A. The Community Facilities District hereby acknowledges that the Underwriter is entering into this Purchase Agreement in reliance on the representations, warranties and agreements made by the Community Facilities District herein, and the Community Facilities District shall take all action necessary to enforce its rights hereunder for the benefit of the Underwriter and shall immediately notify the Underwriter if it becomes aware that any representation, warranty or agreement made by the Community Facilities District herein is incorrect in any material respect.
The Community Facilities District acknowledges and agrees that (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s -length commercial transaction between the Community Facilities District and the Underwriter, (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and is not acting as the agent or fiduciary of, or a municipal or financial advisor of, the Community Facilities District and has not assumed any advisory or fiduciary responsibility to the Community Facilities District with respect to the transaction co ntemplated hereby and the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided or is currently providing other services to the Community Facilities District on other matters ), (iv) the Underwriter h as financial interests that differ from those of the Community Facilities District, (v) the only obligations the Underwriter has to the Community Facilities District with respect to the transaction contemplated hereby are expressly set forth in this Purcha se Agreement, except as otherwise provided by applicable rules and regulations of the Securities and Exchange Commission or the rules of the MSRB (as defined below) or other law, and (v i) the Community Facilit ies District has consulted its own legal, finan cial, accounting, tax, and other advisors to the extent they have deemed appropriate in connection with this transaction. The Community Facilities District acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the Municipal Securities Rulemaking Board (“MSRB”). The Community Facilities District acknowledges and represents that it has engaged CSG Advisors Incorporated as its municipal advisor Attachment "4"
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3 (as defined in Securities and Exchange Commission Rule 15Ba1) and will rely solely on the financial advice of CSG Advisors Incorporated with respect to the Bonds.
B. Pursuant to the authorization of the Community Facilities District, the Underwriter has distributed copies of the Preliminary Official Statement dated [POS Date], relating to the Bonds, which, together with the cover page, inside cover page and appendices thereto is herein called the “Preliminary Official Statement.” By its acceptance of this Purchase Agreement, the Community Facilities District hereby ratifies the use by the Underwriter of the Preliminary Official Statement, and the Community Facilities District agrees to execute a final official statement relating to the Bonds (the “Official Statement”) which w ill consist of the Preliminary Official Statement with such changes as may be made thereto, with the approval of Stradling Yocca Carlson & Rauth, a Professional Corporation, Disclosure Counsel , as Bond Counsel (“Bond Counsel”), Stradling Yocca Carlson & Rauth, a Professional Corporation, as Disclosure Counsel (“Disclosure Counsel”), and the Underwriter, and to provide copies thereof to the Underwriter as set forth herein. The Community Facilities District hereby authorizes and requires the Underwriter to use and promptly distribute, in connection with the offer and sale of the Bonds, the Preliminary Official Statement, the Official Statement and any supplement or amendment thereto. The Community Fa cilities District further authorizes the Underwriter to use and distribute, in connection with the offer and sale of the Bonds, the Indenture, the Continuing Disclosure Certificate executed by the Community Facilities District in connection with the Bonds (the “Continuing Disclosure Certificate”), this Purchase Agreement and all information contained herein, and all other documents, certificates and statements furnished by or on behalf of the Community Facilities District to the Underwriter in connection wi th the transactions contemplated by this Purchase Agreement.
C. To assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2 -12(b)(5) (the “Rule”), the Community Facilities District will undertake pursuant to the Continuing Disclosure Certificate, in the form attached as an appendix to the Official Statement, to provide annual reports and notices of certain enumerated events. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set f orth in the Official Statement.
D. Except as the Underwriter and the Community Facilities District may otherwise agree, the Community Facilities District will deliver to the Underwriter, at the offices of Bond Counsel in Newport Beach, California, or at such other location as may be mutually agreed upon by the Underwriter and the Community Facilities District, the documents hereinafter mentioned; and the Community Facilities District will deliver to the Underwriter through the facilities of The Depository Trus t Company (“DTC”), the Bonds, in definitive form (all Bonds bearing CUSIP numbers), duly executed by the Community Facilities District and authenticated by the Trustee in the manner provided for in the Indenture and the Community Facilities District Act at 8:00 a.m. California time, on [Closing Date] (the “Closing Date”), and the Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in paragraph (A) of this Section by wire transfer, payable in federal or other immediatel y available funds (such delivery and payment being herein referred to as the “Closing”). The Bonds shall be in fully registered book -entry form (which may be typewritten) and shall be registered in the name of Cede & Co., as nominee of DTC.
Attachment "4"
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4 2. Representations, Warranties and Covenants of the Community Facilities District .
The Community Facilities District represents, warrants and covenants to the Underwriter on behalf of itself and the City that:
A. The City is duly organized and validly existing as a general law city under the Constitution and laws of the State of California and has duly authorized the formation of the Community Facilities District and the incurring of bo nded indebtedness thereby pursuant to resolutions duly adopted by the City Council ( collectively, the “Community Facilities District Formation Resolutions” and, together with the Community Facilities District Resolution of Issuance, the “Community Facilities District Resolutions”) and the Community Facilities District Act. The City Council, as the legislative body of the City and the Community Facilities District, has duly adopted the Community Facilities District Formation Resolution s and an ordinance of the City Council levying Special Taxes within the Community Facilities District (the “Ordin ance”), and has caused to be recorded in the real property records of the County of San Diego, a notice of special tax lien, and any required amendments thereof (collectively, the “Notice of Special Tax Lien” and, together with the Community Facilities Dis trict Formation Resolution s and the Ordinance, the “Formation Documents”), and has duly adopted the Community Facilities District Resolution of Issuance. Each of its Formation Documents remains in full force and effect as of the date hereof and has not been amended or rescinded. The Community Facilities District is duly organized and validly existing as a Community Facilities District under the laws of the State of California. The Community Facilities District has, and at the Closing Date will have, as t he case may be, full legal right, power and authority: (i) to execute, deliver and perform its obligations under this Purchase Agreement, the Continuing Disclosure Certificate and the Indenture, and to carry out all transactions contemplated by each of such agreements; (ii) to issue, sell and deliver the Bonds as provided herein; and (iii) to carry out, give effect to and consummate the transactions contemplated by the Formation Documents, the Indenture, the Bonds, the Continuing Disclosure Certificate , thi s Purchase Agreement, the Acquisition and Funding Agreement dated as of May 1, 2020 (the “Acquisition Agreement”), by and between the City and Lennar Homes of California, LLC, a California limited liability company (“Lennar”) (successor-by-conversion to, and formerly known as, Lennar Homes of California, Inc.), and the Official Statement.
This Purchase Agreement, the Indenture, the Bonds , the Continuing Disclosure Certificate , and the Acquisition Agreement are collectively referred to herein as the “Commu nity Facilities District Documents.”
B. The Community Facilities District and the City, as applicable, have each complied, and will at the Closing Date be in compliance in all material respects, with the Formation Documents and the Community Facilities District Documents, and any immaterial noncompliance by the Community Facilities District and the City, if any, will not impair the ability of the Community Facilities District and the City, as applicable, to carry out, give effect to or consummate the transactions contemplated by the foregoing. From and after the date of issuance of the Bonds, the Community Facilities District will continue to comply with the covenants of the Community Facilities District contained in the Community Facilities District Documents.
C. The information in the Preliminary Official Statement and in the Official Statement relating to the Community Facilities District and the Bonds (other than statements pertaining to the book-entry system, as to which no view is expressed), is true and cor rect in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they Attachment "4"
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5 were made, not misleading; and, upon delive ry and up to and including 25 days after the End of the Underwriting Period (as defined in paragraph (D) below), the Official Statement will be amended and supplemented so as to contain no misstatement of any material fact or omission of any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading.
D. Up to and including 25 days after the End of the Underwriting Period (as defined below), the Community Facilities District will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not affect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The Community Facilities District will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise materially affecting the use of the Official Statement in connection with the offer ing, sale or distribution of the Bonds. As used herein, the term “End of the Underwriting Period” means the later of such time as: (i) the Bonds are delivered to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an under writing syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the End of the Underwriting Period shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shal l be written notice delivered to the Community Facilities District at or prior to the Closing Date, and shall specify a date (other than the Closing Date) to be deemed the “End of the Underwriting Period.” E. Except as described in the Preliminary Official St atement, the Community Facilities District is not, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrume nt to which the Community Facilities District is a party or is otherwise subject or bound, and the performance of its obligations under the Community Facilities District Documents and compliance with the provisions of each thereof, or the performance of th e conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the Uni ted States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other inst rument to which the Community Facilities District is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the Community Facilities District of its obligations under the Community Facilities District Documents or the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement.
F. Except as may be required under the “blue sky” or other securities laws of any jurisdiction, all approvals, consents, authorizations, elections and orders of, or filings or registrations with, any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would mater ially adversely affect, the performance by the Community Facilities District of its obligations under the Community Facilities District Documents, and the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement, have been or will be obtained at the Closing Date and are or will be in full force and effect at the Closing Date.
Attachment "4"
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6 G. The Community Facilities District Documents conform as to form and tenor to the descriptions thereof contained in the Official Statement.
H. The Bonds are payable from the Net Taxes of the Community Facilities District, as set forth in the Indenture, the levy of which has been duly and validly authorized pursuant to the Community Facilities District Act and the Special Taxes within the Community Facilities District will be fixed and levied in an amount which, together with other available funds, is required for the payment of the principal of, and interest on, the Bonds when due and payable, all as provided in the Indenture. The Community Facilities District has covenanted to cause the Special Taxes to be levied and collected at the same time and in the same manner as ordinary ad valorem property taxes or in such other manner as the City Council shall determine.
I. The Indenture creates a valid pledge of, first lien upon and security interest in, the Net Taxes of the Community Facilities District , and in the moneys in the Special Tax Fund , including the Reserve Account therein (the “Reserve Account”) established pursuant to the Indenture, on the terms and conditions set forth in the Indenture.
J. Except as disclosed in the Preliminary Official Statement, there are, to the best of the Community Facilities District’s knowledge, no entities with outstanding assessment liens against any of the properties within the Community Facilities District or which are senior to or on a parity with the Special Taxes of the Community Facilities District referred to in paragraph (H) hereof.
K. The information contained in the Preliminary Official St atement and in the Official Statement (other than statements therein pertaining to the DTC and its book -entry system, as to which no view is expressed) is true and correct in all material respects and such information does not and shall not contain any unt rue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
L. The Preliminary Official Statement was deemed final by a d uly authorized officer of the Community Facilities District prior to its delivery to the Underwriter, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of the Rule. The Community Facilities District hereby covenants and agrees that, within seven (7) business days from the date hereof, or upon reasonable written notice from the Underwriter within sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter, the Community Facilities District shall cause a final printed form of the Official Statement to be delivered to the Underwriter in sufficient quantity to comply with paragraph (b)(4) of the Rule and Rules G-12, G-15, G-32 and G-36 of the MSRB.
M. At the time of acceptance hereof there is and as of the Closing there will be no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body (collectively and individually, an “Action”) pend ing (notice of which has been served on the City or the Community Facilities District) or to the best knowledge of the Community Facilities District or the City threatened, in which any such Action:
(i) in any way questions the existence of the Community Facilities District or the titles of the officers of the Community Facilities District to their respective offices; (ii) affects, contests or seeks to prohibit, restrain or enjoin the issuance or delivery of the Bonds or the payment or collection of Special Taxes or any amounts pledged or to be pledged to pay the principal of and interest on the Attachment "4"
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7 Bonds, or in any way contests or affects the validity of the Community Facilities District Documents or the consummation of the transactions on the part of the Commu nity Facilities District contemplated thereby; (iii) contests the exemption of interest on the Bonds from federal or State income taxation or contests the powers of the Community Facilities District which may result in any material adverse change relating to the financial condition of the Community Facilities District; or (iv) contests the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserts that the Preliminary Official S tatement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were ma de, not misleading; and as of the time of acceptance hereof there is and, as of the Closing Date, there will be no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence.
N. Any certificate signed on behalf of the Community Facilities District by any officer or employee of the Community Facilities District authorized to do so shall be deemed a representation and warranty by the Community Facilities District to the Underwriter on beh alf of itself and the Community Facilities District as to the statements made therein.
O. At or prior to the Closing , the Community Facilities District will have duly authorized, executed and delivered the Continuing Disclosure Certificate in substantially th e form attached as an appendix to the Official Statement. Based upon a review of its previous undertakings, and except as disclosed in the Preliminary Official Statement, the City and its related entities have not failed to comply in all material respects with any previous undertakings with regard to the Rule to provide annual reports or notices of enumerated events in the last five years. The Community Facilities District has not previously entered into any undertaking pursuant to the Rule.
P. The Community Facilities District will apply the proceeds of the Bonds in accordance with the Indenture and as described in the Preliminary Official Statement and Official Statement.
Q. Until such time as moneys have been set aside in an amount sufficient to pay all then outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity, plus unpaid interest thereon and premium, if any, to maturity or to the date of redemption if redeemed prior to maturity, the Community Facilities District will faithfully perform and abide by all of the covenants, undertakings and provisions contained in the Indenture.
R. Between the date of this Purchase Agreement and the date of Closing, the Community Facilities District wi ll not offer or issue any bonds, notes or other obligations for borrowed money not previously disclosed to the Underwriter.
S. The City, on behalf of the Community Facilities District , has adopted local debt policies in accordance with Section 8855(i) of the California Government Code.
The Community Facilities District hereby approves the preparation and distribution of the Official Statement, consisting of the Preliminary Official Statement with such changes as are noted thereon and as may be made thereto, with the approval of Bond Counsel, Disclosure Counsel and the Underwriter, from time to time prior to the Closing Date.
Attachment "4"
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8 The Community Facilities District hereby ratifies any prior use of and authorizes the future use by the Underwriter, in connection with the offering and sale of the Bonds, of the Preliminary Official Statement, the Official Statement, this Purchase Agreement and all information contained herein, and all other documents, certificates and written statements furnished by the Community Facilities District to the Underwriter in connection with the transactions contemplated by this Purchase Agreement.
The execution and delivery of this Purchase Agreement by the Community Facilities District shall constitute a representation by the Community Facil ities District to the Underwriter that the representations and warranties contained in this Section 2 with respect to the Community Facilities District are true as of the date hereof.
3. Conditions to the Obligations of the Underwriter . The obligation of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties on the part of the Community Facilities District contained herein, to the accuracy in all material respects of the statements of the officers and other officials of the Community Facilities District made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the Community Facilities District of their obligations to be performed hereunder at or prior to the Closing Date, and in reliance upon the representations and covenants of Lennar contained in the certificate(s) delivered as of the Closing Date, and to the following additional conditions:
A. At the Closing Date, the Community Facilities District Resolutions, the Community Facilities District Documents shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds and with the Bonds, and with the transactions contemplated thereby, and by this Purchase Agreement, all such actions as, in the opinion of Bond Counsel, shall be necessary and appropriate.
B. At the Closing Date, except as described in the Preliminary Official Statement, the City shall not be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, and the performance of the conditions precedent to be performed hereunder will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of eit her thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, in any manner whi ch would materially and adversely affect the performance of the conditions precedent to be performed by the City hereunder.
C. At the Closing Date, except as described in the Preliminary Official Statement, the Community Facilities District shall not be, in a ny respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative Attachment "4"
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9 decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a part y or is otherwise subject or bound, and the performance by the Community Facilities District of its obligations under the Bonds, the Community Facilities District Resolutions, the Indenture, and any other instruments contemplated by any of such documents, and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed hereunder, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the S tate of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contra ct, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the Community Facilities District of its obligations unde r the Indenture, the Bonds or the performance of the conditions precedent to be performed by the Community Facilities District hereunder.
D. The information contained in the Official Statement is, as of the Closing Date and as of the date of any supplement or amendment thereto pursuant hereto, true and correct in all material respects and does not, as of the Closing Date or as of the date of any supplement or amendment thereto, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
E. Between the date hereof and the Closing Date, the market price or marketability, at the initial offering prices set forth on the cover page of the Official Statement, of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds, shall not have been materially adversely affected, in the reasonable judgment of the Underwriter (e videnced by a written notice to the Community Facilities District terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following:
1. Legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration, or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United St ates of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department of the United States of America or the Internal Revenue Service, with the purpo se or effect, directly or indirectly, of imposing federal income taxation upon such interest as would be received by any owners of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof;
2. Legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on b ehalf of the Securities and Exchange Commission (“SEC”), or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Indenture is not exempt Attachment "4"
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10 from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws as amended and then in effect;
3. A general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the SEC or any other governmental authority having jurisdiction;
4. The introduction, proposal or enactment of any amendment to the federal or Ca lifornia Constitution or any action by any federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the Community Facilities District, its property, income, securities (or interest t hereon), the validity or enforceability of Special Taxes , or the ability of the Community Facilities District to construct or acquire the improvements as contemplated by the Formation Documents, the Community Facilities District Documents or the Official Statement or the right of any owner of the property within the Community Facilities District to develop such property in the manner described in the Official Statement , or the ability of the Community Facilities District to issue the Bonds as contemplated by the Indenture and the Official Statement;
5. Any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Preliminary Official Statement or in the Official Statement, or has the effect that the Preliminary Official Statement or the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therei n or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
6. Any national securities exchange, the Comptroller of the Currency, or any other governmental authority, shall impose as to the Bond s, or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter;
7. There shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war, (2) any other calamity or crisis in the financial markets of the United States or elsewhere, or (3) the sovereign debt rating of the United States is downgraded by any major credit rating agency or a payment default occurs on United States Treasury obligations;
8. Except as disclosed in or contemplated by the Official Statement, any material adverse change in the affair s of the City or Community Facilities District shall have occurred;
9. Any event or circumstance shall exist that either makes untrue or incorrect in any material respect any statement or information in the Official Statement (other than any statement provided by the Underwriter) or is not reflected in the Official Statement but should be reflected therein in order to make the statements therein, in the light of the circumstances under Attachment "4"
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11 which they were made, not misleading and, in either such event, the Commun ity Facilities District refuses to permit the Official Statement to be supplemented to supply such statement or information, or the effect of the Official Statement as so supplemented is to materially adversely affect the market price or marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds;
10. A general banking moratorium shall have been declared by federal or State authorities having jurisdiction and be in force;
11. A material disruption in securities settl ement, payment or clearance services affecting the Bonds shall have occurred;
12. Any new restriction on transactions in securities materially affecting the market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or a charge to the net capital requirements of, underwriters shall have been established by the New York Stock Exchange, the SEC, any other federal or State agency or the Congress of the United States, or by Executive Order;
13. A decision by a court of the United States shall be rendered, or a stop order, release, regulation or no -action letter by or on behalf of the SEC or any other governmental agency having jurisdiction of the subject matter shall have been issued or made, to the effect that th e issuance, offering or sale of the Securities, including the underlying obligations as contemplated by this Purchase Agreement or by the Official Statement, or any document relating to the issuance, offering or sale of the Securities, is or would be in vi olation of any provision of the federal securities laws at the Closing Date, including the Securities Act, the Exchange Act and the Trust Indenture Act;
14. Any proceeding shall have been commenced or be threatened in writing by the Securities and Exchange Com mission against the City or the Community Facilities District; or
15. The commencement of any Action.
F. At or prior to the Closing Date, the Underwriter shall have received a counterpart original or certified copy of the following documents, in each case satisfa ctory in form and substance to the Underwriter:
1. The Official Statement, executed on behalf of the Community Facilities District by an authorized officer;
2. The Indenture, duly executed and delivered by the Community Facilities District and the Trustee;
3. The C ommunity Facilities District Resolutions and the other Formation Documents, and the Community Facilities District Documents, together with a certificate dated as of the Closing Date of the City Clerk to the effect that the Community Facilities District Resolutions and the Ordinance are true, correct and complete copies of the ones duly adopted by the City Council;
Attachment "4"
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12 4. The Continuing Disclosure Certificate executed and delivered by the Community Facilities District and Special District Financing & Administration, LLC , as dissemination agent;
5. An unqualified approving opinion for the Bonds, dated the Closing Date and addressed to the Community Facilities District, of Bond Counsel, to the effect that the Bonds are the valid, legal and binding obligatio ns of the Community Facilities District and that the interest thereon is excluded from gross income for federal income tax purposes and exempt from personal income taxes of the State of California, in substantially the form included as an appendix to the Official Statement, together with a letter of Bond Counsel, dated the Closing Date and addressed to the Underwriter and the Trustee, to the effect that such opinion addressed to the Community Facilities District may be relied upon by the Underwriter and the Trustee to the same extent as if such opinion was addressed to it;
6. A supplemental opinion or opinions of Bond Counsel dated the Closing Date and addressed to the Underwriter to the effect that:
(i) this Purchase Agreement and the Continuing Disclosure Certificate have been duly executed and delivered by the Community Facilities District and, assuming due authorization, execution and delivery by the other parties thereto, constitute the valid and binding obligations of the Community Fa cilities District, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting creditors’ rights generally or by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by limitations on legal remedies against public agencies in the State;
(ii) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended;
(iii) the statements contained in the Official Statement under the captions “INTRODUCTION – Source of Payment for the Bonds,” “INTRODUCTION – Description of the Bonds,” “INTRODUCTION – Tax Exemption ,” “INTRODUCTION – Parity Bonds for Refunding Purposes Only,” “THE BONDS,” “SOURCES OF PAYMENT FOR THE BONDS,” (except information under the caption s “– Special Taxes” as to which no opinion is expressed), “TAX EXEMPTION,” Appendix C – “FORM OF OPINION OF BOND COUNSEL ” and Appendix E - “SUMMARY OF THE INDENTURE,” excluding any material that may be treated as included under such captions by cross -reference or reference to other documents or sources, insofar as such statements expressly summarize certain provisions of the Indenture and Bond Counsel’s final approving opinion, are accurate in all material respects.
