This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
PRELIMINARY OFFICIAL STATEMENT DATED APRIL 5, 2023
NEW ISSUE—-BOOK-ENTRY ONLY RATING:
S&P: “___”
(See “RATING” herein)
In the opinion of Quint & Thimmig LLP, Larkspur, California, Bond Counsel, interest on the Bonds is exempt from California personal income taxes. See “TAX MATTERS” herein. Interest on the Bonds is not excludable from gross income of the owners thereof for federal income tax purposes. $50,000,000*
CITY OF EMERYVILLE
(Alameda County, California)
General Obligation Bonds
Election of 2018, Series 2023
(Housing Projects)
(Federally Taxable)(Social Bonds)
Dated: Date of Delivery Due: August 1 as shown below
The $50,000,000* City of Emeryville (Alameda County, California) General Obligation Bonds, Election of 2018, Series 2023 (Housing Projects) (Federally Taxable) (Social Bonds) (the “Bonds”) are being issued by the City of Emeryville (the “City”) under the provisions of Chapter 4 (commencing with section 43600) of Division 4 of Title 4 of the California Government Code and section 53506 et seq. of the California Government Code, a Resolution adopted by the City Council of the City (the “City Council”) on February 21, 2023, and a Paying Agent/Bond Registrar/Costs Of Issuance Custodian Agreement, dated as of May 1, 2023, by and between the City and The Bank of New York Mellon Trust Company, N.A., as paying agent, transfer agent, bond registrar and costs of issuance custodian agent (the “Paying Agent”).
The Bonds were authorized at an election of the registered voters of the City held on June 5, 2018 (the “Authorization”), at which more than twothirds of the persons voting authorized the issuance and sale of not to exceed $50,000,000 principal amount of general obligation bonds to finance facilities to provide affordable housing and prevent displacement of vulnerable populations, including low and middle-income households, veterans, local artists, seniors, and the disabled and provide supportive housing for people experiencing homelessness; and help low and middle-income households purchase homes (the “Project”). See “PLAN OF FINANCE” herein. See “THE BONDS—Authority for Issuance” herein.
The Bonds are general obligations of the City, payable solely from ad valorem property taxes levied by the City and collected by Alameda County (the “County”). The City Council is empowered and is obligated to levy ad valorem taxes for the payment of principal of and interest on the Bonds upon all property subject to taxation by the City, without limitation of rate or amount (except certain personal property which is taxable at limited rates). See “SECURITY FOR THE BONDS” herein.
The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”). The Bonds are issuable as fully registered securities in denominations of $5,000 or any integral multiple of $5,000. Purchasers of the Bonds (the “Beneficial Owners”) will not receive physical certificates representing their interest in the Bonds.
See “THE BONDS” herein and “APPENDIX F—DTC AND THE BOOK-ENTRY ONLY SYSTEM.” Interest on the Bonds accrues from the date of delivery and is payable semiannually on February 1 and August 1 of each year, commencing August 1, 2023. Payments of principal of and interest on the Bonds will be paid by the Paying Agent, to DTC for subsequent disbursement to DTC Participants, which will remit such payments to the Beneficial Owners of the Bonds. See “THE BONDS—Description of the Bonds” herein.
The Bonds are subject to redemption prior to maturity. See “THE BONDS—Redemption” herein.
MATURITY SCHEDULE
SEE INSIDE COVER
Bids for the purchase of the Bonds will be received by the City on Wednesday, April 26, 2023, until 8:30 A.M., Pacific Daylight time, as provided in the Official Notice of Sale, dated April 17, 2023. The Bonds will be sold pursuant to the terms of sale set forth in the Official Notice of Sale.
This cover page contains information for general reference only. It is not a summary of this issue. Potential purchasers of the Bonds are advised to read the entire Official Statement to obtain information essential to making an informed investment decision.
The Bonds will be offered when, as and if issued and received by the Underwriter subject to the approval of legality by Quint & Thimmig LLP, Larkspur, California, as Bond Counsel. Certain disclosure matters will be passed upon for the City by Quint & Thimmig LLP, Larkspur, California, as Disclosure Counsel. Certain matters will be passed upon for the City by Christie Crowl, Esq., the City Attorney. It is expected that the Bonds, in book-entry form, will be available for delivery on or about May 10, 2023.
Dated: April ___, 2013
*Preliminary, subject to change.
$50,000,000*
CITY OF EMERYVILLE
(Alameda County, California)
General Obligation Bonds
Election of 2018, Series 2023
(Housing Projects)
(Federally Taxable)(Social Bonds)
MATURITY SCHEDULE*
CUSIP Prefix: ________†
Maturity Principal Interest CUSIP
(August 1) Amount Rate Yield Suffix
*Preliminary, subject to change.
† Copyright 2023, American Bankers Association. CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services Bureau, operated by Standard & Poor’s. This data is not intended to create a database and does not serve in any way as a substitute for CUSIP Global Services. CUSIP numbers have been assigned by an independent company not affiliated with the City and are included solely for the convenience of the holders of the Bonds. The City is not responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
For purposes of compliance with Rule 15c2-12 of the United States Securities and Exchange Commission, as amended (“Rule 15c2-12”), this Preliminary Official Statement constitutes an “official statement” of the City with respect to the Bonds that has been deemed “final” by the City as of its date except for the omission of no more than the information permitted by Rule 15c2-12.
Use of Official Statement. This Official Statement is 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. This Official Statement is not a contract between any bond owner and the City or the Underwriter. This Official Statement and the information contained herein are subject to completion or amendment without notice.
No Offering Except by This Official Statement. No dealer, broker, salesperson or other person has been authorized by the City or the Underwriter to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such other information or representation must not be relied upon as having been authorized by the City or the Underwriter.
No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor may 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.
Estimates and Projections. When used in this Official Statement and in any continuing disclosure by the City, in any press release and in any oral statement made with the approval of an authorized officer of the City, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,” “expect,” “intend” and similar expressions identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material.
Information in Official Statement. The information set forth in this Official Statement has been furnished by the City and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness by the City.
The City maintains a website. Unless specifically indicated otherwise, the information presented on such website is not incorporated by reference as part of this Official Statement and should not be relied upon in making investment decisions with respect to the Bonds.
No Securities Laws Registration. The Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exceptions therein for the issuance and sale of municipal securities. The Bonds have not been registered or qualified under the securities laws of any state.
Effective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds will, under any circumstances, give rise to any implication that there has been no change in the affairs of the City, or the other parties described in this Official Statement, or the condition of the property within the City since the date of this Official Statement.
CITY OF EMERYVILLE
1333 Park Avenue
Emeryville, CA 94608
Telephone (510) 596-4300
https://www.ci.emeryville.ca.us
CITY COUNCIL MEMBERS
John J. Bauters, Mayor
Courtney Welch, Vice Mayor
Sukhdeep Kaur, Councilmember
David Mourra, Councilmember
Kalimah A. Priforce, Councilmember
CITY STAFF
Paul Buddenhagen, City Manager
Lawrence Chiu, Finance Director
Charles S. Bryant, Director of Community Development
Chad Smalley, Deputy Director of Community Development
Valerie F. Bernardo, Community & Economic Development Coordinator (Affordable Housing) John Kennedy, Esq., City Attorney
April Richardson, City Clerk
SPECIAL SERVICES
Bond Counsel and Disclosure Counsel
Quint & Thimmig LLP
San Francisco, California
Municipal Advisor
KNN Public Finance, LLC
Berkeley, California
Paying Agent
The Bank of New York Mellon Trust Company, N.A.
Dallas, Texas
i
TABLE OF CONTENTS
INTRODUCTION.............................................................1
THE AFFORDABLE HOUSING EXPENDITURE
PROGRAM.........................................................................4 General...........................................................................4 Preservation Initiatives ................................................4 Production Initiatives...................................................5 Anticipated Use of Bond Proceeds.............................5 DESIGNATION OF THE BONDS AS SOCIAL BONDS6
THE BONDS......................................................................6 Authority for Issuance .................................................6 Purposes of Issuance ....................................................6 Description of the Bonds .............................................6 Payment .........................................................................7 Redemption ...................................................................7 Registration, Transfer and Exchange of Bonds ........8
Defeasance .....................................................................8 PLAN OF FINANCE.........................................................9 ESTIMATED SOURCES AND USES OF FUNDS.........9
DEBT SERVICE SCHEDULE ........................................10 SECURITY FOR THE BONDS ......................................10 Ad Valorem Taxes ......................................................10 Debt Service Fund ......................................................11 Statutory Lien..............................................................11 PAYING AGENT.............................................................12 BOOK-ENTRY ONLY SYSTEM....................................12 THE CITY........................................................................12 PROPERTY TAXATION................................................14 Property Taxation Generally.....................................14 Property Tax Collection Procedures........................14 Taxation of State-Assessed Utility Property...........15 Assessed Valuation ....................................................15 Bonding Capacity .......................................................24 CERTAIN RISK FACTORS........................................... 25 Risks to Assessed Values Generally ........................25 Natural Calamities .....................................................25 Risk of Changing Economic Conditions .................27 Public Health Emergencies .......................................28 Bankruptcy Risks........................................................28 Cybersecurity Risks....................................................28 Article XIIIA of the State Constitution ....................29 Legislation Implementing Article XIIIA .................29 Article XIIIB of the State Constitution.....................30 Articles XIIIC and XIIID of the State Constitution 30
Proposition 1A; Proposition 22.................................31 Proposition 19 .............................................................32 Possible Future Initiatives .........................................32 LEGAL MATTERS......................................................... 32 Possible Limitations on Remedies; Bankruptcy.....32
Legal Opinions............................................................34 TAX MATTERS ............................................................. 34 MUNICIPAL ADVISOR................................................. 34 CONTINUING DISCLOSURE...................................... 35 LEGALITY FOR INVESTMENT IN CALIFORNIA.... 35
ABSENCE OF MATERIAL LITIGATION ................... 35
RATING .......................................................................... 35 UNDERWRITING.......................................................... 35 ADDITIONAL INFORMATION................................... 36 EXECUTION .................................................................. 36
APPENDIX A - AFFORDABLE HOUSING BOND ADMINISTRATION AND EXPENDITURE PLAN
APPENDIX B - GENERAL DEMOGRAPHIC AND ECONOMIC INFORMATION REGARDING THE CITY
OF EMERYVILLE AND ALAMEDA COUNTY
APPENDIX C - CITY FINANCIAL INFORMATION
APPENDIX D - ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2022
APPENDIX E - PROPOSED FORM OF OPINION OF BOND COUNSEL
APPENDIX F - FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX G - DTC AND THE BOOK-ENTRY ONLY SYSTEM
APPENDIX H - SECOND PARTY OPINION
CITY OF EMERYVILLE MAP
OFFICIAL STATEMENT
$50,000,000*
CITY OF EMERYVILLE
(Alameda County, California)
General Obligation Bonds
Election of 2018, Series 2023
(Housing Projects)
(Federally Taxable)(Social Bonds)
The purpose of this Official Statement, which includes the cover page and attached appendices, is to set forth certain information concerning the sale and delivery of the bonds captioned above (the “Bonds”) by the City of Emeryville (the “City”). All capitalized terms used in this Official Statement, unless noted otherwise, have the meanings set forth in the Bond Resolution (as defined below).
INTRODUCTION
This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of Bonds to potential investors is made only by means of the entire Official Statement.
The City. The City is located along the east shore of the San Francisco Bay in Alameda County (the “County”), bordered by the City of Berkeley to its north and the City of Oakland to the east and south. The City, first incorporated in 1896, and operates as a charter city. The City has a Council-Manager form of government. Five council members, including a mayor, are elected at large. For certain information with respect to the City. See THE CITY, APPENDIX B—GENERAL DEMOGRAPHIC AND ECONOMIC
INFORMATION REGARDING THE CITY OF EMERYVILLE AND ALAMEDA COUNTY, APPENDIX C—CITY FINANCIAL INFORMATION, and APPENDIX D—ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2022, for certain demographic, statistical and financial information regarding the City.
Authority for Issuance. The Bonds were authorized at an election of the registered voters of the City held on June 5, 2018, at which more than two-thirds of the persons voting on the measure voted to authorize the issuance and sale of not to exceed $50,000,000 principal amount of general obligation bonds (the “Measure C Authorization”).
The Bonds are being issued under the provisions of Chapter 4 (commencing with section 43600) of Division 4 of Title 4 of the California Government Code and section 53506 et seq. of the California Government Code (collectively, the “Bond Law”) and a Resolution adopted by the City Council of the City (the “City Council”) on February 21, 2023 (the “Bond Resolution”). The Bonds represents the only series * Preliminary, subject to change.
-2-
of bonds to be sold and issued under the Measure C Authorization. See “THE BONDS—Authority for Issuance.”
Purpose for Issuance. Pursuant to the Measure C Authorization, bonds were approved to finance facilities to provide affordable housing and prevent displacement of vulnerable populations, including low and middle-income households, veterans, local artists, seniors, and the disabled and provide supportive housing for people experiencing homelessness; and help low and middle-income households purchase homes and in compliance with the Affordable Housing Bond Administration and Expenditure Plan adopted by the City Council on March 2, 2021 (the “Project”). See “THE AFFORDABLE HOUSING EXPENDITURE PROGRAM,” “PLAN OF FINANCE—Purpose of Issue” and APPENDIX A—AFFORDABLE HOUSING BOND ADMINISTRATION AND EXPENDITURE PLAN.
Security and Sources of Payment for the Bonds. The Bonds are general obligations of the City, and the City Council has the power to direct the County to levy ad valorem taxes upon all property within the City subject to taxation without limitation of rate or amount (except certain personal property which is taxable at limited rates), for the payment of the Bonds and the interest thereon. Under the Bond Resolution, the City directs the County to levy on all the taxable property in the City, in addition to all other taxes, a continuing direct and ad valorem tax annually during the period the Bonds are Outstanding in an amount sufficient to pay the principal of and interest on the Bonds when due, without limitation of rate or amount (except certain personal property which is taxable at limited rates). See “SECURITY FOR THE BONDS.” Payment and Registration of the Bonds. The Bonds will be dated their date of original issuance and delivery (the “Dated Date”) and will be issued as fully registered bonds, without coupons, in the denominations of $5,000 or any integral multiple of $5,000, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available under the bookentry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described below. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. See “THE BONDS” and APPENDIX G—DTC AND THE BOOK-ENTRY ONLY SYSTEM.
Interest on the Bonds accrues from the Dated Date and is payable semiannually on February 1 and August 1 of each year, commencing February 1, 2024. See “THE BONDS—Description of the Bonds.” Tax Matters. Interest on the Bonds is not excludable from gross income of the owners thereof for federal income tax purposes. In the opinion of Bond Counsel, interest on the Bonds will be exempt from State of California (the “State”) personal income taxes. See “TAX MATTERS.” Offering and Delivery. The Bonds are offered when, as and if issued and received by the purchasers, subject to approval as to their legality by Bond Counsel. It is anticipated that the Bonds will be available for delivery through the facilities of DTC on or about May 10, 2023.
Continuing Disclosure. The City has covenanted for the benefit of the holders and Beneficial Owners of the Bonds to make available certain financial information and operating data relating to the City and to provide notices of the occurrence of certain enumerated events in compliance with S.E.C. Rule 15c2- 12(b)(5) (the “Rule”). The specific nature of the information to be made available and of the notices of enumerated events See “CONTINUING DISCLOSURE” and APPENDIX F—FORM OF CONTINUING DISCLOSURE CERTIFICATE.
-3-
Professionals Involved in the Bond Offering. Several professional firms have provided services to the City with respect to the sale and delivery of the Bonds. Quint & Thimmig LLP, Larkspur, California, Bond Counsel, will deliver its legal opinion in substantially the forms set forth in APPENDIX E—FORM OF OPINION OF BOND COUNSEL. Quint & Thimmig LLP, Larkspur, California, is also serving as disclosure counsel to the City with respect to the Bonds (“Disclosure Counsel”). KNN Public Finance, LLC, Berkeley, California, will act as municipal advisor to the City with respect to the Bonds. The payment of fees and expenses of such firms with respect to the Bonds is contingent on the sale and delivery of the Bonds. The City’s financial statements for the fiscal year ended June 30, 2022, have been audited by Maze & Associates, Pleasant Hill, California. See APPENDIX D—ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2022. The purchasers of the Bonds are not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness or fairness of the information in this Official Statement.
Other Information. This Official Statement speaks only as of its date, and the information contained herein is subject to change. Copies of documents referred to herein and information concerning the Bonds are available for inspection at the office of the City Clerk, City of Emeryville, 1333 Park Avenue, Emeryville, CA 94608, telephone (510) 596-4300. The City may impose a charge for copying, mailing and handling.
This Official Statement is not to be construed as a contract with the purchasers 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 summaries and references to documents, statutes and constitutional provisions referred to herein do not purport to be comprehensive or definitive and are qualified in their entireties by reference to each of such documents, statutes and constitutional provisions.
The information set forth herein has been obtained from official sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the City. The information and expressions of opinions herein are subject to change 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 since the date hereof. This Official Statement is 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.
Certain statements 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 Exchange Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget,” or other similar words. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material.
All terms used in this Official Statement and not otherwise defined shall have the meanings given such terms in the Bond Resolution.
-4-
THE AFFORDABLE HOUSING EXPENDITURE PROGRAM
General
The Measure C Authorization supports the City’s Housing Element and General Plan policies by financing affordable housing development costs for extremely low, very low, and low-income households as well as for persons with special needs. The City’s Community Development Department, Economic Development & Housing Division EDH) administers the City’s affordable housing programs and in this role will oversee the programs and projects funded by the Measure C Authorization.
Projects to be financed through Measure C as approved by the voters of the City in the Measure C Authorization may include:
• The acquisition or improvement of real property to produce new affordable housing projects. • The rehabilitation of existing multi-family projects that are affordable to extremely low, very low, low and moderate-income families and individuals.
• The acquisition of additional affordability commitments in new, privately developed mixedincome projects for veterans, seniors, the disabled, current or former foster youth, victims of abuse, people experiencing homelessness homeless and individualssuffering from mental health or substance abuse illnesses.
• Helping low and middle-income households, including local artists, purchase homes and stay in the community with first time homeowner loans.
• Preventing displacement of vulnerable populations in Emeryville, including extremely low, very low, low and moderate-income households, veterans, seniors and people with disabilities. • Providing permanent supportive housing for people experiencing homelessness.
On March 2, 2021, the City Council adopted an Affordable Housing Bond Administration and Expenditure Plan to provide for the production and preservation of affordable housing to be paid for with the proceeds of the Bonds.
