture then in effect and a certificate of the District to that effect shall have been filed with the Trustee; provided, however, that Parity Bonds may be issued notwithstanding that the District is not in compliance with all such covenants so long as immediately following the issuance of such Parity Bonds the District will be in compliance with all such covenants.
(b) The issuance of such Parity Bonds shall have been duly authorized pursuant to the Act and all applicable laws, and the issuance of such Parity Bonds shall have been provided for by a Supplemental Indenture duly adopted by the District which shall specify the following:
(1) the purpose for which such Parity Bonds are to be issued and the fund or funds into which the proceeds thereof are to be deposited; (2) the authorized principal amount of such Parity Bonds; (3) the date and the maturity date or dates of such Parity Bonds; provided that (i) each maturity date shall fall on a September 1, (ii) all such Parity Bonds of like maturity shall be identical in all respects, except as to number, and (iii) fixed serial maturities or Sinking Fund Payments, or any combination thereof, shall be established to provide for the retirement of all such Parity Bonds on or before their respective maturity dates; (4) the description of the Parity Bonds, the place of payment thereof and the procedure for execution and authentication;
(5) the denominations and method of numbering of such Parity Bonds; (6) the amount and due date of each mandatory Sinking Fund Payment, if any, for such Parity Bonds;
(7) the amount, if any, to be deposited from the proceeds of such Parity Bonds in the Reserve Account to increase the amount therein to the Reserve Requirement or to the CFD No. 93-1 IA 16 Reserve Account to increase the amount therein to the Proportionate Share, provided that if the interest on such Parity Bonds is intended by the District to be excluded from the gross income of the recipients thereof for federal income tax purposes, such amount shall not exceed the maximum amount of proceeds that, in the opinion of Bond Counsel, can be so 44 4907-1641-4514v2/022599-0039
deposited without causing the interest on such Parity Bonds to be included in the gross income of the recipients thereof for federal income tax;
(8) the form of such Parity Bonds; and
(9) such other provisions as are necessary or appropriate and not inconsistent with this Indenture.
(c) The District shall have received the following documents or money or securities, all of such documents dated or certified, as the case may be, as of the date of delivery of such Parity Bonds by the Trustee (unless the Trustee shall accept any of such documents bearing a prior date):
(1) a certified copy of the Supplemental Indenture authorizing the issuance of such Parity Bonds;
(2) a written request of the District as to the delivery of such Parity Bonds;
(3) an opinion of Bond Counsel to the District to the effect that (i) the District has the right and power under the Act to adopt the Supplemental Indenture relating to such Parity Bonds, and the Supplemental Indenture has been duly and lawfully adopted by the District, is in full force and effect and is valid and binding upon the District and enforceable in accordance with its terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights); (ii) the Indenture creates the valid pledge which it purports to create of the Net Special Taxes and other amounts as provided in the Indenture, subject to the application thereof to the purposes and on the conditions permitted by the Indenture; and (iii) such Parity Bonds are valid and binding limited obligations of the District, enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights) and the terms of the Indenture and all Supplemental Indentures thereto and are entitled to the benefits of the Indenture and all such Supplemental Indentures, and such Parity Bonds have been duly and validly authorized and issued in accordance with the Act (or other applicable laws) and the Indenture and all such Supplemental Indentures; and a further opinion of Bond Counsel to the effect that, assuming compliance by the District with certain tax covenants, the issuance of the Parity Bonds will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds and any Parity Bonds theretofore issued on a tax exempt basis, or the exemption from State of California personal income taxation of interest on any Outstanding Bonds and Parity Bonds theretofore issued; (4) a certificate of the District containing such statements as may be reasonably necessary to show compliance with the requirements of this Indenture; (5) a certificate of an Independent Financial Consultant certifying that in each Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain Outstanding following the issuance of the Parity Bonds proposed to be issued is less than the Annual Debt Service on the Bonds and Parity Bonds Outstanding prior to the issuance of such Parity Bonds; and
45 4907-1641-4514v2/022599-0039
(6) Such further documents, money and securities as are required by the provisions of this Indenture and the Supplemental Indenture providing for the issuance of Parity Bonds.
(d) So long as any Bonds remain outstanding or any amounts are owed to the Bond Insurer by the District, without the prior written consent of the Bond Insurer, the District shall not issue any Parity Bonds that permits or requires the Owner to tender such Parity Bonds for purchase prior to the stated maturity thereof without the prior written consent of the Bond Insurer.
ARTICLE X
MISCELLANEOUS
Section 10.1. Cancellation of Bonds and Parity Bonds. All Bonds and Parity Bonds surrendered to the Trustee for payment upon maturity or for redemption shall be upon payment therefor, and any Bond or Parity Bond purchased by the District as authorized herein and delivered to the Trustee for such purpose shall be, cancelled forthwith and shall not be reissued. The Trustee shall destroy such Bonds and Parity Bonds, as provided by law, and furnish to the District a certificate of such destruction.
Section 10.2. Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Indenture to be signed or executed by Bondowners may be in any number of concurrent instruments of similar tenor may be signed or executed by such Owners in person or by their attorneys appointed by an instrument in writing for that purpose, or by the bank, trust company or other depository for such Bonds. Proof of the execution of any such instrument, or of any instrument appointing any such attorney, and of the ownership of Bonds or Parity Bonds shall be sufficient for the purposes of this Indenture (except as otherwise herein provided), if made in the following manner:
(a) The fact and date of the execution by any Owner or his or her attorney of any such instrument and of any instrument appointing any such attorney, may be proved by a signature guarantee of any bank or trust company located within the United States of America. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such signature guarantee shall also constitute sufficient proof of his authority.
(b) As to any Bond or Parity Bond, the person in whose name the same shall be registered in the Bond Register shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of any such Bond or Parity Bond, and the interest thereon, shall be made only to or upon the order of the registered Owner thereof or his or her legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond or Parity Bond and the interest thereon to the extent of the sum or sums to be paid. Neither the District nor the Trustee shall be affected by any notice to the contrary.
Nothing contained in this Indenture shall be construed as limiting the Trustee or the District to such proof, it being intended that the Trustee or the District may accept any other evidence of the matters herein stated which the Trustee or the District may deem sufficient. Any request or consent of the Owner of any Bond or Parity Bond shall bind every future Owner of the same Bond or Parity 46 4907-1641-4514v2/022599-0039
Bond in respect of anything done or suffered to be done by the Trustee or the District in pursuance of such request or consent.
Section 10.3. Unclaimed Moneys. Anything in this Indenture to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Outstanding Bonds and Parity Bonds which remain unclaimed for two years after the date when such Outstanding Bonds or Parity Bonds have become due and payable, if such money was held by the Trustee in trust at such date, or for two years after the date of deposit of such money if deposited with the Trustee in trust after the date when such Outstanding Bonds or Parity Bonds become due and payable, shall be repaid by the Trustee to the District, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the District for the payment of such Outstanding Bonds or Parity Bonds; provided, however, that, before being required to make any such payment to the District, the Trustee at the written request of the District or the Authority Trustee shall, at the expense of the District, cause to be mailed by first class mail, postage prepaid, to the registered Owners of such Outstanding Bonds or Parity Bonds at their addresses as they appear on the registration books of the Trustee a notice that said money remains unclaimed and that, after a date named in said notice, which date shall not be less than 30 days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the District.
Section 10.4. Provisions Constitute Contract. The provisions of this Indenture shall constitute a contract between the District and the Bondowners and the provisions hereof shall be construed in accordance with the laws of the State of California.
In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brought or taken and, should said suit, action or proceeding be abandoned, or be determined adversely to the Bondowners or the Trustee, then the District, the Trustee and the Bondowners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.
After the issuance and delivery of the Bonds this Indenture shall be irrepealable, but shall be subject to modifications to the extent and in the manner provided in this Indenture, but to no greater extent and in no other manner.
Section 10.5. Insurer Rights. The Bond Insurer shall be deemed to be the sole holder of the Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Bondowners are entitled to take pursuant to this Indenture pertaining to (i) defaults and remedies and (ii) the duties and obligations of the Trustee. In furtherance thereof and as a term of this Indenture and each Bond, the Trustee and each Bond Owner of a Bond appoint the Bond Insurer as their agent and attorney -in -fact and agree that the Bond Insurer may at any time during the continuation of any proceeding by or against the District under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding") direct all matters relating to such Insolvency Proceeding, including without limitation, (A) all matters relating to any claim or enforcement proceeding in connection with an Insolvency Proceeding (a "Claim"), (B) the direction of any appeal of any order relating to any Claim, (C) the posting of any surety, supersedeas or performance bond pending any such appeal, and (D) the right to vote to accept or reject any plan of adjustment. In addition, the Trustee (solely with respect to the Bonds) and each Owner of a Bond delegate and assign to the Bond Insurer, to the fullest extent permitted by law, the rights of the 47 4907-1641-4514v2/022599-0039
Trustee and each Owner of a Bond in the conduct of any Insolvency Proceeding, including, without limitation, all rights of any party to an adversary proceeding or action with respect to any court order issued in connection with any such Insolvency Proceeding. Remedies granted to the Owners of the Bonds shall expressly include mandamus. The Bond Insurer is hereby deemed a third party beneficiary to this Indenture.
Section 10.6. Reimbursement of Insurer Fees. The District shall pay or reimburse the Bond Insurer from Special Taxes any and all charges, fees, costs and expenses that the Bond Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security under this Indenture or the Authority Indenture; (ii) the pursuit of any remedies under this Indenture or the Authority Indenture or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, this Indenture or the Authority Indenture whether or not executed or completed, or (iv) any litigation or other dispute in connection with this Indenture or the Authority Indenture or the transactions contemplated hereby or thereby, other than costs resulting from the failure of the Bond Insurer to honor its obligations under the Insurance Policy. The Bond Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of this Indenture or the Authority Indenture.
Section 10.7. Provision of Information to Bond Insurer. The Bond Insurer shall be provided with the following information by the District or the Trustee, as the case may be:
(a) On request by the Bond Insurer, the District will provide a certificate that the District is not aware of any Event of Default under this Indenture and will provide such information, data or reports as the Bond Insurer shall reasonably request from time to time; (b) Notice of the resignation or removal of the Trustee and the appointment of, and acceptance of duties by, any successor thereto;
(c) Notice of any default known to the Trustee or the District within five Business Days after knowledge thereof;
(d) Prior notice of the redemption of any of the Bonds, including the principal amount and maturities thereof;
(e) Notice of the commencement of any Insolvency Proceeding by or against the Authority or the District;
(f) Notice of the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the Bonds;
(g) A full original transcript of all proceedings relating to the execution of any amendment, supplement, or waiver to this Indenture;
(h) All reports, notices and correspondence to be delivered to Bond Owners under the terms hereof; and
In addition, the Bond Insurer shall have the right to receive such additional information as it may reasonably request.
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Section 10.8. Discussion of and Access to Information. The District shall permit the Bond Insurer to discuss the affairs, finances and accounts of the District or any information the Bond Insurer may reasonably request regarding the security for the Bonds with appropriate officers of the District and will use commercially reasonable efforts to enable the Bond Insurer to have access to the facilities, books and records of the District on any Business Day upon reasonable prior notice.
Section 10.9. Future Contracts. Nothing herein contained shall be deemed to restrict or prohibit the District from making contracts or creating bonded or other indebtedness payable from a pledge of the Net Special Taxes which is subordinate to the pledge hereunder, or which is payable from the general fund of the District or from taxes or any source other than the Net Special Taxes and other amounts pledged hereunder.
Section 10.10. Further Assurances. The District will 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 Owners of the Bonds or any Parity Bonds the rights and benefits provided in this Indenture.
Section 10.11. Entire Agreement; Severability. This Agreement and the exhibits hereto set forth the entire agreement and understanding of the parties related to this transaction and supersedes all prior agreements and understandings, oral or written. If any covenant, agreement or provision, or any portion thereof, contained in this Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Indenture and the application of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances, shall be deemed severable and shall not be affected thereby, and this Indenture, the Bonds and any Parity Bonds issued pursuant hereto shall remain valid and the Bondowners shall retain all valid rights and benefits accorded to them under the laws of the State of California.
Section 10.12. Notices. Any notices required to be given to the District with respect to the Bonds or this Indenture shall be mailed, first class, postage prepaid, or personally delivered to the City Manager of the City of Beaumont, 550 E. 6th Street, Beaumont, California 92223, and all notices to the Trustee shall be sent via courier or fax or electronic transmission or mailed, first class, postage prepaid, or personally delivered to the Trustee, Zions Bancorporation, National Association, 550 South Hope Street, Suite 2875, Los Angeles, California 90071; Attention: Corporate Trust Services. Any such notices or other communications furnished by electronic transmission shall be in the form of attachments in PDF format. Any notices required to be given to the Bond Insurer with respect to the Bonds or this Indenture shall be mailed, first class, postage prepaid, personally delivered or sent via facsimile or electronic (email) transmission (with a portable document format or similar attachment) to
In each case in which notice or other communication to the Bond Insurer refers to an Event of Default, then a copy of such notice or other communication shall also be sent to the attention of the General Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED." 49 4907-1641-4514v2/022599-0039
IN WITNESS WHEREOF, CITY OF BEAUMONT COMMUNITY FACILITIES DISTRICT NO. 93-1 has caused this Bond Indenture to be signed by its City Manager and Clerk, and ZIONS BANCORPORATION, NATIONAL ASSOCIATION in token of its acceptance of the duties of the Trustee created hereunder, has caused this Bond Indenture to be signed in its corporate name by its officer identified below, all as of the day and year first above written.
CITY OF BEAUMONT COMMUNITY FACILITIES
DISTRICT NO. 93-1
By:
City Manager of the City of Beaumont, acting as
the legislative body of City Beaumont
Community Facilities District No. 93-1
ATTEST:
City Clerk of the City of Beaumont, acting as
the legislative body of City Beaumont
Community Facilities District No. 93-1
[SIGNATURES CONTINUED ON NEXT PAGE.)
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[SIGNATURE PAGE CONTINUED]
ZIONS BANCORPORATION, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Officer
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EXHIBIT A
FORM OF 2025 SPECIAL TAX REFUNDING BOND
No. $[PRINCIPAL AMOUNT]
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 93-1
(IMPROVEMENT AREA NO. 16)
2025 SPECIAL TAX REFUNDING BOND
INTEREST RATE: MATURITY DATE: DATED DATE:
September 1, 20 , 2025
REGISTERED OWNER: ZIONS BANCORPORATION, NATIONAL ASSOCIATION, as Trustee under that certain Indenture of Trust dated as of 1, 2025 by and between the Beaumont Public Improvement Authority and Zions Bancorporation, National Association
PRINCIPAL AMOUNT: AND NO/100 DOLLARS
CITY OF BEAUMONT COMMUNITY FACILITIES DISTRICT NO. 93-1 (the "District") situated in the County of Riverside, State of California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Indenture (as hereinafter defined), to the Registered Owner named above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay interest on such Principal Amount from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication hereof, unless (i) the date of authentication is an Interest Payment Date in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date (as hereinafter defined) but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to the close of business on the first Record Date in which event interest shall be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at the time of authentication of this Bond interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Bond shall be payable from the Dated Date set forth above. Interest will be paid semiannually on March 1 and September 1 and the final maturity date of the Bonds (each an "Interest Payment Date"), commencing [September 1, 2025] at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment. Except as A-1
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otherwise provided in the Indenture, the principal of and premium, if any, on this Bond are payable to the Registered Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the Principal Office of the Trustee (as such term is defined in the Indenture), initially Zions Bancorporation, National Association (the "Trustee"). Interest on this Bond shall be paid by check of the Trustee mailed, by first class mail, postage prepaid, or in certain circumstances described in the Indenture by wire transfer to an account within the United States of America, to the Registered Owner hereof as of the close of business on the fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the "Record Date") at such Registered Owner's address as it appears on the registration books maintained by the Trustee.
This Bond is one of a duly authorized issue of "City of Beaumont Community Facilities District No. 93-1 (Improvement Area No. 16) 2025 Special Tax Refunding Bonds" (the "Bonds") issued in the aggregate principal amount of $ pursuant to the Mello -Roos Community Facilities Act of 1982, as amended, being Sections 53311, et seq., of the California Government Code (the "Act") for the purpose of refinancing certain outstanding special tax bonds of the District and paying certain costs related to the issuance of the Bonds. The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of the City, acting in its capacity as the legislative body of the District (the "Legislative Body"), on , 2025, and a Bond Indenture, dated as of 1, 2025, by and between the District and the Trustee, executed in connection therewith (the "Indenture"), and this reference incorporates the Indenture herein, and by acceptance hereof the Registered Owner of this Bond assents to said terms and conditions. The Indenture is adopted under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California. Capitalized terms not defined herein shall have the meanings set forth in the Indenture.
Pursuant to the Act and the Indenture, the principal of, premium, if any, and interest on this Bond are payable solely from the portion (the "Net Special Taxes") of the annual special taxes authorized under the Act to be levied and collected within the Improvement Area (the "Special Taxes") and certain other amounts pledged to the repayment of the Bonds as set forth in the Indenture. Any amounts for the payment hereof shall be limited to the Net Special Taxes pledged and collected, which include foreclosure proceeds received following a default in payment of the Special Taxes and other amounts deposited to the Special Tax Fund established under the Indenture, except to the extent that other provision for payment has been made by the Legislative Body, as may be permitted by law. The District has covenanted for the benefit of the owners of the Bonds that under certain circumstances described in the Indenture it will commence and diligently pursue to completion appropriate foreclosure proceedings in the event of delinquencies of Special Tax installments levied for payment of principal and interest on the Bonds.
The Bonds maturing on or after September 1, 20_ may be redeemed, at the option of the District from any source of funds, on any date on or after September 1, 20_, in whole, or in part from such maturities as are selected by the District and by lot within a maturity, at a redemption price equal to the principal amount to be redeemed, together with accrued interest to the date of redemption, without premium.
The Bonds maturing on September 1, 20_ (the "20_ Term Bonds") shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Principal Account, on September 1, 20 , and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20_ Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for A-2
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each redeemed 20 Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
BONDS MATURING SEPTEMBER 1, 20
Redemption Dates
(September 1)
20 20
20_ (maturity)
Principal Amount
The Term Bonds maturing on September 1, 20 (the "20 Term Bonds") shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Principal Account, on September 1, 20_, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20 Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed 20_ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
BONDS MATURING SEPTEMBER 1, 20
Redemption Dates
(September 1)
20 20
20_ (maturity)
Principal Amount
The Term Bonds maturing on September 1, 20_ (the "20_ Term Bonds") shall be called before maturity and redeemed, from a Sinking Fund Payment that has been deposited into the Principal Account, on September 1, 20_ in accordance with the schedule of Sinking Fund Payments set forth below. The 20_ Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed 20_ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
BONDS MATURING SEPTEMBER 1, 20
Redemption Dates
(September 1)
20 20 (maturity)
Principal Amount
The Term Bonds maturing on September 1, 20_ (the "20_ Term Bonds") shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Principal Account, on September 1, 20_, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20_ Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed 20_ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
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BONDS MATURING SEPTEMBER 1, 20
Redemption Dates
(September 1)
20 20
20_ (maturity)
Principal Amount
The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:
Redemption Dates
Any Interest Payment Date through March 1, 20_
September 1, 20_ and March 1, 20_
September 1, 20_ and March 1, 20_
September 1, 20 and any Interest Payment Date thereafter Redemption
Prices
Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the registered owners thereof not less than 20 nor more than 45 days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books. Notwithstanding the foregoing, so long as the Authority or the Authority Trustee on the Authority's behalf is the registered owner of the Bonds, no such notices need be provided. Neither a failure of the Registered Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date; provided that funds for the redemption are on deposit with the Trustee on the redemption date. Thereafter, the registered owners of such Bonds shall have no rights except to receive payment of the redemption price upon the surrender of the Bonds.
This Bond shall be registered in the name of the Registered Owner hereof, as to both principal and interest, and the District and the Trustee may treat the Registered Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary.
The Bonds are issuable only in fully registered form in the denomination of $5,000 or any integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Indenture. This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or denominations for the same aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor.
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The Trustee shall not be required to register transfers or make exchanges of (i) any Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed, or (ii) any Bonds chosen for redemption.
The rights and obligations of the District and of the registered owners of the Bonds may be amended at any time, and in certain cases without notice to or the consent of the registered owners, to the extent and upon the terms provided in the Indenture.
THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE CITY OF BEAUMONT
OR OF THE DISTRICT FOR WHICH THE CITY OF BEAUMONT OR THE DISTRICT IS
OBLIGATED TO LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED, GENERAL OR SPECIAL TAXES, OTHER THAN THE SPECIAL TAXES REFERENCED HEREIN. THE
BONDS ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE FROM THE PORTION
OF THE SPECIAL TAXES AND OTHER AMOUNTS PLEDGED UNDER THE INDENTURE BUT ARE NOT A DEBT OF THE CITY OF BEAUMONT, THE STA 1E OF CALIFORNIA OR
ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION.
This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Trustee.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law, and that the amount of this Bond, together with all other indebtedness of the District, does not exceed any debt limit prescribed by the laws or Constitution of the State of California.
IN WITNESS WHEREOF, City of Beaumont Community Facilities District No. 93-1 has caused this Bond to be dated as of , 2025, to be signed on behalf of the District by the Mayor by his facsimile signature and attested by the facsimile signature of the City Clerk.
Mayor of the City of Beaumont
ATTEST:
City Clerk of the City of Beaumont
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[FORM OF TRUSTEE'S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within -defined Indenture.
Dated:
, 2025 ZIONS BANCORPORATION, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Officer
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[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth LLP, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office.
City Clerk of the City of Beaumont
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto whose tax identification number is
the within -mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney to transfer the same on the books of the Trustee with full power of substitution in the premises.
Dated:
Signature guaranteed:
NOTE: Signature guarantee shall be made by a
guarantor institution participating in the
Securities Transfer Agents Medallion Program or
in such other guarantee program acceptable to
the Trustee.
NOTE: The signatures(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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Financial Solutions Attorneys at Law
BEAUMONT
City of Beaumont
Proposed Refunding of Outstanding Bonds Related to
Improvement Areas 7A1, 19A, 18, 16 and 8B of
Community Facilities District No. 93-1
June 3, 2025
UFI Stradling STIFEL
SPICER
CONSULTING GROUP
Table of Contents
1. Financing Overview
2. Items Subject to Council Approval
3. Financing Details and Tentative Schedule
1. Financing Overview
Summary
On March 18, 2025, City Council approved moving forward with the refunding of certain outstanding bonds of CFD 93-1 to generate annual savings for homeowners
City Council established a minimum savings threshold for the refunding of each CFD bond issue of either 3.0% net present value savings or $200 in annual savings per parcel
In aggregate, Improvement Areas 7A1, 19A, 18, 16 and 8B have $33.27 million outstanding
The proposed refunding bonds will be issued through the Beaumont Public Improvement Authority (Authority)
2025 Bonds are expected to qualify for an investment grade rating, bond insurance and a surety reserve policy
2. Items Subject to Council Approval
Items Subject to Approval
Resolutions of the City Council of the City of Beaumont acting as Legislative Body of CFD 93-1, the Board of Directors of the Beaumont Public Improvement Authority, and the Board of Directors of the Beaumont Financing Authority Authorizing the Issuance of CFD 93-1 IA 7A1 Bonds, CFD 93-1 IA 19A Bonds, CFD 93-1 IA 18 Bonds, CFD 93-1 IA 16 Bonds and CFD 93-1 IA 8B Bonds; and the Local Agency Revenue Refunding Bonds, Series 2025 in an amount not -to -exceed $30,000,000
Approving certain documents and other actions
Preliminary Official Statement
Authority Indenture of Trust
Bond Indentures (Local Obligations)
Bond Purchase Agreement
Escrow Agreements
Continuing Disclosure Certf inte7 of 1702
6 3. Financing Details and Schedule
Municipal Market Overview
30 -year tax-exempt interest rate (AAA MMD) has increased by +0.70% since 1/1 and by +0.56% since preparation of Council analysis on 3/10 30 -Year AAA MMD Yield 2025 YTD
4.9% Implementation
of Global Tariffs
4.7% (4.31% on 4/5)
4.5% Savings analysis
prepared for Council
4.3% (3.96% on 3/10) I
4.1%
3.9%
3.7%
3.5%
Jan -25
3.82%
(as of 1/1)
Feb -25 Mar -25
4.80% (2025
High on 4/9)
Court -ordered
block of Tariffs
(4.52% on 5/29)
Apr -25 May -25
8 Source: Bloomberg as of May 29, 2025.
Updated Savings
Recent rise in rates have caused estimated savings for all CFDs to decline; per parcel savings have increased in most CFDs (due to the contribution of available cash to downsize the size of the borrowing)
PRIOR SAVINGS: Base • on 3 19 Market Conditions
Issuer
Year
Issued
Area of
CFD 93-1
Community
Name at Issuance
Par Value
Homes Refunde •
NPV
NPV
�o
Total
Savings
Annual
Savings
Savings
/Parcel
BFA
BFA
BFA
BFA
CFD
2015 IA -7A1
2015 IA -19A
2015 IA -18
2015 IA -16
2017 IA -8B
Four Seasons
Oak Valley
Stetson
Shadow Creek
Sundance
484 $8,755,000 $576,918 6.6% $1,361,686 $68,084
546 12,640,000 790,398 6.3% 2,367,285 236,728
194 3,100,000 84,797 2.7% 461,064 51,229
241 4,555,000 141,093 3.1% 680,952 75,661
192 4,220,000 113,386 2.7% 211,346 17,612
$141
434
264
314
92 UPDATED SAVINGS: Based on 5/29 Market Conditions
Year
Issued
Area of
CFD 93-1
Community
Name at Issuance
Par Value NPV
Homes Refunded $
NPV
Total
Savings
Annual
Savings
Savings
/Parcel
BFA
BFA
BFA
BFA
CFD
2015 IA -7A1
2015 IA -19A
2015 IA -18
2015 IA -16
2017 IA -8B
Four Seasons
Oak Valley
Stetson
Shadow Creek
Sundance
484 $8,755,000 $288,118 3.3% $1,532,134 $76,607
546 12,640,000 584,813 4.6% 2,556,594 255,659
194 3,100,000 42,313 1.4% 486,245 54,027
241 4,555,000 78,581 1.7% 771,584 85,732
192 4,220,000 8,399 0.2% 48,012 4,001
158
472
280
357
21
All number are preliminary and subject to change. Based on market conditions as of May 29, 2025. 9 Estimated Costs of Issuance*
• ■
Estimated Issuance Costs*
Role
Bond/Disclosure Counsel
Municipal Advisor'
Special Tax Consultant2
Trustee
Trustee's Counsel
Rating Agency
Verification Agent
Printer
Underwriter3
Contingency
Party
Stradling
Urban Futures, Inc.
Spicer Consulting
Zions Bank
Dorsey
Standard & Poor's
Causey
AVIA
Stifel
Total Estimated Costs
Total
$150,000
62,500
67,500
15,000
1,750
40,000
5,000
2,500
177,626
5,750
$527,626
Variable fees: 1) UFI fees per CFD: $12,500; 2) Spicer Consulting fees per CFD: $13,500; 3) Stifel fees: 0.675% of par amount
*Preliminary and subject to change.
10 Financing Schedule
Assuming Council approval this evening, staff will assess next steps based on market conditions
If market conditions are favorable (support 3% NPV savings or $200 in annual savings per parcel) the financing team will proceed with next steps:
Post preliminary official statement (make available to prospective investors)
Price the 2025 Bonds
Close the 2025 Bonds
11 BEAUMONT
-C A L I F O R N I A
Staff Report
TO: City Council
FROM: Elizabeth Gibbs, City Manager
DATE June 3, 2025
SUBJECT: Proposed Refunding of the Outstanding Beaumont Public Improvement Authority Wastewater Revenue Bonds, Series 2018A
Description The report seeks City Council and Beaumont Public Improvement Authority approval of related bond documents, including the Preliminary Official Statement, Bond Indenture, Installment Purchase Agreement, Escrow Agreement, and Bond Purchase Contract. Final bond pricing and issuance will occur once savings targets are met, with a target pricing date in mid -June, contingent upon favorable market conditions.
Background and Analysis:
Over the years, staff and City Council have been proactive in monitoring outstanding debt for refunding candidates. Earlier this year, staff and its financing team identified an opportunity to refund the outstanding Beaumont Public Improvement Authority ("Authority") Wastewater Revenue Bonds, Series 2018A ("2018A Bonds").
In September 2018, the Authority issued $81,105,000 of the 2018A Bonds to finance improvements to the City -owned Beaumont Wastewater Treatment Plant. The 2018A Bonds are payable from revenues of the wastewater system. Currently, there is $79,290,000 of par amount outstanding of the 2018A Bonds. The 2018A Bonds were structured with a final term of 2049 and a final interest rate of 5.00%. The call date of the 2015A Bonds is September 1, 2025, at a redemption price of 103%.
Similar to the structure of the 2018A Bonds, the proposed Wastewater Revenue Refunding Bonds, Series 2025A ("2025 Bonds") contemplates an issuance through the Authority. The 2025 Bonds will maintain the same final maturity (September 1, 2049) as the 2018A Bonds. In other words, there would be no extension of the 2018A Bonds.
Furthermore, annual debt payments on the 2025 Bonds would not be higher than existing debt payments on the 2018A Bonds.
The plan of finance of the 2025 Bonds would involve not only a refunding of the 2018A Bonds but also the financing of capital improvements to the wastewater system including, but not limited to:
- installing a ground -mounted solar array at the Treatment Plant to offset power consumption using a behind -the -meter array sized to the plant's average energy demand;
- adding a third centrifuge to accommodate a 25% annual increase in biosolids production while enhancing the Treatment Plant's capacity; and - expanding the Treatment Plant's fine screens to further increase capacity.
It is expected that the 2025 Bonds will receive at least the same rating as the 2018A Bonds (A+ from S&P) based on the strong credit characteristics of the City and its wastewater system. Additionally, the 2025 Bonds are also expected to qualify for bond insurance, which would lead to a lower cost of borrowing.
Staff and City Council have set a minimum savings threshold of 3.0% net present value savings, a benchmark frequently mentioned by GFOA (Government Finance Officers Association) to determine the appropriateness of a refunding. In other words, staff and the financing team will not proceed with the issuance of refunding bonds until 3.0% net present value savings is achieved.
City Council (representing the City as a member of the Authority) and the Authority (as issuer of the 2025 Bonds) are being asked to approve the issuance of the 2025 Bonds and all related documents, as further described herein. If the 2025 Bonds are approved this evening, staff will work with the financing team on finalizing all legal documents and the preliminary official statement with the goal of pricing the refunding bonds when the minimum net present value savings threshold is achieved.
As required under Section 5852.1 of the California Government Code, good faith estimates have been provided to the City by Urban Futures, Inc., the Municipal Advisor, in consultation with Stifel, Nicolaus & Company, Incorporated, as underwriter of the 2025 Bonds as Attachment 1.
Documents Subject to Approval
There is a resolution presented for consideration by City Council, representing the City as a member of the Authority, to approve its documents with respect to the 2025 Bonds.
The City Council members are members of the Board of Directors of the Authority.
Approval by the Board of Directors of the Authority of its resolution presented at this meeting approves its documents with respect to the 2025 Bonds.
The documents for consideration by the City Council and the Boards of Directors of the Authority are described below. Approval of the Resolutions approves the preparation, form, and/or authorizes the execution and delivery of the following documents:
■ Preliminary Official Statement (POS): The POS is the `offering document,' providing a description of the wastewater system, the 2025 Bonds, and all other information that would be material to a prospective investor's decision on whether to purchase the 2025 Bonds. While the City's counsel, consultants, and underwriter have participated in preparing the POS, Council and staff are ultimately responsible for ensuring that the POS is accurate, contains no misleading information and does not omit any information necessary to make the POS not misleading to investors. ■ Bond Indenture: This document contains the terms of the 2025 Bonds, including payment and redemption provisions, definition and pledge of revenues to pay the 2025 Bonds, Rights and Duties of the Trustee, remedies upon a default in the payment of the underlying obligations, and final discharge of the underlying obligations and other related matters.
■ Installment Purchase Agreement: Establishes specific terms and conditions under which wastewater system revenues are pledged to repay the 2025 Bonds. It also contains key covenants related to the issuance of additional debt and setting rates and charges.
■ Escrow Agreement: This document contains terms by which the Zions Bancorporation, National Association, as escrow agent, will hold bond proceeds on the behalf of the owners of the 2018A Bonds to pay and discharge the outstanding bonds on the redemption dates.
■ Bond Purchase Contract: Pursuant to the Bond Purchase Contract, the Authority agrees to sell the 2025 Bonds to the underwriter and the underwriter agrees to purchase the 2025 Bonds, subject to typical closing conditions. City staff, its municipal advisor, and bond counsel will sign off on the final pricing prior to the execution of the Bond Purchase Contract.
The financing team has reviewed the attached documents on behalf of the City. As previously mentioned, if the Resolutions are approved, City staff will continue to work with the appointed financing team to finalize all the documents. The pricing date, assuming interest rates remain favorable and savings thresholds are met, is currently targeted for mid -June.
Fiscal Impact:
The 2025 Bonds will be paid from revenues of the wastewater system. Except for a rating cost from Standard & Poor's (which can be reimbursed from bond proceeds),
there is no impact to the City's General Fund. All other financing costs related to the 2025 Bonds will be paid from bond proceeds.
The estimated cost to prepare this report is $560.
Recommended Action:
Waive the full reading and adopt by title only, "Resolution of the City Council of the City of Beaumont approving the execution and delivery of the Installment Purchase Agreement for the purpose of causing the issuance of the Wastewater Revenue Refunding Bonds, Series 2025A in an aggregate principal amount not to exceed eighty million dollars ($80,000,000) and approving the execution and delivery of certain documents in connection therewith and certain other matters" and recess the City Council meeting.
Convene a meeting of the Board of Directors of the Beaumont Public Improvement Authority and waive the full reading and adopt by title only, "Resolution of the Board of Directors of the Beaumont Public Improvement Authority approving the issuance of its Wastewater Revenue Refunding Bonds, Series 2025A in an aggregate principal amount not to exceed eighty million dollars ($80,000,000) and approving the execution and delivery of certain necessary documents and certificates in connection therewith and related actions" and adjourn the Board Meeting and reconvene the City Council meeting.
Attachments:
A. Good Faith Estimates
B. City Resolution
C. Authority Resolution
D. Official Statement
E. Bond Indenture
F. Installment Purchase Agreement
G. Escrow Agreement
H. Bond Purchase Contract
I. City Council Presentation (Wastewater Refi)
EXHIBIT A
GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the City by Urban Futures, Inc., the City's Municipal Advisor (the "Municipal Advisor") in consultation with Stifel, Nicolas & Co., the Underwriter for the Bonds.
Principal Amount. The Municipal Advisor has informed the City that, based on the City's financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Bonds to be sold is $73,490,000 (the "Estimated Principal Amount"). (a) True Interest Cost of the Bonds. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds, is 4.32%. (b) Finance Charge of the Bonds. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Bonds), is $685,642.
(c) Amount of Proceeds to be Received. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the City for sale of the Bonds, less the finance charge of the Bonds, set forth in (b) above, and any reserve fund funded with proceeds of the Bonds, is $78,006,640. (d) Total Payment Amount. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the City will make to pay debt service on the Bonds, plus the finance charge for the Bonds as described in (b) above not paid with the proceeds of the Bonds, calculated to the final maturity of the Bonds, is $126,743,451.
The foregoing estimates constitute good faith estimates only. The actual principal amount of the Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Bonds being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Bonds sold being different from the Estimated Principal Amount, (c) the actual amortization of the Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the City's financing plan, or a combination of such factors. The actual date of sale of the Bonds and the actual principal amount of Bonds sold will be determined by the City
based on the timing of the need for proceeds of the Bonds and other factors. The actual interest rates borne by the Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the Bonds will also depend, in part, on market interest rates at the time of sale thereof.
Market interest rates are affected by economic and other factors beyond the control of the City.
Stradling Yocca Carlson & Rauth
Draft of 5/16/25
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
BEAUMONT APPROVING THE EXECUTION AND
DELIVERY OF AN INSTALLMENT PURCHASE
AGREEMENT FOR THE PURPOSE OF CAUSING THE
ISSUANCE OF THE WASTEWATER REVENUE REFUNDING
BONDS, SERIES 2025A IN AN AGGREGATE PRINCIPAL
AMOUNT NOT TO EXCEED EIGHTY MILLION DOLLARS
($80,000,000) AND APPROVING THE EXECUTION AND
DELIVERY OF CERTAIN DOCUMENTS IN CONNECTION
THEREWITH AND CERTAIN OTHER MATTERS
WHEREAS, the City of Beaumont (the "City"), a municipal corporation that is duly organized and existing under the general laws of the State of California (the "State"); and WHEREAS, the City proposes to undertake the financing of the acquisition and construction of certain improvements, betterments, renovations and expansions of facilities within its wastewater system (collectively, the "2025 Project"); and
WHEREAS, the City also proposes to refinance certain installment payments owed by the City in connection with the outstanding Beaumont Public Improvement Authority Wastewater Revenue Bonds, Series 2018A (the "2018 Installment Payments"), used for the acquisition and construction of certain improvements, betterments, renovations and expansions of facilities within its wastewater system, including but not limited to expansion of the Beaumont Wastewater Treatment Plant's (the "Treatment Plant") capacity, upgrades to the treatment process at the Treatment Plant, construction of a pipeline between the Treatment Plant and the Inland Empire Brine Line (the "Brine Line"), the acquisition of conveyance capacity in the Brine Line and the acquisition of treatment capacity at Orange County Sanitation District's brine treatment facility (collectively, the "2018 Project"); and
WHEREAS, the City is a member of the Beaumont Public Improvement Authority (the "Authority"), a public entity that is duly organized and existing under a joint exercise of powers agreement and under the Constitution and laws of the State; and WHEREAS, the Authority has previously issued its Wastewater Revenue Bonds, Series 2018A (the "2018 Bonds"), secured by the 2018 Installment Payments; and WHEREAS, the City desires to have the Authority issue Wastewater Revenue Refunding Bonds (the "Bonds") for the purpose of financing the 2025 Project, refinancing of all or a portion of the 2018 Installment Payments and paying costs of issuance in connection therewith; and WHEREAS, the Bonds will be issued pursuant to the Marks -Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code (the "Act"); and WHEREAS, in accordance with the requirements of Government Code Section 5852.1, there has been presented to the City Council of the City and disclosed at the meeting at which this resolution is being adopted the information required by Government Code Section 5852.1 which is attached hereto as Exhibit A; and
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WHEREAS, the City Council has determined that it is in the best interest of the City to enter into an Installment Purchase Agreement (the "Installment Purchase Agreement"), by and between the City and the Authority, and to approve certain other documents to provide for the financing of the 2025 Project and refinancing of the 2018 Installment Payments; and WHEREAS, the Bonds are to be secured by installment payments to be made pursuant to the Installment Purchase Agreement, which installment payments will be payable from net revenues of the City's wastewater system to the extent set forth in the Installment Purchase Agreement; and WHEREAS, the Authority and Zions Bancorporation, National Association, as trustee (the "Trustee"), will enter into an Indenture of Trust (the "Indenture"), to provide for the issuance and security of the Bonds, the financing of the 2025 Project and the refinancing of the 2018 Installment Payments; and
WHEREAS, in order to effect a public sale of the Bonds, the City is required under federal securities laws and regulations to prepare a preliminary official statement with respect to the Bonds (the "Preliminary Official Statement") disclosing material information about the City, the 2025 Project and the City's wastewater system; and
WHEREAS, the City wishes at this time to approve the Preliminary Official Statement for the Bonds, which has been prepared by the City and the Authority with the assistance of Stradling Yocca Carlson & Rauth LLP, as bond counsel and disclosure counsel ("Disclosure Counsel"); and WHEREAS, the City, the Authority and Zions Bancorporation, National Association, as escrow agent (the "Escrow Agent"), desire to enter into an escrow agreement (the "Escrow Agreement") to provide for defeasance of the 2018 Bonds; and WHEREAS, the City desires to execute a Continuing Disclosure Agreement with Urban Futures, Inc., as dissemination agent, to be dated the closing date of the Bonds (the "Continuing Disclosure Agreement"), to provide updates of certain information relating to the City while the Bonds are outstanding; and
WHEREAS, the City desires to execute and deliver a bond purchase agreement (the "Purchase Contract") with the Authority and Stifel, Nicolaus & Company, Incorporated, as underwriter of the Bonds (the "Underwriter"), with respect to the Bonds.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT AS FOLLOWS:
Section 1. The City Council hereby specifically finds and declares that each of the statements, findings and determinations of the City Council that are set forth in the above recitals and in the preambles of the documents that are approved herein are true and correct and that there are significant public benefits of the type described in Section 6586(a) -(d), inclusive, of the Act for the residents of the City by issuing the Bonds under the Act in that the issuance of the Bonds and related transactions will result in demonstrable savings in bond preparation, bond underwriting and bond issuance costs.
