construction phase of the project. Lastly, to protect project costs from future inflation, it is recommended that advance payments to the utility companies for construction services be authorized.
DISCUSSION
Bond Financing Method
On October 28, 2025, the City Council approved the use of a public bond issuance as the financing method for this assessment district. A public offering will be marketed to external investors including full disclosure, underwriting, and investor outreach. A 25-year bond term resembles the recently completed bond sales for the Diamond Street AD 2013-2 and Woods Cove AD 2014-2 projects. The public offering has an estimated “all in” interest rate of 5.18%, which includes all costs associated with the issuance of bonds and the bond discount.
The Fiscal Agent Agreement is included as Attachment 2, and establishes the terms and conditions under which the bonds will be issued, and the bonds and certain other funds and accounts held in connection with the bonds will be administered.
The Preliminary Official Statement (POS), included as Attachment 3, is the document that will be used by the underwriter to market the bonds to potential investors. The POS is to be released before the bond sale and provides information on bond terms and conditions. A memorandum prepared by disclosure counsel summarizing the duties and responsibilities of the City Council with respect to the POS is included as Attachment 4. The Bond Purchase Agreement (BPA), included as Attachment 5, contains the provisions relating to the purchase, sale, and delivery agreement of the bonds between the City and Oppenheimer & Co. Inc., the underwriter of the bonds. The forms of the Fiscal Agent Agreement, POS, Continuing Disclosure Certificate (attached as an appendix to the POS), and the BPA are referenced in the proposed resolutions. The Bond Details, which include the sources and uses of funds, are listed in Attachment 6.
Pursuant to the requirements of Section 5852.1 of the California Government Code, set forth below are good faith estimates as of November 20, 2025.
True Interest Cost 4.71%
Finance Charge $238,299
Proceeds $3,467,714
Total Payment Amount $6,767,000
The good faith estimate is included as Attachment 7.
Project Accounting
Bonds totaling $3,890,000 are proposed to be sold to Oppenheimer & Co. Inc. by January 27, 2026, to finance a portion of the costs of construction of the utility undergrounding improvements within the Assessment District. Additional revenues were received through property owner prepayments and City contributions totaling $2,525,125. Originally, there were 100 assessed parcels with assessments totaling $5,233,077 in the Assessment District. Of those, 23 parcels, including parcels owned by the City of Laguna Beach and South Coast Water District, chose to pre-pay their assessments in the total amount of $1,110,053.
RESOLUTIONS AND APPROPRIATIONS RELATED TO SALE OF BONDS FOR UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-1 (WEST STREET) December 9, 2025
The City also contributed $707,536 as a General Benefit and $707,536 as a separate City Contribution. In total, $6,580,699 in revenue will be received as summarized in the left column of Table 1 below. The estimated appropriations needed to complete the project are listed in the right column on Table 1.
Table 1 – Estimated Project Accounting
REVENUES APPROPRIATIONS
Bond Proceeds: $ 3,890,000 Construction: $ 5,808,679 (3) Premium: $ 165,574 Incidental Expenses
Prepayments: $ 1,110,053 Assessment Engineering: $ 35,460 General Benefit: $ 707,536 (1) Surveying: $ 5,000
City Contribution: $ 707,536 (2) Construction Inspection: $ 143,700 City Administration: $ 40,000 (4)
Bond Issuance
Fiscal Agent: $ 5,000
Fiscal Agent’s Counsel: $ 7,000
Assessment District Admin. $ 10,000
Printing/Filing Fees: $ 5,000
Incidental Contingencies: $ 7,675 (5)
Disclosure Counsel: $ 37,500
Bond Counsel: $ 35,000
Financial Advisor: $ 42,500
Underwriter’s Discount: $ 48,625
Bond Reserve $ 233,400 (6)
Capitalized Interest $ 116,160 (7)
Approximate Total revenues: $ 6,580,699 Approximate Total appropriations: $ 6,580,699 Notes for Table 1
(1) “General Benefit” cost is a contribution by the City toward the project from the Street Light and Utility Fund and from the Wildfire Mitigation and Fire Safety Fund previously appropriated on September 23, 2025.
(2) “City Contribution” cost is an additional contribution from the Wildfire Mitigation and Fire Safety Fund previously appropriated on September 23, 2025.
(3) “Construction” includes contractor costs, construction contingencies, and utility costs (SDG&E, Frontier, Cox, and Crown Castle).
(4) “City Administration” is for the City’s estimated cost of administering construction. (5) “Incidental Contingencies” includes additional proceeds and is adjusted to account for rounding of the Bond Proceed amount.
(6) “Bond Reserve” is 6% of the Bond Proceed amount.
(7) “Capitalized Interest” is the funded interest through September 2, 2026.
RESOLUTIONS AND APPROPRIATIONS RELATED TO SALE OF BONDS FOR UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-1 (WEST STREET) December 9, 2025
Utility Costs
Due to inflationary construction costs, staff requested utility companies to provide up-to-date costs to construct the project. The following costs were provided by the utilities and are included in the total construction appropriation listed in Table 1 above.
SDG&E Cost $1,563,477
Cox Cost $117,611
Frontier Cost $331,000
Crown Castle Cost $63,752
Total Utilities Cost $2,075,840
Staff recommend payments be made to the utilities in advance of construction to lock in these current costs and enable the utility companies to procure materials and provide timely construction services when the City’s contractor begins work, presumably in February 2026.
Construction Inspection and Management
The West Street project requires full-time inspection and part-time construction management services to ensure public safety and adherence to the contract documents throughout construction. Staff solicited proposals from Psomas, Accenture, and Ninyo & Moore who are all on the City’s On-Call Consultant list.
Accenture was determined to be the highest rated firm due to cost competitiveness and experience with utility undergrounding projects. Accenture is providing construction inspection and management for the Woods Cove AD 2014-2 project, currently in construction, and has familiarity with the project contractor, the City’s contract requirements, and public interfacing with the local community.
It is recommended that a task order be awarded to Accenture (On-Call Consultant Contract No. 23-64) in the amount of $143,700 for the West Street project. Although Accenture is on the City’s approved On-Call Consultants list, task orders exceeding $75,000 must be approved by the City Council. In addition to the task order amount, it is recommended to authorize the City Manager to approve change orders for additional construction inspection/construction management services that may be required in an amount not-to-exceed $15,000 for the project.
Utility Underground Assessment Deferment Program
The Deferment Loan Program was revised and adopted by the City Council on July 8, 2025. Changes included authorizing the City Manager to provide discretionary approval for applicants of the program who do not meet the age requirements but otherwise meet all the requirements of the program such as income and asset requirements. While one applicant showed interest in applying for the program, a formal application was not submitted to staff for evaluation. As a result, the Deferment Loan Program will not be utilized for this assessment district.
FINANCIAL ANALYSIS
An appropriation of $6,580,699 is recommended from the Bond Proceeds Fund after the sale of bonds is complete and increase revenues by the same amount as outlined in Table 1. An appropriation for the Deferment Loan Program is not required as no property owners applied to the program.
RESOLUTIONS AND APPROPRIATIONS RELATED TO SALE OF BONDS FOR UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-1 (WEST STREET) December 9, 2025
ENVIRONMENTAL ANALYSIS
At the March 20, 2024 Planning Commission meeting, the City previously conducted environmental review for the proposed undergrounding project and determined that the project was exempt under the California Environmental Quality Act pursuant to CEQA Guidelines Section 15301(b), which authorizes an exemption for “existing facilities providing electric power with no expansion of use”; Sections 15302(c) and (d) for the “replacement or reconstruction of existing utility systems involving negligible or no expansion of capacity, and conversion of overhead electric utility distribution system facilities to underground”; and Section 15303(d) involving “new construction of small utility facilities or structures.” More detailed environmental analysis can be found in that March 20, 2024, Planning Commission approval.
ATTACHMENTS
1. Resolutions (Pgs. 6-17)
2. Fiscal Agent Agreement (Pgs. 18-65)
3. Preliminary Official Statement with form of Continuing Disclosure Certificate as App. D (Pgs. 66-141)
4. Disclosure Responsibility Memo (Pg. 142)
5. Bond Purchase Agreement (Pgs. 143-163)
6. Bond Details (Pgs. 164-170)
7. Good Faith Estimate (Pg. 171)
Submitted By: Mark McAvoy Approved: .David A Kiff
Mark McAvoy, Director of Public
Works & Utilities
Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Pierre Sawaya, Capital Program Manager Thomas Perez, City Engineer Michelle Bannigan, Finance Director
Laura Parisi, City Treasurer
RESOLUTION NO. 25.XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LAGUNA BEACH, CALIFORNIA, DETERMINING UNPAID
ASSESSMENTS IN UNDERGROUND UTILITY ASSESSMENT
DISTRICT NO. 2021-1 (WEST STREET) AND THE MANNER OF
PAYMENT THEREOF AND LISTING BONDS ISSUED ON THE
SECURITY THEREOF
WHEREAS, this Council has taken proceedings under Article XIIID of the California Constitution, the Municipal Improvement Act of 1913, Division 12 of the California Streets and Highways Code (the “Code”) and California Government Code Section 53750 et seq., and has confirmed an assessment which was recorded on October 6, 2025 in the office of the Superintendent of Streets, and the Assessment Diagram and Notice of Assessment which were recorded in the office of the County Recorder of Orange County on October 7, 2025 and October 21, 2025, respectively; and
WHEREAS, the proceedings provided that the bonds designated City of Laguna Beach Underground Utility Assessment District No. 2021-1 (West Street) Limited Obligation Improvement Bonds would be issued pursuant to the Improvement Bond Act of 1915, Division 10 of the Code (the “Bonds”); and
WHEREAS, a list of unpaid assessments has been filed with the City Clerk by the City Treasurer pursuant to Section 8620 of the Code, following the expiration of the cash collection period on November 17, 2025; and
WHEREAS, this Council has, pursuant to Section 8650.1 of the Code, established the denomination of the Bonds and the amounts to mature each year which is other and different that that provided in Section 8650 of the Code; and
Attachment 1
6 -2- Reso. #
WHEREAS, the Bonds are to be serial or term bonds numbered in consecutive numerical order. The Bonds are to be dated their date of delivery. The first payment of interest is payable on September 2, 2026, and thereafter the interest is payable semi-annually on September 2 and March 2 of each year. The bonds shall mature on September 2 in the amounts and years and bear interest from their dates at the rates to be established in the Bond Purchase Agreement for the Bonds.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAGUNA BEACH DOES RESOLVE:
SECTION 1. The unpaid assessments which provide the security for the Bonds which are to be issued are those set forth on the list of unpaid assessments filed with the City Clerk as set forth in the recitals.
SECTION 2. The unpaid assessments securing the Bonds shall be payable in the manner provided in Section 8680 et seq. of the Code and shall be payable in the same manner and at the same time and in the same installments as the general taxes of the City on real property are payable.
Pursuant to Section 8682 of the Code, a certified copy of this Resolution and a copy of the list of unpaid assessments shall be filed by the City Clerk in the office of the Auditor of Orange County, California. The County Auditor shall enter in his assessment roll on which taxes will next become due the amount coming due during the fiscal year covered by the applicable assessment roll pursuant to said Section 8682.
ADOPTED this 9th day of December, 2025.
, Mayor
7 -3- Reso. #
ATTEST:
Ann Marie McKay, City Clerk
I, Ann Marie McKay, City Clerk of the City of Laguna Beach, certify that the foregoing Resolution No. 25.XXX was duly adopted at a regular meeting of the City Council of said City held on December 9, 2025, by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSTAIN: COUNCILMEMBERS:
Ann Marie McKay, City Clerk
8 RESOLUTION NO. 25.XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LAGUNA BEACH, CALIFORNIA, AUTHORIZING THE ISSUANCE
OF CITY OF LAGUNA BEACH UNDERGROUND UTILITY
ASSESSMENT DISTRICT NO. 2021-1 (WEST STREET) LIMITED
OBLIGATION IMPROVEMENT BONDS, AWARDING THE SALE
OF SUCH BONDS, APPROVING FISCAL AGENT AGREEMENT,
OFFICIAL STATEMENT, BOND PURCHASE AGREEMENT, AND
CONTINUING DISCLOSURE CERTIFICATE AND AUTHORIZING
THE CITY MANAGER, OR ASSISTANT CITY MANAGER TO
NEGOTIATE THE TERMS OF THE PURCHASE OF THE BONDS
WHEREAS, the City Council (“City Council”) of the City of Laguna Beach (the “City”), California, has previously adopted its Resolution No. 25.032 on May 20, 2025 (the “Resolution of Intention”), pursuant to the provisions of Division 12 of the Streets and Highways Code of the State of California (the “Municipal Improvement Act of 1913”) with respect to the construction of certain underground utility system improvements, appurtenances, right-of-way improvements, and all appurtenant work in connection therewith in certain streets and other public easements (collectively, the “Improvements”) within, and for the benefit of property within, an assessment district, identified as Underground Utility Assessment District No. 2021-1 (West Street), City of Laguna Beach, Orange County, State of California (the “Assessment District”), and the levy of assessments on the lots and parcels of property within the Assessment District to finance the costs of the construction of the Improvements; and
WHEREAS, the Resolution of Intention provides for the issuance of bonds pursuant to Division 10 of the Streets and Highways Code of the State of California (the “Improvement Bond Act of 1915”) to represent and be secured by unpaid assessments levied on lots and parcels of property within the Assessment District; and
WHEREAS, proceedings for the formation of the Assessment District and the levy of assessments on the assessable lots and parcels of property therein have been completed, the 9 -2- Reso. #
Assessment District has been formed and assessments have been authorized to be levied on the lots and parcels of property therein; and
WHEREAS, the City Treasurer has confirmed an assessment in the total amount of $5,233,077, of which $1,061,227.26 has been prepaid; and WHEREAS, the City Council proposes to issue bonds for the Assessment District to be designated “City of Laguna Beach Underground Utility Assessment District No. 2021-1 (West Street) Limited Obligation Improvement Bonds” (the “Bonds”) in an aggregate principal amount which shall not exceed the amount of the unpaid assessments on lots and parcels of property within the Assessment District, the proceeds of which will be used to finance the costs of the construction of the Improvements; and
WHEREAS, there has been made available to the City Council a form of fiscal agent agreement (the “Fiscal Agent Agreement”) by and between The Bank of New York Mellon Trust Company, as Fiscal Agent (the “Fiscal Agent”) and the City providing for the issuance, administration, and payment of the Bonds; and
WHEREAS, there has been presented to the City Council a form of preliminary official statement (the “Preliminary Official Statement”) describing the Bonds, the City and the Assessment District; and
WHEREAS, there has been presented to the City Council a form of bond purchase agreement (the “Bond Purchase Agreement”) between Oppenheimer & Co. Inc., as underwriter (the “Underwriter”), and the City whereby the Underwriter will purchase the Bonds from the City; and
WHEREAS, there has also been presented to the City Council a form of continuing disclosure certificate (the “Continuing Disclosure Certificate”) to be executed and delivered by the 10 -3- Reso. #
City with respect to the Assessment District and the Bonds for the benefit of the owners of the Bonds in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) of the Securities and Exchange Commission (the “Rule”); and
WHEREAS, Section 8830(b) of the California Streets and Highways Code authorizes a legislative body issuing bonds under the Improvement Bond Act of 1915 to covenant, by resolution, to commence and diligently prosecute to completion any foreclosure action regarding delinquent installments of any assessment which secures the bonds and to specify, by resolution, a deadline for commencement of such foreclosures and such other terms and conditions regarding it as the legislative body may determine to be reasonable; and WHEREAS, the City Council has determined that the Bonds should be issued and sold on the terms and conditions hereinafter specified.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAGUNA BEACH DOES RESOLVE:
SECTION 1. Recitals. The foregoing recitals are true and correct and are incorporated herein by this reference.
SECTION 2. Approval of Issuance of the Bonds. The issuance of not to exceed $4,123,024 aggregate principal amount of the Bonds in order to construct the Improvements within and for the Assessment District is authorized and approved. The Bonds shall be issued as fully registered bonds in denominations of $5,000 or any integral multiple thereof, except that one Bond may include the amount by which the total exceeds the maximum integral of $5,000, if any and shall be issued in accordance with the terms and conditions set forth in the Fiscal Agent Agreement.
11 -4- Reso. #
SECTION 3. Fiscal Agent Agreement. The form of the Fiscal Agent Agreement with respect to the Bonds by and between the City and the Fiscal Agent, which has been made available to the City Council at the meeting at which this Resolution is adopted and to the City Treasurer, is hereby approved, and the City Treasurer or her designated deputies are each individually authorized, for and in the name of and on behalf of the City, and directed to execute and deliver the Fiscal Agent Agreement in substantially the form made available at said meeting with such changes thereto as the City Treasurer or their deputies may approve, such approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 4. Form of Bonds. The form of the Bonds as set forth in the Fiscal Agent Agreement is approved. The City Treasurer and the City Clerk, or their designees, are authorized and directed to execute, by manual or facsimile signature, in the name of and on behalf of the City, the Bonds in either temporary or definitive form and to deliver the Bonds to the Underwriter as provided in the Fiscal Agent Agreement.
SECTION 5. Approval of Preliminary Official Statement; Preparation of Final Official Statement. The form of the Preliminary Official Statement, which has been made available to the City Council at the meeting at which this Resolution is adopted, is approved, together with any changes therein or additions thereto as the City Manager or an Assistant City Manager may approve in consultation with Best Best & Krieger LLP, bond counsel to the City (“Bond Counsel”) and Anzel Galvan LLP, as Disclosure Counsel (“Disclosure Counsel”). The City Manager or the Assistant City Manager is authorized to determine, with the assistance of Bond Counsel and Disclosure Counsel, when the Preliminary Official Statement is to be deemed final within the meaning of the Rule and to deliver a certificate to that effect to the Underwriter. The City Manager or the Assistant City Manager may authorize the Underwriter to distribute the Preliminary Official 12 -5- Reso. #
Statement as approved hereby, or as modified with the consent of the City Manager or the Assistant City Manager, to prospective purchasers of the Bonds. The City Manager or the Assistant City Manager is authorized to participate in the preparation of the final official statement, based on the Preliminary Official Statement, together with any changes therein or additions thereto as may be approved in consultation with Bond Counsel, Disclosure Counsel and the Underwriter, such approval to be conclusively evidenced by the execution and delivery thereof by the City Manager or the Assistant City Manager. The City Manager or the Assistant City Manager is authorized to sign the final official statement on behalf of the City.
SECTION 6. Sale of Bonds. The City Council approves and authorizes the issuance and sale of the Bonds by negotiation with the Underwriter pursuant to the Bond Purchase Agreement between the City and the Underwriter in the form presented to the City Council at the meeting at which this Resolution is adopted, together with any changes therein or additions thereto which are deemed advisable by the City Manager or the Assistant City Manager and Bond Counsel, such approval to be conclusively evidenced by the execution and delivery thereof by the City Manager or the Assistant City Manager. The City Manager or the Assistant City Manager is authorized and directed to execute and deliver the final form of the Bond Purchase Agreement on behalf of the City upon the submission of an offer by the Underwriter to purchase the Bonds, which offer is acceptable to the City Manager or an Assistant City Manager and is consistent with the requirements of this Resolution; provided that the interest rate on any maturity of the Bonds shall not exceed six percent (6.00%) per annum; the purchase price to be paid by the Underwriter for the purchase of the Bonds shall not be less than an amount equal to 1.35% (exclusive of original issue discount) of the aggregate principal amount of the Bonds; and the last maturity of the Bonds shall be paid and redeemed no later than September 2, 2050. The City Manager or the Assistant 13 -6- Reso. #
City Manager is authorized to allow original issue discount in determining the purchase price to be paid by investors who purchase the Bonds from the Underwriter if the City Manager or the Assistant City Manager determines that allowing such discount will result in a lower total interest cost for the Bonds. When the City Manager or the Assistant City Manager has negotiated the Bond Purchase Agreement with the Underwriter within the parameters specified above and when the other terms and conditions of the Bond Purchase Agreement are satisfactory to the City Manager or the Assistant City Manager and Bond Counsel, the City Manager or the Assistant City Manager is authorized to execute and deliver the Bond Purchase Agreement on behalf of the City.
All action which has been taken by or at the direction of the City Manager or the Assistant City Manager prior to the adoption of this Resolution with respect to the sale of the Bonds, including but not limited to the negotiation of the terms of the Bond Purchase Agreement, is ratified and approved.
SECTION 7. No City Obligation. Pursuant to Section 8769 of the Streets and Highways Code of the State of California, the City Council has determined in the Resolution of Intention, and does hereby determine, that the City will not obligate itself to advance funds from the City treasury to cure any deficiency in the Redemption Fund for the Bonds established pursuant to the Fiscal Agent Agreement.
SECTION 8. Approval of Continuing Disclosure Certificate. The form of the Continuing Disclosure Certificate in the form included as an appendix to the Preliminary Official Statement is approved and the City Manager or the Assistant City Manager is authorized to execute and deliver the final form of the Continuing Disclosure Certificate, together with any changes therein or additions thereto as either of them may approve in consultation with Bond Counsel, such 14 -7- Reso. #
approval to be conclusively evidenced by the execution and delivery thereof, for and in the name and on behalf of the City.
SECTION 9. Foreclosure. In the event of delinquency in payment of any installment of an assessment then due and payable, the City Council shall commence foreclosure proceedings, pursuant to Section 8830 et seq. of the California Streets and Highways Code in accordance with the terms and conditions set forth in the Fiscal Agent Agreement.
SECTION 10. Modifications. The approval of the form of the Fiscal Agent Agreement, Continuing Disclosure Certificate, Preliminary Official Statement, the Final Official Statement, and Bond Purchase Agreement given by this Resolution shall apply to any modification, amendment, or supplement of any of said documents which is agreed upon and approved by the City Attorney, Bond Counsel, the City Manager or an Assistant City Manager, and additionally for the Fiscal Agent Agreement, the City Treasurer, as being necessary to carry out the provisions thereof and the authorization and direction provided in this Resolution.
SECTION 11. Appointment of Professionals. In compliance with Section 4(a) of the City’s Debt Management Policy (the “Policy”), the Council hereby authorizes and approves the following professionals to provide services in connection with the issuance the Bonds:
(a) Fiscal Agent. The Bank of New York Mellon Trust Company, N.A. is appointed as fiscal agent pursuant to the Fiscal Agent Agreement, to take any and all action provided for therein to be taken by the Fiscal Agent.
(b) Municipal Advisor. Fieldman, Rolapp & Associates, Inc. is hereby appointed as municipal advisor.
(c) Bond Counsel. Best Best & Krieger LLP is hereby appointed as bond counsel.
(d) Disclosure Counsel. Anzel Galvan LLP is hereby appointed as disclosure counsel.
(e) Assessment Administrator/Dissemination Agent. DTA Public Finance, Inc. is serving as Assessment Administrator and Dissemination Agent. 15 -8- Reso. #
(f) Underwriter. Oppenheimer & Co. Inc. is authorized to serve as the Underwriter for the Bonds in accordance with the conditions set forth in Section 6 hereof.
SECTION 12. Debt Management Policy Disclosures. In compliance with Section 4 of the Policy, the estimated maximum annual debt service on the Bonds is $288,000 and estimated costs of issuance on the Bonds $188,347. The Bonds shall be subject to optional, mandatory and sinking fund redemption as set forth in the Fiscal Agent Agreement.
SECTION 13. Further Action. The City Manager or the Assistant City Manager and City Treasurer are authorized to take any and all action which is directed by the City Attorney and Bond Counsel with respect to the execution and delivery of the Fiscal Agent Agreement, the Continuing Disclosure Certificate, the Preliminary Official Statement, and the Bond Purchase Agreement, and the issuance, sale and delivery of the Bonds, and are which in the opinion of the City Attorney and Bond Counsel is necessary in order for the authorization and direction provided in this Resolution to be carried out. Any references in this Resolution to the City Manager or the Assistant City Manager shall include persons appointed to such positions on an interim or acting basis.
SECTION 14. Conditions of Approval. The approvals, authorization and direction given by this Resolution are conditioned upon the satisfaction of the requirements of Section 6 hereof with respect to the issuance and sale of the Bonds. The officers of the City designated above shall not take any action with respect to the execution and delivery of the Fiscal Agent Agreement, the Continuing Disclosure Certificate and the Bond Purchase Agreement, or the issuance, sale and delivery of the Bonds unless and until such conditions are satisfied; provided, however, that upon satisfaction of such conditions, this Resolution shall be carried out by such officers without further approval or action of the City Council. The approvals, authorization and direction provided by this Resolution shall continue, subject to the satisfaction of such conditions, until December 31, 2026, and the Bonds may be sold, and the Bonds, the Fiscal Agent Agreement, the Continuing 16 -9- Reso. #
Disclosure Certificate, the Bond Purchase Agreement, the Preliminary Official Statement, and the final official statement may be dated, entered into, executed and delivered or distributed, as appropriate, on any date selected by the Mayor, the City Treasurer, the City Manager or the Assistant City Manager and the Underwriter prior to said date.
SECTION 15. Effective Date. This Resolution shall take effect upon adoption and shall remain in effect until all of the Bonds are paid at or redeemed prior to maturity.
ADOPTED this 9th day of December, 2025.
, Mayor
ATTEST:
Ann Marie McKay, City Clerk
I, Ann Marie McKay, City Clerk of the City of Laguna Beach, certify that the foregoing Resolution No. 25.XXX was duly adopted at a regular meeting of the City Council of said City held on December 9, 2025, by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
Ann Marie McKay, City Clerk
17 FISCAL AGENT AGREEMENT
by and between
THE CITY OF LAGUNA BEACH
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
as Fiscal Agent
Dated as of [January 1, 2026]
Relating to
$__________
City of Laguna Beach
Underground Utility Assessment District No. 2021-1
(West Street)
Limited Obligation Improvement Bonds
Attachment 2
18 ARTICLE I AUTHORITY AND DEFINITIONS 19
Section 1.01 Authority for this Agreement ............................................................. 19 Section 1.02 Agreement for Benefit of Bondowners .............................................. 19 Section 1.03 Definitions.......................................................................................... 19 ARTICLE II THE BONDS 24
Section 2.01 Principal Amount; Designation.......................................................... 24 Section 2.02 Terms of Bonds. ................................................................................. 24 Section 2.03 Redemption. ....................................................................................... 25 Section 2.04 Form of Bonds ................................................................................... 29 Section 2.05 Execution of Bonds ............................................................................ 29 Section 2.06 Transfer of Bonds .............................................................................. 29 Section 2.07 Exchange of Bonds ............................................................................ 30 Section 2.08 Bond Register..................................................................................... 30 Section 2.09 Temporary Bonds............................................................................... 30 Section 2.10 Bonds Mutilated, Lost, Destroyed or Stolen ...................................... 31 Section 2.11 Special Obligation .............................................................................. 31 Section 2.12 Refunding ........................................................................................... 31 ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS; IMPROVEMENT FUND; COST OF ISSUANCE FUND;
CAPITALIZED INTEREST FUND 31
Section 3.01 Issuance and Delivery of Bonds ........................................................ 31 Section 3.02 Application of Proceeds of Sale of Bonds ......................................... 32 Section 3.03 Improvement Fund. ............................................................................ 32 Section 3.04 Cost of Issuance Fund. ....................................................................... 33 Section 3.05 Capitalized Interest Fund. .................................................................. 33 Section 3.06 Book-Entry System; Delivery of the Bonds to the Depository.......... 34 ARTICLE IV ASSESSMENT REVENUES; REDEMPTION FUND; RESERVE FUND 36
Section 4.01 Pledge of Assessment Revenues; Transfers of Assessment Revenues. ........................................................................................... 36 Section 4.02 Redemption Fund. .............................................................................. 36 19 Section 4.03 Reserve Fund. .................................................................................... 38 ARTICLE V OTHER COVENANTS OF THE CITY 39
Section 5.01 Punctual Payment............................................................................... 39 Section 5.02 Special Obligation .............................................................................. 39 Section 5.03 Extension of Time for Payment ......................................................... 39 Section 5.04 Against Encumbrances....................................................................... 40 Section 5.05 Protection of Security and Rights of Owners .................................... 40 Section 5.06 Compliance with Laws, Completion of Project ................................. 40 Section 5.07 Collection of Assessment Revenues .................................................. 40 Section 5.08 Further Assurances............................................................................. 40 Section 5.09 Tax Covenants ................................................................................... 40 Section 5.10 Covenant to Foreclose........................................................................ 41 Section 5.11 Continuing Disclosure ....................................................................... 41 ARTICLE VI INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS; LIABILITY OF THE CITY 41
Section 6.01 Deposit and Investment of Moneys in Funds .................................... 41 Section 6.02 Rebate Fund; Rebate to the United States .......................................... 43 Section 6.03 Liability of City.................................................................................. 43 Section 6.04 Employment of Agents by City ......................................................... 44 Section 6.05 Books and Accounts .......................................................................... 44 ARTICLE VII THE FISCAL AGENT 44
Section 7.01 Appointment of Fiscal Agent ............................................................. 44 Section 7.02 Liability of Fiscal Agent .................................................................... 45 Section 7.03 Information ........................................................................................ 47 Section 7.04 Notice to Fiscal Agent ....................................................................... 47 Section 7.05 Compensation, Indemnification ......................................................... 48 Section 7.06 Books and Accounts .......................................................................... 48 ARTICLE VIII MODIFICATION OR AMENDMENT OF THIS AGREEMENT 48 Section 8.01 Amendments Permitted. ..................................................................... 48 Section 8.02 Owners’ Meetings .............................................................................. 49 20 Section 8.03 Procedure for Amendment with Written Consent of Owners ............ 49 Section 8.04 Disqualified Bonds............................................................................. 50 Section 8.05 Effect of Supplemental Agreement .................................................... 51 Section 8.06 Endorsement or Replacement of Bonds Issued After Amendments ...................................................................................... 51 Section 8.07 Amendatory Endorsement of Bonds .................................................. 51 Section 8.08 Execution of Supplemental Agreements ............................................ 51 ARTICLE IX MISCELLANEOUS 51
Section 9.01 Benefits of Agreement Limited to Parties ......................................... 51 Section 9.02 Successor is Deemed Included in All References to Predecessor ........................................................................................ 51 Section 9.03 Discharge of Agreement. ................................................................... 52 Section 9.04 Execution of Documents and Proof of Ownership by Owners .......... 52 Section 9.05 Waiver of Personal Liability .............................................................. 53 Section 9.06 Notices to and Demands on City and Fiscal Agent ........................... 53 Section 9.07 Partial Invalidity................................................................................. 53 Section 9.08 Unclaimed Moneys ............................................................................ 54 Section 9.09 Applicable Law and Venue ................................................................ 54 Section 9.10 Conflict with Act................................................................................ 54 Section 9.11 Conclusive Evidence of Regularity ................................................... 54 Section 9.12 Payment on Business Day .................................................................. 54 Section 9.13 Counterparts ....................................................................................... 54 21 FISCAL AGENT AGREEMENT
THIS FISCAL AGENT AGREEMENT (this “Agreement”) is dated and entered into as of [January 1, 2026], by and between the City of Laguna Beach, California (the “City”), and The Bank of New York Mellon Trust Company, N.A., a national banking association duly organized and existing under the laws of the United States, as fiscal agent (the “Fiscal Agent”).
W I T N E S S E T H:
WHEREAS, the City Council of the City (the “City Council”) has formed Underground Utility Assessment District No. 2021-1 (West Street), City of Laguna Beach, County of Orange, State of California (the “Assessment District”), and has levied an assessment on the property in the Assessment District pursuant to the provisions of the Municipal Improvement Act of 1913, Division 12 (commencing with Section 10000) of the California Streets and Highways Code, and provided for the issuance of bonds for the Assessment District pursuant to the Improvement Bond Act of 1915, Division 10 (commencing with Section 8500) of the California Streets and Highways Code (the “Bond Act”), to be secured by such assessment, to finance the design and construction of public improvements for the benefit of the property within the Assessment District; and WHEREAS, pursuant to the Bond Act, the City Council adopted its Resolution No. _______ which resolution, among other matters, authorized the issuance of the City of Laguna Beach Underground Utility Assessment District No. 2021-1 (West Street) Limited Obligation Improvement Bonds (the “Bonds”), in an aggregate principal amount of not to exceed $_______, the unpaid amount of the assessment levied on parcels of property within the Assessment District, and provided that such issuance would be in accordance with the Bond Act and this Agreement, and authorized the execution hereof; and
WHEREAS, it is in the public interest and for the benefit of the owners of the property within the Assessment District and the owners of the Bonds that the City enter into this Agreement to provide for the issuance of the Bonds, the disbursement of proceeds of the Bonds, and the administration and payment of the Bonds; and
WHEREAS, the Bonds will be secured by and paid from the assessments levied on the parcels of property within the Assessment District and the annual installments of such assessments collected with respect to such parcels; and
WHEREAS, all things necessary to cause the Bonds, when executed by the City and authenticated by the Fiscal Agent and issued as in the Bond Act, the Resolution (as hereinafter defined) and this Agreement provided, to be legal, valid and binding special obligations of the City in accordance with their terms, and all things necessary to cause the authorization, execution and delivery of this Agreement and the authorization, execution, authentication and delivery of the Bonds, subject to the terms hereof, have in all respects been duly authorized.
NOW, THEREFORE, based upon the foregoing recitals, which are incorporated herein by this reference, in consideration of the covenants and provisions herein set forth and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:
22 ARTICLE I
AUTHORITY AND DEFINITIONS
Section 1.01 Authority for this Agreement. This Agreement is entered into pursuant to the provisions of the Bond Act and the Resolution.
Section 1.02 Agreement for Benefit of Bondowners. The provisions, covenants and agreements herein set forth to be performed by or on behalf of the City shall be for the equal benefit, protection and security of the Owners (as defined below). All of the Bonds, without regard to the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or permitted by this Agreement. The Fiscal Agent may become the owner of any of the Bonds with the same rights it would have if it were not Fiscal Agent.
Section 1.03 Definitions. Unless the context otherwise requires, the terms defined in this Section 1.03 shall, for all purposes of this Agreement, of any Supplemental Agreement, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof.
“Agreement” means this Agreement, as it may be amended or supplemented from time to time by any Supplemental Agreement entered into pursuant to the provisions hereof. “Annual Debt Service” means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled, and (ii) the principal amount of the Outstanding Bonds scheduled to be paid. “Assessment” or “Assessments” means the assessment levied on the lots and parcels of property within the Assessment District by the adoption by the City Council of Resolution No.
25.077 on September 23, 2025 and the recording of the assessment diagram and notice of assessment for the Assessment District with the County Recorder of the County of Orange pursuant to Section 3114 of the California Streets and Highways Code. “Assessment District” means Underground Utility Assessment District No. 2021-1 (West Street), City of Laguna Beach, County of Orange, State of California. “Assessment Prepayment” means an amount received by the City from a property owner as a payment in full or a partial payment of the unpaid amount of the Assessment levied on his or her property.
“Assessment Revenues” means the revenues received by the City in each Fiscal Year from the collection of the annual installments of the unpaid Assessments, including penalties and interest on delinquent installments of the unpaid Assessments and proceeds from the sale of property for delinquent Assessment installments, but excluding the amounts of the annual assessments collected by the City for the payment of administration costs pursuant to Sections 23 8682, 8682.1 and 10204(f) of the California Streets and Highways Code and Assessment Prepayments.
“Authorized Officer” means any officer or employee of the City authorized by the City Council as evidenced by a certificate delivered to the Fiscal Agent or the City Treasurer, or by an Authorized Officer to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Officer.
“Bond Counsel” means any attorney or firm of attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities.
“Bond Year” means the period beginning on the Closing Date and ending on September 2, 2026 and thereafter the period beginning on each September 3 and ending on the following September 2.
“Bonds” means the Bonds at any time Outstanding under this Agreement. “Business Day” means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the State of California, the State of New York, or in the state in which the Fiscal Agent has its Principal Office are authorized or obligated by law or executive order to be closed.
“Capitalized Interest Fund” means the fund by that name established in the Interest Account in the Bond Fund by Section 3.05(A) hereof.
“Cash Collections” means any assessments paid by property owners and collected by the City during the cash collection period which occurred prior to the issuance of the Bonds. “City Contribution and Cash Collections Account” means the account by that name established in the Improvement Fund by Section 3.03(A). “City Treasurer” means the City Treasurer of the City or their designee. “Closing Date” means the date upon which there is an exchange of the Bonds for the proceeds representing payment of the purchase price of the Bonds by the Original Purchaser. “Code” means the Internal Revenue Code of 1986, as amended. “Continuing Disclosure Certificate” means the Continuing Disclosure Certificate of the City entered into pursuant to Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, dated as of the Closing Date, as originally executed and as it may be amended from time to time in accordance with the terms thereof. “Costs of Issuance” means items of expense payable or reimbursable directly or indirectly by the City and related to the authorization, sale and issuance of the Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, including but not limited to the preliminary official statement and official statement regarding the 24 Bonds, closing costs, filing and recording fees, initial fees, expenses and charges of the Fiscal Agent, including its first annual administration fee and the fees and expenses of its counsel, expenses incurred by the City in connection with the issuance of the Bonds and the formation of the Assessment District, bond (underwriter’s) discount, legal fees and charges, including the fees of Bond Counsel and counsel to the underwriter, fees of consultants, advisors and engineers, charges for authentication, transportation and safekeeping of the Bonds and other costs, charges and fees in connection with the foregoing.
“Cost of Issuance Fund” means the fund by that name established by Section 3.04(A) hereof.
“Debt Service” means the amount of interest and principal payable on the Bonds scheduled to be paid during the period of computation, excluding amounts payable during such period which relate to principal of the Bonds which are scheduled to be retired and paid before the beginning of such period.
“Depository” means The Depository Trust Company, New York, NY, or any successor thereof, the depository for the Bonds.
“Federal Securities” means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein (as to which the Fiscal Agent is entitled to rely upon investment direction from the City as deemed certification that such investment constitutes a legal investment):
(i) Cash; and
(ii) Direct general obligations of the United States (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States), or obligations, the payment of principal of and interest on which is unconditionally guaranteed by the United States.
“Fiscal Agent” means The Bank of New York Mellon Trust Company, N.A., the fiscal agent appointed by the City, acting as an independent fiscal agent with the duties and powers as herein expressly provided, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in Section 7.01 hereof. “Fiscal Year” means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year, both dates inclusive.
“Improvement Fund” means the fund by that name established by Section 3.03(A) hereof. “Independent Financial Consultant” means a firm of certified public accountants, a financial consulting firm, a consulting engineering firm or an engineer which is not an employee of, or otherwise controlled by, the City.
“Information Services” means the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board at www.emma.msrb.org; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other services providing 25 information with respect to called bonds as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.
“Interest Payment Dates” means March 2 and September 2 of each year, commencing [September 2, 2026].
