percentage which the amount of Supplemental Capital Outlay Funds demanded by IEUA from all Contracting Agencies is to the total amount of the current Capital Capacity Reimbursement Account reserves of all Contracting Agencies set forth in the semiannual report upon which the demand is based. The amount demanded by IEUA from each Contracting Agency on any such date shall be an amount determined by applying the percentage thus obtained to the balance of the reserves, not including interest, in the Contracting Agency’ s Capital Capacity Reimbursement Account set forth in the semiannual report upon which the demand is based. All amounts received by IEUA from the Contracting Agencies as Supplemental Capital Outlay Funds shall be deposited in or credited to the Regional Wastewater Capital Improvement Fund. All such amounts together with all interest earned thereon shall be available and utilized by IEUA solely for the purpose of financing the acquisition, improvement and expansion of the Regional Sewerage System.
F. Allocation of Supplemental Capital Outlay Fund Shortages If at the time of any demand by for Supplemental Capital Outlay Funds, pursuant to subpart E of this Section, there are not sufficient funds deposited or credited to the Capital Capacity Reimbursement Accounts of all Contracting Agencies to pay the full amount of the demand, each Contracting Agency which has a Demand Deficit shall pay the full balance then deposited or credited to its Capital Capacity Reimbursement Account plus an amount determined based on the percentage which the amount of its Demand Defic it is of the total Demand Deficit for all Contracting Agencies . The amount to be paid by each such Contracting Agency shall be determined by multiplying the difference between, the Supplemental Capital Outlay Fund demand and the total amount of the Capital Capacity Reimbursement Account balances of all Contracting Agencies by the percentage thus determined.
G. Audit Process
The audit process for collection of connection fees by Contracting Agencies is intended to verify accuracy and uniformity in practices regionwide and to improve future performance. The audit and BAR review processes may result in IEUA and the Contracting Agencies working collaboratively to reconcile any discrepancies in connection fees from the Residential, or 144
Commercial or Industrial Unit. Contracting Agencies may be audited by IEUA on an annual basis, as well as periodically through the Building Activity Reports Subcommittee as described below.
H. Building Activity Reports and Building Activity Reports Subcommittee There shall be created a Building Activity Reports ( “BAR”) Subcommittee comprised of a staff/employee representative from IEUA and also from of each Contracting Agency who elects to participate . The Contracting Agency representative may be changed by the applicable Contracting Agency at any time. IEUA will convene the BAR Subcommittee quarterly to complete a more extensive review of a percentage of applications for which connection fees have been calculated and collected. The percentage of applications to be reviewed will be determined by the BAR Subcommittee. The review by the BAR Subcommittee may include such reviews as, but not limited to, an in -depth look at the collection fee calculation methodology, approach for calculating connection fees for similar facilities (e.g. - facilities that have an embedded restaurant and other services), monthly sewer fee collections, for region wide consistency.
SECTION 10 - FORECASTING AND PLANNING
A. Contracting Agency Reports
1. Monthly Reports
On such date as IEUA may designate, each Contracting Agency shall submit to IEUA monthly reports of sewered building activity. Each such report shall contain the following information in a format which will allow tracking through the development process:
a. The number of building permits issued during the month for structures which will contribute sewage to the Regional Sewerage System; b. Estimate volume of sewage and EDUs for such building permits; c. The tract number and number of lots for each tentative tract map approved during the month;
d. The tract number and number of lots or dwelling units for each final tract map 145
recorded during the month;
e. The number of final inspections or certificates of occupancy issued during the month for structures which will c ontribute sewage to the Regional Sewerage System;
f. The estimate volume of sewage and EDUs for all such structures.
B. IEUA Reports
1. Annual Forecast
IEUA shall work collaboratively with the individual Contracting Agencies to ensure they are using the most recent planning and other documents and incorporating agency knowledge about their service area into the Annual Forecast. On a biennial basis , prior to the first regularly scheduled Regional Technical Committee meeting of that calendar year, IEUA shall provide to the Regional Technical Committee and the Regional Policy Committee the Regional Annual Forecast from the Regional Wastewater Demand Forecast Model or other mutually agreed upon forecasting methodology.
2. Ten-Year Sewer Capital Forecast
On a biennial basis, by no later than the end of June, IEUA shall prepare and deliver to the Regional Technical Committee and the Regional Policy Committee a T en-Year Sewer Capital Forecast which includes dates of commencement and completion of capital improvement projects necessary to enable the Regional Sewerage System to meet the forecasted Capacity Demands of all Contracting Agencies . Such forecasts, hereinafter referred to as the “ Ten-Year Sewer Capital Forecast,” shall include:
a. Projected dates for the commencement and completion of design and construction of capital improvement projects necessary to meet forecasted Capacity Demands;
b. Estimates for each Regional Treatment Plant of the Capacity Demand of each Contracting Agency which received sewerage service the previous F iscal 146
Year;
c. An estimate of the amoun t of available treatment capacity at the IEUA Regional Treatment Plants;
d. An estimate of the amount of treatment capacity to be added, if any; e. Projected annual expenditures for the design and construction of such projects;
f. The Demand Deficit, if any, of each Contracting Agency; C. Review by Regional Committees
1. Annual Forecast
To ensure accurate forecasting, u pon receipt of the Regional Annual Forecast, the Regional Committees shall review the proposed Capacity Demands and provide input to IEUA within 30 days regarding anticipated development.
2. Ten-Year Sewer Capital Forecast
Upon receipt of the Ten-Year Sewer Capital Forecast, the Regional Committees will have 30 days to review and provide input and the Forecast will be placed on the agenda of both commit tees to provide recommendations to IEUA. Prior to adoption, IEUA shall consider the recommendations of the Regional Policy Committee.
D. Reclaimable Industrial Waste
Proposed new industrial connections to Community Sewer Systems which are expected to discharge more than 25,000 gallons per day of reclaimable industrial waste shall be approved based on the conditions set forth in the Ordinance No. 109 and any successors thereof. The determination of permit requirements and discharge limitations of the reclaimable industrial waste to be discharged into the Regional Sewerage System through an appropriate connection point in a Contracting Agency’s Community Sewer System shall be made by IEUA through the regional pretreatment program, resolution of the Board of Directors of IEUA, and Ordinance No. 109 and 147
any successors thereof.
E. Major Construction Contracts
IEUA shall not proceed with the award of a construction contract for a budgeted Regional Sewerage System capital improvement project previously approved through the Ten-Year Sewer Capital Forecast, which will involve an expenditure in excess of $10,000,000 (adjusted every 5 years or as needed based on the Consumer Price Inde x beginning in the year 2025) , without informing and considering recommendations from the Regional Policy Committee unless IEUA determines the project is necessary for the safe and efficient operation of the Regional Sewerage System. The latest Ten -Year Sewer Capital Forecast and any requested project details including funding information shall be made available to assist in the Regional Policy Committee’s review.
SECTION 11 - AVAILABILITY OF REGIONAL SYSTEM; IEUA’s
PEFORMANCE
A. Contracting Agencies
The services and facilities of the Regional Sewerage System shall be available to any property within the IEUA Service Area, subject to such terms and conditions as may be prescribed by a Contracting Agency for connection to its Community Sewer System.
B. Other Sewage Collection Agencies
IEUA shall not make the services and facilities of the Regional Sewerage System available, other than on a temporary, emergency basis, to any sewage collection agency which is not a party to a Service Contract until such agency has entered into a Service Contract per Section 30. Prior to entering into any such Service Contract, IEUA shall present the proposed terms thereof to the Regional Technical Committee and Regional Policy Committee for review and comment. Any Contracting Agency may challenge services offered under this part B by invoking the procedures set forth in Section 26 of this Service Contract.
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C. IEUA’s Performance
IEUA shall exercise its best effort to implement capital improvement projects necessary to enable the R egional Sewerage System to meet the Forecasted Demands of all Contracting Agencies are planned, designed and constructed in a timely manner and so that the Regional Sewerage System will at all times be able to provide for the Capacity Demands of all Contra cting Agencies. The Contracting Agencies recognize that the timing of the planning, design and construction of such capital improvement projects is largely dependent upon the Contracting Agencies making reasonable accurate projections of increased connections to and usage of their Community Sewer Systems.
SECTION 12 - EXTRA-TERRITORIAL SEWER SERVICE
12.1 SERVICE OUTSIDE THE BOUNDARIES OF IEUA SERVICE AREA A. Upon the Effective Date of this Contract
Any Contracting Agency which, upon the effective date of this contract was furnishing sewer service to any territory outside the boundaries of the IEUA Service Area, may continue to furnish such service and shall be entitled to the services and facilities of the Regional Sewerage System for that purpose. Each Contracting Agency providing sewer service to any such outside territory shall file a map or maps with the secretary of IEUA showing the boundaries of all such territory.
B. After the Effective Date of this Contract
Any Contracting Agency, after the effecti ve date of th is contract, may furnish sewer service to additional territory outside the boundaries of the IEUA Service Area. Prior to furnishing such sewer service, the Contracting Agency shall file a written request with IEUA. IEUA may consider the question of authorizing sewer service to the additional territory, subject to the authorization of the Local Agency Formation Commission for San Bernardino County, and the IEUA Board of Directors shall by resolution authorize sewer service to all or any part of the additional territory by the applicant or applicants unless it determines that such service is not in the public interest. 149
C. Annual Capital Outlay Charge for Territory Outside IEUA and the Service Area In addition to the payment of service charges, each Contracting Agency providing the services and facilities of the Regional Sewerage System to territory outside the IEUA Service Area shall be obligated to pay IEUA special capital outlay charges for such territory, as provided in subpart C or D of this Section or both such subparts , if both are applicable. Monies received by IEUA in payment of special capital outlay charges shall be deposited or credited to the Regional Wastewater Capital Improvement Fund and utilized, together with all interest earned thereon, solely for the purpose of financing the acquisition, improvement , and expansion of the Regional Sewerage System.
D. Annual Capital Outlay Charge
The Contracting Agency shall annually pay IEUA a special capital outlay charge in an amount equivalent to the amount of the property tax and other revenue which IEUA would have received during the fiscal year if such property were within the IEUA Service Area. Such charge shall be payable by the Contracting Agency during each fiscal year in the am ounts and at the times specified by IEUA.
SECTION 13 - DELIVERY POINTS: CONNECTION COSTS
Each Contracting Agency shall deliver sewage from its Community Sewer System into the Regional Sewerage System at such Delivery Points as may, from time to time, be requested by the Contracting Agency and approved by IEUA. The Delivery Point request may be made by the Contracting Agency or on behalf of a third party. In all Delivery Point requests, the Contracting Agency or third party shall pay applicable plan review and hydraulic/load modeling costs for the evaluation of the impact of the Delivery Point to the Regional Sewage System. The Contracting Agency or third party may also be required to submit a resolution confirming the authorization of annexation from the Local Agency Formation Commission for San Bernardino County or a resolution confirming an irrevocable annexation agreement to the Contracting Agency. 150
Upon consideration of the information submitted, IEUA may authorize the new Delivery Point.
IEUA shall provide written notice of its recommendation regarding the new Delivery Point at a regularly scheduled Regional Technical Committee meeting. Upon receipt of a favorable report and recommendation from the committee or upon failure of the committee to respond within a 30- day period, IEUA may authorize the new Delivery Point.
If the Regional Technical Committee recommends against a new Delivery Point for any Contracting Agency, they shall do so in writing including the technical basis for their dec ision.
The Contracting Agency may file a written request for a hearing with the secretary of the Board of Directors of IEUA. Upon receipt of such a request, said Board of Directors shall schedule and conduct a hearing in accordance with the provisions of S ection 26 hereof. All costs and expenses of making the connection between the Regional Sewerage System and the Community Sewer System of any Contracting Agency shall be borne by the Contracting Agency and/or third party.
SECTION 14 - DETERMINATION OF SEWAGE DELIVERIES: COSTS OF
MEASURING EQUIPMENT
IEUA shall determine the amount of sewage delivered to the Regional Sewerage System by all Contracting Agencies and shall maintain accurate and complete records thereof. The amo unt of sewage delivered to the Regional Sewer age System by each Contracting Agency shall be determined by IEUA based on a standard daily measurement or contribution per Equivalent Dwelling Unit methodology established by IEUA and the Regional Technical Committee from time to time.
If required by IEUA, a Contracting Agency shall install and maintain and operate at its expense, measuring devices and equipment for measuring the flow of sewage from the Contracting Agency’s Community Sewer System into the Regional Sewerage System. Prior to installation, IEUA shall approve the design of such measuring devices and equipment and shall inspect and approve their installation. Such measuring devices and equipment shall be examined, tested and serviced regularly, but not less than once a year, by IEUA to e nsure their accuracy. At any time IEUA or any Contracting Agency may inspect any such measuring device and equipment and all records and measurements taken therefrom.
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The determination of sewage flow or contribution methodology per Equivalent Dwelling Unit contributed by each Contracting Agency shall be reviewed and updated if needed, or as requested by IEUA, but not less than every ten (10) years.
Once the EDU methodology is updated and adopted, EDU and equivalent EDU determinations will be made with the updated methodology. Adjustments in cost allocations among Contracting Agencies and users among customer classes (i.e.- residential, commercial, and industrial) resulting from the updated methodology and determination shall be implemented in consultation with the BAR Subcommittee.
SECTION 15 - CONTROL, PRODUCTION, AND DISPOSITION OF RECYCLED WATER
A. General
IEUA shall have ownership and control of all sewage delivered into the Regional Sewerage System for the purposes of Transmission, Treatm ent, and Disposal, and shall retain the exclusive right over the Recycled Water generated from the sewage delivered to IEUA from the Contracting Agencies, having sole discretion over its use , subject only to those contractual rights of the Contracting Agencies described in this Section 15. It is the intent of IEUA that Recycled Water be put to local beneficial use within the IEUA service area and the Chino Basin to the greatest extent practicable and allowed. The contractual right to purchase Recycled Water is established pursuant to this Section 15 while the terms and conditions regulating the sale, delivery, and use of Recycled Water shall be governed by Ordinance No. 112, or any successors thereof.
B. Contractual Right to Purchase Recycled Water
1. Right of First Purchase
Each Contracting Agency shall have the right of first purchase of Recycled Water as provided herein. The purchase of Recycled Water shall be voluntary and determined at the option of the Contracting Agency from year to year. The right of first purchase shall take 152
priority over any other Recycled Water purchase agreements between IEUA and customers that are not Contracting Agencies.
Each Contracting Agency shall have the right of first purchase from IEUA of Recycled Water in a total quantity not exceeding the base entitlement of the Contracting Agency.
The total base supply of Recycled Water which is subject to the right of first purchase from IEUA by the Contracting Agencies receiving sewerage service at any Regional Treatment Plant shall be the total quantity of sewage delivered into the Regional Sewerage System by all such Contracting Agencies, measured at the intake point of the Regional Treatment Plants, less normal processing losses resulting from the treatment of sewage, a nd less Recycled Water exported from the Chino Basin by IEUA to satisfy the SAR Base Flow Obligation if and to the extent deemed necessary by IEUA.
Each Contracting Agency shall have a monthly base entitlement to a portion of the total base supply of Recycled Water , said portion being in the proportion that the quantity of sewage delivered into the Regional Sewerage System by the Contracting Agency bears to the total quantity of sewage delivered into the Regional Sewerage System by all Contracting Agencies.
The Contracting Agencies have expressed a desire to achieve equitable distribution of Recycled Water deliveries, especially during periods of high demand. Each Contracting Agency shall manage its Recycled Water usage responsibly during periods of high demand so as not to impede other Contracting Agencies from utilizing all their base entitlement, and to prevent Contracting Agencies from using Recycled Water in excess of their base entitlement as calculated on a monthly basis. R ecycled Water demands in excess of a Contracting Agency’s monthly base entitlement shall not be allowed if it inhibits another Contracting Agency from developing a new Recycled Water use project that would be within their monthly base entitlement. Following the execution of this contract by all Parties, the Regional Technical and Policy Committees will develop an Exhibit “A”, Peak Flow Monitoring and Enforcement Criteria, to be incorporated into this contract, that will 153
detail the requirements for meeting base entitlement as calculated on a monthly basis .
Authorization of this Exhibit “A” will not require re-authorization of this contract through the Parties. Exhibit “A” shall become an authorized Exhibit of this contract by a two-thirds majority vote of the Regional Policy Committee and approval by the IEUA Board of Directors.
2. SAR Base Flow Obligation.
The Parties have differing views regarding the SAR Base Flow Obligation including, but not limited to the allocation of the obligation and the method and way the obligation is fulfilled. Historically there have been sufficient flows from IEUA Regional Treatment Plant discharges to satisfy base entitlement claims and satisfy the SAR Base Flow Obligation with Recycled Water and it is believed that such condition will continue for the next several years at a minimum. Although alternative sources of water for meeting the SAR Base Flow Obligation are not precluded, IEUA will con tinue its current practice of fulfilling the SAR Base Flow Obligation using Recycled Water from IEUA Regional Treatment Plants in conformity with established practice since inception of the Orange County Judgment, until an alternative acceptable to IEUA is determined. This topic will be reconsidered at the ten -year review provided for in Section 28 of this contract , or earlier upon unanimous consent of the Parties.
IEUA, within its discretion, may prioritize the usage of Recycled Water for meeting the SAR Base Flow Obligation when it is necessary to do so regardless of the effect on base supply for purchase. If the SAR Base Flow Obligation is not met in a given year, IEUA will determine the best course of action to satisfy the SAR Base Flow Obligation the following year, which may include reducing the available base supply. IEUA will satisfy the SAR Base Flow Obligation with the most cost- effective or practical source of water available and seek alternative means of satisfying the SAR Base Flow Obligation in order to maximize available local supplies.
3. Surplus Base Supply.
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Surplus base supply is that portion of base supply remaining after each Contracting Agency has exercised its right of first purchase to purchase its base entitlement, or portion thereof.
During and following the end of each year IEUA shall determine the amount of surplus base supply available, if any, for purchase by Contracting Agencies, and s hall notify all Contracting Agencies of that amount, in writing. Each Contracting Agency shall have the option to purchase surplus base supply in an amount calculated utilizing the same ratio used to calculate base entitlement. However, if after offering s urplus base supply to all Contracting Agencies there remains surplus base supply, then a Contracting Agency may purchase from the remaining surplus base supply in an unrestricted amount subject to mutual agreement with IEUA. Nothing herein shall prevent Co ntracting Agencies from establishing agreements to purchase Recycled Water from other Contracting Agencies. The purchase of Recycled Water in excess of a Contracting Agency’s base entitlement in any given year shall not result in an increase in base entitlement for subsequent years.
4. Disposition by IEUA of Unclaimed Recycled Water.
To the extent that any of the Contracting Agencies fail to exercise their respective rights of first purchase of Recycled Water, IEUA may make any lawful use of such Recycled Water, including beneficial use, sale , or other disposition inside or outside the Chino Basin; provided, that, any funds generated by the sale of Recycled Water shall be deposited into the IEUA Recycled Water Fund. IEUA will inform the Contracting Agencies of the use or sale of any unclaimed Recycled Water within 30 days of the transaction.
SECTION 16 - RESERVED
SECTION 17 - SERVICE CHARGES FOR MAINTENANCE AND OPERATION
OF THE REGIONAL SEWERAGE SYSTEM
All Contracting Agencies shall pay service charges for all sewage delivered to the Regional Sewerage System. Each Contracting Agency shall pay its pro rata share of all net audited costs incurred by IEUA in the maintenance and operations of the system. Net audited costs consist of:
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A. Maintenance and Operation
Costs of maintenance and operation of all transmission and treatment facilities comprising the Regional Sewerage System; and
B. Other Costs
Any other costs reasonably related to the maintenance and operation of the system; and C. Replacement and Unforeseen Costs
Based upon generally accepted engineering and accounting principles, reasonable reserves for the estimated costs and expenses of:
1. Replacement of any facilities where the costs and expenses of replacement are customarily considered a part of the costs and expenses of extraordinary maintenance which adds to the normal service life of facilities; and
2. Unforeseen contingencies; and
3. Actual costs and expenses incurred by IEUA for the Transmission, Treatment and Disposal of any byproduct resulting from the treatment of the Sewage delivered by a Contracting Agency.
D. Cost Of Service Study (“COSS”)
IEUA may, from time to time, conduct a COSS which shall be conducted in accordance with procedures normally utilized in the public rate setting process and in accordance with applicable law.
E. Proposed Service Charge Rate Adjustment (“Adjustment”) Prior to the imposition of a rate adjustment , IEUA shall conduct a rate workshop wherein Contracting Agencies may express comments and feedback on the matter for consideration by IEUA. Rate adjustments for each fiscal year shall be within the discretion of the IEUA Board of Directors and shall conform to the COSS and applicable law. 156
SECTION 18 - RESERVED
SECTION 19 - REGIONAL SEWERAGE SYSTEM BUDGETS
A. Fiscal Year Budgets
For each fiscal year, or on a biennial basis if utilized by IEUA, the IEUA Board of Directors shall cause to be prepared and shall adopt a budget, which includes the Regional Sewerage System budget.
B. Form and Content of Budgets
The budget shall contain a plan of financial operations for the Regional Sewerage System and shall contain an estimate of the requirements for expenditures, including provisions for any reserves, and the means of financing such requirements. The budget shall be itemized and shall show in reasonable detail the nature and purpose of each item of revenue and expense and the actual or estimated amount thereof. The budget shall include a plan of financial operations for the capital costs of the acquisition and construction of the Regional Sewerage System, and a plan of financial operation for the maintenance and operation of the system, prepared as follows:
1. Capital Improvement Fund Budget. The costs of the acquisition and construction of the Regional Sewerage System shall show:
a. The various items and amounts of capital costs and the total thereof; b. The total amount in the Regional Wastewater Capital Improvement Fund and the available an d unencumbered balance of such fund as of the commencement of the fiscal year and an estimate of the amount therein and the unencumbered balance thereof as of the end of the fiscal year; c. The amounts, if any, of IEUA revenues from sources other than property taxes which are or will be available for payment of capital costs and the total thereof; d. The estimated amount of property taxes to be received during the fiscal year; e. The projected amount of Supplemental Capital Outlay Fund contributions 157
required from each Contracting Agency during the fiscal year and the total thereof.
2. Maintenance and Operations Fund Budget. The part covering the maintenance and operation of the Regional Sewerage System shall show:
a. The various items and amounts of maintenance and ope ration expenses , including replacement and rehabilitation, and the total thereof; b. The total amount in any reserves theretofore established, and the available and unencumbered balance in such reserves as of the commencement and end of the fiscal year;
c. The amount of service charges payable by each Contracting Agency and the total paid or payable by all Contracting Agencies;
d. The amounts, if any, of revenue from sources other than services charges which will be available for payment of maintenance and operati on expenses and the total thereof;
e. The total amount required to be raised from service charges for payment of maintenance and operations expenses;
f. The rate of the service charge for the fiscal year(s); g. The amount of any surplus of service charges received by IEUA during the fiscal year preceding the fiscal year in progress in excess of the cost of maintenance and operation of the Regional Sewerage System for that year which was transferred to the Regional Sewerage System Operation and Maintenance Fund re serve for replacement of Regional Sewerage System facilities for such preceding fiscal year, or the amount, if any, of any shortage in the amount of service charges received by IEUA during such preceding fiscal year less than the cost of maintenance and op eration of the Regional Sewerage System for that year which was transferred from said reserve during the year then in progress for such preceding fiscal year; 158
C. Preparation and Approval of Proposed Budgets
Not later than April 1 of each budgeting year, the IEUA Board of Directors shall direct its General Manager, or such other person or persons as the Board may designate, to prepare and submit to the Board a proposed Regional Sewerage System budget for the next fiscal year (s). IEUA will conduct informational sessions with the Regional Technical and Policy Committees to inform the Committees of the proposed Regional Sewerage System budget and provide the Committees with opportunities for input. Said budget and the rate of service charge fo r the next fiscal year will be considered and adopted by IEUA no later than June 30 of each fiscal year. If the Board of Directors fails to adopt a budget by June 30 then, until such time as the Board shall adopt such budget, the budget last adopted shall constitute the budget for such fiscal year.
D. Adoption of Separate Budgets
Notwithstanding the preceding provisions of this section, the Board of Directors of IEUA may elect for any fiscal year to separately prepare and adopt a Capital Improvement Fund B udget and a Maintenance and Operation Fund Budget. If said Board elects to so proceed, each such separate budget shall be prepared in accordance with the provisions of this section which are applicable thereto. Both said budgets shall be processed and adopted in accordance with the procedures and pursuant to the time schedule set forth in this section.
SECTION 20 - BILLING AND PAYMENT OF SERVICE CHARGES
A. Monthly Billing Statements of Service Charges
Not later than 20 days after the end of each month, each Contracting Agency shall provide to IEUA a report with the number of billable Equivalent Dwelling Units billable to each Contracting Agency. IEUA shall provide a billing statement of service charges to each Contracting Agency, setting forth the number of billable Equivalent Dwelling Units during such month for the service charge rate applicable thereto and the total service charge due and payable to IEUA for said month.
Monthly service charges shall be based on the service charge rate adopted by the IEUA Board. 159
B. Payment of Statements; Interest on Overdue Payments
Each Contracting Agency shall pay the amount of the service charge set forth in any statement on or prior to its due date, namely, the thirtieth day following the date of the delivery of such statement. In the event that a Contracting Agency is delinquent in payment of bills for service charges, a penalty of ten (10) percent of the original unpaid invoice amount shall be added to any fee or charge that becomes delinquent. Interest at the maximum rate provided by California Government Code Section 926.10 as may be amended from time to time, shall accrue on the total of all delinquent fees or charges.
Additional charges provided herein for delinquent payments may be waived by the Board of Directors upon written request by the IEUA Customer upon a finding that the delinquency was caused by excusable neglect or circumstances beyond the control of the Cont racting Agency , provided that the delinquent Contracting Agency reimburses IEUA for all costs and penalties actually incurred by IEUA as a result of the delinquent payment.
Interest paid upon any delinquent amount shall be credited to the Regional Sewera ge System Maintenance and Operation Fund unless, by reason of such delinquency, IEUA shall have advanced the amount of the delinquency from other sources, in which case, the interest shall be credited to such fund as the IEUA Board of Directors may designate. A Contracting Agency shall not be entitled to withhold payment, in whole or in part, of the amount of any statement for service charges pending action pursuant to part C of this Section 20.
C. Adjustment for Overpayment or Underpayment
Upon disagreement between any Contracting Agency and IEUA over the amount of service charges or the discovery of an error in computation of service charges for a Contracting Agency, which is not resolved within 30 days of communication, IEUA shall request a recommendation from the Regional Technical committee. The IEUA Board of Directors shall consider the recommendation by the Regional Technical Committee and make its determination on service 160
charge adjustments, due dates and any interest due, and shall provide for the appropriate credit to or debit of any affected Contracting Agency’s service charge account.
D. Deposit of Payments in Maintenance and Operation Fund All monies received by IEUA in payment of service charges s hall be deposited in and credited to a separate fund or account in the treasury of IEUA, to be known as the “Regional Sewerage System Maintenance and Operation Fund. ” All monies in said fund and interest earned thereon shall be used and expended only for payment of maintenance and operation expenses paid or incurred by IEUA under the provisions, of this contract.
SECTION 21 - RESERVED
SECTION 22 - RESERVED
SECTION 23 - GRANTS AND FINANCIAL ASSISTANCE
IEUA and the Contracting Agencies shall exercise their best efforts to obtain the maximum amounts of grants and other financial assistance which may be available from any federal, state, local, or other source for defraying all or any part of the capital costs and the maintenance and operation expenses of the Regional Sewerage System. T he General Manager of IEUA, the Regional Policy Committee, and the Regional Technical Committee shall keep each other fully informed of any available grant or other financial assistance programs known to any of them.
In addition, IEUA shall on a semi -annual basis, submit a report to the Regional Technical Committee and the Regional Policy Committee, as an information item, on any proposed or pending applications (which may include updates on negotiation status) for grants or other financial assistance.
IEUA’s costs for the acquisition, construction, maintenance, or operation of the Regional Sewerage System shall be reduced by amounts of any grants or other non- repayable financial assistance received therefor by IEUA from the federal or state government. 161
SECTION 24 - REGIONAL POLICY COMMITTEE
The parties desire to provide for a Regional Policy Committee to advise IEUA of the needs and views of the Contracting Agencies concerning IEUA’s policies and activities in the financing, acquisition, construction, maintenance and operation of the Regional Sewerage System, to make reports and recommendations with respect thereto, and to inform the Contracting Agencies concerning such policies and activities. Committee membership shall be voluntary.
Each participating Contracting Agency shall appoint one regular member and one alternate member to the Regional Policy Committee. Such members shall be members of the Contracting Agency’s governing body. The regular and alternate members so appointed shall serve at the pleasure of the appointing agency. Each participating Contracting Agency shall give the secretary of IEUA immediate notice of all appointments and removals made by it , and of the name and contact information of each appointee. IEUA shall appoint one regular me mber and one or more alternates to the Regional Policy Committee. The members so appointed shall be members of the IEUA Board of Directors of IEUA and shall serve at the pleasure of IEUA. The IEUA member shall be entitled to participate at all regular and special meetings of the committee.
The Regional Policy Committee shall be chaired by a regular member of the Regional Policy Committee and shall rotate among its regular members on a biennial basis through all the Contracting Agencies. A Vice Chair shall also be designated to act in the Chair ’s absence. The Vice Chair shall be selected by a majority vote of the regular members. A quorum made up of a majority of members shall be required to conduct business.
Each regular member of the Regional Policy Co mmittee or the Contracting Agency’s alternates, shall have one vote. A majority of members voting shall be required to carry any matter before the committee.
The Regional Policy Committee shall hold a regular meeting quarterly or as needed in the determination of IEUA. The Regional Policy Committee may adopt such procedures and rules as it deems advisable concerning its officers, meetings and the manner and method of making its 162
reviews, reports and recommendations on any matter affecting the acquisition, c onstruction, maintenance and operation of the Regional Sewerage System.
IEUA shall, if requested by the Regional Policy Committee, provide the Regional Policy Committee with a meeting place and with the services, advice , and assistance of members of its staff. All records, reports, and other information of IEUA pertaining to the financing, acquisition, construction, maintenance and operation of the Regional Sewerage System shall be available for inspection by members of the Regional Policy Committee. IEUA a grees to maintain and make available to the Regional Policy Committee accurate records of all of its costs, disbursements, and receipts with respect to activities under this contract.
SECTION 25 - REGIONAL TECHNICAL COMMITTEE
The parties desire to provide for a Regional Technical Committee to advise the Regional Policy Committee on technical matters related to the Regional Sewerage System . Participation shall be voluntary. The members and alternate members of the Regional Technical Committee shall be appointed by their respective Contracting Agencies and IEUA shall be entitled to appoint one member and alternate member s with the same right of participation as other members. The committee shall hold regular meetings quarterly or as needed in the determination of IE UA.
Appointments and the number of alternates shall be determined in the sole discretion of each Contracting Agency and IEUA as applicable.
The committee may, and upon request by the Regional Policy Committee or IEUA shall, review and make recommendations concerning any of the following technical matters: the acquisition, design, construction, maintenance, operation, or financing of sewer facilities, sewage treatment, reclamation, or disposal facilities, sewage and effluent measuring devices and equipment, Community Sewer Systems and the Regional Sewerage System; sewer user charges; service charges; quality standards for sewage and any effluent; and any other technical matter related to any of the foregoing.
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SECTION 26 - DISPUTE RESOLUTION
Members of the Regional Poli cy Committee are encouraged to raise pertinent issues concerning the Regional Sewerage Contract with the IEUA Board of Directors during the public comment period of a regularly scheduled meeting of the Board. To the extent that any provision of this contract authorizes a hearing under this Section 26, the following procedures will apply:
A. Notice of Dispute.
The Regional Policy Committee, through a majority vote of its members, may request a hearing before the IEUA Board of Directors on any dispute related t o the IEUA’s performance of this Contract or where the Contract authorizes a hearing by submitting a request in writing to the General Manager of IEUA, with the date of delivery of such request deemed the submission date. The request shall state the issue in dispute and a brief explanation of the Regional Policy Committee position on the matter.
B. Notice of Hearing.
Within 30 days of the submission date IEUA shall schedule a hearing to consider the matter. IEUA shall send written notice to all Contracting Agencies by First Class Mail and shall be deemed to have been given when so deposited in the United States Mail, postage prepaid. The notice shall set forth the date, time and location for the hearing. The hearing shall be conducted in conjunction with a special or regularly scheduled meeting of the IEUA Board of Directors and shall be published in conformity with Brown Act requirements. The hearing shall be scheduled on a date not more than 60 days from the submission date.
C. Hearing.
Any person may address the IEUA Board of Directors at the hearing. Any documentary evidence to be introduced by a party must be submitted to the Secretary of the IEUA Board of Directors no later than 10 days prior to the hearing date to ensure the documents are included in the agenda package and available for posting to the IEUA website. 164
D. Continuance.
The IEUA Board of Directors may, within its discretion, continue the hearing at the request of any person or the Board of Directors upon a showing of good cause , but in no event shall such continuance extend beyond 30 days.
E. Decision.
At the close of the hearing, the IEUA Board of Directors may confer and render a decision through a majority vote of its members , which shall be recorded upon the minutes of the meeting. The decision by the IEUA Board of Directors shall be deemed a final administrative action. The IEUA Board of Directors may continue the matter for up to 60 days for further discussion and consideration of the evidence.
SECTION 27 - EFFECTIVE DATE OF CONTRACT
This contract between IEUA and the undersigned Contracting Agency shall become effective (“Effective Date”) after the occurrence of both of the following events:
1. The authorization and execution of this contract by IEUA and the undersigned Contracting Agencies.
2. IEUA shall give written notice thereof to the undersigned Contracting Agency.
The notice shall specify a date, as deter mined by IEUA in accordance with this section, which shall be the Effective Date of this contract.
SECTION 28 - TERM OF CONTRACT
The term of this contract and any other Service Contract entered into between IEUA and any sewage collection agency, shall be 50 years fro m the Effective Date. It is the intent of the parties that all Service Contracts providing for the services and facilities of the Regional Sewerage System 165
shall have the same termination, date, without regard to the effective dates of the individual, contracts.
In order to provide for a periodic review and update, as necessary, of the provisions of this contract, IEUA and the Contracting Agencies agree to enter good faith discussions at intervals not exceeding ten years or at the request of the majority of the Contracting Agencies.
SECTION 29 - RENEWAL
No later than two years prior to the end of the term of this contract or any earlier termination or extension of this contract, the parties shall negotiate for the extension or renewal of this contract upon comparable terms and conditions. If the parties have been unable to agree thereon, then any Contracting Agency, by written notice given to IEUA at least 12 months prior to the expiration of said term, may elect to receive continued sewage treatment service after the expi ration of said term, on a temporary basis, through separate agreement, upon the following conditions:
A. Expansion.
If, by reason of continued service, no expansion is required in any facilities of the Regional Sewerage System in existence upon the expirat ion of the term of this contract, the Contracting Agency may deliver sewage into the system in any quantity and at any flow rates. If, by reason of continued service, such expansion shall be required, the annual quantity and flow rates of sewage to be deli vered into the Regional Sewerage System by the Contracting Agency shall not exceed the quantity and flow rates delivered by the agency during the last full fiscal year preceding the expiration of said term.
B. Service Charge.
The service charge rate shall be determined as provided in Section 17 hereof. 166
C. Quality.
The sewage quality standards shall be in accordance with those in effect during the last full fiscal year preceding the expiration of said term or any higher standards prescribed by any federal, state or regional agency authorized by law to prescribe quality standards for effluent discharges.
D. Physical Conditions.
IEUA shall maintain and operate the Regional Sewerage System under substantially the same physical conditions of service as prev ailed during the last fiscal year preceding the expiration of said term.
Other terms and conditions of continued service shall be reasonable and equitable and shall be mutually agreed upon and, if they provide for continued service for a specified number of years, a Contracting Agency shall have the option to receive further continued sewage treatment service upon the expiration of that and each succeeding period of continued service. Nothing herein shall extend the term established in Section 28 of this contract.
SECTION 30 - AUTHORIZATION AND EXECUTION OF SEWAGE SERVICE
CONTRACT
A. Authorization of Any Sewage Collection Agency.
All proposed contracts between IEUA and any sewage collection agency for the purpose of, (i) providing the agency with the service s and facilities of the Regional Sewerage System under a Service Contract, (ii) the acquisition by IEUA of any existing sewage treatment and disposal plant or interceptor sewer, or (iii), both (i) and (ii), shall be authorized for execution by IEUA. The agency shall furnish IEUA with a certified copy of the resolution authorizing execution by the agency, together with a certified Copy of the proposed contract referred to therein. The resolution shall contain all restrictions, limitations, and conditions, if any, which may have been imposed on the execution of the contract.
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B. Amendment of Any Existing Contract; New Contracts with Subsequent Contracting Agencies.
If IEUA proposes (i) to amend or rescind any existing Service Contract with a Contracting Agency or (ii) to enter a new Service Contract or a contract for the transfer of any existing sewage facilities to IEUA, as part of the Regional Sewerage System, the IEUA Board of Directors shall adopt a resolution declaring its intention to do so and shall speci fy a time, not sooner than 60 days after the adoption of the resolution, and a place at which the Board will hold a hearing on the question of the proposed amendment, rescission or new contract, as the case may be. Immediately thereafter the secretary of IEUA shall deliver a copy of the resolution, together with a copy of the proposed amendment, rescission or new contract to the clerk or secretary of each Contracting Agency and to each member of the Regional Policy Committee. The Regional Policy Committee shall review the proposal and, not later than 10 days preceding the date of the hearing, shall submit its written report and recommendation thereon to the general manager of IEUA and to each Contracting Agency.
At the hearing on the proposal, the IEUA Board shall consider the report and recommendation of the Regional Policy Committee and shall hear representatives of any Contracting Agency, members of the committee, and any other interested persons. The IEUA Board may modify the proposal and, upon the conc lusion of the hearing, order the authorization for execution by IEUA of the proposed amendment, rescission, or new contract, as the case may be.
SECTION 31 - NOTICE
Notices authorized or required to be given by any provision of this contract shall be deemed to have been given upon delivery, if delivered personally, or upon deposit in the mail, if enclosed in a properly addressed envelope and deposited in the United States mail for delivery by registered or certified mail, or delivered via electronic mail.
Notice shall be given to the parties by delivery or mailing to the following officers of the parties at the following addresses:
168
IEUA
____________________________________
____________________________________
Undersigned Contracting Agency:
____________________________________
____________________________________
At any time, a party may give written notice to the other party of a change in the designated officer or address.
Notice to members of the Regional Policy Committee or the Regional Technical Committee shall be given to the persons and at the addresses designated in the notices of appointment filed with the Secretary of IEUA.
SECTION 32 - PARTIAL INVALIDITY
The invalidity of any provision of this contract shall not affect the validity of the remainder thereof which can be given effect without such invalid provision.
SECTION 33 - INCORPORATION OF RECITALS
The Recitals set forth above are incorporated herein an d made an operative part of this Service Contract.
SECTION 34 - COUNTERPARTS
This Service Contract shall be executed by all parties in duplicate originals, each of which shall be considered an original Service Contract.
169
Date of Execution
___________________________
ATTEST:
____________________________
Secretary of the Board of Directors
Date of Execution
___________________________
ATTEST:
____________________________
City Clerk
Date of Execution
___________________________
ATTEST:
____________________________
City Clerk
Inland Empire Utilities Agency
___________________________
President of the Board of Directors
City of Chino
___________________________
Mayor
City of Chino Hills
___________________________
Mayor
170
Date of Execution
___________________________
ATTEST:
____________________________
Secretary of the Board of Directors
Date of Execution
___________________________
ATTEST:
____________________________
City Clerk
Date of Execution
___________________________
ATTEST:
____________________________
City Clerk
Cucamonga Valley Water District
___________________________
Board President
City of Fontana
___________________________
Mayor
City of Montclair
___________________________
Mayor
171
Date of Execution
___________________________
ATTEST:
____________________________
City Clerk
Date of Execution
___________________________
ATTEST:
____________________________
City Clerk
City of Ontario
___________________________
Mayor
City of Upland
___________________________
Mayor
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City of Fontana
Action Report
City Council Meeting
8353 Sierra Avenue
Fontana, CA 92335
File #: 21-2476 Agenda Date: 9/26/2023
Agenda #: A. Category: Public Hearing
FROM:
Finance
SUBJECT:
Quarterly Lien Action for Delinquent Sewer, Rubbish and Weed Abatement Accounts RECOMMENDATION:
1. Authorize staff to complete and record lien notices against real property for those sewer accounts sixty days or more delinquent as described in Certified Lien List and direct staff to forward recorded liens to the County for collection.
2. Authorize staff to complete and record liens against real property for those rubbish accounts more than ninety days delinquent as described in the Certified Lien List and direct staff to forward recorded liens to the County for collection.
3. Adopt Resolution No. 2023- 099, of the City Council of the City of Fontana adopting the statement of unpaid expenses for weed abatement and imposing a lien against real property for payment thereof.
..End
COUNCIL GOALS:
· To operate in a businesslike manner by becoming more service oriented. · To practice sound fiscal management by developing long-term funding and debt management plans.
· To improve public safety by increasing operational efficiency, visibility, and availability.
DISCUSSION:
Public Hearings on proposed liens are scheduled quarterly to allow for timely collections and recording of indebtedness. The lien process protects revenues due to the City which would have otherwise been subject to loss through skipped accounts or property transfers.
The proposed lists (one each for sewer, rubbish and weed abatement) are on file with the City Clerk.
Each account has had notification by mail regarding the public hearing and intent to record the lien amount, as well as regular billing notification and legal advertisement as required by City Code.
Further, with respect to Weed Abatement, all property owners had the opportunity to protest weed abatement citations through an administrative hearing process.
The lists recommended for adoption contain the following:
Type of Account Number of Properties Current Lien Amount Receivables Protected to Date
Sewer 167 $41,858.99 $4,057,901.22
Rubbish* 657 $98,488.02 $9,100,017.94
Weed Abatement 0 $0.00 $3,995,352.35
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Agenda #: A. Category: Public Hearing
Type of Account Number of Properties Current Lien Amount Receivables Protected to Date
Sewer 167 $41,858.99 $4,057,901.22
Rubbish* 657 $98,488.02 $9,100,017.94
Weed Abatement 0 $0.00 $3,995,352.35
*Collections are payable to Fontana Rubbish
An administrative fee will be included to offset the City's costs to record the lien, as well as the County fee associated with release of the lien to ensure that property titles are cleared once payment has been made. All properties with unpaid liens as of July 1st will be automatically placed on the property tax rolls for collection.
FISCAL IMPACT:
The approval of this item will result in liens in the approximate total amount of $140,347.01 to be recorded and placed on the County property tax roll for collection. This action will prevent increases in customer charges due to uncollectible accounts. The Sewer lien list receivable amount was included as revenue to the Sewer Operations Maintenance Fund in current and prior budget periods.
The recording of Rubbish liens will strengthen Fontana Rubbish's ability to collect, thereby increasing the amount generated by the 12% franchise fee they remit to the City.
MOTION:
Approve staff recommendation.
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CITY OF FONTANA, CALIFORNIA
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN THAT THE CITY COUNCIL OF THE CITY OF FONTANA WILL
HOLD A PUBLIC HEARING CONCERNING THE RECORDING OF REAL PROPERTY LIENS
AGAINST PROPERTIES SERVED BY THE CITY OF FONTANA RUBBISH COLLECTION
CONTRACTOR (BURRTEC WASTE) FOR THOSE ACCOUNTS MORE THAN NINETY DAYS
DELINQUENT, AND FURTHER, THE FORWARDING OF SAID LIENS TO THE COUNTY ASSESSOR’S OFFICE FOR ADDITION TO THE EXTENDED PROPERTY TAX ROLLS FOR COLLECTION. COPIES OF THE CERTIFIED LIEN LIST ARE AVAILABLE AT THE UTILITY BILLING DIVISION PUBLIC SERVICE COUNTER, 8353 SIERRA AVENUE, FONTANA, CALIFORNIA.
IF YOU CHALLENGE IN COURT ANY ACTION TAKEN CONCERNING A PUBLIC
HEARING ITEM, 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 CITY AT, OR PRIOR TO, THE PUBLIC HEARING.
DATE OF HEARING: SEPTEMBER 26, 2023
TIME OF HEARING: 7:00 P.M.
PLACE OF HEARING: CITY HALL COUNCIL CHAMBERS
8353 SIERRA AVENUE
FONTANA, CA 92335
ANY INTERESTED PARTY MAY APPEAR AT THE HEARING AND PRESENT ANY INFORMATION WHICH MAY BE OF ASSISTANCE TO THE CITY COUNCIL. IF YOU HAVE
ANY QUESTIONS CONCERNING THIS MATTER, PLEASE CONTACT THE UTILITY BILLING CUSTOMER SERVICE STAFF AT (909) 350-7670.
PUBLISH: SEPTEMBER 8, 2023
SEPTEMBER 15, 2023
PROOF OF PUBLICATION REQUESTED
175
CITY OF FONTANA, CALIFORNIA
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN THAT THE CITY COUNCIL OF THE CITY OF FONTANA WILL
HOLD A PUBLIC HEARING CONCERNING THE RECORDING OF REAL PROPERTY LIENS
AGAINST PROPERTIES SERVED BY THE CITY OF FONTANA SANITARY SEWER SYSTEM FOR
THOSE ACCOUNTS SIXTY DAYS OR MORE DELINQUENT, AND FURTHER, THE FORWARDING OF SAID LIENS TO THE COUNTY ASSESSOR’S OFFICE FOR ADDITION TO THE EXTENDED PROPERTY TAX ROLLS FOR COLLECTION. COPIES OF THE CERTIFIED LIEN LIST ARE AVAILABLE AT THE UTILITY BILLING DIVISION PUBLIC SERVICE COUNTER, 8353 SIERRA AVENUE, FONTANA, CALIFORNIA.
IF YOU CHALLENGE IN COURT ANY ACTION TAKEN CONCERNING A PUBLIC
HEARING ITEM, 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 CITY AT, OR PRIOR TO, THE PUBLIC HEARING.
DATE OF HEARING: SEPTEMBER 26, 2023
TIME OF HEARING: 7:00 P.M.
PLACE OF HEARING: CITY HALL COUNCIL CHAMBERS
8353 SIERRA AVENUE
FONTANA, CA 92335
ANY INTERESTED PARTY MAY APPEAR AT THE HEARING AND PRESENT ANY INFORMATION WHICH MAY BE OF ASSISTANCE TO THE CITY COUNCIL. IF YOU HAVE
ANY QUESTIONS CONCERNING THIS MATTER, PLEASE CONTACT THE UTILITY BILLING CUSTOMER SERVICE STAFF AT (909) 350-7670.
