Stradling Yocca Carlson & Rauth
Draft of 1/23/24
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CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT (“Disclosure Agreement”), dated as of March 1, 20 24, is executed and delivered by the CHULA VISTA MUNICIPAL FINANCING AUTHORITY (the “Issuer”), and SPICER CONSULTING GR OUP, LLC, as Dissemination Agent (the “Dissemination Agent”) in connection with the issuance of $ ____________ aggregate principal amount of the Chula Vista Municipal Financing Authority Local Agency Revenue Refunding Bonds, Series 2024 (the “Bonds”). The Bonds are being issued pursuant to an Indenture of Trust (the “Indenture”) dated as of March 1, 2024 between the Issuer and Wilmington Trust, National Association (the “Trustee”). The proceeds of the Bonds will be used to acquire the Local Obligations (as defined below) and refund certain outstanding bonds of the Districts (as defined below), to fund the reserve fund securing the Bonds and to pay costs of issuance of the Bonds. The Issuer and the Dissemination Agent covenant and agree as follows:
Section 1. Purpose of the Disclosure Agreement . This Disclosure Agreement is being executed and delivered by the Issuer for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Underwriter in complying with Rule 15c2 -12(b)(5) of the Securities and Exchange Commission.
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Section 3 and 4 of this Disclosure Agreement. “Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income purposes.
“City” shall mean the City of Chula Vista, California.
“Disclosure Representative” shall mean the Executive Director of the I ssuer, or his or her designee, or such other officer or employee as the Issuer shall designate in writing to the Dissemination Agent from time to time.
“Dissemination Agent” shall mean Spicer Consulting Group, LLC , or any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Trustee and the Issuer a written acceptance of such designation.
“Districts” shall mean City of Chula Vista Community Facilities District No. 06 -I (Eastlake - Woods, Vistas and Land Swap) , City of Chula Vista Community Facilities District No. 07 -I (Otay Ranch Village Eleven) , City of Chula Vista Community Facilities District No. 08 -I (Otay Ranch Village Six) and City of Chula Vista Community Facilities District No. 2001 -2 (McMillin – Otay Ranch – Village Six).
“EMMA” shall mean the Electronic Municipal Market Access system of the MSRB.
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“Listed Events” shall mean any of the events listed in Section 5 of this Disclosure Agreement. “MSRB” shall mean the Municipal Securities Rulemaking Board and any s uccessor entity designated under the Rule as the repository for filings made pursuant to the Rule. “Official Statement” means the Official Statement for the Bonds dated ________, 2024. “Participating Underwriter” shall mean Raymond James & Associates, Inc.. “Owners” shall mean the registered owners of the Bonds as set forth in the registration books maintained by the Trustee.
“Repository” shall mean the MSRB or any other entity designated or authorized by the Securities and Exchange Commission to receive r eports pursuant to the Rule. Unless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the EMMA website of the MSRB, currently located at http://emma.msrb.org. “Rule” shall mean Rule 15 c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “Taxing Jurisdictions” shall mean, collectively, the City of Chula Vista Community Facilities District No. 06-I (Eastlake - Woods, Vistas and Land Swap) Improvement Area A , the City of Chula Vista Community Facilities District No. 06-I (Eastlake - Woods, Vistas and Land Swap) Improvement Area B, the City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven), the City of Chula Vista Community Facilities District No. 08-I (Otay Ranch Village Six) and the City of Chula Vista Community Facilities District No. 2001-2 (McMillin – Otay Ranch – Village Six).
Section 3. Provision of Annual Reports.
(a) The Issuer shall, or upon written direction shall cause the Dissemination Agent to, not later than January 31 after the end of the Issuer’s Fiscal Year (currently June 30) commencing with the report due by January 31, 2025, provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Issuer and the City, if any exist, may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the fiscal year of the Issuer or the City changes, the Issuer shall give notice of such change in the same manner as for a Listed Event under Section 5(d). The Issuer shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the Issuer and shall have no duty or obligation to review such Annual Report.
(b) Not later than (15) business days prior to the date specified in subsection (a) for providing the Annual Report to the Repository, the Issuer shall provide t he Annual Report to the Dissemination Agent. If by fifteen (15) business days prior to such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Issuer to inquire if the Issuer is in compliance with subsection (a).
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(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the Repository by the date required in subsection (a), the Dissemination Agent shall send a notice in a timely manner to the Repository, in the form required by the Repository. If the Issuer is the Dissemination Agent and the Issuer is unable to provide to the Repository an Annual Report by the date required in subsection (a), the Issuer shall send a notice in a timely manner to the Reposi tory, in the form required by the Repository.
(d) The Dissemination Agent shall:
(i) determine each year prior to date for providing the Annual Report the name and address of the Repository if other than the MSRB; and (ii) file a report with the Issuer c ertifying that the Annual Report has been sent to the Repository and the date it was provided.
(e) Notwithstanding any other provision of this Disclosure Agreement, all filings shall be made in accordance with the MSRB’s EMMA system or in another manner approved under the Rule.
Section 4. Content of Annual Reports . The Issuer’s Annual Report shall contain or include by reference the following:
(a) Financial Statements. The audited financial statements of the Issuer and the City for the prior fiscal year, if any have been prepared and which, if prepared, shall be prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board; provided, however, that the Issuer and the City may, from time to time, if required by federal or state legal requirements, modify the basis upon which its financial statements are prepared. In the event that the Issuer or the City shall modify the basis upon which it s financial statements are prepared, the Issuer or the City, as applicable, shall provide the information referenced in Section 8 below. If the Issuer or the City are preparing audited financial statements and such audited financial statements are not ava ilable by the time the Annual Report is required to be filed pursuant to Section 3(a), the audited financial statements may be submitted separately from the balance of the Annual Report and later than the date required for the filing of the Annual Report.
