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Section 4. Indenture. The Council hereby approves the form of the Indenture by and between the City, the Authority and U. S. Bank Trust Company, National Association, as trustee ( the ' Indenture") with respect to the Reassessment Bonds, in substantially the form on file with the City Clerk, including such additions or changes as are necessary or advisable, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Indenture by the Authorized O cer. The date, manner of payment, principal amount, interest rate or rates, interest payment dates, denominations, form, registration privileges, manner of execution, place of payment, terms of redemption, costs of issuing and other terms of the Reassessment Bonds shall be as provided in the Indenture as finally executed and delivered. The terms and provisions of the Indenture, as executed, are incorporated herein by this reference as if fully set forth herein. An Authorized Officer is hereby authorized and directed to execute the Indenture on behalf of the City and the City Clerk is hereby authorized and directed to attest thereto.
Section 5. Escrow Agreement. The form of Escrow Agreement by and between the City, the Authority and U. S. Bank Trust Company, National Association, as escrow agent, in the form presented to this Council at this meeting is hereby approved. An Authorized Officer is hereby authorized and directed to execute the Escrow Agreement on behalf of the City and the City Clerk is hereby authorized and directed to attest thereto. The Prior Reassessment Bond will be redeemed on the date specified in the Escrow Agreement, which date is expected to be September 2, 2023. An Authorized Officer is hereby authorized and directed to cause the same to be completed and executed on behalf of the City in substantially said form, with such additions thereto or changes therein as are approved by the Authorized Officer upon consultation with Bond Counsel
Section 6. Sale of Reassessment Bonds. The sale of the Reassessment Bonds to the Authority is hereby approved. The form of the Reassessment Bonds Purchase Agreement ( the Purchase Contract"), providing for the sale of the Reassessment Bonds by the City to the Authority presented at this meeting is hereby approved and each of the Authorized Officers is hereby authorized to execute the Purchase Contract in the form so approved, with such additions thereto and changes therein as are necessary to conform the Purchase Contract to the dates, amounts and interest rates applicable to the Reassessment Bonds as of the sale date or to cure any defect or ambiguity therein. Approval of such additions and changes shall be conclusively evidenced by the execution and delivery of the Purchase Contract by one or more of such officers.
Section 7. Official Statement. This City Council hereby approves the preliminary Official Statement prepared in connection with the Authority Bonds and the Reassessment Bonds in substantially the form submitted to this City Council, together with any changes therein or additions thereto deemed advisable by an Authorized OfFicer. This City Council hereby approves and authorizes the distribution by Stifel, Nicolaus & Company, Incorporated, as underwriter of the Authority Bonds, of the preliminary Official Statement to prospective purchasers of the Authority Bonds, and authorizes and directs an Authorized Officer on behalf of Page3of5
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the City to deem the Official Statement final" pursuant to Rule 15c2- 12 under the Securities Exchange Act of 1934 ( the Rule") prior to its distribution to prospective purchasers of the Authority Bonds. The execution of the final Official Statement, which shall include then current financial information regarding the City and such other changes and additions thereto deemed advisable by an Authorized Officer and such information permitted to be excluded from the preliminary version of the Official Statement pursuant to the Rule, shall be conclusive evidence of the approval of the Official Statement by the City.
Section 8. Continuing Disclosure. The Council hereby approves the form of the Continuing Disclosure Certificate with respect to the Authority Bonds and the Reassessment Bonds in substantially the form thereof attached to the Official Statement on file with the City Clerk. An Authorized OfFicer is hereby authorized and directed to complete and execute the Continuing Disclosure Certificate on behalf of the City with such changes, additions or deletions as may be approved by the Authorized Officer in consultation with the City' s bond counsel.
Section 9. Actions. All actions heretofore taken by the officers and agents of the City with respect to the establishment of the District and the sale and issuance of the Reassessment Bonds are hereby approved, confirmed and ratified, and the appropriate officers of the City are hereby authorized and directed to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Reassessment Bonds in accordance with this resolution, and any certificate, agreement, and other document described in the documents herein approved. All actions to be taken by an Authorized Officer, as defined herein, may be taken by such Authorized Officer or any designee, with the same force and effect as if taken by the Authorized Officer.
Section 10. Effective Date. This resolution shall take effect from and after its adoption.
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I hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of Lathrop at a meeting held on the 8th day of May, 2023, by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
Sonny Dhaliwal, Mayor
ATTEST: APPROVED AS TO FORM:
Teresa Vargas, City Clerk Salvador Navarrete, City Attorney
1100
RESOLUTION NO.
RESOLUTION OF THE BOARD OF DIRECTORS OF THE LATHROP FINANCING
AUTHORITY AUTHORIZING THE ISSUANCE AND SALE OF ITS REFUNDING
REVENUE BONDS IN ONE OR MORE SERIES, AND APPROVING RELATED
AGREEMENTS AND ACTIONS
WHEREAS, the Lathrop Financing Authority ( the " Authority") is a joint exercise of powers authority duly organized and existing under the provisions of Articles 1 through 4 ( commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California ( the " Act"), and is authorized pursuant to Article 4 of the Act ( the Bond Law") to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations and for financing and refinancing public capital improvements of inember entities of the Authority and other local agencies; and
WHEREAS, the City Council of the City of Lathrop ( the " City") has conducted proceedings under and pursuant to the Mello- Roos Community Facilities Act of 1982, as amended, Chapter 2. 5 of Part 1 of Division 2 of Title 5 ( commencing with Section 53311) of the California Government Code ( the Mello- Roos Act ), to form Community Facilities District No. 2003- 1 ( Mossdale ` Village) ( the " CFD"), to authorize the levy of special taxes upon the land within the CFD, and to issue bonds secured by said special taxes, the proceeds of which special taxes and which bonds were to be used to finance the acquisition of water supply necessary or incident to development in the Mossdale Village Planning Area of the City, all as described in those proceedings; and
WHEREAS, under the provisions of the Mello- Roos Act, the CFD is authorized to levy a special tax on parcels within the CFD and has so authorized a levy of a special tax on parcels within the CFD to fund the City' s obligation to pay, from special taxes levied on parcels within the CFD, payments on the City' s $ 7, 285, 000 City of Lathrop Community Facilities District No. 2003- 1 ( Mossdale Village) Special Tax Bonds 2013 Series A ( the " Prior CFD Bonds"); and
WHEREAS, the City has also conducted reassessment proceedings for its original Mossdale Village Assessment District No. 03- 1, and issued reassessment bonds in 2013 designated as the $ 11, 690, 000 City of Lathrop Limited Obligation Refunding Improvement Bonds Reassessment District No. 2013- 1 ( Mossdale Village) ( the " Prior Reassessment Bonds"); and
WHEREAS, in 2013, the City sold the Prior CFD Bonds and the Prior Reassessment Bonds to the Authority and the Authority issued its Refunding Revenue Bonds, 2013 Series A ( the " 2013 Bonds") secured by payments received on the Prior CFD Bonds and the Prior Reassessment Bonds; and WHEREAS, the City has determined that it is in the best financial interests of the City to refinance the Prior CFD Bonds and the Prior Reassessment Bonds and to that end has determined to issue ( i) the City of Lathrop Limited Obligation Attachment " F"
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Refunding Improvement Bonds, Reassessment District No. 2023- 1 ( Mossdale Village) ( the " Reassessment Refunding Bonds") pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds, Division 11. 5 of the Streets and Highways Code of the State of California ( the " Reassessment Refunding Bond Law") and ( ii) the City of Lathrop Community Facilities District No. 03- 1 ( Mossdale Village) Special Tax Refunding Bonds, 2023 Series A ( the " CFD Refunding Bonds") pursuant to the Mello- Roos Act; and
WHEREAS, for the purpose of facilitating the refinancing of the Prior Reassessment Bonds and the Prior CFD Bonds, the Authority desires to issue its Refunding Revenue Bonds, 2023 Series A ( the ' Bonds") pursuant to the Bond Law in order the generate funds for the purchase by the Authority of the Reassessment Refunding Bonds and the CFD Refunding Bonds; and
WHEREAS, for the proposed financing and refinancing, there has been filed with the Secretary of the Board of Directors of the Authority the forms of the following documents to be executed by the Authority with respect to the issuance of the Bonds, which the Board desires to approve for execution as described herein:
1) The Indenture of Trust ( the Indenture"), by and between the Authority, the City and U. S. Bank Trust Company, National Association, as trustee ( the "Trustee");
2) The Preliminary Official Statement for the Bonds ( the Preliminary Official Statement");
3) The CFD Bonds Purchase Agreement relating to the sale of the CFD Bonds by the City to the Authority, to be dated the date of sale, by and between the City and the Authority ( the ' CFD Refunding Bonds Purchase Agreement");
4) The Reassessment Bonds Purchase Agreement relating to the sale of the Reassessment Refunding Bonds by the City to the Authority, to be dated the date of sale, by and between the City and the Authority ( the Reassessment Refunding Bonds Purchase Agreement");
5) The Bond Purchase Agreement relating to the sale of the Bonds to Stifel, Nicolaus & Company, Incorporated ( the " Underwriter") to be dated the date of sale, by and between the Authority and the Underwriter ( the Bond Purchase Agreement"); and
6) Escrow Agreement by and among the City, the Authority and U. S.
Bank Trust Company, National Association, as Escrow Agent ( the Escrow Agreement"); and
WHEREAS, the Authority has determined and hereby finds that the issuance of the Bonds and the acquisition of the CFD Refunding Bonds and the Reassessment
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Refunding Bonds will result in significant public benefits of the type described in Section 6586 of the Bond Law;
NOW, THEREFORE, BE IT RESOLVED, by the Board of Directors of the Lathrop Financing Authority as follows:
Section 1. Recitals. Each of the above recitals is true and correct and is adopted by the Board of Directors.
Section 2. The Bonds; the Indenture. The Bonds shall be issued in an aggregate principal amount not to exceed $ 11, 750, 000 with the number of series, the exact principal amount of each series, the interest rates and the maturity to be determined by the sale of the Bonds as described in Section 4 below. The Bonds shall be executed on behalf of the Authority by the manual or facsimile signature of the Executive Director or Treasurer of the Authority, and may be attested with the manual or facsimile signature of the Secretary.
The Bonds shall be issued under the terms of the Indenture, the form of which is on file with the Secretary of the Board of Directors. The Board of Directors hereby approves the Indenture in substantially the form on file with the Secretary, together with any changes therein or additions thereto approved by the Chairman, the Executive Director or the Treasurer ( each an Authorized Officer"), and the execution thereof by an Authorized Officer shall be conclusive evidence of such approval of any such changes or additions. The Board of Directors hereby authorizes and directs an Authorized Officer to execute, and the Secretary to attest and affix the seal of the Authority to, the final form of the Indenture for and in the name of the Authority. The Board of Directors hereby authorizes the delivery and performance of the Indenture.
Section 3. Trustee. U. S. Bank Trust Company, National Association, is hereby appointed to act as the trustee for the Bonds under the Indenture. If an Authorized Officer determines at any time while the Bonds are outstanding that another bank should be selected to act as trustee for the Bonds, in order to ensure the efficient administration of the Bonds, then such Authorized Officer, or a designee, is hereby authorized and directed to select and engage a bank or trust company meeting the requirements set forth in the Indenture to act as the trustee for the Bonds under the terms of the Indenture.
Section 4. Sale of the Bonds; Bond Purchase Agreement. The Board hereby approves the sale of the Bonds by negotiation with the Underwriter pursuant to the Bond Purchase Agreement in the form on file with the Secretary, together with any changes therein or additions thereto approved by an Authorized Officer, whose execution thereof shall be conclusive evidence of the Authority' s approval of any such additions and changes. The Bond Purchase Agreement shall be executed in the name and on behalf of the Authority by an Authorized OfFicer upon submission of a proposal by the Underwriter to purchase the Bonds, which offer is consistent with the following requirements: the amount of Underwriter' s discount for each series of Bonds shall be not more than 1% of the par amount thereof ( not
1103
taking into account any original issue discount on the sale thereof), the true interest cost of each series of Bonds shall not be in excess of 4. 25% and the aggregate principal amount of the Bonds shall not be in excess of $ 11, 750, 000.
Section 5. CFD Refunding Bonds Purchase Agreement; Reassessment Refunding Bonds Purchase Agreement. The form of the CFD Refunding Bonds Purchase Agreement presented at this meeting is hereby approved and each of the Authorized Officers is hereby authorized to execute the CFD Refunding Bonds Purchase Agreement in the form so approved, with such additions thereto and changes therein as are necessary to conform the CFD Refunding Bonds Purchase Agreement to the dates, amounts and interest rates applicable to the CFD Refunding Bonds as of the sale date or to cure any defect or ambiguity therein.
Approval of such additions and changes shall be conclusively evidenced by the execution and delivery of the CFD Refunding Bonds Purchase Agreement by one or more of such officers.
The form of the Reassessment Refunding Bonds Purchase Agreement presented at this meeting is hereby approved and each of the Authorized Officers is hereby authorized to execute the Reassessment Refunding Bonds Purchase Agreement in the form so approved, with such additions thereto and changes therein as are necessary to conform the Reassessment Refunding Bonds Purchase Agreement to the dates, amounts and interest rates applicable to the Reassessment Refunding Bonds as of the sale date or to cure any defect or ambiguity therein.
Approval of such additions and changes shall be conclusively evidenced by the execution and delivery of the Reassessment Refunding Bonds Purchase Agreement by one or more of such officers.
Section 6. Official Statement. The form of the Preliminary Official Statement presented at this meeting is hereby approved and the Underwriter is hereby authorized to distribute the Preliminary Official Statement to prospective purchasers of the Bonds in the form hereby approved, together with such additions thereto and changes therein as are determined necessary by an Authorized Officer, or his or her written designee, to make such Preliminary OfFicial Statement final as of its date for purposes of Rule 15c2- 12 of the Securities and Exchange Commission, including, but not limited to, such additions and changes as are necessary to incorporate the terms of any municipal bond insurance for the Bonds and make the information therein accurate and not misleading. Each of the Authorized Officers is hereby authorized to execute a final Official Statement in the form of the Preliminary Official Statement, together with such changes as are determined necessary by the Treasurer of the Authority, or his written designee, to make such Official Statement complete and accurate as of its date. The Underwriter is further authorized to distribute the final OfFicial Statement for the Bonds and any supplement thereto to the purchasers thereof upon its execution on behalf of the Authority as described above.
Section 7. Official Actions. The Chairman, the Executive Director, the Treasurer, the Secretary and any and all other ofFicers of the Authority are hereby authorized and directed, for and in the name and on behalf of the Authority, to do
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any and all things and take any and all actions, including execution and delivery of any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the issuance and sale of the Bonds and any of the other transactions contemplated by the documents approved pursuant to this Resolution. Whenever in this Resolution any officer of the Authority is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer shall be absent or unavailable.
Section 9. Effective Date. This Resolution shall take efFect from and after the date of its passage and adoption.
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I hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of Lathrop at a meeting held on the 8th day of May, 2023, by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
Sonny Dhaliwal, Chairman
ATTEST: APPROVED AS TO FORM:
Teresa Vargas, Secretary Salvador Navarrete, Counsel to Authority Page6of6
1106
Jones Hall Draft 4. 24. 23
INDENTURE OF TRUST
between
LATHROP FINANCING AUTHORITY,
CITY OF LATHROP,
and
U. S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
Dated as of 1, 2023
LATHROP FINANCING AUTHORITY
REFUNDING REVENUE BONDS
MOSSDALE DISTRICT REFUNDINGS) SERIES
2023
and
CITY OF LATHROP LIMITED OBLIGATION REFUNDING
COMMUNITY FACILITIES DISTRICT NO. 2003- 1 IMPROVEMENT BONDS
MOSSDALE VILLAGE) CITY OF LATHROP
SPECIAL TAX REFUNDING BONDS Reassessment DISTRICT NO. 2023- 1 2023 SERIES A MOSSDALE VILLAGE)
ATTACHMENT p "
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; AUTHORIZATION AND
PURPOSE OF BONDS; EQUAL SECURITY
Section1. 1. Definitions......................................................................................................... 3 Section 1. 2. Rules of Construction...................................................................................... 11 Section 1. 3. Authorization and Purpose of Bonds ............................................................. 11 Section1. 4. Equal Security................................................................................................. 11
ARTICLE II
ISSUANCE OF BONDS
Section2. 1. Terms of Bonds............................................................................................... 12 Section 2. 2. Redemption of Bonds ..................................................................................... 13 Section2. 3. Form of Bonds ................................................................................................ 16 Section 2. 4. Execution of Bonds......................................................................................... 16 Section 2. 5. Transfer of Bonds ........................................................................................... 16 Section 2. 6. Exchange of Bonds......................................................................................... 16 Section2. 7. Temporary Bonds ........................................................................................... 17 Section2. 8. Bond Register................................................................................................. 17 Section 2. 9. Bonds Mutilated, Lost, Destroyed or Stolen.................................................... 17 Section2. 10. Book- Entry System ......................................................................................... 18 Section2. 11. Validity of Bonds............................................................................................. 19
ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS
Section 3. 1. Issuance of Bonds .......................................................................................... 20 Section3. 2. Purchase Fund................................................................................................ 20 Section 3. 3. Application of Proceeds of Sale of Bonds....................................................... 20 Section 3. 4. Costs of Issuance Fund .................................................................................. 21 Section3. 5. Reserved......................................................................................................... 21 Section3. 6. Rebate Fund ................................................................................................... 21
ARTICLE IV
REVENUES; FLOW OF FUNDS
Section 4. 1. Pledge of Revenues; Assignment of Rights.................................................... 22 Section 4. 2. Receipt, Deposit and Application of Revenues; Revenue Fund..................... 22 Section 4. 3. No Separate Reserve Fund ........................................................................... 23 Section4. 4. Investments..................................................................................................... 23 Section 4. 5. Valuation and Disposition of Investments....................................................... 24
ARTICLE V
COVENANTS OF THE AUTHORITY
Section 5. 1. Punctual Payment........................................................................................... 25 Section 5. 2. Extension of Payment of Bonds...................................................................... 25 Section 5. 3. Against Encumbrances................................................................................... 25 Section 5. 4. Power to Issue Bonds and Make Pledge and Assignment............................. 25 Section 5. 5. Accounting Records and Financial Statements.............................................. 25 Section 5. 6. No Additional Bonds, Except for Refunding.................................................... 26 Section5. 7. Tax Covenants................................................................................................ 26 i
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Section5. 8. Rebate Fund ................................................................................................... 27 Section 5. 9. Continuing Disclosure..................................................................................... 27 Section 5. 10. Compliance with Reporting Requirements of Bond Law................................. 27 Section 5. 11. Further Assurances......................................................................................... 27 Section 5. 12. Collection of Special Taxes and Reassessments........................................... 28 Section 5. 13. Ownership of Acquired Obligations................................................................. 28 Section 5. 14. Administration of the Acquired Obligations..................................................... 28
ARTICLE VI
THE CFD BONDS
Section6. 1. Findings .......................................................................................................... 30 Section 6. 2. Issuance of CFD Bonds.................................................................................. 30 Section 6. 3. Registration and Denominations..................................................................... 30 Section 6. 4. Maturity Schedules and Payment Terms........................................................ 30 Section 6. 5. Redemption of CFD Bonds............................................................................. 31 Section 6. 6. Form and Execution of CFD Bonds................................................................ 31 Section 6. 7. Pledge of Special Tax Revenues to CFD Bonds............................................ 32 Section6. 8. Special Tax Fund............................................................................................ 32 Section6. 9. CFD Reserve Fund......................................................................................... 33 Section 6. 10. CFD Administrative Expense Fund................................................................. 34 Section 6. 11. CFD Bonds Prepayment Fund........................................................................ 34 Section 6. 12. Covenants of the City...................................................................................... 34 Section 6. 13. Cancellation of CFD Bonds............................................................................. 37 Section 6. 14. Defeasance of CFD Bonds............................................................................. 37 Section 6. 15. No Additional CFD Bonds, Except for Refunding ........................................... 37
ARTICLE VII
THE REASSESSMENT BONDS
Section7. 1. Findings .......................................................................................................... 38 Section 7. 2. Issuance of Reassessment Bonds.................................................................. 38 Section 7. 3. Registration and Denominations..................................................................... 38 Section 7. 4. Maturity Schedules and Payment Terms........................................................ 38 Section 7. 5. Redemption of Reassessment Bonds............................................................. 39 Section 7. 6. Form and Execution of Reassessment Bonds................................................ 39 Section 7. 7. Pledge of Reassessment Revenues to Reassessment Bonds....................... 40 Section7. 8. Redemption Fund ........................................................................................... 40 Section 7. 9. Reassessment Reserve Fund......................................................................... 41 Section 7. 10. Reassessment Administrative Expense Fund ................................................ 42 Section 7. 11. Reassessment Bonds Prepayment Fund and Accounts................................. 42 Section 7. 12. Covenants of the City...................................................................................... 43 Section 7. 13. Cancellation of Reassessment Bonds............................................................ 45 Section 7. 14. Defeasance of Reassessment Bonds............................................................. 45 Section 7. 15. No Additional Reassessment Bonds, Except for Refunding........................... 45
ARTICLE VIII
THE TRUSTEE
Section 8. 1. Appointment of Trustee................................................................................... 46 Section 8. 2. Acceptance of Trusts...................................................................................... 46 Section 8. 3. Fees, Charges and Expenses of Trustee ....................................................... 49 Section 8. 4. Notice to Bond Owners of Default................................................................... 49 Section 8. 5. Intervention by Trustee................................................................................... 50 ii
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Section 8. 6. Removal of Trustee......................................................................................... 50 Section 8. 7. Resignation by Trustee................................................................................... 50 Section 8. 8. Appointment of Successor Trustee................................................................. 50 Section 8. 9. Merger or Consolidation.................................................................................. 50 Section 8. 10. Concerning any Successor Trustee................................................................ 50 Section 8. 11. Appointment of Co Trustee............................................................................. 51 Section 8. 12. Limited Liability of Trustee.............................................................................. 51
ARTICLE IX
MODIFICATION AND AMENDMENT
OFTHEINDENTURE
Section9. 1. Amendment..................................................................................................... 52 Section 9. 2. Effect of Supplemental Indenture.................................................................... 52 Section 9. 3. Endorsement or Replacement of Bonds After Amendment............................ 53 Section 9. 4. Amendment by Mutual Consent...................................................................... 53
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10. 1. Events of Default......................................................................................... 54 Section 10. 2. Remedies; Rights of Bond Owners............................................................. 54 Section 10. 3. Application of Revenues and Other Funds After Event of Default.............. 55 Section 10. 4. Power of Trustee to Control Proceedings................................................... 55 Section 10. 5. Appointment of Receivers........................................................................... 56 Section10. 6. Non Waiver................................................................................................. 56 Section 10. 7. Rights and Remedies of Bond Owners....................................................... 56 Section 10. 8. Termination of Proceedings........................................................................ 57
ARTICLE XI
MISCELLANEOUS
Section 11. 1. Limited Liability of Authority........................................................................ 58 Section 11. 2. Benefits of Indenture Limited to Parties...................................................... 59 Section 11. 3. Discharge of Indenture................................................................................ 59 Section 11. 4. Successor is Deemed Included in All References to Predecessor............. 59 Section 11. 5. Delegation by Authority; Content of Certificates ......................................... 60 Section 11. 6. Execution of Documents by Bond Owners.................................................. 60 Section 11. 7. Disqualified Bonds ...................................................................................... 61 Section 11. 8. Waiver of Personal Liability......................................................................... 61 Section 11. 9. Partial Invalidity........................................................................................... 61 Section 11. 10. Destruction of Cancelled Bonds.................................................................. 61 Section 11. 12. Funds and Accounts................................................................................... 61 Section11. 13. Notices........................................................................................................ 61 Section 11. 14. Unclaimed Moneys...................................................................................... 62 Section 11. 15. Payment Due on Other than a Business Day............................................. 62 Section 11. 16. Electronic Signatures.................................................................................. 62 Exhibit A FORM OF BOND
Exhibit B FORM OF CFD BOND
Exhibit C FORM OF REASSESSMENT BOND
Exhibit D CFD BONDS AND REASSESSMENT BONDS DEBT SERVICE SCHEDULES iii
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INDENTURE OF TRUST
THIS INDENTURE OF TRUST ( this " Indenture"), dated as of 1, 2023, is between the LATHROP FINANCING AUTHORITY, a joint powers authority organized and existing under the laws of the State of California ( the " Authority"), the CITY OF LATHROP, a municipal corporation and general law city organized and existing under and by virtue of the Constitution and laws of the State of California ( the " City") and U. S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America (the "Trustee").
RECITALS:
WHEREAS, the Authority is a joint exercise of powers authority duly organized and existing under the provisions of Articles 1 through 4 ( commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California ( the " AcY'), and is authorized pursuant to Article 4 of the Act ( the " Bond Law") to ( i) purchase, with the proceeds of its bonds, bonds issued by a local agency and to hold such bonds and ( ii) issue bonds to pay the cost of any public capital improvement; and
WHEREAS, pursuant to the Mello- Roos Community Facilities Act of 1982, as amended the" CFD Act") the City previously formed its Community Facilities District No. 2003- 1 ( Mossdale Village) ( the " CFD") pursuant to the terms of a Supply Purchase Agreement, dated as of July 1, 2003, befinreen the City and the Lathrop Financing Authority ( the " 2003 CFD Obligation") for the purpose of financing costs of certain public water infrastructure necessary or incident to development in the Mossdale Village Planning Area of the City and authorized a levy of a special tax on parcels within the CFD to support payment of a portion of the $ 32, 530, 000 Lathrop Financing Authority Revenue Bonds ( Water Supply Project), Series 2003, which 2003 CFD Obligation and portion of the Prior Water Bonds attributable to the CFD were refunded in 2013 by the $ 7, 285, 000 City of Lathrop Community Facilities District No. 2003- 1 ( Mossdale Village) Special Tax Bonds 2013 Series A( the" 2013 CFD Bonds") pursuant to a Fiscal Agent Agreement, dated as of November 1, 2013, between the City and Union Bank, N. A.; and WHEREAS, the City has also conducted special assessment proceedings for its Mossdale Village Assessment District No. 03- 1, resulting of the issuance of bonds, namely:
i) $ 14, 050, 000 City of Lathrop Limited Obligation Improvement Bonds Mossdale Village Assessment District No. 03- 1, Series 2003 issued pursuant to a Fiscal Agent Agreement, dated as of October 1, 2003, between the City and MUFG Union Bank, N. A., which were refunded in 2013 by the $ 11, 690, 000 City of Lathrop Limited Obligation Refunding Improvement Bonds Mossdale Village Reassessment District No. 2013- 1 Mossdale Village) ( the " 2013 Reassessment Bonds") pursuant to a Fiscal Agent Agreement, dated as of November 1, 2013, befinreen the City and Union Bank, N. A.; and i) $ 8,255,000 City of Lathrop Limited Obligation Improvement Bonds Mossdale Village Assessment District No. 03- 1, Series 2005 issued pursuant to a Supplemental Fiscal Agent Agreement, dated as of October 1, 2005, between the City and MUFG Union Bank, N. A. , which uvere refunded in 2015 by the $ 6, 395,000 City of Lathrop Limited Obligation Refunding Improvement Bonds ( Reassessment District No. 2015- 1 ( Mossdale Village) ( the " 2015 Reassessment Bonds") pursuant to a Fiscal Agent Agreement, dated as of July 1, 2015, between the City and Union Bank, N. A.; 1 1111
WHEREAS, the City has determined that it is in the best financial interests of the City to refinance the 2013 Reassessment Bonds ( but not the 2015 Reassessment Bonds) and the 2013 CFD Bonds, and accordingly, the City has determined to levy reassessments pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds, Division 11. 5 of the Streets and Highways Code of the State of California ( the " Refunding Assessment Bond Law") and to issue the City of Lathrop Limited Obligation Refunding Improvement Bonds, Reassessment District No. 2023- 1 ( the " Reassessment Bonds") pursuant to and secured by this Indenture in the manner provided herein to refund the 2013 Reassessment Bonds; and WHEREAS, likewise, the City has determined to refund the 2013 CFD Bonds pursuant to the CFD Act and to issue the City of Lathrop Community Facilities District No. 2003- 1 ( Mossdale Village) Special Tax Refunding Bonds, 2023 Series A( the" CFD Bonds") pursuant to and secured by this Indenture in the manner provided herein to refund the 2013 CFD Bonds; and WHEREAS, the Authority wishes to assist the City with the refinancing of the 2013 Reassessment Bonds and the 2013 CFD Bonds by purchasing the Reassessment Bonds and the CFD Bonds ( collectively, the " Acquired Obligations"); and WHEREAS, for the purpose of purchasing the Acquired Obligations and thereby facilitating the refinancing of the 2013 Reassessment Bonds and 2013 CFD Bonds, the Authority has determined to issue its Refunding Revenue Bonds, 2023 Series A in the aggregate principal amount of$ the " Bonds") pursuant to and secured by this Indenture in the manner provided herein; and
WHEREAS, in order to provide for the authentication and delivery of the Bonds, the CFD Bonds and the Reassessment Bonds, to establish and declare the terms and conditions upon which the Bonds, the CFD Bonds and the Reassessment Bonds are to be issued and to secure the payment of the principal thereof and interest thereon, the Authority and the City have authorized the execution and delivery of this Indenture; and WHEREAS, the Authority and the City hereby certify that all acts and proceedings required of each of them by law necessary to make the Bonds, the CFD Bonds and the Reassessment Bonds, when executed by the City or the Authority, as applicable, and authenticated and delivered by the Trustee are duly issued, the valid, binding and legal special obligations of the Authority or the City, as applicable, to constitute this Indenture as a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of the Indenture have been in all respects duly authorized; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of and the interest and premium ( if any) on all Bonds, the CFD Bonds and the Reassessment Bonds at any time issued and Outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds, the CFD Bonds and the Reassessment Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds, the CFD Bonds and the Reassessment Bonds by the respective Owners thereof, and for other valuable considerations, the receipt and sufficiency of which is hereby acknowledged, the Authority and the City do hereby covenant and agree with the Trustee, for the benefit of the respective Owners from time to time of the Bonds, the CFD Bonds and the Reassessment Bonds, as follows:
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ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS; EQUAL SECURITY Section 1. 1. Definitions. Unless the context otherwise requires, the terms defined in this Section will for all purposes of this Indenture and of any Supplemental Indenture and of the Bonds and of any certificate, opinion, request or other documents herein mentioned have the meanings herein specified.
Act" means Articles 1 through 4 ( commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State, as it may hereafter be amended from time to time.
Acquired Obligations" means the CFD Bonds and the Reassessment Bonds.
Additional Bonds" has the meaning given that term in Section 5. 6 in reference to refunding bonds.
Administrative Expenses" means costs for any or all of the following, allocated among the CFD Bonds and the Reassessment Bonds as determined by the City: the expenses of the parties hereto in carrying out their duties hereunder, including the fees and expenses charged by the Authority and the City and of their counsel and consultants, an allocable share of the salaries of staff and its consultants directly related thereto and a proportionate amount of general administrative overhead related thereto ( if applicable), any amounts paid by the Authority or the Ctiy from its general funds for the benefit of the Bonds, the CFD Bonds or Reassessment Bonds, the fees and expenses of the Trustee ( including any fees or expenses of its counsel), and all other costs and expenses of the Authority, City or the Trustee incurred in connection with the issuance and administration of the Bonds, the CFD Bonds or Reassessment Bonds and/ or the discharge of their respective duties hereunder( including, but not limited to, the calculation, levy and collection of the Special Taxes and Reassessments, foreclosures with respect to delinquent taxes or reassessments, and the calculation of amounts subject to rebate in connection with the tax- exemption of the Bonds) and in any way related to the administration of the Bonds, the CFD Bonds or Reassessment Bonds and the CFD and Reassessment District. Administrative Expenses shall include any such expenses incurred in prior years but not yet paid, and any advances of funds by the Authority or the City for Administrative Expenses.
Annual Debt Service" means, for each Bond Year, the principal amount of the Outstanding Bonds, Reassessment Bonds or CFD Bonds, as applicable, scheduled to be paid in such Bond Year.
Authority" means the Lathrop Financing Authority, a joint exercise of powers agency duly organized and existing under the laws of the State.
Authorized Officer" means ( i) with respect to the Authority, the Chairman, Executive Director, Secretary or Treasurer of the Authority or any other person authorized by the Authority to perform an act or sign a document on behalf of the Authority for purposes of this Indenture and ii) with respect to the City, its City Manager, Finance Director or City Clerk, or any other person authorized by the City to perform an act or sign a document on behalf of the City for purposes of this Indenture.
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Beneficial Owners" means the actual purchasers of the Bonds whose ownership interests are recorded on the books of the DTC Participants.
Bond Counsel" means Jones Hall, A Professional Law Corporation, and its successors; or any other attorney at law or firm of attorneys selected by the Authority, of nationally recognized standing in matters pertaining to the federal tax exemption of interest on bonds issued by states and political subdivisions, and duly admitted to practice law before the highest court of any state of the United States of America.
Bond Law" means the Marks Roos Local Bond Pooling Act of 1985, constituting Article 4 of the Act ( commencing with Section 6584), as it may hereafter be amended from time to time.
Bond Register" means the registration books for the Bonds maintained by the Trustee in accordance with Section 2. 8.
Bonds" means the Authority' s Refunding Revenue Bonds, ( Mossdale District Refundings) Series 2023 authorized by, and at any time Outstanding, pursuant to the Bond Law and this Indenture, and any Additional Bonds issued hereunder.
Bond Year" means each twelve- month period extending from September 2 in one calendar year to September 2 of the succeeding calendar year, except in the case of the initial Bond Year which will be the period from the Closing Date to September 2, 2024, both dates inclusive.
Business Day" means a day which is not a Saturday or Sunday or a day of the year on which the New York Stock Exchange or banks in New York, New York or San Francisco, California, or where the Trust Office is located, are not required or authorized to remain closed.
CDIAC" means the California Debt and Investment Advisory Commission of the office of the State Treasurer of the State of California or any successor agency or bureau thereto.
Certificate of the City" means a certificate in writing signed by an Authorized Officer of the City.
Certificate of the Authority" means a certificate in writing signed by an Authorized Officer of the Authority.
CFD Administrative Expense Fund" means the fund established pursuant to Section
6. 10.
CFD 2003- 1" means City of Lathrop Community Facilities District No. 2003- 1 ( Mossdale Village), a community facilities district formed pursuant to the CFD Act.
CFD Bonds" means the City' s Community Facilities District No. 2003- 1 ( Mossdale Village) Special Tax Refunding Bonds, 2023 Series A.
CFD Reserve Fund" means fund by that name established in accordance with Section
6.9. CFD Reserve Requirement" means an amount equal to 50% of Maximum Annual Debt Service on the CFD Bonds, as calculated from time to time. 4 1114
Closing Date" means the date on which the Original Purchaser purchases the Bonds, being 2023.
Code" means the Internal Revenue Code of 1986 as in effect on the Closing Date or except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date, together with applicable temporary and final regulations promulgated, and applicable official guidance published, under the Code.
Community Facilities District" or" CFD" means CFD 2003- 1.
Costs of Issuance" means the costs and expenses incurred in connection with the issuance and sale of the Bonds and the Acquired Obligations, and the acquisition of the Acquired Obligations by the Authority, including the acceptance and initial annual fees and expenses including legal fees and expenses) of the Trustee, legal fees and expenses, costs of printing the Bonds and the preliminary and final Official Statements, fees of financial consultants, and other fees and expenses set forth in a Request of the Authority or Request of the City.
Costs of Issuance Fund" means the fund by that name established in Section 3.4.
County" means the County of San Joaquin, California.
Dated Date" means the Closing Date.
DTC" means The Depository Trust Company, and its successors and assigns.
DTC Participants" means securities brokers and dealers, banks, trust companies, clearing corporations and other organizations maintaining accounts with DTC.
Event of Default" means any of the events described in Section 10. 1.
Fair Market Value" means, with respect to any investment, the price at which a willing buyer would purchase such investment from a willing seller in a bona fide, arm' s length transaction determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market ( within the meaning of Section 1273 of the Code) and, otherwise, the term " Fair Market Value" means the acquisition price in a bona fide arm' s length transaction ( as described above) if( i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, ( ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate( for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, ( iii) the investment is a United States Treasury Security- State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund in which the City and related parties do not own more than a ten percent ( 10%) beneficial interest therein if the return paid by the fund is without regard to the source of the investment.
Federal Securities" means any of the following:
a) Cash ( insured at all times by the Federal Deposit Insurance Corporation). 5 1115
b) Obligations of, or obligations guaranteed as to principal and interest by, the U. S. or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the U. S. including:
U. S. treasury obligations
All direct or fully guaranteed obligations
Farmers Home Administration
General Services Administration
Guaranteed Title XI financing
Government National Mortgage Association ( GNMA)
State and Local Government Series
Fiscal Year" means any twelve-month period extending from July 1 in one calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any other finrelve- month period selected and designated by the City as its official fiscal year period.
Indenture" means this Indenture of Trust, as originally executed or as it may from time to time be supplemented, modified or amended by any Supplemental Indenture.
Independent Accountant" means any accountant or firm of such accountants appointed and paid by the City, and who, or each of whom—
a) is in fact independent and not under domination of the Authority or the City; b) does not have any substantial interest, direct or indirect, in the Authority or the City; and
c) is not an officer or employee of the Authority, or the City, but who may be regularly retained to make annual or other audits of the books of or reports to the Authority or the City.
Independent Financial Consultant" means any financial consultant or firm of such consultants appointed and paid by the Authority or the City, and who, or each of whom— a) is in fact independent and not under domination of the Authority or the City; b) does not have any substantial interest, direct or indirect, in the Authority or the City; and
c) is not an officer or employee of the Authority or the City, but who may be regularly retained to make annual or other audits of the books of or reports to the Authority or the City.
Interest Account" means the account by that name established and held by the Trustee pursuant to Section 4. 2( a).
Interest Payment Date" means March 2 and September 2 in each year, beginning March 2, 2024, and continuing thereafter so long as any Bonds remain Outstanding. 6 1116
Maximum Annual Debt Service" means, as of the date of any calculation, the largest Annual Debt Service on a Series during the current or any future Bond Year.
Mello-Roos Act" means the Mello-Roos Community Facilities Act of 1982, constituting Chapter 2. 5 ( commencing with Section 53311), Article 1 of Division 2 of Title 5 of the Government Code of the State of California, as amended from time to time.
Moody' s" means Moody' s Investors Senrice, its successors and assigns.
Original Purchaser" means, with respect to the Bonds, Stifel Nicolaus & Company.
Outstanding", when used as of any particular time with reference to Bonds, Reassessment Bonds vr CFD Bonds, as applicable, means (subject to the provisions of Section
11. 7) all Bonds, Reassessment Bonds or CFD Bonds, as applicable theretofore executed and issued by the Authority or the City and authenticated and delivered by the Trustee under this Indenture except—
a) Bonds, Reassessment Bonds or CFD Bonds, as applicable, theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; b) Bonds, Reassessment Bonds or CFD Bonds, as applicable, paid or deemed to have been paid within the meaning of Section 11. 3 or Bonds or CFD Bonds called for redemption for which funds have been provided as described herein; and c) Bonds, Reassessment Bonds or CFD Bonds, as applicable, in lieu of or in substitution for which other Bonds or CFD Bonds will have been executed, issued and delivered pursuant to this Indenture or any Supplemental Indenture.
Owner" or " Bond Owner", when used with respect to any Bond, means the person in whose name the ownership of such Bond will be registered on the Bond Register and when used with respect to any when used with respect to any Reassessment Bonds or CFD Bonds, means the Authority.
Permitted Investments" 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, but only to the extent that the same are acquired at Fair Market Value:
a) Federal Securities;
b) any of the following direct or indirect obligations of the following agencies of the United States of America: ( i) direct obligations of the Export- Import Bank; ( ii) certificates of beneficial ownership issued by the Farmers Home Administration; ( iii) participation certificates issued by the General Services Administration; ( iv) mortgagebacked bonds or pass- through obligations issued and guaranteed by the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Federal Housing Administration; ( v) project notes issued by the United States Department of Housing and Urban Development; and ( vi) public housing notes and bonds guaranteed by the United States of America; c) interest- bearing demand or time deposits ( including certificates of deposit) or deposit accounts in federal or state- chartered savings and loan associations or in 7 1117
federai or State of California banks ( including the Trustee and its affiliates), provided that the unsecured short-term obligations of such commercial bank or savings and loan association will be rated in the highest short- term rating category by any Rating Agency; d) commercial paper rated at the time of purchase in the highest short- term rating category by any Rating Agency, issued by corporations which are organized and operating within the United States of America, and which matures not more than 180 days following the date of investment therein;
e) bankers acceptances, consisting of bills of exchange or time drafts drawn on and accepted by a commercial bank whose short-term obligations are rated in the highest short-term rating category by any Rating Agency or whose long-term obligations are rated A or better by each such Rating Agency, which mature not more than 270 days following the date of investment therein;
f) obligations the interest on which is excludable from gross income pursuant to Section 103 of the Tax Code and which are either ( a) rated A or better by any Rating Agency or ( b) fully secured as to the payment of principal and interest by Federal Securities;
g) obligations issued by any corporation organized and operating within the United States of America having assets in excess of Five Hundred Million Dollars 500, 000, 000), which obligations are rated A or better by any Rating Agency; h) money market funds ( including money market funds for which the Trustee, its affiliates or subsidiaries provide investment advisory or other management services) which invest in Federal Securities or which are rated in the highest rating category by any Rating Agency;
i) any investment agreement, repurchase agreement or other investment instrument which represents the general unsecured obligations of a bank, investment banking firm or other financial institution whose long-term obligations are rated at the time of delivery of the investment agreement, repurchase agreement or other investment instrument A or better by any Rating Agency;
j) shares in a California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the Government Code of the State of California that invests exclusively in investments permitted by Section 53601 of Title 5, Division 2, Chapter 4 of the California Government Code, as it may be amended ( California Asset Management Program); and
k) the Local Agency Investment Fund of the State, created pursuant to Section 16429. 1 of the California Government Code.
Prepayment" as to the CFD Bonds means moneys received by the City from the prepayment of Special Taxes as provided in the " Rate and Method of Apportionment of Special Tax" for the CFD, and as to the Reassessment Bonds means moneys received by the City from the prepayment of the Reassessment on any parcel.
Principal Account" means the account by that name established and held by the Trustee pursuant to Section 4. 2( a).
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Reassessment Administrative Expense Fund" means the fund established pursuant to Section 7. 10.
Reassessment Bonds" means the City of Lathrop Limited Obligation Refunding Improvement Bonds, Reassessment District No. 2023- 1.
Reassessment District" means City of Lathrop Reassessment District No. 2023- 1 Mossdale Village).
Reassessment Reserve Fund" means fund by that name established in accordance with Section 7.9.
Reassessment Reserve Requirement" means an amount equal to 75% of Maximum Annual Debt Service on the Reassessment Bonds, as calculated from time to time.
Reassessment Revenues" means, with respect to the Reassessment District, the proceeds of the Reassessments received by the City with respect to the Reassessment District, including all scheduled payments and delinquent payments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Reassessments, net of Administrative Expenses attributable to the Reassessment District.
Reassessments" means the unpaid reassessments levied within the Reassessment District by the City Council pursuant to the proceedings taken pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds, Division 11. 5 ( commencing with Section 9500) of the Streets and Highways Code of California to form the Reassessment District and authorize reassessments within the Reassessment District.
Redemption Fund" means the fund by that name established pursuant to Section 7.8.
Rebate Fund" means the fund by that name established pursuant to Section 3. 6.
Record Date" means, with respect to any Interest Payment Date, the 15th calendar day of the month preceding the month in which such Interest Payment Date occurs, whether or not such day is a Business Day.
Representation Letter" means the representation letter dated as of the Closing Date for the Bonds among the Authority, the Trustee and DTC.
Request of the Authority" means a written request executed by an Authorized Officer of the Authority.
Request of the City" means a written certificate or request executed by an Authorized Officer of the City.
Responsible Officer" means any officer of the Trustee assigned to administer the Trustee' s duties under this Indenture.
Revenue Fund" means the fund by that name established and held by the Trustee pursuant to Section 4.2.
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Revenues" ( a) all amounts received from the Acquired Obligations; ( b) any proceeds of the Bonds originally deposited with the Trustee and all moneys deposited and held from time to time by the Trustee in the funds and accounts established hereunder with respect to the Bonds other than the Rebate Fund); and ( c) investment income with respect to any moneys held by the Trustee in the funds and accounts established hereunder with respect to the Bonds ( other than investment income on moneys held in the Rebate Fund).
S8 P" means S& P Global Ratings, and its successors.
Securities Depositories" means DTC, and, in accordance with then current guidelines of the Securities and Exchange Commission, such other securities depositories as the Authority designates in a written notice filed with the Trustee.
Special Tax Fund" shall mean the fund by that name established and administered pursuant to Section 6.8.
Special Tax Revenues" means, with respect to the CFD, the proceeds of the Special Taxes received by the City with respect to the CFD, including all scheduled payments and delinquent payments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes, net of Administrative Expenses attributable to the CFD.
Special Taxes" means, with respect to the CFD, the special taxes authorized to be levied on parcels for facilities within the CFD, including any scheduled payments and any prepayments of, or interest on, such Special Taxes, and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest on such amount.
State" means the State of California.
Supplemental Indenture" means any indenture, agreement or other instrument hereafter duly executed by the Authority, the City and the Trustee in accordance with the provisions of Article IX.
Trust Office" means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office at the date hereof is located in San Francisco, California, or such other place as designated by the Trustee except that with respect to presentation of Bonds for payment or for registration of transfer and exchange, such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate trust agency business shall be conducted.
Trustee" means U. S. Bank Trust Company, National Association, and its successors and assigns, and any other corporation or association which may at any time be substituted in its place as provided in Article VIII.
2013 Reassessment Bonds" means the $ 11, 690, 000 City of Lathrop Limited Obligation Refunding Improvement Bonds Mossdale Village Reassessment District No. 2013- 1 ( Mossdale Village).
2013 CFD Bonds" means the $ 7, 285, 000 City of Lathrop Community Facilities District No. 2003- 1 ( Mossdale Village) Special Tax Refunding Bonds 2013 Series A 10 1120
2015 Parity Reassessment Bonds" means the " City of Lathrop Reassessment District No. 2015- 1 ( Mossdale Village) Limited Obligation Refunding Improvement Bonds, Series 2015" which were issued in the original principal amount of$ 8, 255, 000.
Section 1. 2. Rules of Construction. All references in this Indenture to " Articles," Sections," and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; and the words " herein," " hereof," " hereunder," and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision.
Section 1. 3. Authorization and Purpose of Bonds. The Authority has reviewed all proceedings heretofore taken relative to the authorization of the Bonds and has found, as a result of such review, and hereby finds and determines, that all things, conditions and acts required by law to exist, happen and/ or be performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Authority is now authorized under the Bond Law and each and every requirement of law, to issue the Bonds in the manner and form provided in this Indenture. Accordingly, the Authority hereby authorizes the issuance of the Bonds pursuant to the Bond Law and this Indenture for the purpose of providing funds to acquire the CFD Bonds and finance the Projects.
Section 1. 4. Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, this Indenture will be deemed to be and will constitute a contract between the Authority and the Owners from time to time of the Bonds; and the covenants and agreements herein set forth to be performed on behalf of the Authority will be for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over other Bonds by reason of the number or date thereof or the time of sale, execution or delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein. 11 1121
ARTICLE II
ISSUANCE OF BONDS
Section 2. 1. Terms of Bonds. The Bonds authorized to be issued by the Authority under and subject to the Bond Law and the terms of this Indenture will be dated the Closing Date and be designated as follows the " Lathrop Financing Authority Refunding Revenue Bonds, Mossdale District Refundings) Series 2023," which will be issued in the original aggregate principal amount of$ provided, however, that prior to delivery of the Bonds each of the following must be delivered to the Trustee:
a) A copy of the resolution adopted by the Authority approving this Indenture and the execution and delivery by the Authority of this Indenture, duly certified by an Authorized Officer to have been duly adopted by the Authority and to be in full force and effect on the date of such certification;
b) A Written Order containing instructions as to the delivery of the Bonds; c) The proceeds of sale of the Bonds;
d) An original executed counterpart of this Indenture; and e) The Acquired Obligations registered in the name of the Trustee.
The Bonds will be issued in fully registered form without coupons in denominations of 5,000 or any integral multiple thereof, so long as no Bond will have more than one maturity date.
The Bonds will mature on September 2 in each of the years and in the amounts, and will bear interest ( calculated on the basis of a 360- day year of twelve 30- day months) at the rates, as follows:
Maturity Date
September 2) Principal Amount Interest Rate
Per Annum
Interest on the Bonds will be payable on each Interest Payment Date to the person whose name appears on the Bond Register as the Owner thereof as of the Record Date immediately preceding each such Interest Payment Date, such interest to be paid by check of the Trustee mailed on such Interest Payment Date by first class mail, postage prepaid, to the Owner at the address of such Owner as it appears on the Bond Register or by wire transfer to an account in the United States of America made on such Interest Payment Date upon instructions of any Owner of$ 1, 000, 000 or more in aggregate principal amount of Bonds of a series provided to the Trustee in writing at least five ( 5) Business Days before the Record Date for such Interest Payment Date. 12 1122
Principal of and premium ( if any) on any Bond will be paid upon presentation and surrender thereof, at maturity or the prior redemption thereof, at the Trust Office of the Trustee. The principal of and interest and premium ( if any) on the Bonds will be payable in lawful money of the United States of America.
Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless ( a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it will bear interest from such Interest Payment Date; or( b) it is authenticated on or before February 15, 2024, in which event it will bear interest from the Closing Date; provided, however, that if, as of the date of authentication of any Bond, interest thereon is in default, such Bond will 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 been paid or made available for payment.
Section 2. 2. Redemption of Bonds.
a) Oqtional Redemqtion. The Bonds maturing on or after September 2, may be redeemed at the option of the Authority on any date on and after September 2, from any source of available funds, prior to maturity as a whole, or in part from maturities corresponding proportionately to the maturities of the CFD Bonds and/ or Reassessment Bonds simultaneously redeemed, if any redemption of CFD Bonds and/ or Reassessment Bonds is being accomplished in conjunction with such optional redemption, and otherwise from such maturities as are selected by the Authority, and by lot within a maturity, at a redemption price equal to principal amount of the Bonds to be redeemed, plus a premium expressed below as a percentage of the principal amount so redeemed, plus accrued interest to the date of redemption thereof:
Redemption Date Redemqtion Premium
September 2, through August 31, 3%
September 2, through August 31, 2
September 2, through August 31, 1
September 2, and thereafter 0
Prior to such redemption the Authority will deliver to the Trustee a certificate of an Independent Financial Consultant verifying that, following such optional prepayment of the CFD Bonds and redemption of the Bonds, the principal and interest generated from the remaining CFD Bonds is adequate to make the timely payment of principal and interest due on the Bonds that will remain Outstanding hereunder following such redemption. In the event of insufficiency, the Independent Financial Consultant shall determine a limitation on the amount of Bonds to be optionally redeemed so as to comply with the foregoing requirement and the optional redemption of Bonds shall be so limited.
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b) Mandatory Special Redemption. The Bonds are subject to mandatory special redemption on any Interest Payment Date from proceeds of early redemption of CFD Bonds from Prepayment of Special Taxes or Reassessments, in whole or in part, in the amounts and among maturities the Authority shall select as directed to the Trustee in a Certificate of the Authority, at the principal amount thereof, plus a premium expressed below as a percentage of the principal amount so redeemed, plus accrued interest to the date of redemption thereof:
Redemption Date Redemption Premium
Interest Payment Dates through March 2, 3%
September 2, and March 2, 2
September 2, and March 2,
September 2, and thereafter
Prior to such redemption the Authority will deliver to the Trustee a certificate of an Independent Financial Consultant verifying that, following such early redemption of the CFD Bonds or Reassessment Bonds and redemption of the Bonds, the principal and interest generated from the remaining CFD Bonds and Reassessment Bonds is adequate to make the timely payment of principal and interest due on the Bonds that will remain Outstanding hereunder following such redemption. In the event of insufficiency, the Independent Financial Consultant shall calculate the amount needed to be deposited with the Trustee to sufficiently comply with the foregoing and the Trustee shall deposit proceeds of early redemption of CFD Bonds Bonds or Reassessment Bonds in such amount into the Revenue Fund, all as directed in a Certificate of the Authority.
