Agenda packet — Kerman City Council, August 27, 2025 (part 1 of 3)

REVISED

JOINT MEETING OF THE CITY COUNCIL AND PUBLIC FINANCING AUTHORITY

REGULAR MEETING AGENDA
Wednesday, August 27, 2025 at 6:00 PM
Kerman City Hall, 850 S. Madera Avenue, Kerman, CA 93630 LEVINE ACT CONTRIBUTION PROHIBITIONS AND MANDATORY DISCLOSURE. The Political Reform Act in Govt Code Section 84308 restricts campaign contributions over $500 to a decision-making public official from a party or participant or their agent in a proceeding involving a contract, license, permit or entitlement for use. The Act requires disclosure of the contribution and recusal where a decision-maker has received $500 or more from a party or participant to a proceeding in the prior 12 months. Participants and agents are required to make this disclosure as well.

A Council Member’s disclosure should be made when the agenda item is called and must include the name of the party, participant, or agent, and any other person making the contribution, the name of the recipient, the amount of the contribution, and the date the contribution was made.

CONFLICT OF INTEREST DISCLOSURES AND RECUSAL. City Council Members with a conflict of interest under the Political Reform Act are required to make disclosure when the item is called and recuse themselves.

1. OPENING CEREMONIES
A. Call to Order
B. Roll Call
C. Invocation
D. Flag Salute

2. AGENDA APPROVAL/ADDITIONS/DELETIONS
To accommodate members of the public or convenience in the order of presentation, items on the agenda may not be presented or acted upon in the order listed.

3. PRESENTATIONS/CEREMONIAL MATTERS
A. Proclamation - Suicide Prevention Week
B. Presentation - Paul Dictos, County of Fresno Assessor's Office 1 4. PUBLIC FORUM (for matters not on agenda)
This portion of the meeting is reserved for members of the public to address the Council on items of interest that are not on the Agenda and are within the subject matter jurisdiction of the Council.

Speakers shall be limited to three minutes. It is requested that no comments be made during this period on items on the Agenda. Members of the public wishing to address the Council on items on the Agenda should notify the Mayor when that Agenda item is called, and the Mayor will recognize your discussion at that time. It should be noted that the Council is prohibited by law from taking any action on matters discussed that are not on the Agenda. Speakers are asked to please use the microphone, and provide their name and address.

5. CONSENT CALENDAR
Matters listed under the Consent Calendar are considered routine and will be enacted by one motion and one vote. There will be no separate discussion of these items. If discussion is desired, a member of the audience or a Council Member may request an item be removed from the Consent Calendar and it will be considered separately.

A. SUBJECT: Minutes - August 13, 2025
RECOMMENDATION: Council by motion approve minutes as presented.

B. SUBJECT: Warrants (JA)

1. Nos. 32646-32736 $4,134,404.11 ACH $844,771.60.

RECOMMENDATION: Council approve warrants and electronic bank transfers as presented. (Pursuant to Government Code 37208)
C. SUBJECT: Payroll (JA)
07/20/2025 to 08/02/2025: $270,774.50: Retro Pay & Other: $3,602.81; Overtime:
$11,591.84; Holiday: $0.00 Standby: $1,821.13; Comp Time Earned: 70.74 D. SUBJECT: Monthly Investment Report
RECOMMENDATION: Council accept monthly investment report as presented.

E. SUBJECT: Approval of Parcel Map 2023-01 and Acceptance of Dedications on Behalf of the Public (JG)
RECOMMENDATION: Council by motion adopt a resolution approving Parcel Map 2023-01 and accepting dedications on behalf of the public.

F. SUBJECT: Consideration of Resolution Approving Amendment to Contract for City Attorney Services (JAJ)
RECOMMENDATION: Council by motion adopt resolution approving Amendment Number Four (4) to Contract for City Attorney Services with Montoy Law Corporation. 2 G. SUBJECT: Updated Fresno County Multi-Jurisdictional Local Hazard Mitigation Plan (JAJ) RECOMMENDATION: Council by motion adopt a resolution approving the updated Fresno County Multi-Jurisdictional Hazard Mitigation Plan.

6. PUBLIC HEARINGS – Revised order to attachments for Items 6.A and 6.B These hearings are scheduled at the time stated and will be heard by the Council as close to the time stated as possible.

Council to convene in Joint Session with the Public Financing Authority for Items A and B A. SUBJECT: Consideration of a Resolution of City Council of the City of Kerman Authorizing the Issuance and Sale of 2025 Lease Revenue Bonds (JA)
RECOMMENDATION: City Council by motion adopt resolution Approving, Authorizing and Directing Execution of Certain Lease Financing Documents and Directing Execution of Certain Related Actions in Connection with Financial Capital Improvements for the issuance and sale of 2025 Lease Revenue Bonds.

B. SUBJECT: Consideration of a Resolution of Board of Directors of the City of Kerman Public Financing Authority authorizing the issuance and sale of 2025 Lease Revenue Bonds (JA) RECOMMENDATION: That the Board, by motion, adopt resolution approving, authorizing and directing the issuance and Sale of Lease Revenue Bonds in an amount not to exceed $25,000,000 to assist the City of Kerman in financing capital improvements, and approving related documents and actions for issuance and sale of 2025 Lease Revenue Bonds.

C. SUBJECT: Consideration of Resolution Approving Agreement with Fieldman, Rolapp & Associates for Continuing Disclosure Services Pertaining to Securities Management (JAJ) RECOMMENDATION: Council by motion adopt resolution approving agreement with Fieldman, Rolapp & Associates for Continuing Disclosure Services pertaining to Securities Management Adjourn Public Financing Authority and Reconvene as City Council

7. DEPARTMENT REPORTS
A. SUBJECT: Resolution Approving Final Map, Subdivision Agreement, Right-to-Farm Covenant, Landscape and Lighting District Covenant and Accepting Dedication of Right-of-Way for Public Street and Utility Purposes for Vesting Tract Map No. 6447 (JG) RECOMMENDATION: Council by motion adopt resolution pertaining to Tract No. 6447 as follows:
3 1. Approving Final Map and Subdivision Agreement

2. Approving Covenant Acknowledging Right To Farm Law

3. Approving Covenant Accepting Annexation into Landscape and Lighting District No. 1

4. Accepting Dedication of Right-of-Way for Public Street and Utility Purposes

5. Authorizing the Mayor and City Manager to sign the Subdivision Agreement and Covenants as appropriate.

8. CITY MANAGER/STAFF COMMUNICATIONS

9. MAYOR/COUNCIL REPORTS/ANNOUNCEMENTS/FUTURE AGENDA ITEMS (This portion of the meeting is reserved for the Mayor and Council Members (i) to make brief reports on boards, committees, and other public agencies, and at public events, (ii) to request updates, (iii) to initiate future agenda items at the request of a Council Member, and (iv) to take action on matters initiated under this section of the agenda items. Under this section the Council may take action only on items specifically agendized and which meet other requirements for action.)

10. CLOSED SESSION
If desired, members of the public may comment on Closed Session items. Members of the public wishing to address Council on Closed Session items should notify the Mayor when that item is called, and the Mayor will recognize your discussion at that time. It should be noted that Council is prohibited from discussing or addressing comments on Closed Session items.

A. Public Employee Performance Evaluation pursuant to Government Code Section 54957 Title:

City Manager
B. Conference with Labor Negotiators pursuant to Government Code Section 54957.6 City Designated Representatives: Mayor Pacheco and Mayor Pro Tem Yep Unrepresented Employee: City Manager

11. ADJOURNMENT
4 NOTICE OF AVAILABILITY OF AGENDA MATERIALS: Any writings or documents provided to a majority of the City Council within 72 hours of the meeting regarding any item on this agenda will be made available for public inspection at the City Clerk’s Office located at 850 S. Madera Ave., Kerman, CA 93630 and on the City website at www.cityofkerman.net.

ADA Compliance and Reasonable Accommodation. The Council has adopted a Reasonable Accommodation Policy, which is available on the City website at www.cityofkerman.net or upon request by emailing the City Clerk at [email protected] or calling (559) 550-1414.

The Policy provides a procedure for receiving and resolving requests for accommodation to participate in this meeting. If you need assistance in order to attend this Council meeting or require auxiliary aids or services, e.g., hearing aids or signing services to make a presentation to the Council, please contact the City Clerk at (559) 550-1414 or email at [email protected] so such aids or services can be arranged. Accommodations should be requested as early as possible as additional time may be required in order to provide the requested accommodation. The meeting room is accessible to persons with physical disabilities.

AGENDA POSTING CERTIFICATION
I, Josie Camacho, City Clerk for the City of Kerman, do hereby declare under penalty of perjury that I caused the above agenda to be posted at City of Kerman Council Chambers at 850 S. Madera Ave., Kerman, CA 93630 and on the City website at www.cityofkerman.net.

Date: August 25, 2025 /s/ Josie Camacho, City Clerk
5 SUICIDE PREVENTION WEEK
SEPTEMBER 7, 2025 - SEPTEMBER 13, 2025
WHEREAS, September 7 through September 13, 2025, is recognized across the United States as Suicide Prevention Week and provides an opportunity to educate our community about warning signs and how best to support those most in need.

WHEREAS, suicide is a national and statewide public mental health problem which occurs among all age groups and across all socioeconomic, racial and ethnic backgrounds, is the 11th leading cause of death in the United States, and the 2nd leading cause of death among individuals between the ages of 25 to 34; and
WHEREAS, more than 45,000 people die by suicide each year in the United States — leaving thousands of families, friends, and communities forever impacted by their loss; and WHEREAS, the stigma associated with mental illness and suicidality hinders suicide prevention by discouraging those at risk for suicide from seeking life-saving help, while also further traumatizing survivors of suicide; and
WHEREAS, suicide is preventable, and it is appropriate for a week to be set aside each year to dedicate our thoughts to improving the mental health of all Kerman residents and raising awareness about suicide.

NOW THEREFORE, BE IT PROCLAIMED that the Kerman City Council do hereby proclaim September 7, 2025 through 13, 2025 in Kerman as National Suicide Prevention Week, and encourages the community to raise awareness of the mental health needs of children, adults, and seniors as fundamental to a healthy and thriving community.

IN WITNESS WHEREOF, I have hereunto set my hand and caused the Official Seal of the City of Kerman to be affixed on this 27th day of August 2025. ________________________
Maria Pacheco
Mayor
6 Section 3, Item A.

CITY COUNCIL REGULAR MEETING MINUTES
Wednesday, August 13, 2025 at 6:00 PM
Kerman City Hall, 850 S. Madera Avenue, Kerman, CA 93630

1. OPENING CEREMONIES
A. Call to Order - 6:02 p.m.

B. Roll Call - All present
C. Invocation - Performed by Mayor Pacheco
D. Flag Salute - Performed

2. AGENDA APPROVAL/ADDITIONS/DELETIONS
Motion made by Councilmember Hall, Seconded by Councilmember Herrera, to move Item 7.C up to be heard before Item 7.A
Ayes: Hall, Herrera, Dhaliwal, Yep, Pacheco
Noes: None
Abstain: None

Absent: None
Motion passes 5-0-0-0

3. PRESENTATIONS/CEREMONIAL MATTERS
None.

4. PUBLIC FORUM
None.

5. CONSENT CALENDAR
Motion made to approve the consent calendar, excluding item 5.H, which was pulled for discussion by Mayor Pro Tem Yep, Seconded by Councilmember Herrera.

Ayes: Yep, Herrera, Dhaliwal, Hall, Pacheco
Noes: None
Abstain: None

Absent: None
Motion passes 5-0-0-0
7 Section 5, Item A.

A. SUBJECT: Minutes - July 23, 2025
RECOMMENDATION: Council approved minutes as presented.

B. SUBJECT: Payroll (JA)
07/06/2025 to 07/19/2025: $278,342.12; Retro Pay & Other: $7,547.07; Overtime: $9,328.21; Standby: $1,702.67; Comp Time Earned: 24.38
RECOMMENDATION: Council approve payroll as presented.

C. SUBJECT: Resolution concerning Local Transportation Purposes Funds (Measure C) (JA) RECOMMENDATION: Council by motion adopt resolution approving submittal of Local Transportation Purposes Certification and Claim for Fiscal Year 2025/2026 (Measure C). - Res. 25-55
D. SUBJECT: California for All Animals UC Davis Shelter Services Grant (SW) RECOMMENDATION: Council by motion adopt resolution accepting grant funds and approving Shelter Services Agreement with Regents of the University of California relating to statewide animal assistance program. - Res. 25-56
E. SUBJECT: Amendment to Agreement with Muniservices, LLC (JA) RECOMMENDATION: Council by motion adopt resolution approving Amendment No. 3 to Consultant Services Agreement with Muniservices, LLC and authorize the City Manager to sign. - Res. 25-57
F. SUBJECT: Amendment to Joint Powers Agreement of the Central San Joaquin Valley Risk Management Authority (JA)
RECOMMENDATION: Council by motion adopt resolution approving amendment to Joint Powers Agreement of the Central San Joaquin Valley Risk Management Authority. - Res. 25-58 G. SUBJECT: City Council Designate Mayor Pacheco and Councilmember Herrera as Voting Delegates and Alternate at the California League of Cities Annual Conference and Expo (Cal Cities) on behalf of the City of Kerman (JC)
RECOMMENDATION: Council by motion approve the designation of Mayor Pacheco as a voting delegate and Councilmember Herrera as alternate on behalf of the City at the California League of Cities Annual Conference and Expo in Long Beach.

H. SUBJECT: Consideration of Resolution Approving Lease with Kerman Telephone Co., a California Corporation dba Sebastian for Equipment Installation on City-Owned Tower Located City Corporation Yard, Including Portions of APNs: 023-060-63u, 023-060-64, 023-060-65st, and 023- 060-69st Commonly Known as 15201 W. California Avenue, Kerman, CA (JAJ) 8 Section 5, Item A.

RECOMMENDATION: Council by motion adopt resolution approving Lease with Kerman Telephone Co., a California corporation dba Sebastian for equipment installation on City-owned tower located City Corporation Yard, including portions of APN(s): 023-060-63u, 023-060-64, 023-060-65st, and 023-060-69st commonly known as 15201 W. California Avenue, Kerman, California 93630. - Res. 25-59
ITEM 5.H - Motion made to approve with the modifications noted to the agreement by Mayor Pro Tem Yep, Seconded by Councilmember Herrera.

Ayes: Yep, Herrera, Hall, Dhaliwal, Pacheco
Noes: None
Abstain: None

Absent: None
Motion passes 5-0-0-0
I. SUBJECT: Reimbursement of Capital Expenditures from Proceeds of Tax-Exempt Obligations (JA)
RECOMMENDATION: Council by motion adopt resolution declaring intention to reimburse expenditures from proceeds of tax-exempt obligations. - Res. 25-60 J. SUBJECT: Amendment to Joint Exercise of Powers Agreement for the Kerman Public Financing Authority (JA)
RECOMMENDATION: Council by motion authorize execution and delivery of first amendment to joint exercise of powers agreement. - Res. 25-61

6. PUBLIC HEARINGS - Opened - 6:10 p.m.

A. SUBJECT: Resolution Confirming and Ordering Tract 6430 Annexation into Kerman Landscaping and Lighting District No. 1, Area 16, and Establishing a Levy of Assessments for the Annexed Territory (JG)
RECOMMENDATION: Council by motion adopt resolution confirming and ordering Tract 6430 annexation into Kerman Landscaping and Lighting District No. 1, Area 16, and establishing a Levy of Assessments for the annexed territory. - Res. 25-62 Closed - 6:15 p.m.

Public Comment: Ken Boyd
Motion made by Mayor Pro Tem Yep, Seconded by Councilmember Hall Ayes: Yep, Hall, Herrera, Dhaliwal, Pacheco
Noes: None
Abstain: None
9 Section 5, Item A.

Absent: None
Motion passes 5-0-0-0

7. DEPARTMENT REPORTS
A. SUBJECT: Establishing Regular Meetings of the Kerman Public Financing Authority (JA) RECOMMENDATION: Board of directors of the Financing Authority by motion adopt resolution establishing regular meetings and approving related actions. - PFA Res. 25-01 Motion made to by Councilmember Hall, Seconded by Councilmember Herrera.

Ayes: Hall, Herrera, Yep, Dhaliwal, Pacheco
Noes: None
Abstain: None

Absent: None
Motion passes 5-0-0-0
B. SUBJECT: Resolution Authorizing Assignment of Lease from City of Kerman to the Kerman Public Financing Authority for 942 South Madera Avenue (JAJ), (JA) RECOMMENDATION: Council by motion adopt resolution approving assignment of lease of 942 South Madera Avenue from the City of Kerman to the Kerman Public Financing Authority for the purpose of facilitating the capital projects funding program of the City. - Res. 25-63 Motion made by Councilmember Herrera, Seconded by Councilmember Hall.

Ayes: Herrera, Hall, Yep, Dhaliwal, Pacheco
Noes: None
Abstain: None

Absent: None
Motion passes 5-0-0-0
C. SUBJECT: Resolution Approving Final Map, Subdivision Agreement, Right-to-Farm Covenant, Landscape and Lighting District Covenant, Temporary Storm Drainage Basin Covenant and Acccepting Dedication of Right-of-Way for Public Street and Utility Purposes for Tract No. 6430 (JG)
RECOMMENDATION: Council by motion adopt resolution pertaining to Tract No. 6430 as follows:

1. Approving Final Map and Subdivision Agreement

2. Approving Covenant Acknowledging Right To Farm Law

3. Approving Covenant Accepting Annexation into Landscape and Lighting District No. 1

4. Approving Covenant and Agreement for Temporary Storm Drainage Basin Use

5. Accepting Dedication of Right-of-Way for Public Street and Utility Purposes over a portion of APN 020-160-18S
10 Section 5, Item A.

6. Authorizing the Mayor and City Manager to sign the Subdivision Agreement and Covenants as appropriate.- Res. 25-64
Public Comment: Ken Boyd, Cherie Smith
Motion made by Councilmember Yep, Seconded by Councilmember Dhaliwal.

Ayes: Yep, Dhaliwal, Herrera, Hall, Pacheco
Noes: None
Abstain: None

Absent: None
Motion passes 5-0-0-0

8. CITY MANAGER/STAFF COMMUNICATIONS
Staff was directed to note gift ideas shared by Mayor Pro Tem Yep, pistachios or a Kerman population-themed souvenir, for the next Kannami visit.

A potential future agenda item is requested regarding downtown parking.

Staff was directed to provide an update regarding the Darden Project.

9. MAYOR/COUNCIL REPORTS/ANNOUNCEMENTS/FUTURE AGENDA ITEMS

10. CLOSED SESSION – None

11. ADJOURNMENT - 6:54 p.m.

MINUTES CERTIFICATION
I, Josie Camacho, City Clerk for the City of Kerman, do hereby declare under penalty of perjury that the above minutes are a true depiction of all actions taken at the City Council meeting held on the first date above written at Kerman City Hall, 850 S. Madera Ave, Kerman, CA.

Date: August 14, 2025 /s/ Josie Camacho, City Clerk
11 Section 5, Item A.

Accounts Payable
User:

Printed:

VSandoval
8/15/2025 3:37 PM
Checks by Date - Summary by Check Date
Check No Vendor No Vendor Name Check Date Check Amount
ACH 10522 CALPERS 07/14/2025 464,273.00
Total for 7/14/2025: 464,273.00
ACH 12521 EDIS 07/15/2025 164.50
Total for 7/15/2025: 164.50
ACH 10522 CALPERS 07/16/2025 388.74
32464 11493 24 / 7 PET VETS 07/16/2025 256.50
32465 10021 ALERT O LITE 07/16/2025 251.14
32466 10040 AT&T MOBILITY 07/16/2025 3,973.76
32467 11324 AVISON CONSTRUCTION INC 07/16/2025 1,331,745.63 32468 11917 BLAIS & ASSOCIATES LLC 07/16/2025 14,848.00 32469 10056 BOGIE'S PUMP SYSTEMS 07/16/2025 351.93
32470 10617 C A REDING CO INC 07/16/2025 67.14
32472 10106 CON EDISON CLEAN ENERGY 07/16/2025 25,540.40 32473 10108 COOKS COMMUNICATIONS CORP 07/16/2025 31,254.17 32474 10109 AUDITOR CONTROLLER/TREASURER-TAX COLLECTOR COUNTY OF FRESNO 07/16/2025 5,248.07 32475 10826 CROWN SERVICES CORPORATION 07/16/2025 310.00 32476 10114 CROWN SHORT LOAD CONCRETE 07/16/2025 1,959.37 32477 12114 D & S PLUMBING HEATING & AIR 07/16/2025 350.00 32478 10128 DEPARTMENT OF JUSTICE 07/16/2025 576.00
32479 11999 DOG WASTE DEPOT 07/16/2025 631.55
32480 10143 ECS IMAGING INC 07/16/2025 4,098.50
32481 10144 ELBERT DISTRIBUTING INC 07/16/2025 698.64
32482 12312 EXTREME CONNECTIONS 07/16/2025 539.52
32483 10439 FAMILY HEALING CENTER 07/16/2025 1,000.00
32485 11358 GREAT AMERICA FINANCIAL SERVICES07/16/2025 390.18 32486 10514 ICAD INC 07/16/2025 292.50
32487 10219 JENSEN & PILEGARD INC 07/16/2025 42.44
32488 10485 JP AIR CONDITIONING & HEATING 07/16/2025 1,488.61 32489 10239 KERWEST INC 07/16/2025 424.00
32490 10250 LIEBERT CASSIDY WHITMORE 07/16/2025 1,215.00 32491 10251 LIGHTHOUSE ELECTRIC INC 07/16/2025 802.50
32492 10252 LITHIA FORD OF FRESNO 07/16/2025 292.22
32493 10678 MAC'S EQUIPMENT INC 07/16/2025 1,873.97
32494 12670 PRISCILLA MENDEZ 07/16/2025 562.50
32495 10261 MID VALLEY DISPOSAL INC 07/16/2025 152,440.59 32496 11181 NORTH KINGS GROUNDWATER SUSTAINABILITY AGENCY 07/16/2025 7,768.87 32497 12356 NOTORIOUS GRAFIX 07/16/2025 455.07
32498 10282 OFFICE DEPOT 07/16/2025 1,221.06
32499 10286 O'REILLY AUTOMOTIVE INC 07/16/2025 2,735.47 32500 10289 P.G.& E. 07/16/2025 9,212.95
32501 10301 PETTY CASH 07/16/2025 200.16
32502 12842 PRIMO BRANDS 07/16/2025 184.48
32503 10319 RENO'S HARDWARE 07/16/2025 1,285.65
AP Checks by Date - Summary by Check Date (8/15/2025 3:37 PM) Page 1 12 Section 5, Item B.

Check No Vendor No Vendor Name Check Date Check Amount
32504 11041 ROSENBALM ROCKERY 07/16/2025 440.77
32505 12475 SAN JOAQUIN PEST CONTROL 07/16/2025 105.00
32506 11650 SITEONE LANDSCAPE SUPPLY, LLC 07/16/2025 1,475.43 32507 10337 SLUMBERGER LUMBER 07/16/2025 1,702.43
32508 10345 STATE OF CALIFORNIA 07/16/2025 100.00
32509 11688 SWANK MOTION PICTURES INC 07/16/2025 510.00 32510 10754 THE HOME DEPOT PRO-SUPPLY WORKS07/16/2025 1,622.56 32511 12048 UNITED STATES TREASURY 07/16/2025 222.08
32512 10391 VALLEY FARM SUPPLY STORES 07/16/2025 2,639.29 32513 12843 DIANA VERA 07/16/2025 150.00
32514 12290 VERIZON 07/16/2025 890.65
32515 10406 WEST HILLS OIL INC 07/16/2025 7,372.64
32516 12267 IRENE ZAMORA 07/16/2025 150.00
Total for 7/16/2025: 1,624,358.13
ACH 12521 EDIS 07/21/2025 29,046.25
ACH 12521 EDIS 07/21/2025 1,449.00
ACH 10522 CALPERS 07/21/2025 141.65
Total for 7/21/2025: 30,636.90
ACH 10522 CALPERS 07/22/2025 41,980.94
Total for 7/22/2025: 41,980.94
ACH 10644 US BANK EQUIPMENT FINANCE 07/23/2025 710.78
32517 11708 ALTEC INDUSTRIES INC 07/23/2025 2,537.59
32518 12537 AMERITAS GROUP INSURANCE CORP- DENTAL CLAIMS 07/23/2025 957.75 32519 10040 AT&T MOBILITY 07/23/2025 310.98
32520 10504 AUTOZONE 07/23/2025 13.72
32521 10452 CITY OF FRESNO WMD 07/23/2025 87.00
32522 11498 COMCAST CABLE COMMUNICATIONS MANAGEMENT LLC 07/23/2025 735.69 32523 11874 CSG CONSULTANTS INC 07/23/2025 8,596.00
32524 11382 DATA TICKET INC 07/23/2025 61.94
32526 11358 GREAT AMERICA FINANCIAL SERVICES07/23/2025 187.44 32527 10655 JIM BRISCO ENTERPRISES INC 07/23/2025 11,097.52 32528 12112 LG ELECTRIC 07/23/2025 950.00
32529 10250 LIEBERT CASSIDY WHITMORE 07/23/2025 225.00
32530 10289 P.G.& E. 07/23/2025 2,152.20
32531 12026 PRECISION CIVIL ENGINEERING INC 07/23/2025 1,685.00 32532 10315 QUINN COMPANY 07/23/2025 640.03
32533 12846 ADRIANA SOSA 07/23/2025 30.00
32534 10021 ALERT O LITE 07/23/2025 43.32
32535 12538 AMERITAS GROUP INSURANCE CORP- DENTAL FEES 07/23/2025 455.00 32536 12848 AUTHENTIC ADVENTURES CENTRAL CALIFORNIA 07/23/2025 1,470.00 32537 12710 EDUARDO BARRERA 07/23/2025 362.00
32538 10054 BLUE SHIELD OF CALIFORNIA 07/23/2025 67,871.17 32539 10617 C A REDING CO INC 07/23/2025 280.88
32540 10078 CALIFORNIA STATE DISBURSEMENT 07/23/2025 115.38 32541 12844 CALIFORNIA STATE DISBURSEMENT CALIFORNIA STATE DISBURSEMENT 07/23/2025 161.53 32542 12213 PATRICK CLARK 07/23/2025 362.00
32543 10114 CROWN SHORT LOAD CONCRETE 07/23/2025 1,093.02 32544 10117 CUMMINS SALES AND SERVICE 07/23/2025 759.92 32545 10139 DOOLEY ENTERPRISES INC 07/23/2025 847.79
32546 12766 BRANDON ESCALERA 07/23/2025 92.00
AP Checks by Date - Summary by Check Date (8/15/2025 3:37 PM) Page 2 13 Section 5, Item B.

Check No Vendor No Vendor Name Check Date Check Amount
32547 10157 FERGUSON ENTERPRISES INC 07/23/2025 158.87
32548 10169 FRESNO PET CEMETERY 07/23/2025 278.40
32549 10514 ICAD INC 07/23/2025 2,002.50
32550 10251 LIGHTHOUSE ELECTRIC INC 07/23/2025 807.50
32551 11935 MATT LOPEZ 07/23/2025 362.00
32552 10272 MUTUAL OF OMAHA 07/23/2025 3,367.89
32553 10282 OFFICE DEPOT 07/23/2025 643.39
32554 11359 ERIKA ORNELAS 07/23/2025 450.00
32555 10324 RIVERSIDE NURSERY & LANDSCAPE INC07/23/2025 165.20 32556 12398 KARLA ROMERO 07/23/2025 150.00
32557 10862 SIGNMAX 07/23/2025 8.02
32558 11650 SITEONE LANDSCAPE SUPPLY, LLC 07/23/2025 870.17 32559 12368 SPECIALTY HOSE EXPRESS LLC 07/23/2025 96.05 32560 11460 SUPERIOR POOL PRODUCTS LLC 07/23/2025 1,953.38 32561 12847 ADRIANA TOPETE 07/23/2025 150.00
32562 10382 UNITED RENTALS NORTH AMERICA INC07/23/2025 363.25 32563 10168 UNITY IT 07/23/2025 319.24
32564 12711 US CAD 07/23/2025 660.00
32565 10387 USA BLUE BOOK 07/23/2025 490.70
Total for 7/23/2025: 118,189.21
ACH 10522 CALPERS 07/24/2025 158.14
Total for 7/24/2025: 158.14
ACH 10147 EMPLOYMENT DEVELOPMENT DEPARTMENT 07/25/2025 11,245.43 ACH 10517 FEDERAL TAXES PAYROLL 07/25/2025 67,047.94
ACH 10518 KERMAN POLICE OFFICERS ASSN 07/25/2025 878.25 ACH 10519 KERMAN MUNICIPAL EMPLOYEES ASSN07/25/2025 247.50 ACH 10520 ICMA-RC 07/25/2025 4,557.47
Total for 7/25/2025: 83,976.59
32566 10092 CENTRAL VALLEY TOXICOLOGY INC 07/30/2025 213.00 32567 10128 DEPARTMENT OF JUSTICE 07/30/2025 175.00
32568 10842 FRESNO ECONOMIC OPPORTUNITIES COMMISSION 07/30/2025 589.93 32569 11358 GREAT AMERICA FINANCIAL SERVICES07/30/2025 176.22 32570 10249 LEAGUE OF CALIFORNIA CITIES 07/30/2025 50.00 32571 10261 MID VALLEY DISPOSAL INC 07/30/2025 1,457.70 32573 10289 P.G.& E. 07/30/2025 17,009.81
32574 11880 PERSONALIZED GIFTS FOR YOU 07/30/2025 3,091.84 32575 10419 ZIM INDUSTRIES INC 07/30/2025 197,174.93
32576 11493 24 / 7 PET VETS 07/30/2025 295.00
32577 10037 ASCAP 07/30/2025 450.50
32578 11722 CALED 07/30/2025 500.00
32579 10074 CALIFORNIA PARK/RECREATION SOC 07/30/2025 370.00 32580 10078 CALIFORNIA STATE DISBURSEMENT 07/30/2025 207.69 32581 12844 CALIFORNIA STATE DISBURSEMENT CALIFORNIA STATE DISBURSEMENT 07/30/2025 161.53 32582 10103 COLONIAL LIFE 07/30/2025 781.31
32583 10104 COMCAST 07/30/2025 498.48
32584 10114 CROWN SHORT LOAD CONCRETE 07/30/2025 1,914.69 32585 10900 E & M INC 07/30/2025 8,925.00
32586 12767 JONATHAN FARR 07/30/2025 362.00
32587 10159 FRESNO COUNCIL OF GOVERNMENTS 07/30/2025 676.00 32588 12379 GILL CHEVROLET 07/30/2025 321.72
AP Checks by Date - Summary by Check Date (8/15/2025 3:37 PM) Page 3 14 Section 5, Item B.

Check No Vendor No Vendor Name Check Date Check Amount
32589 10201 HORIZON 07/30/2025 2,569.33
32590 12018 ICMA MEMBERSHIP RENEWALS 07/30/2025 1,200.00 32591 10219 JENSEN & PILEGARD INC 07/30/2025 178.72
32592 11923 JOE A GONSALVES & SON 07/30/2025 1,250.00
32593 10226 JORGENSEN & CO 07/30/2025 310.58
32594 12852 HITZARI MARTINEZ 07/30/2025 150.00
32595 10282 OFFICE DEPOT 07/30/2025 97.17
32596 10289 P.G.& E. 07/30/2025 572.24
32597 12053 R & L MUSIC ENT 07/30/2025 150.00
32598 10986 ROTARY CLUB OF KERMAN 07/30/2025 1,500.00
32599 10329 SAN JOAQUIN VALLEY AIR POLL 07/30/2025 290.00 32600 12804 CHRISTOPHER SCOTT 07/30/2025 92.00
32601 10862 SIGNMAX 07/30/2025 2,003.40
32602 11650 SITEONE LANDSCAPE SUPPLY, LLC 07/30/2025 1,433.43 32603 12368 SPECIALTY HOSE EXPRESS LLC 07/30/2025 89.34 32604 10345 STATE OF CALIFORNIA 07/30/2025 100.00
32605 10357 TAYLOR MADE IRRIGATION 07/30/2025 16.68
32606 10360 TERRY JOHNSON TRUCKING 07/30/2025 1,383.38
32607 10015 THE ADVANCE GROUP INC 07/30/2025 2,652.36
32608 10363 THE BUSINESS JOURNAL 07/30/2025 140.00
32609 11134 ALFONSO TINOCO 07/30/2025 301.00
32610 11502 TIREHUB LLC 07/30/2025 1,449.33
32611 10374 TRI TECH FORENSICS INC 07/30/2025 367.05
32612 10401 WALLYS TIRE AND WHEEL 07/30/2025 23.54
32613 10406 WEST HILLS OIL INC 07/30/2025 7,898.37
32614 12344 WHITE CAP LP 07/30/2025 1,009.23
32615 10281 NORTH CENTRAL FIRE PROT DIST 07/30/2025 813,689.24 Total for 7/30/2025: 1,076,318.74
ACH 10522 CALPERS 07/31/2025 109.51
ACH 10386 US BANK CORPORATE PAYMENT 07/31/2025 2,659.65 ACH 10386 US BANK CORPORATE PAYMENT 07/31/2025 5,373.58 Total for 7/31/2025: 8,142.74
ACH 12808 QUADIENT FINANCE USA INC 08/01/2025 341.68
ACH 10522 CALPERS 08/01/2025 175.35
ACH 10522 CALPERS 08/01/2025 44,697.09
Total for 8/1/2025: 45,214.12
32616 UB*01982 ARBITRAGE HOMES LLC 08/04/2025 10.80
32617 UB*01984 EDUARDO CAMARGO 08/04/2025 90.47
32618 UB*01992 JAI-DANIELLE ESPINOZA 08/04/2025 147.26
32619 UB*01989 MARTHA ESTRADA 08/04/2025 135.27
32620 BP-JOSE1 JOSEPH CROWN CONSTRUCTION 08/04/2025 22.85 32621 UB*01981 HARDIP KAUR 08/04/2025 84.47
32622 UB*01983 MARIA MARTINEZ 08/04/2025 16.66
32623 UB*01987 HUGO MATA 08/04/2025 136.99
32624 UB*01986 ADRIANA PALACIOS 08/04/2025 68.26
32625 UB*01991 EMILY GARCIA VILLADO 08/04/2025 144.52
Total for 8/4/2025: 857.55
ACH 10522 CALPERS 08/05/2025 45,430.50
AP Checks by Date - Summary by Check Date (8/15/2025 3:37 PM) Page 4 15 Section 5, Item B.

Check No Vendor No Vendor Name Check Date Check Amount
Total for 8/5/2025: 45,430.50
ACH 10522 CALPERS 08/07/2025 44,829.93
32626 11493 24 / 7 PET VETS 08/07/2025 513.00
32627 11387 LUISA AGUIRRE 08/07/2025 580.00
32628 10021 ALERT O LITE 08/07/2025 449.11
32629 12537 AMERITAS GROUP INSURANCE CORP- DENTAL CLAIMS 08/07/2025 2,069.52 32630 12257 AMERITAS LIFE INSURANCE CORP- VISION FEES 08/07/2025 1,043.44 32631 11324 AVISON CONSTRUCTION INC 08/07/2025 664,266.14 32632 11355 BADGER METER 08/07/2025 303.63
32633 12348 BRADY INDUSTRIES 08/07/2025 816.70
32634 10061 BSK ASSOCIATES 08/07/2025 2,367.75
32635 10064 CAL VALLEY PRINTING 08/07/2025 447.07
32636 11215 CALIFORNIA INDUSTRIAL RUBBER COMPANY 08/07/2025 270.98 32637 10962 TOM CHAPMAN 08/07/2025 92.00
32638 10096 CHILDS AND COMPANY INC 08/07/2025 275.17
32639 10452 CITY OF FRESNO WMD 08/07/2025 465.00
32640 10105 COMMUNITY HOSPITALS OF CENTRAL CALIFORNIA 08/07/2025 350.00 32641 10109 AUDITOR CONTROLLER/TREASURER-TAX COLLECTOR COUNTY OF FRESNO 08/07/2025 77.00 32642 10133 DEPARTMENT OF TRANSPORTATION 08/07/2025 2,591.75 32643 10619 EDD 08/07/2025 4,081.00
32644 10166 FRESNO-MADERA AGENCY ON AGING 08/07/2025 37.62 32645 10185 GRAINGER 08/07/2025 121.32
32646 11358 GREAT AMERICA FINANCIAL SERVICES08/07/2025 416.03 32647 10201 HORIZON 08/07/2025 587.31
32648 12643 HYDROPRO SOLUTIONS 08/07/2025 3,082.76
32649 10222 JERRY'S AUTOMOTIVE 08/07/2025 252.00
32650 11482 JIM CRAWFORD CONSTRUCTION 08/07/2025 29.23
32651 10238 KERMAN UNIFIED SCHOOL DIST 08/07/2025 12.46 32652 10239 KERWEST INC 08/07/2025 552.00
32653 11798 KASSANDRA KLEIN 08/07/2025 698.52
32654 12855 PATRICIA LEHMAN 08/07/2025 50.00
32655 11965 MISSION UNIFORM SERVICE 08/07/2025 3,424.78 32656 10265 MONTOY LAW CORPORATION 08/07/2025 15,619.00 32657 10281 NORTH CENTRAL FIRE PROT DIST 08/07/2025 247.00 32658 10282 OFFICE DEPOT 08/07/2025 422.63
32659 10289 P.G.& E. 08/07/2025 2,998.25
32660 11891 PACE SUPPLY 08/07/2025 13,706.24
32661 12854 JONAS QUINTEROS 08/07/2025 74.00
32662 10596 RED WING BUSINESS ADVANTAGE ACCOUNT 08/07/2025 202.60 32663 11714 ROD CARSEY 08/07/2025 2,753.72
32664 12590 DALIA SANTANA ZAMUDIO 08/07/2025 35.14
32665 11212 SE ELECTRIC 08/07/2025 80.00
32666 10332 SEBASTIAN 08/07/2025 2,067.61
32667 11114 SHERWIN WILLIAMS 08/07/2025 408.49
32668 11650 SITEONE LANDSCAPE SUPPLY, LLC 08/07/2025 409.36 32669 11787 SNAP ON INC 08/07/2025 1,102.08
32670 12368 SPECIALTY HOSE EXPRESS LLC 08/07/2025 600.00 32671 11907 SPRINGBROOK HOLDING COMPANY LLC08/07/2025 1,852.00 32672 11460 SUPERIOR POOL PRODUCTS LLC 08/07/2025 1,388.21 32673 10754 THE HOME DEPOT PRO-SUPPLY WORKS08/07/2025 1,189.23 32674 10379 UNDERGROUND SERVICE ALERT OF 08/07/2025 901.11 32675 12048 UNITED STATES TREASURY 08/07/2025 562.48
32676 10168 UNITY IT 08/07/2025 9,847.57
32677 10377 US POST OFFICE 08/07/2025 5,000.00
32678 12853 WINEGARD ENERGY INC 08/07/2025 263.15
AP Checks by Date - Summary by Check Date (8/15/2025 3:37 PM) Page 5 16 Section 5, Item B.

Check No Vendor No Vendor Name Check Date Check Amount
32679 10413 YAMABE & HORN ENGINEERING INC 08/07/2025 141,380.83 32680 12140 ZERONOX 08/07/2025 1,900.33
Total for 8/7/2025: 940,164.25
ACH 10147 EMPLOYMENT DEVELOPMENT DEPARTMENT 08/08/2025 10,660.18 ACH 10517 FEDERAL TAXES PAYROLL 08/08/2025 64,531.33
ACH 10518 KERMAN POLICE OFFICERS ASSN 08/08/2025 908.25 ACH 10519 KERMAN MUNICIPAL EMPLOYEES ASSN08/08/2025 255.00 ACH 10520 ICMA-RC 08/08/2025 2,509.96
Total for 8/8/2025: 78,864.72
32681 10021 ALERT O LITE 08/13/2025 434.44
32682 12861 A-PLUS BUYER INC 08/13/2025 12,930.83
32683 10040 AT&T MOBILITY 08/13/2025 2,203.83
32684 12476 RUTH BELMONTE 08/13/2025 210.00
32685 10617 C A REDING CO INC 08/13/2025 331.70
32686 10078 CALIFORNIA STATE DISBURSEMENT 08/13/2025 115.38 32687 12844 CALIFORNIA STATE DISBURSEMENT CALIFORNIA STATE DISBURSEMENT 08/13/2025 161.53 32688 12858 MARISOL CAMACHO 08/13/2025 47.08
32689 12509 JOSEPH CASTRO 08/13/2025 27.09
32690 10108 COOKS COMMUNICATIONS CORP 08/13/2025 31,394.82 32691 12215 ROSIO CORTEZ 08/13/2025 150.00
32692 10114 CROWN SHORT LOAD CONCRETE 08/13/2025 493.66 32693 11874 CSG CONSULTANTS INC 08/13/2025 8,620.00
32694 11999 DOG WASTE DEPOT 08/13/2025 3,219.12
32695 12521 EDIS 08/13/2025 20,574.84
32696 10157 FERGUSON ENTERPRISES INC 08/13/2025 596.60
32697 10162 FRESNO COUNTY TREASURER 08/13/2025 25,711.44 32698 10163 FRESNO DISTRIBUTING CO 08/13/2025 151.31
32699 10842 FRESNO ECONOMIC OPPORTUNITIES COMMISSION 08/13/2025 378.00 32700 12379 GILL CHEVROLET 08/13/2025 195.00
32701 10185 GRAINGER 08/13/2025 146.45
32702 11358 GREAT AMERICA FINANCIAL SERVICES08/13/2025 163.64 32703 10193 HAVENS SECURITY INC 08/13/2025 1,108.04
32704 12856 JC RENTALS 08/13/2025 1,689.10
32705 10219 JENSEN & PILEGARD INC 08/13/2025 702.68
32706 12860 KERMAN LIONS CLUB 08/13/2025 1,250.00
32707 12816 JIM LIM 08/13/2025 405.00
32708 11699 LORENA OBEZO 08/13/2025 225.00
32709 12618 MAINSTREET DESIGNS INC 08/13/2025 525.85
32710 11703 MAVERICK DATA SYSTEMS LLC 08/13/2025 250.00 32711 10261 MID VALLEY DISPOSAL INC 08/13/2025 158,438.73 32712 10282 OFFICE DEPOT 08/13/2025 54.53
32713 10286 O'REILLY AUTOMOTIVE INC 08/13/2025 1,416.13 32714 10289 P.G.& E. 08/13/2025 75,106.87
32715 12026 PRECISION CIVIL ENGINEERING INC 08/13/2025 2,506.25 32716 12842 PRIMO BRANDS 08/13/2025 392.11
32717 10316 R G EQUIPMENT OF FRESNO INC 08/13/2025 555.79 32718 11549 R J BERRY JR INC 08/13/2025 39,225.36
32719 10319 RENO'S HARDWARE 08/13/2025 849.85
32720 12667 ADRIANA ROTH 08/13/2025 405.00
32721 12475 SAN JOAQUIN PEST CONTROL 08/13/2025 863.00
32722 12536 JAVIER SEGURA 08/13/2025 2,204.46
32723 10862 SIGNMAX 08/13/2025 110.52
32724 11650 SITEONE LANDSCAPE SUPPLY, LLC 08/13/2025 2,069.09 AP Checks by Date - Summary by Check Date (8/15/2025 3:37 PM) Page 6 17 Section 5, Item B.

Check No Vendor No Vendor Name Check Date Check Amount
32725 10337 SLUMBERGER LUMBER 08/13/2025 1,382.09
32726 10345 STATE OF CALIFORNIA 08/13/2025 100.00
32727 10354 T & T PAVEMENT MARKINGS 08/13/2025 34.33
32728 12581 TATES TSHIRT DESIGNS AND PRINTS, LLC08/13/2025 313.30 32729 10754 THE HOME DEPOT PRO-SUPPLY WORKS08/13/2025 4,588.87 32730 12859 JACKLYN VALDEZ 08/13/2025 150.00
32731 12178 VALLEY ANIMAL CENTER SPAY & NEUTER CLINIC 08/13/2025 495.00 32732 10391 VALLEY FARM SUPPLY STORES 08/13/2025 1,873.46 32733 12815 JOHN VERES 08/13/2025 405.00
32734 12290 VERIZON 08/13/2025 1,659.91
32735 10406 WEST HILLS OIL INC 08/13/2025 9,622.15
32736 12344 WHITE CAP LP 08/13/2025 1,211.45
Total for 8/13/2025: 420,445.68
Report Total (297 checks): 4,979,175.71
AP Checks by Date - Summary by Check Date (8/15/2025 3:37 PM) Page 7 18 Section 5, Item B.

CITY OF KERMAN PAYROLL REPORT

RETRO PAY GROSS COMP TIME
& OTHER Hours Amount Hours Amount Hours Amount SALARY EARNED Grand Total $ 270,774.50 $ 3,602.81 238.20 $ 11,591.84 0.00 $ - 72.00 $ 1,821.13 $ 287,790.28 70.74 PAY PERIOD: July 20, 2025 - August 02, 2025
OVERTIME HOLIDAY at 1/2 TIME STANDBY Salary

Page 1 ends

19 Section 5, Item C.

CITY OF KERMAN
CD/Securities Portfolio
As of July 31, 2025 6/30/2025 6/30/2026 FY to Date
Interest Rate/ Opening Maturity Book Additions/ Book Interest Institution Account Number Trans. Date Date Date Balance (Deletions) Cashed In Balance Fair Value Paid CD's:

Pacific Member Bank Irvine 615-030525-245 5.00% 3/15/24 9/15/25 243,000.00 243,000.00 243,051.03 - Discover Bank Greenwood 615-030525-245 3.55% 9/20/22 9/22/25 245,000.00 245,000.00 244,706.00 - BMW Bank North Amer Salt Lake 615-030525-245 0.50% 9/25/20 9/25/25 249,000.00 249,000.00 247,513.47 - Bank of Hapoalim B M New York 615-030525-245 5.05% 4/24/24 10/29/25 200,000.00 200,000.00 200,246.00 - Flagstar Bank National Association 615-030525-245 5.20% 6/11/24 1/13/26 243,000.00 243,000.00 243,899.10 - US Government Bonds
Federal Home Loan Bank 615-030525-245 4.75% 10/30/24 10/30/29 500,000.00 500,000.00 498,100.00 - Federal Home Loan Bank 615-030525-245 4.50% 1/30/25 7/30/27 500,000.00 500,000.00 498,585.00 11,250.00 Federal Home Loan Bank 615-030525-245 4.80% 5/28/25 5/15/28 500,000.00 500,000.00 499,505.00 - Federal Home Loan Bank 615-030525-245 5.00% 5/28/25 5/14/30 500,000.00 500,000.00 499,335.00 - Federal Home Loan Bank 615-030525-245 4.50% 6/30/25 6/23/28 280,000.00 280,000.00 279,669.60 - Federal Home Loan Bank 615-030525-245 4.50% 7/30/25 7/28/28 500,000.00 500,000.00 499,150.00 - Federal Home Loan Bank 615-030525-245 4.50% 3/24/25 3/24/28 251,000.00 251,000.00 250,718.88 - Federal Home Loan Bank 615-030525-245 4.52% 5/7/25 11/7/28 503,000.00 503,000.00 500,349.19 - Federal Home Loan Bank 615-030525-245 5.00% 10/29/24 10/30/29 500,000.00 (500,000.00) - - 6,250.00 United Security Bank CD
United Security Bank 1317802 4.75% 2/2/24 2/2/26 250,000.00 250,000.00 250,000.00 - United Security Bank 1317802 4.75% 6/27/24 6/27/26 250,000.00 250,000.00 250,000.00 - Average Rate 4.39%
Total CD's 5,214,000.00 - - 5,214,000.00 5,204,828.27 17,502.01 20 Section 5, Item D.