7. A letter, dated the Closing Date and addressed to the Underwriter, of Disclosure Counsel, to the effect that such counsel is not passing upon and has not underta ken to determine independently or to verify the accuracy or completeness of the statements contained in the Preliminary Official Statement or in the Official Statement, and is, therefore, unable to make any representation to the Underwriter in that regard, but on the basis of its participation in conferences with representatives of the City, the City Attorney , as issuer’s counsel (“Issuer’s Counsel”) , Bond Counsel, the appraisal of the taxable properties within the Community Facilities District, dated [Appraisal Date] (the “Appraisal Report”), prepared by Kitty Siino & Associates, Inc. (the Attachment "4"
198
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13 “Appraiser”), Empire Economics, Inc, Special District Financing & Administration, LLC (the “Special Tax Consultant ”), CSG Advisors Incorporated, representatives of t he Underwriter and others, during which conferences the content of the Preliminary Official Statement and the Official Statement and related matters were discussed, and its examination of certain documents, and, in reliance thereon and based on the informa tion made available to it in its role as Disclosure Counsel and its understanding of applicable law, Disclosure Counsel advises the Underwriter as a matter of fact, but not opinion, that no information has come to the attention of the attorneys in the firm working on such matter which has led them to believe that the Preliminary Official Statement as of its date and the date hereof and the Official Statement as of its date and as of the Closing Date (in each case excluding therefrom the financial and statistical data, forecasts, charts, numbers, estimates, projections, assumptions and expressions of opinion included in the Preliminary Official Statement and the Official Statement, information regarding DTC and its book entry system and the information set forth in Appendices A, B, C, D, E, F, and G, as to all of which no opinion is expressed) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
8. A certificate dated the Closing Date and signed by an authorized representative of the Community Facilities District or an authorized designee, on behalf of the Community Facilities District to the effect that: (i) the representations and warranties made by the Community Facilities District contained herein are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best knowledge of such officer, no event has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; (iii) the Community Facilities District has complied with all the agreements and satisfied all the conditions on its part to be satisfied under this Purchase Agreement, the Comm unity Facilities District Resolutions, the Community Facilities District Documents and the Official Statement at or prior to the Closing Date; and (iv) all information in the Official Statement relating to the Community Facilities District (other than info rmation therein provided by the Special Tax Consultant) is true and correct in all material respects as of the date of the Official Statement and as of the Closing Date;
9. An opinion of the Issuer’s Counsel dated the date of Closing and addressed to the Unde rwriter, the Trustee and the City, substantially in the form attached hereto as Exhibit D;
10. A certificate dated the Closing Date from the Appraiser addressed to the Community Facilities District and the Underwriter substantially to the effect that (i) the assumptions made in the Appraisal Report are reasonable; the Appraisal Report fairly and accurately described, as of the stated date of value, the market values of the properties in the Community Facilities District that are subject to the Special Taxes, (ii) the Appraiser is not aware of any event or act which occurred since the date of the Appraisal Report which, in its opinion, would materially and adversely affect the conclusions as to the market value of the appraised property in the Community Facilities District, (iii) the Appraiser consents to the reproduction of the Appraisal Report as an appendix to the Preliminary Official Statement and the final Official Statement, each with respect to the Bonds, and to the references to the Appraiser and the Appra isal Report made in the Preliminary Official Statement and the Official Statement, (iv) the Appraisal Report complies with the Appraisal Standards for Land -Secured Financings issued by the California Debt and Investment Advisory Attachment "4"
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14 Commission dated July, 2004 , (v) a true and correct copy of the Appraisal Report is attached as an appendix to the Preliminary Official Statement and the Official Statement ; and (vi) neither the Appraisal Report nor the information in the Preliminary Official Statement or the Official Statement referring to it contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
11. A certificate dated the Closing Date from the Special Tax Consultant addressed to the Community Facilities District and the Underwriter to the effect that: (i) the Special Tax, if levied and collected in the maximum amounts permitted pursuant to the Rate and Method of Apportionment of Special Taxes of the Community Facilities District, as of the Closing Date, would generate at least 110% of the annual debt service payable with respect to the related issue of Bonds plus the Administrative Expenses Cap, based on such assu mptions and qualifications as shall be acceptable to the Underwriter; (ii) the statements in the Preliminary Official Statement and the Official Statement provided by the Special Tax Consultant concerning Special Taxes in the Community Facilities District and all information supplied by it for use in the Official Statement were as of the date of the Preliminary Official Statement, the date of the Official Statement and are as of the Closing Date true and correct, and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading ; (iii) all information supplied by the Special Tax Consultant to the Appraiser is tr ue and correct as of the date of the Preliminary Official Statement and the date of the Official Statement and as of the Closing Date, based on such assumptions as may have been supplied by it; (iv) the information contained in the Appraisal Report with respect to taxes and tax rates applicable, and projected to be applicable, to the property in the Community Facilities District is consistent with such information provided by the Special Tax Consultant to the Appraiser, which information so provided was bas ed on information obtained by the Special Tax Consultant from the Community Facilities District , the Developer and the City; and (v) the Special Tax Consultant is duly authorized to execute and deliver the Continuing Disclosure Certificate in its capacity as dissemination agent thereunder, and the Special Tax Consultant has duly executed and delivered the Continuing Disclosure Certificate;
12. Certified copies of the general resolution of the Trustee authorizing the execution and delivery of certain documents b y certain officers of the Trustee, which resolution authorizes the execution of the Indenture and the authentication of the Bonds;
13. A certificate of the Trustee, addressed to the Underwriter, and the Community Facilities District dated the Closing Date, to the effect that: (i) the Trustee is authorized to carry out corporate trust powers, and has full power and authority to perform its duties under the Indenture; (ii) the Trustee is duly authorized to execute and deliver the Indenture, to accept the obligations created by the Indenture and to authenticate the Bonds pursuant to the terms of the Indenture; (iii) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the authentication of the Bonds or the consummation by the Trustee of the other transactions contemplated to be performed by the Trustee in connection with the authentication of the Bonds and the acceptance and performance of the obligations created by the Indenture; and (iv) to the best of its knowledge, compliance with the terms of the Indenture will not conflict with, or result in a violation or breach of, or constitute a default under, any material agreement or materi al instrument to which the Trustee is a party or by which it is bound, or any law or any rule, regulation, order or decree of Attachment "4"
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15 any court or governmental agency or body having jurisdiction over the Trustee or any of its activities or properties;
14. An opinion o f counsel to the Trustee dated the Closing Date, addressed to the Underwriter, and the Community Facilities District to the effect that (i) the Trustee is a national banking association duly organized and validly existing under the laws of the jurisdiction of its organization and has the corporate power to execute and deliver the Indenture, and any other documentation relating to the Indenture, (ii) the execution and delivery by the Trustee of the Indenture and any other documentation relating to the Indent ure, and its performance of its obligations under the Indenture, have been and are as of the date hereof duly authorized by all necessary corporate action, (i ii) the Indenture has been duly execut ed and delivered and constitute s the valid and legally bindi ng obligation of the Trustee enforceable against it in accordance with its terms except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights ge nerally and by general principles of equity (regardless of whether enforcement is sought as a proceeding in equity or at law), and (iv) the Bonds have been duly authenticated and delivered by the Trustee;
15. A certificate of the Community Facilities District dated the Closing Date, in a form acceptable to Bond Counsel and the Underwriter, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended;
16. A negative assurance letter of counsel to Lennar, dated the date of the Closing, in form and substance acceptable to the Underwriter and Bond Counsel;
17. A Letter of Representations from Lennar dated the date of printing the Preliminary Official Statement, substantially in the form attached hereto as Exhibit B;
18. A Closing Certificate from Lennar dated the Closing Date , substantially in the form attached hereto as Exhibit C or as such Closing Certificate may be modified with the approval of the Underwriter and Disclosure Counsel;
19. A certificate dated th e Closing Date from Empire Economics, Inc. addressed to the Community Facilities District and the Underwriter to the effect that the statements in the Official Statement provided by Empire Economics, Inc. and all information supplied by it for use in the Official Statement were as of the date of the Official Statement and are as of the Closing Date true and correct, and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
20. An opinion of Jones Hall, A Professional Law Corporation, counsel to the Underwriter, dated the date of Closing and addressed to the Underwriter in form and substance acceptable to the Underwriter;
21. A certificate of CSG Advisors Incorporated, the City’s municipal advisor (the “Municipal Advisor”) to the effect that the Municipal Advisor has participated in the preparation of the Preliminary Official Statement and the Official Statement and nothing has come to the attention of the Municipal Advisor which would lead it to believe that the Preliminary Official Statement or the Official Statement contain any untrue statement of a material fact or omits to state a Attachment "4"
201
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16 fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; and
22. Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and ac curacy, as of the date hereof and as of the Closing Date, of the material representations and warranties of the Community Facilities District contained herein, and of the statements and information contained in the Official Statement and the due performanc e or satisfaction by the Community Facilities District at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the Community Facilities District in connection with the transactions contemplated hereby and by the Indenture and the Official Statement.
If the Community Facilities District shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Community Facilities District nor the Underwriter shall be under any further obligation hereunder, except that the respective obligations of the Underwriter and the Community Facilities District set forth in Section 5 hereof shall continue in full force and effect.
4. Establishment of Issue Price.
A. The Underwriter agrees to assist the Community Facilities District in establishing the issue price of the Bonds and shall execute and deliver to the Community Facilities District at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit E, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Community Facilities District an d Bond Counsel (as defined herein), to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.
All actions to be taken by the Community Facilities District under this section to esta blish the issue price of the Bonds may be taken on behalf of the Community Facilities District by the Municipal Advisor and any notice or report to be provided to the Community Facilities District may be provided to the Community Facilities District’s Municipal Advisor.
B. Except as otherwise set forth in Exhibit A attached hereto, the Community Facilities District will treat the first price at which 10% of each maturity of the Bonds (the “ 10% test”) is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the Community Facilities District the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satis fied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Community Facilities District the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date (as defined herein) has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public , provided that the Underwriter’s reporting obligation after the date of the Closing may be at reasonable periodic intervals or otherwise upon request of the Community Facilities District or Bond Counsel. For purposes of this Section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds . For clarity, and notwithstanding any other condition to Attachment "4"
202
Item4.
17 Closing set forth in this Purchase Agreement, the sale of 10% of each maturity of the Bonds to the public prior to the Closing Date shall not be a condition to Closing.
C. The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “ initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the 10% test has not been satisfied and for which the Community Facilities District and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Community Facilities District to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
(1) the close of the fifth (5th) business day after the sale date; or
(2) the dat e on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
The Underwriter will advise the Community Facilities District promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
D. The Underwriter confirms that:
(1) any selling group agreem ent and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable:
(a)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that the reporting obligation after the date of the Closing may be at rea sonable periodic intervals or otherwise upon request of the Underwriter, and ( ii) to comply with the hold -the-offering-price rule, if applicable, in each case if and for so long as directed by the Underwriter, (b) to promptly notify the Underwriter of an y sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and
Attachment "4"
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18 (c) to acknowledge that, unless otherwi se advised by the dealer or broker - dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(2) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third -party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third -party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that the reporting obligation after the date of the Closing may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold -the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires.
E. The Community Faci lities District acknowledges that, in making the representations set forth in this subsection, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the- offering-price rule, if applicable to the Bonds , as set fort h in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker -dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires. The Community Facilities District further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker -dealer that is a party to a third-party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule if applicable to the Bonds.
F. The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section.
Further, for purposes of this section:
(1) “public” means any person other than an underwriter or a related party;
(2) “underwriter” means (A) any person that agrees pursuant to a written contract with the Community Facilities District (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to Attachment "4"
204
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19 the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public); (3) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporati ons (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct owner ship of the applicable stock or interests by one entity of the other); and
(4) “sale date” means the date of execution of this Purchase Agreement by all parties.
5. Expenses. Whether or not the Bonds are delivered to the Underwriter as set forth herein:
A. The Underwriter shall be under no obligation to pay, and the Community Facilities District shall pay or cause to be paid (out of any legally available funds of the Community Facilities District) all expenses incident to the performance of the Community Facilities District’s obligations hereunder, including, but not limited to, the cost of printing, engraving and delivering the Bonds to DTC, the cost of preparation, printing, distributing and delivering of the Indenture, the Preliminary Official Statement, the Official Statement, any amendment or supplement to the Preliminary Official Statement or the Official Statement and this Purchase Agreement, and all other agreements and documents contemplated hereby (and drafts of any thereof) in such reasonable quantities as requested by the Underwriter; and the fees and disbursements of the Trustee, Bond Counsel , Disclosure Counsel and any financial advisors, special tax consultants, appraisers, accountants, engineers or any other e xperts or consultants the City or the Community Facilities District may have retained in connection with the Bonds; and
B. The Community Facilities District shall be under no obligation to pay, and the Underwriter shall pay, any fees of the California Debt and Investment Advisory Commission, the cost of preparation of any “blue sky” or legal investment memoranda and this Purchase Agreement; expenses to qualify the Bonds for sale under any “blue sky” or other state securities laws; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds (except those specifically enumerated in paragraph (a) of this section), including the fees and disbursements of its counsel, meals, transportation and lodging (but not entertainment expenses), and any advertising expenses in connection with the public offering of the Bonds.
6. Notices. Any notice or other communication to be given to the Community Facilities District or the Community Facilities District under this Purchase Agreement may be given by delivering the same in writing to the City of Escondido, 201 North Broadway, Escondido, California 92025, Attention: City Manager; any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus & Attachment "4"
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20 Company, Incorporated , One Montgomery Street, 35th Floor, San Francisco, California 94104, Attention: Sara Brown.
7. Parties In Interest . This Purchase Agreement is made solely for the benefit of the Community Facili ties District and Underwriter (including any successors or assignees of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof.
8. Survival of Representations and Warranties . The representations and warranties of the Community Facilities District under this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing and regardless of any investigations made by or on behalf of the Underwriter (or state ments as to the results of such investigations) concerning such representations and statements of the Community Facilities District and regardless of delivery of and payment for the Bonds.
9. Execution in Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
10. Effective. This Purchase Agreement shall become eff ective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Community Facilities District and shall be valid and enforceable as of the time of such acceptance.
11. No Prior Agreements . This Purchase Agreement super sedes and replaces all prior negotiations, agreements and understanding among the parties hereto in relation to the sale of the Bonds by the Community Facilities District.
12. Governing Law. This Purchase Agreement shall be governed by the laws of the State of California.
Attachment "4"
206
Item4.
S-1
13. Effective Date. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Community Facilities District and shall be valid and enforceable as of the time of such acceptance.
Very truly yours,
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Its: Managing Director
The foregoing is hereby agreed to and
accepted as of the date first above written:
COMMUNITY FACILITIES DISTRICT NO. 2020-2
OF THE CITY OF ESCONDIDO (THE VILLAGES)
By:
Authorized Officer
Time of Execution: _____________ California time
Attachment "4"
207
Item4.
A-1
EXHIBIT A
COMMUNITY FACILITIES DISTRICT NO. 2020-2 OF THE
CITY OF ESCONDIDO (THE VILLAGES)
SPECIAL TAX BONDS, SERIES 2022
MATURITY SCHEDULE
Maturity
(September 1)
Principal
Amount
Interest
Rate Yield Price
10% Test
Satisfied*
10% Test
Not Satisfied
Subject to Hold-
The-Offering-
Price Rule
T: Term Bond.
C: Priced to optional redemption date of September 1, 20__, at %. * At the time of execution of this Purchase Agreement and assuming orders are confirmed immediately after the execution of this Purchase Agreement.
Attachment "4"
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Item4.
A-2
REDEMPTION PROVISIONS
Optional Redemption. The Bonds may be redeemed at the option of the District from any source of funds on any Interest Payment Date on or after September 1, 20 __, in whole or in part, from such maturities as are selected by the District and by lot within a maturity, at the fo llowing redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption:
Redemption Date Redemption Price
September 1, 20__ and March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment Date Thereafter 100
In the event that the District elects to redeem Bonds as provided above, the District will give written notice to the Trustee of its election to so redeem, the redemption date and the principal amount of the Bonds of each maturity to be redeemed. The notice to the Trustee will be given at least 30 but no more than 60 days prior to the redemption date, or by such later date as is accept able to the Trustee.
Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20 __ (the “20__ Term Bonds”) will be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account establ ished under the Indenture, on September 1, 2037, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption will be selected by the Trustee b y lot and will be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
Term Bonds Maturing September 1, 20__
Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
*
* Maturity.
The Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) will be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established under the Indenture, on September 1, 20 __, and on each September 1 thereafter prior to maturity, in accord ance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption will be selected by the Trustee by lot and will be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
Attachment "4"
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Item4.
A-3
Term Bonds Maturing September 1, 20__
Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
*
* Maturity.
If the District purchases Term Bonds during the Fiscal Year immediately preceding one of the sinking fund redemption dates specified above, the District will notify the Trustee at least 45 days prior to the redemption date as to the principal amount purchased, and the amount purchased will b e credited at the time of purchase to the next Sinking Fund Payment for the Term Bond so purchased, to the extent of the full principal amount of the purchase. All Term Bonds purchased will be cancelled pursuant to the Indenture.
In the event of a partial optional redemption or special mandatory redemption of the Term Bonds, each of the remaining Sinking Fund Payments for such Term Bonds will be reduced, as nearly as practicable, on a pro rata basis.
Special Mandatory Redemption from Special Tax Prepayment s. The Bonds are subject to special mandatory redemption as a whole or in part on a pro rata basis among maturities and by lot within a maturity, on any Interest Payment Date on or after September 1, 2022, and will be redeemed by the Trustee, from any amounts paid by the District to the Trustee and designated by the District as a prepayment of Special Taxes for one or more parcels in the District made in accordance with the Rate and Method (the “Prepayments”) deposited to the Redemption Account pursuant to the Indenture, plus amounts transferred from the Reserve Account pursuant to the Indenture, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:
Redemption Date Redemption Price
Any Interest Payment Date from September 1, 2022 through March 1, 20__
103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment Date thereafter 100
Attachment "4"
210
Item4.
B-1
EXHIBIT B
COMMUNITY FACILITIES DISTRICT NO. 2020-2 OF THE
CITY OF ESCONDIDO (THE VILLAGES)
SPECIAL TAX BONDS, SERIES 2022
LETTER OF REPRESENTATIONS OF
LENNAR HOMES OF CALIFORNIA, LLC
[POS Date]
Community Facilities District No. 2020-2
of the City of Escondido (The Villages)
201 North Broadway
Escondido, California 92025
Stifel, Nicolaus & Company, Incorporated
One Montgomery Street, 35th Floor
San Francisco, California 94104
Ladies and Gentlemen:
Reference is made to the Community Facilities District No. 2020 -2 of the City of Escondido (The Villages) Special Tax Bonds, Series 2022 (the “Bonds”) and to the Bond Purchase Agreement to be entered into in connection therewith (the “Bond Purchase Agreement”). This Letter of Representations of Lennar Homes of California, Inc. (the “Letter of Representations ”) is delivered pursuant to and in satisfaction of Section 3(F)(17) of the Bond Purchase Agreement. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Bond Purchase Agreement.
The undersigned certifies that h e or she is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized officer or representative of Lennar Homes of California, LLC, a California limited liability company (the “Developer”), successor-by- conversion to, and formerly known as, Lennar Homes of California, Inc ., and the undersigned, on behalf of the Developer, further certifies as follows:
1. The Developer is duly organized and validly existing under the laws of the State of California and has all requisite right, power and authority (i) to execute and deliver this Letter of Representations, and (ii) to develop its property in the Community Facilities District No. 2020 -2 of the City of Escondido (The Villages) (the “Community Facilities District”) as described in the Preliminary Official Statement.