(b) Financial and Operating Data . The Annual Report shall contain or incorporate by reference the following:
(i) the principal amount of Bonds outstanding as of the September 2 preceding the filing of the Annual Report;
(ii) the balance in each fund under the Indenture and the Reserve Requirement as of the September 2 preceding the filing of the Annual Report; (iii) any changes to the Rates and Methods of Apportionment of the Special Taxes approved or submitted to the qualified electors for approval prior to the filing of the Annual Report;
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(iv) an update of the information set forth in Table 3 in the Official Statement; provided, however, that such update need not include overlapping special tax, assessment or general obligation indebtedness;
(v) an update by Taxing Jurisdiction similar to Table A-2 in the Official Statement of the total Special Taxes levied and collected in the most recent prior fiscal year, and the total Special Taxes that remain unpaid for the prior fiscal year in which Special Taxes we re levied and the number of delinquent parcels in each Taxing Jurisdiction; (vi) an update by Taxing Jurisdiction similar to Table A-1 in the Official Statement showing the Special Tax levy for the then current fiscal year; (vii) a statement regarding the amount of Special Tax prepayments, if any, in the Fiscal Year for which the Annual Report is being prepared; (viii) a statement as to whether any of the Taxing Jurisdictions is participating in the County’s Teeter Program and whether the City has entered into an agreement to sell delinquent installments of Special Taxes of any of the Taxing Jurisdictions to a third party and if so, in either case, identifying which of the Taxing Jurisdictions are included; (ix) the status of any foreclosure actions being pursued by the Districts with respect to delinquent Special Taxes; and
(x) any information not already included under (i) through ( ix) above that the Districts are required to file in the annual report to the California Debt and Investment Advisory Commission pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended.
Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to each of the Repository or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Issuer shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause the Dissemination Agent to give, notice of the occurrence of any of the fo llowing events with respect to the Bonds in a timely manner not more than ten (10) business days after the event:
1. principal and interest payment delinquencies;
2. unscheduled draws on debt service reserves reflecting financial difficulties;
3. unscheduled draws on credit enhancements reflecting financial difficulties;
4. substitution of credit or liquidity providers, or their failure to perform;
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5. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability or of a Notice of Proposed Issue (IRS Form 5701-TEB);
6. tender offers;
7. defeasances;
8. ratings changes; and
9. bankruptcy, insolvency, receivership or similar proceedings.
Note: for the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S.
Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.
10. default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.
(b) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:
1. unless described in paragraph 5(a)(5 ) above, notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds;
2. the consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms;
3. appointment of a successor or additional trustee or the change of the name of a trustee;
4. nonpayment related defaults;
5. modifications to the rights of Owners of the Bonds;
6. notices of redemption;
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7. release, substitution or sale of property securing repayment of the Bonds; and
8. incurrence of a financial obligation of the obligated person, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which reflect financial difficulties.
(c) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event under Section 5(b) above, the Issuer shall as soon as possible determine if such event would be material under applicable federal securities laws.
(d) If the Issuer determines that knowledge of the occurrence of a Listed Event under Section 5(b) would be material under applicable federal securities laws, the Issuer shall file a notice of such occurrence with the Repository in a timely manner not more than 10 business days after the event. (e) The Issuer hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the Issuer and that the Dissemination Agen t shall not be responsible for determining whether the Issuer’s instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule.
(f) For purposes of the events identified in subparagraphs (a)(10) and (b)(8) under this Section 5, the term “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii) . The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
Section 6. Termination of Reporting Obligation . The Issuer’s obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Issuer shall give notice of such termination in the same manner as for a Listed Event under Section 5.
Section 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure Agreement. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent. The initial Dissemination Agent shall be Spicer Consulting Group, LLC. The Dissemination Agent may resign by providing thirty (30) days written notice to the Issuer and the Trustee.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Issuer may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver related to the provisions of Sections 3(a), 4, or 5, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or chan ge in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted;
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(b) The undertaking hereunder, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond coun sel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Issuer shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. In addition, if the amendment is related to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(a), and (ii) the Annual Report for the year in which the change is mad e should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the formed accounting principles.
Section 9. Additional Information . Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communicati on, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report or notice of o ccurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Agreement, the Trustee at the written direction of any Participating Underwriter or the Owners of at least 25% aggregate pri ncipal amount of Outstanding Bonds, shall, or any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under this Disclosure Agreement, but only to the extent funds have been provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional charges of the Trustee whatsoever, including, without limitation, fees and expenses of its attorney. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement shall be an action to compel performance.
Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Issuer agrees to indemnify and save the Dissemination Agent and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of de fending against any claim of liability, but excluding liabilities due to the
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Dissemination Agent’s negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
Section 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows:
Issuer: Chula Vista Municipal Financing Authority
276 Fourth Avenue
Chula Vista, CA 91910
Attention: Executive Director
Dissemination Agent: Spicer Consulting Group, LLC
41880 Kalmia Street, Suite 145
Murrieta, CA 92562
Attention: Shane Spicer
Participating Underwriter: Raymond James & Associates, Inc. 39 East Union Street
Pasadena, CA 91103
Attention: Public Finance
Any person may, by written notice to the other persons listed above, designate a different address to which subsequent notice or communications should be sent.
Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Trustee, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 13. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
CHULA VISTA MUNICIPAL FINANCING
AUTHORITY
By:
Its: Executive Director
SPICER CONSULTING GROUP, LLC, as
Dissemination Agent
By:
Its: Authorized Officer