67.00 19,482.01 - 19,549.01 19,549.01 -
Local Agency Investment Fund
Beginning Balance 98-10-400 18,458,212.85 18,458,212.85 - Interest 4.40% 7/15/25 202,228.94 202,228.94 202,228.94 - -
Transfers In/(Out) -
-
-
Total - LAIF 4.40% 18,458,212.85 202,228.94 - 18,660,441.79 18,660,441.79 202,228.94 Central Valley Money Market Acct 015030960
Beginning Balance 3,649,281.76 3,649,281.76
Interest 7/31/25 247.95 247.95 247.95
- -
Transfers In/(Out) -
-
-

0.08% -
3,649,281.76 247.95 - 3,649,529.71 3,649,529.71 247.95
Subtotal All City Investments 2.96% 27,321,494.61 202,476.89 - 27,523,971.50 27,514,799.77 219,978.90 27,321,561.61 221,958.90 - 27,543,520.51 27,534,348.78 219,978.90 Market Value Adjustment (9,171.73)
221,958.90
221,958.90

0.00 Total Investments
21 Section 5, Item D.

STAFF REPORT
MEETING DATE: August 27, 2025
PRESENTER: Jesus A. Gonzalez, City Engineer
SUBJECT: Approval of Parcel Map 2023-01 and Acceptance of Dedications on Behalf of the Public (JG)
RECOMMENDATION: Council by motion adopt a resolution approving Parcel Map 2023-01 and accepting dedications on behalf of the public.

EXECUTIVE SUMMARY:

Central Valley Engineering and Surveying, Inc. (Applicant) submitted Tentative Parcel Map No. 2023-01 (TPM 2023-01) in April 2023. TPM 2023-01 proposed dividing the existing property located at the northeast corner of Whitesbridge Road and Vineland Avenue into three (3) parcels, two (2) for commercial use and one (1) designated remainder. TPM 2023-01 was approved by the Planning Commission on January 8, 2024 and by the City Council on February 14, 2024.

In conformance with the Conditions of Approval for TPM 2023-01, the Applicant has submitted Parcel Map No. 2023-01 (PM 2023-01) for City review and approval. The Conditions of Approval require the Vineland Avenue dedication of a twenty-two (22) foot easement for public street purposes. The City Engineer and City Surveyor have reviewed the PM 2023-01 and determined the map to be technically correct, and conform to TPM 2023-01, the Kerman Subdivision Ordinance, Subdivision Map Act as well as include the required Vineland Avenue dedication. In order to finalize PM 2023-01 and submit to the County for recordation, the City Council must approve the map and accept the dedication of the right-of-way on behalf of the public.

FISCAL IMPACT:

None.

ATTACHMENTS:

A. Resolution
B. Final Parcel Map No. 2023-01
22 Section 5, Item E.

Attachment ‘A’
RESOLUTION NO. 25-___
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF KERMAN APPROVING PARCEL MAP NO. 2023-01 AND ACCEPTING DEDICATIONS ON BEHALF OF THE PUBLIC WHEREAS, Tentative Parcel Map No. 2023-01 was approved by the Planning Commission on January 8, 2024 and the City Council on February 14, 2024; and WHEREAS, Central Valley Engineering and Surveying, Inc. has submitted an application for Parcel Map No. 2023-01; and
WHEREAS, the City Council has considered the application for Parcel Map No. 2023-01 under the Subdivision Map Act, Subdivision Ordinance of the City of Kerman, and proofs and evidence offered including the recommendations of the City Engineer, the City Surveyor; and WHEREAS, the City Council has found that the proposed subdivision is consistent with the General Plan and all specific plans of the City of Kerman and that none of the grounds for denial set forth in subdivisions (a) through (g) of Section 66474 of the Government Code exist with respect to said subdivision.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF KERMAN RESOLVES AS FOLLOWS:

1. Parcel Map 2023-01, consisting of two (2) sheets, a copy of which is on file with the City Clerk, is hereby approved and the City Clerk is authorized and directed to provide for the recording of said Parcel Map.

2. The offers of right of way dedication made on Parcel Map 2023-01 are hereby accepted on behalf of the public.

3. This resolution is effective upon adoption.

The foregoing resolution was adopted by the City Council of the City of Kerman at a regular meeting held on the 27th day of August, 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
23 Section 5, Item E.

The foregoing resolution is hereby approved.

Maria Pacheco
Mayor
ATTEST:

Josie Camacho
City Clerk
24 Section 5, Item E.

Attachment 'B'
25 Section 5, Item E.
26 Section 5, Item E.

STAFF REPORT
MEETING DATE: August 27, 2025
PRESENTER: John Jansons, City Manager
SUBJECT: Consideration of Resolution Approving Amendment to Contract for City Attorney Services (JAJ)
RECOMMENDATION: Council by motion adopt a resolution approving Amendment Number Four (4) to Contract for City Attorney Services with Montoy Law Corporation.

DISCUSSION:

The Montoy Law Corporation (“Firm”) has provided City Attorney services to the City of Kerman (City) since July 1, 2015. The Agreement for legal services has been amended three times since 2015 including: July 1, 2019, July 1, 2023, and July 1, 2024.

The City and the Firm (the Parties) have now determined to set new rates for legal services as set forth in this Amendment No. 4 to Agreement (“Amendment”) presented as Exhibit ‘A’ to the Resolution (‘Attachment A’). The proposed increases in rates have been negotiated and agreed to by the parties are deemed reasonable and competitive in the marketplace. The Firm does not charge to attend meetings at Kerman City Hall or in the City of Kerman.

FISCAL IMPACT:

The fiscal impact is minimal and is accounted for in the FY 2025-2026 Budget. The new rates effective September 1, 2025, are as follows:

A. General Services Attorney Rate: $265.00 Hourly.

General Services shall include all legal services except Pitchess Motions, Administrative Hearings, and Litigation.

Examples of General Services include staff meetings, advisory services, agenda review, drafting/negotiating contracts, drafting/reviewing correspondence, documents, resolutions, and ordinances, research, and preparation of legal memoranda.

B. Administrative Hearings and Litigation Attorney Rate: $325.00 Hourly.

C. Rate for Paralegal Work: $120.00 Hourly.

ATTACHMENTS:

A. Resolution w/Exhibit (Amendment No. 4)
27 Section 5, Item F.

Attachment ‘A’
RESOLUTION NO. 25-___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF KERMAN APPROVING AMENDMENT NO. 4 TO LEGAL SERVICES AGREEMENT BY AND BETWEEN THE CITY OF KERMAN AND MONTOY LAW CORPORATION EFFECTIVE SEPTEMBER 1, 2025.

WHEREAS, The City of Kerman (“City”) and Montoy Law Corporation (“Firm”) entered into a Legal Services Agreement (“Agreement”) on July 1, 2015, for City Attorney legal services which was amended on July 1, 2019, July 1, 2023, and July 1, 2024; and WHEREAS, Hilda Cantu Montoy will continue to serve as City Attorney to City under the Agreement; and
WHEREAS, the Firm has the legal competence, experience, and qualifications to provide professional legal services required by City; and
WHEREAS, the parties have determined to set new rates for legal services as set forth in this Amendment No. 4 to Agreement (“Amendment”).

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Kerman:

1. The foregoing recitals are true and correct and incorporated by reference.

2. Hilda Cantu Montoy will continue to serve as City Attorney to City under the Agreement.

3. City Council finds that the Firm has the legal competence, experience, and qualifications to provide professional legal services required by City.

4. The City Council approves Amendment No. Four (4) (attached as Exhibit ‘A’ and incorporated by reference) to Legal Services Agreement entered on July 1, 2015, and as amended in 2019, 2029 and 2024.

5. The City Council authorizes the Mayor to execute the Amendment on behalf of the City.

6. This resolution is effective upon adoption.
(Certification on following page)
28 Section 5, Item F.

The foregoing resolution was adopted by the City Council of the City of Kerman at a regular meeting held on the 27th day of August 2025, by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

The foregoing resolution is hereby approved.
____________________________
Maria Pacheco
Mayor
ATTEST:
___________________________
Josie Camacho
City Clerk
29 Section 5, Item F.

Exhibit 'A'
30 Section 5, Item F.
31 Section 5, Item F.
32 Section 5, Item F.

STAFF REPORT
MEETING DATE: August 27, 2025
PRESENTER: John Jansons, City Manager
SUBJECT: Updated Fresno County Multi-Jurisdictional Local Hazard Mitigation Plan (JAJ) RECOMMENDATION: Council by motion adopt a resolution approving the updated Fresno County Multi-Jurisdictional Hazard Mitigation Plan.

DISCUSSION:

The County of Fresno has requested that each jurisdiction in the County consider adopting a Resolution demonstrating their participation in and support for recently updated and approved Fresno County Multi-Jurisdictional Hazard Mitigation Plan.

The County of Fresno initially adopted this Plan on December 1, 2009, and later approved an update on April 23, 2019. The County’s Office of Emergency Services (OES) managed the Plan's development in coordination with the consultant Witt O’Brien’s LLC. The process included participation from various County departments, cities (including Kerman), and special districts.

Public input was sought through public surveys, public forums, and meetings.

Key highlights of the latest update to the Multi-Jurisdictional Hazard Mitigation Plan include:
o Reflects updated hazard profiles, including recent disaster data (e.g., wildfires, droughts, flooding, and extreme heat events between 2018-2023). o Includes new mitigation projects aimed at addressing emerging threats such as public safety power shutoffs (PSPS), extreme heat, and critical infrastructure vulnerabilities. o Updates risk assessments using revised FEMA tools, current GIS data, and more detailed vulnerability analysis.
o Integrates recent land use and development trends to support more informed planning and mitigation prioritization.
o Expands jurisdictional participation to include updated annexes from cities, special districts, and agencies that reflect localized hazard mitigation strategies. o Ensures ongoing eligibility for FEMA Hazard Mitigation Assistance (HMA) programs and full CDAA reimbursement by meeting AB 2140 requirements. 33 Section 5, Item G.

Both California OES and FEMA have conditionally approved the updated Plan, pending formal adoption by each jurisdiction’s governing body for final approval.

Mitigation plans form the backbone of a community's strategy to minimize disaster losses and disrupt the cycle of damage, reconstruction, and repeated harm. Investing in mitigation ensures future community safety and sustainability.

Mitigation's primary goals are to safeguard public safety, prevent loss of life and injuries, protect existing and future developments, preserve a community’s economic, cultural, and environmental assets, reduce downtime for government and businesses post-disaster, and lower the costs and risks associated with disaster response and recovery.

Throughout the planning process, County staff and local jurisdictions identified past and potential future disasters in the County, leading to the creation of mitigation projects aimed at reducing the impact of the most significant potential disasters.

City Council approval will provide enhanced emergency management services to Kerman and further solidify its strong partnership with the County of Fresno.

Due to the size (1,462 pages) of the Fresno County Multi-Jurisdictional Local Hazard Mitigation Plan, a link is provided here: 24-0521 - 2024 Fresno County Mitigation Plan to serve as Exhibit ‘A’ to the Resolution (Attachment ‘A’).

ALTERNATIVES:

There is no viable alternative action. The Plan must be updated to allow the County and City to remain eligible for pre-disaster mitigation funding and enhanced California Disaster Assistance Act (CDAA) reimbursement.

FISCAL IMPACT:

There is no fiscal impact to the City to approve its support for and participation with the updated Fresno County Multi-Jurisdictional Local Hazard Mitigation Plan. Without an adopted Plan, in the event of a disaster the County /City will not be eligible for possible additional CDAA funding.

ATTACHMENTS:

A. Resolution w/Exhibit (24-0521 - 2024 Fresno County Mitigation Plan) B. Fresno County Resolution
C. Email Request from Fresno County
34 Section 5, Item G.

Attachment ‘A’
RESOLUTION NO. 25-___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF KERMAN APPROVING

THE UPDATED COUNTY OF FRESNO COUNTY MULTI-JURISTICTIONAL LOCAL HAZARD

MITIGATION PLAN
WHEREAS, various natural and man-made hazards, such as flood, fire, earthquake, technology disasters, or terrorism have the potential for causing devastating harm and loss of life and property to the citizens of the County of Fresno and Kerman will continue to do so; and WHEREAS, the implementation of hazard mitigation policies and strategies can protect the citizens and significantly reduce the loss of life and property from these hazards; and WHEREAS, the Fresno County Multi-Jurisdictional Local Hazard Mitigation Plan (Plan) has been developed to ensure proactive mitigation policies and actions that help reduce risk and create safer, resilient communities, including Kerman, within Fresno County; and WHEREAS, the County has now updated the Plan to comply with State and Federal Emergency Management Agency (FEMA) requirements and the updated Plan supersedes the 2019 Fresno County Plan or any prior plan; and
WHEREAS, the Fresno County Plan identifies mitigation goals and actions to reduce or eliminate long-term risk to people and property in Fresno County from the impacts of future hazards and disasters; and
WHEREAS, local governments, including Kerman, without a State and Federal approved Plan will not be eligible to receive future mitigation project funding awarded through the PreDisaster Mitigation grant programs (PDM); and WHEREAS, by planning, preparing, and adopting a Plan, the County of Fresno is taking a proactive all-hazards planning approach to reduce and/or eliminate the impacts of hazards before they occur, and incorporates and complies with the principles and requirements found in laws, regulations, and guidelines of Federal, State codes, and the Fresno County Ordinance; and WHEREAS, State and FEMA have both reviewed and independently approved the Fresno County Plan preliminarily, with formal approval and adoption of the plan by the Board of Supervisors having occurred on June 24, 2025; and
WHEREAS, the Plan has been updated to meet Federal and State requirements that the Plan is complete, and hereafter the plan will be updated by the Emergency Services Director as necessary to meet changing conditions; and
WHEREAS, the Board of Supervisors gives its full support to the updated Plan and urges all officials, employees, public and private organizations, and citizens, individually and collectively, to do their share in furthering the total planning effort of the County. 35 Section 5, Item G.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Kerman:

1. The foregoing recitals are true and correct and incorporated by reference.

2. The City Council approves the updated Fresno County Multi-Jurisdictional Local Hazard Mitigation Plan found in Exhibit ‘A’: 24-0521 - 2024 Fresno County Mitigation Plan and incorporated by reference.

3. The City Council appreciates the County’s leadership in this planning process and for including Kerman in the Local Hazard Mitigation plan.

4. The City Council will continue to actively support and participate in Local Hazard Mitigation efforts.

5. This resolution is effective upon adoption.

The foregoing resolution was adopted by the City Council of the City of Kerman at a regular meeting held on the 27th day of August 2025, by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

The foregoing resolution is hereby approved.
____________________________
Maria Pacheco
Mayor
ATTEST:
___________________________
Josie Camacho
City Clerk
36 Section 5, Item G.
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BEFORE THE BOARD OF SUPERVISORS

COUNTY OF FRESNO

STATE OF CALIFORNIA

IN THE MATTER OF THE UPDATING THE )

COUNTY OF FRESNO MULTI-JURISTICTIONAL)

LOCAL HAZARD MITIGATION PLAN ) RESOLUTION
WHEREAS, various natural and man-made hazards, such as flood, fire, earthquake, technology disasters, or terrorism have the potential for causing devastating harm and loss of life and property to the citizens of the County of Fresno and will continue to do so; and WHEREAS, the implementation of hazard mitigation policies and strategies can protect the citizens and significantly reduce the loss of life and property from these hazards; and WHEREAS, the Fresno County Multi-Jurisdictional Local Hazard Mitigation Plan (Plan) has been developed to ensure proactive mitigation policies and actions that help reduce risk and create safer, resilient communities within Fresno County; and WHEREAS, on December 1, 2009, the Board of Supervisors adopted the last Plan to comply with State and Federal Emergency Management Agency (FEMA) requirements; and WHEREAS, on April 23, 2019, the Board of Supervisors adopted the updated Plan to comply with State and FEMA requirements; and
WHEREAS, the County has now updated the Plan and the updated Plan supersedes the 2019 Fresno County Plan or any prior plan; and
WHEREAS, the Fresno County Plan identifies mitigation goals and actions to reduce or eliminate long-term risk to people and property in Fresno County from the impacts of future hazards and disasters; and
WHEREAS, local governments without a State and Federal approved Plan will not be eligible to receive future mitigation project funding awarded through the Pre-Disaster Mitigation grant programs (PDM); and
Resolution No. 25-197
Attachment 'B'
37 Section 5, Item G.
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WHEREAS, by planning, preparing, and adopting a Plan, the County of Fresno is taking a proactive all-hazards planning approach to reduce and/or eliminate the impacts of hazards before they occur, and incorporates and complies with the principles and requirements found in laws, regulations, and guidelines of Federal, State codes, and the Fresno County Ordinance Code; and
WHEREAS, State and FEMA have both reviewed and independently approved the Fresno County Plan preliminarily, with formal approval pending adoption of the plan by the Board of Supervisors; and
WHEREAS, the LHMP has been updated to meet Federal and State requirements that the LHMP is complete, and hereafter the plan will be updated by the Emergency Services Director as necessary to meet changing conditions; and
WHEREAS, the Board of Supervisors gives its full support to the updated Plan and urges all officials, employees, public and private organizations, and citizens, individually and collectively, to do their share in furthering the total planning effort of the County; NOW, THEREFORE, BE IT RESOLVED that the Board of Supervisors of the County of Fresno do hereby adopt and approve the updated Fresno County LHMP to become effective immediately.
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38 Section 5, Item G.
1 THE FOREGOING, was passed and adopted by the following vote of the Board of 2 11 Supervisors of the County of Fresno this 24th day of June, 2025, to wit:
3 IIAYES:
411 NOES:

Supervisors Bredefeld, Chavez, Magsig, Mendes, Pacheco
None
5 ABSENT: None
611 ABSTAINED: None
7 8
9 10
11 II ATTEST:

Bernice E. Seidel
£_/a,_ ~ b-L< /4-__
Ernest Buddy Mend~ Chairman of the
Board of Supervisors of the County of Fresno
12 11 Clerk of the Board of Supervisors
13 11
Coun of Fresno, State of California
14 II By: V ,
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Deputy
39 Section 5, Item G.

Attachment ‘C’
From: Mejorado, Terri <[email protected]>
Sent: Wednesday, June 25, 2025 1:47 PM
To: jjansons <[email protected]>; Wilkins, Steve (Kerman PD) <[email protected]>; Wil Barcoma ([email protected]) <[email protected]>; Cc: Davis, David (cof) <[email protected]>; Passmore, Jason (cof) <[email protected]>; Ryan Essepian <[email protected]> Subject: Adoption of Local Hazard Mitigation Plan
Good Afternoon,
We are pleased to inform you that the Fresno County Board of Supervisors has officially signed the resolution to adopt the Local Hazard Mitigation Plan (LHMP) as presented.

With the County’s adoption now complete, the LHMP is ready for your jurisdiction’s formal adoption.

As a participating jurisdiction, your adoption of the plan is a critical final step to ensure continued eligibility for FEMA hazard mitigation funding and to demonstrate a shared commitment to disaster preparedness and resilience across our region.

Please place the LHMP adoption on your governing board's upcoming agenda. Once adopted, we kindly request a copy of your signed resolution for our records.

Thank you for your continued partnership in building a safer and more resilient Fresno County.

Terri
Terri Mejorado, MBA, CEM, CA-PEM
Emergency Manager
Fresno County OES
O: 559.600.4065
M: 559.284.2532
[email protected]
1221 Fulton Street
Fresno, CA 93721
www.fresnocountyca.gov
“Lets go be awesome together”
-Jamie Martin
40 Section 5, Item G.

STAFF REPORT
TO: Mayor and City Council
MEETING DATE: August 27, 2025
PRESENTER: Josefina Alvarez, Finance Director
SUBJECT: Consideration of a Resolution of City Council of the City of Kerman Authorizing the Issuance and Sale of 2025 Lease Revenue Bonds (JA)
RECOMMENDATION: City Council by motion adopt resolution Approving, Authorizing and Directing Execution of Certain Lease Financing Documents and Directing Execution of Certain Related Actions in Connection with Financial Capital Improvements for the issuance and sale of 2025 Lease Revenue Bonds
EXECUTIVE SUMMARY:

Approval of the attached resolution Attachment ‘A’ enables the City and the Kerman Public Financing Authority to issue the 2025 Lease Revenue Bonds (the “Bonds”) to finance public capital improvements, anticipated to consist of a new multi-generational community resiliency center and improvements to the City’s new police station (the “Projects”).

The City has identified several priority capital projects that would be possible with funding from the Measure M program including an Animal Shelter, Hart Ranch Park, Multi-Generational / Senior Center, a new Police Station, and a Downtown Revitalization Program.

To date, the animal shelter has been completed. Hart Ranch Park is under construction with an estimated completion date of Summer 2026, and a significant phase of Downtown Revitalization and Beautification was completed in early 2025.

To advance the Multi-Generational / Senior Center, the City was successfully awarded a $7.25M grant from the CA Dept. of Agriculture toward what is estimated to be a $15 million project. Subsequent pursuit of additional grants to finance this project have been unsuccessful. The bond issuance will provide the remaining funds needed to undertake this project.

In 2023, the City purchased an existing building for the new Police Station. This acquisition was funded with a grant/earmark from the State of California, made possible by Assembly Member Esmeralda Soria.

Funding from the proposed bond issuance of approximately $12M will be used to fund the design and remodel of the building and grounds.
41 Section 6, Item A.

DISCUSSON:

Financing Structure and SecurityUnder a lease/leaseback structure detailed below, the Bonds are payable from semi-annual lease payments the City makes to the Authority. These payments, assigned to the Trustee under a sublease for the City properties listed below (the “Leased Properties”), are a General Fund obligation of the City and must be appropriated annually by the City Council. They are not secured by a lien or pledge on any specific City revenues or by a lien on the leased properties.

Initial Leased Properties:

Asset Location
Police Station 850 S Madera Ave
Office Building 15061 W C Street (New Police Station)
Whse/Shop Building 15061 W C Street (New Police Station) PW Office Building 15201 W California Ave
PW Shop Building 15201 W California Ave
PW Shop 15201 W California Ave
Office Building 942 S Madera Ave
Animal Shelter 15375 W California Ave ("A" Street)
Community Teen Center 15101 W Kearney Plaza
Lion's Park 744 S Park Ave
Kerckhoff Park 15061 W G Street
Hart Ranch Park 13833 W California Avenue
Legal Structure:

The Authority will be the issuer of the proposed Bonds. In connection with the issuance of the Bonds, the City will enter into a Site Lease with the Authority, pursuant to which the City will lease certain Cityowned property (Leased Property), to the Authority. Under a simultaneous Lease Agreement, the Authority will lease the Leased Property back to the City. Under the Lease Agreement, the City will agree to make rental payments to the Authority for the beneficial use and occupancy of the Leased Property.

Such rental amounts will be calculated to be sufficient in time and amount to pay the debt service payments on the Bonds. Pursuant to an Assignment Agreement, the Authority will assign certain rights under the Lease Agreement to U.S. Bank Trust Company, N.A., as trustee (the “Trustee”) for the Bonds, including the right to receive the rental payments under the Lease Agreement. Due to the fact a portion of the Bonds will be secured by lease payments on the yet to be completed Projects, the City will be required to fund capitalized interest on a portion of the Bonds through April 1, 2028, which represents the expected time period of construction (24 months) plus an additional 12 months.

The Bonds will be issued pursuant to an Indenture of Trust to be entered into among the City, the Authority and the Trustee, which will govern certain key terms of the Bonds including repayment dates, redemption terms, interest rate and rights and remedies of Bond owners. 42 Section 6, Item A.

Staff has been notified that the City has received an underlying credit rating of “A” for the Bonds from Standard & Poor’s (“S&P”). Staff, working with its consultants, is also in the process of obtaining municipal bond insurance (rated “AA” by S&P) and a debt service reserve fund surety for the Bonds. It is anticipated that a municipal bond insurance policy and/or a debt service reserve fund surety will be obtained as an additional benefit to the City. Information on the City’s General Fund and related risks is provided to investors in the offering document for the Bonds (the Preliminary Official Statement).

Additional details on the legal and disclosure documents are outlined below.

Bond Sizing (Not-to-Exceed Amounts):

In order to authorize the sale of the Bonds, staff must provide not-to-exceed amounts in the City Resolution and the Authority Resolution. In order to provide staff with maximum flexibility in determining the optimal size of the Bonds, staff requests: a not to exceed principal amount of $25 million; a not to exceed true interest cost of 5.75%; and a not to exceed underwriter’s discount of 0.75%.

These limits have been included in the City Resolution and Authority Resolution as “not to exceed” to create a reasonable amount of flexibility for the City and the Authority, even though the final principal amount, true interest cost and underwriter’s discount are anticipated to be less.

Good Faith Estimates:

The required good faith estimates discussed below, with respect to the Bonds, are provided in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided by Fieldman, Rolapp & Associates, Inc., the City’s Municipal Advisor, in consultation with the Underwriter, and are based on assumptions of the estimated principal amount of the Bonds and on market interest rates prevailing at the time the estimate is prepared. The estimates reflect the combined totals for the Bonds, as follows:

Principal Amount: The Municipal Advisor informed the City that based on the City’s financing plan and current market conditions, the good faith estimate of the aggregate principal amount of the Bonds to be sold (the Estimated Principal Amount) is $19,955,000.

True Interest Cost of the Bonds: The Municipal Advisor informed the City that its good faith estimate of the true interest cost of the Bonds, which is the rate necessary to discount the amounts payable on the respective principal and interest payment to the purchase price received for the Bonds, is 5.02%.

Finance Charge of the Bonds: The Municipal Advisor informed the City that its good faith estimates of the finance charge for the Bonds, which is the sum of all fees and charges paid to third parties, or costs associated with the Bonds, is $596,821. Such fees and charges include fees for bond and disclosure counsel, municipal advisor, appraiser, escrow verification, trustee, rating agency, title insurance, municipal bond insurance, debt service reserve policy, printing and underwriting.

Detailed estimates of these fees for each party are below:
• Underwriting: $149,663 (0.75 % of par)
• Municipal Bond Insurance: $139,156
• Reserve Fund Surety: $32,783
• City Staff Time: $25,000
• City Attorney: $5,000
• Bond Counsel: $77,000
• Disclosure Counsel: $50,000
43 Section 6, Item A.
• Municipal Advisor: $38,500
• Trustee & Trustee’s Counsel: $4,200
• Title Insurance: $20,130
• Rating Agency (S&P): $28,000
• Printing: $2,000
• Joint Powers Authority: $10,000
• Contingency: $15,389
These fees are all paid for with bond proceeds.

Amount of Proceeds to be Received: The Municipal Advisor informed the City that its good faith estimate of the amount of proceeds expected to be received by the City for sale of the Bonds less the finance charge of the Bonds, as estimated above, and any reserves funded with proceeds of the Bonds is $19,646,861.

Total Payment Amount: The Municipal Advisor informed the City that its good faith estimate of the total payment amount of all payments the City will make to pay debt service on the Bonds calculated to the final maturity of the Bonds is $39,812,853.

The foregoing estimates constitute good faith estimates only. The actual principal amount of the Bonds issued and sold, the true interest costs, the finance charges, the amount of proceeds received, and the total payment amount may differ from such good faith estimates due to:

1. The actual date of the sale of the Bonds being different than the date assumed for purposes of such estimates;

2. The actual principal amount of the Bonds sold being different from the Estimated Principal Amount;

3. The actual amortization of the Bonds being different than the 30-year amortization assumed for purposes of such estimates;

4. The actual market interest rates at the time of sale of the Bonds being different than those estimated for purposes of such estimates;

5. Other market conditions; or

6. Alterations in the City’s financing plan, delays in the financing, additional legal work (including federal tax law due diligence), or a combination of such factors.

The actual date of sale of the Bonds and the actual principal amount of Bonds sold will be determined by the City and the Authority based on the timing of the need for proceeds of the Bonds and other factors. The actual interest rates and amortization of the Bonds will depend on market interest rates at the time of sale, with an expected amortization period of 30 years. Market interest rates are affected by economic and other factors beyond the control of the City and the Authority. If market rates change so that the transaction is no longer financially beneficial, the City and the Authority can terminate the transaction at any time before the Bonds are sold to the Underwriter.

The forms of the base legal documents to be approved by the City Council and the Kerman Public Financing Authority are:
 Indenture of Trust – The Indenture is a contract between the Authority and U.S. Bank National Association, acting as Trustee. The Indenture specifies the Trustee, dated date, maturity date or dates, interest rate or rates, interest payment dates, denominations, forms, registration privileges, manner of execution, place or places of payment, terms of redemption and other terms of the Bonds.
44 Section 6, Item A.
 Site Lease – The Site Lease is a contract between the Authority and the City, under which the City leases the selected leased property to the Authority in exchange for a lump sum amount equal to the principal amount of the Bonds consideration of the Authority’s agreement to provide financing for the Projects.
 Lease Agreement – The Lease Agreement is a contract between the Authority and the City, under which Authority leases back the selected leased property to the City in consideration of the payment by the City of semiannual installment payments which are sufficient to provide revenues with which to pay principal of, and interest on, the Bonds when due.
 Bond Purchase Agreement – The Bond Purchase Agreement is a contract between the Authority, the City and Oppenheimer & Co. Inc., as underwriter (the “Underwriter”), whereby the Authority agrees to sell the Bonds to the Underwriter and the Underwriter agrees to buy the Bonds from the Authority for resale to the public.  Preliminary Official Statement – The Preliminary Official Statement is the offering statement used by the Underwriter to inform the marketplace of the terms of the Bonds and contains all relevant information for the investor to decide whether to purchase the Bonds.

Disclosure Documents: Staff and the City’s financing team have prepared the Preliminary Official Statement in connection with the offering of the Bonds. The Preliminary Official Statement presents material information relating to the Bonds and the City’s finances and operations and will be used in the offering of the Bonds to potential investors.

The United States Securities Exchange Commission has stated that elected officials have certain responsibilities under federal securities law. If City Council members during their review of the Preliminary Official Statements determine that it contains any material false statements or omissions of material information, they should bring this to the attention of staff.

To comply with federal securities law, the City will enter into a Continuing Disclosure Agreement in connection with the issuance of the Bonds. Under the Continuing Disclosure Agreement, the City will agree to annually provide certain financial information relating to the City and notices of certain enumerated events to the market. Such information will be provided through the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access website.

FISCAL IMPACT:

Like the outstanding 2020 Bonds, debt service payment on the Bonds is a liability of the General Fund.

Debt service payments will be made over 30 years in semi-annual payments and will be due semiannually on April 1st and October 1st of each year with the first payment due on April 1, 2026. The estimated annual debt service of the Bonds is provided below.

All financing-related costs will be paid from Bond proceeds. The estimated annual payment is $459,260 in the initial partial year (FY 2025/26). The average net annual payment is approximately $1,298,306 from FY 2026/27 through FY 2055/56.

Table on Next Page
45 Section 6, Item A.

Bonds - Estimated Annual Payment Schedule
Fiscal
Year Principal Interest
Capitalized
Interest Total
2026 $531,489 $72,229 $459,260
2027 $290,000 1,015,938 139,050 1,166,888
2028 305,000 1,001,063 139,050 1,167,013
2029 325,000 985,313 1,310,313
2030 340,000 968,688 1,308,688
2031 355,000 951,313 1,306,313
2032 375,000 933,063 1,308,063
2033 395,000 913,813 1,308,813
2034 415,000 893,563 1,308,563
2035 435,000 872,313 1,307,313
2036 460,000 849,938 1,309,938
2037 485,000 826,313 1,311,313
2038 505,000 801,563 1,306,563
2039 535,000 775,563 1,310,563
2040 560,000 748,188 1,308,188
2041 585,000 719,563 1,304,563
2042 615,000 689,563 1,304,563
2043 650,000 657,938 1,307,938
2044 680,000 624,688 1,304,688
2045 715,000 589,813 1,304,813
2046 755,000 553,063 1,308,063
2047 795,000 513,319 1,308,319
2048 835,000 470,531 1,305,531
2049 885,000 425,381 1,310,381
2050 930,000 377,738 1,307,738
2051 980,000 327,600 1,307,600
2052 1,035,000 274,706 1,309,706
2053 1,085,000 219,056 1,304,056
2054 1,145,000 160,519 1,305,519
2055 1,210,000 98,700 1,308,700
2056 1,275,000 33,469 1,308,469
Total $19,955,000 $19,803,758 $350,329 $39,408,429
ATTACHMENTS:

A. City Resolution
B. Indenture removed
C. Site Lease
D. Lease Agreement
E. Assignment Agreement removed
F. Bond Purchase Agreement
G. Preliminary Official Statement (including Continuing Disclosure Agreement) 46 Section 6, Item A.

Attachment ‘A’
RESOLUTION NO. 25-___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF KERMAN APPROVING, AUTHORIZING

AND DIRECTING EXECUTION OF CERTAIN LEASE FINANCING DOCUMENTS AND DIRECTING

CERTAIN RELATED ACTIONS IN CONNECTION WITH FINANCING CAPITAL IMPROVEMENTS WHEREAS, the City of Kerman (the “City”) desires to finance public capital improvements, anticipated to consist of a new multi-generational community resiliency center and improvements to the City’s new police station (collectively, the “Project”), to be financed through the issuance and sale by the Kerman Public Financing Authority (the “Authority”) of its 2025 Lease Revenue Bonds (the “Bonds”); and
WHEREAS, to finance the Project, the City has proposed to lease certain real property to the Authority (the “Leased Property”), and to lease back the Leased Property from the Authority in consideration of semi-annual lease payments securing the repayment of the Bonds; and WHEREAS, the City Council has duly held a public hearing regarding the issuance by the Authority of the Bonds to finance a portion of the Project in accordance with the requirements of the Marks-Roos Local Bond Pooling Act of 1985, being Article 4 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, commencing with Section 6584 of said Code (the “Bond Law”), the notice of which has been given in accordance with the requirements of Section 6586.5 of the Bond Law; and
WHEREAS, the information required to be obtained and disclosed by the City Council related to the financing under Government Code Section 5852.1 is set forth in the staff report accompanying this resolution; and
WHEREAS, the City Council has duly considered such transactions and wishes at this time to approve all proceedings and documents to which the City is a party relating to the proposed financing.

NOW, THEREFORE, IT IS HEREBY RESOLVED by the City Council of the City of Kerman as follows:

Section 1. Findings and Determinations. In accordance with the Bond Law and based on information provided to the City Council, the City Council hereby finds and determines that the issuance of the Bonds and the transactions related thereto will result in significant public benefits within the meaning of Section 6586.5 of the Bond Law.

Section 2. Authorization of Bonds by Authority. The City Council hereby approves of the issuance of the Bonds by the Authority under the Bond Law, in the aggregate 47 Section 6, Item A.
2 principal amount of not to exceed $25,000,000 for the purpose of providing financing for the Project.

Section 3. Approval of Financing Agreements. The City Council hereby approves each of the following agreements required to implement the financing plan described above, in substantially the respective forms on file with the City Clerk, together with any changes therein or additions thereto deemed advisable by the Mayor, City Manager or the Finance Director (each, an “Authorized Officer”):
 Site Lease between the City as lessor and the Authority as lessee, under which the City leases the Leased Property to the Authority in consideration of the payment of an upfront site lease payment, which will be applied by the City to finance the Project and pay costs of issuance.
 Lease Agreement between the Authority as lessor and the City as lessee, under which the Authority leases the Leased Property back to the City and the City agrees to pay semi-annual lease payments which are sufficient to provide for payment of principal of and interest on the Bonds when due.

Each Authorized Officer is hereby separately authorized and directed for and in the name and on behalf of the City to execute, and the City Clerk is hereby authorized and directed, if necessary, to attest the final form of each of the foregoing agreements, and the execution thereof by an Authorized Officer shall be conclusive evidence of the approval of any such changes or additions.

Section 4. Sale of Bonds. The City Council hereby authorizes the negotiated sale of the Bonds to Oppenheimer & Co. Inc. as underwriter (the “Underwriter”) under the Bond Purchase Contract in substantially the form on file with the City Clerk together with any changes therein or additions thereto deemed advisable by an Authorized Officer, whose execution thereof shall be conclusive evidence of the approval of any such changes or additions. The City Council hereby delegates to each Authorized Officer the authority to accept an offer from the Underwriter to purchase the Bonds and to execute the Bond Purchase Contract for and in the name and on behalf of the City; provided, that the amount of Underwriter’s discount shall not exceed 0.75% of the par amount of the Bonds and the true interest rate on the Bonds shall not exceed 5.75%.

Section 5. Official Statement. The City Council hereby approves and deems nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, the Preliminary Official Statement describing the Bonds in the form on file with the City Clerk, together with such modifications thereof as may be approved by an Authorized Officer. An Authorized Officer is hereby authorized and directed to (a) 48 Section 6, Item A.
3 execute and deliver to the Underwriter a certificate deeming the Preliminary Official Statement to be final, as of its date, within the meaning of such Rule, (b) approve any changes in or additions to cause the Official Statement to be put in final form, and (c) execute the Final Official Statement for and in the name and on behalf of the City once final pricing information is available. The City Council hereby authorizes the distribution of the Preliminary Official Statement and the Final Official Statement.

Section 6. Continuing Disclosure Certificate. The City Council hereby approves the Continuing Disclosure Certificate to be executed by the City, the form of which is attached as an exhibit to the Preliminary Official Statement. Each of the Authorized Officers is hereby authorized and directed to approve any changes in or additions to a final form of said Continuing Disclosure Certificate, and the execution thereof by an Authorized Officer shall be conclusive evidence of approval of any such changes and additions. The final Continuing Disclosure Certificate shall be executed in the name and on behalf of the City by an Authorized Officer.

Section 7. Official Actions. The City Council hereby authorizes and directs each of the Mayor, the City Manager, the Finance Director, the City Clerk and all other officers of the City in the name and on behalf of the City to make any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they or any of them might deem necessary or appropriate in order to consummate any of the transactions contemplated by the agreements and documents approved under this Resolution, including executing any commitments or other documents necessary to obtain bond insurance and/or a reserve fund insurance for the Bonds and to coordinate the release or substitution of real property previously leased by the City and Authority to accomplish the purposes of the financing.

Whenever in this Resolution any officer of the City is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of any person serving in such role in an interim capacity or by any officer or person designated by such officer to act on his or her behalf.

Section 8. Effective Date. This Resolution shall take from and after the date of its passage and adoption.
49 Section 6, Item A.
4 The foregoing resolution was adopted by the City Council of the City of Kerman at a regular meeting held on the 27th day of August, 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN
The foregoing resolution is hereby approved.

Maria Pacheco
Mayor
ATTEST:

Josie Camacho
City Clerk
50 Section 6, Item A.

Jones Hall Draft of August 19, 2025
‘Attachment B’
RECORDING REQUESTED BY:

City of Kerman
AND WHEN RECORDED RETURN TO:

Jones Hall LLP
Attn: James A. Wawrzyniak, Jr.
4 West 4th Avenue, Suite 406
San Mateo, California 94402

THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX UNDER SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.

SITE LEASE
This SITE LEASE (this “Site Lease”), dated for convenience as of October 1, 2025, is between the CITY OF KERMAN, a general law city and municipal corporation duly organized and existing under the laws of the State of California, as lessor which acquired title to a portion of the Leased Property (the “City”), and the KERMAN PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority duly organized and existing under the laws of the State of California, as lessee (the “Authority”).

B A C K G R O U N D :

1. The City is proceeding to finance public capital improvements, anticipated to consist of a new multi-generational community resiliency center and improvements to the City’s new police station (collectively, the “Project”).

2. In order to provide financing for a portion of the costs of the Project, the City has agreed to lease the real property and facilities more particularly described in Appendix A attached hereto and by this reference incorporated herein, consisting of [(i) the Police Station located at 850 S Madera Avenue, (ii) the Office Building and the Warehouse and Shop Building each located at 15061 W C Street, (iii) the Public Works Office Building, the Public Works Shop Building and the Public Works Shop each located at 15201 W California Avenue, (iv) the Office Building located at 942 S Madera Avenue, (v) the Animal Shelter located at 15375 W California Ave ("A" Street), (vi) the Community Teen Center located at 15101 W Kearney Plaza, (vii) Lion's Park located at 744 S Park Ave and (viii) Kerckhoff Park located at 15023-15099 W G Street] (collectively, the “Leased Property”) to the Authority under this Site Lease, pursuant to which the Authority agrees to make an initial rental payment (as described herein, the “Site Lease Payment”) which is sufficient to provide funds for such purpose.

3. The Authority has authorized the issuance of its Kerman Public Financing Authority 2025 Lease Revenue Bonds in the aggregate principal amount of $_____ (the “Bonds”) under an Indenture of Trust dated as of October 1, 2025 (the “Indenture”), between the Authority and U.S. Bank Trust Company, National Association, as trustee 51 Section 6, Item A.
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(the “Trustee”), for the purpose of providing the funds to enable the Authority to pay the Site Lease Payment to the City in accordance with this Site Lease.

4. In order to provide revenues which are sufficient to enable the Authority to pay debt service on the Bonds, the Authority has agreed to lease the Leased Property back to the City under a Lease Agreement dated as of October 1, 2025 (the “Lease”), which has been recorded concurrently herewith, under which the City has agreed to pay semiannual Lease Payments as the rental for the Leased Property thereunder.

5. The lease payments made by the City under the Lease have been assigned by the Authority to Trustee for the security of the Bonds under an Assignment Agreement dated as of October 1, 2025, between the Authority as assignor and the Trustee as assignee, which has been recorded concurrently herewith.

A G R E E M E N T :

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

SECTION 1. Lease of Property to Authority. The City hereby leases the Leased Property to the Authority and the Authority hereby leases the Leased Property from the City, on the terms and conditions hereinafter set forth.

SECTION 2. Term; Possession. The term of this Site Lease commences on the Closing Date and ends on the date on which the Indenture is discharged in accordance with Section 13.01 thereof, but under any circumstances not later than October 1, 20__.

The provisions of this Section 2 are subject in all respects to any other provisions of this Site Lease relating to the termination hereof.

SECTION 3. Rental. The Authority shall pay to the City as and for rental of the Leased Property hereunder, the sum of $________ (the “Site Lease Payment”). The Site Lease Payment is due and payable upon the issuance of the Bonds and the execution and delivery hereof, and will be paid from the proceeds of the Bonds. The Authority and the City hereby find and determine that the total amount of the Site Lease Payment does not exceed the fair market value of the leasehold interest in the Leased Property which is conveyed hereunder by the City to the Authority. No other amount of rental is due and payable by the Authority for the use and occupancy of the Leased Property under this Site Lease.

SECTION 4. Leaseback to City. The Authority shall lease the Leased Property back to the City under the Lease. In no event shall this effectuate a merger of the Site Lease and the Lease.

SECTION 5. Assignments and Subleases. Unless the City is in default under the Lease, the Authority may not assign its rights under this Site Lease or sublet all or any portion of the Leased Property, except as provided in the Assignment Agreement and in the Lease, without the prior written consent of the City. 52 Section 6, Item A.
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SECTION 6. Addition, Substitution or Release of Property. The description of the Leased Property which is leased under the Lease shall conform at all times to the description of the Leased Property which is leased hereunder. Accordingly, if the City exercises its option (a) to substitute property as part of the Leased Property under Section

3.3 of the Lease, (b) to release property from the Lease under Section 3.4 of the Lease, and/or (c) to add to the Leased Property under Section 7.5(b) of the Lease, an amendment shall be made to this Site Lease making a conforming change to the Leased Property hereunder.

SECTION 7. Right of Entry. The City reserves the right for any of its duly authorized representatives to enter upon the Leased Property, or any portion thereof, at any reasonable time to inspect the same or to make any repairs, improvements or changes necessary for the preservation thereof.

SECTION 8. Termination. The Authority agrees, upon the termination of this Site Lease, to quit and surrender the Leased Property in the same good order and condition as the Leased Property was in at the time of commencement of the term hereof, reasonable wear and tear excepted, and agrees that all buildings, improvements and structures then existing upon the Leased Property shall remain thereon and title thereto shall vest thereupon in the City for no additional consideration.

SECTION 9. Default. If the Authority defaults in the performance of any obligation on its part to be performed under the terms of this Site Lease, which default continues for 30 days following notice and demand for correction thereof to the Authority, the City may exercise any and all remedies granted by law, except that no merger of this Site Lease and of the Lease shall be deemed to occur as a result thereof and no such remedy may include termination hereof; provided, however, that so long as the Lease remains in effect, the Lease Payments payable by the City under the Lease shall continue to be paid to the Trustee.

SECTION 10. Quiet Enjoyment. The Authority at all times during the term of this Site Lease shall peaceably and quietly have, hold and enjoy all of the Leased Property, subject to the provisions of the Lease and subject only to Permitted Encumbrances (as that term is defined in the Lease).

SECTION 11. Waiver of Personal Liability. All liabilities under this Site Lease on the part of the Authority are solely corporate liabilities of the Authority as a public entity, and the City hereby releases each and every member and officer of the Authority of and from any personal or individual liability under this Site Lease. No member or officer of the Authority or its governing board shall at any time or under any circumstances be individually or personally liable under this Site Lease for anything done or omitted to be done by the Authority hereunder.

SECTION 12. Taxes. The City covenants and agrees to pay any and all assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Leased Property and any improvements thereon.

SECTION 13. Eminent Domain. If the whole or any part of the Leased Property or any improvements thereon is taken by eminent domain proceedings, the interest of the Authority shall be recognized and is hereby determined to be the amount of the then 53 Section 6, Item A.
-4-
unpaid Lease Payments payable under the Lease and the balance of the award, if any, shall be paid to the City.

SECTION 14. Partial Invalidity. If any one or more of the terms, provisions, covenants or conditions of this Site Lease shall to any extent be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this Site Lease shall be affected thereby, and each provision of this Site Lease shall be valid and enforceable to the fullest extent permitted by law.

SECTION 15. Notices. Any notice, request, complaint, demand or other communication under this Site Lease shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below. Notice shall be effective either (a) 48 hours after deposit in the United States mail, postage prepaid, or (b) in the case of personal delivery to any person, upon actual receipt. The City, the Authority and the Trustee may, by written notice to the other parties, from time to time modify the address to which communications are to be given hereunder.

If to the Authority or the City: City of Kerman
850 S Madera Avenue
Kerman, CA 93630
Attention: Finance Director
If to the Trustee: U.S. Bank Trust Company, National Association 633 West Fifth Street
Los Angeles, CA 90071
Attention: Global Corporate Trust
SECTION 16. Amendment of this Site Lease. The Authority and the City may at any time amend or modify any of the provisions of this Site Lease, but only (a) with the prior written consent of the Owners of a majority in aggregate principal amount of the Outstanding Bonds; or (b) without the consent of any of the Bond Owners, but only if such amendment or modification is for any one or more of the following purposes:
(i) to make cure any ambiguity, or to cure, correct or supplement any defective provision contained herein, or in any other respect whatsoever as the Authority and the City may deem necessary or desirable, provided that, in the opinion of Bond Counsel, such modifications or amendments do not materially adversely affect the interests of the Owners of the Bonds;
(ii) to amend any provision hereof relating to the Tax Code, to any extent whatsoever but only if and to the extent such amendment will not adversely affect the exclusion from gross income of interest on the Bonds under the Tax Code, in the opinion of Bond Counsel; (iii) to conform to any amendment of the Indenture which is made thereto in accordance with Section 9.01 of the Indenture; or
54 Section 6, Item A.
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(iv) for the purpose of effectuating any addition, substitution or release of property under Section 6.

