44 annual Special Tax rates, it is possible that no replenishment would be possible if the Special Tax proceeds, together with other available funds, remain insufficient to pay all such amounts.
Thus, it is possible that the Reserve Fund will be depleted and not be replenished by the levy and collection of the Special Taxes.
Risks Associated with the Reserve Policy Provider
The City expects to fund a portion of the Reserve Fund with a Reserve Policy. The City can provide no assurances that the provider of the Reserve Policy will be able to meet its obligations under the Reserve Policy, if and when required to do so. In addition, any change in the ratings of the provider could impact the price of the 2024 Bonds in the secondary market.
Bankruptcy and Foreclosure Delays
The payment of the Special Tax and the ability of the City to foreclose the lie n of a delinquent unpaid Special Tax, as discussed in “SECURITY FOR THE 2024 BONDS,” may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the laws of the State of California relating to judicial foreclosure. T he various legal opinions to be delivered concurrently with the delivery of the 2024 Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganizat ion, moratorium, and other similar laws affecting creditors' rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.
Although bankruptcy proceedings would not cause the Special Taxes to become extinguished, bankruptcy of a property owner or any other person claiming an interest in the property could result in a delay in superior court foreclosure proceedings and could result in the possibility of Special Tax installments not being paid in part or in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the 2024 Bonds.
In addition, the amount of any lien on property securing the payment of delinquent Special Taxes could be reduced i f the value of the property were determined by the bankruptcy court to have become less than the amount of the lien, and the amount of the delinquent Special Taxes in excess of the reduced lien could then be treated as an unsecured claim by the court.
Any such stay of the enforcement of the lien for the Special Tax, or any such delay or non - payment, would increase the likelihood of a delay or default in payment of the principal of and interest on the 2024 Bonds and the possibility of delinquent Special Taxes not being paid in full.
Disclosure to Future Purchasers
The City has recorded a notice of the Special Tax lien in the Office of the County Recorder. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such special tax obligation in the purchase of a parcel of land or a home in the District or the lending of money secured by property in the District. The Act requires the subdivider of a subdivision (or its agent or representative) to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello -Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective
45 purchaser of the spec ial tax lien in a format prescribed by statute. Failure by an owner of the property to comply with these requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the wi llingness and ability of the purchaser or lessor to pay the Special Tax when due.
No Acceleration Provisions
The 2024 Bonds do not contain a provision allowing for their acceleration in the event of a payment default or other default under the terms of t he 2024 Bond s or the Fiscal Agent Agreement. Under the Fiscal Agent Agreement, a 2024 Bond owner is given the right for the equal benefit and protection of all 2024 Bond owners similarly situated to pursue certain remedies. See “APPENDIX C – Summary of t he Fiscal Agent Agreement.” So long as the 2024 Bonds are in book -entry form, DTC will be the sole 2024 Bond owner and will be entitled to exercise all rights and remedies of 2024 Bond holders.
Cyber Security
The City, like many other public and private entities, relies on a large and complex technology environment to conduct its operations. As a recipient and provider of personal, private, or sensitive information, the City is subject to multiple cyber threats including, but not limited to, hacking, viruses, malware and other attacks on computer and other sensitive digital networks and systems. Entities or individuals may attempt to gain unauthorized access to the City’s digital systems for the purposes of misappropriating assets or information or cau sing operational disruption and damage.
The City is also reliant on other entities and service providers in connection with the administration of the 202 4 Bonds, including without limitation the County tax collector for the levy and collection of Special Taxes, the Fiscal Agent, and the Dissemination Agent.
On November 28, 2021, the City detected a cybersecurity incident that impacted its network. Upon becoming aware of the incident, the City notified law enforcement and conducted an internal investigation to assess the nature and scope of the compromise. The investigation concluded on January 7, 2022, and confirmed that certain data had been accessed and acquired by an unauthorized third-party. The investigation further concluded that such data may have contained personal information of certain persons. As of the date of this Official Statement, the City has not experienced a material financial impact as a result of such incident.
In an effort to reduce the likelihood of additional cyber incid ents in the future, the City has implemented additional security features to its network, conducted employee trainings and hired third-party consultants to monitor the network and notify the City of any suspicious activity.
However, no assurance can be given that the City’s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City, or the administration of the 202 4 Bonds. Nor can any assurance be giv en that the other entities the City relies on will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.
Loss of Tax Exemption
As discussed under the caption “ TAX MATTERS,” interest on the 2024 Bond s might become includable in gross income for purposes of federal income taxation retroactive to the date the 2024 Bonds were issued as a result of future acts or omissions of the City in violation
46 of its covenants in the Fiscal Agent Agreement. The Fiscal Agent Agreement do es not contain a special redemption feature triggered by the occurrence of an event of taxability. As a result, if interest on the 2024 Bonds were to become includable in gross income for purposes of federal income taxation, the 2024 Bond s would continue to remain outstanding until maturity unless earlier redeemed pursuant to optional or mandatory redemption or redemption upon prepayment of the Special Taxes. See “THE 2024 BONDS – Redemption.”
Future legislative proposals, if enacted into law, clarificat ion of the Tax Code (defined herein) or court decisions may cause interest on the 2024 Bonds to be subject, directly, or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Bond owners from realizing the full current benefit of the tax status of such interest.
IRS Audit of Tax-Exempt Bond Issues
The Internal Revenue Service (the “IRS”) has initiated an expanded program for the auditing of tax -exempt bond issues, including both random and targeted audits. It is possible that the 2024 Bonds will be selected for audit by the IRS. It is also possibl e that the market value of such 2024 Bonds might be affected as a result of such an audit of such 2024 Bonds (or by an audit of similar bonds or securities).
Impact of Legislative Proposals, Clarifications of the Code and Court Decisions on Tax Exemption
Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the 2024 Bonds to be subject, directly, or indirectly, to federal income taxation or to be subject to or exempted from state income taxa tion, or otherwise prevent Bondholders from realizing the full current benefit of the tax status of such interest.
For example, various proposals have been made in Congress and by the President which, if enacted, would subject interest on bonds that is ot herwise excludable from gross income for federal income tax purposes, including interest on the 2024 Bonds, to a tax payable by certain 2024 Bond owners that are individuals, estates or trusts with adjusted gross income in excess of certain specified thresholds.
The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the 2024 Bond s.
Prospective purchasers of the 2024 Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations, or litigation.
Voter Initiatives and State Constitutional Provisions
Under the California Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutional amendments. Since 1978, the voters have exercised this power through the adoption of Proposition 13 and similar measures, including Proposition 218, which was approved in the general election held on November 5, 1996, and Proposition 26, which was approved on November 2, 2010.
Proposition 218. Proposition 218 —Voter Approval for Local Government Taxes—Limitation on Fees, Assessments, and Charges —Initiative Constitutional Amendment, added Articles XIIIC and XIIID to the California Constitution, imposing
47 certain vote requirements and other limita tions on the imposition of new or increased taxes, assessments and property -related fees and charges. Among other things, Section 3 of Article XIIIC states that “. . . the initiative power shall not be prohibited or otherwise limited in matters of reducin g or repealing any local tax, assessment, fee or charge.” The Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the A ct unless the legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt.
Proposition 26. On November 2, 2010, California voters approved Proposition 26, entitled the “Su permajority Vote to Pass New Taxes and Fees Act .” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two- thirds vote of the Legislature.
Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes require a majority vote and taxes for specific purposes (“special taxes”) require a two -thirds vote. The Special Taxes and the 2024 Bonds were each authorized by not less than a two -thirds vote of the landowners within the District who constituted the qualified electors at the time of such voted authorization, and the statute of limitations period for any challenges to the formation of the District and the levy of the Special Taxes has expired. The City believes, therefore, that issuance of the 2024 Bonds does not require the conduct of further proceedings under the Act, Proposition 218 or Proposition 26.
Like their antecedents, Proposition 218 and Proposition 26 have undergone, are likely to undergo, both judicial and legislative scrutiny.
For example, in August 2014, in City of San Diego. v. Melvin Shapiro, an Appellate Court invalidated an election held by the City of San Diego to authorize the levying of special taxes on hotels City -wide pursuant to a City charter ordinance creating a convention center facilities district which specifically defined the electorate to cons ist solely of (1) the owners of real property in the City on which a hotel is located, and (2) the lessees of real property owned by a governmental entity on which a hotel is located . The court held that such landowners and lessees are neither “qualified electors” of the City for purposes of Articles XIII A, Section 4 of the California Constitution , nor a proper “electorate” under Article XIIIC, Section 2(d) of the California Constitution. The court specifically noted that the decision did not require the Court to consider the distinct question of whether landowner voting to impose special taxes under Section 53326(b) of the Act (which was the nature of the voter approval through which the District was formed) violates the California Constitution in districts that lack sufficient registered voters to conduct an election among registered voters . Accordingly, this case should have no effect on the levy of the Special Taxes.
The City cannot predict the ulti mate outcome or effect of any such judicial scrutiny, legislative actions, or future initiatives. These initiatives, and any future initiatives, may affect the collection of fees, taxes and other types of revenue by local agencies such as the City.
Subject to overriding federal constitutional principles, such collection may be materially and adversely affected by voter -approved initiatives, possibly to the extent of creating cash -flow problems in the payment of outstanding obligations such as the 2024 Bonds.
48 Risks Associated with Bond Insurance
Before the delivery of the 2024 Bonds, the City will pay the premiums for the Policy and the Reserve Policy. The City can provide no assurances that the Bond Insurer will be able to meet its obligations under the Policy or the Reserve Policy, if and when required to do so. In addition, any change in the ratings of the Bond Insurer could impact the price of the 2024 Bonds in the secondary market.
Public Health Emergencies
In recent years, public health authoriti es have warned of threats posed by outbreaks of disease and other public health threats. Pandemic diseases arising in the future could have significant adverse health and financial impacts throughout the world, leading to loss of jobs and personal financia l hardships, and/or actions by federal, State, and local governmental authorities to contain or mitigate the effects of an outbreak.
Taxpayer assistance measures may include deferral of due dates of property taxes, which was an assistance program during t he COVID -19 pandemic, and with or without a deferral some taxpayers may be unable to make their property and Special Tax payments. No assurance can be given that the property tax payment dates will not be deferred in the future, which may cause a delay in the receipt of Special Taxes. In addition, home values may be affected by a reduction in demand stemming from personal finances, or general widespread economic circumstances resulting from pandemic diseases.
Secondary Market for 2024 Bonds
There can be no guarantee that there will be a secondary market for the 2024 Bonds or, if a secondary market exists, that any 2024 Bonds can be sold for any particular price. Prices of bond issues for which a market is being made will depend upon then -prevailing circumstances.
Such prices could be substantially different from the original purchase price.
No assurance can be given that the market price for the 2024 Bonds will not be affected by the introduction or enactment of any future legislation (including witho ut limitation amendments to the Internal Revenue Code), or changes in interpretation of the Internal Revenue Code, or any action of the Internal Revenue Service, including but not limited to the publication of proposed or final regulations, the issuance of rulings, the selection of the 2024 Bonds for audit examination, or the course or result of any Internal Revenue Service audit or examination of the 2024 Bonds or obligations that present similar tax issues as the 2024 Bonds.
49 TAX MATTERS
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the 2024 Bonds is excluded from gross income for fede ral income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. Interest on the 2024 Bonds may be subject to the corporate alternative minimum tax.
The opinions set forth in the preceding par agraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the " Tax Code") that must be satisfied subsequent to the issuance of the 2024 Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the 2024 Bonds.
Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public at which a 2024 Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes "original issue discount " for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public at which a 2024 Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes "bond pr emium" for purposes of federal income taxes and State of California personal income taxes.
Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the 2024 Bond on the basis of a constant interest rate compo unded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such 2024 Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such 2024 Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the 2024 Bonds who purchase the 2024 Bonds aft er the initial offering of a substantial amount of such maturity. Owners of such 2024 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of 2024 Bonds with original issue discount, including the treatment of purc hasers who do not purchase in the original offering to the public at the first price at which a substantial amount of such 2024 Bonds is sold to the public.
Under the Tax Code, bond premium is amortized on an annual basis over the term of the 2024 Bond (said term being the shorter of the 2024 Bond's maturity date or its call date). The amount of bond premium amortized each year reduces the adjusted basis of the owner of the 2024 Bond for purposes of determining taxable gain or loss upon disposition. The amount of bond premium on a 2024 Bond is amortized each year over the term to maturity of the 2024 Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight -line interpolations between compounding d ates). Amortized 2024 Bond premium is not deductible for federal income tax purposes. Owners of premium 2024 Bonds, including purchasers who do not purchase in the original offering, should consult their own tax
50 advisors with respect to State of Californ ia personal income tax and federal income tax consequences of owning such 2024 Bonds.
California Tax Status . In the further opinion of Bond Counsel, interest on the 2024 Bonds is exempt from California personal income taxes.
Other Tax Considerations. Current and future legislative proposals, if enacted into law, clarification of the Tax Code or court decisions may cause interest on the 2024 Bonds to be subject, directly, or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Tax Code or court decisions may als o affect the market price for, or marketability of, the 2024 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, such legislation would apply to bonds issued prior to enactment.
The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of such opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the 2024 Bonds, or as to the consequences of owning or receiving interest on the 2024 Bonds, as of any future date. Prospective purchasers of the 2024 Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations, or litigation, as to which Bond Counsel expresses no opinion.
Owners of the 2024 Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the 2024 Bonds may have federal or state tax consequences other than as described above. Other than as expressly described above, Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the 2024 Bonds, the ownership, sale, or disposition of the 2024 Bonds, or the amount, accrual or receipt of interest on the 2024 Bonds.
LEGAL OPINIONS
Concurrently with the issuance of the 2024 Bond s, Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, will render its opinion substantially in the form set forth in APPENDIX D to this Official Statement. Certain legal matters with respect to the 2024 Bonds will be passed upon for the City and the District by the City Attorney, and for the City by Jones Hall, A Professional Law Corporation, San Francisco, California, acting as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California.
RATINGS
S&P Global Ratings is expected to assign its municipal bond rating of “ __” to the 2024 Bonds with the understanding that the Bond Insurer will issue the Policy concurrently with the delivery of the 2024 Bonds. S&P Global Ratings has assigned an underlying rating of “ __” to the 2024 Bonds.
Such ratings reflect only the views of such rating agency, and an explanation of the significance of such ratings, and any outlook associated with such ratings, may be obtained by contacting the rating agency at: S&P Global Ratings, 55 Water Street, New York, New York
51 10041. Such ratings are not a recommendation to buy, sell or hol d the 2024 Bonds. There is no assurance that such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by such organizations, if in the rating agency’s judgment circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 2024 Bonds.
LITIGATION
The City is not aware of any pending or threatened litigation challenging the validity of the 2024 Bonds, the Special Taxes securing the 2024 Bonds, or any action taken by the City in connection with the formation of the District, the levying of the Special Taxes or the issuance of the 2024 Bonds.
VERIFICATION OF MATHEMATICAL ACCURACY
Causey Public Finance, LLC , Denver, Colorado, upon delivery of the 2024 Bonds, will deliver one or more reports on the mathematical accuracy of certain computations contained in schedules provided to them relating to the sufficiency of the anticipated receipts from the monies deposited under the Escrow Agreement to pay, when due, the principal, interest, and redemption requirements of the 2014 Bonds.
52 UNDERWRITING
The 2024 Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated, at a purchase price of $________ (which represents the aggregate principal amount of the 2024 Bonds ($________), plus a net original issue premium of $_________, less an Underwriter's discount of $________).
The purchase agreement relating to the 2024 Bonds provides that the Underwriter will purchase all of the 2024 Bonds, if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in such purchase agreement.
The Underwriter may offer and sell the 2024 Bond s to certain dealers and others at prices lower than the offering prices stated on the inside cover page hereof. The offering prices may be changed from time to time by the Underwriter.
PROFESSIONAL FEES
In connection with the issuance of the 2024 Bonds, fees or compensation payable to certain professionals are contingent upon the issuance and delivery of the 2024 Bonds. Those professionals include:
• the Underwriter;
• Fieldman, Rolapp & Associates, Inc., as Municipal Advisor; • Jones Hall, A P rofessional Law Corporation, as Bond Counsel and Disclosure Counsel;
• Stradling Yocca Carlson & Rauth LLP, as Underwriter’s Counsel; • U.S. Bank Trust Company, National Association, as Fiscal Agent; • Causey Public Finance, LLC, as verification agent.
CONTINUING DISCLOSURE
The City will covenant for the benefit of owners of the 2024 Bonds to provide certain financial information and operating data relating to the District and the 2024 Bonds by not later than 9 months after the end of the City’s fiscal year, or March 31 each year based on the City’s current fiscal year end of June 30 (the “Annual Report”) and to provide notices of the occurrence of certain listed events.
These covenants have been made in order to assist the Underwriter in complying wi th Securities Exchange Commission Rule 15c2 -12(b)(5) (the “ Rule”). The specific nature of the information to be contained in the Annual Report or the notices of listed events is set forth in APPENDIX E.
[The City has not, on several occasions during the past five years, fully complied with its prior continuing disclosure undertakings under the Rule. Specific instances of noncompliance, which the City has not determined were material or immaterial, include the following:
53 • [NTD: To be determined]
The City has made additional filings to correct these instances of non -compliance. The City believes it has established processes to ensure it will make required filings on a timely basis in the future.]
EXECUTION
The execution and delivery of this Official Statement ha ve been duly authorized by the City on behalf of the District.
CITY OF HESPERIA, CALIFORNIA,
for and on behalf of
CITY OF HESPERIA COMMUNITY
FACILITIES DISTRICT NO. 2005-1
(BELGATE DEVELOPMENT
RESTRUCTURING)
By:
[NAME],
[TITLE]
A-1
APPENDIX A
GENERAL INFORMATION ABOUT THE CITY OF HESPERIA
AND THE COUNTY OF SAN BERNARDINO
The following information concerning the City of Hesperia and the County of San Bernardino is included only for the purpose of supplying general information. The 2024 Bonds are not a debt of the City of Hesperia, the County, the State or any of its political subdivisions, and neither the City of Hesperia, the Co unty, the State nor any of its political subdivisions is liable therefor.
General
The City. The City of Hesperia (the “ City”) is located in the Mojave Desert in the southwestern portion of San Bernardino County . The City encompasses approximately 7 5 square miles, and is located 35 miles north of the City of San Bernardino and 90 miles northeast of the City of Los Angeles. The City was incorporated in 1988 and is governed by a five member City Council under the Council-Manager form of government.
The County. The County of San Bernardino (the " County") is located in the southeastern portion of the State of California (the " State"). It is the fifth most populous County in the State and the twelfth most populous County in the United States and has a to tal area of 20,105 square miles. The county seat is the city of San Bernardino. The terrain of the County is mostly mountains and desert, and majority of the county population resides south of the San Bernardino Mountains, in San Bernardino Valley. The County is bordered on the west by the Counties of Los Angeles and Kern, on the north by the County of Inyo, and on the south by the County of Riverside.
Population
Population figures and trends for the City, the County and the State of California are shown in the following table.
CITY OF HESPERIA, THE COUNTY OF SAN BERNARDINO
AND STATE OF CALIFORNIA
Population Estimates
(as of January 1)
Area 2020 2021 2022 2023 2024
City of Hesperia 95,834 99,767 99,741 99,338 100,087
San Bernardino County 2,175,424 2,179,006 2,179,845 2,172,694 2,181,433 State of California 39,648,938 39,327,868 39,114,785 39,061,058 39,128,162
Source: State Department of Finance estimates (as of January 1).
A-2
Employment and Industry
The City is included in the Riverside -San Bernardino -Ontario Metropolitan Statistical Area (“MSA”), which includes Riverside and San Bernardino Counties.
The unemployment rate in the MSA was 5.8% in July 2024, up from a revised 5.3% in June 2024, and above the year -ago estimate of 4.9%. This compares with an unadjusted unemployment rate of 5.8% for California and 4.5% for the nation during the same period. The unemployment rate was 5.9% in Riverside County, and 5.7% in San Bernardino County.
The table below lists employment by industry group for the County for the past five years for which data is available.
RIVERSIDE-SAN BERNARDINO-ONTARIO MSA
(RIVERSIDE AND SAN BERNARDINO COUNTIES)
Annual Average Civilian Labor Force, Employment and Unemployment, Employment by Industry
(March 2023 Benchmark)
2019 2020 2021 2022 2023
Civilian Labor Force 2,071,600 2,091,700 2,120,600 2,148,700 2,171,500 Employment 1,987,500 1,885,400 1,964,300 2,058,400 2,068,800 Unemployment 84,000 206,200 156,300 90,200 102,700
Unemployment Rate 4.1% 9.9% 7.4% 4.2% 4.7%
Wage and Salary Employment: (1)
Agriculture 15,400 14,100 13,700 13,800 13,100
Mining and Logging 1,200 1,300 1,400 1,500 1,500
Construction 107,200 104,900 110,100 114,700 115,700
Manufacturing 101,300 96,000 96,100 100,000 98,900
Wholesale Trade 67,700 65,600 67,400 69,500 68,700
Retail Trade 180,700 168,800 177,000 181,000 182,700
Trans., Warehousing, Utilities 146,600 172,500 198,800 214,400 205,100 Information 14,100 12,400 12,500 13,000 13,300
Financial and Insurance 24,800 24,600 24,400 23,800 22,300 Real Estate, Rental & Leasing 20,200 19,500 20,700 22,200 22,500 Professional and Business Services 155,300 152,100 166,600 173,900 164,800 Educational and Health Services 250,300 248,800 254,300 267,500 287,500 Leisure and Hospitality 175,900 141,300 160,200 180,900 186,500 Other Services 46,200 40,200 43,600 47,400 49,300
Federal Government 21,100 22,100 21,100 20,900 21,200
State Government 31,100 31,300 30,400 28,400 28,800
Local Government 209,000 194,600 190,500 200,700 210,900 Total All Industries (2) 1,568,100 1,509,900 1,588,800 1,673,500 1,692,900
(1) Industry employment is by place of work; excludes self -employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) May not add due to rounding.
Source: State of California Employment Development Department.
A-3
Major Employers
The following table lists the major manufacturing and non -manufacturing employers in the County for the fiscal year ended June 30, 2023.
CITY OF HESPERIA
Major Employers
Company Name
Number of
Employees
Percent of Total
Employment
Hesperia Unified School District 2,974 7.91%
County of San Bernardino 423 1.13
Walmart Supercenter 425 1.13
Stater Brothers Markets (3 locations) 338 0.90
Arizona Pipeline Company 175 0.47
Super Target 275 0.73
City of Hesperia 193 0.51
In-N-Out (2 locations) 188 0.50
Robar Enterprises, Inc. 120 0.32
Hesperia Recreation & Park District 111 0.30
St. Mary High Dessert 170 0.45
Source: City of Hesperia Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2023.
A-4
The following table lists the largest manufacturing and non -manufacturing employers within the County as of August 2024, in alphabetical order.
SAN BERNARDINO COUNTY
Largest Employers
August 2024
Employer Name Location Industry
Amazon Fulfillment Ctr Redlands Mail Order Fulfillment Service Amazon Fulfillment Ctr San Bernardino Mail Order Fulfillment Service Arrowhead Regional Medical
Ctr
Colton Hospitals
Big Bear Mountain Resorts Big Bear Lake Resorts
Burlington Distribution Ctr San Bernardino Distribution Centers (whls) California State Univ Sn San Bernardino Schools-Universities & Colleges Academic Dignity Health Cmnty Hosp-Sn San Bernardino Hospitals
Dignity Health-St Bernardine San Bernardino Hospitals
Environmental Systems
Research
Redlands Geographics Information Systems
Fedex Ground Bloomington Delivery Service
Inland Empire Health Plan Rancho
Cucamonga
Health Plans
Loma Linda Univ Health Board Loma Linda Univ/Clg-Governing Body/Regent/Trustee Loma Linda University Med Ctr Loma Linda Hospitals
Mountain High Ski Resort Wrightwood Skiing Centers & Resorts Ontario International Airport Ontario Airports
Ontario-Montclair School Dist Ontario School Districts
Patton State Hospital Patton Hospitals
Primary Care Assoc Med
Group
Ontario Physicians & Surgeons
Redlands Community Hospital Redlands Hospitals
San Antonio Regional Hospital Upland Hospitals
San Bernardino County Sch
Supt
San Bernardino Schools & Educational Services NEC
San Bernardino County Sheriff San Bernardino General Justice Public Order & Safety Activity
St Mary's Medical Ctr Apple Valley Hospitals
Transportation Department San Bernardino State Government-Regulation & Administration-
YRC Freight Bloomington Trucking-Motor Freight
Source: State of California Employment Development Department, extracted from The America's Labor Market Information System (ALMIS) Employer Database, 2024 2nd edition.