2. As set forth in the Preliminary Official Statement, title to a certain portion of the property within the Community Facilities District is held in the name of the Developer (herein, the “Property”). The u ndersigned, on behalf of the Developer, makes the representations herein Attachment "4"
211
Item4.
B-2
with respect to all the Property. Except as otherwise described in the Preliminary Official Statement, the Developer’s current expectation is that the Developer shall remain the part y responsible for the construction and sale of homes within the Property. Except as disclosed in the Preliminary Official Statement, the Developer has not entered into an agreement for development or management of the Property by any other entity, except such subcontracts, consultant agreements and similar agreements for land development activities associated with the Developer’s development plan as are entered into in the ordinary course of business.
3. Except as set forth in the Preliminary Official Statem ent, no action, suit, proceeding, inquiry or investigation at law or in equity, before or by any court, regulatory agency, public board or body is pending against the Developer (with proper service of process to the Developer having been accomplished) or, to the Actual Knowledge of the Undersigned 1, is pending against any current Affiliate2 (with proper service of process to such Affiliate having been accomplished) or to the Actual Knowledge of the Undersigned is threatened in writing against the Developer or any such Affiliate (a) to restrain or enjoin the collection of special taxes levied on the Property by the Community Facilities District (the “ Special Taxes”) or other sums pledged or to be pledged to pay the principal of and interest on the Bonds (e.g., the reserve fund established under the Indenture (herein, the “ Reserve Account”)), (b) to restrain or enjoin the development of the Property as described in the Preliminary Official Statement, (c) in any way contesting or affecting the validit y of the Special Taxes, or ( d) which is reasonably likely to materially and adversely affect the Developer’s ability to develop and sell the Property as described in the Preliminary Official Statement or to pay the Special Taxes due with respect to the Property (to the extent the responsibility of the Developer) prior to delinquency.
4. As of the date of the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, the information contained therein solely with respect to the Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and
1 “Actual Knowledge of the Undersigned ” means , as of the date of this Letter of Representations , the knowledge that the individual signing on behalf of the Developer currently has or has obtain ed through (i) interviews with such current officers and responsible employees of the Developer and its Affiliates as the undersigned has determined are reasonably likely, in the ordinary course of their respective duties, to have knowledge of the matters set forth in this Letter of Representations, and/or (ii) review of documents that were reasonably available to the undersigned and which the undersigned has reasonably deemed necessary for the undersigned to obtain knowledge of the matters set forth in thi s Letter of Representations. The undersigned has not conducted any extraordinary inspection or inquiry other than such inspections or inquiries as are prudent and customary in connection w ith the ordinary course of the Developer’s current business and ope rations. Individuals who are no longer employees of the Developer and its Affiliates have not been contacted.
2 “Affiliate” means, with respect to the Developer, any other Person (i) who directly, or indirectly through one or more intermediaries, is currently controlling, controlled by or under common control with the Developer, and (ii) for whom information, including financial information or operating data, concerning such Person is material to potential investors in their evaluation of the Community Facilities District and investment decision regarding the Bonds (i.e., information relevant to (a) the Developer’s development plans with respect to the Property and ability to pay its Special Taxes on the Property (to the exten t the responsibility of th e Developer) prior to delinquency, or (b) such Person’s assets or funds that would materially affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay its Special Taxes on the Property (to the exte nt the responsibility of the Developer) prior to deliquency . “Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization or a government or politi cal subdivision thereof. For purposes hereof, the term “control” (including the terms “controlling,” “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Due to the merger, and for purposes hereof, the term Affiliate shall exclude CalAtlantic and its direct and indirect subsidiaries.
Attachment "4"
212
Item4.
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contractual arrangements of the Developer or any Affilia tes (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates) as set forth under the sections of the Preliminary Official Statement captioned “INTRODUCTION – General,” “THE DISTRICT – General Description of the District” ( but only as to the first four paragraphs thereof ),” “PROPERTY OWNERSHIP AND THE DEVELOPMENT” (but in all cases under all captions excluding therefrom (i) information regarding the Appraisal Report (as defined herein), mar ket value ratios and annual special tax ratios, and (ii) information which is identified as having been provided by a source other than the Developer), is true and correct in all material respects and did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
5. Except as described in the Preliminary Official Statement, there are no material loans outstanding and unpaid and no material lines of credit of the Developer or its Affiliates, that are secured by an interest in the Property. Neither the Developer nor, to the Actual Knowledge of the Undersigned, any of its Affiliates is currently in material default on a ny loans, lines of credit or other obligation related to the development of the Property or any other project which default is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes due with respect to the Property (to the extent the responsibility of the Developer) prior to delinquency.
6. To the Actual Knowledge of the Undersigned, other than as di sclosed in the Preliminary Official Statement, the Developer is not aware that any of the Property has a current liability with respect to the presence of a substance presently classified as hazardous under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 or applicable California law or is adversely affected by the presence of endangered or threatened species or habitat for endangered or threatened species.
7. The Developer covenants that, while the Bonds or any refundin g obligations related thereto are outstanding, the Developer and its Affiliates which it controls will not bring any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body, that in any way seeks to challenge or overturn the formation of the Community Facilities District, to challenge the adoption of the ordinance of the Community Facilities District levying Special Taxes within the Community Facilities District, to invalidate the Community Facilities District or any of the Bonds or any refunding bonds related thereto, or to invalidate the special tax liens imposed under Section 3115.5 of the Streets and Highways Code based on recordation of the notices of special tax lien relating the reto. The foregoing covenant shall not prevent the Developer in any way from bringing any other action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body including, without limitation, (a) an action or suit contending that the Special Tax has not been levied in accordance with the methodologies contained in the Rate and Method of Apportionment of Special Taxes pursuant to which Special Taxes are levied, (b) an action or suit with respec t to the application or use of the Special Taxes levied and collected , or (c) an action or suit to enforce the obligations of the City and/or the Community Facilities District under the Community Facilities District Resolutions, the Ordinance, the Indentur e, or any other agreements among the Developer, an Affiliate, the City and/or the Community Facilities District or to which the Developer or an Affiliate is a party or beneficiary.
Attachment "4"
213
Item4.
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8. The Developer consents to the issuance of the Bonds. The Developer acknowledges and agrees that the proceeds of the Bonds will be used as described in the Preliminary Official Statement.
9. The Developer intend s to comply with the provision of the Mello -Roos Community Facilities Act of 1982, as amended relating to the Notice of Special Tax described in Government Code Section 53341.5 in connection with the sale of the Property, or portions thereof.
10. To the Actual Knowledge of the Undersigned, the Developer is able to pay its bills as they become due and no legal proceedings are pend ing against the Developer (with proper service of process having been accomplished) or, to the Actual Knowledge of the Undersigned, threatened in writing in which the Developer may be adjudicated as bankrupt or discharged from any and all of its debts or o bligations, or granted an extension of time to pay its debts or obligations, or be allowed to reorganize or readjust its debts, or be subject to control or supervision of the Federal Deposit Insurance Corporation.
11. To the Actual Knowledge of the Undersigned , Affiliates of the Developer are able to pay their bills as they become due and no legal proceedings are pending against any Affiliate of the Developer (with proper service of process having been accomplished) or to the Actual Knowledge of the Undersigned , threatened in writing in which the Affiliates of the Developer may be adjudicated as bankrupt or discharged from any or all of their debts or obligations, or granted an extension of time to pay their debt or obligations, or be allowed to reorganize or readjust their debts or obligations, or be subject to control or supervision of the Federal Deposit Insurance Corporation which is reasonably likely to have a materially adverse impact on the ability of the Developer to develop the Property as described in t he Preliminary Official Statement, or to pay the Special Taxes or ad valorem tax obligations with respect to the portion of the Property then owned by the Developer (to the extent the responsibility of the Developer) prior to delinquency.
12. The Developer has been developing or ha s been involved in the development of numerous projects over an extended period of time. It is likely that the Developer and its Affiliates have been delinquent at one time or another in the payment of ad valorem property taxes, spec ial assessments or special taxes. However, to the Actual Knowledge of the Undersigned, during the last five years, neither the Developer nor any current Affiliate has, during the period of its ownership, been delinquent to any material extent in the paymen t of any ad valorem property tax, special assessment or special tax on property included within the boundaries of a community facilities district or an assessment district in Southern California that (a) caused a draw on a reserve fund relating to such ass essment district or community facilities district financing or (b) resulted in a foreclosure action being commenced against the delinquent Developer or such Affiliate in a court of law.
13. The Developer has not filed for the reassessment of the assessed value of any portions of the Property, other than in connection with the sale of homes to individual homebuyers.
14. To the Actual Knowledge of the Undersigned, there are no claims, disputes, suits, actions or contin gent liabilities by and among the Developer, its Affiliates or any contractors working on the development of the Property which is reasonably likely to materially and adversely affect the Developer’s development of the Property as described in the Prelimin ary Attachment "4"
214
Item4.
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Official Statement, or the payment of the Special Taxes due with respect to the Property (to the extent the responsibility of the Developer) prior to delinquency.
15. Based upon the current development plans, including, without limitation, the current budget and subject to economic conditions and risks generally inherent in the development of real property, including, but not limited to, the risks described in the Preliminary Official Statement under the section entitled “SPECIAL RISK FACTORS,” the Developer presently anticipates that it will have sufficient funds to develop the Property as described in the Preliminary Official Statement and to pay Special Taxes levied against the Property (to the extent the responsibility of the Developer) prior to delinque ncy and does not anticipate that the City or the Community Facilities District will be required to resort to a draw on the Reserve Account for payment of principal of or interest on the Bonds due to the Developer’s nonpayment of Special Taxes. However, ne ither the Developer nor any of its Affiliates are obligated to make any additional capital contribution or loan to the Developer at any time, and the Developer reserves the right to change its development plans and financing plans for the Property at any time without notice.
16. An appraisal of the taxable properties within the Community Facilities District, dated [Appraisal Date] (the “Appraisal Report”), was prepared by Kitty Siino & Associates, Inc. (the “Appraiser”). The Appraisal Report estimates the marke t value of the taxable properties within the Community Facilities District as of April 3, 2022 (the “Date of Value”). To the Actual Knowledge of the Undersigned, all information submitted by, or on behalf of and authorized by, the Developer to the Appraise r and contained in the sections of the Appraisal Report highlighted in yellow or circled in Exhibit A attached hereto, was true and correct in all material respects as of the Date of Value.
17. Solely as to the limited information described in the sections of the Preliminary Official Statement indicated in Paragraph 4 herein (and subject to the limitations and exclusions set forth in Paragraph 4), the Developer agree s to indemnify and hold harmless, to the extent permitted by law, the City, the Community Facili ties District, and their officials and employees, and each Person, if any, who controls any of the foregoing within the meaning of Section 15 of the Securities Act of 1933, as amended, or of Section 20 of the Securities Exchange Act of 1934, as amended (ea ch, an “ Indemnified Party ” and, collectively, the “ Indemnified Parties ”), against any and all losses, claims, damages or liabilities, joint or several, to which such Indemnified Party may become subject under any statute or at law or in equity and shall reimburse any such Indemnified Party for any reasonable legal or other expense incurred by it in connection with investigating any such claim against it and defending any such action, insofar as and solely to the extent such losses, claims, damages, liabilit ies or actions, or legal or other expenses, arise out of or are based upon any untrue statement or alleged untrue statement of a material fact or the omission or alleged omission of a material fact by the Developer in the above-referenced information in th e Preliminary Official Statement, as of its date, necessary to make the statements made by the Developer contained therein, in light of the circumstances under which they were made not misleading. This indemnity provision shall not be construed as a limitation on any other liability which the Developer may otherwise have to any Indemnified Party, provided that in no event shall the Developer be obligated for double indemnification, or for the negligence or willful misconduct of an Indemnified Party.
If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Indemnified Party in Attachment "4"
215
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respect of which indemnification may be sought pursuant to the above paragraph, such Indemnified Party shall promptly notify the Developer in writing; provided that the failure to notify the Developer shall not relieve it from any liability that it may have hereunder except to the extent that it has been materially prejudiced by such failure; and provided, further, that the failure to notify the Developer shall not relieve it from any liability that it may have to an Indemnified Party otherwise than under the above paragraph unless such liability was also conditioned upon such notice. If any such proceeding shall be brought or asserted against an Indemnified Party and it shall have notified the Developer thereof, the Developer shall retain counsel reasonably satisfactory to the Indemnified Party and approved thereby to represent the Indemnified Party in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any such proc eeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Developer and the Indemnified Party shall have mutually agreed to the contrary; (ii) the Developer has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Party; (iii) the Indemnified Party shall have reasonably concluded that there may be legal defenses available to it that are differ ent from or in addition to those available to the Developer such that a material conflict of interest exists for such counsel; or (iv) the named parties in any such proceeding (including any impleaded parties) include the Developer and the Indemnified Part y and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. It is understood and agreed that the Developer shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Parties, and that all such fees and expenses, to the extent reasonable, shall be paid or reimbursed as they are incurred. Any such separate firm shall be designated in writing by such Indemnified Parties. The Developer shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Developer agrees to indemnify each Indemnified Party from and against any loss or liability by reason of such settlement or judgment as set forth above. If the Developer shall, after receiving notice of the indemnification obligation of the Developer and within a period of time necessary to preserve any and all defenses to any claim asserted, fails to assume the defense or to retain counsel for that purpose satisfactory to the Indemnified Party, the Indemnified Party shall have the right, but not the obligation, to undertake the defense of, and to compromise or settle the claim or other matter on behalf of, for the account of and at the risk of, the Developer. The Developer shall not, without the written consent of th e Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is a party and indemnification could have been sought hereunder by such Indemnified Party, unless such settlement (x) includes an unconditional release of such Indemnified Party, in form and substance reasonably satisfactory to such Indemnified Party, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party.
18. If between the date hereof and the Closing Date any event relating to or affecting the Developer, its Affiliates, the proposed development of the Property, ownership o f the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates) shall occur of which the undersigned has actual knowledge which would cause the information under the sections of the Preliminary Official Statement indicated in Paragraph 4 hereof, to Attachment "4"
216
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contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Developer shall notify the City, the Community Facilities District and the Underwriter and if in the opinion of counsel to the City or the Underwriter such event requires the preparation and publication of a supplement or amendment to the Preliminary Official Statement, the Developer shall reasonably cooperate with the City and the Community Facilities District in the preparation of an amendment or supplement to the Preliminary Official Statement in form and substance satisfactory to counsel to the City, the Community Facilities District and to the Underwriter.
19. The Developer agrees to deliver a Closing Certificate dated the date of issuance of the Bonds at the time of issuance of the Bonds in substantially the form attached as Exhibit C to the Bond Purchase Agreement. If any event related to or affecting the Developer, its Affiliates, or the ownership, development, or sale of the Property occurs, as a result of which it is necessary to modify the Closing Certificate, the Developer agrees to deliver a new Closing Certificate revised to reflect such event.
20. On behalf of the Develo per, I have reviewed the contents of this Letter of Representations and have had the opportunity to meet with or contact counsel to the Developer for the purpose of discussing the meaning of the contents of this Letter of Representations. The Developer ac knowledges and understands that a variety of state and federal securities laws, including, but not limited to the Securities Act of 1933, as amended, and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, as amended, may apply to the Developer and that under some circumstances, certification as to the matters set forth in this Letter of Representations, without additional disclosures or other action, may not fully discharge all duties and obligations of the Developer under such securities laws. [Remainder of Page Intentionally Left Blank; Signature Page Follows]
Attachment "4"
217
Item4.
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The undersigned has executed this Letter of Representations solely in his or her capacity as an officer of the Developer and he or she will have no personal liability arising from or relating to this Letter of Representations. Any liability arising from or relating to this Letter of Representations may only be asserted against the Developer.
LENNAR HOMES OF CALIFORNIA, LLC,
a California limited liability company
By:
Name:
Title:
[EXECUTION PAGE OF LETTER OF REPRESENTATIONS]
Attachment "4"
218
Item4.
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EXHIBIT A
To
DEVELOPER LETTER OF REPRESENTATIONS
DEVELOPER PROVIDED INFORMATION IN APPRAISAL REPORT
See attached.
Attachment "4"
219
Item4.
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EXHIBIT C
FORM OF CLOSING CERTIFICATE
$[PAR]
COMMUNITY FACILITIES DISTRICT NO. 2020-2 OF THE
CITY OF ESCONDIDO (THE VILLAGES)
SPECIAL TAX BONDS, SERIES 2022
CLOSING CERTIFICATE OF
LENNAR HOMES OF CALIFORNIA, LLC
[Closing Date]
Community Facilities District No. 2020-2
of the City of Escondido (The Villages)
201 North Broadway
Escondido, California 92025Attn: City Manager
Stifel, Nicolaus & Company, Incorporated
One Montgomery Street, 35th Floor
San Francisco, California 94104
Ladies and Gentlemen:
Reference is made to the above -captioned bonds (the “ Bonds”) and to the Bond Purchase Agreement, dated [Closing Date] (the “ Bond Purchase Agreement ”), entered into in connection therewith. This Closing Certificate of Lennar Homes of California, Inc. (the “Closing Certificate”) is delivered pursuant to Section 3(F)(18) of the Bond Purchase Agreement. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Letter of Representations of Lennar Homes of California, Inc. (the “Letter of Representations”), dated [POS Date], delivered by Lennar Homes of California, LLC, a California limited liability company (the “ Developer”), successor-by-conversion to, and formerly known as, Lennar Homes of California, Inc.
The undersigned certifies that he or she is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized offi cer or representative of the Developer, and the undersigned, on behalf of the Developer, further certifies as follows:
1. The Developer has received the final Official Statement dated [Closing Date] relating to the Bonds (the “Official Statement”). To the Actual Knowledge of the Undersigned, each statement, representation and warranty made in the Letter of Representations is true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof, except that all references therein to the Preliminary Official Statement shall be deemed to be references to the Official Statement.
Attachment "4"
220
Item4.
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2. To the Actual Knowledge of the Undersigned, no event has occurred since the date of the Preliminary Official Statement affecting the statements and information described in Paragraph 4 of the Letter of Representations (and subject to the limitations and exclusions contained in Paragraph 4 of the Letter of Representations) rela ting to the Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of its Affiliates), which should be disclosed in the Official Statement for the purposes for which it is to be used in order to make s uch statements and information contained in the Official Statement not misleading in any material respect.
3. For the period through 25 days after the “ End of the Underwriting Period ” as defined in the Bond Purchase Agreement (provided the Developer may as sume the End of the Underwriting Period is the Closing Date (as defined in the Bond Purchase Agreement), unless it receives written notice from the Underwriter that the End of the Underwriting Period is later than the Closing Date), if any event relating t o or affecting the Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of its Affiliates) shall occur as a result of which it is necessary, in the opinion of the Underwriter or counsel to the City o r the Community Facilities District, to amend or supplement the Official Statement in order to make the information under the sections of the Official Statement indicated in Paragraph 4 of the Letter of Representations not misleading in the light of the ci rcumstances existing at the time it was delivered to a purchaser, the Developer shall reasonably cooperate with the City, the Community Facilities District and the Underwriter in the preparation and publication of a supplement or amendment to the informati on under the sections of the Official Statement indicated in Paragraph 4 of the Letter of Representations, in form and substance satisfactory to the Underwriter and counsel to the City and the Community Facilities District which will amend or supplement th e Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
Attachment "4"
221
Item4.
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The undersigned has executed this Closing Certificate solely in his or her capacity as an officer of the Developer and he or she will have no personal liability arising from or relating to this Closing Certificate. Any liability arising from or relating to this Closing Certificate may only be asserted against the Developer.
LENNAR HOMES OF CALIFORNIA, LLC,
a California limited liability company
By:
Name:
Title:
Attachment "4"
222
Item4.
D-1
EXHIBIT D
FORM OF OPINION OF THE ISSUER’S COUNSEL
[Closing Date]
Community Facilities District No. 2020-2 of the
City of Escondido (The Villages)
Escondido, California
Stifel, Nicolaus & Company, Incorporated
San Francisco, California
The Bank of New York Mellon Company, N.A.,
as Trustee
Los Angeles, California
ISSUER’S COUNSEL OPINION
Re: $[PAR] Community Facilities District No. 2020-2 of the City of Escondido (The Villages) Special Tax Bonds, Series 2022
Ladies and Gentlemen:
I am the City Attorney of the City of Escondido (the “City”), and in such capacity I have acted as issuer’s counsel (“Issuer’s Counsel”) Community Facilities District No. 2020 -2 of the City of Escondido (The Villages) (the “Community Facilities District”) in connection with the issuance of the above-referenced bonds (the “Bonds”). In such capacity, I have been asked to render this opinion in connection with Section 3(F)(9) of that certain Bond Purchase Agreement, dated [Closing Date] (the “Bond Purchase Agreement”), by and between Stifel, Nicolaus & Company, Incorporated , as underwriter, and the Community Facilities District, relating to the Bonds. All capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the Bond Purchase Agreement.