SECTION 17. Governing Law. This Site Lease shall be construed in accordance with and governed by the laws of the State of California.

SECTION 18. Third Party Beneficiary. The Trustee is hereby made a third party beneficiary under this Site Lease with all rights of a third party beneficiary.

SECTION 19. Binding Effect. This Site Lease inures to the benefit of and is binding upon the Authority, the City and their respective successors and assigns, subject, however, to the limitations contained herein.

SECTION 20. Section Headings. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Site Lease.

SECTION 21. Execution in Counterparts. This Site Lease may be executed in any number of counterparts, each of which shall be deemed to be an original but all together shall constitute but one and the same lease. It is also agreed that separate counterparts of this Site Lease may be separately executed by the Authority and the City, all with the same force and effect as though the same counterpart had been executed by both the Authority and the City.

SECTION 22. Defined Terms. All capitalized terms used herein and not otherwise defined have the respective meanings given those terms in the Indenture. [Remainder of page intentionally left blank. Signatures on next page.] 55 Section 6, Item A.
[Signature Page to Site Lease dated as of October 1, 2025] IN WITNESS WHEREOF, the City and the Authority have caused this Site Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written.

KERMAN PUBLIC FINANCING AUTHORITY
By:

John Jansons
Executive Director

CITY OF KERMAN
By:

John Jansons
City Manager
56 Section 6, Item A.

A-1

APPENDIX A

DESCRIPTION OF THE LEASED PROPERTY
The Leased Property consists of that certain real property situated in the City of Kerman, County of Fresno, State of California, which is more particularly described as follows:
57 Section 6, Item A.

Jones Hall Draft of August 19, 2025
‘Attachment C’
RECORDING REQUESTED BY:

City of Kerman
AND WHEN RECORDED RETURN TO:

Jones Hall LLP
Attn: James A. Wawrzyniak, Jr.
4 West 4th Avenue
Suite 406
San Mateo, California 94402

THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX UNDER SECTION 11922 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.

LEASE AGREEMENT
Dated as of October 1, 2025
between the

KERMAN PUBLIC FINANCING AUTHORITY,
as lessor
and the

CITY OF KERMAN,
as lessee
Relating to
$_______
Kerman Public Financing Authority
2025 Lease Revenue Bonds
58 Section 6, Item A.
-iTABLE OF CONTENTS
ARTICLE I:

DEFINITIONS; RULES OF INTERPRETATION:

SECTION 1.1. Definitions ..................................................................................................2 SECTION 1.2. Interpretation .............................................................................................2 ARTICLE II:

COVENANTS, REPRESENTATIONS AND WARRANTIES:

SECTION 2.1. Covenants, Representations and Warranties of the City ..........................3 SECTION 2.2. Covenants, Representations and Warranties of the Board.......................4 ARTICLE III:

DEPOSIT AND APPLICATION OF FUNDS; SUBSTITUTION

AND RELEASE OF PROPERTY
SECTION 3.1. Deposit of Moneys.....................................................................................5 SECTION 3.2. Acquisition and Construction of Project.....................................................5 SECTION 3.3. Substitution of Leased Property ................................................................6 SECTION 3.4. Release of Leased Property......................................................................6 ARTICLE IV:

LEASE OF LEASED PROPERTY; TERM OF THIS LEASE;
LEASE PAYMENTS:

SECTION 4.1. Lease of Leased Property .........................................................................7 SECTION 4.2. Term ..........................................................................................................7 SECTION 4.3. Lease Payments........................................................................................7 SECTION 4.4. Source of Payments; Covenant to Budget and Appropriate .....................8 SECTION 4.5. Additional Rental Payments ......................................................................9 SECTION 4.6. Quiet Enjoyment ........................................................................................9 SECTION 4.7. Title............................................................................................................9 ARTICLE V:

MAINTENANCE; TAXES; INSURANCE; AND OTHER
MATTERS:

SECTION 5.1. Maintenance, Utilities, Taxes and Assessments .....................................10 SECTION 5.2. Modification of Leased Property..............................................................10 SECTION 5.3. Liability and Property Damage Insurance ...............................................11 SECTION 5.4. Casualty Insurance..................................................................................11 SECTION 5.5. Rental Interruption Insurance ..................................................................11 SECTION 5.6. Recordation Hereof; Title Insurance........................................................12 SECTION 5.7. Insurance Net Proceeds; Form of Policies ..............................................12 SECTION 5.8. Installation of City’s Personal Property....................................................12 SECTION 5.9. Liens ........................................................................................................12 SECTION 5.10. Advances .................................................................................................13 ARTICLE VI:

DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF
NET PROCEEDS:

SECTION 6.1. Application of Net Proceeds ....................................................................13 SECTION 6.2. Termination or Abatement Due to Eminent Domain ...............................13 SECTION 6.3. Abatement Due to Damage or Destruction .............................................13 ARTICLE VII:

OTHER COVENANTS OF THE CITY:

SECTION 7.1. Disclaimer of Warranties .........................................................................14 SECTION 7.2. Access to the Leased Property ...............................................................14 59 Section 6, Item A.
-iiSECTION 7.3. Release and Indemnification Covenants.................................................14 SECTION 7.4. Assignment and Subleasing by the City..................................................15 SECTION 7.5. Amendment Hereof .................................................................................15 SECTION 7.6. Tax Covenants ........................................................................................16 SECTION 7.7. Continuing Disclosure..............................................................................17 ARTICLE VIII:

EVENTS OF DEFAULT AND REMEDIES:

SECTION 8.1. Events of Default Defined........................................................................17 SECTION 8.2. Remedies on Default ...............................................................................18 SECTION 8.3. No Remedy Exclusive .............................................................................19 SECTION 8.4. Agreement to Pay Attorneys' Fees and Expenses..................................20 SECTION 8.5. No Additional Waiver Implied by One Waiver .........................................20 SECTION 8.6. Application of Proceeds...........................................................................20 SECTION 8.7. Trustee and Bond Owners to Exercise Rights ........................................20 ARTICLE IX:

PREPAYMENT OF LEASE PAYMENTS:

SECTION 9.1. Security Deposit ......................................................................................20 SECTION 9.2. Prepayment .............................................................................................21 SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain ....................................................................................................21 SECTION 9.4. Credit for Amounts on Deposit ................................................................21 ARTICLE X:

MISCELLANEOUS:

SECTION 10.1. Notices.....................................................................................................21 SECTION 10.2. Binding Effect ..........................................................................................22 SECTION 10.3. Severability ..............................................................................................22 SECTION 10.4. Net-net-net Lease....................................................................................22 SECTION 10.5. Third Party Beneficiary ............................................................................22 SECTION 10.6. Further Assurances and Corrective Instruments.....................................22 SECTION 10.7. Execution in Counterparts. ......................................................................22 SECTION 10.8. Applicable Law ........................................................................................22 SECTION 10.9. Board and City Representatives..............................................................22 SECTION 10.10. Captions...................................................................................................22

APPENDIX A DESCRIPTION OF THE LEASED PROPERTY

APPENDIX B SCHEDULE OF LEASE PAYMENTS
60 Section 6, Item A.

LEASE AGREEMENT
This LEASE AGREEMENT (this “Lease”), dated for convenience as of October 1, 2025, is between the KERMAN PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority organized and existing under the laws of the State of California, as lessor (the “Authority”), and the CITY OF KERMAN, a general law city and municipal corporation duly organized and existing under the laws of the State of California, as lessee (the “City”).

B A C K G R O U N D :

1. In order to provide financing for a portion of the costs of the Project, the City has agreed to lease the real property and facilities more particularly described in Appendix A attached hereto and by this reference incorporated herein, consisting of (i) the Police Station located at 850 S Madera Avenue, (ii) the Office Building and the Warehouse and Shop Building each located at 15061 W C Street, (iii) the Public Works Office Building, the Public Works Shop Building and the Public Works Shop each located at 15201 W California Avenue, (iv) the Office Building located at 942 S Madera Avenue, (v) the Animal Shelter located at 15375 W California Ave ("A" Street), (vi) the Community Teen Center located at 15101 W Kearney Plaza, (vii) Lion's Park located at 744 S Park Ave and (viii) Kerckhoff Park located at 15023-15099 W G Street] (the “Leased Property”) to the Authority under a Site Lease dated as of October 1, 2025 which has been recorded concurrently herewith (the “Site Lease”), under which the Authority agrees to make an initial rental payment (the “Site Lease Payment”) which is sufficient to provide funds for such purposes.

2. The Authority has authorized the issuance of its Kerman Public Financing Authority 2025 Lease Revenue Bonds in the aggregate principal amount of $_______ (the “Bonds”) under an Indenture of Trust dated as of October 1, 2025 (the “Indenture”), between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), and under the provisions of Article 4 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, commencing with Section 6584 of said Code (the “Bond Law”), for the purpose of providing the funds to enable the Authority to pay the Site Lease Payment to the City in accordance with the Site Lease.

3. In order to provide revenues which are sufficient to enable the Authority to pay debt service on the Bonds, the Authority has agreed to lease the Leased Property back to the City under this Lease, under which the City agrees to pay semiannual Lease Payments as the rental for the Leased Property hereunder.

4. The lease payments made by the City under this Lease have been assigned by the Authority to the Trustee for the security of the Bonds under an Assignment Agreement dated as of October 1, 2025, between the Authority as assignor and the Trustee as assignee, which has been recorded concurrently herewith. 61 Section 6, Item A.
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5. The City and the Authority have found and determined that all acts and proceedings required by law necessary to make this Lease, when executed by the City and the Authority, the valid, binding and legal obligations of the City and the Authority, and to constitute this Lease a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Lease have been in all respects duly authorized.

A G R E E M E N T :

In consideration of the material covenants contained in this Lease, the parties hereto hereby formally covenant, agree and bind themselves as follows:

ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
SECTION 1.1. Definitions. Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms in this Lease have the respective meanings given them in the Indenture.

SECTION 1.2. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular includes the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and includes the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof.
(c) All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Lease; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Lease as a whole and not to any particular Article, Section or subdivision hereof. 62 Section 6, Item A.
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ARTICLE II

COVENANTS, REPRESENTATIONS AND WARRANTIES
SECTION 2.1. Covenants, Representations and Warranties of the City. The City makes the following covenants, representations and warranties to the Authority and the Trustee as of the date of the execution and delivery of this Lease:
(a) Due Organization and Existence. The City is a general law city and municipal corporation duly organized and validly existing under the laws of the State of California, has full legal right, power and authority under the laws of the State of California to enter into the Site Lease and this Lease and to carry out and consummate all transactions contemplated hereby, and by proper action the City has duly authorized the execution and delivery of the Site Lease and this Lease.
(b) Due Execution. The representatives of the City executing the Site Lease and this Lease have been fully authorized to execute the same under a resolution duly adopted by the City Council of the City.
(c) Valid, Binding and Enforceable Obligations. The Site Lease and this Lease have been duly authorized, executed and delivered by the City and constitute the legal, valid and binding obligations of the City enforceable against the City in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of the Site Lease and this Lease, the consummation of the transactions therein and herein contemplated and the fulfillment of or compliance with the terms and conditions thereof and hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the City is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the City, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Site Lease and this Lease or the financial condition, assets, properties or operations of the City. (e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the City or of the voters of the City, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of the Site Lease and this Lease, or the consummation of any transaction therein and herein contemplated, except as have been obtained or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental 63 Section 6, Item A.
-4-
authority pending or, to the knowledge of the City after reasonable investigation, threatened against or affecting the City or the assets, properties or operations of the City which, if determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Site Lease and this Lease, or upon the financial condition, assets, properties or operations of the City, and the City is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Site Lease and this Lease or the financial conditions, assets, properties or operations of the City.

SECTION 2.2. Covenants, Representations and Warranties of the Authority. The Authority makes the following covenants, representations and warranties to the City and the Trustee as of the date of the execution and delivery of this Lease:
(a) Due Organization and Existence. The Authority is a joint exercise of powers agency duly organized and existing under the laws of the State of California; has power to enter into this Lease, the Site Lease, the Assignment Agreement and the Indenture; is possessed of full power to own and hold, improve and equip real and personal property, and to lease the same; and has duly authorized the execution and delivery of each of the aforesaid agreements and such agreements constitute the legal, valid and binding obligations of the Authority, enforceable against the Authority in accordance with their respective terms.
(b) Due Execution. The representatives of the Authority executing this Lease, the Site Lease, the Assignment Agreement and the Indenture are fully authorized to execute the same pursuant to official action taken by the governing body of the Authority.
(c) Valid, Binding and Enforceable Obligations. This Lease, the Site Lease, the Assignment Agreement and the Indenture have been duly authorized, executed and delivered by the Authority and constitute the legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of this Lease, the Site Lease, the Assignment Agreement and the Indenture, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the Authority is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Authority, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would 64 Section 6, Item A.
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materially and adversely affect the consummation of the transactions contemplated by this Lease, the Site Lease, the Assignment Agreement and the Indenture or the financial condition, assets, properties or operations of the Authority.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the Authority, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of this Lease, the Site Lease, the Assignment Agreement or the Indenture, or the consummation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the Authority after reasonable investigation, threatened against or affecting the Authority or the assets, properties or operations of the Authority which, if determined adversely to the Authority or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Lease, the Site Lease, the Assignment Agreement or the Indenture, or upon the financial condition, assets, properties or operations of the Authority, and the Authority is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Lease, the Site Lease, the Assignment Agreement or the Indenture or the financial conditions, assets, properties or operations of the Authority.

ARTICLE III
DEPOSIT AND APPLICATION OF FUNDS; SUBSTITUTION

AND RELEASE OF PROPERTY
SECTION 3.1. Deposit of Moneys. On the Closing Date, the Authority will cause the proceeds of sale of the Bonds to be deposited with the Trustee. The Trustee shall deposit those proceeds in accordance with Section 3.01 of the Indenture.

SECTION 3.2. Acquisition and Construction of Project. As provided in Section 3.02 of the Indenture, the proceeds of the sale of the Bonds will be applied to pay the Site Lease Payment to the City in accordance with Section 3 of the Site Lease. Amounts deposited into the Project Fund, which is established under the Indenture, shall be disbursed for the purpose of paying Project Costs. Upon the completion of the Project, the City shall file a Written Certificate of the City with the Trustee, which Written Certificate shall identify the amount (if any) to be retained in the Project Fund to pay remaining Project Costs.
65 Section 6, Item A.
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SECTION 3.3. Substitution of Leased Property. The City may at any time and from time to time, substitute other real property (the “Substitute Property”) for the Leased Property or any portion thereof (the “Former Property”), upon satisfaction of all of the following requirements which are hereby declared to be conditions precedent to such substitution:
(a) No Event of Default has occurred and is continuing. (b) The City has filed with the Authority and the Trustee, and caused to be recorded in the office of the Fresno County Recorder’s Office, sufficient memorialization of an amendment of this Lease, the Site Lease and the Assignment Agreement, which adds the legal description of the Substitute Property to Appendix A and deletes therefrom the legal description of the Former Property.
(c) The City has obtained a CLTA policy of title insurance insuring the City’s leasehold estate hereunder in the Substitute Property, subject only to Permitted Encumbrances, in an amount at least equal to the then-aggregate principal amount of Lease Payments then due hereunder.
(d) The City has certified in writing to the Authority and the Trustee that the Substitute Property serves the municipal purposes of the City, constitutes property which the City is permitted to lease under the laws of the State of California, and has been determined to be important to the proper, efficient and economic operation of the City.
(e) The Substitute Property does not cause the City to violate any of its covenants, representations and warranties made herein.
(f) The City has filed with the Authority and the Trustee a written certificate of the City or other written evidence stating that (i) the estimated value of the Leased Property following such substitution is at least equal to the aggregate principal amount of the Lease Payments then due hereunder, (ii) the estimated fair rental value of the Leased Property following such substitution is at least equal to the remaining Lease Payments due hereunder, and (iii) the useful life of the Substitute Property at least extends to the stated termination date of this Lease.

Upon the satisfaction of all such conditions precedent, the Term of this Lease will thereupon end as to the Former Property and commence as to the Substitute Property, and all references to the Former Property will apply with full force and effect to the Substitute Property. The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of any substitution of property under this Section. The Authority and the City will execute, deliver and cause to be recorded all documents required to discharge the Site Lease, this Lease and the Assignment Agreement of record against the Former Property and to cause the Substitute Property to become subject to all of the terms and conditions of the Site Lease, this Lease and the Assignment Agreement.

SECTION 3.4. Release of Leased Property. The City has the option at any time and from time to time to release any portion of the Leased Property from this Lease (the 66 Section 6, Item A.
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“Released Property”) provided that the City has satisfied all of the following requirements which are hereby declared to be conditions precedent to such release:
(a) No Event of Default has occurred and is continuing. (b) The City has filed with the Authority and the Trustee, and caused to be recorded in the office of the Fresno County Recorder’s Office, sufficient memorialization of an amendment of this Lease, the Site Lease and the Assignment Agreement, which removes the Released Property therefrom. (c) The City has filed with the Authority and the Trustee a written certificate of the City or other written evidence stating that (i) the estimated value of the Leased Property following such release is at least equal to the aggregate principal amount of the Lease Payments then due hereunder, and (ii) the estimated fair rental value of the Leased Property following such release is at least equal to the remaining Lease Payments due hereunder.

Upon the satisfaction of all such conditions precedent, the Term of this Lease will thereupon end as to the Released Property. The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such release. The Authority and the City shall execute, deliver and cause to be recorded all documents required to discharge the Site Lease, this Lease and the Assignment Agreement of record against the Released Property.

ARTICLE IV
LEASE OF LEASED PROPERTY; TERM OF THIS LEASE;

LEASE PAYMENTS
SECTION 4.1. Lease of Leased Property. The Authority hereby leases the Leased Property to the City and the City hereby leases the Leased Property from the Authority, upon the terms and conditions set forth in this Lease.

SECTION 4.2. Term. The Term of this Lease commences on the Closing Date and ends on the date on which the Indenture is discharged in accordance with Section 10.01 thereof, but under any circumstances not later than October 1, 20___. The provisions of this Section are subject to the provisions of Section 6.2 relating to abatement and the taking in eminent domain of the Leased Property in whole or in part.

SECTION 4.3. Lease Payments.
(a) Obligation to Pay. Subject to the provisions of Sections 6.2 and 6.3 and the provisions of Article IX, the City agrees to pay to the Authority, its successors and assigns, the Lease Payments in the respective amounts specified in Appendix B attached to this Lease, to be due and payable in immediately available funds on the Interest Payment Dates immediately following each of the respective Lease Payment Dates specified in Appendix B, and to be deposited by the City with the Trustee on each of the Lease Payment Dates specified in Appendix B. Any amount held in the Bond Fund, the Interest Account and the Principal Account on any Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments in part but not in whole under Article 67 Section 6, Item A.
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IX, and amounts required for payment of past due principal or interest on any Bonds not presented for payment) will be credited towards the Lease Payment then required to be paid hereunder. The City is not required to deposit any Lease Payment with the Trustee on any Lease Payment Date if the amounts then held in the Bond Fund, the Interest Account and the Principal Account are at least equal to the Lease Payment then required to be deposited with the Trustee. The Lease Payments payable in any Rental Period are for the use of the Leased Property during that Rental Period. (b) Effect of Prepayment. If the City prepays all Lease Payments in full under Section 9.2, the City’s obligations under this Section will thereupon cease and terminate.

If the City prepays the Lease Payments in part but not in whole under Section 9.2, the principal components of the remaining Lease Payments will be reduced in integral multiples of $5,000 among Lease Payment Dates on a basis which corresponds to the principal maturities of the Bonds which are redeemed thereby; and the interest component of each remaining Lease Payment will be reduced by the aggregate corresponding amount of interest which would otherwise be payable with respect to the Bonds thereby redeemed under Section 4.01 of the Indenture.
(c) Rate on Overdue Payments. If the City fails to make any of the payments required in this Section, the payment in default will continue as an obligation of the City until the amount in default has been fully paid, and the City agrees to pay the same with interest thereon, from the date of default to the date of payment at the highest rate of interest on any Outstanding Bond.
(d) Fair Rental Value. The aggregate amount of the Lease Payments and Additional Rental Payments coming due and payable during each Rental Period constitute the total rental for the Leased Property for such Rental Period, and are payable by the City in each Rental Period for and in consideration of the right of the use and occupancy of, and the continued quiet use and enjoyment of the Leased Property during each Rental Period. The parties hereto have agreed and determined that the total Lease Payments represent the fair rental value of the Leased Property. In making that determination, consideration has been given to the estimated value of the Leased Property, other obligations of the City and the Authority under this Lease, the uses and purposes which may be served by the Leased Property and the benefits therefrom which will accrue to the City and the general public.
(e) Assignment. The City understands and agrees that all Lease Payments have been assigned by the Authority to the Trustee in trust, under the Assignment Agreement, for the benefit of the Owners of the Bonds, and the City hereby assents to such assignment. The Authority hereby directs the City, and the City hereby agrees to pay to the Trustee at its Office, all payments payable by the City under this Section and all amounts payable by the City under Article IX.

SECTION 4.4. Source of Payments; Covenant to Budget and Appropriate. The Lease Payments are payable from any source of available funds of the City, subject to the provisions of Section 6.3. The City covenants to take all actions required to include the Lease Payments in each of its budgets during the Term of this Lease and to make the necessary appropriations for all Lease Payments and Additional Rental Payments. The foregoing covenant of the City constitutes a duty imposed by law and each and every public official of the City is required to take all actions required by law in the performance 68 Section 6, Item A.
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of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Lease.

SECTION 4.5. Additional Rental Payments. In addition to the Lease Payments, the City shall pay when due the following amounts of Additional Rental Payments in consideration of the lease of the Leased Property by the City from the Authority hereunder:
(a) All fees and expenses incurred by the Authority in connection with or by reason of its leasehold estate in the Leased Property, when due; (b) All reasonable compensation to the Trustee for all services rendered under the Indenture and for all reasonable expenses, charges, costs, liabilities, legal fees and other disbursements incurred in and about the performance of its powers and duties under the Indenture;
(c) The reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the Authority or the Trustee to prepare audits, financial statements, reports, opinions or provide such other services required under this Lease or the Indenture; (d) Amounts coming due and payable as Excess Investment Earnings in accordance with Section 7.6(e); and
(e) The reasonable out-of-pocket expenses of the Authority in connection with the execution and delivery of this Lease or the Indenture, or in connection with the issuance of the Bonds, including but not limited to any and all expenses incurred in connection with the authorization, sale and delivery of the Bonds, or incurred by the Authority in connection with any litigation which may at any time be instituted involving this Lease, the Bonds, the Indenture or any of the other documents contemplated hereby or thereby, or otherwise incurred in connection with the administration of this Lease.

SECTION 4.6. Quiet Enjoyment. Throughout the Term of this Lease, the Authority shall provide the City with quiet use and enjoyment of the Leased Property and the City will peaceably and quietly have and hold and enjoy the Leased Property, without suit, trouble or hindrance from the Authority, except as expressly set forth in this Lease. The Authority will, at the request of the City and at the City’s cost, join in any legal action in which the City asserts its right to such possession and enjoyment to the extent the Authority may lawfully do so. Notwithstanding the foregoing, the Authority has the right to inspect the Leased Property as provided in Section 7.2.

SECTION 4.7. Title. Upon the termination of this Lease (other than under Section

8.2(b) hereof), all right, title and interest of the Authority in and to the Leased Property transfers to and vests in the City. The Authority shall take any and all steps and execute and record any and all documents reasonably required by the City to consummate any such transfer of title.
69 Section 6, Item A.
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ARTICLE V
MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS
SECTION 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the Term of this Lease, as part of the consideration for the rental of the Leased Property, all improvement, repair and maintenance of the Leased Property are the responsibility of the City, and the City will pay for or otherwise arrange for the payment of all utility services supplied to the Leased Property, which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and will pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Leased Property resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sublessee thereof. In exchange for the Lease Payments herein provided, the Authority agrees to provide only the Leased Property. The City waives the benefits of subsections 1 and 2 of Section 1932, Section 1933(4) and Sections 1941 and 1942 of the California Civil Code, but such waiver does not limit any of the rights of the City under the terms of this Lease.

The City shall also pay or cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Leased Property or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City shall pay only such installments as are required to be paid during the Term of this Lease as and when the same become due.

The City may, at its expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority notifies the City that, in its reasonable opinion, by nonpayment of any such items the interest of the Authority in the Leased Property will be materially endangered or the Leased Property or any part thereof will be subject to loss or forfeiture, in which event the City shall promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority and the Trustee.

SECTION 5.2. Modification of Leased Property. The City has the right, at its own expense, to make additions, modifications and improvements to the Leased Property or any portion thereof. All additions, modifications and improvements to the Leased Property will thereafter comprise part of the Leased Property and become subject to the provisions of this Lease. Such additions, modifications and improvements may not in any way damage the Leased Property, or cause the Leased Property to be used for purposes other than those authorized under the provisions of state and federal law; and the Leased Property, upon completion of any additions, modifications and improvements made thereto under this Section, must be of a value which is not substantially less than the value thereof immediately prior to the making of such additions, modifications and improvements. The City will not permit any mechanic’s or other lien to be established or remain against the Leased Property for labor or materials furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the City under this Section; except that if any such lien is established and the City first notifies or causes to be notified the Authority of the City’s intention to do so, the City may in good faith contest any lien filed or established against the Leased Property, 70 Section 6, Item A.
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and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and shall provide the Authority with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Authority. The Authority will cooperate fully in any such contest, upon the request and at the expense of the City.

SECTION 5.3. Liability and Property Damage Insurance. The City shall maintain or cause to be maintained throughout the Term of this Lease, a standard commercial general liability insurance policy or policies in protection of the Authority, the City, and their respective members, officers, agents, employees and assigns. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Leased Property. Such policy or policies shall provide coverage in such liability limits and be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of self-insurance by the City, subject to the provisions of Section 5.7, or in the form of the participation by the City in a joint powers agency or other program providing pooled insurance. The proceeds of such liability insurance must be applied toward extinguishment or satisfaction of the liability with respect to which paid.

SECTION 5.4. Casualty Insurance. The City shall procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease, casualty insurance against loss or damage to all buildings situated on the Leased Property, in an amount at least equal to the lesser of (a) 100% of the replacement value of the insured buildings, or (b) 100% of the aggregate principal amount of the then-outstanding Lease Payments.

Such insurance must, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance, and must include earthquake insurance if available at reasonable cost from reputable insurers in the judgment of the City. Such insurance may be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers agency or other program providing pooled insurance; provided that such insurance may not be maintained by the City in the form of self-insurance. The Net Proceeds of such insurance must be applied as provided in Section 6.1.

SECTION 5.5. Rental Interruption Insurance. The City shall procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease, rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of any portion of the Leased Property constituting buildings or other improvements as a result of any of the hazards covered in the insurance required by Section 5.4, in an amount at least equal to the maximum such Lease Payments coming due and payable during any consecutive two Fiscal Years. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers agency or other program providing pooled insurance; provided that such insurance may not be maintained by the City in the form of self-insurance. The Net Proceeds of such insurance, if any, must be paid to the Trustee and deposited in the Bond Fund, to be applied as a credit towards the payment of the Lease Payments allocable to the insured improvements as the same become due and payable.
71 Section 6, Item A.
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SECTION 5.6. Recordation Hereof; Title Insurance. On or before the Closing Date the City shall, at its expense, (a) cause the Site Lease, the Assignment Agreement and this Lease, or a memorandum hereof or thereof in form and substance approved by Bond Counsel, to be recorded in the office of the Fresno County Recorder’s Office, and (b) obtain a CLTA title insurance policy insuring the City’s leasehold estate hereunder in the Leased Property, subject only to Permitted Encumbrances, in an amount at least equal to the aggregate principal amount of the Bonds. All Net Proceeds received under any such title insurance policy must be deposited with the Trustee in the Bond Fund to be credited towards the prepayment of the remaining Lease Payments under Section 9.4.

SECTION 5.7. Insurance Net Proceeds; Form of Policies. Each policy of insurance maintained under Sections 5.4, 5.5 and 5.6 must name the Trustee as loss payee so as to provide that all proceeds thereunder are payable to the Trustee. The City shall pay or cause to be paid when due the premiums for all insurance policies required by this Lease.

All such policies shall provide that the Trustee is given 30 days’ notice of each expiration, any intended cancellation thereof or reduction of the coverage provided thereby. The City must file with the Trustee annually, within 90 days following the close of each Fiscal Year, a certificate of the City stating that all policies of insurance required hereunder are then in full force and effect. The Trustee has no responsibility for the sufficiency, adequacy or amount of any insurance or self-insurance herein required and is fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss.

If any insurance maintained under Section 5.3 is provided in the form of selfinsurance, the City must file with the Trustee annually, within 90 days following the close of each Fiscal Year, a statement of the risk manager of the City or an independent insurance adviser engaged by the City identifying the extent of such self-insurance and stating the determination that the City maintains sufficient reserves with respect thereto.

If any such insurance is provided in the form of self-insurance by the City, the City has no obligation to make any payment with respect to any insured event except from those reserves.

SECTION 5.8. Installation of City’s Personal Property. The City may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed other items of equipment or other personal property in or upon the Leased Property. All such items shall remain the sole property of the City, in which neither the Authority nor the Trustee has any interest, and may be modified or removed by the City at any time, provided that the City must repair all damage to the Leased Property resulting from the installation, modification or removal of any such items. Nothing in this Lease prevents the City from purchasing or leasing items to be installed under this Section under a lease or conditional sale agreement, or subject to a vendor’s lien or security agreement, as security for the unpaid portion of the purchase price thereof, so long as no such lien or security interest attaches to any part of the Leased Property.

SECTION 5.9. Liens. The City may not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Leased Property, other than as herein contemplated and except for such encumbrances as the City certifies in writing to the Trustee do not materially and adversely affect the leasehold estate of the City in the Leased Property hereunder. If any such mortgage, pledge, lien, charge, encumbrance or claim does materially and adversely 72 Section 6, Item A.
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affect the leasehold estate of the City in the Leased Property hereunder, the City will promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible; provided that the City is not required to do so prior to the time when such mortgage, pledge, lien, charge, encumbrance or claim actually causes such material adverse effect. The City will reimburse the Authority for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.

SECTION 5.10. Advances. If the City fails to perform any of its obligations under this Article V, the Authority may, but is not required to, take such action as it deems necessary to cure such failure, including the advancement of money, and the City shall repay all such advances as Additional Rental Payments hereunder, with interest at the rate set forth in Section 4.3(c).

ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET

PROCEEDS
SECTION 6.1. Application of Net Proceeds. The Trustee, as assignee of the Authority under the Assignment Agreement, has the right to receive all Net Proceeds. As provided in the Indenture, the Trustee will deposit all Net Proceeds in the Insurance and Condemnation Fund to be applied as set forth in Section 5.07 of the Indenture.

SECTION 6.2. Termination or Abatement Due to Eminent Domain. (a) If the Leased Property is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the Term of this Lease thereupon ceases as of the day possession is taken. (b) If less than all of the Leased Property is taken permanently and the remainder is useable for the City’s purposes, or if the Leased Property is taken temporarily, under the power of eminent domain, then:
(i) this Lease continues in full force and effect with respect thereto and does not terminate by virtue of such taking, and the parties waive the benefit of any law to the contrary, and
(ii) the Lease Payments are subject to abatement in an amount determined by the City such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property.

SECTION 6.3. Abatement Due to Damage or Destruction. The Lease Payments are subject to abatement during any period in which by reason of damage or destruction (other than by eminent domain which is hereinbefore provided for) there is substantial interference with the use and occupancy by the City of the Leased Property or any portion thereof. The Lease Payments are subject to abatement in an amount determined by the 73 Section 6, Item A.
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City, such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property not damaged or destroyed. Such abatement will continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, this Lease continues in full force and effect and the City waives any right to terminate this Lease by virtue of any such damage and destruction.

ARTICLE VII

OTHER COVENANTS OF THE CITY
SECTION 7.1. Disclaimer of Warranties. THE AUTHORITY MAKES NO

AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED,

AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR

ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE

CITY OF THE LEASED PROPERTY OR ANY PORTION THEREOF, OR ANY OTHER

REPRESENTATION OR WARRANTY WITH RESPECT TO THE LEASED PROPERTY OR ANY PORTION THEREOF. THE CITY ACKNOWLEDGES THAT THE AUTHORITY

IS NOT A MANUFACTURER OF ANY PORTION OF THE LEASED PROPERTY OR A

DEALER THEREIN, THAT THE CITY LEASES THE LEASED PROPERTY AS-IS, IT

BEING AGREED THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. The Authority has no liability for incidental, indirect, special or consequential damages, in connection with or arising out of this Lease for the existence, furnishing, functioning or use of the Leased Property by the City.

SECTION 7.2. Access to the Leased Property. The City agrees that the Authority and any Authorized Representative of the Authority, and the Authority’s successors or assigns, have the right at all reasonable times to enter upon and to examine and inspect the Leased Property or any part thereof. The City further agrees that the Authority, any Board Representative and the Authority’s successors or assigns may have such rights of access to the Leased Property or any component thereof as reasonably necessary to cause the proper maintenance of the Leased Property if the City fails to perform its obligations hereunder; provided, however, that neither the Authority nor any of its assigns has any obligation to cause such proper maintenance.

SECTION 7.3. Release and Indemnification Covenants. The City agrees to indemnify the Authority, the Trustee and their respective officers, agents, successors and assigns, against all claims, losses and damages, including legal fees and expenses, arising out of any of the following:
(a) the use, maintenance, condition or management of, or from any work or thing done on the Leased Property by the City,
(b) any breach or default on the part of the City in the performance of any of its obligations under this Lease,
74 Section 6, Item A.
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(c) any negligence or willful misconduct of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Leased Property,
(d) any intentional misconduct or negligence of any sublessee of the City with respect to the Leased Property,
(e) the acquisition, construction, improvement and equipping of the Leased Property, or the authorization of payment of the costs thereof, or (f) the acceptance and performance of the duties of the Trustee under the Indenture and under this Lease.

No indemnification is made under this Section or elsewhere in this Lease for willful misconduct or negligence under this Lease by the Authority, the Trustee or their respective officers, agents, employees, successors or assigns.

The indemnification hereunder shall survive removal or resignation of the Trustee, termination of this Lease or discharge of the Bonds.

SECTION 7.4. Assignment and Subleasing by the City. This Lease may not be assigned by the City, other than to an entity which succeeds to the interests of the City as a municipal corporation. The City may sublease the Leased Property, or any portion thereof, subject to all of the following conditions:
(a) This Lease and the obligation of the City to make Lease Payments hereunder must remain obligations of the City.
(b) The City must, within 30 days after the delivery thereof, furnish or cause to be furnished to the Authority and the Trustee a true and complete copy of such sublease.
(c) No such sublease by the City may cause the Leased Property to be used for a purpose which is not authorized under the provisions of the laws of the State of California.
(d) The City must furnish to the Authority and the Trustee a written opinion of Bond Counsel stating that such sublease does not cause the interest components of the Lease Payments to become included in gross income for purposes of federal income taxation or to become subject to personal income taxation by the State of California.

SECTION 7.5. Amendment Hereof. The Authority and the City may at any time amend or modify any of the provisions of this Lease, but only: (a) with the prior written consents of the Owners of a majority in aggregate principal amount of the Outstanding Bonds; or (b) without the consent of the Trustee or any of the Bond Owners, but only if such amendment or modification is for any one or more of the following purposes:
(i) to add to the covenants and agreements of the City contained in this Lease, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power herein reserved to or conferred upon the City; 75 Section 6, Item A.
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(ii) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein, to conform to the original intention of the City and the Authority; (iii) to modify, amend or supplement this Lease in such manner as to assure that the interest on the Bonds remains excluded from gross income under the Tax Code;
(iv) to amend the description of the Leased Property to reflect accurately the property originally intended to be included therein, or in connection with any substitution or release of property under Sections 3.3 or 3.4, or an addition to the Leased Property under this Section 7.5(b);
(v) to obligate the City to pay additional amounts of rental for the use and occupancy of the Leased Property, but only if (A) such additional rent payments are pledged or assigned for the payment of any bonds, notes or other obligations the proceeds of which are applied to finance or refinance the acquisition or construction of any real or personal property for which the City is authorized to expend funds subject to its control, and (B) the City has filed with the Trustee a written certificate stating that the estimated value of the Leased Property is, or following the completion of the acquisition and construction of any improvements to be financed from the proceeds of such bonds, notes or other obligations will be, at least equal to the aggregate thenoutstanding principal amount of the Bonds and all such other bonds, notes or other obligations;
(vi) in any other respect whatsoever as the Authority and the City deem necessary or desirable, if in the opinion of Bond Counsel such modifications or amendments do not materially adversely affect the interests of the Owners of the Bonds.

No such modification or amendment may extend or have the effect of extending any Lease Payment Date or reducing any Lease Payment or any premium payable upon the prepayment thereof, without the express consent of the Owners of the affected Bonds, or modify any of the rights or obligations of the Trustee without its written assent thereto.

SECTION 7.6. Tax Covenants.
(a) Private Business Use Limitation. The City shall assure that the proceeds of the Bonds are not used in a manner which would cause the 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 Tax Code.
(b) Federal Guarantee Prohibition. The City may not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code. (c) No Arbitrage. The City may not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the proceeds of the Bonds or of any other obligations which, if such action had been reasonably expected to have been taken, or 76 Section 6, Item A.
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had been deliberately and intentionally taken, on the Closing Date, would have caused the Bonds to be “arbitrage bonds” within the meaning of Section 148(a) of the Tax Code. (d) Maintenance of Tax Exemption. The City shall take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners of the 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 Closing Date.
(e) Rebate of Excess Investment Earnings to United States. The City shall calculate or cause to be calculated the Excess Investment Earnings in all respects at the times and in the manner required under the Tax Code. The City shall pay the full amount of Excess Investment Earnings to the United States of America in such amounts, at such times and in such manner as may be required under the Tax Code. Such payments shall be made by the City from any source of legally available funds of the City, and shall constitute Additional Rental Payments hereunder.

The City shall keep or cause to be kept, and retain or cause to be retained for a period of six years following the retirement of the Bonds, records of the determinations made under this subsection (e). In order to provide for the administration of this subsection (e), the City may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the City may deem appropriate.

The Trustee has no duty or obligation to monitor or enforce compliance by the City of any of the requirements under this subsection (e).

SECTION 7.7. Continuing Disclosure. The City shall comply with and carry out all of the provisions of the Continuing Disclosure Certificate executed by the City as of the Closing Date, as originally executed and as it may be amended from time to time in accordance with its terms. Notwithstanding any other provision of this Lease, failure of the City to comply with such Continuing Disclosure Certificate will not constitute an Event of Default, although any Participating Underwriter (as that term is defined in such Continuing Disclosure Certificate) or any Owner or beneficial owner of the Bonds may take such actions as may be necessary and appropriate to compel performance by the City of its obligations under this Section, including seeking mandate or specific performance by court order.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1. Events of Default Defined. Any one or more of the following events constitute an Event of Default hereunder:
(a) Failure by the City to pay any Lease Payment or other payment required to be paid hereunder at the time specified herein.
(b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in the preceding subsection (a), for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to 77 Section 6, Item A.
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the City by the Authority or the Trustee. If in the reasonable opinion of the City the failure stated in the notice can be corrected, but not within such 30 day period, the failure will not constitute an Event of Default if the City commences to cure the failure within such 30 day period and thereafter diligently and in good faith cures the failure in a reasonable period of time. (c) The filing by the City of a voluntary petition in bankruptcy, or failure by the City promptly to lift any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar acts which may hereafter be enacted.

SECTION 8.2. Remedies on Default. Whenever any Event of Default has happened and is continuing, the Authority may exercise any and all remedies available under law or granted under this Lease. Notwithstanding anything herein or in the Indenture to the contrary, neither the Authority nor the Trustee may accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable. Each covenant hereof to be kept and performed by the City is expressly made a condition and upon the breach thereof the Authority may exercise any and all rights granted hereunder; except that no termination of this Lease may be effected either by operation of law or acts of the parties hereto, except only in the manner herein expressly provided. Upon the occurrence and during the continuance of any Event of Default, the Authority may exercise each and every one of the following remedies, subject in all respects to the limitations set forth in Section 8.3.
(a) Enforcement of Payments Without Termination. If the Authority does not elect to terminate this Lease in the manner hereinafter provided for in subparagraph (b) hereof, the City agrees to and shall remain liable for the payment of all Lease Payments and the performance of all conditions herein contained and shall reimburse the Authority for any deficiency arising out of the re-leasing of the Leased Property, or, if the Authority is unable to re-lease the Leased Property, then for the full amount of all Lease Payments to the end of the Term of this Lease, but said Lease Payments and/or deficiency shall be payable only at the same time and in the same manner as hereinabove provided for the payment of Lease Payments hereunder, notwithstanding such entry or re-entry by the Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Leased Property or the exercise of any other remedy by the Authority. The City hereby irrevocably appoints the Authority as the agent and attorney-in-fact of the City to enter upon and re-lease the Leased Property upon the occurrence and continuation of an Event of Default and to remove all personal property whatsoever situated upon the Leased Property, to place the Leased Property in storage or other suitable place in the County of Fresno for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and re-leasing of the Leased Property and the removal and storage of the Leased Property by the Authority or its duly 78 Section 6, Item A.
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authorized agents in accordance with the provisions herein contained. The City agrees that the terms of this Lease constitute full and sufficient notice of the right of the Authority to re-lease the Leased Property in the event of such re-entry without effecting a surrender of this Lease, and further agrees that no acts of the Authority in effecting such re-leasing shall constitute a surrender or termination of this Lease irrespective of the term for which such re-leasing is made or the terms and conditions of such re-leasing, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease shall vest in the Authority to be effected in the sole and exclusive manner hereinafter provided for in subparagraph (b) hereof. The City agrees to surrender and quit possession of the Leased Property upon demand of the Authority for the purpose of enabling the Leased Property to be re-let under this paragraph, and the City further waives the right to any rental obtained by the Authority in excess of the Lease Payments and hereby conveys and releases such excess to the Authority as compensation to the Authority for its services in re-leasing the Leased Property.
(b) Termination of Lease. If an Event of Default occurs and is continuing hereunder, the Authority at its option may terminate this Lease and re-lease all or any portion of the Leased Property. If the Authority terminates this Lease at its option and in the manner hereinafter provided on account of default by the City (and notwithstanding any re-entry upon the Leased Property by the Authority in any manner whatsoever or the re-leasing of the Leased Property), the City nevertheless agrees to pay to the Authority all costs, loss or damages howsoever arising or occurring payable at the same time and in the same manner as is herein provided in the case of payment of Lease Payments and Additional Rental Payments. Any surplus received by the Authority from such re-leasing shall be deposited in the Bond Fund.

Neither notice to pay rent or to deliver up possession of the premises given under law nor any proceeding in unlawful detainer taken by the Authority shall of itself operate to terminate this Lease, and no termination of this Lease on account of default by the City shall be or become effective by operation of law, or otherwise, unless and until the Authority shall have given written notice to the City of the election on the part of the Authority to terminate this Lease. The City covenants and agrees that no surrender of the Leased Property, or of the remainder of the Term hereof or any termination of this Lease shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by such written notice. (c) Proceedings at Law or In Equity. If an Event of Default occurs and continues hereunder, the Authority may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due hereunder or to enforce any other of its rights hereunder.

SECTION 8.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy is cumulative and in addition to every other remedy given under this Lease or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon the occurrence of any Event of Default impairs any such right or power or operates as a waiver thereof, but any such right and power may be exercised from time to time and as often as 79 Section 6, Item A.
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may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it in this Article VIII it is not necessary to give any notice, other than as expressly required in this Article VIII or by law.

SECTION 8.4. Agreement to Pay Attorneys’ Fees and Expenses. If the Authority or the City defaults under any of the provisions of this Lease and the nondefaulting party employs attorneys or incurs other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party will on demand therefor pay to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting party.

SECTION 8.5. No Additional Waiver Implied by One Waiver. If the Authority or the City breaches any agreement in this Lease and thereafter the other party waives the breach, such waiver is limited to the particular Breach so waived and does not operate to waive any other breach hereunder.

SECTION 8.6. Application of Proceeds. All net proceeds received from the re-lease of the Leased Property under this Article VIII, and all other amounts derived by the Authority or the Trustee as a result of the occurrence of an Event of Default, must be paid to and applied by the Trustee in accordance with Section 7.03 of the Indenture.

SECTION 8.7. Trustee and Bond Owners to Exercise Rights. Such rights and remedies as are given to the Authority under this Article VIII have been assigned by the Authority to the Trustee under the Assignment Agreement for the benefit of the Bond Owners, to which assignment the City hereby consents. The Trustee and the Bond Owners shall exercise such rights and remedies in accordance with the Indenture.

ARTICLE IX

PREPAYMENT OF LEASE PAYMENTS
SECTION 9.1. Security Deposit. Notwithstanding any other provision of this Lease, the City may on any date secure the payment of the Lease Payments allocable to the Leased Property in whole or in part by depositing with the Trustee an amount of cash which, together with other available amounts on deposit in the funds and accounts established under the Indenture, is either:
(a) sufficient to pay such Lease Payments, including the principal and interest components thereof, in accordance with the Lease Payment schedule set forth in Appendix B, or
(b) invested in whole or in part in non-callable Federal Securities in such amount as will, in the opinion of an independent certified public accountant, together with interest to accrue thereon and together with any cash which is so deposited, be fully sufficient to pay such Lease Payments when due under Section 4.3(a), as the City instructs at the time of said deposit. 80 Section 6, Item A.
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If the City makes a security deposit under this Section with respect to all unpaid Lease Payments, and notwithstanding the provisions of Section 4.2, (i) the Term of this Lease will continue, (ii) all obligations of the City under this Lease, and all security provided by this Lease for said Lease Payments, will thereupon cease and terminate, excepting only the obligation of the City to make, or cause to be made all of said Lease Payments from such security deposit, and (iii) under Section 4.7, title to the Leased Property will vest in the City on the date of said deposit automatically and without further action by the City or the Authority. Said security deposit constitutes a special fund for the payment of Lease Payments in accordance with the provisions of this Lease.

SECTION 9.2. Prepayment. The City has the option to prepay the principal components of the Lease Payments in as described under Section 4.01(a) of the Indenture. Such prepayment price shall be deposited by the Trustee in the Redemption Fund to be applied to the redemption of Bonds under Section 4.01(a) of the Indenture.

The City shall give written notice to the Authority and the Trustee of its intention to prepay the Lease Payments under this Section at least 45 days prior to the prepayment date, or such shorter period of time as may be acceptable to the Trustee in its sole discretion, such notice being solely for the convenience of the Trustee. Additionally, this Lease is subject to extraordinary mandatory prepayment as described under Section 4.01(c) of the Indenture.

SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain. The City shall prepay the principal components of the Lease Payments allocable to the Leased Property in whole or in part on any date, from and to the extent of any Net Proceeds of insurance award or eminent domain award with respect to the Leased Property theretofore deposited in the Redemption Fund for that purpose under Article VI hereof and Section 5.07 of the Indenture. Such Net Proceeds, to the extent remaining after payment of any delinquent Lease Payments, will be credited towards the City’s obligations under this Section and applied to the corresponding redemption of Bonds under Section 4.01 of the Indenture on the next available redemption date.