Preservation Initiatives
The preservation of affordable housing initiative is designed to preserve the existing supply, quality and affordability of housing in the City, to prevent the displacement of existing very low, low and moderateincome tenants, and to reserve existing housing for the City’s special needs households. Programs to be undertaken under the preservation initiate are intended to include:
Acquisition of Below-Market-Rate Homebuyer Units. Preserving the affordability restriction on four below market rate homeownership units at low to moderate-income.
Homebuyer Assistance. Assisting 26 low to moderate income households in becoming homeowners. -5-
Foreclosure Prevention. Assisting 15 existing low to moderate income households to retain their homes by preventing foreclosure.
Rental Preservation. Preserving 160 existing rental units for very low, low, and moderate-income tenants.
Special Housing Needs. Acquiring 15 additional rental units to be set aside for very low to moderate income special needs households.
Production Initiatives
The production of affordable housing initiative is designed to build new affordable housing units for very low, low, and moderate-income households and individuals. Programs to be undertaken under the production initiate are intended to include:
Rental Development. Producing 251 new rental units for Very Low, Low and Moderate-income tenants on development sites with previous City investments.
Development Opportunities. Developing new affordable housing projects for very low to moderate income households.
Anticipated Use of Bond Proceeds
The proceeds of the Bonds are being issued by the City to provide funds for the preservation and production initiatives and certain related administrative costs, all as authorized by the Measure C Authorization, which proceeds are expected to be allocated as follows:
Program
Estimated
Budget
% of
Budget
BMR Ownership Acquisitions
Homebuyer Assistance
Foreclosure Prevention
Rental Preservation
Special Housing Needs
Rental Development
Development Opportunities
Administration
Cost of Issuance
Total $50,000,000
The City has the flexibility to allocate the proceeds of the Bonds in any manner permitted by the Measure C Authorization and the Bond Law, which could be different from that shown above.
The balance of the proceeds of the Bonds will also be used to pay costs of issuance of the Bonds. See “ESTIMATED SOURCES AND USES OF FUNDS.”
-6-
DESIGNATION OF THE BONDS AS SOCIAL BONDS
The City is designating the Bonds as “Social Bonds” based on the intended use of proceeds. The term “Social Bonds” is neither defined in nor related to provisions in the Constitution or laws of the State pursuant to which the Bonds are being issued. The Bonds will be general obligations of the City for the payment of which the City will pledge its faith and credit, as described herein.
None of the City, the Underwriter, the Municipal Advisor, Bond Counsel or Disclosure Counsel has independently confirmed or verified any information or assumed any obligation to ensure that the Bonds comply with any legal or other standards or principles that may be related to Social Bonds. The designation of the Bonds as Social Bonds does not entitle the Owner of any Bond to any benefit under the Internal Revenue Code. Owners of the Bonds do not have any security other than as described under “SECURITY FOR THE BONDS” herein.
The City obtained a second party opinion (the “Second Party Opinion”) from S&P Global Ratings, a Standard & Poor’s Financial Services LLC business (“S&P”), on the alignment of the Bonds with the International Capital Market Association’s Social Bond Principles 2021 (the “ICMA Social Bond Principles”) being (1) Use of Proceeds, (2) Process for Project Evaluation and Selection, (3) Management of Proceeds; and (4) Reporting. The Second Party Opinion See APPENDIX H—SECOND PARTY OPINION.
The Second Party Opinion does not and is not intended to make any representation or give any assurance with respect to any other matter relating to the Bonds. Designations by S&P Global Ratings are not a recommendation to any person to purchase, hold, or sell the Bonds and such labeling does not address the market price or suitability of the Bonds for a particular investor and does not and is not in any way intended to address the likelihood of timely payment of interest or principal when due.
In issuing the Second Party Opinion, S&P Global Ratings has assumed and relied upon the accuracy and completeness of the information made publicly available by the City or that was otherwise made available to S&P Global Ratings.
THE BONDS
Authority for Issuance
The Bonds are issued pursuant to the Bond Law and the Bond Resolution.
Purposes of Issuance
The Bonds are being issued to finance the Project. See “PLAN OF FINANCE” and “ESTIMATED SOURCES AND USES OF FUNDS.”
Description of the Bonds
The Bonds will be issued in book-entry form only and will be initially issued and registered in the name of Cede & Co. as nominee for DTC. Beneficial Owners will not receive physical certificates -7-
representing their interests in the Bonds. See “BOOK-ENTRY ONLY SYSTEM” and APPENDIX G— DTC AND THE BOOK-ENTRY ONLY SYSTEM.
Interest on the Bonds accrues from their date of issuance and is payable semiannually on each Interest Payment Date. Interest on the Bonds accrues on the basis of a 360-day year comprised of twelve 30- day months. Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the 16th day of the month next preceding any Interest Payment Date to that Interest Payment Date, inclusive, in which event it will bear interest from such Interest Payment Date, or unless it is authenticated on or before January 15, 2024, in which event it will bear interest from its date of delivery.
The Bonds are issuable in denominations of $5,000 principal amount or any integral multiple thereof. The Bonds mature on the dates, in the years and amounts set forth on the inside cover page hereof.
The principal of and interest on the Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check or draft of the Paying Agent (hereinafter defined) mailed by first-class mail to the Owner at the Owner’s address as it appears on the registration books maintained by the Paying Agent as of the close of business on the fifteenth day of the month next preceding such interest payment date (the “Record Date”), or at such other address as the Owner may have filed with the Paying Agent for that purpose; provided however, that payment of interest may be by wire transfer in immediately available funds to an account in the United States of America to any Owner of the Bonds in the aggregate principal amount of $1,000,000 or more who shall furnish written wire instructions to the Paying Agent at least five (5) days before the applicable Record Date. See also “Book Entry Only System” below.
See the maturity schedule on the inside cover page hereof and “DEBT SERVICE SCHEDULE.” Payment
The redemption price, if any, on the Bonds will be payable upon maturity or redemption upon surrender of such Bonds at the principal office of the Paying Agent. The interest, principal and redemption price, if any, on the Bonds will be payable in lawful money of the United States of America. The Paying Agent is authorized to pay the Bonds when duly presented for payment at maturity, and to cancel all Bonds upon payment thereof. The Bonds are general obligations of the City and do not constitute obligations of the County. See “SECURITY FOR THE BONDS.” No funds of the County are pledged or obligated to the payment of the Bonds.
Redemption
Optional Redemption. The Bonds maturing on and prior to August 1, 2033, are not callable for redemption prior to their stated maturity date. The Bonds maturing on and after August 1, 2034, are callable for redemption prior to their stated maturity date at the option of the City, in whole or in part on any date on or after August 1, 2033, from any source lawfully available therefor, at a redemption price equal to the principal amount of the Bonds called for redemption, together with accrued interest to the date fixed for redemption, without premium.
-8-
Registration, Transfer and Exchange of Bonds
If the book-entry system as described above and in APPENDIX G— DTC AND THE BOOKENTRY ONLY SYSTEM is no longer used with respect to the Bonds, the following provisions will govern the registration, transfer, and exchange of the Bonds.
The Paying Agent will keep or cause to be kept sufficient books for the ownership and registration of transfer of the Bonds (the “Registration Books”), which will at all times be open to inspection by the City upon reasonable notice; and, upon presentation for such purpose, the Paying Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the Bonds.
Any Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation at the principal office of the Paying Agent, accompanied by delivery of a written instrument of transfer in a form approved by the Paying Agent, duly executed. The City may charge a reasonable sum for each new Bond issued upon any transfer.
Whenever any Bond or Bonds are surrendered for transfer, the City will execute and the Paying Agent will authenticate and deliver a new Bond or Bonds, for like aggregate principal amount.
Bonds may be exchanged at the principal office of the Paying Agent for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity. The City may charge a reasonable sum for each new Bond issued upon any exchange.
Defeasance
The City has the option to pay and discharge the entire indebtedness on all or any portion of the outstanding Bonds in any one or more of the following ways:
(a) by paying or causing to be paid the principal of, and interest and any premium on, such outstanding Bonds, as and when they become due and payable; (b) by depositing with the Paying Agent, in trust, at or before maturity, money which, together with, in the event of a discharge of all of the Bonds, the amounts then on deposit in the funds and accounts provided for in the Paying Agent Agreement is fully sufficient to pay such outstanding Bonds, including all principal, interest and redemption premiums; or
(c) by irrevocably depositing with the Paying Agent or other agent designated by the City, in trust, cash and Federal Securities (as defined below) in such amount as the City will determine as confirmed by an independent certified public accountant will, together with the interest to accrue thereon and, in the event of a discharge of all of the Bonds, moneys then on deposit in the fund and accounts provided for in the Paying Agent Agreement, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates.
If the City has taken any of the actions specified in (a), (b) or (c) above, and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption will have been given as in the Paying Agent Agreement provided or provision satisfactory to the Paying Agent will have been made for the giving of such -9-
notice, then, at the election of the City, and notwithstanding that any Bonds will not have been surrendered for payment, the pledge of the funds and moneys provided for in the Paying Agent Agreement and all other obligations of the City under the Paying Agent Agreement with respect to such outstanding Bonds will cease and terminate. Notice of such election will be filed with the Paying Agent. Notwithstanding the foregoing, the obligation of the City to pay or cause to be paid to the owners of the Bonds not so surrendered and paid all sums due thereon and all amounts owing to the Paying Agent pursuant to the Paying Agent Agreement will continue in any event.
Upon compliance by the City with the foregoing with respect to all bonds outstanding, any funds held by the Paying Agent after payment of all fees and expenses of the Paying Agent, which are not required for the purposes of the preceding paragraph, will be paid over to the City. “Federal Securities” means Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises.
PLAN OF FINANCE
The Project consists of facilities to provide affordable housing and prevent displacement of vulnerable populations, including low and middle-income households, veterans, local artists, seniors, and the disabled and provide supportive housing for people experiencing homelessness; and help low and middleincome households purchase homes and in compliance with the Affordable Housing Bond Administration and Expenditure Plan adopted by the City Council on March 2, 2021 and described in additional detail in “THE AFFORDABLE HOUSING EXPENDITURE PROGRAM,” See also APPENDIX A— AFFORDABLE HOUSING BOND ADMINISTRATION AND EXPENDITURE PLAN.
A portion of the proceeds of the Bonds will be retained by the Paying Agent in a costs of issuance account (the “Costs of Issuance Account”) and used to pay costs associated with the issuance of the Bonds.
Any proceeds of sale of the Bonds not needed to pay costs of issuance of the Bonds will be transferred by the Paying Agent to the City for payment of costs of the Project.
ESTIMATED SOURCES AND USES OF FUNDS
The estimated sources and uses of funds with respect to the Bonds will be applied as follows:
Sources of Funds
Principal Amount of Bonds
Less: Underwriter’s Discount
Total Sources
Uses of Funds
Deposit to Project Fund
Deposit to Costs of Issuance Account (1)
Total Uses
(1) Costs of Issuance include certain legal fees, financing and consulting fees, fees of Trustee, Bond Counsel, Disclosure Counsel, Social Bonds External Verifier and the Municipal Advisor, printing costs, rating agency fees and other miscellaneous expenses.
The Underwriter’s discount is not included in the Costs of Issuance. -10-
DEBT SERVICE SCHEDULE
The following table shows the debt service schedule with respect to the Bonds (assuming no optional redemptions).
Year
Ending
August 1
Principal
Payment*
Interest
Payment
Total
Bonds
Debt Service
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
*Preliminary, subject to change.
SECURITY FOR THE BONDS
Ad Valorem Taxes
Bonds Payable from Ad Valorem Property Taxes. The Bonds are general obligations of the City, and the City Council has the power to direct the County to levy ad valorem taxes upon all property within the City subject to taxation without limitation of rate or amount, for the payment of the Bonds and the interest thereon. Under the Bond Resolution, the City directs the County to levy on all the taxable property in the City, in addition to all other taxes, a continuing direct and ad valorem tax annually during the period the -11-
Bonds are Outstanding in an amount sufficient to pay the principal of and interest on the Bonds when due, without limitation of rate or amount (except certain personal property which is taxable at limited rates).
Levy and Collection. The City has covenanted to direct the County to levy such ad valorem taxes in such amounts and at such times as is necessary to ensure the timely payment of debt service. Such taxes, when collected, will be deposited into a debt service fund for the Bonds, which is maintained by the City and which is irrevocably pledged for the payment of principal of and interest on the Bonds when due. See “–Debt Service Fund” below.
Property taxes within the City are assessed and collected by the County in the same manner and at the same time, and in the same installments as other ad valorem taxes on real property, and will have the same priority, become delinquent at the same times and in the same proportionate amounts, and bear the same proportionate penalties and interest after delinquency, as do the other ad valorem taxes on real property. The City has elected not to participate in the County Teeter Plan. See “PROPERTY TAXATION – Tax Levies and Delinquencies.”
Annual Tax Rates. The amount of the annual ad valorem tax levied by the County, as directed by the City, to repay the Bonds will be determined by the relationship between the assessed valuation of taxable property in the City and the amount of debt service due on the Bonds. Fluctuations in the annual debt service on the Bonds and the assessed value of taxable property in the City may cause the annual tax rate to fluctuate.
For discussion of the assessed valuation of taxable property within the City, see “PROPERTY TAXATION – Assessed Valuation” below.
Natural, economic and other factors both within and out of the City’s control, such as economic recession, deflation of land values, a relocation out of the City or financial difficulty or bankruptcy by one or more major property taxpayers, or the complete or partial destruction of taxable property caused by, among other eventualities, earthquake, flood or other natural disaster, could cause a reduction in the assessed value within the City and necessitate a corresponding increase in the annual tax rate. For additional discussion, see “CERTAIN RISK FACTORS” below.
Debt Service Fund
The City will establish the Debt Service Fund (the “Debt Service Fund”), which will be established as a separate fund to be maintained distinct from all other funds of the City. All taxes levied by the County, as directed by the City, pursuant to the Bond Resolution for the payment of the principal of and interest and premium (if any) on the Bonds will be deposited in the Debt Service Fund held by the City promptly upon the receipt by the City from the County. The Debt Service Fund is pledged for the payment of the principal of and interest and premium (if any) on the Bonds when and as the same become due. The City will transfer amounts in the Debt Service Fund, to the extent necessary to pay the principal of and interest on the Bonds as the same become due and payable to the Paying Agent as required to pay the principal of and interest and premium (if any) on the Bonds.
If, after payment in full of the Bonds, any amounts remain on deposit in the Debt Service Fund, the City shall transfer such amounts to its General Fund, to be applied solely in a manner which is consistent with the requirements of applicable state and federal tax law.
Statutory Lien
-12-
In accordance with Section 53515 of the California Government Code, the Bonds are secured by a statutory lien on all revenues received pursuant to the levy and collection of the ad valorem tax. This lien automatically arises without the need for any action or authorization by the City or the City Council and shall be valid and binding from the time the Bonds are executed and delivered. The revenues received pursuant to the levy and collection of the ad valorem tax shall be immediately subject to the lien, and the lien shall immediately attach to the revenues and be effective, binding, and enforceable against the City, its successors, transferees, and creditors, and all others asserting rights therein, irrespective of whether those parties have notice of the lien and without the need for any physical delivery, recordation, filing, or further act.
PAYING AGENT
The Bank of New York Mellon Trust Company, N.A. will act as the transfer agent, bond registrar, authenticating agent, paying agent and costs of issuance custodian for the Bonds (the “Paying Agent”). As long as DTC is the registered owner of the Bonds and DTC’s book-entry method is used for the Bonds, the Paying Agent will send any notice of redemption or other notices to owners only to DTC. Any failure of DTC to advise any DTC Participant, or of any DTC Participant to notify any Beneficial Owner, of any such notice and its content or effect will not affect the validity or sufficiency of the proceedings relating to the redemption of the Bonds called for redemption or of any other action premised on such notice.
The Paying Agent and the City, the County have no responsibility or liability for any aspects of the records relating to or payments made on account of beneficial ownership, or for maintaining, supervising or reviewing any records relating to beneficial ownership, of interests for the Bonds.
BOOK-ENTRY ONLY SYSTEM
The Depository Trust Company, New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. See APPENDIX G— DTC AND THE BOOK-ENTRY ONLY SYSTEM.
THE CITY
The City is located on the east shore of the San Francisco Bay in Alameda County, bordered by the City of Berkeley to its north and the City of Oakland to the east and south. Interstate 80/580 passes through the City towards Sacramento, running north from the San Francisco Bay Bridge, while Interstate 580 towards Hayward passes just to its south.
The City is one of the smallest cities in California by area, covering 2.25 square miles of which approximately 1.2 miles is land, and one square mile is tidelands on the San Francisco Bay. The City is largely flat and is distinguished by a peninsula created in the 1960s that extends just over a mile into the Bay. A map of the City is provided below.
-13-
MAP OF THE CITY OF EMERYVILLE
On November 4, 2014, the voters of the City passed Measure U which established the City as a charter city. The City has operated under the Council-Manager form of government since 1984, with five City Council members elected at-large for staggered four-year terms. Councilmembers must be registered voters of the City. If, during their term of office, a Councilmember moves to a place of residence outside of the City’s limits, their office shall immediately become vacant. Annually, the City Council members select a Mayor and Vice-Mayor. The City Manager, appointed by the Council, serves as chief administrative officer of the organization. The City Manager is responsible for administration of City affairs, day-to-day operations, and implementation of Council policies. The City Council also appoints a City Attorney.
The current members of the City Council as of the date of this official statement are as follows:
Name Current Term Expires
John J. Bauters, Mayor December, 2024
Courtney Welch, Mayor Pro Tem December, 2024
David Mourra December, 2026
Sukhdeep Kaur December, 2024
Kalimah A. Priforce December, 2026
Key administrative personnel of the City are listed at the front of this Official Statement. -14-
The City provides the following services: public safety (police and fire); public works; community services such as adult services, child development, parks and recreation, and youth services; building and planning; economic development; and general administrative services.
See APPENDIX B—GENERAL DEMOGRAPHIC AND ECONOMIC INFORMATION REGARDING THE CITY OF EMERYVILLE AND ALAMEDA COUNTY, APPENDIX C—CITY FINANCIAL INFORMATION and APPENDIX D—ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2022, for certain demographic, statistical and financial information regarding the City.
PROPERTY TAXATION
The information in this section describes ad valorem property taxation, assessed valuation, and other measures of the tax base of the City. The Bonds are payable solely from ad valorem taxes levied and collected by the County on taxable property in the City. The City’s General Fund is not a source for the repayment of the Bonds.
Property Taxation Generally
The County levies property taxes on behalf of the City for the City’s general operating purposes as well as for the payment of voter-approved general obligation bonds. Taxes levied to pay debt service for general obligation bonds may only be applied for that purpose. In general, if overall assessed values of taxable property in the City were to decline then the City, in order to generate sufficient tax revenues to pay debt service on the Bonds, would increase tax rates applicable to the Bonds.