In rendering this opinion, I have examined and relied upon originals or co pies of the following upon which, with your permission, I am relying, without further inquiry or investigation (although I advise you that I have no actual knowledge to the contrary of any matters related thereto):
(i) the Community Facilities District Res olution of Issuance, (ii) Resolution No. 2020-25 (the “Resolution of Intention”), (iii) Resolution No. 2020-40 (the “Resolution to Incur Indebtedness”), (iv) Resolution No. 2020-45 (the “Resolution of Formation”), (v) Resolution No. 2020-46 (the “Resolution Deeming it Necessary to Incur Indebtedness and Calling Election”), (vi) Resolution No. 2020-55 (the “Resolution Declaring Results”), (viii) Ordinance No. 2020-11 (the “Ordinance” and, together with the Resolution of Intention, the Resolution to Incur In debtedness, the Resolution of Formation, the Resolution Deeming it Necessary to Incur Indebtedness and Calling Election, and the Resolution Declaring Results, the “Formation Resolutions and Ordinance”), (ix) the Community Facilities District Documents, and (x) the Official Statement, relating to the Bonds, a nd I have made such other investigations of law and facts as I have deemed necessary to render the following opinions.
Attachment "4"
223
Item4.
D-2
The opinions expressed herein are based on an analysis of existing statutes, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. I have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur.
In our examination, I have assumed, without independent investigation, the authenticity of all documents submitted to us as originals, of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents and the accuracy of the statements and representations contained in such documents. In ad dition, I have assumed the authority of and due execution by each of the parties to the documents other than the City and the Community Facilities District.
Based on the foregoing, I hereby advise you that, as of the date hereof, I am of the opinion that:
(i) the City is a municipal corporation and general law city, duly organized and existing under the Constitution and the laws of the State of California; (ii) the Community Facilities District is duly organized and validly existing as a community facilitie s district under and by virtue of the Constitution and laws of the State of California (including the Community Facilities District Act); (iii) the Community Facilities District Resolution of Issuance and the Formation Resolutions and Ordinance have been d uly adopted at meetings of the City Council of the City, which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Community Facilities District Resolution of Issuance and the Formation Resolutions and Ordinance are in full force and effect and have not been modified, amended, rescinded or repealed since the respective dates of their adoption; (iv) the Community Facilities District Documents and the Official Stateme nt have been duly authorized, executed and delivered by the Community Facilities District and constitute the legal, valid and binding obligations of the Community Facilities District enforceable against the Community Facilities District in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, to the application of equitable principles where equitable remedies are sought and to the exercise of judicial discretion in appropriate cases or seeks to restrain or to enjoin the development of property within the Community Facilities District;
(v) except as may be stated in the Official Statement, to the best of my knowledge, there is no action, suit, proceeding or investigation before or by any court, public board or body pending (notice of which has been served on the City or the Community Facilities District) or threatened wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence or powers of the City or the Community Facilities District, or the titles of their members and officers to their respective offices; or (b) affect the validity of the Community Facilities District Documents or restrain or enjoin the repayment of the Bond s or in any way contest or affect the validity of the Community Facilities District Documents or contest the authority of the Community Facilities District to enter into or perform its obligations under any of the Community Facilities District Documents or under which a determination adverse to the City or Community Facilities Attachment "4"
224
Item4.
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District would have a material adverse effect upon the financial condition or the revenues of the City or Community Facilities District, questions the right of the Community Facilitie s District to use Special Taxes levied within the Community Facilities District for the repayment of the Bonds or affects in any manner the right or ability of the Community Facilities District to collect or pledge the Special Taxes levied within the Community Facilities District for the repayment of the Bonds; (vi) the execution and delivery of the Bonds and the Community Facilities District Documents, and compliance with the provisions of each, will not conflict with or constitute a breach of or default under any loan agreement, note, ordinance, resolution, indenture, contract, agreement or other instrument of which the Community Facilities District is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely aff ect the ability of the Community Facilities District to perform its obligations under the Bonds or the Community Facilities District Documents; and
(vii) all approvals, consents, authorization, elections and orders of or filings or registrations with any g overnmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the ability of the Community Facilities District, to perform its obligations under the Bonds or the Community Facilities District Documents, have been obtained or made, as the case may be, and are in full force and effect.
This letter is furnished by us as Issuer’s Counsel. Other than the City and the Community Facilities District, no attorney-client relationship has existed or exists between the City Attorney and you in connection with the Bonds or by virtue of this letter. I disclaim any obligation to update this letter. This letter is delivered to you, is solely for your benef it and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person; provided, however, a copy may be included in the transcript of the proceedings for the Bonds. This letter is not intended to, and may not, be relied upon by owners of the Bonds.
I bring to your attention the fact that my conclusions are an expression of professional judgment and are not a guarantee of a result.
City Attorney
Attachment "4"
225
Item4.
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EXHIBIT E
$[PAR]
COMMUNITY FACILITIES DISTRICT NO. 2020-2 OF THE
CITY OF ESCONDIDO (THE VILLAGES)
SPECIAL TAX BONDS, SERIES 2022
FORM OF ISSUE PRICE CERTIFICATE
The undersigned, Stifel, Nicolaus & Company, Incorporated (“Stifel”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”).
1. Bond Purchase Agreement. On [Pricing Date] (the “Sale Date”), Stifel and the Issuer executed a Bond Purchase Contract(the “Purchase Contract”) in connection with the sale of the Bonds.
Stifel has not modified the Purchase Agreement since its execution on the Sale Date.
2. Price.
(a) As of the date of this Certificate, for each [Maturity] [[of the General Rule Maturities] of the Bonds, the first price at which at least 10% of ea ch such Maturity of the Bonds was sold to the Public (the “10% Test”) was the respective price for such Maturity listed in Schedule A attached hereto.
(b) [Stifel offered the Hold -the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.
(c) As set forth in the Bond Purchase Agreement, Stifel has agreed in writing that, (i) for each Maturity of the Hold -the-Offering-Price Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Ma turity during the Holding Period for such Maturity (the “hold -the- offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker -dealer who is a party to the retail distribution agreement, to comply with the hold -the-offering-price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold -the- Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.] (d) [** With respect to each of the General Rule Maturities of the Bonds:
(1) As of the date of this Certificate, Stifel has not sold at least 10% of the Bonds of these Maturities at any single price.
(2) As of the date of this Certificate, Stifel reasonably expects that the first sale to the Public of Bonds of these Maturities will be at or below the respective price or prices Attachment "4"
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F-2
listed on the attached Schedule A as the “Reasonably Expected Sale Prices for Undersold Maturities.”
(3) Stifel will provide actual sales information (substantially similar to the information contained on Schedule B) as to the price at which the first 10% of each such Maturity (i.e., the Undersold Maturity or Maturities) is sold to the Public. (4) On the date the 10% Test is satisfied with respect to all Maturities of the Bonds, Stifel will execute a supplemental cer tificate substantially in the form attached hereto as Schedule C with respect to any remaining Maturities for which the 10% Test has not been satisfied as of the Closing Date.**]
3. Defined Terms.
(a) “General Rule Maturities” means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(b) “Hold-the-Offering-Price Maturities” means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.” (c) “Holding Period” means, with respect to a Hold -the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date, or (ii) the date on which Stifel has sold at least 10% of such Hold -the- Offering-Price Maturity to t he Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity.
(d) “Issuer” means Community Facilities District No. 2020 -2 of the City of Escondido (The Villages).
(e) “Maturity” means Bonds with the same credit a nd payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(f) “Public” means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (g) “Underwriter” means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead Underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
3. Reserve Account. The funding of the Reserve Account under the Indenture, and as provided in the Tax Certificate, is reasonably required, was a vital factor in marketing the Bonds, facilitated Attachment "4"
227
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F-3
the marketing of the Bonds at an interest rate comparable to that of bonds and other tax-exempt obligations of a similar type, and is not in excess of the amount necessary for such purpose.
4. The representations set forth in this certificate are limited to factual matter s only. Nothing in this certificate represents Stifel’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that th e foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate of the Issuer dated [Closing Date] and with respect to compliance with the federal income tax rules affecting the Bond s, and by Bond Counsel, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038 -G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Managing Director
By:
Director
Dated: [Closing Date]
Attachment "4"
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E-1
SCHEDULE A
TO
ISSUE PRICE CERTIFICATE
[Schedules to be updated at pricing in the event there are Hold-the-Offering-Price-Maturities]
Actual Sales Information as of Closing Date
Maturity/CUSIP Coupon Date Sold Time Sold Par Amount Sale Price
[**Reasonably Expected Sales Prices for Undersold Maturities as of Closing Date
Maturity/CUSIP Coupon Par Amount Offering Prices
**]
Attachment "4"
229
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E-2
[**SCHEDULE B
TO
ISSUE PRICE CERTIFICATE
Actual Sales for Undersold Maturities as of the Closing Date
Maturity/CUSIP Date Sold Time Sold Par Amount Sale Price
**]
Attachment "4"
230
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E-3
[**SCHEDULE C
TO
ISSUE PRICE CERTIFICATE
SUPPLEMENTAL ISSUE PRICE CERTIFICATE OF UNDERWRITER
$[PAR]
COMMUNITY FACILITIES DISTRICT NO. 2020-2 OF THE
CITY OF ESCONDIDO (THE VILLAGES)
SPECIAL TAX BONDS, SERIES 2022
The undersigned, Stifel, Nicolaus & Company, Incorporated (“Stifel”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”).
1. Issue Price.
(a) Stifel sold at least 10% of the _______ Maturities of the Bonds to the Public at the price or prices shown on the Issue Price Certificate dated as of the Closing Date (th e “10% Test”). With respect to each of the ______ Maturities of the Bonds, Stifel had not satisfied the 10% Test as of the Closing Date (the “Undersold Maturities”). (b) As of the date of this Supplemental Certificate, Stifel has satisfied the 10% Test with respect to the Undersold Maturities. The first price or prices at which at least 10% of each such Undersold Maturity was sold to the Public are the respective prices listed on Exhibit A attached hereto.
2. Defined Terms.
(a) “Issuer” means Community Facilities District No. 2020-2 of the City of Escondido (The Villages).
(b) “Maturity” means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(c) “Public” means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (d) “Underwriter” means (1) any person that agrees pursuant to a written contract with the Issuer (or with the lead Underwriter to form an under writing syndicate) to participate in the initial sale of the Bonds to the Public, and (2) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (1) of this paragraph to participate in the initial sal e of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
Attachment "4"
231
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3. The representations set forth in this certificate are limited to factual matter s only. Nothing in this certificate represents Stifel’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that th e foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate of the Issuer dated [Closing Date] and with respect to compliance with the federal income tax rules affecting the Bond s, and by Bond Counsel, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038 -G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
[Title]
By:
[Title]
Dated: [Closing Date]
Attachment "4"
232
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E-5
SCHEDULE A
TO
ISSUE PRICE CERTIFICATE
Attachment "4"
233
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E-6
SCHEDULE B
TO
ISSUE PRICE CERTIFICATE
Pricing Wires
Attachment "4"
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STAFF REPORT
June 15, 2022
File Number 0430-80
SUBJECT
BUDGET ADJUSTMENT OF $157,760 FOR BEFORE & AFTER SCHOOL PROGRAM
DEPARTMENT
Community Services Department
RECOMMENDATION
Request the City Council authorize a budget adjustment in the amount of $157,760 for the Before & After School Program.
Staff Recommendation: Approval (Community Services: Joanna Axelrod) Presenter: Robert Rhoades, Deputy Director of Community Services
FISCAL ANALYSIS
The Before & After School Program is over 100% full cost recovery and will be fully funded by the revenue generated through the collection of program fees.
PREVIOUS ACTION
None.
BACKGROUND
The City of Escondido Community Services Departme nt has been operating before and after school programs continuously, except during the pandemic, since the 1980s and has served 11 of the 17 elementary schools within the Escondido Union School District (EUSD) over the years. During the 2021/2022 school year, the program operated at two school sites.
In February 2022, EUSD approached the City to expand after school care from the two existing schools to the five schools (Bernardo, LR Green, Miller, North Broadway, Reidy Creek) that do not operate a free before and after school program. The expenses associated with the expansion of after school program services were included in the City’s Fiscal Year 2023 General Fund Operating Budget.
After surveying parents at the five sch ools, there was a demonstrated need for before school care , and the interest list for after school care exceeded the City’s initial commitment of spaces available. To accommodate these additional community needs, City staff is seeking approval to add 14 new Temporary 235
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Part Time staff positions to the budget. This includes 11 Recreation Leaders to run a Before School Program and three additional Recreation Leaders to accommodate the added interest /waitlists for the afternoon program.
With City Council’s approval, the 2022/2023 Before and After School Program will operate on all school days from 6:30 a.m. – start of school and end of school - 6 p.m., including early release days, and will accept kindergarten through fifth graders (transitional kindergarten ers on approval within certain criteria). Parents/guardians will have the flexibility of “drop-in” service thereby using the program when needed. There is no minimum attendance requirement. This allows participants to attend all year or just a few days. Additionally, participants may be picked up any time before the end of the program, using it for one hour or the entire day. Cost of the program is $7 per participant, per day for the morning and $18 per participant, per day for the afternoon. Programming is based on four basic tenets: 1) be safe 2) encourage learning 3) build positive relationships 4) make it fun. This approach permeates the curriculum and overall programming while still accounting for participant preferences. The recreation -based activities also incorporate homework time, STEAM (science, technology, engineering, art, and math), and special guest speakers that highlight important topics.
Before and after school programs play an important role in communities. Parents are increasingly turning to after school program partners to meet the needs of their family situation; wherein multi-generational, multi-income households are finding it difficult to provide affordable care in high cost of living areas such as Southern California. The benef its of after school programming go beyond the family dynamic of needing care. Businesses report that workers with families lacking adequate after school care miss on average eight days of work per year. This decreased worker productivity is estimated to cost businesses up to $300 billion annually. The City’s Before and After School Program is the most competitively-priced option available in Escondido and incorporates a wide variety of recreational activities and academic learning opportunities sought after by parents. The ultimate goal of the Before and After School Program is to offer low-cost before and after school care that provides quality programming and peace of mind to parents/guardians for a safe and supervised environment.
ATTACHMENTS
a. Budget Adjustment
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FM\105 (Rev.11/06)
C I T Y O F E S C O N D I D O
BUDGET ADJUSTMENT REQUEST
Date of Request: 6/15/2022 For Finance Use Only
Log #
Fiscal Year
ear
Department: Community Services
Division: Recreation
Project/Budget Manager: Robert Rhoades 5482
Name Extension
Council Date (if applicable): 6/15/2022
(attach copy of staff report)
_____ Budget Balances
_____ General Fund Accts
_____ Revenue
_____ Interfund Transfers
_____ Fund Balance
Project/Account Description Account Number Amount of Increase Amount of Decrease Temporary Part-Time 5004-001-102 $150,520
Other Employee Overhead 5025-001-102 $2,420
Worker's Compensation 5028-001-102 $2,320
Office/Operating Supplies 5101-001-102-40007 $2,500
Before/After School Revenue 4302-001 $200,000
Explanation of Request:
Adding 14 staff to the Before & After School Program that will allow the City to operate a morning program and expand our afternoon program to serve more participants in partnership with EUSD at 5 school sites. This program is 100% cost recovery and will be fully funded by the additional revenue generated through the collection of program fees.
APPROVALS
Department Head Date
City Manager Date
Finance Date
City Clerk Date
Distribution (after approval): Original: Finance
DocuSign Envelope ID: C8E5E06F-F58E-460F-B84B-AB82FC4B65AA 6/7/2022
6/7/2022
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STAFF REPORT
June 15, 2022
File Number 0650-10
SUBJECT
GENERAL MUNICIPAL ELECTION – NOVEMBER 8, 2022 – REQUEST THE CITY COUNCIL ADOPT
RESOLUTIONS CALLING FOR AN HOLDING A GENERAL MUNICIPAL ELECTION FOR THE OFFICE OF MAYOR, CITY COUNCIL DISTRICT 1 AND CITY COUNCIL DISTRICT 2 AND REQUESTING CONSOLIDATION WITH THE NOVEMBER 8, 2022, STATEWIDE GENERAL ELECTION
DEPARTMENT
City Clerk’s Office
RECOMMENDATION
Request the City Council Adopt Resolutions calling for and holding a General Municipal Election and requesting consolidation with the November 8, 2022, Statewide General Election. 1) Adopt Resolution No. 2022-55, calling for and giving notice of a General Municipal Election on November 8, 2022 for the following elective offices:
a. One (1) City Council Member with a four-year term to represent District One b. One (1) City Council Member with a four-year term to represent District Two c. One (1) Mayor with a four-year term to be elected at-large
2) Adopt Resolution No. 2022-56 requesting the Board of Supervisors, County of San Diego, to consolidate the City’s General Municipal Election with the Statewide General Election
Staff Recommendation: Approval (City Clerk’s Office: Zack Beck) Presenter: Zack Beck, City Clerk
FISCAL ANALYSIS
$400,000 has been allocated in the 2022-23 General Fund Non-Departmental budget for this election.
PREVIOUS ACTION
None.
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BACKGROUND
The Escondido Municipal Code Section 2-29 requires the City’s General Municipal Election to be held on the same day as the Statewide General Election, which is November 8, 2022. The resolutions presented give notice of the upcoming Municipal Election. The resolutions must be filed with the Registrar of Voters no later than August 12, 2022.
RESOLUTIONS
A. Resolution No. 2022-55
B. Resolution No. 2022-56
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RESOLUTION NO. 2022-55
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ESCONDIDO, CALIFORNIA, CALLING FOR THE HOLDING
OF A GENERAL MUNICIPAL ELECTION TO BE HELD ON
TUESDAY, NOVEMBER 8, 2022 FOR THE ELECTION OF
CERTAIN OFFICERS AS REQUIRED BY THE PROVISIONS
OF THE LAWS OF THE STATE OF CALIFORNIA RELATING
TO GENERAL CITIES
WHEREAS, under the provisions of the laws relating to general law cities in the State of California, and a General Municipal Election shall be held on November 8, 2022, for the election of Municipal Officers; and
WHEREAS, the City Council of the City of Escondido, California, has adopted Ordinance No. 2013- 17, amending the Escondido Municipal Code to provide that the four members of the City Council shall be elected by district, with two such districts to be on the 2022 ballot. The Mayor and all city measures shall be voted on by the city at-large; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Escondido, California , does resolve, declare, determine and order as follows:
1. That pursuant to the requirements of the laws of the State of California relating to General Law Cities, including the requirements of Section 10403 of the Elections Code and Section 34883 of the Government Code, there is called and ordered to be held in t he City of Escondido, California, on Tuesday, November 8, 2022, a General Municipal Election for the purpose of electing one (1) Member of the City Council to be nominated and elected by voters in District One for the full term of four (4) years; one (1) Member of the City Council to be nominated and elected by voters in District Two for the full term of four (4) years; and one (1) Mayor for the full term of four (4) years to be elected at-large; 240
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2. That the ballots to be used at the election shall be in form and content as required by law.
3. That the City Clerk is authori zed, instructed and directed to coordinate with the County of San Diego Registrar of Voters to procure and furnish any and all official ballots, notices, printed matter and all supplies, equipment and paraphernalia that may be necessary in order to properly and lawfully conduct the election.
4. That the polls for the election shall be open at seven o’clock a.m. of the day of the election and shall remain open continuously from that time until eight o’clock p.m. of the same day when the polls shall be closed , pursuant to Election Code Section 10242, except as provided in Section 14401 of the Elections Code of the State of California.
5. That in all particulars not recited in this resolut ion, the election shall be held and conducted as provided by law for holding municipal elections.
6. That notice of the time and place of holding the election is given and the City Clerk is authorized, instructed and directed to give further or additional notice of the election, in time, form and manner as required by law.
7. That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions.
8. That the City Council authorizes the City Clerk to administer said election and all reasonable and actual election expenses shall be paid by the City upon presentation of a properly submitted bill.