SECTION 9.4. Credit for Amounts on Deposit. If the principal components of the Lease Payments are prepaid in full under this Article IX, such that the Indenture is discharged by its terms as a result of such prepayment, at the written election of the City filed with the Trustee any or all amounts then on deposit in the Bond Fund (and the accounts therein) will be credited towards the amounts then required to be so prepaid.

ARTICLE X

MISCELLANEOUS
SECTION 10.1. Notices. Any notice, request, complaint, demand or other communication under this Lease shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by facsimile transmission or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) 48 hours after deposit in the United States of America first class mail, postage prepaid, or (b) in the case of personal delivery to any person, upon actual receipt. The Authority, the City or the Trustee may, by written notice to the other parties, from time to time modify the address to which communications are to be given hereunder. 81 Section 6, Item A.
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If to the Authority or the City: City of Kerman
850 S Madera Avenue
Kerman, CA 93630
Attention: Finance Director
If to the Trustee: U.S. Bank Trust Company, National Association 633 West Fifth Street
Los Angeles, CA 90071
Attention: Global Corporate Trust
SECTION 10.2. Binding Effect. This Lease inures to the benefit of and binds the Authority, the City and their respective successors and assigns.

SECTION 10.3. Severability. If any provision of this Lease is held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision hereof.

SECTION 10.4. Net-net-net Lease. This Lease is deemed and construed to be a “net-net-net lease” and the City hereby agrees that the Lease Payments are an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever.

SECTION 10.5. Third Party Beneficiary. The Trustee is hereby made a third party beneficiary hereunder with all rights of a third party beneficiary.

SECTION 10.6. Further Assurances and Corrective Instruments. The Authority and the City shall, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Leased Property hereby leased or intended so to be or for carrying out the expressed intention of this Lease.

SECTION 10.7. Execution in Counterparts. This Lease may be executed in several counterparts, each of which is an original and all of which constitute but one and the same instrument.

SECTION 10.8. Applicable Law. This Lease is governed by and construed in accordance with the laws of the State of California.

SECTION 10.9. Board and City Representatives. Whenever under the provisions of this Lease the approval of the Authority or the City is required, or the Authority or the City is required to take some action at the request of the other, such approval or such request shall be given for the Authority and for the City by an Authorized Representative thereof, and any party hereto may conclusively rely upon any such approval or request.

SECTION 10.10. Captions. The captions or headings in this Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or Section of this Lease.
[Remainder of page intentionally left blank. Signatures on next page.] 82 Section 6, Item A.
[Signature Page to Lease Agreement dated as of October 1, 2025] IN WITNESS WHEREOF, the Authority and the City have caused this Lease to be executed in their respective names by their duly authorized officers, all as of the date first above written.

KERMAN PUBLIC FINANCING AUTHORITY
By:

John Jansons
Executive Director

CITY OF KERMAN
By:

John Jansons
City Manager
83 Section 6, Item A.

A-1

APPENDIX A

B-1

APPENDIX B

SCHEDULE OF LEASE PAYMENTS
Lease
Payment Date*
Principal
Component
Interest
Component
Aggregate
Lease Payment
Total
* Lease Payment Dates are the 5th Business Day immediately preceding each date listed in the schedule. 85 Section 6, Item A.

Stradling Yocca Carlson & Rauth
Draft of 7/22/25
‘Attachment D'
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$__________

KERMAN PUBLIC FINANCING AUTHORITY
2025 LEASE REVENUE BONDS

BOND PURCHASE AGREEMENT
__________, 2025
Kerman Public Financing Authority
850 S. Madera Ave.

Kerman, California 93630
City of Kerman
850 S. Madera Ave.

Kerman, California 93630
Ladies and Gentlemen:

Oppenheimer & Co. Inc., as underwriter (the “Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with the Kerman Public Financing Authority (the “Authority”) and the City of Kerman, California (the “City”), which, upon the acceptance of the Authority and the City, will be binding upon the Authority, the City and the Underwriter. This offer is made subject to acceptance by the Authority and by the City by the execution of this Purchase Agreement and delivery of the same to the Underwriter prior to 11:59 P.M., Pacific Time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Authority and the City at any time prior to the acceptance hereof by the Authority and the City. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Indenture of Trust, dated as of ____ 1, 2025 (the “Indenture”), by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements herein set forth, the Underwriter hereby agrees to purchase from the Authority, and the Authority hereby agrees to issue, sell and deliver to the Underwriter all (but not less than all) of the Kerman Public Financing Authority 2025 Lease Revenue Bonds, in the aggregate principal amount of $__________ (the “Bonds”). The Bonds will be dated as of their date of delivery. Interest on the Bonds shall be payable semiannually on April 1 and October 1 in each year, commencing ______1, 2026 and will mature, bear interest and be subject to redemption prior to maturity as set forth in Exhibit A hereto. The purchase price for the Bonds shall be equal to $__________ (being the aggregate principal amount thereof, plus net original issue premium of $__________, less an underwriter’s discount of $__________).

Section 2. The Bonds. The Bonds shall be secured by a pledge of Revenues consisting primarily of certain lease payments(“Lease Payments”) to be paid by the City pursuant to a Lease Agreement, dated as of _______1, 2025, by and between the Authority, as lessor, and the City, as lessee (the “Lease Agreement”), concerning the leaseback of certain real property and improvements 86 Section 6, Item A.
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(the “Leased Property”). The Authority’s right to receive the Lease Payments due under the Lease Agreement and to exercise remedies upon default thereunder shall be assigned to the Trustee for the benefit of the owners of the Bonds pursuant to the Indenture.

The Bonds shall be as described in, and shall be secured under and pursuant to the Indenture substantially in the form previously submitted to the Underwriter with only such changes therein as shall be mutually agreed upon by the Authority, the City and the Underwriter.

The proceeds of the Bonds shall be used (i) to finance the acquisition construction and improvement of certain facilities of the City, and (ii) to pay the costs of issuance of the Bonds.

As used herein, the term “Authority Documents” collectively refers to the Bonds, this Purchase Agreement, the Indenture, the Lease Agreement and, the Site Lease, dated as of _____ 1, 2025 (the “Site Lease”), by and between the City and the Authority under which the City will lease the Leased Property to the Authority. The Bonds and the execution and delivery of the Authority Documents were authorized by the Authority under the resolution adopted by the Board of Directors of the Authority on _______, 2025 (the “Authority Resolution”).

As used herein, the term “City Documents” collectively refers to this Purchase Agreement, the Continuing Disclosure Certificate, dated _____1,2025 (the “Continuing Disclosure Agreement”), executed and delivered by the City, the Lease Agreement and the Site and Facility Lease. The City authorized the execution and delivery of the City Documents under the resolution adopted by the City Council of the City on _______, 2025 (the “City Resolution”).

Section 3. Public Offering and Establishment of Issue Price. (a) The Underwriter agrees to make a bona fide initial public offering of all of the Bonds at the public offering prices (or yields) set forth on Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as the Underwriter deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. The City and the Authority acknowledge and agree that: (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s-length commercial transaction between the City and the Authority, on one hand, and the Underwriter, on the other; (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and is not acting as 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 or Authority 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 or Authority on other matters); (iv) the Underwriter has financial and other interests that differ from those of the City and the Authority; and (v) the City and Authority have consulted their own legal, financial and other advisors to the extent they have deemed appropriate.
(b) The Underwriter agrees to assist the Authority in establishing the issue price of the Bonds and shall execute and deliver to the Authority at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in 87 Section 6, Item A.
3 4924-7581-3719/029999-0001
the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority and 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 Authority under this section to establish the issue price of the Bonds may be taken on behalf of the Authority by Fieldman, Rolapp & Associates, Inc. (the “Municipal Advisor”) and any notice or report to be provided to the Authority may be provided to the Municipal Advisor. (c) Except as otherwise set forth in Exhibit A, the Authority will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the Authority the price or prices at which it has sold to the public each maturity of the Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Authority the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public. (d) The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A, except as otherwise set forth therein.

Exhibit A also sets forth, identified under the column “Hold the Offering Price Rule Used,” as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the 10% test has not been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-theoffering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
(i) the close of the fifth (5th) business day after the sale date; or (ii) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.

The Underwriter shall promptly advise the Authority when it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date. (e) The Underwriter confirms that any selling group agreement and any retail distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such retail distribution agreement, as applicable, to: (1) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the Underwriter that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public; and (2) comply with the hold-the-offeringprice rule, if applicable, in each case if and for so long as directed by the Underwriter. The Authority 88 Section 6, Item A.
4 4924-7581-3719/029999-0001
acknowledges that, in making the representation set forth in this subsection, the Underwriter will rely on: (A) in the event that a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold-the-offering-price rule, if applicable, as set forth in a selling group agreement and the related pricing wires; and (B) in the event that a retail distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the hold-the-offering-price rule, if applicable, as set forth in the retail distribution agreement and the related pricing wires. The Authority further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a retail distribution agreement, to comply with its corresponding agreement regarding the hold-the-offering-price rule as applicable to the Bonds. (f) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to the Underwriter shall not constitute sales to the public for purposes of this section.

Further, for purposes of this section:
(i) “public” means any person other than an underwriter or a related party; (ii) “underwriter” means: (A) any person that agrees pursuant to a written contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public; and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the public); (iii) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to: (A) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another); (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another); or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and (iv) “sale date” means the date of execution of this Purchase Agreement by all parties.

Section 4. The Official Statement. By its acceptance of this proposal, the Authority and the City ratify, confirm and approve of the use and distribution by the Underwriter prior to the date hereof of the preliminary official statement relating to the Bonds dated __________, 2025 (including the cover page, all appendices and all information incorporated therein and any supplements or amendments thereto and as disseminated in its printed physical form or in electronic form in all respects materially consistent with such physical form, the “Preliminary Official Statement”) that authorized officers of the City deemed “final” as of its date, for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 15c2-12”), except for certain information permitted to be omitted therefrom by Rule 15c2-12. The Authority and the City hereby agree to deliver or cause to be delivered to the Underwriter, within seven business days of the date hereof, copies of the final official statement, dated the date hereof, relating to the Bonds (including all information 89 Section 6, Item A.
5 4924-7581-3719/029999-0001
previously permitted to have been omitted by Rule 15c2-12), including the cover page, all appendices, all information incorporated therein and any amendments or supplements as have been approved by the Authority, the City and the Underwriter (the “Official Statement”) in such quantity as the Underwriter shall reasonably request to comply with Section (b)(4) of Rule 15c2-12 and the rules of the Municipal Securities Rulemaking Board (the “MSRB”).

The Underwriter hereby agrees that it will not request that payment be made by any purchaser of the Bonds prior to delivery by the Underwriter to the purchaser of a copy of the Official Statement.

The Underwriter agrees: (i) to provide the Authority and the City with final pricing information on the Bonds on a timely basis; and (ii) to promptly file a copy of the Official Statement, including any supplements prepared by the Authority or the City with the MSRB at http://emma.msrb.org. The Authority and the City hereby approve of the use and distribution by the Underwriter of the Preliminary Official Statement in connection with the offer and sale of the Bonds. The Authority and the City will cooperate with the Underwriter in the filing by the Underwriter of the Official Statement with the MSRB.

Section 5. Closing. At 8:30 a.m., Pacific Time, on __________, 2025, or at such other time or date as the Authority and the Underwriter agree upon (the “Closing Date”), the Authority shall deliver or cause to be delivered to the Trustee, the Bonds, in definitive form, registered in the name of Cede & Co., as the nominee of The Depository Trust Company (“DTC”), so that the Bonds may be authenticated by the Trustee and credited to the account specified by the Underwriter under DTC’s FAST procedures. Concurrently with the delivery of the Bonds, the Authority and the City will deliver the documents hereinafter mentioned at the offices of Jones Hall LLP, San Mateo, California (“Bond Counsel”), or another place to be mutually agreed upon by the Authority, the City and the Underwriter.

The Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof by wire transfer in immediately available funds. This payment for and delivery of the Bonds, together with the delivery of the aforementioned documents, is herein called the “Closing.” The Bonds shall be registered in the name of Cede & Co., as nominee of DTC in denominations of five thousand dollars ($5,000) or any integral multiple thereof. The Authority and the City acknowledge that the services of DTC will be used initially by the Underwriter in order to permit the issuance of the Bonds in book-entry form, and agree to cooperate fully with the Underwriter in employing such services.

Section 6. Representations, Warranties and Covenants of the Authority. The Authority represents, warrants and covenants to the Underwriter and the City that:
(a) The Authority is a public body, duly organized and existing under the Constitution and laws of the State of California (the “State”), including Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “JPA Act”), and the Joint Exercise Powers Agreement, as amended, (the “JPA Agreement”), between the City and the California Statewide Communities Development Authority. (b) The Authority has full legal right, power and authority to adopt or enter into, as the case may be, and to carry out and consummate the transactions on its part contemplated by the Authority Documents.
(c) By all necessary official action, the Authority has duly adopted the Authority Resolution and has duly authorized and approved the Authority Documents, has duly authorized and 90 Section 6, Item A.
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approved the Preliminary Official Statement, will, by execution thereof, duly authorize and approve the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations on its part contained in, the Authority Documents and the consummation by it of all other transactions contemplated by the Authority Documents in connection with the issuance of the Bonds. As of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered, and assuming due execution and delivery by the other parties thereto, if applicable, the Authority Documents will constitute the legally valid and binding obligations of the Authority enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights generally, or by the exercise of judicial discretion and the limitations on legal remedies against joint powers authorities in the State. The Authority has complied, and will at the Closing be in compliance in all material respects, with the terms of the Authority Documents. (d) The Authority is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of any state or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party which breach or default has or may have a materially adverse effect on the ability of the Authority to perform its obligations under the Authority Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the adoption, execution and delivery of the Authority Documents, if applicable, and compliance with the provisions on the Authority’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Authority or under the terms of any such law, regulation or instrument, except as may be provided by the Authority Documents.
(e) All material authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by the Authority of its obligations in connection with the Authority Documents have been duly obtained or, when required for future performance, are expected to be obtained, other than such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Preliminary Official Statement and the Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the Authority of its obligations under the Authority Documents have been duly obtained. (f) The Authority hereby agrees that it will notify the other parties hereto if, within the period from the date of this Purchase Agreement to and including the date twenty-five (25) days following the end of the underwriting period (as defined herein), the Authority discovers any preexisting or subsequent fact or becomes aware of the occurrence of any event, in any such case, which 91 Section 6, Item A.
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might cause the Official Statement (as the same may have then been supplemented or amended) to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (g) As of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental authority, public board or body, pending, with service of process upon the Authority having been accomplished, or threatened in writing to the Authority: (i) in any way questioning the corporate existence of the Authority or the titles of the officers of the Authority to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of Lease Payments with respect to the Lease Agreement or any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the Bonds or the other Authority Documents or the consummation of the transactions contemplated thereby or hereby, or contesting the exclusion of the interest on the Bonds from taxation or contesting the powers of the Authority or its authority to issue the Bonds; (iii) which would be likely to result in any material adverse change relating to the business, operations or financial condition of the Authority; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(h) To the Authority’s knowledge, there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of paragraph 6(g). (i) The information in the Official Statement set forth under the caption “THE AUTHORITY” does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(j) Any certificate signed by any officer of the Authority authorized to execute such certificate in connection with the execution, sale and delivery of the Bonds and delivered to the Underwriter shall be deemed a representation and warranty of the Authority to the Underwriter and the City as to the statements made therein but not of the person signing such certificate.

Section 7. Representations, Warranties and Covenants of the City. The City represents, warrants and covenants to the Underwriter and the Authority that:
(a) The City is general law city, validly existing under the Constitution and laws of the State.
(b) The City has full legal right, power and authority to adopt or enter into, as the case may be, and to carry out and consummate the transactions on its part contemplated by the City Documents.
(c) By all necessary official action, the City has duly authorized and approved the City Documents, has duly authorized and approved the Preliminary Official Statement and the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance 92 Section 6, Item A.
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by the City of the obligations on its part contained in, the City Documents and the consummation by it of all other transactions contemplated by the City Documents in connection with the issuance of the Bonds. As of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered, and assuming due execution and delivery by the other parties thereto, if applicable, the City Documents will constitute the legally valid and binding obligations of the City enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights generally, or by the exercise of judicial discretion and the limitations on legal remedies against municipal corporations in the State. The City has complied, and will at the Closing be in compliance in all material respects, with the terms of the City Documents.
(d) The City is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of any state or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party which breach or default has or may have a materially adverse effect on the ability of the City to perform its obligations under the City Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the adoption, execution and delivery of the City Documents, if applicable, and compliance with the provisions on the City’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City or under the terms of any such law, regulation or instrument, except as may be provided by the City Documents.
(e) All material authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by the City of its obligations in connection with the City Documents have been duly obtained or, when required for future performance, are expected to be obtained, other than such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Preliminary Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations under the City Documents have been duly obtained.
(f) The Preliminary Official Statement was as of its date, and the Official Statement is, and at all times subsequent to the date of the Official Statement up to and including the Closing will be, true and correct in all material respects, and the Preliminary Official Statement and the Official Statement do not and will not contain and up to and including the Closing will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading (except 93 Section 6, Item A.
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that this representation does not include statements in the Official Statement under the caption “UNDERWRITING” information regarding DTC and its book-entry only system or CUSIP numbers, or under the caption “THE AUTHORITY” and under the caption “LITIGATION” with respect to the Authority, as to which no view is expressed).
(g) The City will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement. The City will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental authority prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. (h) As of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental authority, public board or body, pending, with service of process upon the City having been accomplished, or threatened in writing to the City: (i) in any way questioning the corporate existence of the City or the titles of the officers of the City to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of Lease Payments with respect to the Lease Agreement or of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the Bonds, or the City Documents or the consummation of the transactions contemplated thereby or hereby, or contesting the exclusion of the interest on the Bonds from taxation, or contesting the powers of the Authority to issue the Bonds; (iii) which would be likely to result in any material adverse change relating to the business, operations or financial condition of the City; and (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (i) To the City’s knowledge, there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of paragraph 7(h). (j) Until the date which is twenty-five (25) days after the “end of the underwriting period” (as hereinafter defined), if any event shall occur of which the City is aware that would cause the Official Statement to contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements in the Official Statement, in light of the circumstances under which they were made, not misleading (except that this representation does not include information regarding DTC and its book entry only system, as to which no view is expressed), the City shall forthwith notify the Underwriter of any such event of which it has knowledge and shall cooperate fully in furnishing any information available to it for any supplement to the Official Statement necessary, in the Underwriter’s reasonable opinion, so that the statements therein as so supplemented will not be misleading in light of the circumstances existing at such time and the City shall promptly furnish to the Underwriter a reasonable number of copies of such supplement. As used herein, the term “end of the underwriting period” means the later of such time as: (i) the Authority delivers the Bonds to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the “end of the underwriting period” shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the Underwriter at or prior to the Closing Date of the Bonds and shall specify a date (other than the Closing Date) to be deemed the “end of the underwriting period.”
94 Section 6, Item A.
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(k) Except as disclosed in the Preliminary Official Statement and the Official Statement, the City has not within the last five years failed to comply in any material respect with any continuing disclosure undertakings with regard to Rule 15c2-12, to provide annual reports or notices of material events specified in such rule.
(l) The financial statements relating to the receipts, expenditures and cash balances of the City as of June 30, 2024 attached as Appendix B to the Official Statement fairly represent the receipts, expenditures and cash balances of the City. Except as disclosed in the Official Statement or otherwise disclosed in writing to the Underwriter, there has not been any materially adverse change in the financial condition of the City or in its operations since June 30, 2024 and there has been no occurrence, circumstance or combination thereof which is reasonably expected to result in any such materially adverse change.
(m) To the extent required by law, the City will undertake, pursuant to the Continuing Disclosure Agreement and the other City Documents, to provide annual reports and notices of certain events, if material. A description of this undertaking is set forth in Appendix D to the Preliminary Official Statement and will also be set forth in the Official Statement. (n) Any certificate signed by any officer of the City authorized to execute such certificate in connection with the execution, sale and delivery of the Bonds and delivered to the Underwriter shall be deemed a representation and warranty of the City to the Underwriter and the Authority as to the statements made therein but not of the person signing such certificate.

Section 8. Conditions to the Obligations of the Underwriter. The Underwriter has entered into this Purchase Agreement in reliance upon the representations and warranties of the Authority and the City contained herein. The obligations of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the statements of the officers and other officials of the Authority and of the City, as well as authorized representatives of Bond Counsel and the Trustee made in any Bonds or other documents furnished pursuant to the provisions hereof; to the performance by the Authority and the City of their obligations to be performed hereunder at or prior to the Closing Date; and to the following additional conditions:
(a) The representations, warranties and covenants of the City and the Authority contained herein shall be true and correct at the date hereof and at the time of the Closing, as if made on the Closing Date.
(b) At the time of Closing, the City Documents and the Authority Documents shall be in full force and effect as valid and binding agreements between or among the various parties thereto, and the City Documents, the Authority Documents and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter.
(c) At the time of the Closing, no material default shall have occurred or be existing under the City Documents, Authority Documents, or any other agreement or document pursuant to which any of the City’s financial obligations were executed and delivered, and the City shall not be in default in the payment of principal or interest with respect to any of its financial obligations, which default would materially adversely impact the ability of the City to pay the Lease Payments.
95 Section 6, Item A.
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(d) In recognition of the desire of the Authority, the City and the Underwriter to effect a successful public offering of the Bonds, and in view of the potential adverse impact of any of the following events on such a public offering, this Purchase Agreement shall be subject to termination in the discretion of the Underwriter by notification, in writing, to the Authority and the City prior to delivery of and payment for the Bonds, if at any time prior to such time, regardless of whether any of the following statements of fact were in existence or known of on the date of this Purchase Agreement:
(i) any event shall occur which makes untrue any material statement or results in an omission to state a material fact necessary to make the statements in the Official Statement, in the light of the circumstances under which they were made, not misleading, which event, in the reasonable opinion of the Underwriter would materially or adversely affect the ability of the Underwriter to market the Bonds; or
(ii) the marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States or by any legislation in or by the Congress of the United States or by the State, or the amendment of legislation pending as of the date of this Purchase Agreement in the Congress of the United States, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any decision of any federal or state court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or State authority affecting the federal or State tax status of the Authority or the City, or the interest on or with respect to bonds or notes (including the Bonds); or
(iii) an order, decree or injunction issued by any court of competent jurisdiction, or order, ruling, regulation (final, temporary or proposed), official statement or other form of notice or communication issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental authority having jurisdiction of the subject matter, to the effect that: (i) obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under the Trust Indenture Act of 1939, as amended; or (ii) the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including any or all underlying obligations, as contemplated hereby or by the Official Statement, is or would be in violation of the federal securities laws as amended and then in effect; or
(iv) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, to the effect that obligations of the general character of the Bonds, or the Bonds are not exempt from registration under or other requirements of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, 96 Section 6, Item A.
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as amended and as then in effect, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended and as then in effect; or (v) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any domestic governmental authority or by any domestic national securities exchange, which are material to the marketability of the Bonds; or (vi) a general banking moratorium shall have been declared by federal, State or New York authorities, or the general suspension of trading on any national securities exchange; or
(vii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets is materially adverse such as to make it, in the sole judgment of the Underwriter, material adversely affects the market price or marketability of the Bonds, or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or (viii) any rating of the Bonds or the rating of any obligations of the City secured by the City’s general fund shall have been downgraded or withdrawn by a national rating service, which, in the opinion of the Underwriter, materially adversely affects the market price of the Bonds; or
(ix) the commencement of any action, suit or proceeding described in Section 6(g) or Section 7(h), if, in the reasonable opinion of the Underwriter, such action, suit or proceeding materially adversely affects the market price of the Bonds. (e) at or prior to the Closing, the Underwriter shall receive the following documents, in each case to the reasonable satisfaction in form and substance of the Underwriter:
(i) The Authority Resolution relating to the Bonds and authorizing the execution and delivery of the Bonds and the Authority Documents and the Official Statement signed by an authorized official of the Authority;
(ii) The City Resolution relating to the Bonds and authorizing the execution and delivery of the City Documents and the delivery of the Bonds and the Official Statement signed by an authorized official of the City;
(iii) The City Documents and the Authority Documents duly executed and delivered by the respective parties thereto, with only such amendments, modifications or supplements as may have been agreed to in writing by the Underwriter; (iv) The approving opinion of Bond Counsel dated the Closing Date and addressed to the Authority and the City, in substantially the form attached as Appendix E to the Official Statement, and a reliance letter thereon addressed to the Underwriter; (v) A supplemental opinion of Bond Counsel dated the Closing Date and addressed to the Underwriter, to the effect that:
97 Section 6, Item A.
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(A) This Purchase Agreement has been duly executed and
delivered by the Authority and the City and is a valid, binding and enforceable obligation of the Authority and the City;
(B) The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act or 1939, as amended;
(C) The statements contained in the Preliminary Official Statement and in the Official Statement under the captions “INTRODUCTION,” “ THE LEASED PROPERTY,” “THE BONDS,” “SECURITY FOR THE BONDS,” and “TAX MATTERS,” and in Appendix C—“ SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS” and Appendix E—“FORM OF OPINION OF BOND COUNSEL,” excluding any material that may be treated as included under such captions by cross reference or reference to other documents or sources, insofar as such statements expressly summarize certain provisions of the Bonds, the Indenture, the Assignment Agreement, the Lease Agreement, the Site and Facilities Lease, and Bond Counsel’s opinion concerning certain federal tax matters relating to the Bonds, are accurate in all material respects; and
(vi) The Official Statement, executed on behalf of the Authority and the City, and the Preliminary Official Statement;
(vii) Evidence that the ratings on the Bonds are as described in the Official Statement;
(viii) A certificate, dated the Closing Date, signed by a duly authorized officer of the Authority satisfactory in form and substance to the Underwriter to the effect that: (i) the representations, warranties and covenants of the Authority contained in this Purchase Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date by the Authority, and the Authority has complied with, in all material respects, all of the terms and conditions of this Purchase Agreement required to be complied with by the Authority at or prior to the Closing Date; (ii) no event affecting the Authority has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purposes for which it is to be used or which is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; and (iii) the Authority is not, in any material respect, in breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, which would have a material adverse impact on the Authority’s ability to perform its obligations under the Authority Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument; (ix) A certificate, dated the Closing Date, signed by a duly authorized officer of the City satisfactory in form and substance to the Underwriter to the effect that: (i) the representations, warranties and covenants of the City contained in this Purchase Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date by the City, and the City has complied with, in all material respects, all of the terms and conditions of the Purchase Agreement required to be complied with by the City at or prior to the Closing Date; (ii) no event affecting the City has occurred since the date of the Official Statement 98 Section 6, Item A.
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which should be disclosed in the Official Statement for the purposes for which it is to be used or which is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; (iii) the information and statements contained in the Official Statement (other than information in the Official Statement under the caption “UNDERWRITING” information regarding DTC and its book entry only system or CUSIP numbers, or under the caption “THE AUTHORITY” and under the caption “LITIGATION” with respect to the Authority) did not as of its date and do not as of the Closing contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect; and (iv) the City is not, in any material respect, in breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement (including but not limited to the Lease) or other instrument to which the City is a party or is otherwise subject, which would have a material adverse impact on the City’s ability to perform its obligations under the City Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument;
(x) An opinion dated the Closing Date and addressed to the Underwriter, of the City Attorney of the City, as Counsel to the Authority, to the effect that:
(A) The Authority is a joint exercise of powers agency of the State, validly existing under the Constitution and laws of the State; (B) The Authority Resolution authorizing the execution and delivery of the Bonds, the Authority Documents and this Purchase Agreement has been duly adopted at a meeting of the Board of Directors of the Authority which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and has not been amended, modified or rescinded;
(C) The Authority has full legal right, power and authority to enter into and carry out the transactions contemplated of it by the Authority Documents and this Purchase Agreement;
(D) The Authority Documents and this Purchase Agreement have been duly authorized, executed and delivered by the Authority, and assuming due authorization, execution and delivery of such documents by the other parties thereto, the Authority Documents and this Purchase Agreement constitute legally binding agreements of the Authority enforceable against the Authority in accordance with their respective terms (except as limited herein); (E) The Authority has obtained all State governmental, legislative, administrative and judicial authorizations, approvals, consents and orders that are required to be obtained on connection with the Authority’s performance of its obligations under the Authority Documents, this Purchase Agreement and the Authority Resolution, unless the failure to obtain such authorizations, approvals, consents or orders would not have a material adverse effect on the due performance by the Authority of such obligations, provided that no opinion is rendered as to any approvals, consents and orders as may be required under Federal law or the Blue Sky laws or securities laws of any other state in connection with such performance; 99 Section 6, Item A.
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(F) Except as disclosed in the Official Statement, the execution and delivery of the Authority Documents and this Purchase Agreement do not materially conflict with or constitute a material breach or default under any State law, administrative regulation or other agreement to which the Authority is a party or to which it is bound; (G) Except as described in the Official Statement, no litigation is pending or, to the best of such counsel’s knowledge, threatened in any State or federal court (1) challenging the titles of the officials of the Authority signatory to any of the Authority Documents or this Purchase Agreement to their respective offices; (2) contesting or affecting the validity of the Authority Documents, this Purchase Agreement or the Authority Resolution; (3) in any way contesting the power of the Authority to approve, execute and deliver the Authority or this Purchase Agreement or to adopt the Authority Resolution; (4) to restrain or enjoin the Lease Payments under the Lease Agreement; or (5) asserting that the Preliminary Official Statement or the Official Statement contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and
(xi) an opinion dated the Closing Date and addressed to the Underwriter, of the City Attorney of the City, to the effect that:
(A) The City is a general law city, validly existing under the Constitution and laws of the State;
(B) The City Resolution authorizing the execution and delivery of the City Documents and this Purchase Agreement, has been duly adopted at a meeting of the City Council of the City which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and has not been amended, modified or rescinded;
(C) The City has full legal right, power and authority to enter into and carry out the transactions contemplated of it by the City Documents and this Purchase Agreement; (D) The City Documents and this Purchase Agreement have been duly authorized, executed and delivered by the City, and assuming due authorization, execution and delivery of such documents by the other parties thereto, the City Documents to which the City is a party and this Purchase Agreement constitute legally binding agreements of the City enforceable against the City in accordance with their respective terms (except as limited herein); (E) The City has obtained all State governmental, legislative, administrative and judicial authorizations, approvals, consents and orders that are required to be obtained on connection with the City’s performance of its obligations under the City Documents, this Purchase Agreement and the City Resolution, unless the failure to obtain such authorizations, approvals, consents or orders would not have a material adverse effect on the due performance by the City of such obligations, provided that no opinion is rendered as to any approvals, consents and orders as may be required under Federal law or the Blue Sky laws or securities laws of any other state in connection with such performance;
(F) Except as disclosed in the Official Statement, the execution and delivery of the City Documents and this Purchase Agreement do not materially conflict with or 100
Section 6, Item A.
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constitute a material breach or default under any State law, administrative regulation or other agreement to which the City is a party or to which it is bound; (G) Except as described in the Official Statement, no litigation is pending or, to the best of such counsel’s knowledge, threatened in any State or federal court (1) challenging the titles of the officials of the City signatory to any of the City Documents and this Purchase Agreement to their respective offices; (2) contesting or affecting the validity of the City Documents, this Purchase Agreement or the City Resolution; (3) in any way contesting the power of the City to approve, execute and deliver the City Documents or to adopt the City Resolution; (4) to restrain or enjoin the Lease Payments under the Lease Agreement; or (5) asserting that the Preliminary Official Statement or the Official Statement contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (xii) An opinion of Jones Hall LLP, San Mateo, California, in its capacity as Disclosure Counsel, dated the Closing Date and addressed to the Authority, the City and the Underwriter, to the effect that, no facts have come to attention of Disclosure Counsel that have caused such counsel to believe that the Preliminary Official Statement, as of its date or the date of this Purchase Agreement, or the Official Statement, as of its date and as of the Closing Date (except for the following items, which are expressly excluded from the scope of this sentence: any financial, statistical and demographic data or forecasts, numbers, charts, estimates, projections, assumptions or expressions of opinion, and information regarding DTC and its book-entry only system, that is contained or incorporated by reference in the Preliminary Official Statement or the Official Statement and the appendices to the Preliminary Official Statement or the Official Statement) contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(xiii) An opinion of Stradling Yocca Carlson & Rauth LLP, counsel to the Underwriter, in form and substance satisfactory to the Underwriter; (xiv) An opinion of counsel to the Trustee, addressed to the Underwriter and dated the Closing Date, in form and substance satisfactory to the Underwriter and to Bond Counsel; (xv) A certificate, dated the Closing Date, signed by a duly authorized official of the Trustee in form and substance satisfactory to the Underwriter; (xvi) The preliminary and final Statement of Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 53583 of the Government Code and Section 8855(g) of the Government Code; (xvii) A copy of the executed Blanket Issuer Letter of Representations by and between the Authority and DTC relating to the book-entry system; (xviii) The tax certificate and agreement of the Authority and the City in form and substance to the reasonable satisfaction of Bond Counsel and the Underwriter; (xix) A certificate, dated the date of the Preliminary Official Statement, of the City, as required under Rule 15c2-12;
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17 4924-7581-3719/029999-0001
(xx) A certificate, dated the date of the Preliminary Official Statement, of the Authority, as required under Rule 15c2-12;
(xxi) Certified copies of the JPA Agreement and all amendments thereto and related certificates issued by the Secretary of State of the State; (xxii) A certified copy of the general resolution of the Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authorizes the execution and delivery of the Indenture and the authentication and delivery of the Bonds by the Trustee;
(xxiii) A copy of an ALTA or CLTA title insurance policy in an amount equal to the principal amount of the Bonds, insuring the City’s leasehold interest in the Leased Property, subject only to permitted encumbrances or such other encumbrances approved in writing by the Underwriter; and
(xxiv) Such additional legal opinions, certificates, proceedings, instruments or other documents as Bond Counsel or the Underwriter may reasonably request.

Section 9. Changes in Official Statement. After the Closing, neither the Authority nor the City will adopt any amendment of or supplement to the Official Statement to which the Underwriter shall reasonably object in writing. Within 90 days after the Closing or within 25 days following the “end of the underwriting period,” whichever occurs first, if any event relating to or affecting the Bonds, the Trustee, the City or the Authority shall occur as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in any material respect in the light of the circumstances existing at the time it is delivered to a purchaser, the Authority will forthwith prepare and furnish to the Underwriter an amendment or supplement that will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to purchaser, not misleading. The City and the Authority shall cooperate with the Underwriter in the filing by the Underwriter of such amendment or supplement to the Official Statement with the MSRB. The Underwriter acknowledges that the “end of the underwriting period” will be the Closing Date.

Section 10. Expenses. The Authority or the City will pay or cause to be paid the approved expenses incident to the performance of its obligations hereunder and certain expenses relating to the sale of the Bonds, including, but not limited to (a) the cost of the preparation and printing or other reproduction of the Authority Documents and the City Documents (other than this Purchase Agreement); (b) the fees and disbursements of Bond Counsel, Disclosure Counsel, the Municipal Advisor and any other experts or other consultants retained by the Authority or the City; (c) the costs and fees of the credit rating agencies; (d) the cost of preparing and delivering the definitive Bonds; (e) the cost of providing immediately available funds on the Closing Date; (f) the cost of the printing or other reproduction of the Preliminary Official Statement and Official Statement and any amendment or supplement thereto, including a reasonable number of certified or conformed copies thereof; and (g) the Underwriter’s out-of-pocket expenses (included in the expense component of the Underwriter’s discount) incurred by the Underwriter on behalf of the City’s employees which are incidental to implementing this Purchase Agreement. The Underwriter will pay the expenses of the preparation of this Purchase Agreement, including CDIAC fees, CUSIP Services Bureau charges, the fees for its 102
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counsel, regulatory fees imposed on new securities issuers and any and all other expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds.

Section 11. Notices. Any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Oppenheimer & Co.

Inc., 135 Main Street, Suite 1700, San Francisco, California 94105, Attention: Nicki Tallman, Managing Director, Public Finance. All notices or communications hereunder by any party shall be given and served upon each other party. Any notice or communication to be given the Authority under this Purchase Agreement may be given by delivering the same in writing to the Kerman Public Financing Authority c/o City of Kerman, 850 S. Madera Ave., Kerman, California 93630, Attention:

Chairperson. Any notice or communication to be given the City under this Purchase Agreement may be given by delivering the same in writing to the City of Kerman, 850 S. Madera Ave., Kerman, California 93630, Attention: City Manager.

Section 12. Parties in Interest. This Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriter (including the successors or assigns thereof) and no other person shall acquire or have any right hereunder or by virtue hereof. All representations, warranties and agreements of the Authority and the City in this Purchase Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriter and shall survive the delivery of and payment for the Bonds.

Section 13. Severability. In case any one or more of the provisions contained herein 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 provision hereof.

Section 14. Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

Section 15. Electronic Signatures.
(a) The parties hereto acknowledge and agree that this Purchase Agreement may be executed by one or more electronic means (hereinafter referred to as “Electronic Signatures”). Each party hereto agrees that Electronic Signatures provided by such party shall constitute effective execution and delivery of this Purchase Agreement by such party to all other parties to or relying on this Purchase Agreement. Each party hereto agrees that Electronic Signatures shall constitute complete and satisfactory evidence of the intent of such party to be bound by those signatures and by the terms and conditions of this Purchase Agreement as signed. Each party agrees that Electronic Signatures shall be deemed to be original signatures for all purposes. (b) Each party hereto agrees to accept Electronic Signatures provided by any and all other parties to this Purchase Agreement as (i) full and sufficient intent by such parties to be bound hereunder, (ii) effective execution and delivery of this Purchase Agreement and (iii) constituting this Purchase Agreement an original for all purposes, without the necessity for any manually signed copies to be provided, maintained or to exist for back up or for any other purpose. (c) If Electronic Signatures are used to execute this Purchase Agreement, each party hereto hereby accepts the terms of, and intends and does sign, this Purchase Agreement by its Electronic Signature hereto.
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4924-7581-3719/029999-0001
Section 16. Governing Law. This Purchase Agreement shall be governed by and construed in accordance with the laws of the State.

OPPENHEIMER & CO. INC.

By:

Title: Authorized Officer
Accepted as of the date first stated above:

CITY OF KERMAN
By:

Its: City Manager
Time of Execution: _____ p.m. Pacific Time
ATTEST:

By:

Its: City Clerk

KERMAN PUBLIC FINANCING AUTHORITY
By:

Its: Chairperson
Time of Execution: _____ p.m. Pacific Time
ATTEST:

By:

Its: Secretary
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A-1
4924-7581-3719/029999-0001

EXHIBIT A
$__________

KERMAN PUBLIC FINANCING AUTHORITY
2025 LEASE REVENUE BONDS

MATURITY SCHEDULE
Maturity
Date
(October 1)
Principal
Amount Interest Rate Yield
Initial
Offering
Price
10% Test
Used
Hold the
Offering
Price Rule
Used
$ % %
T Term Bond.

C Priced to first optional redemption date of October 1, 20__ at par. 106
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B-1
4924-7581-3719/029999-0001

EXHIBIT B
$__________

KERMAN PUBLIC FINANCING AUTHORITY
2025 LEASE REVENUE BONDS

FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Oppenheimer & Co. Inc. (the “Oppenheimer”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned bonds (the “Bonds”).

1. Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.

2. Defined Terms.
(a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(b) Issuer means the Kerman Public Financing Authority. (c) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
(d) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.

The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (e) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is __________, 2025. (f) Underwriter means: (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public; and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).

The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Oppenheimer’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Jones Hall LLP, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal 107
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4924-7581-3719/029999-0001
income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.

OPPENHEIMER & CO. INC.

By:

Name:

Dated: __________, 2025
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4924-7581-3719/029999-0001

SCHEDULE A

SALE PRICES OF THE GENERAL RULE MATURITIES
(Attached)
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Jones Hall Draft of Aug. 19, 2025
‘Attachment E’
PRELIMINARY OFFICIAL STATEMENT DATED _______, 2025
NEW ISSUE - FULL BOOK-ENTRY S&P RATING (INSURED BONDS): “___” S&P RATING (UNDERLYING): “___”
See “RATINGS”
In the opinion of Jones Hall LLP, as Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. Interest on the Bonds may be subject to the corporate alternative minimum tax. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “TAX MATTERS.” Dated: Date of Delivery Due: October 1, as shown on inside cover Authority for Issuance. The bonds captioned above (the “Bonds”) are being issued by the Kerman Public Financing Authority (the “Authority”) pursuant to an Indenture of Trust dated as of [October 1], 2025 (the “Indenture”) by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), which was authorized by a resolution adopted by the Board of Directors of the Authority as described herein. See “THE BONDS – Authority for Issuance.” Use of Proceeds. The Bonds are being issued to finance public capital improvements of the City of Kerman (the “City”) anticipated to consist of, but not limited to, a new multi-generational community resiliency center and improvements to the City’s new police station and to pay costs of issuance of the Bonds. See “FINANCING PLAN.” Security for the Bonds. Under the Indenture, the Bonds are payable from and secured by a first pledge of and lien on “Revenues” (as defined in this Official Statement) received by the Authority under the Lease Agreement dated as of [October 1], 2025, by and between the Authority, as lessor, and the City, as lessee (the “Lease”), consisting primarily of semi-annual lease payments (the “Lease Payments”) made by the City under the Lease with respect to the lease of certain real property, as further described herein. See “SECURITY FOR THE BONDS.”
Bond Terms; Book-Entry Only. The Bonds will bear interest at the rates shown on the inside cover page, payable semiannually on April 1 and October 1 of each year, commencing on [April 1], 2026, and will be issued in fully registered form without coupons in the denomination of $5,000 or any integral multiple of $5,000. The Bonds will be issued in book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). Purchasers of the Bonds will not receive certificates representing their interests in the Bonds. Payments of the principal of and interest on the Bonds will be made to DTC, which is obligated in turn to remit such principal and interest to its DTC Participants for subsequent disbursement to the beneficial owners of the Bonds.

See “THE BONDS – General Provisions.”
Redemption. The Bonds are subject to redemption prior to maturity. See “THE BONDS – Redemption.” [Bond Insurance; Reserve Fund Insurance. [To come, if applicable.]

NEITHER THE BONDS, NOR THE OBLIGATION OF THE AUTHORITY TO PAY PRINCIPAL OF OR INTEREST THEREON,

NOR THE OBLIGATION OF THE CITY TO MAKE THE LEASE PAYMENTS, CONSTITUTE A DEBT OR A LIABILITY OF THE

AUTHORITY, THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL LIMITATION ON INDEBTEDNESS, OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY. THE BONDS ARE SECURED SOLELY BY THE PLEDGE OF REVENUES AND CERTAIN FUNDS HELD UNDER THE INDENTURE. THE BONDS ARE NOT SECURED BY A PLEDGE OF THE TAXING POWER OF THE CITY.

MATURITY SCHEDULE
(see inside cover)
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR GENERAL REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE OF BONDS. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION WITH RESPECT TO THE PURCHASE OF THE BONDS.

The Bonds are offered when, as and if issued and received by the Underwriter and subject to the approval as to their legality by Jones Hall LLP, as Bond Counsel. Certain legal matters will also be passed upon for the Authority and the City by Jones Hall LLP, as Disclosure Counsel. Certain legal matters will be passed upon for the City by the City Attorney. Certain legal matters will be passed upon for the Underwriter by its counsel, Stradling Yocca Carlson & Rauth LLP, Newport Beach, California. It is anticipated that the Bonds will be delivered in book-entry form through the facilities of DTC on or about _______, 2025*. [Oppenheimer logo]
The date of this Official Statement is: ______, 2025. This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances will this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor will there be any sale of these securities in any jurisdiction in which such offer solicitation or sale would be unlawful. 110
Section 6, Item A.

MATURITY SCHEDULE
$_________ Serial Bonds
Maturity Principal Interest
(October 1) Amount Rate Yield Price CUSIP†
$___________ ____% Term Bonds due October 1, 20___; Price: _____%; Yield: ______; CUSIP†: _______
* Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database.

CUSIP® numbers are provided for convenience of reference only. None of the City, the Authority nor the Underwriter takes any responsibility for the accuracy of such numbers. 111
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KERMAN PUBLIC FINANCING AUTHORITY
(Fresno County, California)
_______________________

AUTHORITY BOARD / CITY COUNCIL
Maria Pacheco, Chair/Mayor
Gary Yep, Boardmember/Mayor Pro Tem (District 1)
Berdie Hall, Boardmember/Councilmember (District 2)
Ismael Herrera, Boardmember/Councilmember (District 3)
Raj Dhaliwal, Boardmember/Councilmember (District 4)

CITY / AUTHORITY STAFF
John Jansons, City Manager/Executive Director
Josefina Alvarez, Finance Director/Treasurer
Josie Camacho, City Clerk/Secretary
Hilda Montoy of Montoy Law Corporation, City Attorney/General Counsel

PROFESSIONAL SERVICES
Municipal Advisor
Fieldman, Rolapp & Associates, Inc.

Irvine, California
Bond Counsel and Disclosure Counsel
Jones Hall LLP
San Mateo, California
Trustee
U.S. Bank Trust Company, National Association
Los Angeles, California
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Section 6, Item A.

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations with respect to the Bonds other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized.

This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.

This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the City or any other parties described in this Official Statement, or in the condition of the security for the Bonds since the date of this Official Statement.

This Official Statement is submitted in connection with the sale of the Bonds referred to in this Official Statement and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract with the purchasers of the Bonds. Prospective investors should not construe the contents of this Official Statement as legal, tax or investment advice.

The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness.

The Underwriter has submitted the following statement for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

All references to and summaries of the Indenture or other documents contained in this Official Statement are subject to the provisions of those documents and do not purport to be complete statements of those documents.

The Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for the issuance and sale of municipal securities provided under Section 3(a)(2) of the Securities Act of 1933 and Section 3(a)(12) of the Securities Exchange Act of 1934.

Certain statements included or incorporated by reference in this Official Statement constitute forward-looking statements. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget” or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. No assurance is given that actual results will meet the forecasts of the City in any way, regardless of the level of optimism communicated in the information. The City is not obligated to issue any updates or revisions to the forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur.