PUBLISH: SEPTEMBER 8, 2023
SEPTEMBER 15, 2023
PROOF OF PUBLICATION REQUESTED
176
CITY OF FONTANA, CALIFORNIA
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN THAT THE CITY COUNCIL OF THE CITY OF FONTANA WILL
HOLD A PUBLIC HEARING CONCERNING THE RECORDING OF REAL PROPERTY LIENS AGAINST PROPERTIES PROVIDED WEED ABATEMENT SERVICES THROUGH THE CITY’S
WEED ABATEMENT PROGRAM FOR THOSE ACCOUNTS THIRTY DAYS OR MORE
DELINQUENT AND FURTHER, THE FORWARDING OF SAID LIENS TO THE COUNTY ASSESSOR’S OFFICE FOR ADDITION TO THE EXTENDED PROPERTY TAX ROLLS FOR COLLECTION. COPIES OF THE CERTIFIED LIEN LIST ARE AVAILABLE AT THE CUSTOMER SERVICE DIVISION PUBLIC SERVICE COUNTER, 8353 SIERRA AVENUE, FONTANA, CALIFORNIA.
IF YOU CHALLENGE IN COURT ANY ACTION TAKEN CONCERNING A PUBLIC HEARING
ITEM, 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 CITY AT, OR PRIOR TO, THE PUBLIC HEARING.
DATE OF HEARING: SEPTEMBER 26, 2023
TIME OF HEARING: 7:00 P.M.
PLACE OF HEARING: CITY HALL COUNCIL CHAMBERS
8353 SIERRA AVENUE
FONTANA, CA 92335
ANY INTERESTED PARTY MAY APPEAR AT THE HEARING AND PRESENT ANY INFORMATION WHICH MAY BE OF ASSISTANCE TO THE CITY COUNCIL. IF YOU HAVE
ANY QUESTIONS CONCERNING THIS MATTER, PLEASE CONTACT THE BUSINESS SERVICES CUSTOMER SERVICE STAFF AT (909) 350-7683.
PUBLISH: SEPTEMBER 8, 2023
SEPTEMBER 15, 2023
PROOF OF PUBLICATION REQUESTED
177
RESOLUTION NO. 2023-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FONTANA
ADOPTING STATEMENT OF UNPAID EXPENSES FOR WEED
ABATEMENT AND IMPOSING A LIEN AGAINST PROPERTY FOR
PAYMENT THEREOF
WHEREAS, the City of Fontana (“City”) has conducted its weed abatement program pursuant to the Fontana City Code, Section 27-1 et. seq.;
WHEREAS, at its meeting on September 26, 2023 , the City Council discussed and considered all expenses and other costs of abatement which have remained unpaid to date, as specified in the Statement of Unpaid Expenses for Weed Abatement, on file with the City Clerk for public review and incorporated herein by reference (“Statement”);
WHEREAS, the City Council has read or heard and considered all evidence and testimony presented to it with respect thereto;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Fontana as follows:
Section 1. Based on all evidence and testimony presented to the Council, the Statement is confirmed and adopted.
Section 2. All expenses and other cost s noted on the Statement which remain unpaid to the City as of September 26, 2023, shall constitute a lien upon the real property against which the nuisance was abated, and shall be collected in any lawful means available to the City.
Section 3. The City Clerk is directed to file for recording a "Notice of Lien for Weed Abatement" with the Office of the Recorder for San Bernardino County after September 26, 2023 against those real properties listed on the Statement for any expenses and other costs noted on the Statement which remain unpaid to the City.
Section 4. The Auditor/Controller shall include the amount of the expenses on the bills for taxes levied against the real property against which the expenses have been imposed, and the same shall be collected in the same manner and together with the general taxes for the County of San Bernardino, and shall be subject to the same penalties, interest and collection.
APPROVED AND ADOPTED this 26th day of September, 2023.
READ AND APPROVED AS TO LEGAL FORM:
Resolution No. 2023-
178
-
_____________________________________
City Attorney
I, Germaine McClellan Key, City Clerk of the City of Fontana, do hereby certify that the foregoing resolution is the actual resolution duly and regularly adopted by the City Council at a regular meeting on the 26th day of September, 2023 by the following vote to-wit:
AYES:
NOES:
ABSENT:
_____________________________________
City Clerk of the City of Fontana
_____________________________________
Mayor of the City of Fontana
ATTEST:
_____________________________________
City Clerk
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City of Fontana
Action Report
City Council Meeting
8353 Sierra Avenue
Fontana, CA 92335
File #: 21-2407 Agenda Date: 9/26/2023
Agenda #: B. Category: Public Hearing
FROM:
Planning Department
SUBJECT:
Master Case No. 23-062 and Appeal No. 23-016: Appeal of the Planning Commission’s decision to uphold the Director of Planning’s approval of Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007, for the request to install a new wireless telecommunications facility consisting of a 75’ mono-palm with 14 antennas, supporting equipment, and an equipment enclosure of 347 square feet total, pursuant to CEQA determinations.
RECOMMENDATION:
Based on the information in the staff report and subject to the attached Findings, staff recommends that the City Council:
1. Deny Appeal No. 23-016, thereby upholding the decision of the Planning Commission and Director of Planning approving Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007, for the request to install a new wireless telecommunications facility consisting of a 75’ mono-palm with 14 antennas, supporting equipment, and an equipment enclosure of 347 square feet total.
2. Direct staff to prepare, execute, and file a CEQA Notice of Exemption with the County Clerk, as appropriate, within five (5) working days of the Council’sfinal action on Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007.
APPELLANT/ APPLICANT FOR APPEAL:
Robert Constant
28871 Blythewood Drive
Rancho Palos Verdes, CA 90275
LOCATION:
17010 Sierra Lakes Parkway (APN: 0119-221-69)
PROJECT DESCRIPTION:
Land Use Designation:
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ANALYSIS:
Background
Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007 consist of a request to install a new wireless telecommunications facility consisting of a 75’ mono-palm with 14 antennas, supporting equipment, and an equipment enclosure of approximately 347 square feet that was approved by the Director of Planning at a scheduled public hearing on May 11, 2023.
Mr. Nikos Constant, representing the abutting property owner, communicated concerns verbally during the hearing that follow the concerns provided in the Appellant’s appeal justification letter as well as unrelated matters about various contractors trespassing on the abutting owner’s property.
Subsequent to the Director’s approval, staff received one (1) appeal application in opposition of the project. The appellant, Robert Constant, is the adjoining property owner located at APN: 1119 -221-54, just north of the project site. The grounds for the appeal included concerns relating to:
setbacks, high winds and liability insurance, security, privacy, and safety, unlimited future use, and view impairment.
On July 18, 2023, the Planning Commission held a noticed public hearing on the above- referenced appeal application. After the information was presented and considered, the Planning Commission denied Appeal (APL) No. 23-015 and upheld the Director of Planning’s decision approval of Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007. Subsequent to the Planning Commission’s decision, staff received one (1) appeal application. The appeal letter request, dated July 31, 2023, is attached for the City’sCouncil’sconsideration (Attachment No. 1).
Minor Use Permit (MUP) No. 22-007
Brett Smirl, on behalf of AT&T submitted the application for a Minor Use Permit No. 22-007 on September 26, 2022, for the operation of an unmanned wireless telecommunications facility within the Regional Mixed-Use zone, which was approved by the Director of Planning on May 11, 2023.
This use is considered a public utility facility and is allowed within the Regional Mixed Use zoning district with the approval of a Minor Use Permit. The General Plan Land Use designation and the zoning designation is Regional Mixed Use (RMU). The Regional Mixed-Use zoning is intended for a wide range of retail commercial, office, medium density residential, civic, open space and job-rich light manufacturing uses. The wireless facility will support the intended uses for the areas within the City of Fontana Printed on 9/20/2023Page 2 of 9
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light manufacturing uses. The wireless facility will support the intended uses for the areas within the Regional Mixed Use land use designation.
Administrative Site Plan (ASP) No. 22-028
Brett Smirl, on behalf of AT&T submitted the application of an Administrative Site Plan (ASP) No. 22- 028 on September 26, 2022, for the site and architectural review for the unmanned wireless telecommunications facility that was approved by the Director of Planning on May 11, 2023.
According to the information submitted in the ASP No. 22-028 application, AT&T will be the only carrier on the mono-palm tower at this time. The equipment enclosure is approximately eight (8) feet high and is 347 square feet in size and secured with a decorative stucco finish with a gate. The equipment enclosure will be accessed via a 12’non-exclusive access path on Mango Avenue for maintenance and service for the mono-palm tower.
Both the Director of Planning and the Planning Commission determined that the proposed facility meets the City’srequirements for telecommunication facilities as well as the required findings. The findings for approval are discussed at the end of this staff report.
Appeal Concerns:
The following is a summary of the items raised in the previously referenced appeal letter attached in the Planning Commission Packet (Attachment No. 4); and Appellants’second appeal letter, dated July 31, 2023, attached hereto as Attachment No. 1, which follows the same issues raised in the Appellant’s first letter and expands upon some of the concerns originally raised.
1. Setback:
Response: The Appellant does not claim that the proposed facility violates the Fontana Municipal Code’s requirement for setbacks and admits that the proposed facility will not encroach on his property once constructed. The Appellant is speculating about a scenario in which the proposed wireless facility would fall or collapse on his property. If the Appellant is attempting to claim that his property rights would be impaired by the City’sapproval of the proposed wireless facility, those concerns are not germane to the required findings for approval or would not serve as a basis for denial because the proposed facility will not actually encroach onto the Appellant’s property as constructed. Further, Chapter 32 Wireless Telecommunications Towers and antennas provides development standards for new towers and antennas. The project complies with the development standards outlined in Chapter 32, with a setback distance proposed at 85 percent (approximately 64-foot setback) to the northern property line. Therefore, the project meets this development standard. The proposed AT&T tower and equipment has been reviewed and approved by the City of Fontana Building and Safety and Fire Departments and structural plans would be reviewed once again prior to issuance of building permits.
2. Setback issue to fully negotiated private easements:
Response: Appellant’sconcerns raised here are similar to those raised in Issue 1 and concern a speculative scenario where the proposed wireless facility may fall or collapse onto the Appellant’s property. The Appellant’s claims that the proposed facility may in such a speculative circumstance impair certain unspecified property rights, would not serve as a basis for denial because the proposed facility will not actually encroach onto the Appellant’sproperty as proposed. The AT&T wireless telecommunications facility will be installed at 17010 Sierra City of Fontana Printed on 9/20/2023Page 3 of 9
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as proposed. The AT&T wireless telecommunications facility will be installed at 17010 Sierra Lakes Parkway (APN:1119-221-69). As mentioned above, the project complies with the setback requirements as outlined in Chapter 32. The proposed AT&T tower and equipment has been reviewed by the City of Fontana Building and Safety and Fire Departments and structural plans would be reviewed prior to issuance of building permits. The project will be built pursuant to all applicable building, zoning, fire codes and standards and complies with all applicable FCC and FAA regulations.
3. High winds and liability insurance:
Response: The Appellant has raised potential remedies that are not requirements of the Fontana Municipal Code and are not a condition of approval the City requires. The Appellant has no basis for his requests to be named a party on all liability insurance (it is unspecified whose policy this request would attach), to be indemnified, to receive treble damages, or to secure a lien on the proposed wireless facility. The proposed AT&T tower and equipment has been reviewed by the City of Fontana Building and Safety and Fire Departments and structural plans would be reviewed prior to issuance of building permits. The project will be built pursuant to all applicable building, zoning, fire codes and standards and complies with all applicable FCC and FAA regulations.
4. Security, Privacy, and Safety:
Response: The City’sreview of the application and the Director’sapproval of Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007 followed the procedures and process required by the Fontana Municipal Code. The Appellant has also raised concerns regarding the perceived health and medical risks posed by the proposed wireless facility. The City may not deny a wireless facility application based on concern about RF emissions exposure if the facility complies with FCC guidelines.1
1 In AT&T Wireless Servs. v. City of Carlsbad, 308 F. Supp. 2d 1148, 1161 (S.D. Cal. 2003). the city made a finding that the wireless facility would “negatively affect property values of nearby homes based upon the perceived fear of the health effects cause by the RF emissions.” The court held against Carlsbad, ruling that cities may not regulate based on the “direct or indirect concerns over the health effects of RF.” The court explained that a denial could not be based on substantial evidence (as required by law) “…if the fear of property value depreciation is based on concerns over the health effects caused by RF emissions.” The health risks associated with the public’sexposure to radio frequency (RF) energy has been an area of public concern particularly in light of the public’sincreasing reliance on mobile devices and the proliferation of mobile technology and its supporting infrastructure. Setting the safety standards for RF emissions is exclusively the responsibility of the federal government, and the responsible agency which is the Federal Communications Commission. Thus, Section 332(c)(7)(B)(iv) prohibits the City from denying a wireless facility application based on concerns about RF emissions so long as the applicant has demonstrated that its facilities will comply with FCC standards. The Applicant has provided a certification that the proposed facility will comply with FCC standards for RF emissions. Further, the applicant’sfacility must comply with state and federal law and as such, the Applicant may only use equipment that is FCC approved.
The Appellant has also raised speculative concerns about potential unspecified cybersecurity risks due to the presence of a new telecommunications facility. In regard to cybersecurity concerns, hacking most often occurs because of phishing attacks through email spamming, City of Fontana Printed on 9/20/2023Page 4 of 9
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File #: 21-2407 Agenda Date: 9/26/2023
Agenda #: B. Category: Public Hearing
concerns, hacking most often occurs because of phishing attacks through email spamming, downloading or installing illicit apps for individuals who visit and access unsafe pages on the internet that carry viruses, malware and spyware. Hacking can also potentially occur from using free wi-fi, leaving phones and devices unattended in public, using public charging stations, and having weak passwords. Security technology continues to improve. There are now stronger methods of authentication, identity theft protection, and defense against cyber attacks being developed daily. In many cases, cell tower information increases personal safety. These towers with wireless equipment are built and located at safe and federally regulated distances.
5. Unlimited future use:
Response: The Director’s approval of Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007 will not result in open ended or unlimited use. Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007 authorize the construction and operation of a wireless facility to be used for personal wireless services in communications that radiate or capture electromagnetic waves, digital signals, analog signals, radio frequencies (excluding radar signals), wireless telecommunications signals or other communication signals. The permittee is required to follow all City requirements and processes for any changes to the wireless facility improvements or to any changes in use. Future uses will be analyzed by the City in light of requirements existing at the time of such proposals. Such proposals may or may not include discretionary approvals and/or conditions. In Appellant’ssecond appeal letter, the Appellant has also raised speculative concerns about potential unspecified cybersecurity risks due to the presence of a new telecommunications facility. These concerns are not germane to the required findings for approval or would not serve as a basis for denial.
6. View:
Response: The Appellant has requested a monetary settlement of view impairment.
Without an easement in place encumbering the property subject to new development that has resulted in view impairment, property owners have no inherent right to prevent other property owners from obstructing their view. See Mira Mar Mobile Community v City of Oceanside, 119 Cal.App.4th 477 (2004). Further, the City does not have a view protection ordinance in place which could provide alternative relief. As stated previously, the tower as approved complies with the maximum height requirement outlined in Chapter 32, with a maximum height of 75 feet for a single user. The wireless tower is proposed to be disguised as a mono-palm with faux fronds and a faux growth pod, which will complement the surrounding neighborhood, which is characterized by existing commercial and industrial uses, and blend with the existing area. The proposed equipment enclosure will have a stucco finish with a desert color to match the drive-thru restaurant buildings. The enclosure will be surrounded by mature landscaping to compliment the landscaping of the surrounding properties which will match the surrounding neighborhood.
Findings for Approval for Minor Use Permit No. 22-007
Minor Use Permit No. 22-007, as approved on May 11, 2023, meets the mandatory MUP findings required pursuant to Section 30-178 Findings for approval. The original findings below were prepared by staff for Director of Planning’s consideration:
1. That the proposed use is allowed within the applicable zoning district and complies with all other City of Fontana Printed on 9/20/2023Page 5 of 9
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1. That the proposed use is allowed within the applicable zoning district and complies with all other applicable provisions of the Zoning and Development Code, General Plan, any applicable Specific Plan or area plan, and City regulations/standards.
The project site is located on the north side of Sierra Lakes Parkway and west side of Mango Avenue. The proposed project is for the installation a new 75-foot wireless facility disguised as a mono-palm. The new mono-palm will include fourteen (14) panel antennas, supporting equipment, and an equipment enclosure. The General Plan Land Use designation is Regional Mixed-Use (R-MU) and the zoning designation is Regional Mixed Use (RMU). The Regional Mixed-Use zoning is intended for a wide range of retail commercial, office, medium density residential, civic, open space and job-rich light manufacturing uses. This use is considered a public utility facility and is allowed within the Regional Mixed Use zoning district with the approval of a Minor Use Permit. The wireless facility will support the intended uses for the areas within the Regional Mixed Use land use designation.
2. The site is physically suited for the type, density, and intensity of the proposed use including access, utilities, and the absence of physical constraints and can be conditioned to meet all related performance criteria and development standards.
The physical characteristics of the site are sufficient to accommodate the requested wireless mono-palm, supporting equipment, and equipment enclosure. The project site is approximately
1.8 acres in size and developed with two drive-thru restaurants pads and associated parking, landscaping, and drive aisles. The proposed mono-palm and equipment enclosure meets all applicable development standards including access, setbacks, parking, and drive aisles. There are no changes to the existing site circulation and access for the proposed project. The new wireless tower has been reviewed by Planning, Building and Safety, Engineering, and Fire Prevention and will meet or exceed all requirements.
3. Granting the permit would not be detrimental to the public interest, health, safety, convenience, welfare, or materially injurious to persons, property, or improvements in the vicinity in which the project is located.
The proposed project has been reviewed by Planning, Engineering, Building and Safety, and County Fire Prevention for site circulation, access, and safety. In addition, the site meets all the development standards of the Zoning and Development Code and Chapter 32 of the Fontana Municipal Code (FMC) as outlined in the Wireless Telecommunications Towers and Antennas ordinance and will provide a safe, well-designed facility.
Findings for Approval for Administrative Site Plan No. 22-028 Administrative Site Plan No. 22-028, as approved on May 11, 2023, meets the mandatory ASP findings required pursuant to Section 32-7.2 Findings for approval. The original findings below were prepared by staff for Director of Planning’s consideration:
1. The proposal meets or exceeds contained in this Chapter and is consistent with the General Plan and the applicable land use designation.
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The project site is located on the north side of Sierra Lakes Parkway and west side of Mango Avenue. The proposed project is for the installation a new 75-foot wireless facility disguised as a mono-palm. The new mono-palm will include fourteen (14) panel antennas, supporting equipment, and an equipment enclosure. The General Plan Land Use designation is Regional Mixed-Use (R-MU) and the zoning designation is Regional Mixed Use (RMU). The Regional Mixed-Use zoning is intended for a wide range of retail commercial, office, medium density residential, civic, open space and job-rich light manufacturing uses. This use is considered a public utility facility and is allowed within the Regional Mixed Use zoning district with the approval of a Minor Use Permit and an Administrative Site Plan for site and architectural review of the proposed wireless facility. The proposed project is consistent with the General Plan, the Zoning and Development Code and Chapter 32 of the Fontana Municipal Code (FMC) as outlined in the Wireless Telecommunications Towers and Antennas ordinance.
2. That the site for the intended use is adequate in size, shape, topography, accessibility, and other physical characteristics to accommodate the use and all the required provisions of this chapter.
The project site is an irregular shaped property consisting of one (1) parcel of approximately 1.8 acres, located at 17010 Sierra Lakes Parkway. The new wireless tower has been reviewed by Planning, Building and Safety, Engineering, and Fire Prevention and will meet or exceed all requirements. The proposed project will be built/installed pursuant to all applicable building, zoning, fire codes, and standards which will result in an appropriate, safe, and desirable development, as well as conditions of approval referenced herein. The site is adequate in parking, circulation, and access to the property including the addition of the proposed wireless facility.
3. The proposal of the tower and/or antenna is in its design and appearance consistent with the development and design of the surrounding structures and neighborhood.
The project proposal in its design and appearance as a result from this review will be compatible with the site and other similarly approved wireless facilities. The wireless tower is proposed to be disguised as a mono-palm with faux fronds and a faux growth pod, which will complement the surrounding neighborhood and blend with the existing area. The proposed equipment enclosure will have a stucco finish with a desert color to match the drive-thru restaurant buildings. The enclosure will be surrounded by mature landscaping to compliment the landscaping of the surrounding properties and will match the surrounding neighborhood. The proposed project provides a safe and well-designed site that is both aesthetically and architecturally pleasing.
4. That the proposed use will be organized, designed, constructed, operated and maintained so as to be compatible with the character of the area as intended by the general plan.
The General Plan Land Use designation is Regional Mixed-Use (R-MU) and the zoning designation is Regional Mixed Use (RMU). The operation and maintenance of the facility will be regulated by specific requirements set forth in the Minor Use Permit and attached in the Conditions of Approval. In addition, the project will conform to the requirements of the Zoning and Developments Code and Chapter 32 of the Fontana Municipal Code (FMC) as outlined in the Wireless Telecommunications Towers and Antennas ordinance.
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The proposed project has been reviewed by Planning, Engineering, Building and Safety, and County Fire Prevention for site circulation, access, and safety. The proposed project identified in Findings No. 1-3, meet or exceeds the standards of the Zoning and Development Code and Chapter 32 of the Fontana Municipal Code (FMC) as outlined in the Wireless Telecommunications Towers and Antennas ordinance and will provide a safe design.
5. That adequate streets and highways exist to carry the type and quantity of traffic anticipated to accommodate access for maintenance and/or service vehicles.
The proposed project has been designed to accommodate access for maintenance and/or service vehicles and will not conflict with existing easements or access on-site. The project site is accessed from Mango Avenue and Sierra Lakes Parkway, which are publicly maintained streets.
The proposed project will have one designated parking stall adjacent to the equipment enclosure for maintenance and/or service vehicles and will not conflict with the existing center.
6. The Director of the Planning Department shall make those findings enumerated in this section as amended from time to time, prior to approving any ASP pursuant to this chapter.
As a part of the approval of this Minor Use Permit and Administrative Site Plan, the Director of Planning made the required findings.
Staff prepared the above-listed findings for the Director of Planning’sconsideration pursuant to Section 32-7.2 and Section 30-178, Findings for Approval. On May 11, 2023, the Director of Planning determined that the findings were consistent with the Fontana Municipal Code and FCC statues and regulations and approved the project. The proposed project has met all requirements of the Fontana Municipal Code and the General Plan. As such, staff recommends the City Council deny the request for the appeal and uphold the Planning Commission and Director of Planning’s approval of ASP No. 22-028 and MUP No. 22-007.
Environmental:
The installation of a new wireless telecommunications facility and ancillary equipment as described above associated with Master Case No. (MCN) 22-107 and Administrative Site Plan (ASP) No. 22- 028 and Minor Use Permit (MUP) No. 22-007 is exempt pursuant to Section No. 15311 Class No. 11 (Accessory Structures) and Section No. 15332 Class No. 32 (In-Fill Development Project) of the California Environmental Quality Act (CEQA), and Section No. 3.22 of the 2019 City of Fontana Local Guidelines for Implementing the California Environmental Quality Act.
FISCAL IMPACT:
None
MOTION:
1. Deny Appeal No. 23-016, thereby upholding the decisions of the Planning Commission and Director of Planning approving Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007, for the request to install a new wireless telecommunications facility consisting of a 75’ mono-palm with 14 antennas, supporting equipment, and an equipment enclosure of City of Fontana Printed on 9/20/2023Page 8 of 9
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347 square feet total.
2. Direct staff to prepare, execute, and file a CEQA a Notice of Exemption with the County Clerk, as appropriate, within five (5) working days of the Commission’s final action on Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007.
ATTACHMENTS:
1. Uniform Appeal Letter from Appellant
2. Vicinity Map
3. Director’s Action Packet
4. Planning Commission Packet
5. Notice of Public Hearing
6. Responses from AT&T
Attachments Under Separate Cover:
1. Project Plans
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Robert Constant, The Constant Family Trust 28871 Blythewood Dr. Rancho Palos Verdes, CA 90275 [email protected] 310-541-1297 July 31, 2023 To Whom It May Concern: Robert Constant, next door neighbor directly to the North of proposed cell phone tower (located at 17010 Sierra Lakes Pkwy APN 1119-221-69 Project MCN no. 22-10-7; MUP No. 22-007; ASP 22-028) appeals the July 18, 2023, decision by the Fontana Planning Commission to deny Appeal No. 23-015, thereby upholding the decision of the Director of Planning on May 11, 2023. Un\l the following cybersecurity, safety, land use, and liability issues and demands are addressed, The Constant Family Trust opposes the tower development. In response to The Constant Family’s first appeal, Fontana staff addressed our concerns with a typical boilerplate template that can be summed up with a simple phrase: “complies with the development standards”. However, in their response, staff both admits and omits which proves that the standards have shortcomings. It is those standards shortcomings that this appeal addresses. 1. Setback: If “standards state that the setback requirement is a distance equal to at least 75 percent of the height of the tower from any adjoining lot line, which equates to a minimum of 56 feet setback from adjoining lot line”, then Fontana admits that standards facilitate trespass if the tower falls. This facilita\on puts Fontana at risk of trespass in addi\on to developer. Constant asks, minimally, that Fontana protects both Constant property and Fontana’s own poten\al future trespass and negligence by reloca\ng the tower so that in no way can fall on Constant property. 2. Fully nego\ated private easements: Nowhere in Fontana’s appeal response is the easement issue analyzed. Again, Constant asks that Fontana protects both Constant property and Fontana’s own future liability on the easement issue. If not, then a foreseeable future fall of the tower makes all par\es to the tower, Fontana, developer, and AT&T liable for negligence and trespass. 190
3. High winds and liability insurance: Again, nowhere in Fotana’s appeal response is there any analysis of liability insurance to protect the Constant property, when Fontana’s reply admits that the tower, if it falls, will encroach on Constant property by at minimum, 6 feet. As high winds are always a factor in Fontana, and the bulk of the tower’s weight is at the top, then simple math and engineering proves that a tower falling from that height could do major damage on Constant property to both structures and people. Again, foreseeability is the cornerstone of negligence. Negligence that is facilitated by City of Fontana standards. 4. Security, Privacy, and Safety: It is staff’s reply to Constant’s security concern, that contains the most egregious omission in their reply. Constant’s security concern is not limited to RF emissions. By focusing on that aspect only, Fontana has glossed over the major security concern of our \mes: cybersecurity. What is Fontana doing to protect itself from cybersecurity issues that the development of this tower is directly related? Constant requests that cybersecurity be immediately addressed by City Council in the form of a study and delay of this project. 5. Unlimited Future Usage: The concern over Unlimited Future Usage is directly related to cybersecurity. AT&T or a bad actor, under the guise of Fontana “standards” could add addi\onal spyware, or worse, to the tower not only as it relates to a hos\le foreign actor, but even at Fontana’s own direc\on. Spying on ci\zens is not just something that concerns interna\onal security, but the local community as well. Constant asks that Fontana analyze and protect the community from all foreign, domes\c, and local cybersecurity threats by immediately ceasing this project and organizing a study of the cybersecurity threats Fontana faces both now and in the future in accordance to city’s police power. Threats that are foreseeable considering Fontana’s own investment in the interna\onal logis\cs industry, as well as the property’s loca\on next to the sensi\ve energy producing Mid-Valley Landfill further demand immediate ac\on. 6. View impairment: Compliance with a height requirement does not defend view impairment. This is a taking and should be compensated as such. Just because you can do it, doesn’t mean it costs nothing to do. Ten years ago, The Constant Family presented to both the planning department and City Council, its concerns about the health issues surrounding warehouse development. The family’s focus was on addressing the shortcomings of the standards and accompanying boilerplate template response. Last week, Fontana finally denied a warehouse applica\on, aher a combina\on of intense community pressure, pressure from the California Aiorney General, health studies, and the City Council’s own poli\cal self- 191
preserva\on ins\ncts, as the warehouse health and safety issue has become interna\onal news over the last several years. Constant looks forward to another ten year baile over cybersecurity concerns in Fontana that are directly related to the warehouse issue that Fontana has perpetuated and only now, aiempts to mi\gate. The Constant Family sees that these bailes make the community safer, stronger, and connected to the future health and growth of the Inland Empire. Do the (reasonable and foreseeable) right thing, and analyze the cybersecurity, trespass, and liability issues that this tower portends so that in another ten years, Fontana is not known as a weak link threat to United States cybersecurity, just as it is now considered a weak link threat to the Inland Empire’s health and safety due to city’s warehouse support and prolifera\on. Considering all issues and demands listed above, and in a neighborly aiempt to minimize future li\ga\on, Constant requests that the above reasonable demands be met. This appeal in no way limits any future causes of ac\on that may arise from this project of any other project. Fees to be waived as Constant is an adjoining property owner. Sincerely, Robert Constant Nicholas Constant, Esq. 192
ATTACHMENT NO. 2
VICINITY MAP
DATE: September 26, 2023
CASE: Master Case No. 23-062
Appeal No. 23-016
CITY OF FONTANA PLANNING DEPARTMENT
CIT
NORTH
Project Site
193
194
ATTACHMENT NO. 1
www.fontana.org
8353 SIERRA AVENUE FONTANA, CALIFORNIA 92335-3528 (909) 350-7600
CITY OF FONTANA
MASTER CASE NUMBER: Master Case No. 22-107
PROJECT CASE
NUMBER:
Minor Use Permit No. 22-007
Administrative Site Plan No. 22-028
APPLICANT: Coastal Business Group
AT&T Mobility
24310 Moulton Parkway Ste. O #1009
Laguna Hills CA 92637
PROJECT DESCRIPTION: An Administrative Site Plan request for site and architectural review for the installation of a new 75’ wireless mono-palm including 1 4 antennas, supporting equipment, and an equipment enclosure.
A Minor Use Permit to operate an unmanned wireless
facility within Regional Mixed-Use zone
LOCATION: 17010 Sierra Lakes Parkway
GENERAL PLAN: RMU
ZONING: R-MU
OVERLAY None
EXPIRATION DATE: May 11, 2025
195
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
196
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
197
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
198
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
199
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
200
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
201
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
202
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
203
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
204
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
205
206
207
208
209
210
211
212
ATTACHMENT NO. 6
SITE PLAN
DATE: May 11, 2023
CASE: Master Case No. 22-107
Minor Use Permit No. 22-007
Administrative Site Plan No. 22-028
CITY OF FONTANA PLANNING DEPARTMENT
CIT
NORTH
213
NOTICE OF PUBLIC HEARING
SI DESEA INFORMACION EN ESPAÑOL REFERENTE A ESTA NOTIFICACION O PROYECTO, FAVOR DE COMUNICARSE AL (909) 350-6728.
In compliance with Section No. 202 of the Americans with Disabilities Act of 1990 (42 U.S.C. Sec tion No. 12132) and the federal rules and regulations adopted in implementation thereof, the Agenda will be made available in appropriate alternative formats to persons with a disability. Should you need special assistance to participate in this meeting, please contact the Planning Department by calling (909) 350- 6718. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting.
A PUBLIC HEARING HAS BEEN SCHEDULED BEFORE THE DIRECTOR OF PLANNING OF THE CITY OF FONTANA FOR THE FOLLOWING:
Master Case No. 22-107, Minor Use Permit No. 22-007, and Administrative Site Plan No. 22-028.
The applicant, Coastal Business Group, is requesting a Minor Use Permit to operate an unmanned wireless facility and an Administrative Site Plan for site and architectural review for a new 75’ wireless monopalm including 14 antennas, supporting equipment, and an equipment enclosure.
Environmental
Determination:
This project qualifies for a Categorical Exemption pursuant to Section No. 15332, (Class No. 32, In-Fill Development Project) and Section No. 15311 (Class No. 11, Accessory Structures) of the California Environmental Quality Act (CEQA) , as well as Section No. 3.22 (Categorical Exemption) of the 2019 Local Guidelines for Implementing the California Environmental
Quality Act.
Location of
Property:
17010 Sierra Lakes
Parkway
(APN: 1119-221-69)
Date of Hearing: May 11, 2023
Place of Hearing: DSO DAB Conference
Room
#125 (1st Floor)
City Hall
8353 Sierra Avenue,
Fontana
Time of Hearing: 8:30 AM
Project Site
214
Should you have any questions concerning this project, please contact Mai Thao, Assistant Planner, at 909-350-6650 or by e-mail at [email protected].
ANY INTERESTED PARTY MAY PROVIDE INFORMATION BY LETTER OR EMAIL WHICH MAY BE OF ASSISTANCE TO THE DIRECTOR. A COPY OF THE APPLICATION AND ENVIRONMENTAL
DOCUMENTATION IS AVAILABLE FOR INSPECTION, PLEASE CONTACT THE PLANNER LISTED ABOVE.
IF YOU WISH TO BE PART OF THE AUDIENCE VIA TELEPHONE FOR THE DAB MEETING, PLEASE CALL THE CASE PLANNER REFERENCED ABOVE OR THE PLANNING LINE AT (909) 350-6718 PRIOR TO THE MEETING SO THAT ARRANGEMENTS CAN BE MADE. 215
City of Fontana
Action Report
Planning Commission
8353 Sierra Avenue
Fontana, CA 92335
File #: 21-2293 Agenda Date: 7/18/2023
Agenda #: PH-C Category: Public Hearing
FROM:
Planning Department
TITLE:
Master Case No. 23-062 and Appeal No. 23-015 - Appeal of the Director of Planning’s decision approving Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007, a request to install a new wireless telecommunications facility consisting of a 75’ mono-palm with 14 antennas, supporting equipment, and an equipment enclosure of 347 square feet total pursuant to CEQA determinations.
RECOMMENDATION:
Based on the information in the staff report and subject to the attached Findings, staff recommends that the Planning Commission:
1. Deny Appeal No. 23-015, thereby upholding the decision of the Director of Planning, for Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007, for the request to install a new wireless telecommunications facility consisting of a 75’ mono-palm with 14 antennas, supporting equipment, and an equipment enclosure of 347 square feet total.
2. Direct staff to prepare, execute, and file a CEQA Notice of Determination and a Notice of Exemption with the County Clerk, as appropriate, within five (5) working days of the Commission’s final action on Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007 APPLICANT:
Robert Constant
28871 Blythewood Drive
Rancho Palos Verdes, CA 90275
LOCATION:
17010 Sierra Lakes Parkway (APN: 119-221-69)
REQUEST:
Master Case No. 23-062 and Appeal (APL) No. 23-015 - Appeal of the Director of Planning’sdecision approving Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007 for a request to install a new wireless facility consisting of a 75’mono-palm with 14 antennas, 36 RRU’s,supporting equipment, and an equipment enclosure of 347 square feet total.
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PROJECT PLANNER:
Mai Thao, Assistant Planner
PROJECT DESCRIPTION:
Land Use Designation:
ANALYSIS:
Background
Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007 consist of a request to install a new wireless telecommunications facility consisting of a 75’ mono-palm with 14 antennas, supporting equipment, and an equipment enclosure of approximately 347 square feet that was approved by the Director of Planning at a scheduled public hearing on May 11, 2023.
Mr. Nikos Constant, representing the abutting property owner, communicated concerns verbally during the hearing that follow the concerns provided in the Appellant’s appeal justification letter as well as unrelated matters about various contractors trespassing on the abutting property owner’s property. Subsequent to the Director’s approval, Mr. Constant submitted written communications describing certain concerns raised.
The appeal period for the project was fifteen (15) calendar days after a decision had been made on May 11, 2023, therefore the appeal period closed on May 26, 2023. Since the City is closed on Fridays this extended the closing period until Monday, May 29, 2023. Staff received one (1) appeal application in opposition of the project. The appellant, Robert Constant, is the adjoining property owner located at APN: 1119-221-54, just north of the project site. The appellant has provided one (1) appeal justification letter citing six concerns which is attached hereto as Attachment No. 1. The grounds for the appeal stated in the appeal justification letter included concerns relating to: setback issue to fee simple relating to potential fall concerns, setback issue to private easements, high winds and liability insurance, security, privacy, and safety, unlimited future use, and view impairment.
Minor Use Permit (MUP) No. 22-007
Brett Smirl, on behalf of AT&T submitted the application for a Minor Use Permit No. 22-007 on September 26, 2022, for the operation of an unmanned wireless telecommunications facility within the Regional Mixed-Use zone, which was approved by the Director of Planning on May 11, 2023.
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the Regional Mixed-Use zone, which was approved by the Director of Planning on May 11, 2023.
This use is considered a public utility structure an dfacility and is allowed within the Regional Mixed Use zoning district with the approval of a Minor Use Permit. The General Plan Land Use designation is Regional Mixed-Use (R-MU) and the zoning designation is Regional Mixed Use (RMU). The Regional Mixed-Use zoning is intended for a wide range of retail commercial, office, medium density residential, civic, open space and job-rich light manufacturing uses. The wireless facility will support the intended uses for the areas within the Regional Mixed Use land use designation.
Administrative Site Plan (ASP) No. 22-028
Brett Smirl, on behalf of AT&T submitted the application of an Administrative Site Plan (ASP) No. 22- 028 on September 26, 2022, for the site and architectural review for the unmanned wireless telecommunications facility that was approved by the Director of Planning on May 11, 2023.
According to the information submitted in the ASP22-028 application, AT&T will be the only carrier on the mono-palm tower at this time. The equipment enclosure is approximately eight (8) feet high and is 347 square feet in size and secured with a decorative stucco finish with a gate. The equipment enclosure will be accessed via a 12’non-exclusive access path on Mango Avenue for maintenance and service for the mono-palm tower.
Appeal Concerns:
The following is a summary of the items raised in the previously reference appeal; Attachment No. 1 is a copy of the appeal letter.
1. Setback issue to fee simple: The height of the tower at 75 feet, with a 65-foot setback would encroach on Constant’s fee simple by, at the minimum, ten feet if it falls.
Constant demands that air and land rights be secured for this encroachment.
Response: The Appellant does not claim that the proposed facility violates the Fontana Municipal Code’s requirement for setbacks and admits that the proposed facility will not encroach on his property once constructed. The Appellant is speculating about a scenario in which the proposed wireless facility would fall or collapse on his property. If the Appellant is attempting to claim that his property rights would be impaired by the City’sapproval of the proposed wireless facility, those concerns are not germane to the required findings for approval or would not serve as a basis for denial because the proposed facility will not actually encroach onto the Appellant’s property as constructed. Further, Chapter 32 Wireless Telecommunications Towers and antennas provides development standards for new towers and antennas. The maximum height allowed for a single user is 75 feet in height with the tower set back required to be a distance equal to at least 75 percent of the height of the tower from any adjoining lot line. The project complies with the development standards outlined in Chapter 32, with a setback distance proposed at 85 percent (approximately 64-foot setback) to the northern property line. Therefore, the project meets this development standard. The proposed AT&T tower and equipment has been reviewed and approved by the City of Fontana Building and Safety and Fire Departments and structural plans would be reviewed once again prior to issuance of building permits.
2. Setback issue to fully negotiated private easements: The height of the tower, if it falls, also encroaches on several private easements secured by the Constant with both subservient neighbor as well as third parties. Constant demands further rights be City of Fontana Printed on 7/12/2023Page 3 of 9
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secured for this encroachment.
Response: Appellant’sconcerns raised here are similar to those raised in Issue 1 and concern a speculative scenario where the proposed wireless facility may fall or collapse onto the Appellant’s property. The Appellant’s claims that the proposed facility may in such a speculative circumstance impair certain unspecified property rights, would not serve as a basis for denial because the proposed facility will not actually encroachment onto the Appellant’s property as proposed. The AT&T wireless telecommunications facility will be installed at 17010 Sierra Lakes Parkway (APN:1119-221-69). As mentioned above, the project complies with the setback requirements as outlined in Chapter 32. The proposed AT&T tower and equipment has been reviewed by the City of Fontana Building and Safety and Fire Departments and structural plans would be reviewed prior to issuance of building permits. The project will be built pursuant to all applicable building, zoning, fire codes and standards and complies with all applicable FCC and FAA regulations.
3. High winds and liability insurance: Due to year-round high winds in the area, Constant demands to be a named party on all liability insurance and be completely indemnified with any damages to Constant property paid out at treble damages rate, secured by a lien against tower.
Response: The Appellant has raised potential remedies that are not requirements of the Fontana Municipal Code and are not a condition of approval the City requires. The Appellant has no basis for his requests to be named a party on all liability insurance (it is unspecified whose policy this request would attach), to be indemnified, to receive treble damages, or to secure a lien on the proposed wireless facility. The proposed AT&T tower and equipment has been reviewed by the City of Fontana Building and Safety and Fire Departments and structural plans would be reviewed prior to issuance of building permits. The project will be built pursuant to all applicable building, zoning, fire codes and standards and complies with all applicable FCC and FAA regulations.
4. Security, Privacy, and Safety: Due to the sensitive nature of telecommunications infrastructure locally, nationally, and internationally, as well as future unknowns to health and safety from EMF, Constant demands a more thorough public vetting of this project by City Council in an open forum.
Response: The City’sreview of the application and the Director’sapproval of Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007 followed the procedures and process required by the Fontana Municipal Code. The Appellant has also raised concerns regarding the perceived health and medical risks posed by the proposed wireless facility. The City may not deny a wireless facility application based on concern about RF emissions exposure if the facility complies with FCC guidelines.1
1 In AT&T Wireless Servs. v. City of Carlsbad, 308 F. Supp. 2d 1148, 1161 (S.D. Cal. 2003). the city made a finding that the wireless facility would “negatively affect property values of nearby homes based upon the perceived fear of the health effects cause by the RF emissions.” The court held against Carlsbad, ruling that cities may not regulate based on the “direct or indirect concerns over the health effects of RF.” The court explained that a denial could not be based on substantial evidence (as required by law) “…if the fear of property value depreciation is based on concerns over the health effects caused by RF emissions.” City of Fontana Printed on 7/12/2023Page 4 of 9
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The health risks associated with the public’sexposure to radio frequency (RF) energy has been an area of public concern particularly in light of the public’sincreasing reliance on mobile devices and the proliferation of mobile technology and its supporting infrastructure. Setting the safety standards for RF emissions is exclusively the responsibility of the federal government, and the responsible agency is the Federal Communications Commission. Thus, Section 332 (c)(7)(B)(iv) prohibits the City from denying a wireless facility application based on concerns about RF emissions so long as the applicant has demonstrated that its facilities will comply with FCC standards. The Applicant has provided a certification that the proposed facility will comply with FCC standards for RF emissions. Further, the applicant’sfacility must comply with state and federal law and as such, the Applicant may only use equipment that is FCC approved.
5. Unlimited future use: Due to the open ended and unlimited nature of future usage of the project, Constant demands a renegotiation of all terms at any and every change of future use.
Response: The Director’s approval of Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007 will not result in open ended or unlimited use. Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007 authorize the construction and operation of a wireless facility to be used for personal wireless services in communications that radiate or capture electromagnetic waves, digital signals, analog signals, radio frequencies (excluding radar signals), wireless telecommunications signals or other communication signals. The City is authorized by Government Code Section 65964 to place a ten year limit on the term of the requested wireless permits, which would require the permittee to reapply for new permits at that time and the permittee would be required to comply with all City requirements in effect at that time. The permittee is required to follow all City requirements and processes for any changes to the wireless facility improvements or to any changes in use. Future uses will be analyzed by the City in light of requirements existing at the time of such proposals. Such proposals may or may not include discretionary approvals and/or conditions.
6. View: as a 75-foot tower with a large “monopalm” ball of technology and “camouflage” at the apex, Constant demands monetary settlement of view impairment to be negotiated in good faith before start of project with a complete sightline analysis provided by developer to fully assess impact on Constant’s property value.
Response: The Appellant has requested a monetary settlement of view impairment but has not specified the party that would enter into such a settlement. Without an easement in place encumbering the property subject to new development that has resulted in view impairment, property owners have no inherent right to prevent other property owners from obstructing their view. See Mira Mar Mobile Community v City of Oceanside, 119 Cal.App.4th 477 (2004). Further, the City does not have a view protection ordinance in place which could provide alternative relief. As stated previously, the tower as approved complies with the maximum height requirement outlined in Chapter 32, with a maximum height of 75 feet for a single user. The wireless tower is proposed to be disguised as a City of Fontana Printed on 7/12/2023Page 5 of 9
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height of 75 feet for a single user. The wireless tower is proposed to be disguised as a mono-palm with faux fronds and a faux growth pod, which will complement the surrounding neighborhood, which is characterized by existing commercial and industrial uses, and blend with the existing area. The proposed equipment enclosure will have a stucco finish with a desert color to match the drive-thru restaurant buildings. The enclosure will be surrounded by mature landscaping to compliment the landscaping of the surrounding properties which will match the surrounding neighborhood.
Findings for Approval for Minor Use Permit No. 22-007
Minor Use Permit No. 22-007, as approved on May 11, 2023, meets the mandatory MUP findings required pursuant to Section 30-178 Findings for approval. The original findings below were prepared by staff for Director of Planning’s consideration:
1. That the proposed use is allowed within the applicable zoning district and complies with all other applicable provisions of the Zoning and Development Code, General Plan, any applicable Specific Plan or area plan, and City regulations/standards.
The project site is located on the north side of Sierra Lakes Parkway and west side of Mango Avenue. The proposed project is for the installation a new 75-foot wireless facility disguised as a mono-palm. The new mono-palm will include fourteen (14) panel antennas, supporting equipment, and an equipment enclosure. The General Plan Land Use designation is Regional Mixed-Use (R-MU) and the zoning designation is Regional Mixed Use (RMU). The Regional Mixed-Use zoning is intended for a wide range of retail commercial, office, medium density residential, civic, open space and job-rich light manufacturing uses. This use is considered a public facility and is allowed within the Regional Mixed Use zoning district with the approval of a Minor Use Permit. The wireless facility will support the intended uses for the areas within the Regional Mixed Use land use designation.
2. The site is physically suited for the type, density, and intensity of the proposed use including access, utilities, and the absence of physical constraints and can be conditioned to meet all related performance criteria and development standards.
The physical characteristics of the site are sufficient to accommodate the requested wireless mono-palm, supporting equipment, and equipment enclosure. The project site is approximately
1.8 acres in size and developed with two drive-thru restaurants pads and associated parking, landscaping, and drive aisles. The proposed mono-palm and equipment enclosure meets all applicable development standards including access, setbacks, parking, and drive aisles. There are no changes to the existing site circulation and access for the proposed project. The new wireless tower has been reviewed by Planning, Building and Safety, Engineering, and Fire Prevention and will meet or exceed all requirements.
3. Granting the permit would not be detrimental to the public interest, health, safety, convenience, welfare, or materially injurious to persons, property, or improvements in the vicinity in which the project is located.
The proposed project has been reviewed by Planning, Engineering, Building and Safety, and County Fire Prevention for site circulation, access, and safety. In addition, the site meets all the City of Fontana Printed on 7/12/2023Page 6 of 9
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County Fire Prevention for site circulation, access, and safety. In addition, the site meets all the development standards of the Zoning and Development Code and Chapter 32 of the Fontana Municipal Code (FMC) as outlined in the Wireless Telecommunications Towers and Antennas ordinance and will provide a safe, well-designed facility.
Findings for Approval for Administrative Site Plan No. 22-028 Administrative Site Plan No. 22-028, as approved on May 11, 2023, meets the mandatory ASP findings required pursuant to Section 32-7.2 Findings for approval. The original findings below were prepared by staff for Director of Planning’s consideration:
1. The proposal meets or exceeds contained in this Chapter and is consistent with the General Plan and the applicable land use designation.