Property Tax Collection Procedures
In California, property which is subject to ad valorem taxes is classified as “secured” or “unsecured.” The “secured roll” is that part of the assessment roll containing state assessed public utilities’ property and property, the taxes on which are a lien on real property sufficient, in the opinion of the county assessor, to secure payment of the taxes. A tax levied on unsecured property does not become a lien against such unsecured property but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on such secured property, regardless of the time of the creation of the other liens. Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property.
Property taxes on the secured roll are due in two installments, on November 1 and August 1 of each fiscal year. If unpaid, such taxes become delinquent after December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is declared tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1.5% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is subject to sale by the County.
Property taxes are levied for each fiscal year on taxable real and personal property situated in the taxing jurisdiction as of the preceding January 1. A bill enacted in 1983, SB813 (Statutes of 1983, Chapter 498), however, provided for the supplemental assessment and taxation of property as of the occurrence of a -15-
change of ownership or completion of new construction. Thus, this legislation eliminated delays in the realization of increased property taxes from new assessments. As amended, SB813 provided increased revenue to taxing jurisdictions to the extent that supplemental assessments of new construction or changes of ownership occur subsequent to the January 1 lien date and result in increased assessed value.
Property taxes on the unsecured roll are due on the January 1 lien date and become delinquent, if unpaid on the following August 31. A 10% penalty is also attached to delinquent taxes in respect of property on the unsecured roll, and further, an additional penalty of 1.5% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date.
The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder’s office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee.
The exclusive means of enforcing the payment of delinquent taxes in respect of property on the secured roll is the sale of the property securing the taxes for the amount of taxes which are delinquent.
Taxation of State-Assessed Utility Property
The State Constitution provides that most classes of property owned or used by regulated utilities be assessed by the State Board of Equalization (“SBE”) and taxed locally. Property valued by the SBE as an operating unit in a primary function of the utility taxpayer is known as “unitary property,” a concept designed to permit assessment of the utility as a going concern rather than assessment of each individual element of real and personal property owned by the utility taxpayer. State-assessed unitary and “operating nonunitary” property (which excludes nonunitary property of regulated railways) is allocated to the counties based on the situs of the various components of the unitary property. Except for unitary property of regulated railways and certain other excepted property, all unitary and operating nonunitary property is taxed at special County-wide rates and tax proceeds are distributed to taxing jurisdictions according to statutory formulae generally based on the distribution of taxes in the prior year.
Assessed Valuation
Assessed Valuation. The assessed valuation of property in the City is established by the County Assessor, except for public utility property which is assessed by the SBE. Assessed valuations are reported at 100% of the “full value” of the property, as defined in Article XIIIA of the California Constitution.
Certain classes of property, such as churches, colleges, not-for-profit hospitals and charitable institutions, are exempt from property taxation and do not appear on the tax rolls. No reimbursement is made by the State for such exemptions. Property taxes allocated to the City are collected by the County at the same time and on the same tax rolls as are county and special district taxes. The valuation of secured property by the County Assessor is established as of January 1 and is subsequently equalized in September of each year.
Future assessed valuation growth allowed under Article XIIIA of the State Constitution (new construction, certain changes of ownership, 2% inflation) will be allocated on the basis of “situs” among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies will share the growth of “base” revenues from the tax rate area. Each year’s growth allocation becomes part of each agency’s allocation in the following year.
-16-
Assessed Valuation History. The table below shows the assessed valuation of taxable property in the City for the most recent fiscal years.
TABLE 1
CITY OF EMERYVILLE
HISTORIC ASSESSED VALUATIONS
Total Assessed %
Fiscal Year Local Secured Utility Unsecured Valuation Change 2013-14 $3,701,009,834 $523,096 $345,138,517 $4,046,671,447 n/a 2014-15 3,903,416,646 74,276 318,089,008 4,221,579,930 4.32% 2015-16 4,391,582,455 74,276 325,594,592 4,717,251,323 11.74 2016-17 4,647,598,221 74,276 365,775,461 5,013,447,958 6.28 2017-18 4,901,334,855 71,063 401,138,217 5,302,544,135 5.77 2018-19 5,151,122,393 71,063 471,632,031 5,622,825,487 6.04 2019-20 5,444,504,640 71,063 540,982,229 5,985,557,932 6.45 2020-21 5,761,240,628 71,063 572,494,333 6,333,806,024 5.82 2021-22 6,082,567,636 77,162 595,814,260 6,678,459,058 5.44 2022-23 6,572,305,781 77,162 629,280,241 7,201,663,184 7.83 Source: California Municipal Statistics, Inc.
Assessments may be adjusted during the course of the year when real property changes ownership or new construction is completed. Assessments may also be appealed by taxpayers seeking a reduction as a result of economic and other factors beyond the City’s control, such as a general market decline in property values, reclassification of property to a class exempt from taxation, whether by ownership or use (such as exemptions for property owned by State and local agencies and property used for qualified educational, hospital, charitable or religious purposes), or the complete or partial destruction of taxable property caused by natural or manmade disaster, such as earthquake, flood, fire, toxic dumping, etc. When necessitated by changes in assessed value in the course of a year, taxes are pro-rated for each portion of the tax year.
Appeals of Assessed Valuation; Blanket Reductions of Assessed Values. There are two basic types of property tax assessment appeals provided for under State law.
The first type of appeal, commonly referred to as a base year assessment appeal, involves a dispute on the valuation assigned by the assessor immediately subsequent to an instance of a change in ownership or completion of new construction. If the base year value assigned by the assessor is reduced, the valuation of the property cannot increase in subsequent years more than 2% annually unless and until another change in ownership and/or additional new construction activity occurs.
The second type of appeal, commonly referred to as a Proposition 8 appeal (which Proposition 8 was approved by the voters in 1978), can result if factors occur causing a decline in the market value of the property to a level below the property’s then current taxable value (escalated base year value). Pursuant to State law, a property owner may apply for a Proposition 8 reduction of the property tax assessment for such owner’s property by filing a written application, in the form prescribed by the SBE, with the appropriate county board of equalization or assessment appeals board. A property owner desiring a Proposition 8 reduction of the assessed value of such owner’s property in any one year must apply to the county assessment appeals board (the “Appeals Board”). Following a review of the application by the county assessor’s office, the county assessor may offer to the property owner the opportunity to stipulate to a reduced assessment or -17-
may confirm the assessment. If no stipulation is agreed to, and the applicant elects to pursue the appeal, the matter is brought before the Appeals Board (or, in some cases, a hearing examiner) for a hearing and decision.
The Appeals Board generally is required to determine the outcome of appeals within two years of each appeal’s filing date. Any reduction in the assessment ultimately granted applies only to the year for which application is made and during which the written application is filed. The assessed value increases to its prereduction level (escalated to the inflation rate of no more than 2%) following the year for which the reduction application is filed. However, the county assessor has the power to grant a reduction not only for the year for which application was originally made, but also for the then current year and any intervening years as well.
In practice, such a reduced assessment may and often does remain in effect beyond the year in which it is granted.
In addition to the above-described taxpayer appeals, county assessors may independently reduce assessed valuations based on changes in the market value of property, or for other factors such as the complete or partial destruction of taxable property caused by natural or man-made disasters such as earthquakes, floods, fire, drought or toxic contamination pursuant to relevant provisions of the State Constitution.
In addition, Article XIIIA of the State Constitution provides that the full cash value base of real property used in determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year or may be reduced to reflect a reduction in the consumer price index or comparable local data. This measure is computed on a calendar year basis.
The City typically experiences increases in assessment appeals activity during economic downturns and decreases in assessment appeals as the economy rebounds.
Risk of Decline in Property Values; Fire; Earthquake Risk. Property values could be reduced by factors beyond the City’s control, including fire, earthquake and a depressed real estate market due to general economic conditions in the County, the region and the State.
Other possible causes for a reduction in assessed values include the complete or partial destruction of taxable property caused by other natural or manmade disasters, such as flood, fire, drought, toxic dumping, acts of terrorism, etc., or reclassification of property to a class exempt from taxation, whether by ownership or use (such as exemptions for property owned by State and local agencies and property used for qualified educational, hospital, charitable or religious purposes).
No assurance can be given that property tax appeals and/or blanket reductions of assessed property values will not significantly reduce the assessed valuation of property within the City in the future. For additional discussion, see “CERTAIN RISK FACTORS.”
-18-
Assessed Valuation by Land Use. The following table gives a distribution of taxable real property located in the City by principal purpose for which the land is used, and the assessed valuation and number of parcels for each use.
TABLE 2
CITY OF EMERYVILLE
ASSESSED VALUATION AND PARCELS BY LAND USE
FY2022-23
Assessed % of No. of % of
Valuation (1) Total Parcels Total
Non-Residential:
Commercial/Office $3,035,697,519 46.19% 252 4.83%
Vacant Commercial 39,510,302 0.60 21 0.40
Industrial 513,089,276 7.81 154 2.95
Vacant Industrial 16,860,427 0.26 11 0.21
Recreational/Marina 18,613,753 0.28 431 8.27
Government/Social/Institutional 32,096,390 0.49 310 5.95 Subtotal Non-Residential $3,655,867,667 55.63% 1,179 22.62% Residential:
Single Family Residence $ 90,282,392 1.37% 206 3.90%
Condominium/Townhouse 1,507,510,096 22.94 3,549 68.08
2-4 Residential Units 99,041,643 1.51 185 3.55
5+ Residential Units/Apartments 1,215,816,844 18.50 79 1.52 Vacant Residential 3,787,139 0.06 15 0.29
Subtotal Residential $2,916,438,114 44.37% 4,034 77.38% Total $6,572,305,781 100.00% 5,213 100.00%
Source: California Municipal Statistics, Inc.
(1) Total secured assessed valuation, excluding tax-exempt property. -19-
Assessed Valuation of Single-Family Homes and Condominiums/Townhomes. The following table focuses on single-family homes and condominiums/townhomes only, which together comprise approximately 24.31% of the assessed value of taxable property in the City.
TABLE 3
CITY OF EMERYVILLE
PER PARCEL - ASSESSED VALUATION OF SINGLE-FAMILY HOMES AND
CONDOMINIUMS/TOWNHOMES
Average Median
No. of FY2022-23 Assessed Assessed
Parcels Assessed Valuation Valuation Valuation
Single Family Residential 206 $ 90,282,392 $438,264 $376,291 Condominiums/Townhomes 3,549 1,507,510,096 424,770 394,402 Total 3,755 $1,597,792,488 $425,511 $394,022
No. of
FY2022-23 SFR & Condo % of Cumulative Total % of Cumulative Assessed Valuation Parcels (1) Total % of Total Valuation Total % of Total $0 - $49,999 11 0.293% 0.293% $ 432,432 0.027% 0.027%
$50,000 - $99,999 45 1.198 1.491 3,762,748 0.235 0.263
$100,000 - $149,999 221 5.885 7.377 28,132,389 1.761 2.023 $150,000 - $199,999 294 7.830 15.206 51,399,791 3.217 5.240 $200,000 - $249,999 355 9.454 24.660 80,175,425 5.018 10.258 $250,000 - $299,999 307 8.176 32.836 83,693,645 5.238 15.496 $300,000 - $349,999 330 8.788 41.625 107,903,298 6.753 22.249 $350,000 - $399,999 361 9.614 51.238 135,897,365 8.505 30.755 $400,000 - $449,999 302 8.043 59.281 127,484,849 7.979 38.734 $450,000 - $499,999 316 8.415 67.696 149,940,726 9.384 48.118 $500,000 - $549,999 246 6.551 74.248 129,242,163 8.089 56.207 $550,000 - $599,999 185 4.927 79.174 106,371,898 6.657 62.864 $600,000 - $649,999 179 4.767 83.941 111,980,408 7.008 69.872 $650,000 - $699,999 141 3.755 87.696 94,998,552 5.946 75.818 $700,000 - $749,999 117 3.116 90.812 84,482,143 5.287 81.106 $750,000 - $799,999 84 2.237 93.049 64,942,196 4.064 85.170 $800,000 - $849,999 97 2.583 95.632 80,285,777 5.025 90.195 $850,000 - $899,999 68 1.811 97.443 59,189,244 3.704 93.899 $900,000 - $949,999 37 0.985 98.429 34,135,028 2.136 96.036 $950,000 - $999,999 21 0.559 98.988 20,498,202 1.283 97.319 $1,000,000 and greater 38 1.012 100.000 42,844,209 2.681 100.000 Total 3,755 100.000% $1,597,792,488 100.000%
Source: California Municipal Statistics, Inc.
(1) Improved single family residential parcels and condominiums. Excludes parcels with multiple family units.
Principal Taxpayers. In general, the more property (by assessed value) owned by any single assessee, the more exposure property tax collections have to weakness in that taxpayer’s financial situation and ability or that taxpayer’s willingness to pay property taxes. Based on Fiscal Year 2022-23 locally assessed taxable valuations, the top twenty taxable property owners in the City represent approximately 45.42% of the total Fiscal Year 2022-23 taxable value.
-20-
The following table shows the 20 largest owners of taxable property in the City as determined by secured assessed valuation in Fiscal Year 2022-23.
TABLE 4
CITY OF EMERYVILLE
LARGEST LOCAL SECURED PROPERTY TAXPAYERS
FY2022-23
Assessed % of
Property Owner Primary Land Use Valuation Total(1)
1. Bay Street Centercal LLC Shopping Center $ 265,200,000 4.04%
2. Pixar Studio-Office 265,101,691 4.03
3. KBSIII Towers Emeryville LLC Office Building 199,119,720 3.03
4. Courtyards at 65TH LP Apartments 184,298,392 2.80
5. SPUS8 2100 Powell LP Office Building 183,231,802 2.79
6. Emery Station West LLC Office Building 160,088,486 2.44
7. ES East LLC Office Building 155,642,874 2.37
8. BRE BMR 53rd LP Office Building 148,860,524 2.26
9. Avalon Public Market LLC Apartments 147,963,197 2.25
10. Bay Center Investor LLC Office Building 132,487,207 2.02
11. BCSP Hollis Property LLC Office Building 132,090,000 2.01
12. Bcore Emerytech Owner LLC Office Building 130,365,840 1.98
13. Prime US Tower Emeryville LLC Office Building 124,800,816 1.90
14. G C Diagnostics Corp. Industrial 124,190,219 1.89
15. LMV II Emeryville Holdings LP Apartments 119,188,870 1.81
16. Emeryville Parcel CFG DE LLC Shopping Center 113,090,522 1.72
17. Windsor Metropolitan LP Apartments 107,658,748 1.64
18. East Bay Bridge Retail LLC Shopping Center 100,997,927 1.54
19. BRE Properties Inc. Apartments 98,231,642 1.49
20. Emery Station Joint Venture LLC Office Building 92,480,646 1.41 Total Top 20 $2,985,089,123 45.42%
Source: California Municipal Statistics, Inc.
(1) FY2022-23 Local Secured Assessed Valuation: $6,572,305,781.
Concentration of Taxable Property Ownership. The more property (by assessed value) owned by any single assessee, the more exposure of tax collections to weakness in that taxpayer’s financial situation and ability or willingness to pay property taxes. For fiscal year 2022-23, eleven taxpayers each accounted for more than 2.0% of the total taxable property in the City with the largest two property taxpayers each accounting for over 4.0% of the total taxable property in the City. The top twenty property taxpayers combined consist of over 45% of the total taxable property in the City. Concentration of ownership presents a risk in that if one or more of the largest property owners were to relocate their business out of the City or were to default in the payment of their property taxes or were to successfully appeal the tax assessments on property within the City, a substantial decline in property tax collections could result.
Tax Rates. The State Constitution permits the levy of an ad valorem property tax on taxable property not to exceed 1% of the full cash value of the property, and State law requires the full 1% tax to be levied. The levy of special ad valorem property taxes in excess of the 1% levy is permitted as necessary to provide for debt service payments on school bonds and other voter-approved indebtedness. -21-
The rate of tax necessary to pay fixed debt service on the Bonds in a given year depends on the assessed value of taxable property in that year. (The rate of tax imposed on unsecured property for repayment of the Bonds is the prior year’s secured property tax rate.) Economic and other factors beyond the City’s control, such as a general market decline in property values, reclassification of property to a class exempt from taxation, whether by ownership or use (such as exemptions for property owned by State and local agencies and property used for qualified educational, hospital, charitable or religious purposes), or the complete or partial destruction of taxable property caused by natural or manmade disaster, such as earthquake, flood, fire, toxic dumping, etc., could cause a reduction in the assessed value of taxable property within the City and necessitate a corresponding increase in the annual tax rate to be levied to pay the principal of and interest on the Bonds. Issuance of additional authorized bonds in the future might also cause the tax rate to increase.
The table below summarizes the total ad valorem property tax rates levied by all taxing entities in the principal Tax Rate Area (“TRA”) within the City from fiscal year 2018-19 through fiscal year 2022-23. TRA 14-003 comprises approximately 47.78% of the fiscal year 2022-23 total assessed value of property in the City.
TABLE 5
CITY OF EMERYVILLE
TYPICAL AD VALOREM TAX RATES
Typical Tax Rate Per $100 Assessed Value (TRA 14-003 – FY2022-23 Assessed Valuation: $3,440,717,588)(1) Fiscal Year
2018-19 2019-20 2020-21 2021-22 2022-23
General Tax Rate 1.0000% 1.0000% 1.0000% 1.0000% 1.0000% Alameda County 0 .0112 0 .0108 0 .0036 0.0041 0 .0103
Emery Unified School District 0.0594 0.0614 0.0593 0.0532 0.0463 Peralta Community College District 0.0269 0.0257 0.0452 0.0407 0.0409 Bay Area Rapid Transit District 0.0070 0.0120 0.0139 0.0060 0.0140 East Bay Regional Park District 0.0057 0.0060 0.0014 0.0020 0.0058 Total Tax Rate 1.1102% 1.1159% 1.1234% 1.1060% 1.1173%
Source: California Municipal Statistics, Inc.
Note: The tax rate necessary to pay the fixed debt service on the Bonds will be an addition to the tax rates levied by the taxing entities in Table 5.
(1) TRA 14-003 is 47.78% of the City’s total assessed valuation.
Tax Levies and Delinquencies. Beginning in 1978-79, Article XIIIA and its implementing legislation shifted the function of property taxation primarily to the counties, except for levies to support prior-voted debt, and prescribed how levies on county-wide property values are to be shared with local taxing entities within each county.
-22-
The following table sets forth the secured tax charges and delinquencies for the most recent fiscal years.
TABLE 6
CITY OF EMERYVILLE
SECURED TAX CHARGES AND DELINQUENCIES
Fiscal Secured Amt. Del. % Del.