“Investment Earnings” means all interest earned and any gains and losses on the investment of moneys in any fund or account created by this Agreement excluding interest earned and gains and losses on the investment of moneys in the Rebate Fund. “Maximum Annual Debt Service” means the greatest amount of Annual Debt Service for any Bond Year after calculation is made through the final maturity date of any Outstanding Bonds. “Moody’s” shall mean Moody’s Investors Service, Inc., a national rating service with offices in New York, New York.
“Nominee” means CEDE & Co., the nominee of the Depository. “Officer’s Certificate” means a written certificate of the City signed by an Authorized Officer of the City.
“Original Purchaser” means the first purchaser of the Bonds from the City. “Outstanding” when used as of any particular time with reference to the Bonds, means (subject to the provisions of Section 8.04 hereof) all Bonds except:
(i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation;
(ii) Bonds called for redemption which, for the reasons specified in Section 2.03 (G) hereof, are no longer entitled to any benefit under this Agreement other than the right to receive payment of the redemption price therefor; (iii) Bonds paid or deemed to have been paid within the meaning of Section 9.03 hereof; and
(iv) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City and authenticated by the Fiscal Agent pursuant to this Agreement or any Supplemental Agreement. “Owner” means any person who shall be the registered owner of any Outstanding Bond. “Permitted Investments” means investments authorized pursuant to the City of Laguna Beach Investment Policy for Calendar Year 2025, adopted December 10, 2024 by the City Council, as may be amended from time to time.
“Principal Office” means with respect to the payment, registration, surrender, exchange or transfer of any Bond or Bonds, the principal corporate trust office of the Fiscal Agent in Los 26 Angeles, California; or such other office or address as may be specified in writing by the Fiscal Agent provided, however, that for purposes of administering this Agreement, the principal office shall be the principal office at which the Fiscal Agent administers its corporate trust business in California which, as of the date of this Agreement, is at the address set forth in Section 9.06 hereof (as may be updated with notice from the Fiscal Agent to the City). “Proceeds,” when used with reference to the Bonds, means the aggregate principal amount of the Bonds, plus accrued interest and premium, if any, less original issue discount, if any, less underwriter’s discount.
“Project” means the public improvements within and for the Assessment District as described in the Resolution of Intention.
“Rebate Certificate” means the certificate delivered by the City upon the delivery of the Bonds relating to Section 148 of the Code, or any functionally similar replacement certificate. “Rebate Fund” means the fund by that name established by Section 6.02 hereof. “Record Date” means the fifteenth (15th) day of the month next preceding the applicable Interest Payment Date whether or not such day is a Business Day. “Redemption Fund” means the fund by that name established by Section 4.02(A) hereof. “Regulations” means the temporary and permanent regulations of the United States Department of the Treasury promulgated under the Code.
“Reserve Fund” means the fund by that name established by Section 4.03(A) hereof. “Reserve Requirement” means the amount of $______________. “Resolution” means Resolution No. ____, adopted by the City Council on, [December 9, 2025].
“Resolution of Intention” means Resolution No. 25.032 adopted by the City Council on May 20, 2025.
“Responsible Officer” means, when used with respect to the Fiscal Agent, any managing director, president, vice president, senior associate, associate or other officer of the Fiscal Agent within the Principal Office (or any successor corporate trust office) customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred at the Principal Office because of such person’s knowledge of and familiarity with the particular subject and having direct responsibility for the administration of this Agreement. “Securities Depositories” means The Depository Trust Company, 55 Water Street, 50th Floor, New York, New York, 10041-0099, Call Notification Department, Fax (212) 855-7232; and, in accordance with then current guidelines of the Securities and Exchange Commission, such 27 other securities depositories as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.
“Standard & Poor’s” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., a national rating service with offices in New York, New York. “Supplemental Agreement” means a supplemental agreement issued pursuant to Section
8.05 hereof.
ARTICLE II
THE BONDS
Section 2.01 Principal Amount; Designation. The Bonds in the aggregate principal amount of $__________ are hereby authorized to be issued by the City for the Assessment District under and subject to the terms of the Resolution, this Agreement, the Bond Act and other applicable laws of the State of California. The Bonds shall be designated “City of Laguna Beach Underground Utility Assessment District No. 2021-1 (West Street) Limited Obligation Improvement Bonds,” and shall be secured by the Assessment Revenues.
Section 2.02 Terms of Bonds.
(A) The Bonds. The Bonds shall be issued as fully registered bonds, without coupons, in the denominations of $5,000 or any integral multiple thereof, except that one Bond may include the amount by which the total exceeds the maximum integral of $5,000, if any. The Bonds shall be lettered and numbered in a customary manner as determined by the Fiscal Agent.
The Bonds shall be dated as of the Closing Date.
(B) Maturities. The Bonds shall mature and become payable on September 2 of each year, as follows:
Maturity Dates
(September 2) Principal Amounts Interest Rates
____________________
(T) Term Bond
(C) Interest. The Bonds shall bear interest at the rates set forth in subsection (B) above payable on the Interest Payment Dates in each year. Interest shall be calculated on the 28 basis of a 360-day year composed of twelve (12) 30-day months. Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated after a Record Date and before the close of business on the next Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated on or before the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from the Closing Date; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon or from the Closing Date, if no interest has previously been paid or made available for payment thereon. (D) Method of Payment. Interest on the Bonds is payable by check of the Fiscal Agent mailed by first class mail, postage prepaid, on each Interest Payment Date, until the principal amount of a Bond has been paid or made available for payment, to the registered Owner thereof at such registered Owner’s address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the Record Date preceding the Interest Payment Date; provided that so long as any Bonds are in book-entry form, payments with respect to such Bonds shall be made by wire transfer or such other method acceptable to the Fiscal Agent to the Depository. All Bonds paid in full by the Fiscal Agent pursuant to this subsection shall be canceled by the Fiscal Agent upon surrender. Principal of, redemption premium, if any, and interest payable to any Owner of Bonds in aggregate principal amount of $1,000,000 or more will be paid, upon the written request of any such Owner in form and substance satisfactory to the Fiscal Agent, by wire transfer of immediately available funds to an account within the United States designated by such Owner on or before a Record Date.
(E) CUSIP Identification Numbers. “CUSIP” identification numbers shall be imprinted on the Bonds, but such numbers shall not constitute a part of the contract evidenced by the Bonds. In addition, failure on the part of the City or the Fiscal Agent to use such CUSIP numbers in any notice to the Owners shall not constitute an event of default or any violation of the City’s contract with the Owners and shall not impair the effectiveness of any such notice.
Section 2.03 Redemption.
(A) Optional Redemption. The Bonds are subject to redemption prior to their stated maturity dates on any Interest Payment Date on or after September 2, 20__, on a pro rata basis among maturities (and by lot within any one maturity), in integral multiples of $5,000, at the option of the City from moneys derived by the City from any source, at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption:
Redemption Dates Redemption Price
September 2, 20__ and March 20__ 103%
September 2, 20__ and March 2, 20__ 102
September 2, 20__ and March 2, 20__ 101
September 2, 20__ and any Interest
Payment Date thereafter
100
29 (B) Mandatory Redemption From Assessment Prepayments. The Bonds are subject to mandatory redemption prior to their stated maturity dates on any Interest Payment Date, as selected by the City, in integral multiples of $5,000, from moneys derived by the City from Assessment Prepayments, at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption:
Redemption Dates Redemption Price
Interest Payment Dates on or before
March 2, 20__
103%
September 2, 20__ and March 2, 20__ 102
September 2, 20__ and March 2, 20__ 101
September 2, 20__ and any Interest
Payment Date thereafter
100
In selecting Bonds for redemption pursuant to this subsection (B), the City Treasurer shall select such Bonds in such a way that the ratio of the principal amount of the Bonds in each maturity of the Bonds that will remain Outstanding to the aggregate principal amount of the Bonds that will remain Outstanding will be approximately the same as it was prior to the redemption of such Bonds, insofar as possible.
(C) Sinking Fund Redemption. The Outstanding Bonds maturing on September 2, 20++, are subject to mandatory sinking fund redemption, in part, on September 2, 20++, and on each September 2 thereafter prior to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, from sinking fund payments as follows:
Redemption Dates
(September 2) Sinking Fund Payments
The Outstanding Bonds maturing on September 2, 20++, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, from sinking fund payments as follows:
Redemption Dates
(September 2) Sinking Fund Payments
30 The Outstanding Bonds maturing on September 2, 20__, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, from sinking fund payments as follows:
Redemption Dates
(September 2) Sinking Fund Payments
The amounts in the foregoing schedule shall be reduced pro rata among redemption dates, in order to maintain substantially level Annual Debt Service, as directed in writing to the Fiscal Agent by an Authorized Officer, as a result of any prior partial redemption of the Bonds pursuant to subsection (A) or subsection (B) above. The City shall provide the Fiscal Agent with any revised schedule, if applicable.
(D) Purchase of Bonds. In lieu of payment at maturity or redemption under this Section 2.03, moneys in the Redemption Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase. The Fiscal Agent shall be absolutely protected and shall incur no liability in relying on such an Officer’s Certificate. In such event, the City shall, as may be appropriate, provide to the Fiscal Agent a revised maturity schedule or a revised mandatory sinking fund schedule for the Bonds, or both.
(E) Notice to Fiscal Agent. An Authorized Officer shall give the Fiscal Agent written notice of the City’s intention to redeem Bonds not less than thirty (30) days prior to the applicable redemption date. Such written notice shall specify whether Bonds are to be redeemed pursuant to subsection (A) or subsection (B) above and shall specify the principal amounts and the maturities of the Bonds to be redeemed. The provisions of this subsection (E) shall not apply to the redemption of the Bonds pursuant to Section 2.03(C) hereof. (F) Redemption Procedure by Fiscal Agent. Subject to its receipt of timely notice from an Authorized Officer pursuant to Section 2.03 (E), the Fiscal Agent shall cause notice of any redemption to be (a) mailed by first class mail, postage prepaid, or (b) electronically delivered at least thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption, to the Securities Depositories and to one or more Information Services selected by an Authorized Officer, and to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books maintained by the Fiscal Agent at its Principal Office; but such mailing shall not be a condition precedent to such 31 redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such Bonds.
Such notice shall state the date of such notice, the date of issue of the Bonds, the place or places of redemption, the redemption date, the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers and Bond numbers of the Bonds to be redeemed, by giving the individual CUSIP number and Bond number of each Bond to be redeemed, or shall state that all Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, shall state as to any Bond called for redemption in part the portion of the principal of the Bond to be redeemed, shall require that such Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such Bonds will not accrue from and after the redemption date. The cost of the mailing of any such redemption notice shall be paid by the City. Such notice may state that no representation is made as to the accuracy or correctness of the CUSIP numbers printed thereon or on the Bonds.
Redemption notices may be conditional. The City has the right to rescind any notice of redemption of the Bonds by providing written notice to the Fiscal Agent prior to the date fixed for redemption, in which case such redemption shall be cancelled and annulled and such cancellation shall not constitute an event of default. Any notice of redemption shall be cancelled and annulled if for any reason funds will not 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 City and the Fiscal Agent shall have no liability to the Owners of the Bonds or any other party related to or arising from such rescission or cancellation of redemption. The Fiscal Agent shall deliver the rescission notice in the same manner as the notice of redemption was delivered.
Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.
In the event of an optional redemption pursuant to Section 2.03 (A) hereof or a mandatory redemption pursuant to Section 2.03(B) or a purchase of Bonds pursuant to Section
2.03(D) hereof, the City shall transfer or cause to be transferred to the Fiscal Agent for deposit in the Redemption Fund moneys in an amount equal to the redemption price of the Bonds being redeemed or the purchase price of the Bonds being purchased on or before the fifteenth (15th) day of the month preceding the Interest Payment Date upon which such Bonds are to be redeemed or the date upon which the Bonds are to be purchased, as the case may be.
Whenever provision is made in this Agreement for the redemption of less than all of the Bonds, the Fiscal Agent shall select the Bonds for redemption in such a way that the ratio of Outstanding Bonds shall be approximately the same in each maturity of the Bonds insofar as possible, and shall select Bonds for redemption within each maturity of the Bonds by lot, subject to the procedures of the Depositary.
32 Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the Owner, at the expense of the City, a new Bond or Bonds, of the same maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds.
(G) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the redemption prices of the Bonds called for redemption, together with accrued interest to the date of redemption, shall have been deposited in the Redemption Fund, such Bonds shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price, and interest shall cease to accrue on the Bonds to be redeemed on the redemption date specified in the notice of redemption.
All Bonds redeemed and purchased by the Fiscal Agent pursuant to this Section
2.03 shall be canceled by the Fiscal Agent.
Section 2.04 Form of Bonds. The Bonds, including the Fiscal Agent’s certificate of authentication and the assignment to appear thereon shall be substantially in the forms, respectively, set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions as permitted or required by this Agreement.
Section 2.05 Execution of Bonds. The Bonds shall be executed by the facsimile signatures of the City Treasurer and the City Clerk of the City, who are in office on the date of this Agreement or at any time thereafter. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bond to the Owner, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bond to the Owner.
Any Bond may be signed and attested by such persons as at the actual date of the execution of such Bond shall be the proper officers of the City notwithstanding that on the nominal date of such Bond any such person shall not have been such officer of the City.
Only such Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A hereto, executed and dated by the Fiscal Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of authentication of the Fiscal Agent shall be conclusive evidence that such Bonds have been duly authenticated, registered and delivered hereunder, and are entitled to the benefits of this Agreement.
Section 2.06 Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 hereof, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Fiscal Agent. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting transfer of a Bond any tax or other governmental charge required to be paid with respect to such transfer. 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 Fiscal Agent all 33 information necessary to allow the Fiscal Agent 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 Fiscal Agent shall conclusively rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.
Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of like aggregate principal amount.
No transfers of Bonds shall be required to be made (i) during the fifteen (15) days preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or (ii) with respect to Bonds which have been selected for redemption.
Section 2.07 Exchange of Bonds. Bonds may be exchanged at the Principal Office of the Fiscal Agent only for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity and interest rate. The cost for any services rendered or any expense incurred by the Fiscal Agent in connection with any such exchange shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting exchange of a Bond any tax or other governmental charge required to be paid with respect to such exchange.
Whenever any Bond or Bonds shall be surrendered for exchange, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of like aggregate principal amount.
No exchanges of Bonds shall be required to be made (i) during the fifteen (15) days preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or (ii) with respect to Bonds which have been selected for redemption.
Section 2.08 Bond Register. The Fiscal Agent shall keep, or cause to be kept, at its Principal Office sufficient books for the registration and transfer of the Bonds which books shall show the series, number, CUSIP identification number, date of issuance, amount, rate of interest and Owner of each Bond and shall at all times be open to inspection by the City during regular business hours upon reasonable notice; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the ownership of the Bonds as hereinbefore provided. The ownership of the Bonds shall be proved by the Bond Register.
Section 2.09 Temporary Bonds. The Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the City, and may contain such reference to any of the provisions of this Agreement as may be appropriate.
Every temporary Bond shall be executed by the City upon the same conditions and in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds, it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange for the definitive Bonds at the Principal Office of the Fiscal Agent or at such other location as the Fiscal Agent shall designate, and the Fiscal Agent shall authenticate 34 and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Agreement as definitive Bonds authenticated and delivered hereunder.
Section 2.10 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the City, at the expense of the Owner of said Bond, shall execute, and the Fiscal Agent shall authenticate and deliver, a replacement Bond of like tenor and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be canceled and destroyed by the Fiscal Agent. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Fiscal Agent and, if such evidence be satisfactory to it and indemnity satisfactory to it shall be given, the City, at the expense of the Owner, shall execute, and the Fiscal Agent shall authenticate and deliver, a replacement Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The City or Fiscal Agent may require payment of a sum not exceeding the actual cost of preparing each replacement Bond delivered under this Section 2.10 and of the expenses which may be incurred by the City and the Fiscal Agent for the preparation, execution, authentication and delivery thereof.
Any Bond delivered under the provisions of this Section 2.10 in replacement of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation of the City whether or not the Bond so alleged to be lost, destroyed or stolen is at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Agreement with all other Bonds issued pursuant to this Agreement.
Section 2.11 Special Obligation. All obligations of the City under this Agreement and the Bonds shall be special obligations of the City, payable solely from the Assessment Revenues.
Neither the faith and credit nor the taxing power of the City (except to the limited extent set forth herein) or the State of California or any political subdivision thereof is pledged to the payment of the Bonds.
Pursuant to Section 8769 of the California Streets and Highways Code, the City Council of the City has determined in the Resolution of Intention that the City will not obligate itself to advance funds from the City treasury to cure any deficiency in the Redemption Fund.
Section 2.12 Refunding. The Bonds are subject to refunding pursuant to the procedures of the Refunding Act of 1984 for 1915 Improvement Bond Act Bonds, Division 11.5 (commencing with Section 9500) of the California Streets and Highways Code or as otherwise permitted by law.
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS;
IMPROVEMENT FUND; COST OF ISSUANCE FUND; CAPITALIZED INTEREST FUND Section 3.01 Issuance and Delivery of Bonds. At any time after the execution of this Agreement, the City may issue the Bonds in the aggregate principal amount set forth in Section
2.01 hereof and deliver the Bonds to the Original Purchaser. The Authorized Officers of the City are hereby authorized and directed to deliver any and all documents and instruments necessary to cause the issuance of the Bonds in accordance with the provisions of the Bond Act, the Resolution 35 and this Agreement, to authorize the payment of Costs of Issuance and costs of the Project by the Fiscal Agent from the proceeds of Bonds, and to do and cause to be done any and all acts and things necessary or convenient for delivery of the Bonds to the Original Purchaser.
Section 3.02 Application of Proceeds of Sale of Bonds. The Proceeds of the sale of the Bonds to the Original Purchaser shall be paid as follows:
(A) to the Fiscal Agent, who shall forthwith set aside, pay over and deposit such Proceeds on the Closing Date as follows:
(1) $_________ shall be deposited in the Improvement Fund; (2) $_________ shall be deposited in the Capitalized Interest Fund; and (3) $_________ shall be deposited in the Costs of Issuance Fund. (4) $_________ shall be deposited in the Reserve Fund, which will satisfy the Reserve Fund Requirements as of the Closing Date.
The Fiscal Agent may create additional accounts and subaccounts in any of the funds created under this Fiscal Agent Agreement as the Fiscal Agent may deem appropriate for the purpose of fulfilling its obligations hereunder.
Section 3.03 Improvement Fund.
(A) Establishment of Improvement Fund. There is hereby established, as a separate account to be held by the Fiscal Agent, the “Underground Utility Assessment District No. 2021-1 (West Street) Improvement Fund,” to the credit of which a deposit shall be made as required by paragraph (A) of Section 3.02 hereof. There is hereby established as a separate account within the Improvement Fund the “Underground Utility Assessment District No. 2021-1 (West Street) City Contribution and Cash Collections Account” to the credit of which the City Treasurer shall transfer to the Fiscal Agent from designated City moneys the amount of $1,415,072, which constitutes the City’s contribution to the Project, and $_________, which constitutes the Cash Collections. Moneys in the Improvement Fund and the City Contribution and Cash Collections Account shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed, except as otherwise provided in subsection (D) of this Section 3.03, for the payment or reimbursement of the costs of the design, acquisition and construction of the Project and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds. (B) Procedure for Disbursement. Disbursements from the Improvement Fund shall be made by the Fiscal Agent upon receipt of an Officer’s Certificate which shall:
(1) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made and the person to which the disbursement is to be paid; and (2) certify that no portion of the amount then being requested to be disbursed was set forth in any Officer’s Certificate previously filed with the Fiscal Agent 36 requesting disbursement, and that the amount being requested is an appropriate disbursement from the Improvement Fund.
(C) Investment. Moneys in the Improvement Fund shall be invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained by the Fiscal Agent in the Improvement Fund to be used for the purposes of such fund. (D) Closing of Fund. Upon the filing of an Officer’s Certificate stating that the Project has been completed and that all costs of the Project have been paid or are not required to be paid from the Improvement Fund, and further stating that moneys on deposit in the Improvement Fund are not needed to complete the Project or reimburse the cost thereof, amounts remaining in the Improvement Fund, if any, shall be applied by the City Treasurer as provided for in Section 10427.1 of the California Streets and Highways Code. (E) Officer’s Certificate. Upon receipt of an Officer’s Certificate delivered pursuant to this Section 3.03, the Fiscal Agent is authorized to act thereon without further inquiry and shall not be responsible for the accuracy of the statements made in such Officer’s Certificate or the application of the funds disbursed pursuant thereto, and shall be absolutely protected and incur no liability in relying on such Officer’s Certificate.
Section 3.04 Cost of Issuance Fund.
(A) Establishment of Cost of Issuance Fund. There is hereby established, as a separate account to be held by the Fiscal Agent, the “Underground Utility Assessment District No. 2021-1 (West Street) Cost of Issuance Fund” to the credit of which a deposit shall be made as required by paragraph (A) of Section 3.02 hereof. Moneys in the Cost of Issuance Fund shall be held by the Fiscal Agent and shall be disbursed as provided in subsection (B) of this Section for the payment or reimbursement of Costs of Issuance.
(B) Disbursement. Amounts in the Cost of Issuance Fund shall be disbursed to pay Costs of Issuance, as set forth in a requisition containing respective amounts to be paid to the designated payees, signed by an Authorized Officer and delivered to the Fiscal Agent concurrently with the delivery of the Bonds. The Fiscal Agent shall, to the extent of the moneys on deposit in the Cost of Issuance Fund, pay all Costs of Issuance upon receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee in such requisition, or upon receipt of an Officer’s Certificate requesting payment of a Cost of Issuance not listed on the initial requisition delivered to the Fiscal Agent on the Closing Date. The Fiscal Agent shall maintain the Cost of Issuance Fund for a period of ninety (90) days after the Closing Date and shall then transfer and deposit any moneys remaining therein, including any Investment Earnings thereon, to the Improvement Fund for payment or reimbursement of costs of the Project, and the Fiscal Agent shall close the Cost of Issuance Fund. (C) Investment. Moneys in the Cost of Issuance Fund shall be invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained by the Fiscal Agent in the Cost of Issuance Fund to be used for the purposes of such fund.
Section 3.05 Capitalized Interest Fund.
37 (A) Establishment of Capitalized Interest Fund. There is hereby established, as a separate account to be held by the Fiscal Agent, the "Underground Utility Assessment District No. 2021-1 (West Street) Capitalized Interest Fund" to the credit of which a deposit shall be made as required by paragraph (A) of Section 3.02 hereof. Moneys in the Capitalized Interest Fund shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the interest on the Bonds as provided in subsection (B) and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds. (B) Disbursement. No later than _________, 20__, the Fiscal Agent shall transfer moneys from the Capitalized Interest Fund to the Redemption Fund the amount which is necessary to cause the amount on deposit in the Redemption Fund to be equal to the amount of interest which is due and payable on the Outstanding Bonds on _________, 20__. (C) Closing of Funds. The amount, if any, on deposit in the Capitalized Interest Account on ________, 20__, shall be transferred by the Fiscal Agent and deposited into the Redemption Fund and the Capitalized Interest Fund shall be closed by the Fiscal Agent. (D) Investment. Moneys in the Cost of Issuance Fund shall be invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained by the Fiscal Agent in the Capitalized Interest Fund to be used for the purposes of such fund.
Section 3.06 Book-Entry System; Delivery of the Bonds to the Depository. (A) Book-Entry System; Limited Obligation of the City and the Fiscal Agent.
Notwithstanding any other provision of this Agreement, the Bonds shall be initially delivered to the Depository in the form of a separate single fully registered Bond (which may be typewritten) for each of the maturities of the Bonds. Upon such initial delivery, the ownership of each such Bond shall be registered in the registration books kept by the Fiscal Agent in the name of the Nominee, as nominee of the Depository. Except as provided in subsection (C) below, all of the Outstanding Bonds shall be registered in the registration books kept by the Fiscal Agent in the name of the Nominee.
With respect to Bonds registered in the registration books kept by the Fiscal Agent in the name of the Nominee, the City and the Fiscal Agent shall have no responsibility or obligation to any Participant of the Depository or to any person, corporation or firm on behalf of which the Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the City and the Fiscal Agent shall have no responsibility or obligation with respect to (1) the accuracy of the records of the Depository, the Nominee or any Participant with respect to any ownership interest in the Bonds, (2) the delivery to any Participant or any other person, other than an Owner as shown in the registration books kept by the Fiscal Agent, of any notice with respect to the Bonds, (3) the selection by the Depository and its Participants of the beneficial interest in the Bonds to be redeemed in the event the Bonds are redeemed in part, or (4) the payment to any Participant or any other persons, other than an Owner as shown in the registration books kept by the Fiscal Agent, of any amount with respect to principal of, premium, if any, or interest due with respect to the Bonds. The City and the Fiscal Agent may treat and consider the person in whose name each Bond is registered in the registration books kept by the Fiscal Agent as the holder and absolute owner of such Bond for the purpose of payment of principal, premium, if any, and interest 38 with respect to such Bond, for the purpose of giving notices with respect to such Bond, for the purpose of registering transfers with respect to such Bond and for all other purposes whatsoever.
The Fiscal Agent shall pay all principal of, premium, if any, and interest due with respect to the Bonds only to or upon the order of the Owners thereof, as shown in the registration books kept by the Fiscal Agent, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to satisfy and discharge fully the City’s obligations with respect to payment of principal, premium, if any, and interest due with respect to the Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the registration books kept by the Fiscal Agent, shall receive a Bond evidencing the obligation of the City to make payments of principal, premium, if any, and interest pursuant to this Agreement. Upon delivery by the Depository to the Fiscal Agent and the City of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Agreement shall refer to such new nominee of the Depository.
(B) Representation Letter. In order to qualify the Bonds for the Depository’s book-entry system, an authorized representative of the Fiscal Agent is hereby authorized to execute from time to time and deliver to such Depository a representation letter in the standard form prescribed by the Depository (the “Representation Letter”). The execution and delivery of the Representation Letter shall not in any way limit the provisions of subsection (A) above or impose upon the City or the Fiscal Agent any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners, as shown on the registration books kept by the Fiscal Agent. The Fiscal Agent agrees, to the extent not inconsistent with the provisions hereof, to take all action necessary to continuously comply with all representations made by it in the Representation Letter. In addition to the execution and delivery of the Representation Letter, the City Clerk, the City Treasurer, the City Manager, the Assistant City Manager, the Authorized Officers and all other officers of the City, are hereby authorized to take any other actions, not inconsistent with this Agreement, to qualify the Bonds for the Depository’s book-entry program. (C) Transfers Outside Book-Entry System. In the event (1) the Depository determines not to continue to act as securities depository for the Bonds or (2) the City determines that the Depository shall no longer so act, then the Fiscal Agent shall discontinue the book-entry system with the Depository. If the City fails to identify another qualified securities depository to replace the Depository then the Bonds shall no longer be restricted to being registered in the registration books kept by the Fiscal Agent in the name of the Nominee, but shall be registered in whatever name or names persons transferring or exchanging Bonds shall designate, in accordance with the provisions of this Agreement.
(D) Payments to the Nominee. Notwithstanding any other provisions of this Agreement, so long as any Bond is registered in the name of the Nominee, all payments with respect to principal, premium, if any, and interest due with respect to such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the Representation Letter or as otherwise instructed by the Depository.
39 ARTICLE IV
ASSESSMENT REVENUES; REDEMPTION FUND; RESERVE FUND
Section 4.01 Pledge of Assessment Revenues; Transfers of Assessment Revenues. (A) Pledge of Assessment Revenues. The Bonds shall be secured by a pledge (which pledge shall be effected in the manner and to the extent herein provided) of all of the Assessment Revenues and all moneys deposited in the Redemption Fund, all moneys deposited in the Reserve Fund and, until disbursed as provided in subsections (B) and (D) of Section 3.03 hereof, all moneys deposited in the Improvement Fund. The Assessment Revenues and all moneys deposited into such funds (except as otherwise provided herein with respect to moneys disbursed from the Improvement Fund) are hereby dedicated in their entirety to the payment of the principal of the Bonds, and interest and any premium on, the Bonds, as provided herein and in the Bond Act, until all of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in accordance with Section 9.03 hereof. (B) Transfers of Assessment Revenues. On or before the fifteenth (15th) Business Day preceding each Interest Payment Date, the City Treasurer shall transfer to the Fiscal Agent for deposit in the Redemption Fund an amount of the Assessment Revenues which the Fiscal Agent has advised the City Treasurer will be needed to pay Debt Service on the Bonds on such Interest Payment Date. Upon receipt of each such transfer of Assessment Revenues, the Fiscal Agent shall deposit the amount thereof in the Redemption Fund for the payment of Debt Service on the Bonds on the Interest Payment Date for which the transfer is made.
Section 4.02 Redemption Fund.
(A) Deposits. There is hereby established, as a separate account to be held by the Fiscal Agent, the “Underground Utility Assessment District No. 2021-1 (West Street) Redemption Fund” to the credit of which deposits shall be made as required by paragraph (A) of Section 4.01(B), Section 4.03(B) and Section 4.03(D) hereof and any other provision of this Agreement or Bond Act. Moneys in the Redemption Fund shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as provided below, and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds.
The Fiscal Agent shall deposit to the Redemption Fund all moneys transferred from the Reserve Fund pursuant to Section 4.03(B) and Section 4.03(D) hereof. (B) Disbursements. On each Interest Payment Date, the Fiscal Agent shall withdraw from the Redemption Fund and pay to the Owners of the Bonds the principal of and interest and any premium then due and payable on the Bonds on the Interest Payment Date.
In the event that amounts on deposit in the Redemption Fund are insufficient for the purpose set forth in the preceding paragraph, the Fiscal Agent shall transfer from the Reserve Fund, to the extent of any funds therein, to the Redemption Fund the amount of such insufficiency.
If, after such a transfer from the Reserve Fund, there are insufficient funds in the Redemption Fund to make the payments provided for in the first paragraph of this Section 4.02(B), 40 the City Treasurer shall instruct the Fiscal Agent in writing to apply the available funds to the payment of the principal of and interest on the Bonds in the manner and in the priorities provided in Section 8775 of the California Streets and Highways Code, as it existed on the Closing Date or as it may thereafter be amended. The City Treasurer shall specify in such written instructions how the available funds shall be utilized to pay interest on and principal of the Bonds and the Fiscal Agent may conclusively rely upon such written instructions, and shall not have any responsibility or liability as a result of its reliance upon any such written instructions. When funds become available for the payment of the portion of the principal of any Bond which was not paid upon its maturity date, the Fiscal Agent shall provide notice to the Owner of such Bond as provided in Section 8776 of the California Streets and Highways Code.
On September 3 of each year, beginning on September 3, 2026, the amount on deposit in the Redemption Fund shall not exceed the greater of (i) one year’s earnings on such amount, or (ii) one-twelfth (1/12th) of Annual Debt Service for the then current Bond Year. If on September 3 of any year the amount on deposit in the Redemption Fund exceeds the maximum amount allowable pursuant to the preceding sentence and if on such September 3 the City shall have delivered to the Fiscal Agent an Officer’s Certificate containing the information required below in this paragraph, the excess shall be transferred by the Fiscal Agent as directed by such Officer’s Certificate to the Reserve Fund to the extent that the amount on deposit therein is less than the Reserve Requirement, and any such excess remaining thereafter shall be paid by the Fiscal Agent to the City as directed by such Officer’s Certificate. On September 3 of each year, after any such excess amount has been transferred as hereinabove provided, the amount on deposit in the Redemption Fund shall not exceed the greater of (i) one year’s earnings thereon, or (ii) one-twelfth (1/12th) of Annual Debt Service for the then current Bond Year. An Officer’s Certificate delivered by the City to Fiscal Agent pursuant to this paragraph shall (1) specify the dollar amount of the excess determined pursuant to the first sentence of this paragraph, (2) specify the dollar amount of such excess which the Fiscal Agent is to transfer to the Reserve Fund, and (3) specify the dollar amount of such excess which the Fiscal Agent is to pay to the City. Upon receipt of such an Officer’s Certificate, the Fiscal Agent is authorized to act thereon without further inquiry, shall not be responsible for the accuracy of the statements contained therein, and shall be absolutely protected and incur no liability in relying on such Officer’s Certificate.
Amounts in the Redemption Fund shall also be withdrawn and deposited in the Rebate Fund as provided in Section 6.02 hereof.
(C) Investment. Moneys in the Redemption Fund shall be invested and deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained in the Redemption Fund, except to the extent they are required to be deposited by the Fiscal Agent in the Rebate Fund in accordance with Section 6.02 hereof.
(D) Deficiency. Upon making a transfer from the Reserve Fund to the Redemption Fund, pursuant to subsection (B) of this Section 4.02 or Section 4.03(B) hereof, the Fiscal Agent shall report such fact to the City. As provided in the form of the Bonds attached hereto as Exhibit A, the City Council has determined in the Resolution of Intention that the City will not obligate itself to advance funds from the City Treasury to cure any deficiency which may occur in the Redemption Fund.
41 (E) Determination of Ultimate Loss. Notwithstanding the provisions of subsection (B) of this Section 4.02, if the Treasurer determines, pursuant to Section 8770 of the California Streets and Highways Code, that there is a danger of an ultimate loss accruing to the Bond Owners, for any reason, the provisions of that section and Sections 8771, 8772 and 8773 of the California Streets and Highways Code shall govern with respect to the procedures which shall be followed in paying the principal of and interest on the Outstanding Bonds.
Section 4.03 Reserve Fund.
(A) Establishment of Reserve Fund. There is hereby established, as a separate account to be held by the Fiscal Agent, the “Underground Utility Assessment District No. 2021-1 (West Street) Reserve Fund” (the “Reserve Fund”) to the credit of which a deposit shall be made as required by Section 3.02(B) hereof, which deposit is equal to the Reserve Requirement as of the Closing Date, and to which deposits shall be made as provided in Section 4.02(B) hereof. Moneys in the Reserve Fund shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds as a reserve for the payment of the principal of and interest and any premium on the Bonds and shall be subject to a lien in favor of the Owners of the Bonds. (B) Use of Fund. Except as otherwise provided in this Section, all amounts deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Redemption Fund in the event of any deficiency at any time in the Redemption Fund of the amount then required for payment of the principal of, and interest and any premium on the Bonds or, in accordance with the provisions of subsection (E) of this Section
4.03, or for the purpose of redeeming Bonds.
Amounts transferred from the Reserve Fund to the Redemption Fund pursuant to this subsection shall be restored by the City from the collection of delinquent installments on the Assessments levied on parcels for which such installments are delinquent, and penalties and interest thereon, whether by judicial foreclosure proceedings or otherwise, as soon as is reasonably possible following the receipt by the City of such delinquent installments, penalties and interest. (C) Transfer Due to Deficiency in Redemption Fund. Whenever transfer is made from the Reserve Fund to the Redemption Fund due to a deficiency in the Redemption Fund, the Fiscal Agent shall provide written notice thereof to the City. (D) Transfers on Payment of Assessments. Whenever an Assessment levied on a lot or parcel of property within the Assessment District is paid off, the Fiscal Agent shall, upon receiving an Officer’s Certificate regarding such Assessment, transfer from the Reserve Fund to the Redemption Fund an amount equal to the reduction in such Assessment determined pursuant to Section 8881 of the California Streets and Highways Code, which amount shall be specified in the Officer’s Certificate. Upon receipt of such an Officer’s Certificate, the Fiscal Agent is authorized to act thereon without further inquiry, shall not be responsible for the accuracy of the statements contained therein, and shall be absolutely protected and incur no liability in relying on such Officer’s Certificate.
(E) Transfer of Excess of Reserve Requirement. Whenever, on any September 3, the amount in the Reserve Fund, less Investment Earnings resulting from the investment of the 42 funds therein which pursuant to Section 6.02 hereof must be rebated to the United States (the “Rebate Amount”), exceeds the then applicable Reserve Requirement, as calculated on such date by the City and provided in writing to the Fiscal Agent, the Fiscal Agent shall provide written notice to the City of the amount of the excess and shall, subject to the requirements of Section
6.02 hereof and upon receiving an Officer’s Certificate from an Authorized Officer, transfer an amount equal to the excess from the Reserve Fund to the Redemption Fund to be used for the payment of Debt Service on the next succeeding Interest Payment Date in accordance with Section
4.02 hereof. Upon receipt of such an Officer’s Certificate, the Fiscal Agent is authorized to act thereon without further inquiry, shall not be responsible for the accuracy of statements contained therein, and shall be absolutely protected and incur no liability in relying on such Officer’s Certificate.
(F) Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent shall, upon receiving an Officer’s Certificate from an Authorized Officer, transfer the amount in the Reserve Fund to the Redemption Fund to be applied, on the next succeeding Interest Payment Date to the payment and redemption, in accordance with Section
2.03 and Section 4.02 hereof, as applicable, of all of the Outstanding Bonds. In the event that the amount so transferred from the Reserve Fund to the Redemption Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund shall be transferred by the Fiscal Agent to the City to be applied as provided in Section 8885 of the California Streets and Highways Code. Upon receipt of such an Officer’s Certificate, the Fiscal Agent is authorized to act thereon without further inquiry, shall not be responsible for the accuracy of the statements contained therein, and shall be absolutely protected and incur no liability in relying on such Officer’s Certificate.
(G) Investment. Moneys in the Reserve Fund shall, except as provided in subsection (D) above, be invested and deposited in accordance with Section 6.01 hereof.
ARTICLE V
OTHER COVENANTS OF THE CITY
Section 5.01 Punctual Payment. The City will punctually pay or cause to be paid the principal of and interest and any premium on the Bonds when and as due in strict conformity with the terms of this Agreement and any Supplemental Agreement to the extent that the Assessment Revenues are available therefor, and it will faithfully observe and perform all of the conditions, covenants and requirements of this Agreement and all Supplemental Agreements and of the Bonds.
Section 5.02 Special Obligation. The Bonds are special obligations of the City and are payable solely from and secured solely by the Assessment Revenues and the amounts in the Redemption Fund, the Reserve Fund and the Improvement Fund.
Section 5.03 Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity, the City shall not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding 43 said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City,such claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.
Section 5.04 Against Encumbrances. The City shall not encumber, pledge or place any charge or lien upon any of the Assessment Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by this Agreement.
Section 5.05 Protection of Security and Rights of Owners. The City will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the City, the Bonds shall be incontestable by the City.
Section 5.06 Compliance with Laws, Completion of Project. The City will comply with all applicable provisions of the laws of the State of California in completing the construction and acquisition of the Project.
Section 5.07 Collection of Assessment Revenues. The City shall comply with all requirements of the Bond Act so as to assure the timely collection of Assessment Revenues, including without limitation, the enforcement of the payment or collection of delinquent Assessments.
Section 5.08 Further Assurances. The City will adopt, make, execute and deliver any and all such further ordinances, resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement, and for better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided in this Agreement.
