Gilroy City Council
December 5, 2022

irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases may be declared invalid or unconstitutional.

SECTION IV
This Ordinance shall take effect thirty (30) days after its adoption. The City Clerk is hereby directed to publish this Ordinance or a summary thereof pursuant to Government Code S ection 36933.

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF GILROY this 9th day of January, 2023 by the following vote:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

APPROVED:

Marie Blankley, Mayor

ATTEST:

_______________________
Thai Nam Pham, City Clerk

11.3.a
Packet Pg. 149 Attachment: Proposed Ordinance - Garbage Lien Ordinance Repeal (4071 : Garbage Lien Repeal)

11.3.b
Packet Pg. 150 Attachment: Ordinance 99-13 (4071 : Garbage Lien Repeal)

11.3.b
Packet Pg. 151 Attachment: Ordinance 99-13 (4071 : Garbage Lien Repeal)

11.3.b
Packet Pg. 152 Attachment: Ordinance 99-13 (4071 : Garbage Lien Repeal)

11.3.b
Packet Pg. 153 Attachment: Ordinance 99-13 (4071 : Garbage Lien Repeal)

11.3.b
Packet Pg. 154 Attachment: Ordinance 99-13 (4071 : Garbage Lien Repeal)

11.3.b
Packet Pg. 155 Attachment: Ordinance 99-13 (4071 : Garbage Lien Repeal)

11.3.b
Packet Pg. 156 Attachment: Ordinance 99-13 (4071 : Garbage Lien Repeal)

11.3.b
Packet Pg. 157 Attachment: Ordinance 99-13 (4071 : Garbage Lien Repeal)

ORDINANCE NO. 77-15

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF GILROY

REPEALING AND AMENDING VARIOUS SECTIONS OF THE GILROY

CITY CODE SO AS TO MAKE VIOLATIONS THEREOF INFRACTIONS
RATHER THAN MISDEMEANORS.

THE CITY COUNCIL OF THE CITY OF GILROY DOES ORDAIN AS FOLLOWS:

Section I: The following sections of the Gilroy City Code are hereby repealed: Sections 6A~9, 11.13 and 15.24,
Section II: Section 1.7 of the Gilroy City Code is amended to read as follows:

Sec. 1.7. General penalty; continuing violations.

Whenever in this Code or in any other ordinance of the
city any act is prohibited or is made or declared to ~be un- lawful or an offense, or the doing of any act is required or the failure to do any act is declared to be unlawful, where no specific penalty is provided therefor, the violation of any such provision of this Code or any other ordinance of the city shall be deemed an infraction, and shall be punished as set forth in Government Code Section 36900 as it now exists or may hereafter be amended. Such v£olations may also be redressed by civil action.

Every day any violation of this Code or any other ordinance of the city shall continue shall constitute a separate offense.

Section III: Section 6.5 of the Gilroy City Code is amended to read as follows:

Sec. 6.5. Penalty for violation of article,
Any person violating any of the provisions of this article shall be deemed guilty of an infraction.

Section IV:
read as follows:

Section 6.8(b) of the Gilroy City Code is amended to
Sec. 6.8.Removal and penalty for violation.
b) Any person violating any of the provisions of this
article shall be deemed guilty of an infraction.

Section V' Section 6A.10 of the Gilroy City Code is amended to read as follows:

Sec. 6A.10. Authority ~07 enactment of chaPter,
The provisions of this chapter have been enacted pursuant to the provisions of chapter 5b of the Penal Code of the state.
1-
ORDINANCE NO. 77-15

11.3.c
Packet Pg. 158 Attachment: Ordinance 77-15 (4071 : Garbage Lien Repeal)

Section VI: Section 10.16(a) of the Gilroy City Code is amended to read as follows:

Sec. 10.16. Penalties for violations.
a) Any person who shall violate any of the provisions of the code hereby adopted or fail to comply therewith, or who shall violate or fail to comply with any order made thereunder, or who shall build in violation of any detailed statement of specifications or plans submitted and approved thereunder, or any certificate or permit issued thereunder, and from which no appeal has been taken, or who shall fail to comply with such an order as affirmed or modified by the council or by a court of competent jurisdiction, within the time fixed herein, shall severally for each and every such violation and noncompliance respectively, be guilty of an infraction. The imposition of one penalty for any violation shall not excuse the violation or permit it to continue; and all such persons shall be required to correct or remedy such violations or defects within a reason- able time; and when not otherwise specified, each ten days that prohibited conditions are maintained shall constitute a separate offense.

Section VII:
read as follows:

Section 12.21 of the Gilroy City Code is amended to
Sec. 12.21.Removal of accumulated rubbish within e~ght hours f n0tifl-~atiOn~ .....

Any person who shall fail to cause all rubbish, waste material, dry grass, weeds or foul growths which become a menace to public safety and increases the fire hazard, to be removed from any lot, piece or parcel of land within the city within eight (8) hours after having been notified to do so by the chief of police or the chief of the fire department of the city shall be guilty of an infraction.

Section VIII: Section 12.35 of the Gilroy City Code is amended to read as follows:

Sec. 12.35.Penalties for violation,
Any person violating any of the provisions of this Chapter shall be deemed guilty of an infraction. Each day such violation is committed or permitted to continue shall constitute a separate offense and shall be punishable as such hereunder.

Section IX:
read as follows:

Sec. 13A.12. Violations.

Each violation of any provision of this chapter and each violation of any of the prescribed terms under which the Section 13A.12~of the Gilroy City Code is amended to
2-
ORDINANCE NO. 77-15

11.3.c
Packet Pg. 159 Attachment: Ordinance 77-15 (4071 : Garbage Lien Repeal)

permit is issued shall constitute an infraction. Each
violation of this chapter and each violation of any of
the prescribed terms under which the permit is issued
shall constitute a public nuisance and be subject to abate- ment as such.

Section X: Section 15.120 of the Gilroy City Code is amended to read as follows:

Sec. 15.120. Abandonment.

It shall be unlawful for any person to abandon, park,
store or leave or permit the abandonment, parking, storing or leaving of any licensed or unlicensed vehicle or part thereof which is in an abandoned, wrecked dismantled or inoperative condition upon any private property or public property not including highways within the city for a period in excess'of seven (7) days unless such vehicle or part thereof is
completely enclosed within a fence or building in a lawful manner where it is not plainly visible from the street or other public or private property, or unless such vehicle is stored or parked in a lawful manner on private property in connection with the business of a licensed dismantler, licensed vehicle dealer, licensed junkyard or other similar duly licensed business conducted pursuant to law when such parking or storing of vehicles or parts thereof is necessary to the operation of the business.

Section XI: Section 15.121 of the Gilroy City Code is amended to read as follows:

Sec. 15.121. Failure to remove.

It shall be unlawful for any person to fail or refuse to remove an abandoned, wrecked, dismantled or inoperative vehicle or part thereof or refuse to abate such nuisance when ordered to do so in accordance with the abatement provisions of this article of state law where such state law is applicable.

Section XII:
read as follows:

Sec. 15.122.

Section 15.122 of the Gilroy City Code is amended to
Interference with abatement.

It shall be unlawful for any person to interfere with, hinder or refuse admittance to persons authorized by this article to enter upon private property for the purpose of enforcing the pro- visions of this article.

Section XIII: Section 16.5(b) of the Gilroy-City Code is amended to read as follows:
b) It shall be unlawful for any licensee to operate with- out a permit.
3-
ORDINANCE NO. 77-15

11.3.c
Packet Pg. 160 Attachment: Ordinance 77-15 (4071 : Garbage Lien Repeal)

Section XIV: Section 16.13-1 of the Gilroy City Code is amended to read as follows:

Sec. 16.13-1.Nudity of waiter, waitress, entertainer in food and beverage establishments~
Any person, with or without compensation, who acts as a waiter, waitress, or entertainer, in any establishment which serves food, beverages, or food and beverages, including but not limited to alcoholic beverages, for consumption on the premises of such establishment and performs such activity in the nude, is guilty of an infraction.

Section XV: Section 16.14-1(c) of the Gilroy City Code is amended to read as follows:

Sec. 16.14-1. Public safety telephone numbers; delivery of i--n-~-j~tate rec6rded te%ephone mesSage ther~-~o.
c) Violation of this section is an infraction.

Section XVI: Section 18A.21 of the Gilroy City Code is amended to read as follows:

Sec. 18A.21. Penalty.

Any person violating any of the provisions of this chapter shall be punished as provided by section 1,7.

Section XVII: Section 20.65 of the Gilroy City Code is amended to read as follows:

Sec. 20.65. Penalty.

Any person violating any of the provisions of this article shall be punished as provided in section 1.7.

Section XV.III: Section 21.8 of the Gilroy City Code is amended to read as follows:

Sec. 21.8. Penalty.

Any offer to sell or to contract to sell, or any sale or deed of conveyance, made contrary to the provisions of this chapter is an infraction. Nothing herein contained shall bar any legal, equitable or summary remedy to which the city or other political subdivision or ahy person may be entitled and the city or such other political subdivision or person may file a suit in the superior court of the county to restrain or enjoin any attempted or proposed subdivision or sale in violation of this chapter.

ORDINANCE NO. 77-15

11.3.c
Packet Pg. 161 Attachment: Ordinance 77-15 (4071 : Garbage Lien Repeal)

Section XIX: Section 22~32 of the Gilroy City Code is amended to read as follows:

Sec. 22.32.Violation of provisions of article deemed
n]--
Any person violating any provision of this article, or
any distributor who fails or refuses to register as required herein, or to furnish any return required to be made, or who fails to furnish other data required by the director of finance, or who renders a false or fraudulent return of claim, or any person required to make, render, sign or verify and report or claim who makes a false or fraudulent report or claim with intent to defeat or evade the determination of any amount due under this article is guilty of an infraction,
Section XX:Section 23.13 of the Gilroy City Code is amended to read as follows:

Sec. 23.13. Same--Settlement of disputes.

All disputes as to fare shall be forthwith determined by the officer in charge of the police station, and if his decision is in favor of the passenger, the driver shall convey him to the police station and back to his original destination without charge. Failure to comply with such determination shall subject the offending party to a charge of an' infraction.

Section XXI: Section 23.14 of the Gilroy City Code is amended to read as follows:

Sec. 23.14. Same--Refusal to pay.

It shall be unlawful for any person to refuse to pay the lawful fare as fixed in section 23.12 of any of the vehicles regulated by this chapter, after employing or hiring the same.

Section XXII: Section 25A.13 of the Gilroy City Code is amended to read as follows:

Sec. 25A.13. Violations.

Any person violating any of the provisions of this chapter shall be guilty of an infraction.

Section XXIII: Section 26A.12 of the Gilroy City Code is amended to read as follows:

Sec. 26A.12. Penalty.

It shall be unlawful for any person to violate any provision or to fail to comply with any of the requirements of this chapter.

Each such person shall be deemed guilty of a separate offense 5-
ORDINANCE NO. 77-15

11.3.c
Packet Pg. 162 Attachment: Ordinance 77-15 (4071 : Garbage Lien Repeal)

for each day during any portion of which any violation of any of the provisions of this chapter is committed, continued or permitted by such person.

Section XXIV: Ail ordinances and parts of ordinances in conflict herewith are hereby repealed.

Section XXV: This ordinance shall take effect and be in full force thirty (30) days from and after its passage and approval, PASSED AND ADOPTED this 18th day of April, 1977, by the following vote:

AYES:

NOES:

ABSENT:

COUNCILMEMBERS:

COUNCILMEMBERS:

COUNCILMEMBERS:

STOUTCHILDERSHUGtlAN, LINK, PATE,

GOODRICH
NONE

CUNNINGHAM
APPROVED:
ayor
6-
ORDINANCE NO. 77-15

11.3.c
Packet Pg. 163 Attachment: Ordinance 77-15 (4071 : Garbage Lien Repeal)

I, SUSANNE E. STEINMETZ, City Clerk of the City of Gilroy, do hereby certify that the attached Ordinance No.77-15 is an original ordinance, duly adopted by the Council of the City of Gilroy at a regular meeting of sa|d Council held on the 18th day of April , 19 77L , at which meeting a quorum was present.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the offici2 seal of the City of Gilroy, this 19th
ity clerk of th'~ City of i~lroy /~
seal)
day of April , 19 77

11.3.c
Packet Pg. 164 Attachment: Ordinance 77-15 (4071 : Garbage Lien Repeal)

City of Gilroy

STAFF REPORT
Agenda Item Title: Discussion of Santa Clara County Civil Grand Jury Report Regarding Ballot Measure Wording and Recommendations
Meeting Date: December 5, 2022
From: Jimmy Forbis, City Administrator
Department: Administrative Services
Submitted By: LeeAnn McPhillips, Administrative Services/HR Director/Risk Manager
Prepared By: LeeAnn McPhillips, Administrative Services/HR Director/Risk Manager

Strategic Plan Goals

☐ Develop a Financially
Resilient Organization

☐ Ensure Neighborhood
Equity from City
Services
☐ Promote Economic
Development
Activities

☐ Promote Safe,
Affordable Housing for All

☐ Maintain and Improve
City Infrastructure

RECOMMENDATION

Provide staff direction.

BACKGROUND

On October 7, 2022, the City of Gilroy received a report from the Santa Clara County Civil Grand Jury (SCCCGJ) entitled “If You Only Read the Ballot, You’re Being Duped”.

Staff forwarded a copy of the report to Council on October 7, 2022. All cities and certain special districts and school districts in Santa Clara County received a copy of this report and are required to provide a response.

11.4 Packet Pg. 165

In summary, the SCCCGJ report reports that “the 2022 Civil Grand Jury has seen ballot question language that is confusing, advocacy-oriented, or simply dishonest.” The report goes on to indicate that “many voters cannot comprehend the complicated language or the implications of that “yes’ or “no” vote.” The report summary indicates that voters do not have time to fully research ballot questions and “almost always rely on the language of the ballot measure question itself.” As a result of this concern, the SCCCGJ proposes an oversight person or body who is “well versed in the requirements of the law” and who is “empowered to review and to reject ballot question wording that is false, misleading, or partial to one side.” The SCCCGJ believes this oversite person or body will ensure due process, clearer writing, and more transparency with voters.

The Gilroy City Council is required to submit a response to the SCCCGJ report by no later than January 5, 2023. In the response, the Council must indicate agreement or disagreement (in whole or in part) with the report’s single finding and with three of the report’s six recommendations. If Council disagrees with the finding, an explanation for the disagreement must also be provided. In addition, the Council must indicate whether each identified recommendation in the report has been implemented, not yet implemented, but will be implemented, requires more analysis requiring a future response in no less than six months, or will not be implemented because it is not warranted or is not reasonable with an explanation thereof.

This report is stage one of the Council’s response process allowing Council to discuss the report, finding, and recommendations. Following Council discussion, direction can be provided so that a more formal response can be drafted, approved by Council at a future meeting, and submitted to the SCCCGJ by the January 5, 2023 response deadline.

ANALYSIS

This SCCCGJ report appears to be in response to a ballot measure on term limits submitted by Valley Water. Staff believes the recommendation is an overreach by the SCCCGJ toward agencies that have done nothing wrong. The SCCCGJ recommendations attempt to take away local control of the ballot measure process. In addition, Gilroy, as a Charter City, is not subject to the jurisdiction of the County in these matters and would not be required to abide by a County ordinance regarding ballot questions. Therefore, the SCCCGJ is recommending that the County pursue other legislative solutions to grant control over local agency ballot measures to the County.

The current process has worked well in Gilroy and the Gilroy City Attorney has been able to draft effective impartial analyses of proposed ballot measures to ensure that ballot language is clear to voters. The City Attorney’s process, as required by law, is independent and neutral, and is completed without any outside influence or pressure.

The Gilroy City Attorney has the experience and understanding of the law like County Counsel making it unnecessary to add another layer of review to the process. The actual ballot measure titles are approved by the City Council. Further, Gilroy has not received any complaints regarding confusing ballot measure wording. Therefore, staff

11.4 Packet Pg. 166

does not see a reason or need for the proposed SCCCGJ recommendation s and recommends Council respond accordingly.

For purposes of Council discussion, staff is providing the below draft recommendations.

Council can alter the below responses based on the discussion and direction of Council.

Finding 1:

The Civil Grand Jury finds that in the current environment, which is unregulated at the local level, it is easy for the author of a ballot measure question to write the question in a way that is confusing or misleading to voters.

Draft Response to Finding 1:

The City of Gilroy disagrees with the finding that the writing of ballot measures at the local level is unregulated. All ballot measure questions are reviewed and approved by the Gilroy City Council and subject to State Law. In addition, there is a judicial remedy available by State Law.

The main concern raised by the SCCCGJ report focuses on Measure A submitted by Valley Water. The City of Gilroy, therefore, disagrees that additional restrictions and oversight by the County of Santa Clara are necessary and does not support the removal of local control.

Recommendation 1b:

Governing entities within Santa Clara County should voluntarily submit their ballot questions to the County Counsel for review prior to submission to the Registrar of Voters, unless and until Recommendation 1d is implemented.

Draft Response to Recommendation 1b:

The City of Gilroy does not believe this recommendation is necessary and it will not be implemented by the City. The City of Gilroy will retain local control of ballot measure questions and will not hand over that responsibility to County Counsel. The Gilroy City Council will continue to review and approve ballot measure language as the Gilroy City Council is the body elected by, and responsible to, the residents of the City of Gilroy. In addition, the City of Gilroy has a qualified City Attorney to provide the review as is being proposed in Recommendation 1b.

Recommendation 1c:

Governing entities within Santa Clara County should, by March 31, 2023, adopt their own resolution or ordinance to require submission of their ballot questions to the County Counsel for review prior to submission to the Regist rar of Voters, unless and until Recommendations 1d and 1e are implemented.

Draft Response to Recommendation 1c:

11.4 Packet Pg. 167

The City of Gilroy finds this recommendation unwarranted and it will not be implemented by the City. The City of Gilroy does not often have local measures on the ballot, and has not encountered the type of problem discussed in the report. The Gilroy City Attorney will continue to provide the services identified and the City will not be shifting those responsibilities to County Counsel.

Recommendation 1e:

Governing entities within Santa Clara County should submit their ballot questions for review by the Good Governance in Ballots Commission pursuant to Recommendation 1d.

Draft Response to Recommendation 1e:

The City of Gilroy finds this recommendation unwarranted and it will not be implemented by the City. The County of Santa Clara does not have the authority to regulate another agency and, as a Charter City, Gilroy will retain local control.

Passing legislation that would enable the County of Santa Clara to have an express grant of power over local agencies would be a dangerous precedent and would take away local Gilroy control and grant control to the County of Santa Clara. The elected officials of Gilroy take the ballot measure process very seriously and will continue to satisfy their responsibilities to the residents of Gilroy to ensure a thorough review and approval of any ballot measure questions.

ALTERNATIVES

The Council must reply to the report. However, there are various alternatives the Council can communicate in response to the report.

FISCAL IMPACT/FUNDING SOURCE

Other than staff time, there is no additional fiscal impact in the preparation of this report.

If the recommendations are approved and implemented, it is unclear if there will be fees charged by the County to provide the services identified in the recommendations.

NEXT STEPS

Staff will return at the next Council meeting, December 12, 2022, with final response documents consistent with the Council’s direction. Once approved, documents will be submitted to the Santa Clara County Civil Grand Jury in advance of the January 5, 2023 deadline.

Attachments:

1. SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22

2. SCCCGJ Letter to City of Gilroy 10.7.22

3. SCCCGJ Report - 93305 Requirements for Responses to Findings

11.4 Packet Pg. 168

Release date here Page 0 of 23

IF YOU ONLY READ THE BALLOT,
YOU’RE BEING DUPED
2022 Santa Clara County
Civil Grand Jury
October 7, 2022

11.4.a
Packet Pg. 169 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

T ABLE OF CONTENTS
GLOSSARY AND ABBREVIATIONS..........................................................................................2 SUMMARY .....................................................................................................................................4 BACKGROUND .............................................................................................................................5 METHODOLOGY ..........................................................................................................................6 INVESTIGATION ...........................................................................................................................6 CONCLUSION ..............................................................................................................................16 FINDINGS AND RECOMMENDATIONS..................................................................................17 REQUIRED RESPONSES ............................................................................................................19 REFERENCES ..............................................................................................................................21

11.4.a
Packet Pg. 170 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

GLOSSARY AND ABBREVIATIONS

Attorney General The chief law officer who represents a state in legal proceedings.

Ballot Card The printed ballot, usually on high-grade paper, consisting of the ballot questions and names of individuals running for elected office.

Ballot Measure Ballot measures are proposals, usually at a county or local level, to enact new laws or repeal existing laws, which are placed on the ballot for approval or rejection by the
electorate.

Ballot Proposition

Ballot propositions are proposals, usually at the state level, to enact new laws or constitutional amendments or repeal existing laws or constitutional amendments, which are
placed on the ballot for approval or rejection by the
electorate.

Ballot Question or Ballot
Label

Boards and Commissions

For purposes of this report, Ballot Question or Ballot
Label means the 75-word or less statement of a measure
that precedes “Yes” or “No” on the ballot card.

Boards and Commissions are made up of residents who
volunteer their time and expertise to assist and advise governing bodies in the chosen capacity.

Caselaw

Law or legal precedent established by the outcome of
court cases.

County Counsel or Office of
the County Counsel

The County Counsel is the chief legal advisor and
representative for the county, including the county board of supervisors and all county agencies and departments.

Elections Code

A collection of California laws related to public elections.

11.4.a
Packet Pg. 171 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

Governing Entity

A jurisdiction such as a city, county, school district, special district, or political subdivision.

Home Rule

The right of self-government that is granted by state
constitution or statute to give autonomy to a local
government. Home Rule implies that each level of
government has a separate realm of authority.

Public Opinion Pollsters

Registrar of Voters

Opinion polls are designed to represent the opinions of a population by conducting a series of questions and then extrapolating generalities in ratio or within confidence intervals. A person who conducts polls is referred to as a pollster.

The department responsible for the operation,
administration, and direction of the elections department, with primary responsibility for the registration of voters, the holding of elections, and all matters pertaining to elections.

Single Subject Rule

Per Article II, Section 8(d) of the California Constitution, “An initiative measure embracing more than one subject
may not be submitted to the electors or have any effect.” Essentially, the rule stands for the notion that where an initiative embraces more than one subject, it can neither be submitted to, nor enacted by, the voters.

Term Limits

A specified number of terms (in years) that a person in office is allowed to serve.

Writ of Mandate

In California, writs of mandate are used by superior courts, courts of appeal, and the Supreme Court to command
lower bodies, including both courts and government
agencies, to do or not to do certain things.

11.4.a
Packet Pg. 172 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

SUMMARY

It is not uncommon for the public to be confronted daily with news and information through multiple sources—traditional television programming, 24/7 cable news, satellite radio, social media, and phone alerts. In the context of elections, voters’ busy lives can be overwhelmed with many different voices. County and state voter information guides are required by law to be mailed to every registered voter, but voters today do not have a lot of time to read these resources. As a result, the ballot measure question printed on the ballot itself becomes a key factor in the outcome of an election.

There is an expectation in California law that ballot questions be drafted in a manner that is not false, misleading, or partial to one side.1 But there are ways to work around it. Among the fifty or so jurisdictions in Santa Clara County that are eligible to put forth a ballot measure, the 2022 Santa Clara County Civil Grand Jury (Civil Grand Jury) has seen ballot question language that is confusing, advocacy-oriented, or simply dishonest. Yes, sometimes voters are being deceived.

Many voters cannot comprehend the complicated language or the implications of that "yes” or "no” vote. In a perfect world, voters would have the luxury of time to research these issues. In reality, however, voters almost always rely on the language of the ballot measure question itself.

What can be done about this? The Civil Grand Jury proposes an oversight person or body, one who has taken an oath to act with integrity, is well versed in the requirements of the law, and is empowered to review and to reject ballot question wording that is false, misleading, or partial to one side. Santa Clara County should have a climate whereby governing entities in Santa Clara County are discouraged from using dishonest or deceitful wording in a ballot question, especially when they know it will be reviewed and could be rejected. In so doing, due process will be strengthened. With clearer writing, ballot measure questions will be more transparent and straightforward, which will lead to a better perception of government by the voters. It is time to remove impediments to good governance.

1 California Elections Code section 10403 requires a ballot question to “conform to this code governing the wording of propositions submitted to the voters at a statewide election.” The California Elections Code contains Section 9051, which provides that in a statewide election the ballot title and summary of an initiative or referendum must be a “true and impartial statement of the purpose of the measure in such language that the ballot title and summary shall neither be an argument, nor be likely to create prejudice, for or against the proposed measure.” (Elec. C. §9051(c); see also, McDonough v. Superior Ct. (2012) 204 Cal. App. 4th 1169, 1172.)

11.4.a
Packet Pg. 173 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

BACKGROUND

Ballot measures or ballot propositions are proposals to enact new laws or constitutional amendments or to repeal existing laws or constitutional amendments. They are placed on the ballot for approval or rejection by the voting public. The words “ballot measures” are often used by county, city, and local governing entities, whereas at the state level, the California State Legislature uses the term “ballot propositions” to refer to the same concept. The ballot measure question, which is the subject of this report, refers to the maximum 75-word text that precedes the “Yes” or “No” selection on the ballot card itself. Because most voters never read beyond what is printed on the ballot card, it is of critical importance that ballot measure questions be concise, accurate, and impartial.

Recently, two local newspaper articles highlighted the tactics that governing entities have used to manipulate voters:
• Borenstein, Daniel, Tricks California Local Officials Use To Trick Voters, Bay Area News Group, January 21, 2022.
• Mercury News and East Bay Times Editorial Boards, Stop Deceiving Bay Area Voters on Local Tax Measure Costs, June 26, 2020, updated September 5, 2020.

As part of its charge, the Civil Grand Jury is responsible for identifying areas within local government that lack good governance or practices. This Civil Grand Jury identified as a problem the choice of wording used in local ballot measure questions. Specifically, the Civil Grand Jury discovered that some local governing entities presenting measures for a public vote create ballot questions that are purposefully misleading so they may obtain their desired result. In particular, it was noted that the wording of a ballot question from the June 2022 election, although representing a relatively simple issue, created confusion among the public. When voters found out what the text of the measure actually meant, they felt deceived by the wording of the ballot question. Deception in ballot questions is worth the attention of the Civil Grand Jury. This problem must be remediated to reinstate good governance in the election process.

11.4.a
Packet Pg. 174 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

METHODOLOGY

The Civil Grand Jury used the following investigative methods:
• Interviews with ten individuals who are well versed in the intricacies of the election process and experts in political science and local governments
• Three published Civil Grand Jury reports: 2021-22 Alameda County, 2021-22 Santa Cruz County, 2021 Santa Clara County
• Editorials from local and regional newspapers: Mercury News, Los Angeles Times, San Francisco Chronicle
• Close reviews of ballot measures, past and upcoming, from the counties of San Mateo, Santa Clara, Santa Cruz, and the City and County of San Francisco • Legal research of court challenges involving ballot questions

INVESTIGATION

Throughout this report, the Civil Grand Jury was interested only in the process of ballot measure question drafting, not the substance of the underlying ballot measure itself. In its research and analysis, the Civil Grand Jury does not examine the merits of the measure, but rather whether the question as drafted is truthful, impartial, and fair. Ballot questions must conform to statutory requirements and should provide voters with sufficient information and transparency to make informed decisions.

A straightforward ballot question can be summarized this way: A vote for “Yes” means yes and a vote for “No” means no. Unfortunately, it is common for ballot questions to be presented whereby a vote for “Yes” actually means no, and vice versa. This wording is arguably confusing. Inching farther away from confusing questions, the research performed by the Civil Grand Jury found ballot questions that are even worse—they are misleading.