Year Tax Charge (1) June 30 June 30
2012-13 $ 7,566,443.84 $107,681.88 1.42%
2013-14 7,827,603.29 87,550.23 1.12
2014-15 8,251,654.17 85,731.35 1.04
2015-16 9,223,936.22 113,425.15 1.23
2016-17 9,840,559.74 105,375.41 1.07
2017-18 10,483,910.72 90,283.63 0.86
2018-19 11,146,446.73 94,597.11 0.85
2019-20 11,832,469.19 122,150.74 1.03
2020-21 12,551,729.12 117,185.25 0.93
2021-22 13,294,321.98 149,583.18 1.13
Source: California Municipal Statistics, Inc.
(1) 1% General Fund apportionment
Teeter Plan Not Applicable. The Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”) has been adopted by the County, as provided for in Section 4701 et seq. of the State Revenue and Taxation Code.
Under the Teeter Plan, each participating local agency, including cities, levying property taxes in a county receives the amount of uncollected taxes credited to its fund, in the same manner as if the amount credited had been collected. In return, the county receives and retains delinquent payments, penalties, and interest as collected that would have been due the local agency.
However, although a local agency receives the total levy for its property taxes without regard to actual collections, to the extent of a reserve established and held by its county for this purpose, the basic legal liability for property tax deficiencies at all times remains with the local agency. The Teeter Plan is to remain in effect unless the county board of supervisors orders its discontinuance or unless, prior to the commencement of any fiscal year of the county, the board of supervisors receives a petition for its discontinuance from two-thirds of the participating revenue districts in the county. The board of supervisors may, after holding a public hearing on the matter, discontinue the procedures under the Teeter Plan with respect to any tax levying agency in its county.
The City has elected not to participate in the County Teeter Plan. That means that the City suffers any delinquencies but gains all penalty and interest amounts when such delinquencies are collected.
Direct and Overlapping Debt. Set forth below is a direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc. and effective January 1, 2023. The Debt Report is included for general information purposes only. The City has not reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith. -23-
The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term obligations generally are not payable from revenues of the City (except as indicated) nor are they necessarily obligations secured by land within the City. In many cases, long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency.
The contents of the Debt Report are as follows: (1) the first column indicates the public agencies which have outstanding debt as of the date of the Debt Report and whose territory overlaps the City; (2) the second column shows the percentage that the City’s assessed valuation represents of the total assessed valuation of each public agency identified in the first column; and (3) the third column is an apportionment of the dollar amount of each public agency’s outstanding debt to property in the City, as determined by multiplying the total outstanding debt of each agency by the percentage of the City’s assessed valuation represented in the second column.
-24-
TABLE 7
CITY OF EMERYVILLE
STATEMENT OF DIRECT AND OVERLAPPING BONDED DEBT
(as of January 1, 2023)
CITY OF EMERYVILLE
2022-23 Assessed Valuation: $7,201,663,184
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 1/1/23 Alameda County 1.922% $ 9,915,406
Bay Area Rapid Transit District 0.756 18,781,195
Peralta Community College District 5.178 18,644,425
Emery Unified School District 100.000 80,287,013
Oakland Unified School District 0.001 10,500
East Bay Regional Park District 1.197 2,117,194
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $129,755,733 (1) DIRECT AND OVERLAPPING GENERAL FUND DEBT:
Alameda County General Fund Obligations 1.922 $13,900,346 Alameda-Contra Costa Transit District Certificates of Participation 2.268 254,470 Peralta Community College District Pension Obligation Bonds 5.178 6,313,103 Oakland Unified School District General Fund Obligations 0.001 52 City of Emeryville General Fund Obligations 100.000 1,993,400 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $22,461,371 OVERLAPPING TAX INCREMENT DEBT (Successor Agency):
Series 2014 A Tax Allocation Refunding Bonds 100.000 $47,000,000 Series 2014 B Tax Allocation Refunding Bonds 100.000 6,740,000 TOTAL OVERLAPPING TAX INCREMENT DEBT $53,740,000
COMBINED TOTAL DEBT $205,957,104 (2)
Ratios to 2022-23 Assessed Valuation:
Overlapping Tax and Assessment Debt ........................................1.80% Direct General Fund Debt ($1,993,400) ............................. 0.03% Combined Total Debt ...................................................................2.86% Ratios to Incremental Valuation ($6,459,234,782):
Overlapping Tax Increment Debt .................................................0.83% Source: California Municipal Statistics, Inc.
(1) Excludes Bonds to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Bonding Capacity
The City may issue bonds in an amount up to 3.75% of the assessed valuation of taxable property within its boundaries. Based on the fiscal year 2022-23 assessment roll, the City’s gross bonding capacity is approximately $270.1 million. Refunding bonds may be issued without regard to this limitation; however, once issued, the outstanding principal of any refunding bonds is included when calculating the City’s bonding capacity.
-25-
CERTAIN RISK FACTORS
The following information should be considered by prospective investors in evaluating the Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to investing in the Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks.
The Bonds are payable from and secured by a voter-approved property tax levy on all taxable property within the City. The City is not obligated to pay the debt service on the Bonds from any other sources. This official statement, including Appendices A and C hereto, provide information on the City’s overall operations and financings with an emphasis on its General Fund and therefore includes information on revenues and funds that are not pledged to the Bonds and should not be considered available to pay debt service on the Bonds.
Risks to Assessed Values Generally
Natural and economic forces can affect the assessed value of taxable property in the City. The City is located in a seismically active region, and damage from an earthquake in or near the City could cause moderate to extensive or total damage to taxable property. Other natural or man-made disasters, such as flood and sea level rise, fire, the presence of hazardous materials, acts of terrorism or public health emergencies could also cause a reduction in the assessed value of taxable property within the City. Economic and market forces, such as a downturn in the local economy can also affect assessed values. For additional discussion, see “Natural Calamities,” “Limitations on Development,” and “Risk of Changing Economic Conditions” below.
Natural Calamities
General. From time to time, the City has been and could be subject to natural calamities, including, but not limited to, earthquake, flood, or sea level rise, that may adversely affect economic activity in the City, and which could have a negative impact on the City’s finances and on the taxable assessed values of property located within the City.
Sea Level Rise. Sea levels are rising as a result of higher atmospheric and oceanic temperatures across the globe. The rate of sea level rise is expected to accelerate throughout the century, threatening coastal resources, but projections are complicated by the potential for a substantial acceleration of glacial ice melt resulting in rapid sea level rise, which is not currently accounted for in many global scenarios. In Emeryville, the assets most at risk from sea level rise include those located on the marina and shoreline, along with those neighboring the railroad to the southwest.
The Natural Research Council (NRC) identified the likely sea level rise estimates for the United States west coast in 2012. In Alameda County, models are projecting six inches of sea level rise by 2030 (range: 2-12 in), 11 inches by 2050 (range: 5-24 in), and 36 inches by 2100 (range: 17- 66 in) relative to the year 2000. These timelines for increases in water level may occur sooner on a temporary basis given the combination of permanent sea level rise and temporary extreme tides from storm surge.
Some of the City’s assets are expected to be inundated by sea level rise, either temporarily or permanently, once the increase in water level reaches 24 inches, which is possible by 2050. At this point, the bay level begins encroaching beyond the natural buffer of the shoreline and begins to reach shoreline parks and three commercial buildings, two storm sewer lines and a streetlight on the peninsula. At 36 inches of sea -26-
level rise, which is likely by the end of the century, the water levels reach marina facilities, culverts and sewers, certain commercial buildings, and some of the City’s parks. At 48 inches, likely by the end of the century when combined with average yearly storm surge, water threatens buildings along the peninsula shoreline and floods Powell Street between Anchor Drive and Admiral Drive, cutting off transport to the City’s marina.
With predicted end-of-century sea level rise compounded by glacial melting and/or King Tides and storm surge, there is the possibility that the Bay Area will experience sea level rise related flooding at or above these levels. The equivalent of 72 inches of sea level rise could likely result from a combination of sea level rise and storm surge, such as 36 inches of sea level rise combined with a 50-year storm surge, or 48 inches of sea level rise combined with a 5-year storm surge.
Seismic. There are many faults running through the Bay Area - The San Andreas Fault, The Hayward Fault, The Calaveras Fault and the Rogers Creek Fault. Emeryville is approximately 15 miles from the San Andreas Fault, 3 miles from the Hayward Fault and 19 miles from the Calaveras Fault. The entire City is subject to hazardous ground shaking (and liquefaction for half the City) in a major earthquake on any of these fault lines.
In Emeryville, an earthquake is the hazard with the highest combined likelihood to cause extensive damage to the City and to the region as a whole. In the event of an earthquake, the location of the epicenter as well as the time of day and season of the year could have a profound effect on the number of deaths, casualties, property damage, and disruption of normal government and community services and activities.
The effects could be compounded by collateral emergencies such as fires, dam failure, flooding, tsunami, hazardous material spills, utility disruptions, bridge collapses, structural collapses, street blockage by debris, street surface breakage due to liquefaction, landslides and transportation emergencies.
Destructive earthquakes struck the Bay Area in 1838, 1868, 1906, 1911 and 1989. In the 1989 Loma Prieta earthquake, 62 people died. Most of the fatalities (42) were caused by the collapse of the doubledecked Cypress Freeway that ran through West Oakland, and within one mile of Emeryville.
Liquefaction. Liquefaction is a phenomenon in which the strength and stiffness of a soil is reduced by earthquake shaking or other rapid loading. The instability of the soil can cause buildings or structures on the soil to sink, tip unevenly, or even collapse. Liquefied areas may move laterally, breaking underground cables and damaging communication lines. Areas of liquefaction are more vulnerable to fire because of greater potential for underground gas mains to break due to ground displacements and because of water lines being damaged.
The entire City lies within a liquefaction hazard zone. The peninsula has a very high susceptibility to liquefaction while the areas around the rail line and east have a moderate to low risk of liquefaction. If liquefaction were to occur there is potential for significant damage to infrastructure lines such as water, natural gas, sewage, storm, electrical and telecommunication systems in the City. Development in a liquefaction hazard zone requires adherence to the guidelines for evaluating and mitigating seismic hazards as required by the City’s Public Resources Code.
Drought. Drought conditions are likely to become more frequent and persistent over the 21st century due to climate change. Before reaching a crisis level, a prolonged drought in the City could have economic, environmental and social impacts for the City. Water companies may have to spend more money on new or additional water supplies resulting in increased costs for the consumer. Lower levels of water could cause -27-
more wildfires and loss of wetlands. There could be a threat to public safety in the form of health problems related to dust, lower water flows and poor water quality. There also could be damage to landscaping and city trees as well as an increased fire hazard. At a crisis level, the City, along with all the Bay Area would be severely impacted. This could result in water rationing.
Flooding. While the City’s assets are protected from historical floodplains, with more climate changedriven intense precipitation events there may be more frequent inundation of vulnerable assets. In a 100-year flood, which has a one percent chance of flooding in a given year, the City’s parks along the Bay may be inundated. The peninsula may also be affected, but impacts are expected to be limited to the docks and boat slips. The 500-year flood, which has a 0.2 percent chance in a given year, does not have an increased impact on the shoreline. The assets exposed to flooding near the Bay in Emeryville are strategically placed to reduce the risk of damage. The marina docks are meant to adjust to changing water levels and the parks are well suited to serve as storm barriers, minimizing the risk of flooding in the City.
Wildfire. In recent years, wildfires have caused extensive damage to cities throughout the State. In some instances, entire neighborhoods have been destroyed. Areas effected by wildfires may be more prone to flooding and mudslides. While extreme temperatures and increased variability in rainfall will likely cause drier conditions in California, Emeryville’s location in the Bay Area away from wildlife areas means that there is little threat of fire hazards. No city assets are at risk from wildfire threat.
While the City has experience little direct impact of wildfires on health and safety and property damage, the smoke from nearby wildfires has negatively impacted the quality of life in the City and may have short-term and future impacts on residential and commercial activity in the City.
Climate Action Plan and Local Hazard Mitigation Plan. The City updated its Local Hazard Mitigation Plan (“LHMP”) in 2019 to identify and evaluate all potential natural and man-made hazards which may affect the City and to present mitigation strategies that the City can take to address the hazards identified. In 2016 the City updated its Climate Action Plan (“CAP”) which contains 17 mitigation goals, 5 adaptation goals, 98 mitigation initiatives, 38 adaptation initiatives, and 5 long-term strategies for progressing the City towards carbon neutrality. All of goals in the CAP relate back to meeting the state’s target for reducing greenhouse gas (“GHG”) emissions by 40% below baseline levels by 2030 while the long-term strategies in the City’s CAP target 80% GHG reduction by 2050. Both the LHMP and the CAP can be viewed on the City’s website. Such documents are not incorporated herein by this reference.
Risk of Changing Economic Conditions
While the City has historically enjoyed strong economic and financial performance, the City faces several long-term financial challenges including climate change and sea level rise, changes to the economy of the region and the nation, and the management of pension and post-employment retirement obligations.
While the City has adopted measures and policies to better position its operating budgets for future risks and future economic downturns, such measures may not be sufficient. Property values could be reduced by factors beyond the City’s control, including a depressed real estate market due to general economic conditions in the County, the region, and the State.
The general economy of the City is also subject to the types of risks generally associated with all urban real estate markets. Real estate prices may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in home improvement costs and by other similar factors. In addition, if there is a significant decline in the general -28-
economy of the City, the owners of property within the City may be less able or less willing to make timely payments of property taxes or may petition for reduced assessed valuation causing a delay or interruption in the receipt of property tax revenues by the City.
Public Health Emergencies
The COVID-19 Pandemic is ongoing, and its duration and severity and economic effects are uncertain in many respects and difficult to forecast. The ultimate impacts of the COVID-19 Pandemic on the City’s operations and financings and on the local economy, real estate market and development within the City is not fully known, and it may be some time before the full adverse impact of the COVID-19 Pandemic is known. Further, there could be future outbreaks of other COVID-19 variants or other public health emergencies that could have material adverse effects on the City’s operations and finances.
Bankruptcy Risks
In bankruptcy, the voluntary application of pledged special revenues to indebtedness secured by such revenues is not subject to the automatic stay. A recent decision by the United States Court of Appeals for the First Circuit in a case involving revenue bonds of the Puerto Rico Highways & Transportation Authority, however, concludes that an action by bondholders to compel the application of pledged special revenues is not exempt from the automatic stay. See “LEGAL MATTERS” below.
Cybersecurity Risks
The City and the County may each face various cyber security threats, including, but not limited to, hacking, viruses, malware, ransomware and other attacks on their computers and their networks. No assurance can be given that the City’s or County’s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City or the County.
The City owns and operates its own enterprise class data network serving the municipal city government and its operations. This network is hosted on a trusted third-party cloud provider’s platform with advanced security monitoring and protection. The City has retained information technology professionals to support, maintain and protect these operations locally in a purpose-built and physically secure environment. This network and its operations are governed by and in compliance with all applicable governmental regulations as well as the City’s own administrative regulations. Within the City’s operations and guidance is an active cyber-security program designed to protect from, and to quickly identify and mitigate, a multitude of complex security threats. The City receives regular cyber hygiene reports from the Department of Homeland Security’s Cyber Assessment Division. While no network is completely immune from all possible compromise, the City exercises its due diligence in protecting the data it possesses and the systems it operates. To date, there have been no significant cyber-attacks on the City’s computers and technologies.
The City is reliant on the County in connection with the administration of the Bonds, including without limitation the County’s tax collectors for the levy and collection of ad valorem taxes, and the Paying Agent. No assurance can be given that the City, the County, and these other entities will not be adversely affected by cyber threats and attacks in a manner that may affect owners of the Bonds. -29-
CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING
CITY REVENUES AND APPROPRIATIONS
Principal of and interest on the Bonds are payable from the proceeds of an ad valorem tax levied by the County, as directed by the City, for the payment thereof. See “THE BONDS” and “SECURITY FOR THE BONDS” above. Articles XIIIA, XIIIB, XIIIC and XIIID of the State Constitution, Propositions 62, 111, and 218 and 1A, and certain other provisions of law discussed below are included in this section to describe the potential effect of these Constitutional and statutory measures on the ability of the County to levy, and the City to spend, tax proceeds for operating and other purposes, and it should not be inferred from the inclusion of such materials that these laws impose any limitation on the ability of the County to levy taxes for payment of the Bonds. The tax levied by the County, as directed by the City, for payment of the Bonds was approved by the City’s voters in compliance with Article XIIIA and all applicable laws.
Article XIIIA of the State Constitution
On June 6, 1978, California voters approved Proposition 13, which added Article XIIIA to the State Constitution. Article XIIIA, as amended, limits the amount of any ad valorem tax on real property to one percent of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service (i) on indebtedness approved by the voters prior to July 1, 1978, (ii) on bonded indebtedness approved by a two-thirds vote on or after July 1, 1978, for the acquisition or improvement of real property or (iii) bonded indebtedness incurred by a school district, community college district or county office of education for the construction, reconstruction, rehabilitation or replacement of school facilities, including the furnishing and equipping of school facilities or the acquisition or lease of real property for school facilities, approved by 55 percent of the voters voting on the proposition. Article XIIIA defines full cash value to mean “the county assessor’s valuation of real property as shown on the 1975-76 tax bill under ‘full cash value,’ or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” This full cash value may be increased at a rate not to exceed two percent per year to account for inflation.
Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster, and in other minor or technical ways.
Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to directly levy any property tax (except to pay voter-approved indebtedness). The one percent property tax is automatically levied by the County and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1989.
Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the two percent annual adjustment are allocated among the various jurisdictions in the “taxing area” based upon their respective “situs.” Any such allocation made to a local agency continues as part of its allocation in future years.
-30-
All taxable property is shown at full market value on the tax rolls. Consequently, the tax rate is expressed as $1 per $100 of taxable value. All taxable property value included in this Official Statement is shown at 100 percent of market value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value.
Article XIIIB of the State Constitution
In addition to the limits Article XIIIA imposes on property taxes that may be collected by local governments, certain other revenues of the State and most local governments are subject to an annual “appropriations limit” imposed by Article XIIIB which effectively limits the amount of such revenues those entities are permitted to spend. Article XIIIB, approved by the voters in June 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each government entity applies to “proceeds of taxes,” which consist of tax revenues, State subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed “the cost reasonably borne by such entity in providing the regulation, product or service.” “Proceeds of taxes” excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the appropriation of funds which are not “proceeds of taxes,” such as reasonable user charges or fees, and certain other non-tax funds. Article XIIIB also does not limit appropriation of local revenues to pay debt service on Bonds existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990, levels. The appropriations limit may also be exceeded in case of emergency; however, the appropriations limit for the next three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two-thirds of the legislative body of the local government.
