(d) The Trustee is not liable for any action taken by it and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture.
(e) The Trustee shall not be deemed to have knowledge of any Event of Default hereunder, or any other event which, with the passage of time, the giving of notice, or both, would constitute an Event of Default hereunder unless and until it shall have actual knowledge thereof, or a corporate trust officer shall have received written notice thereof at its Office from the City, the Authority or the Owners of at least 25% in aggregate principal amount of the Outstanding Bon ds. Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or inquire as to the performance or observance by the Authority or the City of any of the terms, conditions, covenants or agreements herein, under the Lease or the Bonds or of any of the documents executed in connection with the Bonds, or as to the existence of a default or an Event of Default or an event which would, with the giving of notice, the passage of time, or both, constitute an Event of Default. The Trustee is not responsible for the validity, effectiveness or priority of any collateral given to or held by it. Without limiting the generality of the foregoing, the Trustee shall not be required to ascertain or inquire as to the performance or observance by the City or the Authority of the terms, conditions, covenants or agreements set forth in the Lease, other than the covenants of the City to make Lease Payments to the Trustee when due and to file with the Trustee when due, such reports and certifications as the City is required to file with the Trustee thereunder.
(f) No provision of this Indenture requires the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers.
(g) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or through agents, receivers or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent, receiver or attorney appointed with due care by it hereunder.
(h) The Trustee has no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of the Bond Owners under this Indenture, Lynwood Public Financing Authority - Page 63 of 242 Agenda Item # 3
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unless such Owners have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities (including but not limited to fees and expenses of its attorneys), including, without limitations, an y liability arising under federal, state or local environmental laws which might be incurred by it in compliance with such request or direction. No permissive power, right or remedy conferred upon the Trustee hereunder shall be construed to impose a duty to exercise such power, right or remedy.
(i) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee is subject to the provisions of Section 8.02(a), this Section 8.04 and Section 8.05, and shall be applicable to the assignment of any rights under the Lease to the Trustee under the Assignment Agreement.
(j) The Trustee is not accountable to anyone for the subsequent use or application of an y moneys (including the proceeds of the Bonds) which are released or withdrawn in accordance with the provisions hereof.
(k) The Trustee makes no representation or warranty, expressed or implied as to the title, value, design, compliance with specificatio ns or legal requirements, quality, durability, operation, condition, merchantability or fitness for any particular purpose for the use contemplated by the Authority or the City of the Leased Property. In no event shall the Trustee be liable for incidental , indirect, special or consequential damages in connection with or arising from the Lease or this Indenture for the existence, furnishing or use of the Leased Property.
(l) The Trustee has no responsibility with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds.
(m) The Trustee is authorized and directed to execute the Assignment Agreement in its capacity as Trustee hereunder.
(n) The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered using Electronic Means ("Electronic Means" shall mean the fol lowing communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder); provided, however, that the Authority and/or City shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) an d containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the Authority and/or the City whenever a person is to be added or deleted from the listing. If the Authority and/or City elects to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s reasonable understanding of such Instructions shall be deemed controlling. The Authority and City understand and agree that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Authority and City shall be responsible for ensuring that only Authorized Officers transmit such Lynwood Public Financing Authority - Page 64 of 242 Agenda Item # 3
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Instructions to the Trustee and that the Authority, City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Authority and/or City. The Trustee shall 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 directions conflict or are inconsistent with a subsequent written instruction. The Authority and City agree: (i) to assume all risks arising out of the us e of Electronic Means to submit Instructions 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; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Authority and City; (iii) that the security procedures (i f any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.
(o) In acting or omitting to act pursuant to the Assignment Agreement, the Lease or the Site Lease, the Trustee shall be entitled to all of the rights, immunities and indemnities accorded to it under this Indenture, including, but not limited to, this Article VIII. Notwithstanding the effective date of this Indenture or anything to the contrary in this Indenture, the Trustee shall have no liability or responsibility for any act or event relating to this Indenture which occurs prior to the date the Trustee formally executes this Indenture and commences acting as Trustee hereunder.
(p) The Trustee shall not be liable to the parties hereto or deemed in breach or default hereunder if and to the extent its performance hereunder is prevented by reason of force majeure. The term “force majeure” means an occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care. Force majeure shall include, but not be limited to, acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences.
SECTION 8.05. Right to Rely on Documents. The Trustee shall be protected and shall incur no liability in acting or refraining from acting in reliance upon any notice, resolution, request, consent, order, certificate, report, opinion, bonds or other paper or document believed by them to be genuine and to have been signed or presented by the proper party or parties. The Trustee is under no duty to make any investigation or inquiry as to any statements contained or matter referred to in any paper or document but may accept and conclusively rely upon the same as conclusive evidence of the truth and accuracy of any such statement or matter and shall be fully protected in relying thereon.
The Trustee may consult with counsel, who may be counsel of or to the Authority, with regard to legal questions, and the opinion of such counsel shall be f ull and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.
The Trustee may treat the Owners of the Bonds appearing in the Registration Books as the absolute owners of the Bonds for all purposes and the Trustee shall not be affected by any notice to the contrary.
Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee deems it necessary or desirable that a matter be proved or establis hed prior to Lynwood Public Financing Authority - Page 65 of 242 Agenda Item # 3
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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 Written Certificate, Written Request or Written Requisition of the Authority or the City, and such Written Certificate, Written Request or Written Requisition shall be full warrant to the Trustee for any action taken or suffered under the provisions of this Indenture in reliance upon such Written Certificate, Written Request or Written Requisition, and the Trustee shall be fully protected in relying thereon, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may deem reasonable.
The Trustee shall have no duty to review, verify or analyze any financial statements furnished to it by the City, and shall hold such financial statements solely as a repository for Bond Owners. The Trustee shall not be deemed to have notice o f any information contained therein or any Event of Default that may be disclosed therein in any manner.
SECTION 8.06. Preservation and Inspection of Documents . All documents received by the Trustee under the provisions of this Indenture shall be retained in its respective possession and in accordance with its retention policy then in effect and shall, upon reasonable notice to Trustee, be subject to the inspection of the Authority, the C ity and any Bond Owner, and their agents and representatives duly authorized in writing, during business hours and under reasonable conditions as agreed to by the Trustee.
SECTION 8.07. Compensation and Indemnification. The Authority shall pay to the Trustee from time to time, on demand, the compensation for all services rendered under this Indenture and also all reasonable expenses, advances (including any interest on advances), charges, legal ( including outside counsel and the allocated costs of internal attorneys) and consulting fees and other disbursements, incurred in and about the performance of its powers and duties under this Indenture.
The Authority shall indemnify the Trustee, its offic ers, directors, employees and agents against any cost, loss, liability , suit, claim, damages, judgment or expense whatsoever (including but not limited to fees and expenses of its attorneys) incurred without negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of this trust and this Indenture, the Assignment Agreement, the Site Lease and the Lease , including costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers hereunder or under the Assignment Agreement or the Lease. As security for the performance of the obligations of the Authority under this Section 8.07 and the obligation of the Authority to make Additional Rental Payments to the Trustee, the Trustee shall have a lien prior to the lien of the Bonds upon all property and funds held or collected by the Trustee as such. The rights of the Trustee and the obligations of the Authority under this Section 8.07 shall survive the resignation or removal of the Trustee or the discharge of the Bonds and this Indenture and the Lease. When the Trustee incurs expenses or renders services after the occurrence of an Event of Default, such expenses and the compensation for such services are intended to constitute expenses of administration under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor relief law.
Lynwood Public Financing Authority - Page 66 of 242 Agenda Item # 3
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ARTICLE IX
MODIFICATION OR AMENDMENT HEREOF
SECTION 9.01. Amendments Permitted.
(a) Amendments With Bond Owner Consent. This Indenture and the rights and obligations of the Authority and of the Owners of the Bonds and of the Trustee may be modified or amended from time to time and at any time by Supplemental Indenture, which the Authority and the Trustee may enter into when the written consents of the Owners of a majority in aggregate principal amount o f all Bonds then Outstanding are filed with the Trustee. No such modification or amendment may (i) extend the fixed maturity of any Bonds, or reduce the amount of principal thereof or extend the time of payment, or change the method of computing the rate of interest thereon, or extend the time of payment of interest thereon, without the consent of the Owner of each Bond so affected, or (ii) reduce the aforesaid percentage of Bonds the consent of the Owners of which is required to effect any such modification or amendment, or permit the creation of any lien on the Revenues and other assets pledged under this Indenture prior to or on a parity with the lien created by this Indenture except as permitted herein, or deprive the Owners of the Bonds of the lien created by this Indenture on such Revenues and other assets (except as expressly provided in this Indenture), without the consent of the Owners of all of the Bonds then Outstanding. It is not necessary for the consent of the Bond Owners to approve the particular form of any Supplemental Indenture, but it is sufficient if such consent approves the substance thereof.
(b) Amendments Without Owner Consent . This Indenture and the rights and obligations of the Authority, of the Trustee and the Owners of the Bonds may also be modified or amended from time to time and at any time by a Supplemental Indenture, which the Authority and the Trustee may enter into without the consent of any Bond Owners, if the Trustee has been furnished an opinion of counsel that the prov isions of such Supplemental Indenture shall not materially adversely affect the interests of the Owners of the Bonds, including, without limitation, for any one or more of the following purposes:
(i) to add to the covenants and agreements of the Authority in this Indenture contained, other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Authority;
(ii) to cure any ambiguity, inconsistency or omission, or to cure or correct any defective provision, contained in this Indenture, or in regard to matters or questions arising under this Indenture, as the Authority deems necessary or desirable, provided th at such modification or amendment does not materially adversely affect the interests of the Bond Owners, in the opinion of Bond Counsel filed with the Trustee;
(iii) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to Lynwood Public Financing Authority - Page 67 of 242 Agenda Item # 3
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add such other terms, conditions and provisions as may be permitted by said act or similar federal statute; or
(iv) to facilitate the issuance of additional obligations of the City under the Lease Agreement as provided in Section 7.5(b)(iv) thereof.
(c) Limitation. The Trustee is not obligated to enter into any Supplemental Indenture authorized by subsections (a) or (b) of this Section 9.01 which materially adversely affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.
(d) Bond Counsel Opinion Requirement. Prior to the Trustee entering into any Supplemental Indenture hereunder, the Authority shall deliver to the Trustee an opinion of Bond Counsel stating, in substance, that such Supplemental Indenture has been adopted in compliance with the requirements of this Indenture.
(e) Notice of Amendments. The Authority shall deliver or cause to be delivered a draft of any Supplemental Indenture to each rating agency which then maintains a rating on the Bonds, at least 10 days prior to the effective date of such Supplemental Indenture under this Section 9.01.
SECTION 9.02. Effect of Supplemental Indenture . Upon the execution of any Supplemental Indenture under this Article IX, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Authority, the Trustee and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.03. Endorsement of Bonds; Preparation of New Bonds . Bonds delivered after the execution of any Supplemental Indenture under this Article may, and if the Authority so determines shall, bear a notation by endorsement or otherwise in form approved by the Authority as to any modification or amen dment provided for in such Supplemental Indenture, and, in that case, upon demand on the Owner of any Bonds Outstanding at the time of such execution and presentation of his Bonds for the purpose at the Office of the Trustee or at such additional offices a s the Trustee may select and designate for that purpose, a suitable notation shall be made on such Bonds. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the Authority, to any modification or amendmen t contained in such Supplemental Indenture, shall be prepared and executed by the Authority and authenticated by the Trustee, and upon demand on the Owners of any Bonds then Outstanding shall be exchanged at the Office of the Trustee, without cost to any B ond Owner, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in equal aggregate principal amount of the same maturity.
SECTION 9.04. Amendment of Particular Bonds. The provisions of this Article IX do not prevent any Bond Owner from accepting any amendment as to the particular Bonds held by such Owner.
Lynwood Public Financing Authority - Page 68 of 242 Agenda Item # 3
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ARTICLE X
DEFEASANCE
SECTION 10.01. Discharge of Indenture. Any or all of the Outstanding Bonds may be paid by the Authority in any of the following ways, provided that the Authority also pays or causes to be paid any other sums payable hereunder by the Authority:
(a) by p aying 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 depositing with the Trustee, in trust, at or before maturity, money or securities in the necessary amount (as provided in Section 10.03) to pay or redeem such Bonds; or
(c) by delivering all of such Bonds to the Trustee for cancellation.
If the Authority also pays or causes to be paid all other sums payable hereunder by the Authority, then and in that case, at the election of the Authority (evidenced by a Written Certificate of the Authority, filed with the Trustee, signifying the intention of the Authority to discharge all such indebtedness and this Indenture), and notwithstanding that any of such Bonds shall n ot have been surrendered for payment, this Indenture and the pledge of Revenues and other assets made under this Indenture with respect to such Bonds and all covenants, agreements and other obligations of the Authority under this Indenture with respect to such Bonds shall cease, terminate, become void and be completely discharged and satisfied, subject to Section 10.02, and except for Section 8.07 hereof, which shall survive. In such event, upon the Written Request of the Authority, the Trustee shall execu te and deliver to the Authority all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over, transfer, assign or deliver to the City all moneys or securities or other property held by it under this Indenture which are not required for the payment or redemption of any of such Bonds not theretofore surrendered for such payment or redemption. The Trustee is entitled to conclusively rely on any such Written Certificate or Written Request and, in each case, is fully protected in relying thereon.
SECTION 10.02. Discharge of Liability on Bonds . Upon the deposit with the Trustee, in trust, at or before maturity, of money or securities in the necessary amount (as provided in Section 10.03) to pay or redeem any Outstanding Bonds (whether upon or prior to the maturity or the redemption date of such Bonds), provided that, if such Bonds are to be redeemed prior to maturity, notice of such redemption shall have been given as provided in Article IV or provision satisfactory to the Trustee shall have been made for the giving of such notice, then all liability of the Authority in respect of such Bonds shall cease, terminate and be completely disc harged, and the Owners thereof shall thereafter be entitled only to payment out of such money or securities deposited with the Trustee as aforesaid for their payment, subject, however, to the provisions of Section 10.04.
The Authority may at any time surr ender to the Trustee, for cancellation by the Trustee, any Bonds previously issued and delivered, which the Authority may have Lynwood Public Financing Authority - Page 69 of 242 Agenda Item # 3
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acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired.
SECTION 10.03. Deposit of Money or Securities with Trustee . Whenever in this Indenture it is provided or permitted that there be deposited with or held in trust by the Trustee money or securities in the necessary amount to pay or redeem any Bonds, the money or securities so to be deposited or held may include money or securities held by the Trustee in the funds and accounts established under this Indenture and shall be:
(a) lawful money of the United States of America in an amount equal to the principal amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of Bonds which are to be redeemed prior to maturity and in respect of which notice of such re demption shall have been given as provided in Article IV or provision satisfactory to the Trustee shall have been made for the giving of such notice, the amount to be deposited or held shall be equal to the principal amount (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption) of such Bonds, premium, if any, and all unpaid interest thereon to the redemption date; or
(b) non-callable Federal Securities, the principal (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption) of and interest on which when due will, in the written opinion of an Independent Accountant filed with the City, the Authority and the Trustee, provide money sufficient to pay the principal (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption) of and interest and premium (if any) on the Bonds to be paid or redeemed, as such principal (including the principal amount of any Term Bonds that is subj ect to mandatory sinking fund redemption) , interest and premium become due, provided that in the case of Bonds which are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in Article IV or provision sa tisfactory to the Trustee has been made for the giving of such notice;
provided, in each case, that (i) the Trustee shall have been irrevocably instructed (by the terms of this Indenture or by Written Request of the Authority) to apply such money to the payment of such principal (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption), interest and premium (if any) with respect to such Bonds, and (ii) the Authority shall have delivered to the Trustee an opinion of Bond Counsel to the effect that such Bonds have been discharged in accordance with this Indenture (which opinion may rely upon and assume the accuracy of the Independent Accountant’s opinion referred to above). The Trustee shall be entitled to conclusively rely on such Written Request or opinion and shall be fully protected, in each case, in relying thereon.
SECTION 10.04. Unclaimed Funds . Notwithstanding any provisions of this Indenture, any moneys held by the Trustee in trust for the payment of the principal (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption) of, or interest on, any Bonds and remaining unclaimed for 2 years after Lynwood Public Financing Authority - Page 70 of 242 Agenda Item # 3
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the principal (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption) of all of the Bonds has become due and payable (whether at maturity or upon call for redempt ion or by acceleration as provided in this Indenture), if such moneys were so held at such date, or 2 years after the date of deposit of such moneys if deposited after said date when all of the Bonds became due and payable, shall be repaid (without liability for interest) to the Authority free from the trusts created by this Indenture, and all liability of the Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of such moneys to the Authority as aforesaid, the Trustee shall (at the cost of the Authority) first mail to the Owners of Bonds which have not yet been paid, at the addresses shown on the Registration Books, a notice, in such form as may be deemed appropriate by the Trustee with respect to the Bonds so payable and not presented and with respect to the provisions relating to the repayment to the Authority of the moneys held for the payment thereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Liability of Authority Limited to Revenues . Notwithstanding anything in this Indenture or in the Bonds contained, the Authority is not required to advance any moneys derived from any source o ther than the Revenues, the Additional Rental Payments and other assets pledged under this Indenture for any of the purposes in this Indenture mentioned, whether for the payment of the principal (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption) of or interest on the Bonds or for any other purpose of this Indenture. Nevertheless, the Authority may, but is not required to, advance for any of the purposes hereof any funds of the Authority which may be made available to it for such purposes.
SECTION 11.02. Limitation of Rights to Parties and Bond Owners. Nothing in this Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any person other than the Authority, the Trustee, the City and the Owners of the Bonds, any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or her ein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Authority, the Trustee, the City and the Owners of the Bonds.
SECTION 11.03. Funds and Accounts . Any fund or account required by this Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with corporate industry standards to the extent practicable, and with due regard for the requirements of Section 6.05 and for the protection of the security of the Bonds and the rights of every Owner thereof. The Trustee may establish such funds and accounts as it deems necessary or appropriate to perform its obligations under this Indenture.
SECTION 11.04. Waiver of Notice; Requirement of Mailed Notice . Whenever in this Indenture the giving of notice by mail or otherwise is required, the giving of such notice Lynwood Public Financing Authority - Page 71 of 242 Agenda Item # 3
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may be waived in writing by the person entitled to receive such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Whenever in this Indenture any notice is required to be given by mail, such requirement may be satisfied by the deposit of such notice in the United States mail, postage prepaid, by first class mail.
SECTION 11.05. Destruction of Bonds . Whenever in this Indenture provision is made for the cancellation by the Trustee, and the delivery to the Authority, of any Bonds, the Trustee shall destroy such Bonds as may be allowed by law and, upon the Authority’s request, deliver a certificate of such destruction to the Authority.
SECTION 11.06. Severability of Invalid Provisions . If any one or more of the provisions contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Indentur e and such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Authority her eby declares that it would have entered into this Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, par agraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable.
SECTION 11.07. Notices. All notices or communications to be given under this Indenture shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be effective either (a) upon transmission by facsimile transmission or other form of telecommunication, confirmed by telephone, (b) 48 hours after deposit in the United States mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Authority, the City or the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.