A-5
Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and non -tax payments, a number often referred to as “disposable” or “after -tax” income. Personal income is the aggregate of wages and salaries, other labor -related income (such as employer contributions to private pension funds), proprietor’ s income, rental income (which includes imputed rental income of owner -occupants of non -farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), non - tax payments (fines, fees, penalties, etc.) and personal contributions to social insurance.
According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.”
The following table summarizes the total effective buying income for the City, the County, the State, and the United States for the period 2021 through 2025.
CITY OF HESPERIA, SAN BERNARDINO COUNTY,
STATE OF CALIFORNIA AND UNITED STATES
Effective Buying Income
2021 through 2025
Year
Area
Total Effective
Buying Income
(000’s Omitted)
Median
Household
Effective
Buying Income
2021 City of Hesperia $1,861,008 $53,854
San Bernardino County 48,859,973 59,285
California 1,290,894,604 67,956
United States 9,809,944,764 56,790
2022 City of Hesperia $2,007,122 $58,778
San Bernardino County 54,797,008 66,785
California 1,452,426,153 77,058
United States 11,208,582,541 64,448
2023 City of Hesperia $2,096,711 $58,670
San Bernardino County 57,619,256 67,680
California 1,461,799,662 77,175
United States 11,454,846,397 65,326
2024 City of Hesperia $2,196,941 $61,802
San Bernardino County 61,583,897 72,724
California 1,510,708,521 80,973
United States 11,987,185,826 67,876
2025 City of Hesperia $2,230,072 $64,160
San Bernardino County 61,385,031 72,440
California 1,557,429,767 82,725
United States 12,525,577,707 69,687
Source: Claritas, LLC.
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Commercial Activity
Total taxable sales during the first quarter of calendar year 2024 in the City were reported to be $ 284,114,628, a 2.68% decrease from the total taxable sales of $ 291,940,642 reported during the first quarter of calendar year 2023.
CITY OF HESPERIA
Number of Permits and Valuation of Taxable Transactions Calendar Years 2019 through 2023
(Dollars in Thousands)
Retail Stores Total Outlets
Year
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2019 1,340 $737,925 2,186 $890,186
2020 1,473 761,407 2,473 910,277
2021 1,372 985,962 2,314 1,160,336
2022 1,478 1,082,444 2,482 1,279,416
2023 1,389 1,001,598 2,367 1,204,717
Source: State Department of Tax and Fee Administration.
Total taxable sales during the first quarter of calendar year 202 4 in the County were reported to be $ 13,638,865,147, a 0.80% increase over the total taxable sales of $13,530,928,670 reported during the first quarter of calendar year 2023.
SAN BERNARDINO COUNTY
Number of Permits and Valuation of Taxable Transactions Calendar Years 2019 through 2023
(Dollars in Thousands)
Retail Stores Total Outlets
Year
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2019 40,964 $27,564,216 64,771 $41,770,309
2020 44,330 28,518,285 71,145 42,884,767
2021 40,801 38,345,912 66,585 55,378,097
2022 41,690 40,003,128 68,480 59,745,218
2023 40,632 38,103,700 67,336 57,475,070
Source: State Department of Tax and Fee Administration.
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Construction Activity
Building activity for the years 2019 through 2023 in the City is shown in the following table:
CITY OF HESPERIA
Total Building Permit Valuations
($ in Thousands)
2019 2020 2021 2022 2023
Permit Valuation
New Single-family $43,234.1 $33,881.9 $50,092.3 $69,344.5 $40,650.9 New Multi-family 21,356.1 31,393.7 20,752.3 209.3 2,870.6 Res. Alterations/Additions 3,944.3 2,499.3 2,728.4 4,862.1 2,130.1 Total Residential 68,534.5 67,774.9 73,573.0 74,415.9 45,651.6
New Commercial 10,975.6 2,821.1 2,368.6 74,207.0 16,886.5 New Industrial 0.0 3,299.6 0.0 0.0 0.0
New Other 5,624.5 8,817.9 9,005.6 15,413.3 8,625.0
Com. Alterations/Additions 13,498.6 4,467.3 4,842.6 7,956.6 2,237.4 Total Nonresidential 30,098.7 19,405.9 16,216.8 97,576.9 27,748.9
New Dwelling Units
Single Family 206 165 255 326 193
Multiple Family 225 278 226 2 26
TOTAL 431 443 481 328 219
Source: Construction Industry Research Board, Building Permit Summary.
Building activity for the years 2019 through 2023 in the County is shown in the following table:
COUNTY OF SAN BERNARDINO
Total Building Permit Valuations
($ in Thousands)
2019 2020 2021 2022 2023
Permit Valuation
New Single-family $1,078,797.7 $934,304.4 $1,086,398.2 $1,028,474.4 $970,669.8 New Multi-family 232,079.3 143,366.2 310,255.4 345,433.5 241,890.6 Res. Alterations/Additions 139,761.1 61,788.5 88,244.1 89,903.3 91,790.6 Total Residential 1,450,638.1 1,139,459.1 1,484,897.7 1,463,811.2 1,304,351.0
New Commercial 449,998.5 274,080.5 399,988.1 782,359.6 214,328.0 New Industrial 476,322.3 330,960.1 385,616.5 588,067.9 441,848.8 New Other 85,651.8 123,121.9 91,860.5 436,144.6 503,523.1 Com. Alterations/Additions 365,127.0 336,533.1 288,180.8 277,379.3 243,899.6 Total Nonresidential 1,377,099.6 1,064,695.6 1,165,645.9 2,083,951.4 1,403,599.5
New Dwelling Units
Single Family 4,096 3,631 4,376 3,701 3,937
Multiple Family 1,884 910 2,636 2,852 2,239
TOTAL 5,980 4,541 7,012 6,553 6,176
Source: Construction Industry Research Board, Building Permit Summary.
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APPENDIX B
RATE AND METHOD
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APPENDIX C
SUMMARY OF THE FISCAL AGENT AGREEMENT
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APPENDIX D
FORM OF OPINION OF BOND COUNSEL
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
$________
CITY OF HESPERIA
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(BELGATE DEVELOPMENT RESTRUCTURING)
COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA
SPECIAL TAX REFUNDING BONDS SERIES 2024
This CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”) is executed and delivered by the City of Hesperia, California (the “City”), on behalf of itself and the City of Hesperia Community Facilities District No. 2005-1 (Belgate Development Restructuring) (the “District”), in connection with the execution and delivery of the bonds captioned above (the “2024 Bonds”). The 2024 Bonds are being executed and delivered pursuant to a Fiscal Agent Agreement, dated as of December 1, 2024 (the “Fiscal Agent Agreement”), by and between the City, for and on behalf of the District, and U.S. Bank Trust Company, National Association , as fiscal agent.
The City covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate . This Disclosure Certificate is being executed and delivered by the City , on behalf of itself and the District, for the benefit of the holders and be neficial owners of the 2024 Bond s and in order to assist the Participating Underwriter in complying with Rule 15c2 -12(b)(5) promulgated under the Securities Exchange Act of 1934, as amended.
Section 2. Definitions. In addition to the definitions of capitalized terms set forth above and in Section 1.03 of the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the meanings ascribed to them below when used in this Disclosure Certificate:
“Annual Report ” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Annual Report Date” means the date that is nine months days after the end of the City’s fiscal year (currently March 31 based on the City’s fiscal year end of June 30).
“Business Day” means any day on which the City is not required or authorized to be closed.
“Dissemination Agent ” means the NBS, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.
“Listed Events ” means any of the events listed in Section 5(a) of this Disclosure Certificate.
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“MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be design ated by the Securities and Exchange Commission as such for purposes of the Rule in the future.
“Official Statement ” means the final official statement, dated __________, 20 24, executed by the City in connection with the issuance of the 2024 Bonds.
“Participating Underwriter” means Stifel, Nicolaus & Company, Incorporated, the original underwriter of the 2024 Bonds required to comply with the Rule in connection with offering of the 2024 Bonds.
“Rule” means Rule 15c2 -12(b)(5) adopted by the Securitie s and Exchange Commission under the Securities Exchange Act of 1934, as amended.
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing March 31, 2025, with the report for the 2023-24 fiscal year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy o f the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b).
The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
(b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) notice to the MSRB, in a timely manner, in an electronic format as prescribed by the MSRB.
(c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then -applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.
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Section 4. Content of Annual Reports . The City ’s Annual Report shall contain or incorporate by reference the following:
(a) The City ’s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board, together with the following statement:
THE CITY’S ANNUAL FINANCIAL STATEMENT IS PROVIDED SOLELY TO COMPLY WITH THE SECURITIES EXCHANGE COMMISSION STAFF’S INTERPRETATION OF RULE 15C2-12 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. NO FUNDS
OR ASSETS OF THE CITY ARE REQUIRED TO BE USED TO PAY DEBT SERVICE ON THE 2024 BONDS, AND NEITHER THE CITY NOR THE DISTRICT IS OBLIGATED TO ADVANCE AVAILABLE FUNDS TO COVER ANY DELINQUENCIES. INVESTORS SHOULD NOT RELY
ON THE FINANCIAL CONDITION OF THE CITY IN EVALUATING WHETHER TO BUY, HOLD OR SELL THE 2024 BONDS.
If the City’s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) Unless otherwise provided in the audited financial statements filed on or before the Annual Report Date, the following financial information and operating data with respect to the District, substantially similar to that provided in the Official Statement:
(i) Updated table s in substantially the form of Table 1 in the Official Statement entitled “Distribution of Land Uses ,” and Table 3 entitled “Distribution of Value-to-Lien Ratios,” based upon the most recent information available.
(ii) An u pdated table detailing delinquency information in substantially the form of Table 5 in the Official Statement entitled “Special Tax Collections and Delinquencies” based upon the most recent information available, along with a summary of pending foreclosure actions.
(iii) The amount of prepayments of the Special Tax with respect to the District for the prior Fiscal Year.
(iv) The principal amount of the 2024 Bonds outstanding and the balance in the Reserve Fund (along with a statement of the Reserve Requirement) as of the September 30 next preceding the Annual Report Date.
(v) Any changes to the Rate and Method of Apportionment for the District set forth in Appendix B to the Official Statement.
(vi) A copy of the annual information required to be filed by the City with the California Debt and Investment Advisory Commission pursuant to the Act and relating generally to outstanding District bond amounts, fund balances, assessed values, special tax delinquencies and foreclosure information.
(c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be
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necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
(d) Any or all of the items listed above may be included by specific reference to other documents, including offic ial statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the 2024 Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform.
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 -TEB) or other material notices or determinations wit h respect to the tax status of the security, or other material events affecting the tax-exempt status of the security.
(7) Modifications to rights of security holders, if material.
(8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the City.
(13) The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material.
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(14) Appointment of a successor or additional fiscal agent or the change of name of a fiscal agent, if material.
(15) Incurrence of a financial obligation of the obligated person, if materi al, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material.
(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.
(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected 2024 Bonds under the Indenture.
(c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), (a)(14) , and (a)(15) of this Section 5 contain the qualifier “if material.” The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that the City determines the event’s occurrence is material for purposes of U.S. federal securities law.
(d) For purposes of this Discl osure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governi ng body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority h aving supervision or jurisdiction over substantially all of the assets or business of the City.
(e) For purposes of Section 5(a)(15) and (16), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to th e Municipal Securities Rulemaking Board consistent with the Rule.
Section 6. Identifying Information for Filings with the MSRB . All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.
Section 7. Termination of Reporting Obligation . The City ’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption, or payment
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in full of all of the 2024 Bonds. If such termination occur s prior to the final maturity of the 2024 Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. The init ial Dissemination Agent shall be NBS. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosur e Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection wi th a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the 2024 Bonds, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the 2024 Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either (i) is approved by holders of the 2024 Bonds in the manner provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the 2024 Bonds.
If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first Annual Report filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
If an amendment is made to this Disclosure Certificate modifying the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qua litative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the abil ity of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.
A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Listed Event under Section 5(b).
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination
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set forth in this Disclosure Certificate or any other means of communi cation, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the 2024 Bonds may take such actions as may be ne cessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Defa ult under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Lia bilities of Dissemination Agent . (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney’s fees) of defending against any clai m of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder and shall not be deemed to be acting in any fiduciary capacity for the City , the 2024 Bond holders or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the 2024 Bonds.
(b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incur red by the Dissemination Agent in the performance of its duties hereunder.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and the holders and ben eficial owners from time to time of the 2024 Bonds and shall create no rights in any other person or entity.
Date: _______________, 2024
CITY OF HESPERIA, CALIFORNIA,
on behalf of
CITY OF HESPERIA COMMUNITY
FACILITIES DISTRICT NO. 2005-1
(BELGATE DEVELOPMENT
RESTRUCTURING)
By:
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[NAME],
[TITLE]
AGREED AND ACCEPTED:
NBS,
as Dissemination Agent
By:
Name:
Title:
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APPENDIX F
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The information in this Appendix F has been provided by The Depository Trust Company (“DTC”), New York, NY, for use in securities offering documents, and the City does not take responsibility for the accuracy or completeness thereof. The City cannot and d oes not give any assurances that DTC, DTC Participants or Indirect Participants will distribute the Beneficial Owners either (a) payments of interest, principal or premium, if any, with respect to the 2024 Bonds or (b) certificates representing ownership i nterest in or other confirmation of ownership interest in the 2024 Bonds, or that they will so do on a timely basis or that DTC, DTC Direct Participants or DTC Indirect Participants mill act in the manner described in this Official Statement.
The followin g description of DTC, the procedures and record keeping with respect to beneficial ownership interests in the 2024 Bonds, payment of principal, interest, and other payments on the 2024 Bonds to DTC Participants or Beneficial Owners, confirmation, and transfer of beneficial ownership interest in the 2024 Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters but should instead confirm the same with DTC or the DTC Participants, as the case may be.
Neither the issuer of the 2024 Bonds (the “Issuer”) nor the trustee, fiscal agent or paying agent appointed with respect to the 2024 Bonds (the “Agent”) take any responsibility for the information contained in this Appendix.
No assurances can be given th at DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the 2024 Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the 2024 Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the 2024 Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the 2024 Bonds (the “Securities”). The Securities will be issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership n ominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited wi th DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.
2. DTC, the world’s largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the
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New York Banking Law, a member of the Federal Reser ve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.
DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clea ring Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directl y or indirectly (“Indirect Participants”). On August 8, 2011, Standard & Poor’s downgraded its rating of DTC from AAA to AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DT C can be found at www.dtcc.com. The information contained on this Internet site is not incorporated herein by reference.
3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Se curities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not e ffect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be th e Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners o f Securities may wish to take certain steps to augment the transmission to them of notices of significant
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events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Benefi cial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses t o the registrar and request that copies of notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the in terest of each Direct Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the reco rd date (identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time.
Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an au thorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.
10. Issuer may decide to discontinue use of the system of book -entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.
11. The information in this section concerning DTC and DTC’s book -entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.
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APPENDIX G
SPECIMEN MUNICIPAL BOND INSURANCE POLICY
Agenda Version
FISCAL AGENT AGREEMENT
by and between the
CITY OF HESPERIA
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION
as Fiscal Agent
Dated as of December 1, 2024
Relating to:
$[Principal Amount]
City of Hesperia
Community Facilities District No. 2005-1
(Belgate Development Restructuring),
County of San Bernardino, State of California
Special Tax Refunding Bonds, Series 2024
Attachment 3
i
TABLE OF CONTENTS
ARTICLE I
AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement ............................................................................................ 3 Section 1.02. Agreement for Benefit of Owners of the 2024 Bonds ...................................................... 3 Section 1.03. Definitions ........................................................................................................................ 3
ARTICLE II
THE BONDS
Section 2.01. Principal Amount; Designation ....................................................................................... 12 Section 2.02. Terms of the 2024 Bonds ............................................................................................... 12 Section 2.03. Redemption .................................................................................................................... 14 Section 2.04. Form of Bonds................................................................................................................ 15 Section 2.05. Execution and Authentication of Bonds ......................................................................... 16 Section 2.06. Transfer or Exchange of Bonds ..................................................................................... 16 Section 2.07. Bond Register ................................................................................................................ 16 Section 2.08. Temporary Bonds .......................................................................................................... 17 Section 2.09. Bonds Mutilated, Lost, Destroyed or Stolen .................................................................. 17 Section 2.10. Book-Entry Only System ................................................................................................ 17
ARTICLE III
ISSUANCE OF 2024 BONDS
Section 3.01. Issuance and Delivery of 2024 Bonds ........................................................................... 20 Section 3.02. Pledge of Special Tax Revenues ................................................................................... 20 Section 3.03. Limited Obligation .......................................................................................................... 20 Section 3.04. No Acceleration .............................................................................................................. 20 Section 3.05. Validity of Bonds ............................................................................................................ 20 Section 3.06. Parity Bonds ................................................................................................................... 21
ARTICLE IV
PROCEEDS, FUNDS AND ACCOUNTS
Section 4.01. Application of 2024 Bond Proceeds ............................................................................... 22 Section 4.02. Costs of Issuance Fund ................................................................................................. 22 Section 4.03. Reserve Fund................................................................................................................. 23 Section 4.04. Bond Fund...................................................................................................................... 26 Section 4.05. Special Tax Fund ........................................................................................................... 27 Section 4.06. Administrative Expense Fund ........................................................................................ 28
ARTICLE V
COVENANTS
Section 5.01. Collection of Special Tax Revenues .............................................................................. 30 Section 5.02. Covenant to Foreclose ................................................................................................... 31 Section 5.03. Punctual Payment .......................................................................................................... 31 Section 5.04. Extension of Time for Payment ...................................................................................... 31 Section 5.05. Against Encumbrances .................................................................................................. 32 Section 5.06. Books and Records ........................................................................................................ 32 Section 5.07. Protection of Security and Rights of Owners ................................................................. 32 Section 5.08. Further Assurances ........................................................................................................ 32 Section 5.09. Private Activity Bond Limitations .................................................................................... 32 Section 5.10. Federal Guarantee Prohibition ....................................................................................... 33 Section 5.11. Rebate Requirement ...................................................................................................... 33 Section 5.12. No Arbitrage ................................................................................................................... 33 Section 5.13. Record Retention; Compliance with Tax Certificate ...................................................... 33 Section 5.14. Maintenance of Tax-Exemption ..................................................................................... 33 Section 5.15. Continuing Disclosure .................................................................................................... 34 Section 5.16. Limits on Special Tax Waivers and Bond Tenders ........................................................ 34
ii
Section 5.17. City Bid at Foreclosure Sale .......................................................................................... 34 Section 5.18. Amendment of Rate and Method ................................................................................... 34 Section 5.19. Provisions Relating to Bond Insurance Policy and Reserve Policy ............................ 34
ARTICLE VI
INVESTMENTS; LIABILITY OF THE CITY
Section 6.01. Deposit and Investment of Moneys in Funds ................................................................. 35 Section 6.02. Liability of City ................................................................................................................ 36 Section 6.03. Employment of Agents by City ....................................................................................... 37
ARTICLE VII
THE FISCAL AGENT
Section 7.01. The Fiscal Agent ............................................................................................................ 38 Section 7.02. Liability of Fiscal Agent .................................................................................................. 39 Section 7.03. Information; Books and Accounts .................................................................................. 40 Section 7.04. Notice to Fiscal Agent .................................................................................................... 40 Section 7.05. Compensation, Indemnification...................................................................................... 42
ARTICLE VIII
MODIFICATION OR AMENDMENT
Section 8.01. Amendments Permitted ................................................................................................. 43 Section 8.02. Owners’ Meetings .......................................................................................................... 44 Section 8.03. Procedure for Amendment with Written Consent of Owners ......................................... 44 Section 8.04. Disqualified Bonds ......................................................................................................... 44 Section 8.05. Effect of Supplemental Agreement ................................................................................ 45 Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments ............................. 45 Section 8.07. Amendatory Endorsement of Bonds .............................................................................. 45
ARTICLE IX
MISCELLANEOUS
Section 9.01. Benefits of Agreement Limited to Parties ...................................................................... 46 Section 9.02. Successor and Predecessor .......................................................................................... 46 Section 9.03. Discharge of Agreement ................................................................................................ 46 Section 9.04. Execution of Documents and Proof of Ownership by Owners ....................................... 47 Section 9.05. Waiver of Personal Liability ............................................................................................ 47 Section 9.06. Notices to and Demands on City and Fiscal Agent ....................................................... 47 Section 9.07. Partial Invalidity .............................................................................................................. 48 Section 9.08. Unclaimed Moneys ........................................................................................................ 48 Section 9.09. Applicable Law ............................................................................................................... 48 Section 9.10. Conflict with Act.............................................................................................................. 48 Section 9.11. Conclusive Evidence of Regularity ................................................................................ 48 Section 9.12. Payment on Business Day ............................................................................................. 48 Section 9.13. State Reporting Requirements....................................................................................... 49 Section 9.14. Counterparts .................................................................................................................. 50
EXHIBIT A: FORM OF 2024 BOND
EXHIBIT B: OFFICER’S CERTIFICATE REQUESTING DISBURSEMENT FROM COSTS OF
ISSUANCE FUND
EXHIBIT C: OFFICER’S CERTIFICATE REQUESTING DISBURSEMENT FROM ADMINISTRATIVE
EXPENSE FUND
EXHIBIT D: PROVISIONS RELATING TO BOND INSURANCE POLICY AND RESERVE POLICY
FISCAL AGENT AGREEMENT
THIS FISCAL AGENT AGREEMENT (the “Agreement”) is made and entered into as of December 1, 2024 , by and between the CITY OF HESPERIA, a municipal corporation and general law city organized and existing under and by virtue of the Constitution and laws of the State of California (the “City”) for and on behalf of the “City of Hesperia Community Facilities District No. 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California” (the “CFD”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION , a national banking association duly organized and existing under the laws of the United States of America with a corporat e trust office located in Los Angeles , California, as fiscal agent (the “Fiscal Agent”).
W I T N E S S E T H :
WHEREAS, the City Council of the City has formed the CFD under the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (section 533 11 et seq. of the California Government Code) (the “Act”); and
WHEREAS, the City Council, as the legislative body with respect to the CFD, is authorized under the Act to levy special taxes to pay for the costs of facilities within the CFD and to authorize the issuance of bonds secured by said special taxes under the Act; and
WHEREAS, under the provisions of the Act and pursuant to a Fiscal Agent Agreement, dated as of December 1, 2014 (the “ 2014 Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as successor fiscal agent (the “ 2014 Fiscal Agent ”), the City issued its $18,450,000 initial principal amount City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2014 (the “ 2014 Bonds”); and
WHEREAS, the 2014 Bonds are subject to optional redemption on March 1, 2025, without premium; and
WHEREAS, the 2014 Bonds Fiscal Agent must cause noti ce of any redemption to be mailed to the owners of the 2014 Bonds at least 30 days but not more than 60 days prior to the date fixed for redemption; and
WHEREAS, the City wishes to refinance the outstanding principal amount of the 2014 Bonds, and, for that purpose, proposes to issue its City of Hesperia Community Facilities District No. 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2024 (the “2024 Bonds”); and
WHEREAS, on October 15, 2024 , the City Council adopted Resolution No. 2024-____ (the “Resolution”) authorizing the issuance of the 2024 Bonds on behalf of the CFD; and
WHEREAS, it is in the public interest and for the benefit of the City, the CFD and the persons responsible for the payment of special taxes that the City enter into this Agreement to provide for the issuance of the 2024 Bond s hereunder to refinance the Prior Bonds and to
2 provide for the disbursement of proceeds of the 2024 Bonds, the disposition of the special taxes securing the 2024 Bonds and the administration and payment of the 2024 Bonds; and
WHEREAS, the City has determined that all things necessary to cause the 2024 Bonds, when authenticated by the Fiscal Agent and issued as provided in the Act, t he Resolution and this Agreement, to be legal, valid, binding and limited obligations in accordance with their terms, and all things necessary to cause the creation, authorization, execution and delivery of this Agreement and the creation, authorization, e xecution and issuance of the 2024 Bonds, subject to the terms hereof, have in all respects been duly authorized.
NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and for other valuable consideration the receipt and suffici ency of which is hereby acknowledged, the parties hereto do hereby agree as follows:
3 ARTICLE I
AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement . This Agreement is entered into pursuant to the Act (as herein defined) and the Resolution.
Section 1.02. Agreement for Benefit of Owners of the 2024 Bonds. The provisions, covenants and agreements herein set forth to be performed by or on behalf of the City shall be for the equal benefit, protection, and security of the Owners of the 2024 Bonds. All of the 2024 Bonds, without regard to the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the 2024 Bond s over any other thereof, except as expressly provided in or permitted by this Agreement.
Section 1.03. Definitions . Unless the context otherwise requires, the terms defined in this Section 1.03 shall, for all purposes of this Agreement, of any Supplemental Agreement, and of any certificate, opinion or othe r document herein mentioned, have the meanings herein specified. All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof.
“Act” means the Mello -Roos Community Facilities Act of 1982, as amended, being sections 53311 et seq. of the California Government Code.
“Administrative Expenses” means costs directly related to the administration of the CFD consisting of: the actual costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by a City emplo yee or consultant or both) and the actual costs of collecting the Special Taxes (whether by the County or otherwise); the actual costs of remitting the Special Taxes to the Fiscal Agent; actual costs of the Fiscal Agent (including its legal counsel) in the discharge of its duties under this Agreement; the actual costs of the City or its designee of complying with the disclosure provisions of the Act and this Agreement, including those related to public inquiries regarding the Special Tax and disclosures to Owners of the 2024 Bonds and the Original Purchaser; the actual costs of the City or its designee related to an appeal of the Special Tax; any amounts required to be rebated to the federal government; an allocable share of the salaries of the City staff di rectly related to the foregoing and a proportionate amount of City general administrative overhead related thereto. Administrative Expenses shall also include amounts advanced by the City for any administrative purpose of the CFD, including costs related to prepayments of Special Taxes, recordings related to such prepayments and satisfaction of Special Taxes, amounts advanced to ensure maintenance of tax exemption, and the costs of prosecuting foreclosure of delinquent Special Taxes, which amounts advanced are subject to reimbursement from other sources, including proceeds of foreclosure.
“Administrative Expense Fund ” means the fund designated the “City of Hesperia Community Facilities District No. 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Administrative Expense Fund ” established and administered under Section 4.06.
4 “Agreement” means this Fiscal Agent Agreement, as it may be amended or supplemented from time to time by any Supplemental Agreement adopted purs uant to the provisions hereof.
“Annual Debt Service” means, for each Bond Year, the sum of (i) the interest due on the Outstanding 2024 Bonds in such Bond Year, assuming that the Outstanding 2024 Bonds are retired as scheduled, and (ii) the principal amount of the Outstanding 2024 Bonds due in such Bond Year.
“Auditor” means the auditor/controller of the County, or such other official at the County who is responsible for preparing property tax bills.
“Authorized Officer” means the City Manager, the Assistant City Manager, the City Clerk, or any other officer or employee authorized by the City Council of the City or by an Authorized Officer to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Officer.
“Bond Counsel ” means Jones Hall, A Professional Law Corporation or any other attorney or firm of attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as to the legalit y and tax -exempt status of securities issued by public entities.
“Bond Fund ” means the fund designated the “City of Hesperia, Community Facilities District No. 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Bonds Bond Fund” established and administered under Section 4.04.
“Bond Insurance Policy” means the Municipal Bond Insurance Policy (Policy No. ____) issued by the Bond Insurer on the Closing Date that guarantees the scheduled payment of principal of and interest on the 2024 Bonds when due.
“Bond Insurer” ________, or any successor thereto.
“Bond Proceeds of the Administrative Expense Fund” means the account designated the “Bond Proceeds Account” within the Administrative Fund established and admi nistered under Section 4.06.
“Bond Year” means the one -year period beginning on September 2 in each year and ending on September 1 in the following year, except that the first Bond Year shall begin on the Closing Date and shall end on September 1, 2025.
“Business Day” means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the state in which the Fiscal Agent has its principal corporate trust office are authorized or obligated by law or executive order to be closed.
“CDIAC” means the California Debt and Investment Advisory Commission of the Office of the State Treasurer, or any successor agency, board, or commission.
“CFD” means the “City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California ” formed under the Resolution of Formation.
5 “City” means the City of Hesperia, and any successor thereto.
“City Attorney ” means any attorney or firm of attorneys employed by the Ci ty in the capacity of city attorney.
“Closing Date ” means the date upon which there is a physical delivery of the 2024 Bonds in exchange for the amount representing the purchase price of the 2024 Bonds by the Original Purchaser.
“Continuing Disclosure Certificate” shall mean that certain Continuing Disclosure Certificate executed by the City and dated the date of issuance and delivery of the 2024 Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof.
“Costs of Issuance ” means items of expense payable or reimbursable directly or indirectly by the City and related to the authorization, sale, delivery and issuance of the 2024 Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, closing costs, appraisal costs, filing and recording fees, fees and expenses of counsel to the City, fees and expenses of the Escrow Agent (including its legal fees and charges), initial fees and charges of the Fiscal Agent including its first annual administration fees and its legal fees and charges, including the allocated costs of in -house attorneys, expenses incurred by the City in connection with the issuance of the 2024 Bonds, 2024 Bond (underwriter’s) discount, legal fees and charges, including bond counsel, and counsel to any financial consultant, financial consultant ’s fees, charges for execution, authentication, transportation and safekeeping of the 2024 Bonds, fees of rating agencies, fees of municipal bond insurance companies insuring the 2024 Bonds, and other costs, charges and fees in connection with the foregoing.
“Costs of Issuance Fund ” means the fund designated the “City of Hesperia, Community Facilities District No. 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Bonds, Costs of Issuance Fund ” established and administered under Section 4.02.
“Council” means the City Council of the City as the legislative body.
“County” means the County of San Bernardino, California.
“Dated Date” means the dated date of the 2024 Bonds, which is the Closing Date.
“Debt Service ” means the scheduled amount of interest and amortization of principal payable on the 2024 Bonds under Sections 2.02 and 2.03 during the period of computation, in each case excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period.
“Depository” means (a) initially, DTC, and (b) any other Securities Deposi tory acting as Depository for book-entry under Section 2.10.
“DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.
“Escrow Agent” means U.S. Bank Trust Company, National Association.
6 “Escrow Agreement” means the E scrow Deposit and Trust Agreement by and between the Escrow Agent and the City, dated as of December 1, 2024 , and providing for the defeasance and redemption of the Prior Bonds.
“Escrow Fund ” means the fund established and administered under the Escrow Agreement.
“Fair Market Value ” means with respect to the 2024 Bonds the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm ’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Tax Code) and, otherwise, the term “Fair Market Value ” means the acquisition price in a bona fide arm ’s length transa ction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Tax Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code, (iii) the investment is a United States Treasury Security —State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund in which the City and related parties do not o wn more than a ten percent (10%) beneficial interest if the return paid by such fund is without regard to the source of the investment.
“Federal Securities ” means: (a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), the payment of principal of and interest on which are unconditionally and fully guaranteed by the United States of America; and (b) any obligations the principal of and interest on which are unconditionally guaranteed by the United States of America.
“Finance Director” means the official of the Ci ty, or such official ’s designee, who acts in the capacity as the chief financial officer of the City, including the controller or other financial officer.
“Fiscal Agent” means U.S. Bank Trust Company, National Association , the Fiscal Agent appointed by th e City and acting as an independent fiscal agent with the duties and powers herein provided, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in Section 7.01.
“Fiscal Year” means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year, both dates inclusive.
“Independent Financial Consultant ” means any consultant or firm of such consultants appointed by the City or the Finance Director, and who, or each of whom: (i) is judged by the Finance Director to have experience in matters relating to the issuance and/or administration of bonds under the Act; (ii) is in fact independent and not under the domination of the City; (iii) does not have any substantial interest, direct or indirect, with or in the Cit y, or any owner of real property in the CFD, or any real property in the CFD; and (iv) is not connected with the City as
7 an officer or employee of the City, but who may be regularly retained to make reports to the City.
“Interest Payment Date” means each September 1 and March 1 of every calendar year, commencing with March 1, 2025.
“Maximum Annual Debt Service ” means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding 2024 Bonds.
“Officer’s Certificate ” means a written certificate of the City signed by an Authorized Officer of the City.
“Ordinance” means any ordinance of the City Council of the City levying the Special Taxes, including but not limited to Ordinance No. 2005-005 introduced by the Council on March 23, 2005, and adopted by the Council on April 6, 2005.
“Original Purchaser” means Stifel, Nicolaus & Co., Incorporated , the first purchaser of the 2024 Bonds from the City.
“Outstanding,” when used as of any particular time with reference to 2024 Bonds, means (subject to the provisions of Section 8.04) all 2024 Bond s except (i) 2024 Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (ii) 2024 Bonds paid or deemed to have been paid within the meaning of Section 9.03; and (iii) 2024 Bonds in lieu of or in substitution for which other 2024 Bond s shall have been authorized, executed, issued and delivered by the City under this Agreement or any Supplemental Agreement.
“Owner” or “Bondowner” means any person who shall be the registered owner of any Outstanding 2024 Bond.
“Participating Underwriter ” shall have the meaning ascribed thereto in the Continuing Disclosure Certificate.
“Permitted Investments” means the following, but only to the extent that the same are acquired at Fair Market Value:
(a) Federal Securities.
(b) any of the following direct or indirect obligations of the following agencies of the United States of America: (i) direct obligations of the Export - Import Bank; (ii) certificates of beneficial ownership issued by the Farmers Home Administration; (iii) participation certificates issued by the General Services Administration; (iv) mortgage -backed bonds or pass -through obligatio ns issued and guaranteed by the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Federal Housing Administration; (v) project notes issued by the United States Department of Housing and Urban Development; and (vi) public housing notes and bonds guaranteed by the United States of America;
(c) interest-bearing demand or time deposits (including certificates of deposit) or deposit accounts in federal or state chartered saving s and loan
8 associations or in federal or State of California banks (including the Fiscal Agent, its parent, if any, and affiliates), provided that (i) the unsecured short -term obligations of such commercial bank or savings and loan association shall be rated in the highest short-term rating category by any nationally recognized rating agency, or (ii) such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation;
(d) commercial paper rated in the highest short -term rating category by any nationally recognized rating agency , issued by corporations which are organized and operating within the United States of America, and which matures not more than 180 days following the date of investment therein;
(e) bankers acceptances, consisting of bills of exchange or time drafts drawn on and accepted by a commercial bank, including its parent (if any), affiliates and subsidiaries, whose short -term obligations are rated in the highest short-term rating category by any nationally recognized rating agency, or whose long-term obligations are rated A or better by any nationally recognized rating agency, which mature not more than 270 days following the date of investment therein;
(f) obligations the interest on which is excludable from gro ss income pursuant to Section 103 of the Tax Code, and which are either (a) rated A or better by any nationally recognized rating agency , or (b) fully secured as to the payment of principal and interest by Federal Securities;
(g) obligations issued by any corporation organized and operating within the United States of America having assets in excess of Five Hundred Million ($500,000,000), which obligations are rated A or better by any nationally recognized rating agency;
(h) money market funds (including money market funds for which the Fiscal Agent, its affiliates or subsidiaries provide investment advisory or other management services) which invest in Federal Securities, or which are rated in the highest short -term rating category by any nationally recog nized rating agency; and
(i) any investment agreement representing general unsecured obligations of a financial institution rated A or better by any nationally recognized rating agency, by the terms of which the Fiscal Agent is permitted to withdraw all amounts invested therein in the event any such rating falls below A.
(j) the Local Agency Investment Fund established pursuant to Section 16429.1 of the Government Code of the State of California, provided, however, that the Fiscal Agent shall be permitted to make investments and withdrawals in its own name and the Fiscal Agent may restrict investments in the such fund if necessary to keep moneys available for the purposes of this Fiscal Agent Agreement.
(k) the California Asset Management Program.
9 “Principal Office ” means such corporate trust office of the Fiscal Agent as may be designated from time to time by written notice from the Fiscal Agent to the City, initially being at the address set forth in Section 9.06, or such other office designated by the Fiscal Agent from time to time; except that with respect to presentation of 2024 Bond s for payment or for registration of transfer and exchange such term shall mean the office or agency of the Fiscal Agent at which, at any particular time, its corporate trust agency business shall be conducted.
“Prior Bonds” means the 2014 Bonds.
“Proceeds” when used with reference to the 2024 Bonds, means the face amount of the 2024 Bond s, plus any accrued interest and premium, less any original issue and/or underwriter’s discount.
“Project” means those items described as the “Facilities” in the Resolution of Formation.
“Qualified Reserve Account Credit Instrument” means the Reserve Policy and an irrevocable standby or direct -pay letter of credit, insurance policy, or surety bond issued by a commercial bank or insurance company and deposited with the Fiscal Agent, provided that all of the following requirements are met at the time of acceptance thereof by the Fiscal Agent: (a) in the case of a commercial bank, the long-term credit rating of such bank at the time of delivery of the irrevocable standby or direct-pay letter of credit is at least "A" from S&P or "A" from Moody’s and, in the case of an insurance company, the claims paying ability of such insurance company at the time of delivery of the insurance policy or surety bond is at least "A" from S&P, or "A" from Moody’s or, if not rated by S&P or Moody’s but rated by A.M. Best & Company, is ra ted at the time of delivery in the highest rating category by A.M. Best & Company; (b) such letter of credit, insurance policy or surety bond has a term of at least 12 months; (c) such letter of credit or surety bond has a stated amount at least equal to t he portion of the Reserve Requirement with respect to which funds are proposed to be released; and (d) the Fiscal Agent is authorized pursuant to the terms of such letter of credit, insurance policy or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Bond Fund for the purpose of making payments with respect to the 2024 Bonds.
“Rate and Method ” means the Rate and Method of Apportionment for City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring) approved by the Resolution of Formation and the qualified electors for the CFD.
“Record Date ” means the fifteenth day of the calendar month next preceding the applicable Interest Payment Date, whether or not such day is a Business Day.
“Regulations” means temporary and permanent regulations promulgated under the Tax Code.
“Reserve Fund” means the fund designated the “City of Hesperia, Community Facilities District No. 2005-1 (Belgate Development Restructuring ), County of San Bernardino, State of California Special Tax Bonds, Reserve Fund” established and administered under Section 4.03.
“Reserve Policy” means the debt service reserve insurance policy (Policy No. ______) to be issued by the Bond Insurer on the Closing Da te and deposited into the Reserve Fund in satisfaction of the initial Reserve Requirement with respect to the 2024 Bonds. The Reserve Policy constitutes a Qualified Reserve Account Credit Instrument.
10 “Reserve Requirement” means, as of the date of any calculation, an amount equal to the least of (i) the Maximum Annual Debt Service on the Outstanding 2024 Bonds, (ii) 125% of average Annual Debt Service on the Outstanding 2024 Bonds and (iii) 10% of the original principal amount of the 2024 Bonds.
“Resolution of Formation” means Resolution No. 2005 -045 adopted by the City Council on March 23, 2005.
“Resolution” or “Resolution of Issuance” means Resolution No. 2024-___ adopted by the Council on October 15, 2024, authorizing the issuance of the 2024 Bonds.
“Securities Depositories” means DTC and, in accordance with then current guidelines of the Securities and Exchange Commission, such other securities depositories as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.
“Special Tax Fund ” means the special fund designated “City of Hesperia, Community Facilities District No. 2005 -1 (Belgate Development Restructuring ), Special Tax Fund ” established and administered under Section 4.05.
“Special Tax Prepayments” means the proceeds of any Special Tax prepayments received by the City, as calculated pursuant to the Rate and Method of Apportionment of the Special Taxes for the CFD, less any administrative fees or penalties collected as part of any such prepayment.
“Special Tax Prepayments Account” means the account by that name established within the Bond Fund by Section 4.04(A) hereof.
“Special Tax Revenues” means the proceeds of the Special Taxes received by the City, including any scheduled payments t hereof and any Special Tax Prepayments, interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest thereon, but shall not include any interest in excess of the interest due on the 2024 Bonds or any penalties collected in connection with any such foreclosure.
“Special Taxes” means the special taxes levied by the City Council within the CFD under the Act, the Ordinance, and this Agreement.
“State” means the State of California.
“Supplemental Agreement” means an agreement the execution of which is authorized by a resolution which has been duly adopted by the City under the Act and which agreement is amendatory of or supplemental to this Agreement , but only if and to the extent that such agreement is specifically authorized hereunder.
“Tax Code ” means the Internal Revenue Code of 1986 as in effect on the date of issuance of the 2024 Bonds or (except as otherwise referenced herein) as it may be am ended to apply to obligations issued on the date of issuance of the 2024 Bond s, together with applicable temporary and final regulations promulgated, and applicable official public guidance published, under the Tax Code.
11 “2014 Bonds” means the $18,450,000 City of Hesperia Community Facilities District No. 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2014, issued on December 18, 2014.
“2014 Bonds Fiscal Agent” means U.S. Bank Trust Company, National Association , a national banking association organized and existing under the laws of United States of America, or its successor or successors, as fiscal agent under the 2014 Bonds Fiscal Agent Agreement for the 2014 Bonds.
“2014 Bonds Fiscal Agent Agreement” means the Fiscal Agent Agreement, dated as of December 1, 2014, by and between the City and the 2014 CFD Fiscal Agent.
“2024 Bond s” means the bonds so designated and authorized to be issued under Section 2.01 hereof.
12 ARTICLE II
THE BONDS
Section 2.01. Principal Amount; Designation . The 2024 Bond s in the aggregate principal amount of _________________ Dollars ($[Principal Amount]) are hereby authorized to be issued by the City for the CFD under and subject to the terms of the Act, the Resolution, this Agreement, and other applicable laws of the State of California. The 2024 Bond s shall be designated as the “City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2024 ,” and shall be in the initial principal amount of $ [Principal Amount].
Section 2.02. Terms of the 2024 Bonds.
(A) Form; Denominations . The 2024 Bond s shall be issued as fully registered Bonds without coupons. The 2024 Bond s shall be lettered and numbered in a customar y manner as determined by the Fiscal Agent. The 2024 Bond s shall be issued in the denominations of $5,000 or any integral multiple in excess thereof.
(B) Date of 2024 Bonds. The 2024 Bonds shall be dated the Closing Date.
(C) CUSIP Identification Number s. “CUSIP” identification numbers may, at the election of the Original Purchaser of the 2024 Bonds, be imprinted on the 2024 Bonds, but such numbers shall not constitute a part of the contract evidenced by the 2024 Bonds and any error or omission with respect thereto shall not constitute cause for refusal of any purchaser to accept delivery of and pay for the 2024 Bonds. In addition, failure on the part of the City or the Fiscal Agent to use such CUSIP numbers in any notice to Owners shall not constitute an event of default or any violation of the City ’s contract with such Owners and shall not impair the effectiveness of any such notice.
13 (D) Maturities; Interest Rates. The 2024 Bonds shall mature and become payable on each September 1, and shall bear in terest at the rates per annum indicated in the below table.
Maturity Date
(September 1)
Principal
Amount
Interest
Rate
(E) Interest. The 2024 Bonds shall bear interest at the rates set forth above payable on the Interest Payment Dates in each year. Interest on all 2024 Bonds shall be calculated on the basis of a 360 -day year composed of twelve 30 -day months. Each 2024 Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such date of authentication, or (ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is authenticated on or before the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from the Dated Date; provided, however, that if at the time of authentication of a 2024 Bond, interest is in default thereon, such 2024 Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.
(F) Method of Payment . Interest on the 2024 Bond s (including the final interest payment upon maturity or earlier redemption), is payable on the applicable Interest Payment Date by check of the Fiscal Agent mailed by first class mail to the registered Owner thereof at such registered Owner ’s address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the Record Date preceding the Intere st Payment Date, or by wire transfer made on such Interest Payment Date upon written instructions of any Owner of $1,000,000 or more in aggregate principal amount of 2024 Bond s delivered to the Fiscal Agent prior to the applicable Record Date, which instru ctions shall continue in effect until revoked in writing, or until such 2024 Bonds are transferred to a new Owner. The principal of the 2024 Bonds and any premium on the 2024 Bonds are payable in lawful money of the United States of America upon surrender of the 2024 Bonds at the Principal Office of the Fiscal Agent.
All 2024 Bonds paid by the Fiscal Agent pursuant to this Section shall be canceled by the Fiscal Agent and all 2024 Bonds acquired by the City shall be surrendered to the Fiscal Agent for cancellation. The Fiscal Agent shall destroy the canceled 2024 Bonds and issue a certificate of destruction of such 2024 Bonds to the City.
14 Section 2.03. Redemption.
(A) Redemption Provisions.
(i) Optional Redemption. The 2024 Bonds are not subject to optional redemption prior to their maturity date.
(ii) Reserved.
(iii) Redemption from Special Tax Prepayments. Special Tax Prepayments and any corresponding transfers from the Reserve Fund pursuant to Section 4.03(F) shall be used to redeem 2024 Bonds on the next Interest Payment Date for which notice of redemption can timely be given under Section 2.03(D), among maturities so as to maintain substantially the same debt service profile for the 2024 Bonds as in effect prior to such redemption and by lot within a maturity, at a redemption price (expressed as a percentage of the principal amount of the 2024 Bond s to be redeemed), as set forth below, together with accrued interest to the date fixed for redemption:
Redemption Date Redemption Price
Any Interest Payment Date before September 1, ____ %
On September 1, ____ and March 1, ____
On September 1, ____ and March 1, ____
On September 1, ___ and any Interest Payment Date thereafter
(B) Notice to Fiscal Agent. The City shall give the Fiscal Agent written notice of its intention to redeem 2024 Bonds under subsection ((A)(iii) not less than forty-five (45) days prior to the applicable redemption date or such lesser number of days as shall be authoriz ed by the Fiscal Agent.
(C) Purchase of 2024 Bonds in Lieu of Redemption . In lieu of redemption under Section 2.03(A), moneys in the Bond Fund or other funds provided by the City may be used and withdrawn by the Fiscal Agent for purchase of Outstanding 2024 Bonds, upon the filing with the Fiscal Agent of an Officer ’s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer ’s Certificate may provide, but in no ev ent may 2024 Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase and any premium which would otherwise be due if such 2024 Bonds were to be redeemed in accordance with this Agreement. Any 2024 Bonds purchased pursuant to this Section 2.03(C) shall be treated as outstanding 2024 Bond s under this Fiscal Agent Agreement, except to the extent otherwise directed by the Finance Director.
(D) Redemption Procedure by Fiscal Agent.
(i) Notices. Th e Fiscal Agent shall cause notice of any redemption to be mailed by first class mail, postage prepaid, at least twenty (20) days but not more than sixty (60) days prior to the date fixed for redemption, to the Securities Depositories, to the Municipal Securities Rulemaking Board, and to the respective registered Owners of any 2024 Bonds designated for redemption, at their addresses appearing on the Bond registration books in the Principal Office of the Fiscal Agent; but such mailing shall not
15 be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such 2024 Bonds.