The State and each local government entity has its own appropriations limit. Each year, the limit is adjusted to allow for changes, if any, in the cost of living, the population of the jurisdiction, and any transfer to or from another government entity of financial responsibility for providing services. Proposition 111 requires that each agency’s actual appropriations be tested against its limit every two years.
If the aggregate “proceeds of taxes” for the preceding two-year period exceeds the aggregate limit, the excess must be returned to the agency’s taxpayers through tax rate or fee reductions over the following two years.
The City has never exceeded its appropriations limit.
Articles XIIIC and XIIID of the State Constitution
General. On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 adds Articles XIIIC and XIIID to the California Constitution and contains a number of interrelated provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges.
On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on -31-
increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature.
The amendments to Article XIIIC define “taxes” that are subject to voter approval as “any levy, charge, or exaction of any kind imposed by a local government,” with certain exceptions.
Taxes. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City (“general taxes”) require a majority vote; taxes for specific purposes (“special taxes”), even if deposited in the City’s General Fund, require a two-thirds vote.
Property-Related Fees and Charges. Article XIIID also adds several provisions making it generally more difficult for local agencies to levy and maintain property-related fees, charges, and assessments for municipal services and programs.
Reduction or Repeal of Taxes, Assessments, Fees and Charges. Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund. If such repeal or reduction occurs, the City’s ability to pay debt service on the Bonds could be adversely affected.
Burden of Proof. Article XIIIC provides that local government “bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.” Similarly, Article XIIID provides that in “any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance” with Article XIIID.
Judicial Interpretation of Proposition 218. The interpretation and application of Articles XIIIC and XIIID will ultimately be determined by the courts, and it is not possible at this time to predict with certainty the outcome of such determination.
Proposition 1A; Proposition 22
Proposition 1A. Proposition 1A, proposed by the Legislature in connection with the State’s Fiscal Year 2004-05 Budget, approved by the voters in November 2004 and generally effective in Fiscal Year 2006- 07, provided that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions.
Proposition 1A generally prohibited the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any Fiscal Year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county had to be approved by two-thirds of both houses of the Legislature.
Proposition 22. Proposition 22, entitled “The Local Taxpayer, Public Safety and Transportation Protection Act,” was approved by the voters of the State in November 2010. Proposition 22 eliminates or reduces the State’s authority to (i) temporarily shift property taxes from cities, counties and special districts -32-
to schools, (ii) use vehicle license fee revenues to reimburse local governments for State-mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues.
Proposition 19
Proposition 19, entitled “Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” was approved by the voters of the State in November 2020. Proposition 19 amends Article XIIIA to: (i) expand special rules that give property tax savings to homeowners that are over the age of 55, severely disabled, or whose property has been impacted by wildfire or natural disaster, when they buy a different home; (ii) narrow existing special rules for inherited properties; and (iii) dedicate most of the potential new State revenue generated from Proposition 19 toward fire protection.
The City cannot predict the impact that Proposition 19 might have on assessed values or property tax revenues in the City, or any other impacts on the local economy or the City’s financial condition.
Possible Future Initiatives
Articles XIIIA, XIIIB, XIIIC and XIIID and Propositions 111, 218 and 1A were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time-to-time other initiative measures could be adopted, further affecting revenues of the City or the City’s ability to expend revenues. The nature and impact of these measures cannot be anticipated by the City.
LEGAL MATTERS
Possible Limitations on Remedies; Bankruptcy
General. Following is a discussion of certain considerations relating to potential bankruptcies of school districts in California. It is not an exhaustive discussion of the potential application of bankruptcy law to the City. State law contains a number of safeguards to protect the financial solvency of school districts.
See “APPENDIX C—CITY FINANCIAL INFORMATION.” If the safeguards are not successful in preventing a school district from becoming insolvent, the State Superintendent of Public Instruction (the “State Superintendent”), operating through an administrator appointed by the State Superintendent, may be authorized under State law to file a petition under Chapter 9 of the United States Bankruptcy Code (the “Bankruptcy Code”) on behalf of a district for the adjustment of its debts, assuming that such district meets certain other requirements contained in the Bankruptcy Code necessary for filing such a petition. School districts under current State law are not themselves authorized to file a bankruptcy proceeding, and they are not subject to involuntary bankruptcy.
Bankruptcy courts are courts of equity and as such have broad discretionary powers. If the City were to become the debtor in a proceeding under Chapter 9 of the Bankruptcy Code, the parties to the proceedings may be prohibited from taking any action to collect any amount from the City (including ad valorem tax revenues) or to enforce any obligation of the City, without the bankruptcy court’s permission. In such a proceeding, as part of its plan of adjustment in bankruptcy, the City may be able to alter the priority, interest rate, principal amount, payment terms, collateral, maturity dates, payment sources, covenants (including tax-related covenants), and other terms or provisions of the Bonds and other transaction documents related to the Bonds, if the bankruptcy court were to determine that the alterations were fair and equitable. In -33-
addition, in such a proceeding, as part of such a plan, the City may be able to eliminate the obligation of the County to raise taxes, if necessary, to pay the Bonds. There also may be other possible effects of a bankruptcy of the City that could result in delays or reductions in payments on the Bonds. Moreover, regardless of any specific adverse determinations in any City bankruptcy proceeding, a City bankruptcy proceeding could have an adverse effect on the liquidity and market price of the Bonds.
As stated above, if the City were to go into bankruptcy, the bankruptcy petition would be filed under Chapter 9 of the Bankruptcy Code. Chapter 9 provides that it does not limit or impair the power of a state to control, by legislation or otherwise, a municipality of or in such state in the exercise of the political or governmental powers of such municipality, including expenditures for such exercise. For purposes of the language of Chapter 9, a school district is a municipality. State law provides that the ad valorem taxes levied to pay the principal and interest on the Bonds shall be used for the payment of principal and interest of the City’s general obligation bonds and for no other purpose. If this restriction on the expenditure of such ad valorem taxes is respected in a bankruptcy case, then the ad valorem tax revenue could not be used by the City for any purpose other than to make payments on the Bonds. It is possible, however, that a bankruptcy court could conclude that the restriction should not be respected.
Statutory Lien. Pursuant to Senate Bill 222 (2015) (“SB 222”) that became effective on January 1, 2016, all general obligation bonds issued by local agencies in California, including the Bonds, will be secured by a statutory lien on all revenues received pursuant to the levy and collection of the tax. SB 222 provides that the lien will automatically arise, without the need for any action or authorization by the local agency or its governing board and will be valid and binding from the time the bonds are executed and delivered.
Although a statutory lien would not be automatically terminated by the filing of a Chapter 9 bankruptcy petition by the City, the automatic stay provisions of the Bankruptcy Code would apply and payments that become due and owing on the Bonds during the pendency of the Chapter 9 proceeding could be delayed unless the Bonds are determined to be secured by a pledge of “special revenues” within the meaning of the Bankruptcy Code and the pledged ad valorem taxes are applied to pay the Bonds in a manner consistent with the Bankruptcy Code.
Special Revenues. If the ad valorem tax revenues that are pledged to the payment of the Bonds (see “THE BONDS – Security”) are determined to be “special revenues” within the meaning of the Bankruptcy Code, then the application in a manner consistent with the Bankruptcy Code of the pledged ad valorem revenues that are collected after the date of the bankruptcy filing should not be subject to the automatic stay. “Special revenues” are defined to include, among others, taxes specifically levied to finance one or more projects or systems of the debtor, but excluding receipts from general property, sales, or income taxes levied to finance the general purposes of the debtor. The City has specifically pledged the ad valorem taxes for payment of the Bonds. Additionally, the ad valorem taxes levied for payment of the Bonds are permitted under the State Constitution only where either (i) the applicable bond proposition is approved by 55% of the voters and such proposition contains a specific list of school facilities projects, or (ii) if the applicable bond proposition is approved by two-thirds of voters and such bonds must be issued for the acquisition or improvement of real property. Because State law prohibits the use of the tax proceeds for any purpose other than payment of the bonds and the bond proceeds can only be used to fund the acquisition or improvement of real property and other capital expenditures included in the proposition, such tax revenues appear to fit the definition of special revenues. However, there is no binding judicial precedent dealing with the treatment in bankruptcy proceedings of ad valorem tax revenues collected for the payments of bonds in California, so no assurance can be given that a bankruptcy court would not hold otherwise. -34-
In addition, even if the ad valorem tax revenues are determined to be “special revenues,” the Bankruptcy Code provides that special revenues can be applied to necessary operating expenses of the project or system before they are applied to other obligations. This rule applies regardless of the provisions of the transaction documents. Thus, a bankruptcy court could determine that the City is entitled to use the ad valorem tax revenues to pay necessary operating expenses of the City and its schools before the remaining revenues are paid to the owners of the Bonds.
Possession of Tax Revenues; Remedies. If one or more of the County or the City go into bankruptcy and have possession of tax revenues (whether collected before or after commencement of the bankruptcy), and if the County or the City, as applicable, does not voluntarily pay such tax revenues to the owners of the Bonds, it is not clear what procedures the owners of the Bonds would take or how effective they would be in obtaining possession of such tax revenues.
Opinion of Bond Counsel Qualified by Reference to Bankruptcy, Insolvency and Other Laws Relating to or Affecting Creditor’s Rights. The proposed form of opinion of Bond Counsel, attached hereto as APPENDIX E—FORM OF OPINION OF BOND COUNSEL, is qualified by reference to bankruptcy, insolvency and other laws relating to or affecting creditor’s rights.
Legal Opinions
The proceedings in connection with the issuance of the Bonds are subject to the approval as to their legality of Quint & Thimmig LLP, Larkspur, California, Bond Counsel for the City. Certain legal matters will also be passed upon for the City by Quint & Thimmig LLP, Larkspur, California, as Disclosure Counsel.
The fees of Bond Counsel and Disclosure Counsel are contingent upon the issuance and delivery of the Bonds.
TAX MATTERS
Interest on the Bonds is not excludable from gross income of the owners thereof for federal income tax purposes. In the opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes.
The complete text of the final opinion that Bond Counsel expects to deliver upon the issuance of the Bonds is set forth in APPENDIX E—FORM OF OPINION OF BOND COUNSEL.
MUNICIPAL ADVISOR
KNN Public Finance, LLC, Berkeley, California, has served as municipal advisor (the “Municipal Advisor”) to the City in connection with the issuance of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness or fairness of the information contained in the Official Statement. The fees of the Municipal Advisor are contingent upon the sale and delivery of the Bonds. -35-
CONTINUING DISCLOSURE
Pursuant to Rule 15c2-12 of the Securities and Exchange Commission (the “Rule”), the City has agreed, for the benefit of holders of the Bonds, to provide certain financial information and operating data relating to the City and the balances of funds relating to the Bonds, by not later than March 31 of each year commencing with the report for the 2021-22 fiscal year (the “Annual Information”), and to provide notices of the occurrence of certain enumerated events. The Annual Information and notices of enumerated events will be filed by the City with the Municipal Securities Rulemaking Board (the “MSRB”), via its Electronic Municipal Market Access (“EMMA”) system. The nature of the information to be provided in the Annual Information and the notices of material events is set forth in APPENDIX F—FORM OF CONTINUING DISCLOSURE CERTIFICATE.
The City has made all required continuing disclosure filings required in the past five years.
LEGALITY FOR INVESTMENT IN CALIFORNIA
Under provisions of the California Financial Code, the Bonds are legal investments for commercial banks in California to the extent that the Bonds, in the informed opinion of the bank, are prudent for the investment of funds of depositors, and under provisions of the California Government Code, are eligible for security for deposits of public moneys in California.
ABSENCE OF MATERIAL LITIGATION
No litigation is pending or threatened concerning the validity of the Bonds, and a certificate to that effect will be furnished by the City to the purchasers at the time of the original delivery of the Bonds. The City is not aware of any litigation pending or threatened questioning the political existence of the City or contesting the County’s abilities to receive ad valorem taxes or contesting the City’s ability to issue and retire the Bonds.
RATING
S&P has assigned the rating of “___” to the Bonds. Such rating reflects only the view of S&P and any desired explanation of the significance of such rating should be obtained from S&P. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such rating will continue for any given period or that such rating will not be revised downward or withdrawn entirely by S&P if, in the judgment of S&P, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price for the Bonds.
UNDERWRITING
The Bonds were sold by competitive bidding on April 26, 2023, to ________ (the “Underwriter”).
The Underwriter has agreed to purchase the Bonds at a purchase price of $________ (being equal to the aggregate principal amount of the Bonds ($_______), less an underwriter’s discount of $______, plus a premium of $_______). The Underwriter will purchase all of the Bonds if any are purchased, the obligation -36-
to make such purchase being subject to the approval of certain legal matters by counsel and certain other conditions. The Underwriter may offer and sell Bonds to certain dealers and others at prices lower than the offering prices stated on the inside cover page hereof. The offering prices may be changed from time to time by the Underwriter.
ADDITIONAL INFORMATION
Quotations from and summaries and explanations of the Bonds, the Resolution, the Continuing Disclosure Certificate of the City and the constitutional provisions, statutes and other documents referenced herein, do not purport to be complete, and reference is made to said documents, constitutional provisions and statutes for full and complete statements of their provisions.
All data contained herein has been taken or constructed from City records. Appropriate City officials, acting in their official capacities, have reviewed this Official Statement and have determined that, as of the date hereof, the information contained herein is, to the best of their knowledge and belief, true and correct in all material respects and does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made herein, in light of the circumstances under which they were made, not misleading. This Official Statement has been approved by the City Board.
EXECUTION
Execution and delivery of this Official Statement have been duly authorized by the City.
CITY OF EMERYVILLE
By
City Manager
Appendix A
APPENDIX A
AFFORDABLE HOUSING BOND
ADMINISTRATION AND EXPENDITURE PLAN
Appendix B
APPENDIX B
GENERAL DEMOGRAPHIC INFORMATION REGARDING THE
CITY OF EMERYVILLE AND ALAMEDA COUNTY
The following information concerning the City of Emeryville and Alameda County is included only for the purpose of supplying general information regarding the City and the County. The Bonds are not a debt of the County, the State or any of its political subdivisions, and none of the County, the State nor any of their political subdivisions, except for the City, are liable therefor.
Although reasonable efforts have been made to include up-to-date information in this Appendix B, some of the information is not current due to delays in reporting of information by various sources. It should not be assumed that the trends indicated by the following data would continue beyond the specific periods reflected herein.
Introduction
The City. The City of Emeryville (the “City”) is located on the east shore of the San Francisco Bay in Alameda County (the “County”), bordered by the City of Berkeley to its north and the City of Oakland to the east and south. Interstate 80/580 passes through the City towards Sacramento, running north from the Bay Bridge, while Interstate 580 towards Hayward passes just to its south. The City is one of the smallest cities in California by area, covering 2.25 square miles of which approximately 1.2 miles is land area, and one square mile is tidal on the San Francisco Bay. The City is largely flat and is distinguished by a peninsula created in the 1960s that extends just over a mile into the Bay. The City is the home of Pixar Animation Studios, Amyris and other life science companies, Peet’s Coffee & Tea, the Center for Investigative Reporting, Alternative Tentacles and Clif Bar. The City attracts many weekday commuters due to its position as a regional employment center.
The County. Located on the east side of the San Francisco Bay, Alameda County encompasses 813 square miles and extends from Albany in the North to Fremont in the South and Livermore in the East. The population of Alameda County exceeds 1.6 million, making it the seventh most populous county in California according to U.S. Census Bureau data. Population growth in Alameda County has been fairly consistent during the last forty years making it a desirable place to live and work.
The County was established in 1853 and is governed by a five-member Board of Supervisors elected by popular vote. Other elected officials include the Auditor-Controller/Clerk-Recorder, Assessor, Treasurer-Tax Collector, District Attorney, and Sheriff/Coroner. The Board of Supervisors is responsible for providing policy direction, approving the County budget, and representing the County in a number of areas including special districts. The County Administrator reports to the Board and is responsible for delivering County services.
The County possesses a large and diverse economic base, consisting of research and high technology, professional services, manufacturing, farming, finance, transportation, wholesale and retail trade, higher education, medical and health services, and government services. The County also has a diversified industrial base that provides well-paying jobs to its residents.
In international trade, Alameda County has a long history of strong cultural and business ties with Pacific Rim trading partners. Because of its central location and state-of-the-art port facilities, it is a major Appendix B
port for the Pacific Rim trade. The County’s extensive network of air, sea, highway and rail facilities have made the County a major transportation hub for regional, national, and international trade.
Population
The table below summarizes the population of the City, the County, and the State for the last five years.
CITY OF EMERYVILLE, ALAMEDA COUNTY, and CALIFORNIA
Population
Year
City of
Emeryville
Alameda
County
State of
California
2018 12,142 1,651,760 39,519,535
2019 12,177 1,659,608 39,605,361
2020 12,448 1,663,114 39,648,938
2021 12,617 1,662,370 39,303,157
2022(1) 12,497 1,651,979 39,185,605
Source: California Department of Finance, E-4 Population Estimate for Cities, Counties, and the State, 2010-22, with 2010 Census Benchmark.
(1) Latest available data.
Appendix B
Employment
The following table summarizes historical employment and unemployment for the County, the State, and the United States:
ALAMEDA COUNTY, CALIFORNIA, and UNITED STATES
Civilian Labor Force, Employment, and Unemployment
(Annual Averages)
Unemployment
Year Area Labor Force Employment Unemployment Rate (1)
2017 Alameda County 848,500 817,600 30,900 3.6%
California 19,312,000 18,393,100 918,900 4.8
United States 160,320,000 153,337,000 6,982,000 4.4
2018 Alameda County 848,200 822,800 25,400 3.0%
California 19,398,200 18,582,800 815,400 4.2
United States 162,075,000 155,761,000 6,314,000 3.9
2019 Alameda County 844,400 819,700 24,700 2.9%
California 19,411,600 18,627,400 784,200 4.0
United States 163,539,000 157,538,000 6,001,000 3.7
2020 Alameda County 813,800 742,400 71,400 8.8%
California 18,821,200 16,913,100 1,908,100 10.1
United States 160,742,000 147,795,000 12,947,000 8.1
2021(2) Alameda County 810,000 760,900 49,100 6.1%
California 18,923,200 17,541,900 1,381,200 7.3
United States 161,204,000 152,581,000 8,623,000 5.3
Source: California Employment Development Department, Monthly Labor Force Data for Counties, Annual Average 2010-21, and US Department of Labor.
(1) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures available in this table.
(2) Latest available full-year data.
Appendix B
Major Employers in the City and in the County
The following table lists the top 10 employers within the City for the 2021 calendar year.