Santa Clara Valley Water District’s Measure A

During the last election in June 2022, the question for Measure A put forth by the Santa Clara Valley Water District (Water District) employed such a tactic:

Shall the measure amending the Santa Clara Valley Water District Ordinance 11-01 to limit Board members to four successive four-year terms be adopted?

The Water District had term limits already in place for board members to serve three four-year terms, or 12 years at most. Measure A sought to increase term limits to four four-year terms, or 16 years at most. However, the ballot question hid the fact that a term limit was already in place; it

11.4.a
Packet Pg. 175 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

asked voters whether a term limit of four terms should be adopted, thereby couching the question as a measure to adopt term limits generally, which one political science expert described to the Civil Grand Jury as a concept widely favorable to the voting public. The ballot question did not reflect what the Water District wanted to do. The Water District wanted to extend term limits, but it wrote the ballot question without using the words “extend,” “change,” or “increase.” Instead, the Water District characterized the ballot measure as setting term limits, which is a mischaracterization of what Measure A was actually about.

Further, it is notable that in November 1998, the County of Santa Clara placed a substantially similar measure on the ballot using the same tactic. Measure E asked:

Shall the County of Santa Clara amend section 202 to limit the number of terms a member of the Board of Supervisors may serve to three terms, consisting of four years each?

Again, the ballot question failed to inform the reader that each member of the County of Santa Clara Board of Supervisors was already limited to two terms and that the ballot measure proposed to extend years served, not “limit” them. By not being transparent, this tactic of ballot question drafting is tantamount to a lie by omission; it borders on deceiving the public. From Measure E in 1998 to Measure A this year, 24 years later, the climate has not changed.

Regulations that Govern Ballot Questions

Sections 9100-9190 of the California Elections Code specifically address county-level elections.

Other sections of the Elections Code, while they do not specifically address county-level elections, have import and therefore apply as well. The County of Santa Clara has not enacted local ordinance code provisions regarding ballot question language.

Under the Elections Code, the wording of a ballot measure must state the ballot question, or what the Elections Code calls the “label,” in 75 words or less (Elec. C. §9051(b), §10403, §13247). The ballot question must state “the nature” of the measure (Elec. C. §13120). The official who drafts the ballot question “shall give a true and impartial statement of the purpose of the measure in such language that the ballot title and summary shall neither be an argument, nor be likely to create prejudice, for or against the proposed measure” (Elec. C. §9051(c)). In other words, ballot measure questions shall not be false, misleading, or partial to one side.

Who is Responsible for Writing Ballot Questions?

Today, ballot questions are rarely written “from scratch.” Residing in the public domain are hundreds, if not thousands, of boilerplate questions spanning the universe of issues typically faced by government and public agencies. Putting a measure on the ballot usually starts with selecting

11.4.a
Packet Pg. 176 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

an existing template, preferably one that had been used successfully within a reasonable timeframe and geographic proximity to the one at hand. Tweaks are then made to the chosen template to fit the measure being proposed.

Governing entities are ultimately responsible for approving the final text of the ballot question, but the actual selection of words is often the calculated and carefully calibrated work product of hired election experts, consultants, and attorneys. These outside consultants often rely on public opinion pollsters to determine the type of proposal and wording to put before voters that would achieve the desired outcome. Often, this includes using “feel good” wording that is shown to resonate with voters: “reduce crime;” “funds spent locally;” “all money locally controlled;” and “with citizen oversight.” Results from public opinion polls often dictate the structure and selection of words used within the ballot question, which is then voted on and, if successful, adopted by the governing body such as a city council, a county board of supervisors, the board members of a school district, or any governing body of a government entity operating within the county. During the course of this investigation, the Civil Grand Jury learned that local measures on the ballot that governing entities choose wording likely to be most successful at the ballot box over clarity of language to the voter.

For purposes of this investigation, the Civil Grand Jury focused on ballot questions relating to local ballot measures, not state propositions, because according to the California Elections Code, the state attorney general is responsible for providing ballot questions for state propositions. In contrast, there is no similar requirement that a certain officer provide the ballot question for local elections, so it is instead drafted by the proponent of the measure at the local level.

Advocacy and Tactical Wordplay Result in Poorly Drafted Ballot Questions

It has been widely observed today that the 75-word ballot questions are being used as advocacy pieces, at the expense of fairness and impartiality. In an aptly titled report published in June of last year, the Alameda County Civil Grand Jury advocated for “The Need for Accuracy and Impartiality of Ballot Measure Questions.” The jury explained how and why the desire to achieve a certain outcome has tainted the process to produce ballot measure questions that are not accurate and impartial:

In general, we found ballot questions suffer from a “proponent’s bias” that is a natural outgrowth of the typical process through which questions are selected, drafted, and proposed. … In general, we found that ballot questions too often fall short of what voters have a right to expect in terms of transparency and impartiality, even when satisfying minimum legal standards.

11.4.a
Packet Pg. 177 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

The jury in Alameda reviewed and provided an in-depth analysis of six ballot questions to reach their conclusion. In so doing, they exposed the “tricks of the trade”—wording chosen for the sole purpose of increasing the odds of success at the polls. Adopting the same methodology as the Alameda report, the Civil Grand Jury reviewed past and upcoming ballot measure questions from local jurisdictions within Santa Clara County. The Santa Clara County Civil Grand Jury observed the same tricks and tactics used by governing bodies to deceive voters:

(1) Using “feel-good" words to garner voter approval. Measure F, November 2020, said “all funds spent locally,” which is meaningless when one pauses to think about it. (2) Adding favorable language even where it plainly does not apply. Measure F, November 2020, said “independent audits, citizens’ oversight” where the underlying ordinance implementing the measure makes no mention whatsoever of audit and oversight requirements.
(3) Adding misleading words to lead voters astray. Measure S, November 2020, said “until ended by voters,” falsely implying that the measure itself provided for repeal or that voters would have an opportunity to repeal the tax when they did not; Measure L, November 2020, conveyed the same with “can be ended by voters.” Measure A, March 2017, said “[funds] cannot be taken away by the State,” falsely implying that the state may access local funds when it may not.
(4) Manipulating words to divert voters from what is actually at issue. Upcoming Measure N, November 2022, which seeks authorization of $572 million in school bonds costing approximately 3 cents per $100 of assessed valuation, states “no increase in tax rates.” (5) Omitting relevant information necessary for voters to make informed decisions. Measure AA, November 2016, and Measure H, November 2014, made no mention of the tax increase that would be required to fund the school bonds that were at issue. (6) Putting multiple issues on a single measure, ostensibly violating the single subject rule.

Measure H, November 2020, sought to increase card room tax and the number of card tables allowed in gambling facilities.

At the writing of this report, the following measures slated for the upcoming November 2022 election also rely on at least one of the tactics described:

E “all funds spent locally with no money taken by the State and spent elsewhere” - see (1) and (3) above.

G, H, J, L “until ended by voters” - see (3) above.

I “Shall the City Charter be amended to add the City's ethics and elections commission (Board of Fair Campaign and Political Practices) to the Charter; remove requirements that members of the Planning, Civil Service, and Salary Setting Commissions be electors and/or citizens; remove gender-specific language; and require the City Council to adopt equity values, standards, and assessments in making certain decisions?” - see (6) above.

O “all money staying local” - see (1) above.

11.4.a
Packet Pg. 178 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

Along the same lines, it is worth noting that in June 2022, the Santa Cruz County Civil Grand Jury released its report, “Words Matter: Did Measure G Deceive Voters?” The question confronting the jury was whether the County of Santa Cruz was honoring the provisions in the ballot measure following its passage. The jury concluded that the ballot question behind the November 2018 Measure G was misleading after its investigation and research revealed no basis whatsoever for including the words “annual audits and independent citizens oversight” within the ballot question.

Arguably, these words were used for no purpose other than to elicit good feelings in the voter.

The Elephant in the Room: Big Money

Elections cost money—lots of money. In an article published June 30, 2002, updated June 22, 2022, CalMatters put it succinctly: “Ballot measures are big business.” The Civil Grand Jury learned that cost is a major factor in the decision to get to the ballot. San Jose’s Mercury News reported that the Water District’s Measure A from the June 2022 election cost taxpayers $3.2 million.

Once the decision is made by the government entity to spend the money to go to ballot, a lot of pressure is put on the entity to do whatever it takes to secure a win. For this reason, proponents of ballot measures stay focused on the result, hiring high-priced election consultants, attorneys, and opinion pollsters to carefully frame the ballot question to achieve the desired outcome. Successful elections will reward those that are behind them. It does not take much imagination to understand how this practice has evolved to become “high stakes.” For example, a school district superintendent who has successfully secured funding through school bond measures may parlay these wins to rally support for a more prestigious role or a position at a larger public institution.

On the other hand, if a measure fails, individuals’ livelihoods are at stake because someone will likely have to take the blame for it—usually either someone on staff or the board proponents of the governing body. This is why proponents advocate so strongly, often—as exemplified above— sacrificing context, clarity, truthfulness, and transparency in ballot question wording in favor of pure advocacy. The Civil Grand Jury learned from those in the ballot question business that it is understood that the drafter will make sure the statement is “lawful,” but it is also understood that it will not necessarily provide full disclosure.

Eroding the Public’s Trust

Many voters in Santa Clara County felt that they were tricked by the Water District based on how Measure A was worded. The Civil Grand Jury compiled the following descriptors of Measure A from local news sources and through its interviews: “deceitful,” “deceptive ballot language,” “designed to confuse voters,” “dishonest,” “false,” “hiding the ball,” “lacks integrity,” “lie by omission,” “misleading,” “not ethical,” “not transparent,” “not clear,” “violates the norm,”

11.4.a
Packet Pg. 179 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

“violates standards of good governance,” “board must be held accountable,” “board should resign,” “board violated its fiduciary duty,” “board violated the trust of the people,” “board wasting money,” “failure of character,” “failure to represent its constituents,” “fraudulent misappropriation of public funds,” “misled the public for political gain,” “self-serving hoodwinking of the electorate,” “self-serving dishonesty,” “unacceptable in a democracy.”

Public opinion made it clear that where a ballot question fails to provide voters with sufficient information to make an informed decision, it does so at the expense of public trust. Forming distrust between government and its citizenry hurts. What the Water District did through Measure A has severe ramifications because it creates distrust between the government agency and the people the agency is supposed to serve and protect. Going forward, Santa Clara County residents will likely question the integrity and ethical behavior of the Water District. Once the bonds of trust have been weakened, citizens are less inclined to trust the actions and decisions of this agency and more inclined to ask, “If the Water District cannot be trusted to be truthful on the ballot, how can we know them to be truthful in other matters?”

With the passage of Measure A, many residents lost confidence in the Water District. It may take a long time to regain trust from the community. While the Civil Grand Jury appreciates the desire of a government entity to advocate for itself when putting ballot measures up for a public vote, ballot questions cannot be false, misleading, or partial to one side. Based on Civil Grand Jury research and reports, too many local measures fail to meet this standard in favor of advocacy and “proponent’s bias.”

Lack of Oversight Results in Poorly Drafted Ballot Questions

Despite the number of hands that touch a proposal from inception to ballot card, the Civil Grand Jury was surprised to discover that there is no filter or oversight by an appropriate official prior to the adoption of ballot question wording. At the state level, the “Attorney General gives a true and impartial statement of the purpose of the measure in such language that the ballot title [e.g., the ballot question] and summary shall neither be an argument, nor likely to create prejudice, for or against the proposed measure” (Elec. C. §9051(c)). But the Attorney General does not have jurisdiction over local measures and thus does not provide the ballot question. When it comes to local measures, the Civil Grand Jury learned that there is not a similar role performed by an official, like the Attorney General, that can provide the wording for ballot questions. Rather, when the ballot question is submitted to the Santa Clara County Registrar of Voters, their review is narrowly limited to enforcement of the 75-word limit. Staff at the County Registrar of Voters manually count the number of words to ensure that the word cap has not been stretched. They do not monitor the content of the ballot question.

11.4.a
Packet Pg. 180 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

At the local level, the County of Santa Clara Office of the County Counsel performs legal services that are most analogous to the Attorney General’s role at the state level with respect to elections.

Further, County Counsel has expertise in election law and advises the County of Santa Clara Registrar of Voters. The County Counsel does not, however, have authority over cities and political subdivisions within the boundaries of the county. Therefore, when a city, school district, or special district places a local measure on the ballot, they are permitted under current law to draft the language themselves. They have every incentive to adopt wording proposed by their polling consultants, who will give weight to “feel good” words over simplicity, transparency, and impartiality. Fundamentally, the government entity’s self-interest dictates the ballot question wording.

The Current Sole Remedy—Initiating a Court Challenge—Falls Short

Under current legislation, there is no realistically expedient method to challenge problematic ballot questions. When a measure is to be placed on the ballot for an upcoming election, it is subject to a 10-day public examination period during which any voter in the jurisdiction may file a lawsuit to amend the language of the measure. California Elections Code section 9295 sets forth the procedure:

During the 10-calendar-day public examination period provided by this section, any voter of the jurisdiction in which the election is being held, or the elections official, himself or herself, may seek a writ of mandate or an injunction requiring any or all of the materials to be amended or deleted. The writ of mandate or injunction request shall be filed no later than the end of the 10-calendar-day public examination period.

A peremptory writ of mandate or an injunction shall be issued only upon clear and convincing proof that the material in question is false, misleading, or inconsistent with the requirements of this chapter, and that issuance of the writ or injunction will not substantially interfere with the printing or distribution of official election materials as provided by law.

There are several reasons why the 10-calendar-day public examination period to object in a formal court setting does not work well:

(1) The public tends not to hear about ballot measures until it is too late. This is due in part to a dearth of media coverage of local news, a result of the consolidation of local news outlets by media conglomerates. It is no secret that in today’s news environment, local news coverage has been reduced significantly. Furthermore, ten days is a very short window to react, let alone mount a court challenge to remediate.

11.4.a
Packet Pg. 181 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

(2) Ten days is much too short a time to locate an attorney well versed in the laws and processes of elections to file a lawsuit in this specialized field. (3) Even if an attorney can be available within the 10-day window, it is not within the means of the average person to afford the attorney fees necessary to pursue a remedy. (4) Voters challenging the wording in a ballot question face an uphill battle because the courts give deference and considerable latitude to the original author. Further, courts uphold the ballot measure question if it substantially complies with the requirement not to be “false, misleading, or partial to one side.” (See Bibliography, Amador and McDonough decisions.) (5) There is practically no recourse to fix non-conforming ballot questions after the 10- calendar day public examination period has passed. (See Bibliography, Denny decision.) (6) Even the single subject rule—a state constitutional doctrine—has been watered down by case law; hence it is no longer vigorously enforced. (See Bibliography, Amador and Harbor decisions.)
When confronted with challenges to ballot measures, the courts have stated:

• Relief under a writ of mandate may be granted "only upon clear and convincing evidence" that the challenged election material is "false or misleading or otherwise inconsistent with the provisions." (See Bibliography, McDonough decision.) • The test is not whether the ballot question could be more complete. (See Bibliography, Martinez decision.)
• The ballot title need not be the “most accurate,” “most comprehensive,” or “fairest” that a skilled wordsmith might imagine. (See Bibliography, Yes on 25, Citizens for an On-Time Budget decision.)
• The courts are not free to change an accurate statement to reflect their interpretation of the common sense understanding of the language. (See Bibliography, Yes on 25, Citizens for an On-Time Budget decision.)
• The courts are not free to wordsmith the ballot question and change it just because they believe it could be better. (See Bibliography, Martinez decision.) • The courts must give deference to the official who drafts the ballot question; “all legitimate presumptions should be indulged in favor of the propriety” of the drafter’s actions. (See Bibliography, Becerra decision.)
Solutions

The Civil Grand Jury has learned that the sole legal remedy currently available to right a wrong when it comes to ballot measure questions is insurmountable for the average citizen. Nonetheless, the Civil Grand Jury notes that there could be two potential mechanisms to improve the current process.

11.4.a
Packet Pg. 182 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

1. Task an appropriate official to review ballot measure questions

Current law requires that the individual who drafts the ballot question do so in a way that is not false, misleading, or partial to one side. In order to meet this requirement, an objective, neutral third party is needed to speak on behalf of the voting public, ideally someone who is well versed in the law, has a fiduciary duty to uphold the law, and has taken an oath to act with integrity. The Civil Grand Jury recommends that County Counsel perform this task. Further, the Civil Grand Jury recommends that the County of Santa Clara Board of Supervisors should endorse the County Counsel to act in a role, like that of the Attorney General, to provide for ballot question wording for all local measures.

What this might look like: After the governing entity ratifies the concept behind the proposed measure, as is the practice today, the entity’s lawyer, whether a city attorney, school district attorney, or special district attorney, would draft a ballot question that is impartial, unbiased, and non-argumentative. The proposed ballot question would then be submitted to the County Counsel, who would be charged with overseeing the narrow task of ensuring that the wording of the question is not false, misleading, or biased in favor of one view. Most importantly, County Counsel would also be authorized to reject non-conforming or deficient wording and to compel revisions. Only when the ballot question at issue conforms to statutory requirements would County Counsel approve it for use.

2. Create an independent oversight commission to review ballot questions

It is not unusual for jurisdictions to convene independent advisory commissions to assist in county governance. The County of Santa Clara alone boasts over 75 boards and commissions, ranging from an Advisory Commission on Consumer Affairs to a Youth Task Force.

For purposes of overseeing conformity of ballot measure questions, the Civil Grand Jury recommends that the County form a Good Governance in Ballots Commission (Good Governance Commission). This advisory commission should act quickly to review and comment on ballot questions or provide recommendations to remediate questions that that are false, misleading, or partial to one side. The composition of the Good Governance Commission should, at a minimum, include an attorney member of the California State Bar, either to participate as a full member or act as an ex officio member without voting privileges. Because County Counsel is the attorney to most Santa Clara County advisory boards and commissions, it could therefore be tasked to help members of this commission navigate the intricacies of California’s statutory requirements.

Apart from the obvious benefits—non-partisanship and public representation—another advantage of having a single commission perform the task of reviewing ballot questions would be to maintain consistency across all governing entities. Regardless of whether a city, county, school district, or

11.4.a
Packet Pg. 183 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

other jurisdiction puts forth the measure, the output from a neutral, uninterested third party would probably help eliminate the rhetoric and advocacy inherent in the current practice.

To be successful, the Good Governance Commission should ideally have the ability to review and to reject language that is biased and partial. The power of rejection is crucial because it would also likely have the effect of encouraging the governing entity to self-police. It must not be merely optional for governing entities to submit their ballot questions for review. If the commission were granted mere advisory powers, then it would have very limited impact; it is reasonable to surmise that most, if not all, governing entities would choose to decline to submit their ballot questions for consideration in the interest of the time required to add a layer of review.

Unfortunately, adoption of a Good Governance Commission that has the power to reject language would require passage of a state law that would enable the County of Santa Clara to have an express grant of power to impose a requirement on other entities. This is because “[t]he board of supervisors has no inherent powers; the counties are legal subdivisions of the state, and the county board of supervisors can exercise only those powers expressly granted it by Constitution or statutes and those necessarily implied therefrom” (Hicks v. Board of Supervisors (1977) 69 Cal. App. 3d 228, 242). In general, absent other express authorization, one governmental entity cannot regulate another.

Put another way, charter cities operate under home rule, which means that they do not answer to the county the city is located in. For example, the County of Santa Clara Board of Supervisors does not have jurisdiction to compel the City of Gilroy, a charter city, to abide by a county ordinance. Absent some legislative authorization, the County of Santa Clara cannot impose a mandatory review process for ballot questions on other entities. For this reason, the Civil Grand Jury urges the County to pursue legislative solutions to facilitate a process by which the County Counsel would be required to review and approve local measure ballot questions before they are voted on.

Formation of a Good Governance in Ballots Commission

The Civil Grand Jury believes that having an independent oversight commission with advisory powers will improve the local electoral process. It puts pressure on governing bodies, sending the message that their ballot questions are being monitored for clarity, truthfulness, fairness, and impartiality.

The Alameda Civil Grand Jury report provides detailed instructions around the formation, structure, and operation of an oversight committee. This can be found in Appendix B of their June 2021 report. Last, but not least, another possibility is to lean on an existing Santa Clara County advisory body, the Citizens’ Advisory Commission on Elections, to create a subcommittee focused

11.4.a
Packet Pg. 184 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

on ballot question integrity and good governance. Because time is of the essence when it comes to the elections process, the subcommittee must act within the short turnaround timeframe established by state statutes and county ordinances.

There do not appear to be any advocates for transparent and neutral language. Action must be taken. Having the Office of the County Counsel review and approve ballot questions to ensure conformity to statutory requirements would be a good start. Convening a citizen-led, independent oversight Good Governance Commission is another solution.

CONCLUSION

Civil Grand Juries are charged to help government develop practical solutions to improve government operations. Poorly worded ballot questions may not be illegal, but if they withhold information to shield what is really at issue, they are unethical. There are insufficient workable checks and balances to prevent this ongoing issue from being curtailed. Not doing anything about this only adds to the distrust of government. The Civil Grand Jury recommends that elected officials be held accountable—ballot questions must be transparent and clear in order to enable today’s voters to make informed decisions. The Civil Grand Jury wants governing entities to know that the public is paying attention and will not tolerate questions that are anything less than truthful, impartial, and fair. Further, ballot measure questions need to be straightforward, understandable, transparent, and honest.

11.4.a
Packet Pg. 185 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

FINDINGS AND RECOMMENDATIONS

Finding 1

The Civil Grand Jury finds that in the current environment, which is unregulated at the local level, it is easy for the author of a ballot measure question to write the question in a way that is confusing or misleading to voters.

Recommendation 1a

The Board of Supervisors should ask the County Counsel to review all ballot questions submitted to it pursuant to Recommendation 1b.

Recommendation 1b

Governing entities 2 within Santa Clara County should voluntarily submit their ballot questions to the County Counsel for review prior to submission to the Registrar of Voters, unless and until Recommendation 1d is implemented.

Recommendation 1c

Governing entities 3 within Santa Clara County should, by March 31, 2023, adopt their own resolution or ordinance to require submission of their ballot questions to the County Counsel for review prior to submission to the Registrar of Voters, unless and until Recommendations 1d and 1e are implemented.

Recommendation 1d

The County should create an independent, citizen-led oversight commission like the recommended Good Governance in Ballots Commission as described in the “Solutions” section of this report.

The Commission should be implemented by August 1, 2024.

2 There are approximately 50 governing entities within Santa Clara County. The Civil Grand Jury has elected to address these recommendations to the County, cities, and a select number of special districts and school districts that have historically the most measures on the ballot for response. The Civil Grand Jury encourages all governing entities to adopt these recommendations.
3 Id.

11.4.a
Packet Pg. 186 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

Recommendation 1e

Governing entities 4 within Santa Clara County should submit their ballot questions for review by the Good Governance in Ballots Commission pursuant to Recommendation 1d.

Recommendation 1f

The County should, by March 31, 2023, take appropriate action to request that the state legislature consider amending current law to require the County Counsel to review and approve local ballot measure questions before they are voted on.

4 Id.

11.4.a
Packet Pg. 187 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

REQUIRED RESPONSES

Pursuant to California Penal Code § 933(b) et seq. and California Penal Code § 933.05, the County of Santa Clara 2022 Civil Grand Jury requests responses from the following governing bodies:

Responding Agency Findings Recommendations
County of Santa Clara Board of Supervisors 1 1a, 1b, 1d, 1f City of Campbell 1 1b, 1c, 1e
City of Cupertino 1 1b, 1c, 1e
City of Gilroy 1 1b, 1c, 1e
City of Los Altos 1 1b, 1c, 1e
Town of Los Altos Hills 1 1b, 1c, 1e
Town of Los Gatos 1 1b, 1c, 1e
City of Milpitas 1 1b, 1c, 1e
City of Monte Sereno 1 1b, 1c, 1e
City of Morgan Hill 1 1b, 1c, 1e
City of Mountain View 1 1b, 1c, 1e
City of Palo Alto 1 1b, 1c, 1e

11.4.a
Packet Pg. 188 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

Responding Agency Findings Recommendations
City of San Jose 1 1b, 1c, 1e
City of Santa Clara 1 1b, 1c, 1e
City of Saratoga 1 1b, 1c, 1e
City Sunnyvale 1 1b, 1c, 1e
Santa Clara Valley Water District 1 1b, 1c, 1e
Valley Transportation Authority 1 1b, 1c, 1e
El Camino Healthcare 1 1b, 1c, 1e
Foothill-DeAnza Community College District 1 1b, 1c, 1e San Jose Unified School District 1 1b, 1c, 1e
East Side Union High School District 1 1b, 1c, 1e
Cupertino Union School District 1 1b, 1c, 1e

11.4.a
Packet Pg. 189 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

REFERENCES

Bibliography:

Alameda County 2020-2021 Grand Jury, Final Report, “The Need for Accuracy and Impartiality of Ballot Measure Questions,” June 2022.

Ballotpedia.org, https://ballotpedia.org/Santa_Clara_County,_California , Measure A (June 2022); Measures F, G, H, L, and S (November 2020); Measure AA (November 2016); Measure H (November 2014); Measure E (November 1998) (accessed September 22, 2022).

Borenstein, Daniel, “Tricks California Local Officials Use To Trick Voters,” The Bay Area News Group, https://www.mercurynews.com/2022/01/21/borenstein-tricks-california-local-officials- use-to-deceive-voters/ January 21, 2022 (accessed August 23, 2022).

California Elections Code sections 303, 9051, 9100-9190, 9295, 13120, and 133247.

Christopher, Ben; Kamal, Sameea, “California Ballot Measures: What You Need to Know,” https://calmatters.org/explainers/california-ballot-measures-2022/ June 30, 2022, updated July 1, 2022 (accessed August 23, 2022).

City and County of San Francisco Department of Elections, https://sfelections.sfgov.org/measures (accessed August 2, 2022).

County of Santa Clara 2020-21 Grand Jury, Final Report, “Gavilan College Measure X Bond Program: Oversight Shortchanged.” June 2022.

County of Santa Clara, Office of the Clerk of the Board of Supervisors, List of Boards and Commissions, https://stenttssaim2publicportal.blob.core.windows.net/bc- entcabodocs/MaddyReport.pdf (accessed August 24, 2022).

County of Santa Clara Registrar of Voters, Ballot Measures proposed for the upcoming November 2022 election, https://sccvote.sccgov.org/candidates-measures/november-8-2022- general-election-list-local-measures (accessed Aug 20, 2022).

Editorial, Mercury News and East Bay Times, “Stop Deceiving Bay Area Voters On Local Tax Measure Costs,” MercuryNews.com, https://www.mercurynews.com/2020/06/26/editorial-stop- deceiving-voters-on-local-tax-measure-costs/ June 26, 2020 (accessed August 23, 2022).

Kumar, Rishi, “Opinion: Why 4 Valley Water board members should resign,” MercuryNews.com, https://www.mercurynews.com/2022/05/11/opinion-why-4-valley-water- board-members-should-resign/ May 11, 2022 (accessed August 23, 2022).

11.4.a
Packet Pg. 190 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

Rogers, Paul, “Self-Serving Dishonesty: Liccardo Blasts Santa Clara Valley Water District Measure To Extend Term Limits, Even After Polling Shows Voters Oppose,” Mercury News, March 30, 2022 (accessed August 23, 2022).

Santa Cruz County 2020-2021 Grand Jury, Final Report, “Words Matter: Did Measure G Deceive Voters?” June 2022.

Caselaw:

Amador Valley Joint Union High School District v. State Board of Equalization, 22 Cal.3d. 208 (1978).