The references to internet websites in this Official Statement are shown for reference and convenience only; unless explicitly stated to the contrary, the information contained within the websites and any links contained within those websites are not incorporated herein by reference and do not constitute part of this Official Statement. 113
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i
INTRODUCTION .......................................1
FINANCING PLAN.....................................4
General ..................................................4 Estimated Sources and Uses..................4
THE LEASED PROPERTY........................5
Leased Property .....................................5
Substitution and Release........................5
DEBT SERVICE SCHEDULE ....................7
THE BONDS..............................................8 Authority for Issuance.............................8
General Provisions .................................8
Transfer, Registration and Exchange......9
Redemption............................................9 Book-Entry Only System.......................11
SECURITY FOR THE BONDS.................12
Revenues; Pledge of Revenues ...........12
Assignment to Trustee..........................12
Allocation of Funds by Trustee .............13
Lease Payments...................................14
Limited Obligation.................................15
Additional Obligations...........................15
Source of Lease Payments; Covenant
to Budget and Appropriate ................16
Abatement............................................16 Remedies on Default ............................16
Property Insurance ...............................17
THE AUTHORITY....................................18
THE CITY ................................................20 General ................................................20 City Government...................................20
Labor Relations ....................................21
CITY FINANCIAL INFORMATION ...........21
Accounting and Financial Reporting .....21
General Fund, the Budget Process and
Information........................................22
Financial Statements ............................23
Sales and Use Taxes ...........................25
Property Taxes .....................................27
Transient Occupancy Tax.....................30
Other Sources of Revenues .................30
Direct and Overlapping Bonded Debt ...31
Relevant Fiscal Policies........................32
Employee Retirement System;
CalPERS...........................................34
No Other Post-Employment Benefit
(OPEB) Plan .....................................37
General Fund Long-Term
Indebtedness ....................................37

CONSTITUTIONAL AND STATUTORY

LIMITATIONS ON TAXES AND
APPROPRIATIONS..............................38
Article XIIIA of the State Constitution ....38
Article XIIIB of the State Constitution ....38
Articles XIIIC and XIIID of the State
Constitution.......................................39
Proposition 1A; Proposition 22..............40
Unitary Property....................................41
Possible Future Initiatives .....................41
BOND OWNERS’ RISKS .........................42
No Pledge of Taxes ..............................42
Abatement ............................................42 Limited Recourse on Default; No Right
to Repossess; No Acceleration of
Lease Payments ...............................43
Additional Obligations of the City ..........44
Default ..................................................44 Sales Taxes..........................................45 Property Taxes .....................................45
Natural Calamities ................................46
Pandemic Diseases ..............................47
Cyber Security ......................................47 Limitations on Remedies Available to
Bond Owners ....................................48
Secondary Market for Bonds.................48
TAX MATTERS........................................49
CERTAIN LEGAL MATTERS...................50
LITIGATION .............................................50 RATING ...................................................51 CONTINUING DISCLOSURE ..................51
MUNICIPAL ADVISOR.............................51
UNDERWRITING.....................................52
CONTINGENT FEES ...............................52
EXECUTION ............................................52 APPENDIX A: AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2024 APPENDIX B: GENERAL INFORMATION ABOUT THE CITY OF KERMAN AND THE COUNTY OF FRESNO APPENDIX C: SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS APPENDIX D: FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX E: FORM OF OPINION OF BOND COUNSEL
APPENDIX F: DTC AND THE BOOK-ENTRY ONLY SYSTEM
[APPENDIX G: SPECIMEN MUNICIPAL BOND INSURANCE POLICY]
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__________________________________

OFFICIAL STATEMENT
__________________________________
$________*

KERMAN PUBLIC FINANCING AUTHORITY
2025 Lease Revenue Bonds

INTRODUCTION
This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement.

The offering of the Bonds to potential investors is made only by means of the entire Official Statement. Capitalized terms used but not defined in this Official Statement have the meanings set forth in the Indenture (as defined below). See “APPENDIX C – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”
Authority for Issuance. The Kerman Public Financing Authority (the “Authority”) is issuing the bonds captioned above (the “Bonds”) under the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 (commencing with Section 6584) of Chapter 5, Division 7, Title 1 of the California Government Code (the “Bond Law”), a resolution adopted by the Board of Directors (the “Board”) of the Authority on August 27, 2025 (the “Authority Resolution”), a resolution adopted by the City Council (the “City Council”) of the City of Kerman (the “City”) on August 27, 2025 (the “City Resolution”), and an Indenture of Trust (the “Indenture”) dated as of [October 1], 2025, by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

Purpose of the Bonds. The Bonds are being issued to finance public capital improvements of the City anticipated to consist of, but not limited to, a new multi-generational community resiliency center and improvements to the City’s new police station, and to pay costs of issuance of the Bonds. See “FINANCING PLAN.”
The Authority and the City. The Authority is a joint powers authority established pursuant to that certain Joint Exercise of Powers Agreement dated as of August 15, 2007, by and between the City and the Kerman Redevelopment Agency, whose membership was recently replaced by the California Statewide Infrastructure Communities Development Authority. The Authority is governed by a five-member Board of Directors (the “Board”), which consists of the members of the City Council of the City. The Authority was created for the purpose of assisting the financing or refinancing of certain public capital facilities of benefit to the City. Under the Bond Law, the Authority has the power to lease real property in furtherance of the acquisition of public improvements necessary or convenient for the operation of the City, or to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or negotiated sale. See “THE AUTHORITY.”

* Preliminary; subject to change.
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The City, incorporated in 1946, is located 16 miles west of the City of Fresno in the San Joaquin Valley. While predominately agricultural, there has been a shift in economic development in recent years, leading to new development. For additional background, and certain demographic and economic information regarding the City and the County, see APPENDIX B.

Bond Terms; Book-Entry Only. The Bonds will bear interest at the rates shown on the inside cover page, payable semiannually on April 1 and October 1 of each year, commencing on [April 1], 2026. The Bonds will be issued in fully registered form, registered in the name of The Depository Trust Company (“DTC”), or its nominee, which will act as securities depository for the Bonds. Purchasers of the Bonds will not receive certificates representing the Bonds that are purchased. See “THE BONDS – Book-Entry Only System” and “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
Security for the Bonds. The City and the Authority will enter into a Site Lease dated as of [October 1], 2025 (the “Site Lease”), under which the City will lease certain real property to the Authority, as described herein (the “Leased Property”) and as further described herein under the caption “THE LEASED PROPERTY.” The net proceeds of the Bonds will be used by the Authority to fund the payment obligation under the Site Lease.

In order to secure the payments of principal of and interest on the Bonds, the Authority will lease the Leased Property back to the City under a Lease Agreement (the “Lease Agreement”), under which the City is obligated to pay semiannual lease payments (the “Lease Payments”) as rental for the Leased Property, and the Authority will assign substantially all of its rights under the Lease Agreement to U.S. Bank Trust Company, National Association as trustee for the Bonds. The Bonds are payable from and secured by a first pledge of and lien on the Revenues received by the Authority under the Lease Agreement, consisting primarily of the Lease Payments.

Under the Lease, the City covenants to take all actions required to include the Lease Payments in each of its budgets during the Term of the Lease and to make the necessary appropriations for all Lease Payments and Additional Rental Payments. This covenant of the City constitutes a duty imposed by law and each and every public official of the City is required to take all actions required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in the Lease agreed to be carried out and performed by the City. See “SECURITY FOR THE BONDS.” [Bond Insurance; Reserve Fund Insurance. [To come, if applicable.] Redemption. The Bonds are subject to redemption prior to their stated maturity dates.

See “THE BONDS – Redemption.”
Abatement. The Lease Payments are subject to complete or partial abatement in the event and to the extent that there is substantial interference with the City’s use and possession of the Leased Property or any portion thereof. If the Lease Payments are abated under the Lease, the Bond Owners may receive less than the full amount of principal of and interest on the Bonds.

See “SECURITY FOR THE BONDS – Abatement” and “BOND OWNERS’ RISKS.” Additional Obligations. Under the Indenture, the Authority covenants that no additional bonds, notes or other indebtedness shall be issued or incurred by the Authority which are payable out of the Revenues in whole or in part. However, the City is permitted to enter into other 117
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obligations which constitute additional charges against its revenues, including pursuant to additional leases involving the Leased Property, without the consent of Owners of the Bonds.

Risks of Investment. Debt service on the Bonds is payable only from Lease Payments and other amounts payable by the City to the Authority under the Lease. The Lease Payments are payable from revenues available in the City’s general fund, which revenues may be materially adversely affected by numerous factors outside the City’s control. For a discussion of some of the risks associated with the purchase of the Bonds, see “BOND OWNERS’ RISKS.”

NEITHER THE BONDS, THE OBLIGATION OF THE AUTHORITY TO PAY PRINCIPAL

OF OR INTEREST THEREON, NOR THE OBLIGATION OF THE CITY TO MAKE THE LEASE

PAYMENTS, CONSTITUTE A DEBT OR A LIABILITY OF THE AUTHORITY, THE CITY, THE

STATE OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY

CONSTITUTIONAL LIMITATION ON INDEBTEDNESS, OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY. THE BONDS ARE SECURED SOLELY BY THE PLEDGE OF REVENUES AND CERTAIN FUNDS HELD UNDER THE INDENTURE. THE BONDS ARE NOT SECURED BY A PLEDGE OF THE TAXING POWER OF THE CITY.
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FINANCING PLAN
General
The Bonds are being issued to finance development of a new multi-generational community resiliency center and tenant improvements to the City’s police station, and to pay costs of issuance for the Bonds.

Multi-Generational Resiliency Center. The City received a $7.25 million grant to be used for the construction of a 15,400 square foot addition to the existing 11,618 square foot Kerman Community Center to create the Kerman Area Multi-Generational Resiliency Center located at 15101 West Kearney Boulevard in the City. The total project cost is estimated a approximately $16.383 million; however, the amount funded through the grant program will specifically cover the hard costs associated with the construction project's resiliency features. The City will match the remaining funds necessary for the project using a portion of the proceeds of the Bonds.

New Police Station Improvements. The City recently purchased a new building, including an adjacent vacant lot anticipated to be used for parking, located at West B Street and South Madera Avenue in the City for approximately $2.9 million. It will be relocating the existing police station facility to the new location, following making tenant improvements expected to be in a cost range of approximately $10-12 million. The tenant improvements will be paid in part from proceeds of the Bonds.

Estimated Sources and Uses
The estimated sources and uses of funds relating to the Bonds are as follows:

Sources:

Principal Amount of Bonds $
Plus/Less [Net] Original Issue
Premium/Discount
TOTAL SOURCES $
Uses:

Deposit to Project Fund
Costs of Issuance(1)
TOTAL USES $
(1) Represents funds to be used to pay Costs of Issuance, which include rating agency fees, bond counsel, disclosure counsel, Trustee fees, Underwriter’s discount and other costs of issuing the Bonds[, including premiums for bond insurance and reserve fund insurance]. 119
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THE LEASED PROPERTY
Leased Property
The Leased Property consists of the City’s interest in [(i) the Police Station located at 850 S Madera Avenue, (ii) the Office Building and the Warehouse and Shop Building each located at 15061 W C Street, (iii) the Public Works Office Building, the Public Works Shop Building and the Public Works Shop each located at 15201 W California Avenue, (iv) the Office Building located at 942 S. Madera Avenue, (v) the Animal Shelter located at 15375 W California Ave ("A" Street), (vi) the Community Center located at 15101 W Kearney Plaza, (vii) Lion's Park located at 744 S Park Ave and (viii) Kerckhoff Park located at 15023-15099 W G Street] [To be finalized].

Simultaneously with the delivery of the Bonds, the Authority will acquire a leasehold interest in the Leased Property from the City. The Authority will sublease the Leased Property to the City pursuant to the Lease. Under the Lease, the City has agreed to maintain the Leased Property in good working condition.

The City estimates that the Leased Property has a value of at least the aggregate principal amount of the Bonds. The City and the Authority, based on records they maintain, estimate the current annual fair rental value of the Leased Property to be not less than the amount of the annual Lease Payments.

Bondholders do not have a mortgage on any portion of the Leased Property and no ability to foreclose on the Leased Property or accelerate the Lease Payments in the event of a default.

See “BOND OWNERS’ RISKS – Limited Recourse on Default; No Right to Repossess; No Acceleration of Lease Payments” and “SECURITY FOR THE BONDS – Remedies on Default” herein.

Substitution and Release
Substitution of Lease Property. Under the Lease, the City has the option at any time and from time to time, to substitute other real property (the “Substitute Property”) for the Leased Property or any portion thereof (the “Former Property”), upon satisfaction of all of the conditions set forth in the Lease, which consist of the following:
 No Event of Default has occurred and is continuing.
 The City has filed with the Authority and the Trustee, and caused to be recorded in the office of the Fresno County Recorder’s Office, sufficient memorialization of an amendment of the Lease, the Site Lease and the Assignment Agreement, which adds the legal description of the Substitute Property to the Lease and deletes therefrom the legal description of the Former Property.  The City has obtained a CLTA policy of title insurance insuring the City’s leasehold estate hereunder in the Substitute Property, subject only to Permitted Encumbrances, in an amount at least equal to the then-aggregate principal amount of Lease Payments then due hereunder.
 The City has certified in writing to the Authority and the Trustee that the Substitute Property serves the municipal purposes of the City, constitutes property which the 120
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City is permitted to lease under the laws of the State of California, and has been determined to be important to the proper, efficient and economic operation of the City.
 The Substitute Property does not cause the City to violate any of its covenants, representations and warranties made in the Lease.
 The City has filed with the Authority and the Trustee a written certificate of the City or other written evidence stating that (i) the estimated value of the Leased Property following such substitution is at least equal to the aggregate principal amount of the Lease Payments then due under the Lease, (ii) the estimated fair rental value of the Leased Property following such substitution is at least equal to the remaining Lease Payments due under the Lease, and (iii) the useful life of the Substitute Property at least extends to the stated termination date of the Lease.

Upon the satisfaction of all such conditions precedent, the Term of the Lease will thereupon end as to the Former Property and commence as to the Substitute Property, and all references to the Former Property will apply with full force and effect to the Substitute Property.

The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of any substitution of property as set forth above.

Release of Leased Property. Under the Lease, the City has the option at any time and from time to time to release any portion of the Leased Property from the Lease (the “Released Property”) provided that the City has satisfied all of the requirements under the Lease that are conditions precedent to such release, which consist of the following:
 No Event of Default has occurred and is continuing.
 The City has filed with the Authority and the Trustee, and caused to be recorded in the office of the Fresno County Recorder’s Office, sufficient memorialization of an amendment of the Lease, the Site Lease and the Assignment Agreement, which removes the Released Property therefrom.
 The City has filed with the Authority and the Trustee a written certificate of the City or other written evidence stating that (i) the estimated value of the Leased Property following such release is at least equal to the aggregate principal amount of the Lease Payments then due hereunder, and (ii) the estimated fair rental value of the Leased Property following such release is at least equal to the remaining Lease Payments due thereunder.

Upon the satisfaction of all the conditions precedent set forth in the Lease, the term of the Lease will end as to the Released Property. The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such release. 121
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DEBT SERVICE SCHEDULE
The table below shows annual debt service payments on the Bonds.

Year Ending
October 1 Principal Interest
Total
Debt Service
Total:
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THE BONDS
This section provides summaries of the Bonds and certain provisions of the Indenture.

See APPENDIX C for a more complete summary of the Indenture. Capitalized terms used but not defined in this section have the meanings given in APPENDIX C.

Authority for Issuance
The Bonds are being issued under the Bond Law and the Indenture, approved pursuant to the Authority Resolution and the City Resolution.

General Provisions
Bond Terms. The Bonds will be dated their date of delivery and issued in fully registered form without coupons in denominations of $5,000 or any integral multiple of $5,000. The Bonds will mature in the amounts and on the dates, and bear interest at the annual rates, set forth on the inside cover page of this Official Statement.

Payments of Principal and Interest. Interest on the Bonds will be payable on April 1 and October 1 in each year, beginning [April 1], 2026 (each an “Interest Payment Date”). Interest on the Bonds is payable from the Interest Payment Date next preceding the date of its authentication unless: a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it will bear interest from such Interest Payment Date, a Bond is authenticated on or before 15 days prior to the first Interest Payment Date, in which event interest thereon will be payable from the Closing Date, or interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been paid in full, payable on each Interest Payment Date.

Interest is computed on the basis of a 360-day year composed of 12 months of 30 days each and payable on each Interest Payment Date to the persons in whose names the ownership of the Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest on any Bond which is not punctually paid or duly provided for on any Interest Payment Date is payable to the person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which is given to such Owner by first-class mail not less than 10 days prior to such special record date.

The Trustee will pay interest on the Bonds by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. At the written request of the Owner of Bonds in an aggregate principal amount of at least $1,000,000, which written request is on file with the Trustee as of any Record Date, the Trustee will pay interest on such Bonds on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account of a financial institution within the United States of America as specified in such written request, which written request will remain in effect until rescinded in writing by the Owner.
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While the Bonds are subject to the book-entry system, the principal, interest and any redemption premium with respect to the Bonds will be paid by the Trustee to DTC for subsequent disbursement to beneficial owners of the Bonds. See “– Book-Entry Only System” below.

Record Date. Under the Indenture, “Record Date” means, with respect to any Interest Payment Date, the 15th calendar day of the month preceding such Interest Payment Date, whether or not such day is a Business Day.

Transfer, Registration and Exchange
The following provisions regarding the exchange and transfer of the Bonds apply only during any period in which the Bonds are not subject to DTC’s book-entry system. While the Bonds are subject to DTC’s book-entry system, their exchange and transfer will be affected through DTC and the Participants and will be subject to the procedures, rules and requirements established by DTC. See “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY SYSTEM.” Bond Register. The Trustee will keep or cause to be kept, at the Office of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds, which will upon reasonable notice as agreed to by the Trustee, be open to inspection during regular business hours by the Authority; and, upon presentation for such purpose, the Trustee will, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such records, the ownership of the Bonds as provided in the Indenture.

Transfer and Exchange. Any Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of such Bond to the Trustee at its Office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. The Trustee will require the Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer.

Whenever any Bond is or Bonds are surrendered for transfer, the Authority will execute and the Trustee will authenticate and deliver to the transferee a new Bond or Bonds of like series, interest rate, maturity and aggregate principal amount. The Authority will pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any transfer of Bonds.

The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of other authorized denominations and of the same series, interest rate and maturity. The Trustee will require the Owner requesting such exchange to pay any tax or other governmental charge required to be paid with respect to such exchange. The Authority will pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any exchange of Bonds.

The Trustee may refuse to transfer or exchange, under the provisions of the Indenture described above, any Bonds selected by the Trustee for redemption under the Indenture, or any Bonds during the period established by the Trustee for the selection of Bonds for redemption.

Redemption
Optional Redemption. The Bonds maturing on or before October 1, ____, are not subject to optional redemption prior to their respective stated maturities. The Bonds maturing on or after 124
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October 1, _____ , are subject to optional redemption in whole, or in part at the at the election of the Authority (at the direction of the City) among maturities on such basis as designated by the Authority and by lot within a maturity, at the option of the Authority, on any date on or after October 1, _____, from any available source of funds, at a redemption price equal to 100% of the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium.

Mandatory Sinking-Fund Redemption. The Bonds maturing October 1, _____ (the “Term Bonds”) are subject to mandatory redemption in part by lot, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts and on October 1 in the respective years as set forth in the following tables; provided, however, that if some but not all of the Term Bonds have been redeemed pursuant to an optional redemption or special mandatory redemption from insurance or condemnation proceeds, the total amount of all future sinking fund payments shall be reduced by the aggregate principal amount of the Term Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral multiples of $5,000 (as set forth in a schedule provided by the Authority to the Trustee).

Term Bonds Maturing October 1, ______
Sinking Fund
Redemption Date
(October 1)
Principal Amount
To Be Redeemed
Extraordinary Mandatory Redemption. The Bonds are subject to mandatory redemption prior to maturity in whole or in part among maturities as determined by the Authority, on any date, at a redemption price equal to 100% of the principal amount thereof to be redeemed (plus accrued but unpaid interest to the redemption date), without premium, from Net Proceeds received under the Lease Agreement and from amounts deposited in the Insurance and Condemnation Fund pursuant to the Indenture, and any other funds available for such purpose under the Indenture.

Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, the Bonds shall be selected for redemption on a prorata basis among outstanding maturities. For purposes of such selection, the Trustee will treat each Bond as consisting of separate $5,000 portions and each such portion will be subject to redemption as if such portion were a separate Bond.

Notice of Redemption. The Trustee will mail notice of redemption of the Bonds by first class mail, postage prepaid, not less than 20 nor more than 60 days before any redemption date, to the respective Owners of any Bonds designated for redemption at their addresses appearing on the Registration Books and to one or more Securities Depositories and to the Information Services.

Neither the failure to receive any notice nor any defect therein will affect the sufficiency of the proceedings for such redemption or the cessation of accrual of interest from and after the 125
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redemption date. Notice of redemption of Bonds will be given by the Trustee, at the expense of the Authority, for and on behalf of the Authority.

However, while the Bonds are subject to DTC’s book-entry system, the Trustee will be required to give notice of redemption only to DTC as provided in the letter of representations executed by the Authority and received and accepted by DTC. DTC and the Participants will have sole responsibility for providing any such notice of redemption to the beneficial owners of the Bonds to be redeemed. Any failure of DTC to notify any Participant, or any failure of Participants to notify the Beneficial Owner of any Bonds to be redeemed, of a notice of redemption or its content or effect will not affect the validity of the notice of redemption, or alter the effect of redemption set forth in the Indenture.

Rescission of Redemption Notice. The Authority has the right to rescind any notice of the redemption of Bonds under the Indenture by written notice to the Trustee on or prior to the dated fixed for redemption. Any notice of optional redemption will be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation will not constitute an Event of Default. The Authority and the Trustee have no liability to the Bond Owners or any other party related to or arising from such rescission of redemption. The Trustee will mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent under the Indenture.

Effect of Redemption. When notice of redemption has been duly given as set forth in the Indenture, and moneys for payment of the redemption price of, together with interest accrued to the date fixed for redemption on, including any applicable premium, the Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions thereof) so called for redemption will become due and payable, interest on the Bonds so called for redemption will cease to accrue, said Bonds (or portions thereof) will cease to be entitled to any benefit or security under the Indenture, and the Owners of said Bonds will have no rights in respect thereof except to receive payment of the redemption price thereof.

Book-Entry Only System
The Bonds will be issued as fully registered bonds in book-entry only form, registered in the name of Cede & Co. as nominee of DTC, and will be available to ultimate purchasers in the denomination of $5,000 or any integral multiple of $5,000, under the book-entry system maintained by DTC. While the Bonds are subject to the book-entry system, the principal, interest and any redemption premium with respect to a Bond will be paid by the Trustee to DTC, which in turn is obligated to remit such payment to its DTC Participants for subsequent disbursement to Beneficial Owners of the Bonds. Purchasers of the Bonds will not receive certificates representing their interests therein, which will be held at DTC. See “APPENDIX F – DTC AND THE BOOKENTRY ONLY SYSTEM” for further information regarding DTC and the book-entry system. 126
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SECURITY FOR THE BONDS
The principal of and interest on the Bonds are not a debt of the Authority or the City, nor a legal or equitable pledge, charge, lien or encumbrance, upon any of their respective property, or upon any of their income, receipts, or revenues except the Revenues and other amounts pledged under the Indenture.

This section provides summaries of the security for the Bonds and certain provisions of the Indenture, the Lease and the Site Lease. See “APPENDIX C – Summary of Principal Legal Documents” for a more complete summary of the Indenture, the Lease, the Site Lease and the Assignment Agreement. Capitalized terms used but not defined in this section have the meanings given in APPENDIX C.

Revenues; Pledge of Revenues
Pledge of Revenues and Other Amounts. Under the Indenture, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, all of the Revenues and all amounts held in any fund or account established under the Indenture (excluding amounts in the Cost of Issuance Fund and the Project Fund) are pledged to secure the payment of the principal of and interest on the Bonds in accordance with their terms and the provisions of the Indenture. This pledge constitutes a lien on and security interest in the Revenues and such amounts and will attach, be perfected and be valid and binding from and after the Closing Date, without the need for any physical delivery thereof or further act.
“Revenues” are defined in the Indenture as (a) all amounts received by the Authority or the Trustee under or with respect to the Lease, including, without limiting the generality of the foregoing, all of the Lease Payments (including both timely and delinquent payments, any late charges, and whether paid from any source), but excluding (i) any amounts the City is obligated to pay under the Lease or under another lease as additional amounts of rental for the use and occupancy of the Leased Property if such additional amounts of rental are pledged or assigned for the payment of any bonds, notes, leases or obligations other than the Bonds,, and (ii) any Additional Rental Payments; and (b) all interest, profits or other income derived from the investment of amounts in any fund or account established under the Indenture.

Assignment to Trustee
Under the Assignment Agreement, the Authority will transfer to the Trustee all of the rights of the Authority in the Lease (other than the rights of the Authority under the provisions of the Lease regarding Additional Rental Payments, repayment of advances, indemnification, and the payment of attorneys’ fees). The Trustee is entitled to collect and receive all of the Revenues, and any Revenues collected or received by the Authority will be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and will immediately be paid by the Authority to the Trustee. The Trustee is also entitled to and will, subject to the provisions of the Indenture regarding the duties of the Trustee, take all steps, actions and proceedings which the Trustee determines to be reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, all of the rights of the Authority and all of the obligations of the City under the Lease.
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Allocation of Funds by Trustee
Deposit of Revenues into Bond Fund. All Revenues shall be promptly deposited by the Trustee upon receipt thereof in a special fund designated as the “Bond Fund” which the Trustee shall establish, maintain and hold in trust; except that all moneys received by the Trustee and required under the Indenture or under the Lease to be deposited in the Redemption Fund or the Insurance and Condemnation Fund shall be promptly deposited in such funds. All Revenues deposited with the Trustee shall be held, disbursed, allocated and applied by the Trustee only as provided in the Indenture. Any surplus remaining in the Bond Fund, after payment in full of (i) the principal of and interest on the Bonds or provision therefore under the Indenture, and (ii) any applicable fees and expenses to the Trustee, shall be withdrawn by the Trustee and remitted to the City.

Transfers from the Bond Fund. On or before each Interest Payment Date, the Trustee will transfer from the Bond Fund and deposit into the following respective accounts (each of which the Trustee will establish and maintain within the Bond Fund), the following amounts in the following order of priority:

Deposit to Interest Account. The Trustee will deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to be at least equal to the amount of interest becoming due and payable on such Interest Payment Date on all Bonds then Outstanding.

Deposit to Principal Account. The Trustee will deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of the Bonds coming due and payable on such Interest Payment Date, including the principal amount of Bonds which are subject to mandatory sinking fund redemption on such Interest Payment Date.

Application of Accounts within Bond Fund.

Application of Interest Account. All amounts in the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it comes due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity).

Application of Principal Account. All amounts in the Principal Account will be used and withdrawn by the Trustee solely to pay the principal amount of the Bonds at their respective maturity dates, and the principal amount of Bonds which are subject to mandatory sinking fund redemption on such Interest Payment Date.

Application of Redemption Fund. The Trustee will establish and maintain the Redemption Fund, into which the Trustee shall deposit a portion of the Revenues received, in accordance with a Written Request of the Authority, amounts in which shall be used and withdrawn by the Trustee solely for the purpose of paying the principal and premium (if any) of the Bonds to be redeemed under the Indenture.
[Application of Reserve Fund; Reserve Fund Insurance Policy. To come, if applicable]
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Lease Payments
Requirement to Make Lease Payments. Under the Lease, subject to the provisions of the Lease concerning rental abatement (see – “Abatement,” below) and prepayment of Lease Payments, the City agrees to pay to the Authority, its successors and assigns, the Lease Payments in the respective amounts specified in the Lease, to be due and payable in immediately available funds on the Interest Payment Dates immediately following each of the respective Lease Payment Dates specified in the Lease, and to be deposited by the City with the Trustee on each of the Lease Payment Dates specified in the Lease (defined as the 5th Business Day immediately preceding each Interest Payment Date).

Any amount held in the Bond Fund, the Interest Account and the Principal Account on any Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments in part but not in whole under the Lease, and amounts required for payment of past due principal or interest on any Bonds not presented for payment) will be credited towards the Lease Payment then required to be paid under the Lease.

The City is not required to deposit any Lease Payment with the Trustee on any Lease Payment Date if the amounts then held in the Bond Fund, the Interest Account and the Principal Account are at least equal to the Lease Payment then required to be deposited with the Trustee.

The Lease Payments payable in any Rental Period are for the use of the Leased Property during that Rental Period.

Rate on Overdue Lease Payments. If the City fails to make any of the payments of Lease Payments required in the Lease, the payment in default will continue as an obligation of the City until the amount in default has been fully paid, and the City agrees to pay the same with interest thereon, from the date of default to the date of payment at the highest rate of interest on any Outstanding Bond.

Fair Rental Value. The aggregate amount of the Lease Payments and Additional Rental Payments coming due and payable during each Rental Period constitute the total rental for the Leased Property for such Rental Period, and are payable by the City in each Rental Period for and in consideration of the right of the use and occupancy of, and the continued quiet use and enjoyment of the Leased Property during each Rental Period. The Authority and the City have agreed and determined that the total Lease Payments represent the fair rental value of the Leased Property. In making that determination, consideration has been given to the estimated value of the Leased Property, other obligations of the City and the Authority under the Lease, the uses and purposes which may be served by the Leased Property and the benefits therefrom which will accrue to the City and the general public.

Additional Rental Payments. In addition to the Lease Payments, the City shall pay when due the following amounts of Additional Rental Payments in consideration of the lease of the Leased Property by the City from the Authority:
(a) All fees and expenses incurred by the Authority in connection with or by reason of its leasehold estate in the Leased Property, when due;
(b) All reasonable compensation to the Trustee for all services rendered under the Indenture and for all reasonable expenses, charges, costs, liabilities, legal fees and 129
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other disbursements incurred in and about the performance of its powers and duties under the Indenture;
(c) The reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the Authority or the Trustee to prepare audits, financial statements, reports, opinions or provide such other services required under the Lease or the Indenture;
(d) Amounts coming due and payable as Excess Investment Earnings in accordance with the Lease; and
(e) The reasonable out-of-pocket expenses of the Authority in connection with the execution and delivery of the Lease or the Indenture, or in connection with the issuance of the Bonds, including but not limited to any and all expenses incurred in connection with the authorization, sale and delivery of the Bonds, or incurred by the Authority in connection with any litigation which may at any time be instituted involving the Lease, the Bonds, the Indenture or any of the other documents contemplated thereby, or otherwise incurred in connection with the administration of the Lease.

Limited Obligation

THE OBLIGATION OF THE CITY TO MAKE THE LEASE PAYMENTS DOES NOT

CONSTITUTE A DEBT OF THE CITY, THE AUTHORITY OR THE STATE OR OF ANY

POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR

STATUTORY DEBT LIMIT OR RESTRICTION, AND DOES NOT CONSTITUTE AN

OBLIGATION FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF

TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.

Additional Obligations
Under the Indenture, the Authority covenants that no additional bonds, notes or other indebtedness will be issued or incurred which are payable out of the Revenues in whole or in part.

However, the Lease provides that the Lease may be amended to obligate the City to pay additional amounts of rental for the use and occupancy of the Leased Property, but only if (a) such additional rent payments are pledged or assigned for the payment of any bonds, notes or other obligations the proceeds of which are applied to finance or refinance the acquisition or construction of any real or personal property for which the City is authorized to expend funds subject to its control, and
(b) the City has filed with the Trustee a written certificate stating that the estimated value of the Leased Property is, or following the completion of the acquisition and construction of any improvements to be financed from the proceeds of such bonds, notes or other obligations will be, at least equal to the aggregate then-outstanding principal amount of the Bonds and all such other bonds, notes or other obligations.
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Source of Lease Payments; Covenant to Budget and Appropriate The Lease Payments are payable from any source of available funds of the City, subject to the provisions of the Lease regarding abatement. See “– Abatement” herein.

Under the Lease, the City covenants to take all actions required to include the Lease Payments in each of its budgets during the Term of the Lease and to make the necessary appropriations for all Lease Payments and Additional Rental Payments. The foregoing covenant of the City constitutes a duty imposed by law and each and every public official of the City is required to take all actions required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in the Lease.

Abatement
Termination or Abatement Due to Eminent Domain. Under the Lease, if the Leased Property is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the Term of the Lease thereupon ceases as of the day possession is taken. If less than all of the Leased Property is taken permanently and the remainder is useable for the City’s purposes, or if the Leased Property is taken temporarily, under the power of eminent domain, then:
(a) the Lease will continue in full force and effect with respect thereto and does not terminate by virtue of such taking, and the parties waive the benefit of any law to the contrary; and
(b) the Lease Payments are subject to abatement in an amount determined by the City such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property.

Abatement Due to Damage or Destruction. The Lease Payments are subject to abatement during any period in which by reason of damage or destruction (other than by eminent domain which is hereinbefore provided for) there is substantial interference with the use and occupancy by the City of the Leased Property or any portion thereof. The Lease Payments are subject to abatement in an amount determined by the City, such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property not damaged or destroyed. Such abatement will continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, the Lease continues in full force and effect and the City waives any right to terminate the Lease by virtue of any such damage and destruction.

Remedies on Default
Failure by the City to make Lease Payments, or failure to pay Additional Rental Payments or to observe and perform any other terms, covenants or conditions contained in the Lease or in the Indenture for a period of 30 days after written notice of such failure and request that it be remedied has been given to the City by the Authority or the Trustee, constitute Events of Default under the Lease. Such events permit the Trustee or the Authority to pursue any and all available remedies. However, notwithstanding anything in the Lease or in the Indenture to the contrary, neither the Authority nor the Trustee have any right, under the Lease, the Site Lease or otherwise, to foreclose or sell the Leased Property, nor is there any right under any circumstances to 131
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accelerate the Lease Payments or otherwise declare any Lease Payments that are not then in default to be immediately due and payable. See “BOND OWNERS’ RISKS – Limited Recourse on Default; No Right to Repossess; No Acceleration of Lease Payments” herein.

Following an event of default, the Authority or the Trustee may elect either to terminate the Lease and seek to collect damages from the City or to maintain the Lease in effect and seek to collect the Lease Payments as they become due. Under the Assignment Agreement, the Authority assigns all of its rights with respect to remedies in an Event of Default to the Trustee, so that all such remedies will be exercised by the Trustee and the Bond Owners as provided in the Indenture. See “BOND OWNERS’ RISKS – Limited Recourse on Default; No Right to Repossess; No Acceleration of Lease Payments” herein.

In the Event of Default, there is no remedy of acceleration of the total Lease Payments due over the term of the Lease and neither the Authority nor the Trustee are empowered to sell the Leased Property.

The City will be liable only for Lease Payments on an annual basis and, in the Event of Default, the Authority or Trustee would be required to seek a separate judgment each year for that year’s defaulted Lease Payments. Any such suit for money damages would be subject to limitations on legal remedies against municipalities in California, including a limitation on enforcement of judgments against funds of a Fiscal Year other than the Fiscal Year in which the Lease Payments were due and against funds needed to serve the public welfare and interest.

Property Insurance
Liability Insurance. Under the Lease, the City is required to maintain or cause to be maintained throughout the Term of the Lease, a standard commercial general liability insurance policy or policies in protection of the Authority, the City, and their respective members, officers, agents, employees and assigns. Such policy or policies must provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Leased Property. Such policy or policies must provide coverage in such liability limits and be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of self-insurance by the City, subject to the provisions of the Lease regarding self-insurance, or in the form of the participation by the City in a joint powers agency or other program providing pooled insurance. The proceeds of such liability insurance must be applied toward extinguishment or satisfaction of the liability with respect to which paid.

Casualty Insurance. The City is required to procure and maintain, or cause to be procured and maintained, throughout the Term of the Lease, casualty insurance against loss or damage to all buildings situated on the Leased Property, in an amount at least equal to the lesser of (a) 100% of the replacement value of the insured buildings, or (b) 100% of the aggregate principal amount of the then-outstanding Lease Payments. Such insurance must, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance, and must include earthquake insurance if available at reasonable cost from reputable insurers in the judgment of the City. Such insurance may be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by 132
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the City in a joint powers agency or other program providing pooled insurance. The Net Proceeds of such insurance must be applied as provided in the Lease.

Rental Interruption Insurance. The City is required to procure and maintain, or cause to be procured and maintained, throughout the Term of the Lease, rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of any portion of the Leased Property constituting buildings or other improvements as a result of any of the hazards covered in the insurance required by the Lease, in an amount at least equal to the maximum such Lease Payments coming due and payable during any consecutive two Fiscal Years. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers agency or other program providing pooled insurance; provided that such insurance may not be maintained by the City in the form of self-insurance. The Net Proceeds of such insurance, if any, must be paid to the Trustee and deposited in the Bond Fund, to be applied as a credit towards the payment of the Lease Payments allocable to the insured improvements as the same become due and payable.

Title Insurance. The city is required obtain a CLTA title insurance policy insuring the City’s leasehold estate under the Lease in the Leased Property, subject only to Permitted Encumbrances, in an amount at least equal to the aggregate principal amount of the Bonds. All Net Proceeds received under any such title insurance policy must be deposited with the Trustee in the Bond Fund to be credited towards the prepayment of the remaining Lease Payments under the Lease.

Insurance Net Proceeds; Form of Policies. Each policy of casualty insurance, rental interruption insurance, and title insurance if any, maintained under the Lease must name the Trustee as loss payee so as to provide that all proceeds thereunder are payable to the Trustee.

The City shall pay or cause to be paid when due the premiums for all insurance policies required by the Lease. All such policies shall provide that the Trustee is given 30 days’ notice of each expiration, any intended cancellation thereof or reduction of the coverage provided thereby. The Net Proceeds of such insurance must be applied as provided in the Lease.

The City must file with the Trustee annually, within 90 days following the close of each Fiscal Year, a certificate of the City stating that all policies of insurance required under the Lease are then in full force and effect. The Trustee has no responsibility for the sufficiency, adequacy or amount of any insurance or self-insurance herein required and is fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss.

If any liability and property damage insurance maintained under the Lease is provided in the form of self-insurance, the City must file with the Trustee annually, within 90 days following the close of each Fiscal Year, a statement of the risk manager of the City or an independent insurance adviser engaged by the City identifying the extent of such self-insurance and stating the determination that the City maintains sufficient reserves with respect thereto. If any such insurance is provided in the form of self-insurance by the City, the City has no obligation to make any payment with respect to any insured event except from those reserves.

THE AUTHORITY
The Authority is a joint exercise of powers authority duly organized and existing under and pursuant to that Joint Exercise of Powers Agreement dated as of August 15, 2007, by and 133
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between the City and the Successor Agency to the Kerman Redevelopment Agency (as successor to the Kerman Redevelopment Agency), and under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the California Government Code. [Updates to come]
The Authority was formed for the purpose, among others, of assisting the City in the acquisition, construction and financing of public improvements that are of public benefit to the City. Under the Law, the Authority has the power to lease real property in furtherance of the acquisition of public improvements necessary or convenient for the operation of the City, or to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or negotiated sale.

The Authority is governed by a five-member Board of Directors (the “Board”), which consists of the members of the City Council of the City. The Mayor serves as the Chairman, the City Manager serves as the Executive Director, the City Clerk serves as the Secretary, and the City’s Finance Director serves as the Treasurer of the Authority. 134
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THE CITY
General
The City was incorporated as a general law city in 1946. The City operates under a Council-Manager form of government. For additional background, and certain demographic and economic information regarding the City and the County, see APPENDIX B.

City Government
The City operates under a Council-Manager structure of government. Policy making and legislative authority are vested in the City Council, which is responsible, among other matters, for passing resolutions and ordinances, adopting the City budget, appointing committees, and hiring the City Manager. The City Council is comprised of five members, including a City-wide-elected Mayor and four Councilmembers elected by district. Each member serves a staggered 4-year term. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing the heads of the various departments.

The City Council of the City currently consists of the following persons:

Name and Office
Current Term
Expires
Maria Pacheco, Mayor November 2028
Gary Yep, Mayor Pro Tem (District 1) November 2026
Berdie Hall, Councilmember (District 2) November 2028
Ismael Herrera, Councilmember (District 3) November 2026 Raj Dhaliwal, Councilmember (District 4) November 2028
Following are short biographies of the City Manager and Finance Director:

John Jansons, City Manager. Mr. Jansons has over 25 years’ experience in local government and has served as Kerman City Manager since 2019. His prior experience includes serving as City Manager in Farmersville, Tulare County and as Town Manager, in Windsor in Sonoma County. He has a successful track record and experience serving as Redevelopment Director and Community Investment Director completing significant projects in economic development, redevelopment, and affordable housing in California and Oregon cities. Mr. Jansons has a Bachelors in International Relations from University California-Davis where he was selected in a national competition to serve a semester aboard at the American Embassy, London England with the United States Department of State.

Josefina Alvarez, Finance Director. Ms. Alvarez has over 20 years of local government experience working for the City of Kerman. Her experience includes processing all functions of the Finance Department, and managing multiple city, state and federal grants. Ms. Alvarez has an Associates Degree in Accounting, and has been a notary public since April 2017.

Theresa Johnson, CPRP, Community Services Director. Ms. Johnson has over 24 years of experience in the local government sector, specializing in Parks, Recreation, and Community Services, and has served as Community Services Director since 2022.

Her prior experience includes serving as a Community Services Coordinator, Recreation Coordinator, and Recreation Supervisor in the cities of Kingsburg, Selma, San Gabriel, 135
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and for the past 11 years in Kerman. She has managed local, state, and federally funded programs and projects, including but not limited to park and facility development, program planning, and implementation. Ms. Johnson earned a Bachelor’s degree in Recreation Administration with an emphasis in Leisure Service Management with certificates in Special Event Planning and Serving At-Risk Youth, as well as a Certified Park and Recreation Professional (CPRP) through the National Recreation and Park Association.

Labor Relations
The City had approximately 83 full-time employees as of June 30, 2025. All employees are covered by the City's Personnel Rules and Regulations adopted by the City Council. Under State law, public employees have the right to "collective bargaining", the right to be represented by unions regarding wages, hours and working conditions. Most City employees are represented by one of four bargaining units that are covered by a Memorandum of Understanding, union contracts that result from good faith negotiations under the terms of State law. All other employees, including Management, are categorized as "unrepresented" or "confidential" employees (ineligible for union representation because of their job access to confidential personnel matters), and have a Schedule of Benefits outlining benefits, and policies, etc. The City characterizes labor relations as being good, stable and productive. Negotiations with one labor group is currently ongoing. The City has not experienced a major work stoppage by City employees in the last 20+ years.

CITY FINANCIAL INFORMATION
Accounting and Financial Reporting
The City maintains its accounting records in accordance with Generally Accepted Accounting Principles (“GAAP”) and the standards established by the Governmental Accounting Standards Board (“GASB”).

Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within ninety days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and accumulated unpaid vacation, sick pay and other employee benefit amounts, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds.

Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources.

Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Other revenues susceptible to accrual are sales taxes and interest revenue. Forfeitures, licenses, other permits and miscellaneous revenue are not susceptible to accrual because they 136
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are not measurable until received in cash. Grant funding received in advance of the related expenditure is accounted for as unearned revenue.

Grant revenues are recognized in the Fiscal Year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net position are available to finance program expenditures. The City’s policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary.

The City Council employs, at the beginning of each Fiscal Year, an independent certified public accounting firm which, at such time or times as specified by the City Council, at least annually, at such other times as such firm shall determine, examines the books, records, inventories and reports of all officers and employees who receive, control, handle or disburse public funds and of all such other officers, employees or departments as the City Council may direct. As soon as practicable after the end of the Fiscal Year, a final audit and report is submitted by such firm to the City Council and a copy of the financial statements as of the close of the Fiscal Year is published.

For additional details, see APPENDIX A.

General Fund, the Budget Process and Information
General Fund. The City’s General Fund is its primary operating fund and is where the City accounts for all its general-purpose revenues. It is distinguished from the City’s other governmental funds that are used to account for special purpose revenues, capital projects, debt service activities, and monies held for the benefit of others.

Fiscal Year Budget Process. The City operates on a Fiscal Year basis that begins on July 1 of each year and ends on June 30 of the following year. The annual budget adopted by the City Council provides for the general operation of the City. Development of the City’s annual budget is a process which generally begins in February and March and continues until the budget is adopted by the City Council in June. The General City Budget includes programs which are provided on a largely City-wide basis. The programs and services are financed primarily by the City’s share of sales tax, property tax, revenues from the State and/or federal government, and charges for services provided.

The City Council approves total budgeted appropriations and any amendments to appropriations throughout the Fiscal Year. Appropriations lapse at Fiscal Year-end. The City Council generally reauthorizes appropriations for continuing projects and activities. The City Council has the legal authority to amend the budget of any fund at any time during the Fiscal Year. The budgetary level of control (the level on which expenditures may not legally exceed appropriations) is generally at the fund level. The City Manager is authorized to transfer budgeted amounts within departments within any fund; however, any revisions that alter the total expenditures of any fund must be approved by the City Council.

Fiscal Year 2025-26 Adopted Budget. The adopted budget for Fiscal Year 2025-26 was approved on June 11, 2024. The adopted budget projects General Fund revenues to be approximately $11.9 million and expenditures to be approximately $16.8 million. The adopted budget includes an expected capital reserve investment from Measure M of approximately $5.4 million. The vast majority of these revenues come from taxes and assessments. 137
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Financial Statements
The City’s accounting policies conform to generally accepted accounting principles and reporting standards set forth by the State Controller. The audited financial statements also conform to the principles and standards for public financial reporting established by GASB. The City’s Annual Comprehensive Financial Report (“ACFR”) for Fiscal Year 2023-24, including the City’s audited financial statements, is set forth in Appendix A. The following table provides a fiveyear history of the City’s General Fund revenues, expenditures, and changes in fund balances for Fiscal Years 2019-20 through 2023-24.

TABLE 1
City of Kerman
Statements of Revenues, Expenditures and Changes in General Fund Balance Fiscal Years 2019-20 through 2023-24
Audited
2019-20
Audited
2020-21
Audited
2021-22
Audited
2022-23
Audited
2023-24
Revenues
Taxes $6,737,248 $7,600,359 $8,085,737 $9,218,980 $9,135,520 Licenses, permits and impact fees 599,114 493,781 1,005,511 798,919 935,220 Intergovernmental 474,459 466,474 501,321 652,435 556,088 Charges for services 210,877 241,968 239,627 246,419 240,764 Fines and forfeitures 33,886 37,643 49,180 21,548 46,727 Rents 132,920 81,704 102,660 100,926 87,372
Investment earning, net of
unrealized gain/(loss) 97,160 (6,078) (64,751) 87,490 465,427 Other revenue 54,876 335,146 124,492 216,175 137,574
Total Revenues 8,340,540 9,250,997 10,043,777 11,342,892 11,604,692 Expenditures
Current:

General Government 617,833 733,650 1,237,962 1,092,891 1,458,732 Public works 811,115 849,204 875,589 1,048,214 1,249,444 Community development 503,717 371,266 377,775 467,290 590,126 Social services 623,057 703,337 718,143 667,896 7 77,468 Public safety 3,217,594 3,508,651 3,900,552 4,013,978 4,386,219 Capital outlay 138,981 1,474,244 1,010,676 400,339 977,391 Total expenditures 5,912,297 7,640,351 8,120,697 7,690,608 9,439,380 Excess (deficiency) of revenues over (under)
expenditures 2,428,243 1,610,645 1,923,080 3,652,284 2,165,312 Other financing sources(uses)
Lease revenues -- 106,388 147,947 98,650
Sale of an asset -- 128,409 -- -- --
Transfers in 10,496 -- --
Transfers (out) -- (243,700) (94,689) (590,567)
Total other financing sources(1) (193,920) 138,905 (137,312) 53,258 (491,917) Net Change in fund balances 2,234,323 1,749,550 1,785,768 3,705,542 1,673,395 Beginning of year 4,426,596 6,660,919 8,410,469 10,196,237 13,901,779 End of year $6,660,919 $8,410,469 $10,196,237 $13,901,779 $15,575,174 ____________
(1) Only net transfers in/(out) information available for certain fiscal years.

Source: City Finance Department and City of Kerman - Audited Financial Statements for Fiscal Years 2019-20 through 2023-24. 138
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Statements of Revenues and Expenditures. The following table provides a five-year history of the City’s General Fund revenues, expenditures, and changes in fund balances for Fiscal Years 2019-20 through 2023-24.