If to the City/Authority: City of Lynwood
11330 Bullis Road
Lynwood, CA 90262
Attn: City Manager/Chief Administrative Officer
If to the Trustee: U.S. Bank Trust Company, National Association U.S. Bank Tower
633 West 5th Street, 24th Floor
Los Angeles, CA 90071
Attn: Corporate Trust Services
SECTION 11.08. Evidence of Rights of Bond Owners . Any request, consent or other instrument required or permitted by this Indenture to be signed and executed by Bond Owners may be in any number of concurrent instruments of substantially similar tenor and shall be signed or executed by such Bond Owners in person or by an 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, or of the holding by any person of Bonds transferable by delivery, shall be sufficient for any purpose of this Indenture and Lynwood Public Financing Authority - Page 72 of 242 Agenda Item # 3
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shall be conclusive in favor of the Trustee and the Authority if made in the manner provided in this Section 11.08.
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 certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the person signing such request, consent or other instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer.
The ownership of Bonds shall be proved by the Registration Books.
Any request, consent, or other instrument or writing of the Owner of any Bond shall bind every future Owner of the same Bond and the Owner of every 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 accordance therewith or reliance thereon.
SECTION 11.09. Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are actually known by the Trustee to be owned or held by or for the account of the Authority or the City, or by any other obligor on the Bonds, or by any person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City or any other obligor on the Bon ds, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination unless all Bonds are so owned or held, in which case such Bonds shall be considered Outstanding for the purpose of such determination ..
Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Bonds and that the pledgee is not a person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City or any other obligor on the Bonds. In case of a dispute as to such right, the Trustee shall be entitled to rely upon the advice of counsel in a ny decision by Trustee and shall be fully protected in relying thereon.
Upon request, the Authority and the City shall certify to the Trustee those Bonds disqualified under this Section 11.09, and the Trustee may conclusively rely on such certifications.
SECTION 11.10. Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest, premium, if any, or principal (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption) due on any date with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owners of the Bonds entitled thereto, subject, however, to the provisions of Section 10.04 but without any liability for interest thereon.
SECTION 11.11. Waiver of Personal Liability . No member, officer, agent or employee of the Authority shall be individually or personally liable for the payment of the principal (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption) of or interest or premium (if any) on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof; but nothing herein Lynwood Public Financing Authority - Page 73 of 242 Agenda Item # 3
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contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law or by this Indenture.
SECTION 11.12. Successor Is Deemed Included in All References to Predecessor.
Whenever in this Indenture either the Author ity, the City or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the Authority, the City or the Trustee sh all bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.
SECTION 11.13. Execution in Several Counterparts . This Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the Authority and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument.
SECTION 11.14. Payment on Non -Business Day. In the event any payment is required to be made hereunder on a day which is not a Business Day, such payment shall be made on the n ext succeeding Business Day and with the same effect as if made on such preceding non-Business Day.
SECTION 11.15. Governing Law . This Indenture shall be governed by and construed in accordance with the laws of the State of California.
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IN WITNESS WHEREOF, the LYNWOOD PUBLIC FINANCING AUTHORITY has caused this Indenture to be signed in its name by its Chief Administrative Officer and attested to by its Secretary, and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written.
LYNWOOD PUBLIC FINANCING AUTHORITY
By
Ernie Hernandez
Chief Administrative Officer
Attest:
Maria Quiñonez
Secretary
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By
Authorized Officer
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APPENDIX A
DEFINITIONS
“Additional Rental Payments ” means the amounts of additional rental which are payable by the City under Section 4.5 of the Lease or which are otherwise identified as Additional Rental Payments under the Lease.
“Assignment Agreement” means the Assignment Agreement dated as of July 1, 2022, between the Authority as assignor and the Trustee as assignee, as originally executed or as thereafter amended.
“Authority” means the Lynwood Public Financing Authority , a joint exercise of powers authority duly organized and existing under the laws of the State of California.
“Authorized Representative” means: (a) with respect to the Authority, its President, Chief Administrative Officer , Authority Finance Director, Treasurer, General Counsel or any other person designated as an Authorized Representative of the Authority by a Written Certificate of the Authority signed by its Chief Administrative Officer and filed with the City and the Trustee; and (b) with respect to the City, its Mayor, City Manager, Finance Director, Treasurer, City Attorney or any other person designated as an Authorized Representative of the City by a Written Certificate of the City signed by its City Manager and filed with the Authority and the Trustee.
“Bond Counsel” means (a) Jones Hall, A Professional Law Corporation, or (b) any other attorney or firm of attorneys appointed by or acceptable to the Authority of nationally- recognized experience in the issuance of municipal bonds.
“Bond Fund” means the fund by that name established and held by the Trustee under Section 5.01.
“Bond Year” means each twelve -month period extending from October 2 in one calendar year to October 1 of the succeeding calendar year, both dates inclusive; except that the first Bond Year commences on the Closing Date and extends to and including October 1, 2022.
“Bonds” means the $__________ aggregate principal amount of Lynwood Public Financing Authority Lease Revenue Bonds, Series 2022 (Federally Taxable) authorized by and at any time Outstanding under this Indenture.
“Business Day” means a day (other than a Saturday or a Sunday) on which banks are not required or authorized to remain closed in the City in which the Office of the Trustee is located.
“City” means the Lynwood, a general law city and municipal corporation organized and existing under the Constitution and laws of the State of California.
“Closing Date” means _________, 2022, the date of delivery of the Bonds to the Original Purchaser.
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“Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the City relat ing to the authorization, issuance, sale and delivery of the Bonds, including but not limited to: printing expenses; rating agency fees; filing and recording fees; initial fees, expenses and charges of the Trustee and their respective counsel, including th e Trustee’s first annual administrative fee; fees, charges and disbursements of attorneys, financial advisors, accounting firms, consultants and other professionals; fees and charges for preparation, execution and safekeeping of the Bonds; and any other cost, charge or fee in connection with the original issuance of the Bonds.
“Costs of Issuance Fund ” means the fund by that name established and held by the Trustee under Section 3.03.
“Depository” means (a) initially, DTC, and (b) any other Securities Depo sitories acting as Depository under Section 2.04.
“Depository System Participant” means any participant in the Depository’s book - entry system.
“DTC” means The Depository Trust Company, and its successors and assigns.
“Event of Default” means any of the events specified in Section 7.01.
“Federal Securities” means: (a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), for which the full faith and credit of the United States of America are pledged; (b) obligations of any agency, department or instrumentality of the United States of America, the timely payment of principal of and interest on which are directl y or indirectly secured or guaranteed by the full faith and credit of the United States of America.
“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 twelve-month period selected and designated by the Authority 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 under the provisions hereof.
“Independent Accountant” means any certified public accountant or firm of certified public accountants 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 connected with the Authority or the City as 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.
“Insurance and Condemnation Fund ” means the fund by that name established and held by the Trustee under Section 5.07.
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“Interest Account” means the account by that name established and held by the Trustee in the Bond Fund under Section 5.02.
“Interest Payment Date” means each April 1 and October 1, commencing October 1, 2022, so long as any Bonds remain unpaid.
“Law” has the meaning given that term in the Recitals.
“Lease” means the Lease Agreement dated as of July 1, 2022 , between the Authority as lessor and the City as lessee of the Leased Property, as originally executed and as it may from time to time be supplemented, modified or amended in accordance with the terms thereof and of this Indenture.
“Lease Payment Date ” means, with respect to any Interest Payment Date, the Business Day immediately preceding such Interest Payment Date.
“Lease Payments” means the amounts payable by t he City under Section 4.3(a) of the Lease, including any prepayment thereof and including any amounts payable upon a delinquency in the payment thereof.
“Leased Property” means the real property described in Appendix A to the Lease.
“Net Proceeds” means amounts derived from any policy of casualty insurance with respect to the Leased Property, or the proceeds of any taking of the Leased Property or any portion thereof in eminent domain proceedings (including sale under threat of such proceedings), to the extent remaining after payment therefrom of all expenses incurred in the collection and administration thereof.
“Nominee” means (a) initially, Cede & Co. as nominee of DTC, and (b) any other nominee of the Depository designated under Section 2.04(a).
“Office” means the corporate trust office of the Trustee in Los Angeles, or such other or additional offices as the Trustee may designate in writing to the Authority from time to time as the corporate trust office for purposes of the Indenture; except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term means the office or agency of the Trustee at which, at any particular time, its corporate trust agency business is conducted.
“Original Purchaser” means Cabrera Capital Markets, LLC, as original underwriter of the Bonds upon their delivery by the Trustee on the Closing Date.
“Outstanding”, when used as of any particular time with reference to Bonds, means all Bonds theretofore, or thereupon being, auth enticated and delivered by the Trustee under this Indenture except: (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with respect to which all liability of the Authority shall have been discharged in accordance with Section 10.02, including Bonds (or portions thereof) described in Section 11.09; and (c) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee under this Indenture.
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“Owner”, whenever used herein with respect to a Bond, means the person in whose name the ownership of such Bond is registered on the Registration Books.
“Permitted Encumbrances” means, as of any time: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may permit to remain unpaid under Article V of the Lease; (b) the Site Lease, the Lease and the Assignment Agreement; (c) any right or claim of any mechanic, laborer, material man, sup plier or vendor not filed or perfected in the manner prescribed by law; and ( d) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record and which the City certifies in writing will not materially impair the use of the Leased Property for its intended purposes.
“Permitted Investments” means any of the following:
(a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), for which the full faith and credit of the United States of America are pledged.
(b) obligations of any agency, department or instrumentality of the United States of America, the timely payment of principal and interest on which are directly or indirectly secured or guaranteed by the full faith and credit of the United States of America.
(c) Any direct or indirect obligations of an agency or department of the United States of America whose obligations represent the full faith and credit of the United States of America, or which are rated A or better by S&P.
(d) Interest-bearing deposit accounts (including certificates of deposit placed by a third party pu rsuant to a separate agreement between the Authority and the Trustee), time deposits, bank deposit products, trust funds, trust accounts, interest bearing deposits, overnight bank deposits or interest bearing money market accounts in federal or State chartered savings and loan associations or in federal or State of California banks (including the Trustee or any of its affiliates ), provided that: (i) the unsecured obligations of such commercial bank or savings and loan association are rated A or better by S& P; or (ii) such deposits are fully insured by the Federal Deposit Insurance Corporation or secured at all times by collateral described in (a) or (b) above.
(e) Commercial paper rated at the time of purchase “A-1+” or better by S&P.
(f) Federal funds or bankers acceptances with a maximum term of one year of any bank (which may include the Trustee and its affliates) which an unsecured, uninsured and unguaranteed obligation rating of “A-1+” or better by S&P.
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(g) Money market mutual funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of at least AAAm-G, AAAm or AAm, which funds may include funds for which the Trustee, its affiliates, parent or subs idiaries provide investment advisory, custodial, transfer agency or other management services , and for which they receive and retain a fee for such services provided to the fund. Money market funds permitted under this paragraph shall not include funds with a floating net asset value.
(h) 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 S&P, or (b) fully secured as to the payment of principal and interest by Permitted Investments described in clauses (a) or (b).
(i) Obligations issued by any corporation organized and operating within the United States of America having assets in excess of $500,000,000, which obligations are rated A or better by S&P.
(j) Bonds or notes issued by any state or municipality which are rated A or better by S&P.
(k) Any investment agreement with, or guaranteed by, a financial institution the long -term unsecured obligations or the claims paying ability of which are rated A or be tter by S&P at the time of initial investment, by the terms of which all amounts invested thereunder are required to be withdrawn and paid to the Trustee in the event either of such ratings at any time falls below A.
(l) The Local Agency Investment Fund of the State of California, created pursuant to Section 16429.1 of the California Government Code, to the extent the Trustee is authorized to register such investment in its name.
“Principal Account” means the account by that name established and held by the Trustee in the Bond Fund under Section 5.02.
“Record Date” means, with respect to any Interest Payment Date, the 15th calendar day of the month preceding such Interest Payment Date, whether or not such day is a Business Day.
“Redemption Fund” means t he fund by that name established and held by the Trustee under Section 5.06.
“Registration Books” means the records maintained by the Trustee under Section
2.05 for the registration and transfer of ownership of the Bonds.
“Revenues” means: (a) all amounts received by the Authority or the Trustee under or with respect to the Lease, including, without limiting the generality of the foregoing, all of the Lease Payments (including both timely and delinquent payments, any late charges, Lynwood Public Financing Authority - Page 80 of 242 Agenda Item # 3
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and whether paid from an y source), but excluding (i) any amounts described in Section
7.5(b)(iv) of the Lease, and (ii) any Additional Rental Payments; and (b) all interest, profits or other income derived from the investment of amounts in any fund or account established under this Indenture.
“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 written notice filed with the Trustee.
“Site Lease” means the Site Lease dated as of July 1, 2022, between the City as lessor and the Authority as lessee, as amended from time to time in accordance with its terms.
“Site Lease Payment” means the amount payable by the Authority to the City on the Closing Date under Section 3 of the Site Lease.
“S&P” means S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC business, its successors and assigns.
“Supplemental Indenture ” means any indenture hereafter duly authorized and entered into between the Authority and the Trustee, supplementing, modifying or amending this Indenture; but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder.
“Term” means, with reference to the Lease, the time during which the Lease is in effect, as provided in Section 4.2 thereof.
“Term Bonds” means the Bonds maturing on October 1 in each of the years 20___ and 20___.
“Trustee” means U.S. Bank Trust Company, National Association , a national banking association organized and existing under the laws of United States of America, or its successor or successors, as Trustee hereunder as provided in Article VIII.
“Written Certificate,” “Written Request” and “ Written Requisition” of the Authority or the City mean, re spectively, a written certificate, request or requisition signed in the name of the Authority or the City by its Authorized Representative. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument.
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APPENDIX B
BOND FORM
NO. R- ***$ ***
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
Lynwood Public Financing Authority
LEASE REVENUE BONDS, SERIES 2022
(FEDERALLY TAXABLE)
INTEREST RATE: MATURITY DATE: ORIGINAL ISSUE DATE: CUSIP:
______% October 1, ____ _______, 2022 _______
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: *** ***
The LYNWOOD PUBLIC FINANCING AUTHORITY, a public body corporate and politic duly organized and existing under the laws of the State of California (the “Authority”), for value received, hereby promises to pay to the Registered O wner specified above or registered assigns (the “Registered Owner”), on the Maturity Date specified above (subject to any right of prior redemption hereinafter provided for), the Principal Amount specified above, in lawful money of the United States of America, and to pay interest thereon in like lawful money from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this Bond unless (i) this Bond is authenticated on or before an Interest Payment Date and after the close of business on the 15 th day of the month preceding such interest payment date, in which event it shall bear interest from such Interest Payment Date, or (ii) this Bond is authenticated on or before September 15, 2022, in which event it shall bear interest from the Original Issue Date specified above; provided, however, that if at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on this Bond, at the Interest Rate per annum specified above, payable semiannually on April 1 and October 1 in each year, commencing October 1, 2022 (the “Interest Payment Dates”), calculated on the basis of a 360-day year composed of twelve 30-day months.
Principal (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption) hereof and premium, if any, upon early redemption hereof are payable upon presentation and surrender hereof at the designated corporate trust office of U.S. Bank Trust Company, National Association (the “Trust Office”), as Lynwood Public Financing Authority - Page 82 of 242 Agenda Item # 3
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trustee (the “Trustee”). Interest hereon is payable by check of the Trustee mailed to the Registered O wner hereof at the Registered Owner’s address as it appears on the registration books of the Trustee as of the close of business on the fifteenth day of the month preceding each Interest Payment Date (a “Record Date”), or, upon written request filed with the Trustee as of such Record Date by a registered owner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer in immediately available funds to an account in the United States designated by such registered owner in such written request.
This Bond is not a debt of the City of Lynwood (the “City”), the County of Los Angeles, the State of California, or any of its political subdivisions, and neither the City, said County, said State, nor any of its political subdivisions, is liable h ereon nor in any event shall this Bond be payable out of any funds or properties of the Authority other than the Revenues.
This Bond is one of a duly authorized issue of bonds of the Authority designated as the “ Lynwood Public Financing Authority Lease Revenue Bonds , Series 2022 (Federally Taxable)” (the “Bonds”), in an aggregate principal amount of $__________, all of like tenor and date (except for such variation, if any, as may be required to designate varying numbers, maturities, interest rates or redemption provisions) and all issued under the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, and under an Indenture, dated as of July 1, 2022, between the Authority and the Trustee (the “Indenture”) and a resolution of the Authority adopted on _____________, 2022, authorizing the issuance of the Bonds. Reference is hereby made to the Indenture (copies of which are on file at the office of the Authority) and all supplements thereto for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Revenues, and the rights thereunder of the owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Authority thereunder, to all of the provisions of which the Registered Owner of this Bond, by acceptance hereof, assents and agrees.
The Bonds have been issued by the Authority for the purpose of refunding all or a portion of the City’s obligations under the CalPERS Contract (as defined in the Indenture), including paying all costs of issuing the Bonds and of refunding the CalPERS Contract .
This Bond and the interest and premium, if any, hereon are special obligations of the Authority, payable from the Revenues, and secured by a charge and lien on the Revenues as defined in the Indenture, consisting principally of lease payments made by the City under a Lease Agreement dated as of July 1, 2022, between the Authority as lessor and the City as lessee (the “Lease”). As and to the extent set forth in the Indenture, all of the Revenues are exclusively and irrevocably pledged in accordance with the terms hereof and the provisions of the Indenture, to the payment of the principal (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption) of and interest and premium (if any) on the Bonds.
The rights and obligations of the Authority and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture, but no such modification or amendment shall extend the fixed maturity of any Bonds, or reduce the amount of principal thereof or premium (if any) thereon, or extend the time of payment , or change the method of computing the rate of interest thereon, or extend the time of payment of interest thereon, without the consent of the owner of each Bond so affected.
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The Bonds maturing on or after October 1, 20___ are subject to redemption, as a whole or in part, at the option of the Authority, on October 1, 20___, and on any date thereafter, at a redemption price equal to 100% of the principal amount of Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium.
The Bonds are subject to redemption as a whole, or in part, on any date, to the extent of any net proceeds of hazard insurance with respect to the property which has been leased under the Lease (the “Leased Property”) or any portion thereof which are not used to repair or replace the Leased Property pursuant to the Lease, or to the extent of any net proceeds arising from the disposition of the Leased Property or any portion thereof in eminent domain proceedings which the City elects to be used for such purpose pursuant to the Lease, at a redemption price equal to the principal amount thereof plus interest accrued thereon to the date fixed for redemption, without premium.
The Bonds maturing on October 1 in e ach of the years 20___ and 20___ are subject to mandatory redemption, in part, from sinking fund payments made under the Indenture, at a redemption price equal to the principal amount thereof to be redeemed, without premium, plus accrued interest to the da te of redemption, in the aggregate respective principal amounts and on October 1 in the respective years as set forth in the following tables:
Term Bonds Maturing
October 1, 20___
Payment Date
(October 1)
Payment
Amount
Term Bonds Maturing
October 1, 20___
Payment Date
(October 1)
Payment
Amount
As provided in the Indenture, notice of redemption will be mailed by the Trustee by first class mail not less than 20 nor more than 60 days prior to the redemption date to the respective owners of any Bonds designated for redemption at their addresses appearing on the registration books of the Trustee, but neither failure to receive such notice nor any defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption Lynwood Public Financing Authority - Page 84 of 242 Agenda Item # 3
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or the cessation of accrual of interest thereon from and after the date fixed for redemption.