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RESOLUTION NO. 2022-56
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ESCONDIDO, CALIFORNIA, REQUESTING THE BOARD OF
SUPERVISORS OF THE COUNTY OF SAN DIEGO TO
CONSOLIDATE A GENERAL MUNICIPAL ELECTION TO BE
HELD ON NOVEMBER 8, 2022, WITH THE STATEWIDE
GENERAL ELECTION TO BE HELD ON THE DATE
PURSUANT TO SECTION 10403 OF THE ELECTIONS
CODE
WHEREAS, the City Council of the City of Escondido called a General Municipal Election to be held on November 8, 2022, for the purpose of the election of one Member of the City Council to be nominated and elected by voters of District One, one Member of the City Council to be nominated and elected by voters of District Two, and one Mayor to be elected at-large; and WHEREAS, it is desirable that the General Municipal Election be consolidated with the Statewide General election to be held on the same date and that within the City the precincts, Vote Centers and election officers of the two elections be the same, and that the County Election Department of the County of San Diego canvass the returns of the General Municipal Election and that the election be held in all respects as if there were only one election.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ESCONDIDO DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS:
1. That pursuant to the requirements of Section 10403 of the Elections Code and Section 34883 of the Government Code, the Board of Supervisors of the County of San Diego is hereby requested to consent and agree to the consolidation of a General Munici pal Election with the Statewide General Election on Tuesday, November 8, 2022, for the purpose of the election of one (1) Member of the City Council to be nominated and elected by registered voters of District One; one (1) Member of the City Council 242
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to be nominated and elected by registered voters of District Two; and one (1) Mayor to be elected at-large by registered voters in the City of Escondido.
2. That pursuant to the San Diego County Municipal Code SEC. 439.1 the Registrar of Voters may, subject to the requirements of this section and subject to such terms and conditions as the Registrar may prescribe, render specified services relating to the conduct of an election to any city or district the governing body of which has by resolution requested the Board of Supervisors for the County of San Diego to permit the Registrar of Voters of the County of San Diego to render such services. a) The governing body of the city or district shall file with the Registrar of Voters a certified copy of the resolution of its governing body requesting the Board of Supervisors to permit the Registrar of Voters to render the specified services relating to the conduct of an election and agreeing that it will be bound by the requirements of this section and such terms and conditions as the Registrar of Voters may prescribe, and agreeing that it will reimburse the County in full for its costs and expenses in rendering such services.
b) The governing body of the city or district shall:
1. In its resolution specify the services requested.
2. Deposit at least 60 days in advance of the election the Registrar of Voter’s estimate of the city or district‘s share of the elections cost.
3. Reimburse the County in full for the services performed upon presentation of a final invoice to the city or district.
4. Include in its resolution an agreement to indemnify and hold harmless the County, its officers, agents and employees from expense of liability, including reasonable attorneys fees, as the result of an election contest arising after conduct of an election. c) If the Registrar of Voters decides that requested election services should not be rendered, the Registrar shall refer the matter to the Board of Supervisors for determination. 243
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3. That the County Elections Department is authorized to canvass the returns of the General Municipal Election. The election shall be held in all respects as if there were only one election, and only one form of ballot shall be used. The election will be held and conducted in accordance with the provisions of law regulating the statewide election in accordance with California Election Code Section 10418.
4. That the Board of Supervisors is requested to issue instructions to the County Elections Department to take any and all steps necessary for the holding of the consolidated election.
5. That the City of Escondido recognizes that additional costs will be incurred by the County by reason of this consolidation and agrees to reimburse the County for any costs.
6. That the City Clerk is hereby directed to file a certified copy of this resolution with the Board of Supervisors and the County Elections Department of the County of San Diego.
7. That the City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.
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STAFF REPORT
June 15, 2022
File Number 1320-90
SUBJECT
2021 REPORT ON DRINKING WATER PUBLIC HEALTH GOALS
DEPARTMENT
Utilities Department, Water Division
RECOMMENDATION
Request the City Council receive and file the Drinking Water Public Health Goals Report for years 2019 - 2021, and accept public comment on the report.
Staff Recommendation: Receive and file (Utilities: Christopher W. McKinney, Deputy City Manager / Director of Utilities ).
Presenter: Reed Harlan, Deputy Director of Utilities/Water
FISCAL ANALYSIS
There are no costs associated with the City of Escondido’s Public Health Goals Report 2021.
PREVIOUS ACTION
A Public Hearing was held at the regular City Council meeting on June 19, 2019 to receive comments on the Water Division’s Public Health Goals Report for the years 2016 – 2018.
BACKGROUND
Standards Versus Goals
Public water supplies are strictly regulated for a host of constituents. The most stringent standards are those set by the United States Environmental Protection Agency (“USEPA”) and the California Department of Public Health (“CDPH”) in their primary drinking water standards. These standards are called Maximum Contaminant Levels (“MCLs”) and they are enforced by CDPH’s Division of Drinking Water. Tests for these constituents are conducted at a required frequency using standard method s. Public drinking water systems must ensure compliance with these standards at all times. The City’s water supply has met these stringent standards at all times during the period of this report (2019 through 2021). 245
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In addition to standards, there are also two sets of goals that may apply to various constituents that are possibly found in drinking water supplies. The goals can be either state or federal goals. The goals are not enforceable, but they provide constituent level targets for which water system operators should strive.
Public Health Goals (“PHGs”) are set by the California Office of Environmental Health Hazard Assessment (“OEHHA”), which is part of Cal-EPA. These goals are set at the concentration of a contaminant in drinking water that poses no significant health risk if consumed for a lifetime. The PHGs are not enforceable and are not required to be met by any public water system. They are set as goals based solely on public health risk considerations and they include a margin of safety Maximum Contaminant Level Goals (“MCLGs”) are the federal equivalent to PHGs. For a particular type of potential contaminant, potential carcinogens, there is a difference in how MCLGs are set. MCLGs for carcinogens are set at zero because the USEPA assumes there is no absolutely safe level of exposure to them. Conversely, PHG’s are set at a level considered to pose no significant risk of cancer. This is usually denoted as a one-in-a-million cancer risk for a lifetime of exposure. Determinations of health risk at these low levels are frequently theoretical and have not been quantified or proven through scientific experimentation.
The remainder of this report summarizes the “Public Health Goals Escondido Water System – 2021.” This document is attached at the end of this staff report and will be submitted to the Calif ornia State Water Resources Control Board (“SWRCB”), in compliance with the California Health and Safety Code.
Public Health Goals Reporting
California law requires that the City of Escondido (“City”) make a report available to the public that compares t he City’s drinking water quality with State Public Health Goals and Federal Maximum Contaminant Level Goals. Given that PHGs and MCLGs are set by two different government agencies – one State and one Federal – and that PHGs and MCLGs have not been set for all substances that may be found in drinking water, these measures can be difficult to interpret. It is important to note that PHGs and MCLGs are not enforceable standards, but they do provide water agencies and water quality laboratories with goals for future improvement as detection and treatment technologies advance. In fact, some PHGs are set below the threshold of existing laboratory detection limits, meaning that the most a water agency can say is that the actual amounts are below the detection lim it but not necessarily below the PHG.
The City’s drinking water quality has consistently met the enforceable Maximum Contaminant Level standards required by the USEPA and the CDPH. Drinking water with contaminant concentrations in excess of the MCLs is considered unsafe to drink. If the concentration of a contaminant is above the PHG and/or MCLG for that contaminant, the water is still considered safe to drink as long as the concentration remains below the MCL. The City’s drinking water has met the enfor ceable MCL standards at all times during the period covered by this report (2019 - 2021). 246
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Provisions of the California Health and Safety Code specify that larger water utilities (>10,000 service connections) prepare a special report if any of their water quality measurements have exceeded any PHG.
The law also requires that where a PHG for a c onstituent has not been established, the water suppliers are to use the MCLGs adopted by the USEPA. Only constituents which have a California primary drinking water standard and for which either a PHG or an MCLG has been set are to be addressed.
There are a few constituents that are routinely detected in water systems at levels well below the MCL (thus, the water is safe to drink), for which no PHG or MCLG has yet been adopted. These constituents are not included in this report.
If a constituent was det ected in the City’s water supply in the years 2019 - 2021 at a level exceeding an applicable PHG or MCLG, this report provides the information required for our customers. Included is:
The numerical public health risk associated with the MCL, the PHG, and the MCLG, whichever are applicable.
The category or type of risk to health that could be associated with each constituent. The best treatment technology available that could be used to reduce the constituent level. An estimate of the cost to install that treatment if it is appropriate and feasible.
Water Quality Data Considered
Water quality data collected from the City of Escondido water system in 2019, 2020, and 2021 was considered in this report. This data has been summarized in the annually published City of Escondido Water Quality Reports. In no case was any substance detected above the MCL, which is the measure for safe drinking water.
The constituents discussed below were detected in Escondido’s drinking water at levels above the PHG, or if no PHG, above the MCLG. These levels do not mean that the water is unsafe to drink, but as described earlier, represent goals for future improvement as detection and treatment technologies advance.
Coliform Bacteria
Each month, approximately 140 to 200 samples are collected from the water distribution system for coliform analysis. Occasionally, a sample was found to be positive for coliform bacteria, but repeat samples were negative and follow up actions were taken. A maximum of 3.21% of these samples were positive in any given month (maximum: 1.94% in 2019, 3.21% in 2020, and 1.07% in 2021).
In the years 2019 through 2021, there were 19 samples out of 5,853 (0.32%) indicating positive for total coliform (“TC”) (9 out of 2,002 in 2019, 7 out of 1,936 in 2020, and 3 out of 1,915 in 2021) , with repeat samples being negative in all cases. The MCL for total coliform is 5% of monthly samples and the MCLG is 0% for monthly samples. The total coliform bacteria percentage levels for water in the distribution system were below the MCL at all times, but at times was over the MCLG.
Monitoring for total coliform bacteria is performed to minimize the possibility of pathogens in the water.
Pathogens are organisms that may cause waterborne disease. Because colifor ms are only a surrogate 247
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indicator of the potential presence of pathogens, it is not possible to state a specific numerical health risk.
While USEPA normally sets MCLGs “at a level where no known or anticipated adverse effects on persons would occur,” they indicate that they cannot do so with total coliform bacteria.
Total coliform bacteria are used as an indicator organism. They are found everywhere in nature and are not generally considered harmful. They are used because of the ease in monitoring and an alysis. If a positive sample is found, it indicates a potential problem that needs to be investigated. It is not at all unusual for a system to have an occasional positive total coliform sample. Follow up sampling indicates the presence or absence of further risk.
The City adds chlorine as a disinfectant during the treatment process, and also chloramines prior to distribution to assure that the water is free of pathogens. The residual levels of the disinfectant are carefully controlled to provide the best health protection without undesirable taste, odor, or byproducts.
This careful balance of treatment processes is essential to supplying Escondido’s customers with safe drinking water.
Other equally important measures that have been implemented include:
An effective cross-connection control program.
Maintenance of a disinfectant residual throughout the system. An effective monitoring and surveillance program.
Maintenance of positive pressure in the distribution system.
Copper and Lead
There is no MCL for copper and lead. Instead, it is required that 90% of the samples taken from household taps and tested for copper and lead cannot exceed an Action Level of 1.3 mg/L for copper and 0.015 mg/l for lead. The PHG for copper is 0.30 mg/L and for lead it is 0.0002 mg/l.
The Federal and State’s Lead and Copper Rule requires that sampling be conducted once every three years for both lead and copper. The samples are taken by designated customers from kitchen or bathroom faucets. The sample is taken after the water sits in the plumbing overnight, without running the water to rinse or flush out contaminants.
The copper sampling in year 2021 indicates that the 90% level of copper samples taken from Escondido household taps was 0.65 mg/L, which is less than the Ac tion Level of 1.3 mg/L, but exceeds the PHG of
0.30 mg/L. Approximately 54% of the 57 samples collected in year 2021 for copper exceeded the PHG of
0.30 mg/L.
The category of health risk for copper is gastrointestinal irritation. Numerical health risk data on copper has not yet been provided by Cal-EPA’s Office of Environmental Health hazard Assessment (“OEHHA”).
Also, the lead sampling in year 2021 indicates t hat the 90% level of lead samples taken from household taps were less than the detection limit for reporting (DLR) of 0.005 mg/L and less than the Action Level of 248
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0.015 mg/L, but exceeded the PHG level of 0.0002 mg/L. It should be noted that the PHG is be low the detection limit for current lead testing methods.
The category of risk for lead is damage to kidneys or the nervous system. Numerical health risk data on lead has not yet been provided by the OEHHA.
The Escondido water system is in full compliance with the Federal and State Copper and Lead Rule. Based on extensive sampling, it was determined according to State regulatory requirements that the City’s water system has lead and copper levels that fall below the Action Levels or Notification Levels. Therefore, the Escondido water system is deemed by the California Department of Health Services to have “optimized corrosion control” for the system. It is not prudent to initiate additional corrosion control treatment until such time as changing conditio ns warrant further action. The cost to reduce the copper level to zero is not known as the majority of copper and lead contamination comes from piping in individual residences.
Chlorite
Chlorite is a disinfection byproduct produced in the treatment of dri nking water with chlorine dioxide.
Chlorine dioxide has been used for control of taste and odor associated with algae and decaying vegetation in the raw water supply , as well as lower disinfectant -by-products levels such as Total Trihalomethanes (TTHMs) an d Haloacetic Acid (five) (HAA5) in drinking water. Chlorine dioxide was applied seasonally at the Escondido-Vista Water Treatment Plant to reduce an odor when the raw water sources had observed a detectable odor. The current chlorite MCL is 1.0 mg/L and the PHG is 0.05 mg/L.
The chlorite levels measured at Escondido distribution system when chlorine dioxide was bei ng used during 2019 to 2021, ranged from 0.02 mg/L to 0.56 mg/L chlorite, thus exceeding the PHG of 0.05 mg/L. (Range: 0.02 – 0.42 mg/L in 2019, 0.05 – 0.40 mg/L in 2020, and 0.09 – 0.56 mg/L in 2021).
Several studies reveal that oral exposure to chlorite can result in significant hematological, endocrine, reproductive, and gastrointestinal effects , as well as changes in neurobehavioral development at levels higher than the MCL.
Based on our sampling, it was determined that the Escondido Water System meets the MCL for Chlorite, but exceeds the PHG.
Arsenic and Uranium
Arsenic is a naturally occurring element in the earth's crust and is very widely distributed in the environment. In certain geographical areas, natural mineral deposits may contain large quan tities of arsenic and this may result in higher levels of arsenic in water. The amounts of arsenic required to cause adverse health effects depend on the chemical and physical form of the arsenic that is ingested. Inorganic forms are generally more acutely toxic than organic forms and more water-soluble forms tend to be more toxic than those that dissolve poorly in water. Also, the oxidation state of arsenic affects its toxicity, with As (III) being more toxic than As (V).
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In most municipal water supplies, particularly surface reservoirs, the chief form of arsenic is As (V)
due to
aeration and chlorination. In chlorinated drinking water supplies, all arsenic forms have been found to be pentavalent (V) as a result of oxidation by free chlorine.
Total arsenic was detected a t ranges from ND (not detected) to DNQ (detected, not quantified) , with a maximum concentration of 0.0008 mg/L. The DLR (detection limits for purposes of reporting) is 0.002 mg/L, which was not exceeded. , However, the PHG level of 0.000004 mg/L was exceeded during the period of 2019 to 2021. (Range: ND – DNQ[0.0006 mg/L] in 2019, ND – DNQ[0.0006 mg/L] in 2020, and ND – DNQ[0.0008 mg/L] in 2021).
Uranium is a naturally occurring radioactive element that is present in the earth’s crust th at is found in some rocks and soil and is weakly radioactive.
Uranium is also found in ground and surface waters due to natural occurrence in geological formations.
The average uranium concentration in surface, ground, and domestic water are 1, 3 and 2 pCi/L (picocuries per liter), respectively. Uranium can also enter the environment in the production and use of phosphate fertilizers, or from mining and industrial processing activities.
The current uranium MCL is 20 pCi/L and the PHG is 0.43 pCi/L.
Uranium was detected at 2.1 pCi/L in year 2021, well below the MCL, but exceeding the PHG of 0.43 pCi/L.
DBCP (1, 2-Dibromo-3-chloropropane)
DBCP was used as a soil fumigant and nematocide, and its use was restricted and its registration was cancelled in 1 985. DBCP was identified as both a carcinogen and a male reproductive toxicant in 1987.
The best available technologies (BAT) to treat for DBCP are granular activated carbon (GAC) or by packed tower aeration.
The state of California PHG for DBCP is 0.000003 mg/L.
DBCP was detected, and ranged as DNQ (0.000004 mg/L – 0.000005 mg/L) on 2021, but exceeded the PHG of 0.000003 mg/L.
TTHM (Total Trihalomethanes)
An important and predominant group of chlorinated drinking water byproducts, trihalomethanes can occur as a result of the reaction between natural organic matter in the water and chlorine added as a disinfectant. The term 'Total Trihalomethanes' (TTHM) describes four disinfection by -products:
Bromoform, Bromodichloromethane, Chloroform, and Dibromochloromethane.
The PHG for Bromoform is 0.0005 mg/L, for Bromodichloromethane is 0.00006 mg/L, for Chloroform is
0.0004 mg/L, and for Dibromochloromethane is 0.0001 mg/L.
Bromoform was detected, and ranged from 0.0013 mg/L to 0.0056 mg/L during 2019 to 2021, exceeding the PHG of 0.0005 mg/L.
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Bromodichloromethane was detected, and ranged from 0.0055 mg/L to 0.026 mg/L, exceed ing the PHG of 0.00006 mg/L.
Chloroform was detected, and ranged from 0.0047 mg/L to 0.025 mg/L, exceed ing the PHG of 0.00 04 mg/L.
Dibromochloromethane was detected, and ranged from 0.0053 mg/L to 0.020 mg/L, exceed ing the PHG of 0.0001mg/L.
HAA5 (Haloacetic Acids): Dichloroacetic Acid
HAAs can be formed by chlorination, ozonation or chloramination of water with formation p romoted by slightly acidic water, high organic matter content and elevated temperature. Chlorine from the water disinfection process can react with organic matter and small amounts of bromide present in water to produce various HAAs.
HAA5 describes five disinfection by products: monochloroacetic acid, dichloroacetic acid, trichloroacetic acid, monobromoacetic acid, and dibromoacetic acid.
US EPA has concluded that dichloracetic acid causes male reproductive and development toxicity and established the MCLG of zero.
Dichloroacetic acid was detected and ranged from 0.0014 mg/L to 0.013 mg/L during 2019 to 2021, exceeding the MCLG of zero.
Gross Alpha Particle Activity
Gross alpha particle activity is a measure of the total amount of radioactivity in a water sample attributable to the radioactive decay of alpha-emitting elements. Alpha particles are highly ionizing, but the particles travel short distances in air (less than 2 inches) before being absorbed. Alpha particles have little ability to penetrate objects; thus, they can be stopped by a sheet of paper or the outer layer of skin.
The external hazard from alpha particles is minimal, but the internal hazard when they are inhaled or ingested may be significant.
The U.S. EPA's MCLG for gross alpha particle is zero, and the state of California MCL is 15 pCi/L.
Gross Alpha particle was detected, and ranged from ND to 3.3 pCi/L on year 2021.
The detection limit for reporting (DLR) of gross beta particle is 3 pCi/L. 251
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These detections do not constitute a violation of drinking water regulations and do not indicate the water was unsafe to drink. The results could be considered typical for a California water agency.
Gross Beta Particle Activity
Gross beta particle activity is a measure of the total amount of radioactivity in a water sample attributable to the radioactive decay of beta -emitting elements. Beta particles usually travel greater distances in air than alpha particles (about 6 feet) before being absorbed.
A low level of gross beta activity is relatively prevalent in the State’s water supply, probably due to the ubiquitous nature of naturally occurring beta particle-emitting radionuclides.
The U.S. EPA's MCLG for gross beta particle is zero, and the state of California MCL is 50 pCi/L and Federal MCL is 4 mrem/yr (milliroentgen equivalent man).
Gross beta particle was detected, and ranged from ND to 4.6 pCi/L on year 2021. The detection limit for reporting (DLR) of gross beta particle is 4 pCi/L.
Summary of Findings
Overall, total coliform, copper, lead, arsenic, DBCP, chlorite, TTHM, HAA5, uranium, gross alpha particle, and gross beta particle constituents were detected in our City’s water system at concentrations above the PHGs or MCLGs. Also, there are several inorganic and organic compounds which are reported as ND (not detected) due to the ir being below the MDL (method detection limit), and due to the PHG level being much lower than the MDL. At no time did the Escondido water system ever serve water containing contaminants above recognized and enforceable MCLs. The drinking water quality of the Escondido water system meets all drinking water standards to protect public health.