Becerra v. Superior Court, 19 Cal.App.5th 967 (2017).

Denny v. Arntz, 55 Cal.App.5th 914 (2020).

Harbor v. Deukmejian, 43 Cal.3d 1078 (1987).

Hicks v. Bd. of Supervisors, 69 Cal. App. 3d 228 (1977).

Home Gardens Sanitary Dist. v. City of Corona, 96 Cal. App. 4th 87 (2002).

Martinez v. Superior Court, 142 Cal.App.4th 1245 (2006).

McDonough v. Superior Court of Santa Clara, 204 Cal.App.4th 1169 (2012).

People v. Langdon, 54 Cal. App.3d 384 (1976).

Rodeo Sanitary Dist. v. Bd. of Supervisors, 71 Cal. App.4th 1443 (1999).

Yes on 25, Citizens for an On-Time Budget v. Superior Court, 189 Cal.App.4th 1445 (2010).

Interviews:

The Civil Grand Jury conducted interviews with ten individuals between June 28, 2022, and August 22, 2022.

11.4.a
Packet Pg. 191 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

IF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPEDIF YOU ONLY READ THE BALLOT, YOU’RE BEING DUPED

This report was ADOPTED by the Santa Clara County 2022 Civil Grand Jury on this 7th day of October, 2022.
______________________________
Mr. James Renalds
Foreperson

11.4.a
Packet Pg. 192 Attachment: SCCCGJ Report - If You Only Read the Ballot You're Being Duped 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording

SUPERIOR COURT BUILDING • 191 NORTH FIRST STREET, SAN JOSE, CALIFORNIA 95113 • (408) 882-2721 • FAX (408) 882-2795

G R A N D J U R Y

S A N T A C L A R A C O U N T Y

October 7, 2022

City of Gilroy
c/o Mr. Thai Pham, City Clerk
7351 Rosanna Street
Gilroy, CA 95020

Sent via email: [email protected]

Dear Mr. Pham:

The 2022 Santa Clara County Civil Grand Jury is transmitting to you its Final Report, If You Only Read the Ballot, You’re Being Duped.

California Penal Code § 933(c) requires that a governing body of the particular public agency or department that has been the subject of a Grand Jury final report shall respond within 90 days to the Presiding Judge of the Superior Court on the findings and recommendations pertaining to matters under the control of the governing body. California Penal Code § 933.05 contains guidelines for responses to Grand Jury findings and recommendations and is attached to this transmission.

Please note:

1. As stated in Penal Code § 933.05(a), attached, you are required to "Agree" or "Disagree" with each applicable Finding: 1. If you disagree, in whole or part, you must include an explanation of the reasons you disagree.

2. As stated in Penal Code § 933.05(b), attached, you are required to respond with one of four possible actions to each applicable Recommendation: 1b, 1c, 1e.

Your comments are due to the office of the Honorable Beth McGowen, 2023 Presiding Judge, Superior Court of California, County of Santa Clara, 191 North First Street, San José, CA 95113, no later than January 5, 2023.

Copies of all responses shall be placed on file with the Clerk of the Court.

If you have any questions, please contact Britney Huelbig, Deputy Manager for the Civil Grand Jury, at (408) 882-2721 or [email protected].

Sincerely,

James Renalds
Foreperson, 2022 Civil Grand Jury

Enclosures

11.4.b
Packet Pg. 193 Attachment: SCCCGJ Letter to City of Gilroy 10.7.22 (4073 : Discussion re: SCCCGJ Ballot Measure Wording Report and Recommendations)

§ 933.05. Responses to findings, West's Ann.Cal.Penal Code § 933.05 © 2019 Thomson Reuters. No claim to original U.S. Government Works.1 California Statutes Annotated - 2018
West's Annotated California Codes
Penal Code (Refs & Annos)
Part 2. Of Criminal Procedure (Refs & Annos)
Title 4. Grand Jury Proceedings (Refs & Annos)
Chapter 3. Powers and Duties of Grand Jury (Refs & Annos) Article 2. Investigation of County, City, and District Affairs (Refs & Annos) West's Ann.Cal.Penal Code § 933.05
§ 933.05. Responses to findings
Currentness
(a) For purposes of subdivision (b) of Section 933, as to each grand jury finding, the responding person or entity shall indicate one of the following:
(1) The respondent agrees with the finding.
(2) The respondent disagrees wholly or partially with the finding, in which case the response shall specify the portion of the finding that is disputed and shall include an explanation of the reasons therefor. (b) For purposes of subdivision (b) of Section 933, as to each grand jury recommendation, the responding person or entity shall report one of the following actions:
(1) The recommendation has been implemented, with a summary regarding the implemented action. (2) The recommendation has not yet been implemented, but will be implemented in the future, with a timeframe for implementation.
(3) The recommendation requires further analysis, with an explanation and the scope and parameters of an analysis or study, and a timeframe for the matter to be prepared for discussion by the officer or head of the agency or department being investigated or reviewed, including the governing body of the public agency when applicable. This timeframe shall not exceed six months from the date of publication of the grand jury report. (4) The recommendation will not be implemented because it is not warranted or is not reasonable, with an explanation therefor.
(c) However, if a finding or recommendation of the grand jury addresses budgetary or personnel matters of a county agency or department headed by an elected officer, both the agency or department head and the board of supervisors shall

11.4.c
Packet Pg. 194 Attachment: SCCCGJ Report - 93305 Requirements for Responses to Findings (4073 : Discussion re: SCCCGJ Ballot Measure Wording Report

§ 933.05. Responses to findings, West's Ann.Cal.Penal Code § 933.05 © 2019 Thomson Reuters. No claim to original U.S. Government Works.2 respond if requested by the grand jury, but the response of the board of supervisors shall address only those budgetary or personnel matters over which it has some decisionmaking authority. The response of the elected agency or department head shall address all aspects of the findings or recommendations affecting his or her agency or department. (d) A grand jury may request a subject person or entity to come before the grand jury for the purpose of reading and discussing the findings of the grand jury report that relates to that person or entity in order to verify the accuracy of the findings prior to their release.
(e) During an investigation, the grand jury shall meet with the subject of that investigation regarding the investigation, unless the court, either on its own determination or upon request of the foreperson of the grand jury, determines that such a meeting would be detrimental.
(f) A grand jury shall provide to the affected agency a copy of the portion of the grand jury report relating to that person or entity two working days prior to its public release and after the approval of the presiding judge. No officer, agency, department, or governing body of a public agency shall disclose any contents of the report prior to the public release of the final report.

Credits
(Added by Stats.1996, c. 1170 (S.B.1457), § 1. Amended by Stats.1997, c. 443 (A.B.829), § 5.)

HISTORICAL AND STATUTORY NOTES
2008 Main Volume
Stats.1997, c. 443 (A.B.829), in subds. (a) and (b), in the introductory paragraphs, substituted “(b)” for “(c)”; in subd. (b)(3), substituted “head” for “director”; in subd. (c), inserted “agency or” throughout; inserted subd. (e), relating to investigations and meetings with the grand jury; and, in subd. (f), substituted “presiding” for “supervising”.

CROSS REFERENCES
Grand jury defined, see Penal Code § 888.

Words and phrases, “county”, see Penal Code § 691.

RESEARCH REFERENCES
Encyclopedias
Cal. Jur. 3d Criminal Law: Pretrial Proceedings § 716, Recommendations and Reporting.

Cal. Jur. 3d Criminal Law: Pretrial Proceedings § 717, Responses to Findings.

Treatises and Practice Aids
Witkin, California Criminal Law 4th Introduction to Criminal Procedure § 43, Reports.

West's Ann. Cal. Penal Code § 933.05, CA PENAL § 933.05 Current with all 2017 Reg.Sess. laws.
(C) 2017 Thomson Reuters. No Claim to Orig. US Gov. Works.

11.4.c
Packet Pg. 195 Attachment: SCCCGJ Report - 93305 Requirements for Responses to Findings (4073 : Discussion re: SCCCGJ Ballot Measure Wording Report

§ 933.05. Responses to findings, West's Ann.Cal.Penal Code § 933.05 © 2019 Thomson Reuters. No claim to original U.S. Government Works.3 End of Document © 2019 Thomson Reuters. No claim to original U.S. Government Works.

11.4.c
Packet Pg. 196 Attachment: SCCCGJ Report - 93305 Requirements for Responses to Findings (4073 : Discussion re: SCCCGJ Ballot Measure Wording Report

City of Gilroy

STAFF REPORT
Agenda Item Title: Approval of the Refinancing of Gilroy Public Facilities Financing Authority's 2013 Refunding Lease Revenue
Bonds
Meeting Date: December 5, 2022
From: Jimmy Forbis, City Administrator
Department: Finance Department
Submitted By: Harjot Sangha, Finance Director
Prepared By: Harjot Sangha, Finance Director

Strategic Plan Goals

 Develop a Financially
Resilient Organization

☐ Ensure Neighborhood
Equity from City
Services
☐ Promote Economic
Development
Activities

☐ Promote Safe,
Affordable Housing for All

☐ Maintain and Improve
City Infrastructure

RECOMMENDATION

Adopt a resolution of the City Council of the City of Gilroy approving the issuance by the Gilroy Public Facilities Financing Authority of not to exceed $15 million of Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A; approving the execution and delivery of various related documents in connection with the offering and sale of such bonds; and authorizing the taking of certain other matters related thereto.

11.5 Packet Pg. 197

EXECUTIVE SUMMARY

The Gilroy Public Facilities Financing Authority (“Authority”) and the City of Gilroy (“City”) issued $23,120,000 of bonds in 2013 (the “2013 Bonds”) to refund prior b onds and notes issued for the construction of the Police Station, improvements to the Corporation Yard, Fire Stations, Sports Park and joint use gymnasium/recreation facility and aquatics center for the Christopher High School campus. The Authority and Cit y have the opportunity to refund the outstanding 2013 Bonds with new Lease Revenue Refunding Bonds, Series 2022A (Convertible) (the “2022 Bonds”) to capture interest savings and reduce the annual lease payments from the City.

BACKGROUND

In 2013, the Authority and City issued the 2013 Bonds at a fixed average interest rate of

4.53% and a 21-year amortization period with debt service secured by General Fund lease payments.

The leased assets are comprised of the City’s Police Station, Sunrise Fire Station, Corporation Yard, and Sports Park site. At the time of the issuance of the Authority’s Lease Revenue Refunding Bonds, Series 2020A, it was written into the documents that the Corporation Yard and Sports Park site would be released when the 2013 Bonds were refunded.

Since 2013, the City has made lease payments to the Authority, which in turn has made debt service payments on the 2013 Bonds. The outstanding principal amount is $15,185,000 as of December 1, 2022.

ANALYSIS

Current tax law does not allow for an advanced tax-exempt refunding of the 2013 Bonds prior to August 3, 2023 (90 days prior to November 1, 2023 , first optional redemption date). However, the Authority and City have the ability to issue taxable refunding bonds that convert to tax-exempt bonds once we are within the 90-day redemption window.

This is often referred to as a “convertible” or “Cinderella” structure. Such a structure provides the Authority and City with the ability to approve the refunding of the 2013 Bonds with the 2022 Bonds, lock in interest rates, and capture savings based on current taxable and tax-exempt rates.

NHA Advisors, the City’s independent financial advisor and fiduciary, advised the City that a convertible transaction is best suited for a private placement, which is expected to provide greater savings than a public offering. A private placement is the sale of bonds to a pre-selected bank rather than a public offering sold to many investors through an underwriter.

Following the receipt of several interest rate and st ructure proposals, NHA Advisors determined that Wells Fargo offered the best combination of interest rates and terms.

Based on preliminary interest rates provided by Wells Fargo on November 18, 2022, the City can realize approximately $1,135,000 of net present value savings over the

11.5 Packet Pg. 198

remaining 11-year term of the bonds, which is a 7.45% reduction to total debt service.

This exceeds the standard 5% threshold for minimum savings that is generally used in the municipal finance industry. It should be noted, how ever, that the interest rates cannot be locked until the rate lock agreement is executed, which will only occur if the Authority and Council approve the refinancing, and the legal due diligence is complete.

At that time, the final savings amount will be determined.

In order to comply with the tax laws, Wells Fargo will have consent rights to the conversion of taxable bonds to tax-exempt bonds. In the event Wells Fargo was to withhold consent, which is unlikely, the 2022 Bonds would remain taxable , and accordingly, the net present value savings would decrease to $372,000 (a 2.45% reduction to total debt service).

The attached resolution and draft financing documents permit the City to proceed with all steps necessary for the issuance of the 2022 Bonds. The resolution authorizes the issuance of bonds not to exceed $15 million, requires a minimum of 5% savings, and limits the repayment term not to exceed the existing debt’s term, November 1, 2033.

ALTERNATIVES

The City Council could decide not to approve the resolution and draft financing documents, maintaining the 2013 Bond debt service terms and conditions. This is not recommended because the issuance of the 2022 Bonds will provide considerable savings to the City.

FISCAL IMPACT/FUNDING SOURCE

The current annual debt service on the bonds is approximately $1.8 million. The estimated annual debt service on new bonds will be approximately $1.6 million, resulting in a net savings of about $200,000 annually through the term of the bonds.

The exhibit to the City Resolution includes information required to be disclosed in a meeting open to the public pursuant to SB 450. Such information includes the true interest cost of the bonds, finance charges of the bonds, the amount of proceeds received by the City, and the total payment amount.

NEXT STEPS

Should the Authority and Council approve the resolution and draft financing documents, the rate lock agreement will be executed, and the interest rates will be locked.

Attachments:

1. Draft Resolution (City)

2. First Supplement to Indenture

3. Fourth Amendment to Lease Agreement

4. Forward Fixed Rate Lock Agreement

11.5 Packet Pg. 199

5. Convertible Bond Purchase Agreement (City of Gilroy)

11.5 Packet Pg. 200

RESOLUTION NO. 2022-XX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY

OF GILROY APPROVING THE ISSUANCE BY THE

GILROY PUBLIC FACILITIES FINANCING AUTHORITY
OF NOT TO EXCEED $15,000,000 OF GILROY PUBLIC

FACILITIES FINANCING AUTHORITY LEASE REVENUE
REFUNDING BONDS, SERIES 2022A (CONVERTIBLE);

APPROVING THE EXECUTION AND DELIVERY OF

VARIOUS RELATED DOCUMENTS IN CONNECTION

WITH THE ISSUANCE AND DELIVERY OF SUCH
BONDS; AND AUTHORIZING THE TAKING OF CERTAIN

OTHER MATTERS RELATED THERETO

WHEREAS, the Gilroy Public Facilities Financing Authority (the “Authority”) was established for the purpose, among others, of providing for the financing and refinancing of public capital improvements for the City of Gilroy (the “City”); and WHEREAS, the Authority has previously issued its $23,120,000 Gilroy Public Facilities Financing Authority Refunding Lease Revenue Bonds, Series 2013 (the “Series 2013 Bonds”), of which $15,185,000 are currently outstanding; and
WHEREAS, the Authority and the City have determined, that it is necessary and desirable in order to refund the Series 2013 Bonds to authorize the issuance, sale and delivery of the Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible) (the “Series 2022A Bonds”) in the aggregate principal amount of not to exceed $15,000,000, under the provisions of Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Law”); and WHEREAS, the City desires to approve in connection with the sale of the Series 2022A Bonds, the form of a Bond Purchase Agreement (the “Bond Purchase Agreement”), among the Authority, the City and Wells Fargo Municipal Capital Strategies, LLC (including any affiliate thereof, the “Purchaser”) and the form of a Forward Fixed Rate Lock Agreement (the “Forward Fixed Rate Lock Agreement”) between the City and Wells Fargo Bank, National Association; and
WHEREAS, Senate Bill 450 (Chapter 625 of the 2017-2018 Session of the California Legislature) (“SB 450”) requires that the City obtain from an underwriter, financial advisor or private lender and disclose, prior to authorization of the issuance of bonds with a term of greater than 13 months, good faith estimates of the following information in a meeting open to the public: (a) the true interest cost of the bonds, (b) the sum of all fees and charges paid to third parties with respect to the bonds, (c) the amount of proceeds of the 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 bonds, and (d) the sum total of all debt service payments on the bonds calculated to the final maturity of the bonds plus the fees and charges paid to third parties not paid with the proceeds of the bonds; and
WHEREAS, in compliance with SB 450, the City has obtained from NHA Advisors, as Municipal Advisor, the required good faith estimates and such estimates are disclosed and set forth on Exhibit A attached hereto; and

11.5.a
Packet Pg. 201 Attachment: Draft Resolution (City) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

Resolution No. 2022-XX
2013 Lease Revenue Bonds Refinancing
City Council Regular Meeting | December 5, 2022

WHEREAS, Senate Bill 1029 (“SB 1029”) was signed by the California Governor on September 12, 2016, and places additional responsibilities on any issuer of public debt including the adoption of debt management policies that meet certain criteria; and WHEREAS, the City has represented that it is in compliance with the applicable SB 1029 pre-issuance requirements and that it expects to comply with all post-issuance requirements of SB 1029 applicable to the Series 2022A Bonds; and
WHEREAS, there have been presented to this meeting the proposed forms of the following documents:
(a) the First Supplement to Indenture, dated as of December 1, 2022 (the “First Supplement to Indenture”), among the Authority, the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”); (b) the Fourth Amendment to Lease Agreement, dated as of December 1, 2022 (the “Fourth Amendment to Lease”) between the City and the Authority; (c) the Forward Fixed Rate Lock Agreement; and
(d) the Bond Purchase Agreement;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Gilroy, as follows:

SECTION 1. Approval of Issuance of Series 2022A Bonds by the Authority. The issuance of the Series 2022A Bonds by the Authority on the terms and conditions set forth in, and subject to the limitations specified in, the Indenture, dated as of August 1, 2020, by and among the Authority, the City and the Trustee, as amended by the First Supplement to Indenture, and this Resolution, is hereby approved; provided, however, that (i) the aggregate principal amount of Series 2022A Bonds shall not exceed $15,000,000, (ii) the maturity of the Series 2022A Bonds shall not exceed November 1, 2033, and (iii) there shall be expected present value savings with respect to the refunding of the Series 2013 Bonds of at least 5% (assuming a successful conversion from a taxable rate to a tax-exempt rate on or about August 8, 2022) of the principal amount of the Series 2013 Bonds using the yield on the Series 2022A Bonds as the discount rate.

SECTION 2. Approval of First Supplement to Indenture. The form of First Supplement to Indenture presented at this meeting is hereby approved, and the Mayor, the City Administrator, the Finance Director and the City Clerk, or his or her designee (each, an “Authorized Officer”) are each hereby authorized and directed, for and in the name of and on behalf of the City, to execute, acknowledge and deliver the First Supplement to Indenture in substantially the form presented at this meeting with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.

11.5.a
Packet Pg. 202 Attachment: Draft Resolution (City) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

Resolution No. 2022-XX
2013 Lease Revenue Bonds Refinancing
City Council Regular Meeting | December 5, 2022

SECTION 3. Approval of Fourth Amendment to Lease. The form of Fourth Amendment to Lease presented at this meeting is hereby approved and each Authorized Officer is hereby authorized and directed, for and in the name of and on behalf of the City, to execute, acknowledge and deliver the Fourth Amendment to Lease in substantially the form presented at this meeting with such changes therein as the Authorized Officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.

SECTION 4. Approval of Forward Fixed Rate Lock Agreement. The City is hereby authorized to enter into the Forward Fixed Rate Lock Agreement and each Authorized Officer is hereby authorized and directed to execute and deliver the Forward Fixed Rate Lock Agreement on behalf of the City, in substantially the form presented to this meeting, with such changes therein, deletions therefrom and additions thereto as the Authorized Officer shall approve in consultation with the City’s financial and legal consultants, which approval shall be conclusively evidenced by the execution and delivery thereof.

SECTION 5.Approval of Bond Purchase Agreement. The City is hereby authorized to enter into the Bond Purchase Agreement and each Authorized Officer is hereby authorized and directed to execute and deliver the Bond Purchase Agreement on behalf of the City, in substantially the form presented to this meeting, with such changes therei n, deletions therefrom and additions thereto as the Authorized Officer shall approve in consultation with the City ’s financial and legal consultants, which approval shall be conclusively evidenced by the execution and delivery thereof.

SECTION 6. Other Acts. The officers and staff of the City are hereby authorized and directed, jointly and severally, to do any and all things, to execute and deliver any and all documents, which in consultation with the City Attorney or with Nixon Peabody LLP, as bond counsel, they may deem necessary or advisable in order to effectuate the purposes of this Resolution, and any and all such actions previously taken by such officers or staff members are hereby ratified and confirmed.

SECTION 7. Effective Date. This Resolution shall take effect upon adoption.

11.5.a
Packet Pg. 203 Attachment: Draft Resolution (City) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

Resolution No. 2022-XX
2013 Lease Revenue Bonds Refinancing
City Council Regular Meeting | December 5, 2022

PASSED and ADOPTED this 5th day of December 2022 by the following roll call vote:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

APPROVED:

Marie Blankley, Mayor

ATTEST:

_______________________
Thai Nam Pham, City Clerk

11.5.a
Packet Pg. 204 Attachment: Draft Resolution (City) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

EXHIBIT A

GOOD FAITH ESTIMATES
The following information was obtained from the City’s Municipal Advisor as of November 18, 2022, and is provided in compliance with Section 5852.1 of the California Government Code with respect to the base rental payments evidenced by the Series 2022A Bonds expected to be issued in the aggregate principal amount of $14,605,490:

1. True Interest Cost of the Base Rental Payments Evidenced by the Bonds. Based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the true interest cost of the base rental payments evidenced by the Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds, is 3.84%.

2. Finance Charge of the Bonds. Based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the City’s finance charge of the Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Bonds), is $175,000.

3. Amount of Proceeds to be Received. Based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the amount of proceeds expected to be received by the City following the Authority’s sale of the Bonds, less the finance charge of the Bonds described in paragraph 2 above and any reserves or capitalized interest paid or funded with proceeds of the Bonds, is $14,430,490.

4. Total Payment Amount. Based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the total payment amount, which means the sum total of all payments the City will make to pay base rental payments evidenced by the Bonds plus the finance charge of the Bonds described in paragraph 2 above not paid with the proceeds of the Bonds, calculated to the final base rental payment evidenced by the Bonds, is $18,092,275.

Attention is directed to the fact that the foregoing information constitutes good faith estimates only. The actual interest cost, finance charges, amount of proceeds and total payment amount may vary from those presently estimated due to variations from these estimates in the timing of the sale of the Bonds, the actual principal amount of Bonds sold, the amortization of the Bonds sold and market interest rates at the time of sale. The date of sale and the amount of Bonds sold will be determined by the City based on need for improvement funds and other factors. The actual interest rates at which the Bonds will be sold will depend on the bond market at the time of sale. The actual amortization of the Bonds will also depend, in part, on market interest rates at the time of sale. Market interest rates are affected by economic and other factors beyond the City’s control.

11.5.a
Packet Pg. 205 Attachment: Draft Resolution (City) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

FIRST SUPPLEMENT TO INDENTURE
by and among
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION ,
as Trustee,

CITY OF GILROY
and

GILROY PUBLIC FACILITIES FINANCING AUTHORITY

Dated as of ______, 2022

Relating to the

$_________
Gilroy Public Facilities Financing Authority
Lease Revenue Refunding Bonds, Series 2022A (Convertible)

11.5.b
Packet Pg. 206 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

TABLE OF CONTENTS

Page

-i-

PART 1

PARTICULAR AMENDMENTS
Part 1.1. Amendments to Section 1.01 of the Original Indenture .................................................. 2 Part 1.2. Amendments to Section 5.01(a) of the Indenture ............................................................ 5 PART 2

ADDITION OF ARTICLE XIV
Part 2.1. Addition of Article XIV .................................................................................................. 6

ARTICLE XIV

TEMRS AND CONDITIONS OF SERIES 2022A BONDS
Section 14.01. Authorization of Series 2022A Bonds ................................................................... 6 Section 14.02. Terms of Series 2022A Bonds ............................................................................... 7 Section 14.03. Form of Series 2022A Bonds ................................................................................. 8 Section 14.04. Execution of Series 2022A Bonds ......................................................................... 8 Section 14.05. Deposit of Proceeds of Series 2022A Bonds; Other Moneys ................................ 8 Section 14.06. Redemption of Series 2022A Bonds ...................................................................... 9 Section 14.07. Transfer Restrictions ............................................................................................ 10 PART 3

MISCELLANEOUS
Part 3.1. Effect of First Supplement to Indenture ........................................................................ 11 Part 3.2. Execution in Counterparts ............................................................................................. 11 Part 3.3. Effective Date ................................................................................................................ 11 EXHIBIT A FORM OF SERIES 2022A BONDS .................................................................... A-1 EXHIBIT B BREAKAGE FEE CALCULATION.................................................................... B-1 EXHIBIT C FORM OF PURCHASER LETTER ..................................................................... C-1 EXHIBIT D FORM OF TAX-EXEMPT BOND CONVERSION AGREEMENT .... D-ERROR! BOOKMARK NOT DEFINED.

11.5.b
Packet Pg. 207 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

FIRST SUPPLEMENT TO INDENTURE
THIS FIRST SUPPLEMENT TO INDENTURE (this “First Supplement to Indenture”), is made and entered into as of _______ 1, 2022, by and among U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as successor trustee (the “Trustee”), the CITY OF GILROY, a political subdivision duly organized and existing under the laws of the State of California (the “City”), and GILROY PUBLIC FACILITIES FINANCING AUTHORITY, a joint powers authority duly organized and existing under and by virtue of the laws of the State of California (the “Authority”);
W I T N E S S E T H:

WHEREAS, the Authority previously issued its Lease Revenue Refunding Bonds, Series 2020A (the “Series 2020A Bonds”), in the aggregate principal amount of $13,740,000, pursuant to an Indenture, dated as of August 1, 2020 (the “Original Indenture”) by and among the Trustee, the City and the Authority, and in accordance with the Joint Exercise of Powers Agreement and its powers thereunder and under the laws of the State of California; WHEREAS, the Original Indenture provides that, subject to the conditions set forth therein, in addition to the Series 2020A Bonds, the Authority may by execution of a Supplemental Indenture without the consent of the Owners, provide for the execution and delivery of Additional Bonds;
WHEREAS, the Authority intends to issue its Lease Revenue Refunding Bonds, Series 2022A (Convertible) (the “Series 2022A Bonds”) pursuant to this First Supplement to Indenture and the Original Indenture (as so amended the “Indenture”), and in accordance with the Joint Exercise of Powers Agreement and its powers thereunder and under the laws of the State of California;
WHEREAS, the proceeds of the Series 2022A Bonds will be applied by the City to (i) refund the Authority’s Refunding Lease Revenue Bonds, Series 2013 (the “Series 2013 Bonds”) and (ii) pay the costs incurred in connection with the issuance of the Series 2022A Bonds; WHEREAS, in order to accomplish such refunding, the Authority and the City are entering into a Fourth Amendment to Lease Agreement, dated as of ________ 1, 2022, in order to amend the First Amended and Restated Lease Agreement, dated as of August 1, 2009, as amended, between the Authority and the City, the “Lease” (i) to increase the amount of Base Payments payable thereunder and (ii) to make certain other modifications in order to provide for the execution and delivery of the Series 2022A Bonds in accordance with the provisions of the Indenture; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this First Supplement to Indenture do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this First Supplement to Indenture;

11.5.b
Packet Pg. 208 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

2 NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties do hereby agree as follows:

PART 1

PARTICULAR AMENDMENTS
Part 1.1. Amendments to Section 1.01 of the Original Indenture. The following definitions, if defined in Section 1.01 of the Original Indenture, are hereby amended and restated and, if not defined, are hereby added, all as follows:

Affiliate
The term “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling or controlled by or under common control with such Person. Without limiting the foregoing, the definition of “affiliate” of any Person shall include any subsidiary of such Person and, with respect to the Series 2022A Bonds Purchaser, shall include Wells Fargo Securities (a trade name) and Wells Fargo Bank, National Association.