Notice of any optional redemption of the Bonds may be conditional and may be rescinded under the circumstances set forth in the Indenture, upon notice to the owners of such Bonds.
If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest shall cease to accrue hereon from and after t he date fixed for redemption.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Trust Office, but only in the manner, subject to the limitations and upon payment of the charges provid ed in the Indenture, and upon surrender and cancellation of this Bond. Upon registration of such transfer, a new Bond or Bonds, of authorized denomination or denominations, for the same aggregate principal amount and of the same maturity will be issued to the transferee in exchange herefor.
This Bond may be exchanged at the Trust Office for Bonds of the same tenor, aggregate principal amount, interest rate and maturity, of other authorized denominations.
The Authority and the Trustee may treat the Regist ered Owner hereof as the absolute owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any notice to the contrary.
Unless this Bond is presented by an authorized representative of The Depository Trust Company to the Au thority or the Trustee for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.
It is hereby certified by the Authority that all of the things, conditions and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time, form and manner as required by the Ordinance and the laws of the State of California and that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Ordinance or any laws of the State of California, and is not in excess of the amount of Bonds permitted t o be issued under the Indenture. The Bonds are legally and validly issued under the Constitution and laws of the State of California.
This Bond shall not be entitled to any benefit under the Indenture or become valid or obligatory for any purpose until th e certificate of authentication hereon endorsed shall have been manually signed by the Trustee.
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IN WITNESS WHEREOF, the Lynwood Public Financing Authority has caused this Bond to be executed in its name and on its behalf with the facsimile signature of its Chief Administrative Officer and attested to by the facsimile signature of its Secretary, all as of the Original Issue Date specified above.
Lynwood Public Financing Authority
By
Chief Administrative Officer
Attest:
Secretary
FORM OF CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture.
Dated:
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, as Trustee
By
Authorized Signatory
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FORM OF ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto __________________________________ whose address and social security or other tax identifying number is ____________________, the within -mentioned Bond and hereby irrevocably constitute(s) and appoint(s)
________________________________________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible
guarantor institution.
Note: The signature(s) on this Assignment must
correspond with the name(s) as written on the face of the within Bond in every particular without alteration or
enlargement or any change whatsoever.
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SITE LEASE
This SITE LEASE (this “Site Lease”), dated for convenience as of July 1, 2022, is between the CITY OF LYNWOOD, a general law city and municipal corporation duly organized and existing under the Constitution and laws of the State of California, as lessor (the “City”), and the LYNWOOD PUBLIC FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of the State of California, as lessee (the “Authority”).
B A C K G R O U N D :
1. The City and the Lynwood Redevelopment Agency (which has been succeeded by the Successor Agency to the former Lynwood Redevelopment Agency) (the “Successor Agency”) entered into a Jo int Exercise of Powers Agreement, dated as of December 1, 1992, establishing the Authority for the purpose, among others, of providing assistance to the City and the Successor Agency with their financing programs.
2. The City is obligated by the Public Employees’ Retirement Law, commencing with Section 20000 of the Government Code of the State of California, as amended (the “Retirement Law ”), to make payments relating to pension benefits accruing to the California Public Employees’ Retirement System’s (“ CalPERS”) members, including the City.
3. The City is obligated specifically to make certain payments to CalPERS in respect of current and retired public safety employees and miscellaneous employees under the pension programs of CalPERS that amortize such obligations over a fixed period of time, including normal costs (collectively, the “CalPERS Obligation”).
4. The CalPERS Obligation is evidenced by a contract or contracts with CalPERS with respect to public safety employees and miscellaneous employees of the City, as heretofore and hereafter amended from time to time (collectively, the “ CalPERS Contract”).
5. The City is authorized under Section 37350 and 37380 of the California Government Code to lease, receive, hold, and enjoy real and personal property , and control and dispose of it for the common benefit, and the Authority is authorized under the Marks-Roos Local Bond Pooling Act of 1985, being Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “ Bond Law”) to issue revenue bonds for the purpose of providing working capital and/or refunding any evidence of indebtedness of its members.
6. The Authority proposes to issue lease revenue bonds under the Bond Law and an Indenture, dated as of July 1, 2022 (the “Indenture”), for the purpose of refunding all or a portion of the City’s obligations under the CalPERS Contract, including paying all costs of issuing the lease revenue bonds and of refunding the CalPERS Contract.
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7. To that end, the City has proposed to lease to th e Authority certain real property described in Appendix A attached hereto and by this reference incorporated herein (the “Leased Property”), under this Site Lease, in consideration of the payment by the Authority of an upfront rental payment (the “Site Lease Payment”) which is sufficient to provide funds for refunding of the CalPERS Contract.
8. The Authority has authorized the issuance of its Lynwood Public Financing Authority Lease Revenue Bonds, Series 2022 (Federally Taxable) (the “Bonds”) under the Indenture for the purpose of providing the funds to enable the Authority to pay the Site Lease Payment to the City in accordance with the Site Lease.
9. In order to provide revenues which are sufficient to enable the Authority to pay debt service on the Bon ds, the Authority has agreed to lease the Leased Property back to the City under a Lease Agreement dated as of July 1, 2022 (the “Lease”), under which the City has agreed to pay semiannual Lease Payments as the rental for the Leased Property thereunder.
10. The lease payments made by the City under the Lease have been assigned by the Authority to the Trustee for the security of the Bonds under an Assignment Agreement dated as of July 1, 2022, between the Authority as assignor and the Trustee as assignee.
A G R E E M E N T :
In consideration of the above premises and of the mutual promises and covenants herein contained and for other valuable consideration, the parties hereto do hereby agree as follows:
SECTION 1. Lease of Property to Authority. The City hereby leases the Leased Property to the Authority and the Authority hereby leases the Leased Property from the City, on the terms and conditions hereinafter set forth.
SECTION 2. Term; Possession . The term of this Site Lease commences on the Closing Date (as defined in the Indenture) and ends on the date on which the Indenture is discharged in accordance with Section 10.03 thereof, but under any circumstances not later than October 1, 20__. The provisions of this Section 2 are subject in all respects to any other provisions of this Site Lease relating to the termination hereof.
SECTION 3. Rental . The Authority shall pay to the City as and for rental of the Leased Property hereunder, the sum of $______________ (the “Site Lease Payment”).
The Site Lease Payment is due and payable upon the issuance of the Bonds and the execution and delivery hereof, and will be paid from the proceeds of the Bonds. The Authority and the City hereby find and determine that the total amount of the Site Lease Payment does not exceed the fair market value of the leasehold interest in the Leased Property which is conveyed hereunder by the City to the Authority. No other amount of rental is due and payable by the Authority for the use and occupancy of the Leased Property under this Site Lease.
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SECTION 4. Leaseback to City. The Authority shall lease the Leased Property back to the City under the Lease.
SECTION 5. Assignments and Subleases. Unless the City is in default under the Lease, the Authority may not as sign its rights under this Site Lease or sublet all or any portion of the Leased Property, except as provided in the Assignment Agreement and in the Lease, without the prior written consent of the City.
SECTION 6. Substitution or Release of Property . If the City exercises its option under Section 3.2 of the Lease to substitute property for the Leased Property in whole or in part, such substitution shall also operate to substitute property for the Leased Property which is leased hereunder. If the City exercises its option under Section 3.3 of the Lease to release a portion of the Leased Property from the Lease, such substitution shall also operate to release such portion of the Leased Property hereunder. The description of the Leased Property which is le ased under the Lease shall conform at all times to the description of the Leased Property which is leased hereunder.
SECTION 7. Right of Entry. The City reserves the right for any of its duly authorized representatives to enter upon the Leased Property, or any portion thereof, at any reasonable time to inspect the same or to make any repairs, improvements or changes necessary for the preservation thereof.
SECTION 8. Termination. The Authority agrees, upon the termination of this Site Lease, to quit and surrender the Leased Property in the same good order and condition as the Leased Property was in at the time of commencement of the term hereof, reasonable wear and tear excepted, and agrees that all buildings, improvements and structures then existing upon the Leased Property shall remain thereon and title thereto shall vest thereupon in the City for no additional consideration.
SECTION 9. Default. If the Authority defaults in the performance of any obligation on its part to be performed under the terms of this Site Lease, which default continues for 30 days following notice and demand for correction thereof to the Authority, the City may exercise any and all remedies granted by law, except that no merger of this Site Lease and of the Lease shall be de emed to occur as a result thereof and no such remedy may include termination hereof; provided, however, that so long as the Lease remains in effect, the Lease Payments payable by the City under the Lease shall continue to be paid to the Trustee.
SECTION 10. Quiet Enjoyment. The Authority at all times during the term of this Site Lease shall peaceably and quietly have, hold and enjoy all of the Leased Property, subject to the provisions of the Lease and subject only to Permitted Encumbrances (as that term is defined in the Lease).
SECTION 11. Waiver of Personal Liability . All liabilities under this Site Lease on the part of the Authority are solely corporate liabilities of the Authority as a public entity, and the City hereby releases each and every mem ber and officer of the Authority of and from any personal or individual liability under this Site Lease. No member or officer of the Authority or its governing board shall at any time or under any circumstances be individually or personally liable under t his Site Lease for anything done or omitted to be done by the Authority hereunder.
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SECTION 12. Taxes. The City covenants and agrees to pay any and all assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Leased Property and any improvements thereon.
SECTION 13. Eminent Domain. If the whole or any part of the Leased Property or any improvements thereon is taken by eminent domain proceedings, the interest of the Authority shall be reco gnized and is hereby determined to be the amount of the then unpaid Lease Payments payable under the Lease and the balance of the award, if any, shall be paid to the City.
SECTION 14. Partial Invalidity . If any one or more of the terms, provisions, covenants or conditions of this Site Lease shall to any extent be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this Site Lease shall be affected thereby, and each provision of this Site Lease shall be valid and enforceable to the fullest extent permitted by law.
SECTION 15. Notices . Any notice, request, complaint, dem and or other communication under this Site Lease shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by telecopy, telex or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by telecopy, telex or other form of telecommunication, (b) 48 hours after deposit in the United States mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The City, the Authority and the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.
If to the City/Authority: City of Lynwood
11330 Bullis Road
Lynwood, CA 90262
Attn: City Manager/Chief Administrative Officer
If to the Trustee: U.S. Bank Trust Company, National Association U.S. Bank Tower
633 West 5th Street, 24th Floor
Los Angeles, CA 90071
Attn: Corporate Trust Services
SECTION 16. Amendment of this Site Lease . The Authority and the City may at any time amend or modify any of the provisions of this Site Lease, but only (a) with the prior written consent of the Owners of a majority in aggregate principal amount of the Outstanding Bonds; or (b) without the consent of any of the Bond Owners, but only if such amendment or modification is for any one or more of the following purposes:
(i) to make cure any ambiguity, or to cure, correct or supplement any defective provision contained herein, or in any other respect whatsoever as the Authority and the City may deem necessary or desirable, provided that, in the opinion of Bond Counsel, such modifications or amendments do not materially adversely affect the interests of the Owners of the Bonds;
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(ii) to conform to any amendment of the Indenture which is made thereto in accordance with Section 9.01 of the Indenture; or
(iii) for the purpose of effectuating any substitution or release of property under Section 6.
SECTION 17. Governing Law. This Site Lease shall be construed in accordance with and governed by the Constitution and laws of the State of California.
SECTION 18. Third Party Beneficiary. The Trustee is hereby made a third party beneficiary under this Site Lease with all rights of a third party beneficiary.
SECTION 19. Binding Effect. This Site Lease inures to the benefit of and is binding upon the Authority, the City and their respective successors and assigns, subject, however, to the limitations contained herein.
SECTION 20. Section Headings. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Site Lease.
SECTION 21. Execution in Counterparts. This Site Lease may be executed in any number of counterparts, each of which shall be deemed to be an original but all together shall constitute but one and the same lease. It is also agreed that separate counterparts of this Site Lease may be separately executed by the Authority and th e City, all with the same force and effect as though the same counterpart had been executed by both the Authority and the City.
SECTION 22. Defined Terms. All capitalized terms used herein and not otherwise defined have the respective meanings given those terms in the Indenture.
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IN WITNESS WHEREOF, the City and the Authority have caused this Site Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written.
CITY OF LYNWOOD,
as lessor
By
Ernie Hernandez
City Manager
Attest:
Maria Quiñonez
City Clerk
LYNWOOD PUBLIC FINANCING AUTHORITY,
as lessee
By
Ernie Hernandez
Chief Administrative Officer
Attest:
Maria Quiñonez
Secretary
Lynwood Public Financing Authority - Page 93 of 242 Agenda Item # 3 A-1
APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The Leased Property consists of the City’s interest in the roadway portion of the City’s public streets, whether fee simple or easement, including arterial/collector streets, local streets and alleys, as described in the attached list.
[List of City streets to come]
Lynwood Public Financing Authority - Page 94 of 242 Agenda Item # 3 Jones Hall Draft of May 11, 2022
LEASE AGREEMENT
Dated as of July 1, 2022
between the
Lynwood Public Financing Authority,
as lessor
and the
City of Lynwood,
as lessee
Relating to
$___________
Lynwood Public Financing Authority
Lease Revenue Bonds, Series 2022
(Federally Taxable)
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TABLE OF CONTENTS
ARTICLE I ................................ ................................ ................................ ................. 2 Definitions; Rules of Interpretation ................................ ................................ ............. 2 SECTION 1.1. Definitions ............................................................................................................ 2 SECTION 1.2. Interpretation ....................................................................................................... 2 ARTICLE II ................................ ................................ ................................ ................ 3 Covenants, Representations and Warranties ................................ ............................ 3 SECTION 2.1. Covenants, Representations and Warranties of the City .................................... 3 SECTION 2.2. Covenants, Representations and Warranties of the Authority ............................ 4 ARTICLE III ................................ ................................ ................................ ............... 6 Deposit and Application of Funds; Acquisition and Construction of the Project; Substitution and Release of Property ................................ ........................... 6 SECTION 3.1. Deposit of Moneys; Refunding of CalPERS Contract ......................................... 6 SECTION 3.2. Substitution of Property ....................................................................................... 6 SECTION 3.3. Release of Property ............................................................................................. 7 ARTICLE IV ................................ ................................ ................................ .............. 8 Lease of Leased Property; Term of This Lease; Lease Payments: ............................ 8 SECTION 4.1. Lease of Leased Property ................................................................................... 8 SECTION 4.2. Term .................................................................................................................... 8 SECTION 4.3. Lease Payments .................................................................................................. 8 SECTION 4.4. Source of Payments; Covenant to Budget and Appropriate; Pledge of Pension Tax Override ................................................................................................................ 9 SECTION 4.5. Additional Rental Payments .............................................................................. 10 SECTION 4.6. Quiet Enjoyment ................................................................................................ 10 SECTION 4.7. Title .................................................................................................................... 10 ARTICLE V ................................ ................................ ................................ ............. 11 Maintenance; Taxes; Insurance; and Other Matters ................................ ................ 11 SECTION 5.1. Maintenance, Utilities, Taxes and Assessments ............................................... 11 SECTION 5.2. Modification of Leased Property ........................................................................ 11 SECTION 5.3. Liability Insurance .............................................................................................. 12 SECTION 5.4. Property Insurance ............................................................................................ 12 SECTION 5.5. Reserved ........................................................................................................... 12 SECTION 5.6. Reserved ........................................................................................................... 12 SECTION 5.7. Insurance Net Proceeds; Form of Policies ........................................................ 12 SECTION 5.8. Installation of City’s Personal Property ............................................................. 13 SECTION 5.9. Liens .................................................................................................................. 13 SECTION 5.10. Advances ......................................................................................................... 13 ARTICLE VI ................................ ................................ ................................ ............ 14 Damage, Destruction and Eminent Domain; Use of Net Proceeds .......................... 14 SECTION 6.1. Application of Net Proceeds .............................................................................. 14 SECTION 6.2. Termination or Abatement Due to Eminent Domain ......................................... 14 SECTION 6.3. Abatement Due to Damage or Destruction ....................................................... 14 SECTION 6.3. Reserved ........................................................................................................... 15 ARTICLE VII ................................ ................................ ................................ ........... 15 Other Covenants of the City ................................ ................................ .................... 15 SECTION 7.1. Disclaimer of Warranties ................................................................................... 15 SECTION 7.2. Access to the Leased Property ......................................................................... 15 SECTION 7.3. Release and Indemnification Covenants ........................................................... 15 SECTION 7.4. Assignment and Subleasing by the City ............................................................ 16 SECTION 7.5. Amendment Hereof ........................................................................................... 16 SECTION 7.6. Federal Tax Law ............................................................................................... 17 SECTION 7.7. Continuing Disclosure ....................................................................................... 17 ARTICLE VIII................................ ................................ ................................ ........... 18 Lynwood Public Financing Authority - Page 96 of 242 Agenda Item # 3
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Events of Default and Remedies ................................ ................................ ............. 18 SECTION 8.1. Events of Default Defined .................................................................................. 18 SECTION 8.2. Remedies on Default ......................................................................................... 18 SECTION 8.3. No Remedy Exclusive ....................................................................................... 18 SECTION 8.4. Agreement to Pay Attorneys' Fees and Expenses ............................................ 19 SECTION 8.5. No Additional Waiver Implied by One Waiver ................................................... 19 SECTION 8.6. Application of Proceeds ..................................................................................... 19 SECTION 8.7. Trustee and Bond Owners to Exercise Rights .................................................. 19 ARTICLE IX ................................ ................................ ................................ ............ 19 Prepayment of Lease Payments................................ ................................ .............. 19 SECTION 9.1. Security Deposit ................................................................................................ 19 SECTION 9.2. Optional Prepayment ......................................................................................... 20 SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain .................................................................................................................................... 20 SECTION 9.4. Credit for Amounts on Deposit .......................................................................... 20 ARTICLE X ................................ ................................ ................................ ............. 21 Miscellaneous ................................ ................................ ................................ ......... 21 SECTION 10.1. Notices ............................................................................................................. 21 SECTION 10.2. Binding Effect .................................................................................................. 21 SECTION 10.3. Severability ...................................................................................................... 21 SECTION 10.4. Net-net-net Lease ............................................................................................ 21 SECTION 10.5. Third Party Beneficiary .................................................................................... 21 SECTION 10.6. Further Assurances and Corrective Instruments ............................................. 21 SECTION 10.7. Execution in Counterparts. .............................................................................. 21 SECTION 10.8. Applicable Law ................................................................................................ 22 SECTION 10.9. Authority and City Representatives ................................................................. 22 SECTION 10.10. Captions ........................................................................................................ 22
APPENDIX A DESCRIPTION OF THE LEASED PROPERTY
APPENDIX B SCHEDULE OF LEASE PAYMENTS
Lynwood Public Financing Authority - Page 97 of 242 Agenda Item # 3
LEASE AGREEMENT
This LEASE AGREEMENT (this “Lease”), dated for convenience as of July 1, 2022, is between the LYNWOOD PUBLIC FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of the State of California, as lessor (the “Authority”), and the CITY OF LYNWOOD, a general law city and municipal corporation duly organized and existing under the Constitution and laws of the State of California, as lessee (the “City”).