Section 2. The issuance by the Authority of the Bonds in the principal amount not to exceed $80,000,000 to finance the 2025 Project, refinance all or a portion of the 2018 Installment Payments 2 4932-6926-2883v5/022599-0036
and to pay the cost of issuance of the Bonds is hereby approved; provided, however, that the Bonds shall be issued only in accordance with the parameters set forth in Section 5 below.
Section 3. The Installment Purchase Agreement is hereby approved substantially in the form on file with the City Clerk. The Mayor or Mayor Pro-Tem of the City or the City Manager or Director of Finance of the City (each, an "Authorized Officer") or the designee thereof is hereby authorized and directed to execute and deliver such Installment Purchase Agreement with such changes, insertions and omissions as may be recommended by the City Attorney or the law firm of Stradling Yocca Carlson & Rauth LLP ("Bond Counsel") and approved by the officer executing the same, said execution being conclusive evidence of such approval.
Section 4. The Continuing Disclosure Agreement is hereby approved substantially in the form on file with the City Clerk. Each Authorized Officer or the designee thereof is hereby authorized and directed to execute and deliver such Continuing Disclosure Agreement with such changes, insertions and omissions as may be recommended by the City Attorney or Bond Counsel and approved by the officer executing the same, said execution being conclusive evidence of such approval.
Section 5. The Purchase Contract is hereby approved substantially in the form on file with the City Clerk. Each Authorized Officer or the designee thereof is hereby authorized and directed to execute and deliver such Purchase Contract with such changes, insertions and omissions as may be recommended by the City Attorney or Bond Counsel and approved by the officer executing the same, said execution being conclusive evidence of such approval; provided, however, that in no event shall the aggregate principal amount of the Bonds exceed $80,000,000, nor shall the underwriting discount exceed 2.47% of the aggregate principal amount of the Bonds, nor shall the Bonds be issued unless the refunding of the 2018 Bonds results in at least 3% net present value savings compared to debt service on the 2018 Bonds.
Section 6. The proceeds of the Bonds shall be deposited as provided in the Indenture and the Installment Purchase Agreement to finance the 2025 Project and refinance the 2018 Installment Payments.
Section 7. The preparation and distribution of the Preliminary Official Statement in substantially the form on file with the City Clerk of the City is hereby approved. The Mayor or Mayor Pro Tempore of the City or the City Manager, Assistant City Manager or Director of Finance of the City or the designee thereof (each, an "Authorized Officer") is hereby authorized: (i) to sign a certificate pursuant to Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (the "Rule") deeming the Preliminary Official Statement substantially final under the Rule, except for the omission of information as permitted by the Rule; and (ii) to execute, approve and deliver the final Official Statement substantially in the form of the Preliminary Official Statement with such changes, insertions and omissions as the officer or officers executing said document may require or approve, subject to advice from the City Attorney or Disclosure Counsel, such approval to be conclusively evidenced by the execution and delivery thereof. The Underwriter is directed to deliver copies of the final Official Statement to all actual initial purchasers of the Bonds.
Section 8. The Authorized Officers, the City Clerk or any other proper officer of the City, acting singly, be and each of them hereby is authorized and directed to execute and deliver any and 3 4932-6926-2883v5/022599-0036
all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the transactions contemplated by the Preliminary Official Statement.
Section 9. The Escrow Agreement in substantially the form on file with the City Clerk of the City, is hereby approved, and each of the Authorized Officers, acting alone, is hereby authorized and directed to execute and deliver the Escrow Agreement with such changes, insertions and omissions as may be approved by the City's legal counsel and Bond Counsel, with the execution thereof by an Authorized Officer being conclusive evidence of approval of any such changes, insertions or omissions.
Section 10. The appointment of Zions Bancorporation, National Association, as Trustee under and pursuant to the Indenture, and as Escrow Agent under and pursuant to the Escrow Agreement, with the powers and duties of said office as set forth therein, is hereby approved.
Section 11. The City Council hereby authorizes the City Manager or his designee: (i) to solicit bids on a municipal bond insurance policy and/or reserve surety; (ii) to negotiate the terms of such policy or policies; (iii) to finalize, if appropriate, the form of such policy or policies with a municipal bond insurer; and (iv) if it is determined that the policy or policies will result in net savings for the City, to pay the insurance premium of such policy or policies from the proceeds of the issuance and sale of the Bonds.
Section 12. The Authorized Officers, the City Clerk or any other proper officer of the City, acting singly, be and each of them hereby is authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the transactions contemplated by the Indenture, the Installment Purchase Agreement, the Purchase Contract, the Continuing Disclosure Agreement, the Escrow Agreement, the Official Statement and this resolution, including the acquisition of any bond insurance or a reserve surety. In the event that the Mayor and Mayor Pro-Tem of the City are unavailable to sign any of the agreements described herein, any other member of the City Council may sign such agreement.
Section 13. Unless otherwise defined herein, all terms used herein and not otherwise defined shall have the meanings given such terms in the Indenture unless the context otherwise clearly requires.
Section 14. The City Council acknowledges that the good faith estimates have been obtained from the City's municipal advisor in accordance with Government Code section 5852.1 and are set forth on Exhibit A attached hereto. The City Council finds and determines that the provisions of Government Code section 5852.1 have been satisfied with respect to the authorization of the Bonds.
Section 15. The City Council hereby approves the execution and delivery of all agreements, documents, certificates and instruments referred to herein with electronic signatures as may be permitted under the California Uniform Electronic Transactions Act and digital signatures as may be permitted under Section 16.5 of the California Government Code using DocuSign.
Section 16. This resolution shall take effect immediately. 4 4932-6926-2883v5/022599-0036
MOVED, PASSED, and ADOPTED this 3rd day of June, 2025.
Mike Lara, Mayor
I, Nicole Wheelwright, Deputy City Clerk of the City of Beaumont, do hereby certify that the foregoing Resolution was passed and adopted at a regular meeting of the City Council of the City of Beaumont held on the 3rd day of June, 2025, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAINED:
ATTEST:
Nicole Wheelwright, Deputy City Clerk
5 4932-6926-2883v5/022599-0036
EXHIBIT A
GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the City by Urban Futures, Inc., the City's Municipal Advisor (the "Municipal Advisor") in consultation with Stifel, Nicolas & Co., the Underwriter for the Bonds.
Principal Amount. The Municipal Advisor has informed the City that, based on the City's financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Bonds to be sold is $73,490,000 (the "Estimated Principal Amount"). (a) True Interest Cost of the Bonds. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds, is 4.32%. (b) Finance Charge of the Bonds. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Bonds), is $685,642.
(c) Amount of Proceeds to be Received. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the City for sale of the Bonds, less the finance charge of the Bonds, set forth in (b) above, and any reserve fund funded with proceeds of the Bonds, is $78,006,640.
(d) Total Payment Amount. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the City will make to pay debt service on the Bonds, plus the finance charge for the Bonds as described in (b) above not paid with the proceeds of the Bonds, calculated to the final maturity of the Bonds, is $126,743,451.
The foregoing estimates constitute good faith estimates only. The actual principal amount of the Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Bonds being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Bonds sold being different from the Estimated Principal Amount, (c) the actual amortization of the Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the City's financing plan, or a combination of such 6 4932-6926-2883v5/022599-0036
factors. The actual date of sale of the Bonds and the actual principal amount of Bonds sold will be determined by the City based on the timing of the need for proceeds of the Bonds and other factors.
The actual interest rates borne by the Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the City.
7 4932-6926-2883v5/022599-0036
Stradling Yocca Carlson & Rauth
Draft of 5/16/25
RESOLUTION NO.
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
BEAUMONT PUBLIC IMPROVEMENT AUTHORITY
APPROVING THE ISSUANCE OF ITS WASTEWATER
REVENUE REFUNDING BONDS, SERIES 2025A IN AN
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED
EIGHTY MILLION DOLLARS ($80,000,000) AND
APPROVING THE EXECUTION AND DELIVERY OF
CERTAIN NECESSARY DOCUMENTS AND CERTIFICATES
IN CONNECTION THEREWITH AND RELATED ACTIONS
WHEREAS, the Beaumont Public Improvement Authority (the "Authority"), a public entity that is duly organized and existing under a joint exercise of powers agreement and under the Constitution and laws of the State of California (the "State"); and WHEREAS, the City of Beaumont (the "City"), a municipal corporation that is duly organized and existing under and by virtue of the general laws of the State, and a member of the Authority, requested that the Authority assist the City in financing of the acquisition and construction of certain improvements, betterments, renovations and expansions of facilities within its wastewater system (collectively, the "2025 Project"); and
WHEREAS, the City also proposes that the Authority assist the City in refinancing certain installment payments owed by the City in connection with the Authority's outstanding Wastewater Revenue Bonds, Series 2018A (the "2018 Installment Payments"), used for the acquisition and construction of certain improvements, betterments, renovations and expansions of facilities within its wastewater system, including but not limited to expansion of the Beaumont Wastewater Treatment Plant's (the "Treatment Plant") capacity, upgrades to the treatment process at the Treatment Plant, construction of a pipeline between the Treatment Plant and the Inland Empire Brine Line (the "Brine Line"), the acquisition of conveyance capacity in the Brine Line and the acquisition of treatment capacity at Orange County Sanitation District's brine treatment facility (collectively, the "2018 Project"); and
WHEREAS, the Authority has previously issued its Wastewater Revenue Bonds, Series 2018A (the "2018 Bonds"), secured by the 2018 Installment Payments; and WHEREAS, the Board of Directors of the Authority (the "Board") has determined that it is desirable to issue its Wastewater Revenue Refunding Bonds, Series 2025A (the "Bonds") to assist the City with the financing of the 2025 Project, refinancing of all or a portion of the 2018 Installment Payments and paying costs of issuance in connection therewith; and WHEREAS, the Bonds will be issued pursuant to the Marks -Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code (the "Act"); and WHEREAS, in accordance with the requirements of Government Code Section 5852.1, there has been presented to the Board of the Authority and disclosed at the meeting at which this resolution is being adopted the information required by Government Code Section 5852.1 which is attached hereto as Exhibit A; and
1 4915-6014-9539v5/022599-0036
WHEREAS, the Bonds are to be secured by installment payments to be made pursuant to an Installment Purchase Agreement (the "Installment Purchase Agreement"), by and between the City and the Authority, which installment payments will be payable from net revenues of the City's wastewater system; and
WHEREAS, the Board has determined that it is in the best interest of the Authority to enter into the Installment Purchase Agreement with the City, and to approve certain other documents; and WHEREAS, the Authority and Zions Bancorporation, National Association, as trustee (the "Trustee"), will enter into an Indenture of Trust (the "Indenture"), to provide for the issuance and security of the Bonds, the financing of the 2025 Project and the refinancing of the 2018 Installment Payments; and
WHEREAS, pursuant to the Indenture, the Authority will assign to the Trustee the installment payments payable under the Installment Purchase Agreement; and WHEREAS, in order to effect a public sale of the Bonds, the Authority is required under federal securities laws and regulations to prepare a preliminary official statement with respect to the Bonds (the "Preliminary Official Statement") disclosing material information about the City, the 2025 Project and the City's wastewater system; and
WHEREAS, the Authority wishes at this time to approve the Preliminary Official Statement for the Bonds, which has been prepared by the City and the Authority with the assistance of Stradling Yocca Carlson & Rauth LLP, as bond counsel and disclosure counsel ("Disclosure Counsel"); and WHEREAS, the Authority desires to execute and deliver a bond purchase agreement (the "Purchase Contract") with the City and Stifel, Nicolaus & Company, Incorporated, as underwriter of the Bonds (the "Underwriter"), with respect to the Bonds; and WHEREAS, the Authority, the City and Zions Bancorporation, National Association, as escrow agent (the "Escrow Agent"), desire to enter into an escrow agreement (the "Escrow Agreement") to provide for defeasance of the 2018 Bonds.
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE BEAUMONT PUBLIC IMPROVEMENT AUTHORITY AS FOLLOWS:
Section 1. The Board hereby specifically finds and declares that each of the statements, findings and determinations of the Authority that are set forth in the above recitals and in the preambles of the documents that are approved herein are true and correct and that there are significant public benefits of the type described in Section 6586(a) -(d), inclusive, of the Act for the residents of the City by issuing the Bonds under the Act in that the issuance of the Bonds and related transactions will result in demonstrable savings in bond preparation, bond underwriting and bond issuance costs.
Section 2. The Board hereby authorizes the preparation, sale and delivery of the Bonds in accordance with the terms and provisions of the Indenture in an aggregate principal amount (not in excess of $80,000,000) that is determined by the Executive Director or the Treasurer, together with other available funds, as being necessary to finance the 2025 Project, refinance all or a portion of the 2 4915-6014-9539v5/022599-0036
2018 Installment Payments and to pay the cost of issuance for the Bonds; provided, however, that the Bonds shall be issued only in accordance with the parameters set forth in Section 6 below.
Section 3. The form of the Bonds, as set forth in the form of the Indenture (as the Indenture may be modified pursuant hereto), is hereby approved; and the Chair and the Secretary are hereby authorized and directed to execute the Bonds by manual or facsimile signature in the name and on behalf of the Authority.
Section 4. The Installment Purchase Agreement is hereby approved substantially in the form on file with the Secretary. The Chair or Vice Chair of the Board or the Executive Director or the Treasurer of the Authority (each, an "Authorized Officer") or the designee thereof is hereby authorized and directed to execute and deliver such Installment Purchase Agreement with such changes, insertions and omissions as may be recommended by General Counsel or Stradling Yocca Carlson & Rauth LLP, as bond counsel ("Bond Counsel") and approved by the officer executing the same, said execution being conclusive evidence of such approval.
Section 5. The Indenture is hereby approved substantially in the form on file with the Secretary. Each Authorized Officer or the designee thereof is hereby authorized and directed to execute and deliver such Indenture with such changes, insertions and omissions as may be recommended by General Counsel or Bond Counsel and approved by the officer executing the same, said execution being conclusive evidence of such approval.
Section 6. The Purchase Contract is hereby approved substantially in the form on file with the Secretary. Each Authorized Officer or the designee thereof is hereby authorized and directed to execute and deliver such Purchase Contract with such changes, insertions and omissions as may be recommended by General Counsel or Bond Counsel and approved by the officer executing the same, said execution being conclusive evidence of such approval; provided, however, that in no event shall the aggregate principal amount of the Bonds exceed $80,000,000, nor shall the underwriting discount exceed 2.47% of the aggregate principal amount of the Bonds, nor shall the Bonds be issued unless the refunding of the 2018 Bonds results in at least 3% net present value savings compared to debt service on the 2018 Bonds.
Section 7. The proceeds of the Bonds shall be deposited as provided in the Indenture and the Installment Purchase Agreement to finance the 2025 Project and refinance the 2018 Installment Payments.
Section 8. The preparation and distribution of the Preliminary Official Statement in substantially the form on file with the Secretary is hereby approved. The Chair or Vice Chair of the Board or the Executive Director or the Treasurer of the Authority or the designee thereof (each, an "Authorized Officer") is hereby authorized: (i) to sign a certificate pursuant to Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (the "Rule") deeming the Preliminary Official Statement substantially final under the Rule, except for the omission of information as permitted by the Rule; and (ii) to execute, approve and deliver the final Official Statement substantially in the form of the Preliminary Official Statement with such changes, insertions and omissions as the officer or officers executing said document may require or approve, subject to advice from the Authority's General Counsel or Disclosure Counsel, such approval to be conclusively evidenced by the execution and delivery thereof. The Underwriter is directed to deliver copies of the final Official Statement to all actual initial purchasers of the Bonds. 3 4915-6014-9539v5/022599-0036
Section 9. The Authorized Officers, the Secretary or any other proper officer of the Authority, acting singly, be and each of them hereby is authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the transactions contemplated by the Preliminary Official Statement.
Section 10. The Escrow Agreement in substantially the form on file with the Secretary of the Board, is hereby approved, and each of the Authorized Officers, acting alone, is hereby authorized and directed to execute and deliver the Escrow Agreement with such changes, insertions and omissions as may be approved by the City's legal counsel and Bond Counsel, with the execution thereof by an Authorized Officer being conclusive evidence of approval of any such changes, insertions or omissions.
Section 11. The appointment of Zions Bancorporation, National Association, as Trustee under and pursuant to the Indenture, and as Escrow Agent under and pursuant to the Escrow Agreement, with the powers and duties of said office as set forth therein, is hereby approved.
Section 12. The Board hereby authorizes the Executive Director or his designee: (i) to solicit bids on a municipal bond insurance policy and/or reserve surety; (ii) to negotiate the terms of such policy or policies; (iii) to finalize, if appropriate, the form of such policy or policies with a municipal bond insurer; and (iv) if it is determined that the policy or policies will result in net savings for the City, to pay the insurance premium of such policy or policies from the proceeds of the issuance and sale of the Bonds.
Section 13. The Authorized Officers, the Secretary or any other proper officer of the Authority, acting singly, be and each of them hereby is authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the transactions contemplated by the Indenture, the Installment Purchase Agreement, the Purchase Contract, the Escrow Agreement, the Official Statement and this resolution, including the acquisition of any bond insurance or a reserve surety. In the event that the Chair and Vice Chair of the Board are unavailable to sign any of the agreements described herein, any other member of the Board may sign such agreement.
Section 14. Unless otherwise defined herein, all terms that are used herein and not otherwise defined shall have the meanings given to such terms in the Indenture unless the context otherwise clearly requires.
Section 15. The Board acknowledges that the good faith estimates have been obtained from the Authority's municipal advisor in accordance with Government Code Section 5852.1 and are set forth on Exhibit A attached hereto. The Board finds and determines that the provisions of Government Code Section 5852.1 have been satisfied with respect to the authorization of the Bonds.
Section 16. The Board hereby approves the execution and delivery of all agreements, documents, certificates and instruments referred to herein with electronic signatures as may be permitted under the California Uniform Electronic Transactions Act and digital signatures as may be permitted under Section 16.5 of the California Government Code using DocuSign.
Section 17. This resolution shall take effect immediately. 4 4915-6014-9539v5/022599-0036
MOVED, PASSED, and ADOPTED on this 3rd day of June, 2025.
Mike Lara, Chair
I, Nicole Wheelwright, Assistant Secretary of the Beaumont Public Improvement Authority, do hereby certify that the foregoing Resolution was passed and adopted at a regular meeting of the Board of Directors of the Beaumont Public Improvement Authority held on the 3rd day of June, 2025, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAINED:
ATTEST:
Nicole Wheelwright, Assistant Secretary
5 4915-6014-9539v5/022599-0036
EXHIBIT A
GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the Authority by Urban Futures, Inc., the City's Municipal Advisor (the "Municipal Advisor") in consultation with Stifel, Nicolas & Co., the Underwriter for the Bonds.
Principal Amount. The Municipal Advisor has informed the Authority that, based on the Authority's financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Bonds to be sold is $73,490,000 (the "Estimated Principal Amount"). (a) True Interest Cost of the Bonds. The Municipal Advisor has informed the Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds, is
4.32%.
(b) Finance Charge of the Bonds. The Municipal Advisor has informed the Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Bonds), is $685,642.
(c) Amount of Proceeds to be Received. The Municipal Advisor has informed the Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the Authority for sale of the Bonds, less the finance charge of the Bonds, set forth in (b) above, and any reserve fund funded with proceeds of the Bonds, is $78,006,640.
(a) Total Payment Amount. The Municipal Advisor has informed the Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the Authority will make to pay debt service on the Bonds, plus the finance charge for the Bonds as described in (b) above not paid with the proceeds of the Bonds, calculated to the final maturity of the Bonds, is $126,743,451.
The foregoing estimates constitute good faith estimates only. The actual principal amount of the Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Bonds being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Bonds sold being different from the Estimated Principal Amount, (c) the actual amortization of the Bonds being different than 6 4915-6014-9539v5/022599-0036
the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the Authority's financing plan, or a combination of such factors. The actual date of sale of the Bonds and the actual principal amount of Bonds sold will be determined by the Authority based on the timing of the need for proceeds of the Bonds and other factors. The actual interest rates borne by the Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the Bonds will also depend, in part, on market interest rates at the time of sale thereof Market interest rates are affected by economic and other factors beyond the control of the Authority.
7 4915-6014-9539v5/022599-0036
Stradling Yocca Carlson & Rauth
Draft of 5/16/25
.53 „Et'
c PRELIIVHNARY OFFICIAL STATEMENT DATED , 2025
° In the opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California ("Bond Counsel'), under existing statutes, aq regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants 0 7 and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax 8 - purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the az ° further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax.