The project site is located on the north side of Sierra Lakes Parkway and west side of Mango Avenue. The proposed project is for the installation a new 75-foot wireless facility disguised as a mono-palm. The new mono-palm will include fourteen (14) panel antennas, supporting equipment, and an equipment enclosure. The General Plan Land Use designation is Regional Mixed-Use (R-MU) and the zoning designation is Regional Mixed Use (RMU). The Regional Mixed-Use zoning is intended for a wide range of retail commercial, office, medium density residential, civic, open space and job-rich light manufacturing uses. This use is considered a public facility and is allowed within the Regional Mixed Use zoning district with the approval of a Minor Use Permit and an Administrative Site Plan for site and architectural review of the proposed wireless facility. The proposed project is consistent with the General Plan, the Zoning and Development Code and Chapter 32 of the Fontana Municipal Code (FMC) as outlined in the Wireless Telecommunications Towers and Antennas ordinance.
2. That the site for the intended use is adequate in size, shape, topography, accessibility, and other physical characteristics to accommodate the use and all the required provisions of this chapter.
The project site is an irregular shaped property consisting of one (1) parcel of approximately 1.8 acres, located at 17010 Sierra Lakes Parkway. The new wireless tower has been reviewed by Planning, Building and Safety, Engineering, and Fire Prevention and will meet or exceed all requirements. The proposed project will be built/installed pursuant to all applicable building, zoning, fire codes, and standards which will result in an appropriate, safe, and desirable development, as well as conditions of approval referenced herein. The site is adequate in parking, circulation, and access to the property including the addition of the proposed wireless facility.
3. The proposal of the tower and/or antenna is in its design and appearance consistent with the development and design of the surrounding structures and neighborhood.
The project proposal in its design and appearance as a result from this review will be compatible with the site and other similarly approved wireless facilities. The wireless tower is proposed to be disguised as a mono-palm with faux fronds and a faux growth pod, which will complement the surrounding neighborhood and blend with the existing area. The proposed equipment City of Fontana Printed on 7/12/2023Page 7 of 9
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the surrounding neighborhood and blend with the existing area. The proposed equipment enclosure will have a stucco finish with a desert color to match the drive-thru restaurant buildings. The enclosure will be surrounded by mature landscaping to compliment the landscaping of the surrounding properties and will match the surrounding neighborhood. The proposed project provides a safe and well-designed site that is both aesthetically and architecturally pleasing.
4. That the proposed use will be organized, designed, constructed, operated and maintained so as to be compatible with the character of the area as intended by the general plan.
The General Plan Land Use designation is Regional Mixed-Use (R-MU) and the zoning designation is Regional Mixed Use (RMU). The operation and maintenance of the facility will be regulated by specific requirements set forth in the Minor Use Permit and attached in the Conditions of Approval. In addition, the project will conform to the requirements of the Zoning and Developments Code and Chapter 32 of the Fontana Municipal Code (FMC) as outlined in the Wireless Telecommunications Towers and Antennas ordinance.
The proposed project has been reviewed by Planning, Engineering, Building and Safety, and County Fire Prevention for site circulation, access, and safety. The proposed project identified in Findings No. 1-3, meet or exceeds the standards of the Zoning and Development Code and Chapter 32 of the Fontana Municipal Code (FMC) as outlined in the Wireless Telecommunications Towers and Antennas ordinance and will provide a safe design.
5. That adequate streets and highways exist to carry the type and quantity of traffic anticipated to accommodate access for maintenance and/or service vehicles.
The proposed project has been designed to accommodate access for maintenance and/or service vehicles and will not conflict with existing easements or access on-site. The project site is accessed from Mango Avenue and Sierra Lakes Parkway, which are publicly maintained streets.
The proposed project will have one designated parking stall adjacent to the equipment enclosure for maintenance and/or service vehicles and will not conflict with the existing center.
6. The Director of the Planning Department shall make those findings enumerated in this section as amended from time to time, prior to approving any ASP pursuant to this chapter.
As a part of the approval of this Minor Use Permit and Administrative Site Plan, the Director of Planning made the required findings.
Staff prepared the above-listed findings for the Director of Planning’s consideration pursuant to Section 32-7.2 and Section 30-178, Findings for Approval. On May 11, 2023, the Director of Planning determined that the findings were consistent with the Fontana Municipal Code and FCC statues and regulations and approved the project. The proposed project has met all the requirements of the Fontana Municipal Code and the General Plan. As such, staff recommends the Planning Commission deny the request for appeal and uphold the approval of ASP No. 22-028 and MUP No. 22-007.
Environmental:
The installation of a new wireless telecommunications facility and ancillary equipment as described above associated with Master Case No. (MCN) 22-107 and Administrative Site Plan (ASP) No. 22- 028 and Minor Use Permit (MUP) No. 22-007 is exempt pursuant to Section No. 15311 Class No. 11 City of Fontana Printed on 7/12/2023Page 8 of 9
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028 and Minor Use Permit (MUP) No. 22-007 is exempt pursuant to Section No. 15311 Class No. 11 (Accessory Structures) and Section No. 15332 Class No. 32 (In-Fill Development Project) of the California Environmental Quality Act (CEQA), and Section No. 3.22 of the 2019 City of Fontana Local Guidelines for Implementing the California Environmental Quality Act.
MOTION:
1. Deny Appeal No. 23-015, thereby upholding the decision of the Director of Planning, for Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007, for the request to install a new wireless telecommunications facility consisting of a 75’ mono-palm with 14 antennas, supporting equipment, and an equipment enclosure of 347 square feet total.
2. Direct staff to prepare, execute, and file a CEQA Notice of Determination and a Notice of Exemption with the County Clerk, as appropriate, within five (5) working days of the Commission’sfinal action on Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-
07. ATTACHMENTS:
1. Uniform Appeal Letter from Appellant
2. Vicinity Map
3. Project Plans
4. Project Packet
5. Notice of Public Hearing
6. Responses from AT&T
7. Letter in Support of Original Project
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ATTACHMENT NO. 2
VICINITY MAP
DATE: July 18, 2023
CASE: Master Case No. 23-062
Appeal No. 23-015
CITY OF FONTANA PLANNING DEPARTMENT
CIT
NORTH
Project Site
14229
15230
16231
17232
18233
19234
20235
21236
22237
23238
24239
25240
26241
27242
28243
29244
30245
31246
32247
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
33248
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
34249
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
35250
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
36251
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
37252
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
38253
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
39254
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
40255
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
41256
CITY OF FONTANA
PLANNING DEPARTMENT
APPROVED
Mai Thao
06/07/2023
Project Planner
Date
Case #'s
MCN22-107
ASP22-028
MUP22-007
MAY 11, 2023
42257
NOTICE OF PUBLIC HEARING
SI DESEA INFORMACION EN ESPAÑOL REFERENTE A ESTA NOTIFICACION O PROYECTO, FAVOR DE COMUNICARSE AL (909) 350-6728.
In compliance with Section No. 202 of the Americans with Disabilities Act of 1990 (42 U.S.C.
Section No. 12132) and the federal rules and regulations adopted in implementation thereof, the Agenda will be made available in appropriate alternative formats to persons with a disability.
Should you need special assistance to participate in this meeting, please contact the Planning Department by calling (909) 350 -6718. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting.
A PUBLIC HEARING HAS BEEN SCHEDULED BEFORE THE PLANNING COMMISSION OF THE CITY OF FONTANA FOR THE FOLLOWING:
Master Case No. 23-062 and Appeal No. 23-015
Review of an appeal to overturn the Director of Planning’s decision on May 11, 2023, approving Master Case No. 22-107, Administrative Site Plan No. 22 -028 and Minor Use Permit No. 22 - 007 for a new wireless telecommunications facility consisting of a 75’ mo no-palm with 14 antennas, supporting equipment, and an equipment enclosure totaling approximately 347 square feet.
Environmental
Determination:
The installation of a new wireless telecommunications facility and ancillary equipment as described above ass ociated with Master Case No. 22 -107, Administrative Site Plan No. 22 -028, and Minor Use Permit No. 22 -007 is exempted pursuant to Section No. 15311 Class No. 11 (Accessory Structures) and Section No. 15332 Class No. 32 (In -Fill Development Project) of the California Environmental Quality Act (CEQA), and Section No. 3.22 of the 2019 City of Fontana Local Guidelines for Implementing the California Environmental Quality Act.
Location of
Property:
17010 Sierra Lakes
Parkway (APN:1119-
221-69)
Date of Hearing: July 18, 2023
Place of
Hearing:
City Hall Council
Chambers, 8353
Sierra Avenue
Fontana, CA 92335
Attachment No. 5
43258
Should you have any questions concerning this project, please contact Mai Thao, Assistant Planner, at (909) 350-6650 or by e-mail at [email protected].
ANY INTERESTED PARTY MAY PROVIDE INFORMATION BY LETTER OR EMAIL WHICH MAY BE OF ASSISTANCE TO THE PLANNING COMMISSION. A COPY OF THE APPLICATION AND ENVIRONMENTAL DOCUMENTATION IS AVAILABLE FOR INSPECTION. PLEASE CONTACT THE PLANNER LISTED ABOVE.
IF YOU CHALLENGE ANY ACTION TAKEN CONCERNING THIS ITEM 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 PROVIDED TO THE CITY AT, OR PRIOR TO, THE PUBLIC HEARING.
Publish: July 7, 2023
Time of Hearing: 6:00 P.M.
44259
Aaron M. Shank
[email protected]
www.porterwright.com
Porter Wright
Morris & Arthur LLP
41 South High Street
Suites 2800-3200
Columbus, OH 43215
Direct: 614.227.2110
Fax: 614.227.2100
Main: 614.227.2000
www.porterwright.com
CHICAGO
CINCINNATI
CLEVELAND
COLUMBUS
DAYTON
NAPLES
PITTSBURGH
TAMPA
WASHINGTON, DC
June 30, 2023
City of Fontana Planning Commission
([email protected])
8353 Sierra Avenue
Fontana, CA 92335
RE: AT&T’s Response to Appeal from Approval of
Administrative Site Plan (ASP) No. 22-028; Minor Use
Permit (MUP) No. 22-007
17010 Sierra Lakes Parkway, Fontana, CA 92335
AT&T Site ID CSL02952
Dear Chair Fort, Vice Chair Sanchez, Secretary Thrasher, and Commissioners Sangha and Quintana:
I write on behalf of New Cingular Wireless PCS, LLC d/b/a AT&T Mobility (AT&T), to respectfully request the Planning Commission uphold the Planning Director’s approval of AT&T’s application to construct a stealth wireless telecommunications facility, disguised to appear as a palm tree (“Proposed Facility”) located at 17010 Sierra Lakes Parkway in the City of Fontana. The Proposed Facility is needed for AT&T to provide more robust and competitive wireless services in this portion of the city.
This carefully sited and well-designed facility will minimize visual impacts and it is the best available and least intrusive means to close AT&T’s significant service coverage gap in this area. The appeal raises a few general concerns that have been fully addressed by AT&T’s careful adherence with the city’s design and development regulations. Thus, AT&T requests the Commission deny the appeal and affirm approval of AT&T’s application for the Proposed Facility.
AT&T’s Proposed Facility
Consistent with Chapter 32 of the Fontana Municipal Code, AT&T seeks to construct the Proposed Facility as an alternative tower structure, which will be a stealth facility disguised as a palm tree. This “mono-palm” structure will be 75 feet tall, will be aesthetically and architecturally blended with the surrounding area, and will be subject to all applicable health and safety regulations as the city requires.
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June 30, 2023
Response to Appellant’s Criticisms
The appeal raises six (6) issues, none of which support upendi ng the Planning Department Director’s approval. AT&T responds to each of these six issues as follows:
1. Setback issue to fee simple. Appellant complains that the tower is taller than the distance from his property line. As the Planning Department found, however, AT&T’s Proposed Facility meets or exceeds all applicable City Code provisions, including in particular Chapter 32, Wireless Telecommunications Towers and Antennas. The Planning Director specifically found that “The proposed project will be built/installed pursuant to all applicable building, zoning, fire codes, and standards which will result in an appropriate, safe, and desirable development, as well as conditions of approval referenced herein.” In addition, the structural report for the tower, which will be submitted in connection with the city’s building permit process, will demonstrate the tower’s safety. Moreover, the appellant explains the tower will be located 65 feet from his property, which is even greater than the 75% of height setback applied in the more stringent conditional use process (see Fontana Code Section 32-7(b)(5)). There is, therefore, no basis to deny AT&T’s application with respect to the setback.
2. Setback issue to fully negotiated private easements. Appellant also raises a concern that the height of the tower “encroaches on several private easements.” Again, however, the Proposed Facility meets all applicable building and safety requirements, as well as design and development standards. Further, as the Planning Director found, the Proposed Facility will be compatible with the “size, shape, topography, accessibility, and other physical characteristics” of the site. This concern does not support denial.
3. High winds and liability insurance. Appellant raises a concern about the high winds in the area. Again, “The proposed project will be built/installed pursuant to all applicable building, zoning, fire codes, and standards which will result in an appropriate, safe, and desirable development, as well as conditions of approval referenced herein.” The structural report for the tower, which will be submitted in connection with the city’s building permit process, will include the effects from wind and will demonstrate the tower’s safety. Further, operating the facility will be conditioned on the City’s inspection. The appellant’s demands to be a named insured with specific benefits is not based on any city requirement and is not appropriate. These issues do not support denial.
4. Security, privacy, and safety. Appellant raises various vague concerns about wireless facilities generally, including the effects from RF emissions. AT&T submitted a Radio Frequency Theoretical Modeling Jurisdictional Report that demonstrates the Proposed Facility will comply with the Federal Communications Commission’s RF emissions regulations. As a result, the city is preempted from considering appellant’s concerns about effects of RF emissions by the federal Telecommunications Act, 47 U.S.C. § 332(c)(7)(B)(iv).
5. Unlimited future use. Appellant asks the city to give him a right to “renegotiation of all terms at any and every change of future use.” While unclear exactly what is appellant’s concern here, AT&T notes that future requests to modify the Proposed Facility or the site will be 46261
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June 30, 2023
22788793v1
subject to the relevant city processes at that time. There is, therefore, no need to condition approval of the Proposed Facility on potential future changes to the facility or the site.
6. Views. Finally, appellant asks to be compensated based on his unsupported statement that the Proposed Facility might cause him damages due to its appearance. But the Proposed Facility fully complies with the city’s design requirements, including its specific design as an “alternative tower structure” as explicitly contemplated and preferred by the City Code. Indeed, the Planning Director found that the design and appearance of the proposed faux palm tree is appropriate:
The project proposal in its design and appearance as a result from this review will be compatible with the site and other similarly approved wireless facilities. The wireless tower is proposed to be disguised as a mono-palm with faux fronds and a faux growth pod, which will complement the surrounding neighborhood and blend with the existing area.
The Planning Director went further to find that “The proposed project provides a safe and well-designed site that is both aesthetically and architecturally pleasing.” Whereas the Proposed Facility design is fully in line with the city’s requirements, the appellant’s request for compensation is neither supported in fact nor based on the city’s regulations.
Conclusion
AT&T is working diligently to upgrade its network to provide and improve wireless services in this area. There has been no substantial evidence proffered on which the city could deny AT&T’s application. AT&T urges the Planning Commission to deny the appeal and affirm approval of AT&T’s application.
Sincerely,
Aaron M. Shank
cc: Mai Thao, Assistant Planner ( [email protected])
Patty Nevins, Planning Director ([email protected])
47262
RP Taft 711 LLC
1187 Coast Village Road
Ste 1, #561
Santa Barbara, CA 93108
July 5, 2023
Mai Thao
Assistant Planner - Planning
City of Fontana
8353 Sierra Ave.
Fontana, CA 92335
E-mail: [email protected]
Re: Master Case No. (MCN) 22-107; Administrative Site Plan No. (ASP)-028; Minor Use Permit No. (MUP) 22-007; New Wireless facility disguised as a mono-palm located at 17010 Sierra Lakes Parkway (APN:1119-221-69) ON APPEAL.
Dear Ms. Thao,
By way of introduction, I am the Manager and General Counsel of RP Taft 711 LLC who owns the property located at 17064 Sierra Lakes Parkway, Fontana, CA 92336. Our tenant is 7-Eleven who is anticipating opening in August. We are a neighboring landowner of the proposed project.
We enthusiastically support this project. I have reviewed the recommendation of the Planning Department Findings and Conditions of Approval and Approved Plan dated May 11, 2023.
The Planning Department has given careful and thoughtful consideration to this necessary project. These towers serve critical needs for surrounding businesses as well as residential users.
Aesthetic considerations have been well addressed consistent with other approved projects of this nature and with the surrounding neighborhood. The site is well suited for this project. Safety considerations have been fully evaluated and engineered.
We ask that this project be FULLY APPROVED.
Should have any questions please feel free to contact me.
Best Regards
Michael P. Mallery
Manager and General Counsel
RP Taft 711 LLC
[email protected]
(559) 341 4217
Delivered via e mail: [email protected]
48263
NOTICE OF PUBLIC HEARING
SI DESEA INFORMACION EN ESPAÑOL REFERENTE A ESTA NOTIFICACION O PROYECTO, FAVOR DE COMUNICARSE AL (909) 350-6728.
In compliance with Section No. 202 of the Americans with Disabilities Act of 1990 (42 U.S.C.
Section No. 12132) and the federal rules and regulations adopted in implementation thereof, the Agenda will be made available in appropriate alternative formats to persons with a disability.
Should you need special assistance to participate in this meeting, please contact the Planning Department by calling (909) 350 -6718. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting.
A PUBLIC HEARING HAS BEEN SCHEDULED BEFORE THE PLANNING COMMISSION OF THE CITY OF FONTANA FOR THE FOLLOWING:
Master Case No. 23-062 and Appeal No. 23-016
Review of an appeal to overturn the Planning Commission’s decision on July 18, 2023, to uphold the Director of Planning decision approving Master Case No. 22 -107, Administrative Site Plan No. 22-028 and Minor Use Permit No. 22-007 for a new wireless telecommunications facility consisting of a 75’ mono -palm with 14 antenna s, supporting equipment, and an equipment enclosure totaling approximately 347 square feet.
Environmental
Determination:
The installation of a new wireless telecommunications facility and ancillary equipment as described above associated with Master Case No. 22 -107, Administrative Site Plan No. 22 -028, and Minor Use Permit No. 22 -007 is exempted pursuant to Section No. 15311 Class No. 11 (Accessory Structures) and Section No. 15332 Class No. 32 (In -Fill Development Project) of the California Environmental Quality Act (CEQA), and Section No. 3.22 of the 2019 City of Fontana Local Guidelines for Implementing the California Environmental Quality Act.
Location of
Property:
17010 Sierra Lakes
Parkway (APN:1119-
221-69)
Date of Hearing: September 26, 2023
Place of
Hearing:
City Hall Council
Chambers, 8353
Sierra Avenue
Fontana, CA 92335
ATTACHMENT NO. 5 264
Should you have any questions concerning this project, please contact Mai Thao, Assistant Planner, at (909) 350-6650 or by e-mail at [email protected].
ANY INTERESTED PARTY MAY APPEAR AND PRESENT ANY INFORMATION BY LETTER OR EMAIL WHICH MAY BE OF ASSISTANCE TO THE CITY COUNCIL. A COPY OF THE APPLICATION AND ENVIRONMENTAL DOCUMENTATION IS AVAILABLE FOR INSPECTION. PLEASE CONTACT THE PLANNER LISTED ABOVE.
IF YOU CHALLENGE IN COURT ANY ACTION TAKEN CONCERNING A PUBLIC HEARING ITEM,
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 TO THE CITY AT, OR PRIOR TO, THE PUBLIC HEARING.
Time of Hearing: 7:00 P.M.
265
Aaron M. Shank
[email protected]
www.porterwright.com
Porter Wright
Morris & Arthur LLP
41 South High Street
Suites 2800-3200
Columbus, OH 43215
Direct: 614.227.2110
Fax: 614.227.2100
Main: 614.227.2000
www.porterwright.com
CHICAGO
CINCINNATI
CLEVELAND
COLUMBUS
DAYTON
NAPLES
PITTSBURGH
TAMPA
WASHINGTON, DC
August 21, 2023
Mayor Warren and City Council
City of Fontana
8353 Sierra Avenue
Fontana, CA 92335
RE: AT&T’s Response to Appeal from Approval of
Administrative Site Plan (ASP) No. 22-028; Minor Use
Permit (MUP) No. 22-007
17010 Sierra Lakes Parkway, Fontana, CA 92335
AT&T Site ID CSL02952
Dear Mayor Warren, Mayor Pro Tem Garcia, and Councilmembers Cothran, Roberts, and Sandoval:
I write on behalf of New Cingular Wireless PCS, LLC d/b/a AT&T Mobility (AT&T), to respectfully request the City Council uphold the Planning Director’s and Planning Commission’s approvals of AT&T’s application to construct a stealth wireless communications facility, disguised to appear as a palm tree (“Proposed Facility”) located at 17010 Sierra Lakes Parkway in the City of Fontana. The Proposed Facility is needed for AT&T to provide more robust and competitive wireless services in this portion of the city.
This carefully sited and well-designed facility will minimize visual impacts, and the city’s approval comports with federal law as it is the best available and least intrusive means to close AT&T’s significant service coverage gap in this area. The appeal raises a few general concerns that have been fully addressed by AT&T’s careful adherence with the city’s design and development regulations. Thus, AT&T requests that the Council deny the appeal and affirm approval of AT&T’s application for the Proposed Facility.
AT&T’s Proposed Facility
Consistent with Chapter 32 of the Fontana Municipal Code, AT&T seeks to construct the Proposed Facility as an alternative tower structure, which will be a stealth facility disguised as a palm tree. This “mono-palm” structure will be 75 feet tall, will be aesthetically and architecturally blended with the surrounding area, and will be subject to all applicable health and safety regulations as the city requires.
The Planning Department Staff Report explained how the
Proposed Facility complies with the city’s General Plan and Fontana 266
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August 21, 2023
Municipal Code. The Staff Report also explained that the monopalm design will “blend with the existing area” and that the equipment enclosure finish and new mature landscaping will “compliment the landscaping of the surrounding properties which will match the surrounding neighborhood.” Addressing the appeal issues, the Staff Report explained, “the project complies with the setback requirements as outlined in Chapter 32. The proposed AT&T tower and equipment has been reviewed by the City of Fontana Building and Safety and Fire Departments and structural plans would be reviewed prior to issuance of building permits. The project will be built pursuant to all applicable building, zoning, fire codes and standards and complies with all applicable FCC and FAA regulations.”
AT&T Needs the Proposed Facility to Provide and Improve Wireless Services
AT&T’s radio frequency engineers have identified a significant gap in service coverage in this large area that is roughly bordered by Escalon Drive to the north, Long Cove Drive to the west, Lurelane Street to the south, and North Alder Avenue to the east. (See Attachment A – AT&T Radio Frequency Statement.) This portion of Fontana includes hundreds of homes in several neighborhoods; parks; a golf course; commercial districts along and near Foothill Freeway, Sierra Lakes Parkway, and South Highland Avenue; busy roads, including a mile stretch of Foothill Freeway; and other points of interest in the vicinity
The Proposed Facility will improve critical wireless services to the area, which are desperately needed especially as customers increasingly use their mobile phones as their primary communication devices. In fact, the Center for Disease Control and Prevention studies the extent of mobile phone use, and recently found that more than 81% of California adults, and more than 98% of Californians under age 18, rely exclusively or primarily on wireless communications in their homes.
1 In fact, the Federal Communications Commission conservatively estimates that 74% of 911 calls are placed by people using wireless phones.2 In addition, the Proposed Facility is a part of AT&T’s commitment to supporting public safety through its partnership with FirstNet, the first-ever nationwide first-responder wireless network.
Approval of AT&T’s Proposal Comports with Federal Law
The federal Telecommunications Act of 1996, 47 U.S.C. § 332 (“ Act”) provides rights to wireless service providers and establishes limitations upon state and local zoning authorities with respect to applications for permits to construct personal wireless service facilities. The United States Supreme Court has explained that the Act was enacted in part to prioritize and streamline deployment of wireless technologies on a national basis.3
1 See Wireless Substitution: State-level Estimates from the National Health Interview Survey, 2019, available at https://www.cdc.gov/nchs/data/nhis/earlyrelease/Wireless_state_ 202108-508.pdf. 2 See, e.g., Thirteenth Annual Report to Congress on State Collection and Distribution of 911 and Enhanced 911 Fees and Charges (Dec. 31, 2021), at 12, available at https://www.fcc.gov/sites/default/files/13th-annual- 911-fee- report-2021.pdf.
3 City of Rancho Palos Verdes v. Abrams, 544 U.S. 113, 115-16 (2005) (“Congress enacted the Telecommun ications Act of 1996 (TCA), 110 Stat. 56, to promote competition and higher quality in American telecommunications 267
City of Fontana City Council
August 21, 2023
The Act defines the scope and parameters of the city’s review of AT&T’s Application.
Under the Act, the city’s review of AT&T’s applications must be based on substantial evidence. 4 The “substantial evidence” requirement means that a local government’s decision must be “authorized by applicable local regulations and supported by a reasonable amount of evidence.”5 In other words, a local government must have specific reasons that are both consistent with the local regulations and supported by substantial evidence in the record to deny a permit.
The Act also prohibits a local government from denying an application for a wireless telecommunications facility where doing so would “prohibit or have the effect of prohibiting the provision of personal wireless services.”
6 Courts have found an “effective prohibition” exists
where a wireless provider demonstrates (1) a significant gap in wireless service coverage, and (2) that the proposed facility would provide the “least intrusive means,” in relation to the land use values embodied in local regulations, to provide the service coverage necessary to fill that gap.7 Under this test, when a wireless carrier satisfies both of these requirements, state and local standards that would otherwise be sufficient to permit denial of the facility are preempted and the municipality must approve the wireless facility.8 When a wireless provider presents evidence of a significant gap and the absence of a less intrusive alternative, the burden shifts to the local government to prove that a less intrusive alternative exists, is available, and is feasible.9
More recently, the FCC has confirmed its rulings that an effec tive prohibition occurs whenever the decision of a local government materially inhibits wireless services, 10 and this
material inhibition standard was again upheld by the Ninth Circuit.11 The FCC explained that a local government “could materially inhibit service in numerous ways – not only by rendering a service provider unable to provide existing service in a new geographic area or by restricting the entry of a new provider in providing service in a particular area, but also by materially inhibiting the introduction of new services or the improvement of existing services.”12
services and to ‘encourage the rapid deployment of new telecomm unications technologies.’ Ibid. One of the means by which it sought to accomplish these goals was reduction of t he impediments imposed by local governments upon the installation of facilities for wireless communications, suc h as antenna towers.”). 4 47 U.S.C. § 332(c)(7)(B)(iii).
5 Metro PCS, Inc. v. City and County of San Francisco , 400 F.3d 715, 725 (9th Cir. 2005), abrogated on other grounds, T-Mobile South, LLC v. City of Roswell, 135 S.Ct. 808 (2015). 6 47 U.S.C. § 332(c)(7)(B)(i)(II).
7 See e.g., Metro PCS, Inc., 400 F.3d at 734-35; Sprint PCS Assets, LLC v. City of Palos Verdes Estates, 583 F.3d 716, 726 (9th Cir. 2009).
8 See T-Mobile USA, Inc. v. City of Anacortes, 572 F.3d 987, 999 (9th Cir. 2009). 9 Id., 572 F.3d at 998-999.
10 See Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment , Declaratory Ruling and Third Report and Order, FCC 18-133 (Sept ember 27, 2018) (“Infrastructure Order”) at ¶ 35; see also, In the Matter of California Payphone Association Petition for Preemption, Etc., Opinion and Order, FCC 97-251, 12 FCC Rcd 14191 (July 17, 1997).
11 City of Portland v. United States, 969 F.3d 1020, 1034-35 (9th Cir. 2020). 12 Infrastructure Order at ¶ 37.
268
City of Fontana City Council
August 21, 2023
Here, AT&T has demonstrated its significant service coverage gap in the vicinity of the Proposed Facility. AT&T’s radio frequency propagation maps submitted in connection with its application, which are also exhibits to the Radio Frequency Statement (Attachment A), depict the service coverage gap that AT&T is experiencing here. These maps show that AT&T lacks adequate wireless service in this significant area. The proposed service coverage from the Proposed Facility is depicted in the coverage maps. As you can see, placing the Proposed Facility in this location will close AT&T’s significant service coverage gap in this area. AT&T has also shown that the Proposed Facility is the least intrusive means to close the gap (see Attachment B – Alternative Sites Analysis). The Planning Commission’s approval thus comports with federal law, and the Council should likewise approve AT&T’s application and deny the appeal.
Response to Appellant’s Criticisms
The appeal acknowledges the Proposed Facility complies with th e city’s standards, thereby conceding the city lacks substantial evidence to deny AT&T’s application. The appeal raises six (6) issues, none of which support upending the Planning Commission’s approval.
AT&T responds to each of these six issues as follows:
1. Setback. Appellant complains that the tower is taller than the distance from his property line. Specifically, as he stated in his appeal from the Planning Director’s approval, the Proposed Facility will be located 65 feet from his property. As the Planning Director found, however, AT&T’s Proposed Facility meets or exceeds all applicable City Code provisions, including in particular Chapter 32, Wireless Telecommunications Towers and Antennas. The Planning Director specifically found that “The proposed project will be built/installed pursuant to all applicable building, zoning, fire codes, and standards which will result in an appropriate, safe, and desirable development, as well as conditions of approval referenced herein.” In addition, the structural report for the tower, which will be submitted in connection with the city’s building permit process, will demonstrate the tower’s safety.
Moreover, the appellant explains the tower will be located 65 feet from his property, which is even greater than the 75% of height setback applied in the more stringent conditional use process (see Fontana Code Section 32-7(b)(5)). As the appeal specifies that requirement – if it applied – would require the Proposed Facility to be located at least 56 feet from his property.
And the appeal admits it is proposed to be sited nine feet farther away than that. There is, therefore, no basis to deny AT&T’s application with respect to the setback.
2. Fully negotiated private easements. Appellant also raises a concern that the height of the tower might encroach on private easements if it were to fail and fall. Again, however, the Proposed Facility meets all applicable building and safety requirements, as well as all design and development standards. The structural soundness and safety of this facility will be ensured via the building permit process. Further, as the Planning Director found, the Proposed Facility will be compatible with the “size, shape, topography, accessibility, and other physical characteristics” of the site. This concern does not support denial.
269
City of Fontana City Council
August 21, 2023
3. High winds and liability insurance. Appellant raises a concern about the high winds in the area. Again, “The proposed project will be built/installed pursuant to all applicable building, zoning, fire codes, and standards which will result in an appropriate, safe, and desirable development, as well as conditions of approval referenced herein.” The structural report for the tower, which will be submitted in connection with the city’s building permit process, will include the effects from wind and will demonstrate the tower’s safety. Further, operating the facility will be conditioned on the City’s inspection. This issue does not support denial.
4. Security, privacy, and safety. Appellant raises various vague concerns about wireless facilities generally, seeking to stoke fears about supposed health impacts and cybersecurity threats. But the appeal fails to offer any evidence – let alone substantial evidence – to support these far-fetched notions. As to health concerns, the Proposed Facility will comply with the FCC’s RF emissions regulations, and, as a result, the city is preempted from considering appellant’s health effects concerns. See 47 U.S.C. § 332(c)(7)(B)(iv). Moreover, the city is preempted from regulating the means and facilities for wireless network expansion.13 On this vague and improper premise, the appeal suggests the city to delay or deny AT&T’s application (and seemingly all other wireless facility applications). But this simply invites the city to violate the Act’s timing, evidentiary, and substantive requirements.
5. Unlimited future use. Appellant reiterates his fears that AT&T and others might use the Proposed Facility as a platform to commit cyber-crimes and espionage. Again, however, the appeal fails to offer any evidence to support these fantastic notions. The appeal specifically views wireless infrastructure as a threat to the city and its logistics industry. But the city’s residents and businesses need reliable wireless services. As the Planning Department Staff Report explained, AT&T will be required to follow the city’s requirements and processes for any future changes to the Proposed Facility.
6. View impairment. Finally, appellant asks to be compensated based on his unsupported statement that the Proposed Facility might cause him damages due to its appearance. But the Proposed Facility fully complies with the city’s design requirements, including its specific design as an “alternative tower structure” as explicitly contemplated and preferred by the City Code. Indeed, the Planning Director found that the design and appearance of the proposed faux palm tree is appropriate:
The project proposal in its design and appearance as a result from this review will be compatible with the site and other similarly approved wireless facilities. The wireless tower is proposed to be disguised as a mono-palm with faux fronds and a faux growth pod, which will complement the surrounding neighborhood and blend with the existing area.
13 Public Utility Comm’n of Texas Petition for Declaratory ruling and/or Preemption of Certain Provisions of the Texas Public Utility Regulatory Act of 1995, Opinion and Order, 13 FCC Rcd 3460, ¶¶ 13, 74 (FCC rel. Oct. 1, 1997) (FCC ruled it is unlawful for a state or locality to spec ify the “means and facilities” through which a service provider must offer services); Bennett v. T-Mobile U.S. Inc., 597 F.Supp. 2d 1050, 1053 (C.D. Cal. 2008) (FCC has regulated “every technical aspect of radio communication”). 270
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22937942v1
The Planning Director went further to find that “The proposed project provides a safe and well-designed site that is both aesthetically and architecturally pleasing.” Whereas the Proposed Facility design is fully in line with the city’s requirements, the appellant’s request for compensation is neither supported in fact nor based on the city’s regulations.
Conclusion
AT&T is working diligently to upgrade its network to provide and improve wireless services in this area. There has been no substantial evidence proffered on which the city could deny AT&T’s application. AT&T urges the City Council to deny the appeal and affirm approval of AT&T’s application.
Sincerely,
Aaron M. Shank
cc: Mai Thao, Assistant Planner ( [email protected])
271
ATTACHMENT A
272
AT&T Mobility Radio Frequency Statement
17010 Sierra Lakes Parkway, Fontana, CA 92335
AT&T has experienced an unprecedented increase in mobile data use on its network since the release of the iPhone in 2007. AT&T estimates that since introduction of the iPhone in 2007, mobile data usage has increased 47 0,000% on its network. AT&T forecasts its customers’ growing demand for mobile data services to continue. The increase d volume of data travels to and from customers’ wireless devices and AT&T’s wireless infrastructure over limited airwaves — radio frequency spectrum that AT&T licenses from the Federal Communications Commission.
Spectrum is a finite resource and there are a limited number of airwaves capable and available for commercial use. Wireless carriers license those airwaves from the FCC. To ensure that service quality, AT&T must knit together its spectrum assets to address customers’ existing usage and forecasted de mand for wireless services, and it must use its limited spectrum in an efficient manner.
AT&T uses high-band (i.e., 6 GHz and higher), mid -band (i.e., C-band, 2300 MHz, 2100 MHz, and 1900 MHz) and low -band (i.e., 850 MHz and 700 MHz) spectrum to provide wi reless service. Each spectrum band has different propagation characteristics and signal quality may vary due to noise or interference based on network characteristics at a given location. To address this dynamic environment, AT&T deploys multiple layers of its licensed spectrum and strives to bring its facilities closer to the customer. The prop osed wireless communications facility at 17010 Sierra Lakes Parkway , Fontana (the “Property”) is needed to close coverage gap in 4G LTE service in an area roughly bordered Escalon Drive to the north, Long Cove Drive to the west, Lurelane Street to the south, and North Alder Avenue to the east. This gap area includes hundreds of homes in several neighborhoods ; parks; a golf course ; commercial distr icts along and near Foothill Freeway, Sierra Lakes Parkway, and South Highland Avenue; busy roads, including a mile stretch of Foothill Freeway; and other points of interest in the vicinity.
The service coverage gap is caused by inadequate infrastructure in the are a. AT&T currently has existing sites in the broader geographical area surrounding the Property but, as Exhibit 1 illustrates, these existing sites do not provide sufficient 4G LTE service in the gap area.
To meet its coverage objectives , AT&T needs to construct a new wireless communications 273
2 facility. Wireless telecommunications is a line -of-sight technology, and AT&T’s antennas need to be high enough propagate an effective signal throughout the gap area. To meet its coverage objectives for this gap area , AT&T propo ses a new wireless telecommunications facility disguised as a palm tree (“monopalm”) . Denial of this proposed facility would materially inhibit AT&T’s ability to provide and improve wireless services in this portion of the city.
The facility at the Property will help clo se the gap in coverage and help address rapidly increasing data usage driven by smart phone and tablet usage. This site is part of an effort to fully deploy 4G LTE technology in the area. Specifically, the proposed facility will close this service coverage gap and provide reliable 4G LTE service for AT&T customers in the affected area. LTE technology also offers lower latency, or the processing time it takes to move data through a network, such as how long it takes to start downloading a webpage or file once you’ve sent the request. Lower latency helps to improve the quality of personal wireless services.
What’s more, LTE uses spectrum more efficiently than other technologies, creating more space to carry data traffic and services and to deliver a better overall network experience.
It is important to understand that service problems can and do occur for customers even in locations where the coverage maps on AT&T’s “Coverage Viewer” website appear to indicate that coverage is available. As the legend to the C overage Viewer maps indicates, these maps display approximate coverage. Actual coverage in an area may differ from the website map graphics, and it may be affected by such things as terrain, weather, network changes, foliage, buildings, construction, high-usage periods, customer equipment, and other factors.
It is also important to note that the signal losses, slow data rates, and other service problems can and do occur for customers even at times when certain other customers in the same vicinity may not e xperience any problems on AT&T’s network. These problems can and do occur even when certain customers’ wireless phones indicate coverage bars of signal strength on the handset. The bars of signal strength that individual customers can see on their wireless phones are an imprecise and slow -to-update estimate of service quality. In other words, a customer’s wireless phone can show coverage bars of signal strength, but that customer will still, at times, be unable to initiate voice calls, complete calls, or do wnload data reliably and without service interruptions due to service quality issues.
274
3 To determine where equipment needs to be located for the provisioning of reliable service in any area, AT&T’s radio frequency engineers rely on far more complex tools an d data sources than just signal strength from individual phones. AT&T uses industry standard propagation tools to identify the areas in its network where signal strength is too weak to provide reliable service quality. This information is developed from ma ny sources including terrain and clutter databases, which simulate the environment, and propagation models that simulate signal propagation in the presence of terrain and clutter variation. AT&T designs and builds its wireless network to ensure customers r eceive reliable in-building service quality. This level of service is critical as customers increasingly use their mobile phones as their primary communication devices. According to the Center for Disease Control and Prevention (CDC), more than 81% of California adults, and more than 98% of Californians under age 18, rely exclusively or primarily on wireless communications in their homes. And California households rely on their mobile phones to do more (E911, video streaming, GPS, web access, text, etc.). I n fact, the FCC conservatively estimates that 74% of 911 calls are placed by people using wireless phones.
The proposed facility at the Property is also a part of AT&T’s commitment to supporting public safety through its partnership with FirstNet, the federal First Responder Network Authority. Conceived by the 9/11 Commission Report as necessary for first responder communications, Congress created the federal First Responder Network Authority, which selected AT&T to build and manage FirstN et, the first -ever nationwide first -responder wireless network. The proposed facility will provide new service on Band 14, which is the nationwide high-quality spectrum set aside by the U.S. government for public safety. Deployment of FirstNet in the subject area will improve public safety by putting advanced wireless technologies into the hands of public safety agencies and first responders.
Exhibit 1 to this Statement is a map of the existing 4G LTE service coverage (without the proposed installation at t he Property) in the area at issue. It includes 4G LTE service coverage provided by other existing AT&T sites. The green shaded areas of the map depict acceptable in - building coverage. In -building coverage means customers are able to place or receive a call on the ground floor of a building. The yellow shaded areas depict areas within a signal strength range that provide acceptable in -vehicle service coverage. In these areas, an AT&T customer should be able to successfully place or receive a call within a ve hicle. The pink and white shading depicts areas within a signal strength range in which a customer might have difficulty 275
4 receiving a consistently acceptable level of service. The quality of service experienced by any individual customer can differ greatly depending on whether that customer is indoors, outdoors, stationary, or in transit. Any area in the yellow , pink, or white category is considered inadequate service coverage and constitutes a service coverage gap.
Exhibit 2 is a map that predicts 4G LTE service coverage based on signal strength in the vicinity of the Property if the proposed facility is constructed as proposed in the application. As shown by this map, constructing the proposed facility at the Proper ty closes this significant service coverage gap.
My conclusions are based on my knowledge of the Property and with AT&T’s wireless network, as well as my review of AT&T’s records with respect to the Property and its wireless telecommunications facilities in the surrounding area. have a Bachelor’s Degree in Electronics and Communication Engineering from the Dr. B.R. Ambedkar Regional Engineering College, Jalandhar, Punjab, India, and have worked as an engineering expert in the wireless communications industry for over 25 years.
__________________________________
Sandeep Mangat
AT&T Mobility Services LLC
Network, Planning & Engineering
RAN Design & RF Engineering
August 2023
276
LTE Coverage Before site CSL02592
277
LTE Coverage After site CSL02592
278
ATTACHMENT B
279
AlternaƟve Sites Analysis
AT&T Mobility
Wireless TelecommunicaƟons Facility
at
Sierra Lakes
17010 Sierra Lakes Parkway
Fontana, CA
Site ID: CSL02952
280
2 LocaƟon of Candidate Sites
281
3 Proposed Facility – Sierra Lakes, 17010 Sierra Lakes Pkwy.
Conclusion: Based upon locaƟon, a willing landlord and the superior coverage as shown in the proposed coverage map included in AT&T’s Radio Frequency Statement, the proposed Facility is the least intrusive means for AT&T to meet its service coverage objecƟve.
This commercial property is located in a Regional Mixed Use (RMU) zoning district. Consistent with Chapter 32 of the Fontana Municipal Code, this “mono-palm” structure will be 75 feet tall, will be aestheƟcally and architecturally blended with the surrounding area, and will be subject to all applicable health and safety regulaƟons as the city requires.
282
4 Per Chapter 32 of the Fontana Municipal Code:
283
5 284
6 Alternate Candidates InvesƟgated
285
7 AlternaƟve Site – ARI Highland Village LP , 16944 S. Highland Avenue
Conclusion: Unavailable.
This property is located approximately 0.33 miles to the southwest of the Proposed Facility. AT&T pursued this locaƟon and there was no interest. Currently, with the City of Fontana setbacks requirements for a wireless facility and the property lines, a cell site with RF’s requested height could not be met.
286
8 AlternaƟve Site – CAKY LLC, 17030 S. Highland Ave.
Conclusion: Unavailable.
This property is located approximately 0.27 miles to the southwest of the Proposed Facility.
AT&T pursued this locaƟon and there was no interest. This property was undeveloped at the Ɵme AT&T approached the property owner. Currently, setbacks cannot be met per the City of Fontana municipal code.
287
9 AlternaƟve Site – CMK2 Fontana LLC, 17051 Sierra Lakes Pkwy.
Conclusion: Unavailable.
This property is located approximately 0.14 miles to the south of the Proposed Facility. AT&T pursued this locaƟon and there was no interest. This was a rooŌop antenna locaƟon. RF would have to consider a much lower RAD.
288
10 AlternaƟve Site – FARSAI-FONTANA LLC, 16943 Sierra Lakes Pkwy.
Conclusion: Unavailable.
This property is located approximately 0.15 miles southwest of the Proposed Facility. AT&T pursued this locaƟon and there was no interest. This is a restaurant parking lot with landscaping for a disguised light standard. RooŌop antennas will not work since this is a single-story building.
289
11 AlternaƟve Site – FONTANABS 2019 LLC, 16963 Sierra Lakes Pkwy.
Conclusion: Unavailable.
This property is located approximately 0.13 miles to the southwest of the Proposed Facility.
AT&T pursued this locaƟon and there was no interest. This was a rooŌop antenna locaƟon. RF would have to consider a lower RAD.
290
12 AlternaƟve Site – Li Hui Min & James Hsi Chieh, APN: 0240-121-22, Fontana, CA. 92336
Conclusion: Unavailable.
This property is located approximately 0.32 miles to the south of the Proposed Facility. AT&T pursued this locaƟon and there was no interest. This is an undeveloped commercial property.
The residenƟal setback is approximately 57’.
291
13 AlternaƟve Site – MV ProperƟes LLC, 17040 S. Highland Ave., Fontana, CA. 92336
Conclusion: Unavailable.
This property is located approximately 0.25 miles to the south of the Proposed Facility. AT&T pursued this locaƟon and there was no interest. This property was undeveloped at the Ɵme AT&T approached the property owner. Currently, setbacks cannot be met.
292
14 AlternaƟve Site - Verizon CollocaƟon Monopine, 17051 Sierra Lakes Pkwy.
Conclusion: Unavailable.
This property is located approximately 0.17 miles to the southeast of the Proposed Facility.
AT&T pursued this locaƟon and had correspondence with the property owner, Vincent Piarulli, about required add land for AT&T’s equipment. AŌer a few weeks of communicaƟon and discussions about lease terms, Mr. Piarulli informed AT&T he was not interested in moving forward as an interested Landlord, therefore, AT&T stopped pursuing this candidate.
293
15 AlternaƟve Site – Cambria Park, 17140 Cambria Ave.
Conclusion: Unavailable.
This property is located approximately 0.42 miles to the southeast of the Proposed Facility.
AT&T pursued this locaƟon, however, setbacks cannot be met.
294
City of Fontana
Action Report
City Council Meeting
8353 Sierra Avenue
Fontana, CA 92335
File #: 21-2474 Agenda Date: 9/26/2023
Agenda #: A. Category: New Business
FROM:
Finance
SUBJECT:
Issuance of Special Tax Bonds for CFD #100 (Victoria)
RECOMMENDATION:
Adopt Resolution No. 2023-100, of the City Council of the City of Fontana authorizing the issuance of City of Fontana Community Facilities District No. 100 (Victoria) Special Tax Bonds, Series 2023, in an aggregate principal amount of not to exceed $6,000,000, authorizing the execution and delivery of an Indenture, a Bond Purchase Agreement and a Continuing Disclosure Agreement, authorizing the distribution of an Official Statement in connection therewith and authorizing the execution of necessary documents and certificates and related actions.
COUNCIL GOALS:
· Practice sound fiscal management by developing long-term funding and debt management plans.
DISCUSSION:
On December 8, 2020, the City Council authorized the formation of Community Facilities District No. 100 (Victoria) and conducted a special election to levy taxes within the District. This project consists of 193 residential lots located at the northwest corner of North Heritage Circle and Victoria Street.
Bond proceeds will be used to fund public infrastructure including sewer, storm drain, street improvements, landscaping, public facilities and park facilities.
In order to issue the special tax bonds, it is necessary to execute bond documents and agreements relating to this District. The recommended action complies with the City’s debt management strategy.