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d) Notice of Redemqtion. The Trustee on behalf, and at the expense, of the Authority will mail ( by first class mail, postage prepaid) notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Bond Register, and to the Securities Depositories and to the Municipal Securities Rulemaking Board, at least 20 but not more than 60 days prior to the date fixed for redemption. Neither failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice will state the date of the notice, the redemption date, the redemption place and the redemption price and will designate the CUSIP numbers, the Bond numbers and the maturity or maturities ( in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and will require that such Bonds be then surrendered at the Trust Office of the Trustee for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. Any such notice of optional redemption may specify that redemption on the specified date will be subject to receipt by the Authority of moneys sufficient to cause such redemption ( and will specify the proposed source of such moneys), and neither the Authority nor the Trustee will have any liability to the Owners or any other party as a result of its failure to redeem the Bonds as a result of insufficient moneys.
The Authority has the right to rescind any optional redemption by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of optional redemption will be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation will not constitute an Event of Default hereunder. The Trustee will give notice of rescission of redemption in the same manner notice of redemption was originally provided.
In addition to the foregoing notice, further notice will be given by the Trustee in said form by first class mail to any Bondowner whose Bond has been called for redemption but who has failed to submit his Bond for payment by the date which is sixty days after the redemption date, but no defect in said further notice nor any failure to give or receive all or any portion of such further notice will in any manner defeat the effectiveness of a call for redemption.
Upon the payment by the Trustee from the applicable account in the Revenue Fund of the redemption price of the Bond being redeemed, each check or other transfer of funds issued for such purpose will, 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. e) Selection of Bonds of a Maturitv for Redemption. Unless otherwise provided hereunder, whenever provision is made in this Indenture or in the applicable Supplemental Indenture for the redemption of fewer than all of the Bonds of a series or maturity of the Bonds, the Authority will select the Bonds to be redeemed from all Bonds of such series and maturity not previously called for redemption, by lot in any manner which the Trustee in its sole discretion will deem appropriate and fair. For purposes of such selection, all Bonds will be deemed to be comprised of separate $ 5, 000 authorized denominations, and such separate authorized denominations will be treated as separate Bonds that may be separately redeemed. f) Partial Redemption of Bonds. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the Authority will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of the same maturity date, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed. 15 1125
g) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of and interest ( and premium, if any) on the Bonds so called for redemption will have been duly provided, such Bonds so called will cease to be entitled to any benefit under this Indenture other than the right to receive payment of the redemption price, and no interest will accrue thereon from and after the redemption date specified in such notice.
All Bonds redeemed pursuant to this Section 2. 2 will be cancelled and destroyed.
Section 2. 3. Form of Bonds. The Bonds, the form of Trustee' s certificate of authentication, and the form of assignment to appear thereon, will be substantially in the form 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 Indenture.
Section 2.4. Execution of Bonds. All the Bonds will, from time to time, be executed on behalf of the Authority by, or bear the manual or facsimile signature of, one of the members of the Board of Directors of the Authority and be attested by the manual or facsimile signature of the Secretary or by any deputy thereof. If any of the directors or officers who will have signed any of the Bonds or whose facsimile signature will be upon the Bonds will cease to be such officer of the Authority before the Bond so signed will have been actually authenticated by the Trustee or delivered, such Bonds nevertheless may be authenticated, issued and delivered with the same force and effect as though the person or persons who signed such Bonds or whose facsimile signature will be upon the Bonds had not ceased to be such officer of the Authority; and any such Bond may be signed on behalf of the Authority by those persons who, at the actual date of the execution of such Bonds, will be the proper officers of the Authority, although at the date of such Bond any such person will not have been such officer of the Authority.
Only such of the Bonds as will bear thereon a certificate of authentication in substantially the form set forth in Exhibit A, manually executed by the Trustee, will be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee will be conclusive evidence that the Bonds so authenticated have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
Section 2. 5. Transfer of Bonds. Subject to Section 2. 10, any Bond may in accordance with its terms, be transferred, upon the Bond Register, 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 written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Bond will be surrendered for transfer, the Authority will execute and the Trustee will thereupon authenticate and deliver to the transferee a new Bond or Bonds of like Series, tenor, maturity and aggregate principal amount. No Bonds selected for redemption will be subject to transfer pursuant to this Section nor will any Bond be subject to transfer during the fifteen days prior to the selection of Bonds for redemption.
The cost of printing any Bonds and any services rendered or any expenses incurred by the Trustee in connection with any transfer or exchange will be paid by the Authority. However, the Owners of the Bonds will be required to pay any tax or other governmental charge required to be paid for any exchange or registration of transfer and the Owners of the Bonds will be required to pay the reasonable fees and expenses of the Trustee and Authority in connection with the replacement of any mutilated, lost or stolen Bonds.
Section 2. 6. Exchange of Bonds. Subject to Section 2. 10, Bonds may be exchanged at the Trust Office of the Trustee for Bonds of the same Series, tenor and maturity and of other 16 1126
authorized denominations. No Bonds selected for redemption will be subject to exchange pursuant to this Section, nor will any Bond be subject to exchange during the fifteen days prior to the selection of Bonds for redemption. The Owners of the Bonds will be required to pay any tax or other governmental charge required to be paid for any exchange and the Owners of the Bonds will be required to pay the reasonable fees and expenses of the Trustee and Authority in connection with the exchange of any Bonds.
Section 2. 7. Temporary Bonds. The Bonds may be issued initially in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, will be of such denominations as may be determined by the Authority and may contain such reference to any of the provisions of this Indenture as may be appropriate.
Every temporary Bond will be executed by the Authority and be registered and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds, it will execute and furnish definitive Bonds without delay, and thereupon the temporary Bonds may be surrendered for cancellation, in exchange therefor at the Trust Office of the Trustee, and the Trustee will authenticate 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 will be entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered hereunder.
Section 2. 8. Bond Register. The Trustee will keep or cause to be kept at its Trust Office sufficient records for the registration and transfer of the Bonds, which will be the Bond Register and will at all times during regular business hours be open to inspection by the Authority upon reasonable notice; and, upon presentation for such purpose, the Trustee will, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said records, Bonds as hereinbefore provided.
Section 2. 9. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond will become mutilated, the Authority, at the expense of the Owner of said Bond, will execute, and the Trustee will thereupon authenticate and deliver, a new Bond of like series, tenor and authorized denomination in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee will be cancelled by it and destroyed in accordance with the retention policy of the Trustee then in effect.
If any Bond issued hereunder will be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence be satisfactory to it and indemnity satisfactory to it will be given, at the expense of the Bond Owner, the Authority will execute, and the Trustee will thereupon authenticate and deliver, a new Bond of like series and tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen ( or if any such Bond will have matured or will have been called for redemption, instead of issuing a substitute Bond the Trustee may pay the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee). The Trustee may require payment of a reasonable fee for each new Bond issued under this Section and of the expenses which may be incurred by the Authority and the Trustee. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen will constitute an original contractual obligation on the part of the Authority whether or not the Bond alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and will be equally and proportionately entitled to the benefits of this Indenture with all other Bonds secured by this Indenture.
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Section 2. 10. Book-Entry System.
a) All Bonds will be initially issued in the form of a separate single certificated fully registered Bond for each maturity date of the Bonds. Upon initial issuance, the ownership of each Bond will be registered in the Bond Register in the name of Cede & Co., as nominee of DTC.
Except as provided in Section 2. 10( d), all Outstanding Bonds will be registered in the Bond Register in the name of Cede & Co., as nominee of DTC.
b) With respect to Bonds registered in the Bond Register in the name of Cede & Co., as nominee of DTC, the Authority and the Trustee will have no responsibility or obligation with respect to( i) the accuracy of the records of DTC, Cede& Co. or any DTC Participant with respect to any ownership interest in the Bonds, ( ii) the delivery to any DTC Participant or any other person, other than an Owner, as shown in the Bond Register, of any notice with respect to the Bonds, including any notice of redemption, or( iii) the payment to any DTC Participant or any other person, other than an Owner, as shown in the Bond Register, of any amount with respect to principal of, premium, if any, or interest on the Bonds. The Authority and the Trustee may treat and consider the person in whose name each Bond is registered in the Bond Register as the holder and absolute owner of such Bond for the purpose of payment of principal, premium, if any, and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Trustee will pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Owners, as shown in the Bond Register, as provided in Section 2. 8, or their respective attorneys duly authorized in writing, and all such payments will be valid and effective to fully satisfy and discharge the Authority' s obligations with respect to payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the Bond Register, will receive a certificated Bond evidencing the obligation of the Authority to make payments of principal, premium, if any, and interest pursuant to this Indenture. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede Co., and subject to the provisions herein with respect to record dates, the word " Cede& Co." in this Indenture will refer to such new nominee of DTC.
c) The delivery of the Representation Letter and the Trustee will not in any way limit the provisions of Section 2. 10( b) or in any other way impose upon the Authority or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners, as shown on the Bond Register. The Trustee will take all action necessary for all representations in the Representation Letter with respect to the Trustee to be complied with at all times.
d) DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the Authority and the Trustee and discharging its responsibilities with respect thereto under applicable law. i) The Authority, in its sole discretion and without the consent of any other person, may terminate the services of DTC with respect to the Bonds if the Authority determines that:
A) DTC is unable to discharge its responsibilities with respect to the Bonds, or
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B) a continuation of the requirement that all Outstanding Bonds be registered in the Bond Register in the name of Cede & Co., or any other nominee of DTC, is not in the best interest of the beneficial owners of such Bonds. ii) Upon the termination of the services of DTC with respect to the Bonds pursuant to subsection 2. 10( d)( i)( B), or upon the discontinuance or termination of the services of DTC with respect to the Bonds pursuant to subsection 2. 10( d)( i)( A) after which no substitute securities depository willing to undertake the functions of DTC hereunder can be found which, in the opinion of the Authority, is willing and able to undertake such functions upon reasonable and customary terms, the Authority is obligated to deliver Bond certificates, as described in this Indenture and the Bonds will no longer be restricted to being registered in the Bond Register in the name of Cede & Co. as nominee of DTC, but may be registered in whatever name or names DTC will designate to the Trustee in writing, in accordance with the provisions of this Indenture.
e) Notwithstanding any other provisions of this Indenture to the contrary, as long as any Bond is registered in the name of Cede& Co., as nominee of DTC, all payments with respect to principal or, premium, if any, and interest on such Bond and all notices with respect to such Bond will be made and given, respectively, in the manner provided in the Representation Letter.
Section 2. 11. Validity of Bonds. The validity of the authorization and issuance of the Bonds will not be affected in any way by any proceedings taken by the Authority or the City with respect to the application of the proceeds of the Bonds, and the recital contained in the Bonds that the same are issued pursuant to the Bond Law will be conclusive evidence of their validity and of the regularity of their issuance.
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ARTICLE ill
DEPOSIT AND APPLICATION OF PROCEEDS
Section 3. 1. Issuance of Bonds. Upon the execution and delivery of this Indenture and compliance with the requirements set forth in Section 2. 1, the Authority will execute and deliver the Bonds in the principal amounts set forth in Section 2. 1 to the Trustee for authentication and delivery to the Original Purchaser thereof upon the Request of the Authority.
Section 3. 2. Purchase Fund. The Trustee shall establish and maintain a separate fund to be known as the " Purchase Fund" into which shall be deposited a portion of the proceeds of sale of the Bonds pursuant to Section 3. 3 hereof. The Trustee shall use the proceeds of the Bonds deposited into the Purchase Fund to (i) purchase Acquired Obligations by the Authority for the amount of$ on the Closing Date, allocated as follows:
i) For purchase of the CFD Bonds: an amount equal to$ which is equal to the initial principal amount of the CFD Bonds ($ plus an original issue premium of $ and less an underwriter' s discount of $ and less the amount of$ of CFD Bond proceeds contributed to the Costs of Issuance Fund.
ii) For purchase of the Assessment Bonds: an amount equal to which is equal to the initial principal amount of the Assessment Bonds plus an original issue premium of $ and less an
underwriter' s discount of $ and less the amount of $ of Assessment Bond proceeds contributed to the Costs of Issuance Fund.
Section 3. 3. Application of Proceeds of Sale of Bonds . a) Upon receipt by the Trustee of the proceeds of the Bonds on the Closing Date, the Authority is deemed to have completed the purchase of and payment for the CFD Bonds and Reassessment Bonds at a purchase price equal to the par amount of such bonds. The Trustee shall apply the proceeds of the sale of the Bonds received on the Closing Date, being an amount equal to $ constituting the aggregate principal amount of the Bonds, less original issue discount of$ less an Underwriter' s discount of$ as set forth in subsection ( b) below.
b) Each series of Acquired Obligations shall bear a proportionate share of the benefits and burdens related to the purchase price of the Bonds, including the underwriter' s discount. The available amount of proceeds of each respective series of Acquired Obligations is calculated as the principal amount of the respective series of Acquired Obligations, less original issue discount and less the allocable share of Underwriter' s discount, as follows. i) for the CFD Bonds, $
ii) for the Assessment Bonds, $
c) On the Closing Date, the Trustee shall apply the available proceeds of the sale of the CFD Bonds as set forth in subsection ( b) above, as follows:
i) CFD Bonds: Available proceeds of$ shall be used as follows:
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A) $ will be deposited into the 2013 CFD Bonds Account
of the Escrow Fund established under the Escrow Agreement.
B) $ will be deposited in the CFD Reserve Fund to be
used in accordance with Section 6. 9.
C) Costs of Issuance.
d) On the Closing Date, the Trustee shall apply the available proceeds of the sale of the Reassessment Bonds as set forth in subsection ( b) above, as follows:
i) Reassessment Bonds: Available proceeds of$ shall be used as follows:
A) $ will be deposited into the 2013 Reassessment Bonds Account of the Escrow Fund established under the Escrow Agreement.
B) $ will be deposited in the Reassessment_Reserve Fund to be used in accordance with Section 7. 9.
C) Costs of Issuance.
Section 3. 4. Costs of Issuance Fund. The Trustee will establish and maintain a fund known as the " Costs of Issuance Fund" into which will be deposited the amounts set forth in Section 3. 3. The moneys in the Costs of Issuance Fund will be used to pay Costs of Issuance from time to time upon receipt by the Trustee of a Request of the Authority or Request of the City.
On the date which is 90 days following the Closing Date, or upon the earlier receipt by the Trustee of a Request of the Authority or Request of the City stating that all Costs of Issuance have been paid, the Trustee will transfer all remaining amounts in the Costs of Issuance Fund to the Revenue Fund, for payment of debt service on the Bonds. Upon such transfer, the Costs of Issuance Fund will be closed and the Trustee will no longer be obligated to make payments for Costs of Issuance.
The Authority or the City may at any time file a Request of the Authority or Request of the City requesting that the Trustee retain a specified amount in the Costs of Issuance Fund and transfer to the Revenue Fund all remaining amounts, and upon receipt of such request by the Trustee, the Trustee will comply with such request.
Section 3. 5. Reserved.
Section 3. 6. Rebate Fund. Upon the initial need arises for a deposit to be made into the Rebate Fund, the Trustee shall establish and maintain a separate fund to be known as the Rebate Fund" to be administered as described in Section 5. 8. 21 1131
ARTICLE IV
REVENUES; FLOW OF FUNDS
Section 4. 1. Pledge of Revenues; Assignment of Rights. Subject to the provisions of Sections 8. 3 and 11. 3, the Bonds will be secured by a first lien on and pledge ( which will be effected in the manner and to the extent hereinafter provided) of all of the Revenues. The Bonds will be equally secured by a pledge, charge and lien upon the Revenues without priority for any Bond over any other Bond; and the payment of the interest on and principal of the Bonds and any premiums upon the redemption of any Bonds will be and are secured by an exclusive pledge, charge and lien upon the Revenues. So long as any of the Bonds are Outstanding, the Revenues will not be used for any purpose except as is expressly permitted by this Indenture.
The Authority hereby transfers in trust, grants a security interest in and assigns to the Trustee, for the benefit of the Owners from time to time of the Bonds all of the Revenues and all of the right, title and interest of the Authority in the Acquired Obligations, subject to the terms of this Indenture. The Trustee will be entitled to and will collect and receive all of the Revenues, and any Revenues collected or received by the Authority will be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and will forthwith be paid by the Authority to the Trustee. Subject to the provisions of Section 10. 2, the Trustee also will be entitled to and will take all steps, actions and proceedings reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, all of the rights of the Authority and all of the obligations of the Authority under the Acquired Obligations.
Upon the deposit with the Trustee of moneys sufficient to pay all principal of, premium, if any, and interest on the Bonds and upon satisfaction of all claims against the Authority hereunder with respect to the Bonds, including all fees, charges and expenses of the Trustee and the Authority which are properly payable hereunder, or upon the making of adequate provisions for the payment of such amounts as permitted hereby, all moneys remaining in all funds and accounts pertaining to such Bonds( except any amounts on deposit in the Rebate Fund and except moneys necessary to pay principal of, premium, if any, and interest on such series of Bonds, which moneys will be held by the Trustee pursuant to Section 11. 3), will no longer be considered Revenues and are not pledged to repay the Bonds. Such amounts will be held by the Trustee for the then outstanding Acquired Obligations. In the event that the Acquired Obligations have been paid or defeased, then any such amounts will be paid by the Trustee to or upon the direction of the Authority to be used by the Authority for additional authorized expenses, as a credit to the following year' s applicable Special Tax or Reassessment levy and/ or refunded to payors of the applicable Special Taxes or Reassessments.
Section 4. 2. Receipt, Deposit and Application of Revenues; Revenue Fund. a) All Revenues described in clause ( a) of the definition thereof in Section 1. 1 will be promptly deposited by the Trustee upon receipt thereof in the " Revenue Fund," which shall be established and held by the Trustee in trust for the benefit of the Authority and the Owners of the Bonds.
On or before each Interest Payment Date and date for redemption of the Bonds, the Trustee will transfer from the Revenue Fund, and deposit into the following respective accounts for the Bonds, each of which will be held in trust by the Trustee within the Revenue Fund, the following amounts in the following order of priority, the requirements of each such account including the making up of any deficiencies in any such account resulting from lack of Revenues 22 1132
sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:
i) Interest Account. On each Interest Payment Date and redemption date, the Trustee will deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest becoming due and payable on such Interest Payment Date on all Outstanding Bonds or to be paid on the Bonds being redeemed on such date. No deposit need be made into the Interest Account if the amount contained therein is at least equal to the interest becoming due and payable upon all Outstanding Bonds on the next succeeding Interest Payment Date or redemption date, as applicable. All moneys in the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it will become due and payable ( including accrued interest on any Bonds redeemed prior to maturity). In the event that the amounts on deposit in the Interest Account on any Interest Payment Date or redemption date are insufficient for any reason to pay the aggregate amount of interest then coming due and payable on the Outstanding Bonds, the Trustee will apply such amounts to the payment of interest on each of the Outstanding Bonds on a pro rata basis. ii) Principal Account. On each Interest Payment Date and redemption date on which the principal of the Bonds will be payable, the Trustee will deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of, and premium (if any) on, the Bonds coming due and payable on such Interest Payment Date, or required to be redeemed on such date pursuant to Section 2. 2; provided, however, that no amount will be deposited to effect a redemption pursuant to Section 2. 2( a) or 2. 2( b) unless the Trustee has first received a certificate of an Independent Accountant certifying that such deposit to effect an optional redemption of the Bonds will not impair the ability of the Authority to make timely payment of the principal of and interest on the Bonds, assuming for such purposes that the CFD continues to make timely payments on the CFD Bonds not then in default. All moneys in the Principal Account will be used and withdrawn by the Trustee solely for the purpose of i) paying the principal of the Bonds at the maturity thereof or ( ii) paying the principal of and premium ( if any) on any Bonds upon the redemption thereof pursuant to Section 2. 2. b) If on any Interest Payment Date or date for redemption the amount on deposit in the Revenue Fund is inadequate to make the transfers described in subsection ( a) above as a result of a payment default on an issue of CFD Bonds, the Trustee will notify the Authority of the amount needed to make the required deposits under subsection ( a) above. c) On each Interest Payment Date after making the transfers required under subsections ( a) and ( b) above, upon receipt of a Request of the Authority to do so, the Trustee will transfer from the Revenue Fund to the Rebate Fund for deposit therein the amounts specified in such Request.
Section 4. 3. No Separate Reserve Fund. The Trustee shall not maintain a separate fund for the Bonds, it being understood that the CFD Reserve Fund and Reassessment Reserve Fund benefit payment of the Bonds.
Section 4. 4. Investments. All moneys in any of the funds or accounts established with the Trustee pursuant to this Indenture will be invested by the Trustee solely in Permitted Investments, as directed pursuant to the Request of the Authority filed with the Trustee at least two( 2) Business Days in advance of the making of such investments. The Trustee will be entitled 23 1133
to conclusively rely on any such Request of the Authority and will be fully protected in relying thereon. In the absence of any such Request of the Authority the Trustee will invest any such moneys in Permitted Investments described in clause ( h) of the definition thereof provided, however, that any such investment will be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee will have received a Request of the Authority specifying a specific money market fund and, if no such Request of the Authority is so received, the Trustee will hold such moneys uninvested. The Trustee will be entitled to rely upon any investment directions from the Authority as conclusive certification to the Trustee that the investments described therein are so authorized under the laws of the State of California and qualify as Permitted Investments. Permitted Investments purchased as an investment of moneys in any fund or account established pursuant to this Indenture will be deemed to be part of such fund or account.
All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder will be deposited in the fund or account from which such investment was made.
For purposes of acquiring any investments hereunder, the Trustee may commingle moneys held by it in any of the funds and accounts held by it hereunder. The Trustee and its affiliates may act as advisor, sponsor, principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor. The Trustee and its affiliates may make any and all investments permitted herein through its own investment department. The Trustee will incur no liability for losses arising from any investments made pursuant to this Section
4. 4.
The Authority acknowledges that, to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority the right to receive brokerage confirmations of security transactions as they occur, the Authority specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the Authority periodic cash transaction statements which shall include detail for all investment transactions made by the Trustee hereunder.
Section 4. 5. Valuation and Disposition of Investments. a) Except as otherwise provided in subsection ( b) of this Section, the Authority covenants that all investments of amounts deposited in any fund or account created by or pursuant to this Indenture, or otherwise containing gross proceeds of the Bonds ( within the meaning of section 148 of the Code) will be acquired, disposed of, and valued by the Authority as of the date that valuation is required by this Indenture or the Code) at Fair Market Value. b) Investments in funds or accounts ( or portions thereof) that are subject to a yield restriction under applicable provisions of the Code will be valued by the Authority at their present value (within the meaning of section 148 of the Code).
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ARTICLE V
COVENANTS OF THE AUTHORITY
Section 5. 1. Punctual Payment. The Authority will punctually pay or cause to be paid the principal and interest and premium ( if any) to become due in respect of all the Bonds, in strict conformity with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, but only out of Revenues and other assets pledged for such payment as provided in this Indenture.
Section 5. 2. Extension of Payment of Bonds. The Authority will not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest will be extended, such Bonds or claims for interest will not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which will have been so extended. Nothing in this Section will be deemed to limit the right of the Authority to issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance will not be deemed to constitute an extension of maturity of the Bonds.
Section 5. 3. Against Encumbrances. The Authority will not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the pledge and assignment created by this Indenture and except as otherwise permitted by Section
5.6 of this Indenture. Subject to this limitation, the Authority expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, including other programs under the Bond Law, and reserves the right to issue other obligations for such purposes.
Section 5. 4. Power to Issue Bonds and Make Pledge and Assignment. The Authority is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to pledge and assign the Revenues, the Acquired Obligations and other assets purported to be pledged and assigned, respectively, under this Indenture. The Bonds and the provisions of this Indenture are and will be the legal, valid and binding limited, special obligations of the Authority in accordance with their terms, and the Authority and the Trustee will at all times, subject to the provisions of Article VIII and to the extent permitted by law, defend, preserve and protect said pledge and assignment of the Revenues, the Acquired Obligations and other assets and all the rights of the Bond Owners under this Indenture against all claims and demands of all persons whomsoever.
Section 5. 5. Accounting Records and Financial Statements. The Trustee will at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with corporate trust industry standards in which complete and accurate entries will be made of transactions made by it relating to the proceeds of Bonds, the Revenues, the Acquired Obligations and all funds and accounts established pursuant to this Indenture. Such books of record and account will be available for inspection by the Authority and the City upon reasonable prior notice during regular business hours and under reasonable circumstances, in each case as agreed to by the Trustee.
Not later than 45 days following each Interest Payment Date, the Trustee will prepare and file with the Authority a report setting forth: ( i) amounts withdrawn from and deposited into each 25 1135
fund and account maintained by the Trustee under this Indenture; ( ii) the balance on deposit in each fund and account as of the date for which such report is prepared; and ( iii) a brief description of all obligations held as investments in each fund and account. Copies of such reports may be mailed to any Owner upon the Owner' s written request to the Trustee at the expense of such Owner at a cost not to exceed the Trustee' s actual costs of duplication and mailing.
Section 5. 6. No Additional Bonds, Except for Refunding. The Authority may not issue any additional bonds, notes or other obligations payable from the Revenues on a parity with the Bonds, except that the Authority may issue bonds, notes or other obligations for the purpose of refunding any Outstanding Bonds in whole or in part.
Section 5. 7. Tax Covenants.
a) Private Activity Bond Limitation. The Authority will assure that the proceeds of the Bonds are not used so as to cause the Bonds to satisfy the private business tests of Section 141( b) of the Code or the private loan financing test of Section 141( c) of the Code. b) Federal Guarantee Prohibition. The Authority will not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Bonds to be" federally guaranteed" within the meaning of Section 149( b) of the Code. c) No Arbitraqe. The Authority will not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the Bond proceeds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date, would have caused the Bonds to be" arbitrage bonds" within the meaning of Section 148 of the Code.
d) Rebate of Excess Investment Earninqs to United States. The Authority will calculate or cause to be calculated excess investment earnings with respect to the Bonds which are required to be rebated to the United States of America pursuant to Section 148( of the Code, and will pay the full amount of such excess investment earnings to the United States of America in such amounts, at such times and in such manner as may be required pursuant to the Code.
Such payments will be made by the Authority from any source of legally available funds of the Authority, including amounts deposited into the Rebate Fund, if any. The Authority will keep or cause to be kept, and retain or cause to be retained for a period of six( 6) years following the final payment of the Bonds, records of the determinations made pursuant to this subsection ( d). In order to provide for the administration of this subsection ( d), the Authority may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the Authority may deem appropriate. e) Maintenance of Tax Exemption. The Authority will take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners thereof to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Bonds.
f) Record Retention. The Authority will retain its records of all accounting and monitoring it carries out with respect to the Bonds for at least 3 years after the Bonds mature or are redeemed ( whichever is earlier); however, if the Bonds are redeemed and refunded, the Authority will retain its records of accounting and monitoring at least 3 years after the earlier of the maturity or redemption of the obligations that refunded the Bonds. 26 1136
g) Compliance with Tax Certificate. The Authority will comply with the provisions of the Tax Certificate and the Use of Proceeds Certificate with respect to the Bonds, which are incorporated herein as if fully set forth herein. The covenants of this Section will survive payment in full or defeasance of the Bonds.
Section 5. 8. Rebate Fund.
a) Establishment. The Trustee will establish a Rebate Fund pursuant to Section 3. 6 when deposits are required to be made therein. Absent an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest on the Bonds will not be adversely affected, the Authority will cause to be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to this Section, Section 5. 8( d) and the Code. All money at any time deposited in the Rebate Fund will be held by the Trustee in trust for payment to the United States Treasury in accordance with written instructions given by the Authority to the Trustee, upon which the Trustee may conclusively rely.
b) Disposition of Unexqended Funds. Any funds remaining in the Rebate Fund after redemption and payment of the Bonds and after payment of all the amounts payable to the United States Treasury from the Rebate Fund, including accrued interest and payment of all applicable fees to the Trustee, may be withdrawn by the Trustee and remitted to the Authority and utilized in any manner by the Authority.
Section 5. 9. Continuing Disclosure. The Authority hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate.
Notwithstanding any other provision of this Indenture, failure of the Authority to comply with the Continuing Disclosure Certificate will not be considered an Event of Default; however, any Participating Underwriter or any holder or beneficial owner of the Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.
Section 5. 10. Compliance with Reporting Requirements of Bond Law. a) The Authority hereby covenants and agrees that it will comply with and carry out all of the reporting requirements of the Bond Law, including, but not limited to, Section 6599. 1 thereof.
b) Not later than January 1 of the year following issuance of the Bonds, and at least once a year thereafter, the Authority shall file a report with the Board in accordance with the requirements of Government Code Section 53411, which report shall contain: ( i) the amount of Revenues collected and expended; and ( ii) if applicable, the status of the Project financed by the Bonds. In addition, no later than seven months after the end of the Authority' s fiscal year, the Authority shall prepare and supply to CDIAC the information required by Section 8855( k) of the Government Code. The annual reporting shall be made using such form or forms as may be prescribed by CDIAC.
Section 5. 11. Further Assurances. The Authority and the City will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Bonds the rights and benefits provided in this Indenture.
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Section 5. 12. Collection of Special Taxes and Reassessments. The City covenants to comply with all requirements of the Mello- Roos Act so as to assure the timely collection of Special Taxes and Reassessments, including without limitation, the enforcement of delinquent Special Taxes and Reassessments.
On or within five ( 5) Business Days of each June 1, the Trustee shall provide the City with a notice stating the amount then on deposit in the Revenue Fund, the CFD Reserve Fund and the Reassessment Reserve Fund. The receipt of such notice by the City shall in no way affect the obligations of the City under the following two paragraphs. Upon receipt of such notice, the City shall ascertain the relevant parcels on which the Special Taxes and Reassessments are to be levied, taking into account any parcel splits during the preceding and then current year.
The City shall fix and levy the amount of Special Taxes and Reassessments required for the payment of principal of and interest on any outstanding CFD Bonds becoming due and payable during the ensuing Bond Year, including any necessary replenishment or expenditure of the CFD Reserve Fund and/or the Reassessment Reserve Fund attributable to the related bonds and an amount estimated to be sufficient to pay the Administrative Expenses during such year.
The Special Taxes and Reassessments shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property.
Section 5. 13. Ownership of Acquired Obligations. Subject to the provisions of this Indenture( including Article VIII), the Authority and the Trustee will use reasonable efforts to collect all amounts due on the Acquired Obligations and will enforce, and take all steps, actions and proceedings which the Authority and Trustee determine to be reasonably necessary for the enforcement of all of the rights of the Authority thereunder and for the enforcement of all of the obligations and covenants of the Authority. The Trustee will authenticate and hold the Acquired Obligations registered in the name of the Trustee, as assignee of the Authority, as set forth in Article VI and VII hereof.
Section 5. 14. Administration of the CFD Bonds. The Authority and Trustee shall enforce all of their rights with respect to the Acquired Obligations to the fullest extent necessary to preserve the rights and protect the security of the Bondowners under this Indenture. The Authority, as owner of the Acquired Obligations, and the Trustee, may, without the consent of or notice to the Owners consent to any amendment, change or modification of any series of Acquired Obligations as follows:
a) to conform to the provisions of this Indenture ( including any modifications or changes contained in any Supplemental Indenture);
b) for the purpose of curing any ambiguity or inconsistency or formal defect or omission;
c) so as to add additional rights acquired in accordance with the provisions of such series of Acquired Obligations;
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d) in connection with any other change therein, provided under that such change will not materially adversely affect the interests of the Owners of the Bonds in the opinion of nationally- recognized bond counsel filed with the Trustee; e) in the opinion of Bond Counsel, to preserve or assure the exemption of interest on the Bonds from federal income taxes or the exemption from California personal income tax;
f) any amendment to a series of Acquired Obligations or any change or modification of the Reassessment District or CFD, including a change to the method of apportionment of special taxes, provided, that the Trustee shall have received a certificate of the City to the effect that, after giving effect to the change or modification:
A) The maximum Special Taxes that may be levied in each year on property within the Reassessment District and the CFD is not less than 110% of the principal and interest due plus Administrative Expenses in each corresponding future Bond Year with respect to the respective Reassessment Bonds or CFD Bonds Outstanding, as applicable, as of the date of such change or modification that the maximum Special Taxes or Reassessments, as applicable, that may be levied in each year on property within such CFD or Reassessment District is not less than 110% of the principal and interest due on such series of Reassessment Bonds or CFD Bonds in each corresponding future Bond Year.
Except for amendments, changes or modifications provided for in the preceding paragraph, neither the Authority nor the Trustee shall consent to any amendment, change or modification of any CFD Bonds without the mailing of notice and the written approval or consent of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding. Nothing contained in this Section shall be construed to prevent the Trustee, with the consent of the Authority, from settling a default under the CFD Bonds or Reassessment Bonds on such terms as the Authority may determine to be in the best interests of the Owners. 29 1139
ARTICLE VI
THE CFD BONDS
Section 6. 1. Findings.
a) The City has reviewed all proceedings heretofore taken relative to the CFD and has found, as a result of such review, and does hereby find and determine that all acts, conditions and things required by law to exist, to happen and to be performed precedent to and in the issuance of the CFD Bonds as hereinafter authorized and provided have occurred as required by law, and the City is now authorized pursuant to the Act and the Mello- Roos Act to issue the CFD Bonds in the manner and form as provided in this Indenture. b) The City declares and determines that it does not obligate itself to advance, and will not advance, funds from its own fund to cure any deficiency which may occur at any time in the payment of any of the CFD Bonds.
Section 6. 2. Issuance of CFD Bonds. The CFD Bonds shall be issued as provided herein upon the security of the Special Taxes to be levied and shall be secured by said Special Taxes in accordance with the provisions of the Mello- Roos Act and the proceedings of the City Council of the City taken thereunder with respect to the CFD. The CFD Bonds shall be dated the Dated Date. The CFD Bonds shall be limited to the aggregate principal amounts, and shall be known, as described in this Indenture.
Section 6. 3. Registration and Denominations. The CFD Bonds shall be issued as fully registered bonds, registered in the name of the Trustee, shall be of the denomination of any amount, expressed in dollars and cents, but not exceeding the principal amount of CFD Bonds maturing on any one date, as determined by the registered owners thereof (not exceeding the principal amount of CFD Bonds maturing at any one time). No CUSIP numbers shall be assigned to the CFD Bonds unless required or desired by the owner thereof. Upon the execution and delivery of this Indenture and satisfaction of the conditions for issuance of the CFD Bonds set forth herein, the City shall execute and the Trustee shall authenticate the CFD Bonds registered in the name of the Trustee, as assignee of the Authority.
Section 6. 4. Maturity Schedules and Payment Terms.
a) The CFD Bonds shall be issued as term bonds, dated the Closing Date and will mature on September 2 in each of the years and in the amounts, and will bear interest( calculated on the basis of a 360-day year of twelve 30-day months) at the rates per annum as set forth in Exhibit B attached hereto, and shall be payable as set forth in Exhibit D- 1 hereto. b) The CFD Bonds shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless ( a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it will bear interest from such Interest Payment Date; or ( b) it is authenticated on or before August 15, 2023, in which event it will bear interest from the Closing Date; provided, however, that if, as of the date of authentication of any CFD Bond, interest thereon is in default, such CFD Bond will 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 been paid or made available for payment. 30 1140
c) Interest and principal on the CFD Bonds will be payable to the Trustee ( as the assignee of the Authority as the Owner thereofl in lawful money of the United States of America on each Interest Payment Date. Payment of the interest on and principal and redemption premiums, if any, of the CFD Bonds due on or before the maturity or prior to redemption thereof shall be made by wire transfer of immediately available funds to the Trustee, as the registered owner of the CFD Bonds.
If on any Interest Payment Date the Trustee is unable to pay principal, interest and premium, if any, due on any Interest Payment Date for the CFD Bonds due to insufficient funds in the Special Tax Fund, or if funds are withdrawn from the CFD Reserve Fund to pay principal and/ or interest on the Bonds the Trustee shall notify the City in writing of such fact, and the City, shall notify CDIAC of such fact within 10 days of such Interest Payment Date. The Trustee has no obligation under this Indenture to provide notice or disclosure to the Owners of insu cient funds or anticipation of deficiency in the Special Tax Fund or the Revenue Fund.
Section 6. 5. Redemption of CFD Bonds.
a) Optional Redemption. Any CFD Bond may be redeemed in whole or in part, in any amount, at the option of the City, upon payment of the principal amount thereof and interest accrued thereon to the date of redemption, in the same years and on the same terms as the Bonds as set forth in Section 2. 2( a).
b) Prepavment Redemption. Any CFD Bond may be redeemed in whole or in part, in any amount, from Prepayments of Special Taxes, upon payment of the principal amount thereof and interest accrued thereon to the date of redemption, in the same years and on the same terms as the Bonds as set forth in Section 2.2( b).
c) Mandatory Redemption of Term Bonds. The CFD Bonds, which are all issued as term bonds, are subject to mandatory redemption as specified in Exhibit B attached hereto.
In the event that CFD Bonds subject to mandatory redemption pursuant to this Section are redeemed in part prior to their stated maturity date from optional or prepayment redemption, the amounts in the above tables, may be reduced in each year remaining until and including the final maturity date of such CFD Bonds as specified in a Written Request of the City provided to the Trustee.
Section 6. 6. Form and Execution of CFD Bonds. The CFD Bonds shall be in substantially the form, the blanks to be filled in with appropriate words or figures, as shown in Exhibit B, attached hereto and incorporated herein. The Mayor of the City shall execute each of the CFD Bonds on behalf of the City, manually or by use of their engraved, printed or lithographed facsimile signatures. Such signing as herein provided shall be a sufficient and binding execution of the CFD Bonds by the City. If the Mayor of the City shall cease to be such officer before the delivery of the CFD Bonds to the Trustee, such signature shall nevertheless be valid and sufficient for all purposes the same as though such officer had remained in office until the delivery of the CFD Bonds. Only such of the CFD Bonds as shall bear thereon a certificate of registration and authentication in the form set forth in Exhibit B, executed and dated by an authorized officer of the City, shall be entitled to any benefits hereunder or be valid or obligatory for any purpose, and such certificate shall be conclusive evidence that the CFD Bonds so authenticated have been duly authorized, executed, issued and delivered hereunder and are entitled to the benefits hereof. 31 1141
Section 6. 7. Pledge of Special Tax Revenues to CFD Bonds. The Special Tax Revenues of the CFD shall constitute a trust fund for the redemption and payment of the principal and interest as it becomes due on the CFD Bonds until paid. All of the Special Tax Revenues and all moneys deposited in the Special Tax Fund are hereby pledged to secure the repayment of the CFD Bonds as provided herein. Such pledge shall constitute a first lien on the Special Taxes of the CFD. The Special Tax Revenues and all moneys deposited into the Special Tax Fund (except as otherwise provided herein) are hereby dedicated in their entirety to the payment of the principal of, including any mandatory sinking fund payments, and interest and any premium on, the CFD Bonds as provided herein and in the Mello- Roos Act until all of the the CFD Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in accordance with Section 10. 3.
Section 6. 8. Special Tax Fund. The City shall forward, or cause the county in which the CFD is located, to forward, all Special Tax Revenues, to the Trustee. The Trustee, on behalf of the City, will establish and maintain a separate fund to be held by the Trustee to be known as the" Special Tax Fund," to the credit of which the Trustee shall deposit, immediately upon receipt, all the Special Tax Revenues received by the Trustee, on behalf of the City, and any other amounts required hereunder to be deposited in the Special Tax Fund. Moneys in the Special Tax Fund shall be held in trust by the Trustee, on behalf of the City, for the benefit of the Owners of the Bonds and, pending any disbursement as described below, shall be subject to a lien in favor of the Authority, as owner of the CFD Bonds
Except for the portion of any Prepayment to be deposited to the Redemption Account, the Trustee will, on each date on which the Special Taxes are received from the City, deposit the Special Taxes in the Special Tax Fund to be held in trust for the Authority, as sole Owner of the CFD Bonds. As soon as practicable after the receipt by the Trustee of any Special Tax Revenues, including any interest and penalties, other than as a result of Prepayments, or the transfer of amounts to the accounts of the Special Tax Fund pursuant to the terms hereof, but no later than ten ( 10) Business Days prior to the next Interest Payment Date, the Trustee shall withdraw from the accounts within the Special Tax Fund and deposit the following amounts in the following order of priority:
i) in the Revenue Fund an amount equal to the portion of the Special Tax Revenues that represent the portion of the collection amount attributable to the payment of principal, premium, if any, and interest next due on the CFD Bonds; and ii) in the CFD Reserve Fund, an amount, but only to the extent that a draw on the CFD Reserve Fund has occurred which is attributable to deficiencies in the payment of the CFD Bonds, equal to the amount drawn from the CFD Reserve Fund.
As to receipt by the City or the Trustee of Prepayment of the Special Taxes, the City shall deliver to the Trustee in a Certificate of the City directing the Trustee to deposit the P epayment amount into the corresponding account of the Prepayment Fund to be disbursed as set forth in Section 6. 11.
On or about September 2 of each year, the Trustee shall notify the City of any amounts remaining in the Special Tax Fund, which amounts shall be released from the lien and pledge in favor of the Bonds, and may be used by the City to pay for Administrative Expenses in excess of the amount of any Administrative Expenses, or for any other lawful purpose, and the Trustee shall transfer such amounts to, or upon the order of, the City, as set forth in a Certificate of the City delivered to the Trustee.
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Section 6. 9. CFD Reserve Fund. The Trustee shall establish and maintain a separate fund to be held by the Trustee to be known as the " CFD Reserve Fund,"), to the credit of which the Trustee shall deposit, immediately upon receipt, reserve proceeds as set forth in Section
3. 3( c) and amounts required to be deposited pursuant to Section 6. 8 above, equal to the initial CFD Reserve Requirement. Moneys the CFD Reserve Fund shall be held in trust by the Trustee for the benefit of the Trustee ( as assignee of the Authority, as owner of the CFD Bonds), and the Owners of the Bonds and, pending any disbursement, shall be subject to a lien in favor of the City and the Owners of the Bonds, provided however, that the CFD Reserve Fund shall be available only for the CFD Bonds, there is no " cross collateralization" among the Bonds or the Reassessment Bonds.
i) The CFD Reserve Requirement shall be maintained in the CFD Reserve Fund, provided however In the event that the amount of the CFD Reserve Requirement is reduced because of the payment at final maturity of the CFD Bonds or Prepayment of Special Taxes, the Trustee shall, upon receipt of a Request of the City, adjust the balance in the CFD Reserve Fund to an amount being the newly established CFD Reserve Requirement and transfer the excess funds as directed in a Certificate of the City. ii) Subject to the limitations set forth in the following paragraph, amounts in the CFD Reserve Fund shall be applied to pay the principal of and interest on the CFD Bonds when the available moneys in the Special Tax Fund are insufficient therefor. In addition, amounts in the CFD Reserve Fund may be applied ( i) in connection with an optional redemption of the CFD Bonds pursuant to Section 6.5(a) of this Indenture or a defeasance pursuant to Section 6. 14 of this Indenture, but only to the extent that amounts remaining on deposit in the CFD Reserve Fund after such application are equal to the then applicable CFD Reserve Requirement, ( ii) in connection with Prepayments of Special Taxes of the CFD, but only to the extent that amounts remaining on deposit in the CFD Reserve Fund after such application are equal to the CFD Reserve Requirement, or ( iii) when the balance therein equals the principal and interest due on the CFD Bonds to and including maturity.
iii) If the available amounts in the CFD Reserve Fund are insufficient to pay the principal of or interest on the CFD Bonds when due, the Trustee shall withdraw from the CFD Reserve Fund for deposit in the Special Tax Fund moneys necessary for such purposes, and the Trustee shall notify the City of such deficiency and the moneys necessary to make up the deficiency in the CFD Reserve Fund, and the City shall take into account such delinquency in future levies, as required.
Notwithstanding establishment of the CFD Reserve Fund for the payment of the principal of or interest on CFD Bonds when due, amounts in the CFD Reserve Fund may be disbursed to the City in such amount as determined by the City to be necessary to pay costs associated with collection of Special Taxes for the CFD to the extent required for compliance by the City of the covenant set forth in Section 6. 12 hereof. To the extent that the transfer of such moneys from the CFD Reserve Fund results in the amount on deposit to be below the applicable CFD Reserve Requirement, the City shall increase the applicable Special Tax levy in future years within the CFD until the amount on deposit in the CFD Reserve Fund is at least equal to the CFD Reserve Requirement.
iv) In the event Special Taxes are paid in cash in advance of the final maturity date of the CFD Bonds and the City is required to credit such prepaid Special Tax obligation to the CFD 33 1143
Reserve Fund thus reducing the total amount on deposit in the CFD Reserve Fund, the corresponding Special Tax obligation will receive such credit only if and to the extent that the amount which is eligible to be credited is not needed to redeem Bonds. If the all or part of the amount is needed to redeem Bonds, the City shall use it for such purpose. To the extent it is not needed, the amount to be so credited is the pro- rata share of the original amount deposited in the CFD Reserve Fund, less any amount previously transferred from the CFD Reserve Fund as a result of the delinquency in the payment of Special Tax installments for the parcel for which the Special Tax is being prepaid. The City shall direct the Trustee in writing to transfer the amount representing such credit from the CFD Reserve Fund to the Special Tax Fund or Prepayment Fund, as applicable, for the CFD Bond.
On August 1 of each year, any interest earned on the investment of monies on deposit in the CFD Reserve Fund which would cause the amount therein to exceed the CFD Reserve Requirement shall be applied as directed in a Certificate of the City. v) When amounts in the CFD Reserve Fund are sufficient to repay the remaining principal and interest due on the CFD Bonds that will be applied to the Bonds, such amount shall be transferred to the Special Tax Fund as a credit against the payments due on the CFD Bonds, with the amount transferred being deposited first to interest due on the CFD Bonds on such date and the balance being deposited to principal due on the CFD Bonds on such date.
Section 6. 10. CFD Administrative Expense Fund. The City shall establish and maintain a separate fund to be held by the City to be known as the " CFD Administrative Expense Fund" ( the " CFD Administrative Expense Fund"), to the credit of which the City shall deposit, immediately upon receipt, the Administrative Expenses attributable to the CFD Bonds and the Bonds and any amounts authorized by the City to be deposited pursuant to Section 6. 8 above.
The moneys in the CFD Administrative Expense Fund shall be disbursed to pay Administrative Expenses related to the CFD Bonds and the Bonds, as determined by the City to be necessary to carry out its obligations related to the CFD and the CFD Bonds.
Section 6. 11. CFD Bonds Prepayment Fund. There is hereby created and established a separate fund for the CFD Bonds to be known as the" Prepayment Fund." If and to the extent a Prepayment of Special Taxes for the CFD occurs, the City shall forward such prepayment to the Trustee and the Trustee shall deposit, immediately upon receipt, all Prepayments of Special Taxes received from the City. Moneys in the Prepayment Account shall be used exclusively for the administration of any prepayments of Special Taxes to assure the timely redemption of the CFD Bonds, as directed by the City. In the event all of the Special Taxes are prepaid in full, such Prepayment Account shall be closed.
Section 6. 12. Covenants of the City_. the City covenants as follows:
a) Punctual Pavment. It will duly and punctually pay or cause to be paid the principal of and interest on the CFD Bonds issued hereunder, together with the premium, if any to the extent that Special Tax Revenues and other amounts pledged hereunder are available for such payment.
b) Aaainst Encumbrance. It will not mortgage or otherwise encumber, pledge or place any charge upon any of the Special Tax Revenues except as provided hereunder, and will not issue any obligation or security having a lien or charge upon the Special Tax Revenues superior to or on parity with the CFD Bonds. Nothing hereunder prevents the City from issuing or incurring 34 1144
indebtedness that is payable from a pledge of Special Tax Revenues, which is subordinate in all respects to the pledge of Special Tax Revenues to repay the CFD Bonds. c) Levv of Special Tax. The City will comply with all requirements of the Mello-Roos Act so as to assure the timely collection of Gross Taxes, including without limitation, the enforcement of delinquent Special Taxes.
i) Processing. On or within 5 Business Days of each June 1, the Trustee will provide the Finance Director with a notice stating the amount then on deposit in the Special Tax Fund and the other funds and accounts held by the Trustee hereunder, whether or not amounts need to be deposited into the CFD Reserve Fund to increase the amounts on deposit in such account to the CFD Reserve Requirement, and informing the City that the Special Taxes need to be levied under the Ordinance as necessary to provide for the Special Tax Requirement ( as defined in clause ( iv) below). The receipt of or failure to receive such notice by the Finance Director will in no way affect the obligations of the Finance Director under the following two paragraphs and the Trustee will not be liable for failure to provide such notice to the Finance Director. Upon receipt of such notice, the Finance Director will communicate with the Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits or combinations during the preceding and then current year. ii) Levy. The Finance Director will effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance by each August 1 that the CFD Bonds are outstanding, or otherwise such that the computation of the levy is complete before the final date on which Auditor will accept the transmission of the Special Tax amounts for the parcels within the CFD for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, the Finance Director will prepare or cause to be prepared, and will transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next real property tax roll. iii) Computation. The Finance Director will fix and levy the amount of Special Taxes within the CFD in an amount sufficient, together with other amounts on deposit in the Special Tax Fund and available for such purpose, to pay ( A) the principal of and interest on the CFD Bonds when due, (B) the Administrative Expenses, including amounts necessary to discharge any rebate obligation, during such year and ( C) any amounts required to replenish the CFD Reserve Fund to the CFD Reserve Requirement ( the Special Tax RequiremenY'), taking into account the balances in such funds and in the Special Tax Fund. The Special Taxes so levied will not exceed the authorized amounts as provided in the proceedings under the Resolution of Formation. iv) Collection. The Special Taxes will be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property. d) Commence Foreclosure Proceedinps. Under the Mello- Roos Act, the City hereby covenants with and for the benefit of the Owners of the CFD Bonds that it will order, and cause to be commenced as hereinafter provided, and thereafter diligently prosecute to judgment( unless such delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due as provided in the following two 35 1145
paragraphs; provided however, that the City' s obligation to pursue foreclosure will be at the option of the City so long as (i) the County's Teeter Plan is in effect with respect to the delinquent parcel meeting the conditions below, and ( ii) there is no then- outstanding draw on the CFD Reserve Fund. In the event that either of these conditions is not met, the City will be obligated to pursue foreclosure as follows. The Finance Director will notify the City Attorney of any such delinquency of which the Finance Director is aware, and the City Attorney will commence, or cause to be commenced, such proceedings.