TABLE 2
City of Kerman
General Fund Balance Sheets
Fiscal Years 2019-20 through 2023-24
Audited
2019-20
Audited
2020-21
Audited
2021-22
Audited
2022-23
Audited
2023-24
Assets
Cash and investments $4,457,333 $7,058,206 $8,779,669 $11,168,887 $13,386,679 Accounts receivable 22,211 34,986 22,255 21,076 19,785
Taxes receivable 1,009,923 970,993 1,072,342 1,774,305 1,269,563 Leases receivable -- -- 745,077 653,761 560,909
Prepaids 1,034 -- 2,784 -- 55,007
Due from other governments 52,440 91,332 102,164 139,978 104,824 Interest receivable 19,649 7,558 22,388 107,673 199,072 Due from other funds 1,446,853 1,095,958 609,981 1,173,703 1,321,770 Total Assets 7,009,443 9,259,033 11,356,660 15,039,383 16,917,609 Liabilities
Accounts payable 335,898 836,502 431,961 506,464 810,147 Due to other funds -- -- -- -- --
Deposits payable 9,379 8,750 10,578 12,400 12,200
Unearned revenue 3,247 3,312 -- -- 3,378
Total Liabilities 348,524 848,564 442,539 522,242 825,725 Deferred Inflow of Resources
Deferred right to use lease revenue -- -- 717,884 615,362 516,710 Total Deferred Inflows of Resources -- -- 717,884 615,362 516,710 Fund Balances
Unfunded liability 100,000 100,000 100,000 100,000 100,000 Emergency reserve 1,478,074 1,885,088 2,005,174 1,897,652 2,334,845 Revenue stability reserve 886,845 1,131,053 1,203,105 1,138,591 1,400,907 Major asset repair and replacement reserve 886,845 1,131,053 1,203,105 1,138,591 1,400,907 Unassigned 3,309,156 4,163,275 5,684,854 9,626,945 10,338,515 Total Fund Balance 6,660,919 8,410,469 10,196,237 13,901,779 15,575,174 Total Liabilities & Fund Balance $7,009,443 $9,259,033 $11,356,660 $15,039,383 $16,917,609 _____________
Source: City of Kerman - Audited Financial Statements for Fiscal Years 2019-20 through 2023-24. 139
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Governmental Activities Key Revenue Components (Taxes and Assessments). The following tables sets forth the components of the City largest category of revenues (Taxes and Assessments), encompassing the General Fund and funds related to other governmental activities.

TABLE 3
City of Kerman
Governmental Activities – Components of Taxes and Assessments Fiscal Years 2019-20 through 2023-24
Type of Tax 2019-20 2020-21 2021-22 2022-23 2023-24
Property taxes $2,607,496 $2,811,398 $2,978,759 $3,331,004 $3,671,701 Special assessments 237,404 240,602 237,806 355,159 380,457 Sales taxes 4,291,380 4,969,193 5,310,960 6,102,938 5,759,619 Franchise and other taxes 127,452 136,653 150,911 177,341 189,465 Business licenses 70,970 95,902 87,503 93,766 117,084
Rents 374,787 324,332 273,087 344,623 421,168
Interest income /(loss) 147,952 14,831 (40,259) 168,185 598,169 Gain on sale of assets -- 128,409 -- -- --
Other 108,655 400,885 190,780 276,491 208,398
Transfers (31,283) 252,456 430,879 61,150 309,105
Totals $7,934,813 $9,374,661 $9,620,426 $10,910,657 $11,655,166 _______________________
Source: City of Kerman - Audited Financial Statements for Fiscal Years 2019-20 through 2023-24.

Sales and Use Taxes
Overview. Sales and use taxes typically represents the largest source of tax revenues to the City’s General Fund. Sales and use taxes are less stable sources of revenues to the City, given that they are based on consumer spending within the City which is impacted by a variety of factors including the overall economy and other factors.

Historic Taxable Transactions. The following table shows historical taxable transactions in the City for the most recent three years available.

TABLE 4
City of Kerman
Taxable Transactions
Fiscal Years 2022 through 2024
(In Thousands of Dollars)
2022 2023 2024
% Change from
2023-24
Motor Vehicle and Parts Dealers $12,117 $15,322 $16,065 4.62% Home Furnishings and Appliances -- $ 477 -- --
Building Materials -- -- -- --
Food and beverage stores 5,029 5,871 6,124 4.13%
Gasoline stations 24,181 23,818 22,590 -5.43%
Clothing and Clothing Accessories stores 2,984 2,977 3,150 5.49% General merchandise stores -- -- -- --
Food services and drinking places 26,785 29,885 30,657 2.52% Other retail stores 86,939 83,431 83,836 0.48%
Total Retail and Food Services 158,035 161,782 162,423 0.39% All other outlets 37,080 63,620 61,181 -3.99%
Total All Outlets $195,115 $225,402 $223,604 -0.80%
____________________
Source: California Department of Tax and Fee Administration. 140
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City of Kerman Measure M (1.0%). In November 2018, voters in the City approved Measure M, which established an additional 1.0% sales and use tax on taxable transactions within the City. Measure M was approved by 73.17% of the voters voting on the question and is a “general tax,” which means funds are available for all general purposes of the City and not restricted to particular projects or services. There is no sunset date on this 1.0% sales and use tax.

The City intends to use a portion of Measure M revenues to pay the lease payments securing the Bonds.

State-Wide Sales Tax Law. Taxable transactions in the City are currently subject to the following sales and use tax, of which the City’s share is only a portion. The City collects a percentage of taxable sales in the City (minus certain administrative costs) pursuant to the Bradley-Burns Uniform Local Sales and Use Tax (the “Sales Tax Law”). The State collects and administers the sales tax under the Sales Tax Law, and makes distributions on taxes collected within the City, as shown in the following table. Measure M, a 1% general sales tax measure for essential city services and projects in the City (described further herein), was passed by the voters in November 2018.

TABLE 5
City of Kerman
Sales Tax Rate as of January 1, 2025
State of California 6.00%
Fresno County 0.25
City of Kerman Measure M 1.00
Fresno County Local Tax 1.00
Fresno County District Tax 0.725
Total 8.975%
____________
Source: California Department of Tax and Fee Administration (CDTFA).

Sales Tax Collection Procedures. Collection of the sales and use tax is administered by the California Department of Tax and Fee Administration (the “CDTFA”). This process was formerly administered by the State Board of Equalization. The Taxpayer Transparency and Fairness Act of 2017, which took effect July 1, 2017, restructured the State Board of Equalization and separated its functions among three separate entities: the State Board of Equalization, the CDTFA and the Office of Tax Appeals. The State Board of Equalization will continue to perform the duties assigned to it by the State Constitution, while all other duties will be transferred to the newly established CDTFA and the Office of Tax Appeals. CDTFA will handle most of the taxes and fees previously collected by the State Board of Equalization, including sales and use tax.

Under the Sales and Use Tax Law, all sales and use taxes collected by the CDTFA under a contract with any city, city and county, or county are required to be transmitted by the CDTFA to such city, city and county, or county periodically as promptly as feasible. These transmittals are required to be made at least twice in each calendar quarter.

Under its procedures, the CDTFA projects receipts of the sales and use tax on a quarterly basis and remits an advance of the receipts of the sales and use tax to the City on a monthly basis. The amount of each monthly advance is based upon the CDTFA’s quarterly projection.

During the last month of each quarter, the CDTFA adjusts the amount remitted to reflect the actual receipts of the sales and use tax for the previous quarter. 141
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The CDTFA receives an administrative fee based on the cost of services provided by the Board to the City in administering the City’s sales tax, which is deducted from revenue generated by the sales and use tax before it is distributed to the City.

Applicability of Sales and Use Tax. Sales and use taxes are complementary taxes; when one applies, the other does not. In general, the statewide sales tax applies to gross receipts of retailers from the sale of tangible personal property in the State. The use tax is imposed on the purchase, for storage, use or other consumption in the State of tangible personal property from any retailer. The use tax generally applies to purchases of personal property from a retailer outside the State where the use will occur within the State. The sales tax is imposed upon the same transactions and items as the statewide sales tax and the statewide use tax.

Certain transactions are exempt from the State sales tax, including sales of the following products:
• food products for home consumption;
• prescription medicine;
• newspapers and periodicals;
• edible livestock and their feed;
• seed and fertilizer used in raising food for human consumption; and • gas, electricity and water when delivered to consumers through mains, lines and pipes.

This is not an exhaustive list of exempt transactions. A comprehensive list can be found in the CDTFA’s Publication 61 (December 2022) entitled “Sales and Use Taxes: Exemptions and Exclusions,” which can be found on the CDTFA’s website at http://www.cdtfa.ca.gov/. The reference to this Internet website is provided for reference and convenience only. The information contained within the website may not be current, has not been reviewed by the City and is not incorporated in this Official Statement by reference.

Property Taxes
Property Taxes represents the second-largest sources of taxes to the City’s General Fund, after sales and use taxes. Property taxes represent a very stable source of revenue to the City, and are based in large part on assessed valuations of property located in the City.

Property Tax Delinquencies; Teeter Plan. The Board of Supervisors of Fresno County has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”), as provided for in Section 4701 et seq. of the California Revenue and Taxation Code. Under the Teeter Plan, each entity levying property taxes in Fresno County may draw on the amount of uncollected secured taxes credited to its fund, in the same manner as if the amount credited had been collected. As a result, participating entities receive 100% of secured property taxes levied in exchange for foregoing any interest and penalties collected on delinquent taxes.

So long as the Teeter Plan remains in effect, the City’s receipt of revenues with respect to the levy of ad valorem property taxes levied in Fresno County will not be dependent upon actual collections of the ad valorem property taxes by each County. However, under the statute creating 142
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the Teeter Plan, a Board of Supervisors can under certain circumstances terminate the Teeter Plan in part or in its entirety with respect to the entire county and, in addition, a Board of Supervisors can terminate the Teeter Plan with respect to the City if the delinquency rate for all ad valorem property taxes levied within the City in any year exceeds 3%. In the event that the Teeter Plan were terminated, the amount of the levy of ad valorem property taxes in the City would depend upon the collections of the ad valorem property taxes and delinquency rates experienced with respect to the parcels within the City.

General Method of Property Tax Calculations. Proposition 13, passed in 1978, established the current property tax regime for local agencies, including the City, throughout the State. Under Proposition 13, subject to voter-approved debt and certain other exceptions, the base property tax rate on a parcel is limited to 1% of its assessed value and the property tax collected by this 1% County-wide rate is shared by the local agencies eligible to receive property taxes within the applicable County pursuant to applicable State law. Under Proposition 13, the 1975-76 fiscal year serves as the original base year used in determining the assessment for real property. Thereafter, annual increases to the base year value are limited to the inflation rate, as measured by the California Consumer Price Index, or 2%, whichever is less. A new base year value, however, is also established whenever a property, or portion thereof, has had a change in ownership or has been newly constructed. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Article XIIIA of the State Constitution” for additional information.

Proposition 8, enacted in 1978, allows for a temporary reduction in assessed value when a property suffers a “decline-in-value.” As of the January 1st (lien date) each year, the Assessor must enroll either a property’s Proposition 13 value (adjusted annually for inflation by no more than 2%) or its current market value, whichever is less. When the current market value replaces the higher Proposition 13 value, the lower value is commonly referred to as a “Proposition 8 Value.” “Proposition 8 values” are temporary and, once enrolled, must be reviewed annually by the assessor until the Proposition 13 adjusted base year value is enrolled.

Levy and Collection of Property Taxes. Property taxes are levied for each fiscal year on taxable real and personal property as of the preceding January 1. For assessment and collection purposes, property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing State-assessed public utilities property and real property the taxes on which have a viable tax lien, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.” Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year, and become delinquent on December 10 and April 10, respectively.

A penalty of 10% attaches immediately to all delinquent payments. Property on the secured roll with respect to which taxes are delinquent become tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of a penalty of 1% per month to the time of redemption, plus costs and a redemption fee. If taxes are unpaid for a period of five years or more, the property is deeded to the State and may be sold at public auction.

Property taxes on the unsecured roll are due as of the January 1 lien dates and become delinquent on August 31. A 10% penalty attaches to delinquent unsecured taxes. If unsecured taxes are unpaid at 5:00 p.m. on October 31, an additional penalty of 1% attaches to them on the first day of each month until paid. The County has four ways of collecting delinquent unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a judgment in the office 143
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of the County Clerk specifying certain facts in order to obtain a lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Recorder’s office in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee.

Beginning in 1978-79, Proposition 13 and its implementing legislation shifted the function of property tax allocation to the counties, except for levies to support prior voted debt, and prescribed how levies on county-wide property values are to be shared with local taxing entities within each county.

Historical Assessed Valuations. The table below presents the assessed valuation of taxable property in the City for the prior ten fiscal years.

TABLE 6
City of Kerman
Assessed Valuations of All Taxable Property
Fiscal Years 2015-16 through 2024-25
Fiscal
Year Local Secured Utility Unsecured Total
Percent
Change
2015-16 $600,286,525 $295,160 $30,938,900 $631,520,585 --% 2016-17 628,890,853 295,160 27,628,679 656,814,692 4.0
2017-18 681,421,657 295,160 28,651,470 710,368,287 8.2
2018-19 720,913,254 295,160 34,163,140 755,371,554 6.3
2019-20 777,949,156 313,915 30,620,810 808,883,881 7.1
2020-21 842,549,900 313,915 24,497,833 867,361,648 7.2
2021-22 878,929,354 329,115 29,604,634 908,863,103 4.8
2022-23 961,552,596 454,096 35,091,955 997,098,647 9.7
2023-24 1,062,884,576 502,118 35,365,686 1,098,752,380 10.2 2024-25 1,142,716,732 370,573 47,616,108 1,190,703,413 8.4 Source: California Municipal Statistics Inc.
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Principal Property Taxpayers. The top twenty largest local secured property taxpayers in the City, as shown on the 2024-25 secured tax roll, are listed in the table below. See “– Property Taxes” above for additional information on the levy and collection of property taxes in the City.

TABLE 7
City of Kerman
Principal Property Taxpayers (Secured Roll)
Fiscal Year 2024-25
2024-25 % of
Property Owner Primary Land Use Assessed Valuation Total (1)

1. Perfect Pac LP Industrial $ 30,336,022 2.65%

2. Wal-Mart Real Estate Business Trust Commercial 20,098,461 1.76

3. Golden Meadows LLC Apartments 18,373,244 1.61

4. Joseph Crown Construction & Development Residential Properties 12,987,220 1.14

5. Kalpakoff Properties LLC Industrial 12,855,946 1.13

6. 15649 West California Avenue LP Apartments 12,100,000 1.06

7. Kerman Strauss LLC Commercial 9,192,177 0.80

8. Pebble Brook LLC Apartments 9,042,611 0.79

9. Golden West Mobile Estates LLC Mobile Home Park 7,807,509 0.68

10. Helena Chemical Company Industrial 7,472,639 0.65

11. J S West & Company Industrial 6,946,468 0.61

12. Pacific West Coast Properties LLC Commercial 5,561,923 0.49

13. Pinnacle Agriculture Distribution Inc. Industrial 5,407,639 0.47

14. Kathana LLC Commercial 4,521,795 0.40

15. CA Manufacturing & Engineering Co LLC Industrial 4,515,038 0.40

16. G & B Investments Apartments 4,400,330 0.39

17. DBB Properties LLC Commercial 3,438,216 0.30

18. Kerman Go LLC Commercial 3,127,972 0.27

19. 4G Holdings XI LLC Commercial 3,060,000 0.27

20. Century Communities of California LLC Residential Properties 2,884,635 0.25 $184,129,845 16.11%
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(1) The total City secured assessed valuation for fiscal year 2024-25 is $1,142,716,732.

Source: California Municipal Statistics, Inc.

Transient Occupancy Tax
The City levies a “hotel/motel” tax, which is also known as a transient occupancy tax (“TOT”) on short-term lodging stays in the City in the amount of 10% of the room rates charged by hotels, motels and similar establishments in the City. This revenue is included in the City’s financial statements as Miscellaneous Revenue.

Other Sources of Revenues
Administration and Overhead Fees. Fiscal Year 2025-26 revenues remain the same as Fiscal Year 2024-25 with $310,771 for Administration and Overhead. These fees are charged to the various departments outside of the General Fund for their estimated share of costs related to the infrastructure and administration services provided by the City. No fee increases for administration and overhead are included in Fiscal Year 2025-26 budget.

Building Fees. Building Fees are projected at $987,500 for Fiscal Year 2025-26 which consist of Planning and Zoning Fees, Building Permits, Engineering Inspection Fees, Plan Check Inspection Fees and C & D Recycle Program.
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Franchise Taxes. Franchise taxes are projected to increase 6.54% when compared to the Fiscal Year 2024-25 estimated year end budget. Franchise tax revenue is expected to be $236,549 for Fiscal Year 2025-26. Franchise taxes are paid to the City by PG&E and Comcast Cable Television.

Rents. Rental income is expected to slightly decrease by about 2.01% when compared to Fiscal Year 2024-25 estimated year end budget. This decrease is due to a lease that is expected to end December 2025. If the lessee agrees to renew the lease, revenues for rents should be back on track with an increase. The Fiscal Year 2025-26 projection for rental revenues is $189,962. The City’s General Fund receives rent from the Community Teen Center, 942 S.

Madera Avenue building, agricultural properties, cell tower leases and from other facilities and parks rentals.

Licenses and Permits. This revenue category is mainly comprised of business licenses, animal licenses and other licenses and permits. Total revenues for Fiscal Year 2025-26 in this category are $136,464, with business license revenue of $122,716, animal license of $7,000 and Miscellaneous Permits of $6,747.

Direct and Overlapping Bonded Debt
Set forth on the following page is a direct and overlapping debt report for the City (the “Debt Report”) prepared by California Municipal Statistics, Inc. The Debt Report is included for general information purposes only. The City has not reviewed the Debt Report for completeness or accuracy and makes no representations in connection therewith. The Debt Report generally includes long term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term obligations generally are not payable from revenues of the City (except as indicated) nor are they necessarily obligations secured by land within the City. In many cases long-term obligations issued by a public agency are payable from the general fund or other revenues of such public agency. Neither the City, the Authority nor the Underwriter has verified this information. 146
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TABLE 8
City of Kerman
Direct and Overlapping Debt Statement
As of February 1, 2025
2024-25 Assessed Valuation: $1,190,703,413
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 2/1/25 State Center Community College District 0.971% $ 3,388,644 Kerman Unified School District 51.477 20,039,537
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $23,428,181
DIRECT AND OVERLAPPING GENERAL FUND DEBT:

Fresno County General Fund Obligations 1.070% $200,518
Fresno County Pension Obligation Bonds 1.070 1,789,443
City of Kerman General Fund Obligations 100.000 2,659,000 (1) TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $4,648,961 COMBINED TOTAL DEBT $28,077,142 (2)
Ratios to 2024-25 Assessed Valuation:

Direct Debt ($2,659,000)................................................................................0.22% Total Direct and Overlapping Tax and Assessment Debt ................................1.97% Combined Total Debt .......................................................................................2.36% (1) Excludes Bonds to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Source: California Municipal Statistics, Inc.

Relevant Fiscal Policies
General. The City has adopted a comprehensive set of fiscal policies to provide guidance for all fiscal activities and resource allocation decisions as defined in the annual budget. The policies set forth guidelines for both current activities and long-range planning. In addition, the City Council approved or adopted several other fiscal policies including:
 Investment Policy.
 Debt Management Policy.
 Reserve Policy
The following are certain highlighted aspects of the adopted policies.

City Investment Policy. The City invests its funds in accordance with the City’s Investment Policy, in accordance with Section 53600 et seq. of the State Government Code. Idle cash management and investment transactions are the responsibility of the City Manager and City Treasurer. The Investment Policy sets forth the policies and procedures applicable to the investment of City funds and designates eligible investments. The Investment Policy’s stated overarching purpose is to (i) ensure that public funds are invested in such a manner as to comply with state and local laws; (ii) ensure prudent money management; (iii) provide for daily cash flow requirements; and (iv) meet the objectives of the Investment Policy (per California Government Code Section 53600.5) in the following order of priority:

Safety of Principal: Safety of principal is the foremost objective of the investment program. Investments of the City shall be undertaken in a manner that seeks to ensure 147
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the preservation of capital in the overall portfolio. To attain this objective, the City strives to diversify its investments by investing funds among a variety of securities with independent returns.

Liquidity: The City’s investment portfolio will remain sufficiently liquid to enable the City to meet all operating requirements which might be reasonably anticipated. Maturities of investments are selected in anticipation if disbursement needs, thereby obviating the need for forced liquidation or lost interest penalties.

Return on Investments: The City’s investment portfolio shall have the objective of attaining a comparative performance measurement or an acceptable rate of return throughout budgetary and economic cycles. These measurements should be commensurate with the City’s investment risk constraints identified in the Investment Policy and the cash flow characteristics of the portfolio.

Debt Management Policy. The City’s Debt Management Policy sets forth parameters for issuing debt and managing the City’s debt portfolio and generally sets forth the following: (i) the purposes for which the debt proceeds may be used, (ii) the types of debt that may be issued, (iii) the relationship of the debt to, and integration with, the issuer’s capital improvement program or budget, if applicable, (iv) policy goals related to the City’s planning goals and objectives, and (v) the internal control procedures that the City has implemented, or will implement, to ensure that the proceeds of the proposed debt issuance will be directed to the intended use. This policy will also assist the City in pursuing and maintaining quality credit ratings in addition to providing guidance to decision makers.

Reserve Policy. The City maintains four Reserve Policies to support the City during economic cycle fluctuations that affect City revenue generation, to secure greater stability in multiyear municipal financing, and to safeguard the public welfare and interest to provide continued service delivery to the Kerman residents, during unexpected revenue shortage or unplanned, necessary expenditures.
 Emergency Reserve- comprises 25% of operating expenditures, to cover an emergency, unanticipated expense or cash flow needs;
 Revenue Stability Reserve- comprises 15% of operating expenditures, to cover any unanticipated drop in sales or property tax revenues;
 Major Asset Repair and Replacement Reserve- comprises 5% of operating expenditures for repairs and 10% of operating expenditures for replacements, to cover any repairs and replacement of major facilities and equipment; and  Undesignated Reserve- comprises any amount remaining after meeting minimum reserves, to cover any discretionary expenditures approved by the Council.

As of June 30, 2024, the General Fund had a Reserve Balance of $15,575,174.Risk Management. The City participates with other public entities in a joint venture under a joint powers agreement which establishes the Central San Joaquin Valley Risk Management Authority (“CSJVRMA”). The relationship between the City and CSJVRMA is such that CSJVRMA is not a component unit of the City for financial reporting purposes.

The CSJVRMA is a consortium of 55 cities in San Joaquin Valley, California. It was established under the provisions of California Government Code Section 6500, et. seq. The CSJVRMA is governed by a Board of Directors, which meets three to four times each year, consisting of one member appointed by each member city. The day-to-day business is handled 148
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by a management group employed by the CSJVRMA. The financial statements of CSJVRMA can be obtained at 1831 K Street, Sacramento, CA 95814.

Each member government pays a primary deposit to cover estimated losses for a fiscal year (claims year). Six months after the close of a fiscal year, outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. Costs are spread to members as follows: the first $25,000 of each occurrence is charged directly to the member. Each member maintains a $1,000,000 self-insured retention (“SIR”) amount covered by the Authority pooled investments. The Authority purchases excess liability coverage through the California Affiliated Risk Management Authority for the amount in excess of $1,000,000.

The City maintains a self-insured retention level of $50,000 for workers’ compensation insurance. Coverage between $50,000 and $500,000 is provided through the risk pool. CSJVRMA participates in an excess pool which provides workers’ compensation coverage from $5,000,000 to $200,000,000. Each program year is retrospectively adjusted three years after the end of the program year and annually thereafter.

The City also purchases various property coverage programs. Deductibles and limits per property type can be obtained from the City Manager or directly from the Authority.

See APPENDIX A Note 9 for additional details regarding the City’s pension and other employee benefits, including as relates to Risk Management.

Employee Retirement System; CalPERS
This caption contains certain information relating to California Public Employees’ Retirement System (“CalPERS”). The information is primarily derived from information produced by CalPERS, its independent accountants and actuaries. The City has not independently verified the information provided by CalPERS and makes no representations and expresses no opinion as to the accuracy of the information provided by CalPERS.

The comprehensive annual financial reports of CalPERS are available on its Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information concerning benefits and other matters. Such information is not incorporated by reference in this Official Statement. None of the Authority, City or Underwriter can guarantee the accuracy of such information. Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or may be changed in the future. Actuarial assessments will change with the future experience of the pension plans.

General Information about the Pension Plans. All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost-Sharing MultipleEmployer Defined Benefit Pension Plan (“Plan”), administered by CalPERS. The Plan’s benefit provisions are established by statute. The Plan is included as a pension trust fund in the CalPERS Comprehensive Annual Financial Report, which is available online at www.calpers.ca.gov.

The Plan consists of a miscellaneous pool and a safety pool (referred to as “risk pools”), which are comprised of individual employer miscellaneous and safety rate plans, respectively, including those of the City. The City’s employer rate plans in the safety risk pool include the 149
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Miscellaneous Plan (“Miscellaneous”), PEPRA Miscellaneous plan (“PEPRA Miscellaneous”), the Safety Classic plan (“Safety Classic”), and the PEPRA Safety plan (“PEPRA Safety”).

PEPRA. On September 12, 2012, the California Governor signed AB 340, a bill that enacted the California Public Employees’ Pension Reform Act of 2012 (“PEPRA”) and that also amended various sections of the California Education and Government Codes, including the County Employees Retirement Law of 1937. Effective January 1, 2013, PEPRA: (i) requires public retirement systems and their participating employers to share equally with employees the normal cost rate for such retirement systems; (ii) prohibits employers from paying employer paid member contributions to such retirement systems for employees hired after January 1, 2013; (iii) establishes a compulsory maximum non safety benefit formula of 2.5% at age 67; (iv) defines final compensation as the highest average annual pensionable compensation earned during a 36 month period; and (v) caps pensionable income at $110,100 ($132,120 for employees not enrolled in Social Security) subject to Consumer Price Index increases. Other provisions reduce the risk of the City incurring additional unfunded liabilities, including prohibiting retroactive benefits increases, generally prohibiting contribution holidays, and prohibiting purchases of additional nonqualified service credit.

Actions Taken by CalPERS Related to Discount Rate and Other Assumptions. In 2013, the CalPERS’ Board of Administration (the “Board of Administration”) approved a recommendation to change the CalPERS amortization and smoothing policies. In 2018, the Board of Administration voted to shorten the period over which CalPERS will amortize actuarial gains and losses from 30 years to 20 years for new pension liabilities. In 2014, the Board of Administration approved new demographic actuarial assumptions based on a 2013 study of recent experience. The largest impact, applying to all benefit groups, is a new 20-year mortality projection reflecting longer life expectancies and that longevity will continue to increase. Because retirement benefits will be paid out for more years, the cost of those benefits will increase as a result. In 2015, the Board of Administration adopted a funding risk mitigation policy intended to incrementally lower its discount rate – its assumed rate of investment return – in years of good investment returns, help pay down the pension fund’s unfunded liability, and provide greater predictability and less volatility in contribution rates for employers. In 2016, the Board of Administration voted to lower its discount rate for local agencies over time.

On July 12, 2021, CalPERS announced it had achieved a preliminary investment return of 21.3% for the 12-month period ending June 30, 2021. Under the Funding Risk Mitigation Policy approved by the CalPERS Board of Administration in 2015, the double-digit return triggered a November 2021 reduction in the discount rate from 7.00% to 6.80%.

Lowering the discount rate means employers that contract with CalPERS to administer their pension plans will see increases in their normal costs and unfunded actuarial liabilities.

Active members hired after January 1, 2013, under PEPRA will also see their contribution rates rise. PEPRA included certain other provisions to try to minimize pension costs for covered employees. The three-year reduction of the discount rate will result in average employer rate increases of about 1 percent to 3 percent of normal cost as a percent of payroll for most miscellaneous retirement plans, and a 2 percent to 5 percent increase for most safety plans.

Additionally, many CalPERS employers will see a 30 to 40 percent increase in their current unfunded accrued liability payments. These payments are made to amortize unfunded liabilities over 20 years to bring the pension fund to a fully funded status over the long-term.

Asset Volatility Ratio (AVR). Plans that have higher asset-to-payroll ratios experience more volatile employer contributions (as a percentage of payroll) due to investment return. For 150
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example, a plan with an asset-to-payroll ratio of 8 may experience twice the contribution volatility due to investment return volatility, than a plan with an asset-to-payroll ratio of 4. Shown below is the asset volatility ratio for the Miscellaneous Plan, the PEPRA Miscellaneous, the Safety Classic and the PEPRA Safety plan which a measure of each plan’s current contribution volatility. It should be noted that this ratio is a measure of the current situation. It increases over time but generally tends to stabilize as the plan matures.

Benefits Provided. The Plan provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Classic members and PEPRA Safety members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. PEPRA Miscellaneous members with five years of total service are eligible to retire at age 52 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after five years of service. The death benefit is the Basic Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

The provisions and benefits of each Plan that were in effect at June 30, 2024, are summarized as follows:

Miscellaneous Plan
Miscellaneous
PEPRA
Hire Date
Prior to
January 1, 2013
On or after
January 1, 2013
Benefit formula 2.0% @ 60 2.0% @ 62
Benefit vesting schedule 5 years’ service 5 years’ service Benefit payments Monthly for life Monthly for life
Retirement age 60 60
Monthly benefits, as a % of eligible 2.00% 2.00%
Required employee contribution rates 7.00% 7.75%
Required employer contribution rates 10.10% 7.68%
Employer Rate Plans in the Safety Risk Pool
Safety Classic PEPRA Safety
Hire Date Prior to January 1, 2013 On or after January 1, 2013 Benefit Formula 2.0% @ 55 2.0% @ 57
Benefit Vesting Schedule 5 years of service 5 years of service Benefit Payments Monthly for life Monthly for life
Retirement Age 55 55
Monthly Benefits, as a % of Eligible 2.00% 2.00%
Required Employee Contribution Rates 7.00% 11.00%
Required Employer Contributions Rates 16.45% 10.85%
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Source: City of Kerman - Audited Financial Statements for Fiscal Year 2023-24.

Contributions. Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on July 1 following the notice of a change in the rate.

Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any 151
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unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the year ended June 30, 2024, the contributions recognized $777,836 as part of the pension expense.

Net Pension Liability. At June 30, 2024, the City reported a net pension liability for its Miscellaneous Plan of $3,614,718, and for its Safety Police Plan of $2,091,321. See Note 11 to the City’s audited financial statements for the fiscal year ending June 30, 2024 attached hereto as Appendix A for more information.

No Other Post-Employment Benefit (OPEB) Plan
The City does not offer Other Post-Employment Benefits.

General Fund Long-Term Indebtedness
The following is the only long-term debt obligation payable from the City’s General Fund. 2020 Refunding Lease Financing. In September 2020, the City and Authority entered into a lease refinancing agreement to refinance lease revenue bonds issued in 2007. Under this arrangement, the Authority agreed to assign its right to receive semiannual lease payments from the City in consideration of the receipt of funding in an amount of $3,041,000. The lease payments are made each April 1 and October 1 beginning in 2021 through 2037, with an interest rate of

2.31%. Webster Bank is the sole assignee under this financing. 152
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CONSTITUTIONAL AND STATUTORY

LIMITATIONS ON TAXES AND APPROPRIATIONS
The constitutional and statutory provisions discussed in this section have the potential to affect the ability of the City to levy taxes and spend tax proceeds for operating and other purposes.

Article XIIIA of the State Constitution
Section 1(a) of Article XIIIA of the State Constitution limits the maximum ad valorem tax on real property to 1% of full cash value (as defined in Section 2 of Article XIIIA), to be collected by counties and apportioned according to law. Section 1(b) of Article XIIIA provides that the 1% limitation does not apply to ad valorem taxes to pay interest or redemption charges on (1) indebtedness approved by the voters prior to June 1, 1978 or (2) any bonded indebtedness for the acquisition or improvement of real property approved on or after June 1, 1978, by two thirds of the votes cast by the voters voting on the Proposition. Section 2 of Article XIIIA defines “full cash value” to mean “the county assessor’s valuation of real property as shown on the 1975–76 tax bill under ‘full cash value’ or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or to reflect a reduction in the consumer price index or comparable data for the area under taxing jurisdiction or reduced in the event of declining property value caused by substantial damage, destruction or other factors. Legislation enacted by the State Legislature to implement Article XIIIA provides that notwithstanding any other law, local agencies may not levy any ad valorem property tax except to pay debt service on indebtedness approved by the voters as described above.

The voters of the State subsequently approved various measures that further amended Article XIIIA. One such amendment generally provides that the purchase or transfer of (i) real property between spouses or (ii) the principal residence and the first $1,000,000 of the full cash value of other real property between parents and children, does not constitute a “purchase” or “change of ownership” triggering reassessment under Article XIIIA. This amendment could serve to reduce the property-tax revenues of the City. Other amendments permitted the State Legislature to allow persons over 55 or “severely disabled homeowners” who sell their residences and buy or build another of equal or lesser value within two years in the same county, to transfer the old residence’s assessed value to the new residence.

In the November 1990 election, the voters approved the amendment of Article XIIIA to permit the State Legislature to exclude from the definition of “newly constructed” the construction or installation of seismic retrofitting improvements or improvements utilizing earthquake hazard mitigation technologies constructed or installed in existing buildings after November 6, 1990.

Article XIIIA has also been amended to permit reduction of the “full cash value” base in the event of declining property values caused by damage, destruction or other factors, provided that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster.

Article XIIIB of the State Constitution
Article XIIIB of the State Constitution limits the annual appropriations of the State and of any city, county, school district, special district, authority or other political subdivision of the State to the appropriations limit for the prior Fiscal Year, as adjusted for changes in the cost of living, population and services for which the fiscal responsibility is shifted to or from the governmental 153
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entity. The “base year” for establishing this appropriations limit is the 1978–79 Fiscal Year. The appropriations limit may also be adjusted in emergency circumstances, subject to limitations.

Appropriations of an entity of local government subject to Article XIIIB generally include authorizations to expend during a Fiscal Year the “proceeds of taxes” levied by or for the entity, exclusive of certain State subventions, refunds of taxes, and benefit payments from retirement, unemployment insurance and disability insurance funds. “Proceeds of taxes” include but are not limited to, all tax revenues, certain State subventions received by the local governmental entity and the proceeds to the local governmental entity from (1) regulatory licenses, user charges, and user fees (to the extent that such proceeds exceed the cost of providing the service or regulation) and (2) the investment of tax revenues. Article XIIIB provides that if a governmental entity’s revenues in any year exceed the amounts permitted to be spent, the excess must be returned by revising tax rates or fee schedules over the subsequent two fiscal years.

Article XIIIB does not limit the appropriation of moneys to pay debt service on indebtedness existing or authorized as of January 1, 1979, or for bonded indebtedness approved thereafter by a vote of the electors of the issuing entity at an election held for that purpose, or appropriations for certain other limited purposes. Furthermore, Article XIIIB was amended in 1990 to exclude from the appropriations limit “all qualified capital outlay projects, as defined by the Legislature” from proceeds of taxes. The Legislature has defined “qualified capital outlay project” to mean a fixed asset (including land and construction) with a useful life of 10 or more years and a value which equals or exceeds $100,000. As a result of this amendment, the appropriations to pay the lease payments on the City’s long term General Fund lease obligations are generally excluded from the City’s appropriations limit. The City has never exceeded its appropriations limit.

Articles XIIIC and XIIID of the State Constitution
General. On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 adds Articles XIIIC and XIIID to the California Constitution and contains a number of interrelated provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges.

On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. The amendments to Article XIIIC define “taxes” that are subject to voter approval as “any levy, charge, or exaction of any kind imposed by a local government,” with certain exceptions.

Taxes. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City (“general taxes”) require a majority vote; taxes for specific purposes (“special taxes”), even if deposited in the City’s General Fund, require a two-thirds vote.

Property-Related Fees and Charges. Article XIIID also adds several provisions making it generally more difficult for local agencies to levy and maintain property-related fees, charges, and assessments for municipal services and programs. These provisions include, among other things, (i) a prohibition against assessments which exceed the reasonable cost of the proportional 154
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special benefit conferred on a parcel, (ii) a requirement that assessments must confer a “special benefit,” as defined in Article XIIID, over and above any general benefits conferred, (iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party, and (iv) a prohibition against fees and charges which are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners.

Reduction or Repeal of Taxes, Assessments, Fees and Charges. Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund. If such repeal or reduction occurs, the City’s ability to pay debt service on the Bonds could be adversely affected.

Burden of Proof. Article XIIIC provides that local government “bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.” Similarly, Article XIIID provides that in “any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance” with Article XIIID.

Judicial Interpretation of Proposition 218. The interpretation and application of Articles XIIIC and XIIID will ultimately be determined by the courts, and it is not possible at this time to predict with certainty the outcome of such determination.

Impact on City’s General Fund. The City does not believe that any material source of General Fund revenue is subject to challenge under Proposition 218 or Proposition 26.

The approval requirements of Articles XIIIC and XIIID reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase the taxes, fees, charges or taxes in the future that it may need to meet increased expenditure needs.

Proposition 1A; Proposition 22
Proposition 1A. Proposition 1A, proposed by the Legislature in connection with the State’s Fiscal Year 2004-05 Budget, approved by the voters in November 2004 and generally effective in Fiscal Year 2006-07, provided that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibited the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any Fiscal Year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county had to be approved by two-thirds of both houses of the Legislature.

Proposition 22. Proposition 22, entitled “The Local Taxpayer, Public Safety and Transportation Protection Act,” was approved by the voters of the State in November 2010.

Proposition 22 eliminates or reduces the State’s authority to (i) temporarily shift property taxes 155
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from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for State-mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues.

Unitary Property
AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from most utility property assessed by the State Board of Equalization (“Unitary Property”), commencing with the 1988–89 Fiscal Year, are allocated as follows: (i) each jurisdiction will receive up to 102% of its prior year State–assessed revenue; and (ii) if county–wide revenues generated from Unitary Property are less than the previous year’s revenues or greater than 102% of the previous year’s revenues, each jurisdiction will share the burden of the shortfall or benefit of the excess revenues by a specified formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas.

The provisions of AB 454 do not constitute an elimination of the assessment of any State– assessed properties nor a revision of the methods of assessing utilities by the State Board of Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all jurisdictions in a county.

Possible Future Initiatives
Article XIIIA, Article XIIIB and Propositions 218, 26, IA and 22 were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time, other initiative measures could be adopted, further affecting the City’s revenues or its ability to expend revenues.
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BOND OWNERS’ RISKS
The following describes certain special considerations and risk factors affecting the payment of and security for the Bonds. The following discussion is not meant to be an exhaustive list of the risks associated with the purchase of any Bonds and does not necessarily reflect the relative importance of the various risks. Potential investors in the Bonds are advised to consider the following special factors along with all other information in this Official Statement in evaluating the Bonds. There can be no assurance that other considerations will not materialize in the future.

No Pledge of Taxes
General. The obligation of the City to pay the Lease Payments and Additional Rental Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay Lease Payments and Additional Rental Payments does not constitute a debt or indebtedness of the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.

The City is currently liable on other obligations payable from general revenues, which are described above under “CITY FINANCIAL INFORMATION – General Fund Long-Term Indebtedness.”
Limitations on Taxes and Fees. Certain taxes, assessments, fees and charges presently imposed by the City could be subject to the voter approval requirements of Article XIIIC and Article XIIID of the State Constitution. Based upon the outcome of an election by the voters, such fees, charges, assessments and taxes might no longer be permitted to be imposed, or may be reduced or eliminated and new taxes, assessments fees and charges may not be approved.

The City has assessed the potential impact on its financial condition of the provisions of Article XIIIC and Article XIIID of the State Constitution respecting the imposition and increase of taxes, fees, charges and assessments and does not believe that an election by the voters to reduce or eliminate the imposition of certain existing fees, charges, assessments and taxes would substantially affect its financial condition. However, the City believes that if the initiative power was exercised so that all local taxes, assessments, fees and charges that may be subject to Article XIIIC and Article XIIID of the State Constitution are eliminated or substantially reduced, the financial condition of the City, including its General Fund, could be materially adversely affected.

Although the City does not currently anticipate that the provisions of Article XIIIC and Article XIIID of the State Constitution would adversely affect its ability to pay Lease Payments and its other obligations payable from the General Fund, no assurance can be given regarding the ultimate interpretation or effect of Article XIIIC and Article XIIID of the State Constitution on the City’s finances. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.”
Abatement
In the event of loss or substantial interference in the use and possession by the City of all or any portion of the Leased Property caused by material damage, title defect, destruction to or condemnation of the Leased Property, Lease Payments will be subject to abatement. See “SECURITY FOR THE BONDS – Abatement” herein. In the event that such component of the Leased Property, if damaged or destroyed by an insured casualty, could not be replaced during the period of in which proceeds of rental interruption insurance, if any, will be available in lieu of 157
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Lease Payments, or in the event that casualty insurance proceeds or condemnation proceeds are insufficient to provide for complete repair or replacement of such component of the Leased Property or prepayment of the Bonds, there could be insufficient funds to make payments to Owners in full. It is not always possible to predict the circumstances under which abatement of rental may occur. In addition, there is no statute, case or other law specifying how such an abatement of rental should be measured. For example, it is not clear whether fair rental value is established as of commencement of the lease or at the time of the abatement. If the latter, it may be that the value of the Leased Property is substantially higher or lower than its value at the time of issuance of the Bonds. Abatement, therefore, could have an uncertain and material adverse effect on the security for and payment of the Bonds.

If damage, destruction, title defect or eminent domain proceedings with respect to the Leased Property results in abatement of the Lease Payments related to such Leased Property and if such abated Lease Payments, if any, together with moneys from rental interruption or use and occupancy insurance, if any, (in the event of any insured loss due to damage or destruction), and eminent domain proceeds, if any, are insufficient to make all payments of principal and interest with respect to the Bonds during the period that the Leased Property is being replaced, repaired or reconstructed, then all or a portion of such payments of principal and interest may not be made. Reduction in Lease Payments due to abatement as provided in the Lease does not constitute a default thereunder, and no remedy is available to the Bond Owners under the Lease or the Indenture for nonpayment under such circumstances. See APPENDIX C – “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Lease – Abatement of Rental.” Limited Recourse on Default; No Right to Repossess; No Acceleration of Lease Payments Failure by the City to make Lease Payments, or failure to pay Additional Rental Payments or to observe and perform any other terms, covenants or conditions contained in the Lease or in the Indenture for a period of 30 days after written notice of such failure and request that it be remedied has been given to the City by the Authority or the Trustee, constitute Events of Default under the Lease. Such events permit the Trustee or the Authority to pursue any and all remedies available. However, notwithstanding anything in the Lease or in the Indenture to the contrary, there is no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments that are not then in default to be immediately due and payable.

In the event of a default, there is no remedy of acceleration of the total Lease Payments due over the term of the Lease and neither the Authority nor the Trustee are empowered to sell the Leased Property. The City will be liable only for Lease Payments on an annual basis and, in the event of a default, the Authority or Trustee would be required to seek a separate judgment each year for that year’s defaulted Lease Payments. Any such suit for money damages would be subject to limitations on legal remedies against municipalities in California, including a limitation on enforcement of judgments against funds of a Fiscal Year other than the Fiscal Year in which the Lease Payments were due and against funds needed to serve the public welfare and interest. 158
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Additional Obligations of the City
General. The City is permitted to enter into other obligations which constitute additional charges against its revenues without the consent of Owners of the Bonds, and may in the future be subject to liabilities payable from the general fund (some of which are described below). To the extent that additional obligations are incurred by (or imposed upon) the City, the funds available to pay Lease Payments may be decreased.

The Lease Payments and other payments due under the Lease (including payment of costs of repair and maintenance of the Leased Property, taxes and other governmental charges levied against the Leased Property) are payable from funds lawfully available to the City. If the amounts that the City is obligated to pay in a fiscal year exceed the City’s revenues for such year, the City may choose to make some payments rather than making other payments, including Lease Payments and Additional Rental Payments, based on the perceived needs of the City. The same result could occur if, because of California Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues or is required to expend available revenues to preserve the public health, safety and welfare.

Litigation. The City is subject to litigation arising in the normal course of business, and no assurance can be provided regarding the financial impact of any future litigation against the City. See “LITIGATION.”
CalPERS Obligations. Many cities and other local agencies in the State have been faced with increased payments due to CalPERS in recent years. The City, like many other cities and local agencies in the State, is responsible for payments to CalPERS for its share of employee pension costs. Amounts owed to CalPERS for pension costs have increased in recent years and are expected to continue to increase, as CalPERS implements changes to its discount rate and other methodologies for calculating pension costs. See “THE CITY – Pension Plans” for additional information on CalPERS.

Default
Whenever any event of default referred to in the Lease happens and continues, the Trustee (as assignee of the Authority) is authorized under the terms of the Lease to exercise any and all remedies available under law or granted under the Lease. See “APPENDIX C – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” for a detailed description of available remedies in the case of a default under the Lease.

If a default occurs, there is no remedy of acceleration of the total Lease Payments due over the term of the Lease. The Trustee is not empowered to sell the Leased Property and use the proceeds of such sale to prepay the Bonds or pay debt service on the Bonds.

The City will be liable only for Lease Payments on an annual basis and, in the event of a default, the Trustee would be required to seek a separate judgment each year for that year’s defaulted Lease Payments. Any such suit for money damages would be subject to limitations on legal remedies against municipalities in the State, including a limitation on enforcement of judgments against funds of a fiscal year other than the fiscal year in which the Lease Payments were due and against funds needed to serve the public welfare and interest. 159
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Sales Taxes
Sales tax revenues are typically the biggest source of revenue to the City, behind property taxes. Sales tax revenues are based upon the gross receipts of retail sales of tangible goods and products by retailers with taxable transactions in the City, which could be impacted by a variety of factors.

For example, before final maturity of the Bonds, the City may enter into an economic recession. In times of economic recession, the gross receipts of retailers often decline, and such a decline would cause the sales tax revenues received by the City to also decline.

In addition, changes or amendments in the laws applicable to the City’s receipt of sales tax revenues, whether implemented by State legislative action or voter initiative, could have an adverse effect on sales tax revenues received by the City. For example, many categories of transactions are exempt from the statewide sales tax, and additional categories could be added in the future. Currently, most sales of food products for human consumption are exempt; this exemption, however, does not apply to liquor or to restaurant meals. The rate of sales tax levied on taxable transactions in the City or the fee charged by the CDTFA for administering the City’s sales tax could also be changed.

Property Taxes
Property taxes are a significant source of General Fund revenue to the City. Certain risks associated with property tax revenues follow.

Levy and Collection. The City does not have any independent power to levy and collect property taxes. Any reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the City’s property tax revenues, and accordingly, could have an adverse impact on the ability of the City to make Lease Payments. Likewise, delinquencies in the payment of property taxes could have an adverse effect on the City’s ability to pay principal of and interest on the Bonds when due.

Reduction in Inflationary Rate. Article XIIIA of the California Constitution provides that the full cash value base of real property used in determining assessed value may be adjusted from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data.

See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.” Such measure is computed on a calendar year basis. Because Article XIIIA limits inflationary assessed value adjustments to the lesser of the actual inflationary rate or 2%, there have been years in which the assessed values were adjusted by actual inflationary rates, which were less than 2%. Since Article XIIIA was approved, the annual adjustment for inflation has fallen below the 2% limitation a limited number of times.

The City is unable to predict if any adjustments to the full cash value base of real property within the City, whether an increase or a reduction, will be realized in the future.

Appeals of Assessed Values. There are two types of appeals of assessed values that could adversely impact property tax revenues:

Proposition 8 Appeals. Most of the appeals that might be filed in the City would be based on Section 51 of the Revenue and Taxation Code, which requires that for each lien 160
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date the value of real property must be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value.

Under California law, property owners may apply for a reduction of their property tax assessment by filing a written application with the appropriate county board of equalization or assessment appeals board. In most cases, the appeal is filed because the applicant believes that present market conditions (such as residential home prices) cause the property to be worth less than its current assessed value. These market-driven appeals are known as Proposition 8 appeals.