(ii) Contents of Notices . Such notice shall state the redemption date and the redemption price and, if less than all of the then Outstanding 2024 Bonds are to be called for redemption shall state as to any 2024 Bond called in part the principal amount thereof to be redeemed, and shall require that such 2024 Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such 2024 Bonds will not accrue from and after the redemption date. The notice may state that such redemption is conditioned upon the timely delivery of the redemption price by the City to the Fiscal Agent. The cost of mailing any such redemption notice and any expenses incurred by the Fiscal Agent in connection therewith shall be paid by the City.
(iii) Reserved.
(iv) Redemption. Whenever provision is made in this Agreement for the redemption of less than all of the 2024 Bond s of any maturity or any given portion thereof, the Fiscal Agent shall select the 2024 Bond s to be redeemed, from all 2024 Bonds or such given portion thereof not previously called for redemption, by lot in any manner which the Fiscal Agent in its sole discretion shall deem appropriate; provided, however, that if 2024 Bond s are to be redeemed as a r esult of Special Tax Prepayments, 2024 Bonds shall be selected for redemption on a pro -rata basis among maturities.
(v) New Bonds. Upon surrender of 2024 Bonds redeemed in part only, the City shall execute, and the Fiscal Agent shall authenticate and deli ver to the registered Owner, at the expense of the City, a new 2024 Bond or 2024 Bonds, of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the 2024 Bond or 2024 Bonds of such registered Owner.
(E) Effect of Redemption . From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the 2024 Bonds so called for redemption shall have been deposited in the Bond Fund , such 2024 Bond s so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price, and no interest shall accrue thereon on or after the redemption date specified in the notice of redemption. All 2024 Bonds redeemed and purchased by the Fiscal Agent under this Section 2.03 shall be canceled by the Fiscal Agent. The Fiscal Agent shall destroy the canceled 2024 Bonds in accordance with the Fiscal Agent ’s retention policy then in effect.
Section 2.04. Form of Bonds . The 2024 Bond s, the Fiscal Agent ’s certificate of authentication and the assignment, to appear thereon, shall be substantially in the forms, respectively, set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions, and insertions, as permitted or required by this Agreement, the Resolution and the Act.
16 Section 2.05. Execution and Authentication of Bonds.
(A) Execution. The 2024 Bond s shall be exec uted on behalf of the City by the manual or facsimile signatures of its Mayor and its City Clerk who are in office on the date of execution of this Agreement or at any time thereafter, and the seal of the City shall be impressed, imprinted or reproduced by facsimile thereon. If any officer whose signature appears on any 2024 Bond ceases to be such officer before delivery of the 2024 Bonds to the Owner, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the 2024 Bonds to the Owner. Any 2024 Bond may be signed and attested on behalf of the City by such persons as at the actual date of the execution of such 2024 Bond shall be the proper officers of the City although at the nominal date of such 2024 Bond any such person shall not have been such officer of the City.
(B) Authentication. Only such 2024 Bond s as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A, executed and dated by the Fiscal Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of authentication of the Fiscal Agent shall be conclusive evidence that the 2024 Bond s registered hereunder have been duly authenticated, registere d and delivered hereunder and are entitled to the benefits of this Agreement.
Section 2.06. Transfer or Exchange of Bonds . Any 2024 Bond may, in accordance with its terms, be transferred, upon th e books required to be kept under the provisions of Section 2.07 by the person in whose name it is registered, in person or by such person ’s duly authorized attorney, upon surrender of such 2024 Bond for cancellation, accompanied by delivery of a duly writ ten instrument of transfer in a form acceptable to the Fiscal Agent. 2024 Bonds may be exchanged at the Principal Office of the Fiscal Agent solely for a like aggregate principal amount of 2024 Bond s of authorized denominations and of the same maturity. Th e cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer or exchange shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such transfer or exchange any tax or other go vernmental charge required to be paid with respect to such transfer or exchange. Whenever any 2024 Bond or 2024 Bonds shall be surrendered for transfer or exchange, the City shall execute and the Fiscal Agent shall authenticate and deliver a new 2024 Bond or 2024 Bonds, for a like aggregate principal amount.
No transfers or exchanges of 2024 Bonds shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection of 2024 Bonds for redemption or (ii) with respect to a 2024 Bond after such 2024 Bond has been selected for redemption; or (iii) between a Record Date and the succeeding Interest Payment Date.
Section 2.07. Bond Register . The Fiscal Agent will keep, or cause to be kept, at its Principal Office sufficient books for the registration and transfer of the 2024 Bonds which books shall show the series number, date, amount, rate of interest and last known owner of each 2024 Bond and shall at all times be open to inspection by the City during regular business hours upon reasonable notice; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the ownership of the 2024 Bonds as hereinbefore provided. The City and the Fiscal Agent will treat the Owner of any 2024 Bond whose name appears on the 2024 Bond register as the absolute Owner of such 2024 Bond for any and all purposes, and the City and the Fiscal Agent shall not be affected by any notice to the contrary. The City and the Fiscal Agent may rely on the address of the Owner as it appears in the Bond register for any and all purposes.
17 Section 2.08. Temporary Bonds. The 2024 Bonds may be initially issued in temporary form exchangeable for definitive 2024 Bond s when ready for delivery. The temporary 2024 Bonds may be printed, lithographed or typew ritten, shall be of such authorized denominations as may be determined by the City, and may contain such reference to any of the provisions of this Agreement as may be appropriate. Every temporary 2024 Bond shall be executed by the City upon the same condi tions and in substantially the same manner as the definitive 2024 Bonds. If the City issues temporary 2024 Bond s, it will execute and furnish definitive 2024 Bonds without delay and thereupon the temporary 2024 Bond s shall be surrendered, for cancellation, in exchange for the definitive 2024 Bonds at the Principal Office of the Fiscal Agent or at such other location as the Fiscal Agent shall designate, and the Fiscal Agent shall authenticate and deliver in exchange for such temporary 2024 Bond s an equal agg regate principal amount of definitive 2024 Bonds of authorized denominations. Until so exchanged, the temporary 2024 Bonds shall be entitled to the same benefits under this Agreement as definitive 2024 Bonds authenticated and delivered hereunder.
Section 2.09. Bonds Mutilated, Lost, Destroyed or Stolen.
(A) Mutilated. If any 2024 Bond shall become mutilated, at the expense of the Owner of such 2024 Bond, the City shall execute and t he Fiscal Agent shall authenticate and deliver a replacement 2024 Bond of like tenor and principal amount in exchange and substitution for the 2024 Bond so mutilated, but only upon surrender to the Fiscal Agent of the 2024 Bond so mutilated. Every mutilated 2024 Bond so surrendered to the Fiscal Agent shall be canceled by it and destroyed by the Fiscal Agent, in accordance with the Fiscal Agent ’s retention policy then in effect.
(B) Destroyed or Stolen . If any 2024 Bond shall be lost, destroyed or stolen, the City shall execute and the Fiscal Agent shall authenticate and deliver a replacement 2024 Bond of like tenor and principal amount in lieu of and in substitution for the 2024 Bond so lost, destroyed or stolen, at the expense of the Owner, but only following provision by the Owner to the Fiscal Agent of indemnity for the City and the Fiscal Agent satisfactory to the Fiscal Agent.
The City may require payment of a sum not exceeding the actual cost of preparing each a replacement 2024 Bond delivered under this Section and the City and the Fiscal Agent may require payment of the expenses which may be incurred by the City and the Fiscal Agent for the preparation, execution, authentication and delivery thereof. Any 2024 Bond delivered under the provisions of this Section in lieu of any 2024 Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the City whether or not the 2024 Bond so alleged to be lost, dest royed or stolen is at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Agreement with all other 2024 Bonds issued under this Agreement.
(C) Additional Stock. If the Fiscal Agent has an insufficient stock of unauthenticated printed 2024 Bond s for such purpose, it shall communicate with the Finance Director with respect to the printing of an additional stock of 2024 Bonds, in such quantities and as otherwise approved in writing by the Finance Director.
Section 2.10. Book-Entry Only System. DTC shall act as the initial Depository for the 2024 Bonds. One 2024 Bond for each maturity of the 2024 Bonds shall be initially executed, authenticated, and delivered as set forth herein with a separate fully registered certificate (in print or typewritten form). Upon initial execution, authentication, and delivery, the ownership of the 2024 Bonds shall be registered in the 2024 Bond register kept by the Fiscal Agent for the
18 2024 Bonds in the name of Cede & Co., as nominee of DTC or such nominee as DTC shall appoint in writing.
The Authorized Officers of the City and the Fiscal Agent are hereby authorized to take any and all actions as may be necessary and not inconsistent with this Agreement to qualify the 2024 Bonds for the Depository’s book-entry system, including the execution of the Depository ’s required representation letter.
With respect to 2024 Bonds registered in the 2024 Bond register in the name of Cede & Co., as nominee of DTC, neither the City nor the Agent shall have any responsibility or obligation to any broker -dealer, bank, or other financial institution for which DTC holds 2024 Bonds as Depository from t ime to time (the “DTC Participants”) or to any person for which a DTC Participant acquires an interest in the 2024 Bond s (the “Beneficial Owners ”). Without limiting the immediately preceding sentence, neither the City nor the Fiscal Agent shall have any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co., or any DTC Participant with respect to any ownership interest in the 2024 Bonds, (ii) the delivery to any DTC Participant, any Beneficial Owner, or any other pe rson, other than DTC, of any notice with respect to the 2024 Bonds, including any 2024 Bonds to be redeemed in the event the City elects to redeem the 2024 Bonds, in part, (iii) the selection by the Depository of the beneficial interests in the 2024 Bonds to be redeemed in the event the City elects to redeem the 2024 Bonds in part, (iv) the payments to any DTC Participant, any Beneficial Owner, or any person, other than DTC, of any amount with respect to the principal of or interest or premium on the 2024 Bonds, or (v) any consent given or other action taken by the Depository as Owner of the 2024 Bonds.
Except as set forth above, the City and the Fiscal Agent may treat as and deem DTC to be the absolute Owner of each 2024 Bond , for which DTC is acting as De pository for the purpose of payment of the principal of and premium and interest on such 2024 Bonds, for the purpose of giving notices of redemption and other matters with respect to such 2024 Bonds, for the purpose of registering transfers with respect to such 2024 Bond s, and for all purposes whatsoever. The Fiscal Agent on behalf of the City shall pay all principal of and premium and interest on the 2024 Bonds only to or upon the order of the Owners as shown on the 2024 Bond register, and all such paymen ts shall be valid and effective to fully satisfy and discharge all obligations with respect to the principal of and premium and interest on the 2024 Bonds to the extent of the sums or sums so paid.
No person other than an Owner, as shown on the 2024 Bond register, shall receive a physical 2024 Bond. Upon delivery by DTC to the City and the Fiscal Agent of written notice to the effect the DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the transfer provisions in Sectio n 2.06 hereof, references to “Cede & Co. ” in this Section 2.10 shall refer to such new nominee of DTC.
DTC may determine to discontinue providing its services with respect to the 2024 Bonds at any time by giving written notice to the City and to the Fiscal Agent during any time that the 2024 Bond s are Outstanding, and discharging its responsibilities with respect thereto under applicable law. The City may terminate the services of DTC with respect to the 2024 Bonds if it determines that DTC is unable to discharge its responsibilities with respect to the 2024 Bonds or that continuation of the system of book -entry transfer through DTC is not in the best interest of the Beneficial Owners, and the City shall mail notice of such termination to the Fiscal Agent.
19 Upon termination of the services of DTC as provided in the previous paragraph, and if no substitute Depository willing to undertake the functions hereunder can be found which is willing to undertake such functions upon reasonable or customary terms, or if the City determines that it is in the best interest of the Beneficial Owners of the 2024 Bonds that they be able to obtain certified 2024 Bonds, the 2024 Bonds shall no longer be restrict ed to being registered in the Bond register of the Fiscal Agent in the name of Cede & Co., as nominee of DTC, but may be registered in whatever name or names the Owners shall designate at that time, in accordance with Section 2.06.
To the extent that the Beneficial Owners are designated as the transferee by the Owners, in accordance with Section 2.06, the 2024 Bonds will be delivered to such Beneficial Owners.
20 ARTICLE III
ISSUANCE OF 2024 BONDS
Section 3.01. Issuance and Delivery of 2024 Bonds. At any time after the execution of this Agreement, the City may issue the 2024 Bonds for the CFD in the aggregate principal amount set forth in Section 2.01 and deliver the 2024 Bond s to the Fiscal Agent for authentication and delivery to the Original Purchaser. The Authorized Officers of the City are hereby authorized and directed to execute and deliver any and all documents and instruments necessary to cause the issuance of the 2024 Bonds in accordance with the provisions of the Act, the Resolution and this Agreement, to authorize the payment of Costs of Issuance, to authorize the transfer of moneys to the Escrow Agent for deposit into the Escrow Fund for the purpose of defeasing and refunding the Prior Bonds, and to do and cause to be done any and all acts and things necessary or convenient for the timely delivery of the 2024 Bond s to the Original Purchaser. The Fiscal Agent is hereby authorized and directed to authenticate the 2024 Bonds and deliver them to the Original Purchaser, upon receipt of the purchase price for the 2024 Bonds.
Section 3.02. Pledge of Special Tax Revenues . The 2024 Bonds shall be secured by a first pledge (which pledge shall be effected in the manner and to the extent herein provided) of all of the Special Tax Revenues and all moneys deposited in the 2024 Bond Fund (including the Special Tax Prepayments Account ), and, until disbursed as provided herein, the Special Tax Fund. The Special Tax Revenues and all moneys deposited into such funds (except as otherwise provided herein) are hereby dedicated to the payme nt of the principal of, and interest and any premium on, the 2024 Bonds as provided herein and in the Act until all of the 2024 Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose under Section 9.03.
The 2024 Bonds shall be secured by a first pledge (which pledge shall be effected in the manner and to the extent herein provided) of all of the moneys and any Qualified Reserve Account Credit Instrument deposited in the Reserve Fund.
Amounts in the Administrative Expense Fund and the Costs of Issuance Fund are not pledged to the repayment of the 2024 Bonds.
Section 3.03. Limited Obligation. All obligations of the City under this Agreem ent and the 2024 Bond s shall not be general obligations of the City, but shall be limited obligations, payable solely from the Special Tax Revenues and the funds pledged therefore hereunder.
Neither the faith and credit nor the taxing power of the City (except to the limited extent set forth herein) or of the State of California or any political subdivision thereof is pledged to the payment of the 2024 Bonds.
Section 3.04. No Acceleration. The principal of the 2024 Bonds shall not be subject to acceleration hereunder. Nothing in this Section shall in any way prohibit the redemption of 2024 Bonds under Section 2.03, or the defeasance of the 2024 Bond s and discharge of this Agreement under Section 9.03.
Section 3.05. Validity of Bonds . The validity of the authorization and issuance of the 2024 Bonds shall not be dependent upon the completion of the refinancing of the Prior Bonds.
21 Section 3.06. Parity Bonds. The City is not authorized to issue bonds that are secured by Special Tax Revenues on a parity basis with the 2024 Bonds.
Nothing in this Section 3.06 shall prohibit the City from issuing any other bonds or otherwise incurring debt secured by a pledge of the Special Tax Revenues subordinate to the pledge thereof under Section 3.02 of this Agreement.
22 ARTICLE IV
PROCEEDS, FUNDS AND ACCOUNTS
Section 4.01. Application of 2024 Bond Proceeds. On the Closing Date, the Original Purchaser will wire the purchase price of the 2024 Bonds of $_____ (being an amount equal to the par amount of the 2024 Bonds, plus a premium of $_______, less an underwriter’s discount of $ _________) as follows: (i) the amount of $ _________ to the Bond Insurer to pay the premiums for the Bond Insurance Policy ($ ________) and the Reserve Policy ($ _________) and (ii) the amount of $ _______ to the Fiscal Agent, for application as set forth below. Upon receipt of the amount identified in clause (ii) of the previous sentence, the Fiscal Agent shall:
(A) deposit $________ into the Costs of Issuance Fund;
(B) deposit $_______ (equaling 50% of the initial Reserve Requirement) into the Reserve Fund;
(C) transfer $__________ to the Escrow Agent for deposit into the Escrow Fund held by the Escrow Agent pursuant to the Escrow Agreement to be held, along with other moneys transferred by the 2014 Bonds Fiscal Agent, to defease the Prior Bonds on the Closing Date and to redeem the Prior Bonds on March 1, 2025; and
(D) deposit $ __________ into the Bond Proceeds Account of the Administrative Expense Fund.
On the Closing Date, the Fiscal Agent shall deposit the Reserve Policy into the Reserve Fund.
The Fiscal Agent may, in its discretion, establish a temporary fund or account to facilitate the foregoing deposits.
Section 4.02. Costs of Issuance Fund.
(A) Establishment of Costs of Issuance Fund . The Costs of Issuance Fund is hereby established as a separate fund to be held by the Fiscal Agent, to the credit of which a deposit shall be made as required by Section 4.01.
Moneys in the Costs of Issuance Fund shall be held by the Fiscal Agent for the benefit of the City and shall be disbursed as provided in subsection (B) of this Section for the payment or reimbursement of Costs of Issuance.
(B) Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed from time to time to pay Costs of Issuance, as set forth in a requisition substantially in the form of Exhibit B hereto, executed by the Finance Director, containing respective amounts to be paid to the designated payees and delivered to the Fiscal Agent. Each such requisition shall be sufficient evidence to the Fiscal Agent of the facts stated therein and the Fiscal Agent shall have no duty to confirm the accuracy of such facts.
23 (C) Investment. Moneys in the Costs of Issuance Fund shall be invested and deposited by the Fiscal Agent under Section 6.01. Interest earnings and profits resulting from such investment shall be retained by the Fiscal Agent in the Costs of Issuance Fund to be used for the purposes of such fund.
(D) Closing of Fund . The Fiscal Agent shall maintain the Costs of Issuance Fund for a period of 90 days from the Closing Date and then the Fiscal Agent shall transfer any moneys remaining therein, including any investment earnings thereon, to the Bond Fund to pay interest on the 2024 Bonds on the next Interest Payment Date.
Section 4.03. Reserve Fund.
(A) Establishment of Fund . The Reserve Fund is hereby established as a separate fund to be held by the Fiscal Agent to the credit of which the Fiscal Agent shall deposit the amount specified in Section 4.01, which deposit, as of the Closing Date, is equal to 50% of the initial Res erve Requirement, and the Reserve Policy with a stated amount of $__________, which is equal to 50% of the initial Reserve Requirement , which deposit s, as of the Closing Date, satisfy the initial Reserve Requirement.
Thereafter, deposits shall be made as provided in Section 4.05(B).
Moneys in the Reserve Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the 2024 Bonds as a reserve for the payment of the principal of, and interest and any premium on, the 2024 Bonds and sha ll be subject to a lien in favor of the Owners of the 2024 Bonds.
(B) Use of Reserve Fund . Except as otherwise provided in this Section, all amounts deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fun d of the amount then required for payment of the principal of, and interest and any premium on, the 2024 Bonds or, in accordance with the provisions of this Section, for the purpose of redeeming 2024 Bonds from the Bond Fund. Whenever a transfer is made from the Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund, the Fiscal Agent shall provide written notice thereof to the Finance Director specifying the amount withdrawn.
(C) Transfer of Excess of Reserve Requirement . Whenever, on or before any Interest Payment Date, or on any other date at the request of the Finance Director, the amount in the Reserve Fund exceeds the Reserve Requirement, the Fiscal Agent shall provide written notice to the Finance Director of the amount of the excess and shall transfer an amount equal to the excess from the Reserve Fund to the Bond Fund, to be used to pay interest on the 2024 Bonds on the next Interest Payment Date.
(D) Transfer for Rebate Purposes . Amounts in the Reserve Fund shall be withdrawn for purposes of making payment to the federal government to comply with Section 5.11, upon receipt by the Fiscal Agent of an Officer ’s Certificate specifying the amount to be withdrawn and to the effect that such
24 amount is needed for rebate purposes; provided, however, that no amounts in the Reserve Fund shall be used for rebate unless the amount in the Reserve Fund following such withdrawal equals the Reserve Requirement.
(E) Transfer When Balance Exceeds Outstanding 2024 Bonds.
Whenever the balance in the Res erve Fund exceeds the amount required to redeem or pay the Outstanding 2024 Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent shall, upon the written request of the Finance Dir ector, transfer any cash or Permitted Investments in the Reserve Fund to the Bond Fund to be applied, on the redemption date to the payment and redemption, in accordance with Section 4.04 or 2.03, as applicable, of all of the Outstanding 2024 Bonds. In the event that the amount so transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding 2024 Bonds, the balance in the Reserve Fund shall be transferred to the Finance Director to be used by the City for any lawful purpose.
Notwithstanding the provisions of the first paragraph of this Section
4.03(E), no amounts shall be transferred from the Reserve Fund under this Section 4.03(E) until after: (i) the calculation of any amounts due to the federal government under Section 5.11 and withdrawal of any such amount under Section 4.03(D) for purposes of making such payment to the federal government; and (ii) payment of any fees and expenses due to the Fiscal Agent.
(F) Transfer Upon Special Tax Prepayment. Whenever Special Taxes are prepaid and 2024 Bonds are to be redeemed with the proceeds of such prepayment pursuant to Section 2.03(A)(iii), a proportionate amount in the Reserve Fund (determined on the basis of the principal of 2024 Bonds to be redeemed and th e original principal of the 2024 Bonds, but in any event not in excess of the amount that will leave the balance in the Reserve Fund following the proposed redemption equal to the Reserve Requirement) shall be transferred on the Business Day prior to the redemption date by the Fiscal Agent to the Bond Fund to be applied to the redemption of the 2024 Bonds pursuant to Section
2.03(A)(iii). The Finance Director shall deliver to the Fiscal Agent an Officer ’s Certificate specifying any amount to be so transfer red, and the Fiscal Agent may rely on any such Officer’s Certificate.
If the Reserve Requirement is being maintained partially in cash and partially with a Qualified Reserve Account Credit Instrument, the amount that will be transferred to the Bond Fund pursuant to the previous paragraph shall be the product of (i) the amount that would have been transferred to the Bond Fund pursuant to the previous paragraph if the Reserve Requirement were being met completely with cash multiplied by (ii) the percentage of the Reserve Requirement that is being maintained in cash . Concurrently, to the extent provided in the Qualified Reserve Account. Credit Instrument, the available amount thereunder shall be reduced by the product of ( iii) the amount that would have been transferred to the Bond Fund pursuant to the previous paragraph if the Reserve Requirement were being met completely with cash multiplied by ( iv) the percentage of the Reserve Requirement that is being maintained with the Qualified Reserve Account Credit Instrument.
25 (G) Investment. Moneys in the Reserve Fund shall be invested under Section 6.01.
(H) Reserve Policy. The City will have no obligation to replace the Reserve Policy or to fund the Reserve Fund with cash if, at any time that the 2024 Bonds are Outstanding, the Reserve Policy (or the Bond Insurer) is downgraded or the Bond Insurer becomes insolvent, if there is an unscheduled termination of the Reserve Policy or if for any reason insufficient amounts are available to be drawn upon under the Rese rve Policy; provided, however, that the City shall reimburse the Bond Insurer, in accordance with the terms of the Reserve Policy, for any draws made thereon.
The City and the Fiscal Agent shall comply with the terms of the Reserve Policy as shall be requ ired to receive payments thereunder in the event and to the extent required under this Section.
(I) Qualified Reserve Account Credit Instruments . The City shall have the right at any time to direct the Fiscal Agent to release funds from the Reserve Fund, in whole or in part, by tendering to the Fiscal Agent: (i) a Qualified Reserve Account Credit Instrument, and (ii) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Account Credit Instru ment will cause interest on the 2024 Bonds the interest on which is excluded from gross income of the owners thereof for federal income tax purposes to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Fiscal Agent, and upon delivery by the City to the Fiscal Agent of a written calculation of the amount permitted to be released from the Reserve Fund (upon which calculation the Fiscal Agent may conclusively rely), the Fiscal Agent shall transfer such funds from the Reserve Fund to the Special Tax Fund or the Bond Fund to be used for the purposes thereof, as directed in writing by an Authorized Officer.