On or about January 30 and June 30 of each Fiscal Year, the Finance Director will compare the amount of Special Taxes theretofore levied in the CFD to the amount of Gross Taxes theretofore received by the City, and:
i) Individual Delinquencies. If the Finance Director determines that any single parcel subject to the Special Tax in the CFD is delinquent in the payment of Special Taxes in the aggregate amount of$ 3, 000 or more, then the Finance Director will send or cause to be sent a notice of delinquency( and a demand for immediate payment of the delinquent amounts) to the property owner within 60 days of such determination, and ( if the delinquency remains uncured) foreclosure proceedings will be commenced by the City within 120 days of such determination.
ii) Aggregate Delinquencies. If the Finance Director determines that the total amount of delinquent Special Tax for the prior Fiscal Year for the entire CFD ( including the total of delinquencies under paragraph ( i) above), exceeds 5% of the total Special Tax due and payable for the prior Fiscal Year, the City will notify or cause to be notified property owners who are then delinquent in the payment of Special Taxes( and demand immediate payment of the delinquency) within 60 days of such determination, and will commence foreclosure proceedings within 120 days of such determination against each parcel of land in the CFD with a Special Tax delinquency.
e) Reduction of Maximum Special Taxes. The City covenants that it will not initiate proceedings to reduce the maximum Special Tax rates for the City, unless, in connection therewith, ( i) the City receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that, on the basis of the parcels of land and improvements existing in the CFD as of the July 1 preceding the reduction, the maximum amount of the Special Tax which may be levied on then existing Developed Property( as defined in the Rate and Method of Apportionment of Special Taxes then in effect in the CFD) in each Bond Year for any CFD Bonds Outstanding will equal at least 110% of the sum of the estimated Administrative Expenses and gross debt service in each Bond Year on all CFD Bonds to remain Outstanding after the reduction is approved ( subject to the limitation in 53321( d) of the Mello- Roos Act), ( ii) the City finds that any reduction made under such conditions will not adversely affect the interests of the Owners of the CFD Bonds, and ( iii) the City is not delinquent in the payment of the principal of or interest on the CFD Bonds. For purposes of estimating Administrative Expenses for the foregoing calculation, the Independent Financial Consultants will compute the Administrative Expenses for the current Fiscal Year and escalate that amount by 2% in each subsequent Fiscal Year. f) Required Reportinq. ( i) Not later than October 30 of each calendar year, beginning with the October 30 first succeeding the date of the CFD Bonds, and in each calendar year thereafter until the October 30 following the final maturity of the CFD Bonds, the City shall prepare and supply the California Debt and Investment Advisory Commission (" CDIAC"), by mail, postage prepaid, with the information required under Section 53359. 5( b) of the Mello- Roos Act. If at any 36 1146
time the Trustee fails to pay principal and interest due on any scheduled payment date for the CFD Bonds, or if funds are withdrawn from the CFD Reserve Fund to pay principal and interest on the Bonds, the Trustee shall notify the City of such failure or withdrawal in writing. An official of the City shall notify CDIAC pursuant to Government Code Section 53359.5( c) within 10 days of the occurrence of any of the following events: (i) the scheduled principal or interest on the CFD Bonds is not paid; or (ii) a draw on the CFD Reserve Fund to pay principal and interest on the Bonds, which draw causes the amounts in the CFD Reserve Fund to be reduced to an amount less than the CFD Reserve Requirement.
ii) Not later than January 1 of the year following issuance of the CFD Bonds, and at least once a year thereafter, the City shall file a report with the Board in accordance with the requirements of Government Code Section 53411, which report shall contain: ( i) the amount of Special Taxes collected and expended; and ( ii) if applicable, the status of the Projects financed by the Bonds. In addition, no later than seven months after the end of the City' s fiscal year, the City shall prepare and supply to CDIAC the information required by Section 8855( k) of the Government Code. The annual reporting shall be made using such form or forms as may be prescribed by CDIAC.
Section 6. 13. Cancellation of CFD Bonds. Upon the surrender to the Trustee of any temporary or mutilated CFD Bond or CFD Bonds surrendered for transfer or exchange, or CFD Bonds purchased, redeemed or paid at maturity, the same shall forthwith be canceled and the Trustee shall destroy such CFD Bonds it has received in accordance with its retention policy then in effect.
Section 6. 14. Defeasance of CFD Bonds. The CFD Bonds may be refunded and defeased pursuant to the provisions of the Mello- Roos Act, subject to such conditions as the City may require to assure availability of moneys for a corresponding defeasance of the Bonds in accordance with Section 11. 3 hereof.
Section 6. 15. No Additional CFD Bonds, Except for Refunding. The City may not issue any additional indebtedness secured on parity with the CFD Bonds hereunder issued, except for refunding any CFD Bonds.
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ARTICLE VII
THE REASSESSMENT BONDS
Section 7. 1. Findings.
a) The City has reviewed all proceedings heretofore taken relative to the Reassessment District and has found, as a result of such review, and does hereby find and determine that all acts, conditions and things required by law to exist, to happen and to be perFormed precedent to and in the issuance of the Reassessment Bonds as hereinafter authorized and provided have occurred as required by law, and the City is now authorized pursuant to the Act and the Refunding Assessment Bond Law to issue the Reassessment Bonds in the manner and form as provided in this Indenture.
b) The City declares and determines that it does not obligate itself to advance, and will not advance, funds from its own fund to cure any deficiency which may occur at any time in the payment of any of the Reassessment Bonds.
Section 7. 2. Issuance of Reassessment Bonds. The Reassessment Bonds shall be issued as provided herein upon the security of the Reassessments to be levied and shall be secured by said Reassessments. The Reassessment Bonds shall be dated the Dated Date. The Reassessment Bonds shall be limited to the aggregate principal amounts, and shall be known, as described in this Indenture.
Section 7. 3. Registration and Denominations. The Reassessment Bonds shall be issued as fully registered bonds, registered in the name of the Trustee, shall be of the denomination of any amount, expressed in dollars and cents, but not exceeding the principal amount of Reassessment Bonds maturing on any one date, as determined by the registered owners thereof( not exceeding the principal amount of Reassessment Bonds maturing at any one time). No CUSIP numbers shall be assigned to the Reassessment Bonds unless required or desired by the owner thereof. Upon the execution and delivery of this Indenture and satisfaction of the conditions for issuance of the Reassessment Bonds, the City shall execute and the Trustee shall authenticate the Reassessment Bonds registered in the name of the Trustee, as assignee of the Authority.
Section 7. 4. Maturity Schedules and Payment Terms.
a) The Reassessment Bonds shall be issued as term bonds, dated the Closing Date and will mature on September 2 in each of the years and in the amounts, and will bear interest calculated on the basis of a 370- day year of twelve 30- day months) at the rates per annum as set forth in Exhibit C attached hereto, and shall be payable as set forth in Exhibit D- 2 hereto. b) The Reassessment Bonds shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless ( a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it will bear interest from such Interest Payment Date; or ( b) it is authenticated on or before August 15, 2023, in which event it will bear interest from the Closing Date; provided, however, that if, as of the date of authentication of any Reassessment Bond, interest thereon is in default, such Reassessment Bond will 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 been paid or made available for payment.
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c) Interest and principal on the Reassessment Bonds will be payable to the Trustee as the assignee of the Authority as the Owner thereo in lawful money of the United States of America on each Interest Payment Date. Payment of the interest on and principal and redemption premiums, if any, of the Reassessment Bonds due on or before the maturity or prior to redemption thereof shall be made by wire transfer of immediately available funds to the Trustee, as the registered owner of the Reassessment Bonds.
If on any Interest Payment Date the Trustee is unable to pay principal, interest and premium, if any, due on any Interest Payment Date for the Reassessment Bonds due to insufficient funds in the Redemption Fund, or if funds are withdrawn from the Reassessment Reserve Fund to pay principal and/or interest on the Bonds the Trustee shall notify the City in writing of such fact, and the City shall notify CDIAC of such fact within 10 days of such Interest Payment Date. The Trustee has no obligation under this Indenture to provide notice or disclosure to the Owners of insufficient funds or anticipation of deficiency in the Redemption Fund or the Revenue Fund.
Section 7. 5. Redemption of Reassessment Bonds.
a) Optional Redemption. Any Reassessment Bond may be redeemed in whole or in part, in any amount, at the option of the City, upon payment of the principal amount thereof and interest accrued thereon to the date of redemption, in the same years and on the same terms as the Bonds as set forth in Section 2. 2( a).
b) Preqavment Redemption. Any Reassessment Bond may be redeemed in whole or in part, in any amount, from Prepayments of Reassessments, upon payment of the principal amount thereof and interest accrued thereon to the date of redemption, in the same years and on the same terms as the Bonds as set forth in Section 2. 2( b). c) Mandatory Redemption of Term Bonds. The Reassessment Bonds, which are all issued as term bonds, are subject to mandatory redemption as specified in Exhibit C attached hereto.
In the event that Reassessment Bonds subject to mandatory redemption pursuant to this Section are redeemed in part prior to their stated maturity date from optional or prepayment redemption, the amounts in the above tables, may be reduced in each year remaining until and including the final maturity date of such Reassessment Bonds as specified in a Written Request of the City provided to the Trustee.
Section 7. 6. Form and Execution of Reassessment Bonds. The Reassessment Bonds shall be in substantially the form, the blanks to be filled in with appropriate words or figures, as shown in Exhibit C, attached hereto and incorporated herein. The City Manager or Finance Director, or a designee, of the City shall execute each of the Reassessment Bonds on behalf of the City, manually or by use of their engraved, printed or lithographed facsimile signatures. Such signing as herein provided shall be a sufficient and binding execution of the Reassessment Bonds by the City. If the City Manager or Finance Director, or a designee shall cease to be such officer before the delivery of the Reassessment Bonds to the Trustee, such signature shall nevertheless be valid and sufficient for all purposes the same as though such officer had remained in office until the delivery of the Reassessment Bonds. Only such of the Reassessment Bonds as shall bear thereon a certificate of registration and authentication in the form set forth in Exhibit C, executed and dated by an authorized officer of the City, shall be entitled to any benefits hereunder 39 1149
o be valid or obligatory for any purpose, and such certificate shall be conclusive evidence that the Reassessment Bonds so authenticated have been duly authorized, executed, issued and delivered hereunder and are entitled to the benefits hereof.
Section 7. 7. Pledge of Reassessment Revenues to Reassessment Bonds. The Reassessment Revenues of the CFD shall constitute a trust fund for the redemption and payment of the principal and interest as it becomes due on the Reassessment Bonds until paid. All of the Reassessment Revenues and all moneys deposited in the Redemption Fund are hereby pledged to secure the repayment of the Reassessment Bonds as provided herein. Such pledge shall constitute a first lien on the Reassessments. The Reassessment Revenues and all moneys deposited into the Redemption Fund ( except as otherwise provided herein) are hereby dedicated in their entirety to the payment of the principal of, including any mandatory sinking fund payments, and interest and any premium on, the Reassessment Bonds as provided herein until all of the Reassessment Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose.
Section 7. 8. Redemption Fund. The City shall forward, or cause the county in which the Reassessment District is located, to forward, all Reassessment Revenues, to the Trustee.
The Trustee, on behalf of the City, will establish and maintain a separate fund to be held by the Trustee to be known as the " Redemption Fund," to the credit of which the Trustee shall deposit, immediately upon receipt, all the Reassessment Revenues received by the Trustee, on behalf of the City, and any other amounts required hereunder to be deposited in the Redemption Fund.
Moneys in the Redemption Fund shall be held in trust by the Trustee, on behalf of the City, for the benefit of the Owners of the Bonds and, pending any disbursement as described below, shall be subject to a lien in favor of the Authority, as owner of the Reassessment Bonds.
Except for the portion of any Prepayment to be deposited to the Redemption Fund, the Trustee will, on each date on which the Reassessments are received from the City, deposit the Reassessments in the Redemption Fund to be held in trust for the Authority, as sole Owner of the Reassessment Bonds. No later than ten ( 10) Business Days prior to the next Interest Payment Date, the Trustee shall withdraw from the Redemption Fund and deposit the following amounts in the following order of priority:
i) in the Revenue Fund an amount equal to the portion of the Reassessments that represent the portion of the collection amount attributable to the payment of principal, premium, if any, and interest next due on the Reassessment Bonds; and ii) in the Reassessment Reserve Fund, an amount, but only to the extent that a draw on the Reassessment Reserve Fund has occurred which is attributable to deficiencies in the payment of the Reassessment Bonds, equal to the amount needed to cause the amount in the Reassessment Reserve Fund to equal the Reassessment Reserve Requirement.
As to receipt by the City or the Trustee of Prepayment of the Reassessments, the City shall deliver to the Trustee in a Certificate of the City directing the Trustee to deposit the Prepayment amount into the corresponding account of the Prepayment Fund to be disbursed as set forth in Section 7. 11.
On or about September 2 of each year, the Trustee shall notify the City of any amounts remaining in the Redemption Fund, which amounts shall be released from the lien and pledge in favor of the Bonds, and may be used by the City to pay for Administrative Expenses in excess of 40 1150
the amount of any Administrative Expenses, or for any othe lawful purpose, and the Trustee shall transfer such amounts to, or upon the order of, the City, as set forth in a Certificate of the City delivered to the Trustee.
Section 7. 9. Reassessment Reserve Fund. The Trustee shall establish and maintain a separate fund to be held by the Trustee to be known as the " Reassessment Reserve Fund,"), to the credit of which the Trustee shall deposit, immediately upon receipt, reserve proceeds as set forth in Section 3. 1( b) and amounts required to be deposited pursuant to Section 7. 8 above, equal to the initial Reassessment Reserve Requirement. Moneys the Reassessment Reserve Fund shall be held in trust by the Trustee for the benefit of the Trustee ( as assignee of the Authority, as owner of the Reassessment Bonds), and the Owners of the Bonds and, pending any disbursement, shall be subject to a lien in favor of the City and the Owners of the Bonds, provided however, that the Reassessment Reserve Fund shall be available only for the Reassessment Bonds, there is no" cross collateralization" among the Bonds or the CFD Bonds. i) The Reassessment Reserve Requirement shall be maintained in the Reassessment Reserve Fund, provided however In the event that the amount of the Reserve Requirement for the Reassessment Bonds is reduced because of the payment at final maturity of the Reassessment Bonds or Prepayment of Reassessments, the Trustee shall, upon receipt of a Request of the City, adjust the balance in the Reassessment Reserve Fund to an amount being the newly established Reserve Requirement and transfer the excess funds as directed in a Certificate of the City. ii) Subject to the limitations set forth in the following paragraph, amounts in the Reassessment Reserve Fund shall be applied to pay the principal of and interest on the Reassessment Bonds when the available moneys in the Redemption Fund are insufficient therefor. In addition, amounts in the Reassessment Reserve Fund may be applied( i) in connection with an optional redemption of the Reassessment Bonds pursuant to Section 7. 5( a) of this Indenture or a defeasance pursuant to Section 7. 14 of this Indenture, but only to the extent that amounts remaining on deposit in the Reassessment Reserve Fund after such application are equal to the then applicable Reassessment Reserve Requirement, ( ii) in connection with Prepayments of a Reassessment, but only to the extent that amounts remaining on deposit in the Reassessment Reserve Fund after such application are equal to the Reassessment Reserve Requirement, or ( iii) when the balance therein equals the principal and interest due on the Reassessment Bonds to and including maturity.
iii) If the available amounts in the Reassessment Reserve Fund are insufficient to pay the principal of or interest on the Reassessment Bonds when due, the Trustee shall withdraw from the Reassessment Reserve Fund for deposit in the Redemption Fund moneys necessary for such purposes, and the Trustee shall notify the City of such deficiency and the moneys necessary to make up the deficiency in the Reassessment Reserve Fund, and the City shall take into account such delinquency in future levies, as required.
Notwithstanding establishment of the Reassessment Reserve Fund for the payment of the principal of or interest on Reassessment Bonds when due, amounts in the Reassessment Resenre Fund may be disbursed to the City in such amount as determined by the City to be necessary to pay costs associated with collection of Reassessments to the extent required for compliance by the City of the covenant set forth in Section 7. 12 hereof. To the extent that the transfer of such moneys from the Reassessment Reserve 41 1151
Fund results in the amount on deposit to be below the applicable Reassessment Reserve Requirement, the City shall increase the applicable Reassessment levy in future years within the Reassessment until the amount on deposit in the Reassessment Reserve Fund is at least equal to the Reassessment Reserve Requirement. iv) In the event Reassessments are paid in cash in advance of the final maturity date of the Reassessment Bonds and the City is required to credit such prepaid obligation to the Reassessment Reserve Fund thus reducing the total amount on deposit in the Reassessment Reserve Fund, the corresponding Reassessments will receive such credit only if and to the extent that the amount which is eligible to be credited is not needed to redeem Bonds. If the all or part of the amount is needed to redeem Bonds, the City and the Authority shall use it for such purpose. To the extent it is not needed, the amount to be so credited is the pro- rata share of the original amount deposited in the Reassessment Reserve Fund, less any amount previously transferred from the Reassessment Reserve Fund to the Redemption Fund for the Reassessment Bond as a result of the delinquency in the payment of Reassessment installments for the parcel for which the Reassessment is being prepaid. The City shall direct the Trustee in writing to transfer the amount representing such credit from the Reassessment Reserve Fund to the Redemption Fund or Prepayment Fund, as applicable, for the Reassessment Bond.
On August 1 of each year, any interest earned on the investment of monies on deposit in the Reassessment Reserve Fund which would cause the amount therein to exceed the Reassessment Reserve Requirement shall be applied as directed in a Certificate of the City.
v) When amounts in the Reassessment Reserve Fund are sufficient to repay the remaining principal and interest due on the Reassessment Bonds that will be applied to the Bonds, such amount shall be transferred to the Redemption Fund as a credit against the payments due on the Reassessment Bonds, with the amount transferred being deposited first to interest due on the Reassessment Bonds on such date and the balance being deposited to principal due on the Reassessment Bonds on such date.
Section 7. 10. Reassessment Administrative Expense Fund. The City shall establish and maintain a separate fund to be held by the City to be known as the " Reassessment Administrative Expense Fund" ( the " Reassessment Administrative Expense Fund"), to the credit of which the City shall deposit, immediately upon receipt, the Administrative Expenses attributable to the Reassessment Bonds and the Bonds and any amounts authorized by the City to be deposited pursuant to Section 7. 8 above. The moneys in the Reassessment Administrative Expense Fund shall be disbursed to pay Administrative Expenses related to the Reassessment Bonds and the Bonds, as determined by the City to be necessary to carry out its obligations related to the Reassessment District and the Reassessment Bonds.
Section 7. 11. Reassessment Bonds Prepayment Fund and Accounts. There is hereby created and established a separate fund for the Reassessment Bonds to be known as the Prepayment Fund." If and to the extent a Prepayment of a Reassessment occurs, the City shall notify the Trustee and the Trustee shall establish within the Prepayment Fund a separate account for the Reassessment District, to the credit of which the City shall deposit to the account, immediately upon receipt, all Prepayments of Reassessments received by the City. Moneys in such Prepayment Account shall be used exclusively for the administration of any prepayments of Reassessments to assure the timely redemption of Reassessment Bonds. In the event the Reassessments are prepaid in full, the Prepayment Account shall be closed. 42 1152
Section 7. 12. Covenants of the City. The City covenants as follows:
a) Punctual Pavment. It will punctually pay or cause to be paid the principal of, and interest and any premium on, the Reassessment Bonds when and as due in strict conformity with the terms hereunder and any Supplemental Agreement, and it will faithfully observe and perform all of the conditions, covenants and requirements hereunder and all Supplemental Agreements and of the Reassessment Bonds.
b) Aqainst Encumbrance. It will not encumber, pledge or place any charge or lien upon any of the Reassessments or other amounts pledged to the Reassessment Bonds superior to or on parity with the pledge and lien created hereunder for the benefit of the Reassessment Bonds, except as permitted by the Resolution of Issuance, hereunder, or applicable law. c) Collection of Reassessments. The City will comply with all requirements hereunder or applicable law to assure the timely collection of the Reassessments, including, without limitation, the enforcement of delinquent Reassessments. Any funds received by the City in and for the Reassessment District, including, but not limited to, collections of Reassessments upon the secured tax rolls, collections of delinquent Reassessments and penalties on such delinquent Reassessments, through foreclosure proceedings and the prepayment of Reassessments or portions thereof, will be immediately transmitted directly to the Trustee, without deduction, to be deposited into the funds and accounts specified below. To that end, the following will apply:
i) The Reassessments, as set forth on the List of Unpaid Reassessments on file with the Finance Director, together with the interest on the Reassessments, will be payable in annual series corresponding in number to the number of serial maturities of the Reassessment Bonds issued.
An annual proportion of each Reassessment will be payable in each year preceding the date of maturity of each of the several series of Reassessment Bonds issued sufficient to pay the Reassessment Bonds when due and such proportion of each Reassessment coming due in any year, together with the annual interest thereon, will be payable in the same manner and at the same time and in the same installments as the general taxes on real property are payable, and become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interests after delinquency as do the general taxes on real property.
All sums received from the collection of the Reassessments and of the interest and penalties on such Reassessments will be placed in the Redemption Fund. In addition, all sums received by the City with respect to the assessments levied in connection with the 2023 Reassessment Bonds, including any penalties and delinquencies, will be placed in the Redemption Fund. Any prepayments of Reassessments will be placed in the Prepayment Account established under and administered in accordance with this Indenture.
ii) The Finance Director will, before the final date on which the Auditor will accept the transmission of the Reassessments for the parcels within the Reassessment District for inclusion on the next tax roll, prepare or cause to be prepared, and will transmit to the Auditor, such data as the Auditor requires to include the installments of the Reassessments on the next secured tax roll of the County. The Finance Director is 43 1153
authorized to employ consultants to assist in computing the installments of the Reassessments and in reconciling Reassessments billed to amounts received as provided in paragraph ( iii) below.
iii) The Reassessments will be payable and be collected in the same manner and at the same time and in the same installments as the general taxes on real property are payable, and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property. In addition to any amounts authorized pursuant to the Bond Law to be included with the annual amounts of installments as aforesaid, the City, pursuant to section 8682. 1 of the Bond Law, may cause to be entered on the assessment roll on which taxes will next become due, opposite each lot or parcel of land within the Reassessment District in the manner set forth in said section 8682, each lot' s pro rata share of the estimated annual expenses of the City in connection with the administrative duties thereof for the Reassessment Bonds, including, but not limited to, the costs of registration, authentication, transfer and compliance with the covenants hereunder, which amounts will be used to defray the costs of the City in complying with such provisions. Delinquent Reassessments will be subject to foreclosure as described below.
d) Commence Foreclosure Proceedinqs. The City covenants with and for the benefit of the Owners of the Reassessment Bonds that it will order, and cause to be commenced, and thereafter diligently prosecute an action in the superior court to foreclose the lien of any Reassessment or installment thereof which has been billed, but has not been paid; provided however, that the City' s obligation to pursue foreclosure will be at the option of the City so long as ( i) the County' s Teeter Plan is in effect with respect to the delinquent parcel meeting the conditions below, and ( ii) there is no then- outstanding draw on the Reassessment Reserve Fund.
In the event that either of these conditions is not met, the City will be obligated to pursue foreclosure as follows. The Finance Director will notify the City Attorney of any such delinquency of which the Finance Director is aware, and the City Attorney will commence, or cause to be commenced, such foreclosure proceedings, including collection actions preparatory to the filing of any complaint. The City Attorney is authorized to employ counsel to conduct any such foreclosure proceedings.
On or about January 30 and June 30 of each Fiscal Year, the Finance Director will compare the amount of Reassessments installments theretofore levied in the Reassessment District to the amount of Reassessments installments theretofore received by the City, and:
i) Individual Delinquencies. If the Finance Director determines that any single parcel is delinquent in the payment of Reassessment installments in the aggregate amount of$ 3, 000 or more, then the Finance Director will send or cause to be sent a notice of delinquency ( and a demand for immediate payment thereofl to the property owner within 60 days of such determination, and ( if the delinquency remains uncured) foreclosure proceedings will be commenced by the City within 120 days of such determination. ii) Aggregate Delinquencies. If the Finance Director determines that ( i) the total amount of delinquent Reassessment for the prior Fiscal Year for the entire Reassessment District ( including the total of delinquencies under paragraph ( i) above), exceeds 5% of the total Reassessment installments due and payable for the prior Fiscal Year, the City will notify or cause to be notified property owners who are then delinquent in the payment of Reassessments ( and demand immediate payment of the delinquency) 44 1154
within 60 days of such determination, and will commence foreclosure proceedings within 120 days of such determination against each parcel of land in the Reassessment District with a Reassessment delinquency.
Section 7. 13. Cancellation of Reassessment Bonds. Upon the surrender to the Trustee of any temporary or mutilated Reassessment Bond or Reassessment Bonds surrendered for transfer or exchange, or Reassessment Bonds purchased, redeemed or paid at maturity, the same shall forthwith be canceled and the Trustee shall destroy such Reassessment Bonds it has received in accordance with its retention policy then in effect.
Section 7. 14. Defeasance of Reassessment Bonds. The Reassessment Bonds may be refunded and defeased pursuant to the provisions of the Refunding Assessment Bond Law, subject to such conditions as the City may require to assure availability of moneys for a corresponding defeasance of the Bonds in accordance with Section 10. 3 hereof.
Section 7. 15. No Additional Reassessment Bonds, Except for Refunding. The City may not issue any additional indebtedness secured on parity with the Reassessment Bonds hereunder issued, except for refunding any Reassessment Bonds and/ or the 2015 Parity Reassessment Bonds.
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ARTICLE VIII
THE TRUSTEE
Section 8. 1. Appointment of Trustee. U. S. Bank Trust Company, National Association, with its corporate trust office presently located in San Francisco, California, a national banking association organized and existing under and by virtue of the laws of the United States of America, is hereby appointed Trustee by the Authority for the purpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture. The Authority agrees that it will maintain a Trustee which is a trust company, national banking association or bank of good standing located in or incorporated under the laws of the State of the United States of America, duly authorized to exercise trust powers, with a combined capital and surplus of at least Seventy- five Million Dollars($ 75,000,000), subject to supervision or examination by federal or state authority. If such bank, national banking association or trust company publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this Section 8. 1, the combined capital and surplus will be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
The Trustee is hereby authorized to pay the principal of and interest and redemption premium ( if any) on the Bonds when duly presented for payment at maturity, or on redemption or purchase prior to maturity, to make regularly scheduled interest payments> and to cancel any Bond upon payment thereof.
Section 8. 2. Acceptance of Trusts. The Trustee hereby accepts the trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions:
a) The Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default hereunder has occurred (which has not been cured or waived), the Trustee may exercise such of the rights and powers vested in it by this Indenture and will use the same degree of care and skill and diligence in their exercise, as a reasonable prudent person would exercise or use under the circumstances in the conduct of his own affairs.
b) The Trustee may execute any of the trusts or powers and perform the duties required of it hereunder by or through attorneys, agents, or receivers, but will not be responsible for the acts of any agents, attorneys or receivers appointed by it unless such appointment was the result of negligence or willful misconduct. The Trustee may consult with and act upon the advice of counsel (which may be counsel to the Authority) concerning all matters of trust and its duty hereunder and will be wholly protected in reliance upon the advice or opinion of such counsel in respect of any action taken or omitted by it in good faith and in accordance herewith. c) The Trustee will not be responsible for any recital herein, or for any of the supplements thereto or instruments of further assurance, or for the validity, effectiveness or the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby and the Trustee will not be bound to ascertain or inquire as to the observance or perFormance of any covenants, conditions or agreements on the part of the Authority hereunder. The Trustee will have no responsibility, opinion, or liability with respect to any information, statement, or recital in any offering memorandum, official statement, or other disclosure material prepared or distributed with respect to the issuance of the Bonds.
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d) Except as provided in Section 3. 3, the Trustee will not be accountable for the use of any proceeds of sale of the Bonds delivered hereunder. The Trustee may become the Owner of Bonds secured hereby with the same rights which it would have if not the Trustee; may acquire and dispose of other bonds or evidences of indebtedness of the Authority with the same rights it would have if it were not the Trustee; and may act as a depositary for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners of Bonds, whether or not such committee will represent the Owners of the majority in aggregate principal amount of the Bonds then Outstanding. e) The Trustee will be protected and will incur no liability in acting, or refraining from acting in good faith and without negligence, in reliance upon any notice, request, consent, certificate, order, affidavit, letter, telegram, facsimile transmission, electronic mail, or other paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken or omitted to be taken by the Trustee in good faith and without negligence pursuant to this Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Owner of any Bond, will be conclusive and binding upon all future Owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof. The Trustee will not be bound to recognize any person as an Owner of any Bond or to take any action at such person' s request unless the ownership of such Bond by such person will be reflected on the Bond Register. f) As to the existence or nonexistence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee will be entitled to rely upon a Certificate of the Authority as sufficient evidence of the facts therein contained and prior to the occurrence of an Event of Default hereunder of which the Trustee has been given notice or is deemed to have notice, as provided in Section 8. 2( h), will also be entitled to accept a Certificate of the Authority to the effect that any particular dealing, transaction or action is necessary or expedient, and will be fully protected in relying thereon, but may at its discretion secure such further evidence deemed by it to be necessary or advisable, but will in no case be bound to secure the same. g) The permissive right of the Trustee to do things enumerated in this Indenture will not be construed as a duty and notwithstanding any other provision of this Indenture, the Trustee will not be answerable for other than its negligence or willful misconduct. The immunities and exceptions from liability of the Trustee will extend to its officers, directors, employees and agents. h) The Trustee will not be required to take notice or be deemed to have notice of any Event of Default hereunder except where a Responsible Officer has actual knowledge of such Event of Default and except for the failure by the Authority to make any of the payments to the Trustee required to be made by the Authority pursuant hereto, including payments on the CFD Bonds, or failure by the Authority to file with the Trustee any document required by this Indenture to be so filed subsequent to the issuance of the Bonds, unless a Responsible Officer will be specifically notified in writing of such default by the Authority or by the Owners of at least twenty five percent ( 25°/a) in aggregate principal amount of the Bonds then Outstanding and all notices or other instruments required by this Indenture to be delivered to the Trustee must, in order to be effective, be delivered to a Responsible Officer at the Trust Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default hereunder except as aforesaid. Delivery of a notice to the officer and address for the Trustee set forth in Section 11. 12, as updated by the Trustee from time to time, will be deemed notice to a Responsible Officer.
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i) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys, experts, accountants and representatives, will have the right ( but not any duty) fully to inspect all books, papers and records of the Authority pertaining to the Bonds, and to make copies of any of such books, papers and records such as may be desired but which is not privileged by statute or by law.
Q) The Trustee will not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the performance of its duties hereunder.
k) Nofinrithstanding anything elsewhere in this Indenture with respect to the execution of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Indenture, the Trustee will have the right, but will not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, as may be deemed desirable by the Trustee in its sole discretion for the purpose of establishing the right of the Authority to the execution of any Bonds, the withdrawal of any cash, or the taking of any other action by the Trustee.
I) Before taking the action referred to in Section 8. 5 or this Article VIII, the Trustee may require that an indemnity bond satisfactory to it be furnished for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful misconduct in connection with any such action.
m) All moneys received by the Trustee will, until used or applied or invested as herein provided, be held in trust for the purposes for which they were received but need not be segregated from other funds.
n) Whether or not expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of, or affording protection to, the Trustee will be subject to the provisions of this Article VIII.
o) The Trustee will not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of delay in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, acts of God or of the public enemy or terrorists, acts of a government, acts of the other party, fires, floods, epidemics, pandemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources or energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to the project, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/ or occurrences beyond the control of the Trustee.
p) The Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by unsecured e- mail, facsimile transmission or other similar unsecured electronic methods, provided, however, that, the Trustee will have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate will be amended and replaced whenever a person is to be added or deleted from the listing. If the Authority elects to give the Trustee e- mail or facsimile instructions ( or instructions by a similar 48 1158
electronic method) and the Trustee acts upon such instructions, the Trustee' s understanding of such instructions will be deemed controlling. The Trustee will not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee' s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The Authority agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties.
q) Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee will 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 be deemed to be conclusively proved and established by a certificate of the Authority, and such certificate will be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable. r) In no event shall the Trustee or an agent of the Trustee be responsible or liable for special, indirect, consequential, punitive or incidental loss or damage of any kind whatsoever including, but not limited to, loss of profit) irrespective of whether the Trustee or an agent of the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
Section 8. 3. Fees, Charges and Expenses of Trustee. The Trustee will be entitled to payment and reimbursement by the Authority, but solely from the Revenues, for reasonable fees for its services rendered hereunder and all advances ( including any interest on advances), counsel fees and expenses ( including fees and expenses of outside counsel and the allocated costs of internal attorneys) and other expenses reasonably and necessarily made or incurred by the Trustee in connection with such services. Upon the occurrence of an Event of Default hereunder, but only upon an Event of Default, the Trustee will have a first lien with right of payment prior to payment of any Bond upon the amounts held in Funds and accounts hereunder for the foregoing fees, charges and expenses incurred by it respectively. The Trustee' s right to payment of its fees and expenses will survive the discharge and payment or defeasance of the Bonds and termination of this Indenture, and the resignation or removal of the Trustee.
The Authority covenants and agrees, solely using the Revenues and no other funds, to indemnify the Trustee and its duly authorized officers, directors, agents and employees against any loss, costs, claims, suits, judgments, expense( including reasonable legal fees and expenses) and liability ( other than those which are due to the Trustee' s negligence or willful misconduct) which it may incur arising out of or in the exercise and performance of its powers and duties hereunder, including the costs and expenses of defending against any claim of liability. The obligations of the Authority under this Section 8. 3 shall survive resignation or removal of the Trustee hereunder and payment of the Bonds and discharge of this Indenture.
Section 8. 4. Notice to Bond Owners of Default. If an Event of Default hereunder occurs with respect to any Bonds of which the Trustee has been given, or is deemed to have notice, as provided in Section 8. 2( h), then the Trustee will promptly give written notice thereof by first class mail to the Owner of each such Bond, unless such Event of Default will have been cured before the giving of such notice.
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Section 8. 5. Intervention by Trustee. In any judicial proceeding to which the Authority is a party which, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of Owners of any of the Bonds, the Trustee may intervene on behalf of such Bond Owners, and subject to Section 8. 2( I), will do so if requested in writing by the Owners of at least twenty five percent ( 25%) in aggregate principal amount of such Bonds then Outstanding.
Section 8. 6. Removal of Trustee. The Owners of a majority in aggregate principal amount of the Outstanding Bonds may and the Authority may, so long as no Event of Default then exists, upon 30 days' prior written notice to the Trustee, remove the Trustee initially appointed, and any successor thereto, by an instrument or concurrent instruments in writing delivered to the Trustee. Upon any such removal, the Authority will appoint a successor or successors thereto; provided that any such successor will be a national banking association meeting the requirements set forth in Section 8. 1. Notwithstanding any other provision of this Indenture, no removal of the Trustee will be effective until a successor is appointed.
Section 8. 7 Resignation by Trustee. The Trustee and any successor Trustee may at any time give prior written notice of its intention to resign as Trustee hereunder, such notice to be given to the Authority by registered or certified mail. Upon receiving such notice of resignation, the Authority will promptly appoint a successor Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon acceptance of appointment by the successor Trustee. Upon such acceptance, the Authority will cause notice thereof to be given by first class mail, postage prepaid, to the Bond Owners at their respective addresses set forth on the Bond Register.
Section 8. 8. Appointment of Successor Trustee. In the event of the removal or resignation of the Trustee pursuant to Sections 8. 6 or 8. 7, respectively, the Authority will promptly appoint a successor Trustee. In the event the Authority will for any reason whatsoever fail to appoint a successor Trustee within thirty ( 30) days following the delivery to the Trustee of the instrument described in Section 8. 6 or within thirty ( 30) days following the receipt of notice by the Authority and the City pursuant to Section 8. 7, the Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee meeting the requirements of Section 8. 1.
Any such successor Trustee appointed by such court will become the successor Trustee hereunder nofinrithstanding any action by the Authority purporting to appoint a successor Trustee following the expiration of such thirty day period.
Section 8. 9. Merger or Consolidation. Any company into which the Trustee 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 will be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company will meet the requirements set forth in Section 8. 1, will be the successor to the Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. The Trustee may assign its rights, duties and obligations hereunder in whole or in part, to an affiliate or subsidiary thereof, provided such Corporation, affiliate or subsidiary will meet the requirements set forth in Section 8. 1.
Section 8. 10. Concerning any Successor Trustee. The Authority may appoint a successor Trustee hereunder without additional action of the Board of Directors. Every successor Trustee appointed hereunder will execute, acknowledge and deliver to its predecessor and also to the Authority an instrument in writing accepting such appointment hereunder and to the 50 1160
predecessor Trustee an instrument indemnifying the predecessor Trustee for any costs or claims arising during the time the successor Trustee serves as Trustee hereunder and thereupon such successor, without any further act, deed or conveyance, will become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such predecessor will, nevertheless, on the Request of the Authority, or of the Trustee' s successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee will deliver all securities and moneys held by it as the Trustee hereunder to its successor. Should any instrument in writing from the Authority be required by any successor Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor Trustee, any and all such instruments in writing will, on request, be executed, acknowledged and delivered by the Authority.
Section 8. 11. Appointment of Co-Trustee. It is the purpose of this Indenture that there will be no violation of any law of any jurisdiction ( including particularly the law of the State) denying or restricting the right of banking corporations or associations to transact business as a trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture, and in particular in case of the enforcement of the rights of the Trustee on default, or in the case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted, or take any other action which may be desirable or necessary in connection therewith, it may be necessary that the Trustee or the Authority appoint an additional individual or institution as a separate co-trustee. The following provisions of this Section 8. 11 are adopted to these ends.
In the event that the Trustee or the Authority appoints an additional individual or institution as a separate or co-trustee, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto will be exercisable by and vest in such separate or co- trustee but only to the extent necessary to enable such separate or co- trustee to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate or co-trustee will run to and be enforceable by either of the Trustee or separate or co- Trustee.
Should any instrument in writing from the Authority be required by the separate trustee or co-trustee so appointed by the Trustee or the Authority for more fully and certainly vesting in and confirming to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing will, on request, be executed, acknowledged and delivered by the Authority.
In case any separate trustee or co-trustee, or a successor to either, will become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co-trustee, so far as permitted by law, will vest in and be exercised by the Trustee until the appointment of a new trustee or successor to such separate trustee or co-trustee.
Section 8. 12. Limited Liability of Trustee. No provision in this Indenture will require the Trustee to risk or expend its own funds or otherwise incur any financial liability hereunder. The Trustee will not be liabte for any action taken or omitted to be taken by it in accordance with the direction of a majority ( or any lesser amount that may direct the Trustee in accordance with the provisions of the Indenture) of the Owners of the principal amount of Bonds Outstanding relating to the time, method and place of conducting any proceeding or remedy available to the Trustee under this Indenture. The rights of the Trustee under this Section 8. 12 will survive termination of this Indenture, discharge of the Bonds and resignation or removal of the Trustee. 51 1161
ARTICLE IX
MODIFICATION AND AMENDMENT OF THE INDENTURE
Section 9. 1. Amendment. This Indenture and the rights and obligations of the Authority and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Indenture which will become binding when the prior written consent of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding are filed with the Trustee. No such modification or amendment will (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Authority to pay the principal, interest or redemption premiums at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the Owner of such Bond, ( b) reduce the percentage of Bonds required for the written consent to any such amendment or modification, or c) without written consent of the Trustee, modify any of the rights or obligations of the Trustee.
This Indenture and the rights and obligations of the Authority and of the Owners of the Bonds may also be modified or amended at any time by a Supplemental Indenture which will become binding upon adoption, without consent of any Owners, to the extent permitted by law but only for any one or more of the following purposes
a) to add to the covenants and agreements of the Authority contained in this Indenture, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or powers herein reserved to or conferred upon the Authority so long as such addition, limitation or surrender of such rights or powers will not materially adversely affect the Owners of the Bonds; or
b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Indenture, or in any other respect whatsoever as the Authority may deem necessary or desirable, provided under any circumstances that such modifications or amendments will not materially adversely affect the interests of the Owners of the Bonds; or c) to amend any provision relating to the Code as may be necessary or appropriate to assure compliance with the Code and the exclusion from gross income of interest on the Bonds; or
d) to amend any provision to place any Additional Bonds on a parity with the Bonds for all purposes of this Indenture, including, but not limited to, for the purpose of exercising all rights and remedies hereunder; or
e) to amend the provisions of Section 4.4.
If requested, the Trustee will be furnished with an opinion of Bond Counsel that any such Supplemental Indenture entered into by the Authority and the Trustee complies with the provisions of this Article IX and the Trustee may conclusively rely upon such opinion and will be fully protected in relying thereon.
Section 9. 2. Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective pursuant to this Article IX, this Indenture will be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners of Outstanding Bonds, as the case may 52 1162
be, will thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of this Indenture for any and all purposes.
Section 9. 3. Endorsement or Replacement of Bonds After Amendment. After the effective date of any action taken as hereinabove provided, the Authority may determine that any affected Bonds will bear a notation, by endorsement in form approved by the Authority, as to such action, and in that case upon demand of the Owner of any Bond Outstanding at such effective date and presentation of its Bond for that purpose at the Trust Office of the Trustee, a suitable notation as to such action will be made on such Bond. If the Authority will so determine, new Bonds so modified as, in the opinion of the Authority, will be necessary to conform to such Bond Owners' action will be prepared and executed, and in that case upon demand of the Owner of any Bond Outstanding at such effective date such new Bonds will be exchanged at the Trust Office of the Trustee, without cost to each Bond Owner, for Bonds then Outstanding, upon surrender of such Outstanding Bonds.
Section 9. 4. Amendment by Mutual Consent. The provisions of this Article IX will not prevent any Bond Owner from accepting any amendment as to the particular Bond held by such Owner, provided that due notation thereof is made on such Bond. 53 1163
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10. 1. Events of Defauit. The following events will be Events of Default hereunder.
a) Default in the due and punctual payment of the principal of any Bond when and as the same will become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise;
b) Default in the due and punctual payment of any installment of interest on any Bond when and as such interest installment will become due and payable; or c) Default by the Authority in the observance of any of the other covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, if such default will have continued for a period of 60 days after written notice thereof, specifying such default and requiring the same to be remedied, will have been given to the Authority by the Trustee, or to the Authority and the Trustee by the Owners of not less than 25% in aggregate principal amount of the Bonds at the time Outstanding; provided that such default ( other than a default arising from nonpayment of the Trustee' s fees and expenses, which must be cured within such 60 day period unless waived by the Trustee) will not constitute an Event of Default hereunder if the Authority will commence to cure such default within said 60 day period and thereafter diligently and in good faith will cure such default within a reasonable period of time.
Section 10.2. Remedies; Rights of Bond Owners. Upon the occurrence of an Event of Default, the Trustee may pursue any available remedy at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Outstanding Bonds, and to enforce any rights of the Trustee under or with respect to this Indenture. In the event of an Event of Default arising out of a nonpayment of Trustee' s fees and expenses, the Trustee may sue the Authority to seek recovery of its fees and expenses; provided, however, that such recovery may be made only from Revenues.
If an Event of Default will have occurred and be continuing and if requested to do so by the Owners of at least 25% in aggregate principal amount of Outstanding Bonds, and, in each case, if indemnified as provided in Section 8. 2( I), the Trustee will be obligated to exercise such one or more of the rights and powers conferred by this Article X and, as applicable, under the CFD Bonds, as the Trustee, being advised by counsel, will deem most expedient in the interests of the Bond Owners.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee ( or to the Bond Owners) is intended to be exclusive of any other remedy, but each and every such remedy will be cumulative and will be in addition to any other remedy given to the Trustee or to the Bond Owners hereunder or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any Event of Default will impair any such right or power or will be construed to be a waiver of any such Event of Default or acquiescence therein; such right or power may be exercised from time to time as often as may be deemed expedient.
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Section 10. 3. Application of Revenues and Other Funds After Event of Default. All amounts received by the Trustee with respect to the Bonds pursuant to any right given or action taken by the Trustee under the provisions of this Indenture relating to the Bonds will be applied by the Trustee in the following order upon presentation of the several Bonds, and the stamping thereon of the amount of the payment if only partially paid, or upon the surrender thereof if fully paid—
First, to the payment of the fees, costs and expenses of the Trustee in declaring such Event of Default and in carrying out the provisions of this Article X, including reasonable compensation to its agents, attorneys and counsel ( including outside counsel and the allocated costs of internal attorneys), and to the payment of all other outstanding fees and expenses of the Trustee; and
Second, to the payment of the whole amount of interest on and principal of the Bonds then due and unpaid, with interest on overdue installments of principal and interest to the extent permitted by law at the net effective rate of interest then borne by the Outstanding Bonds; provided, however, that in the event such amounts will be insufficient to pay in full the full amount of such interest and principal, then such amounts will be applied in the following order of priority. a) first to the payment of all installments of interest on the Bonds then due and unpaid,
b) second, to the payment of all installments of principal of the Bonds then due and unpaid, and
c) third, to the payment of interest on overdue installments of principal and interest on Bonds.
Section 10.4. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, will have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, it may, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee will not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if there has been filed with it a written request signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement or other such litigation and provided further that the Trustee will have the right to decline to comply with such written request unless indemnification satisfactory to it has been provided. Any suit, action or proceeding which any Owner of Bonds will have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners of Bonds similarly situated and the Trustee is hereby appointed ( and the successive respective Owners of the Bonds issued hereunder, by taking and holding the same, will be conclusively deemed so to have appointed it) the true and lawful attorney in fact of the respective Owners of the Bonds for the purposes of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners of the Bonds as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney in fact. 55 1165
Section 10. 5. Appointment of Receivers. Upon the occurrence of an Event of Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Bond Owners under this Indenture, the Trustee will be entitled, as a matter of right, to the appointment of a receiver or receivers of the Revenues and other amounts pledged hereunder, pending such proceedings, with such powers as the court making such appointment will confer.
Section 10. 6. Non Waiver. Nothing in this Article IX or in any other provision of this Indenture, or in the Bonds, will affect or impair the obligation of the Authority, which is absolute and unconditional, to pay the interest on and principal of the Bonds to the respective Owners of the Bonds at the respective dates of maturity, as herein provided, out of the Revenues and other moneys herein pledged for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any Bond Owners will not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of the Trustee or any Owner of any of the Bonds to exercise any right or power accruing upon any default will impair any such right or power or will be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy conferred upon the Trustee or Bond Owners by the Bond Law or by this Article X may be enforced and exercised from time to time and as often as will be deemed expedient by the Trustee or the Bond Owners, as the case may be.
Section 10. 7. Rights and Remedies of Bond Owners. No Owner of any Bond issued hereunder will have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless ( a) such Owner will have previously given to the Trustee written notice of the occurrence of an Event of Default; ( b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding will have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; ( c) said Owners will have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and ( d) the Trustee will have refused or omitted to comply with such request for a period of 60 days after such written request will have been received by, and said tender of indemnity will have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy hereunder; it being understood and intended that no one or more Owners of Bonds will have any right in any manner whatever by his or their action to enforce any right under this Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Indenture will be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding.
The right of any Owner of any Bond to receive payment of tne principal of and interest and premium ( if any) on such Bond as herein provided or to institute suit for the enforcement of any such payment, will not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Indenture. 56 1166
Section 10. 8. Termination of Proceedings. In case the Trustee will have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings will have been discontinued or abandoned for any reason, or will have been determined adversely, then and in every such case, the Authority, the Trustee and the Bond Owners will be restored to their former positions and rights hereunder, respectively, with regard to the property subject to this Indenture, and all rights, remedies and powers of the Trustee will continue as if no such proceedings had been taken.
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ARTICLE XI
MISCELLANEOUS
Section 11. 1. Limited Liability of Authority. Notwithstanding anything in this Indenture contained, ( a) the Authority will not be required to advance any moneys derived from any source of income other than the Revenues for the payment of the principal of or interest on the Bonds, or any premiums upon the redemption thereof, or for the perFormance of any covenants herein contained for the benefit of the owners of the Bonds (except to the extent any such covenants are expressly payable hereunder from the Revenues) and ( b) the Authority will not be required to advance any moneys derived from any source of income other than the Special Tax Revenues for the payment of the principal of or interest on the CFD Bonds, or any premiums upon the redemption thereof, or for the performance of any covenants herein contained for the benefit of the owners of the CFD Bonds ( except to the extent any such covenants are expressly payable hereunder from the Special Tax Revenues). The Authority may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose and may be used by the Authority for such purpose without incurring indebtedness.
The Bonds will be revenue bonds, payable exclusively from the Revenues and other funds as in this Indenture provided. The CFD Bonds will be Special Tax Refunding Bonds, payable exclusively from the Special Tax Revenues of the CFD, and other funds as in this Indenture provided. The general fund of the Authority is not liable, and the credit of the Authority is not pledged, for the payment of the interest and premium ( if any) on or principal of the Bonds or the CFD Bonds. The Owners of the Bonds and the CFD Bonds will never have the right to compel the forfeiture of any property of the Authority. The principal of and interest on the Bonds and CFD Bonds, respectively, and any premiums upon the redemption of any thereof, will not be a legal or equitable pledge, charge, lien or encumbrance upon any property of the Authority or upon any of its income, receipts or revenues except the Revenues and the applicable Special Tax Revenues, and other funds pledged to the payment thereof as in this Indenture provided.
Neither the Authority nor its members, officers, directors, agents or employees or their successors and assigns shall be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under, by reason of or in connection with the Bonds or the Indenture, except only to the extent amounts are received for the payment thereof pursuant to the Indenture. Notwithstanding any contrary provision hereof, the Authority shall under no circumstances be obligated to pay the cost or expense of carrying out its duties hereunder except from funds received for such purposes or from funds which are made available under this Indenture or otherwise.
The Authority shall not be obligated to pay the principal ( or redemption price) of or interest on the CFD Bonds, except from the applicable Reassessments and other moneys and assets received by the Trustee pursuant to this Indenture. Neither the faith and credit nor the taxing power of the State or any political subdivision thereof, nor the faith and credit of the Authority or any member is pledged to the payment of the principal ( or redemption price) or interest on the CFD Bonds. Neither the Authority nor its members, officers, directors, agents or employees or their successors and assigns shall be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under, by reason of or in connection with the CFD Bonds or the Indenture, except only to the extent amounts are received for the payment pursuant to the Indenture.
58 1168
Section 11. 2. Benefits of Indenture Limited to Parties. Nothing in this Indenture, expressed or implied, is intended to give to any person other than the Authority, the Trustee and the Owners of the Bonds, any right, remedy or claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of the Authority will be for the sole and exclusive benefit of the Trustee and the Owners of the Bonds.
Section 11. 3. Discharge of Indenture. If the Authority will pay and discharge any or all of the Outstanding 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 premium ( if any) on such Bonds, as and when the same become due and payable; b) by irrevocably depositing with the Trustee, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established with the Trustee pursuant to this Indenture and available for such purpose, is fully sufficient to pay such Bonds, including all principal, interest and redemption premiums; or
c) by irrevocably depositing with the Trustee or any other fiduciary, Federal Securities in such amount as an Independent Accountant determines will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established with the Trustee pursuant to this Indenture and available for such purpose, be fully sufficient to pay and discharge the indebtedness on such Bonds including all principal, interest and redemption premiums) at or before their respective maturity dates;
then any such Outstanding Bond or Bonds will be deemed to have been paid and discharged; provided, however, that any such Outstanding Bond or Bonds will be deemed to have been paid under paragraph ( c) above only if (i) in the case of Bonds to be redeemed prior to the maturity thereof, notice of such redemption will have been mailed pursuant to Section 2. 2(()) or provision satisfactory to the Trustee will have been made for the mailing of such notice, ii a verification report of an Independent Accountant will be delivered to the Trustee, and ( iii) an opinion of Bond Counsel will be delivered to the Trustee in the case of a defeasance of Bonds, to the effect that the requirements of this Indenture have been satisfied with respect to such discharge of such Bonds. Upon a discharge of one or more Bonds as described above, and notwithstanding that any of such Bonds will not have been surrendered for payment, the pledge of the Revenues, and other funds provided for in this Indenture with respect to such Bonds, and all other pecuniary obligations of the Authority under this Indenture with respect to such Bonds, as applicable, will cease and terminate, except only the obligation of the Authority to comply with the covenants contained in Section 5.7( Tax Covenants), to pay or cause to be paid to the Owners of such Bonds not so surrendered and paid all sums due thereon from amounts set aside for such purpose, and h ape not IreXueed fo asaid purposesew II bee paid over to the Author ty or pon a Trustee, w q
Request of the Authority.
The above provisions and procedures shall also be applicable to the defeasance of CFD Bonds.
Section 11. 4.Successor is Deemed Included in All References to Predecessor. Whenever in this Indenture or any Supplemental Indenture either the Authority is named or referred to, such reference will be deemed to include the successor, via written assignment, 59 1169
operation of law, or otherwise, to the powers, duties and functions, with respect to the management, administration and control of the affairs of the Authority, that are presently vested in the Authority, and all the covenants, agreements and provisions contained in this Indenture by or on behalf of the Authority will bind and inure to the benefit of its successors whether so expressed or not.
Section 11. 5. Delegation by Authority; Content of Certificates. The Authority may delegate any or all of its obligations hereunder to its Authorized Officers, consultants and/ or others. Every certificate by or on behalf of the Authority with respect to compliance with a condition or covenant provided for in this Indenture will include ( a) a statement that the person or persons making or giving such certificate have read such covenant or condition and the definitions herein relating thereto; ( b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate are based; ( c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such covenant or condition has been complied with; and ( d) a statement as to whether, in the opinion of the signers, such condition or covenant has been complied with.