The following documents, in their materially correct form, are attached hereto:
1. Indenture;
2. District Continuing Disclosure Agreement;
3. Bond Purchase Agreement;
4. Preliminary Official Statement; and
5. Appraisal Report.
FISCAL IMPACT:
The fiscal impact associated with the approval of this item is $4.58 million in bond proceeds resulting from the issuance of the bonds to be made available for the approved infrastructure projects which also includes $916,000 in community benefit fees (20% of bond proceeds) to fund a defined community benefit project. Costs of issuance will be paid from gross bond proceeds. Debt service City of Fontana Printed on 9/20/2023Page 1 of 2
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File #: 21-2474 Agenda Date: 9/26/2023
Agenda #: A. Category: New Business
community benefit project. Costs of issuance will be paid from gross bond proceeds. Debt service payments will be made from special taxes levied on the property owners within the district.
MOTION:
Approve staff recommendation.
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RESOLUTION NO. _______
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
FONTANA AUTHORIZING THE ISSUANCE OF CITY OF
FONTANA COMMUNITY FACILITIES DISTRICT NO. 100
(VICTORIA) SPECIAL TAX BONDS, SERIES 2023, IN AN
AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED
$6,000,000, AUTHORIZING THE EXECUTION AND
DELIVERY OF AN INDENTURE, A BOND PURCHASE
AGREEMENT AND A CONTINUING DISCLOSURE
AGREEMENT, AUTHORIZING THE DISTRIBUTION OF
AN OFFICIAL STATEMENT IN CONNECTION
THEREWITH AND AUTHORIZING THE EXECUTION OF
NECESSARY DOCUMENTS AND CERTIFICATES AND
RELATED ACTIONS
WHEREAS, the City Council (the “City Council”) of the City of Fontana (the “City”) has formed City of Fontana Community Facilities District No. 100 (Victoria) (the “Community Facilities District”) under the provisions of the Mello-Roos Community Facilities Act of 1982 (the “Act”);
WHEREAS, the Community Facilities District is authorized under the Act to levy a special tax (the “Special Tax”) to pay for the costs of certain public facilities (the “Facilities”) and to issue bonds payable from the Special Tax;
WHEREAS, in order to provide funds to finance certain of the Facilities, the Community Facilities District proposes to issue its City of Fontana Communit y Facilities District No. 100 (Victoria) Special Tax Bonds, Series 2023 (the “Series 2023 Bonds”), in the aggregate principal amount of not to exceed $6,000,000;
WHEREAS, in order to provide for the authentication and delivery of the Series 2023 Bonds, to establish and declare the terms and conditions upon which the Series 2023 Bonds are to be issued and secured and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Community Facilities District proposes to enter into an Indenture with U.S.
Bank Trust Company, National Association, as trustee (the “Trustee”) (such Indenture, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Indenture”); WHEREAS, Stifel, Nicolaus & Company, Incorporated (the “Underwriter”), has presented the Community Facilities District with a proposal, in the form of a Bond Purchase Agreement, to purchase the Series 2023 Bonds from the Community Facilities District (such Bond Purchase Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Purchase Agreement”);
WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (“Rule 15c2-12”) requires that, in order to be able to purchase or sell the Series 2023 Bonds, the underwriter thereof must have reasonably determined that the Community Facilities District , as 297
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the issuer of the Series 2023 Bonds, has undertaken in a written agreement or contract for the benefit of the holders of the Series 2023 Bonds to provide disclosure of certain financial information and certain listed events on an ongoing basis; WHEREAS, in order to cause such requirement to be satisfied, the Community Facilities District desires to enter into a Continuing Disclosure Agreement with U.S. Bank Trust Company, National Association , in its capacity as Trustee and in its capacity as dissemination agent thereunder (such Continuing Disclosure Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Continuing Disclosure Agreement”);
WHEREAS, a form of the Preliminary Official Statement to be distributed in connection with the public offering of the Series 2023 Bonds has been prepared (such Preliminary Official Statement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the “Preliminary Official Statement”);
WHEREAS, there have been prepared and submitted to this meeting forms of:
(a) the Indenture;
(b) the Purchase Agreement;
(c) the Continuing Disclosure Agreement; and
(d) the Preliminary Official Statement;
WHEREAS, Kitty Siino & Associates, Inc. has prepared and provided to the Community Facilities District an appraisal report, dated August 22, 2023 (the “Appraisal”), providing an opinion of value of the property in the Community Facilities District, which has been submitted to this meeting;
WHEREAS, Section 5852.1 of the California Government Code requires that the City Council obtain from an underwriter, financial advisor or private lender and disclose, in a meeting open to the public, prior to authorization of the issuance of the Series 2023 Bonds, good faith estimates of (a) the true interest cost of the Series 2023 Bonds, (b) the sum of all fees and charges paid to third parties with respect to the Series 2023 Bonds, (c) the amount of proceeds of the Series 2023 Bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Series 2023 Bonds, and (d) the sum total of all debt service payments on the Series 2023 Bonds calculated to the final maturity of the Series 2023 Bonds plus the fees and charges paid to third parties not paid with the proceeds of the Series 2023 Bonds;
WHEREAS, in compliance with Section 5852.1 of the California Government Code, the City Council has obtained from CSG Advisors Incorporated, as the Community Facilities District’s municipal advisor (the “ Municipal Advisor”), the required g ood faith estimates , which the Municipal Advisor has prepared in consultation with the Underwriter, and such estimates are disclosed and set forth in Exhibit A attached hereto;
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WHEREAS, the Community Facilities District desires to proceed to issue and sell the Series 2023 Bonds and to authorize the execution of such documents and the performance of such acts as may be necessary or desirable to effect the offering, sale and issuance of th e Series 2023 Bonds; and
WHEREAS, the City Council is the legislative body of the Community Facilities District; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Fontana, as follows:
Section 1. The foregoing recitals are true and correct, and the C ity Council so finds and determines.
Section 2. Subject to the provisions of Section 3 hereof, the issuance of the Series 2023 Bonds, in an aggregate principal amount of not to exceed $6,000,000, on the terms and conditions set forth in, and subject to the limitati ons specified in, the Indenture, be and the same is hereby authorized and approved. The Series 2023 Bonds shall be dated, shall bear interest at the rates, shall mature on the dates, shall be subject to call and redemption, shall be issued in the form and shall be as otherwise provided in the Indenture, as the same shall be completed as provided in this Resolution.
Section 3. The Indenture, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereb y approved. Each of the Mayor of the City, and such other member of the City Council as the Mayor may designate, the City Manager of the City, the Chief Financial Officer, Finance Department, of the City and such other officer or employee of the City as th e City Manager may designate (the “Authorized Officers”) is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to execute and deliver the Indenture in the form submitted t o this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Indenture by such Authorized Officer; provide d, however, that such changes, insertions and omissions shall not authorize an aggregate principal amount of Series 2023 Bonds in excess of $6,000,000, shall not result in a final maturity date of the Series 2023 Bonds later than September 1, 2055 and shall not result in a true interest cost for the Series 2023 Bonds in excess of 6.50%.
Section 4. The Purchase Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to execute and deliver the Purchase Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate underwriter’s discount (not including any original issue discount) from the principal amount of the Series 2023 Bonds in excess of 1.50% of the aggregate principal amount of the Series 2023 Bonds. The City Council hereby finds and determines that the sale of the Series 299
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2023 Bonds at negotiated sale as contemplated by the Purchase Agreement will result in a lower overall cost.
Section 5. The Continuing Disclosure Agreement, in substanti ally the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to execute and deliver the Continuing Disclosure Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Continuing Disclosure Agreement by such Authorized Officer.
Section 6. The Preliminary Official Statement, in substantially the form presented to this meeting and made a part her eof as though set forth in full herein, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, be and the same is hereby approved, and the use of the Preliminary Official Statement in connection with the offering a nd sale of the Series 2023 Bonds is hereby authorized and approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, to certify on behalf of the Community Facilities District that the Preliminary Official Statement is deemed final as of its date, within the meaning of Rule 15c2-12 (except for the omission of certain final pricing, rating and related information as permitted by Rule 15c2-12).
Section 7. The preparation and delivery of a final Official St atement (the “Official Statement”), and its use in connection with the offering and sale of the Series 2023 Bonds, be and the same is hereby authorized and approved. The Official Statement shall be in substantially the form of the Preliminary Official Stat ement, with such changes, insertions and omissions as may be approved by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. Each of the Authorized Officers is hereby authorized, and any one of the Autho rized Officers is hereby directed, for and in the name of the Community Facilities District, to execute the final Official Statement and any amendment or supplement thereto.
Section 8. Based upon the value of the property within the Community Facilities District reported in the Appraisal and the value -to-lien information for such property set forth in the Preliminary Official Statement, the City Council, for purposes of Section 53345.8 of the Act, hereby finds and determines that the value of the real property that would be subject to the Special Tax to pay debt service on the Series 2023 Bonds will be at least three times the principal amount of the Series 2023 Bonds to be sold and the principal amount of all other bonds o utstanding that are secured by a special tax levied pursuant to the Act on property within the Community Facilities District or a special assessment levied on property within the Community Facilities District.
Section 9. The City Council hereby waives the provision s of the City of Fontana Community Facilities and Assessment District Policy for the Provision of Public Facilities and Services (Operation and Maintenance) and Fee Deferrals in Proposed Development Projects that are inconsistent or in conflict with the offering, issuance and sale of the Series 2023 Bonds and the financing of the Facilities as approved and authorized hereby. In the judgment of the City Council, additional benefit inures to the ultimate property owners, the Community Facilities District and/or the City as a result of such waiver.
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Section 10. The City Council hereby approves the execution and delivery of all agreements, documents, certificates and instruments referred to herein with electronic signatures as may be permitted under the California Uniform Electronic Transactions Act and digital signatures as may be permitted under Section 16.5 of the California Government Code using DocuSign.
Section 11. All actions heretofore taken by the officers, employees and agents of the City with respect to the issuance and sale of the Series 2023 Bonds, or in connection with or related to any of the agreements , documents, certificates or instruments referred to herein, are hereby approved, confirmed and ratified.
Section 12. The Authorized Officers and the officers , employees and agents of the City are, and each of them is, hereby authorized and directed, for and in the name of the Community Facilities District to take all actions and do any and all things and to execute and deliver any and all agreements, documents, certificates or ins truments that they, or any of them , may deem necessary or advisable in order to consummate the transactions contemplated by this Resolution and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution not inconsistent with the provisions hereof.
Section 13. This Resolution shall take effect immediately upon its adoption.
PASSED AND ADOPTED the ____ day of __________, 2023.
__________________________________
Mayor
ATTEST:
_________________________________
City Clerk
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EXHIBIT A
GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the Series 2023 Bonds in accordance with Section 5852.1 of the California Government Code. Such good faith estimates have been provided to the Community Facilities District by the Municipa l Advisor, which the Municipal Advisor has prepared in consultation with the Underwriter.
Principal Amount. The Municipal Advisor has informed the Community Facilities District that, based on the Community Facilities District’s financing plan and current m arket conditions, its good faith estimate of the aggregate principal amount of the Series 2023 Bonds to be issued and sold is $ 5,330,000 (the “Estimated Principal Amount”), plus approximately $34,000 of net premium estimated to be generated based on current market conditions. Net premium is generated when, on a net aggregate basis for a single issuance of bonds, the price paid for such bonds is higher than the face value of such bonds. Such Estimated Principal Amount plus such estimated net premium amount would produce approximately $5,364,000 of gross proceeds.
True Interest Cost of the Series 2023 Bonds. The Municipal Advisor has informed the Community Facilities District that, a ssuming that the Estimated Principal Amount of the Series 2023 Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Series 2023 Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Series 2023 Bonds, is 5.15%.
Finance Charge of the Series 2023 Bonds. The Municipal Advisor has informed the Community Facilities District that, a ssuming that the Estimated Principal Amount of the Series 2023 Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate , its good faith estimate of the finance charge for the Series 2023 Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Series 2023 Bonds), is $388,000.
Amount of Proceeds to be Received. The Municipal Advisor has informed the Community Facilities District that, assuming that the Estimated Principal Amount of the Series 2023 Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the Community Facilities District for sale of the Series 2023 Bonds, less the finance charge of the Series 2023 Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the Series 2023 Bonds, is $4,770,000.
Total Payment Amount . The Municipal Ad visor has informed the Community Facilities District that, assuming that the Estimated Principal Amount of the Series 2023 Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the Community Facilities District will make to pay debt service on th e Series 2023 Bonds, plus the finance charge for the Series 2023 Bonds, as described above, not paid with the proceeds of the Series 2023 Bonds, calculated to the final maturity of the Series 2023 Bonds, is $10,660,000, 302
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which excludes any reserves or capitalized interest funded or paid with proceeds of the Series 2023 Bonds (which may offset such total payment amount).
The foregoing estimates constitute good faith estimates only and are based on market conditions prevailing at the time of preparation of such estimates. The actual principal amount of the Series 2023 Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Series 2023 Bonds being different than the date assumed for purposes of such estimates , (b) the actual principal amount of Series 2023 Bonds issued and sold being different from the Estimated Principal Amount, (c) the actual amortization of the Series 2023 Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Series 2023 Bonds being different than tho se estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the Community Facilities District’s financing plan, or a combination of such factors. The actual date of sale of the Series 2023 Bonds and the actual principal amount of Series 2023 Bonds issued and sold will be determined by the Community Facilities District based on the timing of the need for proceeds of the Series 2023 Bonds and other factors. The actual interest rates borne by the Series 2023 Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the Series 2023 Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the Community Facilities District. 303
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CITY OF FONTANA )
COUNTY OF SAN BERNARDINO )
STATE OF CALIFORNIA )
I, Germaine Key, City Clerk of the City of Fontana, California, and Ex-Officio Clerk of the City Council, do hereby certify that the foregoing Resolution is the actual Resolution duly and regularly adopted by the City Council of said City at a regular meeting thereof, held on _________, 2023, by the following vote to-wit:
AYES:
NOES:
ABSENT:
City Clerk
Mayor
ATTEST:
City Clerk
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INDENTURE
by and between
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100
(VICTORIA)
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
AS TRUSTEE
Dated as of ________ 1, 2023
Relating to
City of Fontana
Community Facilities District No. 100
(Victoria)
Special Tax Bonds
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ARTICLE I DEFINITIONS; EQUAL SECURITY ..............................................................3 Section 1.01. Definitions......................................................................................................3 Section 1.02. Rules of Construction ..................................................................................10 Section 1.03. Equal Security ..............................................................................................10 ARTICLE II THE BONDS ...................................................................................................12 Section 2.01. Authorization of Bonds; Special, Limited Obligations ................................12 Section 2.02. Terms of Series 2023 Bonds ........................................................................12 Section 2.03. Execution of Bonds ......................................................................................13 Section 2.04. Authentication of Bonds ..............................................................................13 Section 2.05. Registration Books .......................................................................................14 Section 2.06. Transfer and Exchange of Bonds .................................................................14 Section 2.07. Book-Entry System ......................................................................................14 Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen ................................................16 Section 2.09. Temporary Bonds.........................................................................................17 ARTICLE III ISSUANCE OF SERIES 2023 BONDS; APPLICATION OF PROCEEDS; ADDITIONAL BONDS ...........................................................18 Section 3.01. Issuance of Series 2023 Bonds ....................................................................18 Section 3.02. Application of Proceeds ...............................................................................18 Section 3.03. Costs of Issuance Fund ................................................................................18 Section 3.04. Improvement Fund .......................................................................................19 Section 3.05. Conditions for the Issuance of Additional Bonds ........................................21 Section 3.06. Procedure for the Issuance of Additional Bonds .........................................22 Section 3.07. Additional Bonds .........................................................................................23 ARTICLE IV REDEMPTION OF BONDS ...........................................................................24 Section 4.01. Redemption of Series 2023 Bonds ...............................................................24 Section 4.02. Notice of Redemption ..................................................................................26 Section 4.03. Selection of Bonds for Redemption .............................................................26 Section 4.04. Partial Redemption of Bonds .......................................................................27 Section 4.05. Effect of Notice of Redemption ...................................................................27 ARTICLE V SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS ...............28 Section 5.01. Pledge ...........................................................................................................28 Section 5.02. Special Tax Fund .........................................................................................28 Section 5.03. Bond Fund ....................................................................................................29 306
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Section 5.04. Reserve Fund ...............................................................................................30 Section 5.05. Redemption Fund .........................................................................................30 Section 5.06. Rebate Fund .................................................................................................31 Section 5.07. Administrative Expense Fund ......................................................................31 Section 5.08. Investment of Moneys..................................................................................32 ARTICLE VI COVENANTS .................................................................................................34 Section 6.01. Collection of Special Tax Revenues ............................................................34 Section 6.02. Foreclosure ...................................................................................................34 Section 6.03. Compliance with Act ...................................................................................35 Section 6.04. Punctual Payment.........................................................................................35 Section 6.05. Extension of Payment of Bonds ...................................................................35 Section 6.06. Against Encumbrances; Defense of Pledge .................................................35 Section 6.07. Tax Covenants .............................................................................................35 Section 6.08. Non-Cash Payments of Special Tax ............................................................36 Section 6.09. Reduction in Special Tax .............................................................................36 Section 6.10. Continuing Disclosure .................................................................................36 Section 6.11. Accounting Records .....................................................................................36 Section 6.12. State Reporting.............................................................................................37 Section 6.13. Annual Reports to the California Debt and Investment Advisory Commission ...............................................................................................37 Section 6.14. Further Assurances .......................................................................................37 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES ..................................................38 Section 7.01. Events of Default .........................................................................................38 Section 7.02. Foreclosure ...................................................................................................38 Section 7.03. Other Remedies ............................................................................................38 Section 7.04. Remedies Not Exclusive ..............................................................................39 Section 7.05. Application of Net Special Tax Revenues After Default .............................39 Section 7.06. Power of Trustee to Enforce ........................................................................39 Section 7.07. Owners’ Direction of Proceedings ...............................................................40 Section 7.08. Limitation on Owners’ Right to Sue ............................................................40 Section 7.09. Absolute Obligation .....................................................................................40 Section 7.10. Termination of Proceedings .........................................................................40 307
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Section 7.11. No Waiver of Default ...................................................................................41 ARTICLE VIII TRUSTEE ........................................................................................................42 Section 8.01. Duties and Liabilities of Trustee ..................................................................42 Section 8.02. Qualifications; Removal and Resignation; Successors ................................42 Section 8.03. Liability of Trustee ......................................................................................43 Section 8.04. Right to Rely on Documents and Opinions .................................................45 Section 8.05. Accounting Records and Financial Statements............................................45 Section 8.06. Preservation and Inspection of Documents..................................................45 Section 8.07. Compensation and Indemnification .............................................................45 ARTICLE IX SUPPLEMENTAL INDENTURES ................................................................47 Section 9.01. Supplemental Indentures ..............................................................................47 Section 9.02. Effect of Supplemental Indenture ................................................................48 Section 9.03. Endorsement of Bonds; Preparation of New Bonds ....................................48 Section 9.04. Amendment of Particular Bonds ..................................................................48 ARTICLE X DEFEASANCE................................................................................................49 Section 10.01. Discharge of Indenture ...............................................................................49 Section 10.02. Bonds Deemed To Have Been Paid ...........................................................49 Section 10.03. Unclaimed Moneys ....................................................................................50 ARTICLE XI MISCELLANEOUS ........................................................................................51 Section 11.01. Notices .......................................................................................................51 Section 11.02. Successor Is Deemed Included in All References to Predecessor .............51 Section 11.03. Limitation of Rights ...................................................................................51 Section 11.04. Destruction of Bonds .................................................................................52 Section 11.05. Severability of Invalid Provisions ..............................................................52 Section 11.06. Evidence of Rights of Owners ...................................................................52 Section 11.07. Disqualified Bonds.....................................................................................52 Section 11.08. Money Held for Particular Bonds ..............................................................53 Section 11.09. Funds and Accounts ...................................................................................53 Section 11.10. Business Days ............................................................................................53 Section 11.11. Waiver of Personal Liability ......................................................................53 Section 11.12. Conflict with Act........................................................................................53 Section 11.13. Conclusive Evidence of Regularity ...........................................................53 308
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Section 11.14. Governing Laws .........................................................................................54 Section 11.15. Electronic Signature ...................................................................................54 Section 11.16. Execution in Several Counterparts .............................................................54 EXHIBIT A PERMITTED INVESTMENTS ................................................................... A-1 EXHIBIT B FORM OF SERIES 2023 BOND ..................................................................B-1 309
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INDENTURE
THIS INDENTURE (this “Indenture”), dated as of ________ 1, 2023, is by and between CITY OF FONTANA COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA) , a community facilities district organized and existing under the laws of the State of California (the “Community Facilities District”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the law s of the United States of America, as trustee (the “Trustee”).
W I T N E S S E T H:
WHEREAS, the City Council of the City of Fontana has formed the Community Facilities District under the provisions of the Mello-Roos Community Facilities Act of 1982 (the “Act”); WHEREAS, the Community Facilities District is authorized under the Act to levy a special tax (the “Special Tax”) to pay for the costs of certain public facilities (the “Facilities”) and to issue bonds payable from the Special Tax;
WHEREAS, in order to provide funds to finance certain of the Facilities, the Community Facilities District desires to provide for the issuance of City of Fontana Community Facilities District No. 100 (Victoria) Special Tax Bonds, Series 2023 (the “ Series 2023 Bonds”), in t he aggregate principal amount of not to exceed $_________; WHEREAS, the Community Facilities District desires to provide for the issuance of additional bonds (the “Additional Bonds”) for refunding purposes payable from the Special Tax on a parity with the Series 2023 Bonds, provided that said issuance is in accordance with the Act and this Indenture (the Series 2023 Bonds and any such Additional Bonds being collectively referred to as the “Bonds”);
WHEREAS, in order to provide for the authentication and de livery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Community Facilities District has authorized the execution and delivery of this Indenture; and WHEREAS, the Community Facilities District has determined that all acts and proceedings required by law necessary to make the Bonds, when executed by the Community Facilities District, authenticated an d delivered by the Trustee and duly issued, the valid, binding and legal special, limited obligations of the Community Facilities District, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accorda nce with its terms, have been done and taken, and the execution and delivery of this Indenture has been in all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of, premium, if any, and the interest on all Bonds at any time issued and outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the 310
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Bonds by the owners thereof, and for other valuable consideration, the r eceipt whereof is hereby acknowledged, the Community Facilities District does hereby covenant and agree with the Trustee, for the benefit of the respective owners from time to time of the Bonds, as follows:
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ARTICLE I
DEFINITIONS; EQUAL SECURITY
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Indenture and of any certificate, opinion or other document herein mentioned, have the meanings herein specified.
“Act” means the Mello -Roos Community Fac ilities Act of 1982, constituting Sections 53311 et seq. of the California Government Code.
“Acquisition Account” means the account by that name within the Improvement Fund established and held by the Trustee pursuant to Section 3.04. “Acquisition Agreement” means the Acquisition and Funding Agreement, dated as of December 1, 2020, by and among the Community Facilities District, the City and SC VICTORIA, LLC, as originally executed and as it may be amended from time to time in accordanc e with the terms thereof.
“Acquisition Facilities” has the meaning ascribed thereto in the Acquisition Agreement. “Additional Bonds” means Bonds other than Series 2023 Bonds issued hereunder in accordance with the provisions of Sections 3.05 and 3.06. “Administrative Expense Fund” means the fund by that name established and held by the Trustee pursuant to Section 5.07.
“Administrative Expenses” means costs directly related to the administration of the Community Facilities District, including: the costs of computing the Special Tax and preparing the annual Special Tax collection schedules and the costs of collecting the Special Tax, the costs of remitting the Special Tax to the Trustee, the fees and costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under this Indenture, the costs incurred by the Community Facilities District in complying with the disc losure provisions of any continuing disclosure undertaking and this Indenture, including those related to public inquiries regarding the Special Tax and disclosures to Owners, the costs of the Community Facilities District related to an appeal of the Speci al Tax, any amounts required to be rebated to the federal government in order for the Community Facilities District to comply with Section 6.07, an allocable share of the salaries of the City staff providing services on behalf of the Community Facilities District directly related to the foregoing and a proportionate amount of City general administrative overhead related thereto, and the costs of foreclosure of any delinquent Special Tax. “Annual Debt Service” means, for each Bond Year, the sum of (a) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled (including by reason of mandatory sinking fund redemptions), and (b) the principal of the Outstanding Bonds due in such Bond Year (including by reason of mandatory sinking fund redemptions).
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“Authorized Denominations” means (a) with respect to the Series 2023 Bonds, $5,000 and any integral multiple thereof, and (b) with respect to each Series of Additional Bonds, the authorized denominations for such Series of Additional Bonds specified in the Supplemental Indenture pursuant to which such Additional Bonds are issued. “Authorized Representative” means, with respect to the Community Facilities District, the City Manager of the City and the Chief Financial Officer, Finance Department, of the City, and any other Person designated as an Authorized Representative of the Community Facilities District in a Written Certificate of the Community Facilities District submitted to the Trustee. “Average Annual Debt Service” means the average of the Annual Debt Service for all Bond Years, including the Bond Year in which the calculation is made. “Beneficial Owners” means those Persons for which the Participants have caused the Depository to hold Book-Entry Bonds.
“Bond Counsel” means a firm of nationally recognized bond counsel selected by the Community Facilities District.
“Bond Fund” means the fund by that name established and held by the Trustee pursuant to Section 5.03.
“Bond Year” means the twelve-month period beginning on September 2 in each year and extending to the next succeeding September 1, both dates inclusive, except that the first Bond Year shall begin on the Closing Date and end on September 1, 2024. “Bonds” means the City of Fontana Community Facilities District No. 100 (Victoria) Special Tax Bonds issued hereunder, and includes the Series 2023 Bonds and any Additional Bonds.
“Book-Entry Bonds” means the Bonds of a Series registered in the name of the Depository, or the Nominee thereof, as the registered owner thereof pursuant to the terms and provisions of Section 2.07.
“Business Day” means a day that is not (a) a Saturday, Sunday or legal holiday in the State, (b) a day on which banking institutions in the State, or in any state in which the Office of the Trustee is located, are required or authorized by law (including executive order) to close, or (c) a day on which the New York Stock Exchange is closed. “Cede & Co.” means Cede & Co., the nominee of DTC, an d any successor nominee of DTC with respect to a Series of Book-Entry Bonds.
“City” means the City of Fontana, a general law city organized and existing under the laws of the State, and its successors.
“City Council” means the City Council of the City.
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“Closing Date” means the date upon which the Series 2023 Bonds are delivered to the Original Purchaser, being _________, 2023.
“Code” means the Internal Revenue Code of 1986.
“Community Benefit Facilities Account” means the account by that name within the Improvement Fund established and held by the Trustee pursuant to Section 3.04. “Community Benefit Facilities” means Construction Facilities, the costs of which are paid from the Community Benefit Facilities Account.
“Community Facilities District” means City of Fontana Community Facilities District No. 100 (Victoria), a community facilities district organized and existing under the laws of the State, and its successors.
“Construction Account” means the account by that name within the Improvement Fund established and held by the Trustee pursuant to Section 3.04. “Construction Facilities” means the Facilities other than the Acquisition Facilities. “Corresponding Bond Year” means, with respect to any Fiscal Year, the Bond Year that commences in such Fiscal Year.
“Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the Community Facilities District relating to the authorization, issuance, sale and delivery of the Bonds, including printing expenses, rating agenc y fees, filing and recording fees, initial fees, expenses and charges of the Trustee and its counsel, including the Trustee’s first annual administrative fee, fees, charges and disbursements of attorneys, municipal advisors, accounting firms, consultants a nd other professionals, fees and charges for preparation, execution and safekeeping of the Bonds, any premium for bond insurance securing payment of the Bonds and any other cost, charge or fee in connection with the original issuance of the Bonds. “Costs o f Issuance Fund” means the fund by that name established and held by the Trustee pursuant to Section 3.03.
“County” means the County of San Bernardino, a county and political subdivision of the State organized and existing under the laws of the State, and any successor thereto. “County Assessor” means the Assessor of the County.
“County Auditor” means the Auditor-Controller of the County. “Defeasance Securities” means (a) non-callable direct obligations of the United States of America (“United States Treasury Obligations”), and (b) evidences of ownership of proportionate interests in future interest and principal payments on United States Treasury Obligations he ld by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying 314
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United States Treasury Obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated.
“Depository” means DTC, and its successors as securities depository for any Series of Book-Entry Bonds, including any such successor appointed pursuant to Section 2.07. “Developer” means TRI Pointe Homes, Inc., a corporation organized and existing under the laws of the State of Delaware, and any successor thereto. “Developer Continuing Disclosure Certificate” means the Continuing Disclosure Certificate, dated as of ________ 1, 2023, executed by the Developer, as originally executed and as it may be amended from time to time in accordance with the terms thereof. “District Continuing Disclosure Agreement” means the Continuing Disclosure Agreement, dated as of ________ 1, 2023, by and between the Community Facilities District and U.S. Bank Trust Company, National Association , in its capacity as Trustee and in its capacity as dissemination agent thereunder, as originally executed and as it may be amended , supplemented or otherwise modified from time to time in accordance with the terms thereof. “DTC” means The Depository Trust Company, a limited-purpose trust company organized under the laws of the State of New York.
“Event of Default” means any event specified in Section 7.01. “Facilities” means the public facilities authorized to be financed by the Community Facilities District, as described in the Resolution of Formation. “Fiscal Year” means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other twelve -month period hereafter selected and designated as the official fiscal year period of the Community Facilities District. “Improvement Fund” means the fund by that n ame established and held by the Trustee pursuant to Section 3.04.
“Indenture” means this Indenture, dated as of ________ 1, 2023 , by and between the Community Facilities District and U.S. Bank Trust Company, National Association, as Trustee, as originally executed and as it may be modified or amended from time to time by any Supplemental Indenture.
“Independent Consultant” means any consultant or firm of such consultants selected by the Community Facilities District and who, or each of whom (a) is generally recognized to be qualified in the financial consulting field, (b) is in fact independent and not under the control of the Community Facilities District or the City, (c) does not have any substantial interest, direct or indirect, with or in the Community F acilities District or the City, with or in any owner of real property in the Community Facilities District or in any real property in the Community Facilities District, and (d) is not connected with the Community Facilities District or the City as an offic er or employee thereof, but who may be regularly retained to make reports to the Community Facilities District or the City.
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“Interest Account” means the account by that name within the Bond Fund established and held by the Trustee pursuant to Section 5.03.
“Interest Payment Dates” means March 1 and September 1 of each year, commencing ________ 1, 20__.
“Letter of Representations” means the Letter of Representations from the Community Facilities District to the Depository, in which the Community Facilities D istrict makes certain representations with respect to issues of its securities for deposit by the Depository. “Maximum Annual Debt Service” means the largest Annual Debt Service for any Bond Year, including the Bond Year in which the calculation is made. “Moody’s” means Moody’s Investors Service, Inc., a corporation duly organized and existing under the laws of the State of Delaware, and its successors and assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Community Facilities District. “Net Special Tax Revenues” means Special Tax Revenues, less amounts required to pay Administrative Expenses.
“Nominee” means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.07.
“Office of the Trustee” means the principal corporate trust office of the Trustee in Los Angeles, California or such other office as may be specified to the Community Facilities District by the Trustee in writing; provided, however, that with respect to presentation of Bonds for payment or for registration of transfer and exchange, such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate trust agency business shall be conducted, which other office or agency shall be specified to the Community Facilities District by the Trustee in writing.
“Ordinance” means any ordinance adopted by the City Council levying the Special Tax. “Original Purchaser” means the original purchaser of the Series 2023 Bonds from the Community Facilities District.
“Outstanding” means, when used as of any particu lar time with reference to Bonds, subject to the provisions of Section 11.07, all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under this Indenture except (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation, (b) Bonds with respect to which all liability of the Community Facilities District shall have been discharged in accordance with Section 10.01, and (c) Bonds in lieu of which other Bonds shall have been authenticated and deliv ered by the Trustee, or that have been paid without surrender thereof, pursuant to Section 2.08. “Owner” means, with respect to a Bond, the Person in whose name such Bond is registered on the Registration Books.
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“Participant” means any entity that is recognized as a participant by DTC in the book - entry system of maintaining records with respect to Book-Entry Bonds. “Participating Underwriter” has the meaning ascribed to such term in the District Continuing Disclosure Agreement and the Developer Continuing Disclosure Certificate. “Payment Request” has the meaning ascribed to such term in the Acquisition Agreement. “Permitted Investments” is defined in Exhibit A hereto. “Person” means an individual, corporation, limited liability company, firm, association, partnership, trust or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof.
“Principal Account” means the account by that name within the Bond Fund established and held by the Trustee pursuant to Section 5.03.
“Rate and Method” means the rate and method of apportionment of the Special Tax approved by the qualified electors of the Community Facilities District. “Rebate Fund” means the fund by that name established and held by the Trustee pursuant to Section 5.06.
“Rebate Requirement” has the meaning ascribed to such term in the Tax Certificate. “Record Date” means, with respect to interest payable on any Interest Payment Date, the 15th calendar day of the month preceding such Interest Payment Date, whether or not such day is a Business Day.
“Redemption Fund” means the fund by that name established and held by the Trustee pursuant to Section 5.05.
“Redemption Price” means the aggregate amount of principal of and premium, if any, on the Bonds upon the redemption thereof pursuant hereto.
“Registration Books” means the records maintained by the Trustee for the registration of ownership and registration of transfer of the Bonds pursuant to Section 2.05. “Reserve Fund” means the fund by that name established and held by the Trustee pursuant to Section 5.04.
“Reserve Requirement” means, as of the date of any calculation, the least of (a) “10% of the proceeds of the issue,” within the meaning of Section 148 of the Code (excluding Bonds refunded with the proceeds of subsequently issued Bonds), (b) Maximum Annual Debt Service, and (c) 125% of Average Annual Debt Service.
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“Resolution of Formation” means Resolution No. 2020-157, adopted by the City Council on December 8, 2020, as originally adopted and as it may be amended, supplemented or otherwise modified from time to time.
“S&P” means S&P Global Ratings , a business unit of Standard and Poor’s Financial Services, LLC, and its successors and assigns, except that if such en tity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term “S&P” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Community Facilities District.
“Series” means the initial series of Bonds executed, authenticated and delivered on the date of initial issuance of the Bonds and designated pursuant to this Indenture as the Series 2023 Bonds, and any Additional Bonds issued pursuant to a Supplemental Indenture and identified as a separate Series of Bonds.
“Series 2023 Bonds” means the City of Fontana Community Facilities District No. 100 (Victoria) Special Tax Bonds, Series 2023, issued hereunder. “Special Tax” means the special tax described and defined in the Rate and Method as the “Special Tax” approved by the qualified electors of the Community Facilities District. “Special Tax Fund” means the fund by that name established and held by the Trustee pursuant to Section 5.02.
“Special Tax Revenues” means the proceeds of the Special Tax received by or on behalf of the Community Facilities District, including any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Tax, which shall be limited to the amount of said lien and interest and penalties thereon.
“State” means the State of California.
“Supplemental Indenture” means any supplemental indenture modifying or amending this Indenture, but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder.
“Tax Certificate” means the Tax Certificate executed by the Community Facilities District at the time of issuance of the Series 2023 Bonds relating to the requirements of Section 148 of the Code, as originally executed and as it may be amended , supplemented or otherwise modified from time to time in accordance with the terms thereof. “Trustee” means U.S. Bank Trust Company, National Associat ion, a national banking association organized and existing under the laws of the United States of America, or any successor thereto as Trustee hereunder substituted in its place as provided herein. “Verification Report” means, with respect to the deemed payment of Bonds pursuant to clause (ii) of Section 10.02(a), a report of a nationally recognized certified public accountant, or 318
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firm of such accountants, verifying that the Defeasance Securities and cash, if any, deposi ted in connection with such deemed payment satisfy the requirements of clause (ii) of Section 10.02(a). “Written Certificate” and “Written Request” of the Community Facilities District mean, respectively, a written certificate or written request signed in the name of the Community Facilities District by an Authorized Representative. Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument.
Section 1.02. Rules of Construction . (a) The terms defined herein expressed in the singular shall, unless the context otherwise indicates, include the plural and vice versa. (b) The use herein of the masculine, feminine or neuter gender is for convenience only and shall be deemed and construed to include correlative words of the masculine, feminine or neuter gender, as appropriate.
(c) References herein to a document shall include all amendments, supplement s or other modifications to such document, and any replacements, substitutions or novation of, that document.
(d) Any term defined herein by reference to another document shall continue to have the meaning ascribed thereto whether or not such other document remains in effect. (e) The use herein of the words “including” and “includes,” and words of similar import, shall be deemed to be followed by the phrase “without limitation.” (f) Headings of Articles and Sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof.
(g) All references herein to designated “Articles,” “Sections,” “Exhibits,” “subsections,” “paragraphs,” “clauses,” and other subdivisions are to the designated Articles, Sections, Exhibits, subsections, paragraphs, clauses, and other subdivisions of this Indenture. (h) The words “hereof” (except when preceded by a specific Section or Article reference) “herein,” “hereby,” “hereunder,” “hereinabove,” “hereinafter,” and other equivalent words and phrases used herein refer to this Indenture and not solely to the particular portion hereof in which any such word is used.
(i) Any reference to a Person, or a Person in a specified capacity, shall be construed to include such Person’s successors or such Person’s successors in such capacity, as the case may be.
Section 1.03. Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract among the Community Facilities District, the Trustee and the Owners from time to time of all Bonds authorized, executed, issued and delivered hereunder and then Outsta nding to secure the full and final payment of the principal of, premium, if any, and interest on all Bonds that may from time to time be authorized, executed, issued and delivered hereunder, subject to the agreements, 319
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conditions, covenants and provisions contained herein; and all agreements and covenants set forth herein to be performed by or on behalf of the Community Facilities District shall be for the equal and proportionate benefit, protection and security of all Owners of the Bonds without distinction , preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number or date thereof or the time of authorization, sale, execution, issuance or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein. 320
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ARTICLE II
THE BONDS
Section 2.01. Authorization of Bonds ; Special , Limited Obligations. (a) The Community Facilities District hereby authorizes the issuance of the Bonds under and subject to the terms of this Indenture, the Act and other applicable laws of the State. The Bonds may consist of one or more Series of Bonds of varying denominations, dates, maturities, interest rates and other provisions, subject to the provisions and conditions contained herein. The Bonds shall be designated generally as the “City of Fontana Community Facilities District No. 100 (Victoria) Special Tax Bonds,” each Series thereof to bear such additional designation as may be necessary or appropriate to distinguish such Series from every other Series of Bonds. (b) The Bonds shall be special , limited obligations of the Community Facilities District, payable, as provided herein, solely from Net Special Tax Revenues and the other assets pledged therefor hereunder. Neither the faith and credit nor the taxing power of the Community Facilities District (except to the limited extent set forth herein), the City or the State, or any political subdivision thereof, is pledged to the payment of the Bonds.
Section 2.02. Terms of Series 2023 Bonds. (a) The Series 2023 Bonds sha ll be designated “City of Fontana Community Facilities District No. 100 (Victoria) Special Tax Bonds, Series 2023 .” The aggregate principal amount of Series 2023 Bonds that may be issued and Outstanding under this Indenture shall not exceed $_________, except as may be otherwise provided in Section 2.08.
(b) The Series 2023 Bonds shall be issued in fully-registered form without coupons in Authorized Denominations, so long as no Series 2023 Bond shall have more than one maturity date. The Series 2023 Bonds sh all be dated as of the Closing Date, shall be in the aggregate principal amount of $_________, shall mature on September 1 of each year, shall bear interest at the rates per annum (calculated on the basis of a 360-day year comprised of twelve 30-day months) and shall be in the principal amounts as follows:
Maturity Date
(September 1)
Principal
Amount
Interest
Rate
$ %
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(c) Interest on the Series 2023 Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Series 2023 Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event interest thereon shall be payable from such Interest Payment Date, (ii) a Series 2023 Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the Closing Date, or (iii) interest on any Series 2023 Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has previously been paid or duly provided for. Interest shall be paid in lawful money of the United States on each Interest Payment Date. Interest shall be paid by check of the Trustee mailed by first-class mail, postage prepaid, on each Interest Payment Date to the Owners of the Series 2023 Bonds at their respective addresses shown on the Registration Boo ks as of the close of business on the preceding Record Date. Notwithstanding the foregoing, interest on any Series 2023 Bond that is not punctually paid or duly provided for on any Interest Payment Date shall, if and to the extent that amounts subsequently become available therefor, be paid on a payment date established by the Trustee to the Person in whose name the ownership of such Series 2023 Bond is registered on the Registration Books at the close of business on a special record date to be established by the Trustee for the payment of such defaulted interest, notice of which shall be given to such Owner not less than ten days prior to such special record date. (d) The principal of the Series 2023 Bonds shall be payable in lawful money of the United States o f America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee.
(e) The Series 2023 Bonds shall be subject to redemption as provided in Article IV. (f) The Series 2023 Bonds shall be in substantially the form set forth in Exhibit B hereto, with appropriate or necessary insertions, omissions and variations as permitted or required hereby.
Section 2.03. Execution of Bonds . The Bonds shall be executed in the name and on behalf of the Community Facilities District with the man ual or facsimile signature of the Mayor of the City attested by the manual or facsimile signature of the City Clerk of the City. The Bonds shall then be delivered to the Trustee for authentication by it. In case any of such officers who shall have signed or attested any of the Bonds shall cease to be such officers before the Bonds so signed or attested shall have been authenticated or delivered by the Trustee, or issued by the Community Facilities District, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Community Facilities District as though those who signed and attested the same had continued to be such officers, and also any Bonds may be signed and attested on behalf of the Community Facilities District by such Persons as at the actual date of execution of such Bonds shall be the proper officers of the City although at the nominal date of such Bonds any such Person shall not have been such officer of the City.
Section 2.04. Authentication of Bonds. Only such of the Bonds as shall bear thereon a certificate of authentication substantially in the form as that set forth in Exhibit B hereto for the Series 2023 Bonds, manually executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be conclusive 322
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evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
Section 2.05. Registration Books . The Trustee shall keep or cause to be kept, at the Office of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds, which shall be open to inspection during regular business hours and upon reasonable notice by the Community Facilities District. Upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such records, the ownership of the Bonds.
Section 2.06. Transfer and Exchange of Bonds. (a) Any Bond may be transferred upon the Registration Books by the Person in whose name it is registered, in person or by such Person’s duly authorized attorney, upon surrender of such Bond to the Trustee for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be so surrendered for transfer, the Community Facilities District shall execute and the Trustee shall authenticate and shall deliver a new Bond or Bonds of the same Series and maturity in a like aggregate principal amount, in any Authorized Denomination. The Trustee shall require the Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. (b) The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of the same Series and maturity of other Authorized Denominations.
The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. (c) The Trustee shall not be obligated to make any transfer or exchange of Bonds of a Series pursuant to this Section during the period established by the Trustee for the selection of Bonds of such Series for redemption, or with respect to any Bonds of such Series selected for redemption.
Section 2.07. Book-Entry System. (a) Prior to the issuance of a Series of Bonds, the Community Facilities District may provide that such Series of Bonds shall initially be issued as Book-Entry Bonds, and in such event, the Bonds of such Series for each maturity date shall be in the form of a separate single fully -registered Bond (which may be typewritten). Upon initial issuance, the ownership of each such Bond of such Series shall be registered in the Registration Books in the name of the Nominee, as nominee of the Depository. The Series 2023 Bonds shall initially be issued as Book-Entry Bonds.
Payment of principal of, and interest and premium, if any, on, any Book -Entry Bond registered in the name of the Nominee shall be made on the applicable payment date by wire transfer of New York clearing house or equivalent next day funds or by wire transfer of same day funds to the account of the Nominee. Such payments shall be made to the Nominee at the address that is, on the Record Date, shown for the Nominee in the Registration Books. (b) With respect to Book -Entry Bonds, the Community Facilities District and the Trustee shall have no responsibility or obligation to any Participant or to any Person on behalf of which such a Participant holds an interest in such Book -Entry Bonds. Without limiting the 323
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immediately preceding sentence, the Community Facilities District and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Participant with respect to any ownership interest in Book -Entry Bonds, (ii) the delivery to any Participant or any other Person, other than an Owner as shown in the Registration Books, of any notice with respect to Book -Entry Bonds, including any notice of redemption, (iii) the selection by the Depository and its Participants of the beneficial interests in Book-Entry Bonds of a maturity to be rede emed in the event such Book -Entry Bonds are redeemed in part, (iv) the payment to any Participant or any other Person, other than an Owner as shown in the Registration Books, of any amount with respect to principal of, or premium, if any, or interest on Bo ok-Entry Bonds, or (v) any consent given or other action taken by the Depository as Owner. (c) The Community Facilities District and the Trustee may treat and consider the Person in whose name each Book -Entry Bond is registered in the Registration Books as the absolute Owner of such Book -Entry Bond for the purpose of payment of principal of, and premium, if any, and interest on such Bond, for the purpose of selecting any Bonds, or portions thereof, to be redeemed, for the purpose of giving notices of redemption and other matters with respect to such Book -Entry Bond, for the purpose of registering transfers with respect to such Book-Entry Bond, for the purpose of obtaining any consent or other action to be taken by Owners and for all other purposes whatsoever, and the Community Facilities District and the Trustee shall not be affected by any notice to the contrary.
(d) In the event of a redemption of all or a portion of a Book -Entry Bond, the Depository, in its discretion (i) may request the Trustee to authenticate an d deliver a new Book - Entry Bond, or (ii) if the Depository is the sole Owner of such Book -Entry Bond, shall make an appropriate notation on the Book-Entry Bond indicating the date and amounts of the reduction in principal thereof resulting from such redemp tion, except in the case of final payment, in which case such Book-Entry Bond must be presented to the Trustee prior to payment. (e) The Trustee shall pay all principal of, and premium, if any, and interest on the Book-Entry Bonds only to or “upon the order of” (as that term is used in the Uniform Commercial Code as adopted in the State) the respective Owner, as shown in the Registration Books, or such Owner’s respective attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the obligations with respect to payment of principal of, and premium, if any, and interest on the Book -Entry Bonds to the extent of the sum or sums so paid.