CITY OF EMERYVILLE
Top 10 Employers
For the 2021 Calendar Year(1)
% of
Employer Employees Total
Pixar Animation Studios 1,465 19.80%
Amyris Inc 595 8.04
AC Transit 435 5.88
Grocery Outlet Headquarters 427 5.77
Clif Bar & Co. 343 4.64
Grifols Diagnostic Solutions 265 3.58
IKEA 265 3.58
Peet's Coffee & Tea Inc. 255 3.45
Oaks Card Club 217 2.93
City of Emeryville 170 2.30
Total Top 10 4,437 59.96%
Source: City of Emeryville 2021-22 Annual Comprehensive Financial Report. (1) Latest available full-year data.
The following table lists the top 10 employers in the County in 2021.
ALAMEDA COUNTY
Top 10 Employers
For the 2021 Calendar Year(1)
Industry
# of
Employees
% of
Total
Kaiser Permanente Medical Group Inc. 34,666 4.62%
Tesla 13,000 1.73
Safeway Inc. 9,731 1.30
County of Alameda 9,424 1.26
Sutter Health 9,377 1.25
John Muir Health 6,300 .84
PG&E 5,100 .68
Workday 5,098 .68
Chevron Corp. 4,700 .63
Wells Fargo & Co. 4,354 .58
Total Top 10 101,750 13.55%
Source: Alameda County 2020-21 ACFR.
(1) Latest available full-year data.
Appendix B
Construction Activity
The following table reflects the five-year history of building permit valuation for the City and the County:
CITY OF EMERYVILLE
Building Permits and Valuation
(Dollars in Thousands)
2017 2018 2019 2020 2021(2)
Permit Valuation:
New Single-family $ 623 — $ 182 — $ 423
New Multi-family 35,515 $ 23,530 — $110,237 71,393
Res. Alterations/Additions 926 3,157 3,418 3,969 2,039
Total Residential $37,064 $ 26,688 $ 3,600 $114,207 $ 73,856 Total Nonresidential 45,654 81,660 104,700 35,833 182,411 Total All Building $82,718 $108,349 $108,300 $150,040 $256,268 New Dwelling Units:
Single Family 2 — 1 — 3
Multiple Family 87 66 — 314 186
Total 89 66 1 314 189
ALAMEDA COUNTY
Building Permits and Valuation
(Dollars in Thousands)
2017 2018 2019 2020 2021(2)
Permit Valuation:
New Single-family $ 763,677 $ 689,529 $ 675,129 $ 394,500 $ 407,584 New Multi-family 1,307,093 1,431,985 782,536 722,038 829,822 Res. Alterations/Additions 501,276 469,158 512,409 293,866 222,971 Total Residential $2,572,084 $2,590,673 $1,970,076 $1,410,405 $1,460,378 Total Nonresidential 1,587,834 1,762,395 1,794,925 998,193 1,316,988 Total All Building $4,159,882 $4,353,068 $3,765,001 $2,408,599 $2,777,366 New Dwelling Units:
Single Family 2,175 1,867 1,871 1,152 1,589
Multiple Family 6,889 6,540 4,145 2,610 4,494
Total 9,064 8,407 6,016 3,762 6,083
Source: Construction Industry Research Board: “Building Permit Summary.” Note: Columns may not sum to totals due to independent rounding. (1) Latest available full year data.
Household Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner-occupants of non-farm Appendix B
dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, State and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.” The following table summarizes the median household effective buying income for the City, the County, the State, and the nation for the past five years.
CITY OF EMERYVILLE, ALAMEDA COUNTY,
STATE OF CALIFORNIA AND UNITED STATES
Median Household Effective Buying Income
2018 2019 2020 2021 2022
City of Emeryville $77,046 $86,022 $91,671 $108,324 $95,566 Alameda County 79,446 84,435 88,389 99,940 98,721
California 62,637 65,870 67,956 77,058 77,175
United States 52,841 55,303 56,790 64,448 65,326
Source: Nielsen, Inc.
Recent Development in the City
Major residential development activity in the City included continued construction of The Emery Apartments on the former Sherwin Williams property, which includes 500 residential units, 85 of which are deed-restricted affordable units and 3.5 acres of park space. Construction also continued for the Bayview Emeryville Apartments, a 186-unit building, including eight units for Very Low Income households (i.e. earning up to 50% of the Area Median Income). The City partnered with Resources for Community Development to assist with the financing of the Nellie Hannon Gateway Project, including 90 units of affordable housing and space for the Emeryville Citizens Assistance Project (ECAP); this project received planning approvals in October 2020 and submitted plans for building permits in November 2021. The City also partnered with EAH Housing for the development of an innovative intergenerational affordable housing project on City-owned property at 4300 San Pablo Avenue. This project will include 68 units of affordable housing set aside for seniors and transition aged youth and was made possible by the passage of SB 591; which was legislation supported by the City.
Major commercial development activity in the City included the commencement of construction of the Emeryville Center of Innovation on portions of the former Chiron campus, which will include over 911,000 square feet of new office and lab space among four buildings and a 1,991-space parking structure.
The Bay Street shopping center also received approvals for the construction of a new 48,500 square-foot grocery store with rooftop parking, and construction of the revitalized “food terrace” continued. Additional notable commercial development applications currently in progress include the Emery Station Overland Project (300,000 square feet of life science space, and affordability commitments for 10 existing live-work units); the Marketplace Redevelopment Project Parcels A, B and F (396,000 square feet of life science space), the Christie Avenue Mixed Use Project (464,000 square feet of life science space and 98 units of housing), the 5850 Shellmound Way Project (385,000 square feet of life science space, 6 housing units, 2,300 square feet of ground floor retail/amenity space), and the Bay Center Life Science Building project (210,000 square feet of life science space).
Appendix C
APPENDIX C
CITY FINANCIAL INFORMATION
The information in this section concerning the operations of the City and the City’s general fund finances is provided as supplementary information only, and it should not be inferred from the inclusion of this information in this Official Statement that the principal of or interest on the Bonds is payable from the general fund of the City.
The Bonds are payable solely from the proceeds of an ad valorem tax levied by the County, as directed by the City, in an amount sufficient for the payment thereof. Amounts in the City’s general fund are not pledged to the payment of the Bonds. See “THE BONDS” and “SECURITY FOR THE BONDS” above.
Financial Statements and Budgetary Process
The City’s accounting policies conform to generally accepted accounting principles. The audited financial statements also conform to the principles and standards for public financial reporting established by the Governmental Accounting Standards Board.
Basis of Accounting and Financial Statement Presentation. The government-wide financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due.
Audited Financial Statements. The City retained Maze & Associates, Pleasant Hill, California, California (the “City’s Auditor”), to examine the general-purpose financial statements of the City as of and for the year ended June 30, 2022. The audited financial statements for fiscal year ended June 30, 2022, are included in APPENDIX D—ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2022. The City has not requested, and the City’s Auditor has not provided, any review or update of such financial statements in connection with their inclusion in this Official Statement.
Budget Process. The City Council adopts a bi-annual budget each year with appropriations for all City funds, which begins on July 1 of each year. The budget process begins in December and culminates seven months later with the adoption of the Annual Budget in June. Work begins in December of each year on a mid-year budget review. The mid-year review is published and distributed to the City Council, City staff, and the general public for consideration during second half of each fiscal year. The mid-year review analysis provides the financial starting point for the subsequent year’s budget.
The City’s fiscal year 2022-23 budget is the second single year budget that the City has adopted since the onset of the COVID-19 Pandemic. While the City ordinarily has adopted budgets in two-year cycles to provide stability in the budgetary process, given the uncertainties surrounding the City’s economic recovery from the effects of the COVID-19 Pandemic, the City Council has supported single year budgets Appendix C
for fiscal years 2021-22 and 2022-23 to give time to assess the vigor of the recovery before making significant budget modifications.
The City Council has the legal authority to amend the budget at any time during the fiscal year. The City maintains budgetary controls to ensure compliance with legal provisions embodied in the appropriated budget approved by the City Council. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) for the City’s operating budget is at the fund level. For the operating budget, the City Manager has the authority to move appropriations between accounts (without dollar limitation) within a budget program and within the same fund. All other appropriation changes require the approval of the City Council.
Certain of the City’s revenues are collected and dispersed by the State (such as sales tax and motorvehicle license fees) or allocated in accordance with State law (most importantly, property taxes).
Therefore, State budget decisions can have an impact on City finances.
Appendix C
General Fund Balance Sheet
The following table shows the City’s audited General Fund balance sheets for the five most recent fiscal years.
Table C1
CITY OF EMERYVILLE
GENERAL FUND BALANCE SHEET
Fiscal Years 2017-18 through 2021-22
Fiscal Year ending June 30,
2018 2019 2020 2021 2022
Audited Audited Audited Audited Audited
ASSETS
Cash, cash equivalents, and investments $ 38,958,173 $ 40,306,299 $ 48,779,272 $ 45,164,086 $ 51,860,581 Cash, cash equivalents, and investments with fiscal agents 3,057,229 11,005,889 11,603,335 12,237,291 10,805,405 Accounts receivable 767,650 949,394 1,007,047 656,117 1,096,039 Taxes receivable 3,302,872 3,225,189 1,536,562 3,420,822 3,055,011 Due from other governments 79,506 255,741 65,907 265,644 265,644 Accrued interest 100,556 119,893 90,844 20,831 49,277
Notes and loans 30,956 9,174 - - -
Prepaid costs 38,877 43,363 67,583 48,546 41,786
Due from other funds 1,545,164 - 942,858 1,252,203 -
Total Assets 47,880,983 55,914,942 64,093,408 63,065,540 67,173,743
LIABILITIES
Accounts payable 2,961,211 3,050,834 5,002,878 3,816,516 3,510,655 Accrued liabilities 915,956 937,619 878,849 341,078 359,462 Unearned revenue 1,922,794 994,011 4,277,648 3,844,151 3,268,776 Deposits Payable 372,788 440,174 513,498 468,084 547,706 Total Liabilities 6,172,749 5,422,638 10,672,873 8,469,829 7,686,599
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 368,549 686,784 423,319 295,717 603,717
FUND BALANCES
Non-spendable 38,877 43,363 67,583 48,546 41,786
Restricted 2,864,890 363,652 343,371 319,323 293,956
Committed
Economic uncertainty(1) 20,677,300 22,372,118 22,801,285 22,929,230 22,978,571 PERS liability 8,312,363 13,437,772 14,038,818 14,601,001 13,172,871 Economic development 1,647,919 1,931,111 2,195,341 2,387,238 2,678,518 Community Programs 572,100 445,647 415,648 419,148 346,128 Assigned(2) 3,382,403 3,451,939 3,137,915 3,135,503 3,142,251 Unassigned 3,843,833 7,759,918 9,997,255 10,460,005 16,229,351 Total Fund Balances 41,339,685 49,805,520 52,997,216 54,299,994 58,883,427 Total Liabilities, Deferred Inflows, and Fund Balances 47,880,983 55,914,942 64,093,408 63,065,540 67,173,743 Sources: City of Emeryville Annual Comprehensive Financial Reports for Fiscal Years 2017-18 through 2021-22. (1) For additional discussion, see “City Financial Management – Reserve Policies.” (2) Assigned amounts constitute the City’s General Fund Disaster Reserve. For additional discussion, see “City Financial Management – Reserve Policies.”
Appendix C
General Fund Revenues, Expenditures, and Changes in Fund Balances The following table shows four years of the City’s audited results for its General Fund revenues, expenditures, and changes in fund balances for fiscal years 2018-19 through 2021-22 as well as budgeted projections for fiscal year 2022-23 based on the City’s adopted fiscal year 2022-23 budget.
Table C2
CITY OF EMERYVILLE
GENERAL FUND REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES Fiscal Years 2018-19 through 2022-23
Fiscal Year Ended June 30,
2019 2020 2021 2022 2023
Audited Audited Audited Audited Budget
REVENUES
Taxes(1) $ 37,748,821 $ 35,274,791 $ 29,228,754(2) $ 36,975,855 $34,681,940 Licenses and permits 4,946,540 3,894,645 6,303,737 8,511,793 6,796,270 Intergovernmental 1,270,080 1,864,827 1,823,607 3,174,192 2,054,614 Charges for services 1,012,942 771,445 456,040 548,684 488,100 Investment Income 2,823,453 1,845,444 1,181,450 (2,618,538) 115,000 Rental Income 534,351 410,893 317,441 436,712 501,675
Contributions 130,416 357,468 331,814 320,708 267,600
Miscellaneous 525,678 727,045 921,617 1,227,215 526,300 Total Revenues 48,992,281 45,146,558 40,564,460 48,768,621 45,431,499
EXPENDITURES
City Council 196,959 186,613 185,331 184,998 234,726
City Manager 1,124,576 1,037,140 999,183 942,544 774,101 City Attorney 594,489 546,763 491,405 538,178 739,500
Finance 1,103,089 1,204,350 982,305 984,478 1,406,844
Human Resources 722,633 664,688 681,387 780,633 890,340 Information Technology 726,611 748,638 776,702 789,206 847,654 General Government 2,121,599 2,708,668 2,209,252 2,693,219 2,744,303 Police 12,761,987 13,945,317 13,705,489 14,153,295 15,709,528 Fire 8,181,196 8,684,847 9,210,493 9,553,333 10,280,641 Planning and Building 3,501,780 2,668,198 3,166,549 4,363,795 3,185,370 Economic Development and Housing 777,107 776,419 768,888 708,408 967,926 Community Services 961,378 570,509 525,229 734,620 1,408,292 Youth Services 1,495,713 1,533,726 1,148,805 1,386,293 913,732 Adult Services 987,296 817,265 498,505 517,395 814,713
Public Works 3,360,044 3,551,480 3,816,143 3,763,659 4,078,999 Capital outlay - - 2,078 8,319 5,000
Debt service – Principal - - - - -
Debt service – Interest - - - - -
Total Expenditures 38,616,457 39,644,621 39,167,744 42,096,767 45,789,072 REVENUES OVER EXPENDITURES 10,375,824 5,501,937 1,396,716 6,479,854 (357,573)
OTHER FINANCING SOURCES/(USES)
Other Revenues - - - - -
Transfers in 87,981 61,500 2,331,958 1,591,823 166,500
Transfers out (1,997,970) (2,371,741) (2,425,896) (3,488,244) (2,321,534) Total Other Financing Sources (1,909,989) (2,310,241) (93,938) (1,896,421) (2,155,034) NET CHANGE IN FUND BALANCES 8,465,835 3,191,696 1,302,778 4,583,433 (2,512,607) FUND BALANCES – BEGINNING OF YEAR 41,339,685 49,805,520 52,997,216 54,299,994 58,883,427 FUND BALANCES – END OF YEAR 49,805,520 52,997,216 54,229,994 58,883,427 56,370,820 Source: City of Emeryville Annual Comprehensive Financial Report for Fiscal Years 2018-19 through 2021-22 and the City of Emeryville’s Fiscal Year 2022-23 Budget, as most recently updated on December 31, 2022.
(1) General Fund tax revenue sources include business license taxes, sales and use taxes, property taxes and transient occupancy taxes. For additional discussion and detail, see “Primary Sources of General Fund Revenues.” (2) Reflects reduced tax collections primarily as a result of the effects of the COVID-19 Pandemic. For additional discussion and detail, see “Primary Sources of General Fund Revenues.”
Appendix C
General Fund Budget to Actuals Comparison
The following table shows the City’s General Fund budget figures for fiscal year 2020-21 and 2021- 22, including a comparison of the City’s initial budget, final budget, audited actuals for each year.
Table C3
CITY OF EMERYVILLE
GENERAL FUND BUDGET TO ACTUALS COMPARISON
Fiscal Years 2020-21 and 2021-22
Fiscal Year Ended June 30, 2021 Fiscal Year Ended June 30, 2022 Adopted
Budget
Final
Budget
Audited
Actuals
Adopted
Budget
Final
Budget
Audited
Actuals
RESOURCES (Inflows)
Taxes $ 38,973,300 $ 26,102,200 $ 29,228,754 $ 27,177,160 $ 33,650,950 $ 36,975,855 Licenses and permits 2,617,300 3,795,946 6,303,737 2,608,159 7,827,840 8,511,793 Intergovernmental 1,538,000 1,620,400 1,823,607 3,889,571 3,102,964 3,174,192 Charges for services 1,855,500 590,621 456,040 1,016,700 856,852 548,684 Investment Income 50,000 (53,416) 1,181,450 569,385 436,385 (2,618,538) Rental Income 558,200 281,000 317,441 401,000 411,882 436,712 Contributions 270,000 270,042 331,814 267,600 346,254 320,708 Miscellaneous 502,000 679,161 821,617 490,675 732,520 1,227,215 Transfers In 276,800 7,331,958 2,331,958 2,561,500 2,658,983 1,591,823 Total Resources 46,641,100 40,617,612 42,796,418 38,981,750 50,024,630 50,168,444 CHARGES TO APPROPRIATIONS (Outflows)
City Council 208,900 199,700 185,331 204,686 196,825 184,998 City Manager 1,119,400 1,071,545 999,183 1,140,471 1,211,282 942,544 City Attorney 631,900 648,427 491,405 665,726 841,835 536,178 Finance 1,253,600 1,262,050 982,305 1,123,038 1,061,039 984,478 Human Resources 809,300 775,110 681,387 803,693 802,343 780,633 Information Technology 7822,900 791,547 776,702 815,674 808,439 789,206 General Government 4,244,059 2,831,779 2,209,252 2,975,238 2,436,282 2,693,219 Police 14,430,400 14,283,331 13,705,489 14,702,823 14,815,719 14,153,295 Fire 9,523,500 9,405,360 9,210,493 9,638,379 9,647,776 9,553,333 Planning and Building 2,631,700 2,913,343 3,166,549 2,723,456 4,611,157 4,363,795 Economic Development and Housing 1,123,700 825,700 768,888 836,853 833,428 704,802 Community Services 683,500 539,510 525,229 645,400 785,604 734,620 Youth Services 2,023,400 1,339,016 1,148,805 1,508,989 1,404,334 1,386,293 Adult Services 858,801 687,015 498,505 745,559 675,797 517,395 Public Works 4,153,400 3,610,838 3,816,143 3,792,514 3,760,648 3,763,659 Capital outlay 53,000 - 2,078 - - 8,319
Transfers Out 2,131,622 2,425,413 2,425,896 2,068,034 3,555,609 3,488,244 Total Charges to Appropriations 46,663,082 43,609,684 41,593,640 44,390,533 47,448,117 45,585,011 TOTAL CHANGES TO APPROPRIATIONS (21,982) (2,991,772) 1,202,778 (5,408,783) 2,576,513 4,583,433 FUND BALANCE – BEGINNING OF YEAR 52,977,216 54,299,994
FUND BALANCE – END OF YEAR 54,299,994 58,883,427
Source: City of Emeryville Annual Comprehensive Financial Reports for Fiscal Year 2020-21 and Fiscal Year 2021-22.