Section 5.09 Tax Covenants. The City hereby covenants that:
(A) It will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of the initial issuance and delivery of the Bonds, would have caused any of the Bonds to be “arbitrage bonds” within the meaning of Section 103(b) and Section 148 of the Code;
(B) It will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of initial issuance and delivery of the Bonds, would result in loss of exclusion from gross income for purposes of federal income taxation under Section 103(a) of the Code of interest paid with respect to the Bonds; (C) It will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of initial issuance and delivery of the Bonds, would have caused any of the Bonds to be “private activity bonds” within the meaning of Section 141 of the Code;
44 (D) It will comply with the Rebate Certificate as a source of guidance for achieving compliance with the Code; and
(E) In order to maintain the exclusion from gross income for purposes of federal income taxation of interest paid with respect to the Bonds, it will comply with each applicable requirement of Section 103 and Sections 141 through 150 of the Code.
The covenants of the City contained in this Section 5.09 shall survive the payment, redemption or defeasance of Bonds pursuant to Section 9.03 hereof.
Section 5.10 Covenant to Foreclose. The City hereby covenants with and for the benefit of the Owners of the Bonds that it will order, and cause to be commenced, upon default of any Assessment installments due (except under circumstances to be specified in the resolution of issuance of the Bonds), it will cause judicial foreclosure proceedings against properties with delinquent Assessment installments to be brought within one-hundred fifty (150) days of such default, as permitted by Section 8830(d) of the California Streets and Highways Code. [Notwithstanding the foregoing, the City may elect, in its sole discretion, to defer foreclosure proceedings against properties that are determined pursuant to this Section 5.10 to be delinquent in the payment of any Assessment installments within one-hundred fifty (150) days ofsuch default, as permitted by Section 8830(d) of the California Streets and Highways Code, if the City has received funds equal to the delinquent Assessment installments for each parcel of property from any source, including, but not limited to, funds appropriated by the City for such purpose, and such funds are sufficient to make timely payment of scheduled payment of principal and interest on the Bonds, together with any penalties and fees that otherwise would have been paid or required to be paid from the delinquent Assessment installments.]
Section 5.11 Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate.
ARTICLE VI
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS;
LIABILITY OF THE CITY
Section 6.01 Deposit and Investment of Moneys in Funds. Subject in all respects to the provisions of Section 6.02 hereof, moneys in any fund or account created or established by this Agreement and held by the Fiscal Agent shall be invested by the Fiscal Agent, as applicable, in Permitted Investments, as directed pursuant to an Officer’s Certificate filed with the Fiscal Agent at least two (2) Business Days in advance of the making of such investments.. Unless otherwise directed in writing by the City Treasurer, all funds in the Reserve Fund shall be held uninvested.
If after being directed for investment and such directed investment terminates, closes, or is otherwise unavailable, the Fiscal Agent shall hold such funds uninvested until it receives a new Officer’s Certificate with written investment directive from the City Treasurer. The Fiscal Agent shall not invest any cash held hereunder in the absence of timely and specific written direction in the form of an Officer’s Certificate from the City Treasurer. The Fiscal Agent shall have no obligation to pay additional interest or maximize investment income on any funds held by it.
Neither the City nor the Owners of the Bonds shall have any claim of any kind against the Fiscal Agent in connection with investments properly made pursuant to this Section 6.01. Obligations 45 purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account, subject, however, to the requirements of this Agreement for transfer of Investment Earnings in funds and accounts.
The Fiscal Agent and its affiliates may act as sponsor, advisor, depository, principal or agent in the holding, acquisition or disposition of any investment. The Fiscal Agent shall not incur any liability for losses arising from any investments made pursuant to this Section 6.01. For purposes of determining the amount on deposit in any fund or account held hereunder, all Permitted Investments or investments credited to such fund or account shall be valued at the cost thereof (excluding accrued interest and brokerage commissions, if any). Ratings of Permitted Investments referred to herein shall be determined at the time of purchase of such Permitted Investments and without regard to rating subcategories. The Fiscal Agent shall have no responsibility to monitor the ratings of Permitted Investments after the initial purchase of such Permitted Investments or the responsibility to validate the ratings of Permitted Investments prior to the initial purchase.
The Fiscal Agent shall be entitled to rely conclusively upon the written instructions of the City directing investments in Permitted Investments as to the fact that each such investment is permitted by the laws of the State, and shall not be required to make further investigation with respect thereto. The Fiscal Agent shall not have any responsibility for determining the legality or suitability of any Permitted Investments and may rely on any Officer’s Certificate or other direction as to the legality or suitability of any Permitted Investment. With respect to any restrictions contained in the definition of Permitted Investments which embody legal conclusions (e.g., the existence, validity and perfection of security interests in collateral), the Fiscal Agent shall be entitled to rely conclusively on an opinion of counsel obtained at the City’s expense.
Subject in all respects to the provisions of Section 6.02 hereof, investments in any and all funds and accounts may be commingled in a single fund for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent hereunder, provided that the Fiscal Agent shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in this Agreement.
The Fiscal Agent shall sell or present for redemption any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited, and the Fiscal Agent shall not be liable or responsible for any loss resulting from the acquisition or disposition of any such investment security in accordance herewith.
The City acknowledges that notwithstanding regulations of the Comptroller of the Currency or other applicable regulatory entity may grant the City the right to receive brokerage confirmations of securities transactions as they occur, the City agrees that the Fiscal Agent shall not send such confirmations to the City to the extent permitted by law. The Fiscal Agent shall furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Fiscal Agent hereunder. The City Treasurer shall prepare the same on the behalf of the City of funds directly managed by the City Treasurer, if any. 46 The Fiscal Agent may make any investments hereunder through its own bond or investment department or trust investment department, or those of its parent or any affiliate.
Section 6.02 Rebate Fund; Rebate to the United States. There is hereby created, to be held by the Fiscal Agent, as a separate fund distinct from all other funds and accounts held by the Fiscal Agent under this Agreement, the Rebate Fund. The Fiscal Agent shall, in accordance with written directions received from an Authorized Officer, deposit into the Rebate Fund moneys transferred by the City Treasurer to the Fiscal Agent pursuant to the Rebate Certificate or moneys transferred by the Fiscal Agent from the Reserve Fund. The Rebate Fund shall be held either uninvested or invested only in Federal Securities at the direction of the City. Moneys on deposit in the Rebate Fund shall be applied only to payments made to the United States, to the extent such payments are required by the Rebate Certificate. The Fiscal Agent shall, upon written request and direction of the City, make such payments to the United States.
The Fiscal Agent’s sole responsibilities under this Section 6.02 are to follow the written instructions of the City pertaining hereto. The Fiscal Agent shall have no responsibility to independently make any calculation or determination or to review the City’s calculations hereunder. The Fiscal Agent may rely conclusively upon the City’s determinations, calculations and certifications required by this Section. The City shall be responsible for any fees and expenses incurred by the Fiscal Agent pursuant to this Section 6.02.
The Fiscal Agent shall, upon written request and direction from the City Treasurer, transfer to or upon the order of the City Treasurer any moneys on deposit in the Rebate Fund in excess of the amount, if any, required to be maintained or held therein in accordance with the Rebate Certificate. Upon receipt of such a written request and direction the Fiscal Agent is authorized to act thereon without further inquiry, shall not be responsible for the accuracy thereof, and shall be absolutely protected and incur no liability in relying thereon.
Section 6.03 Liability of City. The City shall not incur any responsibility in respect of the Bonds or this Agreement other than in connection with the duties or obligations explicitly herein or in the Bonds assigned to or imposed upon it. The City shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct.
The City shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements of the Fiscal Agent herein or in any of the documents executed by the Fiscal Agent in connection with the Bonds. The Fiscal Agent has no liability regarding the use of the proceeds from the purchase of the Bonds deposited in funds held by the City.
In the absence of bad faith, the City may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the City and conforming to the requirements of this Agreement. The City shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts.
No provision of this Agreement shall require the City to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Assessment Revenues) in the performance of any of its obligations hereunder, or in the exercise of and of its 47 rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
The City may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, Bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The City may consult with counsel, who may be counsel to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.
Section 6.04 Employment of Agents by City. In order to perform its duties and obligations hereunder, the City may employ such persons or entities as it deems necessary or advisable. The City shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities.
Section 6.05 Books and Accounts. The City Treasurer shall keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City, in which complete and correct entries shall be made of all transactions made by it to the expenditure of amounts disbursed from the City Contribution and Cash Collections Account. Such books of record and accounts shall, upon reasonable notice, at all times during business hours be subject to the inspection of the Owners of not less than ten percent (10%) of the aggregate principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.
ARTICLE VII
THE FISCAL AGENT
Section 7.01 Appointment of Fiscal Agent. The Bank of New York Mellon Trust Company, N.A. is hereby appointed Fiscal Agent, registrar and paying agent for the Bonds. The Fiscal Agent undertakes to perform such duties, and only such duties, as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Fiscal Agent.
Any company into which the Fiscal Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Fiscal Agent may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under the following paragraph of this Section 7.01, shall be the successor to the Fiscal Agent without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.
The City may remove the Fiscal Agent initially appointed upon thirty (30) days prior notice, and any successor thereto, and may appoint a successor or successors thereto, but any such successor shall be a bank or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least $75,000,000, and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, 48 pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section 7.01, the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
The Fiscal Agent may at any time resign by giving written notice to the City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent shall become effective upon acceptance of appointment by the successor Fiscal Agent.
If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of this Section 7.01 within forty-five (45) days after the Fiscal Agent shall have given to the City written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent, at the expense of the City, or any Owner may apply to any federal or state court to appoint a successor Fiscal Agent. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent.
Section 7.02 Liability of Fiscal Agent. The recitals of facts, covenants and agreements herein and in the Bonds contained shall be taken as statements, covenants and agreements of the City and the Fiscal Agent assumes no responsibility nor shall have any liability for the correctness of the same, nor makes any representations as to the validity or sufficiency of this Agreement or of the Bonds, nor shall the Fiscal Agent incur any responsibility or shall have any liability in respect thereof, other than in connection with the express duties or obligations herein or in the Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds.
In the absence of willful misconduct, the Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates, written directions, opinions, solutions, orders, notices, requests, consents, waivers, statements, affidavits or other paper, documents or electronic communications or information furnished to the Fiscal Agent and conforming to the requirements of this Agreement. Except as provided above in this paragraph, the Fiscal Agent shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding in accordance with the terms of this Agreement, upon any resolution, order, notice, request, consent or waiver, opinion, certificate, statement, affidavit, facsimile transmission, electronic mail or other paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of this Agreement, and the Fiscal Agent shall not be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument.
The Fiscal Agent shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements of the City herein or in any of the documents executed by the City in connection with the Bonds. 49 The Fiscal Agent shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Fiscal Agent unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts.
No provision of this Agreement shall require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers unless indemnity and security satisfactory to the Fiscal Agent shall have been provided to the Fiscal Agent.
The Fiscal Agent shall not be responsible for accounting for, or paying to, any party to this Agreement, including, but not limited to the City and the Owners, any returns on or benefit from funds held for payment of unredeemed Bonds or outstanding checks and no calculation of the same shall affect, or result in any offset against, fees due to the Fiscal Agent under this Agreement.
The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Owners pursuant to this Agreement unless such Owners shall have offered to the Fiscal Agent reasonable security or indemnity satisfactory to the Fiscal Agent against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
The Fiscal Agent may become the owner of the Bonds with the same rights it would have if it were not the Fiscal Agent.
The Fiscal Agent shall not be concerned with or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions hereof.
The permissive right of the Fiscal Agent to do things enumerated in this Agreement shall not be construed as a duty and it shall not be liable for other than its negligence or willful misconduct.
In no event shall the Fiscal Agent be liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including but not limited to lost profits) even if the Fiscal Agent has been advised of the likelihood of such damages and regardless of the form of such action, other than for actions involving negligence or willful misconduct by the Fiscal Agent.
The Fiscal Agent shall have no responsibility with respect to the payment of Debt Service by the City or with respect to the observance or performance by the City of the other conditions, covenants and terms contained herein, or with respect to the investment of any moneys in any fund or account established, held or maintained by the City pursuant to this Fiscal Agent Agreement or otherwise.
All indemnification and releases from liability granted herein to the Fiscal Agent shall extend to the agents, consultants, directors, officers and employees of the Fiscal Agent (including legal counsel). The Fiscal Agent may exercise any of its trusts or powers or perform its duties through attorneys, agents or receivers.
50 The Fiscal Agent shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Agreement and delivered using Electronic Means; provided, however, that the City shall provide to the Fiscal Agent an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the City whenever a person is to be added or deleted from the listing. If the City elects to give the Fiscal Agent Instructions using Electronic Means and the Fiscal Agent in its discretion elects to act upon such Instructions, the Fiscal Agent’s understanding of such Instructions shall be deemed controlling. The City understands and agrees that the Fiscal Agent cannot determine the identity of the actual sender of such Instructions and that the Fiscal Agent shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Fiscal Agent have been sent by such Authorized Officer. The City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Fiscal Agent and that the City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the City. The Fiscal Agent shall not be liable for any losses, costs or expenses arising directly or indirectly from the Fiscal Agent’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The City agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Fiscal Agent, including without limitation the risk of the Fiscal Agent acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Fiscal Agent and that there may be more secure methods of transmitting Instructions than the method(s) selected by the City; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Fiscal Agent immediately upon learning of any compromise or unauthorized use of the security procedures.
The Fiscal Agent may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees appointed with due care, and shall not be responsible for any willful misconduct or negligence on the part of any agent, attorney, custodian or nominee so appointed.
Section 7.03 Information. The Fiscal Agent shall provide to the City such information relating to the Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as the City shall reasonably request, including, but not limited to, quarterly (or other frequency agreed to by the City and the Fiscal Agent) statements reporting funds held and transactions by the Fiscal Agent.
Section 7.04 Notice to Fiscal Agent. The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, written direction, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Fiscal Agent may consult with counsel, who may be counsel to the City, with regard to legal questions, and the written opinion of such counsel shall be full and complete authorization and protection in respect 51 of any action taken or suffered by the Fiscal Agent hereunder in good faith and in accordance therewith.
Whenever in the administration of its duties under this Agreement the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, be deemed to be conclusively proved and established by a certificate of the City, and such certificate shall be full warranty to the Fiscal Agent for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.
Section 7.05 Compensation, Indemnification. In addition to any written fee agreement, the City shall pay to the Fiscal Agent from time to time reasonable compensation for all services rendered as Fiscal Agent under this Agreement, and also all reasonable expenses, charges, fees and other disbursements, including those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties under this Agreement, and the Fiscal Agent shall have a first-priority lien therefor on any funds at any time held by it under this Agreement, and the Fiscal Agent shall pay and reimburse all expenses, charges, fees and other disbursements, including those of its attorneys, agents and employees, incurred in connection therewith from the funds held by it under this Agreement. The City further agrees, to the extent permitted by applicable law, to indemnify and save the Fiscal Agent, its officers, employees, directors and agents, harmless against any liabilities, losses, costs, expenses (including legal fees and expenses), suits, claims, judgments or damages which it may incur in the exercise and performance of its powers and duties hereunder or the enforcement of this Section which are not due to its negligence or willful misconduct. The obligation of the City under this Section 7.05 shall survive resignation or removal of the Fiscal Agent under this Agreement and payment of the Bonds and discharge of this Agreement.
Section 7.06 Books and Accounts. The Fiscal Agent shall keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correct entries shall be made of all transactions made by it to the expenditure of amounts disbursed from the Redemption Fund and the Reserve Fund. Such books of record and accounts shall, upon reasonable notice, at all times during business hours be subject to the inspection of the City and the Owners of not less than ten percent (10%) of the aggregate principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.
ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01 Amendments Permitted.
(A) This Agreement and the rights and obligations of the City and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of the Owners, or with the written consent, without a meeting, of 52 the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 8.04 hereof. No such modification or amendment shall (i) extend the maturity of any Bond or the time for paying interest thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation of any pledge of or lien upon the Assessment Revenues, or the moneys on deposit in the Redemption Fund, the Reserve Fund, the Capitalized Interest Fund or the Improvement Fund, superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Bond Act, the laws of the State of California or this Agreement), or (iii) reduce the percentage of Bonds required for the amendment hereof, or (iv) reduce the principal amount of or redemption premium on any Bond or reduce the interest rate thereon. Any such amendment may not modify any of the rights or obligations of the Fiscal Agent without its written consent. The City shall provide to the Fiscal Agent an opinion of counsel that any such Supplemental Agreement entered into by the City and the Fiscal Agent complies with the provisions of this Section 8.01 and the Fiscal Agent may conclusively rely on such opinion. (B) This Agreement and the rights and obligations of the City and the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes:
(1) to add to the covenants and agreements of the City in this Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the City; (2) to make modifications not adversely affecting any Outstanding series of Bonds in any material respect;
(3) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provisions of this Agreement, or in regard to questions arising under this Agreement, as the City and the Fiscal Agent may deem necessary or desirable and not inconsistent with this Agreement, and which shall not adversely affect the rights of the Owners;
(4) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with Section 148 of the Code relating to required rebate of moneys to the United States or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations.
Section 8.02 Owners’ Meetings. The City may at any time call a meeting of the Owners.
In such event the City is authorized to fix the time and place of any such meeting and to provide for the giving of notice thereof and to fix and adopt rules and regulations for the conduct of the meeting.
Section 8.03 Procedure for Amendment with Written Consent of Owners. The City may at any time adopt a Supplemental Agreement amending the provisions of the Bonds or of this 53 Agreement or any Supplemental Agreement, to the extent that such amendment is permitted by Section 8.01(A) hereof, to take effect when and as provided in this Section 8.03. A copy of the Supplemental Agreement, together with a request to Owners for their consent thereto, shall be mailed by first class mail, postage prepaid, or sent by electronic mail (if applicable) by the Fiscal Agent to each Owner of Bonds Outstanding, but failure to mail copies of the Supplemental Agreement and request shall not affect the validity of the Supplemental Agreement when assented to as in this Section provided.
Such a Supplemental Agreement shall not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 8.04) and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 9.04 hereof. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this Section provided for has been mailed.
After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Agreement, the City shall mail a notice to the Owners in the manner hereinbefore provided in this Section for the mailing of the Supplemental Agreement, stating in substance that the Supplemental Agreement has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A record, consisting of the papers required by this Section 8.03 to be filed with the Fiscal Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article VIII) upon the City and the Owners of all Bonds then Outstanding at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty (60)-day period.
Section 8.04 Disqualified Bonds. Bonds owned or held for the account of the City, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided for in this Article VIII, and shall not be entitled to vote upon, consent to, or participate in any action provided for in this Article VIII; except that in determining whether the Fiscal Agent shall be protected in relying upon any vote or consent of an Owner, only Bonds which the Fiscal Agent actually knows to be owned or held for the account of the City shall be disregarded unless all Bonds are so owned or held, in which case such Bonds shall be considered Outstanding for the purpose of such determination.
54 Section 8.05 Effect of Supplemental Agreement. From and after the time any Supplemental Agreement becomes effective pursuant to this Article VIII, this Agreement shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Agreement of the City and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and all purposes.
Section 8.06 Endorsement or Replacement of Bonds Issued After Amendments. The City may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form approved by the City, as to such action. In that case, upon demand of the Owner of any Bond Outstanding at such effective date and upon presentation of his or her Bond for that purpose at the Principal Office of the Fiscal Agent or at such other office as the City may select and designate for that purpose, a suitable notation shall be made on such Bond. The City may determine that new Bonds, so modified as in the opinion of the City is necessary to conform to such action, shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Bonds then Outstanding, such new Bonds shall be exchanged at the Principal Office of the Fiscal Agent without cost to any Owner, for like Bonds then Outstanding, upon surrender of such Bonds.
Section 8.07 Amendatory Endorsement of Bonds. The provisions of this Article VIII shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him or her, provided that due notation thereof is made on such Bonds.
Section 8.08 Execution of Supplemental Agreements. In executing, or accepting the additional trusts created by, any Supplemental Agreement permitted by this Article or the modification thereby of the trusts created by this Agreement, the Fiscal Agent shall be entitled to receive, and shall be fully protected in relying upon, an opinion of counsel stating that the execution of such Supplemental Agreement is authorized or permitted by this Agreement and complies with the terms hereof. The Fiscal Agent may, but shall not be obligated to, enter into any such Supplemental Agreement which affects the Fiscal Agent's own rights, duties or immunities under this Agreement or otherwise.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Benefits of Agreement Limited to Parties. Nothing in this Agreement, expressed or implied, is intended to give to any person other than the City, the Fiscal Agent and the Owners, any right, remedy or claim under or by reason of this Agreement. Any covenants, stipulations, promises or agreements in this Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent.
Section 9.02 Successor is Deemed Included in All References to Predecessor. Whenever in this Agreement or any Supplemental Agreement either the City or the Fiscal Agent is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Agreement contained by or on behalf of the City or the Fiscal 55 Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.
Section 9.03 Discharge of Agreement.
If the City shall pay and discharge the entire indebtedness on all Bonds in any one or more of the following ways:
(A) by well and truly paying or causing to be paid the principal of and interest and any premium on all Bonds, as and when the same become due and payable; (B) by depositing with the Fiscal Agent, in trust, at or before maturity, an amount of money which, together with the amounts then on deposit in the Redemption Fund and the Reserve Fund, is fully sufficient to pay all Bonds, including all principal, interest and redemption premiums, if any; or
(C) by irrevocably depositing with the Fiscal Agent, in trust, cash or noncallable Federal Securities in such amount as the City shall determine, as confirmed by an Independent Financial Consultant, will, together with the interest to accrue thereon and amounts then on deposit in the Redemption Fund and Reserve Fund, be fully sufficient to pay and discharge the indebtedness on all Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; and if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in this Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice, then, at the election of the City, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Assessment Revenues and other funds provided for in this Agreement and all other obligations of the City under this Agreement with respect to all Bonds shall cease and terminate, except the obligation of the City to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon, the obligation of the City to pay all amounts owing to the Fiscal Agent pursuant to Section 7.05 hereof, and the obligations of the City pursuant to the covenants contained in Section 5.09 hereof; and thereafter Assessment Revenues shall not be payable to the Fiscal Agent. Notice of such election shall be filed with the Fiscal Agent. The satisfaction and discharge of this Agreement shall be without prejudice to the rights of the Fiscal Agent to charge and be reimbursed by the City for the expenses which it shall thereafter incur in connection herewith.
Any funds held by the Fiscal Agent to pay and discharge the indebtedness on all Bonds, upon payment of all fees and expenses of the Fiscal Agent, which are not required forsuch purpose, shall be paid over to the City.
Section 9.04 Execution of Documents and Proof of Ownership by Owners. Any request, declaration or other instrument which this Agreement may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such a request, declaration or other instrument, or of a writing appointing such an attorney, may be proved by the certificate of any notary public or other officer authorized 56 to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such a notary public or other officer.
Except as otherwise herein expressly provided, the ownership of registered Bonds and the amount, maturity, number and date of holding the same shall be proved by the registration books maintained by the Fiscal Agent pursuant to Section 2.08 hereof.
Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the City or the Fiscal Agent in good faith and in accordance therewith.
Section 9.05 Waiver of Personal Liability. No member, officer, agent or employee of the City shall be individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law.
Section 9.06 Notices to and Demands on City and Fiscal Agent. Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Fiscal Agent to or on the City may be given or served by being deposited postage prepaid (first class, registered or certified) in a post office letter box addressed (until another address is filed by the City with the Fiscal Agent) as follows:
City of Laguna Beach
505 Forest Avenue
Laguna Beach, CA 92651
Attn: City Treasurer
Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the City to or on the Fiscal Agent may be given or served by being deposited postage prepaid (first class, registered or certified) in a post office letter box addressed (until another address is filed by the Fiscal Agent with the City) as follows:
The Bank of New York Mellon Trust Company, N.A.
333 South Hope Street, Suite 2525
Los Angeles, CA 90071
Attn: Corporate Trust
Electronic Means" shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Fiscal Agent, or another method or system specified by the Fiscal Agent as available for use in connection with its services hereunder.
Section 9.07 Partial Invalidity. If any section, paragraph, sentence, clause or phrase of this Agreement shall for any reason be held by a court of competent jurisdiction to be illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Agreement. The City hereby declares that it would have executed and delivered this Agreement 57 and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more sections, paragraphs, sentences, clauses or phrases of this Agreement may be held illegal, invalid or unenforceable.
Section 9.08 Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, and subject to the escheat laws of the State, any moneys held by the Fiscal Agent in trust for the payment and discharge of the principal of, and the interest and any premium on, the Bonds which remains unclaimed for two (2) years after the date when the payment of such principal, interest and premium have become payable, if such moneys were held by the Fiscal Agent at such date, shall be paid (without liability for interest) by the Fiscal Agent to the City as its absolute property free from any trust, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Owners of such Bonds shall look only to the City for the payment of the principal of, and interest and any premium on, their Bonds.
Section 9.09 Applicable Law and Venue. This Agreement shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California. Venue shall be exclusively in the County of Orange.
Section 9.10 Conflict with Act. In the event of a conflict between any provision of this Agreement with any provision of the Bond Act as in effect on the Closing Date, the provision of the Bond Act shall prevail over the conflicting provision of this Agreement.
Section 9.11 Conclusive Evidence of Regularity. Bonds issued pursuant to this Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Act relative to their issuance.
Section 9.12 Payment on Business Day. In any case where the date of the payment of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption is other than a Business Day, the payment of interest or principal (and premium, if any) need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required, and no interest shall accrue for the period from and after such date.
Section 9.13 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.
58 IN WITNESS WHEREOF, the City has caused this Agreement to be executed in its name and attested, and the Fiscal Agent, in acknowledgment of its acceptance of the trusts created hereunder, has caused this Agreement to be executed in its name, all as of __________ __, 20__.
CITY OF LAGUNA BEACH
By:
City Treasurer
ATTEST:
By:_____________________________
City Clerk
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Fiscal Agent
By: _______________________________
Authorized Officer
-Signature pageFiscal Agent Agreement
59 EXHIBIT “A”
[FORM OF BOND]
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY (AS DEFINED IN THE AGREEMENT) TO THE FISCAL AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND AUTHENTICATED AND DELIVERED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF ORANGE
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BOND
Registered
Number
Registered
Amount
Interest Rate Maturity Date
Original
Issue Date CUSIP NO.
_____, 2026
Registered Owner: CEDE & CO.
Principal Sum:
Under and by virtue of the Improvement Bond Act of 1915, Division 10 (commencing with Section 8500) of the Streets and Highways Code of the State of California (the “Act”), the City of Laguna Beach (the “City”), will, out of the redemption fund for the payment of the Bonds issued upon the unpaid portion of assessments made for the construction and acquisition of certain public improvements in and for Underground Utility Assessment District No. 2021-1 (West Street), City of Laguna Beach, County of Orange, State of California (the “Assessment District”), which improvements and the Assessment District are more fully described in proceedings taken pursuant to Resolution No. ______, the Resolution of Intention for the Assessment District, adopted by the City Council of the City on [December 9, 2025], pay to the registered owner identified above, or registered assigns, on the maturity date specified above the principal sum specified above in lawful money of the United States, and in like manner will pay interest from the interest payment date next preceding the date on which this Bond is authenticated, unless this Bond is authenticated after a Record Date (as hereinafter defined) and before the close of business on the next interest payment 60 date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated on or before the Record Date preceding the first interest payment date, in which event it shall bear interest from the original issue date specified above, until payment of such principal sum shall have been discharged, at the rate of interest per annum specified above, payable semiannually on March 2 and September 2 in each year commencing on [September 2, 2026].
Both the principal hereof and redemption premium hereon are payable at the principal corporate trust office of The Bank of New York Mellon Trust Company, N.A., the Fiscal Agent (the “Fiscal Agent”) in Los Angeles, California or such other office as shall be designated by the Fiscal Agent as its principal corporate trust office for such purpose, and the interest hereon is payable by check mailed to the owner hereof at the owner’s address as it appears on the records of the Fiscal Agent, or at such address as may have been filed with the Fiscal Agent for that purpose, as of the fifteenth (15th) day of the month preceding each interest payment date (the “Record Date”). Principal of, redemption premium, if any, and interest payable to any Owner of Bonds in aggregate principal amount of $1,000,000 or more will be paid, upon the written request of any such Owner in form and substance satisfactory to the Fiscal Agent, by wire transfer of immediately available funds to an account within the United States designated by such Owner on or before a Record Date. Interest on the Bonds will be calculated on the basis of a 360-day year composed of twelve (12) 30-day months.
This Bond will continue to bear interest after maturity at the rate above specified, provided it is presented at maturity and payment thereof is refused upon the sole ground that there are not sufficient moneys in said redemption fund with which to pay the same. If it is not presented at maturity, and there are sufficient moneys in said redemption fund with which to pay the same, interest on this Bond will run until maturity.
Pursuant to Section 8769 of the Streets and Highways Code of the State of California, the City Council of the City has determined that the City will not obligate itself to advance funds from the City treasury to cure any deficiency in the redemption fund.
This Bond is one of several annual series of bonds of like date, tenor and effect, but differing in amounts, maturities and interest rates, issued by the City pursuant to the Act and a Fiscal Agent Agreement dated as of [January 1, 2026] by and between the City and the Fiscal Agent (the “Fiscal Agent Agreement”) in the aggregate principal amount of $__________ (the “Bonds”) for the purpose of providing means for paying for the construction of the improvements which are to be constructed within and for the Assessment District, as described in said proceedings, and is secured by the moneys in said redemption fund and by the unpaid portion of the assessments levied on parcels of property within the Assessment District for the payment of said improvements, and, including principal and interest, is payable exclusively out of said fund.
Reference is hereby made to the Act and the Fiscal Agent Agreement, and all amendments thereto, for a description of the rights, duties and obligations of the City and the owners of the Bonds, the terms upon which the Bonds are issued and the terms and conditions on which the Bonds will be deemed to be paid, at or prior to maturity or redemption of the Bonds, to all the provisions of which agreement the owner of this Bond, by acceptance hereof, assents and agrees.
The Bonds are issuable only as fully registered Bonds in denominations of $5,000, or any integral multiple thereof, except that one Bond may include the amount by which the total exceeds the maximum integral of $5,000, if any.
61 This Bond is transferable by the registered owner hereof, in person or by the owner’s attorney duly authorized in writing, at the office of the Fiscal Agent, subject to the terms and conditions provided in the Fiscal Agent Agreement, including the payment of certain charges, if any, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond or Bonds, of any authorized denomination or denominations, of the same maturity, for the same aggregate principal amount, will be issued to the transferee in exchange for this Bond.
Bonds shall be registered only in the name of an individual (including joint owners), a corporation, a partnership or a trust.
The Fiscal Agent shall not be required to make any exchange or registration of transfer of Bonds during the fifteen (15) days preceding the date established by the Fiscal Agent for the selection of Bonds for redemption, or with respect to any Bonds which have been selected for redemption.
The Fiscal Agent may treat the owner hereof as the absolute owner for all purposes, and the Fiscal Agent shall not be affected by any notice to the contrary.
The Bonds are subject to redemption prior to their stated maturity dates on any Interest Payment Date on or after September 2, 20__, on a pro rata basis among maturities (and by lot within any one maturity), in integral multiples of $5,000, at the option of the City from moneys derived by the City from any source, at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption:
Redemption Dates Redemption Price
September 2, 20__ and March 2, 20__ 103%
September 2, 20__ and March 2, 20__ 102
September 2, 20__ and March 2, 20__ 101
September 2, 20__ and any Interest Payment Date thereafter 100 The Bonds are also subject to mandatory redemption prior to their stated maturity dates on any Interest Payment Date, as selected by the City, in integral multiples of $5,000, from moneys derived by the City from Assessment Prepayments, at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption:
Redemption Dates Redemption Price
Interest Payment Dates on or before March 2, 20__ 103%
September 2, 20__ and March 2, 20__ 102
September 2, 20__ and March 2, 20__ 101
September 2, 20__ and any Interest Payment Date thereafter 100 The Bonds maturing on September 2, 20__, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot; the Bonds maturing on September 2, 20__, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot; the Bonds maturing on September 2, 20__, are subject to mandatory sinking fund 62 redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot; the Bonds maturing on September 2, 20__, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot; and the Bonds maturing on September 2, 20__, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot; each at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, from sinking fund payments as provided in the Fiscal Agent Agreement.
This Bond issubject to refunding pursuant to the procedures of Division 11.5 (commencing with Section 9500) of the Streets and Highways Code of the State of California.
This Bond shall not be entitled to any benefit under the Act or the Fiscal Agent Agreement, or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed shall have been dated and signed by or on behalf of the Fiscal Agent.
IN WITNESS WHEREOF, the City of Laguna Beach, California, has caused this Bond to be signed in facsimile by its City Treasurer and City Clerk, and has caused its official seal to be reproduced in facsimile hereon all as of the ___ day of ______, 2026.
CITY OF LAGUNA BEACH, CALIFORNIA
City Treasurer
ATTEST:
CITY OF LAGUNA BEACH, CALIFORNIA
City Clerk
63 CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-defined Fiscal Agent Agreement.
Dated:___________, 20___ THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., Fiscal Agent
By:
Authorized Signatory
64 ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within-registered Bond and hereby irrevocably constitute(s) and appoints(s) attorney, to transfer the same on the registration books of the Fiscal Agent with full power of substitution in the premises.
Dated:
Note: The signature(s) on this Assignment
must correspond with the fact of the within
registered Bond in every particular without
alteration or enlargement or any change
whatsoever.
Signature Guaranteed:
Note: Signature(s) must be guaranteed
by an eligible guarantor institution
65 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
Agenda Version
PRELIMINARY OFFICIAL STATEMENT DATED JANUARY __, 2026
NEW ISSUE – BOOK-ENTRY ONLY NOT RATED
In the opinion of Best Best & Krieger LLP, Riverside, California (“Bond Counsel”), subject, however, to certain qualifications described in this Official Statement, under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, the interest on the Bonds is excluded from gross income for federal income tax purposes, and interest on the Bonds is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into account in determining the annual adjusted financial statement income of certain corporations for the purpose of computing the alternative minimum tax imposed on certain corporations. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income tax. See “TAX MATTERS” herein. $3,890,000*
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS
Dated: Date of Delivery Due: September 2, as shown on inside cover The City of Laguna Beach Underground Utility Assessment District No. 2021-1 (West Street) Limited Obligation Improvement Bonds (the “Bonds”) are being issued by the City of Laguna Beach, California (the “City”), pursuant to provisions of the Improvement Bond Act of 1915 (the “1915 Act”) and a Fiscal Agent Agreement dated as of January 1, 2026 (the “Fiscal Agent Agreement”), by and between the City and The Bank of New York Mellon Trust Company, N.A., as Fiscal Agent. Capitalized terms used but not defined herein have the meanings given to such terms in the Fiscal Agent Agreement. The Bonds are limited obligations of the City secured by and paid from Assessment Revenues (as defined herein), which principally consist of the revenues received by the City in each Fiscal Year from the collection of the annual installments of the unpaid assessments levied on the parcels of property within Underground Utility Assessment District No. 2021-1 (West Street), City of Laguna Beach, Orange County, State of California (the “Assessment District”), and moneys deposited in certain funds held by the Fiscal Agent and the Treasurer of the City. The Assessment District was formed to finance the design and construction of improvements to underground overhead utilities (the “Improvements”).
The Assessment District was formed and special assessments will be levied on property within the Assessment District in accordance with the Municipal Improvement Act of 1913 (the “1913 Act”). The proceeds of the Bonds will be used to (i) pay for costs of the Improvements, (ii) fund a deposit to the Reserve Fund for the Bonds, (iii) finance capitalized interest for the Bonds through September 2, 2026, and (iv) pay costs of issuance.
The Bonds shall be issued as fully registered bonds, without coupons, in the denominations of $5,000 or any integral multiple thereof, except that one Bond may include the amount by which the total exceeds the maximum integral of $5,000. The Bonds will be issued in fully registered book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”) and purchasers will not receive certificates representing their interest in the Bonds. Interest is payable semiannually on March 2 and September 2 of each year, commencing September 2, 2026. Payments of principal and interest on the Bonds will be paid by the Fiscal Agent directly to DTC or its nominee as the registered owner of the Bonds. Upon receipt of payments of principal and interest on the Bonds, DTC is to remit such principal and interest to DTC Participants for subsequent disbursement to the beneficial owners of such Bonds.
The Bonds are subject to redemption prior to maturity as described herein. See “THE BONDS – Redemption of Bonds.” Under the provisions of the 1915 Act, assessment installments of principal and interest sufficient to meet annual debt service on the Bonds, plus an administrative expense, will be levied by the City and billed by the County of Orange, California to owners of property within the Assessment District against which there are unpaid assessments. On or before the 15th business day preceding each Interest Payment Date, the City will cause these annual assessment installments to be deposited with the Fiscal Agent into the Redemption Fund and used to pay debt service on the Bonds on such date. Unpaid assessments constitute fixed liens on the lots and parcels assessed within the Assessment District and do not constitute a personal indebtedness of the respective owners of such lots and parcels. Accordingly, in the event of a delinquency, proceedings may be taken only against the real property securing the delinquent assessment. Thus, the value of land within the Assessment District is a critical factor in determining the investment quality of the Bonds. See “THE ASSESSMENT DISTRICT – Value-to-Lien Ratios” and “BONDOWNERS’ RISKS – Property Values.” A Reserve Fund has been established under the Fiscal Agent Agreement and, upon the issuance of the Bonds, a deposit will be made so that the balance therein equals the Reserve Requirement on such date. The Reserve Fund will provide funds for payment of principal and interest on the Bonds in the event of any delinquent assessment installments. The City’s obligation to advance funds to the Redemption Fund as a result of delinquent installments is limited to the balance in the Reserve Fund. The City has covenanted in the Fiscal Agent Agreement to initiate judicial foreclosure in the event of a delinquency in the payment of assessment installments. See “SECURITY FOR THE BONDS – Covenant to Commence Superior Court Foreclosure.”
The Bonds are not a debt or a liability of the City, the State of California or any political subdivision thereof. Neither the full faith and credit nor the taxing power of the City, the State of California or any political subdivision thereof is pledged to the payment of the Bonds, or the interest or any premium thereon, and no Owners of the Bonds may compel the exercise of the taxing power of the City or the forfeiture of any of its property. The principal of, premium, if any, and interest on the Bonds are not a debt of the City nor a legal or equitable pledge, charge, lien or encumbrance upon any of its property or upon any of its income, receipts or revenues, other than the assessments.
Investment in the Bonds involves risks which may not be appropriate for some investors. See “BONDOWNERS’ RISKS” for a discussion of certain of the risk factors that should be considered, in addition to the matters set forth herein, in evaluating the investment quality of the Bonds.
This cover page contains certain information for reference only. It is not a summary of this financing. Prospective investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision.