B A C K G R O U N D :
1. The City and the Lynwood Redevelopment Agency (which has been succeeded by the Successor Agency to the former Lynwood Redevelopment Agency) (the “Successor Agency”) entered into a Joint Exercise of Powers Agreement, dated as of December 1, 1992, establishing the Authority for the purpose, among others, of providing assistance to the City and the Successor Agency with their financing programs.
2. The City is obligated by the Public Employees’ Retirement Law, commencing with Section 20000 of the Government C ode of the State of California, as amended (the “Retirement Law ”), to make payments relating to pension benefits accruing to the California Public Employees’ Retirement System’s (“ CalPERS”) members, including the City.
3. The City is obligated specificall y to make certain payments to CalPERS in respect of current and retired public safety employees and miscellaneous employees under the pension programs of CalPERS that amortize such obligations over a fixed period of time, including normal costs (collectively, the “CalPERS Obligation”).
4. The CalPERS Obligation is evidenced by a contract or contracts with CalPERS with respect to public safety employees and miscellaneous employees of the City, as heretofore and hereafter amended from time to time (collectiv ely, the “CalPERS Contract”).
5. The City is authorized under Section 37350 and 37380 of the California Government Code to lease, receive, hold, and enjoy real and personal property, and control and dispose of it for the common benefit, and the Authority is authorized under the Marks-Roos Local Bond Pooling Act of 1985, being Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “ Bond Law”) to issue revenue bonds for the purpose of providing working capital and/or refunding any evidence of indebtedness of its members.
6. The Authority proposes to issue lease revenue bonds under the Bond Law and an Indenture, dated as of July 1, 2022 (the “Indenture”), for the purpose of refunding all or a portion of the City’s obligations under the CalPERS Contract, including paying all costs of issuing the lease revenue bonds and of refunding the CalPERS Contract.
7. To that end, the City has proposed to lease to the Authority certain real property described in Appendix A attached hereto and by this reference incorporated herein (the “ Leased Property”), under a Site Lease, dated the date hereof (the “ Site Lynwood Public Financing Authority - Page 98 of 242 Agenda Item # 3
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Lease”), in consideration of the payment by the Authority of an upfront rental payment (the “Site Lease Payment”) which is sufficient to provide funds for refunding of the CalPERS Contract.
8. The Authority has authorized the issuance of its Lynwood Public Financing Authority Lease Revenue Bonds, Series 2022 (Federally Taxable) (the “Bonds”) under the Indenture for the purpose of providing the funds to enable the Authority to pay the Site Lease Payment to the City in accordance with the Site Lease.
9. In order to provide revenues which are sufficient to enable the Authority to pay debt service on the Bonds, the Authority has agreed to lea se the Leased Property back to the City under this Lease, under which the City has agreed to pay semiannual Lease Payments as the rental for the Leased Property thereunder.
10. The lease payments made by the City under this Lease have been assigned by the Authority to the Trustee for the security of the Bonds under an Assignment Agreement dated as of July 1, 2022, between the Authority as assignor and the Trustee as assignee.
11. The City and the Authority have found and determined that all acts and proceedings required by law necessary to make this Lease, when executed by the City and the Authority, the valid, binding and legal obligations of the City and the Authority, and to constitute this Lease a valid and binding agreement for the uses and purpo ses herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Lease have been in all respects duly authorized.
A G R E E M E N T :
In consideration of the material covenants contained in this Lease, the parti es hereto hereby formally covenant, agree and bind themselves as follows:
ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
SECTION 1.1. Definitions. Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms in this Lease have the respective meanings given them in the Indenture.
SECTION 1.2. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular includes the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and includes the neuter, masculine or feminine gender, as appropriate.
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(b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof.
(c) All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Lease; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Lease as a whole and not to any particular Article, Section or subdivision hereof.
ARTICLE II
COVENANTS, REPRESENTATIONS AND WARRANTIES
SECTION 2.1. Covenants, Representations and Warranties of the City . The City makes the following covenants, representations and warranties to the Authority, the Trustee as of the date of the execution and delivery of this Lease:
(a) Due Organization and Existence. The City is a general law city and municipal corporation duly organized and validly existing under the Constitution and laws of the State of California, has full legal right, power and authority under the laws of the State of California to enter into the Site Lease and this Lease and to carry out and consummate all transactions contemplated hereby, and by proper action the City has duly authorized the execution and delivery of the Site Lease and this Lease.
(b) Due Execution. The rep resentatives of the City executing the Site Lease and this Lease have been fully authorized to execute the same under a resolution duly adopted by the City Council of the City.
(c) Valid, Binding and Enforceable Obligations. The Site Lease and this Lease have been duly authorized, executed and delivered by the City and constitute the legal, valid and binding obligations of the City enforceable against the City in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of the Site Lease and this Lease, the consummation of the transactions therein and herein contemplated and the fulfillment of or compliance with the terms and conditions thereof and hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the City is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or asse ts of the City, which conflict, violation, breach, default, lien, charge or Lynwood Public Financing Authority - Page 100 of 242 Agenda Item # 3
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encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Site Lease and this Lease or the financial c ondition, assets, properties or operations of the City.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the City or of the voters of the City, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of the Site Lease and this Lease, or the consummation of any transaction therein and herein contemplated, except as have been obtained or made and as are in full force and effect.
(f) No Litigation . There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the City after reasonable investigation, threatened against or affecting the City or the assets, properties or operations of the City which, if determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Site Lease and this Lease, or upon the financial condition, assets, properties or operations of the City, and the City is not in default with respect to any order or decree of any court or any order, regu lation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Site Lease and this Lease or the fi nancial conditions, assets, properties or operations of the City.
SECTION 2.2. Covenants, Representations and Warranties of the Authority . The Authority makes the following covenants, representations and warranties to the City, the Trustee as of the date of the execution and delivery of this Lease:
(a) Due Organization and Existence. The Authority is a joint exercise of powers authority duly organized and existing under a joint powers agreement and the laws of the State of California; has power to enter into this Lease, the Site Lease, the Assignment Agreement and the Indenture; is possessed of full power to own and hold, improve and equip real and personal property, and to lease the same; and has duly authorized the execution and delivery of each of the aforesaid agreements and such agreements constitute the legal, valid and binding obligations of the Authority, enforceable against the Authority in accordance with their respective terms.
(b) Due Execution. The representatives of the Authority executing this Lease, the Site Lease, the Assignment Agreement and the Indenture are fully authorized to execute the same pursuant to official action taken by the governing body of the Authority.
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(c) Valid, Binding and Enforceable Obligations . This Lease, the Site Lease, the Assignment Agreement and the Indenture have been duly authorized, executed and delivered by the Authority and constitute the legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms.
(d) No Conflicts . The execution and delivery of this Lease, the Site Lease, the Assignment Agreement and the Indenture, the
consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the Authority is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Authority, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Lease, the Site Lease, the Assignment Agreement and the Indenture or the financial condition, assets, properties or operations of the Authority.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the Authority, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of this Lease, the Site Lease, the Assignment Agreement or the Indenture, or the consummation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect.
(f) No Litigation . There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the Authority a fter reasonable investigation, threatened against or affecting the Authority or the assets, properties or operations of the Authority which, if determined adversely to the Authority or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Lease, the Site Lease, the Assignment Agreement or the Indenture, or upon the financial condition, assets, properties or operations of the Authority, and the Authority is not in default wit h respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Lease, the Site Lease, the Assignment Lynwood Public Financing Authority - Page 102 of 242 Agenda Item # 3
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Agreement or the Indenture or the financial conditions, assets, properties or operations of the Authority.
ARTICLE III
DEPOSIT AND APPLICATION OF FUNDS; SUBSTITUTION
AND RELEASE OF PROPERTY
SECTION 3.1. Deposit of Moneys; Refunding of CalPERS Contract.
(a) Deposit of Bond Proceeds. On the Closing Date, the Authority will cause the proceeds of sale of the Bonds to be deposited with the Trustee. The Trustee shall deposit such proceeds in accordance with Section 3.02 of the Indenture.
(b) Refunding of CalPERS Contract. Pursuant to Section 3.02 of the Indenture, the Authority will transfer a portion of the proceeds of the Bonds to the City. The City hereby agrees to apply such proceeds to refund the CalPERS Contract.
SECTION 3.2. Substitution of Prope rty. The City has the option at any time and from time to time, to substitute other real property (the “ Substitute Property”) for the Leased Property or any portion thereof (the “ Former Property”), upon satisfaction of all of the following requirements which are hereby declared to be conditions precedent to such substitution:
(a) No Event of Default has occurred and is continuing , as certified in writing by the City.
(b) The City has filed with the Auth ority and the Trustee, and if the Substitute Property is property other than the City’s streets , caused to be recorded in the office of the Los Angeles County Recorder sufficient memorialization of an amendment hereof that adds the legal description of the Substitute Property to Appendix A and deletes therefrom the legal description of the Former Property , and , if applicable, has filed and caused to be recorded corresponding amendments to the Site Lease and Assignment Agreement.
(c) If the Substitute Property is property other than the City’s streets, the City has obtained a CLTA policy of title insurance insuring the City’s leasehold estate hereunder in the Substitute Property, subject only to Permitted Encumbrances, in an amount at least equal to the estimated value thereof.
(d) The City has certified in writing to the Authority and the Trustee that the Substitute Property serves the municipal purposes of the City and constitutes property which the City is permitted to lease under the laws of the State of California, and has been determined to be essential to the proper, efficient and economic operation of the City and to serve an essential governmental function of the City.
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(e) The Substitute Property does not cause the City to violate any of its covenants, representations and warranties made herein, as certified in writing by the City.
(g) The City has filed with the Authority and the Trustee a written certificate of the City or other written evidence stating that the useful life of the Substitute Property at least extends to the final maturity of the Bonds , that the estimated value of the Leased Property, after substitution of the Substitute Property and release of the Former Property, is at least equal to the aggregate Outstanding principal amount of the Bonds, and the fair rental value of the Leased Property, after substitution of the Substitute Property and release of the Former Property, is at least equal to the Lease Payments thereafter coming due and payable hereunder.
Upon the satisfaction of all such conditions precedent, the Term of this Lease will thereupon end as to the Former Property and commence as to the Substitute Property, and all references to the Former Property will apply with full force and effect to the Substitute Property. The Cit y is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of any substitution of property under this Section. If applicable, the Authority and the City will execute, deliver and cause to be recorded all documents required to discharge the Site Lease, this Lease and the Assignment Agreement of record against the Former Property and to cause the Substitute Property to become subject to all of the terms and conditions of the Site Lease, this Lease and the Assignment Agreement.
SECTION 3.3. Release of Property. The City has the option at any time and from time to time to release any portion of the Leased Property from this Lease (the “Released Property”) provided that the City has satisfied all of the following requirements which are hereby declared to be conditions precedent to such release:
(a) No Event of Default has occurred and is continuing , as certified in writing by the City.
(b) The City has filed with the Authority and the Trustee, and if the Substitute Property is property other than the City’s streets , caused to be recorded in the office of the Los Angeles County Recorder sufficient memorialization of an amendment hereof , the Site Lea se and the Assignment Agreement which removes the Released Property from the Site Lease , the Assignment Agreement and this Lease.
(c) The City has certified in writing to the Authority and the Trustee that the value of the property which remains subject to this Lease following such release is at least equal to the aggregate Outstanding principal amount of the Bonds, and the fair rental value of the property which remains subject to this Lease following such release is at least equal to the Lease Payments thereafter coming due and payable hereunder.
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Upon the satisfaction of all such conditions precedent, the Term of this Lease will thereupon end as to the Released Property. The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such release. If applicable, the Authority and the City shall execute, deliver and cause to be recorded all documents required to discharge the Site Lease, this Lease and the Assignment Agreement of record against the Released Property.
ARTICLE IV
LEASE OF LEASED PROPERTY; TERM OF THIS LEASE;
LEASE PAYMENTS
SECTION 4.1. Lease of Leased Property. The Authority hereby leases the Leased Property to the City and the City hereby leases the Leased Property from the Authority, upon the terms and conditions set forth in this Lease.
SECTION 4.2. Term. The Term of this Lease commences on the Closing Date and ends on the date on which the Indenture is discharged in accordance with Section 10.03 thereof, but under any circumstances not later than October 1, 20__. The provisions of this Section are subject to the provisions of Sections 6.2 through 6.4 relating to the taking in eminent domain , damage and destruction of the Leased Property in whole or in part and interference with completion of construction of the Project.
SECTION 4.3. Lease Payments.
(a) Obligation to Pay. Subject to the provisions of Sections 6.2 through 6.4 and the provisions of Article IX, the City agrees to pay to the Authority, its successors and assigns, the Lease Payments in the respective amounts specified in Appendix B attached to this Lease, to be due and payable in immediately available funds on the Interest Payment Dates immediately following each of the respective Lease Payment Dates specified in Appendix B, and to be deposited by the City with the Trustee on each of the Lease Payment Dates specified in Appendix B. Any amount held in the Bond Fund, the Interest Account (including the Capitalized Interest Subaccount) and the Principal Account on any Lease Paymen t Date (other than amounts resulting from the prepayment of the Lease Payments in part but not in whole under Article IX, and amounts required for payment of past due principal or interest on any Bonds not presented for payment) will be credited towards the Lease Payment then required to be paid hereunder. The City is not required to deposit any Lease Payment with the Trustee on any Lease Payment Date if the amounts then held in the Bond Fund, the Interest Account (including the Capitalized Interest Subaccount) and the Principal Account are at least equal to the Lease Payment then required to be deposited with the Trustee. The Lease Payments payable in any Rental Period are for the use of the Leased Property during that Rental Period.
(b) Effect of Prepayment. If the City prepays all Lease Payments in full under Sections 9.2 or 9.3, the City’s obligations under this Section will thereupon cease and terminate. If the City prepays the Lease Payments in part but not in whole under Sections
9.2 or 9.3, the principal components of the remaining Lease Payments will be reduced in integral multiples of $5,000 among Lease Payment Dates on a basis which corresponds to the principal maturities of the Bonds which are redeemed thereby; and the interest Lynwood Public Financing Authority - Page 105 of 242 Agenda Item # 3
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component of ea ch remaining Lease Payment will be reduced by the aggregate corresponding amount of interest which would otherwise be payable with respect to the Bonds thereby redeemed under Section 4.01 of the Indenture.
(c) Rate on Overdue Payments . If the City fails to make any of the payments required in this Section, the payment in default will continue as an obligation of the City until the amount in default has been fully paid, and the City agrees to pay the same with interest thereon, from the date of default to the date of payment at the highest rate of interest on any Outstanding Bond.
(d) Fair Rental Value . The aggregate amount of the Lease Payments and Additional Rental Payments coming due and payable during each Rental Period constitute the total rental for the Leased Property for such Rental Period, and are payable by the City in each Rental Period for and in consideration of the right of the use and occupancy of, and the continued quiet use and enjoyment of the Leased Property during each Rental Period. The parties hereto have agreed and determined that the total Lease Payments represent the fair rental value of the Leased Property. In making that determination, consideration has been given to the estimated value of the Leased Property, other obligations of the City and the Authority under this Lease, the uses and purposes which may be served by the Leased Property and the benefits therefrom which will accrue to the City and the general public.
(e) Assignment. The City understands and agrees that all Lease Payments have been assigned by the Authority to the Trustee in trust, under the Assignment Agreement, for the benefit of the Owners of the Bonds, and the City hereby assents to such assignment. The Authority hereby directs the City, and the City hereby agrees to pay to the Trustee at its Office, all payments payable by the City under this Section and all amounts payable by the City under Article IX.
SECTION 4.4. Source of Payments; Covenant to Budget and Appropriate; Pledge of Pension Tax Override. The Lease Payments are payable from any source of available funds of the City, subje ct to the provisions of Sections 6.2 through 6.4. Subject to the provisions of Sections 6.2 through 6.4, the City covenants to take all actions required to include the Lease Payments in each of its budgets during the Term of this Lease and to make the necessary appropriations for all Lease Payments and Additional Rental Payments. The foregoing covenant of the City contained constitutes a duty imposed by law and each and every public official of the City is required to take all actions required by law in the performance of the official duty of such officials to ena ble the City to carry out and perform the covenants and agreements in this Lease agreed to be carried out and performed by the City.
On April 9, 1946, the voters in the City approved a retirement tax to support amounts owed by the City to CalPERS pursuant to the CalPERS Contract (the “Pension Tax Override”), which Pension Tax Override is accounted for in a special fund, separate and apart from the General Fund, and available only for its authorized purposes . In furtherance of its authorized purposes, the City hereby pledges the Pension Tax Override to the payment of the Lease Payments.
The obligation of the City to make Lease Payments or Additional Rental Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation other Lynwood Public Financing Authority - Page 106 of 242 Agenda Item # 3
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than the Pension Tax Override. Neither the Bonds nor the obligation of the City to make Lease Payments or Additional Rental Payments constitutes an indebtedness of the City, the State or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.
SECTION 4.5. Additional Rental Payments. In addition to the Lease Payments, the City shall pay when due the following amounts of Additional Rental Payments in consideration of the lease of the Leased Property by the City from the Authority hereunder:
(a) all fees and expenses incurred by the Authority in connection with or by reason of its leasehold estate in the Leased Property, when due,
(b) all reasonable compensation to the Trustee for all services rendered under the Indenture and for all reasonable expenses, charges, costs, liabilities, legal fees and o ther disbursements incurred in and about the performance of its powers and duties under the Indenture,
(c) the reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the Authority or the Trustee to prepare audits, financial statements, reports, opinions or provide such other services required under this Lease or the Indenture, and
(d) the reasonable out-of-pocket expenses of the Authority in connection with the execution and delivery of this Lease o r the Indenture, or in connection with the issuance of the Bonds, including but not limited to any and all expenses incurred in connection with the authorization, sale and delivery of the Bonds, or incurred by the Authority in connection with any litigatio n which may at any time be instituted involving this Lease, the Bonds, the Indenture or any of the other documents contemplated hereby or thereby, or otherwise incurred in connection with the administration of this Lease.
SECTION 4.6. Quiet Enjoyment. Throughout the Term of this Lease, the Authority shall provide the City with quiet use and enjoyment of the Leased Property and the City will peaceably and quietly have and hold and enjoy the Leased Property, without suit, trouble or hindrance from the Authority, except as expressly set forth in this Lease. The Authority will, at the request of the City and at the City’s cost, join in any legal action in which the City asserts its right to such possession and enjoyme nt to the extent the Authority may lawfully do so. Notwithstanding the foregoing, the Authority has the right to inspect the Leased Property as provided in Section 7.2.
SECTION 4.7. Title. Upon the termination of this Lease (other than under Section
8.2(b) hereof), all right, title and interest of the Authority in and to the Leased Property transfers to and vests in the City. If applicable, the Authority shall take any and all steps and execute and record any and all docu ments reasonably required by the City to consummate any such transfer of title.