The Fiscal Agent shall comply with all documentation relating to a Qualified Reserve Account Credit Instrument as shall be required to maintain such Qualified Reserve Account Credit Instrument in full force and effect and as shall be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under this Section. Upon the scheduled expiration of any Qualified Reserve Account Credit Instrument, the City shall either (i) replace such Qualified Reserve Account Credit Instrument with a new Qualified Reserve Account Credit Instrument, or (ii) deposi t or cause to be deposited with the Fiscal Agent an amount of funds equal to the Reserve Requirement, to be derived from the first available Special Tax Revenues. If the Reserve Requirement is being maintained partially in cash and partially with a Qualified Reserve Account Credit Instrument, the cash shall be first used to meet any deficiency which may exist from time to time in the Bond Fund with respect to the 2024 Bonds. If the Reserve Requirement is being maintained with two or more Qualified Reserve Account Credit Instruments, any draw to meet a deficiency which may exist from time to time in the Bond Fund with respect to the 2024 Bonds shall be pro -rata with respect to each such instrument (calculated based on the available coverage amount for each s uch Qualified Reserve Account Credit Instrument).
26 If the Reserve Requirement is being maintained partially in cash and partially with a Qualified Reserve Account Credit Instrument, the City shall reimburse the provider of the Qualified Reserve Account Credit instrument before replenishing the cash amount.
The City will have no obligation to replace a Qualified Reserve Account Credit Instrument or to fund the Reserve Fund with cash if, at any time that the 2024 Bonds are Outstanding, the Qualified Reserve Account Credit Instrument (or its provider) is downgraded or the provider becomes insolvent, if there is an unscheduled termination of the Qualified Reserve Account Credit Instrument or if for any reason insufficient amounts are available to be drawn upon under the Qualified Reserve Account Credit Instrument; provided, however, that the City shall reimburse the provider, in accordance with the terms of the Qualified Reserve Account Credit Instrument, for any draws made thereon.
The City and the Fiscal Agent shall comply with the terms of the Qualified Reserve Account Credit Instrument as shall be required to receive payments thereunder in the event and to the extent required under this Section.
Section 4.04. Bond Fund.
(A) Establishment of Bond Fund . The Bond Fund is hereby established as a separate fund to be held by the Fiscal Agent to the credit of which deposits shall be made as required by Section 4.01 and Section 4.03 and as otherwise set forth in this Agreement. M oneys in the Bond Fund shall be held by the Fiscal Agent for the benefit of the City and the Owners of the 2024 Bonds, and shall be disbursed for the payment of the principal of, and interest and any premium on, the 2024 Bonds as provided below.
There is also hereby created in the Bond Fund a separate account to be held by the Fiscal Agent, designated the “Special Tax Prepayments Account,” to the credit of which deposits shall be made as provided in clause (iii) of the second paragraph of Section 4.05(A).
(B) Disbursements. At least ten (10) Business Days before each Interest Payment Date, the Fiscal Agent shall notify the Finance Director in writing as to the principal and premium, if any, and interest due on the 2024 Bonds on the next Interest Payment Date (whether as a result of scheduled principal of and interest on the 2024 Bonds or an optional redemption of the 2024 Bonds). On each Interest Payment Date, the Fiscal Agent shall withdraw from the Bond Fund and pay to the Owners of the 2024 Bond s the p rincipal of, and interest and any premium, due and payable on such Interest Payment Date on the 2024 Bonds.
At least five (5) Business Days prior to each Interest Payment Date, the Fiscal Agent shall determine if the amounts then on deposit in the Bond Fund are sufficient to pay the debt service due on the 2024 Bond s on the next Interest Payment Date. In the event that amounts in the Bond Fund are insufficient for such purpose, the Fiscal Agent promptly shall notify the Finance Director by telephone (and confirm in writing) of the amount of the insufficiency.
27 In the event that amounts in the Bond Fund are insufficient for the purpose set forth in the preceding paragraph with respect to any Interest Payment Date, the Fiscal Agent shall withdraw from the Re serve Fund, in accordance with the provisions of Section 4.03, to the extent of any funds or Permitted Investments therein, amounts to cover the amount of such Bond Fund insufficiency related to the 2024 Bonds . Amounts so withdrawn from the Reserve Fund shall be deposited in the Bond Fund.
If, after the foregoing transfers, there are insufficient funds in the Bond Fund to make the payments provided for in the second sentence of the first paragraph of this Section 4.04(B), the Fiscal Agent shall apply th e available funds first to the payment of interest on the 2024 Bonds, then to the payment of principal due on the 2024 Bonds.
(C) Disbursements from the Special Tax Prepayments Account .
Moneys in the Special Tax Prepayments Account shall be transferred by the Fiscal Agent to the Bond Fund on the next date for which notice of redemption of 2024 Bond s can timely be given under Section 2.03(A)(iii) and shall be used (together with any amounts transferred pursuant to Section 4.03(F) to redeem 2024 Bonds on the redemption date selected in accordance with Section 2.03.
(D) Investment. Moneys in the Bond Fund, the Special Tax Prepayments Account shall be invested under Section 6.01. Interest earnings and profits resulting from such investment shall be retained in the Bond Fund.
(E) Deficiency. If at any time the Fiscal Agent has actual knowledge that there is a danger of deficiency in the Bond Fund and that the Fiscal Agent may be unable to pay Debt Service on the 2024 Bonds in a timely manner, the Fiscal Agent shall report to the Finance Director such fact. The City covenants to increase the levy of the Special Taxes in the next Fiscal Year (subject to the maximum amount authorized by the Resolution of Formation) in accordance with the procedures set forth in the Act for the purpose of curing Bond Fund deficiencies.
(F) Excess. Any excess moneys remaining in the Bond Fund, following the payment of Debt Service on the 2024 Bonds on any September 1, shall be transferred to the Special Tax Fund.
Section 4.05. Special Tax Fund.
(A) Establishment of Special Tax Fund . The Special Tax Fund is hereby established as a separate fund to be held by the Fiscal Agent, to the credit of which the Fiscal Agent shall deposit amounts received from or on behalf of the City consisting of Special Tax Revenues and amounts transferred from the Administrative Expense Fund and the Bond Fund. The City shall promptly remit any Special Tax Revenues received by it to the Fiscal Agent fo r deposit by the Fiscal Agent to the Special Tax Fund.
Notwithstanding the foregoing,
28 (i) any Special Tax Revenues constituting payment of the portion of the Special Tax levy for Administrative Expenses shall be separately identified by the Finance Director and shall be deposited by the Fiscal Agent in the Administrative Expense Fund;
(ii) any Special Tax Revenues constituting the collection of delinquencies in payment of Special Taxes shall be separately identified by the Finance Director and shall b e disposed of by the Fiscal Agent first, for transfer to the Bond Fund to pay any past due debt service on the 2024 Bond s; second, for transfer to the Reserve Fund to the extent needed to increase the amount then on deposit in the Reserve Fund up to the th en Reserve Requirement; and third, to be held in the Special Tax Fund for use as described in Section 4.05(B) below; and
(iii) any proceeds of Special Tax Prepayments shall be separately identified by the Finance Director and shall be deposited by the Fi scal Agent in the Special Tax Prepayments Account established pursuant to Section 4.04(A).
(B) Disbursements. No later than the fifth Business Day prior to each Interest Payment Date, the Fiscal Agent shall withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority (i) with respect to any Interest Payment Date that is a March 1, to the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers from the Reserve Fund and the Special Tax Prepayments Account to the Bond Fund such that the amount in the Bond Fund equals the interest due on the 2024 Bonds on such Interest Payment Date , one-third of the principal due on the 2024 Bonds on the immediately succeeding September 1, and any past due principal or interest on the 2024 Bonds not theretofore paid from a transfer described in subparagraph (ii) of the second paragraph of Section
4.05(A), (ii) with respect to any Interest Payment Date that is a September 1, to the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers from the Reserve Fund and the Special Tax Prepayments Account to the Bond Fund such that the amount in the Bond Fund equals the principal, p remium, if any, and interest due on the 2024 Bonds on such Interest Payment Date and any past due principal or interest on the 2024 Bonds not theretofore paid from a transfer described in subparagraph (ii) of the second paragraph of Section 4.05(A) , (iii) to the Reserve Fund , an amount, taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserve Fund is equal to the Reserve Requirement , and (iv) to the City, the remaining amount, which shall be used by the City for a ny lawful purpose.
(C) Investment. Moneys in the Special Tax Fund shall be invested and deposited by the Fiscal Agent under Section 6.01. Interest earnings and profits resulting from such investment and deposit shall be retained in the Special Tax Fund to be used for the purposes thereof.
Section 4.06. Administrative Expense Fund.
(A) Establishment of Administrative Expense Fund . The Administrative Expense Fund is hereby established as a separate fund to be held
29 by the Fiscal Agent, to the credit of which deposits shall be made as required by Section 4.05(A). There is further hereby established the Bond Proceeds Account within th e Administrative Expense Fund as a separate fund to be held by the Fiscal Agent, to the credit of which deposits shall be made as required by Section
4.01(D).
Moneys in the Administrative Expense Fund shall be held by the Fiscal Agent for the benefit of the City and shall be disbursed as provided below.
(B) Disbursement. Amounts in the Administrative Expense Fund shall be withdrawn by the Fiscal Agent and paid to the City or its order upon receipt by the Fiscal Agent of an Officer ’s Certificate, in substantially the form of Exhibit C hereto, stating the amount to be withdrawn, that such amount is to be used to pay an Administrative Expense or a Cost of Issuance and the nature of such Administrative Expense or such Cost of Issuance. Amounts deposited to the Bond Proceeds Account of the Administrative Expense Fund pursuant to Section 4.01(D) shall be separately identified at all times and shall be expended for purposes of the Administrative Expense Fund prior to the use of amounts transferred to the Administrative Expense Fund from the Special Tax Fund pursuant to Section 4.05(A). When all amounts in the Bond Proceeds Account have been spent, the Fiscal Agent shall close the Bond Proceeds Account.
Annually, on the last day of each Fisc al Year, the Fiscal Agent shall withdraw from the Administrative Expense Fund (except for amounts in the Bond Proceeds Account) and transfer to the Special Tax Fund any amount in excess of that which is needed to pay any Administrative Expenses incurred bu t not yet paid, and which are not otherwise encumbered, as identified by the Finance Director in an Officer’s Certificate.
(C) Investment. Moneys in the Administrative Expense Fund shall be invested by the Fiscal Agent under Section 6.01. Interest earnin gs and profits resulting from such investment shall be retained by the Fiscal Agent in the Administrative Expense Fund to be used for the purposes of such fund.
30 ARTICLE V
COVENANTS
Section 5.01. Collection of Special Tax Revenues . The City shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes.
(A) Processing. On or within five (5) Business Days of each June 1, the Fiscal Agent shall provide the Finance Director with a notice stating the amount then on deposit in the Special Tax Fund, the Bond Fund, the Reserve Fund, and informing the City that the Special Taxes need to be levied under the Ordinance as necessary to provide for Annual Debt Service , Administrative Expenses and replenishment (if necessary) of the Reserve Fund so that the balance therein equal the Reserve Requirement. The receipt of or failure to receive such notice by the Finance Director shall in no way affect the obligations of the Finance Director under the following two paragraphs and the Fiscal Agent shall not be liable for failure to pr ovide such notices to the Finance Director.
Upon receipt of such notice, the Finance Director shall communicate with the Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits or combin ations during the preceding and then current year.
(B) Levy. The Finance Director shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance by each August 1 that the 2024 Bonds are outstanding, or otherwise such that the computation of the levy is complete before the final date on which Auditor will accept the transmission of the Special Tax amounts for the parcels within the CFD for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, the Finance Director shall prepare or cause to be prepared, and shall transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next real property tax roll.
(C) Computation. The Finance Director shall fix and levy the amount of Special Taxes within the CFD required for the payment of principal of and interest on any outstanding 2024 Bonds of the CFD becoming due and payable during the ensuing calendar year, including any necessary r eplenishment or expenditure of the Reserve Fund for the 2024 Bonds and an amount estimated to be sufficient to pay the Administrative Expenses, including amounts necessary to discharge any rebate obligation, during such year, taking into account the balances in the applicable funds established under this Agreement and in the Special Tax Fund. The Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings under the Resolution of Formation.
(D) Collection. Except as set fo rth in the Ordinance, Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same time and in the same
31 proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property.
Section 5.02. Covenant to Foreclose . Under the Ac t, the City hereby covenants with and for the benefit of the Owners of the 2024 Bond s that it will order, and cause to be commenced as hereinafter provided, and thereafter diligently prosecute to judgment (unless such delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due as provided in the following two paragraphs. The Finance Director shall notify the City Attorney of any such delinquency of which the Finance Director is aware, and the City Attorney shall commence, or cause to be commenced, such proceedings.
On or about August 1 of each Fiscal Year, the Finance Director shall compare the amount of Special Taxes theretofore levied in the CFD to the am ount of Special Tax Revenues theretofore received by the City, and:
(A) Individual Delinquencies . If the Finance Director determines that any single parcel subject to the Special Tax in the CFD is delinquent in the payment of Special Taxes in the aggregate amount of $ 7,500 or more, then the Finance Director shall send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 45 days of such determination, and (if the delinquency remains un cured) foreclosure proceedings shall be commenced by the City within 90 days of such determination. Notwithstanding the foregoing, in its sole discretion, the Finance Director may defer such action if the amount in the Reserve Fund is at least equal to the Reserve Requirement.
(B) Aggregate Delinquencies . If the Finance Director determines that the total amount of delinquent Special Tax for the prior Fiscal Year for the entire CFD, (including the total of delinquencies under subsection (A) above), exceeds 5% of the total Special Tax due and payable for the prior Fiscal Year, the Finance Director shall notify or cause to be notified all property owners who are then delinquent in the payment of Special Taxes (and demand immediate payment of the delinquency) within 45 days of such determination, and shall commence foreclosure proceedings within 90 days of such determination against each parcel of land in the CFD with a Special Tax delinquency.
The Finance Director and the City Attorney, as applicable, are he reby authorized to employ counsel to conduct any such foreclosure proceedings. The fees and expenses of any such counsel (including a charge for City staff time) in conducting foreclosure proceedings shall be an Administrative Expense hereunder.
Section 5.03. Punctual Payment. The City will punctually pay or cause to be paid the principal of, and interest and any premium on, the 2024 Bond s when and as due in strict conformity with the terms of this Agreement and any Supplemental Agreement, and it will faithfully observe and perform all of the condition’s covenants and requirements of this Agreement and all Supplemental Agreements and of the 2024 Bonds.
Section 5.04. Extension of Time for Payment . In order to prevent any accumulation of claims for interest after maturity, the City shall not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the 2024 Bonds and
32 shall not, dire ctly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City, such claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Agreement, except subject to the prior payment in full of the principal of all of the 2024 Bond s then Outstanding and of all claims f or interest which shall not have been so extended or funded.
Section 5.05. Against Encumbrances . The City will not encumber, pledge, or place any charge or lien upon any of the Special Tax Revenues or other amounts pledged to the 2024 Bonds superior to or on a parity with the pledge and lien herein created for the benefit of the 2024 Bonds, or their Owners, except as permitted by this Agreement.
Section 5.06. Books and Records.
(A) City. The City will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City, in which complete and correct entries shall be made of all transactions relating to the Special Tax Revenues. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Fiscal Agent and the Owners of not less than ten percent (10%) of the principal amount of the 2024 Bonds then Outstanding, or their representatives duly authorized in writing.
(B) Fiscal Agent . The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correc t entries shall be made of all transactions made by it relating to the expenditure of amounts disbursed from the funds, and, if any, accounts in such funds held by the Fiscal Agent hereunder. Such books of record and accounts shall at all times during business hours be subject to the inspection of the City and the Owners of not less than ten percent (10%) of the principal amount of the 2024 Bond s then Outstanding, or their representatives duly authorized in writing upon reasonable prior notice.
Section 5.07. Protection of Security and Rights of Owners . The City will preserve and protect the security of the 2024 Bonds and the rights of the Owners and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the 2024 Bonds by the City, the 2024 s shall be incontestable by the City.
Section 5.08. Further Assurances . The Ci ty will adopt, make, execute, and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement, and for the better assuring and confirming unto the Owners of the rights and benefits provided in this Agreement.
Section 5.09. Private Activity Bond Limitations . The City shall assure that the proceeds of the 2024 Bonds are not so used as to cause the 2024 Bonds to satisfy the private business tests of section 141(b) of the Tax Code or the private loan financing test of section 141(c) of the Code.
33 Section 5.10. Federal Guarantee Prohibition . The City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause the 2024 Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code.
Section 5.11. Rebate Requirement. The City shall take any and all actions necessary to assure compliance with section 148(f) of the Tax Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the 2024 Bonds. The Finance Director shall take note of any investment of monies hereunder in excess of the yield on the 2024 Bonds and shall take such actions as are necessary to en sure compliance with this Section 5.11, such as increasing the portion of the Special Tax levy for Administration Expenses as appropriate to have funds available in the Administrative Expense Fund to satisfy any rebate liability under this Section. If nec essary to satisfy its obligations under this Section 5.11, the City may use:
(A) Earnings on the Reserve Fund if the amount on deposit in the Reserve Fund, following the proposed transfer, is equal to the Reserve Requirement;
(B) Amounts on deposit in the Administrative Expense Fund; and
(C) Any other funds available to the CFD, including amounts advanced by the City, in its sole discretion, to be repaid by the CFD as soon as practicable from amounts described in the preceding clauses (A) and (B).
Section 5.12. No Arbitrage . The City shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with respect to the proceeds of the 2024 Bonds which, if such action had been reasona bly expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the 2024 Bonds would have caused the 2024 Bonds to be “arbitrage bonds” within the meaning of section 148 of the Tax Code.
The Fiscal Agent shall not be responsible for calculating rebatable arbitrage or for the adequacy or correctness or any rebate report or rebate calculations. The Fiscal Agent shall be deemed conclusively to have complied with the provisions of this Agreement regarding calculation and payment of the rebatable arbitrage if the Fiscal Agent follows the directions of the City and the Fiscal Agent shall have no independent duty to review such calculations or enforce the compliance with such rebate requirements.
Section 5.13. Record Retention; Compliance with Tax Certificate . The City will retain its records of all accounting and monitoring it carries out with respect to the 2024 Bonds for at least 3 yea rs after the 2024 Bonds mature or are redeemed (whichever is earlier); however, if the 2024 Bonds are redeemed and refunded, the City will retain its records of accounting and monitoring at least 3 years after the earlier of the maturity or redemption of the obligations that refunded the 2024 Bonds.
The City will comply with the provisions of the Certificate as to Arbitrage and the Certificate Regarding Use of Proceeds with respect to the 2024 Bonds, which are incorporated herein as if fully set forth herein. The covenants of this Section will survive payment in full or defeasance of the 2024 Bonds.
Section 5.14. Maintenance of Tax -Exemption. The City shall take all actions necessary to assure the exclusion of interest on the 2024 Bonds from the gross income of the
34 Owners of the 2024 Bonds to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the 2024 Bonds.
Section 5.15. Continuing Disclosure . The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate.
Notwithstanding any other provision of this Agreement, failure of the City to comply with the Continuing Disclosure Certificate shall not be considered an event of default for the purposes of this Agreement. However, any Owner or Beneficial Owner of the 2024 Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.
Section 5.16. Limits on Special Tax Waivers and Bond Tenders . The City covenants not to exercise its rights under the Act to waive delinquency and redemption penalties related to the Special Taxes or to declare Special Tax penalties amnesty program if to do so would materially and adversely affect the interests of the Owners of the 2024 Bonds and further covenants not to permit the tender of 2024 Bond s in payment of any Special Taxe s except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the City having insufficient Special Tax Revenues to pay the principal of and interest on the 2024 Bonds remaining Outstanding following such tender.
Section 5.17. City Bid at Foreclosure Sale. The City will not bid at a foreclosure sale of property in respect of delinquent Special Taxes, unless it expressly agrees to tak e the property subject to the lien for Special Taxes imposed by the District and that the Special Taxes levied on the property are payable while the City owns the property.
Section 5. 18. Amendment of Rate and Method . The City shall not initiate proceedings under the Act to modify the Rate and Method if such modification would adversely affect the security for the 2024 Bonds. If an initiative is adopted that purports to modify the Rate and Method i n a manner that would adversely affect the security for the 2024 Bonds, the City shall, to the extent permitted by law, commence and pursue reasonable legal actions to prevent the modification of the Rate and Method in a manner that would adversely affect the security for the 2024 Bonds.
Section 5.19. Provisions Relating to Bond Insurance Policy and Reserve Policy .
Notwithstanding anything to the contrary contained in this Agreement, the provisions of Exhibit D shall govern with regard to the Bond Insurance Policy and the Reserve Policy and the rights of the Bond Insurer under this Agreement. Such provisions are hereby incorporated by reference into this Agreement as if set forth directly herein.
All amounts payable by the City under the provisions set forth in Appendix D shall be payable only from Special Tax Revenues as described in this Agreement.
35 ARTICLE VI
INVESTMENTS; LIABILITY OF THE CITY
Section 6.01. Deposit and Investment of Moneys in Funds.
(A) General. Moneys in any fund or account created or established by this Agreement and held by the Fiscal Agent shall be invested by the Fiscal Agent in Permitted Investments, which in any event by their terms mature prior to the date o n which such moneys are required to be paid out hereunder, as directed pursuant to an Officer ’s Certificate filed with the Fiscal Agent at least two (2) Business Days in advance of the making of such investments.
In the absence of any such Officer ’s Certificate, the Fiscal Agent shall invest any such moneys in Permitted Investments described in Section (h) of the definition thereof which by their terms mature prior to the date on which such moneys are required to be paid out hereunder to the extent reasonably practicable, and if such investments cannot be made shall hold such funds uninvested. The Finance Director shall make note of any investment of funds hereunder in excess of the yield on the 2024 Bond s so that appropriate actions can be taken to assure compliance with Section 5.11.
(B) Moneys in Funds. Moneys in any fund or account created or established by this Agreement and held by the Finance Director shall be invested by the Finance Director in any Permitted Investment or in any other lawful inve stment for City funds, which in any event by its terms matures prior to the date on which such moneys are required to be paid out hereunder.
Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, s ubject, however, to the requirements of this Agreement for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts.
Whenever in this Agreement any moneys are required to be transferred by the City to the Fiscal Agent, such transfer may be accomplished by transferring a like amount of Permitted Investments.
(C) Actions of Officials . The Fiscal Agent and its affiliates or the Finance Director may act as sponsor, advisor, depository, principal or agent in the acqu isition or disposition of any investment. Neither the Fiscal Agent nor the Finance Director shall incur any liability for losses arising from any investments made pursuant to this Section. The Fiscal Agent shall not be required to determine the legality of any investments.
(D) Valuation of Investments . Except as otherwise provided in the next sentence, all investments of amounts deposited in any fund or account created by or pursuant to this Agreement, or otherwise containing gross proceeds of the 2024 Bonds (within the meaning of section 148 of the Tax Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by this Agreement or the Tax Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under the applicable provisions of the Tax Code and (unless valuation is undertaken at least annually) investments in the Reserve Fund shall be valued at their present value (within the meaning of section 148 of the Tax Code). The Fiscal Agent shall not be liable for verification of the application of such sections of the Tax Code or for any determination of Fair Market Value or present value and may conclusively rely upon an Officer’s Certificate as to such valuations.
36 (E) Commingled Money. Investments in any and all funds and accounts may be commingled in a separate fund or funds for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the c redit of particular funds or accounts of amounts received or held by the Fiscal Agent or the Finance Director hereunder, provided that the Fiscal Agent or the Finance Director, as applicable, shall at all times account for such investments strictly in acco rdance with the funds and accounts to which they are credited and otherwise as provided in this Agreement.