Any such certificate made or given by an officer of the Authority may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known that the same were erroneous. Any such certificate or opinion or representation made or given by counsel may be based, insofar as it relates to factual matters, on information with respect to which is in the possession of the Authority, or upon the certificate or opinion of or representations by an officer or officers of the Authority, unless such counsel knows that the certificate or opinion or representations with respect to the matters upon which his certificate, opinion or representation may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known that the same were erroneous.
Section 11. 6. Execution of Documents by Bond Owners. Any request, consent or other instrument required by this Indenture to be signed and executed by Bond Owners may be in any number of concurrent writings of substantially similar tenor and may be signed or executed by such Bond Owners in person or by agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, will be sufficient for any purpose of this Indenture and will be conclusive in favor of the Trustee and of the Authority if made in the manner provided in this Section 11. 6.
The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgements of deeds, certifying that the person signing such request, consent or other instrument or writing acknowledged to him the execution thereof.
The ownership of Bonds will be conclusively proved by the Bond Register. Any request, consent or vote of the Owner of any Bond will bind every future Owner of the same Bond and the Owner of any Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Authority in pursuance of such request, consent or vote.
In lieu of obtaining any demand, request, direction, consent or waiver in writing, the Trustee may call and hold a meeting of the Bond Owners upon such notice and in accordance with such rules 60 1170
a nd obii9 ation as the Trustee considers fair and reasonable for the purpose of obtaining any such action. consent
Section 11. 7. Disqualified Bonds. In de
ed in any demandt requestedirecton,
requisi e
aggregate principal amount of Bonds have concu or for the account of the or waiver under this Indenture, Bonds which are owned or held by uthorit but excluding Bonds held in any employees'
uch detrrmntation) provbdedlshowaeaer, thaA Y
deemed not to be Outstanding for the purpose of any s
rotected in relying on any such for the purpose of determining whether the Trustee will be p demand, request, direction, consent or waiver, n
h Au ho itylw tSPefj/ to the T ustee those
owned or held will be disregarded. Upon reques ,
Bonds disqualified pursuant to this Section 11. 7.
Section 11. 8. Waiver of Personal Liabi i
he a m nt of the nterest on o penc pal of
Authority will be individually or personally liable fo p Y the Bonds; but nothing herein contained will relieve any such officer, agent or employee from the performance of any official duty provided by law.
Section 11. 9. Partial Invalidity. If any one or more of the covenants or agreements, or portions thereof, provided in this Indenture on the povenfant oruco enants, such ag eement oe performed should be contrary to law, then suc
a reements, or such portions thereof, will be null Sthereof and wlillbn no way affect the val'dity of 9 remaining covenants and agreements or portion
this Indenture or of the Bonds; but the Bond Owner ie rov sionsl og lawan The Author ty hereby them under the Bond Law or any other applicab p
other section,
declares that it would have eCeteclause a d Iphrase atnd wou d have auhorzed the issuance of paragraph, subdivision, senten , or more sections, paragraphs, the Bonds pursuant hereto irrespective of the fact that any lication thereof to any subdivisions, sentences, clauses or phrases of this Indenture or the app person or circumstance may be held to be unconstitutional, unenforceable or invalid.
Section 11. 11. Destruction of Cancelled Bonds. Whenever in this Indenture Provision is made for the surrender to the AuthorisY' ndenture, the Trustee w ll desthoy such Bonds paid or cancelled pursuant to the provisions of t in accordance with the retention policy of the Trustee then in effect.
Section 11. 12. Funds and AccohetAuthor ty or he Trustee may bel establ sheld Indenture to be established and maintained by t
audits thereof and
e
and maintained in the accounting reardfo°the purpose' tof suchereco dseany the case may
All either as a fund or an account, and m y,
any reports or statements with respe funds and accounts hed by the Authonty will at all tmes be such records with respect to all such maintained in accordance with generally accepted
the Trusteepw II Ibeeat al l times ma'nta ned lin
respect to all such funds and accounts held by accordance with corporate trust industry practices; in each case with due regard for the protection of the security of the Bonds and the rights of every Owner thereof.
Section 11. 13. Notices. Any notice, request, complaint, demand, communication or other paper will be sufficiently given and will be dd as follows oWsent bylematlo the Finanbe registered or certified mail, postage prepaid, addresse Director of the City with receipt confirmed or acknowledged:
61 1171
Lathrop Financing Authority
If to the Authority or the City: c/o City of Lathrop
390 TownCalfornia r95330
Lathrop,
Attention: Finance Director
U. S. Bank Trust Company, National Association
If to the Trustee: pne California Street Suite 1000
Sttent onclGlobalaCorpora e Trust
A
The Authority and the Trustee may designate any further or different addresses to which subsequent notices, certificates or other communications will be sen ' Indenture to the contrary
Unclaimed Moneys. Anything in this
Section 11. 14. the Trustee in trust for the payment and discharge of any of notwithstanding, any moneys held by
ears after the date when such Bonds ha onbif such
call for earlier redemp
the Bonds which remain unclaimed for two( 2) Y
ears after the date of deposit of
due and payable, either at their stated maturity dafos o 2 y moneys were held by the Trustee at such date,
and free from trust,
e osited with the Trustee after said dats apsolute properntys become due an
such moneys if d P
the Trustee to the Authority, as it
payable, will be repaid by rovided, however, that thereupon be released and discharge uhBondsep thereto and the Bon
and the Trustee will ment of s
Owners will look only to the Authority fOnent to the Authority, the Trustee will, at the expense of before being required to make such paY
e s remain unclaimed and that, after a Authority, cause to be mailed to the Owners of all su n
Bonds, at their respective ad
resseh
appearing on the Bond Register, a notice that said mo 30 da s after the date of mailmg suc date in said notice, which date will not be fewer than thirty ( ) Y balance of such moneys then unclaimed will be returned to the Authority• ate for notice, the If the d
Payment Due on Other than a Busmess Day•
of any right, as
Section 11. 15. for the
n an payment or the last date for perfoaasuch payment, wih noXnteresgacc maki on he next g Y
provided in the Indenture, is not a Business , be made or act performed or right exercise period after such nominal Da with date, may the same force and effect as if done on the nominal date provide succeeding Busmess Y in this Indenture. Electronic Signatures. All notices, approvals, consents, reques s Section 11. 16. in English and must be in
and any ned manually or by waY of an electronic signature ( communications to the inclOrbig Trustee hereunder must be in writin9 ided b DocuSign,
the form of a document that is s g
table to the Trustee). Electronic
electronic images of handwritte on9nsignaturedprovider Iaccep eS pro
00 or other app icable law
Adobe Sign or any other elect With the ESIGN ACT of 20
signatures believed bY tal s
rnatuees for a III purposes. If the Authority ch
ees t
tassumel
all rsks
s hall be d e e m e d o rig
i n 9
si natures, including without limitation the risk of th e T arties. signatures to sign documents del ivere d to th e T ru ste e, th e Authori a misuse by third p
arising out of its use of electrorn 9
acting on an Trustee may in any instance and in its sole discretion require unauthorized document and the risk of interception or Trustee in lieu of, or in Notwithstandmg the foregoing, the that an original document bearing a
manc roni9 sagnature
delivered to the
addition to, any document signed via ele
62 1172
Signature Page Follows]
63 1173
IN WITNESS WHEREOF, the Authority has { iS Indentureaonbe exe uted by onebof ts authorized signatory, and the Trustee has caused authorized officers, all as of the day and year first above written.
LATHROP FINANCING AUTHORITY
By' Treasurer
C TY OF LATHROP
By: Finance Director
U. S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By Authorized OfFicer
1, 2023—
Signature Pag( ossdale D stri t Refund ng) Series 20
1174
FORM OF BOND
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
No.
LATHROP FINANCING AUTHORITY
REFUNDING REVENUE BOND MOSSDALE DISTRICT REFUNDINGS) SERIES 2023 DATED DATE: CUSIP:
INTEREST RATE: MATURITY DATE:
2023
o
a
Se tember 2,
REGISTERED OWNER: CEDE & CO.
DOLLARS**"
PRINCIPAL AMOUNT:
romises to
The LATHROP FINANCING AUTHORITY, a{ nt pfoWvalue re eivedghereby p d existing
under the laws of the State of California ( the Autho Y ' on the Maturity Date identified a but only out of the Revenues and other funds tered Owner"
rred to) to the Registered Owner
p Y the Principal Amount identified above or registered assigns ( the Regis ri ht of prior redemption hereinafter mentioned), interest thereon at above ( subject to any 9
identified above in lawful money of the United 5
from the nterest Payment Date ( as hereinafter the Interest Rate identified above in like money efined next preceding the date of authentication
d offteenBthnalendar day oBthe month pretcedng
on or before an Interest Payment Date and after the
15, 2023, the month in which such Interest Payment Date ocuthent cated on or prio olFebruary rest from
such Interest Payment Date, or unless this Bond is a
rovided, however, that
in which event it will bear
onroftths Bond nte esDtase ndefaut ont his Bondiousl Bbeen pad or if, at the time of authentica interest from the Interes
enaYmaabl easemiannually onr Ma chr2 and Septe
Matur t'nDate stted
made available for paym ), p Y
commencing March 2, 2024 e
this Bond
t
The Prnc paltAmountustpayable upon S
rComt
any,
above or date of redemption of
able by check of the and surrender at the Trust Office ( as defustee,in t Intere t hereon S pa6ank
Tru
to the National Association, as trustee ( the
Trustee mailed by first class mail, postage prepaid, on each earssonPhe reg station books Registered Owner at the address of the Registeofd 0 month prepeding the month in which such of the Trustee as of the fifteenth calendar day ment of interest may be made by wire Interest Payment Date occurs; provided, however, that pay istered owner of Bonds in the transfer to an account in the United States of America to any reg s on the fifteenth calendar te rincipal amount of$ 1, 000, 000 or more upon wrie of busines ns of any such registered
aggrega p
owner filed with the Trustee for that purpose as of the c os ment Date occurs.
day of the month preceding the month in which such Interest Pay A- 1
1175
member This Bond is a limited obligation of the Authority, payable solely from the Revenues an funds pledged under the Indenture ( as defined herein). This Bond is not a debt of any uthorit or the State of California or any of itsnthe Indenburle) Sland none of t1e membe s of the A Y
debt of the Authority but only to the extent set forth i thorit , said State or any of its political subdiviof communbtY facilities d strictsthority has
of the Au Y
no taxing power, except as to authorized special taxes
Series
This Bond is one of a duly authorized series as bMo$sdalehDistric RefundiingS ted t e
Lathrop Financing Authority Refunding Revenue Bon secured by an Indenture of 2023" ( the " Bonds"), limited in principal amount to $ Trust dated as of 1, 2023 (the Indenture"), between the Authority and the Trustee.
Reference is hereby made to the Indenture and all indentures supplemental thereto for a ion of the rights thereunder of the owners of tof tBe ra hts, f
duties and mmun' t'eies of the
descript 9
Revenues ( as that term is defined in the Indenture), and all of the terms of the Trustee and of the rights and
aedhe'e in and constit te a chontractbetween eheSAered rOwner, t
by
Indenture are hereby mcorpo
Registered Owner, and to all sf the provisions of which Indenture the 9 acceptance, assents and agree
Th e Bonds are authorized to be issued pursuanttoe 4 pommencingtw h Section 6584) of Bond Pooling Act of 1985, as amended, constituting Artic Chapter 5 of Division 7 of Title 1 of the Government nd asfand So te extelnt set forth n the
The Bonds are limited obligations of the Authori y a , I ndenture, are payable solely from and secured btl tlfin the I denture1eThe Reve neseand such certain other funds held by the Trustee as pro ment of the principal of and interest on other funds constitute a trust fund for the security and PaY the Bond , s exce pt to the extent otherwise provided in the lond enture. r interestTheor redemption full faith andpremiums credit of the Authority is not pledged to the payment of the principa n on the Bonds. The Bonds are not securedhe Authoaity or any ofetsl ntl ome o rrece pts, if a y) of the property of t
lien or encumbrance upon, any
except the Revenues and such other funds as provided in the Indenture:
Tax Refunding Bonds
The Bonds have been issued bnds ( then Reassessment Bondsl')of the City of Lathrop the " CFD Bonds") and reassessme
issued as follows, all as more particularly described in the Indenture• ent Bonds, Reassessment
i City of Lathrop Limited Obligation Refunding Improvem District No. 2023- 1; ii City of Lathrop Community Facilities District No. 2003- 1 ( Mossdale Village) Special Tax Refunding Bonds, 2023 Series A.
The obligation of the Authority to make payments of principal and interest on the Bonrrdslis obli ation secured by Revenues as defined aCFD Bnds and ReassessmentBonds. a limited 9
comprised of payments received by the Authority on the
A-2
1176
may be redeemed at the option of
on or after September 2, - source of available funds,
The Bonds maturing tember 2, _ from any
onding proportionately to the
the Authority on any date on and after Sep redeemed, if any or in part from maturities corresp prior to maturity as a WhO1e onds is being accomp ished in conjunction with maturities of the CFD Bonds andlor Reassen{ g ent Bonds simultaneous Y
d b the Authority,
redemption of CFD Bonds andlor Reassessme rincipal amount of the Bonds to be demption, and otherwise from SCe equal tolps as are selec e
ci al amount so
such optional re tion pr rin
and by lot within a maturity, at a
ree sd below as a percentage of the p
p
redeemed, plus a premium eXP tion thereof:
redeemed, plus accrued interest to the date of re em p
Redem tion Premium
Redemption Date 3%
through August 31, _ 2
September 2, — through August 31, —
September 2,
through August 31, p
September 2,
and thereafter September 2,
tional prepayment of the CFD ion the Authority will deliver to the Trustee a certificate o a Prior to such redempt that, following such p
the rincipal and interest generated from the remaining CF Independent Financial Consultant verifyipg
ds and redemption of the Bonds, I ayment of principal and interest due on the Bonds that Bon tion. In the event of insufficiency, the
Bonds is adequate to ' r
hereunder following such redemp
I remain Outstanding wil ant shall determine t and the optional redemption a limitation en the amount of Bonds to e
Independent Financial Consu I with the foregoing requirem optionaliy redeemed so as to comp y
of Bonds shall be so limited. Interest Payment Date
s ecial redemption oa ent of Special Taxes or
The Bonds are subject to mandatory p
maturities the Authority shall
from proceeds of early redemptionart, inof theCFDamounts Bonds and from Prep Y amon at the principal amount thereof, Reassessments, in whole or in p
e of the principal amount so redeemed, plus
lect as directed to the Trustee in
a Caperetntagthe
Authority,
se ressed below
plus a premium exp tion thereof:
accrued interest to the date of redemp
Redem tion Premium
Redemption Date 3%
ment Dates through March 2, — 2
Interest Pay
and March 2, 1
September 2,_—
and March 2, — 0
September 2, _—
and thereafter September 2,
ion the Authority will deliver to the Tru redemptionifiocfa the CFD Prior to such redempt
in that, following such early
Independent Financial Consultant verify' 9tion of the Bonds, the principal and interest generated nds or Reassessment Bonds and redemp
Bo ds and Reassessment ain Outstanding hereunder Bonds.
I remeauate
to make the time
t
from the remaining CFD Bon
a ment of p
the Independent Financial ConN1th the rincipal and inte t e event of insuffc ency, at W'
p y tee to sufficiently comp y
such redemption. In osited with the Trus tion of CFD Bonds or following redemp shall calculate the amount needed to beo eP
Proceeds of early
oin and the Trustee shall depinto the Revenue Fund, all as directed in a Ce t ficate of foreg 9 Reassessment Bonds in such amoun
first class mail,
the Authority. will mail by nated for ense ofec vowners of any Bonds desig The Trustee on behalf e e pthon tophe resp postage prepaid, notice of any
A-3
1177
e addresses appearing on the registration books maintainBd a d ( a
at their respectiv rior to the redemption, ositories and to the Municipal Securities Rulemakmg Trustee and to the Securities Dep
at least 20 but not more tsuch6
otace so mailed nor
that neither failure to receive any
such terms tion of such Bonds or are defined in hpWeveenture , redemption date; provided, roceedings for the redemp t on and payment any defect therein will affect the validity of the p ion of the accrual of interest thereo ndent
I
eg nterestawedceaseto accrue hereon from
the cessat ecified in the I
is duly provided therefor as sp
and after the date fixed for redemption.
ons in denominations of
istered Bonds without coup
on a ment of the
The Bonds are issuable as fully re9
be exchanged at the Trust
inte ral multiple thereof. Subjectistered Bondsfmayand up p ytered Bonds
5, 000 or any 9.
charges, if any, provided in the I n d
e
n
ta e,p
u ly reg
Office of the Trustee for a like agg g
rincipal amount and matu rity of fully regis
of other authorized denomina tion s.
erson or by its attorney duly
This Bond is transferable by the Registere d Owner, but only in p in the manner, subject to the authorized in writing, at the Trust Office of the Trustee, Bond or Bonds, of authorized limitations and upon payment of the charges provided in theste edture, and upon surrender an
cancellation of this Bond. Upon such transfer a new fully reg re ate principal amount will be issued to e denomination or denominations, for the same agg 9
tion, or( ii) selected
erefor. The Trustee will not berods for redempter
the trans er or
transferee in exBon i auring 15 days pnor to selection of B exchange of any
for redemption. the Trustee may treat the Registered Owner as the absolute owner or The Authority and an notice to the contrary•
tions of the Authority and of the `^ time nf the manner2, o II ur oses, and the Authority and th aTrustee
will not be affected y
a p P
The Indenture and the rights and oblig
rovided that no such modification or
the Trustee may be modified or am
ed nthe ndenturetip
e and at any
of rovid n Bond or otherwise
the extent, and upon the terms p
rincipal, interest or redemption premiums endment will ( a) extend the maturity of or reau hepe interest rate on a
am n gond without the rovided therein of a y
alter or impair the obligation of the Authority o P
ercentage of Bonds required b reduce the p
at the time and placsent of the owneaoasuch Bonde( ification, or (c) without its written consent express written con such amendment or mod
for the written consent to a
y hts or obligations of the Trustee, all as more fully set forth in t e thereto, modify any of the g
Indenture.
d b the Authority that all things, condtlt
in the nssuance of this Bond' d°
It is hereby certifie Y
erformed precedent to a
to have happened and to have have been been pperformed in due time, forAc , a d thatrthe ramount of ts exist, hav e h app
e n e d an d
li mit res cribed
does not exceed any P
Constitution and statutes of
indebtedness of the Authori yy
t
e
qct. Bond, together with al l other
by
the Constitution or statutes of the State of Ca l ifo rn i a o r bY t e
denture, or become valid or
This Bond will not be entitled to any benefit under the In obligatory for any purpose, until the certificate of authentication hereon will have been signed by the Trustee. ository Trust is Bond is presented by an authorized represes{ aation of tansDfer, exchange or U nl e ss th pTC") to the Tru stee for reg
Company, a New York corpora
ed and delivered is registered in the nam e of C ed e & Co. or such payment, and any Bond execut
A-4
1178
and any payment is made to
an authorized representative of DTC resentative of DTC), ANY as is requested by an authorized rep
other name
or to suchto her entity Co., has an interest
Cede & Co. E HEREOF FOR VALUE OR Oe HERW SE BY OR T
TRANSFER, PLEDGE OR OTHER S
istered owner hereof, Ce
ANY PERSON IS WRONGFUL since the reg
herein.
A-5
1179
pp FINANCING AUTHORIT e chaa member° oh
the facsimile si9nature of the LATHR all as
N WITNESS WHEREOF, the facsimile signature of its Secretary, to be executed in its fthe Autho tytad attlested by
Board of Directors o
of the date set forth above. LATHROP F NANCING AUTHORI
By Treasurer
Attest:
Secretary
CERTIFICATE OF AUTHENTICATION
f the Bonds described in the within- mentioned Indenture.
This is one o
NATIONAL
Date:
U. S. BAN TON, as Tr uMee
NY
ASSOCIA
By' Authorized Signatory
A-6
1180
ASSIGNMENT
rsi ned do(es) hereby sell, assign and transfer unto
For value received the unde 9
stered Bond and hereby irrevocably constitute( s) and appoint( s) whose taxrde tio'ned reg
umber is
oWer of substitution in the
the within attorney to transfer the same on the books of the Trustee with full p premises.
Dated:
gignature guaranteed:
NOTE: The signatures( s) on this Assignment must
uaranteed by an ond with the name(as) ticular as written withouton alteration the face oor S must be 9 corresp
NOTE: Signature( ) the within Bond in e
can9e Whatsoever
eligible guarantor institution enlargement or any
A- 7
1181
EXHIBIT B
FORM OF CFD BOND
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
No.
CITY OF LATHROP
COMMUNITY FACILITIES DISTRICT NO. 2003- 1
MOSSDALE VILLAGE)
SPECIAL TAX REFUNDING BONDS
2023 SERIES A
INTEREST RATE: MATURITY DATE: BOND DATE: CUSIP:
September 2, 2023 N/ A
REGISTERED OWNER: U. S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee under that certain Indenture of Trust dated as of 1, 2023 befinreen the Lathrop Financing Authority and
U. S. Bank Trust Company, National Association
PRINCIPAL AMOUNT: *** DOLLARS***
THE CITY OF LATHROP ( the " City"), for and on behalf of City of Lathrop Community Facilities District No. 2003- 1 ( Mossdale Village) ( the " CFD"), FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Indenture ( as hereinafter defined), to the Registered Owner named above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay interest on such Principal Amount from the Interest Payment Date ( as hereinafter defined) next preceding the date of authentication hereof, unless ( i) the date of authentication is an Interest Payment Date in which event interest shall be payable from such date of authentication, ( ii) the date of authentication is after a Record Date( as hereinafter defined) but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication, or iii) the date of authentication is prior to the close of business on the first Record Date in which event interest shall be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at the time of authentication of this Bond interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Bond shall be payable from the Dated Date set forth above. Interest will be paid semiannually on March 2 and September 2 ( each an " Interest Payment Date"), commencing September 2, 2023, at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment.
The principal of and premium, if any, on this Bond are payable to the Registered Owner hereof in lawful money of the United States of America upon presentation and surrender of this B- 1
1182
Bond at the Principal Office of the Trustee ( as such term is defined in the Indenture), initially U. S.
Bank Trust Company, National Association ( the" Trustee"). Interest on this Bond shall be paid by check of the Trustee mailed, by first class mail, postage prepaid, or in certain circumstances described in the Indenture by wire transfer to an account within the United States of America, to the Registered Owner hereof as of the close of business on the fifteenth day of the month preceding the month in which the Interest Payment Date occurs ( the " Record Date") at such Registered Owner' s address as it appears on the registration books maintained by the Trustee.
This Bond is one of a duly authorized issue of" City of Lathrop Community Facilities District No. 2003- 1 ( Mossdale Village) Special Tax Bonds, 2023 Series A" ( the " Bonds") issued in the aggregate principal amount of$ pursuant to the Mello- Roos Community Facilities Act of 1982, as amended, being Sections 53311, et seq., of the California Government Code ( the Act") for the purpose of refinancing outstanding special tax bonds of the City and paying certain costs related to the issuance of the Bonds. The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of the City a2023 in its capacity as the legislative body of the CFD ( the " Legislative Body") on and an Indenture executed in connection therewith ( the " Indenture"), and this reference incorporates the Indenture herein, and by acceptance hereof the Registered Owner of this Bond assents to said terms and conditions. The Indenture is adopted under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California.
Pursuant to the Act and the Indenture, the principal of, premium, if any, and interest on this Bond are payable solely from the portion of the annual special taxes authorized under the Act to be levied and collected within the CFD( the" Special Taxes") and certain other amounts pledged to the repayment of the Bonds as set forth in the Indenture. Any amounts for the payment hereof shall be limited to the Special Taxes pledged and collected or foreclosure proceeds received following a default in payment of the Special Taxes and other amounts deposited to the Special Tax Fund established under the Indenture, except to the extent that other provision for payment has been made by the Legislative Body, as may be permitted by law. The City has covenanted for the benefit of the owners of the Bonds that under certain circumstances described in the Indenture it will commence and diligently pursue to completion appropriate foreclosure proceedings in the event of delinquencies of Special Tax installments levied for payment of principal and interest on the Bonds.
Optional Redemption. The Bonds may be redeemed, at the option of the City, from any source of funds on any Interest Payment Date on or after September 2, in whole, or in part and by lot, at a redemption price equal to the principal amount to be redeemed, plus accrued interest to the date of redemption, together with a premium that is sufficient, based on the certificate of an Independent Financial Consultant, to redeem the corresponding portion of the Authority Bonds.
Mandatory Sinkinq Fund Redemqtion. The Bonds maturing September 2, are subject to mandatory sinking payment redemption in part on September 2, and on each September 2 thereafter to maturity, by lot, at a redemption price equal to 100% of their principal amount to be redeemed, without premium, in the aggregate respective principal amounts as set forth in the following table:
B- 2
1183
Mandatory
Redemption Date Sinking Fund
September 2) Payment
maturity)
Extraordinary Redemption. The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from Prepayments, plus amounts transferred from the Reserve Account, at a redemption price equal to the principal amount to be redeemed, plus accrued interest to the date of redemption, together with a premium that is sufficient, based on the certificate of an Independent Financial Consultant, to redeem the corresponding portion of the Authority Bonds.
Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the registered owners thereof not fewer than 30 nor more than 45 days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books. Neither a failure of the Registered Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date; provided that funds for the redemption are on deposit with the Trustee on the redemption date. Thereafter, the registered owners of such Bonds shall have no rights except to receive payment of the redemption price upon the surrender of the Bonds.
This Bond shall be registered in the name of the Registered Owner hereof, as to both principal and interest, and the City and the Trustee may treat the Registered Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary.
The Bonds are issuable only in fully registered form in the denomination of$ 5, 000 or any integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Indenture. This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or denominations for the same aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor.
The Trustee shall not be required to register transfers or make exchanges of( i) any Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed, or ( ii) any Bonds chosen for redemption.
The rights and obligations of the City and of the registered owners of the Bonds may be amended at any time, and in certain cases without notice to or the consent of the registered owners, to the extent and upon the terms provided in the Indenture.
B- 3
1184
THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE CITY OR THE CFD FOR
WHICH THE CITY OR THE CFD IS OBLIGATED TO LEVY OR PLEDGE, OR HAS LEVIED OR
PLEDGED, GENERAL OR SPECIAL TAXES, OTHER THAN THE SPECIAL TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED OBLIGATIONS OF THE CITY PAYABLE
FROM THE PORTION OF THE SPECIAL TAXES AND OTHER AMOUNTS PLEDGED UNDER
THE INDENTURE BUT ARE NOT A DEBT OF THE CITY, THE STATE OF CALIFORNIA OR
ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION.
This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Trustee.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law, and that the amount of this Bond, together with all other indebtedness of the City, does not exceed any debt limit prescribed by the laws or Constitution of the State of California.
B- 4
1185
IN WITNESS WHEREOF, the City of Lathrop, for and on behalf of its City of Lathrop Community Facilities District No. 2003- 1 ( Mossdale Village) has caused this Bond to be dated as of 2023, to be signed on behalf of the City by the Mayor by facsimile signature and attested by the facsimile signature of the City Clerk hereon.
Mayor
ATTEST:
City Clerk
CERTIFICATE OF AUTHENTICATION AND REGISTRATION
This is one of the Bonds described in the within- defined Indenture.
Dated: 2023
U. S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By:
Its: Authorized Officer
B- 5
1186
EXHIBIT C
FORM OF REASSESSMENT BOND
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
No.
LIMITED OBLIGATION REFUNDING IMPROVEMENT BONDS
CITY OF LATHROP
REASSESSMENT DISTRICT NO. 2023- 1
MOSSDALE VILLAGE)
INTEREST RATE: MATURITY DATE: BOND DATE: CUSIP:
September 2, 2023 N/ A
REGISTERED OWNER: U. S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee under that certain Indenture of Trust dated as of 1, 2023 between the Lathrop Financing Authority and
U. S. Bank Trust Company, National Association
PRINCIPAL AMOUNT: *** DOLLARS**'`
Under and by virtue of the Refunding Act of 1984 for 1915 Improvement Act Bonds, Division 11. 5 of the Streets and Highways Code ( the " Act"), the City of Lathrop, County of San Joaquin, State of California ( the " City"), will, out of the redemption fund for the payment of the bonds issued upon the unpaid portion of reassessments made for the refunding bonds more fully described in proceedings taken pursuant to Resolution of Intention No. adopted by the City Council of the City on 2023, pay to the registered owner named above or registered assigns, on the maturity date stated above, the principal amount stated above, in lawful money of the United States of America and in like manner will pay interest from the Interest Payment Date ( as hereinafter defined) next preceding the date on which this bond is authenticated, unless this bond is authenticated and registered as of an Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or unless this bond is authenticated and registered prior to August 15, 2023, in which event it shall bear interest from the dated date above until payment of the principal amount shall have been discharged, at the rate per annum stated above, payable semiannually on March 2 and September 2 ( each an Interest Payment Date") in each year commencing on September 2, 2023. Both the principal hereof and redemption premium hereon are payable upon surrender at the corporate trust office of U. S. Bank Trust Company, National Association, as Authentication Agent, Trustee, Registrar and Paying Agent ( the Agent ), in San Francisco, California, and the interest hereon is payable by check mailed by first class mail to the registered owner hereof at the owner' s address as it appears on the records of the Agent as of the 15th day of the calendar month immediately preceding each Interest Payment Date ( the " Record Date"), or by wire transfer made on such Interest Payment Date upon written instructions of any Owner of$ 1, 000,000 or more in aggregate principal amount of Bonds delivered to the Trustee prior to the applicable Record Date.
C- 1
1187
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 of Lathrop under the Act, the Resolution of Issuance and the Indenture for the purpose of providing means for paying for the improvements described in the proceedings, and is secured by the moneys in the redemption fund and by the unpaid portion of assessments made for the payment of those improvements, and, including principal and interest, is payable exclusively out of the redemption fund.
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 Agent, subject to the terms and conditions provided in the Resolution of Issuance and the Indenture, 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, and for the same aggregate principal amount, will be issued to the transferee in exchange therefor.
Bonds shall be registered only in the name of an individual ( including joint owners), a corporation, a partnership, or a trust.
Neither the City nor the Agent shall be required to make such exchange or registration of transfer of bonds during the 15 days of the calendar month immediately preceding any Interest Payment Date.
The City and the Agent may treat the registered owner hereof as the absolute owner for all purposes, and the City and the Agent shall not be affected by any notice to the contrary.
Optional Redemption. Each Outstanding Bond, or any portion of the principal thereof, in the principal amount of $5,000 or any integral multiple thereof, may be redeemed, at the option of the City, from any source of funds on any Interest Payment Date on or after September 2, in whole, or in part and by lot, at a redemption price equal to the principal amount to be redeemed, plus accrued interest to the date of redemption, unless sooner surrendered, in which event said interest will be paid to the date of payment, all in the manner and as provided in the Bond Law, together with a premium that is sufficient, based on the certificate of an Independent Financial Consultant, to redeem the corresponding portion of the Authority Bonds.
Redemqtion Followinq Prepavment of Reassessments. The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis among maturities, on any Interest Payment Date, at a redemption price equal to the principal amount to be redeemed, plus accrued interest to the date of redemption, together with a premium that is sufficient, based on the certificate of an Independent Financial Consultant, to redeem the corresponding portion of the Authority Bonds.
This bond is a Limited Obligation Refunding Improvement Bond because, under the Resolution of Issuance and the Indenture, the City is not obligated to advance funds from the City treasury to cover any deficiency which may occur in the redemption fund for the bonds.
G2
1188
Mandatory Sinkina Fund Redemption. The Bonds maturing September 2, are subject to mandatory sinking payment redemption in part on September 1, and on each September 2 thereafter to maturity, by lot, at a redemption price equal to 100% of their principal amount to be redeemed, without premium, in the aggregate respective principal amounts as set forth in the following table:
Mandatory
Redemption Date Sinking Fund
September 2) Payment
maturity)
This bond will continue to bear interest after maturity at the rate above stated; provided it is presented at maturity and payment thereof is refused upon the sole ground that there are not sufficient moneys in the redemption fund with which to pay same. If it is not presented at maturity, interest thereon will run until maturity.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS OF THIS BOND SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN THIS PLACE.
This bond shall not be entitled to any benefit under the Act, the Resolution Authorizing Issuance of Bonds ( the " Resolution of Issuance") and the Indenture dated as of 1, 2023, between the City and the Agent ( the " Indenture") or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Agent.
IN WITNESS WHEREOF, the City of Lathrop has caused this bond to be signed in facsimile by the Finance Director of the City and by its City Clerk, all as of the dated date specified above.
CITY OF LATHROP
City Clerk Finance Director
CERTIFICATE OF AUTHENTICATION AND REGISTRATION
This is one of the Bonds described in the within- defined Indenture.
C- 3
1189
Dated: 2023
U. S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By:
Its: Authorized Officer
C- 4
1190
EXHIBIT D- 1
CFD BONDS DEBT SERVICE SCHEDULE
D- 1
1191
EXHIBIT D- 2
REASSESSMENT BONDS DEBT SERVICE SCHEDULE
D- 9
1192
Jones Hall Draft 4. 24. 23
ESCROW AGREEMENT
Relating to
18,975, 000
LATHROP FINANCING AUTHORITY
REVENUE BONDS
Mossdale District Refundings)
2013 Series A
and
11, 690,000
LIMITED OBLIGATION REFUNDING IMPROVEMENT BONDS
CITY OF LATHROP
Reassessment District No. 2013- 1
Mossdale Village)
7, 285,000
CITY OF LATHROP
COMMUNITY FACILITIES DISTRICT NO. 2003- 1
MOSSDALE VILLAGE)
SPECIAL TAX BONDS
2013 SERIES A
THIS ESCROW AGREEMENT ( the " Agreement") is dated as of 2023 in connection with the issuance of the three above referenced series of bonds, and is entered into by and between the CITY OF LATHROP ( herein the " City"), a general law city, duly organized and existing under and by virtue of the Constitution and laws of the State of California, the LATHROP FINANCING AUTHORITY, a joint powers authority organized and existing under the laws of the State of California ( the " Authority") and U. S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association having a corporate trust office in California, as Escrow Agent ( the " Escrow AgenY') and is also the 2013 Fiscal Agent and 2013 Trustee ( as hereinafter defined).
BACKGROUND:
1. The City and the Authority each previously issued the following respective bonds:
i) City issuance of$ 11, 690, 000 original amount of Limited Obligation Refunding Improvement Bonds Reassessment District No. 2013- 1 ( Mossdale Village) ( the " 2013 Reassessment Bonds"), pursuant to a Fiscal Agent Agreement, dated as of November 1, 2013 ( the " 2013 Reassessment Bonds Fiscal Agent Agreement"), by and between the City and the Escrow Agent, as successor to MUFG Union Bank, N. A, who has been succeeded as by fiscal agent by U. S. Bank Trust Company, National Association, and ii) City issuance of $ 7,285,000 original amount of Community Facilities District No. 2003- 1 ( Mossdale Village) Special Tax Bonds ( the " 2013 CFD Bonds") pursuant to a Fiscal Agent Agreement, dated as of November 1, 2013 ( the " 2013 CFD Bonds Fiscal Agent AgreemenY'), by and between the City and the Escrow Agent, as fiscal agent ( as qTTACHMENT M '
1193
to both the 2013 Reassessment Bonds Fiscal Agent Agreement and the 2013 CFD Bonds Fiscal Agent Agreements, the "2013 Fiscal Agent"). iii) Authority issuance of $ 18,975,000 original amount of Revenue Bonds, 2013 Series A ( the " 2013 Authority Bonds") pursuant to an Indenture of Trust Fiscal Agent Agreement, dated as of November 1, 2013 ( the " 2013 Indenture"), by and between the City and the Escrow Agent, as trustee ( the " 2013 Trustee"); and
2. The City is authorized to redeem the 2013 Reassessment Bonds and 2013 CFD Bonds on September 2, 2023 at a redemption price equal to the outstanding principal amount thereof to be redeemed plus interest accrued to the redemption date, without premium and thee Authority is likewise authorized to redeem the 2013 Authority Bonds on September 2, 2023 at a redemption price equal to the outstanding principal amount thereof to be redeemed plus interest accrued to the redemption date, without premium.
3. The City has authorized the issuance of its ( i) Limited Obligation Refunding Improvement Bonds, Reassessment District No. 2023- 1 ( Mossdale Village) ( the " Reassessment Refunding Bonds") and ( ii) Community Facilities District No. 2003- 1 ( Mossdale Village) Special Tax Bonds 2023 Series A ( the " CFD Refunding Bonds"), and therein determined to use the proceeds of the Reassessment Refunding Bonds and CFD Refunding Bonds to retire, in advance of their stated maturities, the 2013 Reassessment Bonds and 2013 CFD Bonds, and the Authority has in turn authorized the issuance of its Refunding Revenue Bonds, 2023 Series A ( the 2023 Authority Bonds ) in order to purchase the CFD Refunding Bonds and Reassessment Refunding Bonds; all such 2023 Authority Bonds, CFD Refunding Bonds and Reassessment Refunding Bonds are being issued pursuant to an Indenture of Trust dated as of 1, 2023, by and among the Authority, the City and U. S. Bank Trust Company, National Association, as trustee thereunder( the " Trustee").
4. In furtherance of the proposed redemption of the 2013 Reassessment Bonds, 2013 CFD Bonds and 2013 Authority Bonds, the City and the Authority desire to provide for the investment, use and disposition of, interest on the funds deposited into an Escrow Fund to accomplish the timely redemption and payment of the such bonds.
5. The Escrow Agent has full powers to act with respect to said Escrow Fund and to perform the duties and obligations to be undertaken pursuant to this Agreement; NOW, THEREFORE, in consideration of the above premises and of the mutual promises and covenants herein contained and for other valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:
Section 1. Appointment of Escrow Agent. The Authority hereby appoints U. S. Bank Trust Company, National Association as escrow agent for all purposes of this Agreement and in accordance with the terms and provisions of this Agreement, and the Escrow Agent hereby accepts such appointment.
Section 2. Establishment of Escrow Fund and Accounts Therein. There Escrow Agent shall establish an " Escrow Fund" to be held by the Escrow Agent, separate and apart from any funds or accounts of the Escrow Agent, as an irrevocable escrow securing payment of principal of and interest on the 2013 Reassessment Bonds, 2013 CFD Bonds and 2013 Authority Bonds as hereinafter set forth. Within the Escrow Fund the Escrow Agent shall establish a " 2013 Reassessment Bonds Account," a " 2013 CFD Bonds Account" and a " 2013 2 1194
Authority Bonds Account." for the payment and prepayment of the respective previously issued bonds.
All cash and Defeasance Securities ( as defined herein) in the 2013 Authority Bonds Account are hereby irrevocably pledged as a special fund for the payment and prepayment of the 2013 Authority Bonds in accordance with the terms hereof.
As used herein, the term " Defeasance Securities" means the federal securities set forth on Exhibit A hereto and hereby incorporated herein.
Section 3. Deposit of Funds. Deposits into the accounts within the Escrow Fund shall be made in the amounts set forth below from the sources set forth below:
a) 2013 Reassessment Bonds Account: Total Deposit: $
i) proceeds of the Reassessment Refunding Bonds ( in the amount of transferred to the Escrow Agent by the Trustee;
ii) from amounts held by the 2013 Fiscal Agent under the 2013 Reassessment Bonds Fiscal Agent Agreement in the Reserve Fund, in the amount of $ and
iii) from amounts held by the 2013 Fiscal Agent under the 2013 Reassessment Bonds Fiscal Agent Agreement in the Redemption Fund, in the amount of$ b) 2013 CFD Bonds Account: Total Deposit: $
i) proceeds of the CFD Refunding Bonds ( in the amount of transferred to the Escrow Agent by the Trustee;
ii) from amounts held by the 2013 Fiscal Agent under the 2013 CFD Bonds Fiscal Agent Agreement in the Reserve Fund, in the amount of$ and iii) from amounts held by the 2013 Fiscal Agent under the 2013 CFD Bonds Fiscal Agent Agreement in the Special Tax Fund, in the amount of$ c) 2013 Authoritv Bonds Account: Total Deposit: $
a) from the amount deposited for the 2013 Reassessment Bonds under subsection ( a) above, the amount of $ as in internal transfer by the Escrow Agent;
a) from the amount deposited for the 2013 CFD Bonds under subsection ( b) above, the amount of$ as in internal transfer by the Escrow Agent; b) from amounts held by the 2013 Trustee in the Reserve Fund under the 2013 Indenture, to the Escrow Agent in the amount of$ and
c) from amounts held by the 2013 Trustee in the Revenue Fund under the 2013 Indenture, to the Escrow Agent in the amount of$
3 1195
The Defeasance Securities and cash will be deposited with and held by the Escrow Agent in the 2013 Authority Bonds Account solely for the uses and purposes set forth herein.
The Escrow Agent will have no lien upon or right of set off against the Defeasance Securities and cash at any time on deposit in the Escrow Fund. If at any time the Escrow Agent shall receive actual knowledge that the deposits into the Escrow Fund will not be sufficient to make any payment required hereunder, the Escrow Agent shall notify the City of such fact and the City or the Authority shall promptly cure such deficiency. The Escrow Agent shall not be liable for any such deficiency.
The Authority, as owner of the 2013 CFD Bonds, hereby waives the defeasance requirements set forth in Section 8. 1 of the 2013 CFD Bonds Fiscal Agent Agreement. The cash deposited into the 2013 CFD Bonds Account and 2013 Reassessment Bonds Account shall be used for prepayment and redemption of the respective 2013 CFD Bonds and 2013 Reassessment Bonds as set forth in Exhibit B, provided however, that upon deposit shall be available for the immediate use of funding the 2013 Authority Bonds Account as set forth herein, to be invested as set forth in Exhibit A.
The Escrow Agent will have no lien upon or right of set off against such cash at any time on deposit in the Escrow Fund. The Escrow Agent may create such subaccounts within the Escrow Fund as it may require to accomplish the purposes of this Escrow Agreement.
It is the intention of the parties hereto that the 2013 CFD Bonds Account and 2013 Reassessment Bonds Account has been funded with an amount sufficient to pay interest and principal on the 2013 Reassessment Bonds and 2013 CFD Bonds as set forth in Exhibit B, and that the amounts on deposit therein shall in turn be sufficient to defease the 2013 Authority Bonds as of the date of transferring the funds in the 2013 CFD Bonds Account and 2013 Reassessment Bonds Account to the 2013 Authority Bonds Account. If at any time the Escrow Agent receives actual knowledge that the cash and amounts in the 2013 Authority Bonds Account will not be sufficient to make any payment required by Section 4 hereof, the Escrow Agent will notify the Authority of such fact and the Authority will immediately cure such deficiency from any source of legally available funds. Investment earnings on amounts on deposit in each account shall be maintained in the corresponding account of the Escrow Fund until the 2013 Authority Bonds have been fully defeased.
Section 4. Instructions as to Application of Deposit. The total amount of Defeasance Securities and cash deposited in the 2013 Authority Bonds Account pursuant to Section 3(c) will be applied by the Escrow Agent to the payment and prepayment of the 2013 Authority Bonds in accordance with the 2013 Indenture on the date( s) and in the amounts set forth on Exhibit B hereto. Any amounts remaining in the 2013 Authority Bonds Account following the full prepayment of all of the 2013 Authority Bonds shall be transferred by the Escrow Agent to the 2023 Trustee, for deposit to the Revenue Fund established and held by the 2023 Trustee with respect to the 2023 Bonds.
Section 5. Election to Prepay; Notices. The City hereby irrevocably elects to ( i) prepay all of the 2013 Reassessment Bonds and 2013 CFD Bonds on September 2, 2023, and in turn, ( ii) the Authority hereby irrevocably elects to prepay all of the 2013 Authority Bonds outstanding on September 2, 2023.
a) The Escrow Agent is hereby directed to give a Notice of Redemption of the 2013 Authority Bonds as required by Section 2. 2( d) of the 2013 Indenture, in the form attached hereto as Exhibit C, or such other form deemed appropriate by the 2013 Trustee, to the registered 4 1196
owners of the 2013 Authority Bonds at least thirty (30) but not more than sixty (60) days prior to the date fixed for redemption.
b) The Escrow Agent is hereby directed to timely give a Notice of Defeasance of the 2013 Authority Bonds, substantially in the form attached hereto as Exhibit D, to the Municipal Securities Rulemaking Board ( MSRB)' s Electronic Municipal Market Access ( EMMA) system accessible at the emma.msrb.org website.
c) Pursuant to the 2013 CFD Bonds Fiscal Agent Agreement and the 2013 Reassessment Bonds Fiscal Agent Agreement, the 2013 Fiscal Agent is required to give at least 30 days' notice of optional redemption to the registered owners of the 2013 CFD Bonds and 2013 Reassessment Bonds. The City, as owner of the 2013 CFD Bonds and 2013 Reassessment Bonds hereby waives such notice requirements. d) This Agreement constitutes notice to the 2013 Fiscal Agent and 2013 Trustee of the intent of the City and Authority to redeem the 2013 CFD Bonds, 2013 Reassessment Bonds and 2103 Authority Bonds and the parties hereto waive any requirements of noticing of redemptions among them and as may be required under the CFD Bonds Fiscal Agent Agreement, 2013 Reassessment Bonds Fiscal Agent Agreement and as required under Section
2. 2(d) of the 2013 Indenture.
Section 6. Excess Moneys in Escrow Fund. Upon prepayment of all the 2013 CFD Bonds, 2013 Reassessment Bonds and 2013 Authority Bonds outstanding on September 2, 2023, all moneys remaining in the respective 2013 Reassessment Bonds Fiscal Agent Agreement, 2013 CFD Bonds Fiscal Agent Agreement and the 2013 Indenture, and respective accounts of the Escrow Fund, shall be transferred to the 2023 Trustee for deposit into the respective fund for payment of debt service of each respective series of refunding bonds, as set forth in 2023 Indenture, and shall be used to pay debt service on such respective series of bonds.
Section 7. Compensation to Escrow Agent. From proceeds of the 2013 Authority Bonds or other lawfully available sources of the City or the Authority, the City will pay, and from proceeds of the CFD Refunding Bonds and Reassessment Refunding Bonds an/or the 2023 Authority Bonds, or other lawfully available sources, the Authority and the City will pay the Escrow Agent full compensation for its duties under this Agreement, including out- of-pocket costs such as publication costs, prepayment expenses, legal fees and other costs and expenses relating hereto and, in addition, all fees, costs and expenses relating to the purchase of any Defeasance Securities after the date hereof. Under no circumstances will amounts deposited in or credited to the Escrow Fund be deemed to be available for said purposes.
Section 8. Immunities and Liabilities of Escrow Agent.
i) The Escrow Agent undertakes to perform only such duties as are expressly and specifically set forth in this Agreement and no implied duties or obligations will be read into this Agreement against the Escrow Agent.
ii) The Escrow Agent will not have any liability hereunder except to the extent of its own gross negligence or willful misconduct.
iii) The Escrow Agent may consult with counsel of its own choice ( which may be counsel to the Authority) and the opinion of such counsel will be full and complete authorization to take or suffer in good faith any action in accordance with such opinion of counsel. 5 1197
iv) The Escrow Agent will not be responsible for any of the recitals or representations contained herein.
v) The Escrow Agent will not be liable for the accuracy of any calculations provided as to the sufficiency of the moneys or Defeasance Securities deposited with it to pay the principal of, and interest on, the 2013 Authority Bonds. vi) The Escrow Agent will not be liable for any action or omission of the Authority or the City under this Agreement or any related agreement. vii) Whenever in the administration of this Agreement the Escrow Agent deems 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 negligence or willful misconduct on the part of the Escrow Agent, be deemed to be conclusively proved and established by a certificate of an authorized representative of the Authority, and such certificate will, in the absence of negligence or willful misconduct on the part of the Escrow Agent, be full warrant to the Escrow Agent for any action taken or suffered by it under the provisions of this Agreement upon the faith thereof. viii) The Escrow Agent may conclusively rely, as to the truth and accuracy of the statements and correctness of the opinions and the calculations provided, and will be protected and indemnified, in acting, or refraining from acting, upon any written notice, instruction, request, certificate, document or opinion furnished to the Escrow Agent signed or presented by the proper party, and it need not investigate any fact or matter stated in such notice, instruction, request, certificate or opinion.
ix) The Escrow Agent may at any time resign by giving written notice to the Authority of such resignation. The Authority will promptly appoint a successor Escrow Agent by the resignation date. Resignation of the Escrow Agent will be effective upon acceptance of appointment by a successor Escrow Agent. If the Authority does not promptly appoint a successor, the Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor Escrow Agent, which court may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by law, appoint a successor Escrow Agent. After receiving a notice of resignation of an Escrow Agent, the Authority may appoint a temporary Escrow Agent to replace the resigning Escrow Agent until the Authority appoints a successor Escrow Agent. Any such temporary Escrow Agent so appointed by the Authority will immediately and without further act be superseded by the successor Escrow Agent so appointed.
x) The Authority covenants to indemnify and hold harmless the Escrow Agent against any loss, liability or expense, including legal fees, in connection with the performance of any of its duties hereunder, except the Escrow Agent will not be indemnified against any loss, liability or expense resulting from its gross negligence or willful misconduct.
Section 9. Amendment. This Agreement may be amended by the parties hereto, i) without the consent of the owners of the 2013 Authority Bonds, but only if such amendment is made ( a) to cure, correct or supplement any ambiguous or defective provision contained herein, b) to pledge additional security to the payment and prepayment of the 2013 Authority Bonds, or c) to deposit additional monies for the purposes of this Agreement, or ( ii) with the consent of 100% of the owners of the 2013 Authority Bonds outstanding, and only if there will have been filed with the Authority, the Authority and the Escrow Agent a written opinion of Jones Hall, A 6 1198
Professional Law Corporation, as special counsel, stating that any such amendment will not materially adversely affect the interests of the owners of the 2013 Authority Bonds, and that any such amendment will not cause the portion of lease payments representing interest payable with respect to the 2013 Authority Bonds to become includable in the gross income of the owners thereof for federal income tax purposes.
Section 10. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which will be an original and all of which will constitute but one and the same instrument.
Section 11. Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the State of California.
Section 12. Severability. In the event any provision of this Agreement will be held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision hereof.
Remainder of page intentionally left blank. Signature on next page.] 7 1199
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be executed by their duly authorized officers all as of the date first above written.
LATHROP FINANCING AUTHORITY
By:
Treasurer
CITY OF LATHROP
By:
Finance Director
U. S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Escrow Agent
By:
Authorized Officer
Signature Page to Escrow Agreement dated as of 2023]
1200
EXHIBIT A
DEFEASANCE SECURITIES
2013 AUTHORITY BONDS ACCOUNT
Type of
Security Maturity Date Amount Rate Total Receipts
A- 1
1201
EXHIBIT B
SCHEDULE OF PAYMENT AND PREPAYMENT/REDEMPTION
2013 Reassessment Bonds
Period Principal
Ending Interest Redeemed Total
9/ 2/ 2023
2013 CFD Bonds
Period Principal
Ending Interest Redeemed Total
9/2/2023
2013 Authoritv Bonds
Period Principal
Ending Interest Redeemed Total
9/ 2/ 2023
B- 1
1202
EXHIBIT C
NOTICE OF DEFEASANCE AND REDEMPTION
18, 975,000
LATHROP FINANCING AUTHORITY
REVENUE BONDS
Mossdale District Refundings)
2013 Series A
Date of Original Issuance: November 14, 2013
NOTICE IS HEREBY GIVEN, by the Authority to the Lathrop Financing Authority ( the Authority") with respect to the captioned securities ( the " Bonds"), that all of the outstanding Bonds have been called for optional redemption on September 2, 2023 (the "Redemption Date") at a redemption price of 100% of the principal amount thereof ( the " Redemption Price"), together with the accrued interest thereon to the Redemption Date, without premium. Amounts sufficient for such prepayment have been deposited into an escrow fund held by U. S. Bank Trust Company, National Association, for such purpose.
The Bonds that are subject to redemption on the Redemption Date are as follow:
Outstanding
Maturity Date Principal Interest CUSIP No.