Amortization End Date
The term “Amortization End Date” means the earliest to occur of (a) the third (3rd) anniversary of receipt of written notice from the Purchaser of a Downgrade Redemption Event, and (b) the date on which all Series 2022A Bonds are redeemed, repaid, prepaid or cancelled in accordance with the terms of the Indenture.

Amortization Payment Date
The term “Amortization Payment Date” means (a) the six month anniversary of the date of receipt of written notice from the Purchaser of a Downgrade Redemption Event and each six-month anniversary thereafter which occurs prior to the Amortization End Date and (b) the Amortization End Date.

Authorized Denominations
The term “Authorized Denominations” means $5,000 or any integral multiple thereof. In the case of the Series 2022A Bonds, however, Authorized Denominations means $250,000 or any integral multiple of $1 in excess thereof.

Bond Interest is Taxable
The term “Bond Interest is Taxable” means that interest paid or to be paid on a Series 2022A Bond is or will be includable for federal income tax purposes in the gross income of the Series 2022A Bonds Purchaser or any other Owner thereof, but excluding the inclusion of interest on such Series 2022A Bond as an item of tax preference for purposes of the calculation of an alternative minimum tax imposed on the Series 2022A Bonds Purchaser or such other Owner.

11.5.b
Packet Pg. 209 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

3 Bond Purchase Agreement
The term “Bond Purchase Agreement” means the Bond Purchase Agreement, dated [December __, 2022], by and among the Authority, the City and the Series 2022A Bonds Purchaser, as the same may be amended, modified or supplemented from time to time in accordance with its terms.

Bonds
The term “Bonds” means the Series 2020A Bonds, the Series 2022A Bonds and all Additional Bonds.

BPA Credit Event
The term “BPA Credit Event” has the meaning assigned to “Event of Default” in the Bond Purchase Agreement.

Conversion Date
The term “Conversion Date” shall mean the date on which the Series 2022A Bonds become Tax-Exempt.

Default Rate
The term “Default Rate” has the meaning assigned to such term in the Bond Purchase Agreement.

Determination of Taxability
The term “Determination of Taxability” means (a) any determination, decision, decree or advisement by the Commissioner of Internal Revenue, or any District Director of Internal Revenue or any court of competent jurisdiction to the effect that Bond Interest is Taxable, or (b) the delivery to the Series 2022A Bonds Purchaser, any Owner or the Trustee of an Opinion of Counsel, delivered by Bond Counsel, to the effect that Bond Interest is Taxable. A Determination of Taxability also shall be deemed to have occurred on the first to occur of the following:
(i) the date when the Authority files any statement, supplemental statement, or other tax schedule, return or document, which discloses that Bond Interest is Taxable; (ii) the effective date of any federal legislation enacted or federal rule or regulation promulgated after the date of this Indenture which has the effect that Bond Interest is Taxable; or (iii) if upon sale, lease or other deliberate action within the meaning of Treas. Reg. § 1.141-2(d), the failure to receive an Approving Opinion.

11.5.b
Packet Pg. 210 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

4 Interest Fund
The term “Interest Fund” means the Series 2020A Interest Fund, the Series 2022A Interest Fund and each additional fund established for the payment of interest of a Series of Additional Bonds within the Revenue Fund established in accordance with Section 5.01(a) hereof.

Downgrade Redemption Event
The term “Downgrade Redemption Event” has the meaning assigned to such term in the Bond Purchase Agreement.

Interest Payment Date
The term “Interest Payment Date” means May 1 and November 1 of each year, commencing November 1, 2020 in the case of Series 2020A Bonds and May 1, 2023 in the case of Series 2022A Bonds.

Maximum Federal Corporate Tax Rate
The term “Maximum Federal Corporate Tax Rate” means the maximum rate of income taxation imposed on corporations pursuant to Section 11(b) of the Code, as in effect from time to time or, if as a result of a change in the Code the rate of income taxation imposed on corporations generally shall not be applicable to the Series 2022A Bonds Purchaser, the maximum statutory rate of federal income taxation which could apply to the Series 2022A Bonds Purchaser. As of the Series 2022A Bonds Closing Date, the Maximum Federal Corporate Tax Rate is 21%.

Principal Fund
The term “Principal Fund” means the Series 2020A Principal Fund, the Series 2022A Principal Fund and each additional fund established for the payment of principal of a Series of Additional Bonds within the Revenue Fund established in accordance with Section 5.01(a) hereof.

Principal Payment Date
The term “Principal Payment Date” means November 1 of each year, commencing on the Principal Payment Date or Dates set forth in Section 2.02 hereof with respect to the Series 2020A Bonds and Section 14.02 hereof with respect to the Series 2022A Bonds.

Series 2022A Bonds
The term “Series 2022A Bonds” means the Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible).

Series 2022A Bonds Closing Date
The term “Series 2022A Bonds Closing Date” means ________, 2022.

11.5.b
Packet Pg. 211 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

5 Series 2022A Bonds Purchaser
The term “Series 2022A Bonds Purchaser” means Wells Fargo Municipal Capital Strategies, LLC, as the initial purchaser of the Series 2022A Bonds.

Taxable Date
The term “Taxable Date” means the date on which interest on the Series 2022A Bonds is first includable in gross income of an Owner (including, without limitation, any previous Owner) thereof as a result of a Determination of Taxability.

Taxable Rate
The term “Taxable Rate” means [__._]%, the rate of interest on the Series 2022A Bonds payable from the Series 2022A Bonds Closing Date to but not including the Conversion Date.

Tax-Exempt Rate
The term “Tax-Exempt Rate” means [__._]%, the rate of interest on the Series 2022A Bonds payable from and after the Conversion Date.

Taxable Gross-Up Rate
The term “Taxable Gross-Up Rate” means, for any date of determination, the rate of interest per annum equal to the product of the interest rate on the Series 2022A Bonds then in effect multiplied by the quotient of (a) one divided by (b) one minus the then current Maximum Federal Corporate Tax Rate in effect on the date of calculation. 2013 Escrow Agent
The term “2013 Escrow Agent” means U.S. Bank Trust Company, National Association, as escrow agent under the 2013 Escrow Agreement.
2013 Escrow Agreement
The term “2013 Escrow Agreement” means the Escrow Agreement, dated as of December 1, 2022, between the Authority and the Escrow Agent, providing for the defeasance and redemption of the Series 2013 Bonds.

Part 1.2. Amendments to Section 5.01(a) of the Indenture. Section 5.01(a) of the Original Indenture is hereby amended to read as follows:

There is hereby established a special fund designated as the “Revenue Fund” which shall be held by the Trustee and which shall be kept separate and apart from all other funds and moneys held by the Trustee. Within the Revenue Fund, the Trustee shall establish and maintain (i) a separate fund designated the “Series 2020A Interest Fund” and a separate fund designated the “Series 2020A Principal Fund,” and (ii) a separate fund designated the “Series 2022A Interest Fund” and a separate

11.5.b
Packet Pg. 212 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

6 fund designated the “Series 2022A Principal Fund.” Upon the issuance of Additional Bonds, the Trustee shall also establish and maintain, within the Revenue Fund, a separate Interest Fund and a separate Principal Fund for each Series of Additional Bonds. The City hereby irrevocably pledges and transfers to the Trustee, for the benefit of the Owners, all of its right, title and interest in and to all amounts on deposit from time to time in the funds and accounts established hereunder (other than the Rebate Fund), subject to the provisions hereof permitting the disbursement thereof for or to the purposes and on the conditions and terms set forth herein, and in and to the Revenues, which shall be used for the punctual payment of the interest and principal of the Bonds and the Revenues shall not be used for any other purpose while any of the Bonds remain Outstanding. It is the intent of the parties hereto that the Authority shall not have any right, title, in or to the Revenues. In the event, however, that it should be determined that the Authority has any right, title or interest in or to the Revenues, then the Authority hereby irrevocably pledges and transfers to the Trustee, for the benefit of the Owners, all of such right, title and interest, which shall be used for the punctual payment of the interest and principal of the Bonds. These pledges shall constitute a first and exclusive lien on the funds established hereunder and the Revenues in accordance with the terms hereof subject in all events to the power of the City and the Authority to cause the execution and delivery of Additional Bonds pursuant to Section 2.10 hereof which shall be on a parity with the Bonds Outstanding.

PART 2

ADDITION OF ARTICLE XIV
Part 2.1. Addition of Article XIV. The Original Indenture is hereby amended and supplemented by adding thereto an additional Article as follows:

ARTICLE XIV

TEMRS AND CONDITIONS OF SERIES 2022A BONDS
Section 14.01. Authorization of Series 2022A Bonds. A second Series of Bonds is hereby created and designated “Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible).” The aggregate principal amount of Series 2022A Bonds which may be issued and Outstanding under this Indenture shall not exceed $__________.

The Authority has reviewed all proceedings heretofore taken relative to the authorization of the Series 2022A Bonds and has found, as a result of such review, and hereby finds and determines that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of the Series 2022A Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and that the Authority is now duly authorized, pursuant to each and every requirement of the Act, to issue the Series 2022A Bonds in the form and manner provided herein and that the Series 2022A Bonds shall be entitled to the benefit, protection and security of the provisions hereof.

11.5.b
Packet Pg. 213 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

7 The recital contained in the Series 2022A Bonds that the same are issued pursuant to the Act and pursuant hereto shall be conclusive evidence of their validity and of the regularity of their issuance, and all Series 2022A Bonds shall be incontestable from and after their issuance. The Series 2022A Bonds shall be deemed to be issued, within the meaning hereof, whenever the definitive Series 2022A Bonds (or any temporary Series 2022A Bonds exchangeable therefor) shall have been delivered to the purchaser thereof and the proceeds of sale thereof received.

Section 14.02. Terms of Series 2022A Bonds. The Series 2022A Bonds shall be issued in the aggregate principal amount of $_________. The Series 2022A Bonds shall be dated as of the date of initial delivery, shall be executed and delivered in the form of fully registered Series 2022A Bonds in physical form, without coupons, in Authorized Denominations, shall be payable in lawful money of the United States of America, and shall mature on November 1, 2033 and initially bear interest at the Taxable Rate, subject to prior redemption as described in Article IV and Section 14.06 hereof.

On or after August ___, 2023, the Authority and the City may request to the Series 2022A Bonds Purchaser that the Series 2022A Bonds be designated Tax-Exempt. Upon the consent of the Series 2022A Bonds Purchaser and receipt by the Series 2022A Bonds Purchaser of (i) a [Tax- Exempt Bond Conversion Agreement] in substantially the form of [Exhibit D], (ii) an Opinion of Counsel as to the tax-exempt status of the Series 2022A Bonds and (iii) written confirmation that no Event of Default or BPA Credit Event has occurred and is continuing and that all representations and warranties of the Authority and the City in the Bond Purchase Agreement, the Indenture and the Lease Agreement continue to be true and accurate, the Series 2022A Bonds shall bear interest at the Tax-Exempt Rate.

Each Series 2022A Bond shall bear interest from the Interest Payment Date to which interest has been paid or duly provided for next preceding its date of authentication, unless such date of authentication shall be (i) prior to the close of business on May 1, 2023, in which case such Series 2022A Bond shall bear interest from its date of delivery, (ii) subsequent to a Record Date but before the related Interest Payment Date, in which case such Series 2022A Bond shall bear interest from such Interest Payment Date, or (iii) an Interest Payment Date to which interest has been paid in full or duly provided for, in which case such Series 2022A Bond shall bear interest from such date of authentication; provided, however, that if, as shown by the records of the Trustee, interest shall be in default, each Series 2022A Bond shall bear interest from the last Interest Payment Date to which such interest has been paid in full or duly provided for. Interest on the Series 2022A Bonds shall be computed on the basis of a 360-day year of twelve 30-day months.

The interest on the Series 2022A Bonds shall be payable on each Interest Payment Date by check sent by first class mail by the Trustee to the respective Owners of the Series 2022A Bonds as of the Record Date for such Interest Payment Date at their addresses shown on the books required to be kept by the Trustee pursuant to the provisions of Section 2.08 hereof. Payments of defaulted interest on any Series 2022A Bond shall be paid by check to the Owner as of a special record date to be fixed by the Trustee, notice of which special record date shall be given to the Owner of the Series 2022A Bond not less than ten days prior thereto. The principal and premium, if any, of the Series 2022A Bonds shall be payable upon presentation and surrender thereof on maturity or on redemption prior thereto at the Principal Corporate Trust Office of the Trustee.

Notwithstanding the foregoing, so long as Wells Fargo Municipal Capital Strategies, LLC is the

11.5.b
Packet Pg. 214 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

8 Owner of the Series 2022A Bonds, principal of, premium, if any, and interest on the Series 2022A Bonds shall be paid by wire transfer and without presentment or surrender of the Series 2022A Bonds.

The Owner of $1,000,000 or more in aggregate principal amount of the Series 2022A Bonds may request in writing that the Trustee pay the interest on the Series 2022A Bonds by wire transfer to an account in the United States of America and the Trustee shall comply with such request for all Interest Payment Dates following the 15th day after receipt of such request.

Notwithstanding anything to the contrary herein:
(i) on or after the Conversion Date, to the extent the Series 2022A Bonds are Tax- Exempt, from and after any Taxable Date, the interest rate on the Series 2022A Bonds shall be established at a rate equal to the Taxable Gross-Up Rate; and (ii) upon the occurrence and during the continuation of any Event of Default, the interest rate on the Series 2022A Bonds shall be established at a rate equal to the Default Rate.

Section 14.03. Form of Series 2022A Bonds. The Series 2022A Bonds and the assignment to appear thereon shall be in substantially the forms set forth in Exhibit A hereto, with necessary or appropriate insertions, omissions and variations as permitted or required hereby.

Section 14.04. Execution of Series 2022A Bonds. The Chairman or Executive Director of the Authority is hereby authorized and directed to execute each of the Series 2022A Bonds on behalf of the Authority and the Secretary of the Authority is hereby authorized and directed to countersign each of the Series 2022A Bonds on behalf of the Authority. The signatures of such Chairman, Executive Director and Secretary may be by printed, lithographed or engraved by facsimile reproduction. In case any officer whose signature appears on the Series 2022A Bonds shall cease to be such officer before the delivery of the Series 2022A Bonds to the purchaser thereof, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until such delivery of the Series 2022A Bonds.

Only those Series 2022A Bonds bearing thereon a certificate of authentication and registration in substantially the form set forth in Exhibit A hereto, executed manually and dated by the Trustee, shall be entitled to any benefit, protection or security hereunder or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive evidence that the Series 2022A Bonds so authenticated and registered have been duly authorized, executed, issued and delivered hereunder and are entitled to the benefit, protection and security hereof.

The Series 2022A Bonds shall not be book-entry bonds but rather physical delivery bonds.

Section 14.05. Deposit of Proceeds of Series 2022A Bonds; Other Moneys. The proceeds received from the sale of the Series 2022A Bonds in the amount of $__________ shall be transferred for deposit by the Trustee to the following respective funds or accounts:
(a) The Trustee shall deposit in the Costs of Issuance Fund established pursuant to Section 3.04 hereof the amount of $_________;

11.5.b
Packet Pg. 215 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

9 (b) The Trustee shall transfer to the Escrow Agent the amount of $_______ for deposit in the Escrow Fund held under the Escrow Agreement.

The deposits required of the Trustee set forth above into funds or accounts shall be deemed made by the transfer of funds by the Trustee in accordance with the instructions of the City. To facilitate any transfers to or for the benefit of the City required in this Section, the Trustee may, in its discretion open a temporary fund or account on its records which shall be closed upon completion of such transfers.

Section 14.06. Redemption of Series 2022A Bonds. The Series 2022A Bonds shall be subject to redemption prior to their Maturity Date as set forth in this Section. (a) Optional Redemption. The Series 2022A Bond may be prepaid in whole at any time upon at least three Business Days’ prior written notice to the Series 2022A Bonds Purchaser specifying the amount of prepayment. In the event that the Authority pursuant to this Section 14.06(a) optionally redeems the Series 2022A Bonds, the Authority shall, at the time of such prepayment, pay to the Series 2022A Bonds Purchaser the principal of the Series 2022A Bonds plus interest accrued to the date of prepayment plus an additional fee or redemption premium equal to the Breakage Fee as described in Exhibit B. (b) Mandatory Sinking Account Redemption. The Series 2022A Bonds shall be subject to redemption from Mandatory Sinking Account Payments in part on November 1, 2023, and on each November 1 thereafter, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium, as follows; provided, however, that in lieu of redemption thereof, such Series 2022A Bonds may be purchased by the Authority and tendered to the Trustee:

Sinking Fund
Redemption Date
(November 1)

Principal Amount to be
Redeemed or Purchased

If some but not all of the Series 2022A Bonds have been redeemed pursuant to optional redemptions, the total amount of Mandatory Sinking Account Payments to be made subsequent to such redemption shall be reduced in an amount equal to the principal amount of the Series 2022A

11.5.b
Packet Pg. 216 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

10 Bonds so redeemed by reducing each such future Mandatory Sinking Account Payment on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, as shall be designated pursuant to written notice which shall include a revised Mandatory Sinking Account Payment schedule filed by Authority with the Trustee.
(a) Extraordinary Redemption. In the event that the Series 2022A Bonds are subject to extraordinary redemption in accordance with Section 4.01(a) of the Indenture, the Authority shall, at the time of such prepayment, pay to the Series 2022A Bonds Purchaser the principal of the Series 2022A Bonds plus interest accrued to the date of prepayment plus an additional fee or redemption premium equal to the Breakage Fee as described in Exhibit B. (b) Downgrade Redemption Event. Upon receipt of written notice from the Purchaser of a Downgrade Redemption Event and direction to redeem the Series 2022A Bonds, the Series 2022A Bonds shall be redeemed in equal (as nearly as possible) semiannual installments payable on each Amortization Payment Date (each such payment, an “Amortization Payment”) with the final installment in an amount equal to the entire then-outstanding principal amount of such Series 2022A Bonds to be redeemed on the Amortization End Date.

Section 14.07. Transfer Restrictions. The Series 2022A Bonds may be transferred in Authorized Denominations without limitation to any Affiliate of the Series 2022A Bonds Purchaser or to a trust or custodial arrangement established by the Series 2022A Bonds Purchaser or an Affiliate of the Series 2022A Bonds Purchaser, each of the beneficial owners of which are “qualified institutional buyers” as defined in Rule 144A promulgated under the Securities Act of 1933, as amended (each a “Purchaser Transferee”) and subject to the limitations, if any, set forth in the Bond Purchase Agreement. On or after August 8, 2024, the Series 2022A Bonds may be transferred in Authorized Denominations to another purchaser (other than an Affiliate of the Series 2022A Bonds Purchaser or a trust or custodial arrangement as described in the preceding sentence) if (i) written notice of such transfer, together with addresses and related information with respect to such purchaser, is delivered to the Authority and the Trustee by such transferor and (ii) such purchaser shall have delivered to the Authority, the Trustee and the transferor a Purchaser Letter in the form attached hereto as Exhibit C executed by a duly authorized officer of such purchaser; provided that each such purchaser shall constitute (1) a “qualified institutional buyer” as defined in Rule 144A promulgated under the Securities Act of 1933, as amended, and (2) a commercial bank organized under the laws of the United States, or any state thereof, or any other country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, and, in any such case, having a combined capital and surplus, determined as of the date of any transfer pursuant to this Section, of not less than $5,000,000,000 (each a “Non-Purchaser Transferee”).. Notwithstanding the foregoing, the Series 2022A Bonds Purchaser shall not transfer the Series 2022A Bonds to a Non-Purchaser Transferee prior to [December __, 202_], without the prior written consent of the City and the Authority which shall not be unreasonably withheld.

11.5.b
Packet Pg. 217 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

11 PART 3

MISCELLANEOUS
Part 3.1. Effect of First Supplement to Indenture. This First Supplement to Indenture and all of the terms and provisions herein contained shall form part of the Original Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Original Indenture. The Original Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof, as heretofore amended and supplemented, and as amended and supplemented hereby. If there shall be any conflict between the terms of this First Supplement to Indenture and the terms of the Original Indenture (as in effect on the day prior to the effective date of this First Supplement to Indenture), the terms of this First Supplement to Indenture shall prevail.

Part 3.2. Execution in Counterparts. This First Supplement to Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. The parties further agree that facsimile signatures or signatures scanned into .pdf (or signatures in another electronic format designated by the City) and sent by e-mail shall be deemed original signatures.

Part 3.3. Effective Date. This First Supplement to Indenture shall become effective upon its execution and delivery.

[This space intentionally left blank]

11.5.b
Packet Pg. 218 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

12 IN WITNESS WHEREOF, the parties hereto have executed and attested to this First Supplement to Indenture by their officers thereunto duly authorized as of the day and year first written above.

U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, as Trustee

By:

Authorized Officer

CITY OF GILROY

By:

Mayor

Attest:

By:

City Clerk

GILROY PUBLIC FACILITIES

FINANCING AUTHORITY

By:

Executive Director

Attest:

By:

Secretary

11.5.b
Packet Pg. 219 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

A-1

EXHIBIT A

FORM OF SERIES 2022A BONDS

The Transferability of the Bond is Restricted
as Described in Section 14.07 of the Indenture

UNITED STATES OF AMERICA

STATE OF CALIFORNIA
No. R-__ $___________

GILROY PUBLIC FACILITIES FINANCING AUTHORITY
LEASE REVENUE REFUNDING BONDS, SERIES 2022A (CONVERTIBLE) Interest Rate Maturity Date Dated CUSIP
% initially and
__% after the
Conversion Date
November 1, 2033 _______, 2022
REGISTERED OWNER: WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC PRINCIPAL SUM:

The GILROY PUBLIC FACILITIES FINANCING AUTHORITY, a joint powers authority, duly created and lawfully existing under the Constitution and laws of the State of California (the “Authority”), for value received, hereby promises to pay (but only out of the Revenues, as hereinafter defined) to the registered owner specified above or registered assigns on the maturity date specified above (subject to any right of prior redemption provided for) the principal sum specified above, together with interest thereon from the Interest Payment Date (as defined below) to which interest has been paid or duly provided for next preceding its date of execution, unless such date of authentication shall be (i) prior to the close of business on May 1, 2023, in which case such Bond shall bear interest from its date of delivery, (ii) subsequent to a Record Date but before the related Interest Payment Date, in which case such Bond shall bear interest from such Interest Payment Date, or (iii) an Interest Payment Date to which interest has been paid in full or duly provided for, in which case such Bond shall bear interest from such date of authentication; provided, however, that if, as shown by the records of the Trustee, interest shall be in default, each Bond shall bear interest from the last Interest Payment Date to which such interest has been paid in full or duly provided for. The term “Interest Payment Date” means May 1, 2023, and each May 1 and November 1 thereafter. The term “Record Date” means the close of business on the 15th day of the month preceding any Interest Payment Date, whether or not such day is a Business Day.

11.5.b
Packet Pg. 220 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

A-2

This Bond shall initially bear interest at the Taxable Rate. From and after the Conversion Date, this Bond shall bear interest at the Tax-Exempt Rate; provided that from and after any Taxable Date, the interest rate on this Bond shall be established at a rate equal to the Taxable Gross-Up Rate; provided, further, that upon the occurrence and during the continuation of any Event of Default, the interest rate on this Bond shall be established at a rate equal to the Default Rate.

The principal of this Bond shall be payable in lawful money of the United States of America at the corporate trust office of U.S. Bank Trust Company, National Association (the “Trustee”) upon presentation and surrender of this Bond.

Payment of interest on this Bond due on or before the maturity or prior redemption, thereof shall be made to the person in whose name such Bond is registered, as of the Record Date preceding the applicable interest payment date, on the registration books kept by the Trustee at its corporate trust office, such interest to be paid by check mailed by first class m ail on such interest payment date to the registered owner at his address as it appears on such books. Interest on this Bond shall be payable in lawful money of the United States of America and shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. This Bond shall not be entitled to any benefit, protection or security under the Indenture, as hereinafter defined, or become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been signed by the Trustee. Notwithstanding the foregoing, so long as Wells Fargo Municipal Capital Strategies, LLC is the Owner of this Bond, principal of, premium, if any, and interest on this Bond shall be paid by electronic transfer and without presentment or surrender of this Bond.

The Owner of $1,000,000 or more in aggregate principal amount of the Bonds may request in writing that the Trustee pay the interest on such Bonds by wire transfer to an account in the United States of America and the Trustee shall comply with such request for all Interest Payment Dates following the 15th day after receipt of such request.

This Bond is one of a duly authorized issue of bonds of the Authority designated as its “Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible)” (the “Bonds”), in the aggregate principal amount $________, all of like tenor and date (except for such variations, if any, as may be required to designate varying numbers, maturities and interest rates), and is issued under and pursuant to the provisions of an Indenture, dated as of August 1, 2020, as amended by a First Supplement to Indenture, dated as of _______ 1, 2022 (collectively, the “Indenture”), by and among the Authority, the City of Gilroy (the “City”) and the Trustee (copies of which are on file at the corporate trust office of the Trustee). Unless the context otherwise requires, capitalized terms not defined herein shall have the meanings ascribed to them in the Indenture.

The Bonds are limited obligations of the Authority and are payable, as to interest thereon and principal thereof, solely from the revenues derived from Base Payments paid by the City pursuant to a First Amended and Restated Lease Agreement, dated as of August 1, 2009, as amended, including as amended by a Fourth Amendment to Lease Agreement, dated as of _______ 1, 2022 (collectively, the “Lease”), between the Authority, as lessor, and the City, as lessee, for the use and possession of the Leased Property as long as the City has such use and possession of

11.5.b
Packet Pg. 221 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

A-3

the Leased Property, as well as from all other benefits, charges, income, proceeds, profits, receipts, rents and revenues derived by the Authority, as assignee of the City’s rights under the Lease, from operation or use of the Leased Property (the “Revenues”). All the Bonds (as defined in the Indenture) are equally and ratably secured by the Revenues and enjoy the benefits of a security interest in the money held in the funds established pursuant to the Indenture (other than the Rebate Fund), subject to the provisions of the Indenture permitting the disbursement thereof for or to the purposes and on the conditions and terms set forth therein.

The obligation of the City to pay Base Payments does not constitute an indebtedness of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay Base Payments does not constitute an indebtedness of the City, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. The obligation of the City to make the Base Payments is subject to abatement during any period in which, by reason of material damage, destruction or title defect, there is substantial interference with the use and occupancy of the Leased Property or portions thereof or if the Leased Property or portions thereof are taken under the power of eminent domain, all as more particularly provided in the Lease to which reference is hereby made.

To the extent and in the manner permitted by the terms of the Indenture, the provisions of the Indenture may be amended or supplemented by the parties thereto, in some instances without the consent of the registered owners of the Bonds. No such amendment or supplement shall (1) extend the Principal Payment Date of any Bond or reduce the rate of interest represented thereby or extend the time of payment of such interest or reduce the amount of principal represented thereby without the prior written consent of the registered owner of each Bond so affected, or (2) reduce the percentage of registered owners whose consent is required for the execution of any amendment hereof or supplement hereto without the prior written consent of the registered owners of all Bonds then Outstanding, or (3) modify any of the rights or obligations of the Trustee without its prior written consent thereto, or (4) amend the amendment provisions of the Indenture without the prior written consent of the registered owners of all Bonds then Outstanding.