(F) Statements, Confirmations Waiver. The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions effected by the Fiscal Agent as they occur, the City specifically waives receipt of such confirmations to the extent permitted by law. The Fiscal Agent wil l furnish to the City periodic cash transaction statements which include detail for all investment transactions effected by the Fiscal Agent or brokers selected by the City . Upon the City’s election, such statements will be delivered via the Fiscal Agent’ s online service and upon electing such service, paper statements will be provided only upon request. The City further understands that trade confirmations for securities transactions effected by the Fiscal Agent will be available upon request and at no ad ditional cost and other trade confirmations may be obtained from the applicable broker.
(G) Sale of Investments . The Fiscal Agent or the Finance Director, as applicable, shall sell at Fair Market Value, or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and neither the Fiscal Agent nor the Finance Director shall be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance herewith.
Section 6.02. Liability of City.
(A) General. The City shall not incur any responsibility in respect of the 2024 Bonds or this Agreement other than in connection with the duties or obligations explicitly herein or in the 2024 Bonds assigned to or imposed upon it. The City shall not be liable in conn ection with the performance of its duties hereunder, except for its own negligence or willful default. The City shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants, or agreements of the Fiscal Agent herein or of any of the documents executed by the Fiscal Agent in connection with the 2024 Bond s, or as to the existence of a default or event of default thereunder.
(B) Reliance. In the absence of bad faith, the City, including the Finance D irector, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the City by the Fiscal Agent or an Independent Financial Consultant and conforming to the re quirements of this Agreement. The City, including the Finance Director, shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts. The City may rely and shall be pro tected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper p arties.
The City may consult with counsel, who may be the City Attorney, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in g ood faith and in accordance therewith.
37 (C) No General Liability . No provision of this Agreement shall require the City to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Special Tax Revenues) in the performance of any of its obligations hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
(D) Owner of Bonds . The City shall not be bound to recognize any person as the Owner of a 2024 Bond unless and until such 2024 Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed.
Section 6.03. Employment of Agents by City . In order to perform its duties and obligations hereunder, the City may employ such persons or entities as it deems necessary or advisable. The City shal l not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities.
38 ARTICLE VII
THE FISCAL AGENT
Section 7.01. The Fiscal Agent.
(A) Appointment. The Fiscal Agent is hereby appointed as the fiscal, authentication, paying and transfer agent hereunder for the 2024 Bond s. The Fiscal Agent undertakes to perform such duties, and only such duties, as are specifically set forth in this Agreement, and no implied duties, covenants or obligati ons shall be read into this Agreement against the Fiscal Agent.
(B) Merger. Any company into which the Fiscal Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Fiscal Agent may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under the following paragraph of this Section 7.01 shall be the successo r to such Fiscal Agent without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. The Fiscal Agent shall give the Finance Director written notice of any such succession hereunder.
(C) Removal. Upon 30 days written notice, the City may remove the Fiscal Agent initially appointed, and any successor thereto, and may appoint a successor or successors thereto, but any such successor shall be a bank or trust company having a combined capital (exclusive of bo rrowed capital) and surplus of at least fifty million dollars ($50,000,000), and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section 7.01, combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
(D) Resignation. The Fiscal Agent may at any time resign by giving written notice to the City by certified mail return receipt requested, and by giving to the Owners notice by mail of such resignation. Upon recei ving notice of such resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent shall become effective upon acceptance of appointment by the successor Fiscal Agent.
(E) No Successor . If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of this Section 7.01 within forty -five (45) days after the Fiscal Agent shall have given to the City written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent, at the expense of the City, or any Owner may apply to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon, aft er such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent.
(F) Court Order . If, by reason of the judgment of any court, the Fiscal Agent is rendered unable to perform its duties hereunder, all such duties and all of the rights and powers of the Fiscal Agent hereunder shall be assumed by and vest in the Finance Director of the Ci ty in trust for the benefit of the Owners. The City covenants for the direct benefit of the Owners
39 that its Finance Director in such case shall be vested with all of the rights and powers of the Fiscal Agent hereunder and shall assume all of the responsibilities and perform all of the duties of the Fiscal Agent hereunder, in trust for the benefit of the Owners of the 2024 Bonds.
Section 7.02. Liability of Fiscal Agent.
(A) General. The recitals of facts, covenants and agreements herein and in the 2024 Bonds contained shall be taken as statements, covenants and agreements of the City, and the Fiscal Agent assumes no responsibility for the correctness of the same, nor makes any representations as to the validity or sufficiency of this Agreement or of the 2024 Bonds, nor shall the Fiscal Agent incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the 2024 Bonds assigned to or imposed upon it. Th e Fiscal Agent shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any off ering memorandum or other disclosure material prepared or distributed with respect to the issuance of the 2024 Bond s. All indemnifications and releases from liability granted to the Fiscal Agent hereunder shall extend to the directors, officers, and employees of the Fiscal Agent.
The Fiscal Agent shall not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of enforced delay ( “unavoidable delay”) in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a pa rty or others relating to zoning or other governmental action or inaction pertaining to the project, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occu rrences beyond the control of the Fiscal Agent.
(B) Reliance. The Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates, documents, written instructions or opinions furnished to the Fiscal Agent and conforming to the requirements of this Agreement; but in the case of any such certificates, documents, written instructions or opinions by which any provision hereof are specifically required to be furnished to the Fiscal Agent, the Fiscal Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement. Except as provided above in this paragraph, the Fiscal Agent shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in accordance with the terms of this Agreement, upon any resolution, order, notice, request, consent or waiver, certificate, statement, affidavit, facsimile transmission, electronic mail, or other paper or document which it shall reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of this Agreement, and the Fiscal Agent shall not be under any duty t o make any investigation or inquiry as to any statements contained or matters referred to in any such instrument.
(C) No Duty to Inquire . The Fiscal Agent shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants, or agreements of the City or the CFD herein or of any of the documents executed by the City or the CFD in
40 connection with the 2024 Bond s, or as to the existence of a default or event of default thereunder.
(D) Errors in Judgment . Th e Fiscal Agent shall not be liable for any error of judgment made in good faith by a responsible officer of the Fiscal Agent unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts.
(E) No Expenditures. No provision of this Agreement shall require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers.
(F) No Action. The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Owners under this Agreement unless such Owners shall have offered to the Fiscal Agent security or indemnity reasonably satisfactory to the Fiscal Agent against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
(G) Owner of Bonds . The Fiscal Agent may become the owner of the 2024 Bonds with the same rights it would have if it were not the Fiscal Agent.
Section 7.03. Information; Books and Accounts . The Fiscal Agent shall provide to the City such information relating to the 2024 Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as the City shall reasonably request, including but not limited to monthly statements reporting funds held and transactions by the Fiscal Agent, including the value of any investments held by t he Fiscal Agent per Section 6.01(F) . The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Bond Fund, the Special Tax Fund, the Reserve Fund and the Cost of Issuance Fund. Such books of record and accounts shall, upon reasonable notice, during business hours be subject to the inspec tion of the City and the Owners of not less than ten percent (10%) of the principal amount of the 2024 Bonds then Outstanding, or their representatives duly authorized in writing.
Section 7.04. Notice to Fiscal Agent . The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, facsimile transmission, electronic mail, written instructions, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Fiscal Agent may consult with counsel, who may be counsel to the City, with regard to legal questions, and the opinion of s uch counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in accordance therewith.
The Fiscal Agent shall not be bound to recognize any person as the Owner of a 2024 Bond unless and until such 2024 Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed.
Whenever in the administration of its duties under this Agreement the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, be deemed to be conclusively proved and established by an Officer’s Certificate of the City, and
41 such certificate shall be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.
The Fiscal Agent shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Agreement and delivered using Electronic Means (“Electronic Means” shall mean the following communications methods: e - mail, facsimile transmission, secure electroni c transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Fiscal Agent, or another method or system specified by the Fiscal Agent as available for use in connection with its services hereunder); provided, however, that the City shall provide to the Fiscal Agent an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency cer tificate shall be amended by the City whenever a person is to be added or deleted from the listing. If the City elects to give the Fiscal Agent Instructions using Electronic Means and the Fiscal Agent in its discretion elects to act upon such Instructions , the Fiscal Agent’s understanding of such Instructions shall be deemed controlling. The City understands and agrees that the Fiscal Agent cannot determine the identity of the actual sender of such Instructions and that the Fiscal Agent shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Fiscal Agent have been sent by such Authorized Officer. The City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Fiscal Agent and that the City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon recei pt by the City. The Fiscal Agent shall not be liable for any losses, costs or expenses arising directly or indirectly from the Fiscal Agent’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent w ith a subsequent written instruction. The City agrees:
(i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Fiscal Agent, including without limitation the risk of the Fiscal Agent acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Fiscal Agent and that there may be more secure methods of tr ansmitting Instructions than the method(s) selected by the City; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Fiscal Agent immediately upon learning of any compromise or unauthorized use of the security procedures.
The Fiscal Agent shall not be concerned with or accountable to anyone for the subsequent use o r application of any moneys which shall be released or withdrawn in accordance with the provisions hereof.
The Fiscal Agent may execute any of the duties or powers hereof and perform the duties required of it hereunder either directly or by or through att orneys or agents, shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.
The permissive right of the Fiscal Agent to do things enumerated in this Agreement shall not be construed as a duty and it shall not be answerable for such actions other than as a result of its negligence or willful misconduct.
42 In no event shall the Fiscal Agent be responsible or liable for special, indirect, consequential, punitive, or incidental loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Fiscal Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.
Section 7.05. Compensation, Indemnifi cation. The City shall pay to the Fiscal Agent from time to time reasonable compensation for all services rendered as Fiscal Agent under this Agreement, and also all reasonable expenses, charges, c ounsel fees and other disbursements, including those of its attorneys (including the allocated costs of in -house attorneys), agents and employees, incurred in and about the performance of their powers and duties under this Agreement, but the Fiscal Agent s hall not have a lien therefor on any funds at any time held by it under this Agreement. The City further agrees, to the extent permitted by applicable law, to indemnify and save the Fiscal Agent, its officers, employees, directors and agents harmless against any liabilities, costs, claims or expenses, including fees and expenses of its attorneys, which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or willful misconduct as finally adjudicated by a court of competent jurisdiction. The obligations of the City under this Section shall survive resignation or removal of the Fiscal Agent under this Agreement, and payment of the 2024 Bonds and discharge of this Agreement, but any monetary obligati on of the City arising under this Section shall be limited solely to amounts on deposit in the Administrative Expense Fund.
43 ARTICLE VIII
MODIFICATION OR AMENDMENT
Section 8.01. Amendments Permitted.
(A) With Consent. This Agreement and the rights and obligations of the City and of the Owners of the 2024 Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of Owners, or with the written consent without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the 2024 Bond s then Outstanding, exclusive of 2024 Bond s disqualified as pro vided in Section 8.04. No such modification or amendment shall (i) extend the maturity of any 2024 Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium o n, any 2024 Bond , without the express consent of the Owner of such 2024 Bond, or (ii) permit the creation by the City of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the 2024 Bonds (except as otherwise permitted by the Act, the laws of the State of California or this Agreement), or reduce the percentage of 2024 Bond s required for the amendment hereof.
(B) Without Consent. This Agreement and the rights and obligations of the City a nd of the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes:
(i) to add to the covenants and agreem ents of the City herein, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the City;
(ii) to make modifications not adversely affecting any Outstanding 2024 Bonds in any material respect;
(iii) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Agreement, or in regard to questions arising under this Agreement, as the City and the Fiscal Agent may deem necessary or desirable and not inconsistent with this Agreement, and which shall not adversely affect the rights of the Owners of the 2024 Bonds; and
(iv) to make such additions, deletions or modifications as may be necessary or desirable to assure exclusion from gross income for federal income tax purposes of interest on the 2024 Bonds.
(C) Fiscal Agent’s Consent. Any amendment of this Agreement may not modify any of the rights or obligations of the Fiscal Agent without its written consent. The Fiscal Agent shall be furnished an opinion of counsel that any such Supplemental Agreement entered into by the City and the Fiscal Agent complies with the provisio ns of this Section 8.01 and the Fiscal Agent may conclusively rely on such opinion and shall be absolutely protected in so relying.
44 Section 8.02. Owners ’ Meetings. The City may at any time call a meeting of the Owners. In such event the City is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof and to fix and adopt rules and regulations for the conduct of said meeting.
Section 8.03. Procedure for Amendment w ith Written Consent of Owners . The City and the Fiscal Agent may at any time adopt a Supplemental Agreement amending the provisions of the 2024 Bond s or of this Agreement or any Supplemental Agreement, to the extent that such amendment is permitted by Section 8.01(A), to take effect when and as provided in this Section 8.03. A copy of such Supplemental Agreement, together with a request to Owners for their consent thereto, shall be mailed by first class mail, by the Fiscal Agent, at the expense of the City), to each Owner of 2024 Bonds Outstanding, but failure to mail copies of such Supplemental Agreement and request shall not affect the validity of the Supplemental Agreement when assented to as in this Section 8.03 provided.
Such Supplemental Agreement shall not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the 2024 Bond s then Outstanding (exclusive of 2024 Bond s disqualified as provided in Section 8.04) and a notice shall have been mailed as hereinafter in this Section 8.03 provided. Each such consent shall be effective only if accompanied by proof of ownership of the 2024 Bonds for which such consent is given, which proof shall be such as is permitted by Section 9.04. Any such consent shall be binding upon the Owner of the 2024 Bonds giving such consent and on any subsequent Owner (whether or not such sub sequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this Section 8.03 provided for has been mailed.
After the Owners of the required percentage of 2024 Bond s shall have filed their consents to the Supplemental Agreement, the City shall mail a notice to the Owners in the manner hereinbefore provided in this Section 8.03 for the mailin g of the Supplemental Agreement, stating in substance that the Supplemental Agreement has been consented to by the Owners of the required percentage of 2024 Bonds and will be effective as provided in this Section 8.03 (but failure to mail copies of said no tice shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A record, consisting of the papers required by this Section 8.03 to be filed with the Fiscal Ag ent, shall be proof of the matters therein stated until the contrary is proved.
The Supplemental Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed c onclusively binding (except as otherwise hereinabove specifically provided in this Article) upon the City and the Owners of all 2024 Bonds at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period.
Section 8.04. Disqualified Bonds . 2024 Bonds owned or held for th e account of the City, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding 2024 Bond s provided for in this Article VIII, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Article VIII. Upon request of the Fiscal Agent, the City shall specify in a certificate to the Fiscal Agent those 2024 Bonds disqualified pursuant to this Section and the Fiscal Agent may conclusively rely on such certificate.
45 Section 8.05. Effect of Supplemental Agreement . From and after the time any Supplemental Agreement becomes effective under this Article VIII, this Agreement shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations under this Agreement of the City, the Fiscal Agent and all Owners of 2024 Bonds Outstanding shall thereafter be determined, exercise d and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and all purposes.
Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments .
The City may determine that 2024 Bonds issued and delivered after the effective date of any action taken as provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form approved by the City, as to such action. In that case, upon demand of the Owner of any 2024 Bond Outstanding at such effective date and upon presentation of his 2024 Bond for that purpose at the Principal Office of the Fiscal Agent or at such other office as the City may select and designate for that purpose, a suitable notation shall be made on suc h 2024 Bond. The City may determine that new 2024 Bonds, so modified as in the opinion of the City is necessary to conform to such Owners’ action, shall be prepared, executed, and delivered. In that case, upon demand of the Owner of any 2024 Bond s then Out standing, such new 2024 Bond s shall be exchanged at the Principal Office of the Fiscal Agent without cost to any Owner, for 2024 Bonds then Outstanding, upon surrender of such 2024 Bonds.
Section 8.07. Amendatory Endorsement of Bonds. The provisions of this Article VIII shall not prevent any Owner from accepting any amendment as to the particular 2024 Bonds held by him, provided that due notation thereof is made on such 2024 Bonds.
46 ARTICLE IX
MISCELLANEOUS
Section 9.01. Benefits of Agreement Limited to Parties . Nothing in this Agreement, expressed or implied, is intended to give to any person other than the City, the Fiscal Agent and the Owners, any right, remedy, claim under or by reason of this Agreement. Any covenants, stipulations, promises or agreements in this Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent.
Section 9.02. Successor and Predecessor . Whenever in this Agreement or any Supplemental Agreement either the City or the Fiscal Agent is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Agreement contained by or on behalf of the City or the Fiscal Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.
Section 9.03. Discharge of Agreement . If the City shall pay and discharge the entire indebtedness on all 2024 Bonds Outstanding in any one or more of the following ways:
(A) by paying or causing to be paid the principal of, and interest and any premium on, all 2024 Bonds Outstanding, as and when the same become due and payable;
(B) by depositing with the Fiscal Agent, at or before maturity, money which, together with the amounts then on deposit in the funds and accounts provided for in the 2024 Bond Fund, the Reserve Fund, is fully sufficient to pay all 2024 Bond s Outstanding, includ ing all principal, interest and redemption premiums; or
(C) by irrevocably depositing with the Fiscal Agent, cash and/or Federal Securities in such amount as the City shall determine, as confirmed by an independent certified public accountant, will, toget her with the interest to accrue thereon and moneys then on deposit in the fund and accounts provided for in the Bond Fund , the Reserve Fund (to the extent invested in Federal Securities), be fully sufficient to pay and discharge the indebtedness on all 2024 Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates.
If the City shall have taken any of the actions specified in (A), (B) or (C) above, and if such 2024 Bonds are to be redeemed prior to the ma turity thereof, notice of such redemption shall have been given as in this Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice, then, at the election of the City, and notwithstanding that any 2024 Bonds shall not have been surrendered for payment, the pledge of the Special Taxes and other funds provided for in this Agreement and all other obligations of the City under this Agreement with respect to such 2024 Bonds Outstanding shall cease and terminate. Notice of such election shall be filed with the Fiscal Agent.
47 Notwithstanding the foregoing, the following obligations and pledges of the City shall continue in any event: (i) the obligation of the City to pay or cause to be paid to the Owners o f the 2024 Bonds not so surrendered and paid all sums due thereon, (ii) the obligation of the City to pay amounts owing to the Fiscal Agent pursuant to Section 7.05, and (iii) the obligation of the City to assure that no action is taken or failed to be tak en if such action or failure adversely affects the exclusion of interest on the 2024 Bonds from gross income for federal income tax purposes.
Upon compliance by the City with the foregoing with respect to all 2024 Bond s Outstanding, any funds held by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent, which are not required for the purposes of the preceding paragraph, shall be paid over to the City and any Special Taxes thereafter received by the City shall not be remitted to the Fiscal Agent but shall be retained by the City to be used for any purpose permitted under the Act and the Resolution of Formation.
Section 9.04. Execution of Documents and Proof of Ownership by Owners . Any request, declaration, consent or other instrument which this Agreement may require or permit to be executed by Owners may be in one or more instruments of similar tenor and shall be executed by Owners in person or by their attorneys appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, declaration, consent or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer.
Except as otherwise herein expressly provided, the ownership of registered 2024 Bonds and the amount, maturity , number, and date of holding the same shall be proved by the registration books maintained by the Fiscal Agent under Section 2.07.
Any request, declaration, consent, or other instrument or writing of the Owner of any 2024 Bond shall bind all future Owner s of such 2024 Bond in respect of anything done or suffered to be done by the City or the Fiscal Agent in good faith and in accordance therewith.
Section 9.05. Waiver of Personal Liability. No member, officer, agent, or employee of the City shall be individually or personally liable for the payment of the principal of or interest or any premium on the 2024 Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law.
Section 9.06. Notices to and Demands on City and Fiscal Agent . Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Fiscal Agent to or on the City may be given or served by facsimile transmission receipt of which has been confirmed , email or deposit postage prepaid in a post office letter box addressed (until another address is filed by the City with the Fiscal Agent) as follows:
48 City of Hesperia
9700 Seventh Avenue
Hesperia, CA 92345
Attention: City Manager
Fax: 1-760-947-1825
Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the City to or on the Fiscal Agent may be given or served by facsimile transmission receipt of which has been confirmed , email or deposit postage prepaid in a post office letter box addressed (until another address is fil ed by the Fiscal Agent with the City) as follows:
U.S. Bank Trust Company, National Association
Attention: Global Corporate Trust
633 West 5th Street, 24th Floor
Los Angeles, CA 90071
Email: [email protected]
Section 9.07. Partial Invalidity. If any Section, paragraph, sentence, clause, or phrase of this Agreement shall for any reason be held by a court of competent jurisdiction to be illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Agreement. The City hereby declares that it would have adopted this Agreement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the 2024 Bond s pursuant thereto i rrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Agreement may be held illegal, invalid or unenforceable.
Section 9.08. Unclaimed Moneys . Anything con tained herein to the contrary notwithstanding, any moneys held by the Fiscal Agent in trust for the payment and discharge of the principal of, and the interest and any premium on, the 2024 Bonds which remains unclaimed for two (2) years after the date when the payment of such principal, interest and premium have become payable, if such moneys were held by the Fiscal Agent at such date, shall be repaid by the Fiscal Agent to the City as its absolute property free from any trust, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Owners of such 2024 Bonds shall look only to the City for the payment of the principal of, and interest and any premium on, such 2024 Bonds. Any right of any Owner to look to the City for such payment shall survive only so long as required under applicable law.
Section 9.09. Applicable Law . This Agreement shall be governed by and enforced in accordance with the laws of the State applicable to contracts made and performed in the State.
Section 9.10. Conflict with Act. In the event of a conflict between any provision of this Agreement with any provision of the Act as in effect on the Closing Date, the provision of the Act shall prevail over the conflicting provision of this Agreement.
Section 9.11. Conclusive Evidence of Regularity . 2024 Bond s issued under this Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Special Taxes.
Section 9.12. Payment on Business Day . In any case where the date of the maturity of interest or of principal (and premium, if any) of the 2024 Bond s, or the date fixed for
49 redemption of any 2024 Bonds, or the date any action is to be taken under this Agreement, is other than a Business Day, the payment of interest or principal (and premium, if any) or the action shall be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period from and after such date.
Section 9.13. State Reporting Requirements . In addition to Section 5.15, the following requirements shall apply to the 2024 Bonds:
(A) Annual Reporting. Not later than October 3 0 of each calendar year, beginning with the October 30 first succeeding the date of the 2024 Bonds, and in each calendar year thereafter until the October 30 following the final maturity of the 2024 Bond s, the Finance Director shall cause the information r equired by California Government Code Section 53359.5(b) to be supplied to CDIAC. The annual reporting shall be made using such form or forms as may be prescribed by CDIAC.
(B) Other Reporting . If at any time the Fiscal Agent fails to pay principal and interest due on any scheduled payment date for the 2024 Bonds, or if funds are withdrawn from the Reserve Fund to pay principal and interest on the 2024 Bonds, the Fiscal Agent shall notify the Finance Director of such failure or withdrawal in writing. Th e Finance Director shall notify CDIAC and the Original Purchasers of such failure or withdrawal within 10 days of such failure or withdrawal.
(C) Special Tax Reporting. The Finance Director shall file a report with the City no later than January 1, 2025, and at least once a year thereafter, which annual report shall contain: (i) the amount of Special Taxes collected and expended with respect to the CFD, (ii) the amount of 2024 Bond proceeds collected and expended with respect to the CFD and (iii) the status of the Project . It is acknowledged that the Special Tax Fund and the Special Tax Prepayments Account are the accounts into which Special Taxes collected on the CFD will be deposited for purposes of Section 50075.1(c) of the California Government Code, and the funds and accounts listed in Section 4.01 are the funds and accounts into which 2024 Bond proceeds will be deposited for purposes of Section 53410(c) of the California Government Code, and the annual report described in the prece ding sentence is intended to satisfy the requirements of Sections 50075.1(d), 50075.3(d) and 53411 of the California Government Code.
(D) Compliance with Section 53343.2. The City shall comply with the provisions of Section 53343.2, which require the City , within seven months after the last day of each fiscal year of the CFD, to display prominently on its Internet Web site all of the following information:
(i) A copy of an annual report for that fiscal year if requested pursuant to Section 53343.1.