Seatember 1) Amount Rate 518251
2023 805, 000 4. 250% BF9
2024 835, 000 4. 250 BG7
2025 865, 000 4. 500 BH5
2026 910, 000 4. 500 BJ1
2027 955, 000 6. 000 BK8
2028 1, 010, 000 6.000 BL6
2029 1, 070, 000 6. 000 BM4
2030 1, 120, 000 6. 000 BN2
2035 4, 765, 000 6. 000 BQ5
CUSIP data are provided by CUSIP Global Services, which is managed on behalf of the American Bankers Association by S& P Capital IQ. The Authority and the Trustee shall not be responsible for the selection or use of the CUSIP numbers listed above, nor is any representation made as to the accuracy of the CUSIP numbers listed above or as printed on any Bond; the CUSIP numbers are included solely for the convenience of the owners of the Bonds.
Payment of the Redemption Price on the Bonds called for redemption will be paid only upon presentation and surrender thereof in the following manner:
Delivery Instructions:
U. S. Bank Trust Company, National Association
Global Corporate Trust Services
111 Fillmore Avenue East
St. Paul, MN 55107
Please call Bondholder Services at (800) 934-6802 with any questions.
Bondholders presenting their Bonds in person for same day payment must surrender their Bond( s) by 1: 00 P. M. on the Redemption Date and a check will be available for pick up after 2: 00 P. M. Checks not picked up by 4: 30 P. M. will be mailed to the bondholder via first class mail. If payment of the Redemption Price is to be made to the registered owner of the Bond, you are not required to endorse the Bond to collect the Redemption Price.
C- 1
1203
Interest on the principal amount of the Bonds to be redeemed will not accrue from and after the Redemption Date.
REQUIREMENT INFORMATION
For a list of redemption requirements please visit our website at www. usbank. com/ corporatetrust and click on the " Bondholder Information" link.
IMPORTANT NOTICE
Under the Jobs and Growth Tax Relief Reconciliation Act of 2003 ( the " AcY'), 28% will be withheld if tax identification number is not properly certified.
By: U. S. Bank Trust Company, National Association
as Trustee
G2
1204
EXHIBIT D
NOTICE OF DEFEASANCE
18, 975, 000
LATHROP FINANCING AUTHORITY
REVENUE BONDS
Mossdale District Refundings)
2013 Series A
NOTICE IS HEREBY GIVEN, by the Lathrop Financing Authority ( the Authority ) with respect to the above captioned bonds ( the " Bonds"), that the Bonds have been defeased and discharged under and within the meaning of the Indenture, by and between the Authority and U. S. Bank Trust, National Association, as trustee ( the " Trustee"), dated as of November 1, 2013 the " Indenture").
Outstanding
Maturity Date Principal Interest CUSIP No.
Seatember 11 Amount Rate 518251
2023 805, 000 4. 250% BF9
2024 835, 000 4. 250 BG7
2025 865, 000 4. 500 BH5
2026 910, 000 4. 500 BJ1
2027 955, 000 6. 000 BK8
2028 1, 010, 000 6. 000 BL6
2029 1, 070, 000 6. 000 BM4
2030 1, 120, 000 6. 000 BN2
2035 4,765, 000 6. 000 BQ5
CUSIP data are provided by CUSIP Global Services, which is managed on behalf of the American Bankers Association by S& P Capital IQ. The Authority and the Trustee shall not be responsible for the selection or use of the CUSIP numbers listed above, nor is any representation made as to the accuracy of the CUSIP numbers listed above or as printed on any Bond; the CUSIP numbers are included solely for the convenience of the owners of the Bonds.
Funds for the payment of the Bonds have been deposited with U. S. Bank Trust, National Association, as escrow agent (" Escrow Agent") under an Escrow Agreement ( the " Escrow Agreement"), and the sufficiency of the funds and investments for the purpose of paying the principal of and interest on the Bonds has been verified by a Verification Report ( as defined in the Indenture). As a consequence of the foregoing actions and in accordance with the Indenture, the Bonds are no longer secured by a pledge of revenues under the Indenture, and the Bonds are now payable solely from the moneys set aside in escrow as described above and, if necessary, from other legally available funds described in the Escrow Agreement.
The Authority has irrevocably elected to redeem all of the outstanding Bonds on September 2, 2023, at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date, without premium.
The Undersigned shall not be held responsible for the selection or use of the CUS/P number, nor is any representation made as to its correctness indicated in the Notice of Defeasance. It is included solely for the convenience of the Holders.
Dated: 2023 U. S. Bank Trust, National
Association, as Escrow Agent
1205
BOND PURCHASE AGREEMENT
LATHROP FINANCING AUTHORITY
REFUNDING REVENUE BONDS
MOSSDALE DISTRICT REFUNDINGS) SERIES 2023
2023
Lathrop Financing Authority
390 Towne Centre Drive
Lathrop, CA 95330
Greetings:
The undersigned, Stifel, Nicolaus& Company, Incorporated( the" Underwriter"), offers to enter into this Bond Purchase Agreement( this" Purchase Agreement") with the Lathrop Financing Authority (the " Authority") which will be binding upon the Authority and the Underwriter upon the acceptance hereof by the Authority. This offer is made subject to its acceptance by the Authority by execution of this Purchase Agreement and its delivery to the Underwriter on or befare 8: 00 p. m., California time, on the date hereo£ All terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Indenture ( as hereinafter defined).
The Authority acknowledges and agrees that ( i) the purchase and sale of the Bonds ( as defined below) pursuant to this Purchase Agreement is an arm' s length commercial transaction between the Authority 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 principal and not as agent, fiduciary, or Municipal Advisor ( as such term is defined in Section 15B of The Securities Exchange Act of 1934, as amended) of the Authority;( iii) the Underwriter has not assumed a fiduciary responsibility in favor of the Authority with respect to the offering contemplated hereby or the discussions, undertakings, and procedures leading thereto ( irrespective of whether the Underwriter has provided other services or are currently providing other services to the Authority on other matters); ( iv) the Underwriter has financial interests that may differ from and be adverse to those of the Authority; and ( v) the Authority has consulted with its own legal and financial advisors to the extent it has deemed appropriate.
Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties, and agreements hereinafter set forth, the Underwriter hereby agrees to purchase from the Authority for offering to the public, and the Authority hereby agrees to sell to the Underwriter for such purpose, all ( but not less than all) of the Lathrop Financing Authority Refunding Revenue Bonds ( Mossdale District Refundings) Series 2023 ( the `Bonds").
The purchase price for the Bonds shall be $ being the aggregate principal amount thereof($ less an underwriter' s discount of$ and plus an original issue premium of$
1 82822. 00019\ 41239302. 1
ATTACHMENT "'
1206
Section 2. Description of the Bonds. The Bonds shall be issued pursuant to that certain Indenture of Trust( the" Original Indenture"), dated as of 2023, by and between the Authority and U.S. Bank Trust Company, National Association, as trustee ( the " Trustee) ( the Indenture"), and pursuant to the Marks- Roos Local Bond Pooling Act ( the " Bond Law") and a resolution of the Authority adopted on 2023 ( the " Bond Resolution"). The Bonds shall be as described in the Indenture and the Official Statement dated the date hereof relating to the Bonds ( which, together with all exhibits and appendices included therein or attached thereto and such amendments or supplements thereto which shall be approved by the Underwriter, is hereinafter called the" Official Statement").
Proceeds of the Bonds shall be applied by the Authority to finance the purchase of the following issues of bonds ( together, the" Local Obligations"):
i) the City of Lathrop Limited Obligation Refunding Improvement Bonds, Reassessment District No. 2023- 1 ( Mossdale Village) ( the " Reassessment Refunding Bonds") pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds, Division
11. 5 of the Streets and Highways Code of the State of California ( the " Reassessment Refunding Bond Law") and
ii) the City of Lathrop Community Facilities District No. 03- 1 ( Mossdale Village) Special Tax Refunding Bonds, 2023 Series A ( the " CFD Refunding Bonds") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2. 5 of Part 1 of Division 2 of Title 5 ( commencing with Section 53311) of the California Government Code ( the " Mello- Roos AcY'); and
The Local Obligations will be purchased by the Authority in accordance with a CFD Bonds Purchase Agreement relating to the sale of the CFD Refunding Bonds by the City to the Authority, to be dated the date of sale, by and between the City and the Authority( the" CFD Refunding Bonds Purchase Agreement"), and a Reassessment Bonds Purchase Agreement relating to the sale of the Reassessment Refunding Bonds by the City to the Authority, to be dated the date of sale, by and between the City and the Authority( the " Reassessment Refunding Bonds Purchase Agreement"); Proceeds of the CFD Refunding Bonds will be used to refund and cause the early redemption of the City' s $ 7, 285, 000 City of Lathrop Community Facilities District No. 2003- 1 Mossdale Village) Special Tax Bonds 2013 Series A (the " Prior CFD Bonds"), proceeds of the Reassessment Refunding Bonds will be used refund and cause the prior redemption of the 11, 690, 000 City of Lathrop Limited Obligation Refunding Improvement Bonds Reassessment District No. 2013- 1 ( Mossdale Village) ( the " Prior Reassessment Bonds"); and Proceeds of the Bonds will be deposited in accordance with an Escrow Agreement, dated as of 2023 ( the" Escrow Agreement"), by and among the Authority, the City and U. S. Bank Trust Company, National Association, as escrow agent( the " Escrow AgenY').
Section 3. Public Offering and Establishment of Issue Price. The Underwriter agrees to make an initial public offering of all of the Bonds at the public offering prices and yields set forth on Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices ( or 2 82822. 00019\4l 239302. 1
1207
yields) as the Underwriter deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. a) The Underwriter agrees to assist the Authority in establishing the issue price of the Bonds and shall execute and deliver to the Authority at Closing ( as defined below) an " issue price" or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as E chibit D, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority and Bond Counsel ( as defined below), to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public ofthe Bonds. All actions to be taken by the Authority under this section to establish the issue price of the Bonds may be taken on behalf of the Authority by the Authority' s municipal advisor, KNN Public Finance ( the " Municipal Advisor") and any notice or report to be provided to the Authority may be provided to the Authority' s Municipal Advisor. b) Except as otherwise set forth in Exhibit A attached hereto, the Authority will treat the first price at which 10% of each maturity of the Bonds ( the " 10% test"), identified under the column" 10% Test Used" in Exhibit A, is sold to the public as the issue price of that maturity ( if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution ofthis Purchase Agreement, the Underwriter shall report to the Authority the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Authority the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date ( as defined below) has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public. c) The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices ( the " initial offering price"), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, identified under the column " Hold the Offering Price Rule Used," as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the 10% test has not been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity( the" holdthe- 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:
i) the close of the fifth (Sth) business day after the sale date; or 3 82822. 00019\ 41239302. 1
1208
ii) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
The Underwriter shall promptly advise the Authority when it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth( Sth) business day after the sale date. d) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to the Underwriter shall not constitute sales to the public for purposes of this section. Further, for purposes of this section:
i) " public" means any person other than an underwriter or a related party;
ii) " underwriter" means ( A) any person that agrees pursuant to a written contract with the Authority ( or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and ( B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause ( A) to participate in the initial sale of the Bonds to the public ( including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public); iii) a purchaser of any of the Bonds is a" related party" to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to ( i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations ( including direct ownership by one corporation of another),( ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships ( including direct ownership by one partnership of another), or( iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership ( including direct ownership of the applicable stock or interests by one entity of the other); and
iv) " sale date" means the date of execution ofthis Purchase Agreement by all parties.
Section 4. Delivery of Official Statement. The Authority has delivered or caused to be delivered to the Underwriter prior to the execution of this Purchase Agreement or the first offering of the Bonds, whichever first occurs, copies of the Preliminary Official Statement relating to the Bonds ( the " Preliminary Official Statement"). Such Preliminary Official Statement is the official statement deemed final by the Authority for purposes of Rule 15c2- 12 under the Securities Exchange Act of 1934 ( the " Rule") and approved for distribution by resolution of the Authority.
The Authority shall have executed and delivered to the Underwriter a certification to such effect in the form attached hereto as Appendix B.
4 82822. 00019\ 41239302. 1
1209
The Authority hereby agrees to deliver or cause to be delivered to the Underwriter, within seven( 7) business days of the date hereof, but not less than one ( 1) business day prior to Closing, an electronic version of the Official Statement and a sufficient number of physical copies of the final Official Statement relating to the Bonds, dated the date hereof, which includes all information permitted to be omitted by Rule 15c2- 12 and any amendments or supplements to such Official Statement as have been approved by the Authority and the Underwriter to enable the Underwriter to distribute a single copy of each Official Statement to any potential customer of the Underwriter requesting an Official Statement during the time period beginning when the Official Statement becomes available and ending 25 days after the End of the Underwriting Period ( as such term is defined herein). The Authority hereby approves of the use and distribution ( including the electronic distribution) by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the offer and sale of the Bonds. The Authority shall have executed and delivered to the Underwriter a certification to such effect in the form attached hereto as Exhibit B. The Underwriter agrees that it will not confirm the sale of any Bonds unless the confirmation of sale is accompanied or preceded by the delivery of a copy of the Official Statement.
The Authority will undertake, pursuant to the Indenture and a continuing disclosure obligation ( the " Continuing Disclosure Certificate"), to provide certain annual financial information and notices of the occurrence of certain enumerated events. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the final Official Statement.
Section 5. The Closing. At 8: 00 a. m., California time, on 2023, or at such other time or on such earlier or later business day as shall have been mutually agreed upon by the Authority, the County and the Underwriter, the Authority will deliver ( i) the Bonds in definitive form to the Underwriter at The Depository Trust Company in New York, New York, or such other location as may be specified by the Underwriter, with CUSIP identification numbers printed thereon, in fully registered form and registered in the name of Cede & Co., and ( ii) the closing documents hereinafter mentioned at the offices of Jones Hall, a Professional Law Corporation, San Francisco, California (" Bond Counsel") or another place to be mutually agreed upon by the Authority, the County and the Underwriter. The Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof by federal funds wire payable to the order of the Trustee on behalf of the Authority. This payment and delivery, together with the delivery of the aforementioned documents, is herein called the" Closing." The Bonds will be delivered in such denominations and deposited in the account or accounts specified by the Underwriter pursuant to written notice not later than five ( 5) business days prior to Closing. The Bonds will be made available to The Depository Trust Company for inspection not less than 24 hours prior to the Closing.
Section 6. Representations, Warranties and Covenants. The Authority represents, warrants and covenants to the Underwriter that:
a) Due O anization Existence and Authoritv. The Authority is a joint powers authority duly organized and existing under the laws of the State of California, with full right, power and authority to execute, deliver and perform its obligations under this Purchase Agreement, the Indenture, the Escrow Agreement, the Reassessment Bonds Purchase Agreement and the CFD Bonds Purchase Agreement ( together, the " Authority 5 82822. 00019\ 41239302. 1
1210
Documents") and to carry out and consummate the transactions contemplated by the Authority Documents and the Official Statement.
b) Due Authorization and Approval. By all necessary official action of the Authority, including but not limited to the Bond Resolution, the Authority has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations contained in, the Authority Documents and as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered, the Authority Documents will constitute the legally valid and binding obligations of the Authority enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors' rights generally. The Authority has complied, and will at the Closing be in compliance in all respects, with the terms of the Authority Documents. c) Official Statement Accurate and Complete. ( i) The Preliminary Official Statement was as of its date, and the final Official Statement is, and at all times subsequent to the date of the final Official Statement up to and including the Closing will be, true and correct in all material respects, and the Preliminary Official Statement and the final Official Statement contain, and up to and including the Closing will contain, no misstatement of any material fact and do not, and up to and including the Closing will not, omit any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading; provided, however, no representation is made with respect to information therein relating to the Depository Trust Company and its book- entry only system or CUSIP numbers and the infortnation under the caption" i1NDERWRITING."
ii) As of the date hereof and at all times subsequent hereto up to and including the date which is 25 days following the End of the Underwriting Period for the Bonds, the Official Statement 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 the statements therein, in light of the circumstances under which they were made not misleading ( except that this representation does not include information relating to The Depository Trust Company and its book- entry only system or CUSIP numbers).
iii) If between the date hereof and the date which is 25 days after the End of the Underwriting Period for the Bonds, an event occurs which would cause the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading, the Authority will notify the Underwriter, and, if in the opinion of the Underwriter or the Authority, or their respective counsel, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will cooperate in the preparation of such amendment or supplement to the Official Statement in a form and manner approved by the Underwriter, and shall pay all expenses thereby 6 82822. 00019\ 41239302. 1
1211
incurred. For the purposes of this subsection, between the date hereof and the date which is 25 days after the End of the Underwriting Period for the Bonds, the Authority will furnish such information with respect to itself as the Underwriter may from time to time reasonably request. As used herein, the term " End of the Underwriting Period" means the later of such time as: ( i) the Authority delivers the Bonds to the Underwriter; or ( ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Notwithstanding the foregoing, unless the Underwriter gives written notice to the contrary, the " End of the Underwriting Period" shall be the date of Closing.
iv) Ifthe information contained in the Official Statement is amended or supplemented pursuant to paragraph ( iii) 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 date which is 25 days after the End of the Underwriting Period for the Bonds, the portions of 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 required to be stated therein or necessary to make such information therein in the light of the circumstances under which it was presented, not misleading( except that this representation does not include information relating to The Depository Trust Company or the book- entry- only system, or CUSIP numbers).
v) After the Closing, the Authority will not participate in the issuance of any amendment of or supplement to the Official Statement to which, after being furnished with a copy, the Underwriter shall reasonably object in writing or which shall be disapproved by counsel for the Underwriter.
d) No Breach or Default. As of the time of acceptance hereof and as of the time of the Closing, except as otherwise disclosed in the Official Statement, the Authority is not and will not be in breach of or in default under any applicable constitutional provision, law or administrative rule or regulation of the State of California or the United States, or any applicable judgment ar decree or any Indenture, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Authority is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument; and, as of such times, except as disclosed in the Official Statement, the authorization, execution and delivery ofthe Authority Documents and compliance with the provisions of each of such agreements or instruments do not and will not conflict with or constitute a breach of or default under any applicable constitutional provision, law or administrative rule or regulation of the State of California or the United States, or any applicable judgment, decree, license, permit, indenture, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Authority ( ar any of its officers in their respective capacities as such) is subject, or by which it or any of its properties is bound, nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or 7 82822. 00019\ 41239302. 1
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encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument, except as may be provided by the Authority Documents.
e) No Litia
tion. As of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government authority, public board or body, is or will be pending or threatened ( i) in any way questioning the corporate existence of the Authority or the titles of the officers of the Authority to their respective offices; ( ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity ofthe Bonds or the Authority Documents or the consummation of the transactions contemplated thereby, or contesting the exclusion of the interest on the Bonds from taxation or contesting the powers of the Authority and its authority to pledge the revenues securing the Bonds; ( iii) which may result in any material adverse change relating to the Authority; or ( iv) contesting the completeness or accuracy of the Preliminary Official Statement or the final Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the final Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses ( i) through ( iv) of this sentence.
Compliance with 15c2- 12. Except as disclosed in the Official Statement, the Authority has complied in all material respects with any prior continuing disclosure undertaking in regard to Rule 15c2- 12 within the previous five years.
Section 7. Closing Conditions. The Underwriter has entered into this Purchase Agreement in reliance upon the representations, warranties and covenants herein and the performance by the Authority of its obligations hereunder, both as of the date hereof and as of the date of the Closing. The Underwriter' s obligations under this Purchase Agreement to purchase and pay for the Bonds shall be subject to the following additional conditions:
a) Bring Down R resentation. The representations, warranties and covenants of the Authority contained herein shall be true, complete and correct at the date hereof and at the time of the Closing, as if made on the date of the Closing. b) Executed A,greements and Performance Thereunder. At the time of the Closing ( i) the Authority Documents shall be in full force and effect, and shall not have been amended, modified or supplemented except with the written consent of the Underwriter and( ii) there shall be in full force and effect such resolutions as, in the opinion of Bond Counsel, shall be necessary in connection with the transactions contemplated by the Official Statement and the Authority Documents.
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c) Issuance and Purchase of Local Obli ations. Concurrent with the issuance of the Bonds and the purchase thereof by the Underwriter in accordance with this Purchase Agreement, the Local Obligations shall be issued, and the Local Obligations shall be delivered to the Authority under and in accordance with the CFD Refunding Bonds Purchase Agreement and the Reassessment Refunding Bonds Purchase Agreement, and all conditions set forth in the Local Obligations Purchase Agreement to the issuance and delivery of the Local Obligations shall have been satisfied. d) Closing Documents. At or prior to the Closing, the Underwriter shall receive each of the documents identified in Section 8.
Section 8. Closing Documents. In addition to the other conditions to the Underwriter' s obligations under this Purchase Agreement to purchase and pay for the Bonds, at or before the Closing, the Underwriter shall receive each of the following documents, provided that the actual payment for the Bonds by the Underwriter and the acceptance of delivery thereof shall be conclusive evidence that the requirements of this Section 8 shall have been satisfied or waived by the Underwriter.
a) Bond Opinion. An approving opinion of Bond Counsel dated the date of the Closing and substantially in the form appended to the Official Statement, together with a letter from such counsel, dated the date of the Closing and addressed to the Underwriter, to the effect that the foregoing opinion addressed to the Authority may be relied upon by the Underwriter to the same extent as if such opinion were addressed to it. b) Su plemental O inion. A supplemental opinion or opinions of Bond Counsel addressed to the Underwriter, in form and substance acceptable to the Underwriter, and dated the date of the Closing substantially to the following effect:
i) This Purchase Agreement has been duly authorized, executed and delivered by the Authority and constitute the valid, legal and binding agreements of the Authority, enforceable in accordance with their respective terms. ii) The statements contained in the Official Statement under the captions " FINANCING PLAN," " THE BONDS," " SECURITY FOR THE BONDS," " SECURITY FOR THE CFD BONDS," " SECURITY FOR THE REASSESSMENT BONDS," " LEGAL MATTERS — Tax Matters" and Continuing Disclosure," and in Appendices A and E, insofar as such statements expressly summarize certain provisions of the Bonds, the Indenture, the Escrow Agreement, and the opinion of such firm concerning the exclusion from gross income for federal income tax purposes and exemption from State of California personal income taxes of interest on the Bonds, are accurate in all material respects. iii) The Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended.
c) Municipal Advisor Certificate. A certificate, dated the date of Closing, signed by a duly authorized official of the Authority' s Municipal Advisor addressed to the 9 82822. 00019\ 41239302. 1
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Underwriter and the Authority to the effect, that, in connection with its participation in the preparation of the Official Statement and without undertaking any independent investigation and without having undertaken to determine independently the fairness, accuracy or completeness of the statements contained in the Official Statement, nothing has come to the attention of the Municipal Advisor that would lead it to believe that the statements and information contained in the Official Statement as of the date thereof and the date of the Closing, contains an untrue statement of a material fact or omits to state a material fact required to be stated therein as necessary to make the statements therein, in light ofthe circumstances in which they were made, not misleading. d) Authority Counsel Opinion. An opinion of Counsel to the Authority, dated the date of the Closing and addressed to the Underwriter, in fortn and substance acceptable to Bond Counsel substantially to the following effect:
i) The Authority is a joint powers authority duly organized and validly existing under the laws of the State of California.
ii) The Bond Resolution has been duly adopted, is in full force and effect and has not been modified, amended or rescinded. iii) The Authority Documents have been duly authorized, executed and delivered by the Authority and constitute the legal, valid and binding obligation of the Authority enforceable in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles, if equitable remedies are sought.
iv) Except as otherwise disclosed in the Official Statement and to the best knowledge of such counsel after due inquiry, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental authority or body, pending or threatened against the Authority, challenging the creation, organization or existence of the Authority, or the validity ofthe Authority Documents or seeking to restrain or enjoin the repayment of the Bonds or in any way contesting the authority of the Authority to enter into or perform its obligations under any of the Authority Documents, or under which a determination adverse to the Authority would have a material adverse effect upon the financial condition or the revenues of the Authority, or which, in any manner, questions the right of the Authority to pledge the Revenues to the payment of the Bonds. e) Disclosure Letter. Jones Hall, a Professional Law Corporation(" Disclosure Counsel"), dated the date of the Closing, addressed to the Underwriter and the Authority, to the effect that, based upon its participation in the preparation of the Official Statement and without having undertaken to determine independently the fairness, accuracy or completeness of the statements contained in the Official Statement, such counsel has no reason to believe that, as of the date of the Closing, the Official Statement ( excluding therefrom the reports, financial and statistical data and forecasts therein and the information included in the appendices thereto, information under the caption " LJNDERWRITING," 10 82822. 00019\ 41239302. 1
1215
and information relating to DTC, as to which no advice need be expressed) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
Trustee/ Escrow A ent Counsel Opinion. The opinion of counsel to the Trustee/Escrow Agent, dated the date of the Closing, addressed to the Underwriter, to the effect that:
i) The Trustee/ Escrow Agent is a national banking association, duly arganized and validly existing under the laws of the United States of America, having full power to enter into, accept and administer the trust created under the Indenture and the Escrow Agreement.
ii) The Indenture and the Escrow Agreement have been duly authorized, executed and delivered by the Trustee/Escrow Agent and constitute the legal, valid and binding obligations of the Trustee/Escrow Agent enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles, if equitable remedies are sought.
g) Authorit Certificate. A certificate of the Authority, dated the date of the Closing, signed on behalf of the Authority by the Executive Director, Treasurer or other duly authorized officer of the Authority to the effect that:
i) The representations, warranties and covenants of the Authority contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing and the Authority has complied with all of the terms and conditions of this Purchase Agreement required to be complied with by the Authority at or prior to the date ofthe Closing. ii) No event affecting the Authority has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein, in the light ofthe circumstances under which they were made, not misleading.
h) Trustee/ Escrow Agent' s Certificate. A certificate of the Trustee/ Escrow Agent, dated the date of Closing, in form and substance acceptable to counsel for the Underwriter, to the following effect:
i) The Trustee/ Escrow Agent is duly organized and existing as a national banking association in good standing under the laws of the United States of America, having the full power and authority to enter into and perform its duties under the Indenture and the Escrow Agreement.
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ii) The Trustee/ Escrow Agent is duly authorized to enter into the Indenture and the Escrow Agreement.
iii) To its best knowledge after due inquiry, there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending against the Trustee/ Escrow Agent or threatened against the TrusteeBscrow Agent which in the reasonable judgment of the Trustee/ Escrow Agent would affect the existence of the Trustee/ Escrow Agent or in any way contesting or affecting the validity or enforceability of the Indenture or the Escrow Agreement or contesting the powers ofthe Trustee/Escrow Agent or its authority to enter into and perform its obligation under the Indenture and the Escrow Agreement.
i) Underwriter' s Counsel Letter. An opinion of counsel to the Underwriter, addressed to the Underwriter, in a form acceptable to the Underwriter; j) Ori nal Executed Documents. An original executed copy of each of the Authority Documents.
k) Certificate of Reassessment En ineer and Special Tax Consultant. A certificate in form and substance as set forth in Exhibit C hereto, of NBS Government Finance Group, Temecula, California (" Reassessment Engineer and Special Tax Consultant"), dated as of the Closing Date.
1) Ratin s. Confirmation of a
rating of S& P Global Ratings of"_" for the
Bonds.
m) Escrow Verification. An escrow verification report of Causey Demgen & Moore P. C. ( the" Verification AgenY') with respect to the refunding of the Prior Bonds. n) DTC Letter of Representations. The executed Blanket Letter of Representations of the Authority.
o) CDIAC Forms. A report of proposed debt issuance, acknowledgement thereof and final report to the California Debt and Investment Advisory Commission with respect to the Bonds and the Local Obligations.
p) Additional Documents. Such additional certificates, instruments and other documents as Bond Counsel, Underwriter' s Counsel, the Authority or the Underwriter may reasonably deem necessary.
If the Authority shall be unable to satisfy the conditions contained in this Purchase Agreement, or if the obligations of the Underwriter shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Underwriter nor the Authority shall be under further obligation hereunder, except as further set forth in Section
10. 12
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Section 9. Termination Events. The Underwriter shall have the right to terminate this Purchase Agreement, without liability therefor, by notification to the Authority if at any time between the date hereof and prior to the Closing:
a) any event shall occur which causes any statement contained in the Official Statement to be materially misleading or results in a failure of the Official Statement to state a material fact necessary to make the statements in the Official Statement, in the light ofthe circumstances under which they were made, not misleading; or b) the marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States or by any legislation in or by the Congress of the United States or by the State, or the amendment of legislation pending as of the date of this Purchase Agreement in the Congress of the United States, or the recommendation to Congress or endorsement for passage ( by press release, other form of notice or otherwise) of legislation by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any decision of any Federal or State court or any ruling or regulation ( final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or State authority materially adversely affecting the federal or State tax status of the Authority, or the interest on bonds or notes or obligations of the general character of the Bonds; or
c) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or authority of the State, or a decision by any court of competent jurisdiction within the State or any court of the United States shall be rendered which, in the reasonable opinion of the Underwriter, materially adversely affects the market price of the Bonds; or
d) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental district having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations of the general character of the Bonds, or the Bonds, are not exempt from registration under, any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Indenture needs to be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or 13 82822. 00019\ 41239302. 1
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e) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange which restrictions materially adversely affect the Underwriter' s ability to trade the Bonds; or
a general banking moratorium shall have been established by federal, State of New York, or California authorities; or
g) the United States has become engaged in hostilities which have resulted in a declaration of war or a national emergency or there has occurred any other outbreak of hostilities or a national or international calamity or crisis, or there has occurred any escalation of existing hostilities, calamity or crisis, financial or otherwise, the effect of which on the financial markets of the United States being such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the Bonds; or
h) the commencement of any action, suit or proceeding described in Section 6( e)( i) or 6( e)( ii) with respect to either the Authority or the County which, in the judgment of the Underwriter, materially adversely affects the market price of the Bonds; or i) there shall be in force a general suspension of trading on the New York Stock Exchange or 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 SEC or any other governmental authority having jurisdiction.
Section 10. Expenses. The Underwriter shall be under no obligation to pay and the Authority shall pay or cause to be paid the expenses incident to the performance of the obligations ofthe Authority hereunder including but not limited to( a) the costs of the preparation and printing, or other reproduction (for distribution on or prior to the date hereo of the Authority Documents and the cost of preparing, printing, issuing and delivering the definitive Bonds, ( b) the fees and disbursements of any counsel, financial advisors, accountants or other experts or consultants retained by the Authority and the County; ( c) the fees and disbursements of Bond Counsel; and( d) the cost of printing of the Preliminary Official Statement and any supplements and amendments thereto and the cost of printing of the Official Statement, including the requisite number of copies thereof for distribution by the Underwriter.
The Underwriter shall pay and the Authority shall be under no obligation to pay all expenses incurred by it in connection with the public offering and distribution of the Bonds, including but not limited to ( a) reporting fees chargeable by the California Debt and Investment Advisory Commission, ( b) the Underwriter Counsel' s fee, and ( c) CUSIP Service Bureau fees.
Section 11. Notice. Any notice or other communication to be given to the Authority under this Purchase Agreement may be given by delivering the same in writing to such entity at 390 Towne Centre Drive, Lathrop, CA 95330, Attention: Finance Officer. Any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by 14 82822. 00019\ 41239302. 1
1219
delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, One Montgomery Street, 35th Floor, San Francisco, California 94104, Attention: Eileen Gallaher, Managing Directar.
Section 12. Entire Agreement. This Purchase Agreement, when accepted by the Authority, shall constitute the entire agreement between the Authority and the Underwriter and is made solely for the benefit of the Authority and the Underwriter ( including the successors or assigns of any Underwriter). No other person shall acquire or have any right hereunder by virtue hereof, except as provided herein. All the Authority' s representations, warranties and agreements in this Purchase Agreement shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Underwriter.
Section 13. Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
Section 14. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof.
Section 15. Governing Law. The validity, interpretation and performance of this Purchase Agreement shall be governed by the laws of the State of California.
Signature page follows)
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Section 16. No Assignment. The rights and obligations created by this Purchase Agreement shall not be subject to assignment by the Underwriter or the Authority without the prior written consent of the other parties hereto.
STIFEL, NICOLAUS & COMPANY,
INCORPORATED, as Underwriter
By:
Name:
Title:
Accepted as of the date first stated above:
LATHROP FINANCING AUTHORITY
By:
Name:
Title:
Time:
Signature PageBond Purchase Agreement
S- 1
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APPENDIX A
MATURITY SCHEDULE OF BOND5
Principal
Payment Date Principal 10%
September 2) Amount Interest Rate Yield Price Test
A- 1
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APPENDIX B
LATHROP FINANCING AUTHORITY
REFUNDING REVENUE BONDS
MOSSDALE DISTRICTS REFUNDINGS) SERIES 2023
RULE 15c2- 12 CERTIFICATE
I, Stephen Salvatore, hereby certify that I am the City Manager of the City of Lathrop( the City") and Executive Director of the Lathrop Financing Authority ( the " Authority"), and as such I am authorized to execute this certificate on behalf of the City and the Authority.
I hereby further certify that there has been delivered to Stifel, Nicolaus & Company, Incorporated, the underwriter of the $ Lathrop Financing Authority Refunding Revenue Bonds( Mossdale Districts Refundings) Series 2023 ( the" Bonds"), a Preliminary Official Statement, dated 2023 ( including the cover page and all appendices thereto, the Preliminary Official Statement"), relating to the Bonds, the CFD Refunding Bonds and the Reassessment District Refunding Bonds, as described therein, which Preliminary Official Statement the City and the Authority deem final as of its date for purposes of Rule 15c2 12 promulgated under the Securities Exchange Act of 1934 (" Rule 15c2 12"), except for information permitted to be omitted therefrom by Rule 15c2- 12.
IN WITNESS WHEREOF, I hereunto set my hand this_ day of 2023.
LATHROP FINANCING AUTHORITY
By:
Stephen Salvatore
Executive Director
CITY OF LATHROP
By:
Stephen Salvatore
City Manager
B- 1
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APPENDIX C
LATHROP FINANCING AUTHORITY
REFUNDING REVENUE BONDS
MOSSDALE DISTRICTS REFUNDINGS) SERIES 2023
CERTIFICATE OF REASSE5SMENT ENGINEER AND SPECIAL TAX CONSULTANT NBS Government Finance Group ( the " Reassessment Engineer and Special Tax Consultant") was retained as Reassessment Engineer and Special Tax Consultant by the Lathrop Financing Authority ( the " Authority") and assisted in the preparation of the Preliminary Official Statement, dated 2023, and the Official Statement, dated 2023 collectively, the " Official Statement"), relating to the above- referenced bonds ( the` Bonds").
With respect to each of the Community Facilities District No. 2003- 1 and Reassessment District No. 2023- 1 and the related Local Obligations, we hereby certify as follows:
1. Based upon our review of the Official Statement and such other documents as we have deemed relevant in the circumstances, we hereby certify that the Special Tax to be levied in the Community Facilities District No. 2003- 1, if collected in the maximum amounts permitted pursuant to the Rate and Method for each District, would generate at least 110% of the maximum annual debt service on the Local Obligations of the CFD.
2. All information with respect to the Rate and Method for Community Facilities District No. 2003- 1 set forth in the Official Statement was true and correct in all material respects as of the date of the Official Statement and remains true and correct in all material respects as of the date hereof.
3. All information with respect to the reassessments applied to the Reassessment District No. 2023- 1 set forth in the Official Statement was true and correct in all material respects as of the date of the Official Statement and remains true and correct in all material respects as of the date hereof.
4. All information supplied by the Reassessment Engineer and Special Tax Consultant for use in the Official Statement was true and correct in all material respects as of the date of the Official Statement and remains true and correct in all material respects as of the date hereof and such information does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
Gl
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Capitalized terms used herein and not defined herein shall have the meaning given such terms in the Official Statement.
Dated: 2023 NBS GOVERNMENT FINANCE GROUP
By:
Its:
C- 2
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APPENDIX D
LATHROP FINANCING AUTHORITY
REFUNDING REVENUE BONDS
MOSSDALE DISTRICTS REFUNDINGS) SERIES 2023
FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Stifel, Nicolaus& Company, Incorporated, (" Stifel") hereby certifies as set forth below with respect to the sale and issuance of the above- captioned bonds ( the Bonds").
l. Sale ofthe General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.
2. Defined Terms.
a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the" General Rule Maturities."
b) Issuer means the Lathrop Financing Authority.
c) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
d) Public means any person( including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term " related party" for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. e) 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 Stifel' s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Jones Hall, a Professional Law Corporation 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 D- 1
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Internal Revenue Service Form 8038- G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Name:
Dated:
D- 2
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SCHEDULE A
SALE PRICES OF THE GENERAL RULE MATURITIES
MATURITY SCHEDULE OF BONDS
Principal
Payment Date Principal 10%
September 2) Amount Interest Rate Yield Price Test
D- 3
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Jones Hall Draft 4. 24. 23
PRELIMINARY OFFICIAL STATEMENT DATED 2023
0 NEW ISSUE— BOOK- ENTRY ONLY
RATINGS:
g o
S& P( Insured):"_"
n S8P( Underlying):"
m in the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counse/, subject, however, to certain qualifications described in this O cial Statement, under existing law, the inferest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal a/ternative minimum tax o
imposed on individuals and corporations, although for purposes of computing the alternative minimum tax imposed on certam o corporations, such interesf is taken into account in determining certain income and earnings. For tax years beginning after December 31, 3 2022, interest on the Bonds may be subject to the corporate alternative minimum tax. In the further opinion of Bond Counsel, interest on am the Bonds is exempt irom State of California personal income tax. See" LEGAL MATTERS— Tax Matters." h N
LATHROP FINANCING AUTHORITY
y REFUNDING REVENUE BONDS
m:_ MOSSDALE VILLAGE REFUNDINGS)
2023 SERIES A
o
Dated: Date of Delivery
Due: September 2, as shown on inside cover
i. Authority for Issuance. The Bonds are being issued by the Lathrop Financing Authority ( the " Authority"), pursuant to Articles 1 through 4( commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the California Government Code, under an Indenture of t
Trust dated as of April 1, 2023( the" Indenture"), between the Authority and U. S. Bank Trust Company, National Association, as trustee m the" Trustee"), and under a resolution adopted by the Board of Directors of the Authority on May 8, 2023. See" THE BONDS— Authority 3 forissuance.
Use of Proceeds. The Bonds are being issued to ( i) acquire a series of special tax refunding bonds to be issued by the City of Lathrop ( the " City") concurrently with the issuance of the Bonds ( the " CFD Bonds°), ( ii) acquire a series of reassessment bonds to be m issued by the City concurcently with the issuance of the Bonds( the" Reassessment Bonds"), and( iii) pay costs of issuance of the Bonds.
The CFD Bonds and the Reassessment Bonds are being issued as separate series, each to refund refunding bonds issued by each a respective district in 2013. See " FINANCING PLAN." The CFD Bonds and the Reassessment Bonds are referred to collectively in this Official Statement as the" Acquired Obligations."
o `
0 Security and Sources of Payment for the Bonds. The Bonds are payable solely from" Revenues" pledged by the Authority under o N the Indenture, which consist primarily of debt service payments received on the Acquired Obligations. See " SECURITY FOR THE m BONDS."
Security for the Acquiied Obligations. The CFD Bonds are payable from special taxes levied within the City of Lathrop o
m Community Facilities District No. 2003- 1 ( Mossdale Village)( the" CFD"), which are the source of debt service payments to the Authority on o m the CFD Bonds. See" SECURITY FOR THE CFD BONDS." The Reassessment Bonds are payable from reassessments levied within the City' s Reassessment District No. 2023- 1 ( Mossdale Village)( the" Reassessment DistricY'), which are the source of debt service payments w to the Authority on the Reassessment Bonds. The CFD Bonds and the Reassessment Bonds are further secured by the respective debt N` o service reserve funds with respect to each such series. See" SECURITY FOR THE REASSESSMENT BONDS." The Districts. The CFD and the Reassessment District are overlapping districts in the Mossdale Landing area within the City. The CFD and original assessment district funded public infrastructure for new development projects within the Districts. The Districts overlap in part and combined Districts consist of 2, 106 parcels including 1, 853 parcels that are in both Districts, 229 taxable parcels that are within Lm the CFD but not the Reassessment District and 24 parcels that are within the Reassessment District but not in the CFD. There is no crosscollateralization between the Districts. See " THE DISTRICTS IN THE AGGREGATE," " THE CFD" and " THE REASSESSMENT 1 DISTRICT." e a
Bond Terms. The Bonds will be issued in denominations of $ 5, 000 or any integral multiple of $ 5, 000. Interest is payable o' m,
c°_„ semiannually on each March 2 and September 2, commencing March 2, 2024. The Bonds will be initially issued only in book-entry form c
y a
and registered to Cede & Co. as nominee of The Depository Trust Company, New York, New York(" DTC"), which will act as securities o depository of the Bonds. Principal and interest( and premium, if any) on the Bonds is payable by the Trustee to DTC, which remits such 0 ? payments to its Participants for subsequent distribution to the registered owners as shown on the Trustee' s books. See" THE BONDSo Bond Terms" and"— Book- Entry Only System." Q ` Redemption. The Bonds are subject to optional redemption and mandatory special redemption from the proceeds of early m ° redemption of the CFD Bonds or the Reassessment Bonds as a result of special tax or reassessment prepayments, respectively. See 0 3 " THE BONDS— Redemption."
c° Bond lnsurance. The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a municipal bond m insurance policy to be issued concurrently with the delivery of the Bonds by the" Insurer"). The District will determine whether to insure all, c? or a portion, of the Bonds at the time of pricing.]
o
INSURER LOGO]
10 " Risk Factors. The Bonds may not be appropriate investments for certain individuals. See " RISK FACTORS" for a t discussion of the risk factors that should be considered in evaluating the investment quality of the Bonds. mo N THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM AND SECURED SOLELY BY THE f0 O REVENUES AND FUNDS PLEDGED THEREFOR IN THE INDENTURE. THE BONDS ARE NOT A DEBT OR LIABILITY OF THE CITY, Z,° THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISIONS THEREOF OTHER THAN THE AUTHORITY TO THE LIMITED
EXTENT DESCRIBED HEREIN, AND NEITHER THE FAITH AND CREDIT OF THE AUTHORITY, THE CITY, THE STATE OR ANY OF E o, ITS POLITICAL SUBDIVISIONS ARE PLEDGED TO THE PAYMENT OF PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE m BONDS AND NEITHER THE AUTHORITY( EXCEPT TO THE LIMITED EXTENT DESCRIBED HEREIN), THE CITY, THE STATE NOR a ANY OF ITS POLITICAL SUBDIVISIONS IS LIABLE THEREFOR, NOR IN ANY EVENT SHALL THE BONDS OR ANY INTEREST o REDEMPTION PREMIUM THEREUNDER BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE F— i6
c AUTHORITY AS SET FORTH IN THE INDENTURE. NEITHER THE BONDS NOR THE OBLIGATION TO MAKE PAYMENTS ON THE CFD BONDS OR THE REASSESSMENT BONDS CONSTITUTES AN INDEBTEDNESS OF THE AUTHORITY, THE CITY, THE STATE w OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION o OR RESTRICTION. THE AUTHORITY HAS NO TAXING POWER.
U
Maturity Schedule
ATTACHMENT " °
1229
see inside cover)
The Bonds will be offered when, as and if issued and received by the Underwriter, subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, as Bond Counsel. Certain legal matters will be passed upon for the Authority and the City by the City Attorney and for the Underwriter, by its counsel, Best Best& Krieger LLP, Riverside„ California. Jones Hall, A Professional Law Corporation, San Francisco, California, is also serving as Disclosure Counsel to the City. It is anticipated that the Bonds in definitive form will be available for delivery to DTC in New York, New York on or about 2023.
STIFEL
The date of this Official Statement is 2023.
Preliminary, subject to change.
1230
MATURITY SCHEDULE
LATHROP FINANCING AUTHORITY
REFUNDING REVENUE BONDS
2023 Series A
Base CUSIPt:
Maturity Principal Interest
September 2) Amount Rate Yield Price CUSIP
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
t CUSIP Global Services( CGS) is managed on behalf of American Bankers Association by FactSet Research Systems Inc.
Copyright0 2023 CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP numbers are provided for convenience of reference only. None of the city, the Authority, the Trustee or the Underwriter take any responsibility for the accuracy of the CUSIP data.
Preliminary, subject to change.
1231
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
No Offering May Be Made Except by this O cial Statement No dealer, broker, salesperson or other person has been authorized by the Authority, the City or the Underwriter to give any information or to make any representations with respect to the Bonds, the Reassessment Bonds or the CFD Bonds other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized by the Authority, the City or the Underwriter.
No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.
Effective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the Authority, the City, the CFD, the Reassessment District or any other parties described in this Official Statement, or in the condition of property within the CFD or the Reassessment District since the date of this Official Statement.
Use of this Official Statement. 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. This Official Statement is not a contract with the purchasers of the Bonds.
Preparation of this O cial Statement The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as 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.
Document References and Summaries. All references to and summaries of the Indenture or other documents contained in this Official Statement are subject to the provisions of those documents and do not purport to be complete statements of those documents.
Insurer Disclaimer. the Insurer") makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, the Insurer has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Insurer, supplied by the Insurer and presented under the heading " BOND INSURANCE" and" APPENDIX G— Specimen Municipal Bond Insurance Policy".
Stabilization of and Changes to Offering Prices. The Underwriter may overallot or take other steps that stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market. If commenced, the Underwriter may discontinue such market stabilization at any time. The Underwriter may offer and sell the Bonds to certain dealers, dealer banks and banks acting as agent at prices lower than the public offering prices stated on the cover page of this Official Statement, and those public offering prices may be changed from time to time by the Underwriter.
Bonds are Exempt from Securities Laws Registration. The issuance and sale of the Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for the issuance and sale of municipal securities provided under Section 3(a)( 2) of the Securities Act of 1933 and Section 3( a)( 12) of the Securities Exchange Act of 1934.
Estimates and Projections. 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 21 E 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 " plan," " expect," " estimate," budgeY' or other similar words.
1232
LATHROP FINANCING AUTHORITY
and
CITY OF LATHROP
SAN JOAQUIN COUNTY, CALIFORNIA
BOARD OF DIRECTORS OF THE AUTHORITY
AND MEMBERS OF THE CITY COUNCIL
Sonny Dhaliwal, President and Mayor
Paul Akinjo, Vice President and Vice Mayor
Minnie Diallo, Director and Counci! Member
Diane Lazard, Director and Council Member
Jennifer Torres- O' Callaghan , Director and Council Member
OFFICERS
Stephen Salvatore, City Manager of the City and Executive Director of the Authority Cari James, Finance Director of the City and Finance Officer of the Authority Brad Taylor, City Engineer
Michael King, Assistant City Manager
Salvador Navarrete, City Attorney
FINANCING SERVICES
Municipal Advisor
KNN Public Finance
Berkeley, California
Bond and Disclosure Counsel
Jones Hall, A Professional Law Corporation
San Francisco, California
Verification Agent
Causey, Demgen & Moore Inc.
Denver, Colorado
Reassessment Engineer and Special Tax Administrator
NBS Government Finance Group
Temecula, California
Trustee
U. S. Bank Trust Company, National Association
San Francisco, California
Escrow Agent
U. S. Bank Trust Company, National Association
San Francisco, California
1233
TABLE OF CONTENTS
Paae Paae
INTRODUCTION................................................... 1 Land Use Distribution....................................... 39 FINANCING PLAN................................................. 5 Assessed Property Values............................... 39 Purpose of Issue................................................ 5 Assessed Value- taBurden Ratio..................... 40 Refunding Plan for CFD Bonds......................... 5 Delinquencies.................................................. 41 Refunding Plan for Reassessment Bonds......... 5 Direct and Overlapping Obligations................. 41 Escrow Agreement............................................ 6 Projected Debt Service Coverage.................... 43 Estimated Sources and Uses of Funds............. 7 Debt Service Coverage on the CFD Bonds and the THE BONDS.......................................................... 8 Reassessment Bonds.................................. 43 Authority for Issuance........................................ 8 THE REASSESSMENT DISTRICT...................... 43 Bond Terms....................................................... 8 Location and Description of the Reassessment Redemption ....................................................... 9 District.......................................................... 43 Book- Entry Only System.................................. 10 Land Use Distribution....................................... 44 Registration, Transfer and Exchange of Bonds11 Assessed Property Values............................... 44 Debt Service Schedules: The Bonds, the CFD Assessed Value- to- Burden Ratio..................... 45 Bonds and the Reassessment Bonds......... 12 Delinquencies.................................................. 46 Debt Service Coverage on the CFD Bonds and the Direct and Overlapping Governmental Obligations ReassessmentBonds ................................. 14 46 SECURITY FOR THE BONDS............................ 15 RISK FACTORS................................................... 48 General............................................................ 15 Limited Obligation to Pay Debt Service........... 48 Revenues; Flow of Funds................................ 15 Levy and Collection of the Special Taxes........ 48 Additional Bonds Only For Refunding.............. 17 Collection of the Reassessments..................... 49 BOND INSURANCE............................................ 18 Special Taxes and Reassessments Not a Persional SECURITY FOR THE CFD BONDS.................... 18 Obligation .................................................... 49 General............................................................ 18 Assessed Valuations........................................ 51 Special Taxes; Special Tax Revenues............ 18 Property Values............................................... 51 Priority of Lien.................................................. 19 Other Possible Claims Upon the Property Values ReserveFund for CFD Bonds......................... 19 53 Covenants of the City...................................... 19 Enforcement of Special Taxes or Reassessments on Rate and Method............................................. 22 Governmentally Owned Properties.............. 53 Refunding CFD Bonds..................................... 24 Depletion of Reserve Funds............................ 55 SECURITY FOR THE REASSESSMENT BONDS24 Bankruptcy Delays........................................... 56 General............................................................ 24 Disclosure to Future Purchasers...................... 57 Priority of Lien.................................................. 25 No Acceleration; Right to Pursue Remedies.... 57 Reserve Fund for Reassessment Bonds......... 25 Loss of Tax Exemption .................................... 57 Covenants of the City...................................... 26 Voter Initiatives................................................ 58 Refunding Reassessment Bonds.................... 28 Secondary Market for Bonds........................... 58 THE DISTRICTS IN THE AGGREGATE............. 28 COVID- 19 Pandemic....................................... 59 Introduction...................................................... 28 Cyber Security................................................. 59 Varying Maturity Dates of the Acquired Obligations THE AUTHORITY................................................ 59 29 LEGAL MATTERS............................................... 60 MossdaleVillage.............................................. 29 Tax Matters...................................................... 60 Summary Information on Parcels Within Each Absence of Litigation........................................ 61 District.......................................................... 31 LegalOpinion................................................... 61 Assessed Property Values and Assessed Value- to- RATING................................................................ 61 Burden Ratios on an Aggregate Basis........ 32 VERIFICATION OF MATHEMATICAL ACCURACY62 Major Land Owners......................................... 33 MUNICIPAL ADVISOR........................................ 62 Delinquencies.................................................. 36 PROFESSIONAL SERVICES.............................. 62 Direct and Overlapping Governmental Obligations UNDERWRITING................................................. 62 37 CONTINUING DISCLOSURE.............................. 63 THECFD............................................................. 38 EXECUTION........................................................ 64 Location and Description of the CFD............... 38
APPENDIX A - Summary of Principal Legal Documents
APPENDIX B - General Information About the City of Lathrop and the County of San Joaquin APPENDIX C - Rate and Method of Apportionment of Special Taxes APPENDIX D - Excerpts from Reassessment Report
APPENDIX E - Form of Bond Counsel Opinion
APPENDIX F - Form of Continuing Disclosure Certificate
APPENDIX G - DTC and the Book- Entry- Only System
1234
APPENDIX H - Specimen Municipal Bond Insurance Policy
ii
1235
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1236
OFFICIAL STATEMENT
LATHROP FINANCING AUTHORITY
REFUNDING REVENUE BONDS
MOSSDALE VILLAGE REFUNDINGS)
2023 Series A
INTRODUCTION
The purpose of this Official Statement, which includes the cover page and Appendices hereto ( the " Official Statement"), is to provide certain information concerning the sale and issuance of the revenue bonds captioned above ( the " Bonds") by the Lathrop Financing Authority ( the "Authority").