No Person other than an Owner, as shown in the Registration Books, shall receive an authenticated Book-Entry Bond. Upon delivery by the Depository to the Owners, the Community Facilities District and the Trustee of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Indenture shall refer to such nominee of the Depository. (f) In order to qualify the Book-Entry Bonds for the Depository’s book-entry system, the Community Facilit ies District shall execute and deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the Community Facilities District or the Trustee any obligation whatsoever with respect to Persons having interests in such Book-Entry Bonds other than the Owners, as shown on the Registration Books. Such Letter of Representations may provide the time, form, content and manner of transmission, of notices to the Depository. In addition to the execution and delivery of 324
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a Letter of Representations by the Community Facilities District, the Community Facilities District and the Trustee shall take such other actions, not inconsistent with this Indenture, as are reasonably necessary to qualify Book-Entry Bonds for the Depository’s book-entry program. (g) In the event the Community Facilities District determines that it is in the best interests of the Beneficial Owners that they be able to obtain certificated Bonds and that such Bonds should there fore be made available, and notifies the Depository and the Trustee of such determination, the Depository will notify the Participants of the availability through the Depository of certificated Bonds. In such event, the Trustee shall transfer and exchange certificated Bonds as requested by the Depository and any other Owners in appropriate amounts. In the event (i) the Depository determines not to continue to act as securities depository for Book-Entry Bonds, or (ii) the Depository shall no longer so act an d gives notice to the Trustee of such determination, then the Community Facilities District shall discontinue the Book-Entry system with the Depository. If the Community Facilities District determines to replace the Depository with another qualified securities depository, the Community Facilities District shall prepare or direct the preparation of a new single, separate, fully-registered Bond of the appropriate Series for each maturity date of such Book-Entry Bonds, registered in the name of such successor or substitute qualified securities depository or its nominee. If the Community Facilities District fails to identify another qualified securities depository to replace the Depository, then the Book -Entry Bonds shall no longer be restricted to being registered in the Registration Books in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging such Bonds shall designate, in accordance with the provisions of Sections 2.06, 2.08 and 2.09. Whenever the Depository requests the Community Facilities District to do so, the Community Facilities District shall cooperate with the Depository in taking appropriate action after reasonable notice (i) to make available one or more separate certificates evidencing the Book-Entry Bonds to any Participant having Book -Entry Bonds credited to its account with the Depository, and (ii) to arrange for another securities depository to maintain custody of certificates evidencing the Book-Entry Bonds. (h) Notwithstanding any other pr ovision of this Indenture to the contrary, if the Depository is the sole Owner of the Bonds of a Series, so long as any Book -Entry Bond of such Series is registered in the name of the Nominee, all payments of principal of, and premium, if any, and interest on such Book-Entry Bond and all notices with respect to such Book-Entry Bond shall be made and given, respectively, as provided in the Letter of Representations or as otherwise instructed by the Depository.
(i) In connection with any notice or other communica tion to be provided to Owners pursuant to this Indenture by the Community Facilities District or the Trustee, with respect to any consent or other action to be taken by Owners of Book -Entry Bonds, the Trustee shall establish a record date for such consent or other action and give the Depository notice of such record date not less than 15 calendar days in advance of such record date to the extent possible.
Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen . If any Bond shall become mutilated, the Community Facil ities District, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of the same Series and maturity in a like principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and delivered to, or upon the order of, the Community 325
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Facilities District. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence and indemnity reasonably satisfactory to the Trustee shall be given, the Community Facilities District, at the expense of the Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of the same Series and maturity in a like aggregate principal amount in lieu of and in replacement for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been selected for redemption, instead of issuing a replacement Bond, the Trustee may pay the same without surrender thereof). The Community Facilities District may require payment by the Owner of a sum not exceeding the actual cost of preparing the replacement Bond delivered thereto under this Section and the expenses incurred by the Community Facilities District and the Trustee in connection therewith. Any Bond of a Series issued under the provisions of this Section in lieu of any Bond of such Series alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Community Facilities District whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone , and shall be entitled to the benefits of this Indenture with all other Bonds of such Series secured by this Indenture.
Section 2.09. Temporary Bonds. The Bonds of a Series may be issued in temporary form exchangeable for definitive Bonds of such Series when ready for delivery. Any temporary Bonds may be printed, lithographed or typewritten, shall be of such Authorized Denominations as may be determine d by the Community Facilities District, shall be in fully -registered form without coupons and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Community Facilities Di strict and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Community Facilities District issues temporary Bonds of a Series it shall execute and deliver definitive Bonds of such Ser ies as promptly thereafter as practicable, and thereupon the temporary Bonds of such Series may be surrendered, for cancellation, at the Office of the Trustee and the Trustee shall authenticate and deliver, in exchange for such temporary Bonds, an equal aggregate principal amount of definitive Bonds of such Series and maturities in Authorized Denominations. Until so exchanged, the temporary Bonds of such Series shall be entitled to the same benefits under this Indenture as definitive Bonds of such Series authenticated and delivered hereunder.
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ARTICLE III
ISSUANCE OF SERIES 2023 BONDS; APPLICATION OF PROCEEDS;
ADDITIONAL BONDS
Section 3.01. Issuance of Series 2023 Bonds. The Community Facilities District may, at any time, execute the Series 2023 Bonds and deliver the same to the Trustee. The Trustee shall authenticate the Series 2023 Bonds and deliver the Series 2023 Bonds to the Original Purchaser upon receipt of a Written Request of the Community Facilities District and upon receipt of the purchase price therefor.
Section 3.02. Application of Proceeds. (a) On the Closing Date, the proceeds of the sale of the Series 2023 Bonds received by the Trustee, $_________, shall be deposited by the Trustee as follows:
(i) the Trustee shall deposit the amount of $_________ in the Costs of Issuance Fund;
(ii) the Trustee shall deposit the amount of $_________ in the Reserve Fund, which is equal to the Reserve Requirement;
(iii) the Trustee shall deposit the amount of $_________ in the Interest Account; (iv) the Trustee shall deposit the amount of $_________ in the Acquisition Account;
(v) the Trustee shall deposit the amount of $_________ in the Construction Account; and
(vi) the Trustee shall deposit the amount of $_________ in the Community Benefit Facilities Account.
(b) [On the Closing Date, the amount transferred by the Community Facilities District to the Trustee , $_________, which consists of amounts of the Special Tax coll ected by the Community Facilities District, shall be deposited by the Trustee as follows:
(i) the Trustee shall deposit the amount of $_________ in the Construction Account;
(ii) the Trustee shall deposit the amount of $_________ in the Community Benefit Facilities Account; and
(iii) the Trustee shall deposit the amount of $ ________ in the Administrative Expense Fund.]
Section 3.03. Costs of Issuance Fund . (a) The Trustee shall establish and maintain a separate fund designated the “Costs of Issuance Fund.” On the Closing Date, the Trustee shall deposit in the Costs of Issuance Fund the amount required to be deposited therein pursuant to 327
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Section 3.02. There shall additionally be deposited in the Cost of Issuance Fund the portion, if any, of the proceeds of the sale of any Additional Bonds required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued. (b) The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance upon submission of a Written Request of the Community Facilities District st ating (i) the Person to whom payment is to be made, (ii) the amount to be paid, (iii) the purpose for which the obligation was incurred, (iv) that such payment is a proper charge against the Costs of Issuance Fund, and (v) that such amount has not been the subject of a prior disbursement from the Costs of Issuance Fund, in each case together with a statement or invoice for each amount requested thereunder. On the last Business Day that is no later than six months after the Closing Date, the Trustee shall tr ansfer any amount remaining in the Costs of Issuance Fund to the Construction Account and, upon making such transfer, the Costs of Issuance Fund shall be closed.
(c) If the Costs of Issuance Fund has been closed in accordance with the provisions hereof, the Costs of Issuance Fund shall be reopened and reestablished by the Trustee in connection with the issuance of any Additional Bonds, if so provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued.
Section 3.04. Improvement Fund . (a) The Trustee shall establish and maintain a separate fund designated the “Improvement Fund.” Within the Improvement Fund, the Trustee shall establish and maintain a separate account designated the “Acquisition Account,” a separate account designated the “Construction Account” and a separate account designated the “Community Benefit Facilities Account.” On the Closing Date, the Trustee shall deposit in the Acquisition Account, the Construction Account and the Community Benefit Facilities Account the respective amounts required to be deposited therein pursuant to Section 3.02.
The moneys in the Acquisition Account shall be used and withdrawn by the Trustee from time to time to pay the costs of the Acquisition Facilities upon submission of a Written Request of the Community Facilities District stating (i) the Person to whom payment is to be made, (ii) the amount to be paid, (iii) the purpose for which the obligation was incurred, (iv) that such payment is for costs of the Acquisition Facilities and is a proper charge against the Acquisition Account, (v) that payment of such costs has not been the subject of a prior disbursement from the Acquisition Account, the Construction Account or the Community Benefit Facilities Account, and (vi) whether or not such costs of the Acquisition Facilities are to be paid pursuant to a Payment Request submitted in accordance with the Acquisition Agreement, in each case together with a statement or invoice for each amount requested thereunder. If costs of the Acquis ition Facilities are to be paid pursuant to a Payment Request submitted in accordance with the Acquisition Agreement, a duplicate original of the signed and approved Payment Request relating to such costs of the Acquisition Facilities, together with all ex hibits and attachments thereto, must accompany such Written Request of the Community Facilities District.
Upon the submission of a Written Certificate of the Community Facilities District stating (i) that the portion of the Acquisition Facilities to be financed from the Acquisition Account has been completed and that all costs of such Acquisition Facilities have been paid, or (i i) that such portion of the Acquisition Facilities has been substantially completed and that all remaining costs 328
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of such portion of the Acquisition Facilities have been determined and specifying the amount to be retained therefor, the Trustee shall transfe r all of the amount remaining in the Acquisition Account (less any such retention) to the Construction Account or the Community Benefit Facilities Account, as directed in a Written Certificate of the Community Facilities District submitted to the Trustee.
(b) The moneys in the Construction Account shall be used and withdrawn by the Trustee from time to time to pay the costs of the Construction Facilities upon submission of a Written Request of the Community Facilities District stating (i) the Person to whom payment is to be made, (ii) the amount to be paid, (iii) the purpose for which the obligation was incurred, (iv) that such payment is for costs of the Construction Facilities and is a proper charge against the Construction Account, and (v) that payment of suc h costs has not been the subject of a prior disbursement from the Acquisition Account, the Construction Account or the Community Benefit Facilities Account, in each case together with a statement or invoice for each amount requested thereunder. Additionall y, upon submission of a Written Request of the Community Facilities District stating (i) that a portion of the amount on deposit in the Construction Account is to be transferred to the Community Benefit Facilities Account, and (ii) the amount to be so transferred, the Trustee shall transfer such amount from the Construction Account to the Community Benefit Facilities Account.
Upon the submission of a Written Certificate of the Community Facilities District stating (i) that the portion of the Construction Facilities to be financed from the Construction Account has been completed and that all costs of such Construction Facilities have been paid, or (ii) that such portion of the Construction Facilities has been substantially completed and that all remaining costs of such portion of the Construction Facilities have been determined and specifying the amount to be retained therefor, the Trustee shall (A) if the amount remaining in the Construction Account (less any such retention) is equal to or greater than $25,00 0, transfer the portion of such amount equal to the largest integral multiple of $5,000 that is not greater than such amount to the Redemption Fund, to be applied to the redemption of Bonds, and (B) after making the transfer, if any, required to be made pursuant to the preceding clause (A), transfer all of the amount remaining in the Construction Account (less any such retention) to the Bond Fund, to be applied to the payment of interest on the Bonds.
(c) The moneys in the Community Benefit Facilities Account shall be used and withdrawn by the Trustee from time to time to pay the costs of Construction Facilities that constitute Community Benefit Facilities upon submission of a Written Request of the Community Facilities District stating (i) the Person to whom payment is to be made, (ii) the amount to be paid, (iii) the purpose for which the obligation was incurred, (iv) that the Construction Facilities, the costs of which are to be paid, constitute Community Benefit Facilities and such payment is for costs of the Community Benefit Facilities and is a proper charge against the Community Benefit Facilities Account , and (v) that payment of such costs has not been the subject of a prior disbursement from the Acquisition Account, the Construction Account or the Community Benefit Facilities Account, in each case together with a statement or invoice for each amount requested thereunder. Additionally, upon submission of a Written Request of the Community Facilities District stating (i) that a portion of the amount on depo sit in the Community Benefit Facilities Account is to be transferred to the Construction Account, and (ii) the amount to be so transferred, 329
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the Trustee shall transfer such amount from the Community Benefit Facilities Account to the Construction Account.
Upon the submission of a Written Certificate of the Community Facilities District stating (i) that the portion of the Community Benefit Facilities to be financed from the Community Benefit Facilities Account has been completed and that all costs of such Community Benefit Facilities have been paid, or (ii) that such portion of the Community Benefit Facilities has been substantially completed and that all remaining costs of such portion of the Community Benefit Facilities have been determined and specifying t he amount to be retained therefor, the Trustee shall (A) if the amount remaining in the Community Benefit Facilities Account (less any such retention) is equal to or greater than $25,000, transfer the portion of such amount equal to the largest integral multiple of $5,000 that is not greater than such amount to the Redemption Fund, to be applied to the redemption of Bonds, and (B) after making the transfer, if any, required to be made pursuant to the preceding clause (A), transfer all of the amount remaining in the Community Benefit Facilities Account (less any such retention) to the Bond Fund, to be applied to the payment of interest on the Bonds.
Section 3.05. Conditions for the Issuance of Additional Bonds . The Community Facilities District may at any time issue one or more Series of Additional Bonds payable from Net Special Tax Revenues as provided herein on a parity with all other Bonds theretofore issued hereunder, but only subject to the following conditions, which are hereby made conditions precedent to the issuance of such Additional Bonds:
(a) upon the issuance of such Additional Bonds, no Event of Default shall have occurred and be continuing hereunder;
(b) the issuance of such Additional Bonds shall have been authorized under and pursuant to this Indenture and the Act and shall have been provided for by a Supplemental Indenture, which shall specify the following:
(i) the purposes for which the proceeds of such Additional Bonds are to be applied, which purposes may only include one or more of (A) providing funds to refund any Bonds previously issued hereunder, (B) providing funds to pay Costs of Issuance incurred in connection with the issuance of such Additional Bonds, and (C) providing funds to make any deposit to the Reserve Fund required pursuant to paragraph (vii) below;
(ii) the designation of such Series of Additional Bonds, the aggregate principal amount of the Additional Bonds of such Series, and the principal amount of, and the interest rate to be borne by, each maturity of such Additional Bonds; (iii) that such Additional Bonds shall be payable as to interest on the Interest Payment Dates, except that the first installment of interest may be payable on either March 1 or September 1 and shall be for a period of not longer than twelve months;
(iv) the date, the maturity date or dates and the dates on which mandatory sinking fund redemptions, if any, are to be made for such Additional 330
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Bonds; provided, however, that each such maturity date and date on which a mandatory sinking fund redemption is to be made shall be a September 1 and, provided, further, that serial maturities of serial Bonds or mandatory sinking fund redemptions for term Bonds, or any combination thereof, shall be established to provide for the redemption or payment of such Additional Bonds on or before their respective maturity dates;
(v) the Authorized Denominations of such Additional Bonds; (vi) the redemption premiums and terms, if any, for such Additional Bonds;
(vii) the form of such Additional Bonds;
(viii) the amount, if any, to be deposited from the proceeds of sale of such Additional Bonds in the Reserve Fund; provided, however, that the amount on deposit in the Reserve Fund at the time that such Additional Bonds become Outstanding shall be at least equal to the Reserve Requirement; and (ix) such other provisions that are appropriat e or necessary and are not inconsistent with the provisions hereof;
(c) Annual Debt Service in each Bond Year, calculated for all Bonds that will be Outstanding after the issuance of such Additional Bonds, will be less than or equal to Annual Debt Service in s uch Bond Year, calculated for all Bonds that are Outstanding immediately prior to the issuance of such Additional Bonds.
Nothing contained herein shall limit the issuance of any special tax bonds payable from the Special Tax if, after the issuance and deli very of such special tax bonds, none of the Bonds theretofore issued hereunder will be Outstanding.
Section 3.06. Procedure for the Issuance of Additional Bonds . At any time after the sale of any Additional Bonds in accordance with the Act, such Additional Bonds shall be executed by the Community Facilities District for issuance hereunder and shall be delivered to the Trustee and thereupon shall be authenticated and delivered by the Trustee, but only upon receipt by the Trustee of the following:
(a) a certified copy of t he Supplemental Indenture authorizing the issuance of such Additional Bonds;
(b) a Written Request of the Community Facilities District as to the delivery of such Additional Bonds;
(c) a Written Certificate of the Community Facilities District stating that the conditions precedent to the issuance of such Additional Bonds specified in Section 3.05 have been satisfied;
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(d) an opinion of Bond Counsel substantially to the effect that (i) this Indenture, as modified and amended by all Supplemental Indentures theretofore, or thereupon being, entered into, has been duly authorized, executed and delivered by, and constitutes the valid and binding obligation of, the Community Facilities District, (ii) such Additional Bonds constitute valid and binding special , limited obligations of the Community Facilities District, and (iii) the issuance of such Additional Bonds, in and of itself, will not adversely affect the exclusion of interest on the Bonds Outstanding prior to the issuance of such Additional Bonds from gross income for federal income tax purposes; (e) the proceeds of the sale of such Additional Bonds; and (f) such further documents or money as are required by the provisions hereof or by the provisions of the Supplemental Indenture pursuant to which such Additional Bonds are issued.
Section 3.07. Additional Bonds. So long as any of the Bonds remain Outstanding, the Community Facilities District shall not issue any Additional Bonds or obligations payable from Net Special Tax Revenues on a parity with the Bonds, except pursuant to Sec tions 3.05 and 3.06.
So long as any of the Bonds remain Outstanding, the Community Facilities District shall not issue any obligations payable from Net Special Tax Revenues on a basis senior to the Bonds. The Community Facilities District may issue obligations payable from Net Special Tax Revenues on a basis subordinate to the Bonds, without complying with Sections 3.05 and 3.06. 332
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ARTICLE IV
REDEMPTION OF BONDS
Section 4.01. Redemption of Series 2023 Bonds. (a) Optional Redemption. The Series 2023 Bonds maturing on and after September 1, 20__, shall be subject to optional redemption, in whole, or in part in Authorized Denominations, on any date on or after September 1, 20__, from any source of available funds, at the following respective Redemption Prices (expres sed as percentages of the principal amount of the Series 2023 Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
Redemption Dates Redemption Price
September 1, 20__ through August 31, 20__ 103%
September 1, 20__ through August 31, 20__ 102
September 1, 20__ through August 31, 20__ 101
September 1, 20__ and thereafter 100
The Community Facilities District shall give the Trustee written notice of its intention to redeem Series 2023 Bonds pursuant to this subsection not less than 45 days prior to the applicable redemption date, unless a later date is agreed to by the Trustee. (b) Mandatory Redemption from Special Tax Prepayments. The Series 2023 Bonds shall be subject to mandatory redemption, in whole, or in part in Authorized Denominations, on any Interest Payment Date, from and to the extent of Special Tax prepayments required to be applied thereto pursuant to Section 5.02(a) and any amount required to be applied thereto pursuant to Section 5.04(c), at the following respective Redemption Prices (expressed as percentages of the principal amount of the Series 2023 Bonds to be rede emed), plus accrued interest thereon to the date of redemption:
Redemption Dates Redemption Price
Any Interest Payment Date 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 thereafter 100
(c) Mandatory Sinking Fund Redemption. The Series 2023 Bonds maturing September 1, 20__ shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing September 1, 20__, at a Redemption Price equal to the principal amount of the Series 2023 Bonds maturing September 1, 20__ to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:
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Sinking Fund
Redemption Date
(September 1)
Principal Amount
to be
Redeemed
$
(Maturity)
If some but not all of the Series 2023 Bonds maturing on September 1, 20__ are redeemed pursuant to Section 4.01(a), the principal amount of the Series 2023 Bonds maturing on September 1, 20__ to be redeemed pursuant to Section 4.01(c) on any subsequent September 1 shall be reduced, by $5,000 or an integral multiple thereof, as d esignated by the Community Facilities District in a Written Certificate of the Community Facilities District submitted to the Trustee; provided, however, that the aggregate amount of such reductions shall not exceed the aggregate amount of the Series 2023 Bonds maturing on September 1, 20__ redeemed pursuant to Section 4.01(a). If some but not all of the Series 2023 Bonds maturing on September 1, 20__ are redeemed pursuant to Section 4.01(b), the principal amount of the Series 2023 Bonds maturing on September 1, 20__ to be redeemed pursuant to Section 4.01(c) on any subsequent September 1 shall be reduced by the aggregate principal amount of the Series 2023 Bonds maturing on September 1, 20__ so redeemed pursuant to Section 4.01(b), such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination shall be given by the Trustee to the Community Facilities District.
The Series 2023 Bonds maturing September 1, 20__ shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing September 1, 20 __, at a Redemption Price equal to the principal amount of the Series 2023 Bonds maturing September 1, 20__ to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:
Sinking Fund
Redemption Date
(September 1)
Principal Amount
to be
Redeemed
$
(Maturity)
If some but not all of the Series 2023 Bonds maturing on September 1, 20__ are redeemed pursuant to Section 4.01(a), the principal amount of the Series 2023 Bonds maturing on September 1, 20__ to be redeemed pursuant to Section 4.01(c) on any subsequent September 1 shall be reduced, by $5,000 or an integral multiple thereof, as d esignated by the Community Facilities District in a Written Certificate of the Community Facilities District submitted to the Trustee; provided, however, that the aggregate amount of such reductions shall not exceed the aggregate amount of the Series 2023 Bonds maturing on September 1, 20__ redeemed pursuant to 334
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Section 4.01(a). If some but not all of the Series 2023 Bonds maturing on September 1, 20__ are redeemed pursuant to Section 4.01(b), the principal amount of the Series 2023 Bonds maturing on September 1, 20__ to be redeemed pursuant to Section 4.01(c) on any subsequent September 1 shall be reduced by the aggregate principal amount of the Series 2023 Bonds maturing on September 1, 20__ so redeemed pursuant to Section 4.01(b), such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination shall be given by the Trustee to the Community Facilities District.
Section 4.02. Notice of Redemption . The Trustee on behalf and at the expense of the Community Facilities District shall mail by first class mail notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registrat ion Books and to the Original Purchaser , at least 30 but not more than 60 days prior to the date fixed for redemption. Such notice shall state the date of the notice, the redemption date, the redemption place and the Redemption Price and shall designate th e CUSIP numbers, if any, the Bond numbers and the maturity or maturities of the Bonds to be redeemed (except in the event of redemption of all of the Bonds of such maturity or maturities in whole), and shall require that such Bonds be then surrendered at the Office of the Trustee for redemption at the Redemption Price, giving notice also that further interest on such Bonds will not accrue from and after the date fixed for redemption. Neither the failure to receive any notice so mailed, nor any defect in suc h notice, shall affect the validity of the proceedings for the redemption of the Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. With respect to any notice of any optional redemption of Bonds, unless at t he time such notice is given the Bonds to be redeemed shall be deemed to have been paid within the meaning of Section 10.02, such notice shall state that such redemption is conditional upon receipt by the Trustee, on or prior to the date fixed for such red emption, of moneys that, together with other available amounts held by the Trustee, are sufficient to pay the Redemption Price of, and accrued interest on, the Bonds to be redeemed, and that if such moneys shall not have been so received said notice shall be of no force and effect and the Community Facilities District shall not be required to redeem such Bonds. In the event a notice of redemption of Bonds contains such a condition and such moneys are not so received, the redemption of Bonds as described in the conditional notice of redemption shall not be made and the Trustee shall, within a reasonable time after the date on which such redemption was to occur, give notice to the Persons and in the manner in which the notice of redemption was given, that such moneys were not so received and that there shall be no redemption of Bonds pursuant to such notice of redemption.
Section 4.03. Selection of Bonds for Redemption . Whenever provision is made in this Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be redeemed from all Bonds not previously called for redemption (a) with respect to any optional redemption of Bonds of a Series, among maturities of Bonds of such Series as directed in a Written Request of the Community Facilities District, (b) with respect to any redemption pursuant to Section 4.01(b) and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued, among maturities of all Series of Bonds on a pro rata basis as nearly as practicable, and (c) with respect to any other redemption of Additional Bonds, among maturities as provided in the Supplemental Indenture pursuan t to which such Additional Bonds are issued, and by lot among Bonds of the same Series with the same maturity in any manner that the Trustee in its sole discretion shall deem appropriate. For purposes of such selection, all Bonds shall be 335
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deemed to be comp rised of the greatest number of separate denominations that would result in each such denomination being an Authorized Denomination and each such separate denomination shall be treated as a separate Bond that may be separately redeemed.
Section 4.04. Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Community Facilities District shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Community Facilities District, a new Bond or Bonds of the same Series in Authorized Denominations in an aggregate principal amount equal to the unredeemed portion of the Bonds surrendered.
Section 4.05. Effect of Notice of Redemption . (a) Notice of redemption of the Bonds subject to redemption having been mailed as aforesaid, and moneys for the Redemption Price thereof, and the interest thereon to the applicable date fixed for redemption, having been set aside with the Trustee, such Bonds shall become due and payable on said date, and, upon presentation and surrender thereof at the Office of the Trustee, said Bonds shall be paid at the Redemption Price thereof, together with interest accrued and unpaid to said date. (b) If, on said date fixed for redemption, moneys for the Redemption Price of all the Bonds to be redeemed, together with interest to said date, shall be held by the Trustee so as to be available therefor on such date, and, if notice of redemption thereof shall have been mailed as aforesaid and not canceled, then, from and after said date, interest on said Bonds shall cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds shall be held in trust for the account of the Owners of the Bonds so to be redeemed without liability to such Owners for interest thereon.
(c) All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions hereof shall be canceled upon surrender thereof and destroyed. 336
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ARTICLE V
SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS
Section 5.01. Pledge. Subject only to the provisions of thi s Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, in order to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of this Indenture and the Act, the Community Facilities District hereby pledges to the Owners, and grants thereto a lien on and a security interest in, all of the Net Special Tax Revenues and any other amounts held in the Special Tax Fund, the Bond Fund an d the Reserve Fund. Said pledge shall constitute a first lien on and security interest in such assets, which shall immediately attach to such assets and be effective, binding and enforceable against the Community Facilities District, its successors, purcha sers of any of such assets, creditors and all others asserting rights therein, to the extent set forth in, and in accordance with, this Indenture, irrespective of whether those parties have notice of the pledge of, lien on and security interest in such assets and without the need for any physical delivery, recordation, filing or further act.
Section 5.02. Special Tax Fund. (a) The Trustee shall establish and maintain a separate fund designated the “Special Tax Fund.” As soon as practicable after the receipt by the Community Facilities District of any Special Tax Revenues, but in any event no later than the date ten Business Days prior to the Interest Payment Date after such receipt, the Community Facilities District shall transfer such Special Tax Revenues to the Trustee for deposit in the Special Tax Fund; provided, however, that with respect to any such Special Tax Revenues that represent a Special Tax prepayment (i) said Special Tax prepayment shall be identified as such in a Written Certificate of the Community Facilities District submitted to the Trustee at the time such Special Tax prepayment is transferred to the Trustee, (ii) the portion of such Special Tax prepayment that is to be applied to the Redemption Price of the Bonds shall be identified in such Written Certificate of the Community Facilities District, shall be deposited by the Trustee in the Redemption Fund and shall be applied to the redemption of Bonds pursuant to Section 4.01(b) and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued, and (iii) the portion of such Special Tax prepayment that is to be applied to the payment of interest on the Bonds to be so redeemed shall be ide ntified in such Written Certificate of the Community Facilities District, shall be deposited by the Trustee in the Interest Account and shall be applied to the payment of such interest.
(b) Upon receipt of a Written Request of the Community Facilities District, the Trustee shall withdraw from the Special Tax Fund and transfer to the Administrative Expense Fund the amount specified in such Written Request of the Community Facilities District as the amount necessary to be transferred thereto in order to have suff icient amounts available therein to pay Administrative Expenses.
(c) No later than the Business Day immediately preceding each Interest Payment Date, after having made any requested transfer to the Administrative Expense Fund, the Trustee shall withdraw from the Special Tax Fund Net Special Tax Revenues in an amount sufficient to enable the Trustee to make the following transfers in the following order of priority:
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(i) Interest Account. To the Interest Account, the amount, if any, necessary to cause the amount on deposit in the Interest Account to be equal to the interest due on the Bonds on such Interest Payment Date;
(ii) Principal Account. To the Principal Account, the amount, if any, necessary to cause the amount on deposit in the Principal Account to be equal to the principal, if any, due on the Bonds on such Interest Payment Date, including principal due and payable by reason of mandatory sinking fund redemption of such Bonds; and (iii) Reserve Fund. To the Reserve Fund, the amount, if any, necessary to cause the amount on deposit in the Reserve Fund to be equal to the Reserve Requirement.
Upon the receipt of such amounts from the Community Facilities District, the Trustee shall make such transfers in said order of priority.
Section 5.03. Bond Fund. (a) The Trustee shall establish and maintain a separate fund designated the “Bond Fund.” Within the Bond Fund, the Trustee shall establish and maintain a separate account designated the “Principal Account” and a separate account designated the “Interest Account.” The Trustee shall deposit in the Interest Account and the Principal Account from time to time the amounts required to be deposited therein pursuant to Section 5.02. [On the Closing Date, the Trustee shall deposit in the Interest Account the amount specified in Secti on
3.02.]
(b) In the event that, on the Business Day prior to an Interest Payment Date , after the deposit in the Interest Account of the amounts required to be deposited therein pursuant to Section
5.02, amounts in the Interest Account are insufficient to pay the interest on the Bonds due and payable on such Interest Payment Date, the Trustee shall withdraw from the Reserve Fund, to the extent of any funds therein, the amount of such insufficiency, and shall transfer any amounts so withdrawn to the Interest Account.
(c) On each Interest Payment Date, the Trustee shall withdraw from the Interest Account for payment to the Owners of the Bonds the interest on the Bonds then due and payable. (d) In the event that, on the Business Day prior to a September 1 on which principal of the Bonds is due and payable , after the deposit in the Principal Account of the amounts required to be deposited therein pursuant to Section 5.02, including principal due and payable by reason of mandatory sinking fund redemption of the Bonds, amounts in the Principal Account are insufficient to pay such principal, after having withdrawn any amounts from the Reserve Fund required to be withdrawn therefrom on such date pursuant to subsection (b) of this Section, the Trustee shall withdraw from t he Reserve Fund, to the extent of any funds therein, the amount of such insufficiency, and shall transfer any amounts so withdrawn to the Principal Account. (e) On each September 1 on which principal of the Bonds is due and payable, including principal due an d payable by reason of mandatory sinking fund redemption of the Bonds, the Trustee shall withdraw from the Principal Account for payment to the Owners of the Bonds such principal then due and payable.
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Section 5.04. Reserve Fund. (a) The Trustee shall establish and maintain a special fund designated the “Reserve Fund.” On the Closing Date, the Trustee shall deposit in the Reserve Fund the amount specified in Section 3.02. The Trustee shall deposit in the Reserve Fund from time to time the amounts required to be deposited therein pursuant to Section 5.02(c). There shall additionally be deposited in the Reserve Fund, in connection with the issuance of Additional Bonds, the amount required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued.
(b) Except as otherwise provided in this Section, amounts in the Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of (i) making transfers to the Interest Account in accordance with Section 5.03(b) in the event of any deficiency in the Interest Account of the amount then required for payment of the interest on the Bonds, (ii) making transfers to the Principal Account in accordance with Section 5.03(d) in the event of any deficiency in the Principal Account of the amount then required for payment of the principal of the Bonds, and (iii) redeeming Bonds in accordance with the provisions of this Section. (c) Whenever Bonds are to be optionally redeemed or redeemed from Special Ta x prepayments, a proportionate share, determined as provided below, of the amount on deposit in the Reserve Fund shall, on the date on which amounts to redeem such Bonds are deposited in the Redemption Fund or otherwise deposited with the Trustee pursuant to Section 10.02, be transferred by the Trustee from the Reserve Fund to the Redemption Fund or to such deposit held by the Trustee and shall be applied to the redemption of said Bonds; provided, however, that such amount shall be so transferred only if and to the extent that the amount remaining on deposit in the Reserve Fund will be at least equal to the Reserve Requirement (excluding from the calculation thereof said Bonds to be redeemed). Such proportionate share shall be equal to the largest integral multiple of the minimum Authorized Denomination for said Bonds that is not larger than the amount equal to the product of (i) the amount on deposit in the Reserve Fund on the date of such transfer, times (ii) a fraction, the numerator of which is the principal amount of Bonds to be so redeemed and the denominator of which is the principal amount of Bonds to be Outstanding on the day prior to the date on which such Bonds are to be so redeemed.
(d) Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Trustee shall, upon receipt of a Written Request of the Community Facilities District, transfer the amount in the Reserve Fund to the Interest Account, Principal Account and/or Redemption Fund, as applicable, to be applied, on the next succeeding Interest Payment Date to the payment and redemption of all of the Outstanding Bonds. (e) If, as a result of the scheduled payment of principal of or interest on the Bonds, the Reserve Requirement is reduced, the Trustee shall transfer an amount equal to the amount of such reduction to the Interest Account.
Section 5.05. Redemption Fund. (a) The Trustee shall establish and maintain a special fund designated the “Redemption Fund.” The Trustee shall deposit in the Redemption Fund (i) amounts received from the Community Facilities District in connection with the Community Facilities District’s exercise of its rights to optio nally redeem Bonds, (ii) the portion of Special Tax prepayments required to be deposited therein pursuant to Section 5.02(a), (iii) amounts 339
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required to be transferred to the Redemption Fund from the Improvement Fund (or accounts therein) pursuant to Section 3.04, (iv) amounts required to be transferred to the Redemption Fund from the Reserve Fund pursuant to Section 5.04(c) or Section 5.04(d), and (v) amounts required to be deposited therein pursuant to any Supplemental Indenture. (b) Amounts in the Redemption Fund shall be disbursed therefrom for the payment of the Redemption Price of Series 2023 Bonds redeemed pursuant to Section 4.01(a) or Section
4.01(b) and for the payment of the Redemption Price of Additional Bonds redeemed under the Supplemental Indenture pursuant to which such Additional Bonds are issued (other than mandatory sinking fund redemptions thereof).
Section 5.06. Rebate Fund. (a) The Trustee shall establish and maintain a special fund designated the “Rebate Fund.” There shall be deposited i n the Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Certificate, as specified in a Written Request of the Community Facilities District. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement, for payment to the United States of America. Notwithstanding defeasance of the Bonds pursuant to Article X or anything to the contrary contained herein, all amounts required to be deposited into or on deposit in the Rebate Fund shall be governed exclusively by this Section and by the Tax Certificate, which is hereby incorporated herein as if fully set forth herein. The Trustee shall be deemed conclusively to have complied with such provisio ns if it follows the written directions of the Community Facilities District, and shall have no liability or responsibility to enforce compliance by the Community Facilities District with the terms of the Tax Certificate. The Trustee may conclusively rely upon the Community Facilities District’s determinations, calculations and certifications required by the Tax Certificate. The Trustee shall have no responsibility to independently make any calculation or determination or to review the Community Facilities District’s calculations. (b) Any funds remaining in the Rebate Fund after payment in full of all of the Bonds and after payment of any amounts described in this Section, shall, upon receipt by the Trustee of a Written Request of the Community Facilities District, be withdrawn by the Trustee and remitted to the Community Facilities District.
Section 5.07. Administrative Expense Fund . (a) The Trustee shall establish and maintain a special fund designated the “Administrative Expense Fund.” [On the Closing Date, the Trustee shall deposit in the Administrative Expense Fund the amount required to be deposited therein pursuant to Section 3.02.] The Trustee shall deposit in the Administrative Expense Fund the amounts transferred from the Special Tax Fund and required to be deposited therein pursuant to Section 5.02.
(b) The moneys in the Administrative Expense Fund shall be used and withdrawn by the Trustee from time to time to pay the Administrative Expenses upon submis sion of a Written Request of the Community Facilities District stating (i) the Person to whom payment is to be made, (ii) the amount to be paid, (iii) the purpose for which the obligation was incurred and that such purpose constitutes an Administrative Expense, (iv) that such payment is a proper charge against the Administrative Expense Fund, and (v) that such amount has not been the subject of a prior disbursement from the Administrative Expense Fund , in each case together with a statement or invoice for each amount requested thereunder.
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Section 5.08. Investment of Moneys . (a) Except as otherwise provided herein, all moneys in any of the funds or accounts established pursuant to this Indenture held by the Trustee shall be invested by the Trustee solely in Permitted Investments, as directed in a Written Request of the Community Facilities District received by the Trustee no later than two Business Days prior to the making of such investment. Moneys in all such funds and accounts shall be invested in Permitted Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in this Indenture; provided, however, that Permitted Investments in which moneys in the Reserve Fund are so invested sha ll mature no later than the earlier of five years from the date of investment or the final maturity date of the Bonds and, provided, further, that if such Permitted Investments may be redeemed at par so as to be available on each Interest Payment Date, any amount in the Reserve Fund may be invested in such redeemable Permitted Investments maturing on any date on or prior to the final maturity date of the Bonds. Absent a timely Written Request of the Community Facilities District with respect to the investment of moneys in any of the funds or accounts established pursuant to this Indenture held by the Trustee, the Trustee shall invest such moneys in Permitted Investments described in paragraph (6) of the definition thereof.
(b) Subject to the provisions of Sectio n 5.06, all interest, profits and other income received from the investment of moneys in any fund or account established pursuant to this Indenture (other than the Reserve Fund) shall be retained therein. Subject to the provisions of Section 5.06, all interest, profits or other income received from the investment of moneys in the Reserve Fund shall (i) prior to the date on which a Written Certificate of the Community Facilities District is submitted to the Trustee pursuant to subsection (b) of Section 3.04, be transferred to the Construction Account, and (ii) unless a Written Certificate of the Community Facilities District has been previously submitted to the Trustee pursuant to subsection ( c) of Section 3.04, on and after the date such Written Certificate of the Community Facilities District is submitted to the Trustee pursuant to subsection ( b) of Section 3.04 and prior to the date on which the Written Certificate of the Community Facilities District is submitted to the Trustee pursuant to subsection (c) of Section 3.04, be transferred to the Community Benefit Facilities Account and, thereafter, shall be transferred to the Interest Account; provided, however, that, notwithstanding the foregoing, any such transfer shall be made from the Reserve Fund only if and to the extent that, after such transfer, the amount on deposit in the Reserve Fund is at least equal to the Reserve Requirement.
(c) Permitted Investments acquired as an investment of moneys in any fund or account established under this Indenture shall be credited to such fund or account. For the purpose of determining the amount in any fund or account, all Permitted Investments credited to such fund or account shall be valued by the Trustee at the market value thereof (without regard to costs incurred in the acquisition or disposition thereof, including breakage, unwind or other similar fees), such valuation to be performed not less frequently than semiannually on or before each February 15 and August 15. To the extent of any valuations to be made by the Trustee hereunder, the Trustee may utilize computerized securities pricing services that may be available to it, including those available through its regular accounting system. Any Permitted Investment that is a registrable security shall be registered in the name of the Trustee. (d) The Trustee may act as principal or agent in the making or disposing of any investment. Upon the Written Request of the Community Facilities District, the Trustee shall sell 341
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or present for redemption any Permitted Investments so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investments are credited, and the Trustee shall not be liable or responsible for any loss resulting from any investment made or sold pursuant to this Section. For purposes of investment, the Trustee may commingle moneys in any of the funds and accounts established hereunder. The Trustee, in making or disposing of any investment permitted by this Section, may deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or such affiliate is acting as an agent of the Trustee or for any third person or dealing as a principal for its own account.
(e) The Community Facilities District acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Community Facilities District the right to receive brokerage confirmations of security transactions as they occur, the Community Facilities District specifically waives receipt of such confirmations to the extent permitted by law. The Trustee shall furnish the Community Facilities District periodic cash transaction statements, which shall include detail for all investment transactions made by the Trustee hereunder.
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ARTICLE VI
COVENANTS
Section 6.01. Collection of Special Tax Revenues . (a) The Community Facilities District shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including the enforcement of delinquent Special Tax payments. (b) Prior to August 1 of each year, the Community Facilities District shall ascertain from the County Assessor the relevant parcels on which the Special Tax is to be levied, taking into account any parcel splits during the preceding and then current year. The Community Facilities District shall effect the levy of the Special Tax each Fiscal Year in accordance with the Ordinance by each August 10, or otherwise such that the computation of the levy is complete before the final date on which the County Auditor will accept the transmission of the Special Tax amounts for the parcels within the Community Facilities District for inclusion on the next real property tax roll.
Upon the comp letion of the computation of the amounts of the levy, the Community Facilities District shall prepare or cause to be prepared, and shall transmit to the County Auditor, such data as the County Auditor requires in order to include the levy of the Special Ta x on the next real property tax roll.
(c) The Community Facilities District shall fix and levy the Special Tax within the Community Facilities District in each Fiscal Year in accordance with the Rate and Method and, subject to the limitations in the Rate and M ethod as to the maximum Special Tax that may be levied on each parcel, in an amount sufficient to yield Special Tax Revenues in the amount required for (i) the payment of principal of and interest on any Outstanding Bonds becoming due and payable during th e Corresponding Bond Year, (ii) any necessary replenishment of the Reserve Fund, and (iii) the payment of Administrative Expenses estimated to be paid from such Special Tax Revenues, taking into account the balances in the funds and accounts established hereunder. (d) The Special Tax shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable (or in such other manner as the City Council shall determine, including direct billing of the affected property owners), and have the same priority, become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property.
Section 6.02. Foreclosure. Pursuant to Section 53356.1 of the Act, the Community Facilities District hereby covenants with and for the benefit of the Owners that it will determine or cause to be determined, no later than September 15 of each year, whether or not any owners of property within the Community Facilities District are delinquent in the payment of the Special Tax levied thereon and, if such delinquencies exist, the Community Facilities District will order and cause to be commenced no later than November 1, and thereafter diligently prosecute, an action in the superior court to foreclose the lien of the Special Tax or installment thereof not paid when due; provided, however, that the Community Facilities District shall not be required to order the commencement of foreclosur e proceedings if (a) the total Special Tax delinquency in the Community Facilities District for such Fiscal Year is less than 5% of the total amount of the Special Tax levied in such Fiscal Year, and (b) the amount then on deposit in the Reserve Fund is 343
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equal to the Reserve Requirement. Notwithstanding the foregoing, if the Community Facilities District determines that any single parcel in the Community Facilities District is delinquent in excess of $5,000 in the payment of the Special Tax, then the Communi ty Facilities District shall diligently institute, prosecute and pursue foreclosure proceedings against such parcel.
Section 6.03. Compliance with Act . The Community Facilities District shall comply with all applicable provisions of the Act.
Section 6.04. Punctual Payment. The Community Facilities District shall punctually pay or cause to be paid the principal, premium, if any, and interest to become due in respect of all the Bonds, in strict conformity with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, but only out of Net Special Tax Revenues and other assets pledged for such payment as provided in this Indenture and received by the Community Facilities District or the Trustee.
Section 6.05. Extension of Payment of Bonds. The Community Facilities District shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in c ase the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to t he prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon that shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the Community Facilities District to issue Bonds for the purpose of refunding any Outstanding Bonds in accordance with the provisions hereof , and such issuance shall not be deemed to constitute an extension of maturity of the Bonds.
Section 6.06. Against Encumbrances; Defense of Pledge . The Community Fa cilities District shall not create, or permit the creation of, any pledge of, lien on, security interest in or charge or other encumbrance upon the assets pledged under this Indenture, except as permitted hereby. The Community Facilities District shall at all times, to the extent permitted by law, defend, preserve and protect said pledge of such assets, and the lien thereon and security interest therein created hereby, against all claims and demands of all Persons whomsoever.
Section 6.07. Tax Covenants. (a) The Community Facilities District shall not take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of interest on the Series 2023 Bonds under Section 103 of th e Code. Without limiting the generality of the foregoing, the Community Facilities District shall comply with the requirements of the Tax Certificate, which is incorporated herein as if fully set forth herein. This covenant shall survive payment in full or defeasance of the Series 2023 Bonds. (b) In the event that at any time the Community Facilities District is of the opinion that for purposes of this Section it is necessary or helpful to restrict or limit the yield on the investment of any moneys held by the Trustee in any of the funds or accounts established hereunder, the Community Facilities District shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. 344
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(c) Notwithstanding any provisions of this Section, if the Community Facilities District shall provide to the Trustee an opinion of Bond Counsel to the effect that any specified action required under this Section is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest on the Series 2023 Bonds, the Trustee may conclusively rely on such opinion in complying with the requirements of this Section and of the Tax Certificate, and the covenants hereunder shall be deemed to be modified to that extent.
Section 6.08. Non-Cash Payments of Special Tax. The Community Facilities District shall not authorize owners of taxable parcels within the Community Facilities District to satisfy Special Tax obligations by the tender of Bonds unless the Community Facilities District shall have first obtained a report of an Independent Consultant certifying that doing so would not result in the Community Facilities District having insufficient Special Tax Revenues to pay the principal of and interest on all Outstanding Bonds when due.
Section 6.09. Reduction in Special Tax. The Community Facilities District shall not initiate proceedings under the Act to modify the Rate and Method if such modification would adversely affect the security for the Bonds. If an initiative is adopted that purports to modify the Rate and Method in a manner that would adversely affect the security for the Bonds, the Community Facilities District shall, to the extent permitted by law, commence and pursue reasonable legal actions to prevent the modification of the Rate and Method in a manner that would adversely affect the security for the Bonds.
Section 6.10. Continuing Disclosure. (a) Each of the Community Facilities District and the Trustee shall comply with and carry out all of the pr ovisions of the District Continuing Disclosure Agreement applicable to it. Notwithstanding any other provision of this Indenture, failure of the Community Facilities District or the Trustee to comply with the District Continuing Disclosure Agreement shall not be considered an Event of Default; provided, however, that the Trustee may (and, at the written direction of any Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Series 2023 Bonds, and upon receipt of indemnification reasonably satisfactory to the Trustee, shall) or any Owner or Beneficial Owner of the Series 2023 Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order. (b) The Developer has executed the Developer Continuing Disclosure Certificate.
Notwithstanding any other provision of this Indenture, failure of the Developer to comply with the Developer Continuing Disclosure Certificate shall not be considered an Event of Default; provided, however, that the Trustee may (and, at the written direction of any Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Series 2023 Bonds, and upon receipt of indemnification reasonably satisfactory to the Trustee, shall) or any Owner or Beneficial Owner of the Series 2023 Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.
Section 6.11. Accounting Records . The Community Facilities District shall keep or cause to be kept appropriate accounting records in which complete and correct entries shall be made of all transactions relating to the Special Tax, which records shall be available for inspection by the Trustee at reasonable hours and under reasonable conditions. 345
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Section 6.12. State Reporting. If at any time principal or interest due on any scheduled payment date for the Bonds is not paid, or if funds are withdrawn from the Reserve Fund to pay principal of or interest on the Bonds, the Trustee shall notify the Community Facilities District in writing of such failure or withdrawal, and the Community Facilities District shall notify the California Debt and Investment Advisory Commission of such failure or withdrawal within ten days of the failure to make such payment or the date of such withdrawal.
Section 6.13. Annual Reports to the California Debt and Investment Advisory Commission. Not later than October 30 of each year, commencing October 30, 202 4 and continuing until the October 30 following the final maturity of the Bonds, the Community Facilities District shall supply to the California Debt and Investment Advisory Commission the information required to be provided thereto pursuant to Section 53359.5(b) of the Act. Such information shall be made available to any Owner upon written request to the Community Facilities District accompanied by a fee determined by the Community Fac ilities District to pay the costs of the Community Facilities District in connection therewith. The Community Facilities District shall in no event be liable to any Owner or any other person or entity in connection with any error in any such information.
Section 6.14. Further Assurances . The Community Facilities District shall make, execute and deliver any and all such further agreements, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance o f this Indenture and for the better assuring and confirming unto the Owners of the rights and benefits provided in this Indenture.