The Bonds are authorized to be executed and delivered in the form of fully registered Bonds without coupons, in denominations of two hundred fifty thousand dollars ($250,000) or any integral multiple of $1 in excess thereof (each, an “Authorized Denomination”).

This Bond is transferable by the Owner hereof, in person or by his attorney duly authorized in writing, at the office of the Trustee in Los Angeles, California, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture; and upon surrender of this Bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer, a new Bond or Bonds of Authorized Denominations of the same Principal Payment Date equal to the principal amount hereof will be executed and delivered by the Trustee to the Owner thereof in exchange or transfer herefor. The Trustee shall not be required to transfer or exchange any Bond during any period in which it is selecting Bonds for redemption, nor shall the Trustee be required to transfer or exchange any Bond or portion thereof selected for redemption from and after the date of mailing the notice of redemption. The Trustee may treat the Owner hereof as the absolute owner hereof for all purposes, whether or not this Bond shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the principal of,

11.5.b
Packet Pg. 222 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

A-4

premium, if any, and interest on this Bond shall be made only to such Owner as above provided, which payments shall be valid and effectual to satisfy and discharge the liability on this Bond to the extent of the sum or sums so paid.

The Bonds are subject to redemption prior to maturity as described in the Indenture , including as set forth in Article IV and Section 14.06 of the Indenture.

As provided in the Indenture, notice of redemption hereof or of any part hereof shall be mailed, first class postage prepaid, not less than 30 nor more than 60 days before the redemption date, to the Owner of this Bond at his or her address as it appears in the registration books maintained by the Trustee and as specified in the Indenture, but neither failure to receive any such notice nor any defect contained therein shall affect the validity of the proceedings for the redemption of this Bond. If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, the interest represented hereby shall cease to accrue from and after the designated redemption date.

Notwithstanding the foregoing, this Bond may be prepaid in whole at any time upon at least three Business Days’ prior written notice to the Owner specifying the amount of prepayment.

In the event that the Authority pursuant to Section 14.06(a) of the Indenture optionally redeems this is Bond, the Authority shall, at the time of such prepayment, pay to the Owner the principal of this Bond plus interest accrued to the date of prepayment plus an additional fee or redemption premium equal to the Breakage Fee as described in the Indenture.

The Trustee has no obligation or liability to the registered owners of the Bonds for the payment of the interest or principal or redemption premiums, if any, on the Bonds; but rather the Trustee’s sole obligation is to administer, for the benefit of the City, the Authority and the registered owners of the Bonds, the various funds established under the Indenture. The Authority has no obligation or liability whatsoever to the registered owners of the Bonds.

The Indenture provides that the occurrences of certain events constitute Events of Default.

Subject to certain limitations and to the rights of the Trustee or the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding shall be entitled to take whatever action at law or in equity may appear necessary or desirable to enforce its rights as assignee.

11.5.b
Packet Pg. 223 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

A-5

IN WITNESS WHEREOF, the Gilroy Public Facilities Financing Authority has caused this Bond to be executed in facsimile by its Chairman and by its Secretary all as of _____________, 2022.

GILROY PUBLIC FACILITIES FINANCING AUTHORITY

____________________________ ____________________________ Secretary Chairman

11.5.b
Packet Pg. 224 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

A-6

CERTIFICATE OF AUTHENTICATION AND REGISTRATION
This is one of the Bonds described in the within mentioned Indenture which has been authenticated and registered.

Dated: ___________, 2022

U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, as Trustee

By:

Authorized Signatory

11.5.b
Packet Pg. 225 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

A-7

FORM OF ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto __________________ the within Bond and do(es) hereby irrevocably constitute and appoint ______________________ attorney to transfer such Bond on the register of the Trustee, with full power of substitution in the premises.

Dated:

SIGNATURE GUARANTEED BY:

Note: The signature(s) to 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, and the signature(s) must be guaranteed by an eligible guarantor institution.

Social Security Number, Taxpayer Identification Number or other identifying number of Assignee:
________________________________

11.5.b
Packet Pg. 226 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

B-1

EXHIBIT B

BREAKAGE FEE CALCULATION

Each capitalized term used herein and not otherwise defined herein shall have the meaning provided therefor in the Indenture, unless the context otherwise requires.

Upon the occurrence of a Break Event, the Breakage Fee shall be calculated and paid as follows:

“Break Date” means any date that an optional redemption is made.

“Break Event” means any optional redemption or extraordinary redemption of the Bonds.

“Calculation Agent” will be Wells Fargo Bank, National Association. If for any reason Wells Fargo Bank, National Association is unable or unwilling to calculate the Breakage Fee, the Calculation Agent shall be an independent financial advisor or investment banker appointed by the Authority with the consent of the Series 2022A Bonds Purchaser.

“Day Count Fraction” is the anticipated basis on which interest at the Taxable Rate is to be computed on each of the Series 2022A Bonds. The Day Count Fraction utilizes a 360-day year and consisting of twelve 30-day months.

“Maturity Date” means November 1, 2033.

“Interest Rate” means the Taxable Rate.

“Scheduled Due Date” means each date specified on the Amortization Schedule attached as Schedule I hereto.

“Schedule of Principal Amount” is the anticipated principal amount of the Series 2022A Bonds scheduled to be outstanding on the date the Series 2022A Bond is funded and on the Scheduled Due Date. The Schedule of Principal Amounts for the Scheduled Due Dates is specified on the Amortization Schedule attached as Schedule I hereto.

1. In connection with any Break Event, a Breakage Fee shall be paid by the Authority if the Breakage Fee is a positive number. No Breakage Fee shall be payable for a Break Event if the Breakage Fee for that Break Event is a negative number. Breakage Fees will be determined by the Calculation Agent, on the Business Day next preceding any Break Date and will be calculated for the Series 2022A Bonds as follows:
“Breakage Fee” for any Break Event is the difference of:
(i) the sum of the present values of a series of amounts computed for each Scheduled Due Date after the Break Date through the Maturity Date for the Series 2022A Bond, each of which amounts is equal to the product of (A) the Affected Principal Amount for the Affected Principal Period ending on the

11.5.b
Packet Pg. 227 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

B-2

Scheduled Due Date, times (B) the Interest Rate, times (C) the Day Count Fraction for such Affected Principal Period,

minus
(ii) the sum of the present values of a series of amounts computed for each Scheduled Due Date after the Break Date through the Maturity Date for the Series 2022A Bond, each of which amounts is equal to the product of (A) the Affected Principal Amount for the Affected Principal Period ending on the Scheduled Due Date, times (B) the Break Rate, times (C) the Day Count Fraction for such Affected Principal Period,

where:
(1) the Calculation Agent computes such present values by discounting each such series of amounts described in clause (i) and (ii) above from the Scheduled Due Date to the Break Date using a series of discount factors corresponding to the Scheduled Due Date as determined by the Calculation Agent from the swap yield curve that the Calculation Agent would use as of the Break Date in valuing a series of fixed rate interest rate swap payments similar to such series of amounts;
(2) the “Affected Principal Amount” for an Affected Principal Period is the principal amount of the Series 2022A Bonds reflected in the Schedule of Principal Amounts scheduled to be outstanding during that Affected Principal Period determined as of the relevant Break Date by the reference to such Schedule of Principal Amounts before giving effect to any Break Event on that Break Date, and for any Break Event, multiplying each such principal amount times the Prepayment Fraction;
(3) “Affected Principal Period” is each period from and including a Scheduled Due Date to but excluding the next succeeding Scheduled Due Date; provided, however, if the Break Date is not a Scheduled Due Date, the initial Affected Principal Period shall be the period from and including the Break Date to but excluding the next succeeding Scheduled Due Date and the Affected Principal Period for such initial Affected Principal Period shall be the amount stated in the Schedule of Principal Amounts outstanding for the Scheduled Due Date next preceding the Break Date; (4) “Prepayment Fraction” means, for each Scheduled Due Date, a fraction the numerator of which is the amount of the credit to be applied pursuant to the applicable provisions of the Series 2022A Bond and the Indenture to reduce the amount of the prepayment otherwise due on such date and the denominator of which is the amount of the payment otherwise due on such date (without regard to such credit); and
(5) “Break Rate” means, for any Break Date, and with respect to each Series 2022A Bond, the fixed rate the Calculation Agent determines is representative of what swap dealers would be willing to pay to the Calculation Agent (or, if required to be cleared under the Commodity

11.5.b
Packet Pg. 228 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

B-3

Exchange Act or a Commodity Futures Trading Commission rule or regulation promulgated thereunder, to a swap clearinghouse) as fixed rate payors on a semi-annual basis in return for receiving the daily average of SOFR over a one-month period (or such alternate rate index designated for use in lieu of SOFR by the International Swaps and Derivatives Association) based payments monthly under interest rate swap transactions that would commence on such Break Date, and mature on, or as close as commercially practicable to, the Maturity Date for such Series 2022A Bond;

2. The Calculation Agent shall determine the Breakage Fee hereunder in good faith using such methodology as the Calculation Agent deems appropriate under the circumstance, and the Calculation Agent’s determination shall be conclusive and binding in the absence of manifest error.

11.5.b
Packet Pg. 229 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

B-4

SCHEDULE I
AMORTIZATION SCHEDULE1

Scheduled Due Date Schedule of Principal Amounts

1 Such amount to be the outstanding principal of the Bonds on each such date after the required amortization payment has been m ade.

11.5.b
Packet Pg. 230 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

C-1

EXHIBIT C

FORM OF PURCHASER LETTER
__________, 20__
City of Gilroy
Gilroy, California

Gilroy Public Facilities Financing Authority
Gilroy, California
U.S. Bank Trust Company, National Association
Los Angeles, California
Nixon Peabody LLP
Los Angeles, California
Re: Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible)
Ladies and Gentlemen:

The undersigned, __________ (the “Purchaser”), hereby acknowledges receipt of the above-referenced bonds (the “Bonds”), dated ________, 2022, in fully registered form and in the aggregate principal amount of $__________. The Bonds have been checked, inspected and approved by the Purchaser.

The undersigned further acknowledges that the Bonds are secured by a certain Indenture, dated as of August 1, 2020, as amended by the First Supplement to Indenture, dated as of December 1, 2022 (collectively, the “Indenture”), among the City of Gilroy (the “City”), the Gilroy Public Facilities Financing Authority (the “Authority”) and U.S. Bank Trust Company, National Association (the “Trustee”).

In connection with the sale of the Bonds to the Purchaser, the Purchaser hereby makes the following representations upon which you may rely:

1. The Purchaser hereby certifies that it is a “qualified institutional buyer” within the meaning of Rule 144A(a)(1) promulgated under the Securities Act of 1933, as amended (the “Act”) and applicable state securities laws (a “Qualified Buyer”).

2. The Purchaser (a) is a bank, any entity directly or indirectly controlled by the bank or under common control with the bank, other than a broker, dealer or municipal securities dealer registered under the Securities Exchange Act of 1934, or a consortium of such entities; and (b) has the present intent to hold the Bonds to maturity; provided, however, that the Purchaser shall not be precluded from transferring, participating or assigning its interest in the Bonds in accordance with the terms and conditions set forth in

11.5.b
Packet Pg. 231 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

C-2

the Indenture. The Purchaser understands that it may need to bear the risks of this investment for an indefinite period of time, since a sale of the Bonds, or any portion thereof, may not be possible. The Purchaser is not participating, directly or indirectly, in a distribution of the Bonds and will not take, or cause to be taken, any action that would cause the Purchaser to be deemed an “underwriter” of such Bonds as defined in Section 2(a)(11) of the Act. The Purchaser understands that the Authority has no obligation to register the Bonds for resale under the Act. The Purchaser further understands that the Bonds are being sold in a transaction that is exempt from the registration requirements of the Act. The Purchaser acknowledges that the City will not be entering into a continuing disclosure undertaking for the Bonds pursuant to Section 15c2-12 of the Securities Exchange Act of 1934, as amended; provided, however, that the City has agreed in the Indenture to provide certain ongoing information to the Purchaser.

3. The Purchaser has received and carefully read all information and other items of disclosure relating to the City and the Bonds that the Purchaser has deemed material for it to make an informed lending decision with respect to its purchase of the Bonds and, in connection therewith, has had access to all other materials, books, records, documents, and information relating to the City and the Bonds, and has been able to verify the accuracy of, and supplement, the information contained therein.

4. The Purchaser acknowledges that it has either been supplied with or been given access to information, financial statements or other financial information, which it has requested from the City and to which a reasonable investor would attach significance in making an investment decision (collectively, the “Disclosure Items”). The Purchaser has had an opportunity to ask questions of, and receive satisfactory answers from, duly designated representatives of the City concerning the terms and conditions pursuant to which the offer to purchase the Bonds is being made, and is satisfied with the information provided in response to its requests, and is satisfied that its request for such information has been fully complied with by the City.

5. The Purchaser has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of purchasing the Bonds based upon (i) the information furnished to it by the City; (ii) its or such representative’s personal knowledge of the business and affairs of the City; (iii) such additional information as it or such representative may have requested and have received from the City; and (iv) the independent inquiries and investigations undertaken by it or such representative.

6. The Purchaser represents that it can bear the economic risk of loss of the Bonds.

7. No person has given any information or made any representation not contained in any Disclosure Items referred to above or otherwise provided to the Purchaser in writing by a person employed or authorized in writing by the City. The Purchaser understands and agrees that any information or representation not contained therein must not, and will not, be relied upon and that nothing contained therein should be construed as legal or tax advice to the Purchaser.

11.5.b
Packet Pg. 232 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

C-3

8. The signatory of this letter is a duly authorized officer of the Purchaser with the authority to sign this letter on behalf of the Purchaser, and this letter has been duly authorized, executed, and delivered by the Purchaser.

9. The Purchaser understands that the purchase of the Bonds involves significant credit risks. The Purchaser is aware that there are certain economic and regulatory variables and risks that could adversely affect the security for the Bonds. The Purchaser has reviewed the documents executed in conjunction with the issuance of Bonds, or summaries thereof, including, without limitation, the Indenture.

10. The Purchaser acknowledges and agrees that the Authority and the City take no responsibility for, and make no representation to the Purchaser, or any subsequent purchaser, with regard to, a sale, transfer or other disposition of the Bond in violation of the provisions of the Indenture, or any securities law or income tax law consequences thereof. The Purchaser also acknowledges that, with respect to the City’s obligations and liabilities, the Purchaser is solely responsible for compliance with the sales restrictions on the Bond in connection with any subsequent transfer of the Bonds made by the Purchaser.

11. The Purchaser has been informed that the Bonds (i) have not been and will not be registered or otherwise qualified for sale under the “Blue Sky” laws and regulations of any jurisdiction, (ii) will not be listed on any stock or other securities exchange and (iii) will carry no rating from any rating service.

12. The Purchaser acknowledges that the sale of the Bonds to the Purchaser is made in reliance upon the certifications, representations and warranties herein by the addresses hereto.

Capitalized terms used herein and not otherwise defined have the meanings given such terms in the Indenture.

[PURCHASER]
By: ______________________________
Its: ______________________________

11.5.b
Packet Pg. 233 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

D-1

EXHIBIT D

FORM OF TAX-EXEMPT BOND CONVERSION AGREEMENT

TAX-EXEMPT BOND CONVERSION AGREEMENT
THIS TAX-EXEMPT BOND CONVERSION AGREEMENT (the “Agreement”) is made by and among the CITY OF GILROY, a political subdivision duly organized and existing under the laws of the State of California (the “City”), the GILROY PUBLIC FACILITIES FINANCING AUTHORITY, a joint powers authority duly organized and existing under and by virtue of the laws of the State of California (the “Authority”) and [__________] (the “Owner”).

RECITALS
WHEREAS, pursuant to the provisions of the Indenture, dated as of August 1, 2020, as amended by a First Supplement to Indenture, d ated as of December 1, 2022 (collectively, the “Indenture”), each by and among U.S. Bank Trust Company, National Association (the “Trustee”), the City and the Authority, the Authority issued its Lease Revenue Refunding Bonds, Series 2022A (Convertible) (th e “Bond”);
WHEREAS, the Indenture provides that the Owner, the Authority and the City may agree to convert the rate at which the Bond bears interest from the Taxable Rate to the Tax-Exempt Rate effective as of the Conversion Date, subject to meeting certain conditions; WHEREAS, the Authority, the City, and the Owner now wish to enter into this Agreement in order to effectuate such conversion in accordance with Section 14.02 of the Indenture and to acknowledge that such conversion constitutes a “reissuance” of the Bond for federal income tax purposes, creating a new debt instrument the issuer of which is the Authority; NOW, THEREFORE, and in consideration of the respective promises and mutual covenants and benefits hereinafter set forth, the Authority, the City, and the Owner agree as follows:

AGREEMENT
Section 1. Definitions, Declarations, Findings and Determinations. The definitions, declarations, determinations and findings contained in the recitals to this Agreement are hereby adopted, restated and made a part of the operative provisions hereof. Capitalized terms used herein and not otherwise defined shall have the meanings assigned thereto in the Indenture.

Section 2. Conversion to Tax-Exempt Rate. The Authority, the City, and the Owner hereby agree that the interest rate on the Bond will convert to the Tax-Exempt Rate on the Conversion Date (the “Conversion”), subject to compliance with the conditions set forth in Section

14.02 of the Indenture, including, particularly, the issuance of the Opinion of Counsel described therein. The Authority, the City, and the Owner acknowledge that the Conversion of the Bond

11.5.b
Packet Pg. 234 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

D-2

from the Taxable Rate to the Tax-Exempt Rate is intended to constitute a “reissuance” of the Bond for federal income tax purposes, creating a new debt instrument the issuer of which is the Authority.

Section 3. Compliance with Covenants Regarding Tax Exemption and Filing of Form 8038-G.
(a) The Authority and the City hereby agree that the covenants contained in the tax certificate, dated the date hereof, will become operative on the Conversion Date and shall be incorporated as operative terms of the Indenture.
(b) The Authority agrees to file a Form 8038-G with the Internal Revenue Service in connection with Conversion and the deemed reissuance of the Bond, solely for federal tax purposes, as tax-exempt bonds.

Section 4. Delivery of Agreement to Trustee. Upon compliance with the provisions of Section 14.02 of the Indenture, the Authority, the City, and the Owner hereby agree to deliver an executed copy of this Agreement to the Trustee for the Bond.

Section 5. Multiple Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original instrument and each will have the force and effect of an original and all of which together constitute, and will be deemed to constitute, one and the same instrument.

Section 6. Effective Date. This Agreement shall become effective upon satisfaction of all of the conditions described in Section 14.02 of the Indenture.

Section 7. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

Section 8. Severability. The provisions of this Agreement are severable, and if any provision or part of this Agreement or the application hereof to any person or circumstance shall ever be held by any court of competent jurisdiction to be invalid or unconstitutional for any reason, the remainder of this Agreement and the application of such provision or part of this Agreement to other persons or circumstances shall not be affected thereby. [Execution Page Follows]

11.5.b
Packet Pg. 235 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4863-6504-4543.3

D-3

EXECUTED in multiple counterparts as of ________ , 20__.

CITY OF GILROY

By:

Name: _________________________________
Title: __________________________________

Attest:

By:

City Clerk

GILROY PUBLIC FACILITIES

FINANCING AUTHORITY

By:

Name: _________________________________
Title: __________________________________

Attest:

By:

Secretary
[OWNER]

By:

Name: _________________________________
Title: __________________________________

11.5.b
Packet Pg. 236 Attachment: First Supplement to Indenture (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4864-2749-7279.2

TO BE RECORDED AND WHEN RECORDED
RETURN TO:

Nixon Peabody LLP
300 South Grand Avenue, Suite 4100
Los Angeles, California 90071
Attention: Danny Kim, Esq.

This document is recorded for the benefit of the City of Gilroy and the recording is fee-exempt under Section 6103 of the California Government Code and the recording is exempt under Section 27383 of the California Government Code and Section 11928 of the California Revenue and Taxation Code.

FOURTH AMENDMENT TO LEASE AGREEMENT
by and between

GILROY PUBLIC FACILITIES FINANCING AUTHORITY
as Lessor
and

CITY OF GILROY
as Lessee
Dated as of December 1, 2022

11.5.c
Packet Pg. 237 Attachment: Fourth Amendment to Lease Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

Table of Contents

Page
i

SECTION 1 Definitions .................................................................................................. 2 SECTION 2 Revised Lease Payment Schedule ............................................................... 2 SECTION 3 Amendment of Section 3.5 Additional Payments ....................................... 2 SECTION 4 Recordation Hereof ..................................................................................... 3 SECTION 5 Amendments Authorized ............................................................................ 3 SECTION 6 Governing Law ........................................................................................... 3 SECTION 7 Binding Effect ............................................................................................. 3 SECTION 8 Severability of Invalid Provisions ............................................................... 3 SECTION 9 Third Party Beneficiary .............................................................................. 3 SECTION 10 Execution of Counterparts .......................................................................... 3

11.5.c
Packet Pg. 238 Attachment: Fourth Amendment to Lease Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4864-2749-7279.2

[Fourth Amendment to Lease Agreement]

FOURTH AMENDMENT TO

LEASE AGREEMENT
This FOURTH AMENDMENT TO LEASE AGREEMENT (this “Fourth
Amendment”), dated as of December 1, 2022, is between the GILROY PUBLIC FACILITIES FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of the State of California (the “Authority”), as lessor, and the CITY OF GILROY, a charter city and municipal corporation duly organized and existing under the Constitution and laws of the State of California (the “City”), as lessee.

BACKGROUND:

1. The Authority has been formed under a Joint Exercise of Powers Agreement dated as of March 21, 1994, between the City and the Community Development Agency of the City of Gilroy, as amended by a First Amendment to Joint Powers Agreement on July 1, 2013, among the City, the Successor Agency of the Community Development Agency of the City of Gilroy and the Industrial Development Authority of the City of Gilroy, and is authorized thereunder to finance the acquisition and construction of public capital improvements for its members.

2. In order to provide financing for the construction of a police station, a fire station, a corporation yard and a playfield sports complex (the “2003 Projects”), the Authority and the City have previously authorized the execution and delivery of Certificates of Participation (City of Gilroy — Public Buildings Project) Series 2003 (Auction Rate) in the aggregate principal amount of $45,900,000 (the “2003 Certificates”).

3. In connection with the refunding of the 2003 Certificates, the Authority issued its $46,370,000 aggregate principal amount of Gilroy Public Facilities Financing Authority 2009 Bond Anticipation Notes, Series 2009 (the “2009 Notes”) and the City and the Authority have previously entered into that certain First Amended and Restated Lease Agreement, dated as of August 1, 2009, which was recorded in the Official Records of Santa Clara County on August 25, 2009 as Document No. 20409795 (the “2009 Lease”).

4. In connection with the refunding of the 2009 Notes, the Authority issued its Gilroy Public Facilities Financing Authority Refunding Bond Anticipation Notes, Series 2010 (the “2010 Notes”), in the aggregate principal amount of $22,840,000, and its Gilroy Public Facilities Financing Authority Refunding Lease Revenue Bonds, Series 2010 (the “2010 Bonds”), in the aggregate principal amount of $24,475,000.

5. In connection with the refunding of the 2010 Notes, the Authority issued its Gilroy Public Facilities Financing Authority Refunding Lease Revenue Bonds, Series 2013 (the “2013 Bonds”) and the City and the Authority have previously entered into that certain Second Amendment to Lease Agreement, dated as of August 1, 2013 (the “Second Amendment”), which was recorded in the Official Records of Santa Clara County on August 1, 2013 as Document No. 22357436.

11.5.c
Packet Pg. 239 Attachment: Fourth Amendment to Lease Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4864-2749-7279.2

[Fourth Amendment to Lease Agreement]

6. In connection with the refunding of the 2010 Bonds, the Authority issued its Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2020A (the “2020A Bonds”) and the City and the Authority have previously entered into that certain Third Amendment to Lease Agreement, dated as of August 1, 2020 (the “Third Amendment”), which was recorded in the Official Records of Santa Clara County on August 6, 2020 as Document No. 24566122.

7. In connection with the refunding of the 2013 Bonds, the Authority intends to issue its Lease Revenue Refunding Bonds, Series 2022A (Convertible) (the “2022A Bonds”), in the aggregate principal amount of $________ pursuant to an Indenture, dated as of August 1, 2020, as amended by the First Supplement to Indenture, dated as of December 1, 2022 (collectively, the “Indenture”), by and among the Authority, the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

8. The City and the Authority wish to further amend the 2009 Lease at this time for the purpose of revising the Lease Payment schedule to reflect the payment of Debt Service on the 2022A Bonds in addition to the payment of Debt Service on the 2020A Bonds.

9. Such amendments are permitted to be made under Section 7.3 of the 2009 Lease, since such amendments will not materially adversely affect the interests of the owners of any Authority Debt, in the opinion of bond counsel which has been filed with the Authority, the City and the Trustee.

10. The Authority and the City have each duly authorized the execution and delivery of this Second Amendment.

AGREEMENT:

In consideration of the above premises and of the mutual promises and covenants herein contained and for other valuable consideration, the parties hereto do hereby agree as follows:

SECTION 1 Definitions. All capitalized terms in this Fourth Amendment and not otherwise defined herein have the respective meanings given them in the Indenture.

SECTION 2 Revised Lease Payment Schedule. The Lease Payment schedule set forth in Exhibit C to the Third Amendment is hereby revised to reflect the payment of Debt Service on the 2022A Bonds in addition to the payment of Debt Service on the 2020A Bonds. Such Lease Payment schedule is attached to this Fourth Amendment as Exhibit B and is subject to adjustment upon the occurrence of a BPA Credit Event or a Determination of Taxability as more fully set forth in the Indenture.

SECTION 3 Amendment of Section 3.5 Additional Payments. Section 3.5 of the 2009 Lease is hereby amended by the addition of a new paragraph (f) which shall appear immediately following paragraph (e) and shall read as follows:
(f) All amounts due and owing under that certain Bond Purchase Agreement dated [December __, 2022], among the City, the Authority and Wells Fargo Municipal Capital Strategies, LLC, as purchaser of the 2022A Bonds, as the same may be amended, modified or supplemented from time to time in accordance with its terms.

11.5.c
Packet Pg. 240 Attachment: Fourth Amendment to Lease Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4864-2749-7279.2

[Fourth Amendment to Lease Agreement]

SECTION 4 Recordation Hereof. On or before the Series 2022A Bonds Closing Date the City shall cause this Fourth Amendment to be recorded in the office of the Santa Clara County Recorder with respect to the Leased Property.

SECTION 5 Amendments Authorized. The Authority and the City hereby find and determine that the amendments made under Section 1 and 2 are authorized to be made under Section 7.3 of the 2009 Lease. Such amendment is necessary to conform to the terms and conditions upon which the 2022A Bonds are issued, and such amendments to do not materially adversely affect the interests of the owners of the 2020A Bonds.

SECTION 6 Governing Law. This Fourth Amendment shall be construed in accordance with and governed by the Constitution and laws of the State of California.

SECTION 7 Binding Effect. This Fourth Amendment shall inure to the benefit of and shall be binding upon the Authority, the City and their respective successors and assigns, subject, however, to the limitations contained herein.

SECTION 8 Severability of Invalid Provisions. If any one or more of the provisions contained in this Fourth Amendment are for any reason held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Fourth Amendment and such invalidity, illegality or unenforceability shall not affect any other provision of this Fourth Amendment, and this Fourth Amendment shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Authority and the City each hereby declares that it would have entered into this Fourth Amendment and each and every other Section, paragraph, sentence, clause or phrase hereof irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of this Fourth Amendment may be held illegal, invalid or unenforceable.