The Bonds are to be offered when, as and if issued and delivered to the Underwriter, subject to the approval as to their legality by Best Best & Krieger LLP, Riverside, California, as Bond Counsel. Certain legal matters will be passed upon for the City by the City Attorney, and Anzel Galvan LLP, San Francisco, California, as Disclosure Counsel, and for the Underwriter by its counsel, Kutak Rock LLP, Irvine, California. It is anticipated that the Bonds in book-entry form will be available for delivery through the facilities of DTC on or about ______, 2026. [Oppenheimer Logo]
Dated: _____________, 2026
* Preliminary; subject to change.
Attachment 3
66 MATURITY SCHEDULE
$3,890,000*
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS
Base CUSIP†
: _______
Maturity
(September 2)
Principal
Amount
Interest
Rate Yield Price
CUSIP†
Number
$______ ____% Term Bonds due September 2, 20__; Yield ___%; Price ____; CUSIP†
:
$______ ____% Term Bonds due September 2, 20__; Yield ___%; Price ____; CUSIP†
:
C: Priced to optional redemption of September 2, 20__, at ___%. † CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright (c) 2026 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 Underwriter or their agents or counsel take any responsibility for the accuracy of such numbers. * Preliminary; subject to change.
67 CITY OF LAGUNA BEACH
COUNTY OF ORANGE
CITY COUNCIL
Alex Rounaghi, Mayor
Mark Orgill, Mayor Pro Tem
Hallie Jones, Councilmember
Sue Kempf, Councilmember
Bob Whalen, Councilmember
CITY OFFICIALS
Dave Kiff, City Manager
Gavin Curran, Assistant City Manager
Jeremy Frimond, Assistant City Manager
Michelle Bannigan, Director of Finance
Ann Marie McKay, City Clerk
Laura Parisi, C.P.A., City Treasurer
Megan Garibaldi, City Attorney
Mark McAvoy, Director of Public Works and Utilities
PROFESSIONAL SERVICES
Assessment Engineer
NV5, Inc.
San Diego, California
District Administrator
David Taussig and Associates, Inc.1
Newport Beach, California
Bond Counsel
Best Best & Krieger LLP
Riverside, California
Disclosure Counsel
Anzel Galvan LLP
San Francisco, California
Municipal Advisor
Fieldman, Rolapp & Associates, Inc.
Irvine, California
Fiscal Agent
The Bank of New York Mellon Trust
Company, N.A.
Los Angeles, California
1 David Taussig and Associates, Inc. does business in California under the fictious business name “DTA.” 68 GENERAL INFORMATION ABOUT THE OFFICIAL STATEMENT
No dealer, broker, salesperson or other person has been authorized by the City or the Underwriter to give any information or to make any representations with respect to the City or the Bonds other than the information contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by the City or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts.
Certain of the information set forth herein has been obtained from sources which the City believes to be reliable, but such information is not guaranteed as to accuracy or completeness. The information and expressions of opinion herein are subject to change without notice; and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. The information set forth in this Official Statement is not guaranteed as to accuracy or completeness by the Underwriter, and this Official Statement is not to be construed as a representation by the Underwriter.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement, each 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 summaries of the Fiscal Agent Agreement and other documents herein are made subject to the complete provisions thereof and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the City for further information in connection therewith. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.
CERTAIN STATEMENTS CONTAINED IN THIS OFFICIAL STATEMENT REFLECT NOT HISTORICAL FACTS BUT FORECASTS AND “FORWARD-LOOKING STATEMENTS.” NO ASSURANCE
CAN BE GIVEN THAT THE FUTURE RESULTS DISCUSSED HEREIN WILL BE ACHIEVED, AND ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE FORECASTS DESCRIBED HEREIN. IN THIS RESPECT, THE WORDS “ESTIMATE,” “PROJECT,” “ANTICIPATE,” “EXPECT,” “INTEND,” “BELIEVE” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. ALL PROJECTIONS, FORECASTS, ASSUMPTIONS, EXPRESSIONS OF OPINIONS,
ESTIMATES AND OTHER FORWARD-LOOKING STATEMENTS ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.
The City maintains a website. However, the information presented on that website is not part of this Official Statement and should not be relied upon in making investment decisions with respect to the Bonds.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL
THE BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT
PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE
HEREOF AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.
69 TABLE OF CONTENTS
i
Page Page
INTRODUCTION......................................................1 Purpose; Security for the Bonds...............................1 Forward Looking Statements...................................2 Assessment District................................................2 No Additional Bonds...............................................3 The Improvements...................................................3 Professionals Involved in the Offering ..................3 Continuing Disclosure ...........................................4 Bondowners’ Risks................................................4 Other Information ..................................................4
ESTIMATED SOURCES AND USES OF
FUNDS ..................................................................5 THE BONDS..............................................................5 General...................................................................5 Redemption of Bonds ............................................6 Purchase in Lieu of Redempton.............................8 Notice of Redemption ............................................8 Selection of Bonds for Redemption.......................9 Effect of Redemption.............................................9 Refunding Bonds ...................................................9 Annual Debt Service Schedule ..............................9 SECURITY FOR THE BONDS ..............................10 Limited City Obligation.......................................10 Pledge and Transfers of Assessment Revenues...11
Reserve Fund .......................................................12 Covenant to Commence Superior Court
Foreclosure ......................................................13 Delinquency Resulting in Ultimate or
Temporary Loss on Bonds ..............................15 Priority of Lien; Senior Prior Lien.......................15 Existing Liens ......................................................15 No Teeter Plan .....................................................15 Deferral Program .................................................16 No Additional Bonds Except for Refunding
Purposes...........................................................16 THE ASESSMENT DISTRICT...............................18 Description...........................................................18 Description of Improvements ..............................18 Formation Proceedings ........................................19 Allocation of Assessments...................................20 Maximum Annual Assessment for
Administrative Costs and Expenses................20
Value-to-Lien Ratios............................................21 Largest Property Owners .....................................24 Direct and Overlapping Debt...............................25 Sample Tax Bill................................................... 26 BONDOWNERS’ RISKS ....................................... 27 Potential Insufficiency of Assessment
Installments..................................................... 27 Assessments Are Not Personal Obligations........ 28
Risks of Real Estate Secured Investments
Generally ........................................................ 28 Limited Obligations ............................................ 28 Delinquency Resulting in Ultimate or
Temporary Loss on Bonds.............................. 29 Potential Early Redemption of Bonds from
Prepayments or Other Sources ....................... 29 Non-Cash Payments of Assessments.................. 29
Limited City Obligation Upon Delinquency....... 29
Bankruptcy and Foreclosure ............................... 30 FDIC/Federal Government Interests in
Properties........................................................ 31 No Acceleration Provision .................................. 32 Limitations on Remedies..................................... 32 Foreclosure Shortfall........................................... 33 Natural Disasters................................................. 33 Hazardous Substances......................................... 35 Property Values................................................... 36 Parity of Taxes, Bonds and Special
Assessments.................................................... 36 Right to Vote on Taxes Act................................. 37 Ballot Initiatives and Legislative Measures........ 38
Impact of Legislative Proposals, Clarifications
of the Tax Code and Court Decisions on
Tax Exemption ............................................... 38 Loss of Tax Exemption ....................................... 38 IRS Audit of Tax-Exempt Bond Issues............... 39
Absence of Secondary Market for the Bonds ..... 39
Future Debt Issuance........................................... 39 Disclosures to Future Purchasers........................ 40 Cybersecurity ...................................................... 40 LEGAL MATTERS ................................................ 40 ABSENCE OF LITIGATION................................. 40 TAX MATTERS ..................................................... 41 CONTINUING DISCLOSURE .............................. 43 NO RATING ........................................................... 43 UNDERWRITING.................................................. 43 MUNICIPAL ADVISOR........................................ 44 FINANCIAL INTERESTS ..................................... 44 MISCELLANEOUS................................................ 44 APPENDIX A - GENERAL ECONOMIC DATA REGARDING THE CITY AND THE COUNTY...................... A-1 APPENDIX B - FORM OF BOND COUNSEL OPINION ....................................................................................... B-1 APPENDIX C - SUMMARY OF THE FISCAL AGENT AGREEMENT................................................................ C-1 APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE ......................................................... D-1 APPENDIX E - THE BOOK-ENTRY SYSTEM .. .................................................................................................... E-1 APPENDIX F - ASSESSMENT DIAGRAM................................................................................................................ F-1 APPENDIX G - ENGINEER’S REPORT.................................................................................................................. G-1 APPENDIX H - LIST OF UNPAID ASSESSMENTS ................................................................. ............................. H-1 70 [INSERT AERIALS AND REGIONAL LOCATION MAP]
71 1
__________________________________
OFFICIAL STATEMENT
__________________________________
$3,890,000*
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT 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.
Purpose; Security for the Bonds
The purpose of this Official Statement, which includes the cover page and Appendices hereto (this “Official Statement”), is to provide certain information concerning the sale and issuance of the City of Laguna Beach Underground Utility Assessment District No. 2021-1 (West Street) Limited Obligation Improvement Bonds (the “Bonds”) by the City of Laguna Beach, California (the “City”).
The Bonds will be issued pursuant to a Fiscal Agent Agreement dated as of January 1, 2026 (the “Fiscal Agent Agreement”), by and between the City and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the “Fiscal Agent”). Capitalized terms not otherwise defined herein shall have the meanings set forth in the Fiscal Agent Agreement. See Appendix C – “SUMMARY OF THE FISCAL AGENT AGREEMENT.”
The Bonds will be secured under the Fiscal Agent Agreement by a pledge of all of the Assessment Revenues and moneys deposited in certain funds held by the Fiscal Agent and the City Treasurer of the City under the Fiscal Agent Agreement. See “SECURITY FOR THE BONDS.” Assessment Revenues principally consist of the revenues received by the City in each Fiscal Year from the collection of the annual installments of the unpaid Assessments (as defined herein) excluding amounts collected for administrative costs pursuant to Sections 8682, 8682.1 and 10204(f) of the California Streets and Highways Code levied on parcels of property within Underground Utility Assessment District No. 2021-1 (West Street), City of Laguna Beach, Orange County, State of California (the “Assessment District”).
The proceeds of the Bonds will be used to (i) pay for costs to finance the design and construction of improvements to underground overhead utilities (the “Improvements”) within the Assessment District, (ii) fund a deposit to the Reserve Fund for the Bonds, (iii) finance capitalized interest for the Bonds through September 2, 2026, and (iv) pay costs of * Preliminary; subject to change.
72 2
issuance. See “ESTIMATED SOURCES AND USES OF FUNDS” and “THE ASSESSMENT DISTRICT.”
Forward Looking Statement
Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as a “plan,” “expect,” “estimate,” “project,” “budget” or similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information under the caption “THE ASSESSMENT DISTRICT.”
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. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.
Assessment District
The Assessment District is located within the City and is generally bounded by Coast Highway, Egan Road, Eagle Rock Way, West Street, Valido Road and Rico Road. The Assessment District consists of 102 parcels, two of which are undevelopable strip parcels with an assessed value of zero dollars each and are not subject to the levy of Assessments. The parcels in the Assessment District are mostly developed for residential use. Of the 100 assessable parcels within the Assessment District, a total of 95 parcels are zoned for residential use, including three parcels that comprise a City park. The remaining five parcels are non-residential parcels, four of which are zoned within a local business district and one is an institutional parcel owned by the South Coast Water District (“SCWD”).
The City is a community of approximately 22,800 residents, located in the County of Orange, California (the “County”), approximately 50 miles south of the City of Los Angeles. The City’s location on the Pacific Coast has enhanced its position as a regional arts and tourism center. See Appendix A – “GENERAL ECONOMIC DATA REGARDING THE CITY AND THE COUNTY” for general information regarding the City and the County.
Assessment proceedings were initiated by the City Council of the City pursuant to the Municipal Improvement Act of 1913, Division 12 of the California Streets and Highways Code (the “1913 Act”) by adoption of Resolution No. 25.032 on May 20, 2025, declaring its intention to form the Assessment District and directing NV5, Inc., San Diego, California, (the “Assessment Engineer”), to prepare a written report containing among other things, the proposed assessment for each parcel of land in the Assessment District. The written report was filed and preliminarily approved by the City Council on May 20, 2025 by Resolution No. 25.033 The Assessment Engineer subsequently filed a final written report with the City Council, which report was approved by the 73 3
City Council on September 23, 2025 by Resolution No. 25.077 (the “Engineer’s Report”). See Appendix G – “ENGINEER’S REPORT.”
On September 23, 2025, a public hearing was duly held as noticed, and all persons interested and desiring to be heard were given an opportunity to speak and be heard, and all matters pertaining to the Assessment District and proposed levy of assessments were fully heard and considered by the City Council, and all oral statements and all written protests or communications were duly considered. Following the public hearing, the assessment ballots were tabulated by the Assessment Engineer and the City Clerk and it was found that a majority protest as defined by Article XIIID of the California Constitution did not exist. On September 23, 2025, the City Council adopted its resolution confirming the proposed assessments. The City Council confirmed a total assessment of $5,233,077 and recorded such confirmed assessments (the “Assessments”). After confirmation and recordation, the Assessments became liens against the assessed parcels.
Following the recordation of the Assessments, all property owners in the Assessment District were given the opportunity to pay all or a portion of their Assessments in cash. As previously described, originally, there were 102 parcels in the Assessment District, of which 100 were assessed parcels with Assessments totaling $5,233,077 (the remaining 2 parcels are not subject to levy of Assessments). During the cash prepayment period, 22] parcels fully prepaid their Assessment in the total amount of $1,061,227]. The Bonds will be secured by unpaid Assessments equal to the aggregate principal amount of the Bonds. See “SECURITY FOR THE BONDS.” As of the date of issuance of the Bonds, there are 78] parcels in the Assessment District with unpaid Assessments securing the Bonds. See “THE ASSESSMENT DISTRICT.” For a list of the unpaid Assessments, see Appendix H – “LIST OF UNPAID ASSESSMENTS.”
No Additional Bonds
The City is not authorized to issue any additional bonds (other than refunding bonds) secured by the Assessment Revenues on a parity with the Bonds. See “THE BONDS – Refunding Bonds” and “SECURITY FOR THE BONDS – No Additional Bonds.”
The Improvements
The proceeds of the Bonds will primarily be used to provide financing to complete the Improvements. The Improvements to be constructed and installed will provide conversion to an underground utility system. See ‘THE ASSESSMENT DISTRICT – Description of Improvements.” The Assessment Engineer has determined that the Improvements provide a special benefit to the assessed parcels, will enhance neighborhood aesthetics, and the safety and reliability of the utility system. See Appendix G – “ENGINEER’S REPORT.”
Professionals Involved in the Offering
The Bank of New York Mellon Trust Company, N.A., Los Angeles, California, will act as Fiscal Agent under the Fiscal Agent Agreement. David Taussig and Associates, Inc., doing business as DTA (“DTA”), Newport Beach, California, will serve as District Administrator and as the initial Dissemination Agent under the City’s Continuing Disclosure Certificate. Fieldman, Rolapp & Associates, Inc., Irvine, California, has served as Municipal Advisor to the City in connection with the Bonds.
74 4
The legal proceedings in connection with the issuance and delivery of the Bonds are subject to the approval as to their legality by Best Best & Krieger LLP, Riverside, California, Bond Counsel.
Certain legal matters will be passed on for the City by the City Attorney, and by Anzel Galvan LLP, San Francisco, California, as Disclosure Counsel. Certain legal matters will be passed on for the Underwriter by Kutak Rock LLP, Irvine, California. Other professional services have been performed by NV5, Inc., San Diego, California, as Assessment Engineer. For information concerning financial or other interest which certain of the above-mentioned professionals, advisors, counsel and agents may have in the offering of the Bonds, see “FINANCIAL INTERESTS.” Continuing Disclosure
In order to assist the Underwriter in complying with Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission, the City will agree to provide certain annual financial information and operating data and notice of certain enumerated events See “CONTINUING DISCLOSURE” and Appendix D – “FORM OF CONTINUING DISCLOSURE CERTIFICATE” for a description of the specific nature of the annual reports and notices of enumerated events to be provided by the City.
Bondowners’ Risks
Certain events could affect the timely repayment of the principal of and interest on the Bonds when due. See the section of this Official Statement entitled “BONDOWNERS’ RISKS” for a discussion of certain factors which should be considered, in addition to other matters described in this Official Statement, in evaluating an investment in the Bonds. The purchase of the Bonds involves risks, and the Bonds are not suitable investments for some types of investors. See “BONDOWNERS RISKS.”
Other Information
This Official Statement speaks only as of its date, and the information contained herein is subject to change. Brief descriptions of the Bonds and the Fiscal Agent Agreement are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Fiscal Agent Agreement, the Bonds and the constitution and laws of the State as well as the proceedings of the City Council of the City, are qualified in their entirety by references to such documents, laws and proceedings, and with respect to the Bonds, by reference to the Fiscal Agent Agreement. Copies of the Fiscal Agent Agreement, the Continuing Disclosure Certificate and other documents and information referred to herein are available for inspection and (upon request and payment to the Fiscal Agent of a charge for copying, mailing and handling) for delivery from the Fiscal Agent.
The information set forth herein has been obtained from sources which are believed to be reliable but is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the City. The information and expressions of opinions herein are subject to change without notice, and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or the Assessment District since the date hereof. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.
75 5
ESTIMATED SOURCES AND USES OF FUNDS
The table below provides a summary of the sources and uses of funds for the Bonds, contributions by the City, and prepayments of Assessment by property owners during the cash prepayment period.
Sources: Amount
Principal Amount of the Bonds $
Less: Underwriter’s Discount
Plus: [Net] Original Premium
Plus: City Contributions
Plus: Property Owner Prepayments
Total Sources $
Uses:
Improvement Fund(1) $
Capitalized Interest Fund(2)
Reserve Fund(3)
Costs of Issuance Fund(4)
Total Uses $
(1) To be held by the City Treasurer and used to finance the construction of the Improvements. (2) To be held by the City Treasurer and used to pay interest on the Bonds through September 2, 2026. (3) To be held by the Fiscal Agent; equals the Reserve Requirement for the Bonds on the date the Bonds are issued. See “SECURITY FOR THE BONDS – Reserve Fund.”
(4) To be held by the City Treasurer and used to pay costs of issuance, including but not limited to, Fiscal Agent, Bond Counsel and Disclosure Counsel fees and costs, printing costs and other related costs for the issuance of the Bonds, reimbursable expenses of the City.
THE BONDS
General
The Bonds were authorized for issuance by a resolution adopted by the City Council of the City on December 9, 2025], and are being issued by the City pursuant to the Improvement Bond Act of 1915 (the “1915 Act”) and the Fiscal Agent Agreement.
The Bonds will be dated their date of delivery and mature on September 2 in the years and in the amounts shown on the inside cover page of this Official Statement. Interest shall be payable semiannually on March 2 and September 2 (each an “Interest Payment Date”) of each year until maturity commencing September 2, 2026. The Bonds shall be issued as fully registered bonds, without coupons, in the denominations of $5,000 or any integral multiple thereof, except that one Bond may include the amount by which the total exceeds the maximum integral of $5,000, if any.
Interest will be calculated on the basis of a 360-day year composed of twelve 30-day months.
Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated after a Record Date and before the close of business on the next Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated on or before the Record Date preceding the first Interest 76 6
Payment Date, in which event it shall bear interest from the Closing Date; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon or from the Closing Date, if no interest has previously been paid or made available for payment thereon. “Record Date” is defined in the Fiscal Agent Agreement as the 15th day of the month next preceding the applicable Interest Payment Date whether or not such day is a Business Day.
Interest on the Bonds is payable by check of the Fiscal Agent mailed by first class mail, postage prepaid, on each Interest Payment Date, until the principal amount of a Bond has been paid or made available for payment, to the registered Owner thereof at such registered Owner’s address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the Record Date preceding the Interest Payment Date. The Bonds will be held in book entry form and registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), and all interest payments will be made directly to DTC for distribution to the beneficial owners of the Bonds in accordance with DTC’s procedures. See APPENDIX E – “THE BOOK-ENTRY SYSTEM.”
Redemption of Bonds*
Optional Redemption. The Bonds are subject to redemption prior to their stated maturity dates on any Interest Payment Date on and after September 2, 20__, on a pro rata basis among maturities (and by lot within any one maturity), in integral multiples of $5,000, at the option of the City from moneys derived by the City from any source, at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption:
Redemption Dates Redemption Price
September 2, 20__ and March 2, 20__ 103%
September 2, 20__ and March 2, 20__ 102
September 2, 20__ and March 2, 20__ 101
September 2, 20__ and any Interest Payment Date thereafter 100 Mandatory Redemption From Assessment Prepayments. The Bonds are subject to mandatory redemption prior to their stated maturity dates on any Interest Payment Date, as selected by the City, in integral multiples of $5,000, from moneys derived by the City from Assessment Prepayments, at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption:
Redemption Dates Redemption Price
Interest Payment Dates on or before March 2, 20__ 103%
September 2, 20__ and March 2, 20__ 102
September 2, 20__ and March 2, 20__ 101
September 2, 20__ and any Interest Payment Date thereafter 100 * Preliminary; subject to change.
77 7
In selecting Bonds for mandatory redemption, the City Treasurer shall select such Bonds in such a way that the ratio of the principal amount of the Bonds in each maturity of the Bonds that will remain Outstanding to the aggregate principal amount of the Bonds that will remain Outstanding will be approximately the same as it was prior to the redemption of such Bonds, insofar as possible. See “BONDOWNERS’ RISKS – Potential Early Redemption of Bonds from Prepayments or Other Sources.”
Sinking Fund Redemption. The Outstanding Bonds maturing on September 2, 20__, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, from sinking fund payments as follows:
Redemption Dates
(September 2) Sinking Fund Payments
$
(maturity)
The Outstanding Bonds maturing on September 2, 20__, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, from sinking fund payments as follows:
Redemption Dates
(September 2) Sinking Fund Payments
$
(maturity)
The Outstanding Bonds maturing on September 2, 20__, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, from sinking fund payments as follows:
Redemption Dates
(September 2) Sinking Fund Payments
$
(maturity)
The Outstanding Bonds maturing on September 2, 20__, are subject to mandatory sinking fund redemption, in part, on September 2, 20__, and on each September 2 thereafter prior to 78 8
maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, from sinking fund payments as follows:
Redemption Dates
(September 2) Sinking Fund Payments
$
(maturity)
The amounts in the foregoing schedules will be reduced pro rata among redemption dates, in order to maintain substantially level Annual Debt Service, as directed in writing to the Fiscal Agent by an Authorized Officer, as a result of any prior partial optional redemption or mandatory redemption from Assessment Prepayments of the Bonds or from moneys derived by the City from any source as described above under the subcaptions “– Optional Redemption” and “– Mandatory Redemption From Assessment Prepayments” above, respectively.
Purchase in Lieu of Redemption
In lieu of payment at maturity or redemption as described in the preceding section, moneys in the Redemption Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase.
Notice of Redemption
The Fiscal Agent will cause notice of any redemption to be mailed by first class mail, postage prepaid, at least 30 days but not more than 60 days prior to the date fixed for redemption, to the Securities Depositories and to one or more Information Services selected by an Authorized Officer, and to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books maintained by the Fiscal Agent at its Principal Office; but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such Bonds.
The notice of redemption shall state the date of such notice, the date of issue of the Bonds, the place or places of redemption, the redemption date, the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers and Bond numbers of the Bonds to be redeemed, by giving the individual CUSIP number and Bond number of each Bond to be redeemed, or shall state that all Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, shall state as to any Bond called for redemption in part the portion of the principal of the Bond to be redeemed, shall require that such Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such Bonds will not accrue from and after the redemption date. 79 9
Redemption notices may be conditional. The City has the right to rescind any notice of redemption of the Bonds by providing written notice to the Fiscal Agent prior to the date fixed for redemption. Any notice of redemption shall be cancelled and annulled if for any reason funds will not 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 City and the Fiscal Agent have no liability to the Owners of the Bonds or any other party related to or arising from such rescission of redemption. The Fiscal Agent shall deliver the rescission notice in the same manner as the notice of redemption was delivered.
Selection of Bonds for Redemption
Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the Bonds, the Fiscal Agent shall select the Bonds for redemption in such a way that the ratio of Outstanding Bonds shall be approximately the same in each maturity of the Bonds insofar as possible, and shall select Bonds for redemption within each maturity of the Bonds by lot.
Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the Owner, at the expense of the City, a new Bond or Bonds, of the same maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds.
Effect of Redemption
From and after the date fixed for redemption, if funds available for the payment of the redemption prices of the Bonds called for redemption, together with accrued interest to the date of redemption, shall have been deposited in the Redemption Fund, such Bonds shall cease to be entitled to any benefit under the Fiscal Agent Agreement other than the right to receive payment of the redemption price, and interest shall cease to accrue on the Bonds to be redeemed on the redemption date specified in the notice of redemption.
Refunding Bonds
Pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds (Division 11.5 of the Streets and Highways Code) (the “1984 Act”), the City may issue refunding bonds for the purpose of redeeming all or a portion of the Bonds. The City may issue and sell refunding bonds without giving notice to or conducting a hearing for the owners of property in the Assessment District if the City Council makes the findings required in the 1984 Act. In the event refunding bonds are sold, the Bonds will be redeemed in whole or in part, as applicable, from refunding bond proceeds.
Annual Debt Service Schedule
The following table presents the debt service schedule for the Bonds based on the maturity schedule and interest rates set forth on the inside cover page of this Official Statement assuming no earlier redemption thereof (other than mandatory sinking fund redemption). 80 10
TABLE 1
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS
Debt Service
Year Ending
September 2 Principal Interest
Total Debt
Service
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
TOTAL
Source: Underwriter.
SECURITY FOR THE BONDS
Limited City Obligation
THE CITY’S OBLIGATION TO ADVANCE MONEYS TO PAY DEBT SERVICE ON
THE BONDS IN THE EVENT OF DELINQUENT ASSESSMENT INSTALLMENTS IS
LIMITED TO THE MONEYS AVAILABLE IN THE REDEMPTION FUND AND IN THE RESERVE FUND. BONDOWNERS SHOULD NOT RELY UPON THE CITY TO ADVANCE 81 11
MONEYS TO THE REDEMPTION FUND SHOULD THE RESERVE FUND EVER BE
DEPLETED AND THE CITY HAS MADE THE EXPRESS ELECTION UNDER SECTION 8769(B) OF THE CALIFORNIA STREETS AND HIGHWAYS CODE NOT TO DO SO.
THE BONDS ARE NOT SECURED BY THE GENERAL TAXING POWER OF THE
CITY, THE COUNTY OF ORANGE OR THE STATE OF CALIFORNIA, OR ANY OF ITS
POLITICAL SUBDIVISIONS, NOR IS THE FULL FAITH AND CREDIT OF THE CITY, THE
COUNTY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS PLEDGED TO THE PAYMENT OF THE BONDS.
Pledge and Transfers of Assessment Revenues
Pledge of Assessment Revenues. The Bonds will be secured by a pledge of all of the Assessment Revenues and all moneys deposited in the Redemption Fund, all moneys deposited in the Reserve Fund and the Capitalized Interest Fund and, until disbursed as provided in the Fiscal Agent Agreement, all moneys deposited in the Improvement Fund. The Assessment Revenues and all moneys deposited into such funds (except as otherwise provided in the Fiscal Agent Agreement with respect to moneys disbursed from the Improvement Fund) are dedicated in their entirety to the payment of the principal of the Bonds, and interest and any premium on, the Bonds, as provided in the Fiscal Agent Agreement and in the 1915 Act, until all of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in accordance with the Fiscal Agent Agreement.
“Assessment Revenues” are defined in the Fiscal Agent Agreement to mean the revenues received by the City in each Fiscal Year from the collection of the annual installments of the unpaid Assessments, including penalties and interest on delinquent installments of the unpaid Assessments and proceeds from the sale of property for delinquent Assessment installments, but excluding the amounts of the annual assessments collected by the City for the payment of administration costs pursuant to Sections 8682, 8682.1 and 10204(f) of the California Streets and Highways Code (see “THE ASSESSMENT DISTRICT – Maximum annual Assessment for Administrative Costs and Expenses”) and Assessment Prepayments.
“Assessment Prepayment” is defined in the Fiscal Agent Agreement to mean an amount received by the City from a property owner as a payment in full or a partial payment of the unpaid amount of the Assessment levied on his or her property.
Although the unpaid Assessments constitute fixed liens on the lots and parcels assessed, they do not constitute a personal indebtedness of the respective owners of such lots and parcels. There can be no assurance as to the ability or the willingness of such owners to pay the unpaid Assessments when due. See “BONDOWNERS’ RISKS.”
The unpaid Assessments will be collected in annual installments, together with interest, on the County secured tax roll on which general taxes on real property are collected (the “Assessment Installments”). The City will include in the Annual Installments an amount for the payment of administrative expenses in the amount set forth in the Engineer’s Report; such amounts are not pledged as security for, or otherwise available to pay debt service on, the Bonds. The Assessment Installments are payable and become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do general taxes. 82 12
The properties upon which the Assessments are levied are subject to the same provisions for sale and redemption as are properties for nonpayment of general taxes.
Transfers of Assessment Revenues. No later than August 15, 2026, the Fiscal Agent shall transfer moneys from the Capitalized Interest Fund and deposit said moneys to the Redemption Fund in the amount necessary to equal the interest which is due and payable on the Outstanding Bonds on such September 2, 2026 On or before the 15th Business Day preceding each Interest Payment Date, excluding the September 2, 2026, the City Treasurer shall transfer to the Fiscal Agent for deposit in the Redemption Fund an amount of the Assessment Revenues which the Fiscal Agent has advised the City Treasurer will be needed to pay Debt Service on the Bonds on such Interest Payment Date.
Upon receipt of each such transfer of Assessment Revenues, the Fiscal Agent shall deposit the amount thereof in the Redemption Fund for the payment of Debt Service on the Bonds on the Interest Payment Date for which the transfer is made.
The Assessment Installments billed against each of the lots and parcels in the Assessment District each year represent a pro rata share of the total principal, including mandatory sinking fund payments, if any, and interest coming due on all of the Bonds that year, including any amounts needed to replenish the Reserve Fund. The amount billed against each lot or parcel is based on the percentage which the unpaid Assessment against the property bears to the total of unpaid Assessments in the Assessment District. The failure of a property owner to pay an annual Assessment Installment will not result in an increase in Assessment Installments against other parcels in the Assessment District.
Each property owner has a statutory right to prepay the Assessment on a parcel in whole or in part on any date. Amounts received as prepaid Assessments will be used solely for the purpose of redeeming Bonds. See “THE BONDS – Redemption of Bonds – Mandatory Redemption from Assessment Prepayments.”
Reserve Fund
General. The Fiscal Agent Agreement provides for the creation of the “Underground Utility Assessment District No. 2021-1 (West Street) Reserve Fund” (the “Reserve Fund”), as a separate account to be held by the Fiscal Agent. Moneys in the Reserve Fund shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds as a reserve for the payment of the principal of and interest and any premium on the Bonds and shall be subject to a lien in favor of the Owners of the Bonds.
The Reserve Fund is required to be maintained at the Reserve Requirement. Under the Fiscal Agent Agreement, “Reserve Requirement” is defined to mean the amount of $____, representing 6% of the original principal amount of the Bonds.
Use of Funds. Except as otherwise described below, all amounts deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Redemption Fund in the event of any deficiency at any time in the Redemption Fund of the amount then required for payment of the principal of, and interest and any premium on the Bonds or, in accordance with the provisions of the Fiscal Agent Agreement described under the subcaption “– Transfer of Excess of Reserve Requirement” below, or for the purpose of redeeming Bonds. Amounts transferred from the Reserve Fund to the Redemption Fund will be restored by the City from the 83 13
collection of delinquent installments on the Assessments levied on parcels for which such installments are delinquent, and penalties and interest thereon, whether by judicial foreclosure proceedings or otherwise, as soon as is reasonably possible following the receipt by the City of such delinquent installments, penalties and interest.
Transfer Due to Deficiency in Redemption Fund. Whenever transfer is made from the Reserve Fund to the Redemption Fund due to a deficiency in the Redemption Fund, the Fiscal Agent shall report such fact to the City.
Transfers on Payment of Assessments. Whenever an Assessment levied on a lot or parcel of property within the Assessment District is paid off, the Fiscal Agent shall, upon receiving an Officer’s Certificate regarding such Assessment, transfer from the Reserve Fund to the Redemption Fund an amount equal to the reduction in such Assessment determined pursuant to Section 8881 of the California Streets and Highways Code, which amount shall be specified in the Officer’s Certificate. Upon receipt of such an Officer’s Certificate, the Fiscal Agent is authorized to act thereon without further inquiry, shall not be responsible for the accuracy of the statements contained therein, and shall be absolutely protected and incur no liability in relying on such Officer’s Certificate.
Transfer of Excess of Reserve Requirement. Whenever, on any September 3, the amount in the Reserve Fund, less Investment Earnings resulting from the investment of the funds therein which must be rebated to the United States, exceeds the then applicable Reserve Requirement, the Fiscal Agent shall provide written notice to the City of the amount of the excess and shall, subject to the requirements of the Fiscal Agent Agreement, transfer an amount equal to the excess from the Reserve Fund to the Redemption Fund to be used for the payment of Debt Service on the next succeeding Interest Payment Date in accordance with the Fiscal Agent Agreement.
Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent shall, upon receiving written direction from an Authorized Officer, transfer the amount in the Reserve Fund to the Redemption Fund to be applied, on the next succeeding Interest Payment Date to the payment and redemption, in accordance with the provisions of the Fiscal Agent Agreement, as applicable, of all of the Outstanding Bonds. In the event that the amount so transferred from the Reserve Fund to the Redemption Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund shall be transferred by the Fiscal Agent to the City to be applied as provided in Section 8885 of the California Streets and Highways Code. Upon receipt of such an Officer’s Certificate, the Fiscal Agent is authorized to act thereon without further inquiry, shall not be responsible for the accuracy of the statements contained therein, and shall be absolutely protected and incur no liability in relying on such Officer’s Certificate. The City has no obligation to replenish the Reserve Fund except to the extent that delinquent Assessments are paid or proceeds from foreclosure sales are realized. See “BONDOWNERS’ RISKS – Foreclosure Shortfall.”
Covenant to Commence Superior Court Foreclosure
The 1913 Act provides that in the event any assessment or installment thereof or any interest thereon is not paid when due, the City may order that the same be collected by an action brought in 84 14
the superior court to foreclose the lien of the unpaid assessment. In such an action, the real property subject to the unpaid assessment may be sold at judicial foreclosure sale. This foreclosure sale procedure is not mandatory. However, in the Fiscal Agent Agreement, the City covenants with and for the benefit of the Owners of the Bonds that it will order, and cause to be commenced, upon default of any Assessment installments due (except under circumstances to be specified in the resolution of issuance of the Bonds), judicial foreclosure proceedings against properties with delinquent Assessment installments to be brought within 150 days of such default, as permitted by Section 8830(d) of the California Streets and Highways Code. The Fiscal Agent Agreement further provides that, notwithstanding the foregoing, the City may elect, in its sole discretion, to defer foreclosure proceedings against properties that are determined to be delinquent in the payment of any Assessment installments within 150 days of such default, as permitted by Section 8830(d) of the California Streets and Highways Code, if the City has received funds equal to the delinquent Assessment installments for each parcel of property from any source, including, but not limited to, funds appropriated by the City for such purpose, and such funds are sufficient to make timely payment of scheduled payment of principal and interest on the Bonds, together with any penalties and fees that otherwise would have been paid or required to be paid from the delinquent Assessment installments.
If the Reserve Fund is depleted, there could be a default or a delay in payments to the Owners of the Bonds pending prosecution of foreclosure proceedings and receipt by the Assessment District of foreclosure sale proceeds, if any.
Prior to July 1, 1983, the right of redemption from foreclosure sales was limited to a period of one year from the date of sale. Under legislation effective July 1, 1983, this statutory right of redemption was amended to provide that before notice of sale of the foreclosed parcel can be given following court judgment of foreclosure, a redemption period of 120 days must elapse. Furthermore, if the purchaser at the sale is the judgment creditor (here, the City) an action may be commenced by the delinquent property owner within six months after the date of sale to set aside such sale. The constitutionality of the aforementioned legislation which repeals the one year redemption period has not been tested and there can be no assurance that, if tested, such legislation will be upheld.
Foreclosure by court action is subject to normal litigation delays, the nature and extent of which are largely dependent upon the nature of the defense, if any, put forth by the debtor and the condition of the calendar of the superior court. Such foreclosure actions can be stayed by the superior court on generally accepted equitable grounds or as the result of the debtor’s filing for relief under the federal bankruptcy laws. Amendments to the 1915 Act enacted in 1988 and effective January 1, 1989, provide that under certain circumstances property may be sold upon foreclosure at less than the Minimum Price or without a Minimum Price. “Minimum Price” as used in the 1915 Act is the amount equal to the delinquent installments of principal or interest of the assessment together with all interest penalties, costs, fees, charges and other amounts more fully detailed in the 1915 Act. The court may authorize a sale at less than the Minimum Price if the court determines that sale at less than the Minimum Price will not result in an ultimate loss to the Owners of the Bonds or, under certain circumstances, if owners of 75% or more of the outstanding Bonds consent to such sale. However, there can be no assurance that foreclosure proceedings will occur in a timely manner so as to avoid depletion of the Reserve Fund and a delay in payments of debt service on the Bonds. In the event court foreclosure proceedings are commenced by the City, there may be delays in payments to Owners of the Bonds pending prosecution of the foreclosure proceedings to completion and the receipt of the City of any proceeds of the foreclosure sale. It is also possible that no qualified bid will be received at the foreclosure sale. See “BONDOWNERS’ RISKS.” 85 15
Delinquency Resulting in Ultimate or Temporary Loss on Bonds The Fiscal Agent Agreement provides that, if the City Treasurer determines, pursuant to Section 8770 of the California Streets and Highways Code, that there is a danger of an ultimate loss accruing to the Bond Owners, for any reason, the provisions of that section and Sections 8771, 8772 and 8773 of the California Streets and Highways Code shall govern with respect to the procedures which shall be followed in paying the principal of and interest on the Outstanding Bonds. Under said sections, if after holding a hearing, the City Council determines that in its judgment there will be a shortage in the Redemption Fund, it shall direct the City Treasurer to pay to the holders of all outstanding and unpaid Bonds such proportion thereof as the amount of funds on hand bears to the total amount of the unpaid principal of the Bonds and the interest which has accrued or will accrue thereon. Similar proportionate payments shall thereafter be made periodically as moneys come into the Redemption Fund.
Priority of Lien; Senior Prior Lien
The Assessments and each Assessment Installment, and any interest and penalties thereon, constitute a lien against the respective parcels of assessable property within the Assessment District until the same are paid. Such lien is subordinate to all fixed special assessment liens previously imposed upon the same property but has priority over all private liens and over all fixed special assessment liens which may thereafter be created against the property. Such lien is co-equal to and independent of the lien for general taxes and any lien imposed under the Mello-Roos Community Facilities Act of 1982, as amended.