City Financial Management
The City Council has adopted a comprehensive set of financial management policies to provide for the prudent investment of City funds and management of debt. The City’s practice is to incur debt only after deliberation over the effect of such debt on the City’s General Fund and other resources of the City, and in those circumstances where the use of debt would be appropriate to the scale and economic life of the asset being financed and the accumulation or availability of reserves to fund the capital requirement.
Reserve Policies. The City maintains a target reserve for economic uncertainties in an amount equal to approximately of 50% of the General Fund annual operating budget. Appropriations from the reserve for Appendix C
economic uncertainties are restricted for emergency situations and limited to one-time or short-term (one or two fiscal years) use. Should the City’s economic uncertainty reserve level fall below the target amount of 50%, the City’s goal is to replenish the fund within three fiscal years.
The City maintains a disaster reserve to provide funding if needed to respond to a disaster or other imminent or emergency event. The target fund balance for the disaster reserve is $5 million.
The City also maintains an unassigned general fund balance primarily as a working capital requirement to bridge the gap between the time expenses are paid and the time revenues are collected. The General Fund’s unassigned reserve balances fluctuate from time to time and reflect annual operating results. The City has no specific target level for its undesignated general fund balance, although the City attempts to ensure that sufficient balances are maintained to provide contingencies for unseen operating or capital needs and cash flow requirements.
The following table shows the City’s audited General Fund reserve levels and reserve policy targets for its economic uncertainty and disaster reserves for the four most recent fiscal years as well as budgeted projections for fiscal year 2022-23.
Table C4
CITY OF EMERYVILLE
GENERAL FUND RESERVE LEVELS
Fiscal Year Ending June 30,
2019 2020 2021 2022 2023
Audited Audited Audited Audited Budgeted (1)
Reserve for economic uncertainties $ 22,372,118 $ 22,801,285 $ 22,929,230 $ 22,978,571 Target
Disaster reserve 3,451,939 3,137,915 3,135,503 3,142,251 Target 5,000,000
Source: City of Emeryville FY2018-19 through 2021-22 Annual Comprehensive Financial Reports and the City of Emeryville Finance Department.
The City weathered the COVID-19 Pandemic without making draws on its reserve for economic uncertainties, without laying off any City staff, and without making any material reductions to primary programs and services for the community.
Investment Policy. The investment of funds of the City (except pension and retirement funds) is made in accordance with the City’s Investment Policy, most recently approved on June 8, 2022 (the “Investment Policy”), and Section 53601 et seq. of the California Government Code. The Investment Policy is subject to revision at any time and is reviewed at least annually to ensure compliance with the stated objectives of safety, liquidity, yield, and current laws and financial trends. All amounts held under the Indenture are invested at the direction of the City in Permitted Investments, as defined in the Indenture, and are subject to certain limitations contained therein.
Debt Management Policy. In accordance with Section 8855(i) of the California Government Code the City adopted a debt management policy in September of 2017, to establish conditions for the use of debt; to ensure that debt capacity and affordability are adequately considered; to minimize the City’s Appendix C
interest and issuance costs; to maintain the highest possible credit rating; to provide complete financial disclosure and reporting; and to maintain financial flexibility for the City.
Five-Year Capital Improvement Program. The City has historically adopted a five-year Capital Improvement Program (“CIP”), which is then updated along with each two-year budget adoption. The current CIP was adopted in 2019. Given the impacts of the pandemic on City revenues, the CIP project list has not been updated since adoption.
Pension Funding Policy. On __________, the City Council adopted a pension funding policy. The pension funding policy documents the method the City will use to determine its actuarially determined contributions to fund the long-term cost of benefits to the plan participants and annuitants.
The City established a Section 115 Trust Fund to accumulate funds that can only be used towards future pension costs in addition to paying the required CalPERS annual pension payments. For FY 2022- 23 the City has budgeted $300,000 from interest earnings in the Trust. The Section 115 Trust Fund is projected to have a balance of $14.0 million at the end of FY 2022-23. [ADDITIONAL DETAIL TO COME.]
Primary Sources of General Fund Revenues
The City relies on several sources to balance its General Fund budget. The City’s largest General Fund revenue source are business license taxes and cardroom taxes, which together typically account for 19% of the City’s General Fund revenues. The second largest General Fund revenue source is property taxes, which typically account for approximately 18% of the City’s General Fund revenues. Sales and use taxes and transient occupancy taxes are the General Fund’s third and fourth largest revenue sources, typically combining for approximately 17% and 11% of the City’s General Fund Revenues, respectively.
Together these four primary sources of General Fund revenues have constituted approximately 67% of the City’s General Fund revenues in recent years.
While many the City’s primary general fund revenue streams including business license taxes, cardroom taxes, sales and use taxes, and transient occupancy taxes were negatively affected by the COVID19 Pandemic, particularly during the City’s 2020-21 fiscal year, they have begun to recover from COVID19 Pandemic-lows.
The table below shows the City’s primary sources of General Fund revenue sources for the four most recent fiscal years and budgeted projections for Fiscal Year 2022-23. Fiscal year 2022-23 data is sourced from City’s General Fund Budget for Fiscal Year 2022-23, as most recently updated on December 31, 2022.
Appendix C
Following the table is a brief discussion of each of the City’s primary sources of General Fund revenues.
Table C4
CITY OF EMERYVILLE
PRIMARY SOURCES OF GENERAL FUND REVENUES
Fiscal Year Ending June 30,
2019 2020 2021 2022 2023
Audited Audited Audited Audited Budgeted (1)
Business License Taxes(1) $ 9,567,421 $ 8,658,838 $ 6,522,370 $ 9,137,993 $ 9,040,000 Sales and Use Taxes (2) 8,653,789 7,219,188 7,577,960 8,646,814 7,606,059 Property Taxes (3) 6,545,887 8,952,000 8,557,303 9,366,214 8,741,217 Transient Occupancy Taxes 8,687,505 6,027,857 2,278,249 4,500,562 4,300,000 Total Primary Sources 33,454,602 30,857,883 24,935,882 31,561,585 29,687,279 All Other General Fund Revenues 13,996,878 12,732,788 13,735,150 17,934,783 15,744,223 Total General Fund Revenues $47,451,480 $43,590,671 $38,671,032 $49,586,367 $45,231,499 Source: City of Emeryville FY2018-19 through 2021-22 Annual Comprehensive Financial Reports and the City of Emeryville’s FY 2022-23 Budget, adopted June 7, 2022.
Note: FY2022-23 data is from the City’s FY2022-23 Budget, as most recently updated on December 31, 2022. (1) Business License Taxes amounts include Cardroom Taxes. (2) General Fund sales and use taxes revenues do not include revenues from Measure F, a special sales tax approved by the voters of the City in March 2020. For additional discussion, see “Sales Taxes.” (3) On November 8, 2022, the voters of the City approved Measure O, an increase to the City’s existing real property transfer tax. For additional discussion of Measure O, see “Property Taxes.” Business License Taxes. The City’s business license taxes revenues consist of collections a tax on gross receipts derived from business activities within the City. The tax rate for most businesses is 0.10% (.0010) per calendar year on the gross receipts earned during the prior year. The City also collects a tax on cardrooms within the City equal to 10% of gross receipts or $1,000 per table, whichever is greater. Business License Taxes (together with cardroom taxes) are the City’s largest source of General Fund revenues. In Fiscal Year 2019-20, business license taxes (together with cardroom taxes) generated approximately $8.7 million. In Fiscal Year 2020-21 business license taxes (together with cardroom taxes) generated approximately $6.5 million. Business license taxes(together with cardroom taxes) generated approximately $9.1 million in revenues in Fiscal Year 2021-22 and the City has budgeted for $9.0 million in business license tax (together with cardroom tax) revenue in Fiscal Year 2022-23. While the City’s business license taxes and cardroom taxes were affected by reduced business and commercial activities taking place in the City during the COVID-19 Pandemic, the City expects business license tax collections and cardroom taxes to increase to historical norms as the effects of the COVID-19 Pandemic subside.
Property Taxes. Property taxes are the General Fund’s second largest revenue source. The County levies a tax of 1% on the assessed valuation of property within the County. The City receives a share of this 1% levy on the assessed value of property located within the City limits. In Fiscal Year 2019-20, property taxes generated approximately $9.0 million (including property taxes in-lieu of vehicle license fees). In Fiscal Year 2020-21 property taxes (including property taxes in-lieu of vehicle license fees) generated approximately $8.6 million. Property tax revenues (including property taxes in-lieu of vehicle license fees) generated approximately $9.4 million in Fiscal Year 2021-22 and the City has budgeted for $8.7 million in property tax revenues (including property taxes in-lieu of vehicle license fees) for Fiscal Year 2022-23. The City’s General Fund property tax revenues have been largely unaffected by the COVID-19 Pandemic. See “Property Taxes” below for additional information relating to the property taxes and the assessed valuation of property located in the City.
Appendix C
Sales and Use Taxes. Sales and use taxes are third largest revenue source. In Fiscal Year 2019-20, sales and use taxes generated approximately $7.2 million in general fund revenues and in Fiscal Year 2020- 21, sales and use taxes generated approximately $7.6 million in general fund revenues. Sales and use tax revenues generated approximately $8.6 million in Fiscal Year 2021-22 and the City has budgeted for $7.6 million of sales and use tax revenues in Fiscal Year 2022-23.
Transient Occupancy Taxes. Transient occupancy taxes are the fourth largest revenue source.
Transient guests in the City’s hotels are charged a tax of 12% of the rent paid to the hotel operator. Persons are considered to be transients during the first thirty consecutive days of occupancy. Transient occupancy taxes are the City’s fourth largest source of General Fund revenues. In Fiscal Year 2019-20, transient occupancy taxes generated approximately $6.0 million. In Fiscal Year 2020-21 transient occupancy taxes generated approximately $2.3 million, a significant decline due primarily to the COVID-19 Pandemic.
Transient occupancy taxes generated approximately $4.5 million in Fiscal Year 2021-22 and the City has budgeted for $4.3 million of charges for services revenues for Fiscal Year 2022-23. The City’s transient occupancy tax collections were significantly affected by reduced travel activity taking place in the City during the COVID-19 Pandemic and the City does not expect transient occupancy tax revenues to return to pre-pandemic norms in the immediate future.
Business License Taxes
The City’s Business License Tax Ordinance was adopted in 1985 and has required that all businesses pay a tax on gross receipts derived from business activities that occur within the City. The tax rate for most businesses is 0.10% (.0010) per calendar year on the gross receipts earned during the prior year. The minimum tax rate is $25.00 per year. The City does not allow for deductions before calculating gross business receipts. All businesses are responsible for paying the tax based on their gross receipts before deductions are taken.
The penalty rate for late payment of taxes is 5% per month with a maximum rate of 25% of the taxable amount. The interest on delinquent accounts is 1.5% on the total outstanding balance (tax + penalty) with no cap. In addition to accruing penalties described above, any person carrying on any business without first obtaining a business license is subject to criminal prosecution.
The City also collects a business license tax on card rooms within the City equal to 10% of gross receipts or $1,000 per table, whichever is greater.
Sales and Use Taxes
A sales tax is imposed on the privilege of consuming personal property in the State. The State does not tax services. The tax rate is established by the State Legislature, and is presently 7.25%, statewide (of which 1% is paid to the City) (the “State Sales Tax”). In addition, many of the State’s cities, counties, districts and communities have special taxing jurisdiction to impose a transaction (sales) or use tax. These so-called district taxes increase the tax rate in a particular area by adding the local option tax to the statewide tax. While more than one district tax may be in effect for a particular location, counties, municipalities, and districts are allowed to increase the sales tax in specific jurisdictions up to a total of 10.25%, unless the State grants a variance.
Appendix C
The following table shows a breakdown of the composition of the current sales and use tax rate applicable to transactions in the City:
Table C5
CITY OF EMERYVILLE
CURRENT SALES AND USE TAX RATES
Component Tax Rate
State General Fund 7.25%
Alameda County Special Taxes 3.00
Measure F 0.25
Total 10.50%
Source: City of Emeryville
Measure F. In March of 2020 over 74% of the voters of the City voting in the election approved 0.25% special sales and use tax measure that can only be used to support a limited list of City expenditures including police, fire, and childcare services. Measure F sales and use taxes are collected in a separate fund and are not available to the City’s General Fund except for the purposes explicitly authorized by Measure F. Since the beginning of Measure F collections, the revenues generated by Measure F have been used to support the Emeryville Child Development Center, which is an authorized use under the ballot measure.
The State’s Department of Tax and Fee Administration actual administrative costs with respect to the portion of sales taxes allocable to the City are deducted before distribution and are determined on a quarterly basis.
Many categories of transactions are exempt for the State Sales Tax. The most important of these exemptions are the sales of food products for home consumption, prescription medicine, edible livestock and their feed, seed and fertilizer used in raising food for human consumption, and gas and electricity and water when delivered to consumers through mains, lines and pipes. In addition, occasional sales (i.e., sales of property not held or used by a seller during activities for which he or she is required to hold a seller’s permit) are generally exempt from both the State Sales Tax; however, the occasional sales exemption does not apply to the sale of an entire business and other sales of machinery and equipment used in a business.
Action by the State Legislature or by voter initiative could change the transactions and items upon which the State Sales Tax are imposed. Such changes or amendments could have either an adverse or beneficial effect on revenues produced by sales taxes. The City is not currently aware of any proposed legislative change that would have a material adverse effect on the State Sales Tax.
Property Taxes
Measure O. On November 8, 2022, over 70% of the voters in the City voting in the election on that date approved Measure O, an increase to the City’s existing real property transfer tax. Measure O increases the real property transfer tax from $12 per thousand to $15 per thousand for property sales between $1,000,000 and $2,000,000 and $25 per thousand for property sales above $2,000,000. Property sales below $1,000,000 remain taxed at $12 per thousand. Measure O is expected to increase the City’s General Fund property tax revenues by approximately $5,000,000 annually.
Appendix C
While the increased real property transfer taxes from Measure O will be available to the City’s General Fund for any lawful purpose, the City has adopted policies for the expenditure and reserve of Measure O collections. The City’s Measure O policies include establishing a critical needs fund with a target balance of $1 million for use one-time critical maintenance or service needs, contributing to the City’s Capital Improvement Program, and paying down unfunded liabilities such as OPEB and pension liabilities.
For additional discussion of property taxes, see “SECURITY FOR THE BONDS—Ad Valorem Taxes” in the front portion of this Official Statement.
Other Sources of General Fund Revenues
In addition, the City receives approximately 33% of its annual General Fund revenues from investment income, charges for services, rental income, and intergovernmental revenues.
The City does not rely on the State for a material amount of revenues.
OTHER FINANCIAL INFORMATION
Labor Relations
Currently 116 full-time City employees are covered by negotiated agreements as detailed in the table below. The City also employs part-time employees unrepresented by a collective bargaining unit.
Depending on the season, the City employs up to 130 part-time employees.
Table C6
CITY OF EMERYVILLE
NEGOTIATED EMPLOYEE AGREEMENTS
Contract
Bargaining Unit Expiration Date
Confidential, Administrative, Managerial and Professional Employees (CAMP) June 30, 2023 Emeryville Police Officers’ Association (EPOA) June 30, 2023 Service Employees International Union (SEIU) June 30, 2023 Source: City of Emeryville
Appendix C
Risk Management
Self-Insurance. The City is self-insured for workers’ compensation, general liability, dental, and unemployment claims. Workers’ compensation claims are self-insured up to $350,000 per occurrence.
General liability claims are self-insured up to $10,000. Dental claims are self-insured up to $1,500 per covered person per year, which is the benefit limit. Unemployment claims are fully self-insured by the City.
Risk Pools. The City participates in various insurance coverage pool or to obtain insurance coverage in excess of the City’s self-insured limits.
Bay Cities Joint Powers Insurance Authority (“BCJPIA”) covers general liability claims in an amount up to $1,000,000. The City has a deductible or uninsured liability of up to $10,000 per claim. Once the City’s deductible is met, BCJPIA becomes responsible for payment of all claims up to the $1,000,000 limit. In addition, the City, through the BCJPIA, has excess coverage with California Affiliated Risk Management Authorities (CARMA) for claims from $1,000,000 to $28,500,000.
The City also participates in the BCJPIA Workers’ Compensation Group. BCJPIA covers workers’ compensation claims in excess of $350,000 up to $1,000,000 (the City has a deductible or uninsured liability of up to $350,000 per claim). BCJPIA Workers’ Compensation Group participates in the Local Agency Workers’ Compensation Excess Insurance Joint Powers Authority (LAWCX). LAWCX covers workers’ compensation claims from $1,000,000 to the statutory limit.
Employment practices liability coverage is also obtained through participation in BCJPIA. The coverage is provided by the Employment Risk Management Authority (ERMA). ERMA provides coverage up to $1,000,000 per occurrence, for claims in excess of the City’s deductible of $50,000.
For additional information about the City’s Risk Management, see APPENDIX D—ANNUAL
COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2022, Note 12.
Employee Retirement Plans
The information set forth below regarding the California Public Employees’ Retirement System (“CalPERS”) program, other than the information provided by the City regarding its annual contributions thereto, has been obtained from publicly available sources which are believed to be reliable but are not guaranteed as to accuracy or completeness, and should not be construed as a representation by either the City or the Underwriter.
Plan Description. All qualified permanent and probationary employees are eligible to participate in Management of Emeryville Services Authority’s Miscellaneous Plan, or the City of Emeryville’s Safety Police or Safety Fire Plans (the “Plans”), cost-sharing multiple-employer defined benefit pension plan administered by the California Public Employees’ Retirement System (“CalPERS”). Benefit provisions under the Plans are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. The Emeryville Police Officers’ Association (“EPOA”) Retirement Enhancement Plan is an agent multiple employer defined benefit pension plan administered by the Public Agency Retirement System (PARS). The EPOA Plan has been closed to new entrants since June 30, 2020.
Appendix C
Benefits Provided. The Plans provide service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. Plan members are provided one of the following death benefit: the Basic Death Benefit, the 1959 Survivor Benefit, or the Optional Settlement 2W Death Benefit.
The cost-of-living adjustments for each 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 the 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 CalPERS. 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 City’s combined contributions to its Miscellaneous, Safety, and EPOA Plans for the most recent is summarized in the following table.
Table C7
CITY OF EMERYVILLE
HISTORICAL PENSION CONTRIBUTIONS
Fiscal Year
Ending
June 30,
Miscellaneous
Plan
Safety
Plan
EPOA
Plan
Total
Combined
Contributions
2018 $ 730,186 $ 6,307,196 $ 151,248 $ 7,188,630
2019 1,124,374 2,658,885 151,057 3,934,316
2020 1,369,757 3,030,829 147,759 4,548,345
2021 1,334,665 3,508,756 136,068 4,979,489
2022 1,783,332 3,613,298 152,560 5,549,190
Source: City of Emeryville fiscal year 2021-22 Annual Comprehensive Financial Report.