SECTION 9 Third Party Beneficiary. The Trustee is hereby made a third party beneficiary under this Fourth Amendment with all rights of a third party beneficiary.

SECTION 10 Execution of Counterparts. This Fourth Amendment may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original and all of which shall together constitute but one and the same instrument.

11.5.c
Packet Pg. 241 Attachment: Fourth Amendment to Lease Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4864-2749-7279.2

[Fourth Amendment to Lease Agreement]

IN WITNESS WHEREOF, the Authority and the City have caused this Fourth Amendment to be executed in their respective names by their duly authorized officers, all as of the date first above written.

GILROY PUBLIC FACILITIES
FINANCING AUTHORITY, as Lessor
By:

Executive Director
ATTEST:

By:

Secretary
CITY OF GILROY, as Lessee

By:

City Administrator
ATTEST:

By:

City Clerk

11.5.c
Packet Pg. 242 Attachment: Fourth Amendment to Lease Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

A-1

EXHIBIT A

DESCRIPTION OF LEASED PROPERTY
All that certain real property, situated in the City of Gilroy, County of Santa Clara, State of California, described on the attached pages.

11.5.c
Packet Pg. 243 Attachment: Fourth Amendment to Lease Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

B-1

EXHIBIT B

BASE RENTAL PAYMENT SCHEDULE AS AMENDED
(TAXABLE RATE)
2020A Lease Revenue Bonds 2022A Lease Revenue Bonds
Payment
Date Principal Interest Principal Interest1 Total Lease Payment 11/01/20 $790,000 $162,208.33
05/01/21 323,750.00
11/01/21 715,000 323,750.00
05/01/22 305,875.00
11/01/22 755,000 305,875.00
05/01/23 287,000.00
11/01/23 795,000 287,000.00
05/01/24 267,125.00
11/01/24 840,000 267,125.00
05/01/25 246,125.00
11/01/25 880,000 246,125.00
05/01/26 224,125.00
11/01/26 925,000 224,125.00
05/01/27 201,000.00
11/01/27 1,000,000 201,000.00
05/01/28 176,000.00
11/01/28 1,030,000 176,000.00
05/01/29 150,250.00
11/01/29 1,085,000 150,250.00
05/01/30 123,125.00
11/01/30 1,140,000 123,125.00
05/01/31 94,625.00
11/01/31 1,200,000 94,625.00
05/01/32 64,625.00
11/01/32 1,260,000 64,625.00
05/01/33 33,125.00
11/01/33 1,325,000 33,125.00
$13,740,000 $5,155,708.33

1 Subject to adjustment upon a BPA Credit Event as more fully set forth in the Indenture.

11.5.c
Packet Pg. 244 Attachment: Fourth Amendment to Lease Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

B-2

BASE RENTAL PAYMENT SCHEDULE AS AMENDED
(TAX-EXEMPT RATE AFTER CONVERSION)
2020A Lease Revenue Bonds 2022A Lease Revenue Bonds
Payment
Date Principal Interest Principal Interest1 Total Lease Payment 11/01/20 $790,000 $162,208.33
05/01/21 323,750.00
11/01/21 715,000 323,750.00
05/01/22 305,875.00
11/01/22 755,000 305,875.00
05/01/23 287,000.00
11/01/23 795,000 287,000.00
05/01/24 267,125.00
11/01/24 840,000 267,125.00
05/01/25 246,125.00
11/01/25 880,000 246,125.00
05/01/26 224,125.00
11/01/26 925,000 224,125.00
05/01/27 201,000.00
11/01/27 1,000,000 201,000.00
05/01/28 176,000.00
11/01/28 1,030,000 176,000.00
05/01/29 150,250.00
11/01/29 1,085,000 150,250.00
05/01/30 123,125.00
11/01/30 1,140,000 123,125.00
05/01/31 94,625.00
11/01/31 1,200,000 94,625.00
05/01/32 64,625.00
11/01/32 1,260,000 64,625.00
05/01/33 33,125.00
11/01/33 1,325,000 33,125.00
$13,740,000 $5,155,708.33

1 Subject to adjustment upon a BPA Credit Event or a Determination of Taxability as more fully set forth in the Indenture.

11.5.c
Packet Pg. 245 Attachment: Fourth Amendment to Lease Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4864-2749-7279.2

CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the Fourth Amendment to Lease Agreement, dated as of December 1, 2022, by and between the Gilroy Public Facilities Financing Authority (the “Authority”) and the City of Gilroy (the “City”), from the Authority to the City, is hereby accepted by the undersigned on behalf of the City pursuant to authority conferred by resolution of the City Council of the City adopted on December 5, 2022, and the City consents to recordation thereof by its duly authorized officer.

Dated as of December 1, 2022

CITY OF GILROY
By: _______________________________
City Administrator

11.5.c
Packet Pg. 246 Attachment: Fourth Amendment to Lease Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4864-2749-7279.2

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA )
) ss

COUNTY OF SANTA CLARA )
On _________________, 2022, before me, ______________________________, Notary Public, personally appeared __________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

11.5.c
Packet Pg. 247 Attachment: Fourth Amendment to Lease Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4864-2749-7279.2

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA )
) ss

COUNTY OF SANTA CLARA )
On _________________, 2022, before me, ______________________________, Notary Public, personally appeared __________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

11.5.c
Packet Pg. 248 Attachment: Fourth Amendment to Lease Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

FORWARD FIXED RATE LOCK AGREEMENT

This Forward Fixed Rate Lock Agreement is entered into as of December 6, 2022 (this “Agreement”), between the City of Gilroy, California (the “City”) and Wells Fargo Bank, National Association (the “Bank”), to provide the City with a forward rate commitment (the “Forward Rate”) for the extension of credit to the City in the form of a direct purchase by the Bank, or a wholly owned subsidiary of the Bank, of the Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible) (the “Bonds”) to be issued pursuant to the Indenture, dated as of August 1, 2020, as amended by the First Supplement to Indenture, dated as of December 1, 2022 (the “Issuing Document”) and having the terms set forth in Exhibit A attached hereto.

Subject to the satisfaction of the terms and conditions set forth herein and in Exhibit B attached hereto (the “Terms and Conditions”), the Bank hereby offers ta taxable fixed rate of [___%] per annum and a tax-exempt fixed rate of [___%] per annum (collectively, the “Forward Rates”) for a principal amount of [$________] (being the principal amount of the Bonds) through December 20, 2022 (the “Rate Lock Expiration Date”). Notwithstanding the foregoing, the Bank’s commitment to purchase the Bonds shall be subject to: (i) the satisfaction of the terms and conditions set forth in the term sheet attached as Exhibit C hereto (the “Term Sheet”), including, but not limited to, the execution and delivery of the definitive bond documentation (the “Bond Documentation”) with respect to the Bonds in form and substance satisfactory to the Bank on or prior to the Rate Lock Expiration Date (such date of execution and delivery, the “Closing Date”); and (ii) the occurrence of no change in law that would prohibit the purchase of the Bonds by the Bank.

By entering into this Agreement, the City agrees that in the event that for any reason, other than by reason of the Bank’s failure to purchase the Bonds in accordance with the terms of the Bond Documentation, the Closing Date does not occur on or before the Rate Lock Expiration Date, the Bank shall not be obligated to provide the Forward Rates and the City shall pay to the Bank a Breakage Fee determined as provided in Exhibit D hereto. Such payment, if any, shall be due two (2) business days after the Bank gives written notice to the City of the amount thereof, setting forth in reasonable detail the basis for the calculation thereof. A certificate by the Bank as to such amount shall be conclusive if made in good faith, absent manifest error. The City acknowledges and agrees that such amount, if any, represents reasonable compensation for loss of bargain and is not a penalty.

The City agrees that this Agreement may obligate the City to make a significant payment to the Bank in the event the Closing Date does not occur on or prior to the Rate Lock Expiration Date, and the amount of any such payment cannot be predicted in advance of such event. The City is fully informed of and is capable of evaluating, and has evaluated, the potential financial risks and benefits and the appropriateness in light of its individual circumstances, of this Agreement. The City is entering into this Agreement in reliance only upon its own judgment, and is not relying upon any representations, warranty, views or advice of the Bank.

11.5.d
Packet Pg. 249 Attachment: Forward Fixed Rate Lock Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

The City agrees that the Bank’s willingness to commit to and lock in the Forward Rates in advance of the Closing Date is sufficient consideration for the City’s agreement to pay the amounts due hereunder, if any. Any amount due hereunder which is not paid when due shall bear interest until paid at the default rate set forth in the Term Sheet.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES

HERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE

OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE BONDS OR

ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, INCLUDING

CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. IN THE EVENT SUCH WAIVER OF JURY TRIAL IS UNENFORCEABLE; EACH OF THE PARTIES HERETO AGREE TO JUDICIAL

REFERENCE AS PROVIDED IN CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638
This Agreement is governed by the laws of the State of California, without regard to conflict of law principles that would require the application of different governing law. No modification or waiver of any of the terms of this Agreement will be valid unless agreed to in writing by the Bank and the City. When accepted, this Agreement will constitute the entire agreement between the Bank and the City concerning the Forward Rates, and shall supersede all prior and contemporaneous understandings and agreements (written or oral) relating thereto. This Agreement may be delivered by the exchange of signed signature pages by email delivery of a pdf copy, and any printed or copied version of any signature page so delivered will have the same force and effect as an originally signed version of such signature page. This Agreement shall become effective upon satisfaction of the conditions set forth herein, execution by the Bank and the Bank’s receipt of counterpart hereof executed by the City.

To accept this Agreement, please sign the enclosed copy where indicated below and return it to the Bank no later than the Bank’s close of business on December 6, 2022 (such date of execution and delivery, the “Rate Lock Closing Date”). If this Agreement is not accepted by said date, this Agreement will automatically terminate without liability or further obligation of the Bank.

[Balance of Page Intentionally Left Blank]

11.5.d
Packet Pg. 250 Attachment: Forward Fixed Rate Lock Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

IN WITNESS WHEREOF, the parties hereto have caused this Forward Fixed Rate Lock Agreement to be duly executed and delivered by their respective officers as of the date first written above.

CITY OF GILROY, CALIFORNIA
By: ____________________________________
Name: _____________________________
Title: _____________________________

WELLS FARGO BANK, NATIONAL

ASSOCIATION
By: ____________________________________
Name: _____________________________
Title: _____________________________

11.5.d
Packet Pg. 251 Attachment: Forward Fixed Rate Lock Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

EXHIBIT A

SUMMARY OF TERMS FOR THE BOND

1. Principal Amount of Bond: [$________]

2. Maturity Date: November 1, 2033

3. Interest Payment Frequency: semi-annually

4. Interest Payment Dates: first business day of each May and November

5. Interest Accrual: 360-day year, consisting of twelve 30-day months

6. Optional Redemption: subject to make-whole

7. Taxable Rate: [___%]

8. Tax-Exempt Rate: [___%]

9. Mandatory Sinking Fund Redemption Schedule of the Bonds:

Mandatory Sinking Account
Payment Date
Sinking Fund
Installment
November 1, 2023 [$________]
November 1, 2024 [$________]
November 1, 2025 [$________]
November 1, 2026 [$________]
November 1, 2027 [$________]
November 1, 2028 [$________]
November 1, 2029 [$________]
November 1, 2030 [$________]
November 1, 2031 [$________]
November 1, 2032 [$________]
November 1, 2033 [$________]

11.5.d
Packet Pg. 252 Attachment: Forward Fixed Rate Lock Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

EXHIBIT B

TERMS AND CONDITIONS
The obligation of the Bank to lock the Forward Rate is subject to the conditions precedent that the Bank shall have received, on or before the Rate Lock Closing Date, the items listed below, each dated and in form and substance as is satisfactory to the Bank:

1. an executed copy of this Forward Fixed Rate Lock Agreement and the Term Sheet;

2. a certificate by an authorized officer of the City certifying the names and signatures of the persons authorized to sign, on behalf of the City, this Forward Fixed Rate Lock Agreement; and

3. an opinion of counsel to the City as to the due authorization, execution, delivery and enforceability of this Forward Fixed Rate Lock Agreement, and such other customary matters as the Bank may reasonably request.

11.5.d
Packet Pg. 253 Attachment: Forward Fixed Rate Lock Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

EXHIBIT C

TERM SHEET

11.5.d
Packet Pg. 254 Attachment: Forward Fixed Rate Lock Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

EXHIBIT D

CALCULATION OF BREAKAGE FEE
The Breakage Fee applicable to any failure for the Closing Date to occur on or prior to the Rate Lock Expiration Date, shall be calculated as set forth in this Exhibit D.

1. Capitalized terms used in this Exhibit D and not otherwise defined herein have the meanings assigned thereto in the Forward Fixed Rate Lock Agreement to which this Exhibit D is attached.

The following defined terms are used in this Exhibit D:
“Breakage Fee” means the amount required to be paid by the City in connection with any Termination Event, calculated as provided in this Exhibit D. “Calculation Agent” means Wells Fargo Bank, National Association or its affiliates or such other entity designated by the Bank.
“Day Count Fraction” is the basis on which interest will be computed on the Bonds. The Day Count Fraction utilizes 30-day months and 360-day years. “Interest Payment Frequency” is the anticipated frequency of interest payments under the Bonds. The Interest Payment Frequency is semi-annually, with interest to be paid on the first business day of each May and November.
“Fixed Rate” means [___%] per annum.
“Maturity Date” means November 1, 2033.
“Scheduled Date” means each date specified on Schedule 1 hereto in the columns labeled Scheduled Date.
“Schedule of Principal Amounts” is the anticipated principal amount of the Bonds scheduled to be outstanding on the date the Bonds are funded and on the Scheduled Dates. The Schedule of Principal Amounts for the Scheduled Dates is specified in Schedule 1 to this Exhibit D.
“Termination Date” means the Rate Lock Expiration Date or such earlier date on which the City informs the Bank in writing that it will not close the transaction contemplated herein with the Bank on or prior to the Rate Lock Expiration Date.
“Termination Event” means the failure of the Closing Date to occur on or prior to the Rate Lock Expiration Date for any reason other than the Bank’s failure to comply with the Terms and Conditions, in whole or in part, as set forth in the Forward Fixed Rate Lock Agreement.

11.5.d
Packet Pg. 255 Attachment: Forward Fixed Rate Lock Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

2. In connection with any Termination Event, a Breakage Fee shall be paid by the City to the Bank if the Breakage Fee is a positive number. No Breakage Fee shall be payable for a Termination Event if the Breakage Fee for that Termination Event is a negative number. Any Breakage Fee will be determined by the Calculation Agent, on the business day next preceding the Termination Date, as follows:
“Breakage Fee” for any Termination Event is the difference of:
(i) the sum of the present values of a series of amounts computed for each Scheduled Date after the Closing Date through the Maturity Date, each of which amounts is equal to the product of (A) the Affected Principal Amount for the Affected Principal Period ending on that Scheduled Date, times (B) the Fixed Rate times (C) the Day Count Fraction for such Affected Principal Period,
minus
(ii) the sum of the present values of a series of amounts computed for each Scheduled Date after the Closing Date through the Maturity Date, each of which amounts is equal to the product of (A) the Affected Principal Amount for the Affected Principal Period ending on that Scheduled Date, times (B) the Termination Rate, times (C) the Day Count Fraction for such Affected Principal Period,
where:
(1) the Calculation Agent computes such present values by discounting each such series of amounts described in clauses (i) and (ii) above from their respective Scheduled Date to the Maturity Date using a series of discount factors corresponding to those Scheduled Dates as determined by the Calculation Agent from the swap yield curve that the Calculation Agent would use as of the Termination Date in valuing a series of fixed rate interest rate swap payments similar to such series of amounts; (2) the “Affected Principal Amount” for an Affected Principal Period is the principal amount of the Bonds reflected in the Schedule of Principal Amounts scheduled to be outstanding during that Affected Principal Period determined as of the Termination Date by reference to such Schedule of Principal Amounts before giving effect to the Termination Event on that Termination Date;
(3) the “Affected Principal Period” is each period from and including a Scheduled Date to but excluding the next succeeding Scheduled Date; provided, however, if the Termination Date occurs prior to the first Scheduled Date, the initial Affected Principal Period shall be the period from and including the first Scheduled Date to but excluding the Scheduled Date next succeeding the first Scheduled Date and the Affected Principal Amount for such initial Affected Principal Period shall be the initial amount stated in the Schedule of Principal Amounts outstanding; and

11.5.d
Packet Pg. 256 Attachment: Forward Fixed Rate Lock Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

(4) the “Termination Rate” for any Termination Date is the fixed rate the Calculation Agent determines is representative of what swap dealers would be willing to pay to the Calculation Agent (or, if required to be cleared under the Commodity Exchange Act or a Commodity Futures Trading Commission rule or regulation promulgated thereunder, to a swap clearinghouse) as fixed rate payors in accordance with the Interest Payment Frequency in return for receiving the daily average of SOFR over a one-month period (or such alternate rate index designated for use in lieu of SOFR by the International Swaps and Derivatives Association) based payments monthly under interest rate swap transactions that would commence on such Termination Date, and mature on, or as close as commercially practicable to, the Maturity Date.

3. The Calculation Agent shall determine the Breakage Fee hereunder in good faith using such methodology as the Calculation Agent deems appropriate under the circumstance, and the Calculation Agent’s determination shall be conclusive and binding in the absence of manifest error.

11.5.d
Packet Pg. 257 Attachment: Forward Fixed Rate Lock Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

SCHEDULE 1

Scheduled Date Schedule of Principal Amounts
December 6, 2022 [$________]
May 1, 2023 [$________]
November 1, 2023 [$________]
May 1, 2024 [$________]
November 1, 2024 [$________]
May 1, 2025 [$________]
November 1, 2025 [$________]
May 1, 2026 [$________]
November 1, 2026 [$________]
May 1, 2027 [$________]
November 1, 2027 [$________]
May 1, 2028 [$________]
November 1, 2028 [$________]
May 1, 2029 [$________]
November 1, 2029 [$________]
May 1, 2030 [$________]
November 1, 2030 [$________]
May 1, 2031 [$________]
November 1, 2031 [$________]
May 1, 2032 [$________]
November 1, 2032 [$________]
May 1, 2033 [$________]
November 1, 2033* [$________]
* Maturity Date

11.5.d
Packet Pg. 258 Attachment: Forward Fixed Rate Lock Agreement (4070 : City - 2013 Lease Revenue Bonds Refinancing)

BOND PURCHASE AGREEMENT
among

CITY OF GILROY,

GILROY PUBLIC FACILITIES FINANCING AUTHORITY
and

WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC
Relating to
[$_________]
Gilroy Public Facilities Financing Authority
Lease Revenue Refunding Bonds
Series 2022A (Convertible)

Dated [December __, 2022]

11.5.e
Packet Pg. 259 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

ARTICLE I

DEFINITIONS
Section 1.01. Definitions........................................................................................................ 1 Section 1.02. Incorporation of Certain Definitions by Reference; Interpretation .................. 5

ARTICLE II

PURCHASE OF OBLIGATION
Section 2.01. Execution of this Agreement; Purchase of Bond ............................................. 6

ARTICLE III

CONDITIONS PRECEDENT TO PURCHASE OF OBLIGATION
Section 3.01. Conditions Precedent to Execution and Closing .............................................. 6

ARTICLE IV

REPRESENTATION AND WARRANTIES
Section 4.01. The City represents and warrants to the Purchaser as follows: ....................... 8 Section 4.02. The Authority represents and warrants to the Purchaser as follows: ............. 12

ARTICLE V

COVENANTS
Section 5.01. Covenants ....................................................................................................... 15

ARTICLE VI

EVENTS OF DEFAULT
Section 6.01. Events of Default ........................................................................................... 18 Section 6.02. Consequences of an Event of Default ............................................................ 20 Section 6.03. Downgrade Redemption Event ...................................................................... 20

ARTICLE VII

MISCELLANEOUS
Section 7.01. Amendments and Waivers ............................................................................. 20 Section 7.02. Counterparts ................................................................................................... 20 Section 7.03. Notices ........................................................................................................... 20 Section 7.04. Severability .................................................................................................... 21 Section 7.05. Governing Law; Waiver of Jury Trial ........................................................... 22 Section 7.06. Complete and Controlling Agreement ........................................................... 22 Section 7.07. Indemnification .............................................................................................. 22 Section 7.08. Patriot Act ...................................................................................................... 22 Section 7.09. No Advisory or Fiduciary Responsibility ...................................................... 23 Section 7.10. Excess Interest ............................................................................................... 23 Section 7.11. Contractual Interpretation .............................................................................. 23

11.5.e
Packet Pg. 260 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

Section 7.12. EMMA Posting .............................................................................................. 24 Section 7.13. Electronic Signatures ..................................................................................... 24

11.5.e
Packet Pg. 261 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

BOND PURCHASE AGREEMENT
THIS BOND PURCHASE AGREEMENT is dated [December __, 2022] (as amended, modified or restated from time to time, this “Agreement”), among the CITY OF GILROY (the “City”), the GILROY PUBLIC FACILITIES FINANCING AUTHORITY (the “Authority”) and WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC (the “Purchaser”).

W I T N E S E T H:

WHEREAS, pursuant to that certain Resolution No. [_____] adopted by the City on [December __, 2022] (the “Resolution”) and the certain Resolution No. [_____] adopted by the Authority on [December __, 2022] (the “Authority Resolution”), the City has approved (i) the issuance of the Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible) (the “Bond”) for the purpose of refunding a portion of the Gilroy Public Facilities Financing Authority Refunding Lease Revenue Bonds, Series 2013 (the “Refunded Bond”) and the payment of costs associated with the issuance of the Bond and (ii) the execution and delivery of a purchase agreement and other documentation related to the issuance of the Bond and the purchase of the Bond in advance of its issuance on [December __, 2022]; and WHEREAS, the Bonds will be issued pursuant to the Indenture, dated as of August 1, 2020, as supplemented by the First Supplement to Indenture, dated as of [December __, 2022], each by and among U.S. Bank Trust Company, National Association (the “Trustee”), the City and the Authority; and
WHEREAS, the Purchaser hereby agrees to purchase the Bond when issued in compliance with the requirements and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, including the covenants, terms and conditions hereinafter contained, and to induce the Purchaser to purchase the Bond, the Purchaser, the Authority and the City agree as follows:

ARTICLE I

DEFINITIONS
Section 1.01. Definitions. In addition to terms defined at other places in this Agreement, the following defined terms are used throughout this Agreement with the following meanings:
“affiliate” means, with respect to any Person, any other Person directly or indirectly controlling or controlled by or under common control with such Person. Without limiting the foregoing, the definition of “affiliate” of any Person shall include any subsidiary of such Person and, with respect to the Purchaser, shall include Wells Fargo Securities (a trade name) and Wells Fargo Bank, National Association.
“Additional Payments” has the meaning set forth in the Lease Agreement.

11.5.e
Packet Pg. 262 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

2 “Agreement” means this Bond Purchase Agreement as originally executed and as it may from time to time be amended or supplemented in accordance with the term hereof. “Anti-Corruption Laws” means (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended, (b) the U.K. Bribery Act of 2010, as amended, and (c) any other anti-bribery or anti- corruption laws, regulations or ordinances in any jurisdiction in which the City is located or doing business.
“Anti-Money Laundering Laws” means applicable laws or regulations in any jurisdiction in which the City is located or doing business that relate to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto. “Assignment Agreement” has the meaning set forth in the Indenture. “Authority” means the Gilroy Public Facilities Financing Authority, a joint powers authority duly organized and existing under and by virtue of the laws of the State of California. “Base Payments” has the meaning set forth in the Lease Agreement. “Bond” means the Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible).
“Bond Counsel” means Nixon Peabody LLP.
“Bond Documents” means, collectively, this Agreement, the Resolution, the Authority Resolution, the Bond, the Indenture, the First Supplement to Indenture, the Lease Agreement, the Fourth Amendment to Lease Agreement, the Assignment Agreement and the Site Lease. “Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday on which banking institutions in Gilroy, California or New York, New York are authorized by law to close or (b) a day on which the New York Stock Exchange or the Federal Reserve Bank is closed. “City” means the City of Gilroy, a charter city duly organized and existing under the Constitution and laws of the State of California.
“Conversion Date” means the date on which the conditions to the conversion of the interest rate on the Bond from the Taxable Fixed Rate to the Tax-Exempt Fixed Rate pursuant to Section

3.01(b) hereof have been satisfied, which such date shall be on or after [August 8, 2023]. “City Representative” means the Mayor, City Administrator, Finance Director or City Clerk of the City, or such other person designated in writing by the City. “Closing Date” means the date of issuance of the Bond, [December __, 2022], or such other date if acceptable to the Purchaser, subject to the satisfaction of the conditions precedent set forth in Section 3.01(a).
“Confidential Information” means any sensitive or confidential information regarding the Purchaser or any affiliate of the Purchaser including, without limitation, address and account

11.5.e
Packet Pg. 263 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

3 information, e-mail addresses, telephone numbers, facsimile numbers, and names and signatures of officers and employees.
“Default Rate” means, for any day, a fluctuating rate of interest per annum equal to the greatest of (i) the Prime Rate in effect at such time plus four percent (4.0%), (ii) the Federal Funds Rate in effect at such time plus five percent (5.0%), and (iii) ten percent (10.0%). “Determination of Taxability” has the meaning set forth in the Indenture. “EMMA” means Electronic Municipal Market Access as provided by the Municipal Securities Rulemaking Board.
“Event of Default” with respect to this Agreement shall have the meaning set forth in Section 6 of this Agreement.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that: (a) if such day is not a Business Day, then the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day; and (b) if no such rate is so published on such next succeeding Business Day, then the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of one-hundredth of one percent) charged to the Purchaser on such day on such transactions as determined by the Purchaser. If the Federal Funds Rate determined as provided above would be less than zero percent (0.0%), then the Federal Funds Rate shall be deemed to be zero percent (0.0%).
“Fitch” means Fitch Ratings, Inc., and any successor rating agency. “First Supplement to Indenture” means the First Supplement to Indenture, dated as of December 1, 2022, by and among the Trustee, the City and the Authority. “Fourth Amendment to Lease Agreement” means the Fourth Amendment to Lease Agreement, dated as of December 1, 2022, between the Authority, as lessor, and the City, as lessee. “Indenture” means the Indenture by and among the Trustee, the City and the Authority, dated as of August 1, 2020, as originally executed and as it may from time to time be amended or supplemented in accordance therewith.
“Lease Agreement” means the First Amended and Restated Lease Agreement dated as of August 1, 2009, by and between the City, as sublessee, and the Authority, as sublessor, as originally executed and as it may be amended or supplemented in accordance therewith. “Lease Payments” has the meaning set forth in the Lease Agreement. “Leased Property” has the meaning set forth in the Indenture.