The City previously formed Underground Utility Assessment District No. 09-1 (“Assessment District 09-1”), an underground utility assessment district. Three parcels in the Assessment District are also located within the boundaries of Assessment District 09-1. The lien of the assessments levied on such parcels for Assessment District 09-1 is senior to the lien of the unpaid Assessments levied on such parcels for the Assessment District. See “THE ASSESSMENT DISTRICT – Value to Lien Ratios.” See also “BONDOWNERS’ RISKS – Parity of Taxes, Bonds and Special Assessments.” See “THE ASSESSMENT DISTRICT – Direct and Overlapping Debt” herein for a description of other special taxes, assessments or reassessments secured by a lien on property within the Assessment District.
Existing Liens
In addition to Assessment District 09-1, contained within the Assessment District are numerous overlapping local agencies providing public services and having liens against the respective parcels of assessable property within the Assessment District. See “THE ASSESSMENT DISTRICT — Direct and Overlapping Debt” herein.
No Teeter Plan
In 1949, the California Legislature enacted an alternative method for the distribution of secured property taxes to local agencies. This method, known as the Teeter Plan, is now set forth in Sections 4701-4717 of the California Revenue and Taxation Code. The County has adopted a Teeter Plan. However, the City has not made application to the County to request that assessments or reassessments of its special assessment districts, including the Assessment District, be included in the 86 16
County’s Teeter Plan. Consequently, the amount of the levy of Assessments in the Assessment District that can be allocated to the City depends upon the actual collections of such Assessments.
Deferral Program
Pursuant to Section 10700 et seq. of the California Streets and Highways Code, the City has established a deferral program with respect to assessments levied on parcels in assessment districts that are formed by the City under the 1913 Act to finance the undergrounding of utilities (the “Deferral Program”), including the Assessment District. Under the Deferral Program, eligible property owners are permitted to defer the payment of assessments so long they continue to own the property in the district. Participation in the Deferral Property is subject to the satisfaction of certain other eligibility requirements, including: (1) the property owner or their spouse must be at least 62 years old, blind or disabled in accordance with standards used by the Internal Revenue Service for tax return purposes; (2) the property within the assessment district must be the property owner’s primary residence; and the (3) the property owner’s household income cannot exceed the amount corresponding to low income household in the County. In connection with the Bonds, none of the property owners within the Assessment District applied to participate in the Deferral Program.
No Additional Bonds Except for Refunding Purposes
The City is not authorized to issue additional bonds (other than refunding bonds) secured by the Assessment Revenues. See “THE BONDS – Refunding Bonds.” See Appendix C – “SUMMARY OF FISCAL AGENT AGREEMENT” for a further summary of the Fiscal Agent Agreement.
87 17
[Insert Boundary Map]
88 18
THE ASSESSMENT DISTRICT
Description
The Assessment District is generally bounded by Coast Highway, Egan Road, Eagle Rock Way, West Street, Valido Road and Rico Road within the City. The first page of the Assessment Diagram outlining the boundaries of the Assessment District is included in the previous page. See Appendix F – “ASSESSMENT DIAGRAM” for a complete copy of the Assessment Diagram outlining the boundaries of the Assessment District.
Originally, there were 102 parcels in the Assessment District, of which 100 were assessed parcels with unpaid Assessments totaling $5,233,077 (the remaining 2 parcels are not subject to levy of Assessments). Of the 100 assessable parcels in the Assessment District, the Assessments for 22] parcels were paid in full during the cash prepayment period. As a result, there are 78] parcels in the Assessment District with unpaid Assessments securing the Bonds.
The parcels in the Assessment District are mostly developed for residential use. Of the 100 assessable parcels within the Assessment District, a total of 95 parcels are zoned for residential use, including three parcels that comprise a City park. The remaining five parcels are non-residential parcels, four of which are zoned within a local business district and one is an institutional parcel owned by SCWD. SCWD provides water, recycled water, and wastewater services to the South Orange County. A portion of the City, including the Assessment District, is located within SCWD’s service area. The parcel in the Assessment District that is owned by SCWD includes a reservoir and a fueling station. The City and SCWD are among the property owners in the Assessment District that prepaid their assessment during the cash prepayment period.
As previously described, three parcels (Assessor Parcel Numbers 056-062-06, 056-062-07, and 056-062-08) in the Assessment District are also within the boundaries of Assessment District 09-
1. The City previously issued limited obligation bonds in the original principal amount of $5,345,000 payable from unpaid assessments levied in Assessment District 09-1, of which unpaid assessments totaling approximately $3,167 relate to such three parcels. The lien of the assessments levied on such parcels for Assessment District 09-1 is senior to the lien of the unpaid Assessments levied on such parcels for the Assessment District. See Appendix H – “LIST OF UNPAID ASSESSMENTS” for certain information for such parcels including their estimated value-to-lien ratios. See also “BONDOWNERS’ RISKS – Parity of Taxes, Bonds and Special Assessments.” The Bonds will be secured by unpaid Assessments equal to the aggregate principal amount of the Bonds. The first Assessment Installments are expected to be levied in fiscal year 2026-27. The aggregate assessed value of parcels in the Assessment District with unpaid Assessments was $113,336,445] for fiscal year 2025-26. See Appendix H – “LIST OF UNPAID ASSESSMENTS.” Description of Improvements
The Improvements within the Assessment District will consist of the undergrounding of overhead utility lines and utility poles within the Assessment District. The Improvements will include removal of existing overhead power, telephone and cable wires, removal of existing utility poles, removal of overhead residential service drops, construction of mainline underground power, telephone and cable conduit, and construction of service conduits. The utilities to be undergrounded 89 19
include power lines owned by San Diego Gas & Electric and communication lines owned by Frontier Communications, Cox Communications and Crown Castle. The proposed undergrounding of electric and communication improvements to be constructed are the within public right-of-way and/or easements owned by the serving utility.
The cost of the Improvements and incidental expenses was estimated to total approximately $5,808,679 (excluding financing costs) based on the Engineer’s Report prepared by the Assessment Engineer in connection with the formation of the Assessment District. “THE BONDS – Sources and Uses of Funds.”
The design of the Improvements is complete and the City has received bids to complete the construction of the Improvements. The lowest responsive bid was submitted by Hot Line Construction, Inc. The City Council awarded the construction to Hot Line Construction, Inc. on September 23, 2025. The following table shows a summary of the total cost estimated based on the construction bid received and other costs as contained in the Engineer’s Report prepared by the Assessment Engineer, as further updated by the City. A copy of the Engineer’s Report is attached hereto as Appendix G – “ENGINEER’S REPORT.”
TABLE 2
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS
Estimate of Costs and Expenses
Construction Costs $5,808,679
Project Incidental Expenses 184,160
Bond Financing Costs (1) 422,286*
Total Project Costs $6,415,125*
Less: City Contribution $707,536
Less: City Contribution for General Benefit 707,536
Less: Property Owner Prepayments 1,110,053
Total Unpaid Assessments (2) $3,890,000*
(1) Includes Reserve Fund deposit equal to the Reserve Requirement of the Bonds, capitalized interest, underwriter’s discount, costs of issuance and other costs associated with the issuance of the Bonds totaling ($587,859 less the premium on the Bonds ($165,573).
(2) Total may not foot due to rounding.
*Preliminary; subject to change.
Source: Assessment Engineer and DTA.
Formation Proceedings
The City Council has taken proceedings under the 1913 Act for the formation of the Assessment District and has confirmed the Assessments. On September 23, 2025, the City Council conducted a duly noticed public hearing regarding the formation of the Assessment District. As of the close of the public hearing, there was no majority protest and the majority of the assessment ballots cast, weighted by the amount of the assessments represented thereby, were in favor of the 90 20
formation of the Assessment District and levy of the Assessments. Property owners were then given an opportunity to prepay their Assessments in cash or to pay them in annual installments following the issuance of the Bonds. At the end of the cash collection period, a list of unpaid assessments was filed with the City Treasurer, acting as treasurer pursuant to Section 8620 of the 1915 Act. The Assessments and a related diagram were recorded in the office of the City Engineer/Superintendent of Streets, and with the County Recorder of the County. A notice of assessment, as prescribed in Section 3114 of the Streets and Highways Code, was recorded with the County Recorder of the County, whereupon the Assessments attached as a lien upon the property assessed within the Assessment District as provided in Section 3115 of the Streets and Highways Code.
Allocation of Assessments
The Assessment District was formed under the authority of the 1913 Act and Article XIIID of the California State Constitution, together with its implementing legislation (collectively “Proposition 218”), which require that local agencies levy assessments according to the special benefit and prescribe the procedures for such levy. Costs and expenses of the proposed Improvements must be apportioned against the parcels in the Assessment District by a formula which proportionally and equitably distributes the costs in direct proportion to the estimated special benefits these parcels receive from the Improvements. Neither the 1913 Act nor Proposition 218 specifies the method that is used to apportion the benefits.
In the Engineer’s Report, the Assessment Engineer identified the benefits the proposed Improvements will render to the properties within the Assessment District and determined that the property owners of assessed parcels will receive a unique and special benefit distinguished from general benefits to the area at large. The unique and special benefit from the Improvements identified in the Engineer’s Report are improved neighborhood aesthetics, enhanced safety, and enhanced reliability of service from utilities. See APPENDIX G – “ENGINEER’S REPORT” for a description of the method of apportionment of the Assessments. Assessments on assessed parcels in the Assessment District range from a high of approximately $141,563 to a low of approximately $19,374 depending on the special benefit each property will receive from the Improvements as set forth in the Engineer’s Report and confirmed by the City Council.
Maximum Annual Assessment for Administrative Costs and Expenses The annual costs associated with administering the Assessment District will be spread to each parcel in the Assessment District with unpaid Assessments on a pro-rata basis. Administrative costs for the Assessment District cannot exceed a total of $85 per parcel per year, subject to an annual increase based on the Consumer Price Index or 3%, whichever is greater, during the preceding year ending in January, for all Urban Consumers in the Los Angeles, Orange and Riverside County areas.
The exact amount of the administration charge will be established each year by the City Treasurer’s Office. Costs of administering the Assessment District will first be paid in fiscal year 2025-26.
The annual administrative assessment described above is separate from and is in addition to the $16.00 per parcel collection fee which will be added to each annual installment pursuant to Section 8682 of the California Streets and Highways Code, and is further separate from and in addition to specific fees payable to the City in connection with (a) prepayments of assessments by property owners, (b) apportionments of assessments to reflect divisions of parcels and (c) late 91 21
charges and penalties which become payable in the event of delinquency in the payment of assessment installments by December 10 and April 10 each year.
Pursuant to the Fiscal Agent Agreement, the amounts of the annual assessments collected by the City for the payment of administration costs pursuant to Sections 8682, 8682.1 and 10204(f) of the California Streets and Highways Code and Assessment Prepayments are not pledge as security for the Bonds. See “SECURITY FOR THE BONDS – Pledge and Transfers of Assessment Revenues.”
Value-to-Lien Ratios
The value of the land within the Assessment District with unpaid Assessments is significant because in the event of a delinquency in the payment of Assessments, the City may foreclose only against delinquent parcels. According to the County’s property ownership records, the assessed value of the property within the Assessment District with unpaid Assessments was $143,451,408 for fiscal year 2025-26. Based on fiscal year 2025-26 assessed values and the unpaid Assessments, the 78] parcels within the Assessment District with unpaid Assessments have an aggregate assessed value-toassessment lien ratio of 28.38 to 1* (including overlapping tax and assessment debt).
Table 3 shows the stratification of the estimated value-to-assessment liens and the estimated overall value-to-debt ratios including overlapping tax and assessment debt for the parcels with unpaid Assessments within the Assessment District. Table 4 shows each of the parcels with unpaid Assessments within the Assessment District with value-to-lien ratios less than 3.00 to 1 (including overlapping tax and assessment debt).
Appendix H lists each of the parcels with unpaid Assessments within the Assessment District and calculates the estimated value-to-assessment lien and the estimated overall value-to-lien (including overlapping tax and assessment debt). See Appendix H – “LIST OF UNPAID ASSESSMENTS.”
Assessed values do not necessarily represent market values. Article XIIIA of the California Constitution (Proposition 13) defines “full cash value” to mean “the County assessor’s valuation of real property as shown on the 1975/76 roll under ‘full cash value’, or, thereafter, the appraised value of real property when purchased or newly constructed or when a change in ownership has occurred after the 1975 assessment,” subject to exemptions in certain circumstances of property transfer or reconstruction. The “full cash value” is subject to annual adjustment to reflect increases, not to exceed 2% for any year, or decreases in the consumer price index or comparable local data, or to reflect reductions in property value caused by damage, destruction or other factors. Because of the general limitation to 2% per year in increases in full cash value of properties which remain in the same ownership, the County tax roll does not reflect values uniformly proportional to actual market values. From time to time, property sales occur which result in new Proposition 13 base values on the assessment roll.
No single owner is expected to be responsible for more than 2.34% of the total unpaid Assessments.
* Preliminary; subject to change.
92 22
TABLE 3
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS
Assessed Value-to-Lien Summary
Fiscal Year 2025-26 Assessed Value (1)
Value to
Lien Ratio
No.
of
Parcel Land Improvements Total
Original
Assessment
District
Lien
Outstanding
Assessment
District
Lien (2)*
% of
Outstanding
Assessment
District Lien*
Total
Direct and
Overlapping
Debt (3)*
Total
Lien (4)*
Valueto-Lien
Ratio*
Greater than 100: 1 2 $5,082,818 $982,226 $6,065,044 $55,912 $54,376 1.38% $2,229 $56,605 107.15 50:1 to 99.99:1 8 $22,671,369 $3,911,242 $26,582,611 $378,025 $367,642 9.32% $9,779 $377,421 70.43 25:1 to 49.99:1 33 $52,645,690 $7,568,822 $60,214,512 $1,748,802 $1,700,769 43.11% $28,402 $1,729,172 34.82 10:1 to 24.99:1 20 $13,671,486 $2,886,932 $16,558,418 $1,061,487 $1,032,332 26.17% $6,059 $1,038,391 15.95 3:1 to 9.99:1 8 $2,284,031 $883,775 $3,167,806 $400,448 $389,449 9.87% $1,160 $390,610 8.11 Less than 2.99:1 7 $394,685 $353,369 $748,054 $411,740 $400,431 10.15% $262 $400,693 1.87 Total 78 $96,750,079 $16,586,366 $113,336,445 $4,056,412 $3,945,000 100.00% $47,892 $3,992,892 28.38 (1) Assessed Value as of January 1, 2025 as provided by County of Orange Assessor. (2) Based on par amount of Bonds.
(3) Sourced from California Municipal Statistics, Inc. Includes senior assessment lien on three parcels (Assessor Parcel Numbers 056-062-06, 056-062-07, and 056-062-08) in the Assessment District are also within the boundaries of Assessment District 09-1. (4) Represents the projected outstanding assessment plus the total direct and overlapping debt. *Preliminary; subject to change.
Source: Orange County Assessor’s office as compiled by DTA. 93 23
TABLE 4
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS
Parcels with Value-to-Lien Less than 3:1 (1)
Fiscal Year 2025-26 Assessed Value (1)
Assmt. # APN Land Improvements Total
Original
Assessment
District Lien
Outstanding
Assessment
District Lien (2)*
Total
Direct and
Overlapping
Debt (3)*
Value-toLien*
% of Total
Outstanding
Balance*
10 056-070-22 (4) $56,340 $56,866 $113,206 $56,079 $54,538 $42 2.07 1.38% 12 056-070-37 (5) $56,348 $73,714 $130,062 $54,249 $52,759 $45 2.46 1.34% 24 056-070-30 (6) $64,777 $36,112 $100,889 $87,542 $85,138 $35 1.18 2.16% 51 056-063-04 (7) $50,820 $30,865 $81,685 $52,079 $50,649 $30 1.61 1.28% 54 056-063-03 (8) $50,813 $43,273 $94,086 $51,590 $50,173 $32 1.87 1.27% 57 056-063-14 (9) $59,242 $33,036 $92,278 $57,302 $55,728 $31 1.65 1.41% 77 056-086-29 (10) $56,345 $79,503 $135,848 $52,899 $51,446 $47 2.64 1.30% Total $394,685 $353,369 $748,054 $411,740 $400,431 $262 1.87 10.15% (1) Assessed Value and ownership as of January 1, 2025, as provided by County of Orange Assessor. (2) Based on par amount of Bonds.
(3) Sourced from California Municipal Statistics, Inc.
(4) No sales/transaction on file. Property looks fully developed based on satellite image. (5) No sales/transaction on file. Property looks fully developed based on satellite image. (6) No sales/transaction have occurred on the property since 1978. (7) No sales/transaction have occurred on the property since 1997. (8) Sold for $1.6M on August 8, 2025. New assessed value will be included in Fiscal Year 2025-26. (9) No sales/transaction have occurred on the property since 1982. (10) No sales/transaction have occurred on the property since 1986. *Preliminary; subject to change.
Source: DTA; City of Laguna Beach.
94 24
Largest Property Owners
Table 5 below lists the top 10 property owners within the Assessment District by share of unpaid Assessments.
TABLE 5
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS
Largest Property Owners
Fiscal Year 2025-26 Assessed Value (1)
Owner
No. of
Parcels
Land
Value
Improvement
Value
Total
Assessed
Value
Outstanding
Assessment
District
Lien *
Total
Direct and
Overlapping
Debt (3)* Total Lien
Value-toLien*% of
Lien*
DICKINSON, ALEXANDER G TR 1 $3,735,568 $864,741 $4,600,309 $92,200 $1,690 $93,890 49.00 2.34% BENHAM, MARY ANN TR (2) 1 $64,777 $36,112 $100,889 $85,138 $35 $85,172 1.18 2.16% BLEVINS, LEE DUDLEY TR 2 $2,164,863 $0 $2,164,863 $84,144 $366 $84,511 25.62 2.13% ZHOU, CHUANJIE TR Z & P 1 $1,974,531 $45,069 $2,019,600 $73,094 $743 $73,837 27.35 1.85% MCCUE, SAM TR THE 1 $1,659,387 $86,710 $1,746,097 $67,299 $642 $67,941 25.70 1.71% DAHLE, DENNIS J 1 $1,595,583 $100,089 $1,695,672 $64,260 $624 $64,884 26.13 1.63% KLOKOW, ANNE E 1 $801,492 $133,399 $934,891 $64,109 $341 $64,450 14.51 1.63% KORNBLAU, JEROME E TR 1 $712,544 $227,738 $940,282 $63,731 $343 $64,074 14.67 1.62% LICHTENBERG, DANIEL S TR 1 $1,672,831 $449,766 $2,122,597 $61,702 $778 $62,480 33.97 1.56% LAWS, DAVID 1 $1,950,058 $162,192 $2,112,250 $61,702 $777 $62,479 33.81 1.56% Subtotal Top Owners 11 $16,331,634 $2,105,816 $18,437,450 $717,378 $6,341 $723,719 25.48 18.18% All Other Owners 67 $80,418,445 $14,480,550 $94,898,995 $3,227,622 $41,551 $3,269,173 29.03 81.82% Total 78 $96,750,079 $16,586,366 $113,336,445 $3,945,000 $47,892 $3,992,892 28.38 100.00%
(1) Assessed Value as of January 1, 2025 as provided by County of Orange Assessor. (2) Property built in 1935. No sales/transactions have occurred on the property since 1978. *Preliminary; subject to change.
Source: Orange County Assessor’s office as compiled by DTA. 95 25
Direct and Overlapping Debt
The ability of an owner of land within the Assessment District to pay the Assessment Installments could be affected by the existence of other taxes and assessments imposed upon the property. These other taxes and assessments, some of which secure the repayment of overlapping debt, are detailed in Table 6 below (the “Debt Report”). See Table 6 below for all entities levying taxes, assessments or other charges on property in the Assessment District. The Debt Report has been derived from data assembled and reported to the City by California Municipal Statistics, Inc. as of ________, 2025.
The Debt Report includes information for all parcels within the Assessment District, including the 22 parcels which have prepaid their Assessment in full. Neither the City nor the Underwriter has independently verified the information in the Debt Report and neither guarantees its completeness or accuracy.
TABLE 6
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS
Direct and Overlapping Debt
2025-26 Assessed Valuation: $
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt [11/1/25] Metropolitan Water District General Obligation Bonds % $ Laguna Beach Unified School District General Obligation Bonds City of Laguna Beach Assessment District No. 2021-1 West Street 100.000 0 (2) City of Laguna Beach Underground Utility Assessment District No. 09-1 (3) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $
OVERLAPPING GENERAL FUND DEBT:
Orange County General Fund Obligations % $
Orange County Board of Education General Fund Obligations City of Laguna Beach General Fund Obligations
TOTAL OVERLAPPING GENERAL FUND DEBT $
COMBINED TOTAL DEBT $ (4)
Ratios to 2025-26 Assessed Valuation:
Total Direct Debt (1) .........................................................................0.00% Total Overlapping Tax and Assessment Debt ...........................[__]% Combined Total Debt................................................................. [__]% (1) Includes all parcels in the boundaries of Assessment District No. 2021-1 West Street. (2) Excludes issue to be sold.
(3) Remaining principal.
(4) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and non-bonded capital lease obligations.
Source: California Municipal Statistics, Inc.
96 26
Sample Tax Bill
The following table sets forth a sample estimated property tax bill for a random parcel’s assessed value among the homes in the Assessment District, and effective tax rates in the Assessment District, based on tax rates for fiscal year 2025-26.
TABLE 7
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS
Sample Tax Bill – Fiscal Year 2025-26 (Estimate) (1)
ESTIMATED ASSESSED VALUATION(1)
Gross Assessed Valuation $1,453,031
LESS: Homeowner Exemption ($7,000)
Net Assessed Value $1,446,031
AD VALOREM TAXES(2) RATE AMOUNT
Basic Levy Rate 1.00000% $14,460
Laguna Beach USD 2010R 0.00885% $128
Metro Water D-MWDOC 0.00700% $101
TOTAL GENERAL PROPERTY TAXES 1.0159% $14,689.51
OVERLAPPING ASSESSMENTS (2)
Vector Control Chg $1.92
Mosq., Fire Ant Assmt $9.07
MWD Water Stdby Chg $11.60
Laguna Beach Sewer Asmt $429.20
Laguna Beach Solid Waste $1,247.34
ASSESSMENT DISTRICT NO. 2021-1 (ESTIMATE) (3)* $3,767.69 TOTAL SPECIAL ASSESSMENTS & CHARGES $5,466.82
PROJECTED TOTAL PROPERTY TAXES $29,156.33
PROJECTED TOTAL EFFECTIVE TAX RATE 1.39%
(1) Based on the average Assessed Value for parcels with unpaid Assessments. (2) Based on the property tax bill for fiscal year 2025-26 (3) Estimate for fiscal year 2025-26 based on parcel's share of debt service on the Bonds ($287,250) plus an administration fee of $85.
*Preliminary; subject to change.
Source: DTA.
97 27
BONDOWNERS’ RISKS
The purchase of the Bonds involves certain investment risks. The following is a discussion of certain risk factors which should be carefully considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. The City cautions prospective investors that this discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the Bonds. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in the Assessment District to pay their Assessments when due. Any such failure to pay Assessments could result in the inability of the City to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the Assessment District.
Potential Insufficiency of Assessment Installments
As previously described, the Bonds will be secured under the Fiscal Agent Agreement by a pledge of all of the Assessment Revenues and all moneys deposited in the Redemption Fund, all moneys deposited in the Reserve Fund and, until disbursed as provided in the Fiscal Agent Agreement, all moneys deposited in the Improvement Fund. See “SECURITY FOR THE BONDS.” Assessment Revenues principally consist of the annual installments of the unpaid Assessments, excluding amounts collected for administrative costs pursuant to Sections 8682, 8682.1 and 10204(f) of the California Streets and Highways (i.e. the Assessment Installments).
In order to pay debt service on the Bonds, it is necessary that unpaid Assessment Installments be paid in a timely manner. The Reserve Fund will be used to pay debt service on the Bonds if delinquent Assessment Installments should occur. The Assessments are a lien on the parcels of land and the City will covenant to institute foreclosure proceedings under certain circumstances, as described in the Fiscal Agent Agreement, against parcels with delinquent Assessment Installments.
See “SECURITY FOR THE BONDS – Covenant to Commence Superior Court Foreclosure.” Failure by the owners of the parcels within the Assessment District to pay Assessment Installments when due, depletion of the Reserve Fund or the inability to sell the parcels within the Assessment District at foreclosure proceedings for amounts sufficient to cover delinquent Assessment Installments levied against such parcels would result in the inability to make full or punctual payments of debt service to the Owners of the Bonds, and Owners of the Bonds would therefore be adversely affected.
The 1915 Act provides that except under certain circumstances property is to be sold upon foreclosure at a Minimum Price. “Minimum Price” as defined in the 1915 Act is the amount equal to the delinquent installments of principal or interest of the assessment or assessment, together with all interest penalties, costs, fees, charges and other amounts more fully detailed in the 1915 Act. The court may authorize a sale at less than the Minimum Price if the court determines that sale at less than the Minimum Price will not result in an ultimate loss to the Owners of the Bonds or, under certain circumstances, if owners of 75% or more of the outstanding Bonds consent to such sale.
There can be no assurance that foreclosure proceedings will occur in a timely manner so as to avoid depletion of the Reserve Fund and a delay in payments of debt service on the Bonds. See “SECURITY FOR THE BONDS – Covenant to Commence Superior Court Foreclosure” and “– Foreclosure Shortfall” below.
98 28
The timely payment of the Assessment Installments will depend upon the willingness and ability of the owners of the assessable parcels of property in the Assessment District to pay such installments when due. Neither the City nor the Underwriter have undertaken to assess the financial condition of the owners of the assessable parcels of property in the Assessment District (except to the limited extent to determine household income of property owners of certain assessable parcels solely for purposes of determining their eligibility to participate in the Deferral Program for the Assessment District) or the likelihood that they will pay or will be able to pay the Assessment Installments when due, and neither expresses any view concerning these matters. See “SECURITY FOR THE BONDS – Deferral Program.”
Assessments Are Not Personal Obligations
The current and future owners of land within the Assessment District are not personally liable for the payment of the Assessments. Rather, the Assessments are a lien secured only by the parcels of land with unpaid Assessment Installments within the Assessment District. If the value of a parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the Assessment Installments, the City has no recourse against the owner.
Risks of Real Estate Secured Investments Generally
The Owners of the Bonds will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (a) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the Assessment District, the supply of or demand for competitive properties in such area, and the market value of competitive properties in the event of sale or foreclosure, (b) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies, and (c) natural disasters (including, without limitation, earthquakes, fires, droughts and floods), which may result in uninsured losses.
No assurance can be given that the property owners will pay Assessments in the future or that they will be able to pay such Assessments on a timely basis. See “– Bankruptcy and Foreclosure” and “– Foreclosure Shortfall” below, for a discussion of certain limitations on the City’s ability to pursue judicial proceedings with respect to delinquent parcels.
Limited Obligations
The Bonds are not payable from the general funds of the City. Except for the pledge of the Assessment Revenues, which principally consist of the Assessment Installments, the credit and the taxing power of the City is not pledged for the payment of principal or interest of the Bonds, and, except as provided in the Fiscal Agent Agreement, no Owner of the Bonds may compel the exercise of any taxing power by the City or force the forfeiture of any City property. The principal of, premium, if any, and interest on the Bonds are not a debt of the City or a legal or equitable pledge, charge, lien or encumbrance upon any of the City’s property or upon any of the City’s income, receipts or revenues, except the amounts pledged under the Fiscal Agent Agreement. 99 29
Delinquency Resulting in Ultimate or Temporary Loss on Bonds If a temporary deficiency occurs in the Redemption Fund with which to pay the principal of or interest on Bonds that have then matured, or the principal and interest on Bonds coming due during the current year, unless it appears to the City Treasurer that there will be an ultimate loss to the Owners of the Bonds, the City Treasurer shall cause the Fiscal Agent to pay the principal of Bonds which have matured as presented and make interest payments on the Bonds when due, as long as there are available funds in the Redemption Fund, in the order of priority and as required by the Fiscal Agent Agreement. If it appears to the City Treasurer that there is a danger of an ultimate loss accruing to the Owners of the Bonds for any reason, the City Treasurer is required pursuant to the 1915 Act to withhold payment on all matured Bonds and interest on all Bonds and report the facts to the City so that the City may take proper action to equitably protect all Owners of the Bonds. See “SECURITY FOR THE BONDS – Delinquency Resulting in Ultimate or Temporary Loss on Bonds.”
Potential Early Redemption of Bonds from Prepayments or Other Sources Property owners within the Assessment District are permitted to prepay their Assessments at any time. Such prepayments could also be made from the proceeds of bonds issued by or on behalf of an overlapping special assessment district or community facilities district. Such prepayments will result in an extraordinary mandatory redemption of Bonds on the Interest Payment Date for which timely notice may be given under the Fiscal Agent Agreement following the receipt of the prepayment. The Fiscal Agent Agreement also provides that any surplus amount in the Improvement Fund transferred by the Fiscal Agent to the City shall be used by the City to prepay Assessments and redeem Bonds in accordance with Section 10427.1 of the 1913 Act. Any extraordinary mandatory redemption of Bonds from prepayments that were purchased at a price greater than par could reduce the otherwise expected yield on such Bonds. See the caption “THE BONDS – Redemption of Bonds – Mandatory Redemption From Assessment Prepayments.”
Non-Cash Payments of Assessments
The 1915 Act may permit the owner of a parcel that is subject to an unpaid Assessment Installment to tender any Bond secured by such Assessment in payment or partial payment of any installment of the Assessment or interest or penalties thereon which may be due or payable. A Bond so tendered is to be accepted at the par amount thereof and credit is to be given for any interest thereon accrued to the date of the tender. Thus, if Bonds can be purchased at a discount, it may be to the advantage of a property owner to pay amounts due with respect to an assessment by tendering a Bond. Such a practice would decrease the cash flow available to the City to make payments with respect to other Bonds then outstanding and could result in a default in payment on the Bonds.
Limited City Obligation Upon Delinquency
Pursuant to the 1915 Act, the City has elected not to be obligated to advance funds from the treasury of the City for delinquent Assessment Installments. The only obligation of the City with respect to such delinquencies and the consequent deficiencies in the Redemption Fund is to advance money to the Redemption Fund from the Reserve Fund. The City has no obligation to replenish the Reserve Fund except to the extent that delinquent Assessment Installments are paid or proceeds from foreclosure sales are realized. There is no assurance that the balance in the Reserve Fund will always be adequate to pay the principal of and interest on the Bonds if there are delinquent Assessment 100
30 Installments when due. If during the period of delinquency there are insufficient funds in the Reserve Fund, a delay may occur in payments to the Owners of the Bonds.
Bankruptcy and Foreclosure
The payment of Assessment Installments and the ability of the City to foreclose on the lien of a delinquent unpaid Assessment Installment, as discussed in the section entitled “SECURITY FOR THE BONDS – Covenant to Commence Superior Court Foreclosure,” may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure could be delayed due to crowded local court calendars, delays in the legal process and procedural delaying tactics.
Potential investors should be aware that judicial foreclosure proceedings are not summary remedies and can be subject to significant procedural and other delays caused by crowded court calendars and other factors beyond the control of the City. Potential investors should assume that, under current conditions, a judicial foreclosure of the lien of assessments may take two or three years from initiation to the lien foreclosure sale. At an assessment lien foreclosure sale, each parcel will be sold for not less than the “minimum bid amount” which is equal to the sum of all delinquent Assessment Installments, penalties and interest thereon, costs of collection (including reasonable attorneys’ fees), post-judgment interest and costs of sale. Each parcel is sold at foreclosure for the amounts secured by the assessment lien on such parcel and multiple parcels may not be aggregated in a single “bulk” foreclosure sale. If any parcel fails to obtain a “minimum bid,” the City may, but is not obligated to, seek superior court approval to sell such parcel at an amount less than the minimum bid. Such superior court approval requires the consent of the Owners of 75% of the aggregate principal amount of the outstanding Bonds. See “– Foreclosure Shortfall” below.
Delays and uncertainties in the assessment lien foreclosure process create significant risks for Owners of the Bonds. High rates of assessment payment delinquencies which continue during the pendency of protracted assessment lien foreclosure proceedings, could result in the rapid, total depletion of the Reserve Fund prior to replenishment from the resale of property upon foreclosure.
In that event, there could be a delay or default in payment of the principal of, and interest on, the Bonds.
The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion) will be qualified, as to the enforceability of the various legal instruments, by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.
Although bankruptcy proceedings would not cause the lien of the assessment to become extinguished, the bankruptcy of a property owner or of a partner or other equity owner of a property owner, could result in the stay of the enforcement of the lien for the assessments, a delay in prosecuting superior court foreclosure proceedings or adversely affect the ability or willingness of a property owner to pay the Assessment Installments and could result in the possibility of delinquent Assessment Installments not being paid in full. In addition, the amount of any lien on property securing the payment of delinquent Assessment Installments could be reduced if the value of the property were determined by the bankruptcy court to have become less than the amount of the lien, and the amount of the delinquent assessments in excess of the reduced lien could then be treated as an unsecured claim by the court. Any such stay of the enforcement of the lien, or any such delay or 101
31 non-payment, would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds and the possibility of delinquent Assessment Installments not being paid in full.
Moreover, amounts received upon foreclosure sales may not be sufficient to fully discharge delinquent installments.
Other laws generally affecting creditors’ rights or relating to judicial foreclosure may affect the ability to enforce payment of Assessment Installments or the timing of enforcement of Assessment Installments. For example, the Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant, a six-month period after termination of such military service to redeem property sold to enforce the collection of a tax, assessment or reassessment and a limitation on the interest rate on the delinquent tax, assessment or reassessment to persons in military service if the court concludes the ability to pay such taxes, assessments or reassessments is materially affected by reason of such service.
FDIC/Federal Government Interests in Properties
The City’s ability to enforce the lien of an Assessment Installment and to foreclose the lien of a delinquent Assessment Installment, is limited with regard to properties in which the Internal Revenue Service, the Drug Enforcement Agency, Federal Deposit Insurance Corporation (the “FDIC”), or other federal government entities such as Fannie Mae or Freddie Mac, has or obtains an interest. Specifically, in the event that any financial institution making a loan which is secured by parcels is taken over by the FDIC and the applicable Assessment Installment is not paid, the remedies available to the City may be constrained. The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement”) provides that taxes other than ad valorem taxes which are secured by a valid lien in effect before the FDIC acquired an interest in a property will be paid unless the FDIC determines that abandonment of its interests is appropriate. The Policy Statement provides that the FDIC generally will not pay installments of non-ad valorem taxes which are levied after the time the FDIC acquires its fee interest, nor will the FDIC recognize the validity of any lien to secure payment except in certain cases where the Resolution Trust Corporation had an interest in property on or prior to December 31, 1995. Moreover, the Policy Statement provides that, with respect to parcels on which the FDIC holds a mortgage lien, the FDIC will not permit its lien to be foreclosed out by a taxing authority without its specific consent, nor will the FDIC pay or recognize liens for any penalties, fines or similar claims imposed for the non-payment of taxes.
If a parcel with unpaid Assessments within the Assessment District is owned by a federal governmental entity, or a private deed of trust secured by a parcel with unpaid Assessments within the Assessment District is owned by a federal governmental entity, the ability to foreclose on the parcel to collect delinquent Assessments may be limited. Federal courts have held that, based on the supremacy clause of the United States Constitution, in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. This means that, unless Congress has otherwise provided, if a federal governmental entity owns a parcel with unpaid Assessment Installments within the Assessment District but does not pay taxes and assessments levied on the parcel (including Assessment Installments), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.
Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the City wishes to foreclose on the parcel as a result of delinquent 102
32 Assessment Installments, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Assessment Installments and preserve the federal government’s mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association (“FNMA”) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States.
The City has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels with unpaid Assessment Installments within the Assessment District, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the Bonds are outstanding.
The City’s remedies may also be limited in the case of delinquent Assessment Installments with respect to parcels in which other federal agencies (such as the Internal Revenue Service and the Drug Enforcement Administration) have or obtain an interest.
The City is unable to predict what effect the FDIC’s application of the Policy Statement would have in the event of a delinquency on a parcel within the City in which the FDIC has an interest, although prohibiting the lien of the FDIC to be foreclosed at a judicial foreclosure sale would reduce or eliminate the persons willing to purchase a parcel at a foreclosure sale. Owners and beneficial owners of the Bonds should assume that the City will be unable to foreclose on any parcel owned by the FDIC. According to County records, as of January 1, 2025, no property in the Assessment District with unpaid Assessments was owned by the FDIC or any other federal government entity.
No Acceleration Provision
The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the Bonds or the Fiscal Agent Agreement or in the event interest on the Bonds becomes included in gross income for federal income tax purposes. See “– Limitations on Remedies” below.
Limitations on Remedies
Remedies available to the Owners of the Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on, or to preserve the taxexempt status of, the Bonds.
Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Fiscal Agent Agreement to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or others similar laws affecting generally the enforcement of creditor’s rights, by equitable principles, by the exercise of judicial discretion and by limitations on remedies against public agencies in the State. Additionally, the Bonds are not subject to acceleration in the event of the breach of any covenant or duty under the Fiscal Agent Agreement. See “– No Acceleration Provision” above. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the Owners of the Bonds.
103
33 Foreclosure Shortfall
Pursuant to the 1915 Act, if a parcel which is included within the Assessment District is foreclosed upon and cannot be sold at the foreclosure sale at a price equal to the amount of the judgment for delinquent Assessment Installments with costs and interest thereon, the City may petition a court to authorize the sale of such parcel at a lesser Minimum Price or without a Minimum Price. There can be no assurance that foreclosure proceedings will occur in a timely manner so as to avoid depletion of the Reserve Fund and a delay in payments of debt service on the Bonds. See “SECURITY FOR THE BONDS – Covenant to Commence Superior Court Foreclosure.” In comparing the aggregate value of real property within the Assessment District and the principal amount of the Bonds, it should be noted that only parcels upon which there is a delinquent Assessment Installments can be foreclosed, and the other parcels within the Assessment District cannot be foreclosed upon as a whole to pay delinquent Assessment Installments of the owners of such delinquent parcels. In any event, individual parcels may be foreclosed upon to pay delinquent Assessment Installments levied only against such parcels. See “– Parity of Liens, Bonds and Special Assessments” below.
Natural Disasters
The value of the assessed property in the Assessment District in the future can be adversely affected by a variety of additional factors, particularly those which may affect infrastructure and other public improvements and private improvements on the assessed parcels and the continued habitability and enjoyment of such private improvements. Such additional factors include, without limitation, geologic conditions such as earthquakes, topographic conditions such as earth movements, landslides, wildfires, floods, and climatic conditions such as droughts.