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ARTICLE V
MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS
SECTION 5.1. Maintenance, Utilities, Taxes and Assessments . Throughout the Term of this Lease, as part of the consideration for the rental of the Leased Property, all improvement, repair and maintenance of the Leased Property are the responsibility of the City, and the City will pay for or otherwise arrange for the payment of all utility services supplied to the Leased Property, which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and will pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Leased Property resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sublessee thereof. In exchange for the Lease Payments herein provided, the Authority agrees to provide only the Leased Property. The City waives the benefits of subsections 1 and 2 of Section 1932, Section 1933(4) and Sections 1941 and 1942 of the California Civil Code, but such waiver does not limit any of the rights of the City under the terms of this Lease.
The City shall also pay or cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Leased Property or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City shall pay only such installments as are required to be paid during the Term of this Lease as and when the same become due.
The City may, at its expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority notifies the City that, in its reasonable opinion, by nonpayment of any such items the interest of the Authority in the Leased Property will be materially endangered or the Leased Property or any part thereof will be subject to loss or forfeiture, in which event the City shall promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority and the Trustee.
SECTION 5.2. Modification of Leased Property. The City has the right, at its own expense, to make additions, modifications and improvements to the Leased Property or any portion thereof. All additions, modifications and improvements to the Leased Property will thereafter comprise part of the Leased Property and become subject to the provisions of this Lease. Such additions, modifications and improvements may not in any way damage the Leased Property, or cause the Leased Property to be used for purposes other than those authorized under the provisions of st ate and federal law; and the Leased Property, upon completion of any additions, modifications and improvements made thereto under this Section, must be of a value which is not substantially less than the value thereof immediately prior to the making of suc h additions, modifications and improvements. The City will not permit any mechanic’s or other lien to be established or remain against the Leased Property for labor or materials furnished in connection with any remodeling, additions, modifications, improv ements, repairs, renewals or replacements made by the City under this Section; except that if any such lien is established and the City first notifies or causes to be notified the Authority of the City’s intention to do so, the City may in good faith conte st any lien filed or established against the Leased Property, Lynwood Public Financing Authority - Page 108 of 242 Agenda Item # 3
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and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and shall provide the Authority with full se curity against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Authority. The Authority will cooperate fully in any such contest, upon the request and at the expense of the City.
SECTION 5.3. Liability Insurance. The City shall maintain or cause to be maintained throughout the Term of this Lease, but only if and to the extent available from reputable insurers at reasonable cost in the reasonable opinion of the City, a standard commercial general liability insurance policy or policies in protection of the Authority, the City, and their respective members, officers, agents, employees and assigns. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Leased Property. Such policy or policies shall provide coverage in such liabi lity limits and be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of self-insurance by the City, subject to the provisions of Section 5.7, or in the form of the participation by the City in a joint powers agency or other program providing pooled insurance. The proceeds of such liability insurance must be applied toward extinguishment or satisfaction of the liability with respect to which paid.
SECTION 5.4. Property Insurance. Solely to the extent the Leased Property is property other than the City’s streets, the City shall procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease, property insurance against loss or damage to all improvements situated on the Leased Property, in an amount at least equal to the lesser of (a) 100% of the replacement value of the improvements, or (b) 100% of the aggregate principal amount of the Outstanding Bonds. Such insurance must, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance ; provided, that such coverage shall include earthquake insurance only if available at reasonable cost from reputable insurers in the judgment of the City. Such insurance may be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers agency or other program providing pooled insurance; provided that such insurance may not be maintained by the City in the form of self-insurance. The Net Proceeds of such insurance must be applied as provided in Section 6.1.
SECTION 5.5. Reserved.
SECTION 5.6. Reserved.
SECTION 5.7. Insurance Net Proceeds; Form of Policies. Each policy of insurance maintained under Section 5.4 must name the Trustee as loss payee so as to provide that all proceeds thereunder are payable to the Trustee. The City shall pay or cause to be paid when due the premiums for all insurance policies required by this Lease. The City must file with the Trustee annually, within 90 days following the close of each Fiscal Year, a certificate of the City stating that all policies of insurance required hereunder are then in full force and effect. The Trustee has no responsibility for the sufficiency, adequacy or amount of any insurance or self -insurance herein required and is fully protected in Lynwood Public Financing Authority - Page 109 of 242 Agenda Item # 3
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accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss.
If any insurance maintained under Sec tion 5.3 is provided in the form of self - insurance, the City must file with the Trustee annually, within 90 days following the close of each Fiscal Year, a statement of the risk manager of the City or an independent insurance adviser engaged by the City id entifying the extent of such self -insurance and stating the determination that the City maintains sufficient reserves with respect thereto.
If any such insurance is provided in the form of self-insurance by the City, the City has no obligation to make any payment with respect to any insured event except from those reserves.
SECTION 5.8. Installation of City’s Personal Property . The City may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed other items of equipment or other personal property in or upon the Leased Property. All such items shall remain the sole property of the City, in which neither the Authority nor the Trustee has any interest, and may be modified or removed by the City at any time, provided that the City must repair all damage to the Leased Property resulting from the installation, modification or removal of any such items. Nothing in this Lease prevents the City from purchasing or leasing items to be installed under this Section under a lease or conditional sale agreement, or subject to a vendor’s lien or security agreement, as security for the unpaid portion of the purchase price thereof, so long as no such lien or security interest attaches to any part of the Leased Property.
SECTION 5.9. Liens. The City may not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbran ce or claim on or with respect to the Leased Property, other than as herein contemplated and except for such encumbrances as the City certifies in writing to the Trustee do not materially and adversely affect the leasehold estate of the City in the Leased Property hereunder. If any such mortgage, pledge, lien, charge, encumbrance or claim does materially and adversely affect the leasehold estate of the City in the Leased Property hereunder, the City will promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible; provided that the City is not required to do so prior to the time when such mortgage, pledge, lien, charge, encumbrance o r claim actually causes such material adverse effect. The City will reimburse the Authority for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.
SECTION 5.10. Advances. If the City fails to perform any of its obligations under this Article V, the Authority may (but is not required to) take such action as it deems necessary to cure such failure, including the advancement of money, and the City shal l repay all such advances as Additional Rental Payments hereunder, with interest at the rate set forth in Section 4.3(c).
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ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET
PROCEEDS
SECTION 6.1. Application of Net Proceeds . The Trustee, as assignee of the Authority under the Assignment Agreement, has the right to receive all Net Proceeds. As provided in the Indenture, the Trustee will deposit all Net Proceeds in the Insurance and Condemnation Fund to be applied as set forth in Section 5.07 of the Indenture.
SECTION 6.2. Termination or Abatement Due to Eminent Domain . If the Leased Property is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the Term of this Lease thereupon ceases as of the day possession is taken. If less than all of the Leased Property is taken permanently, or if the Leased Property is taken temporarily, under the power of eminent domain, then:
(a) this Lease shall continue in full force and effect with respect thereto and does not terminate by virtue of such taking, and the parties waive the benefit of any law to the contrary; and
(b) the Lease Payments are subject to abatement in an amount determined by the City such that the resulting Lease Payments represent fair cons ideration for the use and occupancy of the remaining usable portions of the Leased Property.
The abatement of Lease Payments hereunder in accordance with the terms hereof shall not constitute an Event of Default (as defined in Section 8.1) hereunder.
SECTION 6.3. Abatement Due to Damage or Destruction . The Lease Payments are subject to abatement during any period in which by reason of damage or destruction (other than by eminent domain whic h is hereinbefore provided for) there is substantial interference with the use and occupancy by the City of the Leased Property or any portion thereof. The Lease Payments are subject to abatement in an amount determined by the City such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property not damaged or destroyed. Such abatement will continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, this Lease continues in full force and effect and the City waives any right to terminate this Lease by virtue of any such damage and destruction.
Notwithstanding the foregoing, there shall be no abatement of Lease Payments to the extent that the proceeds of property insurance, rental interruption insurance or capitalized interest are available to pay Lease Payments which would otherwise be abated under this Section, it being hereby declared that such proceeds and amounts constitute a special fund for the payment of the Lease Payments.
The abatement of Lease Payments hereunder in accordance with the terms hereof shall not constitute an Event of Default (as defined in Section 8.1) hereunder.
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SECTION 6.4. Reserved.
ARTICLE VII
OTHER COVENANTS OF THE CITY
SECTION 7.1. Disclaimer of Warranties. THE AUTHORITY AND THE TRUSTEE
MAKE NO AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS OR
IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE
CONTEMPLATED BY THE CITY OF THE LEASED PROPERTY OR ANY PORT ION
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE LEASED PROPERTY OR ANY PORTION THERE OF. THE CITY
ACKNOWLEDGES THAT TH E AUTHORITY IS NOT A MANUFACTURER OF ANY
PORTION OF THE LEASE D PROPERTY OR A DEAL ER THEREIN, THAT THE CITY
LEASES THE LEASED PR OPERTY AS -IS, IT BEI NG AGREED THAT ALL O F THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. The Authority and its assigns have no liability for incidental, indirect, special or consequential damages, in connection with or arising out of this Lease for the existence, furnishing, functioning or use of the Leased Property by the City.
SECTION 7.2. Access to the Leased Property. The City agrees that the Authority and any Authorized Representative of the Authority, and the Authority’s successors or assigns, have the right at all reasonable times to enter upon and to examine and inspect the Leased Property or any part thereof. The City further agrees that the Authorit y, any Authority Representative and the Authority’s successors or assigns may have such rights of access to the Leased Property or any component thereof as reasonably necessary to cause the proper maintenance of the Leased Property if the City fails to per form its obligations hereunder; provided, however, that neither the Authority nor any of its assigns has any obligation to cause such proper maintenance.
SECTION 7.3. Release and Indemnification Covenants . The City agrees to indemnify the Authority, the Trustee and their respective officers, agents, successors and assigns, against all claims, losses and damages, including legal fees and expenses, arising out of any of the following:
(a) the use, maintenance, condition or management of, or from any work or thing done on the Leased Property by the City,
(b) any breach or default on the part of the City in the performance of any of its obligations under this Lease,
(c) any negligence or willful misconduct of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Leased Property,
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(d) any intentional misconduct or negligence of any sublessee of the City with respect to the Leased Property,
(e) the acquisition, construction, improvement and equipping of the Leased Property, or the authorization of payment of the costs thereof, or
(f) the acceptance and performance of the duties of the Trustee under the Indenture, the Assignment Agreement and under this Lease.
No indemnification is made under this Section or elsewhere in this Lease for willful misconduct or negligence under this Lease by the Authority, the Trustee or their respective officers, agents, employees, successors or assigns.
SECTION 7.4. Assignment and Subleasing by the City. The City may sublease the Leased Property, or any portion thereof, subject to all of the following conditions:
(a) this Lease and the obligation of the City to make Lease Payments hereunder must remain obligations of the City , as certified in writing by the City;
(b) the City must, within 30 days after the delivery thereof, furnish or cause to be furnished to the Authority and the Trustee a true and complete copy of such sublease; and
(c) no such sublease by the City may cause the Leased Property to be used for a purpose which is not authorized under the provisions of the laws of the State of California, as certified in writing by the City.
SECTION 7.5. Amendment Hereof. The Authority and the City may at any time amend or modify any of the provisions of this Lease, but only: (a) with the prior written consents of the Owners of a majority in aggregate princi pal amount of the Outstanding Bonds; or (b) without the consent of the Trustee or any of the Bond Owners, but only if such amendment or modification is for any one or more of the following purposes:
(i) to add to the covenants and agreements of the City contained in this Lease, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power herein reserved to or conferred upon the City;
(ii) to make such provisions for the purpose of curing any ambiguity, or of curin g, correcting or supplementing any defective provision contained herein, to conform to the original intention of the City and the Authority;
(iii) to amend the description of the Leased Property to reflect accurately the property originally intended to b e included therein, or in connection with any substitution or release of property under Sections
3.2 or 3.3;
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(iv) to obligate the City to pay additional amounts of rental for the use and occupancy of the Leased Property, but only if (A) such additional amounts of rental are pledged or assigned for the payment of any bonds, notes, leases or other obligations the proceeds of which are applied to finance authorized expenditures of the City for the common benefit, and (B) the City has obtained and filed with t he Trustee an appraisal or other evidence of value satisfactory to the City showing that the estimated value of the Leased Property is at least equal to the aggregate principal amount of the Outstanding Bonds and all such other bonds, notes, leases or other obligations; or
(v) in any other respect whatsoever as the Authority and the City deem necessary or desirable, if in the opinion of Bond Counsel such modifications or amendments do not materially adversely affect the interests of the Owners of the Bonds.
No such modification or amendment may (a) extend or have the effect of extending any Lease Payment Date or reducing any Lease Payment or any premium payable upon the prepayment thereof, without the express consent of the Owners of the affected Bonds, or (b) modify any of the rights or obligations of the Trustee without its written assent thereto. If the Trustee’s consent to such modification or amendment is required, the Trustee shall be entitled to the same documents as it would be entitled to under Article IX of the Indenture for such type of modification or amendment.
SECTION 7.6. Federal Tax Law . The City and the Authority do not intend the interest on the Bonds to be excluded from gross income for federal income tax purposes.
SECTION 7.7. Continuing Disclosure. The City shall comply with and carry out all of the provisions of the Continuing Disclosure Certificate executed by the City as of the Closing Da te, as originally executed and as it may be amended from time to time in accordance with its terms. Notwithstanding any other provision of this Lease, failure of the City to comply with such Continuing Disclosure Certificate will not constitute an Event of Default, although any Participating Underwriter (as that term is defined in such Continuing Disclosure Certificate) or any Owner or beneficial owner of the Bonds may take such actions as may be necessary and appropriate to compel performance by the City of its obligations under this Section, including seeking mandate or specific performance by court order.
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ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1. Events of Default Defined. Any one or more of the following events constitute an Event of Default hereunder:
(a) Failure by the City to pay any Lease Payment or other payment required to be paid hereunder at the time specified herein.
(b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in the preceding subsection (a), for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority or the Trustee.
If in the reasonable opinion of the City the failure stated in the notice can be corrected, but not within such 30 -day period, the failure will not constitute an Event of Default if the City commences to cure the failure within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time , such period of time not to be longer than 180 days after the delivery of such default notice.
(c) The filing by the City of a voluntary petition in bankruptcy, or failure by the City promptly to lift any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the Federal Ba nkruptcy Code, as amended, or under any similar acts which may hereafter be enacted.
SECTION 8.2. Remedies on Default. Whenever any Event of Default has happened and is continuing, the Authority may exercise any and all remedies available under law or granted under this Lease to collect the amounts then due and thereafter to become due hereunder or to enforce any other of its rights hereunder , except as provided herein .
Notwithstanding anything herein or in t he Indenture to the contrary, (a) neither the Authority nor the Trustee may accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable (the Authority hereby expressly waives the right to receive any amount from the City pursuant to Section 1951.2 of the California Civil Code to accelerate payment of the Lease Payments) and (b) neither the Authority nor the Trustee shall have the right to re -lease any portion of the Leased Property that constitutes a City street. Each covenant hereof to be kept and performed by the City is expressly made a condition and upon the breach thereof the Authority may exercise any and all rights granted hereunder; except that no termination of this Lease may be effected either by operation of law or acts of the parties hereto, except only in the manner herein expressly provided.
SECTION 8.3. No Remedy Exclusive . No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy is cumulative and in addition to every other remedy given under this Lease or now or hereafter existing Lynwood Public Financing Authority - Page 115 of 242 Agenda Item # 3
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at law or in equity. No delay or omission to exercise any right or power accruing upon the occurrence of any Event of Default impairs any such right or power or operates as a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed exp edient. In order to entitle the Authority to exercise any remedy reserved to it in this Article VIII it is not necessary to give any notice, other than as expressly required in this Article VIII or by law.
SECTION 8.4. Agreement to Pay Attorneys’ Fees a nd Expenses. If the Authority or the City defaults under any of the provisions of this Lease and the nondefaulting party employs attorneys or incurs other expenses for the collection o f moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party will on demand therefor pay to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting party ; provided, however, that the Trustee shall not be required to expend its own funds for any payment described in this Section.
SECTION 8.5. No Additional Waiver Implied by One Waiver. If the Authority or the City breaches any agreement in this Lease and thereafter the other party waives the breach, such waiver is limited to the particular breach so waived and does not operate to waive any other breach hereunder.
SECTION 8.6. Application of Proceeds. All net proceeds received from the re-lease of the Leased Property under this Article VIII, and all other amounts derived by the Authority or the Trustee as a result of the occurrence of an Event of Default, must be paid to and applied by the Trustee in accordance with Section 7.03 of the Indenture.
SECTION 8.7. Trustee and Bond Owners to Exercise Rights . Such rights and remedies as are given to the Authority under this Article VIII have been assigned by the Authority to the Trustee under the Assignment Agreement for the benefit of the Bond Owners, to which assign ment the City hereby consents. The Trustee and the Bond Owners shall exercise such rights and remedies in accordance with the Indenture.
ARTICLE IX
PREPAYMENT OF LEASE PAYMENTS
SECTION 9.1. Security Deposit. Notwithstanding any other provision of this Lease, the City may on any date secure the payment of the Lease Payments allocable to the Leased Property in whole or in part by depositi ng with the Trustee an amount of cash which, together with other available amounts on deposit in the funds and accounts established under the Indenture, is either:
(a) sufficient to pay such Lease Payments, including the principal and interest components thereof, in accordance with the Lease Payment schedule set forth in Appendix B, or
(b) invested in whole or in part in non-callable Federal Securities in such amount as will, in the opinion of an independent certified public accountant, (which opinion must be addressed and delivered to the Lynwood Public Financing Authority - Page 116 of 242 Agenda Item # 3
-20-
Trustee), together with interest to accrue thereon and together with any cash which is so deposited, be fully sufficient to pay such Lease Payments when due under Section 4.3(a), as the City instructs at the time of said deposit.
If the City makes a security deposit under this Section with respect to all unpaid Lease Payments, and notwithstanding the provisions of Section 4.2, (a) the Term of this Lease will continue, (b) all obligations of the City under this Lease, and all security provided by this Lease for said Lease Payments, will thereupon cease and terminate, excepting only the obligation of the City to make, or cause to be made all of said Lease Payments from such security deposit, and (c) under Section 4.7, ti tle to the Leased Property will vest in the City on the date of said deposit automatically and without further action by the City or the Authority. Said security deposit constitutes a special fund for the payment of Lease Payments in accordance with the provisions of this Lease.
SECTION 9.2. Optional Prepayment. The City has the option to prepay the principal components of the Lease Payments in whole, or in part in any integral multiple of $5,000, from any source of legally available funds, on any date on or after October 1, 20__, at a prepayment price equal to the aggregate principal components of the Lease Payments to be prepaid, together with the interest component of the Lease Payment required to be paid on such Interest Payment Date, and together with a prepayment premium equal to the premium (if any) required to be paid on the resulting redemption of Bonds under Section 4.01(a) of the Indenture. Such prepayment price shall be deposited by the Trustee in the Redemption Fund to be applied to the redemption of Bonds under Section 4.01(a) of the Indenture. The City shall give 10 days’ written notice to the Trustee of its intention to prepay the Lease Payments under this Section.
SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain. The City shall prepay the principal components of the Lease Payments allocable to the Leased Property in whole or in part on any date, from and to the extent of any Net Proceeds of insurance award or eminent domain award with respect to the Leased Property theretofore deposited in the Redemption Fund for that purpose under Article VI hereof and Section 5. 07 of the Indenture. Such Net Proceeds, to the extent remaining after payment of any delinquent Lease Payments, will be credited towards the City’s obligations under this Section and applied to the corresponding redemption of Bonds under Section 4.01(b) of the Indenture.
SECTION 9.4. Credit for Amounts on Deposit . If the principal components of the Lease Payments are prepaid in full under this Article IX, such that the Indenture is discharged by its terms as a result of such prepayment, at the written election of the City filed with the Trustee any or all amounts then on deposit in the Bond Fund (and the accounts therein) will be credited towards the amounts then required to be so prepaid.
Lynwood Public Financing Authority - Page 117 of 242 Agenda Item # 3
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ARTICLE X
MISCELLANEOUS
SECTION 10.1. Notices. Any notice, request, complaint, demand or other communication under this Lease shall be given by first class mail or personal d elivery to the party entitled thereto at its address set forth below, or by facsimile transmission or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) 48 hours after deposit in the United States of America first class mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Authority, the City or the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.
If to the City/Authority: City of Lynwood
11330 Bullis Road
Lynwood, CA 90262
Attn: City Manager/Chief Administrative Officer
If to the Trustee: U.S. Bank Trust Company, National Association U.S. Bank Tower
633 West 5th Street, 24th Floor
Los Angeles, CA 90071
Attn: Corporate Trust Services
SECTION 10.2. Binding Effect. This Lease inures to the benefit of and binds the Authority, the City and their respective successors and assigns.
SECTION 10.3. Severability. If any provision of this Lease is held invalid or unenforceable by any court of co mpetent jurisdiction, such holding will not invalidate or render unenforceable any other provision hereof.
SECTION 10.4. Net-net-net Lease. This Lease is deemed and construed to be a “net-net-net lease” and the City hereby agrees that the Lease Payments are an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever.
SECTION 10.5. Third Party Beneficiary. The Trustee is hereby made a third party beneficiary hereunder with all rights of a third party beneficiary.
SECTION 10.6. Further Assurances and Corrective Instruments. The Authority and the City shall, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Leased Property hereby leased or intended so to be or for carrying out the expressed intention of this Lease.
SECTION 10.7. Execution in Counterparts. This Lease may be executed in several counterparts, each of which is an original and all of which constitute but one and the same instrument.
Lynwood Public Financing Authority - Page 118 of 242 Agenda Item # 3
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SECTION 10.8. Applicable Law . This Lease is governed by and construed in accordance with the laws of the State of California.
SECTION 10.9. Authority and City Representatives . Whenever under the provisions of this Lease the approval of the Authority or the City is required, or the Authority or the City is required to take some action at the request of the other, such approval or such request shall be given for the Authority and for the City by an Authorized Representative thereof, and any party hereto may conclusively rely upon any such approval or request.
SECTION 10.10. Captions. The captions or headings in this Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or Section of this Lease.
Lynwood Public Financing Authority - Page 119 of 242 Agenda Item # 3
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IN WITNESS WHEREOF, the Authority and the City have caused this Lease to be executed in their respective names by their duly authorized officers, all as of the date first above written.
LYNWOOD PUBLIC FINANCING AUTHORITY,
as lessor
By
Ernie Hernandez
Chief Administrative Officer
Attest:
Maria Quiñonez
Secretary
CITY OF LYNWOOD,
as lessee
By
Ernie Hernandez
City Manager
Attest:
Maria Quiñonez
City Clerk
Lynwood Public Financing Authority - Page 120 of 242 Agenda Item # 3
A-1
APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The Leased Property consists of the City’s interest in the roadway portion of the City’s public streets, whether fee simple or easement, including arterial/collector streets, local streets and alleys, as described in the attached list.
[List of City streets to come]
Lynwood Public Financing Authority - Page 121 of 242 Agenda Item # 3
B-1
APPENDIX B
SCHEDULE OF LEASE PAYMENTS
Lease
Payment Date*
Principal
Component
Interest
Component
Aggregate
Lease Payment
* Lease Payment Dates are the Business Day immediately preceding each date listed in the schedule
Lynwood Public Financing Authority - Page 122 of 242 Agenda Item # 3 Jones Hall Draft of May 11, 2022
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this “ Agreement”), dated for convenience as of July 1, 2022 , is between the LYNWOOD PUBLIC FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of the State of California (the “Authority”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee (the “Trustee”).
B A C K G R O U N D :
1. The City of Lynwood (the “ City”) and the Lynwood Redevelopment Agency (which has been succeeded by the Successor Agency to the former Lynwood Redevelopment Agency ) (the “ Successor Agency ”) entered i nto a Joint Exercise of Powers Agreement, dated as of December 1, 1992, establishing the Authority for the purpose, among others, of providing assistance to the City and the Successor Agency with their financing programs.
2. The City is obligated by the Public Employees’ Retirement Law, commencing with Section 20000 of the Government Code of the State of California, as amended (the “Retirement Law ”), to make payments relating to pension benefits accruing to the California Public Employees’ Retirement Syste m’s (“CalPERS”) members, including the City.
3. The City is obligated specifically to make certain payments to CalPERS in respect of current and retired public safety employees and miscellaneous employees under the pension programs of CalPERS that amortize such obligations over a fixed period of time, including normal costs (collectively, the “CalPERS Obligation”).
4. The CalPERS Obligation is evidenced by a contract or contracts with CalPERS with respect to public safety employees and miscellaneous emplo yees of the City, as heretofore and hereafter amended from time to time (collectively, the “ CalPERS Contract”).
5. The City is authorized under Section 37350 and 37380 of the California Government Code to lease, receive, hold, and enjoy real and personal property, and control and dispose of it for the common benefit, and the Authority is authorized under the Marks-Roos Local Bond Pooling Act of 1985, being Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “ Bond Law”) to issue revenue bonds for the purpose of providing working capital and/or refunding any evidence of indebtedness of its members.
6. The Authority proposes to issue lease revenue bonds under the Bond Law and an Indenture, dated as of July 1, 2022 (the “Indenture”), for the purpose of refunding Lynwood Public Financing Authority - Page 123 of 242 Agenda Item # 3 -2-
all or a portion of the City’s obligations under the CalPERS Contract, including paying all costs of issuing the lease revenue bonds and of refunding the CalPERS Contract.
7. To that end, the City has proposed to lease to the Authority certain real property described in Appendix A attached hereto and by this reference incorporated herein (the “ Leased Property”), under a Site Lease, dated the date hereof (the “ Site Lease”), in consideration of the payment by the Authority of an upfront rental payment (the “Site Lease Payment”) which is sufficient to provide funds for refunding of the CalPERS Contract.
8. The Authority has authorized the issuance of its Lynwood Joint Powers Financing Authority Lease Revenue Bonds, Se ries 2022 (Federally Taxable) (the “Bonds”) under the Indenture for the purpose of providing the funds to enable the Authority to pay the Site Lease Payment to the City in accordance with the Site Lease.
9. In order to provide revenues which are sufficien t to enable the Authority to pay debt service on the Bonds, the Authority has agreed to lease the Leased Property back to the City under a Property Lease, dated the date hereof (the “Lease”), under which the City has agreed to pay semiannual Lease Payments as the rental for the Leased Property thereunder.
10. The Authority has requested the Trustee to enter into this Agreement for the purpose of assigning certain of its rights under the Lease to the Trustee for the benefit of the Bond owners.
A G R E E M E N T :
In consideration of the material covenants contained in this Agreement, the parties hereto hereby formally covenant, agree and bind themselves as follows:
SECTION 1. Defined Terms . All capitalized terms not otherwise defined herein have the respective meanings given those terms in the Indenture.
SECTION 2. Assignment. The Authority hereby assigns to the Trustee, for the benefit of the Owners of all Bonds which are issued and Outstanding under the Indenture, all of the Authority’s rights under the Lease (excepting only the Authority’ s rights under Sections 4.5, 5.10, 7.3 and 8.4 of the Lease and its rights to give consents and approvals under the Lease), including but not limited to:
(a) the right to receive and collect all of the Lease Payments fr om the City under the Lease;
(b) the right to receive and collect any proceeds of any insurance maintained thereunder with respect to the Leased Property, or any eminent domain award (or proceeds of sale under threat of eminent domain) paid with respect to the Leased Property; and
(c) the right to exercise such rights and remedies conferred on the Authority under the Lease as may be necessary or convenient (i) to enforce payment of the Lease Payments and any amounts required Lynwood Public Financing Authority - Page 124 of 242 Agenda Item # 3 -3-
to be deposited in the Insurance and Condemnation Fund established under Section 5.07 of the Indenture, or (ii) otherwise to protect the interests of the Bond Owners in the event of a default by the City under the Lease.
The Trustee shall administer all of the rights assigned to it by the Authority under this Agreement in accordance with the provisions of the Indenture, for the benefit of the Owners of Bonds. The assignment made under this Section 2 is absolute and irrevocable, and without recourse to the Authority.
SECTION 3. Acceptance. The Trustee hereby accepts the assignments made herein for the purpose of securing the payments due under the Lease and Indenture to, and the rights under the Lease and Indenture of, the Owners of the Bonds, all subject to the provisions of the Ind enture. The recitals contained herein are those of the Authority and not of the Trustee, and the Trustee assumes no responsibility for the correctness thereof.
SECTION 4. Conditions. This Agreement confers no rights and imposes no duties upon the Trust ee beyond those expressly provided in the Indenture. The assignment hereunder to the Trustee is solely in its capacity as Trustee under the Indenture, and the Trustee shall have the same rights, protections, immunities and indemnities hereunder as afforded to it under the Indenture.
SECTION 5. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which is an original and all together constitute one and the same agreement. Separate counterparts of this Agreemen t may be separately executed by the Trustee and the Authority, both with the same force and effect as though the same counterpart had been executed by the Trustee and the Authority.
SECTION 6. Binding Effect. This Agreement inures to the benefit of and binds the Authority and the Trustee, and their respective successors and assigns, subject, however, to the limitations contained herein.
SECTION 7. Governing Law. This Agreement is governed by the Constitution and laws of the State of California.
Lynwood Public Financing Authority - Page 125 of 242 Agenda Item # 3 -4-
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly authorized officers as of the day and year first written above.
LYNWOOD PUBLIC FINANCING AUTHORITY
By
Ernie Hernandez
Chief Administrative Officer
Attest:
Maria Quiñonez
Secretary
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By
Authorized Representative
Lynwood Public Financing Authority - Page 126 of 242 Agenda Item # 3 A-1
APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The Leased Property consists of the City’s interest in the roadway portion of the City’s public streets, whether fee simple or easement, including arterial/collector streets, local streets and alleys, as described in the attached list.
[List of City streets to come]
Lynwood Public Financing Authority - Page 127 of 242 Agenda Item # 3 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
Jones Hall Draft of May 11, 2022
PRELIMINARY OFFICIAL STATEMENT DATED ________, 2022
NEW ISSUE – FULL BOOK-ENTRY S&P [(Insured)]: “__”
[(Underlying)]: “__”
See “RATING[S]” herein.
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however, to certain qualifications described herein, under existing law, interest on the Bonds is exempt from State of California personal income taxes. Bond counsel observes that interest on the Bonds is not excluded from gross income for federal income tax purposes. See “TAX MATTERS” herein.”
$______________*
LYNWOOD PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2022
(FEDERALLY TAXABLE)
Dated: Date of Delivery Due: October 1, as shown on inside cover Authority for Issuance. The bonds captioned above (the “Bonds”) are being issued by the Lynwood Public Financing Authority (the “Authority”) pursuant to resolutions adopted by the governing body of the Authority and the City Council of the City of Lynwood (the “City”) on [May 17], 2022, and an Indenture of Trust dated as of July 1, 2022 (the “Indenture”), by and between the Authority and U.S. Bank Trust Company, National Association , as trustee (the “Trustee”). See “THE BONDS – Authority for Issuance.”
Purpose. The proceeds of the Bonds will be used to (i) refund a portion of the City ’s obligations under the CalPERS Contract, and (ii) pay the costs of issuing the Bonds. See “FINANCING PLAN.” Security for the Bonds. Under the Indenture, the Bonds are payable from and secured by a first pledge of and lien on “Revenues” consisting primarily of lease payments (the “Lease Payments”) made by the City for the lease of property under a Lease Agreement dated as of July 1, 2022 , between the Authority, as lessor, and the City, as lessee, concerning the leaseback of certain real property, as described in this Official Statement. The Bonds are also secured by certain funds held under the Indenture. See “SECURITY FOR THE BONDS.”
Bond Terms; Book-Entry Only. The Bonds will bear interest at the rates shown on the inside cover page, payable semiannually on April 1 and October 1 of each year, commencing on October 1, 2022, and will b e issued in fully-registered form without coupons in integral multiple s of $5,000. The Bonds will be issued in book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company ( “DTC”). Purchasers of the Bon ds will not receive certificates representing their interests in the Bonds. Payments of the principal of, premium, if any, and interest on the Bonds will be made to DTC, which is obligated in turn to remit such principal, premium, if any, and interest to its DTC Participants for subsequent disbursement to the beneficial owners of the Bonds. See “THE BONDS − General Provisions.” Redemption. The Bonds are subject to redemption prior to maturity. See “THE BONDS – Redemption.” [Bond Insurance. To come, if applicable]
The Bonds are special obligations of the Authority, payable solely from and secured by a pledge of the Revenues as specified therein and in the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds.
The obligation of the City to pay Lease Payments does not constitute an indebtedness of the City, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction, and does not constitute an obligation for which the City or the State of California is obligated to levy or pledge any form of taxation or for which the City or the State of California has levied or pledged any form of taxation, except for the pension tax override levied and collected by the City as described herein. The Authority has no power to tax.
MATURITY SCHEDULE
(see inside cover)
This cover page contains certa in information for general reference only . It is not a summary of all the provisions of the Bonds. Prospective investors must read the entire Official Statement to obtain information essential to making an informed investment decision.
The Bonds are offered when, as and if issued, subject to approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will also be passed upon for the Authority and the City by Jones Hall, A Professional Law Corporation, as Disclosure Counsel. Certain legal matters will be passed upon for the Authority and the City by the City Attorney of the City . Certain legal matters will be passed on for the Underwriter by Quint & Thimmig LLP , as Underwriter ’s Counsel. It is anticipated that the Bonds will be delivered in book-entry form through the facilities of DTC on or about ______, 2022. [Underwriter Logo]
The date of this Official Statement is: _____ __, 2022
* Preliminary; subject to change.
Lynwood Public Financing Authority - Page 128 of 242 Agenda Item # 3
LYNWOOD PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2022
(FEDERALLY TAXABLE)
MATURITY SCHEDULE
(Base CUSIP:† ________)
$_____ Serial Bonds
Maturity Date
(October 1)
Principal
Amount
Interest
Rate Yield Price CUSIP†
$______ - ____% Term Bonds due October 1, 20__; Yield ____%; Price ___; CUSIP†: ___
$______ - ____% Term Bonds due October 1, 20__; Yield ____%; Price ___; CUSIP†: ___
C: Yield to the first optional redemption date of October 1, 20__, at par. † CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of t he American Bankers Association by FactSet Research Systems Inc. Copyright (c) 2022 CUSIP Global Services. All rights reserved. CUS IP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitu te for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the Authority, the Underwriter or their agents or counsel take any responsibility for the accuracy of such numbers.
Lynwood Public Financing Authority - Page 129 of 242 Agenda Item # 3
LYNWOOD PUBLIC FINANCING AUTHORITY
CITY OF LYNWOOD, CALIFORNIA
AUTHORITY BOARD/CITY COUNCIL
Jorge Casanova, Mayor and President
José Luis Solache, Mayor Pro Tem and Vice President
Oscar Flores, Councilmember and Authority Member
Marisela Santana, Councilmember and Authority Member
Rita Soto, Councilmember and Authority Member
AUTHORITY/CITY OFFICIALS
Ernie Hernandez, City Manager and Chief Administrative Officer Harry Wong, City and Authority Finance Director
Gabriela Camacho, City and Authority Treasurer
Noel Tapia, City Attorney and Authority Counsel
Maria Quiñonez, City Clerk and Authority Secretary
PROFESSIONAL SERVICES
MUNICIPAL ADVISOR
Kosmont Transactions Services, Inc.
Manhattan Beach, California
BOND AND DISCLOSURE COUNSEL
Jones Hall, A Professional Law Corporation
San Francisco, California
Trustee
U.S. Bank Trust Company, National Association
Los Angeles, California
Lynwood Public Financing Authority - Page 130 of 242 Agenda Item # 3
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of 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 between any bond owner and the Authority or the Underwriter.
No Offering Except by This Official Statement . No dealer, broker, salesperson or other person has been authorized by the Authority or the Underwriter to give any information or to make any representations other than those 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 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 nor may there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
Preparation of Official Statement. The information set forth in this Official Statement has been furnished by the Authority and other sources which are believed to be reliable, but it 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, their 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.
Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the Authority in any press release and in any oral statement made with the approval of an authorized officer of the City or the Authority or any other entity described or referenced herein, the words or phrases “will likely result, ” “are expected to”, “will continue”, “is anticipated”, “estimate”, “project”, “forecast”, “expect”, “intend” and similar expressions identify “forward looking statements ” within the meaning of the Private Securities Litigation Reform Act of 1995 . Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward -looking statements. Any forecast is subject to such uncertainties . Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the City, Auth ority or any other entity described or referenced herein since the date hereof.
Stabilization of Prices . In connection with this offering, the Underwriter may overallot or effect transactions which stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may offer and sell the Bonds to certain securities dealers, dealer banks and banks acting as agent at prices lower than the public offering prices stated on the inside cover page of this Official Statement, and those public offering prices may be changed from time to time by the Underwriter.
Document Summaries. All summaries of the Indenture or other documents referred to in this Official Statement are made subject to the provisions of such documents and qualified in their entirety to reference to such documents, and do not purport to be complete statements of any or all of such provisions .
No Securities Laws Registration. The Bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon exceptions therein for the issuance and sale of municipal securities. The Bonds have not been registered or qualified under the securities laws of any state.
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, give rise to any implication that there has been no change in the affairs of the City, the Authority, the other parties descr ibed in this Official Statement, or the condition of the property within the City since the date of this Official Statement.
Website. The City maintains a website. However, the information presented on the website is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds .
Lynwood Public Financing Authority - Page 131 of 242 Agenda Item # 3
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TABLE OF CONTENTS
INTRODUCTION ................................................ 1 REFINANCING PLAN ........................................ 4 Refinancing of CalPERS Contract ................. 4
Estimated Sources and Uses of Funds .......... 4
THE LEASED PROPERTY ................................ 5
Description and Location ................................ 5 Modification of Leased Property ..................... 5 Substitution ..................................................... 6 Release of Leased Property ........................... 7 THE BONDS ...................................................... 7 Authority for Issuance .................................... 7 General Provisions ......................................... 8 Redemption .................................................... 9 Book-Entry Only System .............................. 11 Transfer, Registration and Exchange .......... 11
DEBT SERVICE SCHEDULE .......................... 13
SECURITY FOR THE BONDS ........................ 14
Revenues; Pledge of Revenues ................... 14
Allocation of Revenues by Trustee;
Application of Funds................................. 15 Lease Payments; Covenant to Appropriate . 15
Limited Obligation......................................... 16 Abatement .................................................... 17 Default; Remedies ........................................ 17 Insurance ...................................................... 18 Additional Lease Payments and Additional
Bonds ....................................................... 19 THE AUTHORITY ............................................ 20 THE CITY ......................................................... 20 General ......................................................... 20 City Government .......................................... 20 Labor Relations ............................................ 21 CITY FINANCIAL INFORMATION ................... 21
Accounting and Financial Reporting ............ 21
Pension Tax Override; Bartel Report ........... 23
General Fund Overview and Budget ............ 23
Sales and Use Taxes ................................... 28 Property Taxes ............................................. 31 Other Sources of Revenues ......................... 35
Financial Statements .................................... 36 General Fund Historical Financial Data ....... 36
Relevant Fiscal Policies ............................... 38 Risk Management ........................................ 39 Employee Retirement System; CalPERS .... 39
Other Post-Employment Benefits (OPEB) ... 44
General Fund Long-Term Indebtedness ...... 45
Direct and Overlapping Bonded Debt .......... 46
CONSTITUTIONAL AND STATUTORY
LIMITATIONS ON TAXES AND
APPROPRIATIONS ..................................... 48 Limitations on Revenues.............................. 48 Statutory Revenue Limitations -
Proposition 62 .......................................... 51 Proposition 1A .............................................. 51 Proposition 22 .............................................. 52 Unitary Property ........................................... 52 Possible Future Initiatives ............................ 53 BOND OWNERS’ RISKS ................................. 53 Abatement of Lease Payments .................... 53
Limitation on Remedies ............................... 54 No Acceleration Upon Default ..................... 54
Early Prepayment Risk ................................ 54 Limitations on Taxes and Fees .................... 56
Additional Obligations of the City ................. 57 Property Taxes ............................................. 57 Public Health Emergencies .......................... 59 Certain Risks Associated with Sales Tax
and Other Local Tax Revenues ............... 59
Natural Calamities ........................................ 60 Hazardous Substances ................................ 61 Potential Impact of Climate Change ............ 61
COVID-19 Pandemic ................................... 61 Cyber Security ............................................. 62 Litigation ....................................................... 62 Secondary Market for Bonds ....................... 62
TAX MATTERS ................................................ 63 CERTAIN LEGAL MATTERS .......................... 63
NO LITIGATION ............................................... 63 RATING[S] ....................................................... 64 CONTINUING DISCLOSURE .......................... 64
UNDERWRITING ............................................. 64 MUNICIPAL ADVISOR .................................... 65 EXECUTION .................................................... 65
APPENDIX A - GENERAL INFORMATION ABOUT THE CITY OF LYNWOOD AND THE COUNTY OF LOS
ANGELES
APPENDIX B - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
APPENDIX C - AUDITED FINANCIAL STATEMENTS OF THE CITY FOR FISCAL YEAR ENDED JUNE 30, 2021
APPENDIX D - PROPOSED FORM OF OPINION OF BOND COUNSEL
APPENDIX E - FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX F - DTC AND THE BOOK-ENTRY ONLY SYSTEM
[APPENDIX G - FORM OF MUNICIPAL BOND INSURANCE POLICY] Lynwood Public Financing Authority - Page 132 of 242 Agenda Item # 3
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__________________________________
OFFICIAL STATEMENT
__________________________________
$_____________*
LYNWOOD PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2022
(FEDERALLY TAXABLE)
The purpose of this Official Statement, which includes the cover page, inside cover page and attached appendices, is to set forth certain information concerning the sale and delivery of the bonds captioned above (the “Bonds”) by the Lynwood Public Financin g Authority (the “Authority”). All capitalized terms used in this Official Statement, unless noted otherwise, have the meanings set forth in the Indenture (as defined below).
INTRODUCTION
This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described herein . A full review should be made of the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement.
Authority for Issuance . The Authority is issuing the Bonds pursuant to (a) the Marks- Roos Local Bond Pooling Act of 1985, being Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Bond Law”), (b) resolutions adopted by the governing body of the Authority on [May 17], 2022 (the “Authority Resolution”), and by the City Council of the City of Lynwood (the “City”) on [May 17], 2022 (the “City Resolution”), and (c) an Indenture of Trust (the “Indenture”) dated as of July 1, 2022, by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
The Authority. The Authority was formed pursuant to the provisions of Articles 1 through 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Act”) and the Join Exercise of Powers Agreement, dated as of December 1, 1992, by and between the City and the Lynwood Redevelopment Agency (which has been succeeded by the Successor Agency to the former Lynwood Redevelopment Agency), to assist in financings for either member.
The City Council of the City serves as the governing body of the Authority.
The City. The City was incorporated in 1921 under the general laws of the State of California (the “State”). The City is situated approximately 13 miles south of downtown Los Angeles at the intersection of two major freeways. The local economy represents a diverse blend of industrial, commercial, agricultural and residential development. See “APPENDIX A – FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY.”
* Preliminary; subject to change.
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Purpose of the Bonds. The Bonds are being issued to provide funds to refund a portion of the City ’s obligations under the CalPERS Contract (as hereinafter defined), and to pay the costs of issuing the Bonds. See “REFINANCING PLAN.”
Security for the Bonds and Pledge of Revenues. Under the Indenture, the Bonds are payable from and secured by a pledge of and lien on “Revenues,” consisting principally of lease payments (the “Lease Payments”) made by the City for the lease of property under a Lease Agreement dated as of July 1, 2022 (the “Lease Agreement”), between the Authority, as lessor, and the City, as lessee, concerning the leaseback of the City’s interest in the City’s streets (as more particularly described herein, the “Leased Property”). The Bonds are also secured by certain funds on deposit under the Indenture.
Under an Assignment Agreement dated as of _______ 1, 2022 (the “Assignment Agreement”), between the Authority and the Trustee, the Authority has transferred to the Trustee all of the rights of the Authority in the Lease Agreement (other than the rights of the Authority under the provisions of the Lease Agreement regarding Additional Ren tal Payments, advances, release and indemnification covenants, and agreement to pay attorneys’ fees).
To provide an upfront site lease payment to facilitate the financing plan, the City and the Authority will enter into a Site Lease dated as of _______ 1, 2022 (the “Site Lease”), under which the City will lease the Leased Property to the Authority. Concurrently, the City and the Authority will enter into the Lease Agreement, under which the Authority will lease the Leased Property back to the City. See SECURITY FOR THE BONDS” and “THE LEASED PROPERTY.”
[No Reserve Fund. The Authority will not establish a debt service reserve fund for the Bonds.]
[Bond Insurance. To come, if applicable.]
Covenant to Budget and Appropriate Lease Payments . The Lease Payments are payable from any source of available funds of the City, subject to the provisions of the Lease Agreement regarding abatement. See “ – Abatement” below. The City covenants in the Lease Agreement to take all actions required to include the Lease Payments in each of its budgets during the Term of the Lease Agreement and to make the necessary appropriations for all Lease Payments and Additional Rental Payments, subject to the provisions of the Lease Agreement regarding abatement. Such covenant con stitutes a duty imposed by law and each and every public official of the City is required to take all actions required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements agreed to be carried out and performed by the City under the Lease Agreement.
Pledge of Pension Tax Override. On April 9, 1946, the voters in the City approved a retirement tax to support amounts owed by the City to CalPERS pursuant to the CalPERS Contract (the “Pension Tax Override”), which Pension Tax Override is accounted for in a special fund, separate and apart from the General Fund, and available only for its authorized purposes.
In furtherance of its authorized purposes, under the Lease Agreement , the City pledges the Pension Tax Override to the payment of the Lease Payments.
Form of Bonds; Book -Entry Only. The Bonds will be issued in fully registered form, registered in the name of The Depository Trust Company ( “DTC”), or its nominee, which will act as securities depository for the Bonds . Purchasers of the Bonds will not receive certificates Lynwood Public Financing Authority - Page 134 of 242 Agenda Item # 3
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representing the Bonds that are purchased. See “THE BONDS – Book-Entry Only System” and “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
Other General Fund Obligations. The Lease Agreement may be amended to obligate the City to pay additional amounts of rental for the use and occupancy of the Leased Property if certain conditions are met. See “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.” The Lease Agreement does not limit the City’s right to incur additional obligations payable from its General Fund. The City has existing obligations payable from its General Fund.
See “APPENDIX A – FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY” for more information.
Redemption. The Bonds are subject to optional redemption, mandatory sinking fund redemption, and special mandatory redemption from the proceeds of insurance or condemnation proceeds prior to their stated maturity dates. See “THE BONDS – Redemption.”
Abatement. The Lease Payments are subject to complete or partial abatement in the event and to the extent that there is substantial interference with the City’s use and possession of the Leased Property or any portion thereof. If the Lease Payments are abated under the Lease Agreement, the Bond Owners would receive less than the full amount of principal of and interest on the Bonds. To the extent proceeds of property insurance (as described in this Off icial Statement), Lease Payments (or a portion thereof) may be made from those proceeds during periods of abatement. The City is neither required nor will it maintain rental interruption insurance with respect to the Leased Property. See “SECURITY FOR THE BONDS – Abatement” and “BOND OWNERS’ RISKS.”
Legal Opinion. Upon delivery of the Bonds, Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel (“Bond Counsel”) will release its final approving legal opinion with respect to the Bonds, regarding the validity of the Bonds, in the form attached hereto as Appendix D. See “APPENDIX D – PROPOSED FORM OF OPINION OF BOND COUNSEL.”
Risks of Investment; COVID-19 Pandemic. Debt service on the Bonds is payable only from Lease Payments and other amounts payable by the City to the Authority under the Lease Agreement. While the City’s General Fund has not experienced a material adverse impact due to the COVID-19 pandemic to date, continued and/or renewed outbreaks could lead to additional or modified public health restrictions and have an adverse effect on the City’s op erations and financial condition in the future, and the effect could be material. For a discussion of some of the risks associated with the purchase of the Bonds, including the potential impact of the COVID-19 pandemic on the City’s operations, see “BOND OWNERS’ RISKS,” and in particular “ – Public Health Emergencies” and “– COVID-19 Pandemic.”
The Bonds are special obligations of the Authority, payable solely from and secured by a pledge of the Revenues as specified therein and in the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State, or any po litical subdivision thereof, is pledged to the payment of the Bonds.
The obligation of the City to pay Lease Payments does not constitute an indebtedness of the City, the State, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction, and does not constitute an obligation for which the City or the State is obligated to levy or pledge any form of taxation or for which the City or the State has levied or pledged any form of taxation, except for the Lynwood Public Financing Authority - Page 135 of 242 Agenda Item # 3
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pension tax override levied and collected by the City as described herein . The Authority has no power to tax.
REFINANCING PLAN
Refinancing of CalPERS Contract
The City is obligated by the Public Employees’ Retirement Law, commencing with Section 20000 of the Government Code of the State, as amended (the “Retirement Law ”) to make payments relating to pension benefits accruing to the California Public employees ’ Retirement System’s (“CalPERS”) members, including the City. The City is obligated specifically to make certain payments to CalPERS in respect of current and retired public safety employees and miscellaneous employees under the pension programs of CalPER S that amortize such obligations over a fixed period of time, including normal costs (collectively, the “CalPERS Obligation”). The CalPERS Obligation is evidenced by a contract or contracts with CalPERS with respect to public safety employees and miscellaneous employees of the City, as heretofore and hereafter amended from time to time (collectively, the “CalPERS Contract”).
According to the most recent actuarial valuations performed by CalPERS, dated June 30, 2021, the City ’s unfunded accrued liability (t he “UAL”) with respect to the City’s pension plans totaled approximately $_____ million. Upon the issuance of the Bonds, the City will apply proceeds thereof in the amount of $ _____ million* to refund a portion of the CalPERS Contract.
The City projects that, i mmediately after the refunding of the CalPERS Contract with such proceeds, the funding level of the City’s pension plans will be raised to an estimated ___%, saving the City approximately $____ million in fiscal year 2022-23, and an additional $___ million after fiscal year 2022-23 (across all City funds, including the General Fund).* The City anticipates using such savings, commencing in fiscal year 2022-23, to mitigate projected decreases in General Fund revenues, establish and fund a trust under Section 115 of the Internal Revenue Code for the purpose of paying costs associated with its pension plans, and rebuild reserves.
Estimated Sources and Uses of Funds
The estimated sources and uses of funds relating to the Bonds are as follows:
SOURCES: Amount
Principal Amount of Bonds $
Plus/Less: [Net] Original Issue [Premium/Discount]
TOTAL SOURCES $
USES:
Refund Portion of CalPERS Contract $
Costs of Issuance (2)
TOTAL USES $
(1) Includes, among other things, Underwriter’s discount, the fees and expenses of Bond Counsel and Disclosure Counsel, the Trustee, the Municipal Advisor, rating agency fees, and printing Official Statement.
* Preliminary; subject to change.
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THE LEASED PROPERTY
Description and Location
Lease Payments will be made by the City under the Lease Agreement for the use and occupancy of the Leased Property. The Leased Property consists of the City ’s interest in the roadway portion of the City ’s public streets, whether fee simple or easement, includ ing arterial/collector streets, local streets and alleys. According to the City’s Pavement Management Program Final Report, dated June 29, 2020 (the “ 2020 PMP Report ”), the City’s pavement management network consists of approximately 24.4 section miles of arterial/collector streets (approximately 7,267,122 square feet of pavement), 60.2 section miles of local streets (approximately 10,976,318 square feet of pavement), and 10.6 section miles of alleys (approximately 975,467 square feet of pavement).
According to the 2020 PMP Report, the City estimates the total replacement value of the Leased Property is approximately $288,283,600. As stated in the 2020 PMP Report, “This value clearly indicates that the City’s pavement network is the most valuable and esse ntial asset to Lynwood.”
Simultaneously with the delivery of the Bonds, the Authority will a cquire a leasehold interest in the Leased Property from the City. The Authority will sublease the Leased Property to the City pursuant to the Lease Agreement. While the City is in possession of the Leased Property, all maintenance and repair of the Leased Property is the responsibility of the City. The City has determined that the replacement value of the Leased Property is in excess of the principal amount of the Bonds and the fair rental value of the Leased Property is commensurate with the Lease Payments.
Under the Lease Agreement, remedies available to the Authority and the Trustee to collect amounts due from the City do not include (i) the right to accelerat e the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable or (ii) right to re -lease any portion of the Leased Property that constitutes a City street. See “SECURITY FOR THE BONDS – Default; Remedies” below and “BOND OWNERS’ RISKS – Limitation on Remedies.”
Modification of Leased Property
Under the Lease Agreement, the City has the right, at its own expense, to make additions, modifications and improvements to the Leased Property or any portion thereof. All additions, modifications and improvements to the Leased Property will thereafter comprise part of the Leased Property and become subject to the provisions of the Lease Agreement.
Such additions, modifications and improvements may not in any way damage the Leased Property, or cause the Leased Property to be used for purposes other than those authorized under the provisions of state and federal law; and the Leased Property, upon completion of any additions, modifications and improvements made thereto, must be of a value which is not substantially less than the value thereof immediately prior to the making of such a dditions, modifications and improvements.
The City will not permit any mechanic ’s or other lien to be established or remain against the Leased Property for labor or materials furnished in connection with any remodeling, additions, modifications, improve ments, repairs, renewals or replacements made by the City under the Lynwood Public Financing Authority - Page 137 of 242 Agenda Item # 3
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Lease Agreement; except that if any such lien is established and the City first notifies or causes to be notified the Authority of the City’s intention to do so, the City may in good faith contest any lien filed or established against the Leased Property, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and shall provide the Authority with f ull security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Authority. The Authority will cooperate fully in any such contest, upon the request and at the expense of the City.
Substitution
Under the Lease Agreement, the City has the option at any time and from time to time, to substitute other real property (the “Substitute Property”) for the Leased Property or any portion thereof (the “Former Property”), upon satisfaction of all of the requirements set forth in the Lease Agreement, which includes (among others) the following:
• The City has filed with the Authority and the Trustee, and, if the Substitute Property is property other than the City’s streets, caused to be recorded in the office of the Los Angeles County Recorder sufficient memorialization of an amendment of the Lease Agreement that adds the legal description of the Substitute Property to the Lease Agreement and deletes therefrom the legal description of the Former Property, and, if applicable, has filed and caused to be recorded corresponding amendments to the Site Lease and Assignment Agreement.
• If the Substitute Property is property other than the City ’s streets, the City has obtained a CLTA policy of title insurance insuring the City’s leasehold estate under the Lease Agreement in the Substitute Property, subject only to Permitted Encumbrances, in an amount at least equal to the estimated value thereof. • The City has certified in writing to the Authority and the Trustee that the Substitute Property serves the municipal purposes of the City and constitutes property which the City is permitted to lease under the laws of the State, and has been determined to be essential to the proper, efficient and economic operation of the City and to serve an essential governmental function of the City.
• The Substitute Property does not cause the City to violate any of its covenants, representations and warranties made in the Lease Agreement, as certified in writing by the City.
• The City has filed with the Authority and the Trustee a written certificate of the City or other written evidence stating that the useful life of the Substitute Property at least extends to the final maturity of the Bonds, that the estimated value of the Leased Property, after substitution of the Substitute Property and release of the Former Property, is at least equal to the aggregate Outstanding principal amount of the Bonds, and the fair rental value of the Leased Property, after substitution of the Substitute Property and release of the Former Property, is at least equal to the Lease Payments thereafter coming due and payable under the Lease Agreement.
Upon the satisfaction of all such conditions precedent, the Term of the Lease Agreement will thereupon end as to the Former Property and commence as to the Substitute Property, and all references to the Former Property will apply with full force and effect to the Substitute Property.
The City is not entitled to any reduction, diminution, extension or other modification of the Lease Lynwood Public Financing Authority - Page 138 of 242 Agenda Item # 3
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Payments whatsoever as a result of any substitution of property under the Lease Agreement. If applicable, the Authority and the City will execute, deliver and cause to be recorded all documents required to discharge the Site Lease, the Lease Agreement and the Assignment Agreement of record against the Former Property and to cause the Substitute Property to become subject to all of the terms and conditions of the Site Lease, the Lease Agreement and the Assignment Agreement.
See “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”
Release of Leased Property
Under the Lease Agreement, the City has the option at any time and from time to time to release any portion of the Leased Property from the Lease Agreement (the “Released Property”) provided that the City has satisfied all of the requirements under the Lease Agreement that are conditions precedent to such release, which include (among others) the following:
• The City has filed with the Authority and the Trustee, and, if applicable, caused to be recorded in the office of the Los Angeles County Recorder sufficient memorialization of an amendment of the Lease Agreement, the Site Lease and the Assignment Agreement which removes the Released Property from the Sit e Lease, the Assignment Agreement and the Lease Agreement.