11.5.e
Packet Pg. 264 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

4 “Lease Obligation Debt” means any debt of the City and/or the Authority, the payment of which is payable from and/or secured by lease revenue rental payments payable under real property (but not equipment) leases from the general fund of the City. “Material City Debt” means any debt of the City that is outstanding in a principal amount of $5,000,000 or more.
“Maximum Federal Corporate Tax Rate” has the meaning set forth in the Indenture. “Moody’s” means Moody’s Investors Service, Inc. and any successor rating agency. “Owner” means the registered owner of the Bond.
“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Title III of Pub. L. 107 56 (signed into law October 26, 2001).
“Person” means any individual, corporation, not for profit corporation, partnership, limited liability company, joint venture, association, professional association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other form of entity.
“Prime Rate” means on any day, the rate of interest per annum then most recently established by Wells Fargo Bank, National Association as its “prime rate.” Any such rate is a general reference rate of interest, need not be related to any other rate, and need not be the lowest or best rate actually charged by Wells Fargo Bank, National Association to any customer or a favored rate and need not correspond with future increases or decreases in interest rates charged by other lenders or market rates in general; Wells Fargo Bank, National Association may make various business or other loans at rates of interest having no relationship to such rate. If Wells Fargo Bank, National Association ceases to establish or publish a prime rate from which the Prime Rate is then determined, the applicable variable rate from which the Prime Rate is determined thereafter shall be instead the prime rate reported in The Wall Street Journal (or the average prime rate if a high and a low prime rate are therein reported), and the Prime Rate shall change without notice with each change in such prime rate as of the date such change is reported. If the Prime Rate determined as provided above would be less than zero percent (0.0%), then the Prime Rate shall be deemed to be zero percent (0.0%).
“Property” means, when used in connection with any Person, any and all rights, title and interests of such Person in and to any and all property (including cash) whether real, personal or mixed, or tangible or intangible, and wherever situated. “Purchaser” means Wells Fargo Municipal Capital Strategies, LLC, and its successors and assigns.
“Purchase Price” has the meaning assigned in Section 2.01(a). “Refunded Bond” means the Gilroy Public Facilities Financing Authority Refunding Lease Revenue Bonds, Series 2013.

11.5.e
Packet Pg. 265 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

5 “Rating Agency” means any of S&P, Moody’s and Fitch, as applicable. “Rental Payments” has the meaning set forth in the Indenture. “Revenues” has the meaning set forth in the Indenture.
“S&P” means S&P Global Ratings, and any successor rating agency. “Sanction” or “Sanctions” means any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and restrictions and anti-terrorism laws imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future statute or Executive Order, (b) the United Nations Security Council, (c) the European Union, (d) the United Kingdom, or (e) any other governmental authority with jurisdiction over the City. “Sanctioned Target” means any target of Sanctions, including: (a) Persons on any list of targets identified or designated pursuant to any Sanctions, (b) Persons, countries or territories that are the target of any territorial or country-based Sanctions program, (c) Persons that are a target of Sanctions due to their ownership or control by any Sanctioned Target(s), or (d) otherwise a target of Sanctions, including vessels and aircraft, that are designated under any Sanctions program. “Site Lease” has the meaning set forth in the Indenture. “State” means the State of California.
“Taxable Date” has the meaning set forth in the Indenture. “Taxable Gross-Up Rate” has the meaning set forth in the Indenture. “Taxable Rate” means [__._]%, the rate of interest on the Bond payable from the Closing Date to but not including the Conversion Date.
“Tax-Exempt Rate” means [__._]%, the rate of interest on the Bond payable from and after the Conversion Date.
“Trustee” means U.S. Bank Trust Company, National Association.

Section 1.02. Incorporation of Certain Definitions by Reference; Interpretation .

Each capitalized term used herein and not otherwise defined herein shall have the meaning provided therefor in the Indenture, unless the context otherwise requires. In the event of any conflict between the terms and provisions of this Agreement and the provisions of the Indenture, the provisions of the Indenture shall be controlling.

11.5.e
Packet Pg. 266 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

6 ARTICLE II

PURCHASE OF OBLIGATION
Section 2.01. Execution of this Agreement; Purchase of Bond. (a) Purchase. Upon the terms and conditions and based on the representations, warranties and covenants of the Authority and the City set forth herein and in the Bond Documents, the Purchaser hereby agrees to purchase from the Authority, and the Authority hereby agrees to issue and sell to the Purchaser, the Bond at the purchase price of [$________] representing the aggregate principal amount of the Bond (the “Purchase Price”).
(b) Closing. On the Closing Date, the Authority and the City, as applicable, shall deliver to the Purchaser the documents described in and that satisfy the conditions set forth in Section 3.01(a). Upon delivery of such documents and satisfaction of such conditions, the Purchaser will pay the Purchase Price for the Bond in immediately available federal funds at the direction of the Authority. One fully registered Bond, in the aggregate principal amount equal to the Purchase Price, shall be issued to and registered in the name of the Purchaser, and shall be delivered at the direction of the Purchaser. (c) Conversion Date. On the Conversion Date, the City shall deliver to the Purchaser the documents described in and satisfy the conditions set forth in Section 3.01(b) hereof. Upon delivery of such documents and satisfaction of such conditions, the interest rate on the Bond shall convert to the Tax-Exempt Rate; provided that from and after any Taxable Date, the interest rate on the Bond shall be established at a rate at all times equal to the Taxable Gross-Up Rate.

ARTICLE III

CONDITIONS PRECEDENT TO PURCHASE OF OBLIGATION
Section 3.01. Conditions Precedent to Execution and Closing. The Purchaser has entered into this Agreement in reliance upon the representations, warranties and covenants of the City and the Authority contained herein and the Bonds Documents and to be contained in the documents and instruments to be delivered on the Closing Date and upon the agreement of the City to perform its obligations hereunder and thereunder. Accordingly, the Purchaser’s obligation under this Agreement to purchase and pay for the Bond shall be subject to the performance by the City and the Authority of their obligations to be performed hereunder and under such other documents and instruments to be delivered at or prior to the Closing Date, and shall also be subject to the requirements of the Indenture and the following conditions:
(a) Conditions to Effectiveness of this Agreement. On or prior to the Closing Date, the Purchaser shall have received the following documents in form and substance satisfactory to the Purchaser:

11.5.e
Packet Pg. 267 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

7 (i) an executed original or certified copy, as applicable, of this Agreement, the Indenture, the First Supplement to Indenture, the Lease Agreement, the Fourth Amendment to Lease Agreement, the Site Lease, the Assignment Agreement, the Resolution and the Authority Resolution; (ii) the fully executed and authenticated Bond in physical form and registered in the name of the Purchaser; provided that the Bond may bear a CUSIP number, but it shall not carry a rating from any ratings service or be offered pursuant to an offering statement (or other disclosure document) or by a placement agent; (iii) a certificate executed by a City Representative certifying that on and as of the Closing Date: (1) each representation and warranty of the City in this Agreement is true and correct in all material respects (except to the extent that such representation and warranty expressly relates to an earlier date), (2) no Event of Default has occurred and is continuing or would result from the execution or performance of the Bond Documents; (3) since June 30, 2021, no event has occurred or condition arisen, either individually or in the aggregate, that has had or could reasonably be expected to have a material impairment of the ability of the City to perform its obligations under the Bond Documents; and (4) the names and signatures of the persons authorized to sign the Bond Documents executed on the Closing Date on behalf of the City;
(iv) a certificate executed by an authorized representative of the Authority certifying, on and as of the Closing Date, the names and signatures of the persons authorized to sign the Bond Documents executed on the Closing Date on behalf of the Authority;
(v) evidence satisfactory to the Purchaser that the long-term unenhanced rating assigned to Lease Obligation Debt is not less than “AA” from S&P;
(vi) a certificate of the City that the requirements of Section 2.10 of the Indenture have been met, including a certificate of the City as to the annual fair rental value of the Leased Property;
(vii) certified copies of the policies of insurance required by Article IV of the Lease Agreement or certificates thereof, which shall evidence that the amounts of the insurance required under Section 4.4 and 4.5 of the Lease Agreement have been increased, if necessary, to cover the amount of the Bond; (viii) a CLTA or ALTA title insurance policy or other appropriate form of policy in the amount of the Bond of the type and with the endorsements described in Section 4.6 of the Lease Agreement;
(ix) an opinion of counsel to the City, in form and substance satisfactory to the Purchaser addressing the due authorization, execution, adoption, delivery and

11.5.e
Packet Pg. 268 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

8 enforceability of this Agreement and the other Bond Documents to which the City is a party and such other matters as the Purchaser may require; (x) an Opinion of Counsel as required under Section 2.11(a) of the Indenture addressed to the Purchaser or on which the Purchaser is otherwise expressly authorized to rely;
(xi) the City will cause to be delivered to the Purchaser a copy of the City’s audited financial statements for the fiscal year ended June 30, 2021; (xii) the Purchaser shall have received reimbursement of the fees and expenses of Kutak Rock LLP, as counsel to the Purchaser, incurred in connection with the preparation, review, negotiation, execution and delivery of this Agreement and the Bond Documents, which fees may be paid directly to Kutak Rock LLP; and (xiii) such additional certificates, instruments, opinions or other documents as the Purchaser may reasonably request.
(b) Conditions to Conversion of Interest Rate. The interest rate on the Bond shall convert to the Tax-Exempt Rate, subject to the conditions precedent set forth in this Section 3.01(b), and the Purchaser shall have received, on or before the applicable Conversion Date, the items listed below in this Section, each dated and in form and substance as is satisfactory to the Purchaser:
(i) the City, the Authority and the Purchaser shall have delivered to the Trustee a [Tax-Exempt Bond Conversion Agreement] in substantially the form of [Exhibit E] to the First Supplement to Indenture;
(ii) the Purchaser shall have received an opinion of Bond Counsel addressed to the Purchaser to the effect that, as of the Conversion Date, interest on the Bond is excludable from gross income for federal income tax purposes; and (iii) A certificate from the authorized officers of the City and the Authority, certifying that: (A) the representations and warranties of the City and the Authority contained in this Agreement and in the Bond Documents are true and correct as of the Conversion Date; and (B) no Event of Default has occurred and is continuing.

In the event the conditions to the conversion of the interest rate set forth in Section 3.01(b) are not satisfied on the Conversion Date, the interest rate on the Bond shall remain at the Taxable Rate.

ARTICLE IV

REPRESENTATION AND WARRANTIES
Section 4.01. The City represents and warrants to the Purchaser as follows:

11.5.e
Packet Pg. 269 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

9 (a) Organization and Power. The City (a) is a charter city and is validly existing under the laws of the State under and pursuant to the Constitution of the State and (b) has all governmental power and authority, and all governmental licenses, authorizations, consents and approvals, to execute, deliver and perform its obligations under this Agreement and, as of the Closing Date, will have all g overnmental power and authority, and all governmental licenses, authorizations, consents and approvals, to execute, deliver and perform its obligations under the other Bond Documents. (b) Consents. No consent, approval, authorization or order of any court or governmental body is required for the performance by the City of its obligations under the Bond Documents.
(c) No Conflict With Other Instruments or Law. Neither the execution and delivery of this Agreement or the other Bond Documents, nor compliance with the provisions thereof, or the issuance of the Bond conflicts with or will result in a breach of or default under (i) any indenture, mortgage, commitment, note or other agreement or instrument to which the City is a party or by which it is bound or (ii) to the best of the City’s knowledge, any other law, rule, regulation or ordinance or judgment, order or decree of any court or governmental agency or body having jurisdiction over the City or any of its activities or properties.
(d) Power and Authority; Enforceability. (i) The City has taken all action required to be taken by it to authorize the issuance and delivery of the Bond and the performance of its obligations thereunder, (ii) the City has full legal right, power and authority to enter into this Agreement and the other Bond Documents and to perform its obligations hereunder and thereunder, and (iii) this Agreement and the other Bond Documents have been duly authorized and (assuming due authorization, execution and delivery by the other parties thereto) when executed, constitute valid and binding obligations of the City enforceable against the City in accordance with their respective terms, subject to equitable principles, bankruptcy, insolvency and similar laws. (e) No Material Litigation; Pending Legislation. (i) There is no action, suit, proceeding, inquiry or investigation at law or in equity or before or by any court, public board or body pending, or, to the best knowledge of the City, threatened against or affecting the City wherein an unfavorable decision, ruling or finding would have a material adverse effect on (1) the transactions contemplated by, or the validity or enforceability of, this Agreement or the other Bond Documents or (2) the tax-exempt status of interest on the Bond on or after the Conversion Date, if applicable.
(ii) There is no amendment, or to the knowledge of the City, proposed amendment to the Constitution of the State or any State law or any administrative interpretation of the Constitution of the State or any State law, or any legislation that has passed either house of the legislature of the State, or any judicial decision interpreting any of the foregoing, the effect of which will materially adversely affect the issuance of the Bond, the security for the Bond or the City’s obligations under this Agreement, the Indenture, the Bond or the other Bond Documents, or the City’s ability to repay when due its obligations under the Lease Agreement.

11.5.e
Packet Pg. 270 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

10 (f) Financial Statements. The audited financial statements of the City for the fiscal year ended June 30, 2021, heretofore furnished to the Purchaser, fairly present the financial condition of the City in all material respects as of such date and the results of its operations for the period then ended in conformity with generally accepted accounting principles applicable to State political subdivisions, except as otherwise expressly noted therein. Since June 30, 2021, there has been no change in the financial condition or operations of the City that could reasonably be expected to result in a material adverse change in the operations, business, properties, liabilities or condition of the City or the ability of the City to perform its obligations under any Bond Document. (g) No Default. No Event of Default or any event that, with the giving of notice or the lapse of time or both, would constitute an Event of Default has occurred and is continuing.
(h) Usury. Under State law, the City may not plead the defense of usury or maintain any action thereon or therefor.
(i) Anti-Corruption Laws and Anti-Money Laundering Laws. To the best of City’s knowledge, after due care and inquiry, no affiliate, officer, director or agent acting on behalf of the City is under investigation for an alleged violation of Anti-Money Laundering Laws or Anti-Corruption Laws by a governmental authority that enforces such laws.
(j) Sanctions. (i) The City is not a Sanctioned Target and (ii) to the best of City’s knowledge, after due care and inquiry, no affiliate, officer, director or agent acting on behalf of the City is under investigation for an alleged violation of Sanction(s) by a governmental authority that enforces Sanctions.
(k) Security. The Bond is a limited obligation of the Authority and is payable, as to interest thereon and principal thereof, solely from the revenues derived from Base Payments paid by the City pursuant to Lease Agreement. The Bond is equally and ratably secured by the Revenues and enjoys the benefits of a security interest in the money held in the funds established pursuant to the Indenture (other than the Rebate Fund (as defined in the Indenture)), subject to the provisions of the Indenture permitting the disbursement thereof for or to the purposes and on the conditions and terms set forth therein. The obligation of the City to pay Base Payments does not constitute an indebtedness of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay Base Payments does not constitute an indebtedness of the City, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. The obligation of the City to make the Base Payments is subject to abatement during any period in which, by reason of material damage, destruction or title defect, there is substantial interference with the use and occupancy of the Leased Property or portions thereof or if the Leased Property or portions thereof are taken under the power of eminent domain.

11.5.e
Packet Pg. 271 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

11 (l) Immunity. Under State law, an action may be maintained against the City upon a contract made by the City, including the Bond Documents, and the City agrees not to assert the defense of sovereign immunity in any legal proceeding arising under or relating to the enforcement of the obligations of the City under the Bond Documents. (m) Investment Company. The City is not an “investment company” or a company “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.
(n) Margin Stock. The City is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock, and no part of the proceeds from the issuance of the Bond will be used to purchase or carry any such margin stock or extend credit to others for the purpose of purchasing or carrying any such margin stock. (o) Environmental Matters. The operations of the City are in material compliance with all of the requirements of applicable federal, state and local environmental, health and safety statutes and regulations and are not the subject of any governmental investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, where a failure to comply with any such requirement or the need for any such remedial action could reasonably be expected to result in a material adverse effect on its obligations under the Bond Documents.
(p) Insurance. The City currently maintains insurance coverage with insurance companies believed by the City to be capable of performing their obligations under the respective insurance policies issued by such insurance companies to the City (as determined in its reasonable discretion) and in full compliance with the Lease Agreement and the other Bond Documents.
(q) Title to Property; Site Lease; Lease Agreement. The City has good and marketable fee simple title to all Leased Property, subject only to Permitted Encumbrances (as defined in the Lease Agreement). The Lease Agreement and Site Lease are in full force and effect. The City, as lessee under the Lease Agreement, is in peaceable possession of the Leased Property. No waiver, indulgence or postponement of any of the City’s obligations under the Lease Agreement has been granted by the Authority. There exists no event of default or event, occurrence, condition or act that, with the giving of notice, the lapse of time or the happening of any further event or condition, would become a default under the Lease Agreement or Site Lease.
(r) Essentiality. The Leased Property is an essential asset of the City necessary to serve the needs of the residents of the City. The City believes that at all times while any Rental Payments or any obligation of the City under the Bond Documents remains unpaid, the Leased Property will remain an essential asset of the City. (s) Fair Rental Value. The total Base Payments for the Leased Property do not exceed the annual fair rental value of the Leased Property. In making such determination of annual fair rental value, consideration has been given to the uses and purposes which

11.5.e
Packet Pg. 272 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

12 may be served by the Leased Property and the benefits therefrom which will accrue to the City and the general public.
(t) Additional Rentals. All obligations of the City hereunder, other than the principal of and interest with respect to the Bond, shall be paid as Additional Payments pursuant to Section 3.5 of the Lease Agreement.

Section 4.02. The Authority represents and warrants to the Purchaser as follows:
(a) Organization and Power. The Authority (a) is a joint powers authority duly organized and existing under and by virtue of the laws of the State of California and (b) has all governmental power and authority, and all governmental licenses, authorizations, consents and approvals, to execute, deliver and perform its obligations under this Agreement and, as of the Closing Date, will have all governmental power and authority, and all governmental licenses, authorizations, consents and approvals, to execute, deliver and perform its obligations under the other Bond Documents. (b) Consents. No consent, approval, authorization or order of any court or governmental body is required for the performance by the Authority of its obligations under the Bond Documents.
(c) No Conflict With Other Instruments or Law. Neither the execution and delivery of this Agreement or the other Bond Documents, nor compliance with the provisions thereof, or the issuance of the Bond conflicts with or will result in a breach of or default under (i) any indenture, mortgage, commitment, note or other agreement or instrument to which the Authority is a party or by which it is bound or (ii) to the best of the Authority’s knowledge, any other law, rule, regulation or ordinance or judgment, order or decree of any court or governmental agency or body having jurisdiction over the Authority or any of its activities or properties.
(d) Power and Authority; Enforceability. (i) The Authority has taken all action required to be taken by it to authorize the issuance and delivery of the Bond and the performance of its obligations thereunder, (ii) the Authority has full legal right, power and authority to enter into this Agreement and the other Bond Documents and to perform its obligations hereunder and thereunder, and (iii) this Agreement and the other Bond Documents have been duly authorized and (assuming due authorization, execution and delivery by the other parties thereto) when executed, constitute valid and binding obligations of the Authority enforceable against the Authority in accordance with their respective terms, subject to equitable principles, bankruptcy, insolvency and similar laws. (e) No Material Litigation; Pending Legislation. (i)There is no action, suit, proceeding, inquiry or investigation at law or in equity or before or by any court, public board or body pending, or, to the best knowledge of the Authority, threatened against or affecting the Authority wherein an unfavorable decision, ruling or finding would have a material adverse effect on (1) the transactions contemplated by, or the validity or enforceability of, this Agreement or the other Bond Documents or (2) the tax-exempt status of interest on the Bond upon the Conversion Date, if applicable.

11.5.e
Packet Pg. 273 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

13 (ii) There is no amendment, or to the knowledge of the Authority, proposed amendment to the Constitution of the State or any State law or any administrative interpretation of the Constitution of the State or any State law, or any legislation that has passed either house of the legislature of the State, or any judicial decision interpreting any of the foregoing, the effect of which will materially adversely affect the issuance of the Bond, the security for the Bond or the Authority’s obligations under this Agreement, the Bond or the other Bond Documents, or the Authority’s ability to repay when due its obligations under the Bond.
(f) No Default. No Event of Default or any event that, with the giving of notice or the lapse of time or both, would constitute an Event of Default has occurred and is continuing.
(g) Usury. Under State law, the Authority may not plead the defense of usury or maintain any action thereon or therefor.
(h) Anti-Corruption Laws and Anti-Money Laundering Laws. To the best of Authority’s knowledge, after due care and inquiry, no affiliate, officer, director or agent acting on behalf of the Authority is under investigation for an alleged violation of Anti- Money Laundering Laws or Anti-Corruption Laws by a governmental authority that enforces such laws.
(i) Sanctions. (i) The Authority is not a Sanctioned Target and (ii) to the best of Authority’s knowledge, after due care and inquiry, no affiliate, officer, director or agent acting on behalf of the Authority is under investigation for an alleged violation of Sanction(s) by a governmental authority that enforces Sanctions. (j) Security. The Bond is a limited obligation of the Authority and is payable, as to interest thereon and principal thereof, solely from the revenues derived from Base Payments paid by the City pursuant to Lease Agreement. The Bond is equally and ratably secured by the Revenues and enjoys the benefits of a security interest in the money held in the funds established pursuant to the Indenture (other than the Rebate Fund (as defined in the Indenture)), subject to the provisions of the Indenture permitting the disbursement thereof for or to the purposes and on the conditions and terms set forth therein. The obligation of the City to pay Base Payments does not constitute an indebtedness of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay Base Payments does not constitute an indebtedness of the City, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. The obligation of the City to make the Base Payments is subject to abatement during any period in which, by reason of material damage, destruction or title defect, there is substantial interference with the use and occupancy of the Leased Property or portions thereof or if the Leased Property or portions thereof are taken under the power of eminent domain.

11.5.e
Packet Pg. 274 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

14 (k) Immunity. Under State law, an action may be maintained against the Authority upon a contract made by the Authority, including the Bond Documents, and the Authority agrees not to assert the defense of sovereign immunity in any legal proceeding arising under or relating to the enforcement of the obligations of the Authority under the Bond Documents.
(l) Investment Company. The Authority is not an “investment company” or a company “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.
(m) Margin Stock. The Authority is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock, and no part of the proceeds from the issuance of the Bond will be used to purchase or carry any such margin stock or extend credit to others for the purpose of purchasing or carrying any such margin stock. (n) Environmental Matters. The operations of the Authority are in material compliance with all of the requirements of applicable federal, state and local environmental, health and safety statutes and regulations and are not the subject of any governmental investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, where a failure to comply with any such requirement or the need for any such remedial action could reasonably be expected to result in a material adverse effect on its obligations under the Bond Documents.
(o) Insurance. The Authority currently maintains insurance coverage with insurance companies believed by the Authority to be capable of performing their obligations under the respective insurance policies issued by such insurance companies to the Authority (as determined in its reasonable discretion) and in full compliance with the Lease Agreement and the other Bond Documents.
(p) Title to Property; Site Lease; Lease Agreement; Assignment Agreement.

The Authority has good and marketable leasehold title to all of the Leased Property pursuant to the Site Lease. The Lease Agreement and Site Lease are in full force and effect.

The Authority, as lessee under the Site Lease, is in peaceable possession of the Leased Property. No waiver, indulgence or postponement of any of the Authority’s obligations under the Site Lease has been granted by the City. There exists no event of default or event, occurrence, condition or act that, with the giving of notice, the lapse of time or the happening of any further event or condition, would become a default under the Lease Agreement or the Site Lease. Pursuant to the Assignment Agreement, the Authority has assigned without recourse all its rights to receive Base Payments scheduled to be paid by the City under and pursuant to the Lease Agreement to the Trustee for the benefit of the owners of the Bond.
(q) Pledged Revenues. The Indenture creates a valid pledge of the Revenues as security for the punctual payment and performance of the obligations of the Authority under the Bond.

11.5.e
Packet Pg. 275 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

15 ARTICLE V

COVENANTS
Section 5.01. Covenants. The City and the Authority covenant and agree that they will comply with the following covenants until the date on which no amount is due or owing to the Purchaser under this Agreement or the other Bond Documents, unless the Purchaser shall otherwise consent in writing.
(a) Financial Reporting and Notices. The City and the Authority will prepare or cause to be prepared and delivered to the Purchaser the following:
(i) The City shall provide to the Purchaser within two hundred seventy (270) days of the end of each fiscal year of the City, a copy of its audited financial statements for such fiscal year along with a certificate executed by an authorized officer of the City certifying that no Event of Default or event that with the lapse of time or the giving of notice would constitute an Event of Default has occurred, or if any such default has occurred, specifying the nature of such default, the period of its existence, the nature and status thereof and any remedial steps taken or proposed to correct such default.
(ii) The City shall provide to the Purchaser the City’s annual budget within sixty (60) days of the end of each fiscal year of the City.
(iii) The City and the Authority shall provide prompt written notice to the Purchaser of (1) any Event of Default or event that with the lapse of time or the giving of notice would constitute an Event of Default, and (2) all actions, suits or proceedings pending against the City or the Authority in any court before any governmental authority which could reasonably be expected to result in a material adverse effect upon the operations, business, properties, liabilities or condition of the City or the Authority or a material impairment of the ability of the City or the Authority to perform its obligation under the Bond Documents.
(b) Existence, Etc. The Authority shall maintain its existence as a joint powers authority duly organized and existing under and by virtue of the laws of the State of California. The City shall maintain its existence as a municipal corporation duly organized and existing under the Constitution and laws of the State of California. (c) Defaults. The Authority and the City will promptly (and in any event within five Business Days after becoming aware thereof) notify the Purchaser of the occurrence of any Event of Default, specifying the details of such Event of Default and, to the extent a determination has been made, the action that the Authority and the City propose to take with respect thereto.
(d) Litigation; Material Change. The Authority and the City shall promptly notify the Purchaser of (i) the existence and status of any litigation which individually or in the aggregate could, in the event of an unfavorable outcome, have a material adverse effect on, or (ii) the occurrence of any other event or change which could have a material

11.5.e
Packet Pg. 276 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

16 adverse effect on, (A) the ability of the Authority or the City to perform their respective obligations hereunder or under the other the Bond Documents or (B) the enforceability or validity of this Agreement or any of the other Bond Documents. (e) Compliance with Laws. The City and the Authority shall comply in all material respects with all applicable laws, ordinances, rules, regulations and requirements of any governmental authority unless noncompliance would not have a material impairment on the ability of the City or the Authority to perform its obligations under this Agreement or the other Bond Documents or a material adverse effect upon the legality, validity, binding effect or enforceability against the City or the Authority of this Agreement or the other Bond Documents including, without limitation, environmental laws, Anti- Money Laundering Laws, Anti-Corruption Laws and Sanctions. (f) Maintenance of Books and Records; Inspections. The City and the Authority shall maintain adequate books, accounts and records, and prepare all financial statements required under this Agreement in accordance with generally accepted accounting principles applicable to State political subdivisions and joint powers authorities and in compliance with the regulations of any governmental authority having jurisdiction over it. The City and the Authority shall permit any employee or representative of the Purchaser to visit and inspect any of their properties, to examine and audit their books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss its affairs, finances and accounts with its officers and, upon prior notice to the City or the Authority, its independent public accountants (and by this provision the City and Authority authorize said accountants to discuss their finances and affairs with the Purchaser and to provide the Purchaser with access to such accountants’ work papers), all upon reasonable notice and during business hours and as often as may be reasonably requested. (g) Modifications. The City and the Authority shall not enter into or consent to any alteration, modification, supplement or amendment to this Agreement or the other Bond Documents, without the prior written consent of the Purchaser, except in connection with the issuance of Additional Bonds under the Indenture, which shall not require written consent of the Purchaser.
(h) [Maintenance of Rating. The City and the Authority shall at all times maintain a long-term unenhanced rating on Lease Obligation Debt from any of Moody’s, S&P or Fitch.]
(i) Other Agreements. In the event that the City or the Authority has entered into or shall enter into any credit agreement, purchase agreement, liquidity agreement or other agreement (each an “Other Agreement”) under which any person or entity undertakes to purchase Lease Obligation Debt from the City or Authority or extend credit or liquidity to the City or the Authority or provides credit enhancement for Lease Obligation Debt of the City or the Authority, and such Other Agreement provides such person or entity with different or more restrictive covenants, different or additional events of default and/or greater rights and remedies than are provided to the Purchaser in this Agreement or the other Bond Documents, the City and the Authority shall provide the Purchaser with a copy of each such Other Agreement and such different or more restrictive covenants, different

11.5.e
Packet Pg. 277 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

17 or additional events of default and/or greater rights and remedies shall automatically be deemed to be incorporated into this Agreement and the Purchaser shall have the benefits of such different or more restrictive covenants, different or additional events of default and/or greater rights and remedies as if specifically set forth herein. The City and the Authority shall promptly enter into an amendment to this Agreement to include different or more restrictive covenants, different or additional events of default and/or greater rights and remedies; provided that the Purchaser shall have and maintain the benefit of such different or more restrictive covenants, different or additional events of default and/or greater rights and remedies even if the City or the Authority fails to provide such amendment.
(j) Anti-Money Laundering Laws; Anti-Corruption Laws; Sanctions. The City and the Authority shall not use any proceeds of the Bond to fund, finance or facilitate any activities, business or transactions that would be prohibited by Anti-Money Laundering Laws, Anti-Corruption Laws or Sanctions.
(k) Source of Repayment. The City and the Authority shall not fund any repayment of the Bond with proceeds, or provide as collateral any Property, that is directly or indirectly derived from any transaction or activity that is prohibited by Sanctions, Anti- Money Laundering Laws or Anti-Corruption Laws, or that could otherwise cause the Purchaser or any other party to this Agreement to be in violation of Sanctions, Anti-Money Laundering Laws or Anti-Corruption Laws.
(l) Limitation on Liens. The Authority and the City shall not create a pledge, lien or charge on any part of the Revenues, other than the lien in favor of the holders of the Series 2020A Bonds (as defined in the Indenture), Additional Bonds (as defined in the Indenture) and the Purchaser. The Authority and the City shall not create a pledge, lien or charge on any part of the Leased Property other than Permitted Encumbrances (as defined in the Lease Agreement). The City and the Authority covenant (i) to keep the Leased Property and all parts thereof free from judgments, and materialmen’s and mechanics’ liens, claims, demands, encumbrances, liabilities and other liens of whatever nature or character, which, in each case, might hamper the City or the Authority in utilizing the Leased Property; and (ii) promptly, upon request of the Purchaser, to take such action from time to time as may be reasonably necessary or proper to remedy or cure any cloud upon or defect in the title to the Leased Property or any part thereof, whether now existing or hereafter developing, to prosecute all actions, suits, or other proceedings as may be reasonably appropriate for such purpose.
(m) Lease Payments. The City and the Authority will not issue or authorize the issuance of any obligation payable from Revenues other than as permitted under the Indenture and the Lease Agreement.
(n) Maintenance of Title Insurance. Throughout the term of the Lease Agreement, the City and the Authority shall maintain or cause to be maintained title insurance in the manner and in form and substance as required by the Lease Agreement and the other Bond Documents.