Recommendations for Further Action
The City of Escondido drinking water system meets all State of California and USEPA drinking water standards set to protect public health, but it does exceed some of the public health goals. Costly treatment processes would be required to further reduce t he levels of the constituents identified in this report to meet PHG or MCLG that are significantly below the health-based MCL that have been established to provide “safe drinking water.” The effectiveness of additional treatment processes to provide significant reductions in constituent levels at these already low values is uncertain. In addition, the health protection benefits of further reductions are not clear and may not be quantifiable. Therefore, no action is proposed
ATTACHMENTS
1. Public Health Goals Report 2021
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Public Health Goals
Escondido Water System
2021
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1 CITY OF ESCONDIDO
REPORT ON CITY’S WATER QUALITY
RELATIVE TO PUBLIC HEALTH GOALS
2019 – 2021
California Health and Safety Code Section 116470(b)
Background
Provisions of the California Health and Safety Code specify that larger water utilities (>10,000 service connections) prepare a special report if any of their water quality measurements have exceeded any Public Health Goal (PHG, see definition below). The law also requires that where a PHG for a constituent has not been established, the water suppliers are to use the Maximum Contaminant Level Goals (MCLG) adopted by the United States Environmental Protection Agency ( USEPA).
Only constituents which have a California primary drinking water standard and for which either a PHG or an MCLG has been set are to be addressed.
There are a few constituents that are routinely detected in water systems at levels usually well below the drinking water standards for which no PHG or MCLG has yet been adopted. These will be addressed in the future as they are adopted in either the California or the Federal standards.
If a constituent was detected in the Escondido water supply in the year s of 20 19 through 2021 at a level exceeding an applicable PHG or MCLG, this report provides the information required for our customers. Included is:
• The numerical public health risk associated with the Maximum Contaminant Level (MCL) and the PHG or MCLG. (MCLs are set by the USEP A or the California Department of Public Health in their enforceable drinking water standards).
• The category or type of risk to health that could be associated with each constituent.
• The best treatment technology available that could be used to reduce the constituent level.
• An estimate of the cost to install that treatment if it is appropriate and feasible.
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2 Goals vs Standards
Public water supplies are strictly regulated for a host of contaminants. The most stringent standards are those set by the USEPA and the California Department of Public Health in their primary drinking water standards . These standards are called Maximum C ontaminant Levels (MCL) and they are enforced by the California Department of Public Health. Tests for these contaminants are ru n on a required frequency using standard methodologies. P ublic drinking water system s must ensure compliance with these standards at all times.
Contrary to standards, there are also two sets of goals that may apply to various contaminants that may be found in drinking water supplies. The goals can be either state or federal goals. The goals are not enforceable, but they provide contaminant levels for which the water system operators should strive to meet.
The California Office of Environmental Healt h Hazard Assessment (OEHHA), a section of Cal EPA, sets Public Health Goals (PHGs). The PHGs are not enforceable and are not required to be met by any public water system. They are set as goals bas ed solely on public health risk considerations and they include a margin of safety.
Maximum Contaminant Level Goals (MCLG s) are the federal equivalent to PHGs; however, there is a difference in how levels for carcinogens are set at the federal level. The Maximum Contaminant Level Goals for carcinogens are set at zero because the USEPA assumes there is no absolutely safe level of exposure to them. Conversely, PHGs are set at a level considered to pose no significant risk of cancer, and are usually noted as a one in a million cancer risk for a lifetime of exposure. Determinations of health risk at these low levels are frequently theoretical and have not been quantified or proven through scientific experimentation. .
Best Available Treatment Technology
Both the USEPA and the California Department of Public H ealth adopt what are known as Best Available Technologies (BAT). These technologies take into account practical risk -management factors such as analytical detection capability, available treatment technology, benefits , and costs. These are the best known methods for reducing contaminant levels to the MCL. However, since many PHG’s and all MCLG’s are set much lower than the MCL, it is not always possible to determine what treatment is needed to further reduce contaminant concentrations to the low levels se t in the PHG or MCLG . Unfortunately, the analytical tests to determine these very low levels are not always available or they do not provide reliable test results. In some cases , treatment processes that reduce one contaminant to a very low level may hav e adverse effects on other aspects of water quality.
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3 Water Quality Data Considered
Water quality data collected from the City of Escondido water system during the years 2019, 2020 and 2021, for purposes of determining compliance with drinking water standards , was considered in this report . This data is summarized in the annual Water Quality Reports for the same years ; reports are made available for customer review on the City of Escondido’s website and hard copies are mailed to customers upon request. T he constituents discussed below were detected in Escondido’s drinking water at levels above the PHG, or if no PHG, above the MCLG.
Coliform Bacteria
Each month, approximately 140 – 200 samples are collected from the water distribution system for coliform analysis. Occasionally, a sample was found to be positive for coliform bacteria, but repeat samples were negative and follow up actions were taken. A maximum of 3.21% of these sam ples were positive in any month (maximum: 1.94% in 2019, 3.21% in 2020, and 1.07% in 2021).
In the years 2019 through 2021, there were 19 samples out of 5,853 (0.32%) indicating positive for total coliform (TC), with repeat samples being negative in all cases (positive TC numbers: 9 out of 2,002 in 2019, 7 out of 1,936 in 2020, and 3 out of 1, 915 in 2021) . The MCL for total coliform is 5% of monthly samples and the MCLG is 0% for monthly samples. The total coliform bacteria per centage levels for water in the distribution system were below the MCL at all times, but at times was over the MCLG.
Monitoring for total coliform bacteria is performed to minimize the possibility of pathogens in the water. Pathogens are organisms that may cause waterborne disease. Because coliform s are only a surrogate indicator of the potential presence of pathogens, it is not possible to state a specific numerical health risk.
While USEPA normally sets MCLGs “at a level where no known or anticipated adverse effects on persons would occur,” they indicate that they cannot do so with total coliform bacteria.
Total c oliform bacteria are used as an indicator organism. They are found everywhere in nature and are not generally considered harmful. They are used because of the ease in monitoring and analysis. If a positive sample is found, it indicates a potential problem that needs to be investigated. It is not at all unusual for a system to have an occasional positive total coliform sample. Follow up sampling indicates the presence or absence of further risk.
The City adds chlorine as a disinfectant during the treatment process, and also chloramines prior to distribution to assure that the water is free of pathogens. The residual levels of the disinfectant are carefully controlled to provide the best health protection without undesirable taste, odor, or byproducts. This careful balance of 256
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4 treatment processes is essential to supplying Escondido’s customers with safe drinking water.
Other equally important measures that have been implemented include:
• An effective cross-connection control program.
• Maintenance of a disinfectant residual throughout the system. • An effective monitoring and surveillance program.
• Maintenance of positive pressure in the distribution system.
Copper and Lead
There is no MCL for copper and lead. Instead , it is required that 90% of the samples taken from household taps and tested for copper and lead cannot exceed an Action Level of 1.3 mg/L for copper and 0.015 mg/l for lead. The PHG for copper is 0.30 mg/L and for lead it is 0.0002 mg/l.
The Federal and State’s Lead and Copper Rule requires that sampling be conducted once every three years for both lead and copper. The samples are taken by designated customers from kitchen or lavatory faucets. The sample is taken after the water sits in the plumbing over night, without running the water to rinse or flush out contaminants.
The copper sampling in year 2021 indicates that the 90% level of copper samples taken from Escondido household taps was 0.65 mg/L, which is less than the Action Level of 1.3 mg/L , but exceeds the PHG of 0.30 mg/L. The approximate 54% of the 57 samples collected in year 2021 for copper exceeded the PHG of
0.30 mg/L.
The category of health risk for copper is gastrointestinal irritation. Numerical health risk data on copper has not yet been provided by Califor nia EPA’s Office of Environmental Health hazard Assessment.
Also, the lead sampling in year 2021 indicates that the 90% level of lead samples taken from household taps were less than the detection limit for reporting (DLR) of
0.005 mg/L and less than the Action Level of 0.015 mg/L, but exceeded the PHG level of 0.0002 mg/L.
The category of risk for lead is damage to kidneys or the nervous system .
Numerical health risk data on lead has not yet been provided by California EPA’s Office of Environmental Health hazard Assessment.
The Escondido water system is in full compliance with the Federal and State Copper and Lead Rule. Based on extensive sampling, it was determined according to State regulatory requirements that the City does meet the Action Levels or Notification Levels for c opper and lead. Therefore, the Escondido water 257
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5 system is deemed by the California Department of Health Services to have “optimized corrosion control” for the system. It is not prudent to initiate additional corrosion control tr eatment until such time as changing conditions warrant further action. The cost to reduce the copper level to zero is not known as the majority of copper and lead contamination comes from piping in individual residences.
Arsenic
Arsenic is a naturall y occurring element in the earth's crust and is very widely distributed in the environment. In certain geographical areas, natural mineral deposits may contain large quantities of arsenic and this may result in higher levels of arsenic in water. The amount s of arsenic required to cause adverse health effects depend on the chemical and physical form of the arsenic that is ingested. Inorganic forms are generally more acutely toxic than organic forms and more water-soluble forms tend to be more toxic than thos e that dissolve poorly in water. Also, the oxidation state of arsenic affects its toxicity, with As (III) being more toxic than As (V).
In most municipal water supplies, particularly surface reservoirs, the chief form of arsenic is As (V)
due to aeration and chlorination. In chlorinated drinking water supplies, all arsenic forms have been found to be pentavalent as a result of oxidation by free chlorine.
Total arsenic was detected and ranged from ND to DNQ (detected, not quantified) of 0.0008 mg/L, and DLR (detection limits for purposes of reporting) of 0.002 mg/L, but exceeded the PHG level of 0.000004 mg/L during 2019 to 2021. (Range: ND – DNQ [0.0006 mg/L] in 2019, ND – DNQ [0.0006 mg/L] in 2020, and ND – DNQ [0.0008 mg/L] in 2021).
DBCP (1, 2-Dibromo-3-chloropropane)
DBCP was used as a soil fumigant and nematocide, and its use was restricted and its registration was cancelled in 1985. DBCP was identified as both a carcinogen and a male reproductive toxicant in 1987. The best available technologies (BAT) to treat for DBCP are granular activated carbon (GAC) or by packed tower aeration.
The state of California PHG for DBCP is 0.000003 mg/L.
DBCP was detected, and ranged as DNQ (0.000004 mg/L – 0.000005 mg/L) on 2021, but exceeded the PHG of 0.000003 mg/L.
Chlorite
Chlorite is a disinfection byproduct produced in the treatment of drinking water with chlorine dioxide. Chlorine dioxide has been used for control of taste and odor associated with algae and decaying vegetation in the raw water supply , as well as 258
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6 lower disinfectant-by-products levels such as Total Trihalomethanes (TTHMs) and Haloacetic Acid (five) (HAA5) in drinking water. Chlorine dioxide was applied seasonally at the Escondido Water Treatment Plant to reduce an odor when the raw water sourc es had observed a detectable odor. The current chlorite MCL is
1.0 mg/L and the PHG is 0.05 mg/L.
The chlorite levels measured at E scondido distribution system when chlorine dioxide was being used during 2019 to 2021, ranged from 0.02 mg/L to 0.56 mg/L chlorite, but exceeded the PHG of 0.05 mg/L. (Range: 0.02 – 0.42 mg/L in 2019,
0.05 – 0.40 mg/L in 2020, and 0.09 – 0.56 mg/L in 2021)
Several studies reveal that oral exposure to chlorite can result in significant hematological, endocrine, reproductive, and gastrointestinal effects , as well as changes in neurobehavioral development at levels higher than the MCL.
Based on our sampling, it was determined that the Escondido Water System meets the MCL for Chlorite, but exceeds the PHG.
TTHM (Total Trihalomethanes)
An important and predominant group of chlorinated drinking water byproducts, trihalomethanes can occur as a result of the reaction between natural organic matter in the water and chlorine added as a disinfectant. The term ' Total Trihalomethanes' ( TTHM) describes four disinfection by -products: Bromoform, Bromodichloromethane, Chloroform, and Dibromochloromethane.
The PHG for Bromoform is 0. 0005 mg/L, for Bromodichloromethane is 0. 00006 mg/L, for Chloroform is 0. 0004 mg/L, and for Dibromochloromethane is 0. 0001 mg/L.
Bromoform was detected, and ranged from 0.00 13 mg/L to 0.00 56 mg/L during 2019 to 2021, exceeded the PHG of 0.0005 mg/L.
Bromodichloromethane was detected , and ranged from 0.0055 mg/L to 0.0 26 mg/L, exceeded the PHG of 0.00006 mg/L.
Chloroform was detected, and ranged from 0.0047 mg/L to 0.025 mg/L, exceeded the PHG of 0.0004 mg/L.
Dibromochloromethane was detected, and ranged from 0.0053 mg/L to 0.0 20 mg/L, exceeded the PHG of 0.0001mg/L.
HAA5 (Haloacetic Acids): Dichloroacetic Acid
HAAs can be formed by chlorination, ozonation or chloramination of water with formation promoted by slightly acidic water, high organic matter content and elevated temperature. Chlorine from the water disinfection process can react with 259
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7 organic matter and small amounts of bromide present in water to produce various HAAs.
HAA5 describes five disinfection by products : monochloroacetic acid , dichloroacetic acid, trichloroacetic acid, monobromoacetic acid, and dibromoacetic acid.
US EPA has concluded that dichloracetic acid causes male repr oductive and development toxicity and established the MCLG of zero.
Dichloroacetic acid was detected and ranged f rom 0.0014 mg/L to 0.013 mg/L during 2019 to 2021, exceeding the MCLG of zero.
Uranium
Uranium is a naturally occurring radioactive element present in the earth’s crust that is found in some rocks and soil and is weakly radioactive. Uranium is also found in ground and surface waters due to natural occurrence in geological formations. The average uranium concentration in surface, ground, and domestic water are 1, 3, and 2 pCi/L (picocuries per liter) , respectively. Uranium can also enter the environment i n the production and use of phosphate fertilizers, or from mining and industrial processing activities.
The current uranium MCL is 20 pCi/L and the PHG is 0.43 pCi/L.
Uranium was detected at 2.1 pCi/L (picocuries per liter) in year 2021, well below the MCL but exceeded the PHG of 0.43 pCi/L.
Gross Alpha Particle Activity
Gross alpha particle activity is a measure of the total amount of radioactivity in a water sample attributable to the radioactive decay of alpha- emitting elements.
Alpha particles are highly ionizing, but the particles travel short distances in air (less than 2 inches) before being absorbed. Alpha particles have little ability to penetrate objects; thus, they can be stopped by a sheet of paper or the outer layer of skin. The external hazard from alpha particles is minimal, but the internal hazard when they are inhaled or ingested may be significant.
The U.S. EPA's MCLG for gross alpha particle is zero, and the state of California MCL is 15 pCi/L.
Gross Alpha particle was detected, and ranged from ND to 3.3 pCi/L in year 2021.
The detection limit for reporting (DLR) of gross beta particle is 3 pCi/L.
These detections do not constitute a violation of drinking water regulations or indicate the water was unsafe to drink. The results could be considered typical for a California water agency
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8 Gross Beta Particle Activity
Gross beta particle activity is a measure of the total amount of radioactivity in a water sample attributable to the radioactive decay of beta- emitting elements. Beta particles usually travel greater distances in air than alpha particles (about 6 feet) before being absorbed.
A low level of gross beta activity is relatively prevalent in the State’s water supply, probably due to the ubiquitous nature of naturally occurring beta particle -emitting radionuclides.
The U.S. EPA's MCLG for gross beta particle is zero, and the state of California MCL is 50 pCi/L and Federal MCL is 4 mrem/yr (milliroentgen equivalent man).
Gross beta particle was detected, and ranged from ND to 4.6 pCi/L on year 2021.
The detection limit for reporting (DLR) of gross beta particle is 4 pCi/L.
These detections do not constitute a violation of drinking water regulations or indicate the water was unsafe to drink.
RECOMMENDATIONS FOR FURTHER ACTION:
The City of Escondido drinking water system meets all State of California and USEPA drinking water standards set to protect public health, but it does exceed some of the public health goals. Costly treatment processes would be required to further reduce the levels of the constituents identified in this report to meet PHG or MCLG that are significantly below the health- based MCL that have been established to provide “safe drinking water .” The effectiveness of additional treatment processes to provide signif icant reductions in constituent levels at these already low values is uncertain. In addition, t he health protection benefits of further reductions are not clear and may not be quantifiable. Therefore, no action is proposed.
Summary of Findings:
Overall, total coliform, copper, lead, arsenic, DBCP , chlorite, TTHM, HAA5, uranium, gross alpha particle, and gross beta particle constituents were detected in our City’s water system at concentrations above the PHGs or MCLGs. Also, there are several inorganic and organic compounds which are reported as ND (not detected) due to their being below the MDL (met hod detection limit) , and due to the PHG level being much lower than the MDL. At no time did the Escondido water system ever serve water containing contaminants above recognized and enforceable MCLs. The drinking water quality of the Escondido water system meets all drinking water standards to protect public health.
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STAFF REPORT
June 15, 2022
File Number 0870-11
SUBJECT
ANNUAL ACTION PLAN F OR FISCAL YEAR 2022 -23 DEPARTMENT OF HOU SING AND URBAN DEVELOPMENT (“HUD”) FUNDING OF COMMUNITY DEVELOPMENT BLOCK GRANT (“CDBG”) , HOME INVESTMENT PARTNERSH IP PROGRAM ( “HOME”) FOR AFFORDABLE HOUS ING ACTIVITIES AND EMERGENCY SOLUTIONS GRANTS (“ESG”)
DEPARTMENT
City Manager Office; Housing and Neighborhood Services Division
RECOMMENDATION
Request the City Council a dopt Resolution No. 2022 -75 approving the CDBG and HOME budgets and allocations, and adopt Ordinance No. 2022-11 authorizing the Deputy City Manager to execute contracts with service providers. It is also requested that the City Council adopt Resolution No. 2022-84 approving the FY 2022-2023 One-Year Action Plan to HUD.
Staff Recommendation: Approval (City Manager Office: Rob Van De Hey, Deputy City Manager/ Director of Information Systems)
Presenters: Holly Nelson, Housing and Neighborho od Services Manager; and Johnathan Lung, Management Analyst
FISCAL ANALYSIS
The City of Escondido (“City”) receives an annual federal allocation from HUD for community development, housing and homelessness activities. HUD published allocations for local jurisdictions for FY 2022-23 on May 13, 2022. The City will receive $1,548,067 in CDBG funds (10% decrease from 2021) and $706,529 in HOME funds (13% increase from 2021). The City will not receive an allocation of ESG funds for FY 2022 -23 which addresses homelessness. The ESG funding is based on a formula evaluating geographic size, population, and poverty rates. City staff is having active discussions with HUD to determine the reason why funding was not allocated.
It is important to note that HUD funds must assist the low-income residents of Escondido and may not be used to supplant previously allocated City funds. Funds may also be used to pay for administrative and planning services, subject to regulatory limitations.
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PREVIOUS ACTION
On May 20, 2020, the City Council approved the 2020-2024 Five Year Consolidated Plan (“2020 Con Plan”), which established priorities for the use of CDBG, HOME and ESG federal funds over the five-year period, ending in June 30, 2025, to benefit low-income residents and neighborhoods in the City (Attachment 1).
The goals outlined in the 2020 Con Plan are reflected in the City’s current funding priorities for FY 2022- 23 and reflects the community’s highest priorities: homelessness, public infrastructure, community facilities, housing supply and services, community services, and neighborhood services.
On January 26, 2022, the City Council held the first of two public hearings associated with the FY 2022-23 Annual Action Plan to reaffirm the homelessness, housing and community priorities identified in the 2020 Con Plan. The second public hearing will be held on June 15, 2022.
BACKGROUND
The City receives annual federal entitlement grant s from HUD for community development (CDBG) and housing (HOME) activities. The City was a recipient of ESG funds from 2016 to 2022. In 2020, the City received additional funding allocations for CDBG-CV and ESG -CV funds to prevent, prepare for , and respond to, impacts of the COVID-19 pandemic.
In order to receive funds, the City must develop a five-year Consolidated Plan (“Con Plan”) and create an Annual Action Plan. The 2020 Con Plan helps bring community needs and resources together to achieve goals that address decent housing, homelessness, and expand economic opportunities for City residents, particularly for low-income persons.
The City Council confirmed the 2020 Con Plan priorities and priority emphasis on January 26, 2022, and a Request For Proposal (“RFP”) was released by the City on January 31, 2022 for CDBG and ESG funds. The proposal was published on the Housing and Neighborhood Services’ website and City staff emailed the proposal to 55 different service providers, nonprofits, developers and grassroot organizations in San Diego County. The agencies notified had previously expressed an interest in receiving funding updates.