Any reduction in the assessment ultimately granted as a Proposition 8 appeal applies to the year for which application is made and during which the written application was filed. These reductions are often temporary and are adjusted back to their original values when market conditions improve. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA.

Base Year Appeals. A second type of assessment appeal is called a base year appeal, where the property owners challenge the original (basis) value of their property.

Appeals for reduction in the “base year” value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter. The base year is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date.

No assurance can be given that property tax appeals in the future will not significantly reduce the City’s property tax revenues.

Natural Calamities
General. Natural disasters, such as seismic events, flooding, landslides or wildfires, could affect economic activity in the City, and could have a negative impact on City finances. There can be no assurance that the occurrence of any natural calamity would not cause substantial interference to and costs for the City or impact the Leased Property.

Seismic. Like much of the State, the City is located in a seismically active area of California. If there were to be an occurrence of severe seismic activity in the area of the City, such an occurrence may adversely affect economic activity in the City, and could have a negative impact on City finances. The City could be at risk from strong ground motion and secondary effects related to a seismic event, including ground failure and seismically induced flooding caused by dam failures.

Droughts. California is subject to droughts from time-to-time. Although California is not currently in a drought, drought may reoccur in the future, and have a material adverse impact on the economic activity in the City, which in turn could have a material adverse impact on the City’s General Fund finances.

Wildfires and Fire Insurance. In the past, drought conditions in the State (see “– Natural Calamities – Droughts” above) have led to increased risk of wildfire. In particular, certain electrical 161
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operators in the State have seen their distribution/transmission lines cause billions of dollars in property damage and the loss of lives. In 2023, as in several prior years, for example, devastating wildfires burned in various communities in California, causing wide-spread damage. In 2025, communities in Los Angeles County, including Pacific Palisades, Malibu and Altadena, experienced widespread devastation from wildfires causing losses of life, thousands of burned homes, and billions of dollars in property damage. Although not located in a very high fire hazard severity zone, no assurance can be given that wildfires will not erupt in the City and negatively impact development of property in the City or willingness and ability to pay property taxes in the future.

On January 16, 2025, Governor Gavin Newsom issued Executive Order N-10-25 (the “Governor’s Order”) which canceled penalties, costs and interest on overdue property taxes ) within certain zip codes affected by the Palisades Fire and the Altadena Fire during calendar year 2025. This will likely cause a delay in the payment of taxes by certain property owners in any areas affected by the Governor’s Order. In the event of a major fire or other natural disaster affecting the City, a similar order affecting the City could impact the debt service payment for the Bonds.

Climate Change. City finances may be negatively impacted by climate change. Local impacts of climate change are not definitive, but parcels in the City could experience changes to local and regional weather patterns; increased risk of flooding from severe weather events including heavy rain, hail and thunderstorms; and water restrictions resulting from future drought conditions. See, for example, the discussions above regarding extreme heat, wildfires and droughts.

Pandemic Diseases
In recent years, the COVID-19 pandemic impacted governments, businesses and people in a manner having negative effects on global and local economies. In response to the pandemic, the City took actions to activate its emergency operations center, temporarily close all nonessential City services, introduced teleworking as and where appropriate, implemented daily screening of all employees, and abided by all state and federal guidelines and orders.

Although the COVID-19 pandemic is now officially over, the City cannot predict the impact that COVID-19 or another future pandemic or other health event may have on the City’s General Fund. There can be no assurances that the spread of future pandemics or other health events, such as declining business and travel activity, will not materially adversely impact the financial condition of the City and the City’s General Fund. In addition, the City may experience increased personnel costs and/or reduced revenues due to any such situation and the related impact on economic and other activity in and around the City.

Cyber Security
The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. As a recipient and provider of personal, private or other sensitive electronic information, the City is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks. The City has cyber safety protocols in place and maintains insurance coverage for loss resulting from cyber security incidents, 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 Bonds. To date, the City 162
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experienced one cyber security incident, which was discovered as a result of the City’s cyber safeguards and resolved by the City and its cyber insurer with no adverse consequences to the City.

The City is also reliant on other entities and service providers in connection with the administration of the Bonds, including without limitation the County tax collector for the levy and collection of property taxes, the Trustee, and the dissemination agent. No assurance can be given that the City and/or the other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.

Limitations on Remedies Available to Bond Owners
The ability of the City to comply with its covenants under the Lease may be adversely affected by actions and events outside of the control of the City, and may be adversely affected by actions taken (or not taken) by voters, property owners, taxpayers or payers of assessments, fees and charges. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS” above. Furthermore, any remedies available to the owners of the Bonds upon the occurrence of an event of default under the Lease or the Indenture are in many respects dependent upon judicial actions, which are often subject to discretion and delay and could prove both expensive and time consuming to obtain.

In addition to the limitations on Bondowner remedies contained in the Lease and the Indenture, the rights and obligations under the Bonds, the Lease and the Indenture may be subject to the following: the United States Bankruptcy Code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect; usual equity principles which may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the Federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the Owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation or modification of their rights.

The opinion to be delivered by Bond Counsel, concurrently with the issuance of the Bonds, will include a qualification that the rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture, the Lease and the Site Lease may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in accordance with principles of equity or otherwise in appropriate cases. See “APPENDIX E — FORM OF OPINION OF BOND COUNSEL.”
Secondary Market for Bonds
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that any Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being 163
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made will depend upon then-prevailing circumstances. Such prices could be substantially different from the original purchase price.

TAX MATTERS
Federal Tax Status. In the opinion of Jones Hall LLP, as Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. Interest on the Bonds may be subject to the corporate alternative minimum tax.

The opinions set forth in the preceding paragraph 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 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 Bonds.

Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public at which a 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 Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “bond premium” 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 Bond on the basis of a constant interest rate compounded 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 Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public.

Under the Tax Code, bond premium is amortized on an annual basis over the term of the Bond (said term being the shorter of the 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 Bond for purposes of determining taxable gain or loss upon disposition. The amount of bond premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not 164
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purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Bonds.

California Tax Status. In the further opinion of Bond Counsel, interest on the 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 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 also affect the market price for, or marketability of, the 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 Bonds, or as to the consequences of owning or receiving interest on the Bonds, as of any future date. Prospective purchasers of the 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 Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the 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 Bonds, the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds.

CERTAIN LEGAL MATTERS
Jones Hall LLP, as Bond Counsel, will render an opinion with respect to the validity of the Bonds, the form of which is set forth in “APPENDIX E – FORM OF OPINION OF BOND COUNSEL.” Certain legal matters will also be passed upon for the City and the Authority by Jones Hall LLP, as Disclosure Counsel. Certain legal matters will be passed upon for the City by the City Attorney, and for the Underwriter by its counsel, Stradling Yocca Carlson & Rauth LLP.

LITIGATION
Except as may otherwise be set forth in this Official Statement, to the best knowledge of the City, there is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending and notice of which has been served on and received by the City or, to the knowledge of the City, threatened against or affecting the City or the assets, properties or operations of the City which, if determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Lease, the Site Lease or the Indenture, or upon the financial condition, assets, properties or operations of the City, and the City is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, 165
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state, municipal or other governmental authority, which default might have consequences that would materially adversely affect the consummation of the transactions contemplated by the Lease, the Site Lease or the Indenture, or the financial conditions, assets, properties or operations of the City, including but not limited to the payment and performance of the City’s obligations under the Lease.

RATINGS
It is anticipated that S&P Global Ratings (“S&P”), a division of Standard & Poor’s Financial Services LLC will assign its municipal bond rate of “_______” on the [Insured Bonds/Bonds] in anticipation of the Insurer issuing its Policy on the [Insured Bonds/Bonds]. S&P has also assigned an underlying municipal bond rating of “____” to the Bonds.

These ratings reflect only the views of S&P, and an explanation of the significance of these ratings, and any outlook assigned to or associated with these ratings, should be obtained from S&P. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. The City has provided certain additional information and materials to the rating agency (some of which does not appear in this Official Statement). There is no assurance that these ratings will continue for any given period of time or that these ratings will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of the rating agency, circumstances so warrant. Any such downward revision or withdrawal of any rating may have an adverse effect on the market price or marketability of the Bonds.

CONTINUING DISCLOSURE
The City will covenant for the benefit of owners of the Bonds to provide certain financial information and operating data by not later than nine months after the end of the City’s fiscal year, or April 1, of each year (based on the City’s current fiscal year-end of June 30), commencing April 1, 2026, with the report for the 2024-25 fiscal year (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 with Securities Exchange Commission Rule 15c2-12(b)(5), as amended (the “Rule”). The specific nature of the information to be contained in the Annual Report or the notices of listed events by the City is set forth in “APPENDIX D – Form of Continuing Disclosure Certificate.” The City has not been subject to continuing disclosure obligations under the Rule during the past five years.

MUNICIPAL ADVISOR
The City and the Authority have retained Fieldman, Rolapp & Associates, Inc., of Irvine, California, as municipal advisor (the “Municipal Advisor”) in connection with the offering of the Bonds. All financial and other information presented in this Official Statement has been provided by the City and the Authority from their records, except for information expressly attributed to other sources. The Municipal Advisor takes no responsibility for the accuracy or completeness 166
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of the data provided by the City, Authority or others and has not undertaken to make an independent verification or does not assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. The fee of the Municipal Advisor is contingent upon the successful closing of the Bonds.

UNDERWRITING
Oppenheimer & Co. Inc., as underwriter (the “Underwriter”), has entered into a Bond Purchase Agreement with the Authority and the City under which it will purchase the Bonds at a purchase price of $________________, which is equal to the par amount of the Bonds, [plus a purchase premium][minus a purchase discount] of $__________, less an Underwriter’s discount of $____________.

The Underwriter will be obligated to take and pay for all of the Bonds if any are taken. The Underwriter intends to offer the Bonds to the public at the offering prices set forth on the inside cover page of this Official Statement. After the initial public offering, the public offering price may be varied from time to time by the Underwriter.

CONTINGENT FEES
In connection with the issuance of the Bonds, fees payable to the following professionals involved in the offering are contingent upon the issuance and delivery of the Bonds: Jones Hall LLP, as Bond Counsel and Disclosure Counsel; Fieldman, Rolapp & Associates, Inc., as municipal advisor; Stradling Yocca Carlson & Rauth LLP, as counsel to the Underwriter; and U.S.

Bank Trust Company, National Association, as Trustee.

EXECUTION
The execution of this Official Statement and its delivery have been authorized by the Board of the Authority and the City Council of the City.

KERMAN PUBLIC FINANCING AUTHORITY
By:

Executive Director

CITY OF KERMAN
By:

City Manager
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APPENDIX A

AUDITED FINANCIAL STATEMENTS
FOR FISCAL YEAR ENDING JUNE 30, 2024
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APPENDIX B

GENERAL INFORMATION ABOUT THE CITY OF KERMAN

AND THE COUNTY OF FRESNO
The following information concerning the County of Fresno (the “County”) and the City of Kerman (the “City”) is included only for the purpose of supplying general information regarding the area. The Bonds are not a debt of the County, the City, the State of California (the “State”) or any of its political subdivisions, and neither the County, the City, the State nor any of its political subdivisions is liable therefor. The City and the Underwriter take no responsibility for the accuracy or completeness of such information.

General
The City. The City, incorporated in 1946, is located 16 miles west of the City of Fresno in the San Joaquin Valley. It is one of the fasting growing cities in California, and while predominately agricultural, there has been a shift on economic development in recent years, leading to industrial expansions.

The County. The County is California’s fifth-largest county as measured by area, covering approximately 6,000 square miles. It is located in the geographic center of the State and is the nation’s leading crop-producing county.

Within the County, there are roughly four different agricultural areas. East and south of the City of Fresno, grapes and other fruit and nut crops are grown, harvested and processed for shipment; west of the City of Fresno is a melon-producing area, which lies within the Mendota Unified School District. Also, to the west, large crops of cotton, alfalfa, barley, rice, wheat and vegetables are produced. In the southwest are oil wells, extensive cattle and sheep ranches.

The County is the trade, financial and commercial center for many surrounding counties in the Central Valley and is a hub of transportation facilities connecting the Central Valley to all parts of the Country. Two major north-south highways, State Highway 99 and Interstate Highway 5, pass through the County. State Routes 180 and 198 run east and west. Railroads, major airlines, bus lines and numerous trucking companies also serve the area. [Remainder of page intentionally left blank]
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Population
The most recent estimate of the County’s population at January 1, 2025 was 1,037,053 persons according to the State Department of Finance. The City, with an estimated population of 17,535 persons at January 1, 2025. The table below shows population estimates for the cities in the County for the last five years, as of January 1.

FRESNO COUNTY
Population Estimates for Cities Within the County
Calendar Years 2021 through 2025
2021 2022 2023 2024 2025
Clovis 121,581 123,801 125,000 127,674 129,121
Coalinga 17,519 17,328 17,259 17,252 17,608
Firebaugh 8,145 8,434 8,524 8,510 8,714
Fowler 6,837 6,952 7,193 7,436 7,667
Fresno 542,445 544,097 545,585 552,751 557,032
Huron 6,180 6,187 6,153 6,421 6,932
Kerman 16,034 16,646 17,014 17,403 17,535
Kingsburg 12,527 12,496 12,953 13,167 13,285
Mendota 12,496 12,505 12,493 12,598 12,710
Orange Cove 9,588 9,559 9,504 9,622 9,717
Parlier 14,535 14,504 14,459 14,535 14,649
Reedley 24,906 25,014 25,494 25,950 26,603
Sanger 26,647 26,439 26,421 26,652 27,037
San Joaquin 3,688 3,656 3,636 3,653 3,654
Selma 24,674 24,513 24,453 24,487 24,585
Balance of County 160,884 160,219 159,492 160,009 160,204 Total 1,008,686 1,012,350 1,015,633 1,028,120 1,037,053 Source: State Department of Finance estimates (as of January 1). [Remainder of page intentionally left blank]
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Industry and Employment
The unemployment rate in the Fresno MSA was 7.8 percent in May 2025, down from a revised 8.4 percent in April 2025, and above the year-ago estimate of 7.3 percent. This compares with an unadjusted unemployment rate of 4.9 percent for California and 4.0 percent for the nation during the same period. The unemployment rate was 7.9 percent in Fresno County, and 7.2 percent in Madera County.

The table below provides information about employment by industry type for Fresno County for calendar years 2020 through 2024.

FRESNO COUNTY
Civilian Labor Force, Employment and
Unemployment, Unemployment by Industry
(Annual Averages)
(March 2024 Benchmark)
2020 2021 2022 2023 2024
Civilian Labor Force (1) 504,100 503,000 511,300 527,400 538,700 Employment 445,500 456,700 477,800 488,200 496,200
Unemployment 58,700 46,300 33,400 39,100 42,500
Unemployment Rate 11.6% 9.2% 6.5% 7.4% 7.9%
Wage and Salary Employment: (2)
Agriculture 51,800 52,500 53,000 54,200 53,600
Mining and Logging 300 400 400 400 400
Construction 20,700 22,300 24,400 24,800 25,200
Manufacturing 29,100 29,400 30,300 30,200 30,300
Wholesale Trade 15,500 15,900 17,100 17,300 17,700
Retail Trade 40,800 43,300 44,100 44,400 43,600
Trans., Warehousing, Utilities 19,200 20,500 21,700 21,200 21,600 Information 3,200 3,200 3,500 3,200 2,800
Financial and Insurance 9,200 8,600 8,200 7,500 7,100
Professional and Business Services 34,900 35,000 36,900 36,200 36,500 Educational and Health Services 80,500 83,900 88,100 92,800 98,900 Leisure and Hospitality 32,100 36,600 41,100 41,900 42,300 Other Services 12,100 13,100 14,100 15,700 16,000
Federal Government 11,200 10,400 9,900 9,700 9,700
State Government 15,100 14,600 14,900 15,200 15,700
Local Government 57,000 56,900 60,400 63,100 66,300
Total All Industries (3) 437,800 451,600 473,500 483,300 493,100 (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(3) Columns may not sum to totals due to rounding.

Source: State of California Employment Development Department. 171
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Largest Employers
The following table shows the major employers in the County as of July 2025, in alphabetical order without regard to the number of employees.

FRESNO COUNTY
Major Employers
(Listed Alphabetically)
Employer Name Location Industry
Air National Guard Fresno Veterans' & Military Organizations Amazon Fulfillment Ctr Fresno Mail Order Fulfillment Service California State Univ Fresno Fresno Schools-Universities & Colleges Academic Cargill Fresno Meat Packers (mfrs)
City of Fresno Fresno Theatres-Live
Community Regional Medical Ctr Fresno Hospitals
Foster Farms Fresno Poultry Farms
Fresno County Sheriff Fresno Police Departments
Fresno Police Dept Fresno Police Departments
Fresno Police Dept-Central Fresno Police Departments
Fresno Police-Mgmt Support Fresno Police Departments
Fresno VA Hospital Medical Ctr Fresno Hospitals
Kaiser Permanente Fresno Med Fresno Hospitals
Lion Dehydrators Selma Dehydrating Service (mfrs)
Pelco Inc Fresno Security Control Equip & Systems-Mfrs
Phebe Conley Art Gallery Fresno Art Galleries & Dealers Pitman Family Farms Sanger Farms
Pleasant Valley State Prison Coalinga Government Offices-State St Agnes Medical Ctr Fresno Medical Centers
St Agnes Medical Ctr Fresno Hospitals
Stamoules Produce Co Mendota Fruits & Vegetables & Produce-Retail State Center Community College Fresno Junior-Community College-Tech Institutes Table Mountain Casino Friant Casinos
Taylor Communications Fresno Communications
Teaching Fellows Fresno Employment Service-Govt Co Fraternal Source: State of California Employment Development Department, extracted from The America's Labor Market Information System (ALMIS) Employer Database, 2025 1st Edition.
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Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance).

Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.” The following table summarizes the total effective buying income for the City, the County, the State, and the United States for the period 2021 through 2025.

CITY OF KERMAN, FRESNO COUNTY,

STATE OF CALIFORNIA AND UNITED STATES

EFFECTIVE BUYING INCOME
As of January 1, 2021 through 2025
Year Area
Total Effective
Buying Income
(000’s Omitted)
Median Household
Effective
Buying Income
2021 City of Kerman $240,713 $45,813
Fresno County 20,194,328 48,681
California 1,290,894,604 67,956
United States 9,809,944,764 56,790
2022 City of Kerman $288,736 $53,836
Fresno County 23,555,796 57,777
California 1,452,426,153 77,058
United States 11,208,582,541 64,448
2023 City of Kerman $317,484 $59,322
Fresno County 24,597,995 58,117
California 1,461,799,662 77,175
United States 11,454,846,397 65,326
2024 City of Kerman $315,730 $56,523
Fresno County 26,806,122 63,348
California 1,510,708,521 80,973
United States 11,987,185,826 67,876
2025 City of Kerman $301,158 $52,321
Fresno County 27,508,071 64,590
California 1,557,429,767 82,725
United States 12,525,577,707 69,687
Source: Claritas, LLC.
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Commercial Activity
A summary of historic taxable sales within the City and the County during the past five years in which data is available is shown in the following tables.

Total taxable sales during calendar year 2024 in the City were reported to be $12,414,531,955, a 4.00% decrease from the total taxable sales of $12,932,172,866 reported during calendar year 2023.

CITY OF KERMAN
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions Calendar Years 2020 through 2024 (Dollars in Thousands) Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2020 8,373 $6,264,108 13,770 $8,312,385
2021 8,056 10,320,892 13,398 12,810,755
2022 8,264 10,611,042 13,837 13,379,875
2023 7,941 9,999,468 13,415 12,932,173
2024 8,003 9,602,489 13,568 12,414,532
Source: State Department of Tax and Fee Administration.

Total taxable sales reported during calendar year 2024 in the County were $22,935,579,795, a 3.17% decrease from the total taxable sales of $23,686,220,050 reported during calendar year 2023.

COUNTY OF FRESNO
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions Calendar Years 2020 through 2024 (Dollars in Thousands) Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2020 14,811 $11,671,337 24,307 $17,078,806
2021 14,162 16,672,884 23,521 22,960,963
2022 14,654 17,230,232 24,512 24,307,053
2023 14,316 16,410,906 23,970 23,686,220
2024 14,520 15,871,353 24,413 22,935,580
Source: State Department of Tax and Fee Administration. 174
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APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF

PRINCIPAL LEGAL DOCUMENTS
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APPENDIX D

FORM OF CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (this “Disclosure Certificate”) is executed and delivered by the City of Kerman (the “City”) in connection with the issuance by the Authority of the bonds captioned above (the “Bonds”). The Bonds are being issued under an Indenture of Trust dated as of [October 1], 2025 (the “Indenture”), by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The City hereby covenants and agrees as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2- 12(b)(5), as amended.

Section 2. Definitions. In addition to the definitions set forth above and in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Annual Report Date” means nine months after the end of the City’s fiscal year, or April 1, of each year (based on the City’s current fiscal year-end of June 30). “Dissemination Agent” means ____________, 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. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. “Official Statement” means the final official statement, executed by the City and the Authority in connection with the issuance of the Bonds. “Participating Underwriter” means Oppenheimer & Co. Inc., the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. “Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

Section 3. Provision of Annual Reports.
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(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing April 1, 2026, with the report for Fiscal Year 2024-25, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). The City shall provide a written certificate 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) in a timely manner to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A. (c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.

Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following:
(a) Audited Financial Statements of the City prepared in accordance with Generally Accepted Accounting Principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) To the extent not contained in the audited financial statements filed pursuant to the preceding clause (a), the Annual Report shall contain information showing:
(i) the principal amount of Bonds outstanding and the balance in each fund under the Indenture, as of June 30 preceding the Annual Report; and 177
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(ii) updates to the substance of the information contained in the following tables in the Official Statement: [Review/Confirm] (1) Table 1 – Statements of Revenues, Expenditures and
Changes in General Fund Balance
(2) Table 2 – General Fund Balance Sheets
(3) Table 6 – Assessed Valuations of All Taxable Property (4) Table 7 – Principal Property Taxpayers (top 10 only) (c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
(d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.

Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the 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 with respect to the tax status of the security, or other material events affecting the tax 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 or other obligated person.
(13) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material.
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(14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.
(15) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material (for definition of “financial obligation,” see clause (f)).
(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties (for definition of “financial obligation,” see clause (f)). (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 subsection (a)(8) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the 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” and that subparagraph (a)(6) also contains the qualifier “material” with respect to certain notices, determinations or other events affecting the tax status of the Bonds.

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 it determines the event’s occurrence is material for purposes of U.S. federal securities law. Whenever the City obtains knowledge of the occurrence of any of these Listed Events, the City will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the City will cause a notice to be filed as set forth in paragraph (b) above. (d) For the purposes of the event identified in (a)(12) above, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. 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 obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.
(e) For purposes of this Disclosure 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 governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City. 179
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(f) 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 the 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 in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a 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 such Agent, with or without appointing a successor Dissemination Agent.

Any Dissemination Agent may resign by providing 30 days’ written notice to the City.

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after 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 Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.

If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles 180
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on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.

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 set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a 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. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.

Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) 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 it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond owners or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. (b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.

Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.
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Section 15. Governing Law. This Disclosure Certificate shall be governed by the laws of the state of California.

Date: ________________, 2025

CITY OF KERMAN
By
Name:_____________
Title:_____________
ACCEPTED AND AGREED:
_______________________,
As Dissemination Agent
By
Authorized Representative
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Section 6, Item A.

APPENDIX E

FORM OF OPINION OF BOND COUNSEL
[Closing Date]
Board of Directors
Kerman Public Financing Authority
850 S Madera Avenue
Kerman, California 93630
OPINION: $____________Kerman Public Financing Authority 2025 Lease Revenue Bonds
Ladies and Gentlemen:

We have acted as bond counsel to the Kerman Public Financing Authority (the “Authority”) in connection with the issuance by the Authority of the above-referenced bonds (the “Bonds”). In such capacity, we have examined such law and such certified proceedings, certifications, and other documents as we have deemed necessary to render this opinion.

The Bonds are issued pursuant to (i) Article 4 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, commencing with Section 6584 of said Code (the “Bond Law”), and (ii) the Indenture of Trust (the “Indenture”), dated as of [October 1], 2025, by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), which were approved by a resolution adopted by the Board of Directors of the Authority on [August 27], 2025 (the “Authority Resolution”). Under the Indenture, the Authority has pledged certain revenues (the “Revenues”) for the payment of principal and interest on the Bonds when due, including primarily lease payments to be made by the City of Kerman (the “City”) pursuant to the Lease Agreement, dated as of [October 1], 2025, between the City and the Authority (the “Lease”), which was approved by a resolution adopted by the City Council of the City on [August 27], 2025 (the “City Resolution”).

Regarding questions of fact material to our opinion, we have relied on representations of the Authority contained in the Indenture and the City contained in the Lease, and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.

Based on the foregoing, we are of the opinion that, under existing law:

1. The Authority is a duly created and validly existing joint exercise of powers authority with the power to adopt the Authority Resolution, to enter into the Indenture, and to perform the agreements on its part contained therein, and to issue the Bonds.

2. The City is a general law city and municipal corporation duly organized and existing under the Constitution and laws of the State of California, with the power to adopt the City Resolution, to enter into the Lease, and to perform the agreements on its part contained therein. 183
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3. The Indenture has been duly authorized, executed and delivered by the Authority, and constitutes a valid and binding obligation of the Authority, enforceable against the Authority.

4. The Lease has been duly authorized, executed and delivered by the Authority and the City, and constitutes a valid and binding obligation of the Authority and the City, enforceable against the Authority and the City.

5. The Indenture creates a valid lien on the Revenues and other funds pledged by the Indenture for the security of the Bonds.

6. The Bonds have been duly authorized and executed by the Authority, and are valid and binding limited obligations of the Authority, payable solely from the Revenues and other funds provided therefor in the Indenture.

7. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax.

The opinions set forth in the preceding sentence are subject to the condition that the Authority and the City comply with all requirements of the Internal Revenue Code of 1986, as amended, relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The Authority and the City have 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 Bonds.

8. Interest on the Bonds is exempt from personal income taxation imposed by the State of California.

We express no opinion regarding any other tax consequences arising with respect to the ownership, sale or disposition of, or the amount, accrual or receipt of interest on, the Bonds.

The rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture are limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally, and by equitable principles, whether considered at law or in equity.

This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. Our engagement with respect to this matter has terminated as of the date hereof.

Respectfully submitted,
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APPENDIX F

DTC AND THE BOOK-ENTRY ONLY SYSTEM
The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the 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 Bonds (the “Issuer”) nor the trustee appointed with respect to the Bonds (the “Agent”) take any responsibility for the information contained in this Appendix.

No assurances can be given that 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 Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the 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 securities (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with 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 New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates.

Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding 185
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company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of ___. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 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 Securities 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 effect 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 the 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 of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial 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 to 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 interest 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 186
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rights to those Direct Participants to whose accounts Securities are credited on the record 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 authorized 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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STAFF REPORT
TO: Mayor and City Council
MEETING DATE: August 27, 2025
PRESENTER: Josefina Alvarez, Finance Director
SUBJECT: Consideration of a Resolution of Board of Directors of the City of Kerman Public Financing Authority authorizing the issuance and sale of 2025 Lease Revenue Bonds (JA) RECOMMENDATION: That the Board, by motion, adopt resolution approving, authorizing and directing the issuance and sale of lease revenue bonds in an amount not to exceed $25,000,000 to assist the City of Kerman in financing capital improvements, and approving related documents and actions for issuance and sale of 2025 Lease Revenue Bonds.

EXECUTIVE SUMMARY:

Approval of the attached Resolution Attachment ‘A’ enables the City and the Kerman Public Financing Authority to issue the 2025 Lease Revenue Bonds (the “Bonds”) to finance public capital improvements, anticipated to consist of a new multi-generational community resiliency center and improvements to the City’s new police station (the “Projects”).

The City has identified several priority capital projects that would be possible with funding from the Measure M program including an Animal Shelter, Hart Ranch Park, Multi-Generational / Senior Center, new Police Station and a Downtown Revitalization Program.

To date the animal shelter has been completed, Hart ranch Park is under construction with an estimated completion date of Summer 2026, and a significant phase of Downtown Revitalization and Beautification was completed in early 2025.

To advance the Multi-Generational / Senior Center, the City was successfully awarded a $7.25M grant from the CA Dept. of Agriculture toward what is estimated to be a $15 million dollar project.

Subsequent pursuit of additional grants to finance this project have been unsuccessful. The bond issuance will provide the remaining funds needed to undertake this project.

Funding from the proposed bond issuance of approximately $12M will be used to fund the design and remodel of the building and grounds.
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Section 6, Item B.

DISCUSSON:

Financing Structure and Security -
Under a lease/leaseback structure detailed below, the Bonds are payable from semi-annual lease payments the City makes to the Authority. These payments, assigned to the Trustee under a sublease for the City properties listed below (the “Leased Properties”), are a General Fund obligation of the City and must be appropriated annually by the City Council. They are not secured by a lien or pledge on any specific City revenues or by a lien on the leased properties.

Initial Leased Properties:

Additional details on the legal and disclosure documents are outlined below.

Bond Sizing (Not-to-Exceed Amounts):

Good Faith Estimates:

The required good faith estimates discussed below, with respect to the Bonds, are provided in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided by Fieldman, Rolapp & Associates, Inc., the City’s Municipal Advisor, in consultation with the Underwriter and are based on assumptions of the estimated principal amount of the Bonds and on market interest rates prevailing at the time the estimate is prepared. The estimates reflect the combined totals for the Bonds, as follows:

Detailed estimates of these fees for each party are below:
• Underwriting: $149,663 (0.75 % of par)
• Municipal Bond Insurance: $139,156
• Reserve Fund Surety: $32,783
• City Staff Time: $25,000
• City Attorney: $5,000
• Bond Counsel: $77,000
• Disclosure Counsel: $50,000
• Municipal Advisor: $38,500
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• Trustee & Trustee’s Counsel: $4,200
• Title Insurance: $20,130
• Rating Agency (S&P): $28,000
• Printing: $2,000
• Joint Powers Authority: $10,000
• Contingency: $15,389
These fees are all paid for with bond proceeds.

1. The actual date of the sale of the Bonds being different than the date assumed for purposes of such estimates;

2. The actual principal amount of the Bonds sold being different from the Estimated Principal Amount;

3. The actual amortization of the Bonds being different than the 30-year amortization assumed for purposes of such estimates;

4. The actual market interest rates at the time of sale of the Bonds being different than those estimated for purposes of such estimates;

5. Other market conditions; or

6. Alterations in the City’s financing plan, delays in the financing, additional legal work (including federal tax law due diligence), or a combination of such factors.

The forms of the base legal documents to be approved by the City Council and the Kerman Public Financing Authority are:
 Indenture of Trust – The Indenture is a contract between the Authority and U.S. Bank National Association, acting as Trustee. The Indenture specifies the Trustee, dated date, maturity date or dates, interest rate or rates, interest payment dates, denominations, forms, registration privileges, manner of execution, place or places of payment, terms of redemption and other terms of the Bonds.
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 Site Lease – The Site Lease is a contract between the Authority and the City, under which the City leases the selected leased property to the Authority in exchange for a lump sum amount equal to the principal amount of the Bonds consideration of the Authority’s agreement to provide financing for the Projects.
 Lease Agreement – The Lease Agreement is a contract between the Authority and the City, under which Authority leases back the selected leased property to the City in consideration of the payment by the City of semiannual installment payments which are sufficient to provide revenues with which to pay principal of, and interest on, the Bonds when due.
 Bond Purchase Agreement – The Bond Purchase Agreement is a contract between the Authority, the City and Oppenheimer & Co. Inc., as underwriter (the “Underwriter”), whereby the Authority agrees to sell the Bonds to the Underwriter and the Underwriter agrees to buy the Bonds from the Authority for resale to the public.  Preliminary Official Statement – The Preliminary Official Statement is the offering statement used by the Underwriter to inform the marketplace of the terms of the Bonds and contains all relevant information for the investor to decide whether to purchase the Bonds.

FISCAL IMPACT:

Like the outstanding 2020 Bonds, debt service payment on the Bonds is a liability of the General Fund.

Table on Next Page
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Section 6, Item B.

A. City Resolution revised to Authority Resolution
B. Indenture included
C. Site Lease
D. Lease Agreement
E. Assignment Agreement included
F. Bond Purchase Agreement
G. Preliminary Official Statement (including Continuing Disclosure Agreement) 193
Section 6, Item B.

Attachment ‘A’
RESOLUTION NO. PFA 25-___

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE KERMAN PUBLIC FINANCING

AUTHORITY APPROVING, AUTHORIZING AND DIRECTING THE ISSUANCE AND SALE OF LEASE REVENUE BONDS IN AN AMOUNT NOT TO EXCEED $25,000,000 TO ASSIST THE CITY OF

KERMAN IN FINANCING CAPITAL IMPROVEMENTS, AND APPROVING RELATED DOCUMENTS

AND ACTIONS
WHEREAS, the City of Kerman (the “City”) desires to finance public capital improvements, anticipated to consist of a new multi-generational community resiliency center and improvements to the City’s new police station (collectively, the “Project”), to be financed through the issuance and sale by the Kerman Public Financing Authority (the “Authority”) of its 2025 Lease Revenue Bonds (the “Bonds”); and
WHEREAS, to finance the Project, the City has proposed to lease certain real property to the Authority (the “Leased Property”), and to lease back the Leased Property from the Authority in consideration of semi-annual lease payments securing the repayment of the Bonds; and WHEREAS, the City Council has duly held a public hearing regarding the issuance by the Authority of the Bonds to finance a portion of the Project in accordance with the requirements of the Marks-Roos Local Bond Pooling Act of 1985, being Article 4 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, commencing with Section 6584 of said Code (the “Bond Law”), the notice of which has been given in accordance with the requirements of Section 6586.5 of the Bond Law; and
WHEREAS, the information required to be obtained and disclosed by the Board related to the financing under Government Code Section 5852.1 is set forth in the staff report accompanying this resolution; and
WHEREAS, the Board has duly considered such transactions and wishes at this time to approve all proceedings and documents to which the Authority is a party relating to the proposed financing.

NOW, THEREFORE, IT IS HEREBY RESOLVED by the Board of Directors of the Kerman Public Financing Authority as follows:

Section 1. Approval of Financing Plan; Authorization of Bonds. The Board hereby authorizes and approves the issuance of the Bonds under the Bond Law in the principal amount of not to exceed $25,000,000, for the purpose of providing financing for the Project. The Board hereby confirms that the meeting at which this Resolution is being adopted is a regular meeting of the Board.
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2 Section 2. Approval of Financing Agreements. The Board hereby approves each of the following agreements required to implement the financing plan described above, in substantially the respective forms on file with the Secretary together with any changes therein or additions thereto deemed advisable by the Chair, Executive Director or the Chief Financial Officer (each, an “Authorized Officer”):
 Site Lease between the City as lessor and the Authority as lessee, under which the City leases the Leased Property to the Authority in consideration of the payment of an upfront site lease payment, which will be applied by the City to finance the Project and pay costs of issuance.
 Lease Agreement between the Authority as lessor and the City as lessee, under which the Authority leases the Leased Property back to the City and the City agrees to pay semi-annual lease payments which are sufficient to provide for payment of principal of and interest on the Bonds when due.
 Assignment Agreement between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), whereby the Authority assigns certain of its rights under the Lease Agreement to the Trustee for the benefit of the Bond owners.
 Indenture of Trust between the Authority and the Trustee, prescribing the terms and conditions upon which the Bonds will be issued.

Each Authorized Officer is hereby separately authorized and directed for and in the name and on behalf of the Authority to execute, and the Secretary is hereby authorized and directed, if necessary, to attest the final form of each of the foregoing agreements, and the execution thereof by an Authorized Officer shall be conclusive evidence of the approval of any such changes or additions.

Section 3. Sale of Bonds. The Board hereby authorizes the negotiated sale of the Bonds to Oppenheimer & Co. Inc. as underwriter (the “Underwriter”) under the Bond Purchase Contract in substantially the form on file with the Secretary together with any changes therein or additions thereto deemed advisable by an Authorized Officer, and the execution thereof shall be conclusive evidence of the approval of any such changes or additions. The Board hereby delegates to an Authorized Officer the authority to accept an offer from the Underwriter to purchase the Bonds and to execute the Bond Purchase Contract for and in the name and on behalf of the Authority; provided, the amount of Underwriter’s discount shall not exceed 0.75% of the par amount of the Bonds and the true interest rate on the Bonds may not exceed 5.75%.
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3 Section 4. Authorization to Obtain Municipal Bond Insurance and Reserve Fund Insurance.

The Board hereby directs the Authorized Officers to determine whether it is feasible and in the best interests of the Authority to obtain municipal bond insurance and/or reserve fund insurance for the Bonds. If it is determined to be in the best interests of the Authority to obtain such insurance, each Authorized Officer is authorized to accept a commitment from a municipal bond insurer to issue such insurance, in the name and on behalf of the Authority.

Section 5. Official Statement. The Board hereby approves and deems nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, the Preliminary Official Statement describing the Bonds in the form on file with the Secretary, together with such modifications thereof as may be approved by an Authorized Officer. An Authorized Officer is hereby authorized and directed to (a) execute and deliver to the Underwriter a certificate deeming the Preliminary Official Statement to be final, as of its date, within the meaning of such Rule, (b) approve any changes in or additions to cause a Final Official Statement to be prepared, and (c) execute the Final Official Statement for and in the name and on behalf of the Authority. The Board hereby authorizes the distribution of the Preliminary Official Statement and the Final Official Statement.

Section 6. Official Actions. The Chair, the Executive Director, the Chief Financial Officer, the Secretary and all other officers of the Authority are each authorized and directed in the name and on behalf of the Authority to make any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they or any of them might deem necessary or appropriate in order to consummate any of the transactions contemplated by the agreements and documents approved under this Resolution, including executing any commitments or other documents necessary to obtain bond insurance and/or a reserve surety policy for the Bonds (as described above) and to coordinate the release or substitution of real property previously leased by the City and Authority to accomplish the purposes of the financing. Whenever in this Resolution any officer of the Authority is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of any person serving in such role in an interim capacity or by any officer or person designated by such officer to act on his or her behalf.

Section 7. Effective Date. This Resolution shall take effect immediately upon its passage and adoption.
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Section 6, Item B.
4 The foregoing resolution was adopted by the Board of Directors of the Kerman Public Financing Authority at a regular meeting held on the 27th day of August, 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

The foregoing Resolution is hereby approved.

Maria Pacheco
Chair
ATTEST:

Josie Camacho
Secretary
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Section 6, Item B.

Jones Hall Draft of August 19, 2025
Attachment ‘B’

INDENTURE OF TRUST
Dated as of October 1, 2025
between

KERMAN PUBLIC FINANCING AUTHORITY
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
Authorizing the Issuance of
$______
Kerman Public Financing Authority
2025 Lease Revenue Bonds
198
Section 6, Item B.
-iTABLE OF CONTENTS
ARTICLE I:

DEFINITIONS; RULES OF CONSTRUCTION:

SECTION 1.01. Definitions ...........................................................................................................2 SECTION 1.02. Authorization.......................................................................................................2 SECTION 1.03. Interpretation.......................................................................................................2 ARTICLE II:

THE BONDS:

SECTION 2.01. Authorization of Bonds ........................................................................................3 SECTION 2.02. Terms of the Bonds.............................................................................................3 SECTION 2.03. Transfer and Exchange of Bonds........................................................................4 SECTION 2.04. Book-Entry System .............................................................................................5 SECTION 2.05. Registration Books..............................................................................................7 SECTION 2.06. Form and Execution of Bonds.............................................................................7 SECTION 2.07. Bonds Mutilated, Lost, Destroyed or Stolen ........................................................7 ARTICLE III:

ISSUANCE OF BONDS; APPLICATION OF PROCEEDS:

SECTION 3.01. Issuance of the Bonds.........................................................................................8 SECTION 3.02. Application of Proceeds of Sale of Bonds............................................................8 SECTION 3.03. Establishment and Application of Costs of Issuance Fund ..................................8 SECTION 3.04. Establishment and Application of Project Fund. ...................................................9 SECTION 3.05. Validity of Bonds .................................................................................................9 ARTICLE IV:

REDEMPTION OF BONDS:

SECTION 4.01. Terms of Redemption..........................................................................................9 SECTION 4.02. Selection of Bonds for Redemption...................................................................10 SECTION 4.03. Notice of Redemption; Rescission.....................................................................10 SECTION 4.04. Partial Redemption of Bonds.............................................................................11 SECTION 4.05. Effect of Redemption ........................................................................................11 ARTICLE V:

REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF
PRINCIPAL AND INTEREST:

SECTION 5.01. Security for the Bonds; Bond Fund....................................................................11 SECTION 5.02. Allocation of Revenues .....................................................................................12 SECTION 5.03. Application of Interest Account..........................................................................13 SECTION 5.04. Application of Principal Account ........................................................................13 SECTION 5.05. Application of Redemption Fund .......................................................................13 SECTION 5.06. Insurance and Condemnation Fund ..................................................................13 SECTION 5.07. Investments ......................................................................................................14 SECTION 5.08. Valuation and Disposition of Investments..........................................................15 SECTION 5.09. Reserve Fund ...................................................................................................15 ARTICLE VI:

COVENANTS OF THE AUTHORITY
SECTION 6.01. Punctual Payment.............................................................................................17 SECTION 6.02. Extension of Payment of Bonds ........................................................................17 SECTION 6.03. Against Encumbrances .....................................................................................17 SECTION 6.04. Power to Issue Bonds and Make Pledge and Assignment ................................17 SECTION 6.05. Accounting Records..........................................................................................17 SECTION 6.06. Limitation on Additional Obligations ..................................................................18 199
Section 6, Item B.
-iiSECTION 6.07. Tax Covenants..................................................................................................18 SECTION 6.08. Enforcement of Lease.......................................................................................18 SECTION 6.09. Waiver of Laws .................................................................................................19 SECTION 6.10. Maintenance of Existence .................................................................................19 SECTION 6.11. Further Assurances...........................................................................................19 ARTICLE VII:

EVENTS OF DEFAULT AND REMEDIES:

SECTION 7.01. Events of Default...............................................................................................19 SECTION 7.02. Remedies Upon Event of Default ......................................................................20 SECTION 7.03. Application of Revenues and Other Funds After Default ...................................21 SECTION 7.04. Trustee to Represent Bond Owners..................................................................21 SECTION 7.05. Limitation on Bond Owners’ Right to Sue..........................................................22 SECTION 7.06. Absolute Obligation of Board.............................................................................22 SECTION 7.07. Termination of Proceedings ..............................................................................22 SECTION 7.08. Remedies Not Exclusive ...................................................................................22 SECTION 7.09. No Waiver of Default.........................................................................................23 SECTION 7.10. Notice to the Bond Owners of Default ...............................................................23 ARTICLE VIII:

THE TRUSTEE:

SECTION 8.01. Appointment of Trustee.....................................................................................23 SECTION 8.02. Acceptance of Trusts; Removal and Resignation of Trustee .............................23 SECTION 8.03. Merger or Consolidation....................................................................................25 SECTION 8.04. Liability of Trustee.............................................................................................25 SECTION 8.05. Right to Rely on Documents..............................................................................27 SECTION 8.06. Preservation and Inspection of Documents .......................................................29 SECTION 8.07. Compensation and Indemnification ...................................................................29 ARTICLE IX:

MODIFICATION OR AMENDMENT HEREOF:

SECTION 9.01. Amendments Permitted.....................................................................................30 SECTION 9.02. Effect of Supplemental Indenture ......................................................................31 SECTION 9.03. Endorsement of Bonds; Preparation of New Bonds ..........................................31 SECTION 9.04. Amendment of Particular Bonds........................................................................32 ARTICLE X:

DEFEASANCE:

SECTION 10.01. Discharge of Indenture....................................................................................32 SECTION 10.02. Discharge of Liability on Bonds .......................................................................32 SECTION 10.03. Deposit of Money or Securities with Trustee ...................................................33 SECTION 10.04. Unclaimed Funds ............................................................................................33 ARTICLE XI:

MISCELLANEOUS:

SECTION 11.01. Liability of Authority Limited to Revenues........................................................34 SECTION 11.02. Limitation of Rights to Parties and Bond Owners ............................................34 SECTION 11.03. Funds and Accounts .......................................................................................34 SECTION 11.04. Waiver of Notice; Requirement of Mailed Notice .............................................34 SECTION 11.05. Destruction of Bonds.......................................................................................34 SECTION 11.06. Severability of Invalid Provisions .....................................................................35 SECTION 11.07. Notices............................................................................................................35 SECTION 11.08. Evidence of Rights of Bond Owners................................................................35 SECTION 11.09. Disqualified Bonds ..........................................................................................36 SECTION 11.10. Money Held for Particular Bonds.....................................................................36 SECTION 11.11. Waiver of Personal Liability .............................................................................36 200
Section 6, Item B.
-iiiSECTION 11.12. Successor Is Deemed Included in All References to Predecessor ..................36 SECTION 11.13. Execution in Several Counterparts ..................................................................36 SECTION 11.14. Payment on Non-Business Day ......................................................................37 SECTION 11.15. Governing Law................................................................................................37

APPENDIX A DEFINITIONS

APPENDIX B FORM OF BOND
[APPENDIX C BOND INSURANCE PROVISIONS]
[APPENDIX D RESERVE INSURANCE PROVISIONS]
201
Section 6, Item B.

INDENTURE OF TRUST
This INDENTURE OF TRUST (this “Indenture”), dated for convenience as of October 1, 2025, is between the KERMAN PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority organized and existing under the laws of the State of California (the “Authority”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, with a corporate trust office in San Francisco, California, being qualified to accept and administer the trusts hereby created (the “Trustee”).

B A C K G R O U N D :

2. In order to provide financing for a portion of the costs of the Project, the City has agreed to lease the Leased Property (as defined herein) to the Authority under a Site Lease dated as of October 1, 2025 (the “Site Lease”), under which the Authority agrees to make an initial rental payment (the “Site Lease Payment”) which is sufficient to provide funds for such purposes.

3. The Authority has authorized the issuance of its Kerman Public Financing Authority 2025 Lease Revenue Bonds in the aggregate principal amount of $______ (the “Bonds”) under this Indenture and under the provisions of Article 4 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, commencing with Section 6584 of said Code (the “Bond Law”), for the purpose of providing the funds to enable the Authority to pay the Site Lease Payment to the City in accordance with the Site Lease.

4. In order to provide revenues which are sufficient to enable the Authority to pay debt service on the Bonds, the Authority has agreed to lease the Leased Property back to the City under a Lease Agreement dated as of October 1, 2025 (the “Lease”), under which the City has agreed to pay semiannual Lease Payments as the rental for the Leased Property thereunder.

5. The lease payments made by the City under the Lease have been assigned by the Authority to the Trustee for the security of the Bonds under an Assignment Agreement dated as of October 1, 2025, between the Authority as assignor and the Trustee as assignee.

6. In order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and to secure the payment of the principal thereof, premium (if any) and interest thereon, the Authority has authorized the execution and delivery of this Indenture.

7. [Payment of principal and interest on the Bonds is insured by a Municipal Bond Insurance Policy (the “Bond Insurance Policy”) issued by ___________ (the “Bond Insurer”), and the Bond Insurer is issuing a Municipal Bond Debt Service Reserve 202
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Insurance Policy (the “Reserve Insurance Policy”) to be credited to the Reserve Fund which is established for the Bonds.]