It is possible that one or more of the conditions described below may occur and may result in damage to improvements of varying seriousness, that the damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances, the value of the assessed property may well depreciate or disappear.
Topography. The Assessment District is located in the southern, coastal portion of the City of Laguna Beach. The Assessment District is not in an area specifically determined to be in danger of potential slope instability but is adjacent to areas subject to surficial creep and/or mudflow in the event of heavy rains, particularly following the occurrence of wildfires that damage the groundcover.
Such damage could reduce the value of the parcels in the Assessment District and, if Assessment Installments are not paid, could result in the default on timely payment of principal and interest when due.
Seismic Activity. The Assessment District is also located in a seismically active area of Southern California and is subject to unpredictable seismic activity. There is no evidence that a ground surface rupture will occur in the event of an earthquake, but there is significant potential for destructive ground-shaking during the occurrence of a major seismic event. Known active faults that could cause significant ground shaking in the Assessment District include, but are not limited to, the San Andreas Fault and the Newport-Inglewood Fault. In addition, land susceptible to seismic activity 104
34 may be subject to liquefaction during the occurrence of such an event. In the event of a severe earthquake, there may be significant damage to both property and infrastructure in the Assessment District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Assessment Installments when due. In addition, the value of land in the Assessment District could be diminished in the aftermath of such an earthquake, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of Assessment Installments. The land within the Assessment District is not located within a liquefaction potential zone. See “– Landslides” below.
Floods. The Assessment District is not located within a known 100-year base flood zone which signifies a 1% annual chance of flooding according to the Federal Emergency Management Agency.
Wildfires. In recent years, wildfires have caused extensive damage throughout the State. In some instances, entire neighborhoods have been destroyed. Several of the fires that occurred in recent years damaged or destroyed property in areas that were not previously considered to be at risk from such events.
The Assessment District is located in the vicinity of what is known as the Wildland/Urban Interface (“WUI”). The WUI is the area where structures and other human developments meet or intermingle with undeveloped wildland or areas with heavy vegetation. Each year, many homes across the United States have been lost to WUI fires. The City of Laguna Beach, including the Assessment District, is in an area that has been designated as a “Very High Fire Hazard Severity Zone” on the State (Cal Fire) maps. Within the previous several years, there have been two fires in the open space within and adjacent to the City, one of which destroyed approximately 24 homes in a nearby city. In 1993, the City lost more than 400 homes in a major wildfire.
Landslides. Of the 100 assessable parcels in the Assessment District, 19 parcels (assessments 5 through 12, 15 through 17, 20, 26, 27, 30, 34 through 36, and 102) lie within a “seismic hazard landslide area” as defined by the California Geological Survey. A “seismic hazard landslide area” is a regulatory zone that encompasses areas prone to liquefaction (failure of water-saturated soil) and earthquake-induced landslides. While, grading and slopes in the Assessment District are constructed in a manner expected to remain stable, no assurance can be given as to whether such grading will prevent a future landslide within the Assessment District. See “– Seismic Activity” above.
Drought. From time to time the desert southwest and much of California experiences extended drought conditions. Droughts impact public health and safety related to both water supply and wildfire risk. On October 19, 2021, the Governor declared a Statewide drought state of emergency and requested that all water users voluntarily reduce water use by 15%. On March 24, 2023, the Governor eased the emergency drought restrictions imposed as a result of the Governor’s 2021 declaration. There can be no assurance that subsequent declarations will not impose mandatory water use restrictions should dry conditions persist in the future years.
Climate Change. The State has historically been susceptible to wildfires and hydrologic variability. As greenhouse gas emissions continue to accumulate in the atmosphere as a result of economic activity, climate change is expected to intensify, increasing the frequency, severity and timing of extreme weather events such as coastal storm surges, drought, wildfires, floods and heat waves, king tides, and rising sea levels. The future fiscal impact of climate change on the City and 105
35 the Assessment District is difficult to predict, but it could be significant and it could have a material adverse effect on the City by requiring greater expenditures to counteract the effects of climate change, and by changing the business and activities of the City, its residents and businesses within the City.
Hazardous Substances
One of the most serious risks in terms of the potential reduction in the value of real property is a claim with regard to a hazardous substance. In general, the owners and operators of real property may be required by law to remedy conditions of the lot relating to release or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most wellknown and widely applicable of these laws, but California laws with regard to hazardous substances are also similarly stringent. Under many of these laws, the owner or operator is obligated to remedy a hazardous substance condition of the property whether or not the owner or operator had anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the assessable property within the Assessment District be affected by a hazardous substance, will be to reduce the marketability and value of such parcel by the costs of remedying the condition, because the prospective purchaser, upon becoming owner, will become obligated to remedy the condition just as the seller is so obligated.
SCWD’s parcel in the Assessment District includes a reservoir and a fueling station on site.
SCWD has informed the City that SCWD maintains sodium hypochlorite for use at the reservoir.
Sodium hypochlorite is a chemical compound commonly known as bleach that is often used as a disinfectant in water treatment. Sodium hypochlorite is among the substances classified as hazardous under CERCLA. In addition, SCWD has also informed the City that SCWD maintains approximately 5,000 gallons of gasoline and 275 gallons of diesel fuel at the fueling station. As previously described, SCWD prepaid its assessment during the cash prepayment period. However, no assurance can be provided that any such substances or other hazardous substances maintained on SCWD’s parcel in the Assessment District will not affect surrounding parcels in the Assessment District with unpaid Assessments.
Further, it is possible that liabilities may arise in the future with respect to any of the assessable property within the Assessment District resulting from the current existence on such parcel of a substance currently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the current existence on such parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method in which it is handled. All of these possibilities could significantly affect the value of assessable parcels of property in the Assessment District that is realizable upon a foreclosure.
Other than the parcel that is owned by SCWD in the Assessment District, the City has no knowledge of any hazardous substances being located on the assessable parcels of property in the Assessment District.
106
36 Property Values
The value of the property within the Assessment District is a critical factor in determining the investment quality of the Bonds. If a property owner defaults in the payment of Assessment Installments, the City’s only remedy is to commence foreclosure proceedings in an attempt to obtain funds to pay the Bonds. Reductions in property values due to a downturn in the economy, physical events such as earthquakes, wildfires or floods, stricter land use regulations or other events could adversely impact the security underlying the Assessments.
The assessed values set forth in this Official Statement do not represent market values arrived at through an appraisal process and generally reflect only the sales price of a parcel when acquired by its current owner, adjusted annually by an amount determined by the County Assessor, generally not to exceed an increase of more than 2% per Fiscal Year. No assurance can be given that a parcel could actually be sold for its assessed value. Additionally, market values within the Assessment District could be impacted by a failure to complete the Improvements in a timely manner. The City can make no assurance with respect to whether taxable values of real property will decline in the future. See “THE ASSESSMENT DISTRICT – Value-to-Lien Ratios” And Appendix H – “LIST OF UNPAID ASSESSMENTS.”
The estimated value-to-lien ratio of individual parcels varies greatly. No assurance can be given that should a parcel with delinquent Assessment Installments be foreclosed upon and sold for the amount of the delinquency, any bid will be received for such parcel or, if a bid is received, that such bid will be sufficient to pay all delinquent Assessment Installments. Further, no assurance can be given that such value-to-lien ratios will be maintained over time. As discussed herein, many factors which are beyond the control of the City could adversely affect the property values within the Assessment District. The City also has no control over the amount of additional indebtedness that may be issued by other public agencies, the payment of which, through the levy of a tax or an assessment or reassessment, is on a parity with the Assessment Installments. See “– Parity of Taxes, Bonds and Special Assessments” and “– Future Debt Issuance” below and “THE ASSESSMENT DISTRICT – Direct and Overlapping Debt.” A decrease in the property values in the Assessment District or an increase in the parity liens on property in the Assessment District, or both, could result in a lowering of the value-to-lien ratios of the property in the Assessment District.
See “SECURITY FOR THE BONDS – Covenant to Commence Superior Court Foreclosure” for a discussion of the provisions which apply, and procedures which the City is obligated to follow under the Fiscal Agent Agreement, in the event of delinquencies in the payment of Assessment Installments. Although the 1915 Act authorizes the City to cause a foreclosure action to be commenced and diligently pursued to completion, the 1915 Act does not specify any obligation of the City with regard to purchasing or otherwise acquiring any parcel of property sold at a foreclosure sale in any such action if there is no other purchaser at such sale. The City has not in any way agreed, nor does it expect, to be such a purchaser. See “– FDIC/Federal Government Interests in Properties” for a discussion of the policy of the FDIC regarding the payment of assessments and special taxes and limitations on the City’s ability to foreclose on the lien of the Assessments in certain circumstances.
Parity of Taxes, Bonds and Special Assessments
The Assessments and any penalties with respect thereto constitute a lien against the assessable property within the Assessment District until they are paid. The lien of the Assessments is 107
37 subordinate to all fixed special assessment liens previously imposed upon the same property but has priority over all private liens and over all fixed special assessment liens which may thereafter be created against the property. Such lien is co-equal to and independent of the lien for general taxes and any lien imposed under the Mello-Roos Community Facilities Act of 1982, as amended.
As previously described, three parcels in the Assessment District are also within the boundaries of Assessment District 09-1. The lien of the assessments levied on such parcels for Assessment District 09-1 is senior to the lien of the unpaid Assessments levied on such parcels for the Assessment District. See “SECURITY FOR THE BONDS – Priority of Lien; Senior Prior Lien” and Appendix H – “LIST OF UNPAID ASSESSMENTS.” See also “THE ASSESSMENT DISTRICT – Direct and Overlapping Debt” herein for a description of other special taxes or assessments secured by a lien on property within the Assessment District.
The City does not have control over the ability of other local government agencies to issue indebtedness secured by assessments or special taxes against all or a portion of the Assessment District. In addition, the owners of assessable parcels of property in the Assessment District may, without the consent or knowledge of the City, petition other public agencies to issue public indebtedness secured by assessments or special taxes. Any such assessments or special taxes may have a lien on such property on a parity with the Assessments. See “THE ASSESSMENT DISTRICT – Direct and Overlapping Debt” and “– Future Debt Issuance” below.
Moreover, in the event of a delinquency in the payment of the assessment levy, no assurance can be given that the proceeds of any foreclosure sale would be sufficient to pay the delinquent assessments and any other delinquent assessments, special taxes or taxes. See “–Property Values” above.
Right to Vote on Taxes Act
On November 5, 1996, the voters of the State approved Proposition 218, the so-called “Right to Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which contain, among other things, a number of provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges.
Article XIIID requires that, beginning July 1, 1997, the proceedings for the levy of any assessment by the City under the 1913 Act (including, if applicable, any increase in such assessment or any supplemental assessment under the 1913 Act) must be conducted in conformity with the provisions of Section 4 of Article XIIID. The City completed its proceedings for the levy of assessments in the Assessment District after complying with the procedural requirements of Section 4 of Article XIIID. Under Section 10400 of the 1913 Act, any challenge to the proceedings or the Assessment must be brought within 30 days after the date the assessment was levied.
Article XIIIC removes limitations on the initiative power in matters of local taxes, assessments, fees and charges. Article XIIIC does not define the term “assessment”, and it is unclear whether this term is intended to include assessments levied under the 1913 Act. Furthermore, this provision of Article XIIIC is not, by its terms, restricted in its application to assessments which were established or imposed on or after July 1, 1997. In the case of the unpaid Assessments which are pledged as security for the payment of the Bonds, the 1915 Act provides a mandatory, statutory duty of the City and the County Auditor to post installments on account of the unpaid Assessments to the 108
38 property tax roll of the County each year while any of the Bonds are outstanding, in amounts equal to the principal of and interest on the Bonds coming due in the succeeding calendar year. Although the matter is not free from doubt, it is likely that a court would hold that Article XIIIC has not conferred on the voters the power to reduce or repeal the unpaid Assessments which are pledged as security for payment of a Bond or to otherwise interfere with performance of the mandatory, statutory duty of the City and the County Auditor with respect to the unpaid Assessments which are pledged as security for payment of the Bonds.
The interpretation and application of Article XIIIC will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See “BONDOWNERS’ RISKS – Limitations on Remedies.” Ballot Initiatives and Legislative Measures
Proposition 218 was adopted pursuant to a measure qualified for the ballot pursuant to California’s constitutional initiative process, and the State Legislature has in the past enacted legislation which has altered the spending limitations or established minimum funding provision for particular activities. From time to time, other initiative measures could be adopted by California voters or legislation enacted by the Legislature. The adoption of any such initiative or legislation might place limitations on the ability of the State, the City or local districts to increase revenues or to increase appropriations or on the ability of a landowner to complete the development of property.
Impact of Legislative Proposals, Clarifications of the Tax Code and Court Decisions on Tax Exemption
Future legislative proposals, if enacted into law, clarification of the Internal Revenue Code of 1986, as amended (the “Tax Code”) of 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 of the Bonds from realizing the full current benefit of the tax status of such interest.
For example, Congress has considered in the past and may consider in the future, legislative proposals, including some that carry retroactive effective dates, that, if enacted, would alter or eliminate the exclusion from gross income for federal income tax purposes of interest on municipal bonds, such as the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation.
The introduction or enactment of any such future legislative proposals, clarification of the Tax Code or court decisions may also affect the market price for, or marketability of, the Bonds.
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.
Loss of Tax Exemption
Interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued as a result of future acts or omissions of the City in violation of its covenants in the Fiscal Agent Agreement. Should such an event of 109
39 taxability occur, the Bonds are not subject to a special redemption and will remain outstanding until maturity or until redeemed under one of the other redemption provisions contained in the Fiscal Agent Agreement.
IRS Audit of Tax-Exempt Bond Issues
The Internal Revenue Service has a program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an audit of similar bonds or securities).
Absence of Secondary Market for the Bonds
There can be no assurance that there will be a secondary market for purchase or sale of the Bonds or, if a secondary market exists, that such 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 made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. From time to time, there may be no secondary market for the Bonds, depending upon prevailing market conditions, the financial condition or market position of firms (if any) who may make the secondary market in the Bonds and the financial condition of the owners of property within the Assessment District. The Bonds should therefore be considered longterm investments in which funds are committed to maturity, subject to redemption prior to maturity as described herein.
Future Debt Issuance
The ability of an owner of land within the Assessment District to pay the Assessment Installments could be affected by the existence of other taxes and assessments imposed upon parcels in the Assessment District with unpaid Assessment Installments. In addition, the City and other public agencies whose boundaries overlap those of the Assessment District could impose additional taxes or assessment liens on the property within the Assessment District in order to finance public improvements or services to be located or provided inside of or outside of such area. The lien created on the property within the Assessment District through the levy of such additional taxes may be on a parity with the lien of the Assessment Installments levied by the City. See “THE ASSESSMENT DISTRICT – Direct and Overlapping Debt” herein.
The imposition of additional liens on a parity with the Assessment Installments may reduce the ability or willingness of the landowners to pay the Assessment Installments and increase the possibility that foreclosure proceeds will not be adequate to pay delinquent Assessment Installments.
The City does not have control over the ability of other entities and districts to issue indebtedness secured by special taxes, ad valorem taxes or assessments payable from all or a portion of the property within the Assessment District. In addition, the landowners within the Assessment District may, without the consent or knowledge of the City, petition other public agencies to issue public indebtedness secured by special taxes, ad valorem taxes or assessments. Any such special 110
40 taxes, ad valorem taxes or assessments could reduce the estimated value-to-lien ratios for property within the Assessment District described herein.
Disclosures to Future Purchasers
The willingness or ability of an owner of a parcel to pay the Assessment Installments even if the value of the parcel is sufficient may be affected by whether or not the owner was given due notice of the Assessment Installments authorization at the time the owner purchased the parcel, was informed of the amount of the Assessment Installments on the parcel and the risk of such a levy, and, at the time of such a levy, has the ability to pay it as well as pay other expenses and obligations. The City has caused a notice of the Assessment lien to be recorded in the Office of the Recorder for the County against each parcel in the Assessment District. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Assessment Installments obligation in the purchase of a property within the Assessment District or lending of money thereon.
Cybersecurity
The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. The City is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks. No assurance can be given that the efforts of the City 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. 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 the unpaid Assessments and the Fiscal Agent. No assurance can be given that the City and these other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.
LEGAL MATTERS
The validity of the Bonds and certain other legal matters are subject to the approval of Bond Counsel. Bond Counsel will render an opinion with respect to the validity and enforceability of the Bonds and the Fiscal Agent Agreement. Such opinion will be subject to the various assumptions, exceptions and limitations stated therein. See Appendix B – “FORM OF BOND COUNSEL OPINION.”
Certain legal matters will be passed on for the City by the City Attorney, and by Anzel Galvan LLP, San Francisco, California, as Disclosure Counsel. Certain legal matters will be passed on for the Underwriter by Kutak Rock LLP, Irvine, California.
ABSENCE OF LITIGATION
There is no action, suit, or proceeding pending or, to the best knowledge of the City, threatened to restrain or enjoin the delivery of the Bonds or in any way contesting or affecting the validity of the Bonds or any proceedings of the City taken with respect to the issuance or sale thereof.
The City will certify at closing that there is no litigation of any nature pending against the City to restrain or enjoin the issuance, sale, execution or delivery of the Bonds or in any way 111
41 contesting or affecting the validity of the Bonds, the proceedings of the City taken with respect to the issuance of sale thereof, the proceedings of the City taken with respect to the assessment of property within the Assessment District, the existence or powers of the City or the title of any officers of the City to their respective position. In addition, a no litigation opinion rendered by the City Attorney will be required to be delivered to the Underwriter simultaneously with the delivery of the Bonds.
TAX MATTERS
In the opinion of Best Best & Krieger LLP, Riverside, California, subject, however, to certain qualifications described in this Official Statement, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants, the interest on the Bonds is excluded from gross income for federal income tax purposes, and interest on the Bonds is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into account in determining the annual adjusted financial statement income of certain corporations for the purpose of computing the alternative minimum tax imposed on certain corporations. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income 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 (“Tax Code”) that must be satisfied subsequent to the issuance of the Bonds. The City has made certain representations and covenanted to comply with each such requirement. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel’s attention after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events, or matters.
If the initial offering price to the public (excluding bond houses and brokers) 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 (excluding bond houses and brokers) at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “original issue premium” for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium is disregarded.
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, prepayment, 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 112
42 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, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Bonds under federal individual alternative minimum taxes.
Under the Tax Code, original issue 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 original issue 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 original issue 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 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.
Current and future legislative proposals, if enacted into law, clarification of the Tax Code, or court decisions may cause interest with respect to 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. 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.
The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel’s judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (“IRS”) or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the City or about the effect of future changes in the Tax Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The City has covenanted, however, to comply with the requirements of the Tax Code.
A copy of the proposed form of opinion of Bond Counsel is attached hereto as APPENDIX B.
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. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Bonds other than as expressly described above.
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 113
43 regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
CONTINUING DISCLOSURE
The City has covenanted for the benefit of holders of the Bonds to provide certain financial information and operating data relating to itself and the Assessment District not later than March 1 of each year, commencing on March 1, 2026 with the report for the 2025-26 fiscal year (the “Continuing Disclosure Annual Report”) and to provide notices of the occurrence of certain enumerated events. The Continuing Disclosure Annual Report and the notices of enumerated events will be filed by the City with the Municipal Securities Rulemaking Board (the “MSRB”) through the Electronic Municipal Market Access system (the “EMMA System”) in an electronic format and accompanied by identifying information as prescribed by the MSRB. The specific nature of the information to be contained in the Continuing Disclosure Annual Report or the notices of enumerated events is set forth in the Continuing Disclosure Certificate to be delivered by the City in connection with the Bonds, the form of which is included as Appendix D – “FORM OF CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2- 12(b)(5) (the “Rule”).
In addition to its governance of the Assessment District, the City Council is the legislative body of certain other assessment districts established by the City Council. The City has from time to time entered into undertakings under the Rule in connection with bond issuances thereof. Within the last five years, the City complied in all material respects with its undertakings under the Rule, except that (i) the City failed to file on the EMMA System its audited financial statements for the fiscal years ending June 30, 2021, June 30, 2022 and June 30, 2023, on or before the respective deadlines therefor, and (ii) the City failed to file on the EMMA System a notice regarding its failure to file the financial statements for June 30, 2023 on or before the deadline. The City subsequently filed its audited financial statements for the fiscal years ending June 30, 2021, June 30, 2022 and June 30, 2023, on the EMMA System, approximately 19 days, 90 days and 3 days, respectively, after the respective deadlines.
To assist the City to comply with its existing continuing disclosure undertakings and undertaking under the Rule with respect to the Bonds, the City has designated the City Treasurer with responsibility of ensuring timing and complete filings with respect thereto. In addition, the City has adopted policies and procedures for the City regarding continuing disclosure and has appointed DTA as dissemination agent under the Continuing Disclosure Certificate.
NO RATING
The City has not made, and does not contemplate making, application to any rating agency for the assignment of a rating to the Bonds.
UNDERWRITING
The Bonds are being purchased through negotiation by Oppenheimer & Co. Inc. (the “Underwriter”). The Underwriter has agreed to purchase the Bonds for $________, which represents the par amount of the Bonds, plus net original issue premium of $________and less an underwriter’s discount of $________. The purchase contract for the Bonds provides that the Underwriter will purchase all of the Bonds, if any are purchased, the obligation to make such purchase being subject to 114
44 certain terms and conditions set forth in such purchase contract, the approval of certain legal matters by counsel and certain other conditions.
The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the inside cover page hereof. The offering prices may be changed from time to time by the Underwriter.
MUNICIPAL ADVISOR
Fieldman, Rolapp & Associates, Inc. has acted as Municipal Advisor (the “Municipal Advisor”) to the City in connection with the issuance of the Bonds. The Municipal Advisor has assisted in matters related to the planning, structuring, execution, and delivery of the Bonds. The Municipal Advisor will receive compensation contingent upon the sale and delivery of the Bonds.
The Municipal Advisor has not audited, authenticated, or otherwise independently verified the information set forth in this Official Statement, or any other related information available, with respect to accuracy and completeness of disclosure of such information. Because of this limited participation, the Municipal Advisor makes no guaranty, warranty, or other representation with respect to the accuracy or completeness of this Official Statement, or any other matter related to this Official Statement.
FINANCIAL INTERESTS
The fees of the Underwriter, Anzel Galvan LLP, as Disclosure Counsel, Kutak Rock LLP, as Underwriter’s Counsel, and the Municipal Advisor are contingent upon issuance of the Bonds.
MISCELLANEOUS
Insofar as any statements made in this Official Statement involve matters of opinion or of estimates, whether or not expressly stated, they are set forth as such and not as representations of fact.
No representation is made that any of such statements made will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the Owners of the Bonds.
The execution and delivery of this Official Statement have been duly authorized by the City.
CITY OF LAGUNA BEACH
By:
Assistant City Manager
115
A-1
APPENDIX A
GENERAL ECONOMIC DATA REGARDING THE CITY AND THE COUNTY
THE FOLLOWING DATA HAS BEEN PROVIDED AS GENERAL BACKGROUND INFORMATION ONLY. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING
POWER OF THE CITY, THE COUNTY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS.
ALTHOUGH REASONABLE EFFORTS HAVE BEEN MADE TO INCLUDE UP-TODATE INFORMATION HEREIN, MUCH OF THE INFORMATION IS NOT CURRENT. IT
SHOULD NOT BE ASSUMED THAT THE TRENDS INDICATED BY THE FOLLOWING DATA WOULD CONTINUE BEYOND THE SPECIFIC PERIODS REFLECTED HEREIN.
General and Location
The City of Laguna Beach (the “City”) is located in County of Orange (the “County”). The City was incorporated as a general law city in 1927, operates under the council- manager form of government. The voters of the City elect five council members by popular vote on a non-partisan basis for staggered terms of four years. The council selects the mayor from among its members. The council enacts all local laws, approves the City budget, appoints City officials, and adopts the City tax rate.
The City is a residential community located on the Pacific coastline 50 miles south of Los Angeles and 80 miles north of San Diego. The City is bounded by beach for about seven miles and consists of 3,328 acres situated in southern Orange County. Originally settled in the late 1800s the City has gradually become known as an artists’ colony and popular tourist area because of its location, scenic surroundings, and Mediterranean-type climate.
The City is well known for its summer artistic events. The Festival of Arts, which began over 80 years ago, provides a forum for the talents of several hundred artists. The Pageant of the Masters is a tribute to the achievements of famous painters and sculptors during which their works are replicated as real-life exhibits. These cultural attractions, coupled with the physical attributes of the coastline setting, distinguish the City as offering unusual recreation opportunities throughout the year.
The City maintains its own police and fire departments. The public beaches are protected by a lifeguard contingent fully activated during the summer season. 116
A-2
Population
The following table shows population estimates for the City, the County and the State as of January 1 for the past five calendar years.
CITY OF LAGUNA BEACH, COUNTY OF ORANGE
AND STATE OF CALIFORNIA
Population Estimates
Calendar Years 2021 through 2025
Year
City of
Laguna Beach
County of
Orange California
2021 22,648 3,174,592 39,369,530
2022 22,506 3,159,797 39,179,680
2023 22,445 3,156,200 39,228,444
2024 22,759 3,170,070 39,420,663
2025 22,763 3,175,427 39,529,101
Source: State Department of Finance.
117
A-3
Employment and Industry
The following table summarizes the civilian labor force, employment and unemployment, as well as employment by industry, in the Anaheim-Santa Ana-Irvine Metropolitan Division for the years 2020 through 2024.
ANAHEIM-SANTA ANA-IRVINE METROPOLITAN DIVISION
Employment by Industry
Annual Averages
(March 2024 Benchmark)
2020 2021 2022 2023 2024
Civilian Labor Force (1) 1,575,300 1,569,400 1,593,400 1,611,700 1,623,300 Employment 1,436,000 1,476,000 1,542,300 1,555,700 1,559,600 Unemployment 139,300 93,400 51,100 56,000 63,600
Unemployment Rate 8.8% 6.0% 3.2% 3.5% 3.9%
Wage and Salary Employment(2)
Agriculture 1,900 2,000 1,700 1,700 1,700
Mining and Logging 500 400 400 300 300
Construction 101,300 102,200 105,300 104,600 105,500
Manufacturing 150,100 149,800 155,400 156,600 155,300
Wholesale Trade 76,800 77,500 79,000 81,100 80,800
Retail Trade 137,600 143,400 145,500 145,800 144,800
Transportation, Warehousing and Utilities 29,600 31,100 33,800 35,700 35,400 Information 24,100 24,000 24,300 22,700 21,500
Finance and Insurance 77,700 78,100 72,200 63,200 62,400 Real Estate and Rental and Leasing 38,200 39,000 40,100 40,500 40,800 Professional and Business Services 309,200 321,700 331,500 320,100 315,100 Private Education and Health Services 225,800 237,300 249,200 263,600 274,000 Leisure and Hospitality 161,800 180,400 217,900 229,800 234,500 Other Services 44,100 47,500 53,100 55,200 56,000
Federal Government 11,600 11,000 10,800 10,700 10,700
State Government 32,600 34,200 33,400 33,300 32,700
Local Government 111,900 110,500 114,000 116,500 119,800 Total, All Industries (3) 1,534,600 1,589,800 1,667,700 1,681,400 1,691,400 (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) Figures may not total due to rounding.
Source: State of California Employment Development Department. 118
A-4
Employers
The following table shows the largest employers in the City for the fiscal year ending June 30, 2024.
CITY OF LAGUNA BEACH
Largest Employers
Number of
Employees
Percent of Total
Employment
Montage Laguna Beach Hotel** 602 4.93%
Laguna Beach School District 376 3.08%
Mission Hospital, Laguna Beach (1) 350 2.87%
City of Laguna Beach*** 346 2.83%
Laguna College of Art & Design** 233 1.91%
Surf & Sand Resort** 222 1.82%
Las Brisas Restaurant** 177 1.45%
Pacific Edge Hotel** (2) 114 0.93%
Anneliese Schools 111 0.91%
Mozambique Restaurant** 100 0.82%
**Includes full and part time.
***Includes full time only.
(1) Laguna Beach campus only.
(2) Count includes both hotel and restaurants.
Source: City of Laguna Beach.
119
A-5
The table below lists the largest employers in the County, listed alphabetically.
COUNTY OF ORANGE
Largest Employers
April 2024
Employer Name Location Industry
Abbvie Irvine Pharmaceutical Research Laboratories
American Funds Irvine Services NEC
Anaheim City Hall Anaheim City Hall
B Braun Medical Inc Irvine Physicians & Surgeons Equip & Supls-Mfrs Boeing Co Coml Airlines Spprt Seal Beach Call Centers
Broadcom Corp Irvine Semiconductors & Related Devices (mfrs) California State Univ Fllrtn Fullerton Schools-Universities & Colleges Academic Edwards Lifesciences Corp Irvine Orthopedic Prosthetic/Srgcl Appl (mfrs) Emplicity Irvine Business Services NEC
Fairview Developmental Ctr Costa Mesa Hospitals
James R Glidewell Dental Crmcs Irvine Dentists
Jefferson School of Philosophy Laguna Hills Books School & Textbooks Judicial Council of California Santa Ana Federal Government Contractors Kaiser Permanente Orange Anaheim Hospitals
Laguna Woods Village Cmnty Ctr Laguna Woods Senior Citizens Service Largo Concrete Tustin Concrete Contractors
Menzies Aviation Costa Mesa Airline Support Services
Pacifi Care Health Systems LLC Cypress Insurance
Parker Customer Response Ctr Irvine Customer Loyalty Programs & Svc Providence Mission Hosp Msn Vj Mission Viejo Hospitals
Providence St Joseph Hosp Orng Orange Hospitals
Pylusd Schools Placentia Schools
Quest Diagnostics San Juan Cpstrno Laboratories-Medical UCI Health-Fountain Valley Fountain Valley Hospitals
University of Ca-Irvine Irvine Schools-Universities & Colleges Academic Source: State of California Employment Development Department, extracted from the America's Labor Market Information System (ALMIS) Employer Database, 2025 2nd Edition. 120
A-6
Personal Income
Personal Income is the income that is received by all persons from all sources. It is calculated as the sum of wage and salary disbursements, supplements to wages and salaries, proprietors’ income with inventory valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment, personal dividend income, personal interest income, and personal current transfer receipts, less contributions for government social insurance.
The personal income of an area is the income that is received by, or on behalf of, all the individuals who live in the area; therefore, the estimates of personal income are presented by the place of residence of the income recipients.
The following table summarizes the personal income for the County for 2014 through 2023.
COUNTY OF ORANGE
Personal Income (1)
Year
County of
Orange
Percentage
Change
2014 $173,769,675 N/A
2015 187,042,532 7.64%
2016 194,223,700 3.84
2017 202,337,241 4.18
2018 210,648,610 4.11
2019 221,785,219 5.29
2020 239,165,288 7.84
2021 257,606,430 7.71
2022 264,973,116 2.86
2023 278,760,587 5.20
(1) All dollar estimates are in thousands of current dollars (not adjusted for inflation). Statistics presented in thousands of dollars do not indicate more precision than statistics presented in.
Source: U.S. Department of Commerce, Bureau of Economic Analysis. 121
A-7
The following table summarizes per capita personal income for the County, California and the United States for 2014 through 2023. This measure of income is calculated as the personal income of the residents of the area divided by the resident population of the area.
COUNTY OF ORANGE,
STATE OF CALIFORNIA AND THE UNITED STATES
Per Capita Personal Income
Year
County of
Orange California United States
2014 $55,457 $50,617 $ 44,402
2015 59,238 53,816 46,289
2016 61,184 55,862 48,062
2017 63,510 58,214 48,974
2018 66,056 60,984 51,006
2019 69,616 64,219 53,311
2020 75,074 70,098 55,567
2021 81,505 76,882 59,151
2022 84,109 76,941 64,692
2023 88,897 81,255 66,298
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
Commercial Activity
A summary of historic taxable sales within the City and the County during the past five years for which data is available is shown in the following tables.
CITY OF LAGUNA BEACH
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 1,453 $274,151 2,320 $351,518
2021 1,297 380,176 2,078 498,067
2022 1,265 461,629 2,105 612,102
2023 1,196 445,205 2,038 544,327
2024 1,162 478,596 1,995 562,412
Source: State Department of Tax and Fee Administration. 122
A-8
COUNTY OF ORANGE
Taxable Transactions
Calendar Years 2020 through 2024
(Dollars in Millions)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2020 76,066 $44,257 132,807 $63,834
2021 67,060 53,651 118,779 78,254
2022 67,272 58,099 119,697 88,027
2023 65,013 57,322 116,309 87,298
2024 65,391 56,820 117,426 86,337
Source: State Department of Tax and Fee Administration.
Construction Activity
The following tables shows a five-year summary of the valuation of building permits issued in the City and the County.
CITY OF LAGUNA BEACH
City of Laguna Beach Building Permit Valuation
(Valuation in Thousands of Dollars)
2018 2019 2020 2021 2022
Permit Valuation
New Single-family $16,003.8 $14,698.6 $3,577.1 $22,722.9 $31,375.9 New Multi-family 1,972.6 1,099.7 191.0 0.0 0.0
Res. Alterations/Additions 36,706.5 91,683.1 10,980.0 29,203.8 40,957.2 Total Residential 54,682.9 107,481.4 14,748.1 51,926.7 72,333.1 New Commercial 681.8 655.0 0.0 0.0 1,894.6
New Industrial 0.0 0.0 0.0 0.0 0.0
New Other 4,882.8 3,468.4 979.7 2,586.0 7,786.3
Com. Alterations/Additions 8,140.8 3,614.2 855.1 4,036.6 28,265.0 Total Nonresidential 13,705.4 7,737.6 1,834.8 6,622.6 37,945.9 New Dwelling Units
Single Family 23 27 9 51 69
Multiple Family 6 2 2 0 0
TOTAL 29 29 11 51 69
Source: Construction Industry Research Board, Building Permit Summary. 123
A-9
COUNTY OF ORANGE
County of Orange Building Permit Valuation
(Valuation in Thousands of Dollars)
2018 2019 2020 2021 2022
Permit Valuation
New Single-family $1,442,020.5 $1,094,668.2 $902,643.6 $1,051,349.7 $903,918.4 New Multi-family 726,503.6 1,010,555.6 582,219.6 856,973.7 639,435.9 Res. Alterations/Additions 582,094.5 537,089.8 386,094.4 485,637.1 671,417.6 Total Residential 2,750,618.6 2,642,313.6 1,870,957.6 2,393,960.5 2,214,771.9 New Commercial 1,986,089.1 1,586,162.0 621,133.5 618,834.6 359,401.4 New Industrial 24,323.9 2,412.5 14,052.7 46,820.3 11,700.0 New Other 289,986.9 229,473.5 409,763.1 371,405.3 414,491.5 Com. Alterations/Additions 1,231,885.1 1,334,453.1 939,371.9 788,015.5 1,142,718.9 Total Nonresidential 3,532,285.0 3,152,501.1 1,984,321.2 1,825,075.7 1,928,311.8 New Dwelling Units
Single Family 3,975 3,125 2,863 3,292 2,929
Multiple Family 4,130 7,169 3,032 4,002 3,405
TOTAL 8,105 10,294 5,895 7,294 6,334
Source: Construction Industry Research Board, Building Permit Summary.
Transportation
The City has convenient access to the San Diego and Santa Ana freeways via Laguna Canyon Road and connections to the San Joaquin Hills Corridor Toll Road, San Diego and Newport freeways via Coast Highway. The Orange County Transit Authority provides bus service to Santa Ana, the county seat. In addition, the City operates its own municipal trolly service linking a seven-mile stretch along Coast Highway. Although the City does not have railroad facilities within the City, Amtrak, offering passenger services, has a platform in San Juan Capistrano located 10 miles away and in Irvine located 7 miles away. Air passenger and freight service is available at the nearby John Wayne Airport in Santa Ana. Long Beach Municipal Airport and Los Angeles International Airport are located just off the San Diego freeway about an hour’s drive from the City. 124
B-1
APPENDIX B
FORM OF BOND COUNSEL OPINION
125
C-1
APPENDIX C
SUMMARY OF THE FISCAL AGENT AGREEMENT
126
D-1
APPENDIX D
FORM OF CONTINUING DISCLOSURE CERTIFICATE
$[PAR]
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS
This CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”) is executed and delivered by the City of Laguna Beach, California (the “City”), in connection with the issuance by the City of the bonds captioned above (the “Bonds”). The Bonds are being issued pursuant to a Fiscal Agent Agreement dated as of January 1, 2026 (the “Fiscal Agent Agreement”), by and between the City of Laguna Beach (the “City”) and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the “Fiscal Agent”). 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).
Section 2. Definitions. In addition to the definitions set forth above and in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the 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 March 1 after the end of the City’s fiscal year. “Dissemination Agent” means David Taussig and Associates, Inc. (doing business as “DTA”), 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 dated ______, 2026, executed by the City in connection with the issuance of the Bonds.
“Participating Underwriter” means Oppenheimer & Co. Inc., the original purchaser of the Bonds required to comply with the Rule in connection with offering of the Bonds. 127
D-2
“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time.
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing March 1, 2026, with the report for fiscal year 2025-26 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 certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder. (b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) a notice to the MSRB in a timely manner, in an electronic format as prescribed by the MSRB.
(c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.
Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following:
(a) The City’s audited financial statements for the preceding fiscal year 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, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) Unless otherwise provided in the audited financial statements filed on or before the Annual Report Date, financial information and operating data with respect to the City for the 128
D-3
preceding fiscal year, substantially similar to that provided in the corresponding tables in the Official Statement, as follows:
(i) the principal amount of Bonds outstanding as of the September 3 preceding the filing of the Annual Report;
(ii) the balance in each fund and account established under the Fiscal Agent Agreement as of the September 30 preceding the filing of the Annual Report; (iii) the aggregate assessed valuation (land and improvements) for the Assessment District for the current fiscal year and the prior fiscal year; (iv) the current delinquency rate for the Assessment District indicating, on a summary basis, the annual assessment lien, the amount delinquent, the percent delinquent and the delinquent number of parcels; and
(v) a listing of the principal property owners representing 5% or more of the annual assessment installment.
(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 through the MSRB. The City shall clearly identify each such other document so included by reference. If the document included by reference is a final official statement, it must be available from the MSRB.
Section 5. Reporting of Listed 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 Bonds, or other material events affecting the tax status of the Bonds. 129
D-4
(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, if applicable.
(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. (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. (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.
(b) Upon the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Fiscal Agent Agreement.
(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. Upon 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. 130
D-5
(d) 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. (e) For purposes of Section 5(a)(15) and (16), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB 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 Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be David Taussig and Associates, Inc. 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 Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of holders, or (ii) does not, in the opinion of nationally 131
D-6
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 Report filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
If an amendment is made to this Disclosure Certificate modifying the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the 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. If the City fails 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 Fiscal Agent Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and 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 they 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 by the 132
D-7
City hereunder, and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond holders or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the 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 the 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.