11.5.e
Packet Pg. 278 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

18 (o) Maintenance of Insurance. Throughout the term of the Lease Agreement, the City and the Authority shall maintain or cause to be maintained insurance in the manner and in form and substance as required by the Lease Agreement and the other Bond Documents.
(p) Incorporation of Covenants by Reference. The Authority and the City each agrees that it will perform and comply with each and every covenant and agreement required to be performed or observed by it in the Bond Documents to which it is a party, which provisions, as well as related defined terms contained herein, are hereby incorporated by reference herein with the same effect as if each and every such provision were set forth herein in its entirety. To the extent that any such incorporated provision permits any person to waive compliance with or consent to such provision or requires that a document, opinion or other instrument or any event or condition be acceptable or satisfactory to any person, for purposes of this Agreement, such provision shall be complied with only if it is waived or consented to by the Purchaser and such document, opinion or other instrument shall be acceptable or satisfactory only if it is acceptable or satisfactory to the Purchaser.
(q) Covenants and Legal Duties. Subject to the Lease Agreement, the City covenants to take such action as may be necessary to include all Lease Payments and all estimated Additional Payments due under the Lease Agreement in each of its final approved budgets for the general fund of the City and to make the necessary appropriations (including any supplemental appropriations) from the general fund of the City for all such Lease Payments and Additional Payments coming due and payable during the period covered by each such budget.
(r) Voluntary Rent Abatement. Except as required by law and the terms of the Lease Agreement, the City shall not seek or assert a claim for abatement of any of the Lease Payments under the Lease Agreement.
(s) Immunity. To the fullest extent permitted by law, the City and the Authority agree not to assert the defense of immunity (on the grounds of sovereignty or otherwise) in any proceeding by the Purchaser to enforce any of the obligations of the City and the Authority under this Agreement or any other Bond Document.

ARTICLE VI

EVENTS OF DEFAULT
Section 6.01. Events of Default. The occurrence of any of the following events (whatever the reason for such event and whether voluntary, involuntary, or effected by operation of law) shall be an “Event of Default”, unless waived in writing by Purchaser:
(a) the City or the Authority shall fail to pay the principal of or interest on the Bond when due;

11.5.e
Packet Pg. 279 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

19 (b) any representation or warranty made by or on behalf of the City or the Authority in this Agreement or any certificate or document delivered to the Purchaser related thereto shall provide to have been incorrect or untrue in any material respect when made; (c) the City or the Authority shall default in the performance of any of the covenants set forth in Section 5.01(b), (c), (g), (j), (k), (l), (m), (n), (o), (q), (r) or (s) hereof. (d) the City or the Authority shall fail to observe or perform any other covenant, restriction or agreement set forth in this Agreement or the other Bond Documents and such failure shall remain unremedied for a period of thirty days after the occurrence thereof; (e) the City or the Authority shall (i) have entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, (ii) become insolvent or shall not pay, or be unable to pay, or admit in writing its inability to pay, its debts generally as they become due, (iii) make a general assignment for the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its property, (v) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, marshalling of assets, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate action in furtherance of any matter described in parts (i) through (v) above, or (vii) fail to contest in good faith any appointment or proceeding described in paragraph (e) below;
(f) a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the City or the Authority or any substantial part of its respective property, or a proceeding described in paragraph (d)(v) above shall be instituted against the City or the Authority and such proceeding continues undischarged or any such proceeding continues undismissed or unstayed for a period of thirty (30) or more days; (g) a debt moratorium, debt restructuring, debt adjustment or comparable restriction is imposed on the repayment when due and payable of the principal of or interest on any indebtedness of the City or the Authority by the City or the Authority or any governmental authority with appropriate jurisdiction;
(h) the City shall (i) default on the payment of the principal of or interest on any Material City Debt, beyond the period of grace, if any, provided in the instrument or agreement under which such Material City Debt was created or incurred; or (ii) default in the observance or performance of any agreement or condition relating to any Material City Debt or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event shall occur or condition ex ist, the effect of which default, event of default or similar event or condition is to permit remedial action to be taken with respect to such Material City Debt;

11.5.e
Packet Pg. 280 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

20 (i) any final, unappealable judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes, which are not covered in full by insurance, with written acknowledgement of such coverage having been provided by the provider of such insurance coverage to the Purchaser, in an aggregate amount not less than $5,000,000 shall be entered or filed against the City or the Authority or against any of its property and remain unpaid, unvacated, unbonded or unstayed for a period of sixty (60) days; or
(j) any material provision of this Agreement or any other Bond Documents shall at any time for any reason cease to be valid and binding on the City or the Authority or shall be declared in a final non-appealable judgment by any court with competent jurisdiction to be null and void, invalid, or unenforceable, or the validity or en forceability thereof shall be publicly contested by the City or the Authority.

Section 6.02.Consequences of an Event of Default. Upon the occurrence and during the continuance of an Event of Default the interest rate on the Bond shall increase to the Default Rate as more fully set forth in the Bond and the Indenture, and the Purchaser may exercise, or cause to be exercised, any and all remedies as it may have under the other Bond Documents and as otherwise available at law and at equity.

Section 6.03. [Downgrade Redemption Event. In the event that any of Fitch, Moody’s or S&P shall have downgraded its rating of any Lease Obligation Debt to below “A-” (or its equivalent), “A3” (or its equivalent), or “A-” (or its equivalent) respectively, or suspended or withdrawn its rating of the same (a “Downgrade Redemption Event”), the Purchaser may provide written notice of such Downgrade Redemption Event to the Trustee and the City and direct a mandatory redemption of the Bonds in accordance with [Section 14.06(d)] of the First Supplement to Indenture.]

ARTICLE VII

MISCELLANEOUS
Section 7.01. Amendments and Waivers. No amendment or waiver of any provision of this Agreement or consent to any departure by the City or the Authority from any such provision shall in any event be effective unless the same shall be in writing and signed by the Purchaser.

Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. In the event any agreement contained in this Agreement should be breached by the City or the Authority and thereafter waived by the Purchaser, such waiver shall be limited to the particular breach so waived for the specific period set out in such waiver and such waiver shall not constitute a waiver of such breach for any other period and shall not waive any other or similar breach hereunder.

Section 7.02. Counterparts. This Agreement may be signed in any number of counterpart copies (and by different parties on different counterparts), each of which shall constitute an original but all such copies shall constitute one and the same instrument.

Section 7.03. Notices. All notices, requests, demands, directions and other communications (collectively “notices”) under the provisions of this Agreement shall be in writing

11.5.e
Packet Pg. 281 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

21 (including facsimile communication), unless otherwise expressly permitted hereunder, and shall be properly addressed and sent by registered or certified mail or by express courier for next Business Day delivery and shall be deemed received as follows: (a) if by registered or certified mail, five (5) days after mailing; (b) if by express courier, on the next Business Day; and (c) if by facsimile, when confirmation of transmission is obtained if prior to 5:00 p.m. local time on a Business Day, and otherwise, on the next Business Day; provided that service of a notice prescribed by any applicable law shall be considered complete when the requirements of such applicable law are met. Notices by electronic mail (e mail) shall not constitute notice under this Agreement and are only to be used in addition to notice given as prescribed under subsections (a), (b) or (c) of this Section. All notices shall be sent to the applicable party at the following address or in accordance with the last unrevoked written direction from such party to the other party hereto:
if to the City, addressed to it at:

City of Gilroy
7351 Rosanna Street
Gilroy, California 95020
Attention: Finance Director
Email: [email protected]

if to the Authority, addressed to it at:

Gilroy Public Facilities Financing Authority
7351 Rosanna Street
Gilroy, California 95020
Attention: Treasurer
Email: [email protected]

or if to the Purchaser, addressed to if at:

Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
1655 Grant Street, 3rd Floor
Concord, California 94520
Attention: Zina Monroe
Telephone: (925) 852-1061
Email: [email protected]

The Purchaser may in its sole discretion rely on any notice (including telephone communication or e-mail communication) purportedly made by or on behalf of the City or the Authority, but it shall have no duty to accept any notice not given as prescribed in this Section and shall have no duty to verify the identity or authority of the Person giving such notice, unless such actions or omissions would amount to gross negligence or intentional misconduct.

Section 7.04. Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or nonauthorization without invalidating the

11.5.e
Packet Pg. 282 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

22 remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction.

Section 7.05. Governing Law; Waiver of Jury Trial. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State without giving effect to conflicts of laws provisions.
(b) To the extent permitted by applicable laws, each of the parties hereto hereby waives its right to a jury trial of any claim or cause of action based upon or arising out of this Agreement, the Bond Documents or any of the transactions contemplated hereby or thereby, including contract claims, tort claims, breach of duty claims, and all other common law or statutory claims. If and to the extent that the foregoing waiver of the right to a jury trial is unenforceable for any reason in such forum, each of the parties hereto hereby consents to the adjudication of all claims pursuant to judicial reference as provided in California Code of Civil Procedure Section 638, and the judicial referee shall be empowered to hear and determine all issues in such reference, whether fact or law. Each of the parties hereto represents that each has reviewed this waiver and consent and each knowingly and voluntarily waives its jury trial rights and consents to judicial reference following consultation with legal counsel on such matters. In the event of litigation, a copy of this Agreement may be filed as a written consent to a trial by the court or to judicial reference under California Code of Civil Procedure Section 638 as provided herein.

Section 7.06. Complete and Controlling Agreement. This Agreement and the other Bond Documents completely set forth the agreements between the Purchaser, the Authority and the City and fully supersede all prior agreements, both written and oral, between the Purchaser, the Authority and the City relating to all matters set forth herein and in the other Bond Documents.

Section 7.07. Indemnification. In addition to any and all rights of reimbursement, indemnification, subrogation or any other rights pursuant hereto or under law or equity, the City and the Authority hereby agree (to the extent permitted by law) to indemnify and hold harmless the Purchaser and its officers, directors and agents (each, an “Indemnitee”) from and against any and all claims, damages, losses, liabilities, reasonable costs or expenses whatsoever (including reasonable attorneys’ fees) which may incur or which may be claimed against an Indemnitee by any Person or entity whatsoever (collectively, the “Liabilities”) by reason of or in connection with (a) the execution and delivery of, or payment or failure to pay under, this Agreement or any other Bond Document; (b) the issuance and sale of the Bond; and (c) the use of the proceeds of the Bond; provided that the City and the Authority shall not be required to indemnify an Indemnitee for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by the willful misconduct or gross negligence of such Indemnitee. The obligations of the City and the Authority under this Section shall survive the payment of the Bond and the termination of this Agreement.

Section 7.08. Patriot Act. The Purchaser hereby notifies the City and the Authority that pursuant to the requirements of the Patriot Act it is required to obtain, verify and record information that identifies the City and the Authority, which information includes the name and address of the City and the Authority and other information that is necessary for the Purchaser to identify the City and the Authority in accordance with the requirements of the Patriot Act. The

11.5.e
Packet Pg. 283 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

23 City and the Authority hereby agree that they shall promptly provide such information upon request by the Purchaser.

Section 7.09. No Advisory or Fiduciary Responsibility. In connection with all aspects of the transactions contemplated by this Agreement and the other Bond Documents (including in connection with any amendment, waiver or other modification of this Agreement or of any Bond Document), the City and the Authority acknowledge and agree that: (a)(i) any arranging, structuring and other services regarding this Agreement and the Bond Documents provided by the Purchaser or any affiliate of the Purchaser are arm’s length commercial transactions between the City and the Authority on the one hand, and the Purchaser and any affiliate of the Purchaser on the other hand, (ii) the City and the Authority have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate, and (iii) the City and the Authority are capable of evaluating, and understand and accept, the terms, risks and conditions of the transactions contemplated by this Agreement and the Bond Documents; (b)(i) the Purchaser and each affiliate of the Purchaser is and has been acting solely as a principal and has not been, is not, and will not be acting as an advisor, agent or fiduciary for the City or the Authority or any other Person and (ii) neither the Purchaser nor any affiliate of the Purchaser has any obligation to the City or the Authority with respect to the transactions contemplated by this Agreement and the Bond Documents, except those obligations expressly set forth herein; and (c) the Purchaser and each affiliate of the Purchaser may be engaged in a broad range of transactions that involve interests that differ from those of the City and the Authority, and neither the Purchaser nor any affiliate of the Purchaser has any obligation to disclose any of such interests to the City or the Authority. To the fullest extent permitted by applicable laws, the City and the Authority hereby waive and release any claims that it may have against the Purchaser and each affiliate of the Purchaser with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of the transactions contemplated by this Agreement and the Bond Documents.

Section 7.10. Excess Interest. If the amount of interest payable for any period in accordance with the terms of the Bond or the Bond Documents exceeds the amount of interest that would be payable for such period had interest for such period been calculated at the maximum interest rate permitted by law, then interest for such period shall be payable in an amount calculated at the maximum interest rate permitted by law. Any interest that would have been due and payable for any period but for the operation of the immediately preceding sentence shall accrue and be payable as provided in the foregoing sentence and shall, less interest actually paid to the Purchaser for such period, constitute the “Excess Interest Amount.” If there is any accrued and unpaid Excess Interest Amount as of any date, then the principal amount with respect to which interest is payable shall bear interest at the maximum interest rate permitted by law until payment to the Purchaser of the entire Excess Interest Amount. Notwithstanding the foregoing, on the date on which no principal amount with respect to the Bond remains unpaid, the City shall pay to the Purchaser a fee equal to any accrued and unpaid Excess Interest Amount.

Section 7.11. Contractual Interpretation. The parties acknowledge that they have read and fully understand the terms of this Agreement, have consulted with such attorneys, accountants, advisors, or other professionals as they have deemed appropriate prior to executing this Agreement with adequate opportunity and time for review thereof, and are fully aware of its contents and of its legal effect. Accordingly, neither this Agreement nor any ambiguity herein shall be construed

11.5.e
Packet Pg. 284 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

24 against any party on the grounds that such party drafted this Agreement and instead, this Agreement shall be interpreted as though drafted equally by all parties.

Section 7.12. EMMA Posting. In the event the City or the Authority files with EMMA this Agreement or any other Bond Document or any description of the material terms thereof or notice of any agreement to covenants, events of default, remedies, priority rights or other similar terms, either voluntarily or as required pursuant a continuing disclosure agreement or Rule 15c2- 12 promulgated pursuant to the Securities and Exchange Act of 1934, as amended (the “Rule”) (each such posting, an “EMMA Posting”), the City and the Authority shall (i) provide the Purchaser with a copy of each EMMA Posting prior to submitting or posting on EMMA and (ii) shall not file or permit the filing of any EMMA Posting that includes Confidential Information.

The City and the Authority acknowledge and agree that although the Purchaser may request review, edits or redactions of such materials prior to filing, the Purchaser is not responsible for the City’s or the Authority’s or any other entity’s (including, but not limited to, any broker-dealer’s) compliance or noncompliance (or any claims, losses or liabilities arising therefrom) with any continuing disclosure agreement or any applicable securities or other laws, including, but not limited to, those relating to the Rule.

Section 7.13. Electronic Signatures. The parties agree that the electronic signature of a party to this Agreement shall be as valid as an original signature of such party and shall be effective to bind such party to this Agreement. The parties agree that any electronically signed document (including this Agreement) shall be deemed (i) to be “written” or “in writing,” (ii) to have been signed and (iii) to constitute a record established and maintained in the ordinary course of business and an original written record when printed from electronic files. Such paper copies or “printouts”, if introduced as evidence in any judicial, arbitral, mediation or administrative proceeding, will be admissible as between the parties to the same extent and under the same conditions as other original business records created and maintained in documentary form. Neither party shall contest the admissibility of true and accurate copies of electronically signed documents on the basis of the best evidence rule or as not satisfying the business records exception to the hearsay rule. For purposes hereof, “electronic signature” means a manually signed original signature that is then transmitted by electronic means; “transmitted by electronic means” means sent in the form of a facsimile or sent via the internet as a “pdf” (portable document format) or other replicating image attached to an e mail message; and, “electronically signed document” means a document transmitted by electronic means and containing, or to which there is affixed, an electronic signature.
[Signatures Begin on the Following Page]

11.5.e
Packet Pg. 285 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

Signature Page to Bond Purchase Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Bond Purchase Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.

CITY OF GILROY

By:

Mayor

Attest:

By:

City Clerk

GILROY PUBLIC FACILITIES

FINANCING AUTHORITY

By:

Executive Director

Attest:

By:

Secretary

11.5.e
Packet Pg. 286 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

Signature Page to Bond Purchase Agreement

WELLS FARGO MUNICIPAL CAPITAL

STRATEGIES, LLC
By
Name: Brian Goins
Title: Vice President

11.5.e
Packet Pg. 287 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

11.5.e
Packet Pg. 288 Attachment: Convertible Bond Purchase Agreement (City of Gilroy) (4070 : City - 2013 Lease Revenue Bonds Refinancing)

City of Gilroy

STAFF REPORT
Agenda Item Title: Approval of the Refinancing of Gilroy Public Facilities Financing Authority's 2013 Refunding Lease Revenue
Bonds
Meeting Date: December 5, 2022
From: Jimmy Forbis, City Administrator
Department: Finance Department
Submitted By: Harjot Sangha, Finance Director
Prepared By: Harjot Sangha, Finance Director

Strategic Plan Goals

 Develop a Financially
Resilient Organization

☐ Ensure Neighborhood
Equity from City
Services
☐ Promote Economic
Development
Activities

☐ Promote Safe,
Affordable Housing for All

☐ Maintain and Improve
City Infrastructure

RECOMMENDATION

Adopt a resolution of the Board of Directors of the Gilroy Public Facilities Financing Authority approving the issuance by the Gilroy Public Facilities Financing Authority of not to exceed $15 million of Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A; approving the execution and delivery of various related documents in connection with the offering and sale of such bonds; and authorizing the taking of certain other matters related thereto.

13.2.1 Packet Pg. 289

EXECUTIVE SUMMARY

The Gilroy Public Facilities Financing Authority (“Authority”) and the City of Gilroy (“City”) issued $23,120,000 of bonds in 2013 (the “2013 Bonds”) to refund prior bonds and notes issued for the construction of the police station, improvements to the corporation yard, fire stations, sports park and joint use gymnasium/recreation facility and aquatics center for the Christopher High School campus. The Authority and City have the opportunity to refund the outstanding 2013 Bonds with new Lease Revenue Refunding Bonds, Series 2022A (Convertible) (the “2022 Bonds”) to capture savings and reduce the annual lease payments from the City.

BACKGROUND

In 2013, the Authority and City issued the 2013 Bonds at a fixed average interest rate of

4.53% and a 21-year amortization period with debt service secured by General Fund lease payments.

The leased assets are comprised of the City’s Police Station, Sunrise Fire Station, Corporation Yard, and Sports Park site. At the time of the issuance of the Authority’s Lease Revenue Refunding Bonds, Series 2020A, it was written into the documents that the Corporation Yard and Sports Park site would be released when the 2013 Bonds were refunded.

Since 2013, the City has made lease payments to the Authority, which in turn has made debt service payments on the 2013 Bonds. The outstanding principal amount is $15,185,000 as of December 1, 2022.

ANALYSIS

Current tax law does not allow for an advanced tax-exempt refunding of the 2013 Bonds prior to August 3, 2023 (90 days prior to November 1, 2023 , first optional redemption date). However, the Authority and City have the ability to issue taxable refunding bonds that convert to tax-exempt bonds once we are within the 90 -day redemption window.

This is often referred to as a “convertible” or “Cinderella” structure. Such a structure provides the Authority and City with the ability to approve the refunding of the 2013 Bonds with the 2022 Bonds, lock in interest rates, and capture savings based on current taxable and tax-exempt rates.

NHA Advisors, the City’s independent financial advisor and fiduciary, advised the City that a convertible transaction is best suited for a private placement, which is expected to provide greater savings than a public offering. A private placement is the sale of bonds to a pre-selected bank rather than a public offering sold to many investors through an underwriter.

Following the receipt of several interest rate and structure proposals, NHA Advisors determined that Wells Fargo offered the best combination of interest rates and terms.

Based on preliminary interest rates provided by Wells Fargo on November 18, 2022, the City can realize approximately $1,135,000 of net present value savings over the

13.2.1 Packet Pg. 290

remaining 11-year term of the bonds, which is a 7.45% reduction to total debt service.

This exceeds the standard 5% threshold for minimum savings that is generally used in the municipal finance industry. It should be noted, however, that the interest rates cannot be locked until the rate lock agreement is executed, which will only occur if the Authority and Council approve the refinancing, and legal due diligence is complete. At that time, the final savings amount will be determined.

In order to comply with the tax laws, Wells Fargo will have consent rights to the conversion of taxable bonds to tax-exempt bonds. In the event Wells Fargo was to withhold consent, which is unlikely, the 2022 Bonds would remain taxable, and accordingly, the net present value savings would decrease to $372,000 (a 2.45% reduction to total debt service).

The attached resolutions and draft financing documents permit the Authority and City to proceed with all steps necessary for the issuance of the 2022 Bonds. The resolution authorizes the issuance of bonds not to exceed $15 million, requires a minimum of 5% savings, and limits the repayment term not to exceed the existing debt’s term, November 1, 2033.

ALTERNATIVES

The Authority and City Council could decide not to approve the resolution and draft financing documents, maintaining the 2013 Bond debt service terms and conditions.

This is not recommended because the issuance of the 2022 Bonds will provide considerable savings to the City.

FISCAL IMPACT/FUNDING SOURCE

The current annual debt service on the bonds is approximately $1.8 million. The estimated annual debt service on new bonds will be approximately $1.6 million, resulting in a net savings of about $200,000 annually through the term of the bonds.

The exhibit to the Authority’s Resolution includes information required to be disclosed in a meeting open to the public pursuant to SB 450. Such information includes the true interest cost of the bonds, finance charges of the bonds, the number of proceeds received by the Authority and the City, and the total payment amount.

NEXT STEPS

Should the Authority and Council approve the resolution and draft financing documents, the rate lock agreement will be executed, and the interest rates will be locked.

Attachments:

1. Draft Resolution (Gilroy Public Facilities Financing Authority)

2. First Supplement to Indenture

3. Fourth Amendment to Lease Agreement

13.2.1 Packet Pg. 291

4. Convertible Bond Purchase Agreement (City of Gilroy)

5. Escrow Agreement

13.2.1 Packet Pg. 292

RESOLUTION NO. GPFFA 2022-XX

A RESOLUTION OF THE BOARD OF DIRECTORS OF

THE GILROY PUBLIC FACILITIES FINANCING

AUTHORITY AUTHORIZING THE ISSUANCE OF NOT
TO EXCEED $15,000,000 OF GILROY PUBLIC

FACILITIES FINANCING AUTHORITY LEASE REVENUE
REFUNDING BONDS, SERIES 2022A (CONVERTIBLE);

APPROVING THE EXECUTION AND DELIVERY OF

VARIOUS RELATED DOCUMENTS IN CONNECTION

WITH THE ISSUANCE AND DELIVERY OF SUCH
BONDS; AND AUTHORIZING THE TAKING OF CERTAIN

OTHER MATTERS RELATED THERETO

WHEREAS, the Gilroy Public Facilities Financing Authority (the “Authority”) was established for the purpose, among others, of providing for the financing and refinancing of public capital improvements for the City of Gilroy (the “City”); and WHEREAS, the Authority has previously issued its $23,120,000 Gilroy Public Facilities Financing Authority Refunding Lease Revenue Bonds, Series 2013 (the “Series 2013 Bonds”), of which $15,185,000 are currently outstanding; and
WHEREAS, the Authority and the City have determined, that it is necessary and desirable in order to refund the Series 2013 Bonds to authorize the issuance, sale and delivery of the Gilroy Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2022A (Convertible) (the “Series 2022A Bonds”) in the aggregate principal amount of not to exceed $15,000,000; and
WHEREAS, the Authority desires to approve in connection with the sale of the Series 2022A Bonds, the form of a Bond Purchase Agreement (the “Bond Purchase Agreement”), among the Authority, the City and Wells Fargo Municipal Capital Strategies, LLC (including any affiliate thereof, the “Purchaser”); and
WHEREAS, there have been presented to this meeting the proposed forms of the following documents:
(a) the First Supplement to Indenture, dated as of December 1, 2022 (the “First Supplement to Indenture”), among the Authority, the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”); and (b) the Fourth Amendment to Lease Agreement, dated as of December 1, 2022 (the “Fourth Amendment to Lease”) between the City and the Authority; (c) the Bond Purchase Agreement; and
(d) the Escrow Agreement, dated as of December 1, 2022 (the “Escrow Agreement”), between the Authority and U.S. Bank Trust Company, National Association, as escrow agent;

13.2.1.a
Packet Pg. 293 Attachment: Draft Resolution (Gilroy Public Facilities Financing Authority) (4078 : GPFFA - 2013 LRBs Refunding)

Resolution No. GPFFA 2022-XX
2013 Lease Revenue Bonds Refinancing
Gilroy Public Facilities Financing Authority Regular Meeting | December 5, 2022