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default. The following events shall be Events of Default:
(a) failure to pay any i nstallment of principal of any Bonds when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption or otherwise;
(b) failure to pay any installment of interest on any Bonds when and as the same shall become due and payable;
(c) failure by the Community Facilities District to observe and perform any of the other covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, if such failure shall have continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, shall have been given to the Community Facilities District by the Trustee, or to the Community Facilities District and the Trustee by the Owners of not les s than 5% in aggregate principal amount of the Bonds at the time Outstanding; provided, however, that, if in the reasonable opinion of the Community Facilities District the failure stated in the notice can be corrected, but not within such 30 day period, s uch failure shall not constitute an Event of Default if corrective action is instituted by the Community Facilities District within such 30 day period and the Community Facilities District shall thereafter diligently and in good faith cure such failure in a reasonable period of time; or
(d) the commencement by the Community Facilities District or the City of a voluntary case under Title 11 of the United States Code or any substitute or successor statute.
Section 7.02. Foreclosure. If an Event of Default shall occur under Section 7.01(a) or Section 7.01(b) then, and in each and every such case during the continuance of such Event of Default, the Trustee may, or at the written direction of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding, and upon being indemnified to its satisfaction therefor, shall, commence foreclosure against any parcels of land in the Community Facilities District delinquent in the payment of the Special Tax, as provided in Section 53356.1 of the Act.
Section 7.03. Other Remedies . If an Event of Default shall have occurred and be continuing, the Trustee shall have the right:
(a) by mandamus, suit, action or proceeding, to compel the Community Facilities District and its officers, agents or employees to perform each and every term, provision and covenant contained in this Indenture and in the Bonds, and to require the carrying out of any or all such covenants and agreements of the Community Facilities District and the fulfillment of all duties imposed upon it by this Indenture and the Act; 347
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(b) by suit, action or proceeding in equity, to enjoin any acts or things that are unlawful, or the violation of any of the rights of the Trustee or the Owners; or (c) by suit, action or proceeding in any court of competent jurisdiction, to require the Community Facilities District and its officers and employees to account as if it and they were the trustees of an express trust.
Section 7.04. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Owners is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
Section 7.05. Application of Net Special Tax Revenues After Default . If an Event of Default shall occur and be continuing, all Net Special Tax Revenues and any other funds thereafter received by the Trustee under any of the provisions of this Indenture shall be applied by the Trustee as follows and in the following order:
(a) to the payment of any expenses necessary in the opinion of the Trustee to protect the interests of the Owners and payment of reasonable fees, charges and expenses of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under this Indenture; (b) to the payment of the principal and interest then due with respect to the Bonds (upon presentation of the Bonds to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of this Indenture, as follows:
First: to the payment to the Persons entitled thereto of all installments of interest on the Bonds then due in the order of the maturity of such installments and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due ther eon, to the Persons entitled thereto, without any discrimination or preference; and
Second: to the payment to the Persons entitled thereto of all installments of principal of the Bonds then due, whether at maturity or by call for redemption, with interest on the overdue principal at the rate borne by the respective Bonds on the date of maturity or redemption, and, if the amount available shall not be sufficient to pay in full all the Bonds, together with such interest, then to the payment thereof ratably, a ccording to the amounts of principal due on such date to the Persons entitled thereto, without any discrimination or preference; (c) any remaining funds shall be transferred by the Trustee to the Special Tax Fund.
Section 7.06. Power of Trustee to Enforce. All rights of action under this Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit, 348
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action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of the Owners of such Bonds, subject to the provisions of this Indenture.
Section 7.07. Owners’ Direction of Proceedings . Anything in this Indenture to the contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Tru stee, and upon indemnification of the Trustee to its reasonable satisfaction, to direct the method of conducting all remedial proceedings taken by the Trustee; provided, however, that such direction shall not be otherwise than in accordance with the provisions of this Indenture, the Act and other applicable law and, provided, further, that the Trustee shall have the right to decline to follow any such direction that in the opinion of the Trustee would be unjustly prejudicial to Owners not parties to such direction.
Section 7.08. Limitation on Owners’ Right to Sue . No Owner of any Bond shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture, the Act or any other applicable law with respect to such Bond, unless (a) such Owner shall have given to the Trustee written notice of the occurrence of an Event of Default, (b) the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have mad e written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name, (c) such Owner or said Owners shall have tendered to the Trustee indemnity reasonably satisfactory to the Truste e against the costs, expenses and liabilities to be incurred in compliance with such request, and (d) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder or under law; it being understood and intended that no one or more Owners shall have any right in any manner whatever by such Owner’s or Owners’ action to affect, disturb or prejudice the security of this Indenture or the rights of any other Owners, or to enfor ce any right under the Bonds, this Indenture, the Act or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Owners, subject to the provisions of this Indenture.
Section 7.09. Absolute Obligation . Nothing in this Indenture or the Bonds contained shall affect or impair the obligation of the Community Faci lities District, which is absolute and unconditional, to pay the principal of and interest on the Bonds to the respective Owners as the same become due , as herein provided, but only out of the Net Special Tax Revenues and other assets pledged therefor hereunder, or affect or impair the right of such Owners, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds.
Section 7.10. Termination of Proceedings. In case any proceedings taken by the Trustee or any one or more Owners on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or the Owners, 349
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then in every such case the Community Facilities District, the Trustee and the Owners, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the Community Facilities District, the Trustee and the Ow ners shall continue as though no such proceedings had been taken.
Section 7.11. No Waiver of Default. No delay or omission of the Trustee or of any Owner to exercise any right or power arising upon the occurrence of any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or an acquiescence therein, and every power and remedy given by this Indenture to the Trustee or to the Owners may be exercised from time to time and as often a s may be deemed expedient.
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ARTICLE VIII
TRUSTEE
Section 8.01. Duties and Liabilities of Trustee. The Trustee shall, prior to an Event of Default, and after the curing or waiver of all Events of Default that may have occurred, perform such duties and only such duties as are exp ressly and specifically set forth in this Indenture. The Trustee shall, during the existence of any Event of Default that has not been cured or waived, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
Section 8.02. Qualifications; Removal and Resignation; Successors . (a) The Trustee initially a party hereto and any successor thereto shall at all times be a trust company, national banking association or bank having trust powers in good standing in or incorporated under the laws of the United States or any state thereof, having (or if such trust company, national b anking association or bank is a member of a bank holding company system, its parent bank holding company shall have) a combined capital and surplus of at least $ 250,000,000, and subject to supervision or examination by a federal or state agency. If such tr ust company, national banking association or bank publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining agency above referred to, then for the purpose of this subsection the combined capit al and surplus of such trust company, national banking association or bank shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
(b) The Community Facilities District may, by an instrument in w riting, upon at least 30 days’ notice to the Trustee, remove the Trustee initially a party hereto and any successor thereto unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee initially a party hereto and any successor thereto if (i) at any time requested to do so by an instrument or concurrent instruments in writing signed by the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing), or (ii) the Trustee shall cease to be eligible in accordance with subsection (a) of this Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of such removal to the Trustee. (c) The Trustee may at any time resign by giving written notice of such resignation by first class mail, postage prepaid, to the Community Facilities District, and to the Owners at the respective addresses shown on the Registration Books. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of subsection (a) of this Section, the Trustee shall resign immediately in the manner and with the effect specified in this Section. (d) Upon removal or resignation of the Trustee, the Community Facilities District shall promptly appoint a successor Trustee by an instrument in writing. Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee; provided, however, that any successor Trustee shall be 351
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qualified as provided in subsection (a) of this Section. If no qualified successor Trustee shall have been appointed and have accepted appointment within 45 days following notice of removal or notice of resignation as af oresaid, the removed or resigning Trustee or any Owner (on behalf of such Owner and all other Owners) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice, if any, as i t may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture shall signify its acceptance of such appointment by executing and delivering to the Community Facilities District and to its predecessor Trustee a writt en acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Written Request of the Community Facilities District or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or f urther assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under t his Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the successor Trustee shall, within 15 days after such acceptance, mail, by first class mail postage prepaid, a notice of the succession of such Trustee to the trusts hereunder to the Owners at the addresses shown on the Registration Books. (e) Any trust comp any, national banking association or bank into which the Trustee may be merged or converted or with which it may be consolidated or any trust company, national banking association or bank resulting from any merger, conversion or consolidation to which it shall be a party or any trust company, national banking association or bank to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such trust company, national banking association or bank shall be eligib le under subsection (a) of this Section, shall be the successor to such Trustee, without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.
Section 8.03. Liability of Trustee . (a) The recitals of f acts herein and in the Bonds contained shall be taken as statements of the Community Facilities District, and the Trustee shall not assume responsibility for the correctness of the same or incur any responsibility in respect thereof, other than as expressly stated herein in connection with the respective duties or obligations herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. (b) The Trustee makes no representations as to the validity or sufficiency of this Indenture or of any Bonds, or in respect of the security afforded by this Indenture and the Trustee shall incur no responsibility in respect thereof. The Trustee shall be under no responsibility or duty with respect to the issuance of the Bonds for value, the application of the proceeds thereof except to the extent that such proceeds are received by it in its capacity as Trustee, or the application of any moneys paid to the Community Facilities District or others in accordance with this Indenture. (c) The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. 352
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(d) No provision of this Indenture or any ot her document related hereto shall require the Trustee to risk or advance its own funds.
(e) The Trustee may execute any of its powers or duties hereunder through attorneys, agents or receivers and shall not be answerable for the actions of such attorneys, agents or receivers if selected by it with reasonable care.
(f) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
(g) The immunities and protections extended to the Trustee also extend to its directors, officers, employees and agents.
(h) Before taking action under Article VII, under this Article or upon the direction of the Owners, the Trustee may require indemnity reasonably satisfactory to the Trustee be furnished to it to protect it against all fees and expenses, including those of its attorneys and adviso rs, and protect it against all liability it may incur.
(i) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture. (j) The Trustee may become the Owner of Bonds with the same rights it would have if it were not Trustee and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners, whether or not such committee shall represent the Owners of a majority in aggregate principal amount of the Bonds then Outstanding. (k) The Trustee shall have no responsibility with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds.
(l) The Trustee shall not be liable for the failure to take any action required to be taken by it hereunder if and to the extent that the Trustee’s taking such action is prevented by reason of an act of God, terrorism, war, riot, strike, fire, flood, earthquake, epidemic or other, similar occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care.
(m) The Trustee shall not be deemed to have knowledge of an Event of Default hereunder unless it has actual knowledge thereof.
(n) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and it shall not be answerable for other than its negligence or willful misconduct.
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(o) The Trustee shall not be responsible for or accountable to anyone for the subsequent use or application of any moneys that shall be released or withdrawn in accordance with the provisions hereof.
Section 8.04. Right to Rely on Documents and Opinions . (a) The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bonds or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.
(b) Whenever in the administration of the duties imposed upon it by this Indenture the Trustee shall deem it necessary or desirable that a matter be prove d or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Written Certificate of the Community Facilities District, and such Written Certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such Written Certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable.
(c) The Trustee may consult with counsel, who may be counsel to the Community Facilities District, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.
Section 8.05. Accounting Records and Financial Statements . The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with prudent corporate trust industry standards, in which accurate entries shall be made of all transactions made by it relating to the proceeds of the Bonds, the Spe cial Tax Revenues received by it and all funds and accounts established by it pursuant to this Indenture. Such books of record and account shall be available for inspection by the Community Facilities District during regular business hours and upon reasonable notice and under reasonable circumstances as agreed to by the Trustee. The Trustee shall deliver to the Community Facilities District a monthly accounting of the funds and accounts it holds under this Indenture; provided, however, that the Trustee shall not be obligated to deliver an accounting for any fund or account that (a) has a balance of zero, and (b) has not had any activity since the last reporting date.
Section 8.06. Preservation and Inspection of Documents . All documents received by the Trustee under the provisions of this Indenture shall be retained in its possession and shall be subject during business hours and upon reasonable notice to the inspection of the Community Facilities District, the Owners and their agents and representatives duly authorized in writing.
Section 8.07. Compensation and Indemnification . The Community Facilities District shall pay to the Trustee from time to time from Special Tax Revenues all reasonable compensation pursuant to a pre -approved fee letter for all services rendered under this Indenture, and also all reasonable expenses, charges, legal and consulting fees pursuant to a pre -approved fee letter and other disbursements pursuant to a pre -approved fee letter and those of its attorneys, agents and employees, incurred in and about the performance of their powers and duties under this Indenture. 354
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The Community Facilities District shall, to the extent permitted by law, from Special Tax Revenues, indemnify and save the Trustee harmless against any costs, claims, expenses (including fees and expenses of its counsel) and liabilities that it may incur in the exercise and performance of its powers and duties hereunder, including the enforcement of any remedies and the defense of any suit, and that are not due to its negligence or its willful misconduct. The duty of the Community Facilities District to indemnify the Trustee shall survive the resignation or removal of the Trustee and the termination and discharge of this Indenture.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures . (a) This Indenture and the rights and obligations of the Community Facilities District, the Trustee and the Owners hereunder may be modified or amended from time to time and at any time by a Supplemental I ndenture, which the Community Facilities District and the Trustee may enter into when there are submitted to the Trustee the written consents of the Owners of a majority of the aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds di squalified as provided in Section 11.07. No such modification or amendment shall (i) extend the fixed maturity of any Bond, reduce the amount of principal thereof or the rate of interest thereon, extend the time of payment thereof or alter the redemption provisions thereof, without the prior written consent of the Owner of each Bond so affected, (ii) permit any pledge of, or the creation of any lien on, security interest in or charge or other encumbrance upon the assets pledged under this Indenture prior to or on a parity with the pledge contained in, and the lien and security interest created by, this Indenture or deprive the Owners of the pledge contained in, and the lien and security interest created by, this Indenture, except as expressly provided in this Indenture, without the prior written consents of the Owners of all Bonds then Outstanding, or (iii) modify or amend this Section without the prior written consents of the Owners of all Bonds then Outstanding.
(b) This Indenture and the rights and obligations of the Community Facilities District, the Trustee and the Owners hereunder may also be modified or amended from time to time and at any time by a Supplemental Indenture, which the Community Facilities District and the Trustee may enter into without the consent of any Owners for any one or more of the following purposes:
(i) to add to the covenants and agreements of the Community Facilities District in this Indenture contained , other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Community Facilities District; (ii) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision contained in this Indenture, provided that such modification or amendment does not materially adversely affect the rights or interests of the Owners hereunder; (iii) to provide for the issuance of one or more Series of Additional Bonds, and to provide the terms and conditions under which such Series of Additional Bonds may be issued, subject to and in accordance with the provisions of Article III; (iv) to permit the qualification of this Indenture under the Trust Indentu re Act of 1939, as amended, or any similar federal statute hereafter in effect; (v) to cause interest on the Bonds to be excludable from gross income for purposes of federal income taxation by the United States of America; and 356
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(vi) in any other respect whatsoever as the Community Facilities District may deem necessary or desirable, provided that such modification or amendment does not materially adversely affect the rights or interests of the Owners hereunder. (c) Promptly after the execution by the Community Facilities District and the Trustee of any Supplemental Indenture, the Trustee shall mail a notice (the form of which shall be furnished to the Trustee by the Community Facilities District), by first-class mail, postage prepaid, setting forth in general terms the substance of such Supplemental Indenture, to the Owners at the respective addresses shown on the Registration Books. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture.
Section 9.02. Effect of Supplemental Indenture . Upon the execution of any Supplemental Indenture pursuant to this Article, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Community Facilities District, the Trustee and the Owners shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Section 9.03. Endorsement of Bonds; Preparation of New Bonds . Bonds delivered after the effective date of any Supplemental Indenture pursuant to this Article may and, if the Community Facilities District so determines, shall bear a notation by endorsement or otherwise in form approved by the Community Facilities District and the Trustee as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the Owner of any Bond Outstanding at the time of such effective date and presentation of such Bond for such purpose at the Office of the Trustee a suitable notation shall be made on such Bon ds. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the Community Facilities District and the Trustee, to any modification or amendment contained in such Supplemental Indenture, shall be prepared and e xecuted by the Community Facilities District and authenticated by the Trustee and, in that case, upon demand of the Owner of any Bond Outstanding at the time of such effective date, and presentation of such Bond for such purpose at the Office of the Trustee, such a new Bond in equal principal amount of the same Series, interest rate and maturity shall be exchanged for such Owner’s Bond so surrendered.
Section 9.04. Amendment of Particular Bonds. The provisions of this Article shall not prevent any Owner from acceptin g any amendment or modification as to any particular Bond owned by it, provided that due notation thereof is made on such Bond. 357
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ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Indenture . (a) If the Community Facilities District shall pay or cause to be paid or there shall otherwise be paid to the Owners of all Outstanding Bonds the principal thereof and the interest and premium, if any, thereon at the times and in the manner stipulated herein and therein, then the Owners shall cease to be entitled to the pledge of the Net Special Tax Revenues and the other assets pledged therefor hereunder , and all agreements, covenants and other obligations of the Community Facilities District hereunder shall thereupon cease, terminate and become void and this Indenture shall b e discharged and satisfied. In such event, the Trustee shall execute and deliver to the Community Facilities District all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the Community Facilities District all money or securities held by it pursuant hereto that are not required for the payment of the principal of and interest and premium, if any, on the Bonds.
(b) Subject to the provisions of subsection (a) of this Section, if the Community Facilities District shall pay or cause to be paid to the Owner of an Outstanding Bond the principal thereof and the interest and premium, if any, thereon at the times and in the manner stipulated herein and therein, such Owner shall cease to be entitled to the pledge of the Net Special Tax Revenues and the other assets pledged therefor hereunder and all agreements, covenants and other obligations of the Community Facilities Distri ct hereunder shall thereupon cease, terminate and become void and this Indenture shall be discharged and satisfied as to such Bond. (c) Notwithstanding the discharge and satisfaction of this Indenture or the discharge and satisfaction of this Indenture in respect of any Bond, those provisions of this Indenture relating to the maturity of the Bonds, interest payments and dates thereof, exchange and transfer of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, non -presentment of Bonds, and the duties of the Trustee in connection with all of the foregoing, shall remain in effect and shall be binding upon the Trustee and the Owner of such Bond, and the Trustee shall continue to be obligated to hold in trust any moneys or investments then held by the Trustee for the payment of the principal of and interest and premium, if any, on such Bond, and to pay to the Owner of such Bond the funds so held by the Trustee as and when such payment becomes due.
Section 10.02. Bonds Deemed To Have Been Paid . (a) If moneys shall have been set aside and held by the Trustee for the payment or redemption of any Bond and the payment of the interest thereon to the maturity or redemption date thereof, such Bond shall be deemed to have been paid within the meaning and with the effect provided in Section 10.01. Any Outstanding Bond shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in Section 10.01 if (i) in case such Bond is to be redeemed on any date prior to its maturity date, the Community Facilities District shall have given to the Trustee in form satisfactory to it irrevocable instructions to mail, on a date in accordance with the provisions of Section 4.02 , notice of redemption of such Bond on said redemption date, said notice to be given in accordance with Section 4.02, (ii) there shall have been deposited with the Trustee either (A) money in an amount that shall be sufficient, or 358
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(B) Defeasance Securities, the principal of and the interest on which when due, and without any reinvestment thereof, together with the money, if any, deposited therewith, will provide moneys that shall be sufficient to pay when due the interest to become due on su ch Bond on and prior to the maturity date or redemption date thereof, as the case may be, and the principal of and premium, if any, on such Bond, and (iii) in the event such Bond is not by its terms subject to redemption within the next succeeding 60 days, the Community Facilities District shall have given the Trustee, in form satisfactory to it, irrevocable instructions to mail as soon as practicable, a notice to the Owner of such Bond that the deposit required by clause (ii) above has been made with the Trustee and that such Bond is deemed to have been paid in accordance with this Section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and premium, if any, on such Bond.
(b) No Bond shall be deemed to have been paid pursuant to clause (ii) of subsection (a) of this Section unless the Community Facilities District shall have caused to be delivered to the Community Facilities District and the Trustee (i) an executed copy of a Verification Rep ort with respect to such deemed payment, addressed to the Community Facilities District and the Trustee, in form and in substance acceptable to the Community Facilities District, (ii) a copy of the escrow agreement entered into in connection with the depos it pursuant to clause (ii)(B) of subsection (a) of this Section resulting in such deemed payment, which escrow agreement shall be in form and in substance acceptable to the Community Facilities District and which escrow agreement shall provide that no subs titution of Defeasance Securities shall be permitted except with other Defeasance Securities and upon delivery of a new Verification Report, and no reinvestment of Defeasance Securities shall be permitted except as contemplated by the original Verification Report or upon delivery of a new Verification Report, and (iii) a copy of an opinion of Bond Counsel, dated the date of such deemed payment and addressed to the Community Facilities District and the Trustee, in form and in substance acceptable to the Community Facilities District, to the effect that such Bond has been paid within the meaning and with the effect expressed in this Indenture, all agreements, covenants and other obligations of the Community Facilities District hereunder have ceased, terminated and become void and the Indenture has been completely discharged and satisfied as to such Bonds.
Section 10.03. Unclaimed Moneys . Any moneys held by the Trustee in trust for the payment of the principal of, or premium or interest on, any Bond that remain unclaimed for two years after the date when such principal, premium or interest has become payable, if such moneys were held by the Trustee at such date, or for two years after the date of deposit of such moneys if deposited with the Trustee after the date when such principal, premium or interest become payable, shall be repaid by the Trustee to the Community Facilities District as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owner of such Bond shall look only to the Community Facilities District for the payment of such principal, premium or interest. The Trustee shall hold any such moneys uninvested. 359
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ARTICLE XI
MISCELLANEOUS
Section 11.01. Notices. Any written notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication to be given hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely:
If to the Community Facilities District:
City of Fontana Community Facilities
District No. 100 (Victoria)
c/o City of Fontana
8353 Sierra Avenue
Fontana, California 92335
Attention: Chief Financial Officer, Finance Department
If to the Trustee:
U.S. Bank Trust Company, National Association
633 West Fifth Street, 24th Floor
Los Angeles, California 90071
Attention: Global Corporate Trust
Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if given by courier or delivery service or if personally served or delivered, upon delivery, (b) if given by telecopier, upon the sender’s receipt of an appropriate answerback or other written acknowledgment, (c) if given by electronic mail, on the date sent, but only if confirmation of the receipt of such electronic mail is received or if notice is concurrently sent by another means specified herein, (d) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mai l, or ( e) if given by any other means, upon delivery at the address specified in this Section.
Section 11.02. Successor Is Deemed Included in All References to Predecessor .
Whenever in this Indenture either the Community Facilities District or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained required hereby to be performed by or on behalf of the Community Facilities District or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.
Section 11.03. Limitation of Rights. Nothing in this Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any Pers on other than the Trustee, the Community Facilities District and the Owners any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained, 360
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and all such covenants, con ditions and provisions are and shall be held to be for the sole and exclusive benefit of the Trustee, the Community Facilities District and the Owners.
Section 11.04. Destruction of Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Community Facilities District of any Bonds, the Trustee shall, in lieu of such cancellation and delivery, destroy such Bonds.
Section 11.05. Severability of Invalid Provisions . If any term or provision of this Indenture or the Bonds, or the application of the term or provision to any Person or circumstance is, to any extent, held to be invalid or unenforceable in any jurisdiction, but the extent of such invalidity or unenforceability does not destroy the basis of the bargain between the parties as contained herein, the remainder of this Indenture or the Bonds, as applicable, or the application of the term or provision to Persons or circumstances other than those as to which the term or provision is held invalid or unenforceable, shall not be affected by such invalidity or unenforceability, and each remaining term or provision of this Indenture and the Bonds shall be valid and will be enforced to the fullest extent permitted by law.
Section 11.06. Evidence of Rights of Owners . (a) Any request, consent or other instrument required or permitted by this Indenture to be signed and executed by Owners may be in any number of concurrent instruments of substantially similar tenor and shall be signed or executed by such Owners in person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and the Community Facilities District if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such request, consent or other instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the Person signing such request, consent or other instrument acknowledged to such notary public or such officer the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer.
(c) The ownership of Bonds shall be proved by the Registration Books. (d) Any request, consent or other instrument or writing of the Owner of any Bond shall bind every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Community Facilities District in accordance therewith or reliance thereon.
Section 11.07. Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds that are known by the Trustee to be owned or held by or for the account of the Community Facilities District, or by any other obligor on the Bonds, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Community Facilities District or any other obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the purpo se of any such determination. Bonds so owned that have been pledged in good faith may be regarded as Outstanding for the purposes 361
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of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Community Facilities District or any other obligor on the Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Community Facilities District shall specify in a Written Certificate of the Community Facilities District submitted to the Trustee those Bonds disqualified pursuant to this Section and the Trustee may conclusively rely on such Written Certificate.
Section 11.08. Money Held for Particular Bonds . The money held by the Trustee for the payment of the interest, principal or premium due on any date with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owner entitled thereto, subject, however, to the provisions of Section 10.03, but without any liability for interest thereon.
Section 11.09. Funds and Accounts. Any fund or account required by this Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account, but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with prudent corporate trust industry standards, and with due regard for the requirements hereof and for the protection of the security of the Bonds and the rights of every Owner thereof. Th e Trustee may establish any such additional funds or accounts as it deems necessary to perform its obligations hereunder.
Section 11.10. Business Days. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Indenture , shall not be a Business Day, such payment may be made or act performed or right exercised on the next succeeding Business Day, with the same force and effect as if done on the nominal date provided in this Indenture and, unless otherwise specifically provided in this Indenture, no interest shall accrue for the period from and after such nominal date.
Section 11.11. Waiver of Personal Liability. No member, officer, agent or employee of the Community Facilities District or the City shall be individually or personally liable for the payment of the principal of or premium or interest on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof , but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by any applicable provision of law or by this Indenture.
Section 11.12. Conflict with Act. In the event of any conflict between any provision of this Indenture and any provision of the Act, the provision of the Act shall prevail over the provision of this Indenture.
Section 11.13. Conclusive Evidence of Regularity . Bonds issued pursu ant to this Indenture shall constitute evidence of the regularity of all proceedings under the Act relative to their issuance and to the levy of the Special Tax.
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Section 11.14. Governing Laws. This Indenture shall be governed by and construed in accordance with the laws of the State.
Section 11.15. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Indenture may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs this Indenture using an electronic signature, it is signing, adopting and accepting this Indenture and that signing this Indenture using an electronic signature is the legal equivalent of having placed its handwritten signature on this Indenture on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Indenture in a usable format.
Section 11.16. Execution in Several Counterparts. This Indenture may be executed in any number of counterparts and each of such counterparts sh all for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the Community Facilities District has caused this Indenture to be signed in its name by its represent ative thereunto duly authorized, and the Trustee, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written.
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT
NO. 100 (VICTORIA)
By:
________________, _____________
of the City of Fontana
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, AS
TRUSTEE
By:
Authorized Officer
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EXHIBIT A
PERMITTED INVESTMENTS
“Permitted Investments” means the following:
(1) Direct general obligations of the United States of America (including obligations issued or held in book -entry form on the books of the Department of the Treasury of the United States of America);
(2) Obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America, including:
-Export-Import Bank
-Rural Economic Community Development Administration
-U.S. Maritime Administration
-Small Business Administration
-U.S. Department of Housing & Urban Development (PHAs)
-Federal Housing Administration
-Federal Financing Bank;
(3) Direct obligations of any of the following fe deral agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America:
-Senior debt obligations issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC)
-Obligations of the Resolution Funding Corporation (REFCORP) -Senior debt obligations of the Federal Home Loan Bank System; (4) U.S. dollar denominated deposit accounts, federal funds and bankers’ acceptances with domestic commercial banks which have a rating on their short term certificates of deposit on the date of purchase of “P -1” by Moody’s and “A -1” or “A-1+” by S&P and maturing not more than 360 calendar days after the date of purchase (ratings on holding companies are not considered as the rating of the bank);
(5) Commercial paper which is rated at the time of purchase in the single highest classification, “P -1” by Moody’s and “A -1+” by S&P and which matures not more than 270 calendar days after the date of purchase;
(6) Investments in a money market f und rated “AAAm” or “AAAm -G” or better by S&P, including a fund for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee provide investment advisory or other management services; (7) Pre-refunded Municipal Obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and
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(a) which are rated, based on an irrevocable escrow account or fund (the “escrow”), in the highest rating category of Moody’s or S&P or any successors thereto; or (b) (i) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (2) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate;
(8) Municipal obligations rated “Aaa/AAA” or general obligations of states with a rating of “A2/A” or higher by both Moody’s and S&P;
(9) Investment agreements with a domestic or foreign bank or corporation (other than a life or property casualty insurance company) the long -term debt of which, or, in the case of a guaranteed corporation the long -term debt, or, in the case of a monoline financial guaranty insurance company, claims paying ability, of the guarantor is rated at least “Aa3” by Moody’s and “AA-” by S&P; provided, that, by the terms of the investment agreement:
(a) the invested funds are available for withdrawal without penalty or premium, at any time upon not more than seven days’ prior notice; (b) the investment agreement shall state that it is the unconditional and general obligation of, and is not subordinated to any other obligation of, the provider thereof or, if the provider is a bank, the agreement or the opinion of counsel shall state that the obligation of the provider to make payments thereunder ranks pari passu with the obligations of the provider to its other depositors and its other unsecured and unsubordinated creditors; (c) the Trustee or the Com munity Facilities District receive the opinion of domestic counsel that such investment agreement is legal, valid and binding and enforceable against the provider in accordance with its terms and of foreign counsel (if applicable);
(d) the investment agre ement shall provide that if during its term (i) the provider’s rating by either Moody’s or S&P falls below “Aa3” or “AA-,” respectively, the provider shall, at its option, within 10 days of receipt of publication of such downgrade, either (A) collateralize the investment agreement by delivering or transferring in accordance with applicable state and federal laws (other than by means of entries on the provider’s books) to the Trustee or a holder of the collateral, collateral free and clear of any third-party liens or claims the market value of which collateral is maintained at levels and upon such conditions as would be acceptable to Moody’s and S&P to maintain an “A” rating in an “A” rated structured financing (with a market value approach); or (B) repay the principal of and accrued but unpaid interest, on the investment, and (ii) the provider’s 365
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rating by either Moody’s or S&P is withdrawn or suspended or falls below “A3” or “A -,” respectively, the provider must, at the direction of the Community Facilities District or the Trustee, within 10 days of receipt of such direction, repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium to the Trustee; (e) the investment agreement shall state, and an opinio n of counsel shall be rendered, in the event collateral is required to be pledged by the provider under the terms of the investment agreement, at the time such collateral is delivered, that the holder of collateral has a perfected first priority security i nterest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the holder of collateral is in possession); and
(f) the investment agreement must provide that if during its term (i) the provider shall default in its payment obligations, the provider’s obligations under the investment agreement shall, at the direction of the Community Facilities District or the Trustee, be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the Trustee, and (ii) the provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc., the provider’s obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the Trustee.
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EXHIBIT B
FORM OF SERIES 2023 BOND
No. ___ $____________
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100
(VICTORIA)
SPECIAL TAX BOND, SERIES 2023
INTEREST RATE MATURITY DATE DATED DATE CUSIP
% September 1, 20__ ________, 2023
REGISTERED OWNER:
PRINCIPAL AMOUNT:
City of Fontana Community Facilities District No. 100 (Vic toria) (the “Community Facilities District”), for value received, hereby promises to pay, solely from the sources hereinafter described, to the Registered Owner identified above or registered assigns (the “Registered Owner”), on the Maturity Date identifie d above or on any earlier redemption date, the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Interest Rate identified above in like lawful money from the date hereof payable semiannually on March 1 and September 1 in each year, commencing _________ 1, 20__ (the “Interest Payment Dates”), until payment of such Principal Amount in full.
This Bond is one of a series of a duly authorized issue of bonds approved by the qualified electors of the Community Facilities District, pursuant to the Mello -Roos Community Facilities Act of 1982, constituting Sections 53311 et seq. of the California Government Code (the “Act”), and issued for the purpose of financing certain public facilities, and is on e of the series of bonds designated “City of Fontana Community Facilities District No. 100 (Victoria) Special Tax Bonds, Series 2023” (the “ Series 2023 Bonds”) in the aggregate principal amount of $ _________. The Series 2023 Bonds are issued pursuant to the Indenture, dated as of ________ 1, 2023 (the “Indenture”), by and between the Community Facilities District and U.S. Bank Trust Company, National Association, as trustee (said entity or any successor thereto as trustee under the Indenture, the “Trustee”), and this reference incorporates the Indenture herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. Pursuant to and as more particularly provided in the Indenture, additional bonds ( “Additional Bonds”) may be issued by the Community Facilities District on a parity with the Series 2023 Bonds. The Series 2023 Bonds and any Additional Bonds are collectively referred to as the “Bonds.” The Indenture is entered into, and this Bond is issued under, the Act and the laws of the State of California. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. 367
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Interest on the Series 2023 Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (a) a Series 2023 Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event interest thereon shall be payable from such Interest Payment Date, (b) a Series 2023 Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the Closing Date, or (c) interest on any Series 2023 Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has previously been paid or duly provided for. Interest shall be paid in lawful money of the United States on each Interest Payment Date. Interest shall be paid by check of the Trus tee mailed by first-class mail, postage prepaid, on each Interest Payment Date to the Owners of the Series 2023 Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. Notwithstanding th e foregoing, interest on any Series 2023 Bond which is not punctually paid or duly provided for on any Interest Payment Date shall, if and to the extent that amounts subsequently become available therefor, be paid on a payment date established by the Trust ee to the Person in whose name the ownership of such Series 2023 Bond is registered on the Registration Books at the close of business on a special record date to be established by the Trustee for the payment of such defaulted interest, notice of which shall be given to such Owner not less than ten days prior to such special record date. The principal of the Series 2023 Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee.
The Bonds are special , limited obligations of the Community Facilities District, payable, as provided in the Indenture, solely from Net Special Tax Revenues and the other assets pledged therefor thereunder. Neither the faith and credit nor the taxing power of the Community Facilities District (except to the limited extent set forth in the Indenture), the City of Fontana or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds.
Pursuant to and as more particularly provided in the Indenture, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, in order to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of the Indenture and the Act, the Community Facilities District pledges to the Owners, and grants thereto a lien on and a security interest in, all of the Net Special Tax Revenues and any other amounts held in the Special Tax Fund, the Bond Fund and the Reserve Fund. Said pledge constitutes a first lien on and security interest in such assets, which shall immediately attach to such assets and be effective, binding and enforceable against the Community Facilities Distric t, its successors, purchasers of any of such assets, creditors and all others asserting rights therein, to the extent set forth in, and in accordance with, the Indenture, irrespective of whether those parties have notice of the pledge of, lien on and security interest in such assets and without the need for any physical delivery, recordation, filing or further act.
The Series 2023 Bonds are subject to redemption on the dates, at the Redemption Prices and pursuant to the terms set forth in the Indenture. Notice of redemption of any Series 2023 Bond or any portion thereof shall be given as provided in the Indenture.
The Series 2023 Bonds are issuable as fully -registered Bonds without coupons in Authorized Denominations ($5,000 and any integral multiple thereof). 368
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Any Series 2023 Bond may be transferred upon the Registration Books by the Person in whose name it is registered, in person or by such Person’s duly authorized attorney, upon surrender of such Series 2023 Bond to the Trustee for cancellation, accompanie d by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Series 2023 Bond or Series 2023 Bonds shall be so surrendered for transfer, the Community Facilities District shall execute and the Trustee shall authenticate and shall deliver a new Series 2023 Bond or Series 2023 Bonds of the same maturity in a like aggregate principal amount, in any Authorized Denomination. The Trustee shall require the Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. The Series 2023 Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Series 2023 Bonds of the same maturity of other Authorized Denominations. Th e Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange.
The Indenture and the rights and obligations of the Community Facilities District, the Trustee and the Owners may be modified or amended in the manner, to the extent, and upon the terms provided in the Indenture.
The Indenture contains provisions permitting the Community Facilities District to make provision for the payment of the principal of a nd the interest and premium, if any, on any of the Bonds so that such Bonds shall no longer be deemed to be Outstanding under the terms of the Indenture.
Unless this Bond is presented by an authorized representative of The Depository Trust Company to the Trustee for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.
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IN WITNESS WHEREOF, the Community Facilities District has caused this Bond to be signed in its name and on its behalf by the manual or facsimile signature of the Mayor of the City of Fontana attested by the manual or facsimile signature of the City Clerk of the City of Fontana, all as of the Dated Date identified above.
CITY OF FONTANA COMMUNITY
FACILITIES DISTRICT NO. 100
(VICTORIA)
By:
Mayor of the City of Fontana
Attest:
By:
City Clerk of the City of Fontana
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CERTIFICATE OF AUTHENTICATION
This is one of the Series 2023 Bonds described in the within -mentioned Indenture and registered on the Registration Books.
Date: _________, 2023
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, AS
TRUSTEE
By:
Authorized Officer
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ASSIGNMENT
For value received the undersigned hereby se lls, assigns and transfers unto __________________________________, whose address and social security or other tax identifying number is ____________________, the within -mentioned Bond and hereby irrevocably constitute(s) and appoint(s) ______________________________, attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Note: Signature guarantee shall be made by a guarantor
institution participating in the Securities Transfer
Agents Medallion Program or in such other guarantee
program acceptable to the Trustee.
Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever.
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CONTINUING DISCLOSURE AGREEMENT
by and among
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100
(VICTORIA)
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
AS TRUSTEE
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
AS DISSEMINATION AGENT
Dated as of ________ 1, 2023
City of Fontana
Community Facilities District No. 100
(Victoria)
Special Tax Bonds, Series 2023
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CONTINUING DISCLOSURE AGREEMENT
THIS CONTINUING DISCLOSURE AGREEMENT (this “Disclosure Agreement”), dated as of ________ 1, 2023 , is by and among CITY OF FONTANA COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA) , a community facilities district organized an d existing under the laws of the State of California (the “Community Facilities District”), U.S.
BANK TRUST COMPANY, NATIONAL ASSOCIATION , a national banking association organized and existing under the laws of the United States of America, in its capacity as Trustee (the “Trustee”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION , a national banking association organized and existing under the laws of the United States of America, in its capacity as Dissemination Agent (the “Dissemination Agent”).
W I T N E S S E T H :
WHEREAS, the Community Facilities District has issued its City of Fontana Community Facilities District No. 100 (Victoria) Special Tax Bonds, Series 2023 (the “Series 2023 Bonds”), in the aggregate principal amount of $_________, pursuant to the Indenture, dated as of ________ 1, 2023 (the “Indenture”), by and between the Community Facilities District and the Trustee; and WHEREAS, this Disclosure Agreement is being executed and delivered by the Community Facilities District , the Truste e and the Dissemination Agent for the benefit of the owners and beneficial owners of the Series 2023 Bonds and in order to assist the underwriter of the Series 2023 Bonds in complying with Securities and Exchange Commission Rule 15c2 - 12(b)(5);
NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained, the receipt whereof is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Disclosure Agreement have the meanings herein specified.
Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. “Annual Report” means any Annual Report provided by the Community Facilities District pursuant to, and as described in, Sections 2 and 3 hereof. “Annual Report Date” means the date in each year that is the first day of the month following the eighth month after the end of the Community Facilities District’s fiscal year, which date, as of the date of this Disclosure Agreement, is March 1. “Community Facilities District” means City of Fontana Community Facilities District No. 100 (Victoria), a community facilities district organized and existing under the laws of the State, and its successors.
“Disclosure Representative” means the Chief Financial Officer, Finance Department, of the City, or his or her designee, or such other person as the C ommunity Facilities District shall designate in writing to the Trustee and the Dissemination Agent from time to time. 374
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“Dissemination Agent” means U.S. Bank Trust Company, National Association , acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Community Facilities District and that has filed with the Trustee and the then existing Dissemination Agent a written acceptance of such designation. “Financial Obligation” means (a) a debt obligation of the Community Facilities District, (b) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation of the Community Facilities District, or (c) a guarantee of (i) a debt obligation of the Community Facilities District, or (ii) a derivative instrument described in clause (b), above; provided, however, that the term “Financial Obligation” shall not include “municipal securities” (as such term is defined in the Securities Exchange Act of 1934, as amended) as to which a “final official statement” (as such term is defined in the Rule) has been provided to the MSRB consistent with the Rule.
“Indenture” means the Indenture, dated as of ________ 1, 2023 , by and between the Community Facilities District and U.S. Bank Trust Company, National Association, as Trustee, as originally executed and as it may be modified or amended from time to time in accordance with its terms.
“Listed Events” means any of the e vents listed in subsection (a) or subsection (b) of Section 4 hereof.
“MSRB” means the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule.
Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.
“Participating Underwriter” means the original underwriter of the Series 2023 Bonds required to comply with the Rule in connection with the offering of the Series 2023 Bonds. “Rule” means Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “Trustee” means U.S. Bank Trust Company, National Association , as Trustee under the Indenture, or any successor thereto as Trustee thereunder substituted in its place as provided therein.
Section 2. Provision of Annual Reports. (a) The Community Facilities District shall, or shall cause the Dissemination Agent to, provide to the MSRB an Annual Report that is consistent with the requirements of Section 3 hereof, not later than the Annual R eport Date, commencing with the report for the 2022-23 Fiscal Year. The Annual Report may include by reference other information as provided in Section 3 hereof; provided, however, that the audited financial statements of the Community Facilities District, if any, may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Community Facilities District’s fiscal year changes, it shall, or it shall instruct the Dissemination Agent to, give notice of such change in a filing with the MSRB.
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(b) Not later than 15 business days prior to the date specified in subsection (a) of this Section for the providing of the Annual Repor t to the MSRB, the Community Facilities District shall provide the Annual Report to the Dissemination Agent. If by such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Community Facilities District to determine if the Community Facilities District is in compliance with the first sentence of this subsection (b).
(c) If the Dissemination Agent has not received a copy of the Annual Report from the Community Facilities District by the date specified in subsection (a) of this Section, the Dissemination Agent shall, in a timely manner, send a notice to the MSRB in substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall:
(i) provide each Annual Report received by it to the MSRB, as provided herein; and
(ii) file a report with the Community Facilities District and the Trustee certifying that such Annual Report has been provided pursuant to this Disclosure Agreement and stating the date it was provided to the MSRB.
Section 3. Content of Annual Reports . The Community Facilities District’s Annual Report shall contain or incorporate by reference the following:
(a) The Community Facilities District’s audited financial statements, if any, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Community Facilities District’s audited financial statements, if any, are not available by the time the Annual Report is required to be filed pursuant to subsection (a) of Section 2 hereof, the Annual Report shall contain unaudited financial statements, in a format similar to that used for the Community Facilities District’s audited financial statements, and the audited financial statements, if any, shall be filed in the same manner as the Annual Report when they become available.
(b) The following information:
(i) The principal amount of Series 2023 Bonds Outstanding as of the December 31 next preceding the Annual Report Date;
(ii) The principal amount of Additional Bonds, if any, Outstanding as of the December 31 next preceding the Annual Report Date;
(iii) The balance in the Reserve Fund, and a statement of the Reserve Requirement, as of the December 31 next preceding the Annual Report Date; (iv) The balance in (A) the Acquisition Account , (B) the Construction Account, and (C) the Community Benefit Facilities Account, as of the December 31 next preceding the Annual Report Date;
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(v) The total assessed value of all parcels within the Community Facilities District on which the Special Tax is levied, as shown on the assessment roll of the San Bernardino County Assessor last equalized prior to the December 31 next preceding the Annual Report Date, and a statement of assessed value -to- bonded debt ratios therefor, either by individual parcel or by ca tegories (e.g., “below 3:1,” “3:1 to 4.99:1,” etc.);
(vi) Value-to-bonded debt information, based on the assessed values in the assessment roll of the San Bernardino County Assessor last equalized prior to the December 31 next preceding the Annual Report Date, for (A) each property owner that owns four or more taxable parcels within the Community Facilities District, and (B) all other property owners, grouped together, owning taxable parcels within the Community Facilities District;
(vii) The Special Tax delinquen cy rate for all parcels within the Community Facilities District, as shown on the assessment roll of the San Bernardino County Assessor last equalized prior to the December 31 next preceding the Annual Report Date, the number of parcels within the Communit y Facilities District delinquent in payment of the Special Tax as of the December 31 next preceding the Annual Report Date, the amount of each delinquency, the length of time delinquent and the date on which foreclosure was commenced, or similar information pertaining to delinquencies deemed appropriate by the Community Facilities District; provided, however, that parcels with aggregate delinquencies of $5,000 or less (excluding penalties and interest) may be grouped together and such information may be provided by category;
(viii) The status of foreclosure proceedings and a summary of the results of any foreclosure sales as of the December 31 next preceding the Annual Report Date;
(ix) The identity of any property owner representing more than 5% of the Special Tax levy delinquent in payment of the Special Tax as of the December 31 next preceding the Annual Report Date;
(x) A land ownership summary listing property owners responsible for more than 5% of the annual Special Tax, as shown on the assessment roll of the San B ernardino County Assessor last equalized prior to the December 31 next preceding the Annual Report Date; and
(xi) A description of any changes to the Rate and Method approved by, or submitted for approval to, the qualified electors of the Community Facilities District during the period from the date of filing the prior year’s Annual Report to the date of filing such Annual Report.
Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Community Facilities Dist rict or related public entities that have been made available to the public on the MSRB’s website . The 377
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Community Facilities District shall clearly identify each such other document so included by reference.
Section 4. Reporting of Significant Events. (a) Pursuant to the provisions of this Section, the Community Facilities District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Series 2023 Bonds in a timely manner not later than ten business days after the occurrence of the event:
(i) Principal and interest payment delinquencies.
(ii) Unscheduled draws on debt service reserves reflecting financial difficulties. (iii) Unscheduled draws on credit enhancements reflecting financial difficulties. (iv) Substitution of credit or liquidity providers, or their failure to perform. (v) Adverse tax opinions or issuance b y the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB).
(vi) Tender offers.
(vii) Defeasances.
(viii) Rating changes.
(ix) Bankruptcy, insolvency, receivership or similar event of the Community Facilities District.
(x) Default, event of acceleration, termination event, modification of terms or other similar events under the terms of a Financial Obligation, any of which reflect financial difficulties.
For purposes of the event identified in paragraph (ix) of this subsection , the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Community Facilities District in a proceeding under the U.S. Bankruptcy Code or in a ny other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Community Facilities District, or if such jurisdiction has been assumed by leaving th e existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or gove rnmental authority having supervision or jurisdiction over substantially all of the assets or business of the Community Facilities District. (b) Pursuant to the provisions of this Section, the Community Facilities District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Series 2023 Bonds, if material, in a timely manner not later than ten business days after the occurrence of the event:
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(i) Unless described in paragraph (v) of subsection (a) of this Section, material notices or determinations by the Internal Revenue Service with respect to the tax status of the Series 2023 Bonds or other material events affecting the tax status of the Series 2023 Bonds.
(ii) Modifications to rights of holders of the Series 2023 Bonds. (iii) Series 2023 Bond calls.
(iv) Release, substitution, or sale of property securing repayment of the Series 2023 Bonds.