This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is quali ed by, more complete and detailed information contained in fhe 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 O cial Statement.
Capitalized terms used but not defined in this O cial Statement have fhe meanings set forth in the Indenture ( as defined below). See " APPEND/ X A — Summary of Principal Legal Documents."
Authority for Issuance
The Bonds are being issued by the Authority under Article 4 ( commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California ( the AcY'), under an Indenture of Trust dated as of 1, 2023 ( the " Indenture"), by and befinreen the Authority and U. S. Bank Trust Company, National Association, as trustee ( the Trustee"), and under a resolution adopted by the Board of Directors of the Authority on May 8, 2023 ( the " Authority Resolution"). See " THE BONDS— Authority for Issuance.
Financing Purposes
The Bonds are being issued for the following purposes:
i) to acquire a series of special tax refunding bonds ( the " CFD Bonds") to be issued by the City of Lathrop ( the " City") concurrently with the issuance of the Bonds, and
ii) to acquire a series of reassessment bonds ( the " Reassessment Bonds") to be issued by the City concurrently with the issuance of the Bonds.
Preliminary, subject to change.
1237
The CFD Bonds and the Reassessment Bonds are referred to collectively in this Official Statement as the" Acquired Obligations."
The Acquired Obligations are issued to refund the respective 2013 CFD Bonds and 2013 Reassessment Bonds, described below and owned by the Authority, and in turn facilitate the simultaneous refunding in full of the outstanding amount of the Authority' s $ 12, 335, 000 outstanding principal amount of" Revenue Bonds ( Mossdale Village Refundings) 2013 Series A" issued in 2013 ( the " Prior Bonds"). See " Acquired Obligations" below.
See " FINANCING PLAN" for a further description of the uses of the proceeds of the Bonds and the Acquired Obligations.
Description of the Bonds
The Bonds will be issued in denominations of$ 5, 000 or any integral multiple of$ 5,000.
Interest is payable semiannually on each March 2 and September 2, commencing March 2, 2024. The Bonds will be initially issued only in book- entry form and registered to Cede 8 Co. as nominee of The Depository Trust Company, New York, New York (" DTC"), which will act as securities depository of the Bonds. Principal and interest ( and premium, if any) on the Bonds is payable by the Trustee to DTC, which remits such payments to its Participants for subsequent distribution to the registered owners as shown on the Trustee's books. See "THE BONDS." Redemption
The Bonds are subject to optional redemption and mandatory special redemption from the proceeds of early redemption of the CFD Bonds or the Reassessment Bonds. See " THE BONDS— Redemption."
Security and Sources of Payment for the Bonds
The Bonds are payable from revenues received under the Indenture (" Revenues"), which consist primarily of debt service on the Acquired Obligations, as further described below.
The aggregate debt service on the Acquired Obligations has been structured so that the Authority will receive amounts sufficient, in both time and amount, to enable it to pay debt service on the Bonds. Separate debt service reserve funds have been established with respect to the CFD Bonds and the Reassessment Bonds. See " SECURITY FOR THE BONDS." Acquired Obligations
The CFD Bonds. The " CFD Bonds" consist of the special tax bonds captioned " City of Lathrop Community Facilities District No. 2003- 1 ( Mossdale Village) Special Tax Refunding Bonds, 2023 Series A," which are being issued by the City for and on behalf of the City of Lathrop Community Facilities District No. 2003- 1 ( Mossdale Village) ( the " CFD").
Authority for Issuance. The CFD Bonds are being issued under the Mello- Roos Community Facilities Act of 1982, as amended, being Chapter 2. 5, Part 1, Division 2, Title 5 of the Government Code of the State of California ( the " Mello- Roos Act"), and the Indenture. 2 1238
Purposes. The CFD Bonds are being issued to:
i) refund all of the outstanding special tax refunding bonds issued by the City for the CFD in 2013 (the " 2013 CFD Bonds"),
ii) fund a debt service Reserve Fund for the CFD Bonds, and iii) pay the costs of issuing the CFD Bonds and a portion of the costs of issuing the Bonds.
See " FINANCING PLAN."
Security and Sources of Payment. The CFD Bonds are payable from " Special Tax Revenues" derived from the levy and collection of Special Taxes on taxable property within the CFD, net of amounts set aside to pay Administrative Expenses. The CFD Bonds are further secured by a debt service reserve fund. See " SECURITY FOR THE CFD BONDS" and " THE CFD."
The Reassessment Bonds. The " Reassessment Bonds" consist of the bonds captioned " City of Lathrop Limited Obligation Refunding Improvement Bonds, Reassessment District No. 2023- 1," which are being issued by the City with respect to its Reassessment District No. 2023- 1 ( Mossdale Village) ( the " Reassessment District").
Authority for Issuance. The Reassessment Bonds are being issued under the Refunding Act of 1984 for 1915 Improvement Act Bonds, Division 11. 5 ( commencing with Section 9500) of the Streets and Highways Code of California ( the " Reassessment Act"), and the Indenture.
Purposes. The Reassessment Bonds are being issued to:
i) refund all of the outstanding limited obligation assessment bonds issued by the City for the Reassessment District in 2013 ( the " 2013 Reassessment Bonds"),
ii) fund a debt service reserve fund for the Reassessment Bonds, and iii) pay the costs of issuing the Reassessment Bonds and a portion of the costs of issuing the Bonds.
See " FINANCING PLAN."
Security and Sources of Payment. The Reassessment Bonds are payable from reassessments levied and collected by the City on the parcels within the Reassessment District. The Reassessment Bonds are further secured by a debt service reserve fund.
See " SECURITY FOR THE REASSESSMENT BONDS" and " THE REASSESSMENT DISTRICT."
3 1239
No Cross- Collateralization Between Districts
The Special Taxes are available only to pay debt service on the CFD Bonds, and may not be used to make up any shortfall in the funds available to pay debt service on the Reassessment Bonds. Similarly, the Reassessments are available only to pay debt service on the Reassessment Bonds, and may not be used to make up any shortFall in the funds available to pay debt service on the CFD Bonds. See " SECURITY FOR THE CFD BONDS," " SECURITY FOR THE REASSESSMENT BONDS" and "THE DISTRICTS IN THE AGGREGATE." Debt Service Reserves
CFD Bonds Reserve Fund. As further security for the CFD Bonds, the City will deposit a portion of the proceeds of the CFD Bonds with the Trustee, to be held in a debt service reserve fund established under the Indenture, to be used if there are insufficient amounts available in the Special Tax Fund to pay scheduled debt service on the CFD Bonds. See SECURITY FOR THE CFD BONDS— CFD Reserve Fund."
Reassessment Bonds Reserve Fund. As further security for the Reassessment Bonds, the City will deposit a portion of the proceeds of the Reassessment Bonds with the Trustee, to be held in a debt service reserve fund established under the Indenture, and used if there are insufficient amounts or available Reassessment installments to pay scheduled debt service on the Reassessment Bonds. See "SECURITY FOR THE REASSESSMENT BONDS — Reassessment Reserve Fund."
The Authority will not establish a separate debt service reserve fund for the Bonds since reserve funds are provided for the Acquired Obligations, as described above.
Teeter Plan; Foreclosure Covenant.
The City is located in San Joaquin County ( the " County"), which currently applies the Teeter Plan to ad valorem property taxes, special taxes and assessments and reassessments.
Under the Teeter Plan, the County remits to the applicable taxing entities the full amounts owing of such taxes and assessments without regard to any delinquencies in such payments. The County may discontinue application of the Teeter Plan with respect to any parcel of taxable real property at any time. See "THE DISTRICTS IN THE AGGREGATE— Teeter Plan." To provide additional security for the Acquired Obligations, the City has established in the legal documents applicable to each of the Acquired Obligations, a foreclosure covenant, as described under" SECURITY FOR THE CFD BONDS— Covenants of the City" and " SECURITY FOR THE REASSESSMENT BONDS— Covenants of the City."
Limited Obligations; Risk Factors
The Bonds are special obligations of the Authority payable solely from and secured solely by the Revenues and funds pledged therefor in the Indenture. The Bonds are not a debt or liability of the City, the State of California or any political subdivisions thereof other than the Authority to the limited extent described herein, and neither the faith and credit of the Authority, the City, the State or any of its political subdivisions are pledged to the payment of p incipal of, premium, if any, or interest on the Bonds, and neither the Authority ( except to the limited extent described herein), the City, the State nor any of its political subdivisions is liable therefor, nor in any event shall the Bonds or any interest or redemption premium thereunder be payable out of 4 1240
any funds or properties other than those of the Authority as set forth in the Indenture. Neither the Bonds nor the obligation to make payments on the CFD Bonds or the Reassessment Bonds constitutes an indebtedness of the Authority, the City, the State or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.
The Authority has no taxing power.
For a discussion of some of the risks associated with the purchase of the Bonds, see RISK FACTORS."
FINANCING PLAN
Purpose of Issue
The Bonds are being issued for the following purposes:
i) to acquire the CFD Bonds, which will be issued by the City concurrently with the issuance of the Bonds, and
ii) to acquire the Reassessment Bonds, which will be issued by the City concurrently with the issuance of the Bonds.
The aggregate debt service on the Acquired Obligations has been structured so that the Authority will receive amounts sufficient, in both time and amount, to enable it to pay debt service on the Bonds.
Refunding Plan for CFD Bonds
Proceeds of the CFD Bonds will be used to refund and legally defease, on a current basis, all of the 2013 CFD Bonds, which are the $ 7, 285,000 original amount of" City of Lathrop Community Facilities District No. 2003- 1 ( Mossdale Village) Special Tax Bonds, 2013 Series A,"currently outstanding in the principal amount of$ 4, 745, 000.
The 2013 CFD Bonds were issued to refund the CFD- allocated portion of the cost of a water well and related facilities financed by the Lathrop Financing Authority Revenue Bonds Water Supply Project), Series 2003, which were issued to provide potable water for the City' s Water System.
Refunding Plan for Reassessment Bonds
Proceeds of the Reassessment Bonds will be used to refund and legally defease, on a current basis, all of the 2013 Reassessment Bonds, which are the $ 11, 690, 000 original amount of Limited Obligation Refunding Improvement Bonds City of Lathrop Reassessment District No. 2013- 1" which are currently outstanding in the principal amount of$ 7, 590, 000.
The 2013 Reassessment Bonds were issued to refund bonds captioned " City of Lathrop Limited Obligation Improvement Bonds Mossdale Village Assessment District No. 03- 1," which were issued to finance a portion of the cost of construction of a wastewater treatment facility, and the " City of Lathrop Limited Obligation Improvement Bonds Mossdale Village Assessment District No. 03- 1," which were issued to finance a portion of the cost of construction of water recycling facilities.
5 1241
The City has outstanding its " City of Lathrop Reassessment District No. 2015- 1 Mossdale Village) Limited Obligation Refunding Improvement Bonds, Series 2015" ( the " 2015 Parity Reassessment Bonds") which were issued in the original principal amount of 8, 255, 000, and which are currently outstanding in the principal amount of $ The reassessments paying those bonds also originated from a 2005 refunding of a portion of the Mossdale Village Assessment District No. 03- 1 bonds and thus the 2015 Parity Reassessment Bonds are secured by reassessments payable on parity with the Reassessments securing the Reassessment Bonds.
Escrow Agreement
On the date of issuance of the Bonds ( the " Closing Date"), the City and U. S. Bank Trust Company, National Association, as escrow agent ( the " Escrow Agent") will enter into an Escrow Agreement with respect to the 2013 CFD Bonds, the 2013 Reassessment Bonds and the Prior Bonds. The City will cause a portion of the proceeds of the CFD Bonds and the Reassessment Bonds to be transferred to the Escrow Agent for deposit into separate accounts within an escrow fund ( the " Escrow Fund") in an amount sufficient to defease the 2013 CFD Bonds and 2013 Reassessment Bonds in full and in turn defease the Prior Bonds. The Escrow Agent will invest the amounts deposited in the Escrow Fund in federal securities. All amounts held in the Escrow Fund will be applied on September 2, 2023 to prepay the 2013 CFD Bonds, the 2013 Reassessment Bonds and the Prior Bonds. See " VERIFICATION OF MATHEMATICAL COMPUTATIONS."
The moneys held by the Escrow Agent under the Escrow Agreements are pledged to the payment of the bonds being refunded and will not be available for the payment of the Bonds, the CFD Bonds or the Reassessment Bonds.
6 1242
Estimated Sources and Uses of Funds
The Authority will use Bond proceeds primarily for the purpose of acquiring the CFD Bonds and Reassessment Bonds. The anticipated sources and uses of funds relating to the Bonds, the CFD Bonds and the Reassessment Bonds are as follows:
CFD Reassessment
Sources: Bonds Bonds Bonds
Principal Amount of the Bonds
Plus: Available Funds from Prior Bonds
Total Sources
Uses:
Deposit to Purchase Fund (
Deposit to CFD Reserve Fund 2
Deposit to Reassessment Reserve Fund 2
Costs of Issuance s
Underwriter' s Discount
Total Uses
1] To be used to acquire the CFD Bonds and the Reassessment Bonds. 2] Equal to the Reserve Requirement.
3] The costs of issuing the Bonds, the CFD Bonds and the Reassessment Bonds including Trustee and Trustee fees, Bond Counsel fees, Disclosure Counsel fees, Municipal Advisor, Special Tax Consultant and Reassessment Engineer fees, and printing costs, among other costs. The Bonds are funding a portion of the costs of issuance; the CFD Bonds and Reassessment Bonds are funding the remainder.
7 1243
THE BONDS
This section provides summaries of the Bonds and certain provisions of the Indenture.
See " APPEND/ X A— Summary of Principal Legal Documents" for a more complete summary of the Indenture. Capitalized terms used but not defined in this section have the meanings given in APPENDIX A.
Authority for Issuance
The Bonds are being issued under the Bond Law, the Authority Resolution, and the Indenture.
Bond Terms
General. The Bonds will be dated their date of delivery, and will be issued in the aggregate principal amounts set forth on the inside cover page hereof. The Bonds will bear interest from their dated date at the rates per annum set forth on the inside cover page hereof, payable semiannually on each March 1 and September 1, commencing March 2, 2024 ( each, an " Interest Payment Date"), and will mature in the amounts and on the dates set forth on the inside cover page hereof. The Bonds will be issued in fully registered form in denominations of 5,000 each or any integral multiple thereof.
Payment of Interest and Principal. Interest calculated on the basis of a 360- day year of twelve 30- day months on the Bonds will be payable on each Interest Payment Date to the person whose name appears on the Bond Register as the Owner of such Bond as of the fifteenth calendar day of the month preceding the month in which such Interest Payment Date occurs, whether or not such day is a Business Day ( the " Record Date") immediately preceding each such Interest Payment Date, such interest to be paid by check of the Trustee mailed on such Interest Payment Date by first class mail, postage prepaid, to the Owner at the address of such Owner as it appears on the Bond Register or by wire transfer to an account in the United States of America made on such Interest Payment Date upon instructions of any Owner of 1, 000, 000 or more in aggregate principal amount of Bonds of a Series provided to the Trustee in writing at least 5 Business Days before the Record Date for such Interest Payment Date.
Principal of and premium ( if any) on any Bond will be paid upon presentation and surrender of such Bond, at maturity or the prior redemption of such Bond, at the Trust Office of the Trustee.
Calculation of Interest. Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless ( a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it will bear interest from such Interest Payment Date; or ( b) it is authenticated on or before February 15, 2024, in which event it will bear interest from the Closing Date; provided, however, that if, as of the date of authentication of any Bond, interest on such Bond is in default, such Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on such Bond, or from the Closing Date if no interest has been paid or made available for payment.
8 1244
Redemption
Optional Redemption. The Bonds maturing on or before September 1, are not subject to optional redemption prior to maturity. The Bonds maturing on and after September 1, may be redeemed at the option of the Authority on any date on and after September 1, from any source of available funds, prior to maturity as a whole, or in part from maturities corresponding proportionately to the maturities of the CFD Bonds and/ or Reassessment Bonds simultaneously redeemed, if any redemption of CFD Bonds and/ or Reassessment Bonds is being accomplished in conjunction with such optional redemption, and otherwise from such maturities as are selected by the Authority, and by lot within a maturity, at a redemption price equal to principal amount of the Bonds to be redeemed, plus a premium expressed below as a percentage of the principal amount so redeemed, plus accrued interest to the date of redemption thereof:
Redemption Date Redemption Premium
Special Mandatory Redemption. The Bonds are subject to mandatory special redemption on any Interest Payment Date from proceeds of early redemption of Acquired Obligations from Prepayment of Special Taxes or Reassessments, in whole or in part, in the amounts and among maturities the Authority shall select as directed to the Trustee, at the principal amount thereof, plus a premium expressed below as a percentage of the principal amount so redeemed, plus accrued interest to the date of redemption thereof:
Redemption Date Redemption Premium
Any Interest Payment Date through March 2, 2031 3%
September 2, 2031 and March 2, 2032 2%
September 2, 2032 and March 2, 2033 o a
September 2, 2033 and any Interest Payment Date Thereafter 0% Notice of Redemption. The Trustee on behalf, and at the expense, of the Authority will mail ( by first class mail, postage prepaid) notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Bond Register, and to the Securities Depositories and to the Municipal Securities Rulemaking Board, at least 20 but not more than 60 days prior to the date fixed for redemption. Neither failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice will state the date of the notice, the redemption date, the redemption place and the redemption price and will designate the CUSIP numbers, the Bond numbers and the maturity or maturities ( in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and will require that such Bonds be then surrendered at the Trust Office of the Trustee for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue after the redemption date.
In addition to the foregoing notice, further notice will be given by the Trustee in said form by first class mail to any Bondowner whose Bond has been called for redemption but who has failed to submit his Bond for payment by the date which is sixty days after the redemption date, 9 1245
but no defect in said further notice nor any failure to give or receive all or any portion of such further notice will in any manner defeat the effectiveness of a call for redemption.
Rescission of Redemption Notice. Any such redemption notice may specify that redemption on the specified date will be subject to receipt by the Authority of moneys sufficient to cause such redemption ( and will specify the proposed source of such moneys), and neither the Authority nor the Trustee will have any liability to the Owners or any other party as a result of its failure to redeem the Bonds as a result of insufficient moneys. The Authority will have the right to rescind any redemption by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption will be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation will not constitute an Event of Default hereunder. The Trustee will mail notice of rescission of redemption in the same manner notice of redemption was originally provided.
Selection of Bonds of a Maturity for Redemption. Unless otherwise provided under the Indenture, whenever provision is made in the Indenture for the redemption of fewer than all of the Bonds of a maturity, the Trustee will select the Bonds to be redeemed from all Bonds of such maturity not previously called for redemption, by lot in any manner which the Trustee in its sole discretion will deem appropriate and fair. For purposes of such selection, all Bonds will be deemed to be comprised of separate $ 5,000 authorized denominations, and such separate authorized denominations will be treated as separate Bonds which may be separately redeemed.
Partial Redemption of Bonds. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the Authority will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of the same maturity date, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed.
Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of and interest ( and premium, if any) on the Bonds so called for redemption will have been duly provided, such Bonds so called will cease to be entitled to any benefit under the Indenture other than the right to receive payment of the redemption price, and no interest will accrue on such Bonds from and after the redemption date specified in such notice.
Certification of Independent Financial Consultant. In connection with an optional or special mandatory redemption of Bonds, the Authority will deliver to the Trustee a certificate of an Independent Financial Consultant verifying that, following such prepayment of the CFD Bonds and redemption of the Bonds, the principal and interest generated from the remaining CFD Bonds is adequate to make the timely payment of principal and interest due on the Bonds that will remain Outstanding following such redemption.
Book- Entry Only System
General. The Bonds will be issued as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company (" DTC"), and will be available to actual purchasers of the Bonds ( the " Beneficial Owners") in the denominations set forth above, under the book- entry system maintained by DTC, only through brokers and dealers who are or act through Participants ( as defined in this Official Statement) as described in this Official 10 1246
St tement. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. See APPENDIX I — DTC and the Book-Entry-Only System."
If the book- entry- only system is no longer used with respect to the Bonds, the Bonds will be registered and transferred in accordance with the Indenture. See "—Registration, Transfer and Exchange of Bonds" below.
Payments Made to DTC. While the Bonds are subject to the book- entry system, the principal and interest with respect to a Bond will be paid by the Trustee to DTC, which in turn is obligated to remit such payment to its Participants for subsequent disbursement to Beneficial Owners of the Bonds, as described in " APPENDIX I— DTC and the Book- Entry- Only System." Registration, Transfer and Exchange of Bonds
Bond Register. The Trustee will keep or cause to be kept at its Trust Office sufficient records for the registration and transfer of the Bonds, which will be the Bond Register and will at all times during regular business hours be open to inspection by the Authority upon reasonable notice; and, upon presentation for such purpose, the Trustee will, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said records, Bonds as provided under the Indenture.
Transfer of Bonds. Subject to the book- entry only provisions of the Indenture, any Bond may in accordance with its terms, be transferred, upon the Bond Register, 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 written instrument of transfer in a form approved by the Trustee, duly executed.
Whenever any Bond is surrendered for transfer, the Authority will execute and the Trustee will thereupon authenticate and deliver to the transferee a new Bond or Bonds of like Series, tenor, maturity and aggregate principal amount. No Bonds selected for redemption will be subject to transfer, nor will any Bond be subject to transfer during the 15 days prior to the selection of Bonds for redemption.
The cost of printing any Bonds and any services rendered or any expenses incurred by the Trustee in connection with any transfer or exchange will be paid by the Authority. However, the Owners of the Bonds will be required to pay any tax or other governmental charge required to be paid for any exchange or registration of transfer and the Owners of the Bonds will be required to pay the reasonable fees and expenses of the Trustee and Authority in connection with the replacement of any mutilated, lost or stolen Bonds.
Exchange of Bonds. Bonds may be exchanged at the Trust Office of the Trustee for Bonds of the same Series, tenor and maturity and of other authorized denominations. No Bonds selected for redemption will be subject to exchange, nor will any Bond be subject to exchange during the 15 days prior to the selection of Bonds for redemption. The Owners of the Bonds will be required to pay any tax or other governmental charge required to be paid for any exchange and the Owners of the Bonds will be required to pay the reasonable fees and expenses of the Trustee and Authority in connection with the exchange of any Bonds. 11 1247
Debt Service Schedules: The Bonds, the CFD Bonds and the Reassessment Bonds The table below presents the debt service schedule for the Bonds, assuming no optional or special redemptions are made. The scheduled aggregate debt service on the Bonds is approximately equal to the aggregate of the scheduled debt service on the CFD Bonds and the Reassessment Bonds.
TABLE 1
LATHROP FINANCING AUTHORITY
Annual Debt Service Schedule for the Bonds*
Year
Ending
September 2 Princiqal Interest Total
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
TOTAL
Preliminary, subject to change.
12 1248
The following table summarizes the anticipated debt service payments to be received by the Authority as the result of its ownership of the CFD Bonds.
TABLE 2
CITY OF LATHROP
CFD 2003- 1
Annual Debt Service Schedule for the CFD Bonds*
Year Portion of
Ending CFD Debt Service
September 2 Bonds on Bonds
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
TOTAL
Preliminary, subject to change.
The following table summarizes the anticipated debt service payments to be received by the Authority as the result of its ownership of the Reassessment Bonds.
TABLE 3
CITY OF LATHROP
REASSESSMENT DISTRICT 2023- 1*
Annual Debt Service Schedule for the Reassessment Bonds Year Portion of
Ending Reassessment Debt Service
Sentember 2 Bonds on Bonds
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
TOTAL
Preliminary, subject to change.
13 1249
Debt Service Coverage on the CFD Bonds and the Reassessment Bonds CFD Bonds. The following table summarizes the debt service coverage on the CFD Bonds provided by maximum Special Taxes. The CFD Bonds represent $ principal amount of the $ of Acquired Obligations securing the Bonds.
TABLE 4
CITY OF LATHROP
CFD 2003- 1
Debt Service Coverage on CFD Bonds*
Maximum
Special Tax Maximum
Year Revenues for Special Tax CFD Bond
Ending Developed and Revenues for Debt Debt Service
June 30) Final Map Undeveloped Total Revenue Service'> Coverage Property Property
2023 1, 688, 065 170,029 1, 858, 095
2024 1, 721, 826 173, 430 1, 895, 256
2025 1, 756, 263 176, 899 1, 933, 162
2026 1, 791, 388 180, 437 1, 971, 825
2027 1, 827, 216 184, 045 2,011, 261
2028 1, 863, 760 187, 726 2, 051, 487
2029 1, 901, 035 191, 481 2, 092, 516
2030 1, 939, 056 195, 310 2, 134, 367
2031 1, 977, 837 199, 217 2, 177, 054
2032 2, 017, 394 203, 201 2, 220, 595
2033 2, 057, 742 207, 265 2, 265, 007
2034 2, 098, 897 211, 410 2, 310, 307
2035 2, 140, 875 215, 638 2, 356, 513
1) CFD 2003- 1 ( Mossdale Village) 2023 Series A Bonds.
Sources: San Joaquin County Auditor's O ce; NBS Government Finance Group.
Preliminary, subject to change.
Reassessment Bonds. The Reassessments are sized to equal debt service on the Reassessment Bonds. The Reassessment Bonds will represent $ principal amount of the $ principal amount of Acquired Obligations securing the Bonds.
Preliminary, subject to change.
14 1250
SECURITY FOR THE BONDS
This section provides summaries of the security for the Bonds and certain provisions of the Indenfure. See " APPENDIX A — Summary of Principal Lega/ Documents" for a more complete summary of the Indenture. Capitalized terms used but not defined in this section have the meanings given in APPENDIX A.
General
Revenues. As described below, the Bonds are secured by a lien on and pledge of Revenues made in the Indenture, consisting of amounts received by the Authority as the result of its ownership of the Acquired Obligations. Debt service on the Acquired Obligations is designed to be sufficient, in time and amount, to enable the Authority to pay debt service on the Bonds.
The Indenture defines " Revenues" as follows:
a) all amounts received from the Acquired Obligations;
b) any proceeds of the Bonds originally deposited with the Trustee and all moneys deposited and held from time to time by the Trustee in the funds and accounts established hereunder with respect to the Bonds ( other than the Rebate Fund); and c) investment income with respect to any moneys held by the Trustee in the funds and accounts established hereunder with respect to the Bonds ( other than investment income on moneys held in the Rebate Fund).
Limited Obligations. The Bonds are special obligations of the Authority payable solely from and secured solely by the Revenues and all of the right, title and interest of the Authority in the Acquired Obligations, subject to the terms of the Indenture. The Bonds are not a debt or liability of the City, the State of California or any political subdivisions thereof other than the Authority to the limited extent described in this Official Statement, and neither the faith and credit of the Authority, the City, the State or any of its political subdivisions are pledged to the payment of principal of, premium, if any, or interest on the Bonds and neither the Authority, the City, the State nor any of its political subdivisions is liable therefor, nor in any event will the Bonds or any interest or redemption premium thereunder be payable out of any funds or properties other than those of the Authority as set forth in the Indenture. Neither the Bonds nor the obligation to make payments under the CFD Bonds or the Reassessment Bonds constitute an indebtedness of the Authority, the City ( except to the limited extent described herein), the State nor any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. The Authority has no taxing power.
Revenues; Flow of Funds
Revenues. The Bonds are secured by a first lien on and pledge of all of the Revenues.
Under the Indenture, all of the Revenues and the amounts in the funds established by the Indenture are pledged by the Authority first to secure the payment of the principal of and interest on the Bonds, all in accordance with their terms and the provisions of the Indenture. Said pledge constitutes a lien on and security interest in the Revenues upon the physical delivery thereof. In the Indenture, the Authority transfers in trust and assigns to the Trustee, for the benefit of the Owners from time to time of the Bonds, all of the Revenues and all of the right, 15 1251
title and interest of the Authority in the Acquired Obligations. The Trustee shall be entitled to and shall collect and receive all of the Revenues, and any Revenues collected or received by the Authority as the agent of the Trustee shall be deemed to be held, and to have been collected or received, by the Authority and shall be paid by the Authority to the Trustee. Subject to the provisions of the Indenture regarding the remedies and rights of the Bond Owners, the Trustee also is entitled to and may take all steps, actions and proceedings reasonably necessary in its judgment to enfvrce all of the rights and obligations of the Authority with respect to the Acquired Obligations.
Collection by the Trustee. The Trustee will collect and receive all of the Revenues, and any Revenues collected or received by the Authority will be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and will forthwith be paid by the Authority to the Trustee. Under the Indenture, the Trustee is directed to establish, maintain and hold in trust a special fund designated as the " Revenue Fund" and deposit the Revenues, when and as received by the Trustee, therein, subject to the provisions of the Indenture. All moneys at any time held in the Revenue Fund shall be held in trust for the benefit of the Owners and shall be disbursed, allocated, and applied solely for payment of the Bonds and for any other uses and purposes set forth in the Indenture.
Application of Revenues. On or before each Interest Payment Date and date for redemption of the Bonds, the Trustee will transfer from the Revenue Fund, and deposit into the following respective accounts for the Bonds, the following amounts in the following order of priority, the requirements of each such account ( including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:
Interest Account. On each Interest Payment Date and redemption date, the Trustee will deposit in the Interest Account an amount requi ed to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest becoming due and payable on such Interest Payment Date on all Outstanding Bonds or to be paid on the Bonds being redeemed on such date.
No deposit need be made into the Interest Account if the amount contained in such account is at least equal to the interest becoming due and payable upon all Outstanding Bonds on the next succeeding Interest Payment Date or redemption date, as applicable.
All moneys in the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it becomes due and payable ( including accrued interest on any Bonds redeemed prior to maturity).
If the amounts on deposit in the Interest Account on any Interest Payment Date or redemption date are insufficient for any reason to pay the aggregate amount of interest then coming due and payable on the Outstanding Bonds, the Trustee will apply such amounts to the payment of interest on each of the Outstanding Bonds on a pro rata basis.
Principal Account. On each Interest Payment Date and redemption date on which the principal of the Bonds will be payable, the Trustee will deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of, and premium ( if any) on, the Bonds coming due and payable on such Interest Payment Date, or required to be redeemed on such date; provided, however, that no 16 1252
amount will be deposited to effect a mandatory special redemption unless the Trustee has first received a certificate of an Independent Accountant certifying that such deposit to effect the redemption of the Bonds will not impair the ability of the Authority to make timely payment of the principal of and interest on the Bonds, assuming for such purposes that the Authority continues to receive timely payments on all Acquired Obligations not then in default.
All moneys in the Principal Account will be used and withdrawn by the Trustee solely for the purpose of ( i) paying the principal of the Bonds at the maturity thereof or ( ii) paying the principal of any Bonds upon the redemption thereof.
Deficiencies. If on any Interest Payment Date or date for redemption the amount on deposit in the Revenue Fund is inadequate to make the transfers described above as a result of a payment default on an issue of Acquired Obligations, the Trustee will immediately notify the Authority of the amount needed to make the required deposits under "— Application of Revenues" above and shall withdraw the deficient amount from the Revenue Fund to the extent funds are available therein to correct the deficiency in accordance with the Indenture; see Reserve Fund" below. In the event that within 5 Business Days of delivering such notice the Trustee receives additional payments from the Authority to cure such shortFall, the Trustee will deposit such amounts to the account designated in writing by the Authority.
Deposit into Rebate Fund. On each Interest Payment Date after making the transfers described above, upon receipt of a Request of the Authority to do so, the Trustee will transfer from the Revenue Fund to the Rebate Fund for deposit in the accounts in the Rebate Fund the amounts specified in such Request.
Additional Bonds Only For Refunding
The Authority may not issue any additional bonds, notes or other obligations payable from the Revenues on a parity with the Bonds, except that the Authority may issue bonds, notes or other obligations for the purpose of refunding any Outstanding Bonds in whole or in part.
Refunding CFD Bonds. The City has covenanted in the Indenture that it will not issue additional obligations secured by a pledge of Special Taxes or by the Special Tax Revenues equally and ratably with CFD Bonds, except that the City may issue bonds to refund all or part of the CFD Bonds.
Refunding Reassessment Bonds. The City covenants in the Indenture that it will not encumber, pledge or place any charge or lien upon any of the Reassessments or other amounts pledged to the Reassessment Bonds superior to or on parity with the pledge and lien herein created for the benefit of the Reassessment Bonds, except that the City may issue bonds to refund all or part of the Reassessment Bonds and/or the 2015 Parity Reassessment Bonds.. 17 1253
BONDINSURANCE
to come if applicable]
SECURITY FOR THE CFD BONDS
This section provides summaries of the security for the CFD Bonds and certain provisions of the Indenture. See " APPENDIX A— Summary of Principal Legal Documents" for a more complete summary of the Indenfure. Capitalized terms used but not defined in this section have the meanings given in APPENDIX A.
General
The CFD Bonds constitute a limited obligation of the City that is secured by a first lien on and pledge of, and is payable solely from, Special Tax Revenues ( defined below) collected in the CFD and amounts deposited by the City in the Special Tax Fund ( exclusive of the Administrative Expenses). The City' s limited obligation to pay the principal of, premium, if any, and interest on the CFD Bonds from Special Tax Revenues collected in the CFD is absolute and unconditional.
The CFD Bonds do not constitute a legal or equitable pledge, charge, lien or encumbrance upon any of the CFD' s property, or upon any of its income, receipts or revenues, except the Special Tax Revenues collected in the CFD, which include collections pursuant to any foreclosures of parcels to pay the Special Taxes.
Except for the Special Tax Revenues for the CFD, neither the credit nor the taxing power of the City is pledged for the payment of the CFD Bonds or related interest, and no Owner of the Bonds may compel the exercise of taxing power by the City or the forfeiture of any of its property. The principal of and interest on the CFD Bonds and premiums upon the redemption thereof, if any, are not a debt of the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory limitation or restriction.
Special Taxes; Special Tax Revenues
The " Special Taxes" for the CFD are levied and collected according to the special tax formula contained in the rate and method of apportionment established for the CFD ( the " Rate and Method"). See "— Rate and Method" below and APPENDIX C.
The " Special Tax Revenues" pledged by the City to the CFD Bonds are defined in the Indenture as the proceeds of the Special Taxes received by the City with respect to the CFD, including all scheduled payments and delinquent payments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the 18 1254
lien of the Special Taxes, net of Administrative Expenses attributable to the CFD. " Special Taxes" are comprised the special taxes authorized to be levied on parcels for facilities within the CFD and levied in accordance with the Rate and Method, including any scheduled Payments and any prepayments of, or interest on, such Special Taxes, and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest on such amount.
Except for the portion of any Prepayment to be deposited to the Redemption Account, the Trustee will, on each date on which the Special Taxes are received from the City, deposit the Special Taxes in the Special Tax Fund to be held in trust for the Authority, as sole Owner of the CFD Bonds. No later than ten ( 10) Business Days prior to the next Interest Payment Date, the Trustee shall withdraw from the accounts within the Special Tax Fund and deposit the following amounts in the following order of priority:
ii) in the Revenue Fund an amount equal to the portion of the Special Tax Revenues that represent the portion of the collection amount attributable to the payment of principal, premium, if any, and interest next due on the CFD Bonds; and
ii) in the CFD Reserve Fund, an amount, but only to the extent that a draw on the CFD Reserve Fund has occurred which is attributable to deficiencies in the payment of the CFD Bonds, equal to the amount needed to cause the amount in the CFD Reserve Fund to equal the CFD Reserve Requirement.
Priority of Lien
Each installment of the Special Taxes and any interest and penalties on the Special Taxes, constitutes a lien on the parcel of land on which it was imposed until the same is paid.
Such lien is co-equal to and independent of the lien for general taxes, the lien of any other community facilities district special taxes and special assessment liens. See " THE CFD— Direct and Overlapping Governmental Obligations."
Reserve Fund for CFD Bonds
Under the Indenture, as further security for the CFD Bonds, the City will deposit a portion of the proceeds of the CFD Bonds with the Trustee, to be held by the Indenture in the CFD Reserve Fund established under the Indenture in an amount equal to the CFD Reserve Requirement. [Add for reserve surety, if applicable.]
Under the Indenture, the " CFD Reserve Requirement" for the CFD Bonds means, as of any date of calculation, an amount equal to 50% of Maximum Annual Debt Service ( as defined in the Indenture) on the Outstanding CFD Bonds.
Moneys in the CFD Reserve Fund will be used solely for the purpose of paying the principal of and interest on the CFD Bonds when due if the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor.
See APPENDIX A for a further description of disbursements from the CFD Reserve Fund and the replenishment of the CFD Reserve Fund from the proceeds of Special Taxes.
Covenants of the City
19 1255
In the Indenture, the City covenants as follows, among other things:
Punctual Payment. It will duly and punctually pay or cause to be paid the principal of and interest on the CFD Bonds issued under the Indenture, together with the premium, if any to the extent that Special Tax Revenues and other amounts pledged under the Indenture are available for such payment.
Against Encumbrance. It will not mortgage or otherwise encumber, pledge or place any charge upon any of the Special Tax Revenues except as provided in the Indenture, and will not issue any obligation or security having a lien or charge upon the Special Tax Revenues superior to or on parity with the CFD Bonds. Nothing in the Indenture prevents the City from issuing or incurring indebtedness that is payable from a pledge of Special Tax Revenues, which is subordinate in all respects to the pledge of Special Tax Revenues to repay the CFD Bonds.
Levy of Specia/ Tax. The City will comply with all requirements of the Mello- Roos Act so as to assure the timely collection of Special Taxes, including without limitation, the enforcement of delinquent Special Taxes.
i) Processing. On or within 5 Business Days of each June 1, the Trustee will provide the Finance Director with a notice stating the amount then on deposit in the Special Tax Fund and the other funds and accounts held by the Trustee under the Indenture, whether or not amounts need to be deposited into the CFD Reserve Fund to increase the amounts on deposit in such account to the CFD Reserve Requirement, and informing the City that the Special Taxes need to be levied under the Ordinance as necessary to provide for the Special Tax Requirement ( as defined in clause ( iv) below).
The receipt of or failure to receive such notice by the Finance Director will in no way affect the obligations of the Finance Director under the following two paragraphs and the Trustee will not be liable for failure to provide such notice to the Finance Director. Upon receipt of such notice, the Finance Director will communicate with the Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits or combinations during the preceding and then current year. ii) Levy. The Finance Director will effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance by each August 1 that the CFD Bonds are outstanding, or otherwise such that the computation of the levy is complete before the final date on which Auditor will accept the transmission of the Special Tax amounts for the parcels within the CFD for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, the Finance Director will prepare or cause to be prepared, and will transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next real property tax roll.
iii) Computation. The Finance Director will fix and levy the amount of Special Taxes within the CFD in an amount sufficient, together with other amounts on deposit in the Special Tax Fund and available for such purpose, to pay ( A) the principal of and interest on the CFD Bonds when due, ( B) the Administrative Expenses, including amounts necessary to discharge any rebate obligation, during such year and ( C) any amounts required to replenish the CFD Reserve Fund to the CFD Reserve Requirement the " Special Tax Requirement"), taking into account the balances in such funds and in 20 1256
the Special Tax Fund. The Special Taxes so levied will not exceed the authorized amounts as provided in the proceedings under the Resolution of Formation. iv) Collection. The Special Taxes will be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property.
Commence Foreclosure Proceedings. Under the Mello- Roos Act, the City has covenanted in the Indenture with and for the benefit of the Owners of the CFD Bonds that it will order, and cause to be commenced as hereinafter provided, and thereafter diligently prosecute to judgment ( unless such delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due as provided in the following two paragraphs; provided however, that the City' s obligation to pursue foreclosure will be at the option of the City so long as ( i) the County's Teeter Plan is in effect with respect to the delinquent parcel meeting the conditions below, and ( ii) there is no thenoutstanding draw on the CFD Reserve Fund. In the event that either of these conditions is not met, the City will be obligated to pursue foreclosure as follows. The Finance Director will notify the City Attorney of any such delinquency of which the Finance Director is aware, and the City Attorney will commence, or cause to be commenced, such proceedings.
On or about January 30 and June 30 of each Fiscal Year, the Finance Director will compare the amount of Special Taxes theretofore levied in the CFD to the amount of Special Taxes theretofore received by the City, and:
i) Individual Delinquencies. If the Finance Director determines that any single parcel subject to the Special Tax in the CFD is delinquent in the payment of Special Taxes in the aggregate amount of$ 3, 000 or more, then the Finance Director will send or cause to be sent a notice of delinquency ( and a demand for immediate payment of the delinquent amounts) to the property owner within 60 days of such determination, and ( if the delinquency remains uncured) foreclosure proceedings will be commenced by the City within 120 days of such determination.
ii) Aggregate Delinquencies. If the Finance Director determines that the total amount of delinquent Special Tax for the prior Fiscal Year for the entire CFD ( including the total of delinquencies under paragraph ( i) above), exceeds 5% of the total Special Tax due and payable for the prior Fiscal Year, the City will notify or cause to be notified property owners who are then delinquent in the payment of Special Taxes ( and demand immediate payment of the delinquency) within 60 days of such determination, and will commence foreclosure proceedings within 120 days of such determination against each parcel of land in the CFD with a Special Tax delinquency.
Reduction of Maximum Special Taxes. The City covenants that it will not initiate proceedings to reduce the maximum Special Tax rates for the City, unless, in connection therewith, ( i) the City receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that, on the basis of the parcels of land and improvements existing in the CFD as of the July 1 preceding the reduction, the maximum amount of the Special Tax which may be levied on then existing Developed Property ( as defined in the Rate and Method of Apportionment of Special Taxes then in effect in the CFD) in each Bond Year for any CFD Bonds Outstanding will equal at least 110% of the sum of the estimated Administrative 21 1257
Expenses and gross debt service in each Bond Year on all CFD Bonds to remain Outstanding after the reduction is approved ( subject to the limitation under the Mello- Roos Act that that under no circumstances will the special tax levied in any fiscal year against any parcel subject to this sentence be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within the district by more than 10 percent above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults), ( ii) the City finds that any reduction made under such conditions will not adversely affect the interests of the Owners of the CFD Bonds, and ( iii) the City is not delinquent in the payment of the principal of or interest on the CFD Bonds. For purposes of estimating Administrative Expenses for the foregoing calculation, the Independent Financial Consultants will compute the Administrative Expenses for the current Fiscal Year and escalate that amount by 2% in each subsequent Fiscal Year.
Rate and Method
Genera/. The Special Tax is levied and collected according to the rate and method of apportionment of special taxes for the CFD ( the " Rate and Method"). The qualified electors of the CFD approved the Rate and Method for the CFD on April 1, 2003.
Capitalized terms used but not defined in this Official Statement have the meanings given them in the Rate and Method. The full text of the Rate and Method is attached to the Official Statement as APPENDIX C.
Under the Rate and Method, each parcel of Taxable Property is assigned a specific dollar amount as the Maximum Special Tax that may be levied in any one year. Taxable Property is defined to mean any Assessor Parcel within the CFD that is not exempt from the Special Tax by applicable law or by the provisions of the Rate and Method. Parcel or Assessor Parcel means a lot or parcel with an assigned County Assessor' s Parcel number shown on a County Assessor's Parcel map. Under the Rate and Method certain Public Property acreage ( as defined in the Rate and Method) is specifically exempt and not includable as Taxable Property.
As defined in the Rate and Method, Taxable Property is categorized as either Developed Property or Undeveloped Property. Developed Property is Taxable Property for which a building permit for new construction was issued prior to June 1 of the preceding fiscal year.
Undeveloped Property means any Taxable Property that is not Developed Property.
Developed Property consists of four categories, as follows:
a) Low Density Residential Property is Developed Property for which a building permit was issued for construction of a residential unit without a common wall with another unit and built on a Parcel of 4, 000 square feet or more in area. b) Medium Density Residential Property is Developed Property for which a building permit was issued for construction of ( i) a residential unit without a common wall with another unit and built on a Parcel of less than 4,000 square feet in area, or ( ii) finro or more units with common walls that are offered for sale, including condominiums.
c) High Density Residential Property means any Developed Property for which a building permit was issued for construction of a residential structure with multiple residential units for rent.
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d) Other Property means any Developed Property that is not in one of the three above defined residential properties; for example, property developed for commercial uses.
The Maximum Special Taxes for Taxable Property for Fiscal Year 2022- 23, as established in the Rate and Method based on development status as of June 1, 2022, are as follows:
TABLE 5
CITY OF LATHROP
CFD 2003- 1
Assigned Special Tax Rates for Taxable Property'
Fiscal Year 2022- 23
Low Density
Residential Property 799. 81 per Unit
Medium Density
Residential Property 528. 45 per Unit
High Density
Residential Property 271. 37 per Unit
Other Property and
Undeveloped Property 5,584.44 per Acre
1) Per Rate and Method of Apportionment of Special Taxes for CFD No. 2003- 1.
Source: Rate and Method for CFD 2003- 1.
The Maximum Special Tax amounts shown in the table above have been increased on July 1 of each year since 2005, and will be increased on each July 1 hereafter by an amount equal to 2% of the amount in effect for the prior fiscal year.
In addition, the Maximum Special Tax may be increased by proceedings undertaken by the City Council in response to Land Use/Entitlement Changes ( as defined in Section D of the Rate and Method) that result in prospective Maximum Special Tax revenues th8t 8 e moPe th8n 5% less than Expected Maximum Special Tax Revenues ( as defined in the Rate and Method).
See Section D of APPENDIX C —" RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX" for further explanation of the circumstances under which the so-called Back- Up Formula may be utilized and the method of utilization.
Method of Apportionment. Pursuant to the Rate and Method, the Administrator, who is the person or firm designated by the City to administer the Special Tax, shall determine each fiscal year the Special Tax Requirement ( as defined in the Rate and Method) to be collected in that fiscal year.
The Special Tax shall be levied in each fiscal year in a series of up to six steps described as follows:
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Step 1. The Special Tax shall be levied proportionately on each Parcel of Developed Property up to 100% of the applicable Maximum Special Tax.
Step 2. If additional revenue is needed, the Special Tax shall be levied proportionately on each Parcel of Undeveloped Property within any Final Map and within any Large Lot Subdivision Map up to 100% of the applicable Maximum Special Tax.
Step 3. If additional revenue is needed, the Special Tax shall be levied proportionately on each Parcel of Undeveloped Property not within a Final Map or a Large Lot Subdivision Map up to 100% of the applicable Maximum Special Tax.
Steps 4, 5 and 6. If additional revenue is needed, the Special Tax shall then be levied up to the applicable Maximum Special Tax first, on Association Property, second, on Excess Public Property and third, on each Recycled Water Parcel ( all as defined in the Rate and Method).
Prepayment of Special Tax. The Rate and Method also provides a method of prepayment, in whole or in part, of the obligation of an Assessor Parcel to pay the Special Tax.
The Prepayment Amount for a parcel is calculated based on various factors, all as specified in APPENDIX C.
Refunding CFD Bonds
The City has covenanted in the Indenture that it will not issue additional obligations secured by a pledge of Special Taxes or by the Special Tax Revenues equally and ratably with CFD Bonds, except that the City may issue bonds to refund all or part of the CFD Bonds.
SECURITY FOR THE REASSESSMENT BONDS
This section provides summaries of the security for the Reassessment Bonds and certain provisions of the Indenture. See " APPENDIX A — Summary of Principal Legal Documents" for a more complete summary of the Indenture. Capitalized terms used but not defined in this section have the meanings given in APPEND/XA.
General
Pledge of Reassessments and Moneys in Funds. The Reassessment Bonds are secured by a first pledge ( which pledge will be effected in the manner and to the extent provided in the Indenture) of all of the Reassessments and all moneys deposited in the Redemption Fund and the Reassessment Reserve Fund. The Reassessments and all moneys deposited into such funds ( except as otherwise provided in the Indenture) are dedicated to the payment of the principal of, and interest and any premium on, the Reassessment Bonds as provided in the Indenture and in the Reassessment Act until all of the Reassessment Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in accordance with the provisions of the Indenture relating to discharge of such agreement.
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The Reassessments were levied under proceedings taken by the City under the Reassessment Act. See " THE REASSESSMENT DISTRICT." Excerpts from the Reassessment Report for the Reassessment District is attached as APPENDIX D.
The City has outstanding its " City of Lathrop Reassessment District No. 2015- 1 Mossdale Village) Limited Obligation Refunding Improvement Bonds, Series 2015" ( the " 2015 Parity Reassessment Bonds"), currently outstanding in the principal amount of $ The reassessments paying those bonds are secured by reassessments payable on parity with the Reassessments securing the Reassessment Bonds.
Limited Obligations. All obligations of the City under the Indenture and the Reassessment Bonds are not general obligations of the City, but are limited obligations, payable solely from the Reassessments and the funds pledged for the Reassessment Bonds under the Indenture. Neither the faith and credit of the City nor of the State of California or any political subdivision thereof is pledged to the payment of the Reassessment Bonds.
The Reassessment Bonds are " Limited Obligation Refunding Improvement Reassessment Bonds" and are payable solely from and secured solely by the Reassessments and the amounts in the Redemption Fund and the Reassessment Reserve Fund created under the Indenture. Nofinrithstanding any other provision of the Indenture, the City is not obligated to advance available surplus funds from the City treasury to cure any deficiency in the Redemption Fund.
Priority of Lien
Each installment of the Reassessment and any interest and penalties on such Reassessments, constitutes a lien on the parcel of land on which it was imposed until the same is paid. Such lien is co- equal to and independent of the lien for general taxes, any other special assessment liens and the lien of any community facilities district special taxes. See " THE REASSESSMENT DISTRICT— Direct and Overlapping Governmental Obligations." Reserve Fund for Reassessment Bonds
Under the Indenture, as further security for the Reassessment Bonds, the City will deposit a portion of the proceeds of the Reassessment Bonds with the Trustee, to be held by the Trustee in the Reassessment Reserve Fund established under the Indenture in an amount equal to the Reassessment Reserve Requirement.
Under the Indenture, the " Reassessment Reserve Requirement" for the Reassessment Bonds means, as of any date of calculation, an amount equal to 75% of the Maximum Annual Debt Service ( as defined in the Indenture) on the Outstanding Reassessment Bonds.
Moneys deposited in the Reassessment Reserve Fund will be used and withdrawn by the Trustee solely for the purpose of making transfers to the Reassessment Redemption Fund in the event of any deficiency at any time in the Reassessment Redemption Fund of the amount then required for payment of the principal of, and interest and any premium on, the Reassessment Bonds or for the purpose of redeeming Bonds from the Reassessment Redemption Fund.
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See APPENDIX A for a further description of disbursements from the Reassessment Reserve Fund and the replenishment of the Reassessment Reserve Fund.
Covenants of the City
In the Indenture, the City covenants as follows, among other things:
Punctual Payment. It will punctually pay or cause to be paid the principal of, and interest and any premium on, the Reassessment Bonds when and as due in strict conformity with the terms of the Indenture and any Supplemental Agreement, and it will faithfully observe and perform all of the conditions, covenants and requirements of the Indenture and all Supplemental Agreements and of the Reassessment Bonds.
Against Encumbrance. It will not encumber, pledge or place any charge or lien upon any of the Reassessments or other amounts pledged to the Reassessment Bonds superior to or on parity with the pledge and lien created in the Indenture for the benefit of the Reassessment Bonds, except as permitted by the Resolution of Issuance, the Indenture or applicable law.
Collection of Reassessments. The City wil comply with all requirements of the Indenture or applicable law to assure the timely collection of the Reassessments, including, without limitation, the enforcement of delinquent Reassessments. Any funds received by the City in and for the Reassessment District, including, but not limited to, collections of Reassessments upon the secured tax rolls, collections of delinquent Reassessments and penalties on such delinquent Reassessments, through foreclosure proceedings and the prepayment of Reassessments or portions thereof, will be immediately transmitted directly to the Trustee, without deduction, to be deposited into the funds and accounts specified below. To that end, the following will apply:
i) The Reassessments, as set forth on the List of Unpaid Reassessments on file with the Finance Director, together with the interest on the Reassessments, will be payable in annual series corresponding in number to the number of serial maturities of the Reassessment Bonds issued.