8. The Authority has found and determines, and hereby affirms, that all acts and proceedings required by law necessary to make the Bonds, when executed by the Authority, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal special obligations of the Authority, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Indenture have been in all respects duly authorized.

A G R E E M E N T :

In order to secure the payment of the principal of and the interest and redemption premium (if any) on all the Outstanding Bonds under this Indenture according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable considerations, the receipt of which is hereby acknowledged, the Authority and the Trustee do hereby covenant and agree with one another, for the benefit of the respective Owners from time to time of the Bonds, as follows:

ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.01. Definitions. Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms defined in Appendix A attached to this Indenture have the respective meanings specified in that Appendix when used in this Indenture.

SECTION 1.02. Authorization. Each of the parties hereby represents and warrants that it has full legal authority and is duly empowered to enter into this Indenture, and has taken all actions necessary to authorize the execution hereof by the officers and persons signing it.

SECTION 1.03. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and shall be deemed to include the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof.
203
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(c) All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.

ARTICLE II

THE BONDS
SECTION 2.01. Authorization of Bonds. The Authority has reviewed all proceedings heretofore taken and has found, as a result of such review, and hereby finds and determines that all things, conditions and acts required by law to exist, happen or be performed precedent to and in connection with the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Authority is now duly empowered, under each and every requirement of law, to issue the Bonds in the manner and form provided in this Indenture.

The Authority hereby authorizes the issuance of Bonds in the aggregate principal amount of $______ under the Bond Law for the purposes of providing funds to pay the Site Lease Payment to the City and thereby provide funds to finance the Project. The Bonds are authorized and issued under, and are subject to the terms of, this Indenture and the Bond Law. The Bonds are designated as the “Kerman Public Financing Authority 2025 Lease Revenue Bonds.”
SECTION 2.02. Terms of the Bonds.
(a) Payment Provisions. The Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof, so long as no Bond has more than one maturity date. The Bonds shall mature on October 1 in each of the years and in the amounts, and bear interest (calculated on the basis of a 360-day year of twelve 30-day months) at the rates, as follows:

Maturity Date
(October 1)
Principal
Amount
Interest
Rate
Maturity Date
(October 1)
Principal
Amount
Interest
Rate
__________
* Term Bond
204
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Interest on the Bonds is payable from the Interest Payment Date next preceding the date of authentication thereof unless:
(a) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it will bear interest from such Interest Payment Date, (b) a Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the Closing Date, or (c) interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been paid in full, payable on each Interest Payment Date.

Interest is payable on each Interest Payment Date to the persons in whose names the ownership of the Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest on any Bond which is not punctually paid or duly provided for on any Interest Payment Date is payable to the person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which is given to such Owner by first-class mail not less than 10 days prior to such special record date.

The Trustee will pay interest on the Bonds by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. At the written request of the Owner of Bonds in an aggregate principal amount of at least $1,000,000, which written request is on file with the Trustee as of any Record Date, the Trustee will pay interest on such Bonds on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account of a financial institution within the United States of America as specified in such written request, which written request will remain in effect until rescinded in writing by the Owner. The Trustee will pay principal of the Bonds in lawful money of the United States of America by check of the Trustee upon presentation and surrender thereof at the Office of the Trustee.

SECTION 2.03. Transfer and Exchange of Bonds.
(a) Transfer. Any Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of such Bond to the Trustee at its Office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. The Trustee shall collect from the transferee any tax or other governmental charge on the transfer of any Bonds under this Section 2.03. Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and deliver to the transferee a new Bond or Bonds of like series, interest rate, maturity and aggregate principal amount in authorized denominations. The Authority shall pay the cost of printing Bonds and any 205
Section 6, Item B.
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services rendered or expenses incurred by the Trustee in connection with any transfer of Bonds.
(b) Exchange. The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of other authorized denominations and of the same series, interest rate and maturity. The Trustee shall collect from the transferee any tax or other governmental charge on the exchange of any Bonds under this subsection (b). The Authority shall pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any exchange of Bonds. (c) Limitations. The Trustee may refuse to transfer or exchange, under the provisions of this Section 2.03, any Bonds selected by the Trustee for redemption under Article IV, or any Bonds during the period established by the Trustee for the selection of Bonds for redemption.

Prior to any transfer of the Bonds outside the book-entry system (including, but not limited to, the initial transfer outside the book-entry system) the transferor shall provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045, as amended. The Trustee shall conclusively rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.

SECTION 2.04. Book-Entry System.
(a) Original Delivery. The Bonds will be initially delivered in the form of a separate single fully registered bond (which may be typewritten) for each maturity of the Bonds. Upon initial delivery, the Trustee shall register the ownership of each Bond on the Registration Books in the name of the Nominee. Except as provided in subsection (c), the ownership of all of the Outstanding Bonds shall be registered in the name of the Nominee on the Registration Books.

With respect to Bonds the ownership of which shall be registered in the name of the Nominee, the Authority and the Trustee has no responsibility or obligation to any Depository System Participant or to any person on behalf of which the Nominee holds an interest in the Bonds. Without limiting the generality of the immediately preceding sentence, the Authority and the Trustee has no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Depository System Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Depository System Participant or any other person, other than a Bond Owner as shown in the Registration Books, of any notice with respect to the Bonds, including any notice of redemption, (iii) the selection by the Depository of the beneficial interests in the Bonds to be redeemed if the Authority elects to redeem the Bonds in part, (iv) the payment to any Depository System Participant or any other person, other than a Bond Owner as shown in the Registration Books, of any amount with respect to principal, premium, if any, or interest on the Bonds or (v) any consent given or other action taken by the Depository as Owner of the Bonds. The Authority and the Trustee may treat and consider the person in whose name each Bond is registered as the absolute owner of such Bond for the purpose of payment of principal of and premium, if any, and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers of ownership of such Bond, and for all other purposes 206
Section 6, Item B.
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whatsoever. The Trustee shall pay the principal of and the interest and premium, if any, on the Bonds only to the respective Owners or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to payment of principal of and interest and premium, if any, on the Bonds to the extent of the sum or sums so paid. No person other than a Bond Owner shall receive a Bond evidencing the obligation of the Authority to make payments of principal, interest and premium, if any, under this Indenture. Upon delivery by the Depository to the Authority of written notice to the effect that the Depository has determined to substitute a new Nominee in its place, and subject to the provisions herein with respect to Record Dates, such new nominee shall become the Nominee hereunder for all purposes; and upon receipt of such a notice the Authority shall promptly deliver a copy of the same to the Trustee.
(b) Representation Letter. In order to qualify the Bonds for the Depository’s book-entry system, the Authority shall execute and deliver to such Depository a letter representing such matters as shall be necessary to so qualify the Bonds. The execution and delivery of such letter shall not in any way limit the provisions of subsection (a) above or in any other way impose upon the Authority or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than the Bond Owners. Upon the written acceptance by the Trustee, the Trustee shall agree to take all action reasonably necessary for all representations of the Trustee in such letter with respect to the Trustee to at all times be complied with. In addition to the execution and delivery of such letter, the Authority may take any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry program.
(c) Transfers Outside Book-Entry System. If either (i) the Depository determines not to continue to act as Depository for the Bonds, or (ii) the Authority determines to terminate the Depository as such, then the Authority shall thereupon discontinue the bookentry system with such Depository. In such event, the Depository shall cooperate with the Authority and the Trustee in the issuance of replacement Bonds by providing the Trustee with a list showing the interests of the Depository System Participants in the Bonds, and by surrendering the Bonds, registered in the name of the Nominee, to the Trustee on or before the date such replacement Bonds are to be issued. The Depository, by accepting delivery of the Bonds, agrees to be bound by the provisions of this subsection I. If, prior to the termination of the Depository acting as such, the Authority fails to identify another Securities Depository to replace the Depository, then the Bonds shall no longer be required to be registered in the Registration Books in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging Bonds shall designate, in accordance with the provisions hereof. If the Authority determines that it is in the best interests of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the Authority may notify the Depository System Participants of the availability of such certificated Bonds through the Depository. In such event, the Trustee will issue, transfer and exchange Bonds as required by the Depository and others in appropriate amounts; and whenever the Depository requests, the Trustee and the Authority shall cooperate with the Depository in taking appropriate action (y) to make available one or more separate certificates evidencing the Bonds to any Depository System Participant having Bonds credited to its account with the Depository, or (z) to arrange for another Securities Depository to maintain custody of a single certificate evidencing such Bonds, all at the Authority’s expense.
207
Section 6, Item B.
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(d) Payments to the Nominee. Notwithstanding any other provision of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments with respect to principal of and interest and premium, if any, on such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the letter described in subsection (b) of this Section or as otherwise instructed by the Depository.

SECTION 2.05. Registration Books. The Trustee will keep or cause to be kept, at the Office of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds, which shall upon reasonable notice as agreed to by the Trustee, be open to inspection during regular business hours by the Authority; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such records, the ownership of the Bonds as hereinbefore provided.

SECTION 2.06. Form and Execution of Bonds. The Bonds, the form of Trustee’s certificate of authentication, and the form of assignment to appear thereon, are set forth in Appendix B attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture.

The Chair of the Authority or other Authorized Representative with authority to do so shall execute, and the Secretary of the Authority shall attest each Bond. Either or both of such signatures may be made manually or may be affixed by facsimile thereof. If any officer whose signature appears on any Bond ceases to be such officer before the Closing Date, such signature will nevertheless be as effective as if the officer had remained in office until the Closing Date. Any Bond may be signed and attested on behalf of the Authority by such persons as at the actual date of the execution of such Bond are the proper officers of the Authority, duly authorized to execute debt instruments on behalf of the Authority, although on the date of such Bond any such person was not an officer of the Authority.

Only those Bonds bearing a certificate of authentication in the form set forth in Appendix B, manually or electronically executed and dated by the Trustee, are valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee is conclusive evidence that such Bonds have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture.

SECTION 2.07. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond is mutilated, the Authority, at the expense of the Owner of such Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. The Trustee shall cancel every mutilated Bond surrendered to it and deliver such mutilated Bond to, or upon the order of, the Authority. If any Bond is lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence is satisfactory and if indemnity satisfactory to the Trustee is given, the Authority, at the expense of the Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen. The Trustee may require payment of a sum not exceeding the actual cost of preparing each new Bond issued under this Section and of the expenses which may be incurred by the Trustee in connection therewith. Any Bond 208
Section 6, Item B.
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issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen will constitute an original additional contractual obligation on the part of the Authority whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other Bonds issued under this Indenture.

Notwithstanding any other provision of this Section 2.07, in lieu of delivering a new Bond for which principal has become due for a Bond which has been mutilated, lost, destroyed or stolen, the Trustee may make payment of such Bond in accordance with its terms upon receipt of indemnity satisfactory to the Trustee.

ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF

PROCEEDS
SECTION 3.01. Issuance of the Bonds. At any time after the execution of this Indenture, the Authority may execute and the Trustee shall authenticate and, upon the Written Request of the Authority, deliver the Bonds to the Original Purchaser upon receipt of payment of the purchase price for the Bonds.

SECTION 3.02. Application of Proceeds of Sale of Bonds. Upon the receipt of payment for the Bonds on the Closing Date (which shall constitute the Site Lease Payment due under Section 3 of the Site Lease) in the amount of $______ (representing the aggregate principal amount thereof ($______), plus original issuance premium of $______, less an Underwriter’s discount of $______), and which amount includes the $______ good-faith deposit previously deposited by the Original Purchaser with the Trustee, the Trustee shall deposit the proceeds thereof into a temporary account, which shall be disbursed in full on the Closing Date (whereupon said temporary account shall be closed) as follows:
(a) The Trustee shall deposit the amount of $______ into the Project Fund.
(b) The Trustee shall deposit the amount of $______, constituting the remainder of such proceeds, in the Costs of Issuance Fund. [In addition to the foregoing, the Trustee shall credit the Reserve Insurance Policy to the Reserve Fund in satisfaction of the Reserve Requirement upon delivery of the Bonds.]
SECTION 3.03. Establishment and Application of Costs of Issuance Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the “Costs of Issuance Fund” into which the Trustee shall deposit a portion of the proceeds of sale of the Bonds under Section 3.02(b). The Trustee shall disburse amounts in the Costs of Issuance Fund from time to time to pay the Costs of Issuance upon submission of a Written Requisition of the Authority stating the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against said fund. The Trustee may conclusively rely on such Written Requisitions and shall be fully protected in relying thereon. On ______, or upon 209
Section 6, Item B.
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the earlier Written Request of the Authority, the Trustee shall transfer all amounts remaining in the Costs of Issuance Fund to the Project Fund and shall thereupon close the Costs of Issuance Fund.

SECTION 3.04. Establishment and Application of Project Fund. There is hereby established in trust a special fund designated the “Project Fund,” which will be held by the Trustee and which will be kept separate and apart from all other funds and moneys held by the Trustee into which the Trustee shall deposit a portion of the proceeds of sale of the Bonds under Section 3.02(a). The Trustee shall disburse amounts in the Project Fund from time to time to pay the Project Costs upon submission of a Written Requisition of the City stating the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against said fund. The Trustee may conclusively rely on such Written Requisitions and shall be fully protected in relying thereon.

Upon the receipt of a Written Certificate of the City stating that the Project has been completed and that no further amounts are required to be disbursed from the Project Fund to pay Project Costs, the Trustee will close the Project Fund and transfer any remaining amounts to the Interest Account of the Bond Fund, to be applied as a credit towards the Lease Payments next coming due and payable.

SECTION 3.05. Validity of Bonds. The recital contained in the Bonds that the same are issued under the laws of the State of California shall be conclusive evidence of their validity and of compliance with the provisions of law in their issuance.

ARTICLE IV

REDEMPTION OF BONDS
SECTION 4.01. Terms of Redemption.
(a) Optional Redemption. The Bonds maturing on or before October 1, 20__, are not subject to redemption prior to their respective stated maturities. The Bonds maturing on or after October 1, 20__, are subject to redemption in whole, or in part at the at the election of the Authority among maturities on such basis as shall be designated by the Authority and by lot within a maturity, at the option of the Authority, on any date on or after October 1, 20__, from any available source of funds, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium.
(b) Mandatory Sinking-Fund Redemption. The Term Bonds are subject to mandatory redemption in part by lot, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts and on October 1 in the respective years as set forth in the following tables; provided, however, that if some but not all of the Term Bonds have been redeemed pursuant to an optional redemption or special mandatory redemption from insurance or condemnation proceeds, the total amount of all future sinking fund payments shall be reduced by the aggregate principal amount of the Term Bonds so redeemed, to be 210
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allocated among such sinking fund payments on a pro rata basis in integral multiples of $5,000 (as set forth in a schedule provided by the Authority to the Trustee).

Sinking Fund
Redemption Date
(October 1)
Principal Amount
To be Redeemed
_________________
* Maturity.
(c) Extraordinary Mandatory Redemption. The Bonds are subject to mandatory redemption prior to maturity in whole or in part among maturities as determined by the Authority, on any date, at a redemption price equal to 100% of the principal amount thereof to be redeemed (plus accrued but unpaid interest to the redemption date), without premium, from Net Proceeds received under Section 5.6 of the Lease Agreement and from amounts deposited in the Insurance and Condemnation Fund pursuant to Section

5.06 hereof, and any other funds available for such purpose under this Indenture.

The Authority shall give the Trustee written notice of its intention to redeem Bonds under Section 4.01(a) or Section 4.01(c), and the manner of selecting such Bonds for redemption from among the maturities thereof, in sufficient time to enable the Trustee to give notice of such redemption in accordance with Section 4.03.

SECTION 4.02. Selection of Bonds for Redemption. Whenever provision is made in this Indenture for the redemption of less than all of the Bonds, the Bonds shall be selected for redemption on a pro-rata basis among outstanding maturities. For purposes of such selection, the Trustee shall treat each Bond as consisting of separate $5,000 portions and each such portion shall be subject to redemption as if such portion were a separate Bond.

SECTION 4.03. Notice of Redemption; Rescission. The Trustee shall mail notice of redemption of the Bonds by first class mail, postage prepaid, not less than 20 nor more than 60 days before any redemption date, to the respective Owners of any Bonds designated for redemption at their addresses appearing on the Registration Books and to one or more Securities Depositories and to the Information Services. Each notice of redemption shall state the date of the notice, the redemption date, the place or places of redemption, whether less than all of the Bonds (or all Bonds of a single maturity) are to be redeemed, the CUSIP numbers and (in the event that not all Bonds within a maturity are called for redemption) Bond numbers of the Bonds to be redeemed and the maturity or maturities of the Bonds to be redeemed, and in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on the redemption date there will become due and payable on each of said Bonds the redemption price thereof, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then surrendered. Neither the failure to receive any notice nor any defect therein shall affect the sufficiency of the proceedings for such redemption or the cessation of accrual of interest from and after the redemption date. Notice of redemption of Bonds shall be given by the Trustee, at the expense of the Authority, for and on behalf of the Authority. 211
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The Authority has the right to rescind any notice of the redemption of Bonds under Section 4.01(a) by written notice to the Trustee on or prior to the dated fixed for redemption. Any notice of optional redemption shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default. The Authority and the Trustee have no liability to the Bond Owners or any other party related to or arising from such rescission of redemption. The Trustee shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent under this Section.

SECTION 4.04. Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered.

SECTION 4.05. Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the redemption price of, together with interest accrued to the date fixed for redemption on, including any applicable premium, the Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions thereof) so called for redemption shall become due and payable, interest on the Bonds so called for redemption shall cease to accrue, said Bonds (or portions thereof) shall cease to be entitled to any benefit or security under this Indenture, and the Owners of said Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof.

All Bonds redeemed under the provisions of this Article shall be canceled by the Trustee upon surrender thereof and destroyed in accordance with the retention policy of the Trustee then in effect.

ARTICLE V
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF

PRINCIPAL AND INTEREST
SECTION 5.01. Security for the Bonds; Bond Fund.
(a) Pledge of Revenues and Other Amounts. Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, all of the Revenues and all amounts held in any fund or account established under this Indenture (excluding amounts in the Cost of Issuance Fund and the Project Fund) are hereby pledged to secure the payment of the principal of and interest on the Bonds in accordance with their terms and the provisions of this Indenture. Said pledge constitutes a lien on and security interest in the Revenues and such amounts and shall attach, be perfected and be valid and binding from and after the Closing Date, without the need for any physical delivery thereof or further act. 212
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The full faith and credit of the Authority is not pledged for the payment of the principal of or interest or premium (if any) on the Bonds. The obligation of the City to make Lease Payments or Additional Rental Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the Bonds nor the obligation of the City to make Lease Payments or Additional Rental Payments constitutes an indebtedness of the City, the State of California or any of its political subdivisions (other than the Authority) within the meaning of any constitutional or statutory debt limitation or restriction.
(b) Assignment to Trustee. Under the Assignment Agreement, the Authority has transferred to the Trustee all of the rights of the Authority in the Lease (other than the rights of the Authority under Sections 4.5, 5.10, 7.3 and 8.4 thereof). The Trustee is entitled to collect and receive all of the Revenues, and any Revenues collected or received by the Authority shall be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and shall forthwith be paid by the Authority to the Trustee. The Trustee is also entitled to and shall, subject to the provisions of Article VIII, take all steps, actions and proceedings which the Trustee determines to be reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, all of the rights of the Authority and all of the obligations of the City under the Lease. (c) Deposit of Revenues in Bond Fund. All Revenues shall be promptly deposited by the Trustee upon receipt thereof in a special fund designated as the “Bond Fund” which the Trustee shall establish, maintain and hold in trust; except that all moneys received by the Trustee and required hereunder or under the Lease to be deposited in the Redemption Fund or the Insurance and Condemnation Fund shall be promptly deposited in such funds. All Revenues deposited with the Trustee shall be held, disbursed, allocated and applied by the Trustee only as provided in this Indenture. Any surplus remaining in the Bond Fund, after payment in full of (i) the principal of and interest on the Bonds or provision therefore under Article X, and (ii) any applicable fees and expenses to the Trustee, shall be withdrawn by the Trustee and remitted to the City.

SECTION 5.02. Allocation of Revenues. On or before each Interest Payment Date, the Trustee shall transfer from the Bond Fund and deposit into the following respective accounts (each of which the Trustee shall establish and maintain within the Bond Fund), the following amounts in the following order of priority:
(a) Deposit to Interest Account. The Trustee shall deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to be at least equal to the amount of interest becoming due and payable on such Interest Payment Date on all Bonds then Outstanding.
(b) Deposit to Principal Account. The Trustee shall deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of the Bonds coming due and payable on such Interest Payment Date, including the principal amount of Bonds which are subject to mandatory sinking fund redemption on such Interest Payment Date. 213
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SECTION 5.03. Application of Interest Account. All amounts in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it comes due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity).

SECTION 5.04. Application of Principal Account. All amounts in the Principal Account shall be used and withdrawn by the Trustee solely to pay the principal amount of the Bonds at their respective maturity dates, and the principal amount of Bonds which are subject to mandatory sinking fund redemption on such Interest Payment Date.

SECTION 5.05. Application of Redemption Fund. The Trustee shall establish and maintain the Redemption Fund, into which the Trustee shall deposit a portion of the Revenues received, in accordance with a Written Request of the Authority, amounts in which shall be used and withdrawn by the Trustee solely for the purpose of paying the principal and premium (if any) of the Bonds to be redeemed under Section 4.01(a); provided, however, that at any time prior to the selection of Bonds for redemption, the Trustee may apply such amounts to the purchase of Bonds at public or private sale, when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as shall be directed under a Written Request of the Authority, except that the purchase price (exclusive of accrued interest) may not exceed the redemption price then applicable to the Bonds. The Trustee shall be entitled to conclusively rely on any Written Request of the Authority received under this Section, and shall be fully protected in relying thereon.

SECTION 5.06. Insurance and Condemnation Fund.
(a) Establishment of Fund. Upon the receipt of proceeds of insurance or eminent domain with respect to the Leased Property, the Trustee shall establish and maintain an Insurance and Condemnation Fund, to be held and applied as hereinafter set forth in this Section 5.07.
(b) Deposit of Proceeds. Any Net Proceeds of insurance and eminent domain awards with respect to the Leased Property collected by the City or the Authority in accordance with Article VI of the Lease will be deposited by the Trustee promptly upon receipt thereof in the Insurance and Condemnation Fund. (c) Application of Proceeds. Net Proceeds deposited in the Insurance and Condemnation Fund will be used, as directed by the City, either (i) to replace, repair, restore, modify or improve the Leased Property if the City determines that such is economically feasible or in the best interests of the City, or (ii) to the extent not so used, to prepay the Lease Payments on the next optional prepayment date, and thereby redeem outstanding Bonds pursuant to optional redemption.

Any proceeds of an insurance or eminent domain award deposited in the Insurance and Condemnation Fund to be applied to the prompt replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of the Leased Property by the City, or to replace any Leased Property taken in eminent domain proceedings, shall be applied upon receipt of a Written Request of the City which: (i) states with respect to each payment to be made (A) the requisition number, (B) the name and address of the person to whom payment is due, (C) the amount to be paid and (D) that each obligation mentioned therein has been properly incurred, is a proper charge against the Insurance 214
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and Condemnation Fund and has not been the basis of any previous withdrawal; and (ii) specifies in reasonable detail the nature of the obligation. Any balance of the proceeds remaining after such work has been completed as certified by the City under a Written Certificate to the Trustee shall be paid to the City. The Trustee shall be entitled to conclusively rely on any Written Request or Written Certificate received under this subsection (c) of this Section 5.06 and in each case, shall be fully protected in relying thereon.

Notwithstanding the foregoing, however, in the event of condemnation, damage or destruction of the Leased Property in full, the Net Proceeds of such insurance are required to be used by the City to redeem the Bonds in full; except that, if such proceeds and other amounts available under this Indenture are not sufficient to redeem outstanding Bonds in full, the City is required to rebuild or replace the Leased Property.

SECTION 5.07. Investments. All moneys in any of the funds or accounts established with the Trustee under this Indenture shall be invested by the Trustee solely in Permitted Investments. Such investments shall be directed by the Authority in a Written Request of the Authority filed with the Trustee at least two Business Days in advance of the making of such investments. In the absence of any such directions from the Authority, the Trustee shall hold such moneys uninvested. Permitted Investments purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account. To the extent Permitted Investments are registrable, such Permitted Investments must be registered in the name of the Trustee. The Trustee may rely conclusively upon investment direction of the Authority as to the suitability and legality of the directed investments.

All amounts in any of the funds or accounts established with the City under this Indenture shall be invested by the City solely in investments which are authorized for the investment of such funds under the applicable laws of the State of California and under the adopted investment policy of the City.

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposited in the Bond Fund, provided, however, that earnings on the investment of the amount in the Project Fund shall be retained therein.

For purposes of acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder. The Trustee or any of its affiliates may act as principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor. The Trustee shall incur no liability for losses arising from any investments made under this Section 5.07.

The Trustee may make any investments hereunder through its own bond or investment department or trust investment department, or those of its parent or any affiliate. The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made by the Trustee hereunder. The Trustee is hereby authorized, in making or disposing of any investment permitted by this Section, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or such affiliate is acting as an agent of the Trustee or for any third person or is dealing as a principal for its own account.

The Authority acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority the right to receive brokerage confirmations of security transactions as they occur, the Authority will not 215
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receive such confirmations to the extent permitted by law. The Trustee will at no additional cost furnish the Authority a periodic cash transaction statements which shall include detail for all investment transactions made by the Trustee hereunder.

Except as otherwise provided hereunder or agreed in writing among the parties hereto, the Authority shall retain the authority to institute, participate and join in any plan or reorganization, readjustment, merger or consolidation with respect to the issuer of any securities held hereunder, and, in general, to exercise each and every other power or right with respect to each such asset or investment as individuals generally have and enjoy with respect to their own assets and investment, including power to vote upon any securities.

Unless the Authority notifies the Trustee otherwise in writing, the Trustee will provide the obligatory information to the registrant/issuer of any U.S. securities upon their request. Any objection will apply to all securities held in any trust account now and in the future unless the Authority notifies the Trustee in writing of such objection.

SECTION 5.08. Valuation and Disposition of Investments. (a) Except as otherwise provided in subsection (b) of this Section, the Authority covenants that all investments of amounts deposited in any fund or account created by or under this Indenture, or otherwise containing gross proceeds of the 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 Indenture or the Tax Code) at the Fair Market Value thereof as such term is defined in subsection (d) below. The Trustee shall have no duty in connection with the determination of Fair Market Value other than to follow the investment directions of the Authority in any Written Request of the Authority. (b) Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Tax Code shall be valued at cost thereof, (consisting of present value thereof within the meaning of Section 148 of the Tax Code); provided that the Authority shall inform the Trustee which funds are subject to a yield restriction.
(c) Except for any funds or accounts described in subsection (b), for the purpose of determining the amount in any fund or account established hereunder, the value of Permitted Investments credited to such fund shall be valued by the Trustee at least annually on or before January 1. The Trustee may sell or present for redemption, any Permitted Investment so purchased by the Trustee whenever it is necessary in order to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investment is credited, and the Trustee shall not be liable or responsible for any loss resulting from any such Permitted Investment. (d) For purposes of this Section 5.08, the term “Fair Market Value” means 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 transaction (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 216
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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 which is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is any commingled investment fund in which the Authority and related parties do not own more than a 10% beneficial interest therein if the return paid by the fund is without regard to the source of the investment. To the extent required by the applicable regulations under the Tax Code, the term “investment” will include a hedge. (e) To the extent of any valuations made by the Trustee hereunder, the Trustee may utilize and rely conclusively and without liability upon any generally recognized pricing information service (including brokers and dealers in securities) available to it.

SECTION 5.09. Reserve Fund. The Trustee shall establish a special fund designated as the “Reserve Fund” to be held by the Trustee in trust for the benefit of the Owners of the Bonds, and applied solely as provided herein. All amounts in the Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of (i) paying principal of or interest on the Bonds when due and payable, to the extent that moneys deposited in the Interest Account or the Principal Account are not sufficient for such purpose, and (ii) making the final payments of principal of and interest on the Bonds. If the amounts on deposit in the Reserve Fund are insufficient at any time to pay the full amount of principal of and interest on the Bonds then required to be paid from the Reserve Fund, the Trustee shall apply such amounts first, to the payment of interest and second, to the payment of principal, including the principal amount of any Term Bonds which are subject to mandatory sinking fund redemption under Section 4.01. [The Reserve Fund will be initially maintained in the form of the Reserve Insurance Policy, in an amount equal to the Reserve Requirement. So long as the Reserve Fund is maintained in the form of the Reserve Insurance Policy, the Trustee shall comply with all of the terms and provisions thereof as shall be required to draw amounts thereunder for the purposes of this Section. The Authority and the Trustee agree to comply with the provisions governing the Reserve Insurance Policy set forth in Appendix D hereto.] 217
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ARTICLE VI

COVENANTS OF THE AUTHORITY
SECTION 6.01. Punctual Payment. The Authority shall punctually pay or cause to be paid the principal of and interest and premium (if any) on all the Bonds in strict conformity with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, but only out of the Revenues, and other amounts pledged for such payment as provided in this Indenture.

SECTION 6.02. Extension of Payment of Bonds. The Authority shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which have not been so extended. Nothing in this Section 6.02 limits the right of the Authority to issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance does not constitute an extension of maturity of the Bonds.

SECTION 6.03. Against Encumbrances. The Authority shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the pledge and assignment created by this Indenture. Subject to this limitation, the Authority expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, and reserves the right to issue other obligations for such purposes.

SECTION 6.04. Power to Issue Bonds and Make Pledge and Assignment. The Authority is duly authorized under law to issue the Bonds and to enter into this Indenture and to pledge and assign the Revenues and other amounts purported to be pledged and assigned, respectively, under this Indenture and under the Assignment Agreement in the manner and to the extent provided in this Indenture and the Assignment Agreement. The Bonds and the provisions of this Indenture are and will be the legal, valid and binding special obligations of the Authority in accordance with their terms, and the Authority and the Trustee shall at all times, subject to the provisions of Article VIII and to the extent permitted by law, defend, preserve and protect said pledge and assignment of Revenues and other assets and all the rights of the Bond Owners under this Indenture against all claims and demands of all persons whomsoever.

SECTION 6.05. Accounting Records. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with corporate trust industry standards, in which accurate entries shall be made of all transactions made by it relating to the proceeds of Bonds and all funds and accounts established under this Indenture. The Trustee shall make such books of record and account available for inspection by the Authority and the City, during business hours, upon reasonable notice, and under reasonable circumstances.
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SECTION 6.06. Limitation on Additional Obligations. The Authority covenants that no additional bonds, notes or other indebtedness shall be issued or incurred which are payable out of the Revenues in whole or in part. Notwithstanding the foregoing, additional bonds, notes and obligations may be issued by the Authority that are secured by lease payments payable under the Lease in accordance with Section 7.5(b)(v) of the Lease.

SECTION 6.07. Tax Covenants.
(a) Private Business Use Limitation. The Authority shall assure that the proceeds of the Bonds are not used in a manner which would cause the 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 Tax Code.
(b) Federal Guarantee Prohibition. The Authority may not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code. (c) No Arbitrage. The Authority may not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the proceeds of the Bonds or of any other obligations which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date, would have caused the Bonds to be “arbitrage bonds” within the meaning of Section 148(a) of the Tax Code. (d) Maintenance of Tax Exemption. The Authority shall take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners of the 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 Closing Date. (e) Rebate of Excess Investment Earnings to United States. The Authority shall pay when due an amount equal to excess investment earnings to the United States of America in such amounts, at such times and in such manner as may be required under the Tax Code, such payments to be made from amounts paid by the City for that purpose under Section 4.5(d) of the Lease. The Authority shall keep or cause to be kept, and retain or cause to be retained for a period of six years following the retirement of the Bonds, records of the determinations made under this subsection (e). (f) Record Retention. Without limiting the requirements of subsection (e) above, the Authority will retain its records of all accounting and monitoring it carries out with respect to the Bonds for at least 3 years after the Bonds mature or are redeemed (whichever is earlier); however, if the Bonds are redeemed and refunded, the Authority 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 Bonds. (g) Compliance with Tax Certificate. The Authority will comply with the provisions of the Tax Certificate and the Use of Proceeds Certificate with respect to the 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 Bonds.

SECTION 6.08. Enforcement of Lease. The Trustee shall promptly collect all amounts (to the extent any such amounts are available for collection) due from the City under the Lease. Subject to the provisions of Article VIII, the Trustee shall enforce, and 219
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take all steps, actions and proceedings which the Trustee determines to be reasonably necessary for the enforcement of all of its rights thereunder as assignee of the Authority and for the enforcement of all of the obligations of the City under the Lease.

SECTION 6.09. Waiver of laws. The Authority shall not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law now or at any time hereafter in force that may affect the covenants and agreements contained in this Indenture or in the Bonds, and all benefit or advantage of any such law or laws is hereby expressly waived by the Authority to the extent permitted by law.

SECTION 6.10. Maintenance of Existence. The Authority shall, at all times while any of the Bonds remain Outstanding, maintain its existence as a public agency with full power and authority to carry out its obligations under this Indenture and the Bonds.

SECTION 6.11. Further Assurances. The Authority will make, execute and deliver any and all such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided in this Indenture.
[SECTION 6.10. Provisions Relating to Bond Insurance Policy. So long as the Bond Insurance Policy remains in effect, the Authority and the Trustee shall comply with all of the terms and provisions set forth in Appendix C relating to the Bond Insurer and the Bond Insurance Policy. Such provisions are hereby incorporated into this Indenture by this reference, and shall control and supersede any conflicting or inconsistent provisions in this Indenture, the Site Lease, the Lease or the Assignment Agreement.] [SECTION 6.11. Provisions Relating to Reserve Insurance Policy. So long as the Reserve Insurance Policy remains in effect, the Authority and the Trustee shall comply with all of the terms and provisions set forth in Appendix D relating to the Reserve Insurance Policy. Such provisions are hereby incorporated into this Indenture by this reference, and shall control and supersede any conflicting or inconsistent provisions in this Indenture, the Site Lease, the Lease or the Assignment Agreement.]

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. Events of Default. The following events constitute Events of Default hereunder:
(a) Failure to pay any installment of the principal of any Bonds when due, whether at maturity as therein expressed, by proceedings for redemption, by acceleration, or otherwise.
(b) Failure to pay any installment of interest on the Bonds when due. 220
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(c) Failure by the Authority to observe and perform any of the other covenants, agreements or conditions on its part contained in this Indenture or in the Bonds, if such failure has continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, has been given to the Authority by the Trustee; provided, however, if in the reasonable opinion of the Authority the failure stated in the notice can be corrected, but not within such 30-day period, such failure shall not constitute an Event of Default if the Authority institutes corrective action within such 30- day period and thereafter diligently and in good faith cures the failure in a reasonable period of time.
(d) The commencement by the Authority of a voluntary case under Title 11 of the United States Code or any substitute or successor statute. (e) The occurrence and continuation of an event of default under and as defined in the Lease.

SECTION 7.02. Remedies Upon Event of Default. If any Event of Default occurs, then, and in each and every such case during the continuance of such Event of Default, the Trustee in its discretion may, and upon the written request of the Owners of a majority in aggregate principal amount of the Bonds then outstanding, and upon being indemnified to its satisfaction therefor, the Trustee shall declare in a written notice to the Authority that an Event of Default has occurred and shall proceed to protect or enforce its rights or the rights of such Owners by such appropriate action, suit, mandamus or other proceedings as it deems most effectual to protect and enforce any such right, at law or in equity, including but not limited to enforcement of any and all rights granted to the Authority or the Trustee under the Lease.

Any such declaration of an Event of Default is subject to the condition that if, at any time after such declaration and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the Authority deposits with the Trustee a sum sufficient to pay all the principal of and installments of interest on the Bonds payment of which is overdue, with interest on such overdue principal at the rate borne by the respective Bonds to the extent permitted by law, and the reasonable fees, charges and expenses (including those of its legal counsel, including the allocated costs of internal attorneys) of the Trustee, and any and all other Events of Default known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate has been made therefor, then, and in every such case, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Authority, the City and the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences and waive such Event of Default; but no such rescission and annulment shall extend to or shall affect any subsequent Event of Default, or shall impair or exhaust any right or power consequent thereon.
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SECTION 7.03. Application of Revenues and Other Funds After Default. If an Event of Default occurs and is continuing, all Revenues and any other funds then held or thereafter received by the Trustee under any of the provisions of this Indenture shall be applied by the Trustee in the following order of priority:
(a) To the payment of reasonable fees, charges and expenses of the Trustee (including reasonable fees and disbursements of its legal counsel including outside counsel and the allocated costs of internal attorneys and fees and expenses of its agents and advisors) incurred in and about the performance of its powers and duties under this Indenture;
(b) To the payment of the principal of and interest then due on the Bonds (upon presentation of the Bonds to be paid, and stamping or otherwise noting thereon of the payment if only partially paid, or surrender thereof if fully paid) in accordance with the provisions of this Indenture, as follows:

First: To the payment to the persons entitled thereto of all installments of interest then due in the order of the
maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the
payment thereof ratably, according to the amounts due
thereon, to the persons entitled thereto, without any
discrimination or preference;
Second: To the payment to the persons entitled thereto of the unpaid principal of any Bonds which shall have become
due, whether at maturity or by acceleration or redemption, with interest on the overdue principal at the rate borne by the respective Bonds (to the extent permitted by law), and, if the amount available shall not be sufficient to pay in full all the Bonds, together with such interest, then to the payment thereof ratably, according to the amounts of
principal due on such date to the persons entitled thereto, without any discrimination or preference; and
SECTION 7.04. Trustee to Represent Bond Owners. The Trustee is hereby irrevocably appointed (and the successive respective Owners of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney-in-fact of the Owners of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Owners under the provisions of the Bonds, this Indenture and applicable provisions of any law. All rights of action under this Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of all the Owners of such Bonds, subject to the provisions of this Indenture.
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SECTION 7.05. Limitation on Bond Owners’ Right to Sue. Notwithstanding any other provision hereof, no Owner of any Bonds has the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture, the Lease or any other applicable law with respect to such Bonds, unless (a) such Owner has given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of the Bonds then Outstanding have requested the Trustee in writing to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) such Owner or Owners have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (d) the Trustee has failed to comply with such request for a period of 60 days after such written request has been received by, and said tender of indemnity has been made to, the Trustee; and (e) no direction inconsistent with such written request has been given to the Trustee during such 60 day period by the Owners of a majority in aggregate principal amount of the Bonds then Outstanding.

Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy hereunder or under law; it being understood and intended that no one or more Owners of Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Indenture or the rights of any other Owners of Bonds, or to enforce any right under the Bonds, this Indenture, the Lease or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Owners of the Outstanding Bonds, subject to the provisions of this Indenture.

SECTION 7.06. Absolute Obligation of Board. Nothing herein or in the Bonds contained affects or impairs the obligation of the Authority, which is absolute and unconditional, to pay the principal of and interest and premium (if any) on the Bonds to the respective Owners of the Bonds at their respective dates of maturity, or upon acceleration or call for redemption, as herein provided, but only out of the Revenues and other assets herein pledged therefor, or affect or impair the right of such Owners, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds.

SECTION 7.07. Termination of Proceedings. In case any proceedings taken by the Trustee or by any one or more Bond Owners on account of any Event of Default have been discontinued or abandoned for any reason or have been determined adversely to the Trustee or the Bond Owners, then in every such case the Authority, the Trustee and the Bond Owners, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the Authority, the Trustee and the Bond Owners shall continue as though no such proceedings had been taken.

SECTION 7.08. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Owners of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
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SECTION 7.09. No Waiver of Default. No delay or omission of the Trustee or any Owner of the Bonds to exercise any right or power arising upon the occurrence of any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or an acquiescence therein; and every power and remedy given by this Indenture to the Trustee or the Owners of the Bonds may be exercised from time to time and as often as may be deemed expedient by the Trustee or the Bond Owners.

SECTION 7.10. Notice to the Bond Owners of Default. Upon becoming aware of the occurrence of an Event of Default, but in no event later than five Business Days following becoming aware of such occurrence, the Trustee shall give written notice thereof by first class mail, postage prepaid, to the Owner of each Outstanding Bond, unless such Event of Default has been cured before the giving of such notice; provided, however that except in the case of an Event of Default described in Sections 7.01(a) or 7.01(b), the Trustee may elect not to give such notice to the Bond Owners if and so long as the Trustee in good faith determines that it is in the best interests of the Bond Owners not to give such notice.

ARTICLE VIII

THE TRUSTEE
SECTION 8.01. Appointment of Trustee. U.S. Bank Trust Company, National Association is hereby appointed Trustee by the Authority for the purpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture. The Authority will maintain a Trustee which is qualified under the provisions of the foregoing provisions of this Article VIII so long as any Bonds are Outstanding.

SECTION 8.02. Acceptance of Trusts; Removal and Resignation of Trustee. The Trustee hereby accepts the express trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions:
(a) The Trustee shall, prior to an Event of Default, and after the curing or waiver of all Events of Default which may have occurred, perform such duties and only such duties as are expressly and specifically set forth in this Indenture and no implied duties or covenants shall be read into this Indenture against the Trustee. The Trustee shall, during the existence of any Event of Default (which has not been cured or waived), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a reasonable corporate trustee would exercise or use. (b) The Authority may remove the Trustee upon 30 days’ prior notice, unless an Event of Default has occurred and is then continuing, and shall remove the Trustee (a) if at any time requested to do so by the Owners of a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing) or (b) if at 224
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any time the Trustee ceases to be eligible in accordance with Section

8.02, or becomes incapable of acting, or is adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property is appointed, or any public officer takes control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation. Any such removal shall be made upon at least 30 days’ prior written notice to the Trustee.
(c) The Trustee may at any time resign by giving written notice of such resignation to the Authority and the City, and by giving the Bond Owners notice of such resignation by mail at the addresses shown on the Registration Books.
(d) Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. In the event of the removal or resignation of the Trustee under subsections (b) or (c), respectively, the Authority shall promptly appoint a successor Trustee.

If no successor Trustee has been appointed and accepted appointment within 45 days of giving notice of removal or notice of resignation as aforesaid, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture, must signify its acceptance of such appointment by executing and delivering to the Authority and to its predecessor Trustee a written acceptance thereof, and after payment by the Authority of all unpaid fees and expenses of the predecessor Trustee, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Written Request of the Authority or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to the Leased Property held by such predecessor Trustee under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, the Authority shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the Authority shall promptly mail or cause the 225
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successor trustee to mail a notice of the succession of such Trustee to the trusts hereunder to each rating agency which is then rating the Bonds and to the Bond Owners at the addresses shown on the Registration Books. If the Authority fails to mail such notice within 15 days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Authority.
(e) Any Trustee appointed under this Indenture shall be a corporation or banking association organized and doing business under the laws of any state or the United States of America or the District of Columbia, shall be authorized under such laws to exercise trust powers, shall have (or, in the case of a corporation or association that is a member of a bank holding company system, the related bank holding company has) a combined capital and surplus of at least $50,000,000, and shall be subject to supervision or examination by a federal or state agency, so long as any Bonds are Outstanding. If such corporation or association publishes a report of condition at least annually under law or to the requirements of any supervising or examining agency above referred to, then for the purpose of this subsection (e), the combined capital and surplus of such corporation or association shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If the Trustee at any time ceases to be eligible in accordance with the provisions of this subsection (e), the Trustee shall resign immediately in the manner and with the effect specified in this Section.

SECTION 8.03. Merger or Consolidation. Any bank, federal savings association, or trust company into which the Trustee may be merged or converted or with which it may be consolidated or any bank, federal savings association, or trust company resulting from any merger, conversion or consolidation to which it shall be a party or any bank, federal savings association, or trust company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such bank, federal savings association, or trust company shall be eligible under subsection (e) of Section 8.02 shall be the successor to such Trustee, without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.

SECTION 8.04. Liability of Trustee.
(a) The recitals of facts herein and in the Bonds contained shall be taken as statements of the Authority, and the Trustee shall not assume responsibility for the correctness of the same, or make any representations as to the validity or sufficiency of this Indenture, the Bonds or the Lease (including any right to receive moneys thereunder or the value of or title to the premises upon which the Leased Property is located), nor shall the Trustee incur any responsibility in respect thereof, other than as expressly stated herein in connection with the respective duties or obligations of Trustee herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence. The Trustee may become the Owner of Bonds with the same rights it would have if it were not Trustee, and, to the extent permitted by law, may act as 226
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depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Bond Owners, whether or not such committee shall represent the Owners of a majority in principal amount of the Bonds then Outstanding.
(b) The Trustee is not liable for any error of judgment made by a responsible officer, unless it is proved that the Trustee was grossly negligent in ascertaining the pertinent facts. Permissive rights of the Trustee shall not be construed as duties. (c) The Trustee is not liable with respect to any action taken or omitted to be taken by it in accordance with the direction of the Owners of a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture or assigned to it under the Assignment Agreement.
(d) The Trustee is not liable for any action taken by it and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. (e) The Trustee shall not be deemed to have knowledge of any Event of Default hereunder, or any other event which, with the passage of time, the giving of notice, or both, would constitute an Event of Default hereunder unless and until it shall have actual knowledge thereof, or a corporate trust officer shall have received written notice thereof at its Office from the City, the Authority or the Owners of at least 25% in aggregate principal amount of the Outstanding Bonds. Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or inquire as to the performance or observance by the Authority or the City of any of the terms, conditions, covenants or agreements herein, under the Lease or the Bonds or of any of the documents executed in connection with the Bonds, or as to the existence of a default or an Event of Default or an event which would, with the giving of notice, the passage of time, or both, constitute an Event of Default. The Trustee is not responsible for the validity, effectiveness or priority of any collateral given to or held by it. Without limiting the generality of the foregoing, the Trustee shall not be required to ascertain or inquire as to the performance or observance by the City or the Authority of the terms, conditions, covenants or agreements set forth in the Lease, other than the covenants of the City to make Lease Payments to the Trustee when due and to file with the Trustee when due, such reports and certifications as the City is required to file with the Trustee thereunder.
(f) No provision of this Indenture requires the Trustee 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. (g) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or through agents, receivers or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent, receiver or attorney appointed with due care by it hereunder. (h) The Trustee has no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of the Bond Owners under this Indenture, unless such Owners have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities (including but not limited to fees and expenses of its 227
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attorneys) which might be incurred by it in compliance with such request or direction. No permissive power, right or remedy conferred upon the Trustee hereunder shall be construed to impose a duty to exercise such power, right or remedy. (i) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee is subject to the provisions of Section 8.02(a), this Section 8.04 and Section 8.05, and shall be applicable to the assignment of any rights under the Lease to the Trustee under the Assignment Agreement.
(j) The Trustee is not accountable to anyone for the subsequent use or application of any moneys which are released or withdrawn in accordance with the provisions hereof.
(k) The Trustee makes no representation or warranty, expressed or implied as to the title, value, design, compliance with specifications or legal requirements, quality, durability, operation, condition, merchantability or fitness for any particular purpose for the use contemplated by the Authority or the City of the Leased Property. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages in connection with or arising from the Lease or this Indenture for the existence, furnishing or use of the Leased Property.
(l) The Trustee has no responsibility with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds.
(m) The Trustee is authorized and directed to execute the Assignment Agreement in its capacity as Trustee hereunder.
(n) The Trustee shall not be liable to the parties hereto or deemed in breach or default hereunder if and to the extent its performance hereunder is prevented by reason of force majeure. The term “force majeure” means an occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care. Force majeure shall include, but not be limited to, acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences.

Kerman City CouncilAugust 27, 2025

Kerman City Council
August 27, 2025