(v) Non-payment related defaults.
(vi) The consummation of a merger, consolidation, or acquisition involving the Community Facilities District or the sale of all or substantially all of the assets of the Community Facilities District other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a defin itive agreement relating to any such actions, other than pursuant to its terms.
(vii) Appointment of a successor or additional Trustee or the change of name of a Trustee.
(viii) Incurrence of a Financial Obligation, or agreement to covenants, events of default, remed ies, priority rights or other similar terms of a Financial Obligation, any of which affect holders of the Series 2023 Bonds. (c) The Trustee shall, within one business day of obtaining actual knowledge of the occurrence of any of the Listed Ev ents, contact the Disclosure Representative and inform such person of the event.
(d) Whenever the Community Facilities District obtains knowledge of the occurrence of a Listed Event described in subsection (b) of this Section, the Community F acilities District shall determine if such event would be material under applicable Federal securities law. (e) Whenever the Community Facilities District obtains knowledge of the occurrence of a Listed Event described in subsection (a) of th is Section, or determines that knowledge of a Listed Event described in subsection (b) of this Section would be material under applicable Federal securities law, the Community Facilities District shall, or shall cause the Dissemination Agent to, file a notice of the occurrence of such Listed Event with the MSRB, within ten business days of such occurrence.
(f) Notwithstanding the foregoing, notice of Listed Events described in paragraph (iii) of subsection ( b) of this Section need not be given any earlier than the notice (if any) of the underlying event is given to holders of affected Series 2023 Bonds pursuant to the Indenture. 379
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Section 5. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Agreement must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB.
Section 6. Termination of Reporting Obligation . The Community Facilities District’s obligations under this Disclosure Agreement shal l terminate upon the legal defeasance, prior redemption or payment in full of all of the Series 2023 Bonds. If such termination occurs prior to the final maturity of the Series 2023 Bonds, the Community Facilities District shall give, or cause to be given, notice of such termination in a filing with the MSRB.
Section 7. Dissemination Agent. The Community Facilities District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing 30 days’ written notice to the Community Facilities District and the Trustee.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, th e Community Facilities District, the Trustee and the Dissemination Agent may amend this Disclosure Agreement (and the Trustee and the Dissemination Agent shall agree to any amendment so requested by the Community Facilities District, so long as such amendment does not adversely affect the rights or materially increase the obligations of the Trustee or the Dissemination Agent), and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of subsection (a) of Section 2 hereof, Section 3 hereof or subsection (a) or (b) of Section 4 hereof, it may only be made in connection with a change in circ umstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Series 2023 Bonds, or the type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Series 2023 Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver (i) is approved by Owners of the Series 2023 Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of Owners or Beneficial Owners of the Series 2023 Bonds.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Community Facilities District shall describe such amendment or waiver in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Community Facilities District. In 380
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addition, if the amendment relates to the accounting principles to be followed in preparing financial statements (i) notice of such change shall be given in a filing with the MSRB, and (ii) the Annual Report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.
Section 9. Additional Information . Nothing in t his Disclosure Agreement shall be deemed to prevent the Community Facilities District from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice required to be filed pursuant to this Disclosure Agreement, in addition to that which is required by this Disclosure Agreement. If the Community Facilities District chooses to include any information in any Annual Report or notice in addition to that which is specifically required by this Disclosure Agreement, the Community Facilities District shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event or any other event required to be reported.
Section 10. Default. In the event of a failure of the Community Facilities District, the Trustee or the Dissemination Agent to comply with any provision of this Disclosure Agr eement, the Trustee may (and, at the written direction of any Participating Underwriter or the Owners of at least 25% of the aggregate principal amount of Outstanding Series 2023 Bonds, shall, upon receipt of indemnification reasonably satisfactory to the Trustee), or any Owner or Beneficial Owner of the Series 2023 Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Community Facilities District, the Trustee or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Community Facilities District, the Trustee or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance.
Section 11. Duties, Immunities and Liabilities of Trustee and Dissemination Agent.
Article VIII of the Indenture is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indenture. The Dissemination Agent shall be entitled to the protections and limitat ions from liability afforded to the Trustee thereunder. Neither the Trustee nor the Dissemination Agent shall be responsible for the form or content of any Annual Report or notice of Listed Event. The Dissemination Agent shall receive reasonable compensation for its services provided under this Disclosure Agreement. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement. To the extent permitted by law, the Community Facilities District agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities that any such Person may incur in the exercise or performance of the Dissemination Agent’s powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, and that are not due to such Person’s negligence or its willful misconduct. The obligations of the Community Facilities District under this Section sh all survive resignation or removal of the Dissemination Agent and the termination of this Disclosure Agreement.
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The Dissemination Agent has no power to enforce performance on the part of the Community Facilities District. The Dissemination Agent shall not be responsible for the content of any notice or report prepared by the Community Facilities District pursuant to this Disclosure Agreement.
Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Community Facilities District, the Trustee, the Dissemination Agent, the Participating Underwriter and the Owners and Beneficial Owners from time to time of the Series 2023 Bonds, and shall create no rights in any other person or entity.
Section 13. Governing Laws . This Disclosure Agreement shall be governed by and construed in accordance with the laws of the State of California.
Section 14. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Disclosure Agreement may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs this Disclosure Agreement using an electronic signature, it is signing, adopting and accepting this Disclosure Agreement and that signing this Disclosure Agreement using an electronic signature is the legal equivalent of having placed its handwritten signature on this Disclosure Agreement on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Disclosure Agreement in a usable format.
Section 15. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date first above written.
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT
NO. 100 (VICTORIA)
By:
_____________, ____________
of the City of Fontana
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, AS
TRUSTEE
By:
Authorized Signatory
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, AS
DISSEMINATION AGENT
By:
Authorized Signatory
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EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Fontana Community Facilities District No. 100 (Victoria) Name of Issue: City of Fontana Community Facilities District No. 100 (Victoria) Special Tax Bonds, Series 2023
Date of Issuance: _________, 2023
NOTICE IS HEREBY GIVEN that City of Fontana Community Facilities District No. 100 (Victoria) (the “Community Facilities District”) has not provided an Annual Report with respect to the above -named Bonds as required by the Conti nuing Disclosure Agreement, dated as of ________ 1, 2023, by and among the Community Facilities District, U.S. Bank Trust Company, National Association , in its capacity as Trustee , and U.S. Bank Trust Company, National Association, in its capacity as Disse mination Agent. [The Community Facilities District anticipates that such Annual Report will be filed by ____________.]
Dated: ____________
U.S. Bank Trust Company, National
Association, as Dissemination
Agent, on behalf of City of Fontana
Community Facilities District
No. 100 (Victoria)
cc: City of Fontana
Community Facilities District
No. 100 (Victoria)
384
Jones Hall Draft 9-5-2023
BOND PURCHASE AGREEMENT
$[PAR]
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)
SPECIAL TAX BONDS, SERIES 2023
[Pricing Date]
City of Fontana Community Facilities
District No. 100 (Victoria)
c/o City of Fontana
8353 Sierra Avenue
Fontana, California 92335
Attention: Chief Financial Officer, Finance Department
Ladies and Gentlemen:
Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”) offers to enter into this Bond Purchase Agreement (this “Agreement”) with City of Fontana Community Facilities District No. 100 (Victoria) (the “Issuer” or the “District”), which, upon your acceptance of this offer, will be binding upon the Issuer and the Underwriter. This offer is made subject to the acceptance by the Issuer of this Agreement on or before 11:59 p.m. on the date set forth above.
Terms not otherwise defined herein have the meanings given them in the Indenture described below.
1. Upon the terms and conditions and in reliance upon the respective representations, warranties and covenants herein, the Underwriter hereby agrees to purchase from the Issuer, and t he Issuer hereby agrees to sell to the Underwriter, all (but not less than all) of the above -captioned bonds (the “Bonds”) at a purchase price (the “Purchase Price ”) of $_______ (equal to the par amount of the Bonds ($[PAR].00), plus original issue premium of $_______, less an Underwriter’s discount of $_______).
The Bonds will be issued by the Issuer under the Mello -Roos Community Facilities Act of 1982 (constituting Section 53311 et seq. of the California Government Code) (the “Act”) and a resolution adopted on _______, 2023 (the “Bond Resolution ”) by the City Council (the “City Council”) of the City of Fontana (the “City”) acting as the legislative body of the Issuer.
The special tax that provides a source of payment for the Bonds (the “Special Tax”) will be levied under Ordinance No. 1859 adopted by the City Council on January 12, 2021 (the “Ordinance”). In addition to the Ordinance, the City Council adopted the following in connection with initial formation of the District and the levy of the Special Tax: (i) Resolution No. 2020-129 (the “Resolution of Intention to Form the District ”), (ii) Resolution No. 2020-130 (the “Resolution of Intention to Inc ur Bonded Indebtedness ”), ( iii) Resolution No. 2020-158 (“Resolution Declaring Necessity to Incur Bonded Indebtedness ”), (iv) Resolution No. 2020-157 (the “Resolution of Formation ”), (v) Resolution No. 2020-159 (the “Resolution Calling 385
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Election”), and (v i) Resolution No. 2020-160 (the “Resolution Declaring Election Results ”; together, the “Formation Resolutions and Ordinance ”). Together, the Bond Resolution and the Formation Resolutions and Ordinance are referred to as the “Resolutions and Ordinance.”
The Bonds will be issued under the terms of an Indenture (the “Indenture”), dated as of October 1, 2023, by and between the Issuer and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The proceeds of the sale of the Bonds will be used by the Issuer to (i) provide financing for certain public facilities and costs related to development within the District, (ii) fund a reserve fund with respect to the Bonds, and (iii) pay the costs of issuing the Bonds. Proceeds of the Bonds will be applied in accordance with the Indenture.
The Issuer acknowledges and agrees that: (i ) the primary role of the Underwriter is to purchase securities for resale to investors in an arms -length commercial transaction between the Issuer and the Underwriter and that the Underwriter has financial and other interests that differ from those of the Issuer, and in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as a principal and is not acting as the agent or fiduciary of the D istrict, (ii) the Underwriter is not acting as a municipal advisor (within the meaning of Section 15B of the Securities Exchange Act of 1934, as amended), financial advisor or fiduciary to the Issuer or any other person or entity and has not assumed any advisory or fiduciary responsibility to the Issuer with respect to the transaction contemplated hereby and the discussions, undertakings and proceedings leading thereto (irrespective of whether the Underwriter has provided other services or is currently prov iding other services to the Issuer on other matters), (iii) the only obligations the Underwriter has to the Issuer with respect to the transaction contemplated hereby expressly are set forth in this Agreement, except as otherwise provided by applicable rul es and regulations of the Securities and Exchange Commission or the rules of the MSRB or other law, and (iv) the Issuer has consulted its own legal, accounting, tax, municipal, financial and other advisors, as applicable, to the extent it has deemed appropriate in connection with the transaction contemplated herein. The Issuer acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the MSRB.
2. The Bonds will mature on the dat es and in the principal amounts and will bear interest at the rates (and have the redemption terms) as set forth in Exhibit A hereto. The Underwriter agrees to make a bona fide public offering of all of the Bonds at the offering prices se t forth on the cover of the Final Official Statement described below. Additional details related to the establishment of the issue price of the Bonds is set forth in Section 14.
3. The Issuer agrees to deliver to the Underwriter as many copies of the Final Official Statement dated the date hereof, relating to the Bonds to each of its customers purchasing Bonds no later than the settlement date of the transaction.
In addition, the Issuer has authorized and approved the Preliminary Official Statement dated [POS Date] (the “Preliminary Official Statement ”) and the final Official Statement dated the date hereof (the “Final Official Statement”) and consents to their distribution and use by the Underwriter and the execution and approval of the Final Official Statement by a duly authorized officer of the Issuer. The Issuer deems such Preliminary Official Statement final as of its date for purposes of Rule 15c2-12 of the Securities and Ex change Commission ( “Rule 15c2 -12”), except for information allowed by Rule 15c2-12 to be omitted, and has executed a certificate to that effect in the form of Exhibit D.
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In connection with issuance of the Bonds, and in order to assist the Underwriter in complying with Rule 15c2-12, the Issuer will execute a Continuing Disclosure Agreement, dated as of October 1, 2023 (the “District Continuing Disclosure Agreement ”), substantially in t he form of the Appendix G to the Preliminary Official Statement.
4. The Issuer represents and warrants to the Underwriter that:
(a) The Issuer is duly organized and validly existing as a community facilities district under the laws of the State of California (the “State”), and has the full legal right, power and authority, among other things, (i) upon satisfaction of the conditions in this Agreement and the Indenture, to issue the Bonds as provided herein, and (ii) to secure the Bonds in the manner set forth in the Indenture.
(b) The City Council has the full legal right, power and authority to adopt the Resolutions and Ordinance, and the Issuer has the full legal right, power and authority (i) to enter into this Agreement, the Indenture , and the District Continuing Disclosure Agreement (collectively, the “Issuer Documents”), (ii) to issue, sell and deliver the Bonds to the Underwriter as provided herein, and (iii) to carry out and consummate all other transactions on its part contemplated by the Final Off icial Statement and each of the Issuer Documents , and the Issuer and the City Council have complied with all provisions of applicable law, including the Act, in all matters relating to such transactions.
(c) The Issuer has duly authorized (i) the execution and delivery by the Issuer of the Bonds and the execution, delivery and due performance by the Issuer of its obligations under the Issuer Documents, (ii) the distribution and use of the Preliminary Official Statement and execution, delivery and distribution of the Final Official Statement, and (iii) the taking of any and all such action as may be required on the part of the Issuer to carry out, give effect to and consummate the transactions on its part contemplated by such instruments. All consents or approvals necessary to be obtained by the Issuer in connection with the foregoing have been received, and the consents or approvals so received are still in full force and effect.
(d) The Resolutions and Ordinance have been duly adopted by the City Council and are in full force and effect; and the Issuer Documents, when executed and delivered by the Issuer and the other party thereto, will constitute a legal, valid and binding obligation of the Issuer enf orceable against the Issuer in accordance with their terms, except as enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally.
(e) When delivered to the Underwriter, the Bonds will have been duly authorized by the City Council and duly executed, issued and delivered by the Issuer and will constitute legal, valid and binding special obligations of the Issuer enforceable against the Issuer in accordance with their respective terms, except as enforce ability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally, and will be entitled to the benefit and security of the Indenture.
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(f) The information (excluding information under first three paragraphs of the caption “INTRODUCTION – The District ”, information under the caption “PROPERTY OWNERSHIP AND THE DEVELOPMENT ,” and information relating to The Depository Trust Company (“DTC”) and its book-entry system) contained in the Preliminary Official Statement is, and as of the Closing Date such information in the Final Official Statement will be true and correct in all material respects, and the Preliminary Official Statement does not as of its date and the Final Official Statement will not as of the Closing Date contain any untrue or misleading statement of a material fact (excluding information under the first three paragraphs of the caption “INTRODUCTION – The District ”, information under the caption “PROPERTY OWNERSHIP AND THE DEVELOPMENT,” and information relating to DTC and its book -entry system) or omit to state any material fact (excluding information under the first three paragraphs of the caption “INTRODUCTION – The District, ” information under the caption “PROPERTY OWNERSHIP AND THE DEVELOPMENT,” and information relating to DTC and its book -entry system) necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(g) If, at any time up to and including 25 days after the End of the Underwriting Period (as defined below) , any event known to the officers of the Issuer participating in the issuance of the Bonds occurs with respect to the Issuer or the City as a result of which the Final Official Statement as then amended or supplemented might include an untrue 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, the Issuer shall promptly notify the Underwriter in writing of such event. Any informati on supplied by the Issuer for inclusion in any amendments or supplements to the Final Official Statement will not contain any untrue or misleading statement of a material fact relating to the Issuer or the City or omit to state any material fact relating to the Issuer or the City necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. As used herein, the term “End of the Underwriting Period” means the later of such time as: (i) the Bonds are de livered to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the End of the Underwriti ng Period shall be deemed to be the Closing Date (as described in Section 6 below). Any notice delivered pursuant to this provision shall be written notice delivered to the 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.”
(h) Neither the adoption of the Resolutions and Ordinance, the execution and delivery of the Issuer Documents, nor the consummation of the transactions on the part of the Issuer contemplated herein or therein or the compliance by the Issuer with the provisions hereof or thereof will conflict with, or constitute on the part of the Issuer, a violation of, or a breach of or default under, (i) any material indenture, mortgage, commitment, note or other agreement or instrument to which the Issuer is a party or by which it is bound, (ii) any 388
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provision of the State Constitution or (iii) any existing law, rule, regulation, ordinance, judgment, order or decree to which the Issuer or the City (or the members of the City Council or any of its officers in their respective capacities as such) is subject, that would have a material adverse effect on the ability of the Issuer to perform its obligations under the Issuer Documents.
(i) The Issuer has never been in default at any time, as to principal of or interest on any obligation which it has issued, including those which it has issued as a conduit for another entity, which default may have an adverse effect on the ability of the Issuer to consummate the tra nsactions on its part under the Issuer Documents, except as specifically disclosed in the Final Official Statement; and the Issuer has not entered into any contract or arrangement of any kind which might give rise to any lien or encumbrance on the Special Tax.
(j) Except as is specifically disclosed in the Final Official Statement, to the best knowledge of the Issuer, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending w ith respect to which the Issuer has been served with process or threatened, which in any way questions the powers of the City Council, the City or the Issuer referred to in paragraph (b) above, or the validity of any proceeding taken by the City Council in connection with the issuance of the Bonds, or wherein an unfavorable decision, ruling or finding could materially adversely affect the transactions contemplated by the Issuer Documents, or which, in any way, could adversely affect the validity or enforcea bility of the Resolutions and Ordinance, the Bonds or the Issuer Documents or, to the knowledge of the Issuer, which in any way questions the exclusion from gross income of the recipients thereof of the interest on the Bonds for federal income tax purposes or in any other way questions the status of the Bonds under State tax laws or regulations.
(k) Any certificate signed by an official of the Issuer authorized to execute such certificate and delivered to the Underwriter in connection with the transactions contemplated by the Issuer Documents shall be deemed a representation and warranty by the Issuer to the Underwriter as to the truth of the statements therein contained.
(l) The Issuer has not been notified of any listing or proposed listing b y the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon.
(m) The Bonds will be paid from Net Special Tax Revenues (as defined in the Indenture) received by the Issuer and amounts held in certain funds and accounts established and pledged under the Indenture.
(n) The Special Tax may lawfully be levied in accordance with the rate and method of apportionment of the Special Tax relating to the District (the “Rate and Method”), the Resolution s and Ordinance as described in the Preliminary Official Statement and the Final Official Statement , and, when levied, will be secured by a lien on the property on which they are levied. 389
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(o) The Indenture creates a valid pledge of, and first lien upon the Net Special Tax Revenues deposited thereunder, and the amounts held in certain funds and accounts established and pledged under the Indenture, subject in all cases to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein.
(p) Except as disclosed in the Final Official Statement, in the last five years, neither the City, nor the District, nor any other entity for which the City Council is the legislative body, has failed to comply with any undertaking under Rule 15c2-12 in any material respect.
5. The Issuer covenants with t he Underwriter that the Issuer will cooperate with the Underwriter (at the cost of the Underwriter), in qualifying the Bonds for offer and sale under the securities or Blue Sky laws of such jurisdictions of the United States as the Underwriter may reasonably request; provided, however, that the Issuer shall not be required to consent to suit or to service of process, or to qualify to do business, in any jurisdiction. The Issuer consents to the use by the Underwriter of the Issuer Documents in the course of its compliance with the securities or Blue Sky laws of the various jurisdictions.
6. At 9:00 a.m. on [Closing Date] (the “Closing Date”) or at such other time and/or date as shall have been mutually agreed upon by the Issuer and the Underwriter, the Issu er will deliver or cause to be delivered to the Underwriter the Bonds in definitive form duly executed and authenticated by the Trustee together with the other documents mentioned in Section 8 hereof; and the Underwriter will accept such delivery and pay t he Purchase Price of the Bonds by delivering to the Trustee for the account of the Issuer a check payable in federal funds or making a wire transfer in federal funds payable to the order of the Trustee.
The activities relating to the final execution and d elivery of the Bonds and the Indenture and the payment therefor and the delivery of the certificates, opinions and other instruments as described in Section 8 of this Agreement shall occur at the offices of Orrick, Herrington & Sutcliffe, Los Angeles, California, as bond counsel to the Issuer (“Bond Counsel”). The payment for the Bonds and simultaneous delivery of the Bonds to the Underwriter is herein referred to as the “Closing.” The Bonds will be delivered as fully registered Bonds initially in denominations of $5,000 each and any integral multiple thereof. The Bonds will be registered in the name of Cede & Co., as nominee of DTC, and will be made available for checking by the Underwriter at such place as the Underwriter and the Trustee shall agree not less than 24 hours prior to the Closing.
7. The Underwriter has the right to cancel its obligations to purchase the Bonds if between the date hereof and the Closing Date:
(a) the House of Representatives or the Senate of the Congress of the United States, or a committee of either, shall have pending before it, or shall have passed or recommended favorably, legislation introduced previous to the date hereof, which legislation, if enacted in its form as introduced or as amended, would have the purpose or effect of imposing federal income taxation upon revenues or other income of the general character to be derived by the Issuer or by any similar body under the Indenture or upon interest received on obligations of the general character of the Bonds, or of causing interest on obligations of the general character of the Bonds, to be includable in gross 390
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income for purposes of federal income taxation, and such legislation, in the Underwriter’s reasonable opinion, materially adversely affects the market price of the Bonds; or
(b) a tentative decision with respect to legislation shall be reached by a committee of the House of Representatives or the Senate of the Congress of the United States, or legislation shall be favorably reported or re -reported by such a committee or be introduced, by amendment or otherwise, in or be passed by the House of Representatives or the Senate, or recommended to the Congress of the United States for passage by the President of the United States, or be enacted or a decision by a federal court of the United States or the United States Tax Court shall have been rendered, or a ruling, release, order, circular, regulation or official statement by or on behalf of the United States Treasury Department, the Internal Revenue Service or other governmental agency shall have been made or proposed to be made having the purpose or effect, or any other action or event shall have occurred which has the purpose or effect, directly or indirectly, of adversely affecting the federal income tax consequences of owning the Bonds, including causing interest on the Bonds to be included in gross income for purposes of federal income taxation, or imposing federal income taxation upon re venues or other income of the general character to be derived by the Issuer under the Indenture or upon interest received on obligations of the general character of the Bonds, or the Bonds and also including adversely affecting the tax -exempt status of the Issuer under the Code, which, in the reasonable opinion of the Underwriter, materially adversely affects the market price of or market for the Bonds; or
(c) legislation shall have been enacted, or actively considered for enactment with an effective date prior to the Closing, or a decision by a court of the United States shall have been rendered, the effect of which is that the Bonds, including any underlying obligations, or the Indenture, as the case may be, is not exempt from the registration, qualifica tion or other requirements of the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or
(d) a stop order, ruling, regulation or official statement by the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall have been issued or made or any other event occurs, the effect of which is that the i ssuance, offering or sale of the Bonds, including any underlying obligations, or the execution and delivery of the Indenture as contemplated hereby or by the Final Official Statement, is or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or
(e) any event shall have occurred or any information shall have become known to the Underwriter which causes the Underwriter to reasonably believe that the Final Official Statement as then amended or supplemented includes an untrue 391
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statement of a material fact, or omits to state any materi al fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Issuer fails to amend or supplement such Final Official Statement to cure such omission or misstatement under Section 4(g);or
(f) there shall have occurred any outbreak of hostilities or any national or international calamity or crisis, including a financial crisis, or 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, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriter, would materially adversely affect the market for or market price of the Bonds; or
(g) there shall be in force 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 sec urities 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 , the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriter, would materially adversely affect the market for or market price of the Bonds; or
(h) a general banking moratorium shall have been declared by federal, New York or State authorities; or
(i) any proceeding shall be pending or threatened by the Securities and Exchange Commission against the Issuer; or
(j) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange which adversely affects the Underwriter ’s ability to sell the Bonds; or
(k) the New York Stock Exchange or other national securities exchange, or any governmental authority, shall impose, a s to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; or
(l) an amendment to the federal or State constitution shall be enacted or action taken by any federal or State court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the Issuer, its prope rty, income or securities (or interest thereon), the validity or enforceability of the Special Tax or the ability of the Issuer to issue the Bonds and levy the Special Tax as contemplated by the Indenture, the Rate and Method, the Resolution of Formation, the Ordinance and the Final Official Statement; or 392
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(m) the entry of any order by a court of competent jurisdiction which enjoins or restrains the Issuer from issuing permits, licenses or entitlements within the District or which order, in the reasonable op inion of the Underwriter, otherwise materially and adversely affects development of the real property located in the District.
8. The obligation of the Underwriter to purchase the Bonds is subject (a) to the performance by the Issuer of its obligations to be performed by it hereunder at and prior to the Closing, (b) to the accuracy as of the date hereof and as of the time of the Closing of the representations and warranties of the Issuer herein, and (c) to the following conditions, including the delivery by the Issuer of such documents as are enumerated herein in form and substance satisfactory to the Underwriter:
(a) At the time of Closing, (i) the Final Official Statement and the Issuer Documents shall be in full force and effect and shall not have been ame nded, modified or supplemented except as may have been agreed to by the Underwriter, and (ii) the Issuer shall have duly adopted and there shall be in full force and effect such resolutions and ordinances (including, but not limited to, the Resolutions and Ordinance) as, in the opinion of Bond Counsel, shall be necessary in connection with the transactions contemplated hereby.
(b) Receipt of the Bonds, executed by the Issuer and authenticated by the Trustee, at or prior to the Closing. The terms of the Bonds, when delivered, shall in all instances be as described in Final Official Statement.
(c) At or prior to the Closing, the Underwriter shall receive the following documents in such number of counterparts as shall be mutually agreeable to the Underwriter and the Issuer:
(i) A final approving opinion of Bond Counsel dated the Closing Date in the form attached to the Final Official Statement.
(ii) A letter or letters of Bond Counsel addressed to the Underwriter, which includes a statement to the effect that Bond Counsel ’s final approving opinion may be relied upon by the Underwriter to the same extent as if such opinion were addressed to the Underwriter, and further provides:
(A) the statements contained in the Final Official Statement under the captions “INTRODUCTION – Security and Sources of Payment for the Bonds,” “INTRODUCTION – Description of the Bonds,” “THE BONDS” (other than information relating to DTC and its book - entry only system and information in the section entitled “Debt Service Schedule”, as to which no opinion is expressed), “SECURITY AND SOURCES OF PAYMENT FOR THE
BONDS” (except information in the section s entitled “Special Tax” and “Rate and Method of Apportionment ” as to which no opinion need be expressed), ” “TAX MATTERS ,” and in Appendix F thereto, excluding any material that may be treated as included under such capti ons by reference to other documents, insofar as 393
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such statements expressly summarize certain provisions of the Indenture and Bond Counsel ’s final opinion are accurate in all material respects;
(B) this Agreement and the District Continuing Disclosure Agreement have been duly executed and delivered by, and constitute valid and binding obligations of, the Issuer, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting enforcement of creditors’ rights in general a nd to the application of equitable principles if equitable remedies are sought; and
(C) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust In denture Act of 1939, as amended.
(iii) An opinion of Stradling Yocca Carlson & Rauth , a Professional Corporation, addressed to the Issuer and the Underwriter ( “Disclosure Counsel”), to the effect that during the course of serving as Disclosure Counsel in connection with the issuance of the Bonds and without having undertaken to determine independently or assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Preliminary Official Statement and th e Final Official Statement, no information came to the attention of the attorneys in such firm rendering legal services in connection with the issuance of the Bonds that would lead them to believe that the Preliminary Official Statement as of its date and the date hereof and the Final Official Statement as of its date and the Closing Date, (excluding therefrom the financial statements, any financial or statistical data, or forecasts, charts, numbers, estimates, projections, assumptions or expressions of opi nion included in the Preliminary Official Statement and the Final Official Statement, information regarding DTC, and the appendices to the Preliminary Official Statement and the Final Official Statement, as to which no opinion need be expressed), contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(iv) A letter of Jones Hall, A Professional Law Corporation ( “Underwriter’s Counsel”), dated the Closing Date, addressed to the Underwriter and in form and substance acceptable to the Underwriter.
(v) The Final Official Statement executed on behalf of the Issuer by a duly authorized officer.
(vi) Certified copies of the Resolutions and Ordinance.
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(vii) Evidence of recordation in the real property records of the County of San Bernardino of the Notice of Special Tax Lien, in the form required by the Act.
(viii) A cert ificate of DTA, Inc., Newport Beach, California ( “Special Tax Consultant”), in form and substance as set forth in Exhibit B hereto, dated as of the Closing Date.
(ix) A certificate of the Issuer, in form and substance as set forth in Exhibit C hereto, dated as of the Closing Date.
(x) Evidence that Federal Form 8038 has been executed by the Issuer and will be filed with the Internal Revenue Service.
(xi) Executed copies of the Issuer Documents.
(xii) A non-arbitrage certificate executed by the Issuer in form and substance satisfactory to Bond Counsel.
(xiii) An opinion, dated the Closing Date and addressed to the Underwriter, of the City Attorney, as counsel to the Issuer, to the effect that:
(A) the Issuer is duly organized and validly existing as a community facilities district under and by virtue of the Constitution and laws of the State (including the Act);
(B) the City Council of the City, acting as legislative body of the Issuer, has the full legal right, power and authority to adopt the Resolutions and Ordinance;
(C) the Resolutions and Ordinance were duly adopted at meetings of the City Council , acting as legislative body of the Issuer which wer e called and held under law and with all public notice required by law and at which a quorum was present and acting throughout, and the Resolutions and Ordinance are in full force and effect and have not been amended or repealed;
(D) to their best knowled ge, based on reasonable due diligence, 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 with respect to which the Issuer has been served with process or threatened, in any way affecting the ex istence of the City, the Issuer or the titles of the Issuer ’s officials to their respective offices, or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds or the application of the proceeds thereof in accordance with the Indenture , or the collection or application of the Special Tax to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Issuer Documents or any action of 395
-12-
the Issuer contemplated by any of said documents, or in any way contesting the completeness or accuracy of the Preliminary Official Statement or of the Final Official Statement or the powers of the Issuer or its authority with respect to the Bonds, the Issuer Documents or any action on the part of the Issuer contemplated by any of said documents, wherein an unfavorable decision, ruling, or finding could materially adversely affect the validity or enforceability of the Bonds or the Issuer Documents;
(E) the execution and delivery of the Bonds and the Issuer 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 Issuer is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the ability of the Issuer to perform its obligations under the Bonds or the Issuer Documents; and
(F) all approvals, consents, authoriza tion, 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 materially adversely affect, the abili ty of the Issuer, to perform its obligations under the Bonds or the Issuer Documents, have been obtained or made, as the case may be, and are in full force and effect.
(xiv) In connection with printing and distribution of the Preliminary Official Statement, an executed certificate of the Issuer in the form attached hereto as Exhibit D.
(xv) A certificate of the Trustee in the form and substance attached hereto as Exhibit E, together with certifications as to other matters that Bond Counsel may reasonably require, and an opinion of its counsel in form and substance satisfactory to the Underwriter and Bond Counsel.
(xvi) A certificate of CSG Advisors, Inc., the City’s municipal advisor (the “Municipal Advisor ”), in the form and substance attached hereto as Exhibit F.
(xvii) A Letter of Representations from each of Tri Pointe Homes Holdings, Inc., a Delaware corporation (the “Developer”) and Rescal Victoria 193, LLC, a Delaware limited liability company (the “Land Bank”) addressed to the District and the Underwriter in connection with the printing of the Preliminary Official Statement dated the date of the Preliminary Official Statement, in the form attached hereto as Exhibit G-1 and G -2, respectively.
396
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(xviii) A Closing Certificate from each of the Developer and the Land Bank, dated the Closing Date, in the form attached hereto as Exhibit H-1 and H- 2, respectively.
(xix) (i) A negative assurance letter of counsel to the Developer addressed to the Underwriter and the District , dated the date of the Closing, in form and substance acceptable to the Underwriter and Bond Counsel; and (ii) an opinion of counsel to the Developer addressed to the Underwriter and the District, in form and substance acceptable to the Underwriter and Bond Counsel, to the effect that the Developer Continuing Disclosure Certificate in the form attached as an appendix to the Official Statement (the “ Developer Continuing Disclosure Certificate ”), has been duly authorized, executed and delivered by the Developer;
(xx) A certificate dated the Closing Date from Kitty Siino & Associates, Inc. (the “ Appraiser”) addressed to the District and the Underwriter substantially to the effect that (i) the assumptions made in the appraisal of the taxable properties within the District, dated [August 22 ], 2023 prepared by the Appraiser (the “Appraisal Report”) are reasonable , (ii) the Appraisal Report fairly and accurately described, as of the stated da te of value (the “Date of Value”), the market values of the properties in the District that are subject to the Special Tax, (iii) the Appraiser is not aware of any event or act which occurred since the Date of Value 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, (iv) 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 Appraisal Report made in the Preliminary Official Statement and the Official Statement, (v) the Appraisal Report complies with the Appraisal Standards for Land -Secured Financings issued by the California Debt and Investment Advisory Commission dated July, 2004, (vi) a true and correct copy of the Appraisal Report is attached as an appendix to the Preliminary Official Statement and the Official Statement ; and (vii) 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 s tatements therein, in light of the circumstances under which they were made, not misleading;
(xxi) A certificate dated the Closing Date from Empire Economics, Inc. addressed to the District and the Underwriter to the effect that the statements in the Preliminary Official Statement and the Official Statement provided by Empire Economics, Inc. and all information supplied by it for use in the Preliminary Official Statement and the Official Statement were as of the ir respective dates 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 397
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the statements therein, in light of the circumstances under which they were made, not misleading;
(xxii) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter, Disclosure Counsel or Bond Counsel may reasonably request to evidence compliance by the Issuer with legal requirements, the tru th and accuracy, as of the time of Closing, of the respective representations of the Issuer herein contained and the due performance or satisfaction by the Issuer at or prior to such time of all agreements then to be performed and all conditions then to be satisfied.
If the Issuer is unable to satisfy the conditions to the obligations of the Underwriter contained in this Agreement, or if the obligations of the Underwriter to purchase and accept delivery of the Bonds shall be terminated for any reason permi tted by this Agreement, this Agreement shall terminate and neither the Underwriter nor the Issuer shall be under further obligation hereunder; except that the respective obligations to pay expenses, as provided in Section 11 shall continue in full force and effect.
9. The obligations of the Issuer to issue and deliver the Bonds on the Closing Date is subject, at the option of the Issuer, to the performance by the Underwriter of its obligations to be performed hereunder at or prior to the Closing Date.
10. All representations, warranties and agreements of the Issuer hereunder shall remain operative and in full force and effect, regardless of any investigations made by or on behalf of the Underwriter or the Issuer and shall survive the Closing.
11. The Iss uer shall pay or cause to be paid all reasonable expenses incident to the performance of its obligations under this Agreement, including, but not limited to, delivery of the Bonds, costs of printing the Bonds, the Preliminary Official Statement and the Fin al Official Statement, any amendment or supplement to the Preliminary Official Statement or Final Official Statement and this Agreement, fees and disbursements of Bond Counsel and Disclosure Counsel, any financial advisor and other consultants engaged by t he Issuer, including the fees and expenses of the special tax consultant and fees of the Trustee.
The Underwriter shall pay the California Debt Investment and Advisory Commission fee, all advertising expenses in connection with the public offering of the Bonds, and all other expenses incurred by it in connection with its public offering and distribution of the Bonds, including fees and expenses of its counsel, meals, transportation, and lodging (but not entertainment expenses), and fees and disbursements in connection with the qualification of the Bonds for sale under the securities or “Blue Sky” laws of the various jurisdictions and the preparation of “Blue Sky” memoranda.
12. Any notice or other communication to be given to the Issuer under this Agreement may be given by delivering the same in writing at its address set forth above, and any notice or other communication to be given to the Underwriter under this Agreement may be given by delivering the same in writing to the following: Stifel, Nicolaus & Company, Incorporated, One Montgomery Street, 35th Floor, San Francisco, California 94104, Attention: Sara Oberlies Brown.
13. This Agreement is made solely for the benefit of the Issuer and the Underwriter (including the successors or assigns of the Underwriter) and no other person, including any purchaser 398
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of the Bonds, shall acquire or have any right hereunder or by virtue hereof. This Agreement supersedes and replaces all prior negotiations, agreements and understanding among the parties hereto in relation to the sale of the Bonds by the Issuer.
14. Establishment of Issue Price.
(a) The Underwriter agrees to assist the Issuer in establishing the issue price of the Bonds and shall execute and deliver to the Issuer 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 I, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Issuer and Bond Counsel, to accurately reflect, as applicable, the sales price or price s or the initial offering price or prices to the public of the Bonds.
All actions to be taken by Issuer under this section to establish the issue price of the Bonds may be taken on behalf of the District by the Municipal Advisor and any notice or report to be provided to the District may be provided to the District’s Municipal Advisor. (b) Except as otherwise set forth in Exhibit A attached hereto, the Issuer will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the p ublic as the issue price of that maturity. At or promptly after the execution of this Agreement, the Underwriter shall report to the Issuer the price or prices at which it has sold to the public each maturity of Bonds.
If at that time the 10% test has no t been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Issuer 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 Da te 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 Issuer 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 ma turity of the Bonds. For clarity, and notwithstanding any other condition to Closing set forth in this 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 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 Agreement, the maturities, if any, of the Bonds for which the 10% test has not bee n satisfied and for which the Issuer and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Issuer 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 pr ice 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 date on which the Underwriter ha s 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.
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The Underwriter will advise the Issuer 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:
(i) any selling group agreement and any third -party distribution agreement re lating 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 o r 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 reasonable 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 any 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
(C) to acknowledge that, unless otherwise 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.
(ii) 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 oblig ating 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 t he 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 Issuer acknowledges that, in making the representation s 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 establ ishing 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 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 400
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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 Issuer further acknowledges that the Under writer 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 est ablishing 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:
(i) “public” means any person other than an underwriter or a related party, (ii) “underwriter” means (A) any person that agrees pursuant to a w ritten 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 (B) any person that agrees pursuant to a written contract directly or indirectly with a perso n described in clause (A) to participate in the initial sale of the Bonds to 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),
(iii) 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 ( A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corpo rations (including direct ownership by one corporation of another), ( B) 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 ( C) mor e 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 ownership of the applicable stock or interests by one entity of the other), and
(iv) “sale date” means the date of execution of this Agreement by all parties.
15. In the event that any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision of this Agreement.
16. This Agreement may be executed in any number of counterparts, all of which taken together will constitute one agreement, and a ny of the parties hereto may execute the Agreement by signing any such counterpart.
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S-1
17. This Agreement shall be governed by and construed in accordance with the laws of the State of California.
Very truly yours,
STIFEL, NICOLAUS & COMPANY,
INCORPORATED, as Underwriter
By:
Authorized Officer
Accepted:
CITY OF FONTANA COMMUNITY
FACILITIES DISTRICT NO. 100
(VICTORIA)
By:
Authorized Officer
Time of Execution:
402
A-1
EXHIBIT A
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 __%.
CC: Priced to optional redemption date of September 1, 20__, at par. * At the time of execution of this Agreement and assuming orders are confirmed immediately after the execution of this Agreement.
403
A-2
REDEMPTION TERMS
Optional Redemption. The Bonds maturing on and after September 1, 20__ shall be subject to optional redemption, in whole, or in part in Authorized Denominations, on any date on or after September 1, 20__, from any source of available funds, at the following respective Redemption Prices (expressed as percentages of the princip al amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
Redemption Dates Redemption Price
September 1, 20__ through August 31, 20__ 103%
September 1, 20__ through August 31, 20__ 102
September 1, 20__ through August 31, 20__ 101
September 1, 20__ and thereafter 100
Mandatory Redemption from Special Tax Prepayments . The Bonds shall be subject to mandatory redemption, in whole, or in part in Authorized Denominations, on any Interest Payment Date, from and to the extent of Special Tax prepayments required to be applied thereto pursuant to the Indenture and any amount required to be applied thereto pursuant to the Indenture , at the following respective Redemption Prices (expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
Redemption Dates Redemption Price
Any Interest Payment Date 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 thereafter 100
Mandatory Sinking Fund Redemption . The Bonds maturing September 1, 20 __ shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing September 1, 20 __, at a Redemption Price equal to the principal amount of the Bonds maturing September 1, 20 __ to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:
Term Bond maturing on September 1, 20__
Sinking Fund
Redemption Date
(September 1)
Principal Amount
to be
Redeemed
(Maturity)
404
A-3
The Bonds maturing September 1, 20__ shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing September 1, 20__, at a Redemption Price equal to the principal amount of the Bonds maturing September 1, 20__ to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:
Term Bond maturing on September 1, 20__
Sinking Fund
Redemption Date
(September 1)
Principal Amount
to be
Redeemed
(Maturity)
405
B-1
EXHIBIT B
$[PAR]
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)
SPECIAL TAX BONDS, SERIES 2023
CERTIFICATE OF SPECIAL TAX CONSULTANT
DTA, Inc. (“Special Tax Consultant”), Newport Beach, California, was retained as Special Tax Consultant and assisted in the preparation of and has reviewed the Rate and Method of Apportionment of Special Tax (the “Rate and Method”) set forth in Appendix A to the Preliminary Official Statement dated [POS Date] (the “Preliminary Official Statement ”) and the Official Statement dated [Pricing Date] (the “Official Statement ”) relating to the above -referenced bonds (the “Bonds”) being issued by City of Fontana Community Facilities District No. 100 (Victoria) (the “Issuer”). Based upon the Special Tax Consultant ’s review of the Preliminary Official Statement, the Official Statement and such other documents as it deems relevant in the circumstance s, the Special Tax Consultant hereby certifies that the Special Tax, if collected in the maximum amounts permitted under the Rate and Method, would generate at least 110% of the gross annual debt service on the Bonds plus estimated Administrative Expenses, provided that the annual debt service figures on the attached debt service schedule, which were relied upon by Special Tax Consultant, are substantially true and correct.
Although the Special Tax if collected in the maximum amounts under the Rate and M ethod will generate at least 110% of the gross annual debt service payable with respect to the Bonds each year (net of estimated Administrative Expenses) , no representation is made herein as to actual amounts that will be collected in future years.
All information with respect to the Rate and Method and all other information sourced to the Special Tax Consultant in the Preliminary Official Statement as of its date and [Pricing Date], and the Official Statement as of its date and the date hereof is true and correct, and a true and correct copy of the Rate and Method is attached to the Preliminary Official Statement and the Official Statement as Appendix A.
Dated: [Closing Date]
DTA, INC.
By:
406
C-1
EXHIBIT C
$[PAR]
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)
SPECIAL TAX BONDS, SERIES 2023
ISSUER CLOSING CERTIFICATE
I, the undersigned, hereby certify that I am the ____________ of the City of Fontana (the “City”), the City Council of which is the legislative body for City of Fontana Community Facilities District No. 100 (Victoria) (the “Issuer”), a community facilities district duly organized and existing under the laws of the State of California (the “State”) and that as such, I am au thorized to execute this Certificate on behalf of the Issuer in connection with the issuance of the above-referenced bonds (the “Bonds”).
I hereby further certify on behalf of the Issuer that:
(A) to my best knowledge, after reasonable inquiry, no litigation is pending with respect to which the Issuer has been served with process or threatened (1) to restrain or enjoin the issuance of any of the Bonds or the collection of Net Special Tax Revenues pledged under the Indenture; (2) in any way contestin g or affecting the authority for the issuance of the Bonds or the validity or enforceability of the Bonds or the Issuer Documents; or (3) in any way contesting the existence or powers of the Issuer;
(B) the representations and warranties made by the Issue r in the Bond Purchase Agreement dated [Pricing Date] , between the Issuer and Stifel, Nicolaus & Company, Incorporated (the “Agreement”) are true and correct in all material respects on the Closing Date, with the same effect as if made on the Closing Date;
(C) no event affecting the Issuer has occurred since the date of the Final Official Statement that, as of the Closing Date, would caus e any statement or information contained in the Final Official Statement under the caption “ABSENCE OF LITIGATION ” to be incorrect or incomplete in any material respect or would cause the information contained under such caption in the Final Official State ment to contain an untrue statement of a material fact or omit to state a material fact necessary in order to make such statements therein, in the light of the circumstances under which they were made, not misleading;
407
C-2
(D) as of the date hereof, the Issuer Documents are in full force and effect in accordance with their terms and have not been amended, modified or supplemented except in such case as may have been agreed to by the Underwriter; and
(E) the Issuer has complied with all the agreements and satis fied all the conditions on its part to be performed or satisfied under the Issuer Documents prior to issuance of the Bonds.
Capitalized terms not defined herein shall have the same meaning set forth in the Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date herein below set forth.
Dated: [Closing Date]
CITY OF FONTANA COMMUNITY
FACILITIES DISTRICT NO. 100
(VICTORIA)
By:
Name:
Title:
408
D-1
EXHIBIT D
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)
SPECIAL TAX BONDS, SERIES 2023
I, the undersigned, hereby certify that I am the _____________ of the City of Fontana (the “City”), the City Council of which is the legislative body for City of Fontana Community Facilities District No. 100 (Victoria) (the “Issuer”), a community facilities district duly organized and existing under the laws of the State of California (the “State”) and that as such, I a m authorized to execute this Certificate on behalf of the Issuer in connection with the issuance of the above-referenced bonds (the “Bonds”).
I further hereby certify on behalf of the Issuer as follows:
(1) This Certificate is delivered in connection with the offering and sale of the Bonds in order to enable the underwriter of the Bonds to comply with Rule 15c2 -12 of the Securities Exchange Commission (“Rule 15c2-12”).
(2) In connection with the offering and sale of the Bonds, there has been prepared a Preliminary Official Statement, setti ng forth information concerning the Bonds, the City and the Issuer (the “Preliminary Official Statement”).
(3) As used herein, “Permitted Omissions” shall mean the offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters, all with respect to the Bonds.
(4) The Preliminary Official Statement is, except for the Permitted Omissions, deemed final within the meaning of Rule 15c2-12.
IN WITNESS WHEREOF, I have hereunto set my hand as of [POS Date].
CITY OF FONTANA COMMUNITY
FACILITIES DISTRICT NO. 100
(VICTORIA)
By:
Name:
Title:
409
E-1
EXHIBIT E
$[PAR]
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)
SPECIAL TAX BONDS, SERIES 2023
CERTIFICATE OF U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION
The undersigned hereby states and certifies that the undersigned is an authorized officer of U.S. Bank Trust Company, National Association, as trustee (the “Trustee”) under that certain Indenture, dated as of October 1, 2023 (the “Indenture”), between City of Fontana Community Facilities District No. 100 (Victoria) (the “Issuer”) and the Trustee, relating to the captioned bonds (the “Bonds”) and as such, is familiar with the following facts and is authorized and qualified to certify the following facts on behalf of the Trustee:
(1) The Trustee is duly organized and existing as a national banking association under the laws of the United States of America, having the full power and authority to enter into and perform its duties under the Indent ure and the District Continuing Disclosure Agreement.