An annual proportion of each Reassessment will be payable in each year preceding the date of maturity of each of the several series of Reassessment Bonds issued sufficient to pay the Reassessment Bonds when due and such proportion of each Reassessment coming due in any year, together with the annual interest thereon, will be payable in the same manner and at the same time and in the same installments as the general taxes on real property are payable, and become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interests after delinquency as do the general taxes on real property.
All sums received from the collection of the Reassessments and of the interest and penalties on such Reassessments will be placed in the Redemption Fund. In addition, all sums received by the City with respect to the assessments levied in connection with the Reassessment Bonds, including any penalties and delinquencies, will be placed in the Redemption Fund. Any prepayments of Reassessments will be placed in the Prepayment Account established under and administered in accordance with the Indenture. ii) The Finance Director will, before the final date on which the Auditor will accept the transmission of the Reassessments for the parcels within the Reassessment District for 26 1262
inclusion on the next tax roll, prepare or cause to be prepared, and will transmit to the Auditor, such data as the Auditor requires to include the installments of the Reassessments on the next secured tax roll of the County. The Finance Director is authorized to employ consultants to assist in computing the installments of the Reassessments under the Indenture and in reconciling Reassessments billed to amounts received as provided in paragraph ( iii) below. iii) The Reassessments will be payable and be collected in the same manner and at the same time and in the same installments as the general taxes on real property are payable, and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property. In addition to any amounts authorized pursuant to the Bond Law to be included with the annual amounts of installments as aforesaid, the City, pursuant to section 8682. 1 of the Bond Law, may cause to be entered on the assessment roll on which taxes will next become due, opposite each lot or parcel of land within the Reassessment District in the manner set forth in said section 8682, each IoYs pro rata share of the estimated annual expenses of the City in connection with the administrative duties thereof for the Reassessment Bonds, including, but not limited to, the costs of registration, authentication, transfer and compliance with the covenants of the Indenture, which amounts will be used to defray the costs of the City in complying with the provisions of the Indenture. Delinquent Reassessments will be subject to foreclosure as described below.
Commence Foreclosure Proceedings. The City covenants with and for the benefit of the Owners of the Reassessment Bonds that it will order, and cause to be commenced, and thereafter diligently prosecute an action in the superior court to foreclose the lien of any Reassessment or installment thereof which has been billed, but has not been paid; provided however, that the City' s obligation to pursue foreclosure will be at the option of the City so long as ( i) the County' s Teeter Plan is in effect with respect to the delinquent parcel meeting the conditions below, and ( ii) there is no then-outstanding draw on the Reassessment Reserve Fund. In the event that either of these conditions is not met, the City will be obligated to pursue foreclosure as follows. The Finance Director will notify the City Attorney of any such delinquency of which the Finance Director is aware, and the City Attorney will commence, or cause to be commenced, such foreclosure proceedings, including collection actions preparatory to the filing of any complaint. The City Attorney is authorized to employ counsel to conduct any such foreclosure proceedings.
On or about January 30 and June 30 of each Fiscal Year, the Finance Director will compare the amount of Reassessments installments theretofore levied in the Reassessment District to the amount of Reassessments installments theretofore received by the City, and:
i) Individual Delinquencies. If the Finance Director determines that any single parcel is delinquent in the payment of Reassessment installments in the aggregate amount of$ 3, 000 or more, then the Finance Director will send or cause to be sent a notice of delinquency ( and a demand for immediate payment thereofl to the property owner within 60 days of such determination, and ( if the delinquency remains uncured) foreclosure proceedings will be commenced by the City within 120 days of such determination.
ii) Aggregate Delinquencies. If the Finance Director determines that ( i) the total amount of delinquent Reassessment for the prior Fiscal Year for the entire Reassessment District ( including the total of delinquencies under paragraph ( i) above), exceeds 5% of the total Reassessment installments due and payable for the prior Fiscal 27 1263
Year, the City will notify or cause to be notified property owners who are then delinquent in the payment of Reassessments (and demand immediate payment of the delinquency) within 60 days of such determination, and will commence foreclosure proceedings within 120 days of such determination against each parcel of land in the Reassessment District with a Reassessment delinquency.
Refunding Reassessment Bonds
The City covenants in the Indenture that it will not encumber, pledge or place any charge or lien upon any of the Reassessments or other amounts pledged to the Reassessment Bonds superior to or on parity with the pledge and lien herein created for the benefit of the Reassessment Bonds, except that the City may issue bonds to refund all or part of the Reassessment Bonds and/ or the 2015 Parity Reassessment Bonds.
THE DISTRICTS IN THE AGGREGATE
Introduction
This section presents certain information describing the CFD and the Reassessment District ( each a " District") on a combined basis for informational purposes. However, the Bonds are secured by two distinct revenue streams, debt service on the CFD Bonds and debt service on the Reassessment Bonds. See "SECURITY FOR THE BONDS." Within the combined Districts, there are a total of 2, 096 parcels. Of those parcels, 1, 865 are subject to the lien of the CFD Bonds and the lien of the Reassessment Bonds; 227 are subject only to the lien of the CFD Bonds; and four are subject only to the lien of the Reassessment Bonds.
No Cross- Collateralization Between Districts. The Special Taxes are available only to pay debt service on the CFD Bonds, and may not be used to make up any shortfall in the funds available to pay debt service on the Reassessment Bonds. Similarly, the Reassessments are available only to pay debt service on the Reassessment Bonds, and may not be used to make up any shortfall in the funds available to pay debt service on the CFD Bonds. See " SECURITY FOR THE CFD BONDS" and " SECURITY FOR THE REASSESSMENT BONDS."
Separate Methods for the Calculation, Levy and Collection of Special Taxes and Reassessments. Moreover, the parcels in each District are taxed and/ or assessed according to that District' s specific Rate and Method or the Reassessment Act, as applicable.
Assessed Value- to- Debt Ratios. Special Taxes and Reassessments, as applicable, are levied against individual parcels within each District and any such parcel may have an assessed value- to- debt burden less than the overall assessed value- to- debt burden for such District as to all parcels within such District, or less than the assessed value- to- debt burden of the two Districts in the aggregate.
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Varying Maturity Dates of the Acquired Obligations
The final maturities of the Acquired Obligations differ; the Reassessment Bonds mature in 2023 while the CFD Bonds mature in 2035. Consequently, the source of security for debt service on the Bonds will consist only of the CFD Bonds after September 2, 2033. See " THE BONDS — Estimated Debt Service Schedules: The Bonds, the CFD Bonds and the Reassessment Bonds" for the full debt service schedule for each Acquired Obligation.
For a description of the debt service coverage ratio for each Acquired Obligation, see THE BONDS— Debt Service Coverage on the CFD Bonds and the Reassessment Bonds." The table below summarizes the maturity dates of the Acquired Obligations and the principal amount of each Acquired Obligation.
TABLE 6
LATHROP FINANCING AUTHORITY
CFD 2003- 1 AND REASSESSMENT DISTRICT 2023- 1
Summary of the Acquired Obligations'
District Maturity Date Principal Amount*
CFD 2003- 1 9/ 2/ 2035 4, 695, 000
Reassessment District No. 2023- 1 9/ 2/ 2033 7, 040, 000 Total 11, 735, 000
Preliminary, subject to change.
Mossdale Village
The CFD and the Reassessment District are within Mossdale Village, an approximately 1, 161- acre master- planned residential community with approximately 2, 375 residential units, an associated village center, schools, commercial and service commercial uses and parks and open space located west of I- 5 and east of the San Joaquin River. Mossdale Village contains over one- third of the households in the City.
Development of properties within Mossdale Village commenced in the mid-2000's and is substantially complete.
The CFD and the Reassessment District encompass the bulk of taxable property within Mossdale Village. See " THE CFD" and " THE REASSESSMENT DISTRICT" for specific information concerning the properties subject to the Special Taxes and/ or the Reassessments and the status of development.
See also Appendix B — " GENERAL INFORMATION ABOUT THE CITY OF LATHROP AND THE COUNTY OF SAN JOAQUIN."
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Summary Information on Parcels Within Each District
The table below shows a comparison between the CFD and the Reassessment District with regard to development status, the number of parcels and acres, assessed values, and share of the CFD Bonds and Reassessment Bonds, based on the City' s compilation of Fiscal Year 2022- 23 County Assessor' s data and the burden of the CFD Bonds and Reassessment Bonds.
For purposes of the assessed value-to-burden tables, "developed property" represents parcels with assessed valuations for both land and improvements. There is some commercial property in the process of developing that has improvement value for parking lot improvements, per of the July 2022 secured roll, but no structure in place. Additional information on property ownership, current land uses, assessed values and assessed value- to- burden ratios for each of the Districts follows in subsequent sections of this Official Statement.
TABLE 7
LATHROP FINANCING AUTHORITY
CFD 2003- 1 AND REASSESSMENT DISTRICT 2023- 1
Summary of Parcels in Each District
Fiscal Year 2022- 23)
FY 2022- 23
FY 2022- 23 Assessed Total CFD Reassessment Total
No. of Total Assessed Land Improvement Assessed Bond Districts Bond Bond % of Total Residential PropeRy Parcels Acres Value' Value' Value' Lien Lien' Lien Bond Lien LowDensity 1, 627 238. 56 $ 177, 536, 083 $ 454, 868, 452 $ 632, 404, 535 $ 3, 622, 893 $ 8, 852, 561 $ 12, 475, 45f 77. 8% Medium Density 427 33. 35 40, 388, 741 100, 371, 177 140, 759, 918 628, 205 1, 577,367 2, 205, 57: 13. 8 High Density 3 14. 17 11, 486, 445 30, 450, 000 41, 936, 445 264, 423 62,538 326,96: 2. 0 OtherProperty 14 29. 95 16, 020, 790 26, 817, 252 42, 838, 042 179, 478 516, 541 696, 01 4. 3 Undeveloped Property w/ Final
Map 2 0. 30 67, 948 67, 948 0. 0
Undeveloped Property
3 33 43. 21 11, 341, 743 1, 145, 101 12, 486, 844 335, 725 335, 72° 2. 1 Total 2, 106 359. 54 5256, 841, 750 E613, 657, 982 E870, 493, 732 E4, 695, 000 E11, 344, 733 516, 039, 73; 700. 0% 1) Includes valuations of land and structure. Per San Joaquin Counry Assessor' s secured roll data for Fiscal Year 2022/ 23, with a January 1 valuation date. Assessed value does not reflect any changes made to valuation after July 2022 as a result of assessment appeal, correction or any other changes. 2) Includes the principal amounts for Reassessment District No. 2023- 1 and the unbilled principal amounts after the Fiscal Year 2022/ 23 reassessment levy for Reassessment District 2015- 1.
3) Includes three residential propeRies in CFD 2003- 1 classified as" Undeveloped PropeRy" because they were built in the 1970s.
Source: NBS Govemment Finance Group
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Assessed Property Values and Assessed Value- to-Burden Ratios on an Aggregate Basis Assessed Value. 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 bill 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 percent 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 that remain in the same ownership, the county tax roll does not reflect values uniformly proportional to actual market values.
No assurance can be given that should a parcel with delinquent installments be foreclosed and sold for the amount of the delinquency, that any bid will be received for such property, or if a bid is received that such bid will be sufficient to pay such delinquent installments.
No Appraisal. The Authority has not obtained an appraisal to estimate the current market value of the parcels within the Districts. Therefore, all estimates of value used in this Official Statement are based solely on the fiscal year 2022- 23 assessed values provided by the County Assessor. The current market value of the parcels within the Districts may be less than the County Assessor' s values shown in this Official Statement.
Assessed Va/ ue- to- Burden Ratios. The following table sets forth the estimated assessed value-to-burden ratios for each District, and in the aggregate, based upon fiscal year 2022- 23 assessed values and the principal amounts of the CFD Bonds and the Reassessment Bonds.
Outstanding delinquencies are not reflected in the assessed value- to- burden ratios below; see Table 13 for delinquency rates on Taxable Property in the CFD and Table 17 for delinquency rates with respect to the Prior Reassessments. 32 1268
TABLE 8
LATHROP FINANCING AUTHORITY
CFD 2003- 1 AND REASSESSMENT DISTRICT 2013- 1
Assessed Value-to-Burden Ratios
RAD No. 2023- 1
and RAD No. RAD& CFD of
Number of Total Assessed CFD Bond 2015- 1 Bond Combined Combined Value- to-Lien Parcels Value> Lien 2 Lien 3 Bond Lien Lien 20: 1 and Above 2, 081 867, 071, 048 $ 4, 695, 000 $ 11, 170, 198 15, 865, 198 98. 9% 5: 1 to 20: 1 2 256, 438 0 23, 232 23, 232 0. 1
Below 5: 1 2 226, 503 0 73, 578 73, 578 0. 5
n/ a
4 16 2, 939, 743 0 0 0 0. 0
Public Agency Property 5 0 0 77, 724 77, 724 0. 5
Total 2, 106 $ 870, 493, 732 $ 4,695, 000 $ 11, 344, 733 16, 039, 733 100. 0% 1) Includes valuations of land and structure. Per San Joaquin County Assessor's secured roll data for Fiscal Year 2022/ 23, with a January 1, 2022 valuation date. Assessed value does not reflect any changes made to valuation after July 2022 as a result of assessment appeal, correction or any other changes.
2) CFD bond lien allocation is based on the apportionment of the Fiscal Year 2022- 23 CFD tax levy. 3) Includes the lien of Reassessment District 2013- 1 and Reassessment District 2015- 1. 4) Includes 16 taxable Undeveloped Properties, per the RMA, in CFD 2003- 1 that were not levied in Fiscal Year 2022- 23.
Sources: San Joaquin County Auditor' s O ce, City of Lathrop Building Department; NBS Government Finance Group.
Major Land Owners
The top property owner responsible for the greatest share of the combined Special Tax lien and Reassessment lien represents approximately 1. 84% of the combined lien, and the top ten property owners are responsible, in aggregate, for approximately 7. 57% of the combined Special Tax and Reassessment Lien. None of the top ten lienholders are currently delinquent in a payment of Special Taxes or Prior Reassessments.
The following table lists the top ten lienholders with respect to Taxable Property in the CFD and all property subject to the Reassessment lien in the Reassessment District for fiscal year 2022- 23, based on the projected Special Tax levy, the lien of the Reassessments and fiscal year 2022- 23 assessed values.
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TABLE 9A
LATHROP FINANCING AUTHORITY
CFD 2003- 1 AND REASSESSMENT DISTRICT 2023- 1
Top Ten Bond Lienholders
Fiscal Year 2022- 23)
Percent of Percent
Total CFD 2003- Percent of of Total
Number of Assessed CFD 2003- 1 1 Bond RAD Bond RAD Bond Combined Bond Property Owner Parcels Value' Bond Lien Lien Lien' Lien Bond Lien Lien WATT MCKEE LLC 15 $ 10, 558, 066 0 0. 0% 295, 211 2. 6% 295, 211 1. 8% TARGET CORP 1 18, 101, 166 0 0. 0% 190, 535 1. 7% 190, 535 1. 2% TOWNE CENTRE LATHROP INC 2 35, 306, 445 110, 302 2. 3% 62, 538 0. 6% 172, 841 1. 1% MOSSDALE LANDING OWNER LLC 1 6, 630, 000 154, 121 3. 3% 0 0. 0% 154, 121 1. 0% CHEVRON USA INC 1 3, 000, 000 32, 805 0. 7% 55, 539 0. 5% 88, 344 0. 6% LATHROP CITY OF 5 0 0 0. 0% 77, 724 0. 7% 77, 724 0. 5% DARTANO FARMS INC 1 2, 730, 000 23, 492 0. 5% 39, 746 0. 4% 63, 238 0. 4% SANGHA, JASS K 5 630, 807 0 0. 0% 60, 811 0. 5% 60, 811 0. 4% LATHROP CHRISTIAN CENTER 1 1, 450, 483 39, 335 0. 8% 18, 736 0. 2% 58,070 0. 4% ALBERICO NEIL R TR 7 2, 262, 288 13, 321 0. 3% 39, 259 0. 3% 52, 579 0. 3% AllOtherOwners 2, 067 789, 824, 477 4, 321, 624 92. 0% $ 0, 504, 633 92. 6% 14, 826, 257 92. 4% TOTAL 2, 106 $ 870, 493, 732 54, 695, 000 100. 0% a17, 344, 733 100. 0% 516, 039, 733 100. 0% 1) Includes valuations of land and structure. Per San Joaquin County Assessor' s secured roll data for Fiscal Year 2022/ 23, with a January 1, 2022 valuation date. Assessed value does not reflect any changes made to valuation after July 2022 as a result of assessment appeal, correction or any other changes.
2) Includes the lien of Reassessment District 2013- 1 and Reassessment District 2015- 1.
Sources: San Joaquin County Auditor' s Office, NBS Government Finance Group. 34 1270
TABLE 9B
LATHROP FINANCING AUTHORITY
CFD 2003- 1
Top Ten CFD Bonds Lienholders
Fiscal Year 2022- 23)
Property Owner Number of Total Assessed CFD 2003- 1 Percent of CFD Parcels Value' Bond Lien 2003- 1 Bond Lien
MOSSDALE LANDING OWNER LLC 1 6, 630, 000 154, 121 3. 3% TOWNE CENTRE LATHROP INC 2 35, 306, 445 110, 302 2. 3%
LATHROP CHRISTIAN CENTER 1 1, 450, 483 39, 335 0. 8%
MANTHEY ROAD INVESTMENTS LLC 1 1, 200, 000 34, 204 0. 7% CHEVRON USA INC 1 3, 000, 000 32, 805 0. 7%
DARTANO FARMS INC 1 2, 730, 000 23, 492 0. 5%
HENSLEY, TIMOTHY D& OLGA M 1 1, 225, 019 19, 045 0. 4%
KELLY, WAYNE M& SANDRA L TR 1 2, 288, 140 17, 351 0. 4% ALBERICO NEIL R TR 7 2, 262, 288 13, 321 0. 3%
VALDEZ, ABELINO C TR ETAL 1 2, 363, 495 13, 246 0. 3%
AllOtherOwners 2, 065 774, 741, 165 4, 237, 778 90. 3%
Totals 2, 082 833, 197, 035 54, 695, 000 100. 0%
1) Includes valuations of land and structure. Per San Joaquin County Assessor' s secured roll data for Fiscal Year 2022/ 23, with a January 1, 2022 valuation date. Assessed value does not reflect any changes made to valuation after July 2022 as a result of assessment appeal, correction or any other changes.
Sources: San Joaquin County Auditor's Office, NBS Government Finance Group.
TABLE 9C
LATHROP FINANCING AUTHORITY
RAD 2023- 1 AND 2015- 1
Top Ten Reassessment District Bonds Lienholders
Fiscal Year 2022- 23)
Property Owner Number of Total Assessed RAD Bond Lien 2 Percent of RAD Parcels Value' Bond Lien
WATT MCKEE LLC 15 10, 558, 066 295, 211 2. 6%
TARGET CORP 1 18, 101, 166 190, 535 1. 7%
LATHROP CITY OF 5 77, 724 0. 7%
TOWNE CENTRE LATHROP INC 1 13, 150, 054 62, 538 0. 6%
SANGHA, JASS K 1 226, 503 60, 811 0. 5%
CHEVRON USA INC 1 3, 000, 000 55, 539 0. 5%
DARTANO FARMS INC 1 2, 730, 000 39, 746 0. 4%
ALBERICO NEIL R TR 7 2, 262, 288 39, 259 0. 3%
KELLY, WAYNE M& SANDRA L TR 1 2, 288, 140 28, 365 0. 3% ALBERICO, GERALD L& GUADALUPE L 5 1, 340, 528 24, 012 0. 2% All Other Owners 1, 842 708, 473, 530 10, 470, 991 92. 3% Totals 1, 880 5762, 130, 275 11, 344, 733 100. 0%
1) Inciudes valuations of land and structure. Per San Joaquin County Assessor' s secured roll data for Fiscal Year 2022/ 23, with a January 1, 2022 valuation date. Assessed value does not reflect any changes made to valuation after July 2022 as a result of assessment appeal, correctin or any other changes.
2) Includes the lien of Reassessment District 2023- 1 and Reassessment District 2015- 1.
Sources: San Joaquin County Auditor' s O ce, NBS Government Finance Group.
As noted above, the Acquired Obligations mature at different times. After the September 2, 2033 final maturity of the Reassessment Bonds, the Bonds will only be secured by payments on the CFD Bonds. See "— Varying Maturity Dates of the Acquired Obligations" above and " RISK FACTORS" below.
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Delinquencies
Delinquency Rates. As of 2023, the delinquency rate in the payment of Special Taxes within the CFD was for fiscal year 2022-23. As of 2023, the delinquency rate in the payment of Reassessments for the 2013 Reassessment Bonds was See " THE CFD" and " THE REASSESSMENT DISTRICT" below.
Teeter Plan. The Board of Supervisors of the County has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds ( the " Teeter Plan"), as provided for in Section 4701 et seq. of the California Revenue and Taxation Code.
Under the Teeter Plan, each taxing entity receives 100% of the taxes and assessments levied, without regard to delinquencies. The CFD and the Reassessment District are currently covered under the County' s Teeter Plan. The Board of Supervisors may choose to discontinue the Teeter Plan in its entirety or to exclude or to exclude or limit the coverage for community facilities districts and assessment districts or for the CFD or Reassessment District specifically.
The Board of Supervisors has previously removed specific assessment districts from its Teeter Plan coverage. The County has not taken action to discontinue the Teeter Plan entirely or to remove either of the Districts from the Teeter Plan; however, there can be no assurance that the County will not choose fo discontinue the Teeter Plan in the future, or choose to remove all or a portion of the CFD or the Reassessment District from its Teeter Plan coverage. 36 1272
Direct and Overlapping Governmental Obligations
Efifective Tax Rates. Property in the CFD and the Reassessment District is subject to annual charges and assessments ( which are billed to property owners on a semi- annual basis).
The following table sets forth the total effective tax rate for a typical parcel of Developed Property in the CFD or the Reassessment District based on fiscal year 2022- 23 tax rates.
TABLE 10
LATHROP FINANCE AUTHORITY
CFD NO. 2003- 1 AND REASSESSMENT DISTRICT 2013- 1
Effective Property Tax Rate on Typical Parcel
Fiscal Year 2022- 23
Percent of
Total AV
Assessed Valuation and Property Taxes
Average Assessed Value' 400, 665
Homeowner' s Exemption 7. 000
Net Assessed Value 393, 665
Ad Valorem Property Taxes
General Purpose 1. 0000% 3, 936. 65
Ad Valorem Tax Overrides
Manteca USD 2004 Measure M Bond 0. 0229% 90. 15
Manteca USD 2014 Measure G Bond 0. 0322% 126. 76
Manteca USD 2020 Measure A Bond 0.0447% 175. 97
SJ Delta Coll 2004 Measure L Bond 0. 0144% 56. 69
Total Ad Valorem Property Taxes 0. 1142% 4, 386. 22
Assessments, Special Taxes and Parcel Charges
South Delta Water Agency 2. 00
Lathrop Manteca Fire 111. 16
Water Zone 2
2. 40
SJC Mosquito Abatement 1. 54
SJC Mosquito& Vector Control Benefit District 9• 28
CSA No. 53- Hazardous Waste 4. 00
Reclamation District No. 17 70. 00
Lathrop Mossdale Village LMD 301. 70
RAD No. 2013- 1 2> 601. 64
RAD No. 2015- 1 2> 210. 80
Lathrop CFD 2003- 1 ( MR) 261. 54
Lathrop CFD 2004-01 ( MR) 1. 234. 70
Total Assessments, Special Taxes and Parcel Charges 2, 810. 76 Total Projected Property Taxes 7, 196. 98
Projected Total Effective Tax Rate( as% of Assessed Value) 1. 83% 1) Average Fiscal Year 2022- 23 assessed value of the 701 Low- Density single- family residential properties in both the CFD and RAD 2013- 1, with the most- common RAD 2013- 1 assessment. 2) Most common Fiscal Year 2022- 23 assessment on Low- Density single-family residential properties in both the CFD and RAD 2013- 1.
Sources: NBS Government Finance Group.
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Numerous agencies providing public services overlap the Districts' boundaries. Many of these agencies may have outstanding certificates of participation and bonds in the form of general obligation, special assessment, special tax, redevelopment or lease revenue bonds. In general, certificates of participation and redevelopment and lease revenue bonds do not represent obligations for which a property owner is obligated to make a direct payment.
However, special tax, assessment and general obligation bonds represent a direct obligation of the subject property.
See " THE CFD" and " THE REASSESSMENT DISTRICT" below for information regarding overlapping liens affecting the property in the CFD and the Reassessment District.
THE CFD
Location and Description of the CFD
Community Facilities District No. 2003- 1 ( Mossdale Village) ( the " CFD") was established in 2003 by a vote of more than two-thirds of the qualified electors and authorized to issue special tax bonds in a principal amount not to exceed $ 12, 000,000. Other than the CFD Bonds, the City has no plans to issue debt payable from the Special Taxes. The CFD is located in Lathrop, California, and originally included five Parcels, under four separate ownerships, subject to Special Taxes. The CFD is located immediately to the west of Interstate 5 and the interchange of Interstate 5 and Louise Avenue. See also " THE DISTRICTS IN THE AGGREGATE— Mossdale Village."
The CFD currently consists of 2, 082 parcels, which has primarily been developed as residential property. Within the CFD as of March 31, 2023, there were 2, 057 developed residential parcels, seven developed non- residential parcels, two undeveloped parcels with a final map, and 16 additional undeveloped parcels. Development in the CFD is ongoing.
The Rate and Method for the CFD is attached as APPENDIX C.
For background and demographic information regarding the City and the County, see APPENDIX B.
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Land Use Distribution
The following table shows the distribution of land uses of Taxable Property within the CFD based on the 2022- 23 tax levy.
TABLE 11
CITY OF LATHROP
CFD 2003- 1
Distribution of Land Uses
Taxable Property)
2022- 23 2022- 23
Number of Maximum Maximum % of Maximum
Number of Residential Special Tax Special Tax Special Tax Land Use Category Parcels Units'> Total Acres'> Rate Revenues Revenues Low Density Residential Property 1, 627 1, 627 238. 56 $ 799. 81 per unit $ 1, 301, 291 70. 0% Medium Density Residential Property 427 427 33. 35 528. 45 per unit 225, 648 12. 1 High Density Residential Property 3 350 14. 17 271. 37 per unit 94, 978 5. 1 Other Property 7 0 11. 54 5, 584. 44 per acre 64, 467 3. 5 Undeveloped Property w/ Final Map 2 0 0. 30 5, 584. 44 per acre 1, 681 0. 1 Undeveloped Property 16 0 30. 45 5, 584. 44 per acre 170, 030 9. 2 Total 2, 082 2,404 328. 37 1, 858, 095 100. 0%
1) Per San Joaquin County Assessor's secured roll data for Fiscal Year 2022/23. 2) Per Rate and Method of Apportionment of Special Taxes for CFD No. 2003- 1.
SourCe: NBS Govemment Finance Group.
Assessed Property Values
No Appraisal of Property in the CFD. The City has not commissioned an appraisal of the taxable property in the CFD in connection with the issuance of the Bonds. Therefore, the valuation of the taxable property in the CFD will be estimated for the purposes of the MelloRoos Act, and set forth in this Official Statement, based on the County Assessor' s values. The current market value of the parcels within the CFD may be less than the County Assessor' s values shown in this Official Statement.
Assessed Valuation. The valuation of real property in the City is established by the County Assessor. Assessed valuations are reported at 100% of the full value of the property, as defined in Article XIIIA of the California Constitution. Article XIIIA of the California Constitution defines " full cash value" as the appraised value as of March 1, 1975, plus adjustments not to exceed 2% per year to reflect inflation, and requires assessment of " full cash value" upon change of ownership or new construction.
Accordingly, the gross assessed valuation presented in this Official Statement may not necessarily be representative of the actual market value of certain property in the CFD.
See also " THE DISTRICTS IN THE AGGREGATE — Assessed Property Values and Assessed Value-to-Burden Ratios."
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Historical Assessed Va/ ues. The table below shows a six-year history of assessed valuations of the Taxable Property in the CFD.
TABLE 12
CITY OF LATHROP
CFD 2003- 1
Assessed Valuation History
Fiscal Years 2018-19 through 2022-23
Land Improvement Total
Fiscal Year Assessed Value' Assessed Value' Assessed Value'> 2022- 23 238, 590, 877 594, 606, 158 833, 197, 035
2021- 22 225, 665, 439 539, 495, 794 765, 161, 233
2020- 21 219, 938, 763 509, 261, 049 729, 199, 812
2019- 20 209, 161, 250 488, 411, 759 697,573,009
2018- 19 198, 466, 181 464, 437, 566 662, 903, 747
1) Includes valuations of land and structure. Per San Joaquin County Assessor's secured roll data for Fiscal Year 2022I23, with a January 1 valuation date. Assessed value does not reflect any changes made to valuation after July 2022 as a result of assessment appeal, correction or any other changes.
Sources: San Joaquin County Auditor's Office; NBS Government Finance Group.
Assessed Value-to-Burden Ratio
General Information Regarding Assessed Value- to-Burden Ratios. In comparing the aggregate assessed value of the real property within the CFD and the principal amount of the CFD Bonds, it should be noted that an individual parcel may only be foreclosed upon to pay delinquent installments of the Special Taxes attributable to that parcel. The principal amount of the CFD Bonds is not allocated pro- rata among the parcels within the CFD; rather, the total Special Taxes have been allocated among the parcels within the CFD according to the Rate and Method. The " assessed value-to-burden ratio" measures the burden of Special Taxes borne by each property in the CFD relative to the burden borne by other properties in the CFD.
The value-to- burden ratio on bonds secured by special taxes will generally vary over the life of those bonds as a result of changes in the value of the property that is security for the special taxes and the principal amount of the bonds.
Economic and other factors beyond the property owners' control, such as economic recession, deflation of land values, financial difficulty or bankruptcy by one or more property owners, or the complete or partial destruction of Taxable Property caused by, among other possible events, earthquake, flood, fire or other natural disaster, could cause a reduction in the assessed value within the CFD. See "RISK FACTORS."
See "- Direct and Overlapping Governmental Obligations" below for more information on the aggregate value-to-burden ratios of Taxable Property in the CFD, and " THE DISTRICTS IN THE AGGREGATE — Assessed Property Values and Assessed Value- to-Burden Ratios" for more information on the aggregate value-to-burden ratios of Taxable Property in the CFD and property subject to the lien of the Reassessments.
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Delinquencies
Lery and Collection History. The following table is a summary of Special Tax levies, collections and delinquency rates on Taxable Property in the CFD for the last five fiscal years.
TABLE 13
CITY OF LATHROP
CFD 2003- 1
Historical Delinquency Information
As of June 30 of each Fiscal Year As of January 18. 2023 Total No. of No. of
Fiscal Special Tax Parcels Amount Amount Delinquent a Parcels Amount Year Levv Assessed Collected Delinauent Parcels Delinauent Delinauent Delinauent Delinauent 2021- 22 $ 553, 038 2, 063 $ 550, 308 2, 729 14 0. 49% 9 1, 850 0. 33% 2020- 21 555, 941 2, 060 554, 769 1, 172 6 0. 21% 1 282 0. 05% 2019- 20 555, 542 2, 060 550, 902 4, 640 23 0. 84% 2 281 0. 05% 2018- 19 554, 751 2, 060 551, 380 3, 371 14 0. 61% 1 281 0. 05% 2017- 18 560, 392 2, 061 556, 348 6, 770 32 1. 21% 1 141 0. 03% Sources: Per San Joaquin County Tax Collector and NBS Govemment Finance Group.
Teeter Plan, The CFD is currently covered under the County' s Teeter Plan, and the City receives 100% of the special taxes levied, without regard to delinquencies. See " THE DISTRICTS IN THE AGGREGATE— Delinquencies- Teeter Plan." Foreclosure Proceedings. No foreclosure proceedings have been initiated by the City as a result of Special Tax delinquencies in the CFD.
Direct and Overlapping Obligations
Taxes, Charges and Assessments. Property in the CFD is subject to annual charges and assessments ( which are billed to property owners on a semi- annual basis). See Table 10 above for the total effective tax rate for a typical parcel of Developed Property in the CFD based on fiscal year 2022- 23 tax rates.
Overlapping Public Debt. Contained within the boundaries of the CFD are certain overlapping local agencies providing public services and assessing property taxes, assessments, special taxes and other charges on the property in the CFD. Many of these local agencies have outstanding debt.
The current and estimated direct and overlapping obligations affecting the property in the CFD are shown in the following table. The table was prepared by California Municipal Statistics, Inc., and is included for general information purposes only. The City has not reviewed this report for completeness or accuracy and makes no representation in connection therewith. 41 1277
TABLE 14
CITY OF LATHROP
CFD 2003- 1
Direct and Overlapping Bonded Debt
As of March 10, 2023
2022- 23 Local Secured Assessed Valuation: $ 833, 197, 035( Land and Improvements) DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Applicable Debt 3/ 1/ 23 San Joaquin Delta Community College District 0. 771% 1, 354, 151 Manteca Unified School District 4. 013 8,472,771
Manteca Unified School District Community Facilities District No. 2005- 4 86. 645 4, 119, 977 ( City of Lathrop Community Facilities District No. 2003- 1 100. 000 4,480, 000 City of Lathrop Reassessment District No. 2013- 1
97. 108 6, 845, 641
City of Lathrop Reassessment District No. 2015- 1
90. 280 3. 886, 328
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 29, 158, 868
OVERLAPPING GENERAL FUND DEBT:
San Joaquin County Certificates of Participation 0. 834% 458, 460 Manteca Unified School District General Fund Obligations 4. 013 560, 986 City of Lathrop General Fund Obligations 13. 567 329, 675 Lathrop- Manteca Rural Fire Protection District Certificates of Participation 10. 682 372. 814 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT 1, 721, 935 COMBINED TOTAL DEBT 30, 880, 803 2
Ratios to 2022- 23 Assessed Valuation:
Direct Debt($ 4,480, 000).................................................................. 0. 54% Total Direct and Overlapping Tax and Assessment Debt.................. 3. 50% CombinedTotal Debt......................................................................... 3. 71% 1) Excludes Mello- Roos Act bonds to be sold.
2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non- bonded capital lease obligations.
Source: Califomia Municipa/ Statistics.
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Projected Debt Service Coverage
Coverage Provided by Maximum Special Tax ( 0% Delinquency). If the maximum Special Tax were levied on the parcels of Developed Property in the CFD for fiscal year 2022- 23 and there were no Special Tax delinquencies, the resulting Special Tax revenues ( net of Administrative Expenses) would provide_% coverage on maximum annual debt service on the CFD Bonds. See " THE BONDS — Debt Service Coverage on the CFD Bonds and the Reassessment Bonds."
If the maximum Special Tax were levied on all of the Taxable Property in the CFD and there were 5% Special Tax delinquencies, the resulting Special Tax revenues ( net of Administrative Expenses) would provide _% coverage on maximum annual debt service on the CFD Bonds.
Coverage Provided by Maximum Special Tax ( 5% Delinquency). If the maximum Special Tax were levied on the parcels of Developed Property in the CFD for fiscal year 2022- 23 and there were _% Special Tax delinquencies, the resulting Special Tax revenues net of Administrative Expenses) would provide _% coverage on maximum annual debt service on the CFD Bonds.
If the maximum Special Tax were levied on all of the Taxable Property in the CFD and there were % Special Tax delinquencies, the resulting Special Tax revenues ( net of Administrative Expenses) would provide _% coverage on maximum annual debt service on the CFD Bonds.
THE REASSESSMENT DISTRICT
Location and Description of the Reassessment District
Original Assessment District. The City previously established its Mossdale Village Assessment District No. 03- 1 ( the " Original Assessment District"). The Original Assessment District is located in an area between Interstate 5 to the east and the San Joaquin River to the west and north and south of the Louise Avenue interchange with Interstate 5. The Original Assessment District originally included 14 parcels covering 567 total acres and 433.45 net developable acres for assessment purposes.
The City issued two series of bonds on behalf of the Original Assessment District:
14, 050, 000 City of Lathrop Limited Obligation Improvement Bonds Mossdale Village Assessment District No. 03- 1 ( the " AD 03- 1 Series 2003 Bonds"), issued pursuant to a Fiscal Agent Agreement, dated as of October 1, 2003, between the City and U. S. Bank Trust Company, National Association, and $ 8, 255, 000 City of Lathrop Limited Obligation Improvement Bonds Mossdale Village Assessment District No. 03- 1 ( the " AD 03- 1 Series 2005 Bonds"), issued pursuant to a Supplemental Fiscal Agent Agreement, dated as of October 1, 2005, between the City and U. S. Bank Trust Company, National Association The Reassessment District. The Reassessment District is a reassessment district established 2023 which replaced a reassessment district established in 2013, which replaced an original assessment district established in 2003.
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The Reassessment District currently contains 1, 877 developed parcels and 3 parcels categorized as vacant on the County records. The land in the Reassessment District is primarily residential. See also " THE DISTRICTS IN THE AGGREGATE— Mossdale Village." Excerpts from the Reassessment Report for the Reassessment District is attached as APPENDIX D.
For background and demographic information regarding the City and the County, see APPENDIX B.
Land Use Distribution
The Reassessment District currently contains 1, 877 parcels. The following table shows the distribution of land uses within the Reassessment District as of March 2023.
TABLE 15
CITY OF LATHROP
REASSESSMENT DISTRICT 2023- 1
Distribution of Land Uses
2022- 23
Number of Reassessment % of Principal
Number of Residential Total Principal and and Interest
Land Use Category Parcels Units' Acres' Interest Revenues 2 Revenues Low Density 1, 534 1, 534 226. 40 742, 618 78. 7%
Medium Density 314 314 24. 43 149, 874 15. 9
High Density 1 62 2. 46 5, 965 0. 6
Other Property 10 0 23. 14 29, 417 3. 1
Undeveloped Property 18 0 15. 12 15, 569 1. 7
Totals 1, 877 1, 910 291. 55 943, 443 100. 0%
1) Per San Joaquin County Assessor's secured roll data for Fiscal Year 2022/ 23. 2) Amounts shown for Reassessment District No. 2013- 1.
Sources: San Joaquin CountyAuditor' s O ce, NBS Government Finance Group.
Assessed Property Values
No Appraisal of Property in the Reassessment District. The City has not commissioned an appraisal of the Reassessment Parcels in the Reassessment District in connection with the issuance of the Bonds. Therefore, the estimated valuation of the Reassessment Parcels in the Reassessment District set forth in this Official Statement are based on the County Assessor' s values. The current market value of the parcels within the Reassessment District may be less than the County Assessor' s values shown in this Official Statement.
Assessed Valuation. The valuation of real property in the County is established by the County Assessor. Assessed valuations are reported at 100% of the full value of the property, as defined in Article XIIIA of the California Constitution. Article XIIIA of the California Constitution defines "full cash value" as the appraised value as of March 1, 1975, plus adjustments not to exceed 2% per year to reflect inflation, and requires assessment of " full cash value" upon change of ownership or new construction.
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Accordingly, the gross assessed valuation presented in this Official Statement may not necessarily be representative of the actual market value of certain property in the Reassessment District.
Historica/ Assessed Values. The table below shows a five- year history of assessed valuations of the Reassessment Parcels in the Reassessment District, reflected as to Reassessment District 2013- 1, which the Reassessment District replaces.
TABLE 16
CITY OF LATHROP
REASSESSMENT DISTRICT 2013- 1
Assessed Valuation History
Fiscal Years 2018- 19 through 2022- 23
Land Improvement Total
Assessed Assessed Assessed
Fiscal Year Value' Value' Value'>
2022- 23 219, 137, 674 $ 539, 669, 364 $ 758, 807, 038
2021- 22 207, 286, 390 502, 789, 285 710,075, 675
2020- 21 195, 456, 478 476, 750, 348 672, 206, 826
2019- 20 179, 790, 883 440, 580, 591 620, 371, 474
2018- 19 180, 716, 719 432, 157, 729 612, 874, 448
1) Includes valuations of land and structure. Per San Joaquin County Assessor' s secured roll data for Fiscal Year 2022/ 23, with a January 1 valuation date. Assessed value does not reflect any changes made to valuation after July 2022 as a result of assessment appeal, correction or any other changes.
Source: California Municipa/ Statistics, Inc.
Assessed Value- to-Burden Ratio
General Information Regarding Assessed Value- to-Burden Ratios. The assessed value- to- burden ratio on bonds secured by assessments will generally vary over the life of those bonds as a result of changes in the value of the property that is security for the assessments and the principal amount of the bonds.
In comparing the aggregate assessed value of the real property within the Reassessment District and the principal amount of the Reassessment Bonds, it should be noted that an individual Reassessment Parcel may only be foreclosed upon to pay delinquent installments of the Reassessments attributable to that Reassessment Parcel. The principal amount of the Reassessment Bonds is not allocated pro- rata among the Reassessment Parcels within the Reassessment District; rather, the total Assessments have been allocated among the Reassessment Parcels within the Reassessment District by an assessment engineer.
Economic and other factors beyond the property owners' control, such as economic recession, deflation of land values, financial difficulty or bankruptcy by one or more property owners, or the complete or partial destruction of Reassessment Parcels caused by, among other possible events, earthquake, flood, fire or other natural disaster, could cause a reduction in the assessed value within the Reassessment District. See " RISK FACTORS." 45 1281
See "- Direct and Overlapping Governmental Obligations" below for more information on the aggregate value-to-burden ratio of property subject to the lien of the Reassessments, and THE DISTRICTS IN THE AGGREGATE — Assessed Property Values and Assessed Value- toBurden Ratios" for more information on the aggregate value- to- burden ratio of property subject to the lien of the Reassessments and Taxable Property in the CFD.
Delinquencies
Levy and Collection History. The following table is a summary of the collections and delinquency rates for the Reassessment Parcels, based on the collection of the reassessments of Reassessment District 2013- 1, which the Reassessments refund and replace, for the past five years.
TABLE 17
CITY OF LATHROP
REASSESSMENT DISTRICT 2013- 1
Assessment Collections and Delinquencies
Fiscal Years 2017- 18 through 2021- 22
After 2nd Installment of Taxes Due' As of January 18, 2023 Total Number of Number of
Fiscal Total Parcels Amount Amount Parcels Percent Parcels Amount Percent Year Assessmt Assessed Collected Delinquent Delinquent Delinquent Delinquent Delinquent Delinquent 2021- 22 $ 974, 508 1, 878 968, 972 $ 5, 536 14 0. 57% 9 $ 4, 089 0. 42% 2020- 21 978, 480 1, 878 976, 194 2, 286 6 0. 23% 1 621 0. 06% 2019- 20 973, 565 1, 878 965, 442 8, 123 23 0. 83% 2 613 0. 06% 2018- 19 972, 310 1, 862 965, 689 6, 622 14 0. 68% 1 628 0. 06% 2017- 18 968, 044 1, 862 955, 648 12, 397 31 1. 28% 1 297 0. 03% 1) Per San Joaquin County Tax Collector and NBS.
Source: San Joaquin County Auditor-Controller' s Office; NBS Government Finance Group.
Teeter Plan. The Reassessment District is ( and the Original Assessment was) covered under the County' s Teeter Plan, and the City receives 100% of the assessments levied, without regard to delinquencies. See " THE DISTRICTS IN THE AGGREGATE — Delinquencies - Teeter Plan."
Forec/ osure Proceedings. No foreclosure proceedings have been initiated by the City as a result of the levies of Reassessment District 2013- 1, which the reassessment district was established in 2013 as a refunding replacement of an assessment district established in 2003.
Direct and Overlapping Governmental Obligations
Taxes, Charges and Assessments. Property in the Reassessment District is subject to annual charges and assessments ( which are billed to property owners on a semi- annual basis).
See Table 10 above for the total effective tax rate for a typical parcel in the Reassessment District based on fiscal year 2022- 23 tax rates.
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Overlapping Public Debt. Contained within the boundaries of the Reassessment District are certain overlapping local agencies providing public services and assessing property taxes, assessments, special taxes and other charges on the property in the Reassessment District. Many of these local agencies have outstanding debt.
The current and estimated direct and overlapping obligations affecting the property in the Reassessment District are shown in the following table. The table was prepared by California Municipal Statistics, Inc., and is included for general information purposes only. The City has not reviewed this report for completeness or accuracy and makes no representation in connection therewith.
TABLE 18
CITY OF LATHROP
ASSESSMENT DISTRICT 2023- 1
Direct and Overlapping Bonded Debt
As of March 10, 2023
2022- 23 Local Secured Assessed Valuation: $ 758, 807, 038( Land and Improvements) DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Apqlicable Debt 3/ 1/ 23 San Joaquin Delta Community College District 0. 705°/a 1, 237, 951 Manteca Unified School District 3.669 7, 745, 717
Manteca Unified School District Community Facilities District No. 2005- 4 86. 410 4, 108, 773 City of Lathrop Community Facilities District No. 2003- 1 85. 160 3, 815, 161 City of Lathrop Reassessment District No. 2013- 1 100. 000 7, 049, 493 City of Lathrop Reassessment District No. 2015- 1 98. 936 4, 258. 912 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 28, 216, 007
OVERLAPPING GENERAL FUND DEBT:
San Joaquin County Certificates of Participation 0. 763% 419, 119 Manteca Unified School District General Fund Obligations 3. 669 512, 847 City of Lathrop General Fund Obligations 12. 403 301, 386 Lathrop- Manteca Rural Fire Protection District Certificates of Participation 9. 766 340. 822 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT 1, 574, 174 COMBINED TOTAL DEBT 29, 790, 181 2
Ratios to 2022- 23 Assessed Valuation:
Direct Debt($ 7, 049, 493)............................................................. 0. 93% Total Direct and Overlapping Tax and Assessment Debt............. 3. 72% CombinedTotal Debt.................................................................... 3. 93% 1) Excludes Mello- Roos Act bonds to be sold.
2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non- bonded capital lease obligations.
Source: California Municipal Statistics.
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RISK FACTORS
The purchase of the Bonds described in this Official Statement involves a degree of risk that may not be appropriate for some investors. The following includes a discussion of some of the risks that should be considered before making an investment decision.
Limited Obligation to Pay Debt Service
The Bonds. The Bonds are special obligations of the Authority payable solely from and secured solely by the Revenues and funds pledged therefor in the Indenture, consisting primarily of debt service on the CFD Bonds and the Reassessment Bonds. See " SECURITY FOR THE BONDS."
The CFD Bonds. The City has no obligation to pay principal of or interest on the CFD Bonds if Special Tax collections are delinquent or insufficient, other than from amounts, if any, on deposit in the CFD Reserve Fund established for the CFD Bonds or funds derived from the foreclosure and sale of parcels for Special Tax delinquencies. The City is not obligated to advance funds to pay debt service on the CFD Bonds.
The Reassessment Bonds. The City has no obligation to pay principal of or interest on the Reassessment Bonds if Reassessment collections are delinquent or insufficient, other than from amounts, if any, on deposit in the Reassessment Reserve Fund established for the Reassessment Bonds or funds derived from the foreclosure and sale of parcels for Reassessment delinquencies. The City is not obligated to advance funds to pay debt service on the Reassessment Bonds.
Levy and Collection of the Special Taxes
General. The principal source of payment of principal of and interest on the CFD Bonds is the proceeds of the annual levy and collection of the Special Tax against property within the CFD.
Limitation on Special Tax Rate. The annual levy of the Special Tax on any parcel is limited to the maximum Special Tax rate authorized in the Rate and Method. The levy cannot be made at a higher rate even if the failure to do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other available funds, will not be sufficient to pay debt service on the CFD Bonds.
No Relationship Between Property Value and Special Tax Levy. Because the Special Tax formula set forth in the Rate and Method is not based on property value, the levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular parcels of Taxable Property and the amount of the levy of the Special Tax against those parcels. Thus, there will rarely, if ever, be a uniform relationship between the value of the parcels of Taxable Property and their proportionate share of debt service on the CFD Bonds, and certainly not a direct relationship.
Factors that Could Lead to Special Tax Deficiencies. The following are some of the factors that might cause the levy of the Special Tax on any particular parcel of Taxable Property to vary from the Special Tax that might otherwise be expected:
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Transfers to Governmental Entities. The number of parcels of Taxable Property could be reduced through the acquisition of Taxable Property by a governmental entity ( by exercise of its rights as mortgage guarantor, or for other reasons) and failure of the government to pay the Special Tax based upon a claim of exemption or, in the case of the federal government or an agency thereof, immunity from taxation, thereby resulting in an increased tax burden on the remaining taxed parcels.
Property Tax Delinquencies. Failure of the owners of Taxable Property to pay property taxes ( and, consequently, the Special Tax), or delays in the collection of or inability to collect the Special Tax by tax sale or foreclosure and sale of the delinquent parcels, could result in a deficiency in the collection of Special Taxes. For a summary of Special Tax collections in the Community Facilities District, see " THE CFD — Delinquencies."
Delays Following Delinquencies and Foreclosure Sales. The Indenture provides that the Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described in " SECURITY FOR THE CFD BONDS" and in the Mello- Roos Act, is subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ordinary ad valorem property taxes. Under these procedures, if taxes are unpaid for a period of five years or more, the property is subject to sale by the County.
If sales or foreclosures of property are necessary, there could be a delay in payments to the Authority, as owner of the CFD Bonds, pending such sales or the prosecution of foreclosure proceedings and receipt by the City of the proceeds of sale if the CFD Reserve Fund for the CFD Bonds is depleted. See " SECURITY FOR THE CFD BONDS."
Collection of the Reassessments
General. The principal source of payment of principal of and interest on the Reassessment Bonds is the proceeds of the annual collection of the Reassessments against parcels within the Reassessment District.
Fixed Lien. Reassessment installments billed will be in aggregate amounts equal to debt service on the Reassessment Bonds. Payments of Reassessment installments made by the owners of parcels will be applied on a pro- rata basis to all Reassessment Bonds for which the Reassessment installments are due and could result in a lesser amount being applied to the Reassessment Bonds if the amount paid by the property owners is less than the total Assessment installment. The Reassessment installments cannot be billed or collected at a higher rate even if the failure to do so means that the estimated proceeds of the collection of the Reassessments, together with other available funds, will not be sufficient to pay debt service on the Reassessment Bonds.
No Re/ ationship Between Property Va/ ue and Reassessments. Because the Reassessment amounts contained in the Reassessment Report are not based on property value, the collection of the Reassessments will rarely, if ever, result in a uniform relationship between the value of particular parcels and the amount of the Reassessments against those parcels. Thus, there will rarely, if ever, be a uniform relationship between the value of the 49 1285
parcels and their proportionate share of debt service on the Reassessment Bonds, and certainly not a direct relationship.
Factors that Could Lead to Reassessment Deficiencies. The following are some of the factors that might cause the collection of the Reassessments on any particular parcel to vary from the Reassessments that might otherwise be expected:
Property Tax Delinquencies. Failure of the parcel owners to pay property taxes and, consequently, the Reassessments), or delays in the collection of or inability to collect the Reassessments by tax sale or foreclosure and sale of the delinquent parcels, could result in a deficiency in the collection of Reassessments. For a summary of Assessment collections in the Original Assessment District, see "THE REASSESSMENT DISTRICT— Delinquencies."
Limitations Associated with Foreclosure Sales. The Indenture provides that the Reassessments are to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described in " SECURITY FOR THE REASSESSMENT BONDS," is subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ordinary ad valorem property taxes. Under these procedures, if taxes are unpaid for a period of five years or more, the property is subject to sale by the County.
If sales or foreclosures of property are necessary, there could be a delay in payments to the Authority, as owner of the Reassessment Bonds, pending such sales or the prosecution of foreclosure proceedings and receipt by the City of the proceeds of sale if the Reassessment Reserve Fund for the Reassessment Bonds is depleted. See SECURITY FOR THE REASSESSMENT BONDS."
The California Streets and Highways Code provides that under certain circumstances property may be sold upon foreclosure at a lesser Minimum Price or without a Minimum Price. " Minimum Price" as used in the Streets and Highways Code is the amount equal to the delinquent installments of principal or interest of the Reassessment, together with all interest penalties, costs, fees, charges and other amounts. 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 Reassessment Bonds, or, under certain circumstances, if holders of 75% or more of the outstanding Reassessment Bonds consent to such sale.