Pi 4 See "TAX MATTERS" with respect to tax consequences relating to the Bonds, including with respect to the alternative minimum tax as imposed on certain large corporations.
g
o a NEW ISSUE - BOOK -ENTRY ONLY INSURED BONDS RATING: S&P: " 99 UNDERLYING RATING: S&P: " "
o
. .14 See the caption "RATINGS."
$ *
BEAUMONT PUBLIC IMPROVEMENT AUTHORITY
a o WASTEWATER REVENUE REFUNDING BONDS, SERIES 2025A
ba
o y Dated: Date of Delivery Due: September 1, as shown on inside front cover page .n ° The Bonds are being issued in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of a The Depository Trust Company, New York, New York. Individual purchases will be made in denominations of $5,000 and integral ° multiples thereof and will be in book -entry form only. Purchasers of the Bonds will not receive certificates representing their beneficial ownership in the Bonds but will receive credit balances on the books of their respective nominees. Interest on the Bonds is payable on g March 1 and September 1 of each year, commencing [September 1, 2025]. Payment of the principal of and interest on the Bonds is to be •- 4 made to Cede & Co., which is to disburse said payments to the Beneficial Owners of the Bonds through their nominees. $ The Bonds are subject to optional and mandatory sinking fund redemption prior to maturity, all as more fully described °, t herein.
4 1 The Bonds are being issued to provide funds: (i) to refinance the outstanding Beaumont Public Improvement Authority Wastewater Revenue Bonds, Series 2018A; (ii) to finance certain capital improvements to the City's Wastewater System; and (iii) to pay costs incurred in connection with the issuance of the Bonds, including the premium for a municipal bond insurance policy to be issued by the Insurer 4 '8 guaranteeing the payment of principal of and interest on the Bonds maturing on September 1 of the years 202 through 20 , inclusive. 4o.)0 — The Bonds are being issued pursuant to the Indenture of Trust, dated as of June 1, 2025, by and between the Beaumont Public o =: Improvement Authority and Zions Bancorporation, National Association, as successor trustee (the "Trustee"). THE BONDS ARE A o 0 SPECIAL LIMITED OBLIGATION OF THE AUTHORITY PAYABLE SOLELY FROM AUTHORITY REVENUES, WHICH CONSIST c .m OF SERIES 2025 INSTALLMENT PAYMENTS TO BE MADE BY THE CITY TO THE AUTHORITY PURSUANT TO THE a) 2 -o INSTALLMENT PURCHASE AGREEMENT, DATED AS OF JUNE 1, 2025, BY AND BETWEEN THE CITY AND THE clo
y c AUTHORITY, AND FROM CERTAIN OTHER FUNDS AND ACCOUNTS HELD BY THE TRUSTEE PURSUANT TO THE 8 0 INDENTURE. NEITHER THE FULL FAITH AND CREDIT NOR ANY OTHER REVENUES OR FUNDS OF THE AUTHORITY ARE o PLEDGED TO OR AVAILABLE FOR THE PAYMENT OF DEBT SERVICE ON THE BONDS. THE OBLIGATION OF THE 'ti c AUTHORITY TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON THE BONDS DOES NOT CONSTITUTE AN 0 o OBLIGATION FOR WHICH THE AUTHORITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE AUTHORITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE AUTHORITY HAS NO TAXING a o POWER.
•g .o No debt service reserve fund has been established in connection with the issuance of the Bonds. ,� c w The obligation of the City to make the Series 2025 Installment Payments is a special limited obligation of the City payable solely 71 a o from Net Revenues of the City's Wastewater System. The City may incur additional obligations payable from Net Revenues on a parity with a the obligation to pay Series 2025 Installment Payments, subject to the terms and conditions of the Installment Purchase Agreement, as more °z fully described herein.
o
THE OBLIGATION OF THE CITY TO MAKE SERIES 2025 INSTALLMENT PAYMENTS PURSUANT TO THE •2 q2,3 INSTALLMENT PURCHASE AGREEMENT DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY IS E°
ro .E OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED , ,o ANY FORM OF TAXATION. THE OBLIGATION OF THE CITY TO MAKE THE SERIES 2025 INSTALLMENT PAYMENTS .E t IS A SPECIAL LIMITED OBLIGATION OF THE CITY PAYABLE SOLELY FROM NET REVENUES OF THE CITY'S 0 WASTEWATER SYSTEM AND DOES NOT CONSTITUTE A DEBT OF THE CITY OR OF THE STATE OF CALIFORNIA OR
OF ANY POLITICAL SUBDIVISION THEREOF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY b › DEBT LIMITATION OR RESTRICTION.
.� 5 The scheduled payment of principal of and interest on the Bonds maturing on September 1 of the years 20 through 20 , ° inclusive, when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Bonds by [INSURER]. tzi [INSURER LOGO]
O •1 ' THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS 0 ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE ° o MAKING OF AN INFORMED INVESTMENT DECISION.
°
a '
..� o * Preliminary, subject to change.
4900-2457-4243v51022599-0036
MATURITY SCHEDULE
(See inside front cover page)
The Bonds are offered when, as and if issued and received by the Underwriter, subject to the approval of the valid, legal and binding nature of the Bonds by Stradling Yocca Carlson & Rauth LLP, Bond Counsel, and certain other conditions. Certain matters will be passed upon for the City and the Authority by Slovak Baron Empey Murphy & Pinkney LLP, California, and by Stradling Yocca Carlson & Rauth LLP, as Disclosure Counsel, for the Underwriter by its counsel, Kutak Rock LLP, Irvine, California, for [INSURER] by its counsel and for the Trustee by its counsel. It is anticipated that the Bonds will be available for delivery through the facilities of The Depository Trust Company on or about , 2025.
[STIFEL LOGO]
Dated: 2025
4900-2457-4243v5/022599-0036
BEAUMONT PUBLIC IMPROVEMENT AUTHORITY
WASTEWATER REVENUE REFUNDING BONDS, SERIES 2025A
MATURITY SCHEDULE
BASE CUSIPt
Serial Bonds
Maturity Principal
(September 1) Amount Interest Rate Yield Price CUSIPt
(I)
% Term Bonds Due September 1, 20_(I), Yield:
% Term Bonds Due September 1, 20_(I), Yield:
%, Price:
%, Price:
(C), CUSIPt
(C), CUSIPt
* Preliminary, subject to change.
co Insured Bonds.
t CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc Copyright(c) 2025 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 Authority, the City or the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers. 4900-2457-4243v5/022599-0036
BEAUMONT PUBLIC IMPROVEMENT AUTHORITY
BOARD OF DIRECTORS
Mike Lara, Chair
Jessica Voigt, Vice Chair
Lloyd White, Director
Julio Martinez III, Director
David Fenn, Director
CITY OF BEAUMONT
CITY COUNCIL
Mike Lara, Mayor
Jessica Voigt, Mayor Pro-Tem
Lloyd White, Member of the City Council
Julio Martinez III, Member of the City Council
David Fenn, Member of the City Council
STAFF
Elizabeth Gibbs, City Manager
Jennifer Ustation, Director of Finance
SPECIAL SERVICES
City Attorney
Slovak Baron Empey Murphy & Pinkney LLP
Palm Springs, California
Bond Counsel and Disclosure Counsel
Stradling Yocca Carlson & Rauth LLP
Newport Beach, California
Trustee
Zions Bancorporation, National Association
Los Angeles, California
Municipal Advisor
Urban Futures, Inc.
Walnut Creek, California
Verification Agent
Causey Public Finance LLC
Denver, Colorado
4900-2457-4243v5/022599-0036
No dealer, broker, salesperson or other person has been authorized by the City or the Authority 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 or the Authority. 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 the Authority or any other parties that are described herein since the date hereof. These securities may not be sold, nor may an offer to buy be accepted, prior to the time that the Official Statement is delivered in fmal 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 "THE WASTEWATER SYSTEM OF THE CITY."
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 4900-2457-4243v5/022599-0036
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. [INSURER] (the "Insurer") makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, the Insurer has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Insurer supplied by the Insurer and presented under the caption "BOND INSURANCE" and in Appendix F —"SPECIMEN MUNICIPAL BOND INSURANCE POLICY." 4900-2457-4243v5/022599-0036
TABLE OF CONTENTS
Page
INTRODUCTION 1
THE FINANCING PLAN 2
Refunding Plan 2
Wastewater System Improvements 2
ESTIMATED SOURCES AND USES OF FUNDS 2
THE BONDS 3
General Provisions 3
Book -Entry Only System 3
Transfers and Exchanges Upon Termination of Book -Entry Only System 3 Redemption 4
Selection of Bonds for Redemption 5
Notice of Redemption 5
Effect of Redemption 6
DEBT SERVICE SCHEDULE 6
SECURITY FOR THE BONDS 7
General 7
Series 2025 Installment Payments Payable From Net Revenues 7 Rate Covenant 8
No Reserve Fund 8
Additional Parity Bonds and Contracts 8
Rate Stabilization Fund 9
BOND INSURANCE 10
Bond Insurance Policy 10
[INSURER] 10
THE CITY 10
General 10
Land Use and Service Area 11
Seismic Considerations 11
Governance and Management 11
Employees and Employee Benefits 14
Investment of Funds 19
City Insurance 20
No Outstanding Parity Obligations 21
Financial Statements 21
THE WASTEWATER SYSTEM OF THE CITY 22
The Wastewater System 22
Regulatory Issues 22
Historic Wastewater System Accounts 23
Historic Wastewater System Usage 23
Historic Wastewater System Service Charge Revenues 24
Largest Wastewater System Customers 24
Wastewater System Rates and Charges 25
Wastewater System Collection Procedures 27
Future Wastewater System Improvements 28
Projected Wastewater System Accounts 28
4900-2457-4243v5/022599-0036
TABLE OF CONTENTS
(continued)
Page
Projected Wastewater System Usage 29
Projected Wastewater System Service Charge Revenues 29
Historic Wastewater System Operating Results and Debt Service Coverage 29 Projected Wastewater System Operating Results and Debt Service Coverage 30 CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES 32 Article XIIIB 32
Proposition 218 32
Proposition 26 34
Future Initiatives 34
CERTAIN RISKS TO BONDHOLDERS 35
Limited Obligations 35
Accuracy of Assumptions 35
System Demand 35
System Expenses 35
Limited Recourse on Default 36
Rate -Setting Process under Proposition 218 36
Statutory and Regulatory Compliance 36
Climate Change 36
Cybersecurity 37
Natural Disasters 37
Limitations on Remedies 38
Loss of Tax Exemption 38
Secondary Market 39
Parity Obligations 39
Risks Associated with Bond Insurance 39
THE AUTHORITY 40
APPROVAL OF LEGAL PROCEEDINGS 40
LITIGATION 40
City 40
Authority 40
TAX MATTERS 41
CONTINUING DISCLOSURE 42
RATINGS 43
MUNICIPAL ADVISOR 44
UNDERWRITING 44
MISCELLANEOUS 44
APPENDIX A - CITY FINANCIAL STATEMENTS A-1
APPENDIX B - DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE INSTALLMENT PURCHASE AGREEMENT AND THE INDENTURE B-1
4900-2457-4243v5/022599-0036
TABLE OF CONTENTS
(continued)
Page
APPENDIX C -
APPENDIX D -
APPENDIX E -
APPENDIX F -
FORM OF OPINION OF BOND COUNSEL C-1
BOOK -ENTRY ONLY SYSTEM D-1
FORM OF CONTINUING DISCLOSURE AGREEMENT E-1
SPECIMEN MUNICIPAL BOND INSURANCE POLICY F-1
4900-2457-4243v5/022599-0036
SUMMARY STATEMENT
This Summary Statement is subject in all respects to the more complete information contained in this Official Statement, and the offering of the Bonds to potential investors is made only by means of the entire Official Statement. Capitalized terms that are used and not otherwise defined in this Summary Statement have the meanings ascribed to them in this Official Statement.
Purpose. The Bonds are being issued to provide funds: (i) to refinance the outstanding Beaumont Public Improvement Authority Wastewater Revenue Bonds, Series 2018A; (ii) to finance certain capital improvements to the City's Wastewater System, as described under the caption "THE FINANCING PLAN — Wastewater System Improvements," and (iii) to pay costs incurred in connection with the issuance of the Bonds, including the premium for a municipal bond insurance policy to be issued by the Insurer guaranteeing the payment of principal of and interest on all or a portion of the Bonds. See the caption "ESTIMATED SOURCES AND USES OF FUNDS"
Security for the Bonds. The Bonds are a special limited obligation of the Authority payable solely from Authority Revenues, which consist of Series 2025 Installment Payments to be made by the City to the Authority pursuant to the Installment Purchase Agreement and amounts on deposit in certain funds and accounts established by the Indenture. Neither the full faith and credit nor any other revenues or funds of the Authority are pledged to or available for the payment of debt service on the Bonds. THE OBLIGATION OF
THE AUTHORITY TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON THE BONDS DOES
NOT CONSTITUTE AN OBLIGATION FOR WHICH THE AUTHORITY IS OBLIGATED TO LEVY OR
PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE AUTHORITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE AUTHORITY HAS NO TAXING POWER.
The obligation of the City to make Series 2025 Installment Payments is a special limited obligation of the City payable solely from Net Revenues of the City's Wastewater System, which consist of Revenues of the City's Wastewater System remaining after payment of Operation and Maintenance Costs. See the caption "SECURITY FOR THE BONDS."
The obligation of the City to make the Series 2025 Installment Payments under the Installment Purchase Agreement is absolute and unconditional, and until such time as all payments that are required thereunder have been paid in full (or provision for the payment thereof has been made as provided for in the Installment Purchase Agreement), the City will not discontinue or suspend any Series 2025 Installment Payments required to be made by it under the Installment Purchase Agreement when due, whether or not the Wastewater System or any part thereof is operating or operable, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and whether or not the Wastewater System Improvements have been completed, and such payments will not be subject to reduction whether by offset or otherwise and will not be conditional upon the performance or nonperformance by any party of any agreement for any cause whatsoever.
THE OBLIGATION OF THE CITY TO MAKE SERIES 2025 INSTALLMENT PAYMENTS
PURSUANT TO THE INSTALLMENT PURCHASE AGREEMENT DOES NOT CONSTITUTE AN
OBLIGATION 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 OBLIGATION OF THE CITY TO MAKE THE SERIES 2025 INSTALLMENT PAYMENTS IS A
SPECIAL LIMITED OBLIGATION OF THE CITY PAYABLE SOLELY FROM NET REVENUES AND
DOES NOT CONSTITUTE A DEBT OF THE CITY OR OF THE STATE OF CALIFORNIA OR OF ANY
POLITICAL SUBDIVISION THEREOF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.
4900-2457-4243v5/022599-0036
No Reserve Fund.
The Authority has not funded a debt service reserve fund in connection with the issuance of the Bonds.
Bond Insurance. The scheduled payment of principal of and interest on the Bonds maturing on September 1 of the years 20_ through 20 , inclusive, when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Bonds by the Insurer concurrently with the issuance of the Bonds. See the caption "BOND INSURANCE."
Rate Covenant. In any Fiscal Year in which the amount on deposit in the Rate Stabilization Fund, if established, on the first day of such Fiscal Year is less than the Series 2025 Installment Payments payable in such Fiscal Year, to the fullest extent permitted by law, the City will fix and prescribe, at the commencement of each such Fiscal Year, rates and charges for the Wastewater Service which are reasonably expected, at the commencement of such Fiscal Year, to be at least sufficient to yield during such Fiscal Year Net Revenues equal to 120% of Debt Service for such Fiscal Year. When calculated for the foregoing purposes, Net Revenues do not include amounts transferred from the Rate Stabilization Fund, if established, pursuant to the Installment Purchase Agreement that are in excess of 20% of Debt Service for such Fiscal Year.
In any Fiscal Year in which the amount on deposit in the Rate Stabilization Fund on the first day of such Fiscal Year is at least equal to the Series 2025 Installment Payments payable in such Fiscal Year, to the fullest extent permitted by law, the City will fix and prescribe, at the commencement of each such Fiscal Year, rates and charges for the Wastewater Service which are reasonably expected, at the commencement of such Fiscal Year, to be at least sufficient to yield during such Fiscal Year Revenues equal to 120% of the sum of Operation and Maintenance Costs for such Fiscal Year. When calculated for the foregoing purposes, Revenues do not include any amounts transferred from the Rate Stabilization Fund, if established, pursuant to the Installment Purchase Agreement.
See the caption "SECURITY FOR THE BONDS —Rate Covenant." Additional Indebtedness. The Installment Purchase Agreement does not permit the City to make any additional pledge of, or to place any additional lien on, the Revenues, or any portion thereof, which is senior to the pledge and lien securing the payment of the Series 2025 Installment Payments. The Installment Purchase Agreement does permit the City to incur Parity Bonds and Contracts payable on a parity with the Series 2025 Installment Payments provided that certain conditions are satisfied as described herein. Nothing in the Installment Purchase Agreement precludes the City from entering into obligations which are Operation and Maintenance Costs and, therefore, payable from Revenues prior to the Series 2025 Installment Payments, or from issuing any bonds or executing any contracts the payments under which are payable from Net Revenues on a subordinate basis to the Series 2025 Installment Payments, Parity Bonds and Contracts of the City. See the caption "SECURITY FOR THE BONDS —Additional Parity Bonds and Contracts." Redemption. The Bonds are subject to optional and mandatory sinking fund redemption prior to maturity. See the caption "THE BONDS —Redemption."
The City and the Wastewater System. The City was incorporated in 1912 under the general laws of the State. The City has a land area of approximately 30.9 square miles and an estimated population of 57,416 as of January 1, 2024. The City provides a wide range of services, including police, public works (including sewer and storm drain services), street maintenance and land and building development. The City also operates various community services, including parks, a senior center, a teen and day camp and a municipal swimming pool. The City is located in Riverside County, California (the "County"), approximately 25 miles east of the city of Riverside at the junction of Interstate 10, State Route 60 and State Route 79. 4900 -2457-4243v5/022599-0036
The City's Wastewater System includes approximately 186 miles of gravity pipelines, 25 miles of sewer force mains and 12 lift stations. The majority of Wastewater System facilities were installed after 2005.
The collection system's underground network of pipes range in size from 6 to 30 inches in diameter. The City provides sewer service to approximately 18,805 accounts consisting of single family residential, multi -family residential and mobile home park connections and 538 commercial and industrial accounts within the City's boundaries, an adjacent unincorporated area of the County called Highland Springs and a mobile home park in an adjacent unincorporated area of the County.
Wastewater is collected through the Wastewater System and transported for treatment to the Beaumont Wastewater Treatment Plant (the "Treatment Plant"). The 2018 Wastewater Treatment Plant Salt Mitigation Project expanded the capacity of the Treatment Plant from 4mgd to 6mgd, using membrane bioreactor ("MBR") treatment technology and a reverse osmosis ("RO") system. See the captions "THE CITY" and "THE WASTEWATER SYSTEM OF THE CITY" for a description of the Treatment Plant.
See the captions "THE CITY" and "THE WASTEWATER SYSTEM OF THE CITY" for further information about the City and the Wastewater System.
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BEAUMONT PUBLIC IMPROVEMENT AUTHORITY
WASTEWATER REVENUE REFUNDING BONDS, SERIES 2025A
INTRODUCTION
This Official Statement, including the front cover page, the inside front cover page and the appendices, provides certain information concerning the sale and delivery of the Beaumont Public Improvement Authority Wastewater Revenue Refunding Bonds, Series 2025A (the "Bonds"). Descriptions and summaries of various documents that are set forth in this Official Statement do not purport to be comprehensive or definitive, and reference is made to each document for complete details of all terms and conditions. All statements herein are qualified in their entirety by reference to each such document.
Capitalized terms that are used and not otherwise defined in this Official Statement have the meanings ascribed thereto in Appendix B.
The Bonds are being issued pursuant to an Indenture of Trust, dated as of June 1, 2025 (the "Indenture"), by and between the Beaumont Public Improvement Authority (the "Authority") and Zions Bancorporation, National Association, as successor trustee (the "Trustee"). The Bonds are limited obligations of the Authority payable solely from Authority Revenues, which consist of payments (the "Series 2025 Installment Payments") to be made by the City of Beaumont (the "City") to the Authority pursuant to an Installment Purchase Agreement (the "Installment Purchase Agreement"), dated as of June 1, 2025, by and between the City and the Authority, and amounts on deposit in certain funds and accounts established by the Indenture.
The obligation of the City to make Series 2025 Installment Payments is a special limited obligation of the City payable solely from Net Revenues of the City's Wastewater System, which consist of Revenues of the City's Wastewater System remaining after payment of Operation and Maintenance Costs. See the caption "SECURITY FOR THE BONDS."