(2) The Indenture and the District Continuing Disclosure Agreement have been duly authorized, executed and delivered by the Trustee and the Bonds have been authenticated by a duly authorized representa tive of the Trustee in accordance with the Indenture.
(3) There is no action, suit, proceeding or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending against the Trustee or threatened against the Trustee which in the reasonable judgment of the Trustee would affect the existence of the Trustee or in any way contesting or affecting the validity or enforceability of the Indenture or the District Continuing Disclosure Agreement or contesting the powers of the Trustee or its authority to enter into and perform its obligation under the Indenture or the District Continuing Disclosure Agreement.
Capitalized terms not defined herein have the same meaning as is set forth in the Bond Purchase Agreement relating to the Bonds.
Dated: [Closing Date] U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION,
as Trustee
By
Authorized Officer
410
F-1
EXHIBIT F
$[PAR]
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)
SPECIAL TAX BONDS, SERIES 2023
CERTIFICATE OF MUNICIPAL ADVISOR
The undersigned hereby states and certifies as follows:
(1) The undersigned is an authorized officer of CSG Advisors, Inc., which has acted as municipal advisor (the “Municipal Advisor”) to City of Fontana Community Facilities District No. 100 (Victoria) (the “Issuer”) in connection with the issuance of the above -referenced bonds (the “Bonds”), and as such, is familiar with the facts herein certified and is authorized and qualif ied to certify the same.
(2) The Municipal Advisor has participated in the preparation of the Preliminary Official Statement dated [POS Date] (the “Preliminary Official Statement ”) and the final Official Statement dated [Pricing Date] (the “Official Statement”) relating to the Bonds.
(3) 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 omit to state a material fact necessary to make the stat ements made therein, in light of the circumstances under which they were made, not misleading.
Dated: [Closing Date] CSG ADVISORS, INC.,
as Municipal Advisor
By:
Authorized Officer
411
G-1-1
EXHIBIT G-1
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)
SPECIAL TAX BONDS, SERIES 2023
LETTER OF REPRESENTATIONS
(Tri Pointe Homes Holdings, Inc.)
[POS Date]
City of Fontana Community Facilities
District No. 100 (Victoria)
8353 Sierra Avenue
Fontana, California 92335
Stifel, Nicolaus & Company, Incorporated
One Montgomery Street, 35th Floor
San Francisco, California 94104
Reference is made to the City of Fontana Community Facilities District No. 100 (Victoria) Special Tax Bonds, Series 2023 (the “ Bonds”) and to the Bond Purchase Agreement to be entered into in connection therewith (the “Bond Purchase Agreement”). This Letter of Representations (Tri Pointe Homes Holdings, Inc. ) (the “ Letter of Representations”) is delivered pursuant to and in satisfaction of Section 8(c)(xvii) 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 he 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 Tri Pointe Homes Holdings, Inc., a Delaware corporation (the “Developer”), 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 limited liability company right, power and authority (i) to execute and deliver this Letter of Representations, and (ii) to develop its property in the City of Fontana Community Facilities District No. 100 (Victoria) (the “ Community Facilities District ”) as described in the Preliminary Official Statement.
2. As se t 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 or is owned by, and is under option to the Developer to acquire from, Rescal Victoria 19 3, LLC, a Delaware limited liability company (collectively, herein, the “ Property”). The undersigned, on behalf of the Developer, makes the representations herein with respect to all such Property.
Except as otherwise described in the Preliminary Official Statement, the Developer’s current expectation is that the Developer shall remain the party responsible for the construction and sale of homes within the Property. Except as disclosed in the Preliminary Official Statement with respect to Rescal Victoria 193, LLC, a Delaware limited liability company (the “Land Bank”), 412
G-1-2
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 Statement, no action, suit, proceeding, inquiry or investigation at law or i n 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 s pecial tax levied on the Property by the Community Facilities District (the “ Special Tax”) 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 Fund ”)), (b) to restrain or enjoin the development of the Property as described in the Preliminary Official Statement, (c) to materially adversely affect the ability of the Developer to perform its obligations under the Continuing Disclosure Certificate (as hereinafter defined), (d) in any way contesting or affecting the validity of the Special Tax, or (e) which is reasonably likely to materially and adversely affect the Developer’s ability to acquire, develop, and sell the Property as described in the Preliminary Official Statement or to pay the Special Tax 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
1 “Actual Knowledge of the Undersigned ” means, as of the date of this Letter of Representations , the actual (as opposed to constructive) knowledge that the individual signing on behalf of the Developer currently has or has obtained 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 duti es, 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 know ledge of the matters set forth in this 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 with the ordinary course of the Developer’s current business and operations. 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 Tax on the Property (to the extent the responsibility of the Developer) prior to delinquency, or (b) such Person’s assets or funds that would materially affect the Developer’s ability to de velop the Property as described in the Preliminary Official Statement or to pay its Special Tax on the Property (to the extent the responsibility of the Developer). “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 political subdivision thereof. For purposes hereof, the term “ control” (including the terms “ controlling,” “ controlled by ” or “ under common control with ”) mean s 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.
The Land Bank is not an Affiliate of the Developer.
413
G-1-3
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 such Affiliates) as set forth under the sections of the Preliminary Offi cial Statement captioned “INTRODUCTION – The District” (the first three paragraphs only), “PROPERTY OWNERSHIP AND THE DEVELOPMENT” (excluding information under the caption “ – The Land Bank”), and “CONTINUING DISCLOSURE – The Developer” (but in all cases u nder all captions excluding therefrom (i) information regarding the Appraisal Report (as defined herein), market value ratios and annual special tax ratios, and (ii) information which is identified as having been provided by a source other than the Develop er), 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 any 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 Tax 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 disclosed 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 refunding 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 T ax 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 thereto. 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, regu latory 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 Tax pursuant to w hich Special Tax is levied, (b) an action or suit with respect to the application or use of the Special Tax levied and collected or (c) an action or suit to enforce the obligations of the City and/or the Community Facilities District under the Resolutions and Ordinance, the Indenture, or any other agreements among the Developer, an 414
G-1-4
Affiliate, the City and/or the Community Facilities District or to which the Developer or an Affiliate is a party or beneficiary.
8. The Developer consents to the issuance of the Bo nds. The Developer acknowledges and agrees that the proceeds of the Bonds will be used as described in the Preliminary Official Statement.
9. The Developer intends to comply with the provision of the Mello -Roos Community Facilities Act of 1982, as amended, re lating to the Notice of Special Tax described in Government Code Section 53341.5 in connection with the sale of the Property to homeowners, or portions thereof.
10. To the Actual Knowledge of the Undersigned, the Developer is able to pay its bills as they beco me due and no legal proceedings are pending 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 disch arged from any and all of its debts or obligations, 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. The Developer agrees to execute at Closing the continuing disclosure certificate substantially in the form attached as Appendix H to the Preliminary Official Statement (the “Continuing Disclosure Certificate”), with such additional changes as may be agreed t o by the Developer and the Underwriter. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, the Developer is not aware of any material failures by it or any entity under managerial control of the Developer to comply in all material respects with previous continuing disclosure undertakings in a written certificate or agreement executed by it or an entity under the managerial control of the Developer to provide periodic continuing disclosure reports or notices of material events respecting securities offerings in California within the past five years.
12. To the Actual Knowledge of the Undersigned, execution and delivery of the Continuing Disclosure Certificate, and the performance by the Developer of its obligati ons under the Continuing Disclosure Certificate, will not conflict with or constitute a breach of or default under any loans, lines of credit, agreements, or other contractual or financial obligations of the Developer, or any applicable law, regulation, judgment or decree.
13. 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 the Preliminary Official Statement, to perform its obligations under the Continuing Disclosure Certificate or to pay the Special Tax 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. 415
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14. The Developer has been developing or has been involved in the development of numerous projects over an extended period of time. It is likely tha t the Developer and its Affiliates have been delinquent at one time or another in the payment of ad valorem property taxes, special assessments or special taxes. However, to the Actual Knowledge of the Undersigned, during the last five years, neither the D eveloper nor any current Affiliate has, during the period of its ownership, been delinquent to any material extent in the payment 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 California that (a) caused a draw on a reserve fund relating to such assessment district or community facilities district financing or (b) resulted in a foreclosure action being commenced against the delinquen t Developer or such Affiliate in a court of law.
15. 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.
16. To the Actual Knowledge of t he Undersigned, there are no claims, disputes, suits, actions or contingent 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 t he Developer’s development of the Property as described in the Preliminary Official Statement, the performance of the Developer’s obligations under the Continuing Disclosure Certificate, or the payment of the Special Tax due with respect to the Property (t o the extent the responsibility of the Developer) prior to delinquency.
17. 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 p roperty, 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 Tax levied against the Property (to the extent the responsibility of the Developer) prior to delinquency and does not anticipate that the City or the Community Facilities District will be required t o resort to a draw on the Reserve Fund for payment of principal of or interest on the Bonds due to the Developer’s nonpayment of Special Tax. However, neither 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.
18. An appraisal of the taxable properties within the Community Facilities District, da ted [August 22 , 2023 ] (the “Appraisal Report ”), was prepared by Kitty Siino & Associates, Inc. (the “ Appraiser”). The Appraisal Report estimates the market value of the taxable properties within the Community Facilities District as of July 17, 2023 (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 Appraiser 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.
19. 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 agrees to indemnify and hold harmle ss, to the extent 416
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permitted by law, the City, the Community Facilities 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 (each, 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 be come 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, liabilities 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 materi al fact by the Developer in the above-referenced information in the 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 respect of which indemnifica tion 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 su ch 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 Indemni fied 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 proceeding, 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 ti me 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 different from or in addition to those available to the Developer s uch 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 Party 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 wr iting 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 inde mnify each Indemnified Party from and against any loss or liability by reason of such settlement or judgment to the extent set forth above. If the Developer shall, after receiving notice of the indemnification 417
G-1-7
obligation of the Developer and within a perio d 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 the Indemnified Party, effect any settlement of any pend ing 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.
20. If between the date hereof and the Closing Date any event relating to or affecting the Developer, its Affiliates, ownership of the Property, the proposed development 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 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 (and subject to the limitations and exclusions contained in Paragraph 4 hereof ), to 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 Commun ity 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.
21. 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 H 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.
22. On behalf of the Developer, I have reviewed the contents of this Letter of Representations and have had the opportunity to discuss with counsel to the Developer the meaning of the contents of this Letter of Representations. The Developer acknowledges 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.
418
G-1-8
The undersigned has executed this Letter of Representations solely in his or her capacity as an authorized officer or representative 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.
TRI POINTE HOMES HOLDINGS, INC.,
a Delaware corporation
By:
Name:
Title:
[SIGNATURE PAGE TO LETTER OF REPRESENTATIONS OF
TRI POINTE HOMES HOLDINGS, INC.]
419
G-1-9
EXHIBIT A
TO
LETTER OF REPRESENTATIONS
(Tri Pointe Homes Holdings, Inc.)
DEVELOPER PROVIDED INFORMATION IN APPRAISAL REPORT
See attached.
420
G-2-1
EXHIBIT G-2
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)
SPECIAL TAX BONDS, SERIES 2023
LETTER OF REPRESENTATIONS
(Rescal Victoria 193, LLC)
[POS Date]
City of Fontana Community Facilities
District No. 100 (Victoria)
8353 Sierra Avenue
Fontana, California 92335
Stifel, Nicolaus & Company, Incorporated
One Montgomery Street, 35th Floor
San Francisco, California 94104
Reference is made to the City of Fontana Community Facilities District No. 100 (Victoria) Special Tax Bonds, Series 2023 (the “ Bonds”) and to the Bond Purchase Agreement to be entered into in connection therewith (the “ Bond Purchase Agreement ”). This Lette r of Representations (Rescal Victoria 193, LLC ) (the “ Letter of Representations ”) is delivered pursuant to and in satisfaction of Section 8(c)(xvii) 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 he 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 Rescal Victoria 193, LLC , a Delaware limited liability company (the “Land Bank”), and the undersigned, on behalf of the Land Bank, further certifies as follows:
1. The Land Bank is a limited partnership validly existing and in good standing under the laws of the State of Delaware and has duly qualified to transact business in the State of California, and has all requisite right, power and authority to execute and deliver this Let ter of Representations.
2. As set forth in the Preliminary Official Statement, title to a certain portion of the property within the City of Fontana Community Facilities District No. 100 (Victoria) (the “Community Facilities District ”) is held in the name of the Land Bank (herein, the “ Land Bank Property ”). The undersigned, on behalf of the Land Bank , makes the representations herein with respect to all such Land Bank Property . Except as disclosed in the Preliminary Official Statement, the Land Bank has not entered into an agreement for the sale, development or management of the Land Bank Property with any entity other than Tri Pointe Homes Holdings, Inc.
421
G-2-2
3. Except as set forth in the Preliminary Official Statement, no action, suit, proceeding, inquiry or invest igation at law or in equity, before or by any court, regulatory agency, public board or body is pending against the Land Bank (with proper service of process to the Land Bank having been accomplished) or, to the Actual Knowledge of the Undersigned 3, is pending against any current Affiliate4 (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 Land Bank, or any such Affiliate (a) to restrain or enjoin the collection of special tax levied on the Land Bank Property by the Community Facilities District (the “Special Tax”) 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 I ndenture (herein, the “ Reserve Fund ”)), (b) to restrain or enjoin the development of the Land Bank Property as described in the Preliminary Official Statement, (c) in any way contesting or affecting the validity of the Special Tax, or (d) which is reasonab ly likely to materially and adversely affect the Land Bank ’s ability to sell the Land Bank Property as described in the Preliminary Official Statement or, if the Option Agreement is terminated, to pay the Special Tax due with respect to the Land Bank Prope rty (to the extent the responsibility of the Land Bank) 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 Land Bank , current ownership of the Land Bank Property, and contractual arrangements of the Land Bank (including the Option Agreement described in the Preliminary Official Statement) as set forth under the sections of the Preliminary Official Statement captioned “INTRODUCTION – The District” (second paragraph only) and “PROPERTY OWNERSHIP AND THE DEVELOP MENT – The Land Bank,” and “ – Development Plan – Option Agreement,” is true and correct in all material
3 “Actual Knowledge of the Undersigned ” means, as of the date of this Letter of Representations , the actual (as opposed to constructive) knowledge that the individual signing on behalf of the Land Bank currently has or has obtained through (i) interview s with such current officers and responsible employees of the Land Bank 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 this Letter of Representati ons. The undersigned has not conducted any extraordinary inspection or inquiry other than such inspections or inquiries as are prudent and customary in connection with the ordinary course of the Land Bank’s current business and operations. Individuals who are no longer employees of the Land Bank and its Affiliates have not been contacted.
4 “Affiliate” means, with respect to the Land Bank, any other Person (i) who directly, or indirectly through one or more intermediaries, is currently c ontrolling, controlled by or under common control with the Land Bank, 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 Facilitie s District and investment decision regarding the Bonds (i.e., information relevant to (a) the Land Bank’s development plans with respect to the Land Bank Property and, if the Option Agreement is terminated, ability to pay its Special Tax on the Land Bank P roperty (to the extent the responsibility of the Land Bank) prior to delinquency, or (b) such Person’s assets or funds that would materially affect the Land Bank’s ability to develop the Land Bank Property as described in the Preliminary Official Statement or, if the Option Agreement is terminated, to pay its Special Tax on the Land Bank Property (to the extent the responsibility of the Land Bank ). “ Person” means an individual, a corporation, a partnership, a limited liability company, an association, a jo int stock company, a trust, any unincorporated organization or a government or political 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.
422
G-2-3
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 Land Bank or its Affiliates, that are secured by an interest in the Land Bank Property . Neither the Land Bank nor, to the Actual Knowledge of the Undersigned, any of its Affiliates is (a) currently in breach of or in default under the Option Agreement, (b) in material default on any loans, li nes of credit or other obligation related to the development of the Land Bank Property or any other project which default is reasonably likely to materially and adversely affect the Land Bank’s ability to pay the Special Tax due with respect to the Land Bank Property (if the Option Agreement is terminated and to the extent the responsibility of the Land Bank) prior to delinquency.
6. The Land Bank covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Land Bank and it s 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 Tax 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 thereto. The foregoing covenant shall not prevent the Land Bank in any w ay 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 l evied in accordance with the methodologies contained in the Rate and Method of Apportionment of Special Tax pursuant to which Special Tax are levied, (b) an action or suit with respect to the application or use of the Special Tax levied and collected or (c ) an action or suit to enforce the obligations of the City and/or the Community Facilities District under the Resolutions and Ordinance, the Indenture, or any other agreements among the Land Bank , an Affiliate, the City and/or the Community Facilities Dist rict or to which the Land Bank or an Affiliate is a party or beneficiary.
7. To the Actual Knowledge of the Undersigned, the Land Bank is able to pay its bills as they become due and no legal proceedings are pending against the Land Bank (with proper service of process having been accomplished) or, to the Actual Knowledge of the Undersigned, threatened in writing in which the Land Bank may be adjudicated as bankrupt or discharged from any and all of its debts or obligations, 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.
8. To the Actual Knowledge of the Undersigned, during the last five years, neither the Land Bank nor any current Affiliate has, during the period of its ownership, been delinquent to any material extent in the payment of an y 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 California that (a) caused a draw on a reserve fund relating to such assessment district or community facilities district financing or (b) resulted in a foreclosure action being commenced against the delinquent Land Bank or such Affiliate in a court of law. 423
G-2-4
9. If between the date hereof and the Closing Date any event relating to or affecting the Land Bank, its Affiliates, ownership of the Land Bank Property, and contractual arrangements of the Land Bank or any Affiliates shall occur of which the undersigned has actual knowledge which would cause the information under the sections of the Prelimina ry Official Statement indicated in Paragraph 4 hereof (and subject to the limitations and exclusions contained in Paragraph 4 hereof), to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements th erein, in the light of the circumstances under which they were made, not misleading, the Land Bank 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 Land Bank shall reasonably cooperate with the City and the Community Facilities District in the preparation of an amendment or supplement to the Pre liminary Official Statement in form and substance satisfactory to counsel to the City, the Community Facilities District and to the Underwriter.
10. The Land Bank agrees to deliver a Closing Certificate dated the date of issuance of the Bonds at the time of is suance of the Bonds in substantially the form attached as Exhibit H-2 to the Bond Purchase Agreement. If any event related to or affecting the Land Bank , its Affiliates, or the ownership, development, or sale of the Land Bank Property occurs, as a result of which it is necessary to modify the Closing Certificate, the Land Bank agrees to deliver a new Closing Certificate revised to reflect such event.
11. On behalf of the Land Bank , I have reviewed the contents of this Letter of Representations and have had the opportunity to discuss with counsel to the Land Bank the meaning of the contents of this Letter of Representations. The Land Bank acknowledges 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 Land Bank 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 Land Bank under such securities laws.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
424
G-2-5
The undersigned has executed this Letter of Representations solely in his or her capacity as an authorized officer or representative of the Land Bank 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 Land Bank.
RESCAL VICTORIA 193, LLC,
a Delaware limited liability company
By:
Name:
Title:
425
H-1-1
EXHIBIT H-1
$[PAR]
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)
SPECIAL TAX BONDS, SERIES 2023
CLOSING CERTIFICATE
(Tri Pointe Homes Holdings, Inc.)
[Closing Date]
City of Fontana Community Facilities
District No. 100 (Victoria)
8353 Sierra Avenue
Fontana, California 92335
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 [Pricing Date] (the “ Bond Purchase Agreement ”), entered into in connection therewith. This Closing Certificate ( Tri Pointe Homes Holdings, Inc. ) (the “Closing Certificate”) is delivered pursuant to Section 8(c)(xviii) of the Bond Purchase Agreement. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Letter of Representations (Tri Pointe Homes Holdings, Inc. ), dated [POS Date] (the “Letter of Representations ”), delivered by Tri Pointe Homes Holdings, Inc., a Delaware corporation (the “Developer”).
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 officer 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 [Pricing 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 s ame 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.
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) relating 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 426
H-1-2
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 such 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 assume 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 to 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 or th e 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 (and subject to the limitations and exclu sions contained in Paragraph 4 of the Letter of Representations) not misleading in the light of the circumstances under which they were made, the Developer shall reasonably cooperate with the City, the Community Facilities District and the Underwriter in t he preparation and publication of a supplement or amendment to the information under the sections of the Official Statement indicated in Paragraph 4 of the Letter of Representations (and subject to the limitations and exclusions contained 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 the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
4. The Developer has duly authorized the execution and delivery of the Continuin g Disclosure Certificate and is duly authorized to perform the obligation on its part to be performed thereunder, and the Continuing Disclosure Certificate constitutes the legal, valid and binding obligation of the Developer, enforceable against it in acco rdance with its terms, subject to bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance and other similar laws affecting the rights of creditors and certain equitable, legal or statutory principles affecting enforcement of contractual rights generally, regardless of whether such enforcement is considered in a proceeding of law or equity.
[Remainder of Page Intentionally Left Blank; Signature Page Follows] 427
H-1-3
The undersigned has executed this Closing Certificate solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability arising from or relating to this Closing Certificate. Any liabili ty arising from or relating to this Closing Certificate may only be asserted against the Developer.
TRI POINTE HOMES HOLDINGS, INC.,
a Delaware corporation
By:
Name:
Title:
428
H-2-1
EXHIBIT H-2
$[PAR]
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)
SPECIAL TAX BONDS, SERIES 2023
CLOSING CERTIFICATE
(Rescal Victoria 193, LLC)
[Closing Date]
City of Fontana Community Facilities
District No. 100 (Victoria)
8353 Sierra Avenue
Fontana, California 92335
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 [Pricing Date] (the “ Bond Purchase Agreement ”), entered into in connection therewith. This Closing Certificate ( Rescal Victoria 193, LLC ) (the “ Closing Certificate ”) is delivered pursuant to Section 8(c)(xviii) of the Bond Purchase Agreement. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Letter of Representations (Rescal Victoria 193, LLC ), dated [POS Date] (the “ Letter of Representations ”), delivered by Rescal Victoria 193, LLC, a Delaware limited liability company (the “Land Bank”).
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 officer or representative of the Land Bank, and the undersigned, on behalf of the Land Bank, further certifies as follows:
1. The Land Bank has received the final Official Statement dated [Pricing 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.
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) relating to the Land Bank, the proposed development of the Land Bank Property, current ownership of the Land Bank Property , and contractual arrangements of the Land Bank (including the Option Agreement described in the Official Statement) , which should be 429
H-2-2
disclosed in the Official Statement for the purposes for which it is to be used in order to make such statements and infor mation 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 Land Bank may assume 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 to or affecting the Land Bank, ownership of the Land Bank Property, and contractual arrangements of the Land Bank (including the Option Agreement described in the Official Statement) shall occur as a result of which it is necessary, in the opinion of the Underwriter or counsel to the City or 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 (and subject to the limitat ions and exclusions contained in Paragraph 4 of the Letter of Representations) not misleading in the light of the circumstances under which they were made, the Land Bank shall reasonably cooperate with the City, the Community Facilities District and the Un derwriter in the preparation and publication of a supplement or amendment to the information under the sections of the Official Statement indicated in Paragraph 4 of the Letter of Representations (and subject to the limitations and exclusions contained 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 the Official Statement so that it will not contain an untrue s tatement 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 under which they were made, not misleading.
[Remainder of Page Intentionally Left Blank; Signature Page Follows] 430
H-2-3
The undersigned has executed this Closing Certificate solely in his or her capacity as an authorized officer or representative of the Land Bank and he or she will have no personal liability arising from or relating to this Closing Certificate. Any liabili ty arising from or relating to this Closing Certificate may only be asserted against the Developer.
RESCAL VICTORIA 193, LLC,
a Delaware limited liability company
By:
Name:
Title:
431
I-1
EXHIBIT I
FORM OF ISSUE PRICE CERTIFICATION
$[PAR]
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)
SPECIAL TAX BONDS, SERIES 2023
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 Agreement (the “Purchase Agreement”) in connec tion 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 each 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 Offe ring Price for such Maturity 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 Maturi ty 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 d ate of this Certificate, Stifel has not sold at least 10% of the Bonds of these Maturities at any single price.
432
I-2
(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 bel ow the respective price or prices 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 th e 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 certificate sub stantially 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 S chedule 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 the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity.
(d) “Issuer” means the City of Fontana Community Facilities District No. 100 (Victoria). (e) “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.
(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 wit h 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).
4. Reserve Fund. The funding of the Reserve Fund under the Indenture, and as provided in the Tax Certificate, is reasonably required, was a vital factor in marketing the Bonds, facilitated the 433
I-3
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.
5. The representations set forth in this certificate are limited to factual matters 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 the 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 Bonds, 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]
434
I-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/CUS
IP
Coupon Par Amount Offering
Prices
**]
435
I-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
**]
436
I-3
[**SCHEDULE C
TO
ISSUE PRICE CERTIFICATE
SUPPLEMENTAL ISSUE PRICE CERTIFICATE OF UNDERWRITER
$[PAR]
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)
SPECIAL TAX BONDS, SERIES 2023
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 (the “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 the City of Fontana Community Facilities District No. 100 (Victoria). (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 underwriting 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 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).
437
I-4
3. The representations set forth in this certificate are limited t o factual matters 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 the 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 Bonds, 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 in come 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]
438
I-5
EXHIBIT A
TO
SUPPLEMENTAL ISSUE PRICE CERTIFICATE**]
439
Stradling Yocca Carlson & Rauth
Draft of September 7, 2023
4869-9049-0225v4/022777-0040
PRELIMINARY OFFICIAL STATEMENT DATED _____, 2023
NEW ISSUE – BOOK-ENTRY-ONLY NO RATING
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the District, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of the federal individual alternative minimum tax. Bond Counsel observes that, for tax years be ginning after December 31, 2022, interest on the Bonds included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds. See “TAX MATTERS” herein. $5,330,000*
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)
SPECIAL TAX BONDS, SERIES 2023
Dated: Date of Delivery Due: September 1, as shown on the inside cover page The City of Fontana Community Facilities District No. 100 (Victoria) Special Tax Bonds, Series 2023 (the “Bonds”) are being issued and delivered by the City of Fontana Community Facilities District No. 100 (Victoria) (the “District”) to (i) provide financing for certain public facilities and costs with respect thereto related to the development within the District, (ii) fund a reserve fund with respect to the Bonds, and (iii) pay the costs of issuance with respect to the Bonds. See “ESTIMATED SOURCES AND USES OF FUNDS” herein. The District has been formed by and is located in the City of Fontana, California (the “City”).
The Bonds are authorized to be issued pursuant to the Mello -Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California), and pursuant to an Indenture, dated as of _____ 1, 2023, by and between the District and U.S. Bank Trust Company, National Associat ion, as Trustee. The Bonds are special, limited obligations of the District and are payable solely from Net Special Tax Revenues (as defined herein), and the other assets pledged therefor under the Indenture, all as f urther described herein. The Special Tax (as defined herein) is to be levied according to the rate and method of apportionment approved by the City Council of the City and the qualified electors within the District. The City Council is the legislative body of the District.
The Bonds are issu able in fully registered form and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Individual purchases of Bonds may be made in principal amounts of $5,0 00 and integral multiples thereof. Purchasers of Bonds will not receive certificates representing their beneficial ownership of the Bonds but will receive credit balances on the books of their respective nominees. Interest on the Bonds will be payable on each September 1 and March 1, commencing March 1, 2024. Principal of and interest on the Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants who are expected to remit such payments to the beneficial owners of the Bonds. See “THE BONDS — General Provisions” and Appendix I — “INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY AND ITS BOOK-ENTRY SYSTEM” herein.
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE DISTRICT (EXCEPT TO THE LIMITED
EXTENT SET FORTH IN THE INDENTURE), THE CI TY OR THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE BONDS OR ADDITIONAL BONDS. EXCEPT FOR THE
NET SPECIAL TAX REVENUES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS OR ADDITIONAL BONDS. THE BONDS AND ANY ADDITIONAL BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY BUT
ARE SPECIAL, LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM NET SPECIAL TAX REVENUES AND THE OTHER ASSETS PLEDGED THEREFOR UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN.
The purchase of the Bonds involves certain risks. See the section of this Official Statement entitled “SPECIAL RISK FACTORS” for a discussion of certain risk factors that should be considered, in addition to the other matters set forth herei n, i n evaluating the investment quality of the Bonds.
This cover page contains certain information for general reference only. It is not a summary of this issue. Investors are a dvised to read the entire Official Statement to obtain information essential to the making of an informed investment decision.
The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by Orr ick Herrington & Sutcliffe, LLP, Los Angeles, California, as Bond Counsel, and subjec t to certain other conditions. Certain legal matters will be passed on for the City and the District by Best Best & Krieger LLP, Riverside, California, in its capacity as City Attorney, and by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, Jones Hall, A Professional Law Corporation, San Francisco, California. It is anticipated that the Bonds will be available for delivery to DTC or its agent in book-entry form on or about _____ , 2023. [STIFEL LOGO]
Dated: _____ , 2023
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. 440
4869-9049-0225v4/022777-0040
MATURITY SCHEDULE
BASE CUSIP†: 344630
Maturity Date
(September 1)
Principal
Amount
Interest
Rate Yield Price CUSIP† No.
$_______ _____% Term Bonds due September 1, 20__, Yield: _____% Price: _______ CUSIP No. _________† $_______ _____% Term Bonds due September 1, 20__, Yield: _____% Price: _______ CUSIP No. _________† $_______ _____% Term Bonds due September 1, 20__, Yield: _____% Price: _______ CUSIP No. _________†
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright© 2023 CUSIP Global Services. All rights reserved. CUSIP® data herein is provi ded by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the District, the City, the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers.
441
4869-9049-0225v4/022777-0040
CITY OF FONTANA
CITY COUNCIL
Acquanetta Warren, Mayor
Peter Garcia, Mayor Pro Tem
Phillip Cothran, Council Member
John Roberts, Council Member
Jesus “Jesse” Sandoval, Council Member
STAFF
Matthew C. Ballantyne, City Manager
Jessica Brown, Chief Financial Officer, Management Services Janet Koehler-Brooks, City Treasurer
Germaine Key, City Clerk
Best Best & Krieger LLP, City Attorney
BOND COUNSEL
Orrick Herrington & Sutcliffe LLP
Los Angeles, California
MUNICIPAL ADVISOR
CSG Advisors Incorporated
San Francisco, California
DISCLOSURE COUNSEL
Stradling Yocca Carlson & Rauth, a Professional Corporation Newport Beach, California
TRUSTEE
U.S. Bank Trust Company, National Association
Los Angeles, California
SPECIAL TAX CONSULTANT
DTA, Inc.
Newport Beach, California
APPRAISER
Kitty Siino &Associates, Inc.
Tustin, California
PRICE POINT CONSULTANT
Empire Economics, Inc.
Capistrano Beach, California
442
4869-9049-0225v4/022777-0040
Except where otherwise indicated, all information contained in this Official Statement has been provided by the City and the District. No dealer, broker, salesperson or other person has been authorized by t he City, the District, the Trustee or the Underwriter to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and, if given or made, such other information or representation s must not be relied upon as having been authorized by the City, the District, the Trustee or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers or owners of the Bonds.
Statements contained in this Officia l Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact.
The Underwriter has provided the following sentence for inclusion in this Official Statement:
The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District, or any other parties described herein since the date hereof. All summaries of the Indenture or other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the District for further information in connection therewith.
Certain statements included or incorporated by reference in this Official Statement constitute “forward -looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as a “plan,” “expect,” “estimate,” “project,” “budget” or similar words. Such forward -looking statements include but are not limited to certain statements contained in the information under the captions “THE COMMUNITY FACILITIES DISTRICT” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT.”
The achievement of certain results or other expectations contained in such forward -looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future res ults, performance or achievements expressed or implied by such forward-looking statements. Except as set forth in the District’s Continuing Disclosure Agreement, a form of which is attached hereto as Appendix G, neither the District nor the City plans to issue any updates or revisions to the forward-looking statements set forth in this Official Statement. The Developer (as defined herein) has agreed to provide certain continuing disclosure information concerning the Developer and its property within the D istrict in the form attached hereto as Appendix H. See “CONTINUING DISCLOSURE.” A wide variety of other information, including financial information, concerning the City, is available from publications and websites of the City and others. No such infor mation is a part of or incorporated into this Official Statement.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY
OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. 443
TABLE OF CONTENTS
Page
i
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INTRODUCTION ................................................................................................................................................ 1 The District .................................................................................................................................................... 1 Security and Sources of Payment for the Bonds ............................................................................................ 3 Description of the Bonds ................................................................................................................................ 3 Appraisal Report ............................................................................................................................................ 4 Price Point Study ............................................................................................................................................ 4 Professionals Involved in the Offering .......................................................................................................... 5 Continuing Disclosure.................................................................................................................................... 5 Bond Owners’ Risks ...................................................................................................................................... 5 Other Information .......................................................................................................................................... 5 ESTIMATED SOURCES AND USES OF FUNDS ............................................................................................ 6 THE BONDS ........................................................................................................................................................ 6 General Provisions ......................................................................................................................................... 6 Redemption .................................................................................................................................................... 7 Debt Service Schedule ................................................................................................................................. 11 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS .................................................................. 11 General ......................................................................................................................................................... 11 Special Tax ................................................................................................................................................... 12 Rate and Method of Apportionment ............................................................................................................ 13 Collection and Application of the Special Tax ............................................................................................ 18 Covenant for Superior Court Foreclosure .................................................................................................... 19 Special Tax Fund ......................................................................................................................................... 20 Reserve Fund ............................................................................................................................................... 20 Investment of Moneys .................................................................................................................................. 21 No Additional Bonds Except for Refunding Bonds ..................................................................................... 21 THE COMMUNITY FACILITIES DISTRICT ................................................................................................. 22 General Information Regarding the District ................................................................................................ 22 Assigned Special Tax and Development Summary ..................................................................................... 24 Direct and Overlapping Debt ....................................................................................................................... 24 Property Values ............................................................................................................................................ 27 Value-to-Lien Ratios .................................................................................................................................... 28 Delinquency History .................................................................................................................................... 32 PROPERTY OWNERSHIP AND THE DEVELOPMENT ............................................................................... 32 General Description of the Development ..................................................................................................... 33 Tri Pointe ..................................................................................................................................................... 34 The Land Bank ............................................................................................................................................. 34 Development Plan ........................................................................................................................................ 34 Financing Plan ............................................................................................................................................. 39 SPECIAL RISK FACTORS ............................................................................................................................... 39 Risks of Real Estate Secured Investments Generally – Declines in Value .................................................. 40 Levy of the Special Tax ............................................................................................................................... 40 Collection of the Special Tax ....................................................................................................................... 41 Failure to Develop Properties ...................................................................................................................... 42 Concentration of Property Ownership ......................................................................................................... 42 Exempt Properties ........................................................................................................................................ 43 Constitutional Limitations on Taxation and Appropriations ........................................................................ 43 Maximum Special Tax ................................................................................................................................. 47 Payment of the Special Tax is Not a Personal Obligation of the Owners .................................................... 47 Disclosures to Future Purchasers ................................................................................................................. 47 Parity Taxes and Special Assessments ......................................................................................................... 47 444
TABLE OF CONTENTS
(continued)
Page
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Depletion of Reserve Fund .......................................................................................................................... 48 Bankruptcy and Legal Delays ...................................................................................................................... 48 FDIC/Federal Government Interests In Properties ....................................................................................... 48 Geologic, Topographic and Climatic Conditions ......................................................................................... 49 Hazardous Substances .................................................................................................................................. 50 No Acceleration Provision ........................................................................................................................... 51 Bonds Are Limited Obligations ................................................................................................................... 51 Loss of Tax Exemption ................................................................................................................................ 51 Potential Early Redemption of Bonds from Special Tax Prepayments ........................................................ 51 Cybersecurity ............................................................................................................................................... 51 Impact of Economic Conditions on the Development in the District .......................................................... 52 Increasing Mortgage Interest Rates .............................................................................................................. 52 CONTINUING DISCLOSURE .......................................................................................................................... 53 Community Facilities District ...................................................................................................................... 53 The Developer .............................................................................................................................................. 54 TAX MATTERS................................................................................................................................................. 54 ABSENCE OF LITIGATION ............................................................................................................................ 56 ABSENCE OF RATINGS .................................................................................................................................. 56 CERTAIN LEGAL MATTERS ......................................................................................................................... 56 UNDERWRITING ............................................................................................................................................. 57 FINANCIAL INTERESTS ................................................................................................................................. 57 MUNICIPAL ADVISOR ................................................................................................................................... 57 ADDITIONAL INFORMATION ....................................................................................................................... 57
APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX ............................ A-1 APPENDIX B APPRAISAL REPORT...................................................................................................... B-1 APPENDIX C UPDATED PRICE POINT STUDY .................................................................................. C-1 APPENDIX D FORM OF OPINION OF BOND COUNSEL ................................................................... D-1 APPENDIX E GENERAL INFORMATION CONCERNING THE CITY OF FONTANA .................... E-1 APPENDIX F SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE .................................F-1 APPENDIX G FORM OF DISTRICT CONTINUING DISCLOSURE AGREEMENT .......................... G-1 APPENDIX H FORM OF DEVELOPER CONTINUING DISCLOSURE CERTIFICATE .................... H-1
APPENDIX I INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY AND ITS BOOK-ENTRY SYSTEM ................................................................................. I-1
445
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[INSERT AREA MAP]
446
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[INSERT AERIAL PHOTO]
447
1 4869-9049-0225v4/022777-0040
$5,330,000*
CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)
SPECIAL TAX BONDS, SERIES 2023
INTRODUCTION
This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement.
The purpose of this Official Statement, which includes the cover page, the table of contents and the attached appendices, is to provide certain information concerning the issuance of the City of Fontana Community Facilities District No. 100 (Victoria) Special Tax Bonds, Series 2023 (the “Bonds”) by the City of Fontana Community Facilities District No. 100 (Victoria) (the “District”), in the aggregate principal amount set forth on the front cover page. The proceeds of the Bonds will be used to finance certain public facilities and costs with respect thereto related to the development within the District, to fund a reserve fund for the Bonds (the “Reserve Fund”), and to pay costs of issuance of the Bonds.
The Bonds are being issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Act”), and pursuant to the Indenture, dated as of _____ 1, 2023 (the “Inden ture”), by and between the District and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The Bonds are secured under the Indenture by a pledge of, constituting a lien on and security interest in, the Net Special Tax Revenues (as defined herein) and any other amounts held in the Special Tax Fund, the Bond Fund and the Reserve Fund established pursuant to the Indenture.
This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described herein. A full review should be made of the entire Official Statement.
The sale and delivery of the Bonds to potential investors is made only by means of the entire Official Statement.
All capitalized terms used in this Official Statement and not defined shall have the meaning set forth in Appendix F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE ⎯ Definitions” herein.
The District
The District includes approximately 21.54 gross acres and is located in the northwestern portion of the City of Fontana (the “City”). The District is located at the southwest corner of Victoria Street and Kestrel Drive, just east of Interstate 15. The District is being developed into a gated community known as “Aurora Par k” by Tri Pointe Homes Holdings, Inc., a Delaware corporation (“Tri Pointe” or the “Developer”), and is expected to consist of a total of 193 residential units in two product lines known as “Sienna at Aurora Park” (“Sienna”) and “Goldenrod at Aurora Park” (“Goldenrod”). Sienna is proposed for 82 single family detached residential units and Goldenrod is proposed for 111 single family detached residential units. The District is located in Tract Map No. 20229, recorded on June 17, 2021.
Tri Pointe is acquiring the property within the District in phased takedowns from Rescal Victoria 193, LLC (dba Resmark) (the “Land Bank”) pursuant to an Option Agreement, dated December 23, 2020, between Tri Pointe and the Land Bank (the “Option Agreement”) under which Tri Pointe acquires lots in a finished lot condition as development progresses. The Land Bank acquired the property within the District on December 23, 2020 from SC Victoria, LLC, a California limited liability company (the “Original Landowner” or “SC 448
2 4869-9049-0225v4/022777-0040
Victoria”) and Tri Pointe began taking down lots on June 7, 2021. As of July 17, 2023, the date of value of the Appraisal (defined herein), Tri Pointe had taken down 115 of the 193 residential lots in the District. Tri Pointe is scheduled to take down all of the remaining property to be developed as 78 residential units in the District by October 2024. There is no guarantee that Tri Pointe will acquire the remaining lots as planned. During the term of the Option Agreement, Tri Pointe is contractually obligated t o pay the Special Tax levied on the property subject to such agreement. However, in the event the Option Agreement is terminated prior to Tri Pointe having acquired all of the lots thereunder, the Special Tax would continue to be levied on the property in the District owned by the Land Bank. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” Sales began within the District in June 2022 and, as of July 17, 2023, within the District, 72 residential units had been completed and conveyed to individual homeowners, Tri Pointe owned six completed model units (none of which were in escrow), 10 homes over 95% complete (nine of which were in escrow), 11 residential units under construction and less than 95% complete (10 of which were in escrow), and 16 finished lots and the Land Bank owned 78 finished lots (none of which were in escrow). As of September 1, 2023, within the District, 88 residential units had been completed and conveyed to individual homeowners, Tri Pointe owned six completed model units (none of which were in escrow), 10 homes over 95% complete all of which were in escrow), 11 residential units under construction and less than 95% complete (none of which were in escrow), and the Land Bank owned 78 finished lots (non e of which were in escrow). Sales contracts are subject to cancelation and, therefore, homes currently in escrow may not result in closed escrows with the prospective homebuyers. Within the District, 131 building permits had been obtained as of July 17, 2023. Accordingly, assuming no additional building permits are obtained prior to May 1, 2024, 131 parcels will be classified as Developed Property for the Fiscal Year 2024-25 Special Tax levy. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT.”
The District was formed to finance certain public facilities and costs with respect thereto related to the development within the District. The Act was enacted by the California legislature to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State of California (the “State”). Any local agency (as defined in the Act) may establish a community facilities district to provide for and finance the cost of eligible public facilities and services. The legislative body of the local agency which forms a community facilities district acts on behalf of such district as its legislative body. Subject to approval by two-thirds of the votes cast at an election and compliance with the other provisions of the Act, a legislative body of a local agency may issue bonds for a community facilities district and may levy and collect a special tax within such district to repay such indebtedness.
Pursuant to the Act, the City Council adopted the necessary resolutions stating its intent to establish the District, to authorize the levy of special taxes on taxable property within the boundaries of the District, and to have the District incur bonded indebtedness for the purpose of financing authorized facilities (the “Facilities”).
Following public hearings conducted pursuant to the provisions of the Act, the City Council adopted resolutions establishing the District and calling special elections to submit the levy of the special taxes and the incurring of bonded indebtedness to the qualified voters of the District. On December 8, 2020, at an election held pursuant to the Act, the then sole landowner who comprised the qualified voters of the District, SC Victoria, authorized the District to incur bonded indebtedness in the aggregate principal amount of not to exceed $8,000,000 to be secured by the levy of Special Taxes (as defined below) on taxable property within the District for the purpose of financing the Facilities, and approved the rate and method of apportionment of the special taxes for the District (the “Rate and Method”).
The Rate and Method provides for a Facilities Special Tax (as defined in the Rate and Method) (the “Facilities Special Tax”) to be levied for the Special Tax Requirement for Facilities (as defined in the Rate and Method) and a Services Special Tax (as defined in the Rate and Method) (the “Services Special Tax”) to be levied for services described in the Rate and Method. As used in this Official Statement, the terms “Special Tax” or “Special Taxes” refer only to the Facilities Special Tax and does not include the Services Special Tax.
The Services Special Tax is not pledged under the Indenture nor is the Services Special Tax available to pay debt service on the Bonds. The Special Tax will be levied against certain property within the District pursuant 449
3 4869-9049-0225v4/022777-0040
to the Act, the Ordinance approving the levy of Special Taxes and the Indenture and in accordance with the Rate and Method. The lien of the Special Tax will be co-equal with the lien of the Services Special Tax.
Security and Sources of Payment for the Bonds
Under the Indenture, the City has pledged to repay the Bonds and any additional bonds issued under the Indenture (the “Additional Bonds”) from Net Special Tax Revenues and any other amounts held in the Special Tax Fund, the Bond Fund and the Reserve Fund. Proceeds of any Additional Bonds may only be applied to refund the Bonds or any Additional Bonds previously issued under the Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — No Additional Bonds Except for Refunding Bonds.” The Indenture defines “Net Special Tax Revenues” to mean Special Tax Revenues less amounts required to pay Administrative Expenses. The term “Special Tax Revenues” is defined in the Indenture to mean the proceed s of the Special Tax received by or on behalf of the District, including any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Tax, which will b e limited to the amount of said lien and interest and penalties thereon. “Administrative Expenses” is defined in the Indenture to mean costs directly related to the administration of the District, including, but not limited to: the costs of computing the Special Tax and preparing the annual Special Tax collection schedules and the costs of collecting the Special Tax, the costs of remitting the Special Tax to the Trustee, the fees and costs of the Trustee (including its legal counsel) in the discharge of t he duties required of it under the Indenture, the costs incurred by the District in complying with the disclosure provisions of any continuing disclosure undertaking and the Indenture, including those related to public inquiries regarding the Special Tax a nd disclosures to Owners, the costs of the District related to an appeal of the Special Tax, any amounts required to be rebated to the federal government in order for the District to comply with the tax covenants in the Indenture, an allocable share of the salaries of the City staff providing services on behalf of the District directly related to the foregoing and a proportionate amount of City general administrative overhead related thereto, and the costs of foreclosure of any delinquent Special Tax.
Net Special Tax Revenues are the primary security for the repayment of the Bonds and any Additional Bonds. In the event that Net Special Tax Revenues are not paid when due, the only sources of funds available to pay the debt service on the Bonds and any Additional Bonds will be the amounts held by the Trustee for such purpose in the Special Tax Fund, the Bond Fund and the Reserve Fund. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein.
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE DISTRICT (EXCEPT TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE), THE CITY OR THE
STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE BONDS OR ADDITIONAL BONDS. EXCEPT FOR THE NET SPECIAL TAX
REVENUES, NO OTHER TAXES ARE P LEDGED TO THE PAYMENT OF THE BONDS OR ADDITIONAL BONDS. THE BONDS AND ANY ADDITIONAL BONDS ARE NOT GENERAL OR
SPECIAL OBLIGATIONS OF THE CITY BUT ARE SPECIAL, LIMITED OBLIGATIONS OF THE
DISTRICT PAYABLE SOLELY FROM NET SPECIAL TAX REVENUES AND THE OTHER ASSETS PLEDGED THEREFOR UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN.
Description of the Bonds
The Bonds will be issued and delivered as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to actual purchasers of the Bonds (the “Beneficial Owners”) in the denominations of $5,000 and any integral multiples thereof under the book -entry system maintained by DTC, only through brokers and dealers who are o r act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. In the event that the book-entry only system described herein is no longer used with respect to the Bonds, the Bonds wil l be registered and transferred in accordance with the Indenture. See Appendix I — 450
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“INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY AND ITS BOOK -ENTRY SYSTEM” herein.