To expand its outreach efforts and attract new applicants, the City worked with the Regional Task Force on Homelessness who emailed the CDBG and ESG application to over 1,200 recipients on February 1, 2022.
City Staff created a new, internal CDBG application to expand access to different city departments. Staff presented the information at a citywide department leadership meeting in February 2022 and released a staff memo.
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Twelve proposals were submitted by nonprofit organizations and nine proposals were submitted by City department heads for CDBG -funded activities, and two proposals were submitted by non profit organizations for ESG-funded activities.
Today’s City Council actions will identify specific programs and activities for FY 2022 -23 funds and conditionally commit funding. Final commitment is dependent on HUD’s acceptance of the Action Plan, completion of a National Environmental Policy Act (NEPA), receipt of environmental clearance from HUD, provision of appropriate insurance verification, and acceptance of City contracts. Projects are anticipated to start on July 1, 2022.
CDBG Funds
The CDBG program is a flexible block grant program that provides communities with resources to address a wide range of community needs . The CDBG program works to ensure decent affordable housing and neighborhoods, to provide services to the most vulnerable in our communities, and to create jobs through the expansion and retention of businesses. Each CDBG activity must meet one of the following national objectives for the program: benefit low - and moderate-income persons, prevent or eliminate slums or blight, or address community development needs having a particular urgency. The City will receive $1,548,067 in CDBG entitlement funds for FY 2022 -23 which is 10% decrease from FY 2021 -2022. CDBG funding is down not only in local jurisdictions but also nationwide. It is important to note out of the $1,548,067 no more than 20% of e ntitlement funds ($309,613) may be expended for administrative activities and no more than 15% ($232,210) may be used for public service activities.
As a recipient of CDBG funds, the City is also required to take steps to affirmatively further fair housi ng within its jurisdiction as part of the obligation it assumes when it accepts these funds. Fair Housing services are allowable under Public Service or Administration and by utilizing Administration funds, the City is able to fund more programs under Public Services. Staff recommends renewing Legal Aid Society of San Diego’s services at $35,000 for fair housing services using administrative funds.
FY 2020-2024 Community Development Priorities
1. Homeless Services: Support homeless shelter and other services.
2. Basic Needs: Provide access to food, water, shelter, and sanitation.
3. Health and Human Development : Provide access to recreation, education, and healthcare (including mental health).
4. Neighborhood Revitalization: Improve the livability of neighborhoods.
5. Economic Development : to provide economic development opportunities to low -moderate income residents and businesses.
Each year, the City must develop an action plan that describes all the activities the City plans to carry out that year. Both City-sponsored and non-profit-sponsored projects may be considered. This year, the City 264
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received at total of 25 proposals (12 proposals from outside agencies and 13 proposals from internal City Departments) for FY 2022-23 CDBG funding. The 15 public service fund requests were : (1) Meals on Wheels is requesting $25,000 for its in-home meal delivery to moderate and low-income seniors; (2) San Diego Children’s Discovery Museum is requesting $10,000 to provide free or reduced cost memberships to the museum; (3) Alliance for Regional Solutions is requesting $ 60,000 for its Bridge Housing Network providing year round shelter and services for homeless individuals; (4) Voices for Children is requesting $10,000 for direct advoca cy, assessment and ongoing case monitoring for Escondido foster youth; (5) Palomar Family Counseling Service is requesting $22,333 to promote mental and behavioral health of high school youths affected by the effects of the COVID-19 pandemic; (6) Mama’s Kitchen, is requesting $7,500 for its in-home meal delivery to critically -ill Escondido residents; (7) Center for Community Solutions , a new applicant, is requesting $25,000 to operate a 24/7 emergency domestic violence shelter and provide accompanying services; (8) Interfaith Community Services is requesting $198,099 to provide an emergency family shelter and accompanying services; (9) Legal Aid Society of San Diego is reques ting $35,000 to provide fair housing services; (10) Solutions for Change is requesting $15,000 to support their Workforce Development program which provides homeless families with education to assist with long - term housing stability ; (11) Community Service s is requesting $56,100 for senior nutrition, (12) Community Services is requesting $34,610 for low-cost transportation program, (13) Community Services is $16,000 for Senor care; (14) Community Services is requesting $15,000 for aquatic safety; and (15) Planning Division is requesting $20,000 for translation services for the 2022 General Plan Amendment.
The 10 capital improvements and neighborhood revitalization proposals submitted were: (1) Engineering Division is requesting $8,500,000 for flood mitigation for 450 homes; (2) Community Services is requesting $175,000 for Hoffman House restoration repairs recommended in the Historic Structure Assessment Report; (3) Escondido Education COMPACT is requesting $284,600 to rehabilitate a building to create a center for youth and families; (4) Housing & Neighborhood Services is requesting $231,956 to add funds to the Homeless Resource Center; (5) Public Works is requesting $200,345 for 7 -day a week graffiti removal; (6) Code Enforcement is requesting $115,000 for four part-time code enforcement officers; (7) Boys & Girls Club is requesting $75,000 for playground equipment; (8) Housing & Neighborhood Services is requesting $75,000 for the Grants to Block program; (9) Housing & Neighborhood Services is requesting $25,000 for Project NEAT; and (10) Public Works is requesting $18,000 for water bottle refill stations in local parks.
Staff reviewed the applications for completeness and eligibility. Criteria for the review includes, but is not limited to, a pre-award risk assessment based on subrecipient history, complexity of the project, funding and budget appropriateness, experience, and compliance with federal criteria. Specific allocation recommendations for CDBG-funded activities are described below (Attachment 2).
Proposed Public Service Activities ($231,553)
Senior Nutrition, Senior Transportation and Senior Care ($106,720) 265
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The City’s Community Services Department addresses basic needs for seniors. These programs include a reduce or free lunch program ($56,100), low-cost transportation program ($34,610), and care coordination and helping vulnerable seniors get bridged to resources to improve quality of life at the Park Avenue Community Center ($16,000). These programs address the Con Plan’s Basic Need CDBG priority.
City staff did receive a public comment requesting CDBG funding for the “senior meals program, the legal and tax assistance program and many art and recreation activities.” Alliance for Regional Solutions ($45,000)
The Alliance for Regional Solutions is a collaboration of North County organizations addressing homelessness. The Bridge to Housing Committee of the Alliance is a collaboration of providers who offer short-term housing solutions, case management and services directed at navigating North County’s homeless men, women, and families towards permanent housing and self -sufficiency. This program addresses the Con Plan’s Homelessness Services priority.
Center for Community Solutions Emergency Shelter for Domestic Violence Survivors ($25,000) Center for Community Solutions’ emergency shelter provides 24/7 emergency domestic violence shelter at Hidden Valley House to prevent homelessness, meet basic needs, and connect domestic violence survivors to mental health services. This program addresses the Con Plan’s Homelessness Services priority.
Center for Community Solutions would be a new City CDBG funding recipient.
Meals-on-Wheels of San Diego County Meal Delivery Program ($25,000) Meals-on-Wheels Program pr ovides daily delivery of up to two nutritious meals a day to the home, accompanied by a daily safety check, in -home social visit, and care navigation. This program addresses the Con Plan’s Basic Needs CDBG priority by addressing food insecurity for homebound seniors and people with disabilities. Meals on Wheels has received CDBG funds since 2005.
Palomar Family Counseling Services Healthy Minds, Thriving Youth ($22,333) Palomar Family Counseling Services ’ program, Health Minds, Thriving Youth , provides ment al health therapy to high school-aged youth living in Escondido in order to reduce the psychosocial stressors related to the pandemic, such as depression, anxiety, isolation, loss and financial hardship. Mental health treatment is limited and very impacted. Adding this resource will help improve access and behavioral health care to low-income youth. This program addresses the Con Plan’s Health and Human Development priority which includes mental health.
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Mama’s Kitchen Home Delivered Meal Service: Escondido ($7,500) Mama’s Kitchen’s Home -Delivered Meal Service provides medically tailored meals to low -to-moderate income Escondido residents facing critical illnesses such as cancer, type 2 diabetes, congestiv e heart failure and chronic kidney disease. Funding would allow Mama’s Kitchen to expand services in Escondido.
This program addresses the Con Plan’s Basic Needs priority.
Proposed Capital Improvement and Neighborhood Revitalization Activities ($1,006,901) Escondido Education COMPACT Success Center ($284,600)
Escondido Education COMPACT is requesting funds to rehabilitate a City-owned building to create a center for youth and families in Escondido. The project will be completed in two phases and staff anticipates the center will offer group meetings, counseling and additional programming and resources in employment, mental health and substance use, parenting, and homelessness prevention. This program addresses the Con Plan’s Health and Human Development priority.
Homeless Resource Center ($231,956)
The City Council approved $ 552,289 in FY2020-21 to create a homeless navigation/day center. Over the past two years, CDBG funds have been reallocated to other projects and the day center currently has a budget of $160,000. City staff has been in discussion with service providers and citizens regarding the creation of a one -stop center where individuals and families who at -risk or experiencing homelessness can go to access housing, service providers and access basic needs It would be a “hub” for different providers to offer services, such as employment, legal, health education, benefits, social security and to help the most vulnerable streamline services and access care. This program addresses the Con Pla n’s Homelessness priority.
Graffiti Removal ($200,345)
The Graffiti Removal Project provides funding for graffiti removal 7 -days a week in qualifying low -mod income census tracts and applies only to private properties. CDBG funds can be used to remove gra ffiti from private homes, garages, fences and exterior surfaces of businesses. This project addresses the Con Plan’s Neighborhood Revitalization CDBG priority.
CDBG-Funded Code Enforcement ($115,000)
CDBG-funded neighborhood revitalization efforts would in clude funding for four part -time Code Enforcement Officers to work in commercial and residential areas of CDBG -eligible census tracts. The officers will address code issues relating to business licensing, illegal signage and other appearance and 267
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compliance issues generally associated with commercial and residential areas. This project addresses the Con Plan’s Neighborhood Revitalization CDBG priority.
Boys and Girls Club Playground Equipment ($75,000)
The Boys and Girls Club is requesting funds to replace its outdoor playground at the Conrad Prebys Escondido Branch. The playground equipment is 20 -years old and is deteriorating due to weather and frequent use. This branch has 398 members and local schools that use this equipment for recreation. This project addresses the Con Plan’s Neighborhood Revitalization priority.
Grants to Blocks ($75,000)
This program addresses the need to fund multiple, small neighborhood revitalization projects and right- of-way enhancement mini grants associated with street improvement projects in associated with CDBG- funded code enforcement . Efforts are focused in City’s 18 organized Neighborhood G roup areas. This project addresses the Con Plan’s Neighborhood Revitalization priority.
Project NEAT ($25,000)
The goal of Project NEAT (Neighborhood Enhancement, Awareness and Training) is to improve the appearance and safety of neighborhoods through mediation, education and fostering relationships with neighbors. Project NEAT proactively works with organized neighborhood groups to resolve potential code compliance issues, mostly with regard to yard maintenance and other appearance-related issues, before they reach the level of code enforcement cases. This project addresses the Con Plan’s Neighborhood Revitalization CDBG priority.
Water Bottle Refill Stations ($18,000)
This activity will install four water bottle refill stations at local community parks. City staff reports the water fountains are frequently broken and need repair. Adding new refill stations will promote access to clean drinking water and reduce the negative impact of single -use plastics on the environment. This project addresses the Con Plan’s Basic Needs priority.
HOME Funds ($706,529)
The City will receive $706,529 in HOME funds for Fiscal Year 2022-23 (Attachment 3). The HOME program increases the availability, quality, and access to affordable and decent housing for low-income residents.
HUD provides formula grants to fund a wide range of activities including building, buying, or rehabilitating affordable housing for rent, homeownership or providing direct rental assistance to low -income people.
The City may al locate 10% of new HOME allocation, interest, and program income derived from loan repayments for administration costs. A minimum of 15% of the annual allocation of HOME Program funds 268
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must be reserved for the housing development activities of Community Hous ing Development Organizations (“CHDOs”). A total of 5% of the HOME grant may, but is not required to, be used to provide operating funds to certified CHDOs. Federal regulations state that HOME Program funds must be committed within two years and expended within five years of allocation; recent guidance from HUD has relaxed the commitment deadline, but not the expenditure deadline.
FY 2020-2024 Housing Priorities
1. Creation and preservation of affordable rental housing; and
2. Conservation and expansion of affordable homeownership opportunities.
Creation and Preservation of Affordable Rental Housing ($585,876) This priority relates to the improvement of the supply of rental housing in the City to meet the needs of Escondido residents. Overpayment for housing is a widespread housing problem in Escondido, especially among lower-income renters. Additionally, the ra te of overcrowding is especially acute for large renter households. The City of Escondido has 3,171 people on the County’s waiting list for the Housing Choice Voucher Program commonly referred to as Section 8. The majority of applicants are large families with five or more people, individuals with a disabling condition, and small families.
The City plans to release a Request for Proposal “RFP” to create affordable housing development through new construction or acquisition/rehabilitation for households at 30% of the Area Median Income (“AMI”).
In order to meet this goal, HOME funding and recycled Housing Set -Aside/Successor Housing Agency (“SHA”) funds will be used as leverage to other funding sources, such as Low-Income Tax Credits.
Conservation and Expansion of Affordable Homeownership Opportunities ($50,000) This priority relates to the need for homeownership in Escondido. The rate of homeownership in Escondido is 51%, which is lower than the 55% state and 66% national averages as reported by the United States Census Bureau.
The City developed the Homebuyer Entry Loan Program (“HELP”) to assist first -time homebuyers in the purchase of their homes in 1996. The City’s First Time Homebuyer Program provides down payment and/or closing cost assistance to hous eholds earning up to 80% A MI. The program provides a deferred payment loan for the lessor of 5% of the purchase price, up to $25,000.
The First Time Homebuyer Program remains very popular in the community. Housing and Neighborhood staff receives multiple phone calls a week regarding the program. Although the public interest is there, the City has faced challenges, which have led to a decline in loan applications and the overall number of issuance of loans than previously anticipated. Some of the program’s major challenges continue to be an overall lack of housing inventory and strict federal regulations on income levels and maximum purchase 269
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price limits. Prices for a single -family home have increased significantly over the past years, exceeding HUD’s annual maximum value limit of $518,000. No households were served in FY2021-22 in the program.
The City recognizes this program is important for low-to-moderate income households who are trying to pursue homeownership; however, a comprehensive evaluation of the program needs to be conducted to understand how the City can improve the existing homebuyer program following responsible underwriting and lending standards, ensuring low -income homebuyers are able to afford and sustain homeownership long term. The City’s goal is to assist two households with down payment and/or closing cost assistance in FY2022-23.
ESG Funds ($0 – No funds are expected in FY2022-23)
The purpose of the ESG program is to help individuals and families who are at-risk or experiencing homelessness through prevention, street outreach, emergency and rapid rehousing resources.
ESG is a formula grant program and eligible recipients generally consist of metropolitan cities, urban counties, territories, and states. The ESG funding formula is based on geographic size, population, and poverty rates. All recipients must consult with their local Continuum of Care to determine how to subgrant ESG funds.
According to HUD’s Community Planning and Development Formula Program Allocation published on its website on May 13, 2022, the City will not receive any ESG funds for FY 2022-23. The City has not received any written formal notification from HUD stating that the funds have been eliminated. City staff is in close contact with its HUD Representative who are requesting a full explanation from HUD’s Office of Special Needs Assistance Programs to determine why ESG funds have ended.
The City of Escondido is one of three cities in San Diego County to receive ESG funding. The other two cities, Chula Vista and San Diego, are projected to receive ESG funds in FY 2022-23. The City has been a recipient of ESG funds since 2016 and received an annual allocation of $155,124 in FY 2021-22.
The City released an RFP in February 2022 for ESG program funding for FY 2022-23. City staff received two applications from Interfaith Community Services and Escondido Education COMPACT. After reviewing both applications carefully, staff recommended funding COMPACT’s homeless prevention program to help families at-risk of experiencing homelessness with children age 10-18 in Escondido.
According to the Escondido Unified School District, the district K-8th grade has 1,080 students reported housing insecurity and qualify for McKinney-Vento Services.
City staff has notified Escondido Education COMPACT of the projected ESG funds and stated they are unable to fund the program unless alternative funding is identified. City staff will continue to explore alternative funding opportunities through the County, State and Federal government to address this need.
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ORDINANCES
a. Ordinance No. 2022-11
RESOLUTIONS
a. Resolution No. 2022-75
b. Resolution No. 2022-84
ATTACHMENTS
Attachment 1: Map of CDBG-Eligible Census Blocks
Attachment 2: Proposed CDBG Allocations for FY2022-23 Attachment 3: Proposed HOME Allocations for FY2022-23
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ORDINANCE NO. 2022-11
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
ESCONDIDO, CALIFORNIA, AUTHORIZING THE DEPUTY
CITY MANAGER TO EXECUTE CDBG, HOME, AND ESG
CONTRACTS, INCLUDING THOSE INVOLVING NON-
SUBSTANTIAL CHANGES.
The City Council of the City of Escondido, California does ordain as follows:
SECTION 1. The City Council makes the following findings:
a) The City of Escondido (“City”) receives an annual allocation from the U.S. Department of Housing and Urban Dev elopment (“HUD”) for Community Development Block Grant (“CDBG”), HOME investment Partnership Program (“HOME”) and Emergency Solutions Grants (“ESG”).
b) The City has received one-time, limited funding from the CARES Act for CDBG-CV, ESG-CV, and HOME-CV.
c) To improve efficiency of contract execution and amendments, the Deputy City Manager is hereby authorized to execute agreements , on behalf of the City, with specific providers involving payment of CDBG, HOME, and ESG funds, provided such agreements have been approved by the City Attorney, HUD , and meet all applicable requirements, including environmental review standards.
d) In addition, the Deputy City Manager is hereby authorized, on behalf of the City, to authorize and execute amendments to such agreements involving non-substantial changes to the CDBG, HOME, and ESG budgets within 25%, whether above or below the projected allocation, which may be proportionally dispersed to current distributions and activities. 272
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SECTION 2: P roper notices of a public hearing have been given and public hearings have been held before the City Council on this issue.
SECTION 3. The City Council has reviewed the proposed ordinance authorizing the Deputy City Manager to execute agreements, on behalf of the City, involving payment of CDBG, HOME, and ESG funds, including CDBG-CV, HOME-CV and ESG-CV.
SECTION 4. HUD’s Consolidated Plans, Annual Action Plans , and agreements over two hundred thousand dollars ($200,000) will be presented to City Council for approval.
SECTION 5: Upon consideration of the request, the City Council hereby approves this ordinance.
SECTION 6. ENVIRONMENTAL REVIEW. CDBG, ESG, and HOME funds cannot be committed to projects until certain conditions are met including HUD’s acceptance of the Action Plan, completion of a National Environmental Policy Act (“NEPA”) environmental review for each project, receipt of environmental clearance from HUD, provision of appropriate insurance verification by subrecipients, and acceptance of City contract terms
SECTION 7. SEVERABILITY. If any section, subsection sentence, clause, phrase, or portion of this ordinance is held invalid or unconstitutional for any reason by any court of competent jurisdiction, such portion shall be deemed a separate, distinct, and independent provision and such holding shall not affect the validity of the remaining portions.
SECTION 8. As of the effective date of this ordinance, all ordinances or parts of ordinances in conflict herewith are hereby repealed.
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SECTION 9. The City Clerk is here by directed to certify to the passage of this ordinance and to cause the same or a summary to be published one time within 15 days of its passage in a newspaper of general circulation for the City of Escondido.