The Bonds are being issued to provide funds: (i) to refinance the outstanding Beaumont Public Improvement Authority Wastewater Revenue Bonds, Series 2018A (the "2018 Bonds"); (ii) to finance certain capital improvements to the City's Wastewater System; and (iii) to pay costs incurred in connection with the issuance of the Bonds, including the premium for a municipal bond insurance policy (the "Policy") to be issued by the Insurer guaranteeing the payment of principal of and interest on the Bonds maturing on September 1 of the years 20 through 20_, inclusive (the "Insured Bonds"). See the captions "ESTIMATED SOURCES AND USES OF FUNDS" and "BOND INSURANCE." The City regularly prepares a variety of reports, including audits, budgets and related documents. Any Bond Owner may obtain a copy of such report, as available, from the City. The City has also undertaken to provide annual reports to the Municipal Securities Rulemaking Board's Electronic Municipal Market Access System ("EMMA") pursuant to a continuing disclosure agreement. See the caption "CONTINUING DISCLOSURE" and Appendix E.
The scheduled payment of principal of and interest on the Insured Bonds (the Bonds maturing on September 1 of the years 20 through 20 , inclusive), when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Bonds by the Insurer concurrently with the issuance of the Bonds. See the caption "BOND INSURANCE."
* Preliminary, subject to change.
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THE FINANCING PLAN
Refunding Plan
Pursuant to the Indenture, the Authority will deliver a portion of the proceeds of the Bonds to the Trustee to transfer to Zions Bancorporation, National Association, acting as escrow agent (the "Escrow Agent"), for deposit in an escrow fund (the "Escrow Fund") established under the Escrow Agreement, dated as of June 1, 2025, by and among the Authority, the City and the Escrow Agent (the "Escrow Agreement").
Proceeds of the Bonds and other moneys held in the Escrow Fund will be used to pay the regularly scheduled debt service on the 2018 Bonds on [September 1, 2025] (the "Redemption Date") and to redeem the outstanding 2018 Bonds maturing after the Redemption Date on the Redemption Date. Amounts in the Escrow Fund will be irrevocably pledged to secure, when due, the payment of the principal of, interest and redemption premium due with respect to the 2018 Bonds and will not be available to pay debt service on the Bonds.
Upon issuance of the Bonds, Causey Public Finance LLC, Denver, Colorado, as verification agent, will deliver a report on the mathematical accuracy of certain computations based upon certain information and assertions provided to it by the Underwriter relating to: (a) the adequacy of amounts in the Escrow Fund to pay when due the regularly scheduled debt service on the 2018 Bonds on the Redemption Date and to redeem the outstanding 2018 Bonds maturing after the Redemption Date on the Redemption Date; and (b) the computations of yield of the Bonds which support Bond Counsel's opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes.
Wastewater System Improvements
A portion of the proceeds of the Bonds will be deposited in the Acquisition Fund to be used to pay for some or all of the cost of certain capital improvements to the City's Wastewater System, including, but not limited to: installing a ground -mounted solar array at the Treatment Plant to offset power consumption using a behind -the -meter array sized to the plant's average energy demand; adding a third centrifuge to accommodate a 25% annual increase in biosolids production while enhancing the Treatment Plant's capacity; and expanding the Treatment Plant's fine screens to further increase capacity. See the caption "THE WASTEWATER SYSTEM OF THE CITY —Future Wastewater System Improvements."
ESTIMATED SOURCES AND USES OF FUNDS
The following table sets forth the estimated sources and uses of funds in connection with the issuance of the Bonds:
Sources
Principal Amount of Bonds
Plus Net Original Issue Premium
Total Sources
Uses
Deposit to Escrow Fund
Deposit to Acquisition Fund
Costs of Issuance(1)
Total Uses
o>
Includes certain legal, municipal advisory, financing, rating agency, Trustee fees, Underwriter's discount, premium for the Policy and printing costs.
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THE BONDS
General Provisions
The Bonds will be issued in the aggregate principal amount of $ *. The Bonds will bear interest from and be dated the date of initial issuance, and will be payable upon maturity on the dates set forth on the inside front cover page hereof. Interest on the Bonds will be payable on March 1 and September 1 of each year, commencing [September 1, 2025]. Interest will be calculated at the rates set forth on the inside front cover page hereof on the basis of a year of 360 days comprised of twelve 30 day months.
The Bonds will be delivered only in fully registered form and, 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 for the Bonds. Ownership interests in the Bonds may be purchased in book -entry form only in denominations of $5,000 or any integral multiple thereof. See the caption "— Book -Entry Only System" and Appendix D.
In the event that the book -entry only system that is described below is discontinued, the principal of and interest on any Bond will be payable by check or draft of the Trustee upon presentation and surrender thereof at maturity or upon prior redemption at the Office of the Trustee in Los Angeles, California. Such principal and interest will be payable in lawful money of the United States of America.
Book -Entry Only System
One fully -registered Bond will be issued for each maturity of the Bonds in the principal amount of the Bonds of such maturity. Each such Bond will be registered in the name of Cede & Co. and will be deposited with DTC. As long as the ownership of the Bonds is registered in the name of Cede & Co., the term "Owner" as used in this Official Statement will refer to Cede & Co. and not to the actual purchasers of the Bonds (the `Beneficial Owners").
The Authority may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, the Bonds will be printed and delivered and will be governed by the provisions of the Indenture with respect to payment of principal and interest and rights of exchange and transfer.
The Authority cannot and does not give any assurances that DTC participants or others will distribute payments with respect to the Bonds received by DTC or its nominee as the registered Owner, or any redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or that DTC will service and act in the manner described in this Official Statement. See Appendix D — "BOOK -ENTRY ONLY SYSTEM."
Transfers and Exchanges Upon Termination of Book -Entry Only System In the event that the book -entry system that is described above is discontinued, the Bonds will be printed and delivered as provided in the Indenture. Thereafter, any Bond may, in accordance with its terms, be transferred on the Registration Books by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond at the Office of the Trustee for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee.
The Trustee is not required to register the transfer of any Bond during the period in which the Trustee is selecting Bonds for redemption and any Bond that has been selected for redemption. * Preliminary, subject to change.
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Whenever any Bond is surrendered for transfer, the Authority will execute and the Trustee will authenticate and deliver a new Bond or Bonds of authorized denomination or denominations for a like series and aggregate principal amount of the same maturity. The Trustee will require the Bond Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer.
Following any transfer of Bonds, the Trustee will cancel and destroy the Bonds that it has received.
Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of other authorized denominations of the same series and maturity. The Trustee is not required to exchange any Bond during the period in which the Trustee is selecting Bonds for redemption or any Bond that has been selected for redemption. The Trustee will require the Bond Owner requesting such exchange to pay any tax or other governmental charge required to be paid with respect to such exchange. Following any exchange of Bonds, the Trustee will cancel and destroy the Bonds that it has received.
Redemption
Optional Redemption. The Bonds with stated maturities on or before September 1, 20 , are not subject to redemption prior to their respective stated maturities. The Bonds with stated maturities on or after September 1, 20 , are subject to redemption prior to their respective stated maturities, as a whole or in part, as directed by the Authority in a request provided to the Trustee at least 35 days (or such lesser number of days acceptable to the Trustee in the sole discretion of the Trustee, such notice for the convenience of the Trustee) and by lot within each maturity in integral multiples of $5,000, on September 1, 20 or any date thereafter at a redemption price equal to 100% of the principal amount of the Bonds to be redeemed, together with accrued interest to the date fixed for redemption, without premium.
Mandatory Sinking Fund Redemption. The Bonds with stated maturities on September 1, 20_ are subject to mandatory sinking fund redemption in part (by lot) on September 1, 20 and each September 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule:
Redemption Date
(September 1)
* Maturity.
Principal
Amount
$
The Bonds with stated maturities on September 1, 20_ are subject to mandatory sinking fund redemption in part (by lot) on September 1, 20 and each September 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule:
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Redemption Date
(September 1)
*
* Final Maturity.
Principal
Amount
Partial Redemption of Bonds. Upon surrender of any Bond redeemed in part only, the Authority will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered and of the same series, interest rate and maturity.
Selection of Bonds for Redemption
Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, the Trustee will select the Bonds for redemption as a whole or in part on any date as directed by the Authority and by lot within each maturity in integral multiples of $5,000 in accordance with the provisions set forth above under the caption "—Redemption," the Trustee's selection of Insured Bonds for redemption is subject to the approval of the Insurer, so long as the Policy is in full force and effect and the Insurer is not in default of its obligations thereunder. The Trustee will promptly notify the Authority in writing of the numbers of the Bonds or portions thereof so selected for redemption.
Notice of Redemption
Notice of redemption will be mailed by first class mail not less than 20 days or more than 60 days before any Redemption Date, to the respective Owners of any Bonds that are designated for redemption at their addresses appearing on the Registration Books, to the Securities Depositories and the Information Services.
Each notice of redemption will state the date of notice, the redemption date, the place or places of redemption and the Redemption Price, and will designate the maturities, CUSIP numbers, if any, and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice will also state that on the redemption date there will become due and payable on each of said Bonds or parts thereof that are designated for redemption the Redemption Price thereof or of said specified portion of the principal thereof in the case of a Bond to be redeemed in part only, together with, interest accrued thereon to the redemption date, and that (provided that moneys for redemption have been deposited with the Trustee) from and after such redemption date interest thereon will cease to accrue, and will require that such Bonds be then surrendered to the Trustee. Neither the failure to receive such notice nor any defect in the notice or the mailing thereof will affect the validity of the redemption of any Bond. Notice of redemption of Bonds will be given by the Trustee, at the expense of the Authority, for and on behalf of the Authority.
With respect to any notice of optional redemption of Bonds, such notice may state that such redemption will be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, and interest on such Bonds to be redeemed and that, if such moneys have not been so received, said notice will be of no force and effect and the Trustee will not be required to redeem such Bonds. In the event that such notice of redemption contains such a condition and such moneys are not so received, the redemption will not be made, and the Trustee will within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received.
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Effect of Redemption
Notice of redemption having been duly given as described above under the caption "—Notice of Redemption," and moneys for payment of the redemption price of, together with interest accrued to the date fixed for redemption on, the Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions thereof) so called for redemption will become due and payable, interest on the Bonds so called for redemption will cease to accrue, said Bonds (or portions thereof) will cease to be entitled to any benefit or security under the Indenture, and the Owners of said Bonds will have no rights in respect thereof except to receive payment of the redemption price thereof. The Trustee will, upon surrender for payment of any of the Bonds to be redeemed on their Redemption Dates, pay such Bonds at the Redemption Price. All Bonds redeemed pursuant to the provisions of the Indenture will be canceled upon surrender thereof.
DEBT SERVICE SCHEDULE
Set forth below is a schedule of Series 2025 Installment Payments for each annual period ending on June 30 in the years indicated.
Period Ending
June 30 Principal Interest Total
2025 $ - $ $
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
TOTAL $ $ $
Source: Underwriter.
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SECURITY FOR THE BONDS
General
Each Bond is a special limited obligation of the Authority payable solely from Authority Revenues, which consist of Series 2025 Installment Payments to be made by the City under the Installment Purchase Agreement and certain other funds and accounts established pursuant to the Indenture. NEITHER THE FULL
FAITH AND CREDIT NOR ANY OTHER REVENUES OR FUNDS OF THE AUTHORITY ARE PLEDGED TO OR AVAILABLE FOR THE PAYMENT OF DEBT SERVICE ON THE BONDS. THE
OBLIGATION OF THE AUTHORITY TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON
THE BONDS DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE AUTHORITY IS
OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE AUTHORITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE AUTHORITY HAS NO TAXING POWER.
The Authority has assigned substantially all of its right, title and interest in the Installment Purchase Agreement to the Trustee pursuant to the Indenture, for the benefit of the Owners of the Bonds, including its right to receive Series 2025 Installment Payments and its rights as may be necessary to enforce payment of the Series 2025 Installment Payments when due.
Series 2025 Installment Payments Payable From Net Revenues All of the Authority Revenues and any other amounts (including proceeds of the sale of the Bonds) held in any fund or account established pursuant to the Indenture (except the Rebate Fund) have been irrevocably pledged to secure the payment of the principal of and interest, and the premium, if any, on the Bonds in accordance with their terms and the provisions of the Indenture. Such pledge constitutes a lien on and security interest in such amounts and will attach, be perfected and be valid and binding from and after the Closing Date, without any physical delivery thereof or further act and will be valid and binding against all parties having claims of any kind in tort, contract or otherwise against the Authority, irrespective of whether such parties have notice hereof.
The obligation of the City to make the Series 2025 Installment Payments is payable solely from Net Revenues of the City's Wastewater System, which consist of Revenues of City's Wastewater System remaining after the payment of Operation and Maintenance Costs. All Revenues (as such term is defined in Appendix B under the caption "INSTALLMENT PURCHASE AGREEMENT —Definitions") of the City's Wastewater System and all amounts on deposit in the Revenue Fund have been irrevocably pledged to the payment of the Series 2025 Installment Payments as provided in the Installment Purchase Agreement. The Revenues will not be used for any other purpose while any of the Series 2025 Installment Payments remain unpaid; provided that out of the Revenues there may be apportioned such sums for such purposes as are expressly permitted in the Installment Purchase Agreement, including but not limited to the payment of Operation and Maintenance Costs of the Wastewater System. Such pledge, together with the pledge created by all other Bonds and Contracts (as such terms are defined in Appendix B under the caption "INSTALLMENT PURCHASE AGREEMENT —Definitions" and referred to in the forepart of this Official Statement as "Parity Bonds and Contracts" or "Parity Bonds or Contracts," as applicable), constitutes a first lien on Revenues and, subject to application of Revenues and all amounts on deposit in the Revenue Fund as permitted in the Installment Purchase Agreement, the Revenue Fund and other funds and accounts created thereunder for the payment of the Series 2025 Installment Payments and all other Parity Bonds and Contracts in accordance with the terms thereof and of the Indenture.
Notwithstanding anything contained m the Installment Purchase Agreement, the City is not required to advance any moneys derived from any source of income other than the Revenues and the Revenue Fund for the payment of amounts due under the Installment Purchase Agreement or for the performance of any agreements or covenants that are required to be performed by it contained therein. The City may, however, -7-
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advance moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and may be legally used by the City for such purpose.
THE OBLIGATION OF THE CITY TO MAKE SERIES 2025 INSTALLMENT PAYMENTS
PURSUANT TO THE INSTALLMENT PURCHASE AGREEMENT DOES NOT CONSTITUTE AN
OBLIGATION 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 OBLIGATION OF THE CITY TO MAKE THE SERIES 2025 INSTALLMENT PAYMENTS IS A
SPECIAL LIMITED OBLIGATION OF THE CITY PAYABLE SOLELY FROM NET REVENUES OF THE
CITY'S WASTEWATER SYSTEM AND DOES NOT CONSTITUTE A DEBT OF THE CITY OR OF THE
STATE OR OF ANY POLITICAL SUBDIVISION THEREOF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.
Rate Covenant
In any Fiscal Year in which the amount on deposit in the Rate Stabilization Fund, if established, on the first day of such Fiscal Year is less than the Series 2025 Installment Payments payable in such Fiscal Year, to the fullest extent permitted by law, the City will fix and prescribe, at the commencement of each such Fiscal Year, rates and charges for the Wastewater Service which are reasonably expected, at the commencement of such Fiscal Year, to be at least sufficient to yield during such Fiscal Year Net Revenues equal to 120% of Debt Service for such Fiscal Year. When calculated for the foregoing purposes, Net Revenues do not include amounts transferred from the Rate Stabilization Fund, if established, pursuant to the Installment Purchase Agreement that are in excess of 20% of Debt Service for such Fiscal Year.
In any Fiscal Year in which the amount on deposit in the Rate Stabilization Fund on the first day of such Fiscal Year is at least equal to the Series 2025 Installment Payments payable in such Fiscal Year, to the fullest extent permitted by law, the City will fix and prescribe, at the commencement of each such Fiscal Year, rates and charges for the Wastewater Service which are reasonably expected, at the commencement of such Fiscal Year, to be at least sufficient to yield during such Fiscal Year Revenues equal to 120% of the sum of Operation and Maintenance Costs for such Fiscal Year. When calculated for the foregoing purposes, Revenues do not include any amounts transferred from the Rate Stabilization Fund, if established, pursuant to the Installment Purchase Agreement.
The City may make, or permit to be made, adjustments from time to time in such rates, fees and charges and may make, or permit to be made, such classification thereof as it deems necessary, but may not reduce or permit to be reduced such rates, fees and charges below those then in effect, unless the Revenues from such reduced rates, fees and charges will at all times be sufficient to meet the foregoing requirements.
So long as the City has complied with its obligations set forth in the first two paragraphs of this subcaption, as applicable, the failure of Net Revenues to meet the thresholds set forth in such paragraphs, as applicable, does not constitute a default or an Event of Default under the Installment Purchase Agreement or the Indenture.
No Reserve Fund
The Authority has not funded a debt service reserve fund in connection with the issuance of the Bonds.
Additional Parity Bonds and Contracts
The City may at any time issue or execute any Parity Bonds or Contracts, as the case may be, payable from Net Revenues on a parity with the Series 2025 Installment Payments and secured by a pledge of and lien on Revenues as described in the Installment Purchase Agreement, provided that:
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(a) The Net Revenues for any consecutive twelve calendar month period during the eighteen calendar month period preceding the date of adoption by the City Council of the City of the resolution authorizing the issuance of, or the date of the execution of, such Parity Bonds or Contract, as the case may be, as evidenced by a special report prepared by an Independent Certified Public Accountant or Independent Financial Consultant on file with the City, produce a sum equal to at least 120% of the Debt Service for such twelve month period. When calculated for the foregoing purposes, Net Revenues do not include amounts transferred from the Rate Stabilization Fund, if established, to the Revenue Fund pursuant to the Installment Purchase Agreement that are in excess of 20% of Debt Service for such Fiscal Year; and (b) The Net Revenues for any consecutive twelve calendar month period during the eighteen calendar month period preceding the date of adoption by the City Council of the City of the resolution authorizing the issuance of, or the date of the execution of, such Parity Bonds or Contract, as the case may be, including adjustments to give effect as of the first day of such twelve month period to increases or decreases in rates and charges for the Wastewater Service approved and in effect as of the date of calculation, as evidenced by a special report prepared by an Independent Certified Public Accountant or Independent Financial Consultant on file with the City, produce a sum equal to at least 120% of the Debt Service for such twelve month period, plus the Debt Service which would have accrued on any Parity Bonds and Contracts issued or executed since the end of such twelve month period assuming that such Parity Bonds and Contracts had been issued at the beginning of such twelve month period, plus the Debt Service which would have accrued had such proposed additional Parity Bonds or Contract been issued or executed at the beginning of such twelve month period. When calculated for the foregoing purposes, Net Revenues do not include amounts transferred from the Rate Stabilization Fund, if established, to the Revenue Fund pursuant the Installment Purchase Agreement that are in excess of 20% of Debt Service for such Fiscal Year.
Notwithstanding the foregoing, Parity Bonds or Contracts issued or executed to refund Parity Bonds or Contracts may be delivered without satisfying the conditions set forth above if Debt Service in each Fiscal Year after the Fiscal Year in which such Parity Bonds or Contracts are issued or executed, as applicable, is not greater than Debt Service would have been in each such Fiscal Year prior to the issuance or execution of such Parity Bonds or Contracts.
In addition, so long as the Policy is in full force and effect and the Insurer has not defaulted on its obligations thereunder, no additional Parity Bonds may be issued or Contracts executed if an Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) exists under the Installment Purchase Agreement, unless such Event of Default will be cured upon such issuance.
Rate Stabilization Fund
The City is authorized but not required to establish a special fund designated as the "Rate Stabilization Fund." If the City elects to establish a Rate Stabilization Fund, such fund will be held by the City in trust under the Installment Purchase Agreement. The City has agreed and covenanted to maintain and to hold such fund, if established, separate and apart from other funds so long as any Parity Bonds or Contracts remain unpaid. Money transferred by the City from the Revenue Fund to the Rate Stabilization Fund, if established, in accordance with the Installment Purchase Agreement will be held in the Rate Stabilization Fund and applied in accordance with the Installment Purchase Agreement.
The City may withdraw all or any portion of the amounts on deposit in the Rate Stabilization Fund, if established, and transfer such amounts to the Revenue Fund for application in accordance with the Installment Purchase Agreement or, in the event that all or a portion of the Series 2025 Installment Payments are discharged in accordance with the Installment Purchase Agreement, transfer all or any portion of such amounts for application in accordance with the Installment Purchase Agreement. Any such amounts transferred from the Rate Stabilization Fund, if established, to the Revenue Fund in accordance with the Installment Purchase Agreement constitute pledged Revenues.