(ii) A copy of the report provided to CDIAC pursuant to Section 53359.5.
(iii) A copy of the report provided to the State Controller’s Office pursuant to Section 12463.2.
(E) Amendment. The reporting requirements of this Section 9.13 shall be amended from t ime to time, without action by the City or the Fiscal Agent (i) with respect to subparagraphs (A) and (B) above, to reflect any amendments to Section 53359.5(b) or Section
50 53359.5(c) of the Act, (ii) with respect to subparagraph (C) above, to reflect any a mendments to Section 50075.1, 50075.3, 53410 or 53411 of the California Government Code and (iii) with respect to subparagraph (D) above, to reflect any amendments to Section 53343.2 .
Notwithstanding the foregoing, any such amendment shall not, in itself, affect the City ’s obligations under the Continuing Disclosure Certificate. The City shall notify the Fiscal Agent in writing of any such amendments which affect the reporting obligations of the Fiscal Agent under this Agreement.
(F) No Liability . None o f the City and its officers, agents and employees, the Finance Director or the Fiscal Agent shall be liable for any inadvertent error in reporting the information required by this Section 9.13.
The Finance Director shall provide copies of any such reports to any Owner of the 2024 Bonds upon the written request of an Owner and payment by the person requesting the information of the cost of the City to photocopy and pay any postage or other delivery cost to provide the same, as determined by the Finance Director. The term “Owner” for purposes of this Section 9.13 shall include any Beneficial Owner of the 2024 Bonds as described in Section
2.13. Section 9.14. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.
* * * * * * * * * *
51 IN WITNESS WHEREOF, the City and the Fiscal Agent have caused this Agreement to be executed as of the date first written above.
CITY OF HESPERIA,
for and on behalf of
CITY OF HESPERIA
COMMUNITY FACILITIES DISTRICT
NO. 2005-1 (BELGATE DEVELOPMENT
RESTRUCTURING), COUNTY OF SAN
BERNARDINO, STATE OF CALIFORNIA
By:
City Manager
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Fiscal Agent
By:
Authorized Officer
Exhibit A
EXHIBIT A
FORM OF 2024 BOND
No. __ ***$______***
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF SAN BERNARDINO
CITY OF HESPERIA
Community Facilities District No. 2005-1
(Belgate Development Restructuring),
County of San Bernardino, State of California
Special Tax Refunding Bond, Series 2024
INTEREST RATE MATURITY DATE DATED DATE
____% September 1, ______ ___________
REGISTERED OWNER:
PRINCIPAL AMOUNT: *********DOLLARS
The City of Hesperia (the “City”) for and on behalf of the “City of Hesperia Community Facilities District No. 2005-1 (Belgate Development Restructuring ), County of San Bernardino, State of California” (the “CFD”), for value received, hereby promises to pay solely from Special Tax Revenues (as hereinafter defined) to be collected in the CFD or amounts in certain funds and accounts held under the Agreement (as hereinafter defined), to the registered owner named above, or registered assigns, on the maturity date set forth above, unless rede emed prior thereto as hereinafter provided, the principal amount set forth above, and to pay interest on such principal amount from Dated Date set forth above, or from the most recent Interest Payment Date (as hereinafter defined) to which interest has bee n paid or duly provided for (unless this Bond is authenticated on or before an Interest Payment Date (as hereinafter defined) and after the close of business on the Record Date (as hereinafter defined) preceding such Interest Payment Date, in which event i t shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to February 15, 2025, in which event it shall bear interest from the Dated Date identified above, payable semiannually on each September 1 and March 1, commencing March 1, 2025 (each an “Interest Payment Date ”), at the interest rate set forth above, until the principal amount hereof is paid or made available for payment provided, however, that if at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment.
Principal of and interest on the Bonds (including the final interest payment upon maturity or earl ier redemption), is payable on the applicable Interest Payment Date by check of the Fiscal Agent (defined below) mailed by first class mail to the registered Owner thereof at such registered Owner’s address as it appears on the registration books maintaine d by the Fiscal Agent at the close of business on the Record Date preceding the Interest Payment Date, or by
Exhibit A
wire transfer made on such Interest Payment Date upon written instructions of any Owner of $1,000,000 or more in aggregate principal amount of Bond s delivered to the Fiscal Agent prior to the applicable Record Date. The principal of the Bonds and any premium on the Bonds are payable in lawful money of the United States of America upon surrender of the Bonds at the Principal Office of the Fiscal Agent or such other place as designated by the Fiscal Agent.
This Bond is one of a duly authorized issue of bonds in the aggregate principal amount of $ [Principal Amount] approved by resolution of the City Council of the City on October 15, 2024 (the “Resolution”), under the Mello -Roos Community Facilities Act of 1982, as amended, sections 53311, et seq., of the California Government Code (the “Act”), and is one of the series of bonds designated “City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2024” (the “Bonds”).
This Bond is one of a duly authorized issue of bonds in the aggregate principal amount of $[Principal Amount] approved by resolution of the City Council of the City on November 18, 2014 (the “Resolution”), under the Mello -Roos Community Facilities Act of 1982, as amended, sections 53311, et seq. , of the California Government Code (the “Act”) for the purpose of refinancing the outstanding $18,450,000 City of Hesperia Community Facilities District No. 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2014 (the “2014 Bonds ”), and is one of th e series of bonds designated “City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2024” (the “Bonds”).
The issuance of the Bonds and the terms and conditions thereof are provided for by a Fiscal Agent Agreement, dated as of December 1, 2024 (the “Agreement”), between the City and U.S. Bank Trust Company, National Association (the “Fiscal Agent ”) and this reference incorporates the Agreement herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. The Agreement is authorized under, this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California.
Pursuant to the Act, the Resolution and the Agreement, the principal of and interest on this Bond are payable solely from “Special Tax Revenues”, as defined in the Agreement, which consist primarily of the proceeds of the annual special tax authorized under th e Act to be collected within the CFD (the “Special Tax”), and certain funds held under the Agreement. Any tax for the payment hereof shall be limited to the Special Tax, except to the extent that provision for payment has been made by the City, as may be p ermitted by law. The Bonds do not constitute obligations of the City for which the City is obligated to levy or pledge, or has levied or pledged, general or special taxation other than described hereinabove. Neither the faith and credit nor the taxing power of the City (except to the limited extent set forth in the Agreement) or the State of California or any political subdivision thereof is pledged to the payment of the Bonds.
Optional Redemption. The Bonds are not subject to optional redemption prior to their stated maturity date.
Redemption From Special Tax Prepayments. The Bonds are also subject to redemption from the proceeds of Special Tax Prepayments and any corresponding transfers from the Reserve Fund pursuant to the Agreement on any Interest Pa yment Date, among maturities and series so as to maintain substantially the same debt service profile as in effect prior to such
Exhibit A
redemption and by lot within a maturity, at a redemption price (expressed as a percentage of the principal amount of the Bonds to be redeemed), as set forth below, together with accrued interest to the date fixed for redemption:
Redemption Date Redemption Price
Any Interest Payment Date before September 1, ____ ____% On September 1, ____ and March 1, ____ ____
On September 1, ____ and March 1, ____ ____
On September 1, ____ and any Interest Payment Date thereafter ____
Notice of redemption with respect to the Bonds to be redeemed shall be given to the registered owners thereof, in the manner, to the extent and subject to the p rovisions of the Agreement.
This Bond shall be registered in the name of the owner hereof, as to both principal and interest. Each registration and transfer of registration of this Bond shall be entered by the Fiscal Agent in books kept by it for this pur pose and authenticated by its manual signature upon the certificate of authentication endorsed hereon.
No transfer or exchange hereof shall be valid for any purpose unless made by the registered owner, by execution of the form of assignment endorsed hereo n, and authenticated as herein provided, and the principal hereof, interest hereon and any redemption premium shall be payable only to the registered owner or to such owner’s order. The Fiscal Agent shall require the registered owner requesting transfer or exchange to pay any tax or other governmental charge required to be paid with respect to such transfer or exchange. No transfer or exchange hereof shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selectio n of Bonds for redemption or (ii) with respect to a Bond after such Bond has been selected for redemption.
The Agreement and the rights and obligations of the City thereunder may be modified or amended as set forth therein. The principal of the Bonds is n ot subject to acceleration upon a default under the Agreement or any other document.
This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Fiscal Agent.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED by the City that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond have existed, happened and been performed in due time, form and manner as required by law, and that the amount of this Bond, together with all other indebtedness of the City, does not exceed any debt limit prescribed by the laws or Constitution of the State of California.
Unless this Bond is present ed by an authorized representative of The Depository Trust Company, a New York corporation ( “DTC”), to the Fiscal Agent for registration of transfer, exchange, or payment, and any Bond issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
Exhibit A
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
Exhibit A
IN WITNESS WHEREOF, City of Hesperia has caused this Bond to be to be signed by the facsimile signature of its Mayor and countersigned by the facsimile signature of the City Clerk with the seal of the City imprinted hereon.
[S E A L]
City Clerk Mayor
[FORM OF FISCAL AGENT’S CERTIFICATE OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the Agreement which has been authenticated on , 2024.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Fiscal Agent
By:
Authorized Signatory
Exhibit A
[Statement of Insurance]
Exhibit A
FORM OF ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign, and transfer unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within Bond and do(es) hereby irrevocably constitute and appoint , attorney, to transfer the same on the registration books of the Fiscal Agent, with full power of substitution in the premises.
Dated:
Signature Guaranteed:
NOTICE: Signature guarantee shall be
made by a guarantor institution participating
in the Securities Transfer Agents Medallion
Program or in such other guarantee
program acceptable to the Fiscal Agent.
NOTICE: The signature on this assignment
must correspond with the name(s) as
written on the face of the within Bond in
every particular without alteration or
enlargement or any change whatsoever.
Exhibit B
EXHIBIT B
CITY OF HESPERIA
Community Facilities District No. 2005-1
(Belgate Development Restructuring),
County of San Bernardino, State of California
Special Tax Refunding Bonds, Series 2024
OFFICER’S CERTIFICATE REQUESTING DISBURSEMENT
FROM COSTS OF ISSUANCE FUND
REQUISITION NO. _____
The undersigned hereby states and certifies that:
(i) I am the duly appointed, qualified and acting Assistant City Manager, Management Services of the City of Hesperia, a municipal corporation duly organized and existing under the laws of the State of California (the “City”) and as such, am familiar with the facts herein certified and am authorized to certify the same;
(ii) I am an “Authorized Officer,” as such term is defined in that certain Fiscal Agent Agreement, dated as of December 1, 2024 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”);
(iii) under Section 4.02(B) of t he Fiscal Agent Agreement, the undersigned hereby requests and authorizes the Fiscal Agent to disburse from the Costs of Issuance Fund established under the Fiscal Agent Agreement to each payee designated on Schedule A attached hereto and by this reference incorporated herein, the amount set forth opposite such payee, for payment or reimbursement of previous payment of Costs of Issuance (as that term is defined in the Fiscal Agent Agreement) as described on attached Schedule A;
(iv) the disbursements descr ibed on the attached Schedule A constitute Costs of Issuance, and are properly chargeable to the Costs of Issuance Fund; and
(v) all payments will be made by check or wire transfer in accordance with the payment instructions set forth on Schedule A and th e Fiscal Agent shall have no obligation to authenticate such payment instructions or the authority under which they were given.
Dated:
CITY OF HESPERIA
By:
Assistant City Manager
Exhibit B
SCHEDULE A
Payee Name and Address Purpose of Obligation Amount
Exhibit C
EXHIBIT C
CITY OF HESPERIA
Community Facilities District No. 2005-1
(Belgate Development Restructuring),
County of San Bernardino, State of California
Special Tax Refunding Bonds, Series 2024
OFFICER’S CERTIFICATE REQUESTING DISBURSEMENT
FROM ADMINISTRATIVE EXPENSE FUND
REQUISITION NO. _____
The undersigned hereby states and certifies that:
(i) I am the duly appointed, qualified and acting Assistant City Manager, Management Services of the City of Hesperia, a municipal corporation duly organized and existing under the laws of the State of California (the “City”) and as such, am familiar with the facts herein certified and am authorized to certify the same;
(ii) I am an “Authorized Officer,” as such term is defined in that certain Fiscal Agent Agreement, dated as of December 1, 2024 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”);
(iii) under Section 4.06(B) of the Fiscal Agent Agreement, the undersigned hereby requests and authorizes the Fiscal Agent to disburse from the specified account in the Administrative Expense Fund established under the Fiscal Agent Agreement to each payee designated on Schedule A at tached hereto and by this reference incorporated herein, the amount set forth opposite such payee, for payment or reimbursement of previous payment of an Administrative Expense or Costs of Issuance (as those terms are defined in the Fiscal Agent Agreement) as described on attached Schedule A;
(iv) the disbursements described on the attached Schedule A constitute Administrative Expenses or Costs of Issuance, and are properly chargeable to the specified account of the Administrative Expense Fund; and
(v) all payments will be made by check or wire transfer in accordance with the payment instructions set forth on Schedule A and the Fiscal Agent shall have no obligation to authenticate such payment instructions or the authority under which they were given.
Dated:
CITY OF HESPERIA
By:
Assistant City Manager, Management
Services
Exhibit C
SCHEDULE A
Payee Name and
Address
Purpose of
Obligation
Account
Amount
Exhibit C
EXHIBIT D
PROVISIONS RELATING TO BOND INSURANCE POLICY
AND RESERVE POLICY
Bond Insurance Policy.
[to come]
Reserve Policy.
[to come]
Agenda Version
$18,450,000
City of Hesperia
Community Facilities District No. 2005-1
(Belgate Development Restructuring)
County of San Bernardino, State of California
Special Tax Refunding Bonds, Series 2014
ESCROW DEPOSIT AND TRUST AGREEMENT
THIS ESCROW DEPOSIT AND TRUST AGREEMENT (this “Agreement”) is dated as of December 1, 2024, for the purposes described herein, is entered into by and between the CITY OF HESPERIA (herein the “City”), a general law city and municipal corporation, duly organized and existing under and by virtue of the laws of the State of California and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION , a national banking association duly organized under the laws of the United States of America, as escrow agent (the “Escrow Agent”), with respect to the City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2014 (the “2014 Bonds”), which were issued pursuant to a Fiscal Agent Agreement (the “2014 Fiscal Agent Agreement”), dated as of December 1, 2014, by and between the City and U.S. Bank Trust Company, National Association, as successor fiscal agent (the “ 2014 Fiscal Agent”).
W I T N E S S E T H:
WHEREAS, the 2014 Bonds are subject to optional redemption on March 1, 2025, without premium; and
WHEREAS, the City wishes to refinance the outstanding principal amount of the 2014 Bonds, and, for that purpose, proposes to issue its City of Hesperia Community Facilities District No. 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2024 (the “2024 Bonds”);
WHEREAS, the City has directed authorized officers of the City to enter into this Agreement whereby the proceeds of sale of the 2024 Bonds, together with other funds held under the 2014 Fiscal Agent Agreement, will be deposited in the City of Hesperia Community Facilities District No. 2005 -1 (Belgate Deve lopment Restructuring) Special Tax Refunding Bonds, Series 2014 escrow fund (the “Escrow Fund”) to be created and maintained with the Escrow Agent as set forth in this Agreement, all for the purpose of defeasing and redeeming the 2014 Bonds pursuant to and in accordance with the provisions of the 2014 Fiscal Agent Agreement; and
WHEREAS, the 2014 Fiscal Agent must cause notice of any redemption to be mailed to the owners of the 2014 Bonds at least 30 days but not more than 60 days prior to the date fixed for redemption; and
WHEREAS, pursuant to Section 9.03 of the 2014 Fiscal Agent Agreement, the 2014 Bonds will be defeased when cash or Federal Securities (as defined in the 2014 Fiscal Agent Attachment 4
2 Agreement) in such amount as the City shall determine, as confirmed by an independent certified public accountant , will, together with the interest to accrue thereon and amounts then on deposit in the Bond Fund and the Reserve Fund (to the extent invested in Federal Securities) established under the 2014 Fiscal Agent Agreement, be fully sufficient to pay and discharge the indebtedness on all such 2014 Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; and if such 2014 Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in the 2014 Fiscal Agent Agreement or provision satisfactory to the 2014 Fiscal Agent shall have been made for the giving such notice; and
WHEREAS, the City wishes to instruct the Escrow Agent with respect to investment, use and disposition of funds deposited into the Escrow Fund, including but not limited to investment of certain amounts in the Escrow Fund in “Federal Securities”, which term is defined to have the meaning given to the terms “Federal Securities” under the 2014 Fiscal Agent Agreement; and
WHEREAS, the Escrow Agent has full powers to act with respect to the Escrow Fund and to perform the duties and obligations to be undertaken pursuant to this Agreement;
NOW, THEREFORE , in consideration of the foregoing and of the mutual promises hereinafter set forth and for other valuable consideration, the City and the Escrow Agent agree as follows:
Section 1. Definitions. Capitalized terms used herein are used with the meanings assigned to them in the 2014 Fiscal Agent Agreement and in the recitals hereof unless the context clearly requires some other meaning.
Section 2. Establishment of Escrow; Deposit of F unds. The Escrow Fund is hereby established by the City with the Escrow Agent. The Escrow Fund shall be an irrevocable escrow account to be maintained by the Escrow Agent for the benefit and protection of the owners of the 2014 Bonds. All cash and Federal Securities in the Escrow Fund are hereby irrevocably pledged as a special fund for the payment of the 2014 Bonds in accordance with the provisions of the 2014 Fiscal Agent Agreement. The Escrow Agent shall have no lien upon or right of set off against the Federal Securities and cash at any time on deposit in the Escrow Fund.
(a) Deposit of Bond Proceeds . Concurrently with the delivery of the 2024 Bonds to the purchaser thereof, proceeds of the 2024 Bonds in the amount of $ _______ shall be transferred to the E scrow Agent by U.S. Bank Trust Company, National Association, as fiscal agent with respect to the 2024 Bonds (the “ 2024 Fiscal Agent”), which bond proceeds, together with amounts transferred pursuant to the following paragraphs (b) and (c), shall be used exclusively for the timely payment and redemption of the 2014 Bonds as set forth on Exhibit B hereto.
(b) Deposit of Moneys Relating to the 2014 Bonds Held by the 2014 Fiscal Agent.
Concurrently with the delivery of the 2024 Bonds to the purchaser thereof, the 2014 Fiscal Agent shall transfer $________ held in the funds and accounts established by the 2014 Fiscal Agent Agreement , which amounts, together with Bond proceeds transferred pursuant to the preceding paragraph (a) and amounts transferred pursuant to the following paragraph (c) , shall be used exclusively for the timely payment and redemption of the 2014 Bonds as set forth on Exhibit B hereto or as otherwise set forth below.
3 (c) Deposit of Moneys Held by the City. Concurrently with the delivery of the 2024 Bonds to the purchaser thereof, the City shall transfer to the Escrow Agent $_____ related to the 2014 Bonds, which amount shall be used exclusively for the timely payment and redemption of the 2014 Bonds as set forth on Exhibit B hereto or as otherwise set forth below.
If at any time the Escrow Agent shall receive actual knowledge that the moneys and Federal Securities in the Escrow Fund will not be sufficient to make any payment required hereunder, the Escrow Agent shall notify the City of such fact and the City shall promptly cure such deficiency from any source of legally available funds. The Escrow Agent shall not be liable for any such deficiency.
The Escrow Agent shall deposit the Federal Securities and cash received by the Escrow Agent in the Escrow Fund solely for the uses and purposes set forth herein upon receipt by the Escrow Agent of an opinion of an indepe ndent certified public accountant that the Federal Securities and cash set forth in Section 4, together with interest to be derived therefrom, shall be in an amount which shall at all times be at least sufficient to make the payments specified in Section 5 hereof.
Section 3. Purchase of Federal Securities. The Escrow Agent shall use $______ of the amounts deposited in the Escrow Fund pursuant to Section 2 to acquire in its own name, as Escrow Agent, the Federal Securities described in Exhibit A attached hereto. The Escrow Agent shall hold the balance ($_________) uninvested in cash.
At the written direction of the City, the Escrow Agent shall invest and reinvest any proceeds received from any of the Federal Securities acquired pursuant to this Section 3 (the “Original Federal Securities ”), and the cash originally deposited into the Escrow Fund, for a period ending not later than the date on which such proceeds or cash are required for the purposes specified in Section 5 and maturing in an amount at least equal to their purchase price, in Federal Securities; provided, however, that with respect to any such reinvestment, such written directions of the City shall be accompanied by an opinion of nationally recognized bond counsel (“Bond Counsel”) that investment in accordance with such directions will not affect, for Federal income tax purposes, the exemption from Federal income taxes of the interest on the 2014 Bonds or the Bonds. In the event that the City shall fail to fi le any such written directions with the Escrow Agent concerning the reinvestment of any such proceeds, such proceeds shall be held uninvested by the Escrow Agent.
Section 4. Payment for Federal Securities. Payment for the Federal Securities referred to in Section 3 shall be conclusively evidenced by the Escrow Agent ’s execution and delivery of an acknowledgment of payment.
Section 5. Retention for, and Payment of, the 2014 Bonds. The City hereby instructs the Escrow Agent to retain and hold moneys a nd Federal Securities in the Escrow Fund for the purpose of paying interest on the 2014 Bonds due on March 1, 2025, and on March 1, 2025, to redeem the remaining outstanding principal amount of the 2014 Bonds at a redemption price equal to the principal amount of the 2014 Bonds to be redeemed, without premium.
The Escrow Agent shall transfer to the 2014 Fiscal Agent from the Escrow Fund such amounts as may be necessary for such purposes, as shown on Exhibit B attached hereto. Any
4 monies remaining in the Escrow Fund established under this Agreement after making all of the payments described in this Section 5 shall be transferred to the Fiscal Agent, for deposit into the Bond Fund for the 2024 Bonds.
Section 6. Notice of Redemption and Defeasance . The 2014 Fiscal Agent is hereby directed to give notice of the redemption of the 2014 Bonds to the registered Owners thereof, not less than 30 days nor more than 60 days prior to the redemption date, in accordance with the provisions of the 2014 Fiscal Agent Agreement, in the form attached hereto as Exhibit C, so that redemption shall occur strictly in accordance with the applicable provisions thereof.
In addition, the 2014 Fiscal Agent is hereby directed to give a notice of defeasance through the Municipal S ecurities Rulemaking Board ’s EMMA website in the form attached hereto as Exhibit D. The sole remedy available for the 2014 Fiscal Agent’s failure to timely give such notice of defeasance through the EMMA website shall be an action by the holders of the 2014 Bonds in mandamus for specific performance or similar remedy to compel performance.
Section 7. Substitution of Federal Securities . The City may at any time direct the Escrow Agent to substitute new Federal Securities for any or all of the Federal Securities then deposited in the Escrow Fund, provided that any such direction and substitution shall be accompanied by a certification of an independent certified public accountant or firm of certified public accountants of favorable national reputation experienced in the refunding of obligations of political subdivisions that the Federal Securities then to be so deposited in the Escrow Fund, together with interest to be derived therefrom, shall be in an amount at all times at least sufficient to make the paym ents specified in Section 5 hereof and, further, to be accompanied with an opinion of nationally recognized bond counsel that the substitution will not affect, for Federal income tax purposes, the exemption from Federal income taxes of the interest on the 2014 Bonds and the 2024 Bonds. In the event that, following any such substitution of Federal Securities pursuant to this Section 7, there is an amount of moneys or Federal Securities in excess of an amount sufficient to make the payments required by Section 5 hereof, such excess shall be transferred to the Fiscal Agent, for deposit into the Bond Fund for the 2024 Bonds.
Section 8. Limited Power of Escrow Agent; Permitted Investments . Except as herein otherwise expressly provided, the Escrow Agent shall have no power or duty to make substitutions of the Federal Securities, or to sell, transfer or otherwise dispose of the Federal Securities.