Special Taxes and Reassessments Not a Personal Obligation Property Owners are not personally obligated to pay their respective Special Taxes or Reassessments. Rather, the Special Taxes and Reassessments are obligations only against the respective parcels against which they are levied. If, after a default in the payment of the Special Tax or Reassessment and a foreclosure sale, the resulting proceeds are insufficient, taking into account other obligations also constituting a lien against the parcel, the City has no personal recourse against the parcel owner.
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Assessed Valuations
The City has not commissioned an appraisal of the parcels in the CFD or the Reassessment District in connection with the issuance of the Bonds. Therefore, the estimated valuation of the Taxable Property in the CFD and the Reassessment Parcels in the Reassessment District set forth in this Official Statement are based on the County Assessor's Fiscal Year 2022- 23 values. The assessed value is not an indication of what a willing buyer might pay for a property. The assessed value is not evidence of future value because future facts and circumstances may differ significantly from the present.
No assurance can be given that any of the Taxable Property in the CFD or the Reassessment Parcels in the Reassessment District could be sold for the assessed value if that property should become delinquent and subject to foreclosure proceedings.
Property Values
The value of Taxable Property within the CFD and the Reassessment Parcels within the Reassessment District is a critical factor in determining the investment quality of the Bonds. If a parcel owner defaults in the payment of the Special Taxes or the Reassessments, the City' s only remedy is to foreclose on the delinquent property.
The following is a discussion of some potential risk factors that could affect the value of property in the CFD and the Reassessment District.
Natural Disasters. The value of the Taxable Property in the CFD and the Reassessment Parcels in the Reassessment District can be adversely affected by a variety of natural occurrences, particularly those that may affect infrastructure and other public improvements, and private improvements and the continued habitability and enjoyment of such private improvements.
Earthquake Risk. The areas in and surrounding the City, like those in much of California, may be subject to unpredictable seismic activity. According to the Safety Element of the City' s General Plan, known active faults close to the City include the San Andreas, Hayward, Calaveras and Green Valley- Concord faults to the west, the Midland fault zone to the north and the Bear Mountain and Melones fault zones to the east.
Flood Risk, The Districts are located east of San Joaquin River and west of Interstate Highway 5. Because of its location, historically, property within the City was subject to seasonal flooding.
In 1989, improvements to the levee system were completed by Reclamation District No. 17 ( Mossdale Tract) (" RD 17"), which is a political subdivision of the State formed in 1863 and which operates and maintains the levee system, which serves Lathrop and the surrounding area. Those upgrades resulted in the levee system being certified to the 100- year flood status established by Federal Emergency Management Agency (" FEMA"). In 1997 heavy rains caused levee breaks in this system and neighboring levee systems.
In 2006, additional upgrades to the levee system were completed which were subsequently certified by FEMA as removing the City and the Districts from 100- year 51 1287
flood status. However, there can be no assurance that a major weather event would not cause substantial flood damage within the Districts.
Land within the City lies within three Reclamation District Areas: RD 17, RD 2062 Stewart Tract) and RD 2107 ( Southeast Stewart Tract). The State requires the establishment of the 200- Year Urban Level of Protection ( ULOP) by the year 2028 for the RD 17 Areas and 2025 for the RD 2062 Areas; the ULOP requirements are not applicable to the RD 2107 Area. The San Joaquin Area Flood Control Agency ( SJAFCA) has been designated as the Local Flood Management Agency ( LFMA) for the RD 17 Area and the City of Lathrop is the LFMA for the RD 2062 Area. SJAFCA and the City have met all requirements of the ULOP for the incremental " Adequate Progress" required by the State at this point in time.. There have been no delays in issuing permits in the ULOP area of Lathrop triggered by failing to meet State mandates and the City does not currently foresee any future delays. SJAFCA and RD 17 are continuing efforts to meet 200-year flood protection by 2028 as required by State law.
Other Disasters. Other natural disasters could include, without limitation, landslides, wildfires, droughts or tornadoes. One or more natural disasters could occur and could result in damage to improvements of varying seriousness. 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 there could be significant delinquencies in the payment of Special Taxes or Reassessments, and the value of the parcels in the CFD or the Reassessment District may well depreciate or disappear.
Hazardous Substances. One of the most serious risks in terms of the potential reduction in the property values is a claim with regard to a hazardous substance. In general, the owners and operators of property may be required by law to remedy conditions of the parcel relating to releases 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 well- known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner or operator is obligated to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the Taxable Property in the CFD or Reassessment Parcels in the Reassessment District be affected by a hazardous substance, is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.
Although the City is not aware that the owner or operator of any of the Taxable Property in the CFD or Reassessment Parcels in the Reassessment District has such a current liability, it is possible that such liabilities do currently exist. Further, it is possible that liabilities may arise in the future resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but that has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently on the parcel of a substance not presently classified as hazardous but that 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 of handling it. All of 52 1288
these possibilities could significantly affect the property values that would otherwise be realized upon a delinquency.
No information is available as to the existence of any hazardous substances within the CFD or the Reassessment District.
Prolonged Economic Downturn. To the extent that the current economic downturn occurs and is prolonged, property values could reduce or remain flat for a period not known or anticipated. Declines in home values in the CFD and the Reassessment District could also result in property owner unwillingness or inability to pay mortgage payments, as well as ad valorem property taxes and Special Taxes or Reassessments, when due. Under such circumstances, bankruptcies are likely to increase. Bankruptcy by homeowners with delinquent Special Taxes or Reassessments would delay the commencement and completion of foreclosure proceedings.
Other Factors. Other factors that could adversely affect property values in the CFD or the Reassessment District include, among others, relocation of employers out of the area, shortages of water, electricity, natural gas or other utilities, and destruction of property caused by man- made disasters.
Other Possible Claims Upon the Property Values
While the Special Taxes are secured by the Taxable Property in the CFD, and the Reassessments are secured by the Reassessment Parcels, the security only extends to the value of such property that is not subject to priority and parity liens and similar claims.
A table listing of the outstanding governmental obligations affecting the CFD is set forth above under" THE CFD — Direct and Overlapping Governmental Obligations," and a table listing of the outstanding governmental obligations affecting the Reassessment District is set forth above under " THE REASSESSMENT DISTRICT — Direct and Overlapping Governmental Obligations."
In addition, other governmental obligations may be authorized and undertaken or issued in the future, the tax, assessment or charge for which may become an obligation of one or more of the parcels within the CFD or Reassessment District, and may be secured by a lien on parity with the lien of the Special Tax securing the CFD Bonds or the lien of the Reassessments securing the Reassessment Bonds.
In general, the Special Taxes and Reassessments, and all other taxes, assessments and charges also collected on the tax roll, are on parity, that is, are of equal priority. Questions of priority become significant when collection of one or more of the taxes, assessments or charges is sought by some other procedure, such as foreclosure and sale. If proceedings are brought to foreclose a delinquency, the Special Taxes and Reassessments will generally be on parity with the other taxes, assessments and charges, and will share the proceeds of such foreclosure proceedings on a pro- rata basis.
Enforcement of Special Taxes or Reassessments on Governmentally Owned Properties General. The ability of the City to foreclose the lien of delinquent unpaid Special Tax installments or Reassessments may be limited with regard to properties in which the Federal 53 1289
Deposit Insurance Corporation ( the " FDIC"), the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest.
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.
The supremacy clause of the United States Constitution reads as follows: " This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding." This means that, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes within the CFD or to Reassessments within the Reassessment District, but does not pay taxes and assessments levied on the parcel including Special Taxes and Reassessments), 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 Special Taxes or Reassessments, 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 parity with the Special Taxes or Reassessments and preserve the federal governmenYs 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.
Neither the City nor the Authority has 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 subject to the Special Taxes within the CFD or Reassessments within the Reassessment District. No assurance can be given as to the likelihood that the risks described above will materialize while the CFD Bonds or Reassessment Bonds are outstanding.
FDIC. If any financial institution making any loan secured by real property within the CFD or the Reassessment District is taken over by the FDIC, and prior thereto or thereafter the loan ( or loans) goes into default, resulting in ownership of the property by the FDIC, then the ability of the City to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes or Reassessments may be limited.
The FDIC' s policy statement regarding the payment of state and local real property taxes the " Policy Statement") provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property' s value, and that the FDIC is immune from real property taxes assessed on any basis other than property value.
According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution' s affairs, unless abandonment of the FDIC' s interest in the property is appropriate. The FDIC will pay 54 1290
claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes ( including interest) on FDIC- owned property are secured by a valid lien ( in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC' s consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC' s consent.
The Policy Statement states that the FDIC generally will not pay non- ad valorem taxes, including special taxes and assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Mello- Roos Act and a special tax formula, which determines the special tax due each year, are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC' s federal immunity. The Ninth Circuit issued a ruling on August 28, 2001, in which it determined that the FDIC, as a federal agency, is exempt from Mello- Roos special taxes.
The Authority and the City are unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within the CFD, or of Reassessments on a parcel within the Reassessment District, in which the FDIC has or obtains an interest, although prohibiting the lien of the Special Taxes or Reassessments to be foreclosed out at a judicial foreclosure sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome could cause a draw on either the CFD Reserve Fund established for the CFD Bonds or on the Reassessment Reserve Fund established for the Reassessment Bonds and perhaps, ultimately, if enough property were to become owned by the FDIC, a default in payment on the CFD Bonds or Reassessment Bonds, as applicable.
Exemptions Under Rate and Method and the Me/lo-Roos Act. Certain properties are exempt from the Special Tax in accordance with the Rate and Method and the Mello- Roos Act, which provides that properties or entities of the state, federal or local government are exempt from the Special Tax; provided, however, that property within the CFD acquired by a public entity through a negotiated transaction or by gift or devise, which is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax.
In addition, although the Mello- Roos Act provides that if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment, the constitutionality and operation of these provisions of the Act have not been tested, meaning that such property could become exempt from the Special Tax. The Mello- Roos Act further provides that no other properties or entities are exempt from the Special Tax unless the properties or entities are expressly exempted in a resolution of consideration to levy a new special tax or to alter the rate or method of apportionment of an existing special tax.
Depletion of Reserve Funds
CFD Bonds. The City will establish and maintain a reserve fund for the CFD Bonds that may be used to pay principal of and interest on the CFD Bonds if insufficient funds are available 55 1291
from the proceeds of the levy and collection of the Special Taxes against property within the CFD. See " SECURITY FOR THE CFD BONDS— CFD Reserve Fund." If funds in the CFD Reserve Fund for the CFD Bonds are depleted, the funds can be replenished from the proceeds of the levy and collection of the Special Tax that are in excess of the amount required to pay all amounts to be paid to the Authority under the Indenture.
However, no replenishment from the proceeds of a Special Tax levy can occur so long as the proceeds that are collected from the levy of the Special Tax against property within the CFD at the maximum Special Tax rates, together with other available funds, remain insufficient to pay all such amounts. Thus, it is possible that the CFD Reserve Fund for the CFD Bonds will be depleted and not be replenished by the levy of the Special Tax.
Reassessment Bonds. Similarly, the City will establish and maintain a reserve fund for the Reassessment Bonds that may be used to pay principal of and interest on the Reassessment Bonds if insufficient funds are available from the proceeds of the collection of the Reassessments against property within the Reassessment District. See " SECURITY FOR THE REASSESSMENT BONDS— Reserve Fund."
If funds in the Reassessment Reserve Fund for the Reassessment Bonds are depleted, the funds can only be replenished from the collection of past- due Reassessments, or the proceeds of foreclosure actions against delinquent parcels in the Reassessment District. The Reassessments cannot be increased to make up for prior delinquencies. Thus, it is possible that the Reassessment Reserve Fund for the Reassessment Bonds will be depleted and not be replenished.
Bankruptcy Delays
The payment of the Special Taxes or Reassessments, and the ability of the City to foreclose the lien of a delinquent unpaid Special Tax or Reassessment, may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by State laws relating to judicial foreclosure.
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 and other similar laws affecting creditors' rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.
Although bankruptcy proceedings would not cause the Special Taxes or Reassessments to become extinguished, bankruptcy of a property owner or any other person claiming an interest in the property could result in a delay in superior court foreclosure proceedings and could result in the possibility of Special Tax installments or Reassessments not being paid in part or in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the CFD Bonds or Reassessment Bonds, as applicable. 56 1292
Disclosure to Future Purchasers
Property Owners are not personally obligated to pay their respective Reassessments and Special Taxes. Rather, the Reassessments and Special Taxes are obligations only against the respective parcels against which they are levied. If, after a default in the payment of the Reassessments or Special Taxes and a foreclosure sale, the resulting proceeds are insufficient, taking into account other obligations also constituting a lien against the parcel, the Authority has no personal recourse against the parcel owner.
The City has recorded, in the Office of the County Recorder, a notice of the Special Tax lien with respect to the CFD and a Notice of Reassessment with respect to the Reassessment 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 the obligations represented by the Special Taxes or Reassessments in the purchase of a parcel of land or a home in the CFD or Reassessment District, as applicable, or the lending of money secured by property in the CFD or Reassessment District, as applicable.
No Acceleration; Right to Pursue Remedies
Neither the Bonds, the CFD Bonds nor the Reassessment Bonds contain a provision allowing for acceleration if a payment default or other default occurs under the Indenture, the Indenture or the Indenture. See " APPENDIX A— Summary of Principal Legal Documents." So long as the Bonds are in book-entry form, DTC will be the sole Bond Owner and will be entitled to exercise all rights and remedies of Bond Owners under the Bonds and the Indenture.
Loss of Tax Exemption
As discussed under the caption " LEGAL MATTERS — Tax Matters," interest on the Bonds might 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 Authority in violation of its covenants in the Indenture, or of the City in violation of its covenants in the Indenture or in the Indenture.
The Indenture does not contain a special redemption feature triggered by the occurrence of an event of taxability. As a result, if interest on the Bonds were to be includable in gross income for purposes of federal income taxation, the Bonds would continue to remain outstanding until maturity unless earlier redeemed pursuant to optional or mandatory redemption. See " THE BONDS— Redemption."
In addition, Congress has considered in the past, is currently considering 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.
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Voter Initiatives
Under the California Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutional amendments. Since 1978, the voters have exercised this power through the adoption of Proposition 13 and similar measures, including Proposition 218, which was approved in the general election held on November 5, 1996, and Proposition 26, which was approved on November 2, 2010.
Any such initiative may affect the collection of fees, taxes and other types of revenue by local agencies such as the City. Subject to overriding federal constitutional principles, such collection may be materially and adversely affected by voter-approved initiatives, possibly to the extent of creating cash-flow problems in the payment of outstanding obligations such as the CFD Bonds or the Reassessment Bonds.
Proposition 218— Voter Approval for Local Government Taxes— Limitation on Fees, Assessments, and Charges— Initiative Constitutional Amendment, added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges.
On November 2, 2010, California voters approved Proposition 26, entitled the Supermajority Vote to Pass New Taxes and Fees AcY'. Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as fees." Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes ( as defined in Proposition 26) without a two- thirds vote of the Legislature. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes require a majority vote and taxes for specific purposes (" special taxes") require a two- thirds vote.
The Special Taxes and the CFD Bonds were each authorized by not less than a twothirds vote of the landowners within the CFD who constituted the qualified electors at the time of such voted authorization. The Reassessments have been authorized under the summary proceedings provided by law for refinancing of existing assessment districts. The City believes, therefore, that issuance of the CFD Bonds and the Reassessment Bonds does not require the conduct of further proceedings under the Act, Proposition 218 or Proposition 26.
Like their antecedents, Proposition 218 and Proposition 26 are likely to undergo both judicial and legislative scrutiny before the impact on the CFD or the Reassessment District can be determined. Certain provisions of Proposition 218 and Proposition 26 may be examined by the courts for their constitutionality under both State and federal constitutional law, the outcome of which cannot be predicted.
Secondary Market for Bonds
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that any Bonds can be sold for any particular price. Prices of bond issues for which a market is being made will depend upon then- prevailing circumstances. Such prices could be substantially different from the original purchase price. 58 1294
No assurance can be given that the market price for the Bonds will not be affected by the introduction or enactment of any future legislation ( including without limitation amendments to the Internal Revenue Code), or changes in interpretation of the Internal Revenue Code, or any action of the Internal Revenue Service, including but not limited to the publication of proposed or final regulations, the issuance of rulings, the selection of the Bonds for audit examination, or the course or result of any Internal Revenue Service audit or examination of the Bonds or obligations that present similar tax issues as the Bonds.
COVID- 19 Pandemic
The spread of the COVID- 19 coronavirus pandemic, and responses intended to slow its spread, had the potential to result in negative impacts to the homebuilding operations and sales of homes within the Districts. Throughout the pandemic, the City has continued full building operations. The City issued 649 single family dwelling building permits, In Fiscal Year 2019-20. a 71% increase from the prior fiscal year), 879 in Fiscal Year 2020- 21 and 924 in Fiscal Year 2021- 22, respectively. In 2022, the California State Department of Finance ranked Lathrop as the 2" d fastest growing City within California.
The City did not experience a delay in the receipt of property tax revenues attributable to the pandemic.
Cyber Security
The City, and thus the Authority, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. As a recipient and provider of personal, private or other sensitive electronic information, the City is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks. No assurance can be given that the City' s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City or the Districts, 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, the Reassessment Bonds and the CFD Bonds, including without limitation the County tax collector for the levy and collection of Special Taxes and Reassessments, the Trustee, and the dissemination agent. No assurance can be given that the City or these other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.
THE AUTHORITY
The Authority is a joint exercise of powers authority organized and existing under Articles 1 through 4 ( commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California. The Authority was created by a Joint Exercise of Powers Agreement, dated as of April 1, 1994, between the City and the City of Lathrop Industrial Development Authority, which are the sole members of the Authority.
The Authority was created for the purpose, among others, of issuing securities and borrowing the necessary funds to pay the costs of financing, refinancing, acquiring, constructing, replacing, establishing, improving, maintaining, equipping and operating buildings, structures, improvements or real or personal property for the benefit of the City. 59 1295
The Authority is administered by a five member Board of Directors who are the sitting members of the City Council of the City. The Mayor of the City is the President of the Authority.
The City Manager is Executive Director of the Authority. The City's Finance Director is the Director of Finance of the Authority and the City Clerk is the Secretary.
LEGAL MATTERS
Tax Matters
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings.
The opinions set forth in the preceding paragraph are subject to the condition that the Authority and the City comply with all requirements of the Internal Revenue Code of 1986, as amended ( the " Tax Code") that must be satisfied subsequent to the issuance of the Bonds.
The Authority and the City have covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds.
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 straightline interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition ( including sale, redemption, or payment on maturity) of such Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, 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 and corporate alternative minimum taxes.
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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.
In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes.
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.
Absence of Litigation
The Authority and the City will certify at the time the Bonds are issued that no litigation is pending or threatened concerning the validity of the Bonds, the CFD Bonds or the Reassessment Bonds and that no action, suit or proceeding is known by the Authority or the City to be pending that would restrain or enjoin the delivery of the Bonds, the CFD Bonds or the Reassessment Bonds, or contest or affect the validity of the Bonds, the CFD Bonds or the Reassessment Bonds, or any proceedings of the Authority or the City taken with respect to the Bonds, the CFD Bonds or the Reassessment Bonds.
Legal Opinion
All proceedings in connection with the issuance of the Bonds are subject to the approval as to their legality of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. The unqualified opinion of Bond Counsel approving the validity of the Bonds is attached as APPENDIX E.
RATING
It is anticipated that S& P Global Ratings (" S8 P") will assign its municipal bond rating of to the Bonds that are insured, based on the understanding that the Insurer will issue its Bond Insurance Policy in connection with the closing of the Bonds. S& P has also assigned an underlying municipal bond rating of" " to the Bonds. These ratings reflect only the views of S& P, and an explanation of the significance of such ratings may be obtained from S& P.
There is no assurance that any rating will continue for any given period of time for the Bonds or that it will not be revised downward or withdrawn entirely by S& P, if, in the judgment of S& P, circumstances so warrant. The District and the Authority undertake no responsibility to oppose any downward revision or withdrawal of any rating obtained. Any such downward 61 1297
revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.
VERIFICATION OF MATHEMATICAL ACCURACY
Causey, Demgen & Moore Inc., independent accountants, upon delivery of the Bonds, will deliver a report on the mathematical accuracy of certain computations, contained in schedules provided to them which were prepared by the City, relating to the sufficiency of moneys and securities deposited into the Escrow Fund and accounts therein to pay, when due, the principal, whether at maturity or upon prior prepayment, interest and prepayment premium requirements of the Prior CFD Bonds and the Prior Assessment Bonds, and in turn, the Prior Bonds, respectively.
The report of Causey, Demgen & Moore Inc. will include the statement that the scope of its engagement is limited to verifying the mathematical accuracy of the computations contained in such schedules provided to it, and that it has no obligation to update its report because of events occurring, or data or information coming to its attention, subsequent to the date of its report.
MUNICIPAL ADVISOR
The City has retained KNN Public Finance, LLC, Berkeley, California, as its Municipal Advisor ( the " Municipal Advisor") in connection with the authorization and delivery of the Bonds. The Municipal Advisor has assisted in various matters relating to the planning, structuring and sale of the bonds. The Municipal Advisor has not independently verified any of the data contained in the Official Statement or conducted a detailed investigation of the affairs of the City to determine the accuracy or completely of this Official Statement.
PROFESSIONAL SERVICES
In connection with the issuance of the Bonds, all or a portion of the fees payable to Bond Counsel and Disclosure Counsel, the Underwriter, Underwriter' s Counsel, the Municipal Advisor and U. S. Bank Trust Company, National Association, San Francisco, California, as trustee for the Bonds, are contingent upon the issuance and delivery of the bonds.
UNDERWRITING
Stifel, Nicolaus & Company, Incorporated ( the " Underwriter"), has agreed to purchase the Bonds at a purchase price of $ being the aggregate principal amount of the Bonds ($ less an underwriter' s discount of $ and / ess a net original issue discount of$ In addition, the Underwriter will receive compensation in the aggregate amount of$ from the proceeds of the Acquired Obligations.
The Underwriter may change the initial public offering prices of the Bonds from time to time. The agreement under which the Underwriter has agreed to purchase the Bonds provides that the Underwriter will purchase all the Bonds if any are purchased, and that the obligation to 62 1298
make such purchase is subject to certain terms and conditions set forth therein, including, among others, the approval of certain legal matters by counsel.
CONTINUING DISCLOSURE
The City, on behalf of itself and the Authority, will covenant for the benefit of owners of the Bonds to provide certain financial information and operating data relating to the CFD and the Reassessment District ( the " Annual Report") by not later than nine months following the end of the City' s fiscal year ( currently March 31 based on the City' s fiscal year ending June 30), commencing March 31, 2024, with the report for the fiscal year ending June 30, 2023, and to provide notices of the occurrence of certain listed events.
These covenants have been made in order to assist the Underwriter in complying with Securities Exchange Commission Rule 15c2- 12( b)( 5), as amended ( the " Rule"). The specific nature of the information to be contained in the Annual Report or the notices of listed events is set forth in APPENDIX F."
The City and related governmental entities— specifically those entities, like the Authority, for whom City staff is responsible for undertaking compliance with continuing disclosure undertakings — have previously entered into numerous disclosure undertakings under the Rule in connection with the issuance of long- term obligations.
The City and its affiliated entities failed, on a handful of occasions during the past five years, to comply, in all material respects, with these undertakings.
More specifically, during the last five years:
Supplemental annual reports, notices of the rating changes and filings to correct all of the known failures by the City and its affiliated entities to comply with their continuing disclosure undertakings have been made.
The City has appointed NBS Government Finance Group with the responsibility of ensuring timely and complete filings.
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EXECUTION
The execution and delivery of this Official Statement have been duly authorized by the Authority and the City.
LATHROP FINANCING AUTHORITY
By:
Treasurer
CITY OF LATHROP
By:
Finance Director
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APPENDIX A
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
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APPENDIX B
GENERAL INFORMATION REGARDING THE CITY OF LATHROP
AND THE COUNTY OF SAN JOAQUIN
The following information concerning the City of Lathrop ( the " City') and San Joaquin County ( the " County') are included only for the purpose of supplying general information regarding the community. The Bonds are not a debt of the City, the County, the State or any of its political subdivisions, and neither the City, the County, the State nor any of its political subdivisions is liable therefor.
General
The City of Lathrop ( the " City"), which comprises approximately 22 square miles, is located in close proximity to a metro triangle, bounded by the San Francisco Bay Area ( located approximately 70 miles to the west of the City), the City of Stockton ( located nine miles to the north of the City) and the City of Sacramento ( located approximately 60 miles to the north of the City). The City is located in Northern California, at the intersection of Interstate 5, the more important and most used of the two major north- south routes on the Pacific Coast, and State Route 120 in northern California, which runs between the Central Valley through Yosemite National Park, and ends at U. S. Route 6 in Mono County, California.
The City' s population was 31, 331 as of January 1, 2022 according to the State Department of Finance. The table below shows population estimates for the City, the County and the State for the last five years.
CITY OF LATHROP, SAN JOAQUIN COUNTY,
AND STATE OF CALIFORNIA
Population Estimates
As of January 1
Calendar City of San Joaquin State of
Year Lathrop County California
2017 23, 098 744, 843 39, 352, 398
2018 24, 124 752, 958 39, 519, 535
2019 25, 332 764, 373 39, 605, 361
2020 28, 661 779, 233 39, 538, 223
2021 29, 384 782, 372 39, 303, 157
2022 31, 331 784, 298 39, 185, 605
Source: State Department of Finance estimates.
In the 2000s, the City was one of Northern California' s fastest growing and most comprehensive Master Planned Communities, with a projected " build out" population of 70, 000.
From 1990 to 2004, the City experienced continual growth at an average annual rate of 4 to 5 percent. In 2005 and 2006, the City experienced a surge in population growth, growing at a rate of about 13 percent, bringing the population up to 17, 300 at the end of 2007. Since then the population has continued to increase, but at a much lower rate due to the economic downturn that began in 2008.
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In the 2000s, the City experienced a strong demand for housing from residents of the San Francisco Bay Area, who moved to the City to seek housing affordability. From 2005 to 2007, the City experienced a strong surge in residential construction and related economic conditions, as a result of job growth in the Northern San Joaquin Valley and the neighboring TriValley Area of the East Bay region.
In 2022, the California State Department of Finance ranked Lathrop as the 2" d " Fastest Growing City with a Population over 30, 000" at 6. 63%; Number 2 for the " Greatest Percentage Growth for Single- Family Housing Units" at 10. 97%; and, Number 2 for " Greatest Percent Increase for Total housing Growth" at 10. 07%. Over 40,000 vehicles per day commute over the Altamont Pass into the San Francisco Bay Area for employment. The City is also centrally located within a 30- minute commute of Tracy, Manteca, Stockton, Lodi, Lathrop, Livermore and Pleasanton. The City' s economy is currently influenced by that of a more diverse San Francisco Bay Area economy, where many City residents are employed. Historically, the City has been an agricultural- based community, however, the continuing outward growth of the San Francisco Bay Area has pushed industrial, warehousing and logistics growth into the Northern San Joaquin Valley, which is benefiting the City due to its strategic location at the intersection of several major freeways.
Municipal Government
The City was incorporated on July 1, 1989 and operates under a Council- Manager form of government. The City Council of the City consists of five members, including the Mayor, who is elected for a two- year term, and four Council Members, who are elected for four-year terms.
Four Council members are elected at-large and serve alternating four- year terms. The City Council appoints a City Manager who controls and directs City operations and functions and also serves as City Treasurer. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City and for appointing the heads of the various departments.
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Industry and Employment
The City is included in the Stockton Metropolitan Statistical Area (" MSA"), which includes all of San Joaquin County. The unemployment rate in the San Joaquin County was 5.2 percent in December 2022, down from a revised 5. 6 percent in November 2022, and below the year-ago estimate of 6.2 percent. This compares with an unadjusted unemployment rate of 3. 7 percent for California and 3. 3 percent for the nation during the same period.
STOCKTON METROPOLITAN STATISTICAL AREA
San Joaquin County)
Civilian Labor Force, Employment and Unemployment
Annual Averages)
2017 2018 2019 2020 2021
Civilian Labor Force' 323, 000 324, 100 327, 100 334, 300 334, 300 Employment 300, 200 304, 200 307, 500 295, 600 305, 300 Unemployment 22, 700 19, 900 19, 600 38, 700 29, 000
Unemployment Rate 7. 0°/ a 6. 1°/ a 6. 0% 11. 6% 8. 7%
Wage and Salary Employment: z
Agriculture 16, 400 15, 600 15,400 14, 600 13, 700
Mining and Logging 100 100 100 100 100
Construction 11, 700 12, 800 13, 100 13, 000 13, 800
Manufacturing 20, 300 20, 600 20, 600 20, 200 20, 900
Wholesale Trade 11, 200 11, 800 11, 700 10, 600 10, 800 Retail Trade 26, 800 26, 700 26, 200 24, 600 26, 100
Transportation, Warehousing and Utilities 26, 200 28,400 31, 300 38, 800 41, 700 I nformation 1, 800 1, 800 1, 600 1, 200 1, 200
Finance and Insurance 4, 900 4, 800 4, 700 4, 600 4,600 Professional and Business Services 19, 200 19, 600 20, 200 21, 300 22, 400 Educational and Health Services 38, 200 38, 800 39, 100 37, 300 38, 400 Leisure and Hospitality 21, 500 22, 000 22, 600 18, 500 21, 100 Other Services 7, 600 7, 600 7, 800 6, 800 7, 100
Federal Government 42, 400 43, 500 44, 900 43, 000 41, 900 State Government 3, 100 3, 100 3, 200 3, 300 3, 100
Local Government 6, 600 6, 700 6, 800 6, 800 6, 000
Total, All Industries 3 251, 200 257,000 262, 500 257, 800 267, 100 1) Labor force data is by place of residence; includes self- employed individuals, unpaid family workers, household domestic workers, and workers on strike.
2) Industry employment is by place of work; excludes self- employed individuals, unpaid family workers, household domestic workers, and workers on strike.
3) Totals may not add due to rounding.
Source: Sfate of California Employment Development Department.
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The following tables list the major employers in the City:
CITY OF LATHROP
Major Employers
Number of Percentage of Total
Emplover Name Emqlovees" City Emqlovment
Tesla 3, 000 29. 13%
United Parcel Service ( UPS) 1, 500 14. 56
Pflug Packaging 450 4. 37
Army Air Force Exchange Services 400 3. 88
Wayfair 400 3. 88
Super Store Industries( SSI) 375 3. 64
California Natural Products( CNP) 375 3. 64
Simwon America 336 3. 26
MUSD( Lathrop Schools) 333 3. 23
CBC Steel Buildings 203 1. 97
In- N- Out Burger 200 1. 94
Ashley Furniture 190 1. 84
Target 177 1. 72
Diamond Pet Foods 163 1. 58
City of Lathrop 158 1. 38
Employees within City limits.
Source: City of Lathrop June 30, 2022 Annual Comprehensive Financial Report.
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SAN JOAQUIN COUNTY
Major Employers
As of March 2023)
Emqlover Name Location IndUStN
A Sambado& Sons Inc Linden Nuts- Edible
Adventist Health Lodi Memorial Lodi Hospitals
Amazon Fulfillment Ctr Stockton Mail Order Fulfillment Service Ashley Lane LP Stockton Real Estate
Blue Shield of California Lodi Insurance
Dameron Hospital Stockton Hospitals
Deuel Vocational Instn Fire Tracy Fire Departments
Foster Care Svc Stockton Government Offices- County
Leprino Foods Co Tracy Cheese Processors( mfrs)
Lodi Health Home Health Agency Lodi Home Health Service NA Chaderjian Youth Stockton State Govt- Correctional Institutions Pacific Coast Producers Lodi Canning ( mfrs)
Prima Frutta Packing Inc Linden Fruit& Produce Packers
Safeway Distribution Ctr Tracy Distribution Centers( whls) San Joaquin County CA Pubc Stockton Government Offices- County San Joaquin County Human Svc Stockton Government O ces- County San Joaquin County Sch Stockton School Districts
San Joaquin General Hospital French Camp Hospitals
San Joaquin SherifFs Office French Camp Government Offices- County Sjgov Stockton Government Offices- County
St Joseph' s Regional Health Stockton Hospitals
Stockton Police Dept Stockton Police Departments
Stockton Unified School Dist Stockton School Districts
Walmart Supercenter Stockton Department Stores
Waste Management- Lodi Transfer Lodi Consultants- Business NEC Source: State of Califomia Employment Development Department, extracted from The America' s Labor Market/ nformation System ALMIS) Employer Database, 2023 1 st Edition.
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Effective Buying Income
Effective Buying Income" is defined as personal income less personal tax and non- tax payments, a number often referred to as " disposable" or " after- tax" income. Personal income is the aggregate of wages and salaries, other labor- related income ( such as employer contributions to private pension funds), proprietor's income, rental income ( which includes imputed rental income of owner- occupants of non- farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments ( such as pensions and welfare assistance). Deducted from this total are personal taxes ( federal, state and local), nontax payments ( fines, fees, penalties, etc.) and personal contributions to social insurance.
According to U. S. government definitions, the resultant figure is commonly known as disposable personal income."
The following table summarizes the total effective buying income for the City of Lathrop, San Joaquin County, the State and the United States for the period 2019 through 2023.
CITY OF LATHROP AND SAN JOAQUIN COUNTY
Effective Buying Income
2019 through 2023
Total Effective Median Household
Buying Income Effective Buying
Year Area 000' s Omitted) Income
2019 City of Lathrop 412, 652 64, 194
San Joaquin County 16, 800, 979 55, 534
California 1, 183,264,399 62, 637
United States 9, 017, 967, 563 52, 841
2020 City of Lathrop 470, 209 69, 684
San Joaquin County 17, 868, 858 58, 141
California 1, 243, 564, 816 65, 870
United States 9, 487, 165, 436 55, 303
2021 City of Lathrop 526, 026 73, 391
San Joaquin County 18,493, 713 59, 914
California 1, 290, 894, 604 67, 956
United States 9, 809, 944, 764 56, 790
2022 City of Lathrop 606, 670 82, 512
San Joaquin County 21, 672, 926 68, 971
California 1, 452, 426, 153 77, 058
United States 11, 208, 582, 541 64, 448
2023 City of Lathrop 786, 738 84, 343
San Joaquin County 22, 168, 255 68, 912
California 1, 461, 799, 662 77, 175
United States 11, 454,846,397 65, 326
Source: Claritas.
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Commercial Activity
A summary of historic taxable sales within the City during the past five years in which data is available is shown in the following table. Total taxable sales during the first, three quarters of calendar year 2022 in the City were reported to be $ 780, 578,285, a 8. 82% increase over the total taxable sales of$ 717, 313, 829 reported during the first, three quarters of calendar year 2021.
CITY OF LATHROP
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions Dollars in Thousands)
Retail Stores Total All Outlets
Number Taxable Number Taxable
of Permits Transactions of Permits Transactions
2017 197 210, 754 320 308, 146
2018 209 271, 467 349 450, 095
2019 224 284, 642 380 458, 635
2020 266 476, 295 453 629, 413
2021 255 670, 131 445 994,718
Source: State Department of Tax and Fee Administration.
A summary of historic taxable sales within the County during the past five years in which data is available is shown in the following table. Total taxable sales during the first, three quarters of calendar year 2022 in the County were reported to be $ 7, 655,905,684, a 7.89% increase over the total taxable sales of $7, 096, 252, 732 reported during the first, three quarters of calendar year 2021.
SAN JOAQUIN COUNTY
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions Dollars in Thousands)
Retail Stores Total All Outlets
Number Taxable Number Taxable
of Permits Transactions of Permits Transactions
2017 9, 506 7, 994, 473 14, 758 12, 153, 268
2018 9, 660 8, 855, 169 15, 437 13, 457, 721
2019 9,978 9, 058, 063 16, 144 14, 311, 068
2020 11, 188 10, 122, 979 18, 358 15, 609, 880
2021 10, 642 15, 153, 915 17, 665 22, 306, 576
Source: State Department of Tax and Fee Administration.
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Construction
The following tables show a five- year summary of the valuation of building permits issued in the City and the County.
CITY OF LATHROP
Building Permit Valuation
Valuation in Thousands of Dollars)
2017 2018 2019 2020 2027
Permit Valuation
New Single- family 87, 807. 0 $ 107, 508. 9 $ 111, 318. 7 $ 129, 766. 0 $ 338, 979. 9 New Multi- family 0. 0 0. 0 0. 0 14, 512. 9 22, 626. 6
Res. Alterations/ Additions 542. 8 538. 8 524. 2 423. 9 444. 9 Total Residential 88, 349. 8 $ 108, 047. 7 $ 111, 842. 9 $ 144, 702. 8 $ 362, 051. 4 New Commercial 11, 834. 4 $ 26, 884. 8 $ 5, 179. 2 706. 7 $ 27, 934. 0 New Industrial 0. 0 96, 363. 2 0. 0 0. 0 0. 0
New Other 2, 418. 9 2, 647. 8 4, 831. 9 1, 495. 7 8, 665. 5 Com. Alterations/ Additions 28. 645. 1 2. 484. 5 9. 772. 4 11, 176. 3 27. 402. 9 Total Nonresidential 42, 898. 4 $ 128, 380. 3 $ 19, 783. 5 $ 13, 378. 7 $ 64, 002. 4 New Dwelling Units
Single Family 264 349 348 368 968
Multiple Family 0 0 0 68 77
TOTAL 264 349 348 436 1, 045
Source: Construction Industry Research Board, Building Permit Summary.
SAN JOAQUIN COUNTY
Building Permit Valuation
Valuation in Thousands of Dollars)
2017 2018 2019 2020 2021
Permit Valuation
New Single- family 652, 308. 1 $ 883, 071. 1 $ 843, 700. 9 $ 870, 859. 6 $ 1, 179, 358. 0 New Multi- family 62, 635. 8 99, 601. 4 57, 271. 1 38, 411. 8 69, 775. 2 Res. Alterations/ Additions 86. 516. 1 95. 073. 4 98, 681. 9 40. 144. 4 108, 647. 1 Total Residential 801, 460. 0 $ 1, 077, 745. 9 $ 999, 653. 9 $ 949, 415. 8 $ 1, 357, 780. 3 New Commercial 357, 856. 9 $ 498, 359. 0 $ 380, 383. 3 $ 255, 761. 2 $ 272, 617. 0 New Industrial 179, 728. 4 240, 073. 7 120, 003. 8 534, 199. 5 43, 401. 3 New Other 27, 794. 7 31, 904. 4 61, 991. 7 33, 112. 3 58, 264. 9 Com. Alterations/ Additions 269. 172. 8 249. 142. 4 363. 841. 0 135. 285. 4 272, 064. 7 Total Nonresidential 834, 552. 8 $ 1, 019, 479. 5 $ 926, 219. 8 $ 958, 358. 4 $ 646, 347. 9 New Dwelling Units
Single Family 2,078 2, 765 2, 564 2, 843 3, 665
Multiple Family 516 593 461 245 178
TOTAL 2, 594 3, 358 3, 025 3, 088 3, 843
Source: Construction Industry Research Board, Building Permit Summary.
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APPENDIX C
RATE AND METHOD OF APPORTIONMENT OF
SPECIAL TAXES
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APPENDIX D
EXCERPTS FROM REASSESSMENT REPORT
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APPENDIX E
FORM OF BOND COUNSEL OPINION
2023
Lathrop Financing Authority
c/ o City of Lathrop
390 Towne Centre Drive
Lathrop, California, 95330
OPINION: $ Lathrop Financing Authority
Refundinq Revenue Bonds ( Mossdale Villaae Refundinas) 2023 Series A Members of the Authority:
We have acted as bond counsel to the Lathrop Financing Authority ( the " Authority") in connection with the delivery by the Authority of the above- referenced bonds ( the " Bonds"), issued pursuant to the provisions of the Marks- Roos Local Bond Pooling Act of 1985, constituting Article 4 ( commencing with Section 6584) of Chapter 5, Division 7, Title 1 of the Government Code of the State of California ( the " Bond Law"), and pursuant to an Indenture of Trust dated as of April 1, 2023 ( the " Indenture"), befinreen the Authority and U. S. Bank Trust Company, National Association, as trustee. We have examined the Bond Law, an executed copy of the Indenture and such certified proceedings and other papers as we deem necessary to render this opinion.
As to questions of fact material to our opinion, we have relied upon representations of the Authority contained in the Indenture and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.
Based upon our examination we are of the opinion, under existing law, that:
1. The Authority is a public agency duly organized and existing under the laws of the State of California, with power to enter into the Indenture, to perform the agreements on its part contained therein and to issue the Bonds.
2. The Bonds have been duly authorized, executed and delivered by the Authority and are legal, valid and binding obligations of the Authority, payable solely from the sources provided therefor in the Indenture.
3. The Indenture has been duly approved by the Authority and constitutes a legal, valid and binding obligation of the Authority enforceable against the Authority in accordance with its terms.
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4. Pursuant to the Bond Law, the Indenture establishes a valid lien on and pledge of the Revenues ( as such term is defined in the Indenture) for the security of the Bonds.
5. Interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations ( as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding sentence are subject to the condition that the Authority and the City of Lathrop comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes.
The Authority and the City have covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds.
6. Interest on the Bonds is exempt from personal income taxation imposed by the State of California.
The rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture are limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally, and by equitable principles, whether considered at law or in equity.
This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. Our engagement with respect to this matter has terminated as of the date hereof.
Respectfully submitted,
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APPENDIX F
FORM OF CONTINUING DISCLOSURE CERTIFICATE
LATHROP FINANCING AUTHORITY
REFUNDING REVENUE BONDS
MOSSDALE VILLAGE REFUNDINGS)
2023 SERIES A
This Continuing Disclosure Certificate ( this " Disclosure Certificate") is executed and delivered by the City of Lathrop ( the " City"), for and on behalf of itself and the Lathrop Financing Authority ( the " Authority"), in connection with the issuance by the Authority of the revenue bonds captioned above ( the " Bonds").
The Bonds are generally secured by revenues derived from debt service payments made on finro series of bonds to be issued by the City concurrently with the Bonds: ( i) City of Lathrop Community Facilities District No. 2003- 1 ( Mossdale Village) Special Tax Refunding Bonds, 2023 Series A ( the " CFD Bonds"), and ( ii) City of Lathrop Limited Obligation Refunding Improvement Bonds, Mossdale Village Reassessment District No. 2023- 1 ( the " Reassessment Bonds").
The Bonds are being issued under an Indenture of Trust, dated as of April 1, 2023 ( the Indenture"), befinreen the Authority and U. S. Bank Trust Company, National Association, as trustee ( the " Trustee").
The City, on behalf of itself, City of Lathrop Community Facilities District No. 2003- 1 Mossdale Village) ( the " CFD"), and the Authority, 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 Indenture, 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.
Annua/ Report Date" means the date that is 9 months after the end of the City's fiscal year( currently March 31 based on the City's fiscal year end of June 30).
Dissemination AgenY' means initially, NBS Government Finance Group, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.
Listed Events" means any of the events listed in Section 5( a) of this Disclosure Certificate.
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MSRB" means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.
O cial StatemenY' means the final official statement executed by the City in connection with the issuance of the Bonds.
Participating Underwrite" means Stifel, Nicolaus & Company, Incorporated, dba Stone Youngberg, a Division of Stifel Nicolaus, the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.
Rule" means Rule 15c2- 12( b)( 5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as 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 31, 2014, with the report for the 2012- 13 fiscal year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent ( if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent ( if other than the City) has not received a copy 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( c).
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) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A.
c) With respect to each Annual Report, the Dissemination Agent shall:
i) determine each year prior to the Annual Report Date the then- applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.
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Section 4. Content of Annual Reports. The City' s Annual Report shall contain or incorporate by reference the following:
a) The audited financial statements of the City and the Authority, together with the following statement:
THE CITY' S AND THE AUTHORITY' S ANNUAL FINANCIAL STATEMENTS ARE
PROVIDED SOLELY TO COMPLY WITH THE SECURITIES EXCHANGE COMMISSION STAFF' S INTERPRETATION OF RULE 15C2- 12. NO FUNDS OR ASSETS OF THE CITY OR
THE AUTHORITY OTHER THAN THOSE PLEDGED UNDER THE INDENTURE ARE
REQUIRED TO BE USED TO PAY DEBT SERVICE ON THE BONDS, AND NEITHER THE
CITY NOR THE AUTHORITY ARE OBLIGATED TO ADVANCE AVAILABLE FUNDS FROM ANY SOURCE TO COVER ANY DELINQUENCIES. INVESTORS SHOULD NOT RELY ON
THE FINANCIAL CONDITION OF THE CITY OR THE AUTHORITY IN EVALUATING WHETHER TO BUY, HOLD OR SELL THE BONDS.
The audited financial statements shall be 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 such audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3( a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. b) The following additional items relating to the Authority, and to the CFD and the Reassessment District on a combined basis.
i) Outstanding principal amount of the Bonds as of the end of the most recent fiscal year.
ii) Summary of parcels, substantially in the form of Table 7 contained in the Official Statement.
iii) Distribution of assessed value- to- burden ratios for the current fiscal year substantially in the form of Table 8 contained in the Official Statement. iv) Top ten lienholders for the current fiscal year substantially in the form of Table 9 contained in the Official Statement.
c) The following additional items relating to the CFD:
i) Outstanding principal amount of the CFD Bonds as of the end of the most recent fiscal year.
ii) Balance of the Reserve Fund for the CFD Bonds, and a statement of the applicable Reserve Requirement for the Reserve Fund, as of September 1 of the current fiscal year.
iii) History of special tax collections and delinquencies ( per the San Joaquin County Assessor' s records) for the current fiscal year substantially in the form of Table 13 contained in the Official Statement.
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iv) With respect to delinquent Special Taxes as of June 30 of the preceding fiscal year, ( i) a statement of whether or not the CFD continues to participate in the Alternative Method of Distribution of Tax Levies and Collections described in Revenue and Taxation Code Section 4701 et seq., or an equivalent procedure, ( ii) a list of all parcels delinquent in the payment of Special Taxes in the aggregate of $ 3, 000 or more and information relating to the length of delinquency and status of any foreclosure, including results of foreclosure sales), ( iii) the total dollar amount of delinquencies and iv) in the event that the total delinquencies within the CFD as of June 30 of the preceding fiscal year exceed 5% of the Special Tax for the preceding fiscal year delinquency information for each parcel delinquent in the payment of Special Tax, amounts of delinquencies, length of delinquency and status of any foreclosure of each such parcel ( including results of foreclosure sale).
v) The amount of prepayments of the Special Taxes for the most recently completed Fiscal Year.
vi) A land ownership summary listing property owners responsible for more than 5% of the annual Special Tax levy, as shown on the San Joaquin County Assessor' s equalized tax roll as of June 30 of the preceding fiscal year, and a calculation of each such owner's assessed value-to-burden ratio based upon assessed value and the burden of that property' s share of the CFD Bonds only. vii) An updated calculation as of June 30 of the preceding fiscal year of the CFD' s assessed value-to-burden ratio on a CFD-wide basis, based upon ( A) the Taxable Property' s assessed value as shown on the San Joaquin County Assessor' s equalized tax roll and ( B) the burden of that property' s share of the CFD Bonds. viii) Any changes to the Rate and Method of Apportionment of Special Tax for the CFD as of June 30 of the preceding fiscal year.
ix) Annual information required to be filed by the City with the California Debt and Investment Advisory Commission pursuant to the CFD Act and relating generally to outstanding CFD bond amounts, fund balances, assessed values, special tax delinquencies and foreclosure information.
d) The following additional items relating to the Reassessment District:
i) Outstanding principal amount of the Reassessment Bonds as of the end of the most recent fiscal year.
ii) Balance of the Reserve Fund for the Reassessment Bonds, and a statement of the applicable Reserve Requirement for the Reserve Fund, as of September 1 of the current fiscal year.
iii) A table showing a history of reassessment collections and delinquencies per the San Joaquin County Assessor' s records) for the current fiscal year substantially in the form of Table 17 contained in the Official Statement. iv) With respect to delinquent Reassessments as of June 30 of the preceding fiscal year, ( i) a statement of whether or not the Reassessment District continues to F- 4
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participate in the Alternative Method of Distribution of Tax Levies and Collections described in Revenue and Taxation Code Section 4701 et seq., or an equivalent procedure, ( ii) a list of all parcels delinquent in the payment of Reassessments in the aggregate of $3,000 or more ( and information relating to the length of delinquency and status of any foreclosure, including results of foreclosure sales), ( iii) the total dollar amount of delinquencies and ( iv) in the event that the total delinquencies within the Reassessment District as of June 30 of the preceding fiscal year exceed 5% of the Reassessments for the preceding fiscal year, delinquency information for each parcel delinquent in the payment of Reassessments, amounts of delinquencies, length of delinquency and status of any foreclosure of each such parcel ( including results of foreclosure sale).
v) The amount of prepayments of the Reassessments for the most recently completed Fiscal Year.
vi) A land ownership summary listing property owners responsible for more than 5% of the annual Reassessment levy, as shown on the San Joaquin County Assessor's equalized tax roll as of June 30 of the preceding fiscal year, and a calculation of each such owner' s assessed value- to- burden ratio based upon assessed value and the burden of that property' s share of the Reassessment Bonds only. vii) An updated calculation as of June 30 of the preceding fiscal year of the Reassessment District' s assessed value- to- burden ratio on a Reassessment Districtwide basis, based upon ( A) the assessed values as shown on the San Joaquin County Assessor' s equalized tax roll and ( B) the burden of the property' s share of the Reassessment Bonds.
e) 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.
f) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB' s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.
Section 5. Reportinq of Significant Events.
a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds:
1) Principal and interest payment delinquencies.
2) Non- payment related defaults, if material.
3) Unscheduled draws on debt service reserves reflecting financial difficulties.
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4) Unscheduled draws on credit enhancements reflecting financial difficulties.
5) Substitution of credit or liquidity providers, or their failure to perform. 6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security.
7) Modifications to rights of security holders, if material. 8) Bond calls, if material, and tender offers.
9) Defeasances.
10) Release, substitution, or sale of property securing repayment of the securities, if material.
11) Rating changes.
12) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person.
13) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person ( other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. 14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.
b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent ( if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event.
Notwithstanding the foregoing, notice of Listed Events described in subsections ( a)( 8) and ( 9) above need not be given under this subsection any earlier than the notice ( if any) of the underlying event is given to holders of affected Bonds under the Indenture. c) The City acknowledges that the events described in subparagraphs ( a)( 2), ( a)( 7), a)( 8) ( if the event is a bond call), ( a)( 10), ( a)( 13), and ( a)( 14) of this Section 5 contain the qualifier " if material." The City shall cause a notice to be filed as set forth in paragraph ( b) above with respect to any such event only to the extent that the City determines the evenYs occurrence is material for purposes of U. S. federal securities law. 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 F- 6
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receiver, trustee, 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.
Section 6. Identifying Information for Filinqs 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 ReportinQ 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( c).
Section 8. Dissemination Aaent. 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 NBS Government Finance Group.
Any Dissemination Agent may resign by providing 30 days' written notice to the City.
Section 9. Amendment: Waiver. Nofinrithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
a) if the amendment or waiver relates to the provisions of Sections 3( a), 4 or 5( a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and c) the proposed amendment or waiver either ( i) is approved by holders of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or ( ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first Annual 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.
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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 befinreen 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( c).
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 Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. ( a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or pertormance 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 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.
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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.
Date: 2023
CITY OF LATHROP
By:
Name:
Title:
AGREED AND ACCEPTED:
NBS Government Finance Group,
as Dissemination Agent
By:
Name:
Title:
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EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Lathrop Financing Authority
Name of Issue: Lathrop Financing Authority Refunding Revenue Bonds ( Mossdale Village Refundings) 2023 Series A
Date of Issuance: 2023
NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with respect to the above- named Bonds as required by the Indenture, dated as of April, 2023, by and between the City and U. S. Bank Trust Company, National Association, as trustee. The City anticipates that the Annual Report will be filed by
Dated:
DISSEMINATION AGENT:
By:
its:
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APPENDIX G
DTC AND THE BOOK- ENTRY- ONLY SYSTEM
The following description of the Depository Trust Company (" DTC'), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficia/ 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.