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BOND INSURANCE
The information under this caption has been prepared by the Insurer for inclusion in this Official Statement. None of the Authority, the City or the Underwriter has reviewed this information, nor do the Authority, the City or the Underwriter make any representation with respect to the accuracy or completeness thereof. The following information is not a complete summary of the terms of the Policy and reference is made to Appendix F for a specimen of the Policy.
Bond Insurance Policy
Concurrently with the issuance of the Bonds, [INSURER] (the "Insurer") will issue its Municipal Bond Insurance Policy (the "Policy") for the Bonds maturing on September 1 of the years 20_ through 20_, inclusive (the "Insured Bonds"). The Policy guarantees the scheduled payment of principal of and interest on the Insured Bonds when due as set forth in the form of the Policy included as Appendix F to this Official Statement.
The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law.
[INSURER]
[TO COME]
THE CITY
General
The City was incorporated in 1912 under the general laws of the State. The City has a land area of approximately 30.9 square miles and an estimated population of 57,416 as of January 1, 2024. The City provides a wide range of services, including police, public works (including sewer and storm drain services), street maintenance and land and building development. The City also operates various community services, including parks, a senior center, a teen and day camp and a municipal swimming pool.
The City is located in Riverside County, California (the "County"), approximately 25 miles east of the city of Riverside at the junction of Interstate 10, State Route 60 and State Route 79. With its location at the confluence of several freeways, the City has access to major employment centers in southern California and is also a significant regional center of employment. Amazon (an online retailer), Beaumont Unified School District (a school district), Walmart (a depaitinent store) and CJ Foods (a food manufacturing facility) are major employers in the City. The City is also close to major tourist destinations such as Palm Springs (28 miles east), Big Bear Lake (53 miles north) and Los Angeles (75 miles west).
The Wastewater System includes approximately 186 miles of gravity pipelines, 25 miles of sewer force mains and 12 lift stations. The majority of Wastewater System facilities were installed after 2005. The collection system's underground network of pipes range in size from 6 to 30 inches in diameter. The City provides sewer service to approximately 18,805 accounts consisting of single family residential, multi -family residential and mobile home park connections and 538 commercial and industrial accounts within the City's boundaries, an adjacent unincorporated area of the County called Highland Springs and a mobile home park in an adjacent unincorporated area of the County.
Wastewater is collected through the Wastewater System and transported for treatment to the Treatment Plant. The 2018 Wastewater Treatment Plant Salt Mitigation Project expanded the capacity of the Treatment Plant from 4 mgd to 6 mgd, using membrane bioreactor ("MBR") treatment technology, and a reverse osmosis ("RO") system to reduce the discharge of total dissolved solids and nitrates from the Treatment Plant. The Wastewater System and the Treatment Plant are operated by the City. -10-
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Land Use and Service Area
The City's service area largely encompasses single family residences and multi -family units. With the exception of certain properties that have septic tanks, all of the land within City limits is served by the Wastewater System and new residents and businesses in the City are required to connect to the Wastewater System. The Wastewater System also serves Highland Springs, which is an unincorporated area of the County adjacent to the City, and a mobile home park in an unincorporated area of the County adjacent to the City.
Seismic Considerations
The City is located in a seismically active region. Significant faults are located near the City, including the San Andreas fault. There is potential for destructive ground shaking during the occurrence of a major seismic event. In addition, land along fault lines may be subject to liquefaction during the occurrence of such an event. In the event of a severe earthquake, there may be significant damage to both property and infrastructure within the City, including the Wastewater System. The City has an emergency response plan that would be implemented under such circumstances.
Newer Wastewater System facilities are designed to withstand earthquakes with minimal damage, as earthquake loads are taken into consideration in the design of project structures. The City has also undertaken a vulnerability assessment of critical Wastewater System facilities. The vulnerability assessment ranks City infrastructure by importance, builds redundancy into existing operations and includes contingency plans in the event of damage to City assets and succession plans for critical staff. The impact of lesser magnitude events is expected by the City to be temporary, localized and repairable. The Wastewater System has never sustained major damage to its facilities or experienced extended incidences of service interruptions as a result of seismic disturbances. Wastewater System facilities have been designed and constructed in compliance with the City's construction standards.
The City does not maintain earthquake insurance on Wastewater System facilities. See the captions "—City Insurance" and "CERTAIN RISKS TO BONDHOLDERS —Natural Disasters." Governance and Management
General. The City is governed by a five -member City Council, the members of which are elected at large for staggered four year terms. City Council members elect a mayor from among the City Council members, and the mayor serves a one-year term. The current City Council members and the expiration dates of their terms are set forth below.
City of Beaumont
City Council Members
City Council Member Expiration of Term
Mike Lara, Mayor
Jessica Voigt, Mayor Pro-Tem
Lloyd White, Council Member
Julio Martinez III, Council Member
David Fenn, Council Member
November 2026
November 2026
November 2026
November 2028
November 2028
Day-to-day management of the City is delegated to Elizabeth Gibbs, City Manager since April 11, 2022. Prior to coming to the City, Ms. Gibbs has served as a public administrator with 32 years of experience in local government across a wide range of departments, with expertise in public policy, project management and design, crisis management, fiscal management, community outreach, and public engagement. Ms. Gibbs holds a Bachelor degree and a Master of Public Administration degree from California Baptist University. 4900-2457-4243v5/022599-0036
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Gustavo Romo serves as the Deputy City Manager. Mr. Romo has almost 30 years in municipal government experience, including five years as Deputy City Manager in the city of Bell Gardens assisting the City Manager with complex issues while managing the Community Development Depaititient consisting of Building & Safety, Business License, Code Enforcement, Community Development Block Grant Program, Economic Development, Housing and Planning. Mr. Romo has a Bachelor of Science Degree from California State Polytechnic University in Urban and Regional Planning. Mr. Romo has a Master of Business Administration from the University of Redlands and has over 30 years of government experience in various agencies with increasing responsibilities.
The City's Finance Department provides financial services to the Wastewater System. Jennifer Ustation has been with the City for seven years and served as the Director of Finance since 2021. Prior to becoming the Finance Director, Ms. Ustation served as an Senior Accountant at the City. Ms. Ustation has 13 years of government finance experience. Ms. Ustation holds a Bachelor's Degree in Business Administration with a concentration in Accounting from California State University, San Bernardino, and received the Certified Public Finance Officer ("CPFO") designation in 2024 from the Government Finance Officers Association. She is currently enrolled in the Master of Business Degree Program with a concentration in Organizational Leadership at the University of Redlands with an expected completion in Spring 2026.
City utilities, including the Wastewater System, are managed by the Director of Water Reclamation, Thaxton Van Belle. Mr. Van Belle has over 30 years of experience in the wastewater field, including the operation of advanced membrane and R.O. systems. Mr. Van Belle is a Grade V wastewater treatment operator with the State of California and holds certifications in water treatment, laboratory, and maintenance technologies.
Robert Vestal, P.E., is the Director of Public Works for the City of Beaumont. Mr. Vestal has over 25 years of experience in civil engineering, including four years as Principal Engineer for the city and 20 years in the private sector. Mr. Vestal is a licensed professional engineer and an innovator, having developed industry- leading software tools that enhance practices in structural design, geomatics, GIS, surveying, hydraulics, and hydrology.
Management Policies. The City has adopted several policies designed to ensure the prudent and effective management of City operations, including a general accounting policy, a budget policy, a capital improvement policy, a debt management policy, a cash management policy, a disclosure policy, a financial planning policy, a fixed assets policy, an investment policy, a procurement policy, a reserve policy and a policy and procedures manual. Further information about each such policy is set forth below.
Accounting Policy. The City's accounting policy sets forth guidelines with respect to the collection and disbursement of City resources and the preparation of the City's audited financial statements.
Under the accounting policy: (i) the City accounts for fmancial resources in accordance with generally accepted accounting principles applicable to governmental agencies such as the City ("GAAP") (as discussed further under the caption "—Financial Statements"), Financial Accounting Standards Board statements, Accounting Principles Board opinions and Accounting Research Bulletins of the Committee on Accounting Procedure; (ii) investments held by the City are valued at fair market value and categorized based on investment risk; and (iii) procedures to prevent loss, theft or misuse of City funds, including prohibiting employees who authorize transactions from recording such transactions, avoiding physical delivery of securities and requiring written confirmation for all transactions, are established.
Capital Improvement Policy. Under the City's capital improvement policy, all new developments in the City must be approved by the City Engineer and surety bonds or standby letters are required from developers to ensure the construction of required offsite improvements. City -funded projects are categorized as either: (i) current year funded (appropriated) projects; (ii) 5 -year capital improvement plan projects; (iii) planned but unfunded projects required to maintain existing levels of services; and (iv) unfunded future needs projects to support anticipated growth. The capital improvement policy also establishes how -12-
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projects will be funded; Wastewater System funding sources include developer impact fees, contributed capital and remaining revenues after debt service on Wastewater System obligations is paid. The City's 5 -year capital improvement plan is updated with input from each depaitiiient annually, and projects are prioritized based on revenue generation or cost avoidance, health, safety and welfare, level of service, required maintenance, aesthetic and other considerations.
Debt Management Policy. The City's debt management policy addresses the matters that are required by California Government Code § 8855(i), including: (i) the purposes for which debt proceeds may be used; (ii) the types of debt that may be issued; (iii) the relationship of the debt to, and integration with, the City's capital improvement program or budget; (iv) policy goals related to the City's planning goals and objectives; and (v) the internal control procedures which ensure that the proceeds of each debt issuance are directed to their intended use.
Disclosure/Continuing Disclosure Policy. The City's disclosure and continuing disclosure policy is described under the caption "CONTINUING DISCLOSURE." Financial Planning Policy. Under the City's financial planning policy: (i) revenues will be estimated conservatively and expenditures will be estimated realistically; (ii) the Finance Depai lment will prepare an annual financial assessment of the City and a 5 -year financial forecast for the City, including, for the Wastewater System, anticipated changes in rates, debt service coverage and reserve levels; and (iii) the City will prepare a 10- or 20 -year Wastewater System master plan.
Fixed Assets Policy. The City's fixed assets policy establishes a methodology for determining which fixed assets will be capitalized and the value to assign to such assets. The policy's goals are to control, protect and make use of the City's fixed assets in order to deliver services to residents and to account for such assets in accordance with GAAP. Under the fixed assets policy: (i) only assets valued at over $10,000 will be capitalized (except for land, certain infrastructure and assets that are subject to grant conditions); (ii) each department head will maintain and update annually a list of fixed assets for the applicable department; and (iii) fixed assets may be disposed of only with City Council or City Manager and Finance Depai talent approval, with proceeds returned to the fund that financed the purchase of such assets.
Investment Policy. The City's investment policy is described under the caption "— Investment of Funds."
Procurement Policy. Under the City's procurement policy: (i) professional services will be procured competitively through a request for proposal process, unless approved by the City Council under certain circumstances such as emergencies or grant or loan requirements; (ii) all contracts in excess of $75,000 must be approved by the City Council and include a not -to -exceed compensation amount; and (iii) contracts may not be for a term in excess of five years.
Reserve Policy. The purpose of the City's reserve policy for enterprise funds such as the Sewer Fund is to build a cash balance for daily needs, emergency expenditures in the event of a natural disaster and unanticipated operating deficits as a result of a revenue shortfall. Under the reserve policy, the City's estimates that it will build Sewer Fund reserves to an amount that is equal to 25% of Wastewater System annual operating expenses. The Sewer Fund reserve amount is separately identified in the City's accounting records, financial statements and budgets. As of June 30, 2024, the City held $8,229,142 in unrestricted reserves in its Sewer Fund which will equal to an estimated 219 days of Operation and Maintenance Costs.
Policy and Procedures Manual. The City has also adopted a policy and procedures manual which sets forth detailed guidelines for staff with respect to accounting, cash management, capital assets, cash receipts and accounts payable.
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Hire Date
Benefit Formula
Benefit Vesting Schedule
Benefit Payments
Retirement Age
Employee Contribution Rate
Employer Contribution Rate
(1)
Employees and Employee Benefits
Employees. As of June 30, 2024, the City had approximately 233 full-time equivalent employees, of whom approximately 11 work in the Public Works Department and approximately 10 work in the Finance Department. Public Works Department and Finance Depaitnient employees are represented by the Service Employees International Union Local 721 (the "SEIU"). Relations between the City and the SEIU are governed by a memorandum of understanding (the "MOU"). The current MOU with the SEIU extends through June 30, 2026. The City has never experienced a strike, slowdown or work stoppage.
This caption 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 neither makes any representations nor expresses any opinion as to the accuracy of the information provided by CaIPERS.
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 herein. The City cannot 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 be changed in the future. Actuarial assessments will change with the future experience of the pension plans.
The City participates in a Miscellaneous plan to fund pension benefits for employees who manage the Wastewater System. The City's plans are administered by the California Public Employees Retirement System ("Ca1PERS"). Ca1PERS administers agent multiple -employer public employee defined benefit pension plans for all of the City's qualified permanent and probationary employees. Ca1PERS provides retirement, disability and death benefits to plan members and beneficiaries and acts as a common investment and administrative agent for participating public entities within the State, including the City. CalPERS plan benefit provisions and all other requirements are established by State statute and the City Council. Copies of PERS' annual financial report may be obtained from its executive office located at 400 Q Street, Sacramento, California 95811, or via http://www.calpers.ca.gov . The information on such website is not incorporated herein.
The City participates in separate Ca1PERS Miscellaneous plans for employees based upon hire date.
Benefit provisions for each plan as of June 30, 2024 are set forth below.
City of Beaumont Miscellaneous Ca1PERS Plans
Summary of Benefit Provisions
Employees Hired Employees Hired On
Before 1/1/2013 and After 1/1/2013
3.0%at60 2.0%at62
5 years of service 5 years of service
Monthly for life Monthly for life
50-67 52-67
2.0-3.0% 1.0-2.5%(1)
17.26% 7.68%
[Employees are required to make the full employee contribution. The City does not make any portion of such contribution.] Source: City.
AB 340, Public Employee Pension Reform Act of 2013 (PEPRA). On September 12, 2012, the California Governor signed Assembly Bill 340 ("AB 340"), which implements pension reform in California.
Effective January 1, 2013, AB 340: (i) requires public retirement systems and their participating employers to 4900-2457-4243v5/022599-0036
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share equally with employees the normal cost rate for such retirement systems; (ii) prohibits employers from paying employer paid member contributions to such retirement systems for employees hired after January 1, 2013; (iii) establishes a compulsory maximum non -safety benefit formula of 2.5% at age 67; (iv) defines final compensation as the highest average annual pensionable compensation earned during a 36 -month period; and (v) caps pensionable income at $110,100 ($132,120 for employees not enrolled in Social Security) subject to Consumer Price Index increases. Other provisions reduce the risk of the City incurring additional unfunded liabilities, including prohibiting retroactive benefits increases, generally prohibiting contribution holidays, and prohibiting purchases of additional non -qualified service credit.
Pursuant to AB 340, the City established new pension tier: 2.0% at 62 for Miscellaneous for employees hired on or after January 1, 2013, who were not previously CaIPERS members.
Ca1PERS Plan Actuarial Methods. The staff actuaries at Ca1PERS prepare annually an actuarial valuation which is typically delivered in the time period from July through October of each year (thus, the actuarial valuation dated July 2024 (the most recent valuation provided to the City) covered CaIPERS' Fiscal Year ended June 30, 2023). The actuarial valuations express the City's required contribution which the City must contribute in the Fiscal Year immediately following the Fiscal Year in which the actuarial valuation is prepared (thus, the City's contribution requirement derived from the actuarial valuation as of June 30, 2023 affects the City's Fiscal Year 2025-26 required contribution). Ca1PERS rules require the City to implement the actuary's recommended rates.
The annual actuarially required contribution rates consist of two components: the normal cost and the unfunded accrued liability ("UAL"). The normal cost represents the actuarial present value of benefits that CaIPERS will fund under the Ca1PERS plans that are attributed to the current year, and the accrued liability (the "AAL") represents the actuarial present value of benefits that Ca1PERS will fund that are attributed to past years. The UAL represents an estimate of the actuarial shortfall between actuarial value of assets on deposit at Ca1PERS and the present value of the benefits that Ca1PERS will pay under the Ca1PERS plans to retirees and active employees upon their retirement. The UAL is based on several assumptions such as, among others, the expected rate of investment return, average life expectancy, average age of retirement, inflation, salary increases and occurrences of disabilities. In addition, the UAL includes certain actuarial adjustments such as, among others, the actuarial practice of smoothing losses and gains over multiple years (which is described in more detail below). As a result, the UAL may be considered an estimate of the unfunded actuarial present value of the benefits that CaIPERS will pay under the CaIPERS plans to retirees and active employees upon their retirement and not as a fixed expression of the liability the City owes to Ca1PERS under its Ca1PERS plans.
The CaIPERS Chief Actuary considers various factors in determining the assumptions to be used in preparing the actuarial report. Demographic assumptions are based on a study of the actual history of retirement, rates of termination/separation of employment, years of life expectancy after retirement, disability, and other factors. This experience study is generally done once every four years. The most recent experience study was completed in 2021 in connection with the preparation of actuarial recommendations by the Ca1PERS Chief Actuary as described below.
Beginning in Fiscal Year 2017-18, Ca1PERS began collecting employer contributions toward a pension plan's UAL as dollar amounts instead of the prior method of a percentage of payroll. According to Ca1PERS, this change was intended to address potential funding issues that could arise from a declining payroll or a reduction in the number of active members in the plan. Funding the UAL as a percentage of payroll could lead to underfunding of pension plans. Due to stakeholder feedback regarding internal needs for total contributions expressed as an estimated percentage of payroll, the Ca1PERS reports include such results in the contribution projection for informational purposes only. Contributions toward a pension plan's UAL will continue to be collected as set dollar amounts.
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The CaIPERS Board of Administration has adjusted and may in the future further adjust certain assumptions used in the Ca1PERS actuarial valuations, which adjustments may increase the City's required contributions to CaIPERS in future years. Accordingly, the City cannot provide any assurances that the City's required contributions to CaIPERS in future years will not significantly increase (or otherwise vary) from any past or current projected levels of contributions. Ca1PERS earnings reports for Fiscal Years 2012-13 through 2022-23 report investment gains (and losses) of approximately 12.5%, 18.4%, 2.4%, 0.6%, 11.2%, 8.6%,
6.7%, 4.7%, 21.3%, (6.1%), and 5.8%, respectively. Ca1PERS has preliminarily reported investment gains of approximately 9.3% for Fiscal Year 2023-24. Future earnings performance may increase or decrease future contribution rates for plan participants, including the City.
CaIPERS' discount rate was lowered from 7.00% to 6.80% in fall 2021. Lowering the discount rate means that employers that contract with Ca1PERS to administer their pension plans will see increases in their normal costs and unfunded actuarial liabilities. Active members hired after January 1, 2013 who were not previously CaIPERS members will also see their contribution rates rise under AB 340.
On June 25, 2012, the Governmental Accounting Standards Board approved GASB Statement No. 68 ("GASB 68") with respect to pension accounting and financial reporting standards for state and local governments and pension plans. GASB 68 states that, for pensions within the scope of the statement, a cost - sharing employer that does not have a special funding situation is required to recognize a net pension liability, deferred outflows of resources, deferred inflows of resources related to pensions, and pension expense based on its proportionate share of the net pension liability for benefits provided through the pension plan. While the new accounting standards change financial statement reporting requirements, they do not impact funding policies of the pension systems.
Discount Rate — The discount rate used to measure the total pension liability as of June 20, 2023 was
6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Miscellaneous Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Long-term Expected Rate of Return — The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, PERS took into account both short-term and long- term market return expectations. Using historical returns of all of the funds' asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 basis points.
Changes of Assumptions — Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, Ca1PERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 Ca1PERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement dates 2017 through 2021,
7.65% for measurement dates 2015 through 2016, and 7.50% for measurement date 2014.
For Fiscal Years 2023 and 2024, the City made total Ca1PERS Miscellaneous plan contributions of approximately $1,931,600 and $1,961,630 , respectively. The Wastewater System's share of such contribution was approximately 15%. The City expects the Wastewater System's share of Miscellaneous plan contributions -16-
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to increase in future years as the City hires additional dedicated Wastewater System employees to operate the Wastewater System. See the captions "THE WASTEWATER SYSTEM OF THE CITY —Projected Wastewater System Operating Results and Debt Service Coverage." The following table sets forth the market value of the Miscellaneous Plan's assets and funded status as of the valuation dates from June 30, 2019 through June 30, 2023 and the total employer contributions made by the City for such fiscal years. The table is based on CaIPERS actuarial reports for those years.