Appendix C
Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions. FOR THE FISCAL YEAR ENDED JUNE 30, 2022, the City recognized pension expense of $1,984,265 and $1,893,366 for the safety and miscellaneous plans, respectively, and $32,007 for the EPOA plan. On June 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Table C8
CITY OF EMERYVILLE
DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
Fiscal Year 2021-22
Miscellaneous Safety EPOA
Deferred
Outflows
Deferred
Inflows
Deferred
Outflows
Deferred
Inflows
Deferred
Outflows
Deferred
Inflows
of Resources of Resources of Resources of Resources of Resources of Resources Contributions after measurement date $ 1,783,332 $ - $ 3,613,298 $ - $ - $ - Diff. btw. actual and expected experience 894,168 - 3,354,106 - 248,132 117,080 Changes in assumptions - - - - - -
Net diff. btw. projected and actual
earnings on investment
- 6,960,646 - 11,684,799 202,322 -
Differences in proportions 1,202,589 - 1,003,522 - - -
Changes in employer’s portion - 1,622,525 - 2,690,710 496,118 218,748 Total 3,880,089 8,583,171 7,970,926 14,375,509 496,118 218,748 Source: City of Emeryville fiscal year 2021-22 Annual Comprehensive Financial Report.
For information concerning the City’s pension obligations, including descriptions of the actuarial methods and assumptions, and an explanation of the discount rate used, please see APPENDIX D—
ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2022, Note 9.
Appendix C
Funded Status. The following table sets forth a historical summary of the net pension liability and funded ratios for the City’s retirement Plans for the most recent actuarial valuation dates.
Table C9
CITY OF EMERYVILLE
HISTORICAL PENSION FUNDING PROGRESS
Fiscal Year
Ended
June 30,
Net Pension
Liability
Funded
Ratio
Covered
Payroll
Miscellaneous
2018 $ 11,747,763 73.31% $ 8,122,643
2019 11,652,402 75.26 8,333,650
2020 13,584,578 75.26 8,614,042
2021 15,341,913 78.04 8,822,221
2022 7,973,731 90.49 10,436,301
Safety
2018 $ 32,032,873 73.31% $ 5,077,077
2019 28,178,105 75.26 5,396,885
2020 30,377,824 75.26 5,522,414
2021 33,118,423 73.36 5,390,900
2022 19,631,975 86.61 6,251,423
EPOA
2018 $ 344,239 77.61% $ 3,675,926
2019 456,591 75.12 3,786,204
2020 310,065 83.35 3,154,458
2021 281,242 88.14 3,135,581
2022 626,840 74.93 3,221,809
Source: City of Emeryville fiscal year 2021-22 Annual Comprehensive Financial Report.
CalPERS Amortization Period Reform. On February 13, 2018, the CalPERS Board voted to shorten the period over which actuarial gains and losses are amortized from 30 years to 20 years for new pension liabilities. The new 20-year amortization period began with new gains or losses accrued starting with the June 30, 2019, actuarial valuations. The first payments on the new 20-year amortization schedule took place in 2021.
A shorter amortization period will increase annual Unfunded Accrued Liability (“UAL”) contributions for cities that participate in CalPERS so long as CalPERS remains underfunded. The shortened amortization period will also lead to reductions of periods of negative amortization of the UAL, interest cost savings, and faster recoveries of funded status after market downturns.
Cities that participate in CalPERS will also see additional volatility in their future UAL contributions due to market performance as gains or losses will be amortized faster under the new amortization period.
The announcement on July 12, 2021 that CalPERS achieved an investment return of 21.3% for the period from July 1, 2020 through June 30, 2021 caused the CalPERS Board of Administration to lower Appendix C
CalPERS’ discount rate from 7.00% to 6.80% on December 15, 2021 in accordance with a risk mitigation policy that was adopted in 2015, which calls for the discount rate to be lowered if returns exceed the thencurrent discount rate by two or more percentage points.
The City cannot currently estimate the impact the shorter amortization period or lower discount rate will have on its required contributions for its Miscellaneous and Safety Plans. For information concerning the Plans, including descriptions of the actuarial methods and assumptions, please see APPENDIX D—ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2022, Note 9.
Other Post-Employment Benefits
Plan Description. The City has established a Retiree Healthcare Plan (the “OPEB Plan”), an agent multiple employer defined benefit retiree healthcare plan. The City has established a qualified OPEB trust with the California Government Voluntary Employee Beneficiary Association (VEBA) to perform postretirement medical reimbursement. Currently, the City funds retiree healthcare benefits on a pay-as-yougo basis and sets aside additional amounts in the trust as they become available.
Contributions. The HC Plan and its contribution requirements are established by Memoranda of Understanding with the applicable employee bargaining units and may be amended by agreements between the City and the bargaining units. The annual contribution is based on the actuarially determined contribution. For the 2021-22 fiscal year the City’s contributions were $388,037 in total payments which were recognized as a reduction to the OPEB liability.
Employees Covered. Membership of the OPEB Plan consisted of 132 active employees, 0 inactive members entitled to but not yet receiving benefits, and 100 retirees and beneficiaries receiving benefits on June 30, 2022.
Funding Policy. The City’s OPEB Plan is not funded. The City finances OPEB benefits on a pay-asyou-go basis.
Changes In Net OPEB Liability. The following table shows the changes in the City’s net obligation to the OPEB Plan in fiscal year 2021-22:
Table C10
CITY OF EMERYVILLE
CHANGE IN NET OPEB LIABILITY
Fiscal Year 2021-22
Service cost $ 484,899
Interest on OPEB liability 253,206
Dif. btw. actual and expected experience -
Changes in assumptions (27,318)
Employer contributions (455,517)
Net changes 255,270
Net OPEB obligation, beginning of the year 9,633,758
Net OPEB obligation, end of the year 9,889,028
Source: City of Emeryville fiscal year 2021-22 Annual Comprehensive Financial Report.
Appendix C
The following table shows a four-year history of the City’s outstanding OPEB Plan obligation.
Table C11
CITY OF EMERYVILLE
HISTORIC OPEB LIABILITY
Fiscal
Year Ending
June 30,
Total OPEB
Liability
Plan Net
Position
Net OPEB
Obligation
(UAAL)
2018 $ 6,890,105 $ 2,449,298 $ 4,440,807
2019 8,345,958 2,414,261 5,931,697
2020 9,100,401 2,383,980 6,716,421
2021 9,633,758 2,355,719 7,278,039
2022 9,889,028 2,309,014 7,580,014
Source: City of Emeryville fiscal year 2021-22 Annual Comprehensive Financial Report.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, investment returns, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the Plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future.
For information concerning the City’s OPEB obligations, including descriptions of the actuarial methods and assumptions, please see APPENDIX D—ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2022, Note 11.
Debt Obligations
The City’s only general fund support debt is represented by the Emeryville Public Financing Authority (the Authority) issued $4,390,300 in Lease Revenue Bonds, 2013 Series A (the “2013 Bonds”), with an effective interest rate of 3.02% per annum, sold through a private placement with an institutional investor. The proceeds of the 2013 Bonds were used to refund lease revenue bonds issued in 1998. The City’s annal lease payment obligations to pay the principal of and interest on the 2013 is approximately $378,000. The 2013 Bonds mature in 2028.
Appendix D
APPENDIX D
ANNUAL COMPREHENSIVE FINANCIAL REPORT
OF THE CITY FOR THE YEAR ENDED JUNE 30, 2022
Appendix E
APPENDIX E
PROPOSED FORM OF OPINION OF BOND COUNSEL
[Letterhead of Quint & Thimmig LLP]
[Closing Date]
City Council
City of Emeryville
1333 Park Avenue
Emeryville, California 94608
OPINION: $50,000,000* City of Emeryville (Alameda County, California) General Obligation Bonds, Election of 2018, Series 2023 (Housing Projects) (Federally Taxable) (Social Bonds) Members of the City Council:
We have acted as bond counsel to the City of Emeryville (the “City”) in connection with the issuance by the City of $50,000,000* principal amount of City of Emeryville (Alameda County, California) General Obligation Bonds, Election of 2018, Series 2023 (Housing Projects) (Federally Taxable) (Social Bonds) (the “Bonds”), pursuant to the provisions of Article 9, commencing with section 43600, of Chapter 4 of Division 4 of Title 4 of the California Government Code (the “Act”), and Resolution No. ____, adopted by the City Council of the City (the “Council”) on February 21, 2023 (the “Resolution”). We have examined the law and such certified proceedings and other papers as we deemed necessary to render this opinion.
As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Resolution and in the certified proceedings and certifications of public officials and others furnished to us, without undertaking to verify such facts by independent investigation.
Based upon our examination, we are of the opinion, as of the date hereof, that:
1. The City is duly created and validly existing as a municipal corporation and charted city with the power to issue the Bonds and to perform its obligations under the Resolution and the Bonds.
2. The Resolution has been duly adopted by the Council and creates a valid first lien on the funds pledged under the Resolution for the security of the Bonds.
3. The Bonds have been duly authorized, executed and delivered by the Council and are valid and binding general obligations of the City. The Council is required under the Act to levy an ad valorem property tax upon all taxable property in the City for the interest and redemption of all outstanding bonds of the City, including the Bonds.
The Bonds are payable from an ad valorem tax levied without limitation as to rate or amount.
4. Interest on the Bonds is includible in gross income for federal income tax purposes. * Preliminary, subject to change.
Appendix E
5. Interest on the Bonds is exempt from personal income taxation imposed by the State of California.
Ownership of the Bonds may result in other tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.
The rights of the owners of the Bonds and the enforceability of the Bonds and the Resolution may be subject to the bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’rights heretofore or hereafter enacted and also may be subject to the exercise of judicial discretion in accordance with general principles of equity.
Our opinion represents our legal judgment based upon such review of the law and the facts that we deem relevant to render our opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.
Respectfully submitted,
Appendix F
APPENDIX F
FORM OF CONTINUING DISCLOSURE CERTIFICATE
This CONTINUING DISCLOSURE CERTIFICATE (the “Disclosure Certificate”) is executed and delivered by the CITY OF EMERYVILLE (the “City”) in connection with the issuance by the City of its $50,000,000* City of Emeryville (Alameda County, California) General Obligation Bonds, Election of 2018, Series 2023 (Housing Projects) (Federally Taxable) (Social Bonds) (the “Bonds”). The Bonds are issued pursuant to the provisions of Article 9, commencing with section 43600, of Chapter 4 of Division 4 of Title 4 of the California Government Code (the “Act”), and Resolution No. ____, adopted by the City Council of the City (the “Council”) on February 21, 2023 (the “Resolution”). This Disclosure Certificate is being entered into by the City for the benefit of the owners and beneficial owners of the Bonds and to assist the Underwriter in complying with the Rule (defined below).
Section 1. Definitions. In addition to the definitions set forth above and in the Resolution which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 1, the following capitalized terms shall have the following meanings:
“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Annual Report Date” means the date that is nine months after the end of the City’s fiscal year (currently March 31 based on the City’s fiscal year end of June 30). “Dissemination Agent” shall mean, initially, ___________, or any successor Dissemination Agent designed in writing by the City, and which has been filed with the then current Dissemination Agent a written acceptance of such designation.
“Fiscal Year” means any twelve–month period beginning on July 1 in any year and extending to the next succeeding June 30, both dates inclusive, or any other twelve–month period selected and designated by the City as its official fiscal year period under a certificate of the City filed with the Trustee. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.
“Official Statement” means the final official statement executed by the City in connection with the issuance of the Bonds.
“Participating Underwriter” means, ____________, the original underwriter of the Bonds. “Rule” means Rule 15c2–12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time. “Significant Events” means any of the events listed in Section 5(a) of this Disclosure Certificate. * Preliminary, subject to change.
Appendix F
Section 2. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and to assist the Participating Underwriter in complying with S.E.C. Rule 15c2– 12(b)(5).
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing March 31, 2024, with the report for fiscal year 2022-23 provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Significant Event under Section 5(b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
(b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City in a timely manner shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A. (c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then–applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.
Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following:
(a) The City’s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) Unless otherwise provided in the audited financial statements filed on or prior to the annual filing deadline for Annual Reports provided for in Section 3 above, financial information and operating data with respect to the City for preceding fiscal year, as follows:
[TO BE DETERMINED]
(c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
Appendix F
(d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Significant Events with respect to the Bonds:
(i) Principal and interest payment delinquencies;
(ii) Non–payment related defaults, if material;
(iii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701–TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security;
(vii) Modifications to rights of security holders, if material; (viii) Bond calls, if material, and tender offers;
(ix) Defeasances;
(x) Release, substitution, or sale of property securing repayment of the securities, if material; (xi) Rating changes;
(xii) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person; (xiii) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an 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, if material; (xiv) Appointment of a successor or additional trustee or the change of name of a trustee, if material; (xv) The incurrence of a financial obligation of the City or other obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City or other obligated person, any of which affect security holders, if material; and (xvi) A default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City or other obligated person, any of which reflect financial difficulties.
Appendix F
(b) The City shall or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Significant Event. Notwithstanding the foregoing, notice of Significant Events described in subsection (a)(viii) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Resolution. (c) The City acknowledges that the events described in subparagraphs (a)(ii), (a)(vii), (a)(viii) (if the event is a bond call), (a)(x), (a)(xiii), (a)(xiv) and (a) (xv) of this Section 5 contain the qualifier “if material.” The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that the City determines the event’s occurrence is material for purposes of U.S. federal securities law. The City intends that the words used in paragraphs (xv) and (xvi) and the definition of “financial obligation” to have the meanings ascribed thereto in the Rule.
(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(xii) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City or an obligated person in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City or an obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City.
Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.
Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Significant Event under Section 5(b).
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4, 5(a), 5(b) or 5(c), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after considering any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Resolution for amendments to the Resolution with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating Appendix F
data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.
The Dissemination Agent shall not be obligated to enter into any amendment increasing or affecting its duties or obligations hereunder.
A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Significant Event under Section 5(b).
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Significant Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Significant Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Significant Event.
Section 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) Article VIII of the Resolution is hereby made applicable to this Disclosure Certificate as if this Disclosure Certificate were (solely for this purpose) contained in the Resolution. The Dissemination Agent shall be entitled to the protections and limitations from liability afforded to the Trustee thereunder. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond holders or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. (b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the Bonds and shall create no rights in any other person or entity.
Appendix F
Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.
Date: [Closing Date]
CITY OF EMERYVILLE
By
Authorized Officer
Appendix F
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Name of Obligor: City of Emeryville, California
Name of Issue: City of Emeryville (Alameda County, California) General Obligation Bonds, Election of 2018, Series 2023 (Housing Projects) (Federally Taxable) (Social Bonds) Date of Issuance: [Closing Date]
NOTICE IS HEREBY GIVEN that the Obligor has not provided an Annual Report with respect to the above-named Issue as required by the Continuing Disclosure Certificate, dated [Closing Date], furnished by the Obligor in connection with the Issue. The Obligor anticipates that the Annual Report will be filed by _________________.
Date: ________________
___________, as Dissemination Agent
By
Authorized Officer
cc: Paying Agent
Appendix G
APPENDIX G
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal of and interest on the Bonds to Direct Participants, Indirect Participants or Beneficial Owners (as such terms are defined below) of the Bonds, confirmation and transfer of beneficial ownership interests in the Bonds and other Bond related transactions by and between DTC, Direct Participants, Indirect Participants and Beneficial Owners of the Bonds is based solely on information furnished by DTC to the City which the City believes to be reliable, but the City and the Underwriter do not and cannot make any independent representations concerning these matters and do not take responsibility for the accuracy or completeness thereof. Neither the DTC, Direct Participants, Indirect Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters but should instead confirm the same with DTC or the DTC Participants, as the case may be.
The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Bond will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.
DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede &Co. or such other name as requested by an authorized representative of DTC. The deposit of the Bonds with DTC and their registration in the name of Cede & Co. or such other DTC Appendix G
nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct or Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as tenders, defaults, and proposed amendments to the Bonds documents. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Paying Agent and request that copies of notices be provided directly to them.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Payments of principal of and interest on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its service as depository with respect to the Bonds at any time by giving reasonable notice to the City or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.
The City may decide to discontinue use of the system of book-Entry Only transfers through DTC (or a successor securities depository). In that event, the Bond certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.
In the event that (a) DTC determines not to continue to act as securities depository for the Bonds, or (b) the City determines that DTC shall no longer act and delivers a written certificate to the Paying Agent to that effect, then the City will discontinue the Book-Entry System with DTC for the Bonds. If the City determines to replace DTC with another qualified securities depository, the City will prepare or direct the preparation of a new single separate, fully registered Bond for each maturity of the Bonds registered in the name of such successor or substitute securities depository as are not inconsistent with the terms of the Resolution. If the City fails to identify another qualified securities depository to replace the incumbent securities depository for the Bonds, then the Bonds shall no longer be restricted to being registered in the Bond registration books in the name of the incumbent securities depository or its nominee but shall be registered in whatever name or names the incumbent securities depository or its nominee transferring or exchanging the Bonds shall designate.
Appendix G
In the event that the Book-Entry System is discontinued, the following provisions would also apply: (i) the Bonds will be made available in physical form, (ii) payment of principal of and interest on the Bonds will be payable upon surrender thereof at the trust office of the Paying Agent identified in the Resolution, and (iii) the Bonds will be transferable and exchangeable as provided in the Resolution.
The City and the Paying Agent do not have any responsibility or obligation to DTC Participants, to the persons for whom they act as nominees, to Beneficial Owners, or to any other person who is not shown on the registration books as being an owner of the Bonds, with respect to (i) the accuracy of any records maintained by DTC or any DTC Participants; (ii) the payment by DTC or any DTC Participant of any amount in respect of the principal of and interest on the Bonds; (iii) the delivery of any notice which is permitted or required to be given to registered owners under the Resolution; (iv) any consent given or other action taken by DTC as registered owner; or (v) any other matter arising with respect to the Bonds or the Resolution.
The City and the Paying Agent cannot and do not give any assurances that DTC, DTC Participants or others will distribute payments of principal of and interest on the Bonds paid to DTC or its nominee, as the registered owner, or any notices to the Beneficial Owners or that they will do so on a timely basis or will serve and act in a manner described in this Official Statement.
The City and the Paying Agent are not responsible or liable for the failure of DTC or any DTC Participant to make any payment or give any notice to a Beneficial Owner in respect to the Bonds or any error or delay relating thereto.
Appendix H
APPENDIX H
SECOND PARTY OPINION