Section 15. Governing Law and Venue. This Disclosure Certificate shall be governed by and construed in accordance with the laws of the State of California. Venue shall be in the County of Orange, California.
Date: ______, 2026
CITY OF LAGUNA BEACH
By:
Name:
Title:
AGREED AND ACCEPTED:
David Taussig and Associates, Inc.,
d/b/a DTA
as Dissemination Agent
By:
Name:
Title:
133
E-1
APPENDIX E
THE BOOK-ENTRY 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, fiscal agent or paying agent 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 Bonds (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 maturity of the Securities in the aggregate principal amount of such maturity, 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. 134
E-2
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 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 an S&P Global Ratings rating of AA+. 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 a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
135
E-3
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 the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Principal, redemption price and interest 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 the Authority or the Paying 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, the Paying Agent, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Paying 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. If applicable, a Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to tender/remarketing agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant’s interest in the Securities, on DTC’s records, to tender/remarketing agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Securities to tender/remarketing agent’s DTC account.
10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the Authority or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.
11. The Authority 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.
12. 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.
136
F-1
APPENDIX F
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1 (WEST STREET)
ASSESSMENT DIAGRAM
137
G-1
APPENDIX G
ENGINEER’S REPORT
138
H-1
APPENDIX H
LIST OF UNPAID ASSESSMENTS
139
Assmt. # APN Owner Land Value Impr. Value Total Value
Total Value
(Excludes Cash
Payments)
Original Assessment
Lien Cash Payment [2] Outstanding Balance
*Projected*
Outstanding
Assessment Lien [3]
Senior Assessment
Lien [4]
Other
Overlapping
Debt [4] Value-to-Lien % of Lien
Estimated
Annual Assessment FY
2026-2027
1 056-070-13 ZIMMERMAN, MICHAEL THOMAS $2,423,109 $376,842 $2,799,951 $2,799,951 $29,682 $0 $29,682 $28,867 $0 $1,030 93.65 0.73% $2,187 2 056-070-14 SCHATZ, MARTIN TR M $1,952,425 $1,000,417 $2,952,842 $0 $28,042 $24,769 $0 $0 $0 NA NA 0.00% $0 3 056-070-15 PALSULE, HIMANSHU S TR $2,602,000 $834,721 $3,436,721 $3,436,721 $30,502 $0 $30,502 $29,664 $0 $1,265 111.12 0.75% $2,245 4 056-070-16 AUT, WARREN E TR THE W & $667,233 $501,158 $1,168,391 $1,168,391 $28,675 $0 $28,675 $27,888 $0 $365 41.35 0.71% $2,116 5 056-070-17 OLSEN, BRIAN TR THE OLSEN $2,480,818 $147,505 $2,628,323 $2,628,323 $25,409 $0 $25,409 $24,712 $0 $965 102.36 0.63% $1,884 6 056-070-18 ROSENBERG, MICHAEL E TR $1,868,467 $705,505 $2,573,972 $2,573,972 $53,807 $0 $53,807 $52,329 $0 $945 48.32 1.33% $3,895 7 056-070-19 COGDILL, RUSSELL TR $1,307,285 $312,573 $1,619,858 $1,619,858 $53,317 $0 $53,317 $51,852 $0 $593 30.89 1.31% $3,861 8 056-070-20 MILLLER, CHRISTINE T TR $428,161 $353,869 $782,030 $782,030 $54,870 $0 $54,870 $53,363 $0 $285 14.58 1.35% $3,971 9 056-070-21 STERIS, JASON TR $2,079,106 $1,009,106 $3,088,212 $3,088,212 $55,561 $0 $55,561 $54,035 $0 $1,134 55.98 1.37% $4,019 10 056-070-22 MC KEVITT SEAN & KEVITT JEAN $56,340 $56,866 $113,206 $113,206 [5] $56,079 $0 $56,079 $54,538 $0 $42 2.07 1.38% $4,056 11 056-070-23 SACCANI, MIRKO & GAYNOR FAIRWEATHER $2,068,773 $329,666 $2,398,439 $2,398,439 $59,460 $0 $59,460 $57,826 $0 $883 40.85 1.47% $4,296 12 056-070-37 REILLY, JOHN R TR $56,348 $73,714 $130,062 $130,062 [6] $54,249 $0 $54,249 $52,759 $0 $45 2.46 1.34% $3,927 13 056-070-36 LEBLOCH, JAMES G TR OCP $692,554 $224,400 $916,954 $916,954 $59,531 $0 $59,531 $57,896 $0 $335 15.75 1.47% $4,301 14 056-070-06 FAEC HOLDINGS 390645 LLC $2,233,885 $575,272 $2,809,157 $2,809,157 $32,272 $0 $32,272 $31,385 $0 $1,034 86.65 0.80% $2,370 15 056-070-05 GOODMAN, ETHAN TR E & R $1,680,080 $123,973 $1,804,053 $1,804,053 $55,388 $0 $55,388 $53,867 $0 $661 33.08 1.37% $4,007 16 056-070-04 RIVAS, ERNEST & LAURA $2,011,166 $392,918 $2,404,084 $2,404,084 $55,411 $0 $55,411 $53,889 $0 $882 43.89 1.37% $4,009 17 056-070-03 LAWRENCE MICHAEL JOHNSON SEPARATE PROPERTY TRUST $709,122 $487,861 $1,196,983 $0 $56,827 $51,320 $0 $0 $0 NA NA 0.00% $0 18 056-070-02 CRAWFORD, ROBERT B & DARCI L $2,641,121 $1,127,046 $3,768,167 $0 $60,567 $54,771 $0 $0 $0 NA NA 0.00% $0 19 056-070-01 MYERS, STEVEN MARK TR $495,848 $171,522 $667,370 $0 $54,525 $49,197 $0 $0 $0 NA NA 0.00% $0 20 056-070-26 SOUTH COAST COUNTY WATER DISTRICT $93,128 $887,551 $980,679 $0 $141,563 $129,483 $0 $0 $0 NA NA 0.00% $0 ** 21 056-070-34 SOUTH COAST COUNTY WATER DIST $230 $0 $230 $0 $0 $0 $0 $0 $0 NA NA 0.00% $0 22 056-070-27 DAHLE, DENNIS J $1,595,583 $100,089 $1,695,672 $1,695,672 $66,074 $0 $66,074 $64,260 $0 $624 26.13 1.63% $4,764 23 056-070-40 PLAVSIC, KARYN $4,247,212 $434,588 $4,681,800 $4,681,800 $56,772 $0 $56,772 $55,213 $0 $1,723 82.23 1.40% $4,105 24 056-070-30 BENHAM, MARY ANN TR $64,777 $36,112 $100,889 $100,889 [7] $87,542 $0 $87,542 $85,138 $0 $35 1.18 2.16% $6,284 25 056-062-36 EPSTEIN, ALEXANDER & CASSANDRA $2,893,589 $166,411 $3,060,000 $3,060,000 $58,570 $0 $58,570 $56,962 $0 $1,126 52.68 1.44% $4,233 26 056-062-34 SKYRMS, FREDERICK B $799,135 $176,844 $975,979 $0 $50,900 $45,853 $0 $0 $0 NA NA 0.00% $0 27 056-062-35 CHAMBERLAIN, JEFFREY W TR $959,323 $1,169,658 $2,128,981 $0 $48,034 $43,210 $0 $0 $0 NA NA 0.00% $0 28 056-062-37 LEEMON, STANTON J TR THE $516,283 $324,733 $841,016 $841,016 $56,306 $0 $56,306 $54,760 $0 $307 15.27 1.39% $4,072 29 056-062-20 BOSHNACK JUSTIN TR $402,035 $899,364 $1,301,399 $0 $55,618 $50,206 $0 $0 $0 NA NA 0.00% $0 30 056-062-25 ZHOU, CHUANJIE TR Z & P $1,974,531 $45,069 $2,019,600 $2,019,600 $75,158 $0 $75,158 $73,094 $0 $743 27.35 1.85% $5,407 31 056-062-24 BOSHNACK, JUSTIN TR THE $1,868,495 $564,756 $2,433,251 $0 $55,561 $50,153 $0 $0 $0 NA NA 0.00% $0 32 056-062-38 BERNARDI, ARMAN TR $2,765,147 $162,973 $2,928,120 $0 $57,719 $52,143 $0 $0 $0 NA NA 0.00% $0 33 056-062-18 GLENDINNING, JAMES ALBERT $170,096 $340,851 $510,947 $510,947 $60,567 $0 $60,567 $58,904 $0 $185 8.65 1.49% $4,374 34 056-062-26 LAWS, DAVID $1,950,058 $162,192 $2,112,250 $2,112,250 $63,445 $0 $63,445 $61,702 $0 $777 33.81 1.56% $4,578 35 056-062-28 LICHTENBERG, DANIEL S TR $1,672,831 $449,766 $2,122,597 $2,122,597 $63,445 $0 $63,445 $61,702 $0 $778 33.97 1.56% $4,578 36 056-062-27 BEUTIN, DUSTIN TR BEUTIN $1,497,910 $350,868 $1,848,778 $0 $68,091 $61,711 $0 $0 $0 NA NA 0.00% $0 37 056-062-03 MCCUE, SAM TR THE $1,659,387 $86,710 $1,746,097 $1,746,097 $69,199 $0 $69,199 $67,299 $0 $642 25.70 1.71% $4,985 38 056-062-41 BLACK, JANIS TR J BLACK $1,517,262 $423,737 $1,940,999 $1,940,999 $51,935 $0 $51,935 $50,509 $0 $714 37.89 1.28% $3,763 39 056-062-40 LIUZZI, STEVEN BRUCE TR $1,014,906 $300,245 $1,315,151 $1,315,151 $43,304 $0 $43,304 $42,114 $0 $481 30.88 1.07% $3,151 40 056-062-05 HUNTER, MATTHEW F TR $724,901 $159,645 $884,546 $884,546 $61,275 $0 $61,275 $59,592 $0 $323 14.76 1.51% $4,424 41 056-062-06 PACELLA, MARK S & LUISA CHONG $450,048 $79,050 $529,098 $529,098 $56,320 $0 $56,320 $54,774 $0 $195 9.63 1.39% $4,073 42 056-062-07 NELSON, JAMES POLLOCK TR $1,859,001 $82,219 $1,941,220 $1,941,220 $55,403 $0 $55,403 $53,881 $3,167 $714 33.61 1.37% $4,008 43 056-062-08 SUNSET EQUITY PARTNERS LLC $1,672,357 $94,170 $1,766,527 $1,766,527 $52,799 $0 $52,799 $51,348 $3,167 $650 32.02 1.30% $3,824 45 056-063-06 ANDERSON, WILLIAM T $1,101,531 $51,523 $1,153,054 $1,153,054 $52,528 $0 $52,528 $51,085 $0 $424 22.39 1.29% $3,805 46 056-063-07 WILLIAMS, PATRICIA S TR $2,060,293 $62,123 $2,122,416 $0 $52,626 $47,445 $0 $0 $0 NA NA 0.00% $0 47 056-063-08 KLEIN, ELIZABETH $311,004 $59,932 $370,936 $370,936 $52,453 $0 $52,453 $51,013 $0 $136 7.25 1.29% $3,799 48 056-063-09 VINCENT, LEONARD TR $545,915 $92,526 $638,441 $638,441 $60,412 $0 $60,412 $58,753 $0 $232 10.82 1.49% $4,363 49 056-063-10 DEGARMO, CHARLES W TR $264,410 $167,376 $431,786 $431,786 $51,216 $0 $51,216 $49,809 $0 $159 8.64 1.26% $3,712 50 056-063-05 ROUNAGHI, ALI REZA TR $542,895 $200,199 $743,094 $0 $51,360 $46,278 $0 $0 $0 NA NA 0.00% $0 51 056-063-04 PETERSON, KAREN A TR $50,820 $30,865 $81,685 $81,685 [8] $52,079 $0 $52,079 $50,649 $0 $30 1.61 1.28% $3,773 52 056-063-13 KRAFT, PAUL TR KRAFT $1,023,091 $136,584 $1,159,675 $0 $55,388 $49,993 $0 $0 $0 NA NA 0.00% $0 53 056-063-12 DOW, MARK EDWIN $2,153,284 $274,418 $2,427,702 $0 $55,388 $49,993 $0 $0 $0 NA NA 0.00% $0 54 056-063-03 SMITH, ALAN TR $50,813 $43,273 $94,086 $94,086 [9] $51,590 $0 $51,590 $50,173 $0 $32 1.87 1.27% $3,738 55 056-063-02 KORNBLAU, JEROME E TR $712,544 $227,738 $940,282 $940,282 $65,531 $0 $65,531 $63,731 $0 $343 14.67 1.62% $4,725 56 056-063-15 ZARIE, FREID Y TR THE DF $2,507,656 $199,116 $2,706,772 $2,706,772 $61,712 $0 $61,712 $60,017 $0 $996 44.36 1.52% $4,455 57 056-063-14 PADDOCK, DEXTER S TR $59,242 $33,036 $92,278 $92,278 [10] $57,302 $0 $57,302 $55,728 $0 $31 1.65 1.41% $4,143 58 056-087-12 KORMELUK, NICHOLAS M & STEPHANIE M $1,968,973 $76,823 $2,045,796 $2,045,796 $53,446 $0 $53,446 $51,978 $0 $753 38.80 1.32% $3,870 59 056-086-07 KD2 LLC $2,886,733 $779,006 $3,665,739 $3,665,739 $54,122 $0 $54,122 $52,636 $0 $1,349 67.90 1.33% $3,918 60 056-086-06 DICKINSON, ALEXANDER G TR $3,735,568 $864,741 $4,600,309 $4,600,309 $94,804 $0 $94,804 $92,200 $0 $1,690 49.00 2.34% $6,798 61 056-086-40 MORCK, STIAN Z TR S Z $528,277 $87,765 $616,042 $616,042 $55,388 $0 $55,388 $53,867 $0 $224 11.39 1.37% $4,007 62 056-086-41 STEINCKE, BRIAN TR $1,379,570 $0 $1,379,570 $1,379,570 $55,374 $0 $55,374 $53,853 $0 $508 25.38 1.37% $4,006 63 056-086-37 KNOTT, BRIAN JAMES TR $283,102 $376,024 $659,126 $659,126 $55,388 $0 $55,388 $53,867 $0 $240 12.18 1.37% $4,007 64 056-086-39 KNOTT, BRIAN JAMES TR B J $327,533 $0 $327,533 $327,533 $53,627 $0 $53,627 $52,154 $0 $121 6.27 1.32% $3,883 65 056-086-35 NORING, PAUL THOMAS TR R $378,259 $162,111 $540,370 $540,370 $52,626 $0 $52,626 $51,181 $0 $196 10.52 1.30% $3,812 * 66 056-086-36 CITY OF LAGUNA BEACH $0 $0 $0 $0 $55,613 $50,200 $0 $0 $0 NA NA 0.00% $0 * 67 056-086-01 CITY OF LAGUNA BEACH $109,234 $0 $109,234 $0 $51,659 $46,554 $0 $0 $0 NA NA 0.00% $0 * 68 056-086-02 CITY OF LAGUNA BEACH $109,234 $0 $109,234 $0 $52,948 $47,743 $0 $0 $0 NA NA 0.00% $0 69 056-086-24 TERRY RD LLC $1,585,347 $191,826 $1,777,173 $1,777,173 $52,971 $0 $52,971 $51,516 $0 $654 34.06 1.31% $3,836 70 056-086-23 LEON, DANIEL STEVEN TR $1,589,431 $74,845 $1,664,276 $1,664,276 $53,144 $0 $53,144 $51,684 $0 $612 31.82 1.31% $3,848 71 056-086-22 BENEDICK, JEFFREY L TR $197,443 $108,843 $306,286 $306,286 $44,149 $0 $44,149 $42,937 $0 $113 7.11 1.09% $3,211 72 056-086-21 KLOKOW, ANNE E $801,492 $133,399 $934,891 $934,891 $65,919 $0 $65,919 $64,109 $0 $341 14.51 1.63% $4,753 73 056-086-20 EAGLE ROCK PARK LLC $1,587,568 $4,244 $1,591,812 $1,591,812 $52,896 $0 $52,896 $51,444 $0 $586 30.59 1.30% $3,831 74 056-086-19 GARCIA, GERALD A TR G A $598,472 $61,316 $659,788 $0 $52,899 $47,698 $0 $0 $0 NA NA 0.00% $0 75 056-086-31 SNYDER, KENNETH M JR TR $417,591 $203,888 $621,479 $621,479 $52,899 $0 $52,899 $51,446 $0 $226 12.03 1.30% $3,831 76 056-086-32 BERK, DAVID M TR BERK $1,845,273 $330,765 $2,176,038 $2,176,038 $52,896 $0 $52,896 $51,444 $0 $798 41.65 1.30% $3,831 77 056-086-29 MILLER, NANCY TR LIVING $56,345 $79,503 $135,848 $135,848 [11] $52,899 $0 $52,899 $51,446 $0 $47 2.64 1.30% $3,831 78 056-086-27 TRACY, JILL ANN $3,224,835 $180,720 $3,405,555 $3,405,555 $43,785 $0 $43,785 $42,583 $0 $1,253 77.69 1.08% $3,186 79 056-086-17 GALLO, KEITH EDWIN TR $1,090,479 $223,886 $1,314,365 $1,314,365 $37,602 $0 $37,602 $36,569 $0 $484 35.47 0.93% $2,748 80 056-086-43 SLATTERY, KATHRYN LANG TR $81,436 $74,446 $155,882 $0 $28,488 $25,180 $0 $0 $0 NA NA 0.00% $0 81 056-086-44 SLATTERY, FRIEDA KATHRYN TR $346,304 $596,137 $942,441 $0 $23,473 $20,554 $0 $0 $0 NA NA 0.00% $0 82 056-086-14 SLATTERY, THOMAS E TR $71,920 $430,798 $502,718 $0 $19,374 $16,773 $0 $0 $0 NA NA 0.00% $0 83 056-088-15 HOPPER, RICHARD A TR $1,080,357 $46,396 $1,126,753 $1,126,753 $38,070 $0 $38,070 $37,024 $0 $415 30.10 0.94% $2,781 84 056-088-12 BELL, REX TR $1,254,377 $28,020 $1,282,397 $1,282,397 $44,239 $0 $44,239 $43,024 $0 $472 29.48 1.09% $3,218 85 056-088-11 RONG, JOHN JUN TR $2,682,900 $389,297 $3,072,197 $3,072,197 $47,260 $0 $47,260 $45,962 $0 $1,130 65.24 1.17% $3,432 86 056-088-09 SEAMAN, THOMAS A TR THE T $1,090,791 $115,520 $1,206,311 $1,206,311 $51,187 $0 $51,187 $49,781 $0 $441 24.02 1.26% $3,710 87 056-088-10 JAEGER, DAVID L TR JAEGER $462,261 $43,396 $505,657 $505,657 $43,332 $0 $43,332 $42,142 $0 $186 11.95 1.07% $3,154 88 056-088-08 LEAVERTON, SHANNON D $850,167 $45,595 $895,762 $895,762 $47,260 $0 $47,260 $45,962 $0 $330 19.35 1.17% $3,432 89 056-088-07 GILLESPIE, JOHN $804,821 $27,938 $832,759 $832,759 $45,030 $0 $45,030 $43,793 $0 $304 18.88 1.11% $3,274 90 056-088-06 NOVICK ERIKA TR $1,929,468 $99,471 $2,028,939 $2,028,939 $42,440 $0 $42,440 $41,275 $0 $747 48.28 1.05% $3,090 91 056-088-02 GONZALEZ, BARBARA CHERNEY $265,885 $42,528 $308,413 $308,413 $38,811 $0 $38,811 $37,745 $0 $113 8.15 0.96% $2,833 92 056-088-01 ALTUWAIJRI, AHMED $980,685 $0 $980,685 $980,685 $45,506 $0 $45,506 $44,256 $0 $361 21.98 1.12% $3,307 93 056-085-03 GARY LEGRAND $997,988 $812,111 $1,810,099 $1,810,099 $51,517 $0 $51,517 $50,102 $0 $666 35.65 1.27% $3,733 Assessment District No. 2021-1
City of Laguna Beach
Fiscal Year 2025-2026 Assessed Value [1]
Value-to-Lien Detail by Parcel
(West Street Utility Undergrounding)
140
94 056-085-02 SPCH LAGUNA LLC $510,973 $6,371 $517,344 $517,344 $43,302 $0 $43,302 $42,113 $0 $190 12.23 1.07% $3,151 95 056-085-01 JK ENTERPRISES $845,341 $250,491 $1,095,832 $1,095,832 $49,741 $0 $49,741 $48,375 $0 $403 22.47 1.23% $3,607 ** 96 658-091-06 BLEVINS, LEE DUDLEY TR $995,837 $0 $995,837 $995,837 $43,453 $0 $43,453 $42,260 $0 $366 23.36 1.07% $3,162 ** 97 658-091-05 BLEVINS, LEE DUDLEY TR $1,169,026 $0 $1,169,026 $1,169,026 $43,068 $0 $43,068 $41,885 $0 $430 27.63 1.06% $3,135 98 658-091-04 LYONS, KENNY $1,149,120 $69,492 $1,218,612 $1,218,612 $43,304 $0 $43,304 $42,114 $0 $448 28.63 1.07% $3,151 99 658-091-03 STINNETT, MARY $297,612 $85,195 $382,807 $382,807 $43,304 $0 $43,304 $42,114 $0 $138 9.06 1.07% $3,151 100 658-091-02 PP HOLDINGS LCC $1,465,003 $106,439 $1,571,442 $1,571,442 $43,304 $0 $43,304 $42,114 $0 $578 36.81 1.07% $3,151 ** 101 658-091-01 31502 PCH LLC $1,061,208 $0 $1,061,208 $1,061,208 $42,738 $0 $42,738 $41,564 $0 $390 25.29 1.05% $3,111 102 056-070-07 NOYES, TOM E TR $730,358 $330,657 $1,061,015 $1,061,015 $38,458 $0 $38,458 $37,402 $0 $388 28.08 0.95% $2,808 ** 103 056-062-33 WHITAKER, DAVID L TR $0 $0 $0 $0 [12] $0 $0 $0 $0 $0 NA NA 0.00% $0 Total NA NA $118,030,161 $25,421,247 $143,451,408 $113,336,445 $5,233,077 $1,061,227 $4,056,412 $3,945,000 $6,334 $41,558 28.38 100% $293,880 $287,250
$1,453,031.35 $3,945,000 $3,767.69
Notes:
[1] Assessed Value as of January 1, 2025 as provided by County of Orange Assessor. [2] Cash payments as of November 17, 2025.
[3] Based on bond sizing dated November 18, 2025.
[4] APNs 056-062-06, 056-062-07, and 056-062-08 are within the boundaries of Assessment District No. 09-1. [5] Property built in 1963. No sales/transactions on file. Property looks fully developed based on satellite image. [6] Property built in 1972. No sales/transactions on file. Property looks fully developed based on satellite image. [7] No sales/transactions have occurred on the property since 1978. [8] No sales/transactions have occurred on the property since 1997. [9] Recent sale of $1.6M as of August 8, 2025. However, value will be included in the next fiscal year. [10] No sales/transactions have occurred on the property since 1982. [11] No sales/transactions have occurred on the property since 1986. [12] No sales/transactions have occurred on the property since 1997. *Source: First American Data Tree, Property Detail Report. 141
MEMORANDUM
ANZEL GALVAN LLP | 595 Pacific Avenue, 4th Floor, San Francisco, CA 94133 | +1.415.848.9165 | ANZELGALVAN.COM From: Anzel Galvan LLP
To: Members of the City Council, City of Laguna Beach,
Date: December 9, 2025
Subject: Official Statement for City of Laguna Beach Underground Utility Assessment District No. 2021-1 (West Street) Limited Obligation Improvement Bonds The Preliminary Official Statement (the “POS”) for the above-referenced bonds (the “Bonds”) is the primary disclosure document for the Bonds, and provides information regarding the City, Underground Utility Assessment District No. 2021-1 (West Street), City of Laguna Beach, Orange County, State of California, and the terms and conditions of the Bonds. A copy of the POS is included in the staff report for this item as Attachment 1.
The City must exercise reasonable care to avoid material misstatements or omissions in preparing public statements, including the POS, which are used to sell or tender for securities in primary offerings, and the City may not knowingly or recklessly include material misstatements or misleading statements in other public statements while its securities are outstanding. The distribution of the POS by the City is subject to federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require the POS to include all facts that would be material to an investor in the Bonds. Material information is information where there is a substantial likelihood it would have actual significance in the deliberations of the reasonable investor when deciding whether to buy, sell or hold the Bonds. If the City Council concludes that the POS includes all facts that would be material to an investor in the Bonds, it must adopt a resolution that authorizes staff to execute a certificate to the effect that the POS has been “deemed final.” The Securities and Exchange Commission (the “SEC”), the agency with regulatory authority over the City’s compliance with the federal securities laws, has issued guidance as to the duties of the City Council with respect to its approval of the POS. In its “Report of Investigation in the Matter of County of Orange, California as it Relates to the Conduct of the Members of the Board of Supervisors” (Release No. 36761 / January 24, 1996) (the “Release”), the SEC stated that if a member of the City Council has knowledge of any facts or circumstances that an investor would want to know about prior to investing in the Bonds, whether relating to their repayment, tax-exempt status, undisclosed conflicts of interest with interested parties, or otherwise, they should endeavor to discover whether such facts are adequately disclosed in the POS. In the Release, the SEC stated that the steps that a member of the City Council could take include becoming familiar with the POS and questioning staff and consultants about the disclosure of such facts.
In connection with the Bonds, a Continuing Disclosure Certificate will be executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and to assist Oppenheimer & Co. Inc., the underwriter of the Bonds, in complying with SEC Rule 15c2-12(b)(5).
The form of the Continuing Disclosure Certificate is included as Appendix D to the POS. 142
Attachment 4
$__________
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS
______________________________
BOND PURCHASE AGREEMENT
______________________________
______, 2026
City of Laguna Beach
505 Forest Avenue
Laguna Beach, CA 92651
Ladies and Gentlemen:
Oppenheimer & Co. Inc. (the “Underwriter”), acting not as fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (the “Purchase Agreement”) with the City of Laguna Beach (the “City”) in connection with the City of Laguna Beach Underground Utility Assessment District No. 2021-1 (West Street) (the “Assessment District”) which, upon acceptance, will be binding upon the City and upon the Underwriter. This offer is made subject to acceptance of it by the City on the date hereof, and, if not accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the City at any time prior to the acceptance hereof by the City. Capitalized terms that are used in this Purchase Agreement and not otherwise defined herein shall have the respective meanings ascribed to them in the Fiscal Agent Agreement (as hereinafter defined).
The City acknowledges and agrees that: (i) the purchase and sale of the Bonds (as such term is defined below) pursuant to this Purchase Agreement is an arm’s-length commercial transaction between the City and the Underwriter; (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as a principal and is not and has not been acting as a “municipal advisor” (as such term is defined in Section 15B of the Securities Exchange Act of 1934, as amended) to the City; (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the City with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the City on other matters); (iv) the Underwriter has financial interests that may differ from and be adverse to those of the City; and (v) the City has consulted its own legal, financial and other advisors to the extent that it has deemed appropriate for this transaction. The Underwriter has provided to the City prior disclosures under Rule G-17 of the Municipal Securities Rulemaking Board which have been received by the City.
Attachment 5
143
1. Purchase, Sale and Delivery of the Bonds; Establishment of Issue Price. (a) Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter agrees to purchase from the City, and the City agrees to sell to the Underwriter, all (but not less than all) of $__________ aggregate principal amount of the City of Laguna Beach Underground Utility Assessment District No. 2021-1 (West Street) Limited Obligation Improvement Bonds (the “Bonds”), bearing interest (payable semiannually on March 2 and September 2 in each year, commencing September 2, 2026) at the rates per annum and maturing on the dates and in the amounts set forth in Appendix A attached hereto and incorporated herein.
(b) The purchase price for the Bonds shall be $______ (representing the par amount of the Bonds, plus a net original issue premium of $______ and less an Underwriter’s discount of $_______).
(c) The Bonds are being issued to: (i) pay for costs to finance the design and construction of improvements to underground overhead utilities within the Assessment District, (ii) fund a deposit to the Reserve Fund for the Bonds, (iii) finance capitalized interest for the Bonds through September 2, 2026, and (iv) pay costs of issuance. (d) The Underwriter agrees to assist the City in establishing the issue price of the Bonds and shall execute and deliver to the City at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Appendix B with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the City 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. (e) 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 Appendix A attached hereto. Appendix A also sets forth, identified under the column “Subject to Hold the Offering Price Rule,” as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement) and (ii) the 10% test has not been satisfied and for which the City and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the City to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
(1) the close of the fifth (5th) business day after the sale date; or (2) the 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 City 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. 144
(f) The Underwriter confirms that:
(1) Any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable:
(A) (i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter and (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter, (B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or brokerdealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(2) Any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires. (g) The City acknowledges that, in making the representation set forth in this section, the Underwriter will rely on (1) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (2) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires. (h) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section.
Further, for purposes of this section:
145
(1) “public” means any person other than an underwriter or a related party; (2) “underwriter” means (A) any person that agrees pursuant to a written contract with the City (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 third-party distribution agreement participating in the initial sale of the Bonds to the public); (3) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 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), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) 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 (4) “sale date” means the date of execution of this Purchase Agreement by all parties.
(i) The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable and subject to redemption as provided in, a Fiscal Agent Agreement, dated as of January 1, 2026 (the “Fiscal Agent Agreement”), by and between the City and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the “Fiscal Agent”), approved by a resolution (the “Resolution”), adopted by the City Council of the City (the “City Council”) on December 9, 2025.
(j) Pursuant to the authorization of the City, the Underwriter has distributed copies of the Preliminary Official Statement, dated _______, 2026, relating to the Bonds, which, together with the cover page and all appendices thereto, is herein called the “Preliminary Official Statement” and which, as amended with the prior approval of the Underwriter and executed by the City, will be referred to herein as the “Official Statement.” The City hereby ratifies the use by the Underwriter of the Preliminary Official Statement and the Official Statement and authorizes the Underwriter to use and distribute the Fiscal Agent Agreement, the Official Statement, the Continuing Disclosure Certificate, dated the Closing Date (defined below) (the “Disclosure Certificate”), executed by the City, and other documents or contracts to which the City is a party, including this Purchase Agreement, and all information contained therein, and all other documents, certificates and statements furnished by the City to the Underwriter in connection with the transactions contemplated by this Purchase Agreement, in connection with the offer and sale of the Bonds by the Underwriter. (k) The Underwriter agrees to make a bona fide public offering of the Bonds at the initial offering price set forth in the Official Statement; however, the Underwriter reserves the right to make concessions to dealers and to change such initial offering price as the Underwriter shall deem necessary in connection with the marketing of the Bonds. The Underwriter agrees that, in connection with the public offering and initial delivery of the Bonds to the purchasers thereof from the Underwriter, the Underwriter will deliver or cause to be delivered to each purchaser a copy of the Official Statement prepared in connection with the Bonds. The Underwriter also agrees to notify the City by phone or in writing of the “end of the underwriting period,” as defined in Rule 15c2-12 146
promulgated under the Securities Exchange Act of 1934 (“Rule 15c2-12”). Terms defined in the Official Statement are used herein as so defined.
(l) The City shall deliver, or cause to be delivered, to the Underwriter two (2) executed copies of the final Official Statement prepared in connection with the Bonds, in such form as shall be approved by the City and the Underwriter and such additional conformed copies thereof as the Underwriter may reasonably request. The City deems the Preliminary Official Statement to be “final” as of its date for purposes of Rule 15c2-12. By acceptance of this Purchase Agreement, the City hereby authorizes the use of copies of the Official Statement in connection with the public offering and sale of the Bonds and ratifies and approves the distribution by the Underwriter of the Preliminary Official Statement.
(m) At approximately 8:30 a.m., Pacific Time, on [Closing Date], or at such earlier or later time or date as shall be agreed upon by the City and the Underwriter (such time and date herein referred to as the “Closing Date”), the City shall deliver (i) through the facilities of The Depository Trust Company, all Bonds (being in book-entry form, registered in the name of Cede & Co. and having the CUSIP numbers assigned to them printed thereon) duly executed by the officers of the City as provided in the Fiscal Agent Agreement and with facsimile seals printed thereon, and (ii) to the Underwriter at the offices of Best Best & Krieger LLP, the other documents herein mentioned, and the Underwriter shall accept such delivery and pay the purchase price of the Bonds in same day funds (such delivery and payment being herein referred to as the “Closing”). The Bonds, as so registered, shall be made available to the Underwriter for inspection not later than the first business day before the Closing Date.
2. Representations, Warranties and Agreements of the City. The City represents, warrants and covenants to and agrees with the Underwriter that:
(a) The City is duly organized and validly existing as a municipal corporation under the laws of the State; and has, and at the Closing Date will have, as the case may be, full legal right, power and authority (i) to execute, deliver and perform its obligations under this Purchase Agreement, the Fiscal Agent Agreement, the Resolution and the Disclosure Certificate (collectively, the “City Documents”), (ii) to execute and deliver the Official Statement, and to carry out all transactions contemplated by each of the City Documents, (iii) to adopt the Resolution approving the Fiscal Agent Agreement and enter into the other authorizing documents, (iv) to issue, sell and deliver the Bonds to the Underwriter pursuant to the Fiscal Agent Agreement as provided herein, and (v) to carry out, give effect to and consummate the transactions contemplated by the Official Statement and the City Documents;
(b) The City Council has duly and validly (i) taken or caused to be taken, all proceedings necessary under the Constitution and the laws of the State of California in order to form the Assessment District and to confirm assessments (the “Assessments”) on the parcels located within the Assessment District in the respective amounts shown in the report of the Assessment Engineer, approved by the City Council on September 23, 2025 (the “Engineer’s Report”), to cause each of the Assessments to be a valid lien upon the parcel upon which it was confirmed and to authorize the sale and issuance of the Bonds, (ii) authorized and approved the execution and delivery of the City Documents and the Bonds, (iii) authorized the preparation and delivery of the Preliminary Official Statement and the Official Statement, and (iv) approved the performance by the City of its obligations contained in, and the taking of any and all action as may be necessary to carry out, give effect to and consummate the transactions contemplated by each of the City Documents (including, without limitation, the collection of the Assessments) and the Assessment District has been validly 147
formed, the Assessments have been validly confirmed and constitute liens on the respective parcels within the Assessment District, and (assuming due authorization, execution and delivery by other parties thereto, where necessary) the City Documents and the Bonds will constitute the valid, legal and binding obligations of the City and will be enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights in general and to the application of equitable principles if equitable remedies are sought;
(c) The City is not in breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the performance by the City of its obligations under the Bonds or the City Documents, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound;
(d) Except as may be required under the “blue sky” or other securities laws of any jurisdiction, all approvals, consents, authorizations, elections and orders of or filings or registrations with any State governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the City of its obligations hereunder, or under the City Documents or the Bonds have been obtained and are in full force and effect; (e) Except as disclosed in the Official Statement, there are, to the best knowledge of the City, no outstanding assessment liens against any of the properties within the Assessment District which are senior to or on a parity with the Assessments; (f) Each of the Assessments has been duly and lawfully confirmed, may be collected in installments under the laws of the State, and constitutes a valid and legally binding lien on the property on which it has been confirmed;
(g) As of the date thereof, the Preliminary Official Statement did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The information contained in the Official Statement is, as of the date hereof and will be, as of the Closing Date and as of the date of any supplement or amendment thereto pursuant to paragraph (i) below, true, correct and complete in all material respects and does not, as of the date hereof and will not, as of the Closing Date or as of the date of any supplement or amendment thereto pursuant to paragraph (i) below, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (h) 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 becomes aware as a result of which it may be necessary to supplement the Official Statement in order to make 148
the statements therein, in light of the circumstances existing at such time, not misleading, the City shall forthwith notify the Underwriter of any such event, and shall cooperate fully in furnishing any information available to it for any supplement to the Official Statement necessary so that the statements therein as so amended or 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 City 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);
(i) If the information contained in the Official Statement is amended or supplemented pursuant to paragraph (h) above, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph), at all times subsequent thereto up to and including the Closing Date, the Official Statement so supplemented or amended (including any financial and statistical data contained therein) will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such information therein, in light of the circumstances under which it was presented, not misleading;
(j) The Fiscal Agent Agreement creates a valid pledge of the Assessments and the moneys in the Redemption Fund, the Improvement Fund and the Reserve Fund established pursuant to the Fiscal Agent Agreement, including the investments thereof, subject in all cases to the provisions of the Fiscal Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein; and said pledge constitutes a first lien on and security interest in all of the foregoing;
(k) Except as disclosed in the Preliminary Official Statement and the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending for which the City has been served or, to the knowledge of the City, threatened against the City (i) which would materially adversely affect the ability of the City to perform its obligations under the City Documents or the Bonds, or (ii) seeking to restrain or to enjoin: (A) the development of any of the land within the Assessment District, (B) the issuance, sale or delivery of the Bonds, (C) the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, or (D) the collection or application of the Assessments, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Bonds, the City Documents, any tentative or final subdivision map or building permits applicable to property within the Assessment District, any other instruments relating to the development of any of the property within the Assessment District, or any action contemplated by any of said documents, or (iii) in any way contesting the completeness or accuracy of the Preliminary Official Statement, or the Official Statement or the powers or authority of the City with respect to the Bonds, the City Documents, or any action of the City contemplated by any of said documents; nor is there any action pending or, to the knowledge of the City, threatened against the City which alleges that interest on the Bonds is not excludable from gross income for federal income tax purposes or is not exempt from California personal income taxation;
(l) The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order for the Underwriter to qualify the Bonds for offer and sale under the “blue sky” or other securities laws and regulations of such states and other jurisdictions of the United States of America as the Underwriter may designate; provided, however, the City shall not be required to register as a 149
dealer or a broker of securities or to consent to service of process in connection with any “blue sky” filing;
(m) Any certificate signed by any authorized official of the City authorized to do so shall be deemed a representation and warranty to the Underwriter as to the statements made therein;
(n) The City will apply the proceeds of the Bonds in accordance with the Fiscal Agent Agreement and as described in the Preliminary Official Statement and the Official Statement; (o) Based upon projections which the City believes are reasonable, the Assessments supporting the Bonds, when levied and collected by the City in accordance with the terms of the Assessments formula, assuming normal and reasonable delinquency rates, will provide a yearly cash flow sufficient to make timely payment of principal and interest on the Bonds; (p) The City is not aware of any toxic waste conditions or adverse soils condition which would impair development within the Assessment District; (q) The City will undertake, pursuant to the Disclosure Certificate, to provide annual reports and notice of certain events. Except as described in the Preliminary Official Statement and the Official Statement, the City has not failed to comply, in any material respects, with any continuing disclosure undertaking previously entered into by it pursuant to the provisions of Rule 15c2-12 for each of the past five (5) years;
(r) The Official Statement (except the portions thereof relating to DTC or its book-entry only system and the information under the sections entitled “LEGAL MATTERS” and “TAX MATTERS,” and APPENDIX E - “THE BOOK-ENTRY SYSTEM,” as to which no view need be expressed) is, as of the date thereof, and will be, as of the Closing Date, true, correct and complete in all material respects; and the Official Statement (except the portions thereof mentioned above, as to which no view need be expressed) does not, as of the date thereof, and will not, as of the Closing Date, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and
(s) The Preliminary Official Statement heretofore delivered to the Underwriter has been deemed final by the City as of its date, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of Rule 15c2-12. The City hereby covenants and agrees that, within seven (7) business days from the date hereof, or (upon reasonable written notice from the Underwriter) within sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter, the City shall cause a final printed or electronic form of the Official Statement to be delivered to the Underwriter in a quantity mutually agreed upon by the Underwriter and the City so that the Underwriter may comply with paragraph (b)(4) of Rule 15c2-12 and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board.