City of Beaumont
Historical Funding Status
(Miscellaneous Plan)
Valuation Unfunded
Date Accrued Market Value of Accrued Liability Funded Annual Covered June 30 Liability Assets (MVA) (UAL) Ratio Payroll
2019 $35,103,241 $26,841,251 $ 8,261,990 76.5% $4,948,983 2020 37,847,100 28,637,354 9,209,746 75.7 5,142,570
2021 42,583,033 37,104,646 5,478,387 87.1 5,344,927
2022 45,771,224 34,431,970 11,339,254 75.2 5,150,026
2023 49,015,088 36,580,352 12,434,736 74.6 5,464,234
(') Amounts are the actuarially required employer contribution amounts from the Ca1PERS Annual Valuation Reports rather than the actual amounts contributed by the City. The City's actual contributions differ based on increases or decreases in staffing levels. Differences are accounted for in future actuarially required contribution amounts.
Source: Ca1PERS Actuarial Reports for June 30, 2019 through June 30, 2023.
Assuming a fixed annual return of 6.80% on future employer contributions for Fiscal Year 2023-24 and beyond, the following tables show the employer contribution for Fiscal Year 2025-26 and the projected future employer contributions for the Miscellaneous Plan for the next five Fiscal Years:
City of Beaumont
Present And Future Employer Contributions
(Miscellaneous Plan)
Fiscal Year 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 Normal Cost % 17.39% 17.4% 17.4% 17.4% 17.4% 17.4%
UAL Payment $1,029,264 $1,115,000 $1,185,000 $1,346,000 $1,376,000 $1,400,000 Source: CaIPERS Actuarial Report for June 30, 2023.
A summary of the principal assumptions and methods that were used to determine the Miscellaneous plan's total pension liability for Fiscal Year 2023 is shown below.
City of Beaumont Miscellaneous Ca1PERS Plans
Summary of Actuarial Assumptions
Actuarial Cost Method
Asset Valuation Method
Actuarial Assumptions:
Discount Rate
Inflation
Salary Increases
Entry Age Normal Cost Method in accordance with GASB 68 Actuarial Value of Assets
6.90%
2.30%
Varies by entry age and position
Source: City of Beaumont Annual Comprehensive Financial Report Fiscal Year Ended June 30, 2024. 4900-2457-4243v5/022599-0036
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Benefits Provided. PERS 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 five years of service. The death benefit is one of the following: the Basic Death Benefit, the 1959 Survivor Benefit Level III, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for the Miscellaneous Plan are applied as specified by the Public Employees' Retirement Law.
Contributions. Section 20814(c) of the California Public Employees' 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 July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by PERS. 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 employees.
The aggregate total changes in the net pension liability for Fiscal Year 2023, the latest date for which such information is available, for the City's Ca1PERS Miscellaneous plans were as follows:
City of Beaumont Miscellaneous Ca1PERS Plans
Changes in Net Pension Liability
Increase / (Decrease)
Total Plan Fiduciary Net Pension
Pension Liability Net Position Liability / (Asset)
Balance at June 30, 2022 $45,894,203
Balance at June 30, 2023 49,834,513
Net Changes during Fiscal $ 3,940,310
Year 2023
$ 35,813,769
38,547,510
$ 2,733,741
Source: City of Beaumont Annual Comprehensive Financial Report Fiscal Year Ended June 30, 2024. $10,080,434
11,287,003
$ 1,206,569
The June 30, 2023 balances are based on CaIPERS actuarial valuation data of June 30, 2022 with assumptions and market values updated through June 30, 2023.
The following table presents the net pension liability of the City's Ca1PERS plans, calculated using the discount rate of 6.90%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.90%) or 1 percentage point higher (7.90%) than the current rate:
City of Beaumont Miscellaneous CaIPERS Plans
Sensitivity of the Net Pension Liability to Changes in the Discount Rate Discount Rate —1 % Current Discount Rate Discount Rate + I% (5.90%) (6.90%) (7.90%)
Plan's Net Pension Liability/(Asset) $18,026,909
$11,287,003 $5,739,482
Source: City of Beaumont Annual Comprehensive Financial Report Fiscal Year Ended June 30, 2024.
The City expects total Miscellaneous plan contributions, and the Wastewater System's share of such contributions, to increase in future years as the City hires additional dedicated Wastewater System employees to operate the Wastewater System. Such increased contributions are reflected in the Wastewater System 4900-2457-4243v5/022599-0036
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projected operating results that are set forth herein. See the caption "THE WASTEWATER SYSTEM OF THE CITY —Projected Wastewater System Operating Results and Debt Service Coverage." Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions. For the year ended June 30, 2024, the City recognized pension expense of $2,852,678 to the Miscellaneous Plan. At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
Miscellaneous of Resources* of Resources*
Pension contributions subsequent to measurement date, net $1,961,630 $ Differences between projected and actual earnings on pension plan investments 1,827,467
Change in Employer's Proportion 461,085
Changes of assumptions 681,447
Differences between actual and expected experience 576,602 89,445 Difference between employer's actual contributions and
proportionate share of contributions 274,980 87,397
Total $5,783,211 $ 176,842
The $1,961,630 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the subsequent fiscal period rather than in the current fiscal period.
The remaining amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Fiscal Year Miscellaneous
2025 $ 1,243,320
2026 827,293
2027 1,521,688
2028 52,438
Total $ 3,644,739
For additional information relating to the City's Ca1PERS Miscellaneous plans, see Note 10 to the City's audited fmancial statements for Fiscal Year 2024 set forth in Appendix A.
No Post -Employment Benefits. The City does not provide post -employment benefits other than pensions to retired employees.
Investment of Funds
The City invests its funds in accordance with the City's investment policy (the "Investment Policy"), which was adopted by the City Council on May 16, 2023. The Investment Policy sets forth the policies and procedures that are applicable to the investment of City funds and designates eligible investments. The Investment Policy also sets forth stated objectives, including the assurance of the safety of invested funds, the maintenance of sufficient liquidity, compliance with law and the attainment of the best yield or returns on investments. Funds are invested in the following order of priority:
• Safety of Principal;
• Liquidity; and
• Yield.
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The City Council has delegated the authority to invest funds of the City to the City Manager and his or her designee (referred to in the Investment Policy as the "Investment Officer"). The Investment Officer must invest City funds in accordance with the prudent person standard under California Civil Code § 2261 et seq.
The Investment Policy provides a number of permitted investment categories, including: (i) the State of California Local Agency Investment Fund; (ii) negotiable certificates of deposit with a maximum term of five years (these investments must be collateralized); (iii) medium term notes; (iv) money market funds; (v) US treasury notes; (vi) federal home loan banks; (vii) federal farms credit banks; and (viii) guaranteed investment contracts.
Under the Investment Policy, the City consolidates its cash in order to maximize returns, with income allocated to various funds in proportion to their contributions, based on GAAP. As of June 30, 2024, The value of the City's position in the pool in the Local Agency Investment Fund (a permitted investment under the Investment Policy) is the same as the value of the pool shares in the amount of $49,836,601. Of such amounts, approximately 15% are allocated to the Sewer Fund. The City's Fiscal Year 2025 budget reflects the City's expectation that approximately $5,129,803 million in unrestricted retained earnings will be allocated to the Sewer Fund as of June 30, 2025.
The City's investments are reported quarterly to the City Council, and the Investment Policy requires the City to obtain a review of the City's investments from an independent certified public accountant annually.
For additional information relating to the Investment Policy, see Note 2 to the City's audited financial statements for Fiscal Year 2024 set forth in Appendix A.
City Insurance
The City maintains insurance for the Wastewater System through Exclusive Risk Management Authority of California ("ERMAC"), a joint powers authority that was created under the provisions of Government Code § 6500 et seq. to arrange and administer programs of insurance for the pooling of self - insured losses and to purchase excess insurance coverage.
The City's current insurance coverages (for the Wastewater System and other City assets) are as follows:
General Liability and Property Damage. The City maintains a self -insured retention level of $250,000 for general liability with excess coverage up to $50,000,000, as a participant in ERMAC. Damage to City property is also insured for its replacement cost through participation in ERMAC. Certain components of the Wastewater System, including underground pipelines and manhole covers, are not covered by such insurance. The City does not maintain earthquake insurance on Wastewater System facilities. See the captions "—Seismic Considerations" and "CERTAIN RISKS TO BONDHOLDERS —Natural Disasters." Government Crime. The City carries government crime insurance, including faithful performance/ employee dishonesty, forgery or alteration, computer fraud, etc., in the amount of $15,000,000, with a $2,500 deductible.
Workers Compensation. The City carries workers' compensation insurance in the amount of $10,000,000 in excess of self -insured retention of $300,000.
The City has not settled any claims that exceeded its insurance coverage in the past three years.
The City can provide no assurance that it will maintain the above insurance coverage amounts while the Bonds are outstanding. See Appendix B under the caption "INSTALLMENT PURCHASE AGREEMENT -COVENANTS OF THE CITY -Insurance" for a description of insurance coverages that are required to be maintained while the Bonds are Outstanding. -20-
4900-2457-4243v5/022599-0036
No Outstanding Parity Obligations
The City has no obligations which are payable from Revenues or Net Revenues on a senior basis or on a parity with the Series 2025 Installment Payments, which secure the Bonds. The City is permitted to incur additional obligations that are payable from Net Revenues on a parity with the Series 2025 Installment Payments in the future upon satisfaction of the conditions that are described under the caption "SECURITY FOR THE BONDS —Additional Parity Bonds and Contracts."
Financial Statements
A copy of the most recent audited basic financial statements of the City prepared by Rogers, Anderson, Malody & Scott, LLP, San Bernardino, California (the "Auditor") is set forth in Appendix A. The Auditor's letter dated December 6, 2024 is set forth therein. The Auditor also made certain findings in a report on the City's internal controls dated December 6, 2024. Such findings are also included in Appendix A.
The summary operating results that are contained under the caption "THE WASTEWATER SYSTEM OF THE CITY —Historic Wastewater System Operating Results and Debt Service Coverage" are derived from these financial statements and audited financial statements for prior Fiscal Years (excluding certain non -cash items and after certain other adjustments) and are qualified in their entirety by reference to such statements, including the notes thereto.
The City accounts for moneys received and expenses paid in accordance with GAAP. See the caption "—Governance and Management —Management Policies —Accounting Policy." In certain cases, GAAP requires or permits moneys that are collected in one Fiscal Year to be recognized as revenue in a subsequent Fiscal Year and requires or permits expenses that are paid or incurred in one Fiscal Year to be recognized as expenses in a subsequent Fiscal Year. See Appendix A. Except as otherwise expressly noted herein, all financial information that has been derived from the City's audited financial statements reflects the application of GAAP.
The Sewer Fund is accounted for as a proprietary fund type (enterprise fund). In governmental accounting, enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis are to be financed or recovered primarily through user charges; or where periodic determination of revenues earned, expenses incurred, and/or net income is deemed appropriate for capital maintenance, public policy, management control, accountability or other purposes.
The Sewer Fund is presented on an economic resources measurement focus and the accrual basis of accounting. Revenues are recognized when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. The Sewer Fund distinguishes operating revenues and expenses from non -operating items. Operating revenues and expenses generally result from providing services in connection with the Sewer Fund's principal ongoing operations. Operating expenses include the cost of sales of services, administrative expenses and depreciation on capital assets. All revenues and expenses that do not meet the foregoing definition are reported as non -operating revenues and expenses m the City's financial statements.
In providing a rating on the Bonds, certain rating agencies may have performed independent calculations of coverage ratios using their own internal formulas and methodology, which may not reflect the provisions of the Indenture. See the caption "RATINGS." The City makes no representations as to any such calculations, and such calculations should not be construed as a representation by the City as to past or future compliance with any financial covenants, the availability of particular revenues for the payment of debt service or for any other purpose.
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4900-2457-4243v5/022599-0036
THE WASTEWATER SYSTEM OF THE CITY
The Wastewater System
General. The Wastewater System provides wastewater collection and disposal service to approximately 18,805 accounts consisting of single family residential, multi -family residential and mobile home park connections and 538 commercial and industrial accounts. Wastewater is treated at the Treatment Plant, which is described in detail under the caption "—Treatment Plant." Collection is primarily via gravity pipelines, with lift stations pumping wastewater under pressure through force mains until the nearest gravity line can be reached. The Wastewater System includes approximately 186 miles of gravity pipelines, 25 miles of sewer force mains and 12 lift stations, with an additional lift station expected to be put into service in 2027.
Treatment Plant. The Treatment Plant is currently a 6 mgd permitted capacity tertiary treatment plant that produces a high quality effluent. Treatment consists of coarse screens, grit removal, equalization, fine screens, a membrane bioreactor treatment system, reverse osmosis, ultraviolet disinfection and centrifugal biosolids handling. Treated effluent is discharged into Cooper's Creek within the Santa Ana River watershed.
Pursuant to the NPDES permit, effluent is currently discharged into a tributary of the Santa Ana River.
The Treatment Plant produces Title 22 -compliant recycled water that, with appropriate governmental approvals, can be made available for reuse purposes. Any revenues from recycled water sales, if realized, do not constitute Revenues of the Wastewater System and are not pledged to repayment of the Bonds.
In 2018, the Treatment Plant was improved from the proceeds of the 2018 Bonds, which consisted of the following improvements: (a) the expansion Treatment Plan's capacity from 4 mgd to 6 mgd; (b) the construction of reverse osmosis facilities in order to reduce the amount of TDS in Treatment Plant effluent, the installation of a membrane system for treatment, grit removal, fine screenings, flow equalization basin, and an upgraded ultraviolet disinfectant system; (c) the construction of approximately 23 miles of 12 -inch diameter pipeline between the Treatment Plant and the Inland Empire Brine Line (the "Brine Line"); (d) the acquisition of 0.55 mgd of conveyance capacity and discharge rights in the Brine Line; and (e) the acquisition of 0.55 mgd of treatment capacity at OCSD 's brine treatment facility.
Regulatory Issues
The Treatment Plant is operated pursuant to the terms of an NPDES permit issued by the Regional Board. The Regional Board administers NPDES regulations that are promulgated by the United States Environmental Protection Agency and Division 7 of the State Water Code and regulations thereunder. The Treatment Plant's current NPDES permit, Order No. R8-2022-0042, NPDES No. CA0105376, became effective on November 1, 2022 and expires on October 31, 2027. Since the completion of the Treatment Plant and subsequent startup in 2022, the Treatment Plant has had one self -reported excursion of pH on September 6, 2023. No notices of violations have been issued.
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Historic Wastewater System Accounts
The following table shows the number of Wastewater System accounts for the last five Fiscal Years.
City of Beaumont
Historic Wastewater System Accounts
Fiscal Year Ended
June 30
2020
2021
2022
2023
2024
Commercial/
Residentiall' Industrial Total Increase/(Decrease)
16,799 456 17,255 6.09%
16,584 463 17,047 (1.21)
17,676 484 18,160 6.53
18,331 497 18,828 3.68
18,805 538 19,343 2.74
(1) Includes single family residential, multi -family residential and mobile home park connections.
Source: City.
Historic Wastewater System Usage
The following table shows the volume of wastewater treated by the Wastewater System for the last five Fiscal Years.
City of Beaumont
Historic Wastewater System Usage
Fiscal Year Ended June 30 Daily Average Flow (mgd) Increase/(Decrease) 2020
2021(1)
2022(1)
2023
2024
3.77 3.70
3.60 3.73
3.90 (1) Decrease in Fiscal Years 2021 through 2022 are a result of above average precipitation.
Source: City.
6.20%
(1.86)
(2.84)
3.76 4.56
Wastewater System usage is affected by a number of factors, including but not limited to the number of connections to the Wastewater System. See the caption "Historic Wastewater System Accounts." 4900-2457-4243v5/022599-0036
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Historic Wastewater System Service Charge Revenues
The following table shows service charge revenues of the Wastewater System for the last five Fiscal Years. Connection fee revenues are excluded from the numbers below.
City of Beaumont
Historic Wastewater System Service Charge Revenues
Fiscal Year Ended June 30(1) Service Charge Revenues Increase/(Decrease) 2020
2021
2022
2023
2024
$10,527,803
10,895,306
12,199,547
13,268,270
13,555,693
19.5%
3.5 12.0
8.8 2.2
(1) On June 19, 2018, the City approved a revised rate structure for Fiscal Years 2019 through 2022.
Source: City.
Wastewater System service charge revenues are affected by a number of factors, including the number of connections to the Wastewater System and Wastewater System usage. See the captions "—Historic Wastewater System Accounts" and "—Historic Wastewater System Usage." Largest Wastewater System Customers
The following table shows the ten largest customers of the Wastewater System as of June 30, 2024.
City of Beaumont
Largest Wastewater System Customers as of June 30, 2024 Customer (and Customer Type)
Percentage of Total Wastewater
Annual Payments(') System Service Charge Revenues(2)
CJ Foods (Manufacturing Food) $ 714,712
Perricone Juice (Agricultural Processing) 186,572
Plantation Mobile Homes (Mobile Home Park) 186,035
Beaumont Unified School District (Public Agency) 149,267 Highland Springs Resort (Resort) 76,744
Country Highlands (Mobile Home Park) 61,008
HPD Noble Creek (Apartments) 18,619
M&R Beaumont Partners (Commercial Center) 16,253
Kozy Trailer Lodge (Mobile Home Park) 15,328
Jags Hospitality (Motel) 10,506
TOTAL $ 1,434,044
(1) Rounded to the nearest dollar.
(2) Based on total Fiscal Year 2024 wastewater service charge revenues of $13,555,693.
Source: City.
5.27%
1.38 1.37
1.10 0.57
0.45 0.14
0.12 0.11
0.08 10.59%
The Wastewater System's ten largest customers accounted for approximately 10.59% of total Wastewater System service charge revenues of $13,555,693 in Fiscal Year 2024. On July 18, 2023, the City adopted a new rate structure for Fiscal Years 2024 through 2028. See the caption "—Wastewater System Rates and Charges —Adopted Rates." As a result of the adoption of the new rate structure, the City's expects its top ten customers to be different in Fiscal Year 2024 and future Fiscal Years, although the City does not 4900-2457-4243v5/022599-0036
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expect a significant change in the concentration of total Wastewater System service charge revenues from its top ten customers.
Wastewater System Rates and Charges
General. Wastewater System rates and charges are set by the City Council and are not subject by statute to the jurisdiction of, or regulation by, the California Public Utilities Commission or any other regulatory body. The City is, however, required to comply with the notice, hearing and majority protest provisions of Article XIIID of the State Constitution, which is popularly known as Proposition 218. See the caption "CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES Proposition 218" for further information with respect to Proposition 218.
City staff annually determines the adequacy of the charge structure for wastewater service in the service area after full consideration of expected operations, maintenance, capital costs and capital repayment obligations of the Wastewater System. Subject to the substantive and procedural requirements of Proposition 218 and other applicable law, the City Council currently sets wastewater service charges at a level that it determines is sufficient to pay all Operation and Maintenance Costs of wastewater pumping and collection, to recover operating expenses for the Wastewater System, to make debt service payments and to maintain appropriate reserves for the Wastewater System.
The City has covenanted in the Installment Purchase Agreement that, to the fullest extent permitted by law, the City will fix and prescribe, at the commencement of each Fiscal Year, rates and charges for the Sewer Service provided by the Wastewater System that are reasonably expected, at the commencement of such Fiscal Year, to be at least sufficient to yield during each Fiscal Year Net Revenues equal to 120% of Debt Service for such Fiscal Year. See the caption "SECURITY FOR THE BONDS —Rate Covenant." Adopted Rates. Residential customer wastewater rates consist of monthly flat charges. Commercial and industrial customer wastewater rates consist of volumetric charges based on water usage.
On July 18, 2023, upon the completion of a rate study by Raftelis Financial Consultants, Inc. and after a public hearing required by Proposition 218, the City Council approved a revised Wastewater System rate structure. The revised structure included a rebalancing of rates among customer classes (without significant rate increases overall) for Fiscal Year 2024, as well as rate increases of approximately 6%, 5%, 3%, 2% and 2% effective on September 1, 2023, July 1, 2024, July 1, 2025, July 1, 2026 and July 1, 2027, respectively.
The projected operating results that are set forth herein reflect such adopted rate increases. There is no assurance that the City Council will not repeal or modify such rates in the future or that the Wastewater System's ratepayers will not approve an initiative to repeal or modify any wastewater service rates and charges approved by the City Council. See the caption "CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES —Proposition 218 —Article XIIIC." -25-
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Set forth below are adopted monthly rates by various customer classes.