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RESOLUTION NO. 2022-75
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ESCONDIDO, CALIFORNIA, ADOPTING THE CBDG AND
HOME BUDGETS FOR FISCAL YEAR 2022-23
WHEREAS, the City of Escondido (“City”) is a recipient of Community Development Block Grant (“CDBG”) and HOME Investment Partnerships Program (“HOME”) funds from the United States Department of Housing and Urban Development (“HUD”); and WHEREAS, the CDBG and HOME budgets reflect the work program for the coming year based on the City’s Action Plan for FY 202 2-23, which identifies the goals and priorities, established in the 2020 - 2024 Consolidated Plan; and
WHEREAS, a maximum o f 20% of CDBG funds received may be used for administration, a maximum of 15% of CDBG funds may be used for public service activities and with the remaining funds used for capital improvements and neighborhood revitalization; and WHEREAS, a total of 15% o f HOME funds received by the City must be used for the provision of affordable housing by eligible Community Housing Development Organizations (“CHDOs”), 10% of the HOME funds received by the City may be used for administration, and the remaining HOME funds received by the City may be used for housing development; and
WHEREAS, the City Council desires at this time, and deems it to be in the best public interest, to adopt both CDBG and HOME budgets for FY 2022-23; and
WHEREAS, CDBG and HOME cannot committed funds to projects until certain conditions are met including HUD’s acceptance of the Action Plan, completion of a National Environmental Policy Act (“NEPA”) environmental review for each project, receipt of environmental clearance from HUD, provision of appropriate insurance verification by subrecipients, and acceptance of City contract terms. 275
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NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Escondido, California:
1. That the above recitations are true.
2. That the City Council authorizes and adopts the CDBG and HOME budgets and administration of programs for the period of July 1, 2022, through June 30, 2023
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RESOLUTION NO. 2022-84
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ESCONDIDO, CALIFORNIA, ADOPTING THE FY 2022 -23
CBDG AND HOME FUNDS, AND APPROVING SUBMITTAL
TO DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT
WHEREAS, the City of Escondido (“City”) is a recipient of Community Development Block Grant (“CDBG”) and HOME Investment Partnerships Program (“HOME”) funds from the United States Department of Housing and Urban Development (“HUD”); and WHEREAS, the City Council desires at this time, and deems it to be in the best public interest, to adopt the one-year Action Plan for CDBG and HOME budgets for FY 2022-23.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Escondido, California:
1. That the above recitations are true.
2. That the City Council approves the adoption of the 2022-23 One-Year Action Plan for CDBG and HOME funds.
3. The City Council approves the submittal of the 2022-23 One-Year Action Plan to HUD. 277
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Attachment 1
Map of CDBG Eligible Census Blocks
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City of Escondido, Fiscal Year 2022‐2023
Anticipated CDBG Allocations: $1,548,067
116‐109 CDBG Administration 274,613$
348259 Fair Housing 35,000$
Total 309,613$
Public Service ‐ 15% cap of allocation ($232,210 max)
348489 Senior Nutrition 56,110$
348419 Senior Care 16,000$
348379 Meals on Wheels In Home Meal Delivery 25,000$
348676 Mama's Kitchen Home Delivered Meal Service 7,500$ 348429 Senior Transportation 34,610$
348662 Palomar Family Counseling Services Healthy Minds, Thriving Youth 22,333$ Center for Community Solutions DV Shelter 25,000$
Alliance for Regional Solutions Bridge to Housing Shelter Network 45,000$ Total 231,553$
348580 Code Compliance 115,000$
348610 Graffiti Removal 200,345$
348359 Grants to Blocks 75,000$
348500 Project NEAT 25,000$
Boys & Girls Club Playground Replacement 75,000$
Escondido Education COMPACT Success Center 284,600$
Water Bottle Filling Stations at City Parks 18,000$
Homeless Day Center Purchase/Conversion 213,956.00$
Total 1,006,901$
Total Allocated 1,548,067$
Total Unallocated ‐ $
Homelessness Services/Emergency Shelters
Administration ‐ 20% cap of allocation ($309,613 max)
Neighborhood Revitalization
Health & Human Development
Uncapped Capital Improvement & Other Neighborhood Revitalization Activities ‐ (No max) Health and Human Development
Homelessness Services/Emergency Shelters
Basic Need
Attachment "2"
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HOME Investment Partnership Program
FY 2022-2023
SUMMARY OF HOME FUNDING CATEGORIES
F
UNDING CATEGORY AMOUNT AVAILABLE
2022 Allocation $706,529
TOTAL AVAILABLE FUNDS $706,529
10% of Allocation
City’s Administrative Cost
$ 70,653
$70,653
Mandatory
CHDO Set-Aside (15% of allocation) $9 5,381
Housing Development RFP at 30% AMI $490,495
First-Time Homebuyer Program $50,000
TOTAL EXPENDITURES $706,529
Attachment "3"
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STAFF REPORT
June 15, 2022
File Number 0697-20
SUBJECT
SHORT-FORM RENT INCREASE APPLICATION FOR WESTWINDS MOBILEHOME PARK (FILE NO. 0697- 20-10302)
DEPARTMENT
City Manager Office; Housing & Neighborhood Services Division
RECOMMENDATION
Request the City Council Review Westwinds Mobilehome Park short-form application and if desired, adopt the Rent Review Board Resolution No. RRB 2022-74.
Staff Recommendation: Consider the short -form rent increase application submitted by Westwinds Mobilehome Park and if approved, adopt Rent Review Board Resolution No. RRB 2022-74 (City Manager Office: Robert Van De Hey).
Presenter: Holly Nelson, Housing and Neighborhood Services Manager
FISCAL ANALYSIS
Staff time and resources were expended to process the short-form application . Staff reviewed the application, evaluated the mobilehome park for code enforcement violations and conducted public outreach with the affected park residents, park manager and owners. No additional fiscal impact w as incurred by the City.
PREVIOUS ACTION
On June 8, 1988, the Escondido residents voted to approve Proposition K to enact Mobilehome Rent Control in the City of Escondido (“City”). Under Proposition K, if a park owner wants to increase the rent on a mobilehome rent control space, they must file an application with the City and obtain approval from the Mobilehome Park Rent Review Board (“Board”). This Board is an independent body comprised of the City of Escondido Councilmembers.
In 1997, the Board adopted changes to the Mobilehome Rent Review Board Guidelines t o allow for the acceptance of a “short-form” application . The short -form is an abbreviated and less administrative burdensome application process for park owners and City staff. A park owner can request a rent increase based solely on the change in the San Diego Metropolitan Area ’s Consumer Price Index (“CPI”), All Items/All Urban Consumers component since the last increase was granted by the Board. The requested 281
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increase may not exceed ninety percent (90%) of the increase in CPI since the last application was granted by the Board, or 8% of the current rent, w hichever is less, subject to a two-year limit. Park owners are allowed to submit an applications one-year from the date the last application was submitted.
BACKGROUND
Westwinds Mobilehome Park (“Park”) is an all -age park located at 1415 South Pine Street , Escondido, California. Out of the 65 spaces located in the park, ten spaces are subject to rent control. The park owners are requesting an increase for the ten rent -controlled spaces. The other spaces are not included in this application, because they are on long-term leases, occupied as rentals or by management, or rented as RV spaces. The amenities available for the residents include a furnished clubhouse, a pool, restrooms and coin laundry facilities.
Westwinds Mobilehome Park submitted a short -form application on March 2 3, 2022 , and the City accepted the application for review on March 29, 2022, which was 12 months from their previous application (Attachment 1). City staff reviewed the application and deemed it to be complete on April 22, 2022. City staff mailed a letter on April 28 , 2022, notifying the affected park residents of the application and proposed rent increase, upcoming residential meeting, and public hearing date (Attachment 2).
The Westwinds Mobilehome Park short-form application was available for review at the Westwinds’ park office, Housing & Neighborh ood Services Division counter at City Hall and the City’s website. City staff elected to post the application online on the Housing & Neighborhood’s website to promote transparency and remove potential barriers to access.
Housing & Neighborhood Services a nd Code Enforcement staff facilitated an in -person meeting for the affected Westwind residents on May 16, 2022 , at 6:0 0 p.m. Code enforcement conducted a lighting inspection on May 16 and completed his evaluation on May 17, 2022 (Attachment 3).
City staff mailed a 10-day notice to residents on June 3, 2022, informing them of the June 15, 2022 City Council Meeting (Attachment 4).
THE RENT INCREASE APPLICATION:
The application appears to meet all the eligibility criteria for submittal of a short-form rent increase.
PARK OWNER’S REQUEST:
The Park is requesting an increase of 90% of the change in CPI for the period of December 31, 20 20, to December 31, 2021. Ninety percent of the change in the CPI is 5.714% for the period of consideration.
The average monthly rent for the residents that are affected by this application is $ 478.60. The average monthly increase requested for the ten spaces is $27.35 per space, per month. 282
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This is the 2 4th rent increase request filed by this Park since the Ordinance was implemented. The proposed rent increase is 280% higher than the last increase in May 26, 202 1 for $7.20 per space, per month.
RESIDENT MEETING AND COMMENTS:
Individual letters were sent to each affected resident on April 28, 2022, notifying them of the application and the hearing date. The notice included information about a resident meeting scheduled at the Park’s clubhouse on May 16, 2022 at 6 p.m. No residents were present and a resident representative was not selected. City staff waited for 30 minutes before cancelling the meeting.
City staff received a phone call from an affected resident who shared he was unable to attend the resident meeting due to mobility changes. City staff made special accommodations to meet with the resident at his coach after the meeting had concluded to hear his feedback. The impacted resident expre ssed concerns with the increase, because of his fixed social security income. He reported he would cut back on certain foods and other expenses to afford his rent.
With consent of the resident, City staff relayed these concerns to the Westwinds’ park management. They informed City staff th at the park offers a private rent subsidy program for residents who are h aving difficulty paying their rent. Management outlined the parameters and said residents need to apply for the Section 8 waitlist, fill out an application for the program at the office and show proof of current income to qualify. City staff notified the affected resident of the park’s subsidy program.
CODE ENFORCEMENT INSPECTION:
An inspection of the lighting and common areas was conducted on May 16 and 17 2022. Two issues were identified: an inoperable light near the trashcans and a broken shower in the women’s public restroom.
Code Enforcement mailed a letter to the park managers and owners informing them of the violations and a reinspection was conducted on June 1, 2022 (Attachment 3). All violations were cleared (Attachment 5).
According to the Mobilehome Rent Review Board Guidelines, no increase granted for any park shall go into effect until any existing code deficiencies are corrected.
ADDITIONAL FACTORS AFFECTING THE APPLICATION:
In conformance with the Rent Review Board Guidelines, the decision of the Board will be finalized by adoption of the Resolution confirming the findings of the Public Hearing. The Notice of Determination will be mailed to the applicant and residents immediately upon adoption of the Resolution. Park owners and management must give a 90-day notice of any rent increase to affected residents upon the adoption of the Resolution.
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RESOLUTION
A. Resolution No. 2022-74
ATTACHMENTS
A. Attachment “1” - Westwinds Mobilehome Park Application B. Attachment “2” - Resident Short-Form Letter Notification C. Attachment “3” - Code Enforcement Inspection
D. Attachment “4” - 10-Day Public Hearing Notice
E. Attachment “5” - Code Enforcement Letter Clearing Violations 284
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RESOLUTION NO. RRB 2022-74
A RESOLUTION OF THE CITY COUNCIL/ MOBILEHOME
RENT REVIEW BOARD OF THE CTIY OF ESCONDIDO,
CALIFORNIA AUTHORIZING A RENT INCREASE FOR
WESTWINDS MOBILEHOME PARK
(File Number: 0697-20-10302)
WHEREAS, Article V of Chapter 29 of the Escondido Municipal Code is a codification of the Escondido Mobilehome Rent Protection Ordinance ("Ordinance") and provides for mobilehome space rent regulation; and
WHEREAS, the City of Escondido Mobilehome Park Rental Review Board ("Board") is charged with the responsibility of considering applications for rent increases; and WHEREAS, a short-form rent increase application pursuant to Section 12 of the Rent Review Board Guidelines was filed on March 23 , 2022, (“Ap plication”) by Westwinds Mobilehome Park , LLC (“Park”), the owner of the rental spaces in Westwinds Mobilehome Park, located at 1415 S. Pine Street in Escondido; and
WHEREAS, the Application was deemed complete by City staff on April 12, 2022; and WHEREAS, this is the twenty -fourth (24th) rent increase application filed by the Park since the Ordinance became effective in 1988. The last rent increase was granted by Rent Review Board Resolution No. 2021-02 on May 26, 2021, for an increase of 1.5% percent, or approximately $ 7.20 per space, per month; and
WHEREAS, the Application stated the average monthly rent per affected space was $ 478.60 for the ten spaces subject to the requested rent increase. The Park requested a rent increase in the amount of 90% percent of the change in the Consumer Price Index (“CPI”) for the period December 31, 20 20, through December 31, 2021,. The Application estimated this amount to be an average of $27.35 (5.714% increase of percent) per space, per month; and
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WHEREAS, a notice of the Park's application was mailed to all affected homeowners on April 28, 2022. Notice of the time, date, and place of the rent hearing before the Board was mailed to the Park and to all affected tenants on June 3,2022; and
WHEREAS, on May 16 and May 17, 2022 , a Mobilehome Park Rent Review Code Enforcement Inspection Report ("Inspection Report") was completed. The Inspection Report noted one lighting violation and one health and safety violation related to a broken shower in the park; and WHEREAS, on June 1, 2022, Code Enforcement completed a reinspection and all violations were cleared; and
WHEREAS, on June 15, 2022, the Board held its public hearing. After an initial staff presentation, the Board invited testimony from Park ownership, resi dents of the Park, and other residents of the community at large; and
WHEREAS, after all present had been given an opportunity to speak, the hearing was closed.
Following an opportunity for discussion among the Board members, and clarifying questions to the parties and staff, the Board voted to grant an average rent increas e of $27.35 per space, per month, for the ten spaces, which are subject to the rent increase.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Escondido, Californi a as follows:
1. That the above recitations are true.
2. That the City Council finds that the Westwinds Mobile home short -form application increase is consistent with the Guidelines, and approves the rent increase Application submitted by Westwinds Mobilehome Park, LLC.
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Housing & Neighborhood Services
201 North Broadway, Escondido, CA 92025
Phone: 760-839-4841
April 28, 2022
R
esident
Westwinds Mobilehome Park
1415 S. Pine St.
Escondido, CA 92025
R
e: Short-form Rent Increase Application Submitted by Westwinds Mobilehome Park D
ear Resident:
A
short-form application was submitted by Westwinds Mobilehome Park to the City of Escondido requesting a rent increase on March 29, 2022. The application was reviewed and determined to be complete.
U
nder the City’s Mobilehome Rent Review Board Guidelines, a park owner may request an increase using the “short form” process. To learn more about this process, please go to the City of Escondido’s website MOBILEHOME RENT REVIEW BOARD (escondido.org) or see Section 12 in the attached letter.
I
n accordance with the Guidelines, your park owner is requesting an increase based in the change in the San Diego Metropolitan Area Consumer Price Index also known as “CPI.” The requested increase may not exceed ninety percent (90%) of the CPI from December 31, 2020 through December 31, 2021 (which is 5.714%). There are ten spaces impacted by this request, and the rent increase will increase on average of $27.35 per space, per month.
There will be a meeting on Monday, May 16 at 6:00 p.m. in the clubhouse at Westwinds to discuss the short-form hearing process. Please feel free to attend this meeting and ask any questions you have regarding the hearing process or discuss any concerns. A resident representative will be chosen at this meeting. This designated representative will be given an opportunity to speak on behalf of the affected tenants at the rent review board public hearing.
T
he complete Westwinds Mobilehome Park Short-Form application is available for your review at the park office, Housing & Neighborhood Services’ Division counter at City Hall during normal business hours (Monday – Friday from 8 a.m. – 5 p.m.), and the City’s website. If you feel you are not subject to rent control, please notify the City, in writing, stating the reason. A written letter should be directed to Holly Nelson, Housing & Neighborhood Services Attn: Mobilehome Rent Control Administration, 201 N.
Broadway, Escondido, CA 92025.
The Mobilehome Rent Review Board will consider the short-form application at the public hearing held on June 15, 2022, at 5 p.m., at the City Council Chambers, 201 North Broadway, Escondido. If you wish to present information or speak to the Board about the request, you may fill out a speaker’s slip available in the lobby of the Council Chambers and give it to the City Clerk. If you are protesting the short- form application, you should register in the lobby prior to the opening of the public hearing.
I
f you have any questions, please call 760-839-4518 or email me at [email protected] S
incerely,
Ho
lly Nelson, LCSW
Housing & Neighborhood Services
Attachment "2"
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XX
XX
Attachment "2"
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C
ITY OF ESCONDIDO
Mobilehome Rent Control Administration
201 North Broadway
Escondido, CA 92025-2798
(760) 8
39-4841
RESIDENT NOTICE OF PUBLIC HEARING
N
OTICE IS HEREBY GIVEN that the City Council of the City of Escondido, sitting as the Mobilehome Rent Review Board, will hold a public hearing to consider the following item:
The rental increase application submitted by the owner of rental spaces in Westwinds Mobilehome Park, 1415 S Pine Street, Escondido, CA
A copy of the application is available for review at Westwinds Mobilehome Park Office, Housing Division at City Hall, 201 N. Broadway, Escondido, CA 92025, and the City’s website. A copy of the staff report will be available at the Housing Division counter five days prior to the hearing date.
A hearing to determine whether or not a rent increase will be granted has been scheduled before the Rent Review Board on June 15, 2022, at 5 p.m. in the City Council Chambers, 201 N. Broadway. This will be an in-person meeting and additional safety protocols may be in place. If you are protesting the short-form application, you should register in the foyer prior to the opening of the public hearing. The purpose of the hearing is for the Rent Review Board to obtain input from the owner and tenants about why an increase should, or should not be, granted. The Rent Review Board is neither required to grant an increase, nor is it allowed to grant a decrease in the current rent.
If you challenge the decision of the Board in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the Rent Review Board at or prior to the public hearing.
The hearing is the time and place for you to express your opinion about the rent increase request. If you desire, you may also submit information in writing to Mobilehome Rent Control Administration in the Hou sing Division.
Written information will be included in the reading file of the Rent Review Board (City Council) prior to the hearing.
At the hearing, the Rent Review Board may make a determination about the rent increase or they may request additional information from the owner and/or tenants before they make a decision. If additional information is requested, a new hearing will be scheduled. If an increase is granted, the owner must notify you in writing of the amount of the increase at least (90) days before the increase goes into effect.
S
incerely,
H
olly Nelson, Housing & Neighborhood Services Manager
Attachment "4"
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Mobilehome Rent Control Administration
201 N Broadway
Escondido, CA 92025
Jaime Cerda
2 Bahama
Escondido, CA 92025
Attachment "4"
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Attachment "5"
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KEY-
CONSENT CALENDAR CURRENT BUSINESS
PUBLIC HEARING WORKSHOP
6/22/2022
CONSENT CALENDAR - (J. AXELROD) - PUBLIC SERVICE AGREEMENT FOR SENIOR NUTRITION PROGRAM - Request the City Council adopt Resolution 2022-80 authorizing the Mayor to execute a Public Service Agreement ("PSA") CONSENT CALENDAR - (J. AXELROD) - BID AWARD FOR SENIOR TRANSPORTATION PROGRAM - Request the City Council adopt Resolution 2022-79 authorizing the Mayor to execute a Public Services Agreement ("PSA") with the lowest responsive bidder for the Senior Transportation Program CONSENT CALENDAR - (E. VARSO) - SAN DIEGO COUNTY CAL-ID GRANT - Request the City Council authorize the Police Department to accept a five-year San Diego County Cal-ID Grant from the County of San Diego Remote Access Network (RAN); approve a budget adjustment to spend the funds; and authorize the Chief of Police or his designee to execute grant documents on behalf of the City including future budget adjustments needed.
CONSENT CALENDAR - (A. FINESTONE) - AUTHORIZATION TO PROCESS AN AMENDMENT TO THE GENERAL PLAN LAND USE AND COMMUNITY FORM CHAPTER
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CLERK TO EXECUTE, ON BEHALF OF THE CITY, AMENDMENTS TO THE CONSULTING AGREEMENTS WITH AECOM AND TYLIN FOR THE CONSTRUCTION OF THE
CITRACADO EXTENSION PROJECT
PUBLIC HEARING - (C. HOLMES) - ADOPTION OF THE FISCAL YEAR 2022/23 OPERATING BUDGET (CONTINUED) - Request the City Council adopt Resolution No. 2022-xx approving the Fiscal Year 2022/23 Annual Operating Budget. It is also requested that City Council adopt Resolution 2022-xx approving the Appropriations Limit (Gann Limit) for Fiscal Year 2022/23.
CURRENT BUSINESS - (C. HOLMES) - APPROVAL TO COMMENCE JUDICIAL VALIDATION PROCEEDINGS FOR PENSION OBLIGATION BONDS - Request the City Council Approve the commencement of judicial validation proceedings in order to obtain authority to issue Pension Obligation Bonds in the future 7/13/2022
CONSENT CALENDAR - (J. GOULART) - ANNUAL FUEL PURCHASE - Request the City Council adopt Resolution 2022-67 authorizing the City Council to approve the purchase of unleaded and diesel fuels from SC Fuels.
CURRENT BUSINESS - (Z. BECK) - BOARDS AND COMMISSIONS SUBCOMMITTEE UPDATE -Request the City Council receive and file an update from the Boards and Commissions Subcommittee.
CURRENT BUSINESS - (Z. BECK) - DESIGNATION OF VOTING DELEGATE – League of California Cities Conference
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