3. Conditions to the Obligations of the Underwriter. 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 representations and agreements on the part of the City contained herein, as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other officials of the City made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the 150
City of its obligations to be performed hereunder at or prior to the Closing Date and to the following additional conditions:
(a) At the Closing Date, the City Documents, the Resolution of Formation and any other applicable agreements shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds and with the transactions contemplated thereby and by this Purchase Agreement, all such actions as, in the opinion of Best Best & Krieger LLP, Bond Counsel for the City, shall be necessary and appropriate; (b) Between the date hereof and the Closing Date, the market price or marketability of the Bonds at the initial offering prices set forth in the Official Statement shall not have been materially adversely affected, in the reasonable judgment of the Underwriter (evidenced by a written notice to the City terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following:
(1) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department or the Internal Revenue Service of the United States of America, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon the interest that would be received by the owners of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof;
(2) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America, or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Fiscal Agent Agreement is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, or of the Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws, rules or regulations as amended and then in effect; (3) any amendment to the federal or State Constitution or action by any federal or State court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the City, its property, income, securities (or interest thereon), the validity or enforceability of the Assessments or the ability of the City to construct or acquire the improvements as contemplated by the City Documents, the Resolution of Formation and the Official Statement; (4) any event occurring, or information becoming known, which, in the reasonable judgment of the Underwriter, makes untrue in any material respect any statement or 151
information contained in the Official Statement, or results in the Official Statement containing any untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
(5) there shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (2) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis; (6) the declaration of a general banking moratorium by federal, State of New York or State of California authorities, or the general suspension of trading on any national securities exchange or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on the New York Stock Exchange or other national securities exchange, whether by virtue of determination by that exchange or by order of the Securities and Exchange Commission (the “SEC”) or any other governmental authority having jurisdiction that, in the Underwriter’s reasonable judgment, makes it impracticable for the Underwriter to market the Bonds or enforce contracts for the sale of the Bonds; (7) the imposition by the New York Stock Exchange or other national securities exchange, or any governmental authority, of any material restrictions not now in force with respect to the Bonds or obligations of the general character of the Bonds or securities generally, or the material increase of any such restrictions now in force, including those relating to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; (8) a material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred;
(9) there shall have been any material adverse change in the affairs of the City;
(10) there shall be established any new restriction on transactions in securities materially affecting the free market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or a change to the net capital requirements of, underwriters established by the New York Stock Exchange, the SEC, any other federal or State agency or the Congress of the United States, or by Executive Order; or
(11) any proceeding shall have been commenced or be threatened in writing by the SEC against the City; or
(12) the commencement of any action of the character described in Section 2(r); or
(13) a stop order, release, regulation, or no-action letter by or on behalf of the SEC or any other governmental agency having jurisdiction of the subject matter shall have been issued or made to the effect that the issuance, offering, or sale of the Bonds, including all the underlying obligations as contemplated hereby or by the Official Statement, or any document relating to the issuance, offering or sale of the Bonds is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act of 1933, as amended, the Exchange Act, and the Trust Indenture Act of 1939, as amended.
152
(c) On the Closing Date, the Underwriter shall have received counterpart originals or certified copies of the following documents, in each case satisfactory in form and substance to the Underwriter:
(1) The City Documents and the Resolution of Formation together with a certificate dated as of the Closing Date of the City Clerk of the City, as applicable, to the effect that each such document is a true, correct and complete copy of the one duly adopted by the City Council and that it has not been amended, modified or rescinded since its adoption (except as may have been agreed to by the Underwriter) and is in full force and effect as of the Closing Date; (2) The Official Statement duly executed;
(3) An unqualified approving opinion, dated the Closing Date and addressed to the City, of Best Best & Krieger LLP, Bond Counsel for the City, substantially in the form set forth in Appendix B to the Official Statement and a reliance letter dated the Closing Date and addressed to the Underwriter, to the effect that such approving opinion addressed to the City may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it; (4) A supplemental opinion, dated the Closing Date and addressed to the Underwriter, of Bond Counsel to the effect that (i) the statements contained in the Official Statement on the cover and under the captions “INTRODUCTION,” “THE BONDS,” “SECURITY FOR THE BONDS,” “LEGAL MATTERS” and “TAX MATTERS,” APPENDIX B – “FORM OF BOND COUNSEL OPINION,” and APPENDIX C – “SUMMARY OF THE FISCAL AGENT AGREEMENT,” insofar as such statements purport to summarize certain provisions of the Fiscal Agent Agreement, Bond Counsel’s final approving legal opinion with respect to the Bonds, and federal and State tax law, present an accurate summary of such provisions; (ii) the Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Fiscal Agent Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended; and (iii) the Purchase Agreement and the Disclosure Certificate have been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the other parties thereto, constitute legal, valid and binding agreements of the City enforceable in accordance with their respective terms, subject to laws relating to bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and the application of equitable principles if equitable remedies are sought; (5) An opinion, dated the Closing Date and addressed to the City and the Underwriter, of Anzel Galvan LLP, Disclosure Counsel, to the effect that, without passing upon or assuming any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Official Statement or making any representation that they have independently verified the accuracy, completeness or fairness of any such statements, but on the basis of their participation in telephone conferences with the City’s representatives, Bond Counsel, representatives of the Underwriter and others, during which conferences the contents of the Official Statement and related matters were discussed and in reliance thereon and on the records, documents, certificates and opinions herein mentioned (as set forth above), during the course of their representation of the City on the matter, no facts came to the attention of the attorneys in such firm rendering legal services in connection with such representation which caused such firm to believe that the Preliminary Official Statement as of its date and as of the date of this Purchase Agreement and the Official Statement as of its date and as of the Closing Date contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion need be expressed as to the Appendices of the Preliminary Official Statement and the Official Statement or any financial, 153
statistical, economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion or any information about feasibility, valuation, appraisals, absorption, real estate, archaeological or environmental matters, or any information about book-entry, tax exemption or The Depository Trust Company included or referred to therein);
(6) A Certificate, dated the Closing Date and signed by an authorized representative of the City, ratifying the use and distribution by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the offering and sale of the Bonds; and certifying that (i) the representations and warranties of the City contained in Section 2 hereof are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best of his or her knowledge, no event has occurred since the date of the Official Statement affecting the matters contained therein which should be disclosed in the Official Statement for the purposes for which it is to be used in order to make the statements and information contained in the Official Statement not misleading in any material respect and the Bonds and the City Documents conform as to form and tenor to the descriptions thereof contained in the Official Statement and (iii) the City has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under the City Documents and the Official Statement at or prior to the Closing Date;
(7) An opinion, dated the Closing Date and addressed to the Underwriter, of the City Attorney, to the effect that (i) to the best of his or her knowledge, except as described in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending for which the City has been served or threatened in any way affecting the existence of the City or the titles of its officers to their respective offices, or seeking to restrain or to enjoin the development of property within the Assessment District, the issuance, sale or delivery of the Bonds or the exclusion from gross income for federal income tax purposes or State personal income taxes of interest on the Bonds, or the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, or the collection or application of the Assessments to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Fiscal Agent Agreement, the Resolution of Formation, the Purchase Agreement or any action of the City or which the City contemplated by any of said documents; (ii) the City is duly organized and validly existing under the laws of the State, with, as the case may be, full legal right, power and authority to issue the Bonds and to perform all of its obligations under the Purchase Agreement, the Bonds and the Fiscal Agent Agreement; (iii) the Resolution, which authorized issuance of the Bonds and approved the form and substance of the Fiscal Agent Agreement, the Purchase Agreement and the Disclosure Certificate has been duly adopted by the City Council of the City; (iv) to the best of his or her knowledge after due inquiry, the City has obtained all approvals, consents, authorizations, elections and orders of or filings or registrations with any State governmental authority, board, agency or commission having jurisdiction which constitute a condition precedent to the levy of the Assessments, the issuance of the Bonds or the performance by the City of its obligations thereunder or under the Fiscal Agent Agreement, except that no opinion is expressed regarding compliance with “blue sky” or other securities laws or regulations whatsoever; (v) the City Council has duly and validly adopted the resolutions related to the formation of the Assessment District and the Resolution of Formation at meetings of the City Council which were called and held pursuant to law and with all public notice required by law, and the resolutions relating to the formation of the Assessment District and the Resolution of Formation are now in full force and effect and have not been amended; (vi) the City has duly authorized, executed and delivered the Purchase Agreement, the Fiscal Agent Agreement and the Bonds and has duly authorized the preparation and delivery of the Official Statement; (vii) 154
the Purchase Agreement, the Disclosure Certificate, the Fiscal Agent Agreement and the Bonds constitute legal, valid and binding agreements of the City, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights in general and to the application of equitable principles if equitable remedies are sought; and (viii) the Assessment District has been validly formed, and the Assessments have been duly and validly authorized in accordance with the provisions of the Improvement Bond Act of 1915, as amended, being Division 10 of the California Streets and Highways Code and, except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles and by the exercise of judicial discretion in appropriate cases, a lien to secure payment of the Assessments has been imposed on all the parcels in the Assessment District specified in the Official Statement; (8) One counterpart original or copy certified by the Clerk of the City of a transcript of all proceedings relating to the authorization, issuance, sale and delivery of the Bonds; (9) A certified copy of the general resolution of the Fiscal Agent authorizing the execution and delivery of any City Documents to which the Fiscal Agent is a party; (10) An opinion, dated the Closing Date and addressed to the Underwriter and the City, of counsel to the Fiscal Agent in form and substance acceptable to the Underwriter; (11) The Certificate of the Fiscal Agent, dated the Closing Date, to the effect that (i) the Fiscal Agent is duly organized and existing as a national association under the laws of the State having the full power and authority to perform its duties under the Fiscal Agent Agreement; (ii) the Fiscal Agent is duly authorized to accept the obligations created by the Fiscal Agent Agreement and to authenticate the Bonds pursuant to the terms of the Fiscal Agent Agreement; (iii) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Fiscal Agent that has not been obtained is or will be required for the authentication of the Bonds or the consummation by the Fiscal Agent of the other transactions contemplated to be performed by the Fiscal Agent in connection with the authentication of the Bonds and the acceptance and performance of the obligations created by the Fiscal Agent Agreement; and (iv) compliance with the terms of the Fiscal Agent Agreement will not conflict with, or result in a violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which the Fiscal Agent is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Fiscal Agent or any of its activities or properties; (12) The Disclosure Certificate;
(13) A certificate of NV5, Inc., dated the Closing Date, to the effect that (i) the statements contained in the Preliminary Official Statement and the Official Statement relating to the size and location of the Assessment District, the amounts of the Assessments and the Engineer’s Report and all other information furnished by it therein do not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (ii) in the opinion of NV5, Inc., the Assessments, as set forth in the Engineer's Report, have been spread in conformance with the requirements of the Municipal Improvement Act of 1913 (Division 12 of the California Streets and Highways Code);
155
(14) A certificate of the City, dated the Closing Date, in a form acceptable to Bond Counsel, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended;
(15) A copy of Internal Revenue Service Form 8038-G, executed by an authorized officer of the City;
(16) An opinion of Kutak Rock LLP, counsel to the Underwriter, addressed to the Underwriter and in form and substance acceptable to the Underwriter; and (17) Such additional legal opinions, certificates, instruments and other documents as the Underwriter or Bond Counsel may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the statements and information contained in the Preliminary Official Statement and the Official Statement, of the City’s representations and warranties contained herein, and the due performance or satisfaction by the City and the Fiscal Agent at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by either of them in connection with the transactions contemplated hereby by the City Documents and by the Official Statement.
If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Underwriter nor the City shall be under any further obligation hereunder, except that the respective obligations of the City and the Underwriter set forth in Section 4 and Section 5 hereof shall continue in full force and effect.
4. Conditions of the City’s Obligations. The City’s obligations hereunder are subject to the Underwriter’s performance of their obligations hereunder, and are also subject to the following conditions:
(a) As of the Closing Date, no litigation shall be pending or, to the knowledge of the duly authorized officer of the City executing the certificate referred to in Section 3 hereof, threatened, to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any authority for or the validity of the Bonds or the City Documents or the existence or powers of the City; and
(b) As of the Closing Date, the City shall receive the approving opinions of Bond Counsel and Disclosure Counsel referred to in Section 3 hereof, dated as of the Closing Date.
5. Expenses.
Whether or not the Bonds are delivered to the Underwriter set forth herein:
(a) The Underwriter shall be under no obligation to pay, and the City shall pay or cause to be paid (out of any legally available funds of the City) all expenses incident to the performance of the City’s obligations hereunder, including, but not limited to, the cost of printing and delivering the Bonds to DTC, the cost of printing, distribution and delivery of the Fiscal Agent Agreement, the Preliminary Official Statement, the Official Statement and all other agreements and documents contemplated hereby (and drafts of any thereof) in such reasonable quantities as requested by the Underwriter; the cost of the overlapping debt statement and the fees and disbursements of the 156
Fiscal Agent for the Bonds, Disclosure Counsel, the City’s municipal advisor, the City’s Assessment District administrator and Bond Counsel and any accountants, engineers or any other experts or consultants the City have retained in connection with the Bonds; and (b) The City shall be under no obligation to pay, and the Underwriter shall pay, CUSIP Bureau and CDIAC fees; the cost of preparation of any “blue sky” or legal investment memoranda; expenses to qualify the Bonds for sale under any “blue sky” or other state securities laws; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds (except those specifically enumerated in paragraph (a) of this Section), including the fees and disbursements of its counsel and any advertising expenses.
The City acknowledges that the Underwriter will pay from the underwriter’s expense allocation of the underwriting discount certain fees, including the applicable per bond assessment charged by the California Debt and Investment Advisory Commission.
6. Notices. Any notice or other communication to be given to the City under this Purchase Agreement may be given by delivering the same in writing to the City of Laguna Beach, 505 Forest Avenue, Laguna Beach, California 92651, Attention: Assistant City Manager/Chief Financial Officer; 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: Municipal Capital Markets Group.
7. Parties in Interest. This Purchase Agreement is made solely for the benefit of the City and the Underwriter (including their successors or assigns), and no other person shall acquire or have any right hereunder or by virtue hereof. This Purchase Agreement shall not be assigned by the City or the Underwriter.
8. Survival of Representations, Warranties and Agreements. The representations, warranties and agreements of the City set forth in or made pursuant to this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or termination of this Purchase Agreement and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the City and regardless of delivery of and payment for the Bonds.
9. Effective. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the City and shall be valid and enforceable as of the time of such acceptance. This Purchase Agreement may be signed in counterparts by each party.
10. No Prior Agreements. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understandings between the parties hereto in relation to the sale of Bonds by the City and represents the entire agreement of the parties as to the subject matter herein.
11. Governing Law. This Purchase Agreement shall be governed by the laws of the State of California.
157
Signature Page of Bond Purchase Agreement relating to
City of Laguna Beach
Underground Utility Assessment District No. 2021-1 (West Street) Limited Obligation Improvement Bonds
12. Counterparts. This Purchase Agreement may be executed simultaneously in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument.
Very truly yours,
OPPENHEIMER & CO. INC.
By: __________________________________
Authorized Officer
ACCEPTED:
CITY OF LAGUNA BEACH
By: __________________________________
Authorized Officer
Time of Execution: _____________ p.m.
California time
158
APPENDIX A
MATURITY SCHEDULE
$__________
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS
Maturity
(September 2)
Principal
Amount
Interest
Rate Yield Price
10% Test
Satisfied*
10% Test
Not
Satisfied
Subject to
Hold-TheOfferingPrice Rule
2027
2028
2029
2030
2031
2032
2033
2034
20__(T)
20__(T)
20__(T)
20__(T)
_________________
(T) Term Bond.
(C) Priced to optional call at [par] on September 2, 20__. * At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement.
159
APPENDIX B
FORM OF ISSUE PRICE CERTIFICATE
$_______
CITY OF LAGUNA BEACH
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1
(WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS
The undersigned, on behalf of Oppenheimer & Co. Inc. (“Oppenheimer”) hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (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. Initial Offering Price of the Hold-the-Offering-Price Maturities. (a) Oppenheimer offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.
(b) As set forth in the Bond Purchase Agreement, dated [BPA Date], by and among Oppenheimer, the Issuer and the City of Laguna Beach, Oppenheimer has agreed in writing that, (i) for each Maturity of the Hold-the-Offering-Price Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold-the-offering-price rule.
Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold-the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.
3. Defined Terms.
(a) Issuer means the City of Laguna Beach.
(b) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(c) Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.” (d) Holding Period means, with respect to a Hold-the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the 160
Sale Date, or (ii) the date on which Oppenheimer has sold at least 10% of such Hold-the-OfferingPrice Maturity to the Public at prices that are no higher than the Initial Offering Price for such Holdthe-Offering-Price Maturity. (e) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
(f) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (g) 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 [BPA Date]. (h) 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 the interpretation by Oppenheimer 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 attached Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Bond Counsel, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. Except as expressly set forth above, the certifications set forth herein may not be relied upon or used by any third party or for any other purpose.
Dated: [Closing Date] OPPENHEIMER & CO. INC., as underwriter By:
Authorized Signatory
161
SCHEDULE A
SALE PRICES OF THE GENERAL RULE MATURITIES AND INITIAL OFFERING
PRICES OF THE HOLD-THE-OFFERING-PRICE MATURITIES
[TO BE ATTACHED AT CLOSING]
162
SCHEDULE B
PRICING WIRE OR EQUIVALENT COMMUNICATION
[TO BE ATTACHED AT CLOSING]
163
Prepared by Oppenheimer & Co. Inc. Page 1
SOURCES AND USES OF FUNDS
City of Laguna Beach
UAD No. 2021-1 (West Street) Limited Obligation Bonds, Series 2026 Dated Date 01/27/2026
Delivery Date 01/27/2026
Sources:
Bond Proceeds:
Par Amount 3,890,000.00
Premium 165,573.30
4,055,573.30
Other Sources of Funds:
Contribution from City 707,536.00
Contribution for General Benefit 707,536.00
Property Owner Prepayment 1,110,052.85
2,525,124.85
6,580,698.15
Uses:
Project Fund Deposits:
Construction Costs 5,808,679.11
Project Incidental Expenses 184,160.00
5,992,839.11
Other Fund Deposits:
Cash Funded Reserve 233,400.00
Capitalized Interest Fund 116,159.72
349,559.72
Delivery Date Expenses:
Cost of Issuance 188,347.20
Underwriter's Discount 48,625.00
236,972.20
Other Uses of Funds:
Additional Proceeds 1,327.12
6,580,698.15
Notes:
-Reserve Fund Sized on 6% of Par Amount
-7-Year Call at 103%, Declines to Par in Year 10
-Capitalized Interest Covers First Interest Pmt
-1.25% Underwriter's Discount
164
Prepared by Oppenheimer & Co. Inc. Page 2
COST OF ISSUANCE
City of Laguna Beach
UAD No. 2021-1 (West Street) Limited Obligation Bonds, Series 2026 Cost of Issuance $/1000 Amount
City Staff/Administrative 10.28278 40,000.00
Bond Counsel 8.99743 35,000.00
Disclosure Counsel 9.64010 37,500.00
Municipal Advisor 10.92545 42,500.00
Assessment District Admin 2.57069 10,000.00
Fiscal Agent 1.28535 5,000.00
Fiscal Agent's Counsel 1.79949 7,000.00
Printer 1.28535 5,000.00
Contingency 1.63167 6,347.20
48.41830 188,347.20
165
Prepared by Oppenheimer & Co. Inc. Page 3
BOND SUMMARY STATISTICS
City of Laguna Beach
UAD No. 2021-1 (West Street) Limited Obligation Bonds, Series 2026 Dated Date 01/27/2026
Delivery Date 01/27/2026
First Coupon 09/02/2026
Last Maturity 09/02/2050
Arbitrage Yield 4.403633%
True Interest Cost (TIC) 4.708291%
Net Interest Cost (NIC) 4.804641%
All-In TIC 5.183441%
Average Coupon 5.000000%
Average Life (years) 15.389
Weighted Average Maturity (years) 15.277
Duration of Issue (years) 10.492
Par Amount 3,890,000.00
Bond Proceeds 4,055,573.30
Total Interest 2,993,159.72
Net Interest 2,876,211.42
Total Debt Service 6,883,159.72
Maximum Annual Debt Service 285,000.00
Average Annual Debt Service 279,834.84
Underwriter's Fees (per $1000)
Average Takedown
Other Fee 12.500000
Total Underwriter's Discount 12.500000
Bid Price 103.006383
Par Average Average
Bond Component Value Price Coupon Life
Serial Bonds 960,000.00 107.063 5.000% 5.925
2040 Term Bond 755,000.00 105.614 5.000% 12.697
2045 Term Bond 955,000.00 103.071 5.000% 17.691
2050 Term Bond 1,220,000.00 102.136 5.000% 22.700
3,890,000.00 15.389
All-In Arbitrage
TIC TIC Yield
Par Value 3,890,000.00 3,890,000.00 3,890,000.00
+ Accrued Interest
+ Premium (Discount) 165,573.30 165,573.30 165,573.30
- Underwriter's Discount -48,625.00 -48,625.00
- Cost of Issuance Expense -188,347.20
- Other Amounts
Target Value 4,006,948.30 3,818,601.10 4,055,573.30
Target Date 01/27/2026 01/27/2026 01/27/2026
Yield 4.708291% 5.183441% 4.403633%
166
Prepared by Oppenheimer & Co. Inc. Page 4
BOND DEBT SERVICE
City of Laguna Beach
UAD No. 2021-1 (West Street) Limited Obligation Bonds, Series 2026 Period
Ending Principal Coupon Interest Debt Service
09/02/2026 116,159.72 116,159.72
09/02/2027 90,000 5.000% 194,500.00 284,500.00
09/02/2028 90,000 5.000% 190,000.00 280,000.00
09/02/2029 95,000 5.000% 185,500.00 280,500.00
09/02/2030 100,000 5.000% 180,750.00 280,750.00
09/02/2031 105,000 5.000% 175,750.00 280,750.00
09/02/2032 110,000 5.000% 170,500.00 280,500.00
09/02/2033 115,000 5.000% 165,000.00 280,000.00
09/02/2034 125,000 5.000% 159,250.00 284,250.00
09/02/2035 130,000 5.000% 153,000.00 283,000.00
09/02/2036 135,000 5.000% 146,500.00 281,500.00
09/02/2037 145,000 5.000% 139,750.00 284,750.00
09/02/2038 150,000 5.000% 132,500.00 282,500.00
09/02/2039 160,000 5.000% 125,000.00 285,000.00
09/02/2040 165,000 5.000% 117,000.00 282,000.00
09/02/2041 175,000 5.000% 108,750.00 283,750.00
09/02/2042 180,000 5.000% 100,000.00 280,000.00
09/02/2043 190,000 5.000% 91,000.00 281,000.00
09/02/2044 200,000 5.000% 81,500.00 281,500.00
09/02/2045 210,000 5.000% 71,500.00 281,500.00
09/02/2046 220,000 5.000% 61,000.00 281,000.00
09/02/2047 230,000 5.000% 50,000.00 280,000.00
09/02/2048 245,000 5.000% 38,500.00 283,500.00
09/02/2049 255,000 5.000% 26,250.00 281,250.00
09/02/2050 270,000 5.000% 13,500.00 283,500.00
3,890,000 2,993,159.72 6,883,159.72
167
Prepared by Oppenheimer & Co. Inc. Page 5
BOND DEBT SERVICE
City of Laguna Beach
UAD No. 2021-1 (West Street) Limited Obligation Bonds, Series 2026 Period Annual
Ending Principal Coupon Interest Debt Service Debt Service 09/02/2026 116,159.72 116,159.72 116,159.72
03/02/2027 97,250.00 97,250.00
09/02/2027 90,000 5.000% 97,250.00 187,250.00 284,500.00 03/02/2028 95,000.00 95,000.00
09/02/2028 90,000 5.000% 95,000.00 185,000.00 280,000.00 03/02/2029 92,750.00 92,750.00
09/02/2029 95,000 5.000% 92,750.00 187,750.00 280,500.00 03/02/2030 90,375.00 90,375.00
09/02/2030 100,000 5.000% 90,375.00 190,375.00 280,750.00 03/02/2031 87,875.00 87,875.00
09/02/2031 105,000 5.000% 87,875.00 192,875.00 280,750.00 03/02/2032 85,250.00 85,250.00
09/02/2032 110,000 5.000% 85,250.00 195,250.00 280,500.00 03/02/2033 82,500.00 82,500.00
09/02/2033 115,000 5.000% 82,500.00 197,500.00 280,000.00 03/02/2034 79,625.00 79,625.00
09/02/2034 125,000 5.000% 79,625.00 204,625.00 284,250.00 03/02/2035 76,500.00 76,500.00
09/02/2035 130,000 5.000% 76,500.00 206,500.00 283,000.00 03/02/2036 73,250.00 73,250.00
09/02/2036 135,000 5.000% 73,250.00 208,250.00 281,500.00 03/02/2037 69,875.00 69,875.00
09/02/2037 145,000 5.000% 69,875.00 214,875.00 284,750.00 03/02/2038 66,250.00 66,250.00
09/02/2038 150,000 5.000% 66,250.00 216,250.00 282,500.00 03/02/2039 62,500.00 62,500.00
09/02/2039 160,000 5.000% 62,500.00 222,500.00 285,000.00 03/02/2040 58,500.00 58,500.00
09/02/2040 165,000 5.000% 58,500.00 223,500.00 282,000.00 03/02/2041 54,375.00 54,375.00
09/02/2041 175,000 5.000% 54,375.00 229,375.00 283,750.00 03/02/2042 50,000.00 50,000.00
09/02/2042 180,000 5.000% 50,000.00 230,000.00 280,000.00 03/02/2043 45,500.00 45,500.00
09/02/2043 190,000 5.000% 45,500.00 235,500.00 281,000.00 03/02/2044 40,750.00 40,750.00
09/02/2044 200,000 5.000% 40,750.00 240,750.00 281,500.00 03/02/2045 35,750.00 35,750.00
09/02/2045 210,000 5.000% 35,750.00 245,750.00 281,500.00 03/02/2046 30,500.00 30,500.00
09/02/2046 220,000 5.000% 30,500.00 250,500.00 281,000.00 03/02/2047 25,000.00 25,000.00
09/02/2047 230,000 5.000% 25,000.00 255,000.00 280,000.00 03/02/2048 19,250.00 19,250.00
09/02/2048 245,000 5.000% 19,250.00 264,250.00 283,500.00 03/02/2049 13,125.00 13,125.00
09/02/2049 255,000 5.000% 13,125.00 268,125.00 281,250.00 03/02/2050 6,750.00 6,750.00
09/02/2050 270,000 5.000% 6,750.00 276,750.00 283,500.00 3,890,000 2,993,159.72 6,883,159.72 6,883,159.72
168
Prepared by Oppenheimer & Co. Inc. Page 6
NET DEBT SERVICE
City of Laguna Beach
UAD No. 2021-1 (West Street) Limited Obligation Bonds, Series 2026 Total Cash Funded Capitalized Net Annual
Date Principal Coupon Interest Debt Service Reserve Interest Fund Debt Service Net D/S 09/02/2026 116,159.72 116,159.72 116,159.72
03/02/2027 97,250.00 97,250.00 97,250
09/02/2027 90,000 5.000% 97,250.00 187,250.00 187,250 284,500 03/02/2028 95,000.00 95,000.00 95,000
09/02/2028 90,000 5.000% 95,000.00 185,000.00 185,000 280,000 03/02/2029 92,750.00 92,750.00 92,750
09/02/2029 95,000 5.000% 92,750.00 187,750.00 187,750 280,500 03/02/2030 90,375.00 90,375.00 90,375
09/02/2030 100,000 5.000% 90,375.00 190,375.00 190,375 280,750 03/02/2031 87,875.00 87,875.00 87,875
09/02/2031 105,000 5.000% 87,875.00 192,875.00 192,875 280,750 03/02/2032 85,250.00 85,250.00 85,250
09/02/2032 110,000 5.000% 85,250.00 195,250.00 195,250 280,500 03/02/2033 82,500.00 82,500.00 82,500
09/02/2033 115,000 5.000% 82,500.00 197,500.00 197,500 280,000 03/02/2034 79,625.00 79,625.00 79,625
09/02/2034 125,000 5.000% 79,625.00 204,625.00 204,625 284,250 03/02/2035 76,500.00 76,500.00 76,500
09/02/2035 130,000 5.000% 76,500.00 206,500.00 206,500 283,000 03/02/2036 73,250.00 73,250.00 73,250
09/02/2036 135,000 5.000% 73,250.00 208,250.00 208,250 281,500 03/02/2037 69,875.00 69,875.00 69,875
09/02/2037 145,000 5.000% 69,875.00 214,875.00 214,875 284,750 03/02/2038 66,250.00 66,250.00 66,250
09/02/2038 150,000 5.000% 66,250.00 216,250.00 216,250 282,500 03/02/2039 62,500.00 62,500.00 62,500
09/02/2039 160,000 5.000% 62,500.00 222,500.00 222,500 285,000 03/02/2040 58,500.00 58,500.00 58,500
09/02/2040 165,000 5.000% 58,500.00 223,500.00 223,500 282,000 03/02/2041 54,375.00 54,375.00 54,375
09/02/2041 175,000 5.000% 54,375.00 229,375.00 229,375 283,750 03/02/2042 50,000.00 50,000.00 50,000
09/02/2042 180,000 5.000% 50,000.00 230,000.00 230,000 280,000 03/02/2043 45,500.00 45,500.00 45,500
09/02/2043 190,000 5.000% 45,500.00 235,500.00 235,500 281,000 03/02/2044 40,750.00 40,750.00 40,750
09/02/2044 200,000 5.000% 40,750.00 240,750.00 240,750 281,500 03/02/2045 35,750.00 35,750.00 35,750
09/02/2045 210,000 5.000% 35,750.00 245,750.00 245,750 281,500 03/02/2046 30,500.00 30,500.00 30,500
09/02/2046 220,000 5.000% 30,500.00 250,500.00 250,500 281,000 03/02/2047 25,000.00 25,000.00 25,000
09/02/2047 230,000 5.000% 25,000.00 255,000.00 255,000 280,000 03/02/2048 19,250.00 19,250.00 19,250
09/02/2048 245,000 5.000% 19,250.00 264,250.00 264,250 283,500 03/02/2049 13,125.00 13,125.00 13,125
09/02/2049 255,000 5.000% 13,125.00 268,125.00 268,125 281,250 03/02/2050 6,750.00 6,750.00 6,750
09/02/2050 270,000 5.000% 6,750.00 276,750.00 233,400 43,350 50,100 3,890,000 2,993,159.72 6,883,159.72 233,400 116,159.72 6,533,600 6,533,600 169
Prepared by Oppenheimer & Co. Inc. Page 7
BOND PRICING
City of Laguna Beach
UAD No. 2021-1 (West Street) Limited Obligation Bonds, Series 2026 Maturity Yield to Call Call Premium
Bond Component Date Amount Rate Yield Price Maturity Date Price (-Discount) Serial Bonds:
09/02/2027 90,000 5.000% 3.120% 102.904 2,613.60
09/02/2028 90,000 5.000% 3.260% 104.296 3,866.40
09/02/2029 95,000 5.000% 3.000% 106.768 6,429.60
09/02/2030 100,000 5.000% 3.460% 106.490 6,490.00
09/02/2031 105,000 5.000% 3.550% 107.298 7,662.90
09/02/2032 110,000 5.000% 3.650% 107.848 8,632.80
09/02/2033 115,000 5.000% 3.730% 108.331 9,580.65
09/02/2034 125,000 5.000% 3.780% 108.880 11,100.00
09/02/2035 130,000 5.000% 3.880% 108.788 C 3.893% 09/02/2032 103.000 11,424.40 960,000 67,800.35
2040 Term Bond:
09/02/2036 135,000 5.000% 4.280% 105.614 C 4.472% 09/02/2035 100.000 7,578.90 09/02/2037 145,000 5.000% 4.280% 105.614 C 4.472% 09/02/2035 100.000 8,140.30 09/02/2038 150,000 5.000% 4.280% 105.614 C 4.472% 09/02/2035 100.000 8,421.00 09/02/2039 160,000 5.000% 4.280% 105.614 C 4.472% 09/02/2035 100.000 8,982.40 09/02/2040 165,000 5.000% 4.280% 105.614 C 4.472% 09/02/2035 100.000 9,263.10 755,000 42,385.70
2045 Term Bond:
09/02/2041 175,000 5.000% 4.600% 103.071 C 4.757% 09/02/2035 100.000 5,374.25 09/02/2042 180,000 5.000% 4.600% 103.071 C 4.757% 09/02/2035 100.000 5,527.80 09/02/2043 190,000 5.000% 4.600% 103.071 C 4.757% 09/02/2035 100.000 5,834.90 09/02/2044 200,000 5.000% 4.600% 103.071 C 4.757% 09/02/2035 100.000 6,142.00 09/02/2045 210,000 5.000% 4.600% 103.071 C 4.757% 09/02/2035 100.000 6,449.10 955,000 29,328.05
2050 Term Bond:
09/02/2046 220,000 5.000% 4.720% 102.136 C 4.850% 09/02/2035 100.000 4,699.20 09/02/2047 230,000 5.000% 4.720% 102.136 C 4.850% 09/02/2035 100.000 4,912.80 09/02/2048 245,000 5.000% 4.720% 102.136 C 4.850% 09/02/2035 100.000 5,233.20 09/02/2049 255,000 5.000% 4.720% 102.136 C 4.850% 09/02/2035 100.000 5,446.80 09/02/2050 270,000 5.000% 4.720% 102.136 C 4.850% 09/02/2035 100.000 5,767.20 1,220,000 26,059.20
3,890,000 165,573.30
Dated Date 01/27/2026
Delivery Date 01/27/2026
First Coupon 09/02/2026
Par Amount 3,890,000.00
Premium 165,573.30
Production 4,055,573.30 104.256383%
Underwriter's Discount -48,625.00 -1.250000%
Purchase Price 4,006,948.30 103.006383%
Accrued Interest
Net Proceeds 4,006,948.30
170
Total Estimated Par Amount $3,890,000
Total Estimated Net Premium or (Net Original Discount) $165,573 Total Estimated Bond Proceeds $4,055,573
A. True Interest Cost (TIC) of the Bonds 4.71% 1
B. Sum of all fees and charges paid to 3rd parties $238,299 Cost of Issuance 188,347 1
Underwriter's Discount 48,625 1
Additional Proceeds 1,327 1
C. Bond Proceeds Net of Reserves, Capitalized Interest and 3rd Party Fees and Charges $3,467,714
Bond proceeds 4,055,573 1
Less Debt Service Reserve Fund (233,400) 1
Less Sum of all fees and charges paid to 3rd parties (238,299) 1 Less Capitalized Interest (116,160) 1
D. Total Payment Amount $6,767,000
Total Principal and Interest to Maturity** 6,767,000 1
Sources:
1 Preliminary Cash Flows from Oppenheimer as of 11/20/25 City of Laguna Beach
Underground Utility Assessment District No. 2021-1 (West Street) Limited Obligation Improvement Bonds
SB 450 Summary / Government Code 5852.1*
*Summary reflects good faith estimates as of 11/20/25 and all costs associated with the financing; subject to change based on interest rates, market conditions, and other factors. Estimates do not impose any limitations or constraints upon authorized parameters, which differ from the estimates above ** Less Capitalized Interest, if any
Attachment 7 171
STAFF REPORT
Meeting Date:
December 9, 2025
BUSINESS
26 SUBJECT: ADOPTION OF THE 2025 WASTEWATER MASTER PLAN RECOMMENDATION: It is recommended that the City Council:
1. Adopt the 2025 Wastewater Master Plan; and
2. Find that adoption of the 2025 Wastewater Master Plan is a government activity that will not result in a direct or indirect physical change in the environment and therefore does not constitute a “Project” under the California Environmental Quality Act pursuant to Sections 15060(c)(2) and 15060(c)(3). Individual projects identified in the Plan will undergo separate CEQA review.
SUMMARY OF THE MATTER
This report presents the 2025 Wastewater Master Plan (WMP) and recommends its adoption by the City Council. The plan provides a comprehensive evaluation of the City’s wastewater system, and establishes a long-term strategy for maintaining regulatory compliance, reliability, and capacity. The WMP supports compliance with the Statewide General Waste Discharge Requirements (Order 2022-0103-DWQ) by documenting a planning-level assessment that will guide updates to the City’s Sewer System Management Plan (SSMP). It also forms the technical basis for future wastewater capital improvement planning and the ongoing Sewer Rate Study, to be presented to the City Council in 2026 for consideration.
DISCUSSION
On August 13, 2024, the City Council awarded a professional services agreement to Dudek to prepare the 2025 WMP. The WMP builds on the 2002 and 2009 Sewer System Strategic Plans and reflects over $60 million in wastewater system investments completed since 2002. These investments include major lift station improvements at Main Beach and Victoria I, citywide sewer pipeline lining, comprehensive CCTV inspection and reporting, and various generator replacement and rehabilitation projects to improve overall system reliability.
A progress update was presented at the City Council study session on August 12, 2025. Since that time, Dudek has finalized the hydraulic modeling, completed remaining field condition assessments, and capital project prioritization for all major components of the wastewater system, including 18.7 miles of pipelines, 400 manholes, 26 lift stations, and 25 stormwater diversion structures.
Summary of Findings
Hydraulic Capacity – Flow monitoring and hydraulic modeling confirmed sufficient system capacity under existing and projected (buildout) dry- and wet-weather flow conditions. No capacity issues were observed in the portion of the collection system modeled for the WMP. Based on the capacity stress test and sewer spill analysis performed, installation of five smart manhole covers is recommended at key locations (three along Coast Highway, one on Third Street, and one on High Drive) to monitor flows during peak wetweather conditions and to reduce spill risk.
ADOPTION OF THE 2025 WASTEWATER MASTER PLAN
December 9, 2025