City of Beaumont
Wastewater System Monthly Rates
Customer Class
Residential Customers (Fixed Charge Per Unit):
Single -Family Residential (SFR and Mobile Homes)')
Multi -Family Residential (SFR-Rural, Duplex and
Apartmentr)
Non -Residential Customers Fixed Charge:
Commercial
Schools
Commercial- Low
Commercial- Medium
Commercial- High
Industrial
Dura Plastics Products
Perricone Juice
Rudolph Food Company
CJ Foods #1
CJ Foods #2
Precision Stamping
Non -Residential Volumetric Charges
Commercial
Commercial- Low
Commercial- Medium
Commercial- High
Industrial(4)
Dura Plastics Products
Perricone Juice
Rudolph Food Company
CJ Foods #1
CJ Foods #2
Precision Stamping
Effective Effective Effective Effective
Billing Unit July 1, 2024 July 1, 2025 July 1, 2026 July 1, 2027 Per Unit $ 52.73 $ 54.31 $ 55.40 $ 56.51
Per Unit 29.98 30.88 31.50 32.13
Per Student 1.15 1.19 1.21 1.23
Per Account 6.45 6.64 6.77 6.91
Per Account 6.45 6.64 6.77 6.91
Per Account 6.45 6.64 6.77 6.91
Per Account 580.67 598.09 610.05 622.26
Per Account 580.67 598.09 610.05 622.26
Per Account 580.67 598.09 610.05 622.26
Per Account 580.67 598.09 610.05 622.26
Per Account 580.67 598.09 610.05 622.26
Per Account 580.67 598.09 610.05 622.26
Per hcft3) 5.16 5.31 5.42 5.53
Per hcf3) 6.20 6.39 6.52 6.65
Per hcf(3) 10.38 10.69 10.90 11.12
Per hcf(3) 5.38 5.54 5.65 5.77
Per hcf(3) 11.42 11.76 11.99 12.23
Per hcf3) 0.00 0.00 0.00 0.00
Per hcf(3) 14.04 14.46 14.75 15.04
Per hcf{3) 8.61 8.87 9.04 9.22
Per hcf(3) 0.00 0.00 0.00 0.00
Single Family Residential rate includes the following classifications: Single Family, Multi -Family and Mobile Home Parks. (2) Multi -Family Residential rate includes the following classifications: Single Family -Rural, Multi -Family -Rural, Mobile Home -Rural, 2 Units -Residential (Duplex) and Apartments.
(3) "Hcf" means hundred cubic feet. For commercial customers the volumetric charge is based on average winter water use (lowest four months of water consumption).
(4) For industrial customers, the volumetric charge is based on estimated sewer flow.
Source: City.
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Wastewater Service Charge Comparison. The table below sets forth a comparison of an average monthly wastewater billing of the Wastewater System (based on current rates) to those of similar wastewater surveyors as of July 1 2024, excluding volume charges.
City of Beaumont and Neighboring Service Providers
Single Family Residential Charge Comparison
Service Provider Monthly Fixed Charge
City of Rialto
City of Beaumont Wastewater System
Yucaipa Valley Water District
San Bernardino MWD
East Valley Water District
City of Banning(')
City of Redlands(2)
City of Colton
(') Includes a $2.32 tertiary surcharge.
(2) The City of Redlands lists the rate change effective data as of August 5, 2024.
Source: City.
$62.19
52.73 46.90
48.98 46.49
49.44 66.04
45.38 Connection Fees. The City collects connection fees prior to the connection of new customers to the Wastewater System. Current connection fees are as follows:
Residential
Non -Residential
Source: City.
City of Beaumont
Wastewater System Connection Fees
Connection Type Connection Fee
$6,895
Varies based on formula and type
Wastewater System Collection Procedures
Wastewater System bills are generated and collected by the City and are included jointly with solid refuse waste collection charges. Bills are sent to customers on a bi-monthly basis. Customers have 30 days to make payment, after which bills become delinquent. Delinquent accounts are assessed a late charge of 10% and a delinquent bill will be sent. If payment is not received for two full billing cycles (4 months of service), the City Council adopts a resolution on an annual basis directing the County Treasurer -Tax Collector to place the delinquent wastewater charges on the parcel tax roll and to impose a lien therefor against the parcel, subject to a public hearing and majority protest process.
On average, nearly all bills are paid in full prior to becoming delinquent and nearly all delinquencies of active customers are brought current prior to the placement of liens on real property. With respect to delinquent amounts collected by the County, the City participates in the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (known as the Teeter Plan), as provided for in Section 4701 et seq. of the Revenue and Taxation Code of the State of California, and therefore receives from the County 100% of amounts placed on the property tax roll without exposure to the risk of delinquencies in the payment of property taxes. It should be noted that the County has the right to remove the City from the Teeter Plan process, which would result in the City receiving delinquent wastewater charges only upon collection, along with penalties and interest.
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Future Wastewater System Improvements
The City projects total capital improvements to the Wastewater System of approximately $7.9 million over the current and next three Fiscal Years. Such capital improvements are expected to be financed by a combination of grants, Revenues remaining after payment of debt service on the Bonds, impact fees and City reserves. The City does not expect to issue additional bonds or to incur additional obligations in order to finance such capital improvements. See the caption "THE CITY —Governance and Management — Management Policies —Capital Improvement Policy" for a discussion of the City's capital improvement policy.
A portion of the capital improvements to the Wastewater System is to be funded from proceeds of the Bonds. See the caption "THE FINANCING PLAN." A summary of the Wastewater System capital projects for the current and next three Fiscal Years is set forth below.
Project Name
Rate Funded (PAYGO) CIP
CIP Funded by the Repair &
Replacement Reserve
Total
Fiscal Year Fiscal Year Fiscal Year Fiscal Year
2024-25 2025-26 2026-27 2027-28 Total
$ $ 573,300 364,928 $ 938,228
2,386,913 1,375,920 2,007,697 1,216,428 6,986,958
$2,386,913 $ 1,949,220 $ 2,007,697 $ 1,581,356 $ 7,925,186 Source: City.
Projected Wastewater System Accounts
The following table shows the number of Wastewater System accounts projected by the City for the current and next four Fiscal Years.
Fiscal Year Ending
June 30
2025
2026
2027
2028
2029
City of Beaumont
Projected Wastewater System Accounts
Commercial/
Residential' 22 Industrial2 Total Increase/(Decrease)
19,087 546 19,633 1.50%
19,373 554 19,927 1.50
19,665 563 20,228 1.50
19,962 571 20,533 1.50
20,264 579 20,843 1.50
(1) Includes single family residential, multi -family residential and mobile home park connections. (2) Rounded to the nearest whole number.
Source: City.
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Projected Wastewater System Usage
The following table shows the volume of wastewater treated by the Wastewater System projected by the City for the current and next four Fiscal Years.
City of Beaumont
Projected Wastewater System Usage
Fiscal Year Ending June 30 Daily Average Flow (mgd) Increase/(Decrease) 2025
2026
2027
2028
2029
Source: City.
3.96 4.02
4.08 4.14
4.20 1.50%
1.50 1.50
1.50 1.50
Wastewater System usage will be affected by a number of factors, including the number of connections to the Wastewater System. See the caption "—Projected Wastewater System Accounts." Projected Wastewater System Service Charge Revenues
The following table shows service charge revenues of the Wastewater System projected by the City for the current and next four Fiscal Years.
City of Beaumont
Projected Wastewater System Service Charge Revenues
Fiscal Year Ending June 30 Service Charge Revenues Increase/(Decrease) 2025
2026
2027
2028
2029
Source: City.
$14,233,477
14,660,481
14,953,691
15,252,765
15,405,293
5.0%
3.0 2.0
2.0 1.0
Projected wastewater service charge revenues will be affected by a number of factors, including projected increases in connections and adopted rate increases. See the captions "—Projected Wastewater System Accounts" and "—Wastewater System Rates and Charges." Historic Wastewater System Operating Results and Debt Service Coverage The following table is a summary of operating results of the Wastewater System for the last five Fiscal Years. These results have been derived from the audited financial statements of the City, but exclude certain receipts which are not included as Revenues under the Installment Purchase Agreement and certain non -cash items and include certain other adjustments.
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City of Beaumont
Historic Wastewater System Operating Results
Fiscal Year Ended June 30
2020 2021 2022 2023 2024
Revenues
Charges for Services
Connection Fees(')
Other Income
Interest Income
Total Revenues
Operation and Maintenance Costs
Personnel
Administration
Contract Services(z)
Fuel, Lubricants and Maintenance
Supplies
Office
Utilities
Total Operation and Maintenance Costs
Net Revenues
Debt Service
Series 2018 Installment Payments
Total Debt Service
Debt Service Coverage )
Surplus Cash Available()
(1)
(2)
(3)
(4)
[(5)
(6)
(7)
$ 10,527,803 $ 10,895,306 $ 12,199,547 $ 13,268,270 $ 13,555,693 4,819,408 1,123,349 11,278,753 7,433,292 3,396,301
780 231,195 264,102 4,532 190,030
563,132 54,568 (1,135,640) 525,017 1,053,265
$ 15,911,123 $ 12,304,418 $ 22,606,762 $ 21,231,111 $ 18,195,289 $ 1,988,979 $ 2,215,486
810,273 209,881
852,335 970,966
155,247 311,162
251,190 452,031
20,963 19,578
875,767 922,728
$ 4,954,754 $ 5,101,832
$ 10,956,369 $ 7,202,586
$ 2,602,298 $ 1,892,342(5) $ 2,433,145(5)
827,396 1,491,907(6) 958,112
1,284, 884 1,296,746 1,938,502(7)
128,256 537,960 851,917
524,870 799,057 873,692
18,902 22,406 57,155
858.552 1,124,187 1,326,887
$ 6,245,158 $ 7,164,605 $ 8,439,410
$ 16,361,604 $ 14,066,506 $ 9,755,879
$ 4,868,688 $ 5,073,788 $ 5,072,988 $ 5,073,213 $ 5,073,713 $ 4,868,688 $ 5,073,788 $ 5,072,988 $ 5,073,213 $ 5,073,713
2.25 1.42 3.23 2.77 1.92
$ 6,087,682 $ 2,128,799 $ 11,288,616 $ 11,288,616 $ 4,682,166 Varies based on building permit issuances.
Annual variations reflect differing levels of services provided by outside contractors vis-a-vis internal City staff.
Net Revenues divided by Total Debt Service.
Net Revenues minus Total Debt Service.
.]
Fiscal Year 2023 includes a one-time mitigation credit.
Fiscal Year 2024 includes Development Impact Fee Study and Adaptive Management and Mitigation Plan costs.
Source: City.
Projected Wastewater System Operating Results and Debt Service Coverage The estimated projected operating results for the Wastewater System for the current and next four Fiscal Years are set forth below, reflecting certain significant assumptions concerning future events and circumstances. The financial forecast represents the City's estimate of projected financial results based upon a variety of assumptions, including the assumptions set forth in the footnotes to the chart set forth below. All of such assumptions are material in the development of the City's financial projections, and variations in the assumptions may produce substantially different financial results. Actual operating results achieved during the projection period may vary from those presented in the forecast and such variations may be material. 4900-2457-4243v5/022599-0036
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City of Beaumont
Projected Wastewater System Operating Results
Fiscal Year Ending June 30
Revenues
Charges for Services(')
Connection Fees(2)
Other Income(3)
Interest Income
Total Revenues
Operation and Maintenance Costs
Personnel(5)
Administration(6
Contract Services(%)
Fuel, Lubricants and Maintenance(g)
Supplies(9)
Utilities(10)
Total Operation and Maintenance Costs
Net Revenues
Debt Service
Series 2018 Installment Payments
Series 2025 Installment Payments
Total Debt Service
Debt Service Coverage(" )
2025
$ 14,233,477
2,026,956
167,304
137,746
$ 16,565,483
$ [2,509,844
521,419
1,820,226
2,562,936
941,500
1,249,800
$ 9,605,725]
$ 9,708,388
$ 5,070,713
2026 2027 2028 2029
$ 16,092,763
2,267,558
14,303
138,851
$ 18,513,475
$ 2,905,014
2,057,723
1,792,964
831,106
1,112,192
1,451,287
$ 10,150,286
$ 8,363,189
$ 16,414,618 $ 16,742,910 $ 17,077,768
2,301,571 2,336,095 2,371,136
14,303 14,303 14,303
138,851 140,240 143,642
$ 18,869,343 $ 19,233,547 $ 19,604,849
$ 2,905,733 $ 3,001,792 $ 3,120,918
2,069,073 2,080,651 2,092,460
1,846,753 1,902,156 1,959,220
872,661 916,294 962,109
1,145,558 1,179,924 1,215,322
1,523,851 L600,044 1,680,046
$ 10,363,631 $ 10,680,861 $ 11,030,075
$ 8,718,338 $ 8,816,794 $ 8,892,730
$ -- $ -- $ -- $ --
5,069,088 5,073,463 5,073,588 5,069,463
$ 5,070,713 $ 5,069,088 $ 5,073,463 $ 5,073,588 $ 5,069,463
1.37 1.65 1.72 1.74 1.75
Surplus Cash Available(12) $ 1,889,046 $ 3,294,102 $ 3,644,875 $ 3,743,207 $ 3,823,267 (I)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(1o)
(11)
(12)
Reflects adopted increases in wastewater service charges described under the caption "—Wastewater System Rates and Charges —Adopted Rates." Also reflects projected increases in revenues based on expected new development. See the captions "—Projected Wastewater System Accounts" and "THE CITY —Land Use and Service Area." Reflects City projections of development. Assumes connection fee of $0.30 per residential square foot. See the caption "—Wastewater System Rates and Charges —Connection Fees."
Based on City projections of housing starts at $25 per building permit.
Based on available beginning cash balances and annual interest earnings rate set forth in the July 18, 2023 rate study described under the caption "—Wastewater System Rates and Charges —Adopted Rates." Reflects increases in hiring of Wastewater System personnel.
Reflects increased for administration overhead.
Projected to increase approximately 3% per annum
Projected to increase approximately 5% per annum.
Projected to increase approximately 3% per annum.
Projected to increase approximately 3% per annum.
Net Revenues divided by Total Debt Service.
Net Revenues minus Total Debt Service.
Sources: City.
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CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES Article XIIIB
Article XIIIB of the State Constitution limits the annual appropriations of the State and of any city, county, school district, authority, special district or other political subdivision of the State to the level of appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living and population. The "base year" for establishing such appropriation limit is the 1978-79 State fiscal year and the limit is to be adjusted annually to reflect changes in population and consumer prices.
Adjustments in the appropriations limit of an entity may also be made if: (a) the financial responsibility for a service is transferred to another public entity or to a private entity; (b) the financial source for the provision of services is transferred from taxes to other revenues; or (c) the voters of the entity approve a change in the limit for a period of time not to exceed four years.
Appropriations that are subject to Article XIIIB generally include the proceeds of taxes levied by or for the State or other entity of local government, exclusive of certain State subventions, refunds of taxes and benefit payments from retirement, unemployment, insurance and disability insurance funds. "Proceeds of taxes" include, but are not limited to, all tax revenues and the proceeds to an entity of government from:
(i) regulatory licenses, user charges, and user fees (but only to the extent that such proceeds exceed the cost reasonably borne by the entity in providing the service or regulation); and (ii) the investment of tax revenues.
Article XIIIB includes a requirement that if an entity's revenues in any year exceed the amounts that are permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years.
Certain expenditures are excluded from the appropriations imit, including payments of indebtedness that were existing or legally authorized as of January 1, 1979, or of bonded indebtedness thereafter approved by the voters, and payments that are required to comply with court or federal mandates which without discretion require an expenditure for additional services or which unavoidably make the provision of existing services more costly.
The City is of the opinion that its charges for Wastewater Service do not exceed the costs that it reasonably bears in providing such services and therefore are not subject to the limits of Article XIIIB. The City has covenanted in the Installment Purchase Agreement, to the fullest extent permitted by law, to fix and prescribe, at the commencement of each Fiscal Year, rates and charges for the Wastewater Service which are reasonably expected, at the commencement of each Fiscal Year, to be at least sufficient to yield during each Fiscal Year Net Revenues equal to 120% of Debt Service on the Bonds and other Parity Bonds and Contracts for such Fiscal Year. See the caption "SECURITY FOR THE BONDS —Rate Covenant." Proposition 218
General. An initiative measure entitled the "Right to Vote on Taxes Act" (the "Initiative") was approved by the voters of the State at the November 5, 1996 general election. The Initiative added Articles XIIIC and XIIID to the State Constitution. According to the "Title and Summary" of the Initiative prepared by the State Attorney General, the Initiative limits "the authority of local governments to impose taxes and property -related assessments, fees and charges."
Article XIIID. Article XIIID defines the terms "fee" and "charge" to mean "any levy other than an ad valorem tax, a special tax or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including user fees or charges for a property -related service." A "property -related service" is defined as "a public service having a direct relationship to property ownership." Article XIIID further provides that reliance by an agency on any parcel map (including an assessor's parcel map) may be considered a significant factor in determining whether a fee or charge is imposed as an incident of property ownership.
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Article XIIID requires that any agency which imposes or increases any property -related fee or charge must provide written notice thereof to the record owner of each identified parcel upon which such fee or charge is to be imposed and must conduct a public hearing with respect thereto. The proposed fee or charge may not be imposed or increased if a majority of owners of the identified parcels file written protests against it.
As a result, because fees for wastewater service are a "fee" or "charge" as defined in Article XIIID, the local government's ability to increase such fee or charge may be limited by a majority protest.
In addition, Article XIIID includes a number of limitations that are applicable to existing fees and charges, including provisions to the effect that: (a) revenues that are derived from the fee or charge may not exceed the funds which are required to provide the property -related service; (b) such revenues may not be used for any purpose other than that for which the fee or charge was imposed; (c) the amount of a fee or charge that is imposed upon any parcel or person as an incident of property ownership may not exceed the proportional cost of the service attributable to the parcel; and (d) no such fee or charge may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question.
Property -related fees or charges based on potential or future use of a service are not permitted.
Based upon the California Court of Appeal decision in Howard Jarvis Taxpayers Association v. City of Los Angeles, 85 Cal. App. 4th 79 (2000), which was denied review by the State Supreme Court, it was generally believed that Article XIIID did not apply to charges for water and wastewater services that are "primarily based on the amount consumed" (i.e., metered water or wastewater rates), which had been held to be commodity charges related to consumption of the service, not property ownership. The State Supreme Court ruled in Bighorn -Desert View Water Agency v. Verjil, 39 Cal. 4th 205 (2006) (the "Bighorn Case"), however, that fees for ongoing water service through an existing connection were property -related fees and charges. The Court specifically disapproved the holding in Howard Jarvis Taxpayers Association v. City of Los Angeles that metered water rates are not subject to Proposition 218. The City complied with the notice, hearing and protest procedures in Article XIIID, as further explained by the State Supreme Court in the Bighorn Case, with respect to the wastewater rate increases that were approved on June 19, 2018. See the caption "THE WASTEWATER SYSTEM OF THE CITY —Wastewater System Rates and Charges —Adopted Rates."
On April 20, 2015, the California Court of Appeal, Fourth District, issued an opinion in Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano, 235 Cal. App. 4th 1493 (2015) (the "SJC Case"), upholding tiered water rates under Proposition 218 provided that the tiers correspond to the actual cost of furnishing service at a given level of usage. The opinion was specific to the facts of the case, including a finding that the City of San Juan Capistrano did not attempt to calculate the actual costs of providing water at various tier levels. The City's wastewater rates, which are described under the caption "THE WASTEWATER SYSTEM OF THE CITY —Wastewater System Rates and Charges," do not currently include tiered rates based on usage.
Article XIIIC. Article XIIIC provides that the initiative power may not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge and that the power of initiative to affect local taxes, assessments, fees and charges is applicable to all local governments. Article XIIIC does not define the terms "local tax," "assessment," "fee" or "charge," so it was unclear whether the definitions set forth in Article XIIID referred to above are applicable to Article XIIIC. Moreover, the provisions of Article XIIIC are not expressly limited to local taxes, assessments, fees and charges imposed after November 6, 1996. On July 24, 2006, the State Supreme Court held in the Bighorn Case that the provisions of Article XIIIC applied to rates and fees charged for domestic water use. In the decision, the Court noted that the decision did not address whether an initiative to reduce fees and charges could override statutory rate setting obligations.
On August 3, 2020, the State Supreme Court issued an opinion in Wilde v. City of Dunsmuir (Cal. S.
Ct. S252915) holding that taxpayers do not have the right under Proposition 218 to challenge water rates by referendum, and the City does not believe that Article XIIIC grants to the voters within the City the power -33-
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