Section 9. No Arbitrage with Respect to the 2014 Bonds . The City hereby covenant s that no part of the Escrow Fund shall be used directly or indirectly to acquire any securities or obligations the acquisition of which would cause the 2014 Bonds to be “arbitrage bonds” within the meaning of Section 148(a) of the Code and regulations promulgated thereunder.
Section 10. Records. The Escrow Agent will keep books of record and account in which complete and correct entries shall be made of all transactions relating to the receipts, disbursements, allocations and application of the money and Federal Securities accruing to the Escrow Agent hereunder, and such books shall be available for inspection at reasonable hours and under reasonable conditions with reasonable prior notice by the owners of the 2014 Bonds and the 2024 Bonds.
Section 11. Proper Filings. The City will, at the City’s expense, execute, acknowledge, deliver or file this Agreement and assignments, transfers, financing statements, continuation statements, and assurances required for the better assuring, conveying, pledging, ass igning
5 and confirming unto the Escrow Agent, the moneys and Federal Securities hereby pledged, or intended so to be or which the City may be or may hereafter become bound to pledge, convey or assign to the Escrow Agent or for carrying out the intention or facilitating the performance of the terms of this Agreement.
Section 12. Discharge. The covenants, liens and pledges entered into, created or imposed pursuant to this Agreement shall be fully discharged, and satisfied when all of the 2014 Bonds shall have been paid in full, as to principal, premium and interest. Upon such discharge and satisfaction this Agreement shall cease, terminate, and become null and void, and thereupon the Escrow Agent shall, upon the written request of the City, forthwith execute proper instruments acknowledging satisfaction and discharge of this Agreement.
Section 13. Insufficiency of the Escrow Fund . The City agrees that if for any reason the investments and moneys and other funds in the Escrow Fund are insufficient or otherwi se unavailable to pay timely principal and premium of, and interest on, the 2014 Bonds, the City shall continue to be liable therefor in accordance with the terms of the 2014 Fiscal Agent Agreement and the 2014 Bonds.
Section 14. Tax-Exempt Nature of the 2014 Bonds and the 2024 Bonds. The City covenants and agrees for the benefit of the owners of the 2014 Bonds and the 2024 Bonds that it will not perform or permit to be performed anything or act in such manner as would cause interest on the 2014 Bonds or the 2024 Bonds to be included in the gross income of the recipients thereof for federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”), and, in particular, it will not use any of the proceeds received from the sale of the 2024 Bonds , directly or indirectly, in any manner which would result in such 2024 Bonds being classified as “arbitrage bonds” within the meaning of Section 148(a) of the Code.
Section 15. Compensation of the Escrow Agent . The Escrow Agent ’s fees, exp enses and reimbursement for costs incurred, for and in carrying out the provisions of this Agreement have been fixed by separate agreement. The City shall pay the Escrow Agent full compensation for its duties under this Agreement. Under no circumstances shall amounts deposited in or credited to the Escrow Fund be deemed to be available for said purposes.
Section 16. No Implied Duties; No Rights to Others . Nothing in this Agreement expressed or implied is intended or shall be construed to give to any pe rson other than the City, the Escrow Agent, the 2014 Fiscal Agent and the registered owners of the 2014 Bonds, any legal or equitable right, remedy or claim under or in respect to this Agreement or any covenants, conditions or provisions therein or herein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the City , the Escrow Agent and the Owners of the 2014 Bonds. The Escrow Agent shall perform such duties and only such duties as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Escrow Agent.
Section 17. Immunities and Liabilities of Escrow Agent.
(A) The Escrow Agent shall not have any liability h ereunder except to the extent of its own negligence or willful misconduct. The Escrow Agent is not required to resolve conflicting demands to money or property in its possession under this Agreement.
6 (B) The Escrow Agent may consult with counsel of its o wn choice (which may be counsel to the City) and the opinion of such counsel shall be full and complete authorization to take or suffer in good faith any action hereunder in accordance with such opinion of counsel.
(C) The Escrow Agent shall not be respon sible for any of the recitals or representations contained herein.
(D) The Escrow Agent may become the owner of, or acquire any interest in, any of the 2014 Bonds with the same rights that it would have if it were not the Escrow Agent and may engage or be interested in any financial or other transaction with the City.
(E) The Escrow Agent shall not be liable for the accuracy of any calculations provided as to the sufficiency of the moneys or Federal Securities deposited with it to pay the principal, interest, or premiums, if any, on the 2014 Bonds and shall not be liable for any insufficiency of such moneys and securities to affect such payment.
(F) The Escrow Agent shall not be liable for any action or omission of the City under this Agreement or the 2014 Fiscal Agent Agreement.
(G) Whenever in the administration of this Agreement the Escrow Agent shall deem it necessary or desirable that a matter be proved or established before taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or willful misconduct on the part of the Escrow Agent, be deemed to be conclusively proved and established by a certificate of an authorized official of the City, and such certificate shall, in the absence of negligence or willful misconduct on the part of the Escrow Agent, be full warrant to the Escrow Agent for any action taken or suffered by it under the provisions of this Agreement upon the faith thereof.
(H) The Escrow Agent may at any time resign by giving written notice to the City of such resignation. The City shall promptly appoint a successor Escrow Agent by the resignation date. Resignation of the Escrow Agent will be effective only upon acceptance of appo intment by a successor Escrow Agent. If the City does not appoint a successor, the Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor Escrow Agent, which court may thereupon, after such notice, if any, as it m ay deem proper and prescribe and as may be required by law, appoint a successor Escrow Agent. After receiving a notice of resignation of an Escrow Agent, the City may appoint a temporary Escrow Agent to replace the resigning Escrow Agent until the City appoints a successor Escrow Agent. Any such temporary Escrow Agent so appointed by the City, shall immediately and without further act be superseded by the successor Escrow Agent so appointed.
(I) The City agrees to indemnify the Escrow Agent, its agents a nd its officers or employees for and to hold the Escrow Agent, its agents, officers or employees harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursement s of any kind or nature whatsoever (including, without limitation, reasonable fees and disbursements of counsel, including in -house counsel, for the Escrow Agent) which may be imposed on, incurred by, or asserted against the Escrow Agent at any time by rea son of the performance of its duties as Escrow Agent hereunder and under the 2014 Fiscal Agent Agreement, in any transaction arising out of this Agreement or the Bond Resolution or any of the transactions contemplated herein or in the 2014 Fiscal Agent Agreement, unless due to the Escrow Agent ’s or its officers ’ or employees ’ or agents ’
7 negligence or willful misconduct. Such indemnity shall survive the termination of this Agreement or resignation or removal of the Escrow Agent.
(J) The Escrow Agent sha ll have the right to accept and act upon instructions, including funds transfer instructions (“ Instructions”) given pursuant to this Agreement and delivered using Electronic Means (“ Electronic Means ” means mean the following communications methods: S.W.I.F .T., e -mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Escrow Agent, or another method or system specified by the Escrow Agent as available for use i n connection with its services hereunder); provided, however, that the City shall provide to the Escrow Agent an incumbency certificate listing officers with the authority to provide such Instructions (“ Authorized Officers”) and containing specimen signatu res of such Authorized Officers, which incumbency certificate shall be amended by the City whenever a person is to be added or deleted from the listing. If the City elects to give the Escrow Agent Instructions using Electronic Means and the Escrow Agent i n its discretion elects to act upon such Instructions, the Escrow Agent’s understanding of such Instructions shall be deemed controlling. The City understands and agrees that the Escrow Agent cannot determine the identity of the actual sender of such Inst ructions and that the Escrow Agent shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Escrow Agent have been sent by such Authorized Officer. The City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Escrow Agent and that the City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization c odes, passwords and/or authentication keys upon receipt by the City. The Escrow Agent shall not be liable for any losses, costs or expenses arising directly or indirectly from the Escrow Agent’s reliance upon and compliance with such Instructions notwiths tanding such directions conflict or are inconsistent with a subsequent written instruction. The City agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Escrow Agent, including without limitation the ri sk of the Escrow Agent acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Escrow Agent and that there may be more secure methods of transmitting Instructions than the method(s) selected by the City; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercial ly reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Escrow Agent immediately upon learning of any compromise or unauthorized use of the security procedures.
(K) None of the provisions of this Agree ment shall require the Escrow Agent to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder.
(L) All notices, certificates, or other communications hereunder with the E scrow Agent shall be addressed to the Escrow Agent at:
U.S. Bank Trust Company, National Association
633 West 5th Street, 24th Floor
Los Angele, CA 90071
Attention: Global Corporate Trust
Section 18. Waiver of Notice. Whenever in this Agreement the g iving of notice by mail or otherwise shall be required, the giving of such notice may be waived in writing by the person
8 entitled to receive such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
Section 19. Severability. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity , illegality or unenforceability shall not affect any other provisions of this Agreement, but this Agreement shall be construed as if such invalid or illegal or unenforceable provisions has never been contained herein.
Section 20. Counterparts. This Agr eement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and such counterparts, or as many of them as the City, the PFA and the Escrow Agent shall preserve undestroyed, shall together constitute but one and the same instrument.
Section 21. Business Days. Whenever any act is required by this Agreement to be done on a specified day or date, and such day or date shall be a day other than a business day, then such act may be done on the next succeeding business day.
Section 22. California Law . This Agreement shall be governed exclusively by and interpreted in accordance with, the laws of the State of California.
9 IN WITNESS WHEREOF, the City and the Escrow Agent have each cau sed this Agreement to be executed by the duly authorized officers thereof and have caused the corporate seal to be affixed hereto and attested as of the date first above written.
CITY OF HESPERIA
By:
Assistant City Manager
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Escrow Agent
By:
Authorized Officer
ACKNOWLEDGED AND ACCEPTED:
U.S. BANK TRUST COMP ANY, NATIONAL
ASSOCIATION, as 2014 Fiscal Agent
By:
Authorized Officer
Exhibit A
EXHIBIT A
DESCRIPTION OF FEDERAL SECURITIES
Type
Maturity
Date
Par
Amount
Rate
Cost
Exhibit B
EXHIBIT B
PAYMENT AND REDEMPTION SCHEDULE OF 2014 BONDS
2014 Bonds
Payment
Date
Interest
Principal
Maturing
Principal
Redeemed
Premium
Total
Payment
3/1/15 $0.00 $0.00
Exhibit C
EXHIBIT C
FORM OF NOTICE OF REDEMPTION
Notice to the Holders of Outstanding
$18,450,000
initial principal amount
City of Hesperia
Community Facilities District No. 2005-1
(Belgate Development Restructuring)
County of San Bernardino
State of California
Special Tax Refunding Bonds, Series 2014
Date of Issuance: December 18, 2014
NOTICE IS HEREBY GI VEN that the City of Hesperia (the “City”) has on December _, 2024, from the proceeds of sale of bonds and other sources, irrevocably set aside in an Escrow Fund created for such purpose and held by U.S. Bank Trust Company, National Association , Los Angeles, California, as escrow agent (the “Escrow Agent”) pursuant to an Escrow Deposit and Trust Agreement, dated as of December 1, 2014 (the “Escrow Agreement ”), by and between the City and the Escrow Agent, moneys which shall be sufficient (as evidenced by a report from an independent certified public accountant delivered to the Escrow Agent) to (i) pay interest due on the captioned bonds (the “Bonds”) on March 1, 2015 and (ii) redeem on March 1, 2015 , all of the remaining outstanding Bonds at a redempti on price equal to 100% of the principal amount to be redeemed , without premium. The following is a description of the Bonds to be redeemed, including their CUSIP numbers:
Maturity Date
(September 1)
Principal
Amount
Interest
Rate
CUSIP*
2025 $790,000 5.000% 428059BA6
2026 860,000 5.000 428059BB4
2027 930,000 3.500 428059BC2
2028 990,000 3.625 428059BD0
2029 1,060,000 5.000 428059BE8
2035 5,705,000 5.000 428059BG3
2035 2,500,000 4.000 428059BF5
Interest on the Bonds will not accrue after the Redemption Date.
Bonds must be surrendered at the Principal Office of the Fiscal Agent for redemption at the redemption price described above; the Principal Office of the Fiscal Agent is located at the following address:
U.S. Bank, National Association
Global Corporate Trust
Exhibit C
111 Fillmore Ave. East
Saint Paul, MN 55107
The City and the Escrow Agent shall not be responsible for the selection or use of the CUSIP numbers selected, nor is any representation made as to their correctness indicated in the notice or as printed on any bond. They are included solely for the convenience of the holders.
Dated: January __, 2025
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Escrow Agent
Exhibit D
EXHIBIT D
FORM OF NOTICE OF DEFEASANCE
NOTICE OF DEFEASANCE
$18,450,000
initial principal amount
City of Hesperia
Community Facilities District No. 2005-1
(Belgate Development Restructuring)
County of San Bernardino
State of California
Special Tax Refunding Bonds, Series 2014
Date of Issuance: December 18, 2014
NOTICE IS HEREBY GIVEN that the City of Hesperia (the “City”) has on December __, 2024, from the proceeds of sale of bonds and other sources, irrevocably set aside in an Escrow Fund created for such purpose and held by U.S. Bank Trust Company, National Ass ociation, Los Angeles, California, as escrow agent (the “Escrow Agent”) pursuant to an Escrow Deposit and Trust Agreement, dated as of December 1, 2024 (the “Escrow Agreement ”), by and between the City and the Escrow Agent, moneys which shall be sufficient (as evidenced by a report from an independent certified public accountant delivered to the Escrow Agent) to (i) pay interest due on the captioned bonds (the “Bonds”) on March 1, 2025 and (ii) redeem on March 1, 2025, all of the remaining outstanding Bonds at a redemption price equal to 100% of the principal amount to be redeemed , without premium . The following is a description of the defeased Bonds, including their CUSIP numbers:
Maturity Date
(September 1)
Principal
Amount
Interest
Rate
CUSIP*
2025 $790,000 5.000% 428059BA6
2026 860,000 5.000 428059BB4
2027 930,000 3.500 428059BC2
2028 990,000 3.625 428059BD0
2029 1,060,000 5.000 428059BE8
2035 5,705,000 5.000 428059BG3
2035 2,500,000 4.000 428059BF5
In accordance with the terms of the Fiscal Agent Agreement relating to the Bonds, notice of redemption of the captioned Bonds to be redeemed is required to be given by U.S. Bank Trust Company, National Association , as fiscal agent thereunder, on a date not more than 60 days or less than 30 days prior to the date fixed for redemption thereof.
The moneys deposited in the Escrow Fund (as defined in the Escrow Agreement), including the earnings derived from the investment thereof, are irrevocably pledged to th e
Exhibit D
payment of principal or redemption price of and interest on the Bonds. Said moneys have been invested in certain United States Treasury Bonds State and Local Government Series issued by the United States Treasury ( “SLGS”) and which bear interest and matu re on such dates as to insure the payment of all principals, premium, as applicable, and interest on the Bonds.
Pursuant to the Escrow Agreement, the City may substitute securities for those initially allocated to the Escrow Fund and withdraw moneys from t he Escrow Fund subject to the terms and conditions set forth in the Escrow Agreement.
As a consequence of the foregoing actions and in accordance with the Fiscal Agent Agreement relating to the Bonds, the Bonds are no longer secured by a pledge of the Spe cial Tax Revenues described in or moneys held in certain funds established under the Fiscal Agent Agreement relating to the Bonds, such pledge and the obligations and covenants of the City under the Fiscal Agent Agreement having been fully released and discharged, and the Bonds are now payable solely from the moneys and investments set aside in the Escrow Fund as described above and, if necessary, from other legally available funds of the City.
Dated: December __, 2024
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Escrow Agent
Stradling Yocca Carlson & Rauth
Draft of 9/30/2024
4870-7554-7873v4/200356-0631
$__________
CITY OF HESPERIA
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(BELGATE DEVELOPMENT RESTRUCTURING)
COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA
SPECIAL TAX REFUNDING BONDS, SERIES 2024
BOND PURCHASE AGREEMENT
November __, 2024
City of Hesperia, California
9700 Seventh Avenue
Hesperia, CA 92345
Attention: City Manager
Ladies and Gentlemen:
Stifel, Nicolaus & Company, Incorporated (the “Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (the “Purchase Agreement”) with the City of Hesperia (the “City”) acting on behalf of City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California (the “District”) which, upon acceptance, will be binding upon the City and upon the Underwriter. This offer is made subject to acceptance of it by the City on the date hereof, and if not accepted will be subject to withdrawal by the Underwriter upon notice delivered to the City at any time prior to the acceptance hereof by the City.
The City acknowledges an d agrees that: (i) the purchase and sale of the Bonds (defined below) pursuant to this Purchase Agreement is an arm’s -length commercial transaction between the City and the Underwriter; (ii) in connection therewith and with the discussions, undertakings an d procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as a principal and is not acting as a Municipal Advisor (as defined in Section 15B of The Securities Exchange Act of 1934, as amended); (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the City with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the City on other matters); (iv) the Underwriter has financial interests that may differ from, and be adverse to, those of the City and the District; and (v) the City has consulted its own legal, financial and other advisors to the extent it has deemed appropriate on this transaction.
1. Purchase, Sale, and Delivery of the Bonds.
(a) Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter agrees to purchase from the City, and the City agrees to sell to the Underwriter, all (but not less than all) of the City of Hesperia Community Facilities District No. 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 20 24 (the “Bonds”) in the aggregate principal amount specified in Exhibit A hereto. The Bonds shall be dated the Closing Date (hereinafter Attachment 5
2 4870-7554-7873v4/200356-0631
defined), and bear interest from said date (payable semiannually on March 1 and September 1 in each year, commencing March 1, 20 25) at the rates per annum and maturing on the dates and in the amounts and shall be subject to redemption, all as set forth in Exhibit A hereto. The Bonds maturing on September 1, 20___ through September 1, 20___, inclusive, will be insured under a municipal insurance policy (the “Insurance Policy”) to be issued by _________ (the “Insurer”) concurrently with the issuance of the [Insured] Bonds. The purchase price for the Bonds shall be t he amount specified as such in Exhibit A hereto. As an accommodation to the District, the Underwriter will wire a $________ portion of the purchase price, comprising the premiums for the Insurance Policy and the Reserve Policy (defined below), directly to the Insurer. (b) The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable and subject to redemption as provided in, the Fiscal Agent Agreement by and between the City and U.S. Bank Trust Company, National Association , as Fiscal Agent (the “Fiscal Agent”), dated as of December 1, 2024 (the “Fiscal Agent Agreement”), approved by a Resolution adopted by the City Council of the City (the “ City Council ”), as the legislative body of the Di strict, on [October 15], 2024 (the “Resolution of Issuance”). The Bonds and interest thereon will be payable from a special tax (the “Special Taxes”) levied and collected on the taxable land within the District in accordance with a resolution adopted by t he City Council on March 23, 2005 (the “Resolution of Formation”) and Ordinance No. 2005 -005 adopted on April 6, 2005 (the “Ordinance”). Proceeds of the sale of the Bonds will be used in accordance with the Fiscal Agent Agreement and the Mello -Roos Commun ity Facilities Act of 1982, as amended (Sections 53311 et seq. of the Government Code of the State of California) (the “ Act”), to (i) refund in full the outstanding City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California, Special Tax Refunding Bonds, Series 2014 (the “Refunded Bonds”), (ii) purchase a debt service reserve policy from the Insurer to satisfy 50% of the initial Reserve Requirement (as defined in the Fiscal Age nt Agreement) for the Bonds concurrently with the delivery of the Bonds, (iii) make a deposit into the Reserve Fund in an amount equal to the remaining 50% of the initial Reserve Requirement for the Bonds, (iv) pay the premium for the Insurance Policy, and (v) pay costs of issuing the Bonds. In connection with the refunding of the Refunded Bonds, the City will enter into an Escrow Deposit and Trust Agreement, dated as of December 1, 2024 (the “Escrow Agreement”), by and between the City and U.S. Bank Trust Company, National Association , as escrow agent (the “Escrow Agent”). The Resolution of Issuance, the Ordinance, and the Resolution of Formation are collectively referred to herein as the “District Resolutions.”
(c) At or prior to the acceptance hereof by the City, the City shall cause to be delivered to the Underwriter a Rule 15c2 -12 Certificate of the City , dated as of the date of this Purchase Agreement (the “ Rule 15c2-12 Certificate”), in substantially the form attached hereto as Exhibit B, with only such changes therein as shall have been accepted by the Underwriter. (d) Subsequent to its receipt of the Rule 15c2 -12 Certificate deeming the Preliminary Official Statement for the Bonds, dated November __, 2024 which Preliminary Official Statement, together with t he cover page and all appendices thereto, is herein collectively referred to as the “Preliminary Official Statement”, final for purposes of Rule 15c2-12 of the Securities and Exchange Commission (“Rule 15c2-12”), the Underwriter has distributed copies of t he Preliminary Official Statement. The City hereby ratifies the use by the Underwriter of the Preliminary Official Statement and authorizes the Underwriter to use and distribute the final Official Statement dated the date hereof (including all information previously permitted to have been omitted by Rule 15c2-12, and any supplements and amendments thereto as have been approved by the City as evidenced by the
3 4870-7554-7873v4/200356-0631
execution and delivery of such document by an officer of the City , the “Official Statement”), the Fiscal Agent Agreement, the Continuing Disclosure Certificate of the City dated as of the Closing Date (the “City Disclosure Certificate”), this Purchase Agreement, any other documents or contracts to which the City or the District is a party, and all information contained therein, and all other documents, certificates and statements furnished by the City to the Underwriter in connection with the transactions contemplated by this Purchase Agreement, in connection wit h the offer and sale of the Bonds by the Underwriter. The Underwriter hereby agrees to deliver a copy of the Official Statement to the Municipal Securities Rulemaking Board (the “MSRB”) through the Electronic Municipal Marketplace Access website of the MS RB on or before the Closing Date and otherwise to comply with all applicable statutes and regulations in connection with the offering and sale of the Bonds, including, without limitation, MSRB Rule G-32 and Rule 15c2-12. (e) At 8:00 A.M., Pacific Daylight Time , on December __, 2024, or at such earlier time or date as shall be agreed upon by the Underwriter and the City (such time and date being herein referred to as the “Closing Date”), the City will deliver (i) to the Depository Trust Company in New York, New York, the Bonds in definitive form (all Bonds being in book -entry form registered in the name of Cede & Co. and having the CUSIP numbers assigned to them printed thereon), duly executed by the officers of the City , as provided in the Fiscal Agent Agreement , and (ii) to the Underwriter, at the offices of Bond Counsel (defined below) , or at such other place as shall be mutually agreed upon by the City and the Underwriter, the other documents herein mentioned; and the Underwriter shall accept such delivery and pay the purchase price of the Bonds in immediately available funds (such delivery and payment being herein referred to as the “Closing”).
Notwithstanding the foregoing, the Underwriter may, in its discretion, accept delivery of the Bonds in temporary form upon making arrangements with the City which are satisfactory to the Underwriter relating to the delivery of the Bonds in definitive form. (f) Except as otherwise disclosed in writing and agreed to by the City, the Underwriter agrees to make a bona fide publ ic offering of the Bonds at the initial public offering price or prices (or yields) set forth in Exhibit A hereto; provided, however, that the Underwriter reserves the right to: (i) change such prices as the Underwriter deems necessary or desirable, in its sole discretion, in connection with the marketing of the Bonds, (ii) sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) and others at prices lower than the aforesaid initial offering prices and (iii) over -allot or effect transactions which stabilize or maintain the market price of the Bonds at levels above those that might otherwise prevail in the open market and discontinue such stabilizing, if commenced, at any time without prior notice. A “bona fide public offering” shall include an offering to institutional investors or registered investment companies, regardless of the number of such investors to which the Bonds are sold.
2. Establishment of Issue Price.
(a) The Underwriter agrees to assist the City in establishing the issue price of the Bonds and shall execute and deliver to the City at the Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhib it C, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the City and Jones Hall, A Professional Law Corporation, San Francisco, California (“Bond Counsel”), to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. All actions to be taken by the City under this section to establish the issue price of the Bonds may be taken on behalf of the City by