• The City has certified in writing to the Authority and the Trustee that the value of the property which remains subject to the Lease Agreement following such release is at least equal to the aggregate Outstanding principal amount of the Bonds, and the fair rental value of the property which remains subject to the Lease Agreement following such release is at least equal to the Lease Payments ther eafter coming due and payable under the Lease Agreement.
Upon the satisfaction of all such conditions precedent, the Term of the Lease Agreement will thereupon end as to the Released Property . The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such release. If applicable, the Authority and the City shall execute, deliver and cause to be recorded all documents required to discharge the Site Lease, the Lease Agreement and t he Assignment Agreement of record against the Released Property.
See “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”
THE BONDS
This section provides summaries of the Bonds and certain provisions of the Indenture .
See APPENDIX B for a more complete summary of the Indenture . Capitalized terms used but not defined in this section have the meanings given in APPENDIX B.
Authority for Issuance
The Bonds are being issued under the Bond Law, the Authority Resolution, the City Resolution, and the Indenture. Under Section 863 of the California Code of Civil Procedure, any interested person may bring an action within 60 days from the date the City Resolution and Lynwood Public Financing Authority - Page 139 of 242 Agenda Item # 3
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Authority Resolution were adopted to determine the validity of the Bonds and related lease documents. The period for bringing such action will expire on [July 16], 2022.
General Provisions
Bond Terms. The Bonds will be dated their date of delivery and issued in fully registered form without coupons in integral multiples of $5,000, so long as no Bond has more than one maturity date. The Bonds will mature on October 1 in each of the years and in the amounts, and bear interest at the rates, set forth on the inside cover page of this Official Statement.
Calculation of Interest. Interest on the Bonds will be payable on April 1 and October 1 in each year, commencing October 1, 2022 (each an “Interest Payment Date”).
Interest on the Bonds is payable from the Interest Payment Date next preceding the date of authentication thereof unless:
(a) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it will bear interest from such Interest Payment Date,
(b) a Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the Closing Date, or
(c) interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest h as been paid in full, payable on each Interest Payment Date.
Interest with respect to the Bonds will be computed on the basis of a 360 -day year composed of 12 months of 30 days each.
Record Date. Under the Indenture, “Record Date” means, with respect to any Interest Payment Date, the 15 th calendar day of the month preceding such Interest Payment Date, whether or not such day is a Business Day.
Payments of Principal and Interest. Interest is payable on each Interest Payment Date to the persons in whose names the ownership of the Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest on any Bond which is not punctually paid or duly provided for on any Interest Payment Date is payable to the person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which is given to such Owner by first- class mail not less than 10 days prior to such special record date.
The Trustee will pay interest on the Bonds by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. At the written request of the Owner of Bonds in an aggregate principal amount of at least $1,000,000, which written request is on file with the Trustee as of any Record Date, the Trustee will pay interest on such Bonds on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account of a financial institution within the Lynwood Public Financing Authority - Page 140 of 242 Agenda Item # 3
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United States of America as specified in such written request, which will remain in effect until rescinded in writing by the Owner.
The Trustee will pay principal (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption) of the Bonds in lawful money of the United States of America by check of the Trustee upon presentation and surrender thereof at the Office of the Trustee. While the Bonds are subject to the book -entry system, the principal, interest and any redemption premium with respect to the Bonds will be paid by the Trustee to DTC for subsequent disbursement to beneficial owners of the Bonds. See “– Book-Entry Only System” below.
Redemption*
Optional Redemption. The Bonds maturing on or after October 1, 20__, will be subject to redemption, as a whole or in part at the option of the Authority, on October 1, 20__, and on any date thereafter, at a redemption price equal to 100% of the principal amount of Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium.
Special Mandatory Redemption From Insurance or Condemnation Proceeds . The Bonds are subject to redemption as a whole, or in part among maturities, on any date, from any Net Proceeds required to be used for such purpose as provided in the Indenture, at a redemption price equal to 100% of the principal amount thereof plus interest accrued thereon to the date fixed for redemption, without premium.
Mandatory Sinking Fund Redemption . The Bonds maturing on Oct ober 1, 20__ and October 1, 20__ (collectively, the “Term Bonds”) are subject to mandatory redemption in whole, from sinking fund payments made under the Indenture, at a redemption price equal to the principal amount thereof to be redeemed, without premium, plus accrued interest to the date of redemption, in the aggregate respective principal amounts and on October 1 in the years as set forth in the following tables:
Term Bonds Maturing
October 1, _____
Payment Date
(October 1)
Payment
Amount
(Maturity)
* Preliminary; subject to change.
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Term Bonds Maturing
October 1, _____
Payment Date
(October 1)
Payment
Amount
(Maturity)
If some but not all of the Term Bonds have been redeemed under optional or special mandatory redemption from insurance or condemnation proceeds provisions of the Indenture as described above, the total amount of all future sinking fund payments will be reduced by the aggregate principal amount of the Term Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis as determined by the Authority, which shall notify the Trustee in writing of such determination.
Selection of Bonds for Redemption. If less than all of the Bonds are to be redeemed, the particular maturities of Bonds to be redeemed at the option of the Authority will be determined by the Authority in its sole discretion.
If the Bonds are registered in book -entry only form and so long as DTC or a successor securities depository is the sole registered owner of such Bonds, if less than all of the Bonds of a maturity are called for prior redemption, the particular Bonds or portions thereof to be redeemed shall be allocated on a pro rata pass -through distribution of principal basis in accordance with DTC procedures, provided that, so long as the Bonds are held in book-entry form, the selection for redemption of such Bonds shall be made in accordance with the operational arrangements of DTC then in effect, and, if the DTC operational arrangements do not allow for redemption on a pro rata pass-through distribution of principal basis, the Bonds will be selected for redemption, in accordance with DTC procedures, by lot.
Notice of Redemption. The Trustee shall mail notice of redemption of the Bonds by first class mail, postage prepaid, not less than 20 nor more than 60 days before any redemption date, to the respective Owners of any Bonds designated for redemption at their addresses appearing on the Registration Books and to one or more Securities Depositories and to the Municipal Securities Rulemaking Board.
Neither the failure to receive any notice nor any defect therein will affect the sufficiency of the proceedings for such redemption or the cessation of accrual of interest from and after the redemption date.
Conditional Redemption Notices; Rescission of Redemption. Redemption notices may be conditional. The Authority has the right to rescind any notice of redemption of the Bonds 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 will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation will not constitute an Event of Default under the Indenture.
The Authority and the Trustee have no liability to the Bond Owners or any other party related to or arising from such rescission of redemption . The Trustee will mail notice of such Lynwood Public Financing Authority - Page 142 of 242 Agenda Item # 3
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rescission of redemption in the same manner as the original notice of redemption was sent under the Indenture.
Effect of Redemption. If notice of redemption has been duly given as provided in the Indenture, and moneys for payment of the redemption price of, together with interest accrued to the date fixed for red emption on, including any applicable premium, the Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions thereof) so called for redemption will become due and payable, interest on the Bonds so called for redemption will cease to accrue, said Bonds (or portions thereof) will cease to be entitled to any benefit or sec urity under the Indenture, and the Owners of said Bonds will have no rights in respect thereof except to receive payment of the redemption price thereof.
Book-Entry Only System
The Bonds will be issued as fully registered bonds in book -entry only form, registered in the name of Cede & Co. as nominee of DTC, and will be available to ultimate purcha sers in the denomination of $5,000 or any integral multiple of $5,000, under the book -entry system maintained by DTC. While the Bonds are subject to the book-entry system, the principal, interest and any redemption premium with respect to a Bond will be paid by the Trustee to DTC, which in turn is obligated to remit such payment to its DTC Participants for subsequent disbursement to Beneficial Owners of the Bonds. Purchasers of the Bonds will not receive certificates representing their interests therein, which will be held at DTC.
See “APPENDIX F – DTC AND THE BOOK -ENTRY ONLY SYSTEM ” for further information regarding DTC and the book-entry system.
Transfer, Registration and Exchange
The following provisions regarding the exchange and transfer of the Bonds apply only during any period in which the Bonds are not subject to DTC ’s book-entry system. While the Bonds are subject to DTC ’s book -entry system, their exchange and transfer will be effected through DTC and the Participants and will be subject to the procedures, rules and requirements established by DTC. See “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
Bond Register. The Trustee will keep or cause to be kept, at the Office of the Tr ustee, sufficient records for the registration and transfer of ownership of the Bonds, which shall upon reasonable notice as agreed to by the Trustee, be open to inspection during regular business hours by the Authority; and, upon presentation for such pur pose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such records, the ownership of the Bonds as provided in the Indenture.
Transfer of Bonds. Any Bond may, in a ccordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of such Bond to the Trustee at its Office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. The Trustee will require the Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. Whenever any Bond or Bonds are surrendered for transfer, the Authority will execute and the Trustee will authenticate and deliver to the transferee a new Bond or Bonds of like series, interest rate, maturity and aggregate principal amount . The Authority will pay the cost of printing Bonds and Lynwood Public Financing Authority - Page 143 of 242 Agenda Item # 3
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any services rendered or expenses incurred by the Trustee in connection with any transfer of Bonds.
Exchange of Bonds. The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of other authorized denominations and of the same series, interest rate and maturity. The Trustee will require the Owner requesting such exchange to pay any tax or other governmental charge required to be paid with respect to such exchange.
The Authority will pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any exchange of Bonds.
Limitations on Transfer and Exchange . The Trustee may refuse to transfer or exchange, und er these provisions of the Indenture , any Bonds selected by the Trustee for redemption under the Indenture, or any Bonds during the period established by the Trustee for the selection of Bonds for redemption.
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DEBT SERVICE SCHEDULE
The table below shows annualized debt service payments on the Bonds, assuming no optional redemption or special mandatory redemption from insurance or condemnation proceeds.
Year Ending
June 30
Principal
Interest
Total
Debt Service
Total:
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SECURITY FOR THE BONDS
The principal of and interest on the Bonds are not a debt of the Authority or the City, nor a legal or equitable pledge, charge, lien or encumbrance, upon any of their respective property, or upon any of their income, receipts, or revenues except the Revenues and other amounts pledged under the Indenture.
This section provides summaries of the security for the Bonds and certain provisions of the Indenture, the Lease Agreement and the Site Lease. See “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” for a more complete summary of the Indenture, the Lease Agreement and the Site Lease.
Revenues; Pledge of Revenues
Pledge of Revenues and Other Amounts. Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, all of the Revenues and all amounts (including proceeds of the sale of the Bonds) held in any fund or account established under the Indenture other than the Costs of Issuance Fund are pledged to secure the payment of the principal (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption) of and interest and premium (if any) on the Bonds in accordance with their terms and the provisions of the Indenture. Said pledge constitutes a lien on and security interest in the Revenues and such amounts and will attach, be perfected and be valid and binding fr om and after the Closing Date, without the need for any physical delivery thereof or further act.
Definition of Revenues. “Revenues” are defined in the Indenture as follows:
(a) all amounts received by the Authority or the Trustee under or with respect to the Lease Agreement, including, without limiting the generality of the foregoing, all of the Lease Payments (including both timely and delinquent payments, any late charges, and whether paid from any source), but excluding (i) any additional amounts of rental paid by the City for the use and occupancy of the Leased Property that are pledged to other bonds, notes or other obligations in accordance with the terms of the Lease Agreement , and (ii) any Additional Rental Payments (consisting of certain administrative costs due to the Authority and the Trustee under the Lease Agreement), and
(b) all interest, profits or other income derived from the investment of amounts in any fund or account established under the Indenture.
Assignment to Trustee. Under the Assignment Agreement, the Authority has transferred to the Trustee all of the rights of the Authority in the Lease Agreement (other than the rights of the Authority under the provisions of the Lease Agreement regarding Additional Rental Payments, advances, release and indemnification covenants, and agreement to pay attorneys’ fees).
The Trustee is entitled to collect and receive all of the Revenues, and any Revenues collected or received by the Authority will be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and will forthwith be paid by the Authority to the Trustee.
The Trustee is also entitled to and required to, subject to the provisions of the Indenture regarding rights of the Trustee , take all steps, actions and proceedings which the Trustee Lynwood Public Financing Authority - Page 146 of 242 Agenda Item # 3
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determines to be reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, all of the rights of the Authority and all of the obligations of the City under the Lease Agreement.
Allocation of Revenues by Trustee; Application of Funds
Deposit of Revenues in Bond Fund . All Revenues will be promptly deposited by the Trustee upon receipt thereof in a special fund designated as the “Bond Fund” which the Trustee will establish, maintain and hold in trust; except that all moneys received by the Trustee and required under the Indenture or under the Lease Agreement to be deposited in the Redemption Fund or the Insurance and Condemnation Fund will be promptly deposited in such funds.
All Revenues deposited with the Trustee will be held, disbursed, allocated and applied by the Trustee only as provided in th e Indenture. Any surplus remaining in the Bond Fund, after payment in full of the principal of and interest on the Bonds or provision therefore under Indenture, and any applicable fees and expenses to the Trustee, will be withdrawn by the Trustee and remitted to the City.
Allocation of Revenues . On or before each Interest Payment Date, the Trustee will transfer from the Bond Fund and deposit into the following respective accounts and subaccounts (each of which the Trustee will establish and maintain within the Bond Fund), the following amounts in the following order of priority:
(a) Deposit to Interest Account . The Trustee will deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to be at least equal to the amount of interest becoming due and payable on such Interest Payment Date on all Bonds then Outstanding.
(b) Deposit to Principal Account . The Trustee will deposit in the Principal Account an amount required to cause the aggregate amount o n deposit in the Principal Account to equal the principal amount of the Bonds coming due and payable on such Interest Payment Date (including the principal amount of any Term Bonds that is subject to mandatory sinking fund redemption).
Application of Interest Account. All amounts in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it comes due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity).
Application of Principal Account . All amounts in the Principal Account shall be used and withdrawn by the Trustee solely to pay the principal amount of the Bonds at their respective maturity dates (including the principal amount of any Term Bonds tha t is subject to mandatory sinking fund redemption).
No Reserve Account. The Authority will not establish a debt service reserve fund for the Bonds.
Lease Payments; Covenant to Appropriate
Obligation to Pay. Under the Lease Agreement, subject to the provisions of the Lease Agreement regarding abatement and prepayment, the City agrees to pay to the Authority, its successors and assigns, the Lease Payments in the amounts specified in the Lease Agreement, Lynwood Public Financing Authority - Page 147 of 242 Agenda Item # 3
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to be due and payable in immediately available funds on the Interest Payment Dates immediately following each of the respective Lease Payment Dates specified in the Lease Agreement, and to be deposited by the City with the Trustee on each of the Lease Payment Dates specified in the Lease Agreement.
Any amount held in the Bond Fund, the Interest Account and the Principal Account on any Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments in part but not in whole under the Lease Agreement, and amounts required for payment of past due principal or interest on any Bonds not presented for payment) will be credited towards the Lease Payment then required to be paid thereunder. The City is not required to deposit any Lease Payment with the Trustee on any Lease Payment Date if the amounts then held in the Bond Fund, the Interest Account and the Principal Account are at least equal to the Lease Payment then required to be deposited with the Trustee . The Lease Payments payable in any Rental Period are for the use of the Leased Property during that Rental Period.
Fair Rental Value. The aggregate amount of the Lease Payments and Additional Rental Payments coming due and payable during each Rental Period constitute the total rental for the Leased Property for such Rental Period, and are payable by the City in each Rental Period for and in consideration of the right of the use and occupancy of, and the continued quiet use and enjoyment of the Leased Property during each Rental Period.
The City and the Authority have agreed and determined that the total Lease Payments represent the fair rental value of the Leased Property. In making that determination, consideration has been given to the estimated value of the Leased Property, other obligations of the City and the Authority under the Lease Agreement, the uses and purposes which may b e served by the Leased Property and the benefits therefrom which will accrue to the City and the general public.
Source of Payments; Covenant to Budget and Appropriate; Pledge of Pension Tax Override. Under the Lease Agreement, the Lease Payments are payable from any source of available funds of the City, subject to the provisions of the Lease Agreement regarding abatement.
See “– Abatement” below.
The City covenants in the Lease Agreement to take all actions required to include the Lease Payments in each of its budgets during the Term of the Lease Agreement and to make the necessary appropriations for all Lease Payments and Additional Rental Payments, subject to the provisions of the Lease Agreement regarding abatement . Such covenant constitutes a duty imposed by law and each and every public official of the City is required to take all actions required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements agreed to be carried out and performed by the City under the Lease Agreement.
In addition, in furtherance of its authorized purposes, the City pledges the Pension Tax Override under the Lease Agreement to the payment of the Lease Payments.
Limited Obligation
The Bonds are special obligations of the Authority, payable solely from and secured by a pledge of the Revenues as specified therein and in the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State, or any political subdivision thereof, is pledged to the payment of the Bonds.
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The obligation of the City to pay Lease Payments does not constitute an indebtedness of the City, the State, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction, and does not constitute an obligation for which the City or the State is obligated to levy or pledge any form of taxation or for which the City or the State has levied or pledged any form of taxation, except for the pension tax override levied and collected by the City as described herein. The Authority has no power to tax.
Abatement
Termination or Abatement Due to Eminent Domain . Under the Lease Agreement, if the Leased Property is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the Term of th e Lease Agreement thereupon ceases as of the day possession is taken. If less than all of the Leased Property is taken permanently, or if the Leased Property is taken temporarily, under the power of eminent domain, then:
(a) the Lease Agreement will continue in full force and effect with respect thereto and does not terminate by virtue of such taking, and the parties waive the benefit of any law to the contrary; and
(b) the Lease Payments are subject to abatement in an amount determined by the City such that the resulting Lease Payments represent fair considerat ion for the use and occupancy of the remaining usable portions of the Leased Property.
Abatement Due to Damage or Destruction . Under the Lease Agreement, the Lease Payments are subject to abatement during any period in which by reason of damage or destruction (other than by eminent domain as described above) there is substantial interference with the use and occupancy by the City of the Leased Property or any portion thereof.
The Lease Payments are subject to abatement in an amount determined by the City such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property not damaged or destroyed . Such abatement will continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction.
In the event of any such damage or destruction, the Lease Agreement continues in full force and effect and the City waives any right to terminate the Lease Agreement by virtue of any such damage and destruction.
Notwithstanding the foregoing, there will be no abatement of Lease Payments under the Lease Agreement to the extent that the proceeds of property insurance are available to pay Lease Payments that would otherwise be abated , it being declared that such proceeds and amounts constitute a special fund for the payment of the Lease Payments.
Default; Remedies
The occurrence of a ny one or more of the certain events constitute an Event of Default under the Lease Agreement, including:
(a) Failure by the City to pay any Lease Payment or other payment required to be paid under the Lease Agreement at the time specified therein.
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(b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed Agreement (subject to a cure period as described in the Lease Agreement).
Whenever any Event of Default has happened and is continuing, the Authority may exercise any and all remedies available under law or granted under the Lease Agreement to collect the amounts then due and thereafter to become due thereunder or to enforce any other of its rights thereunder, except as provided therein. N otwithstanding anything in the Lease Agreement or in the Indenture to the contrary, (a) neither the Authority nor the Trustee may accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable (the Authority expressly waives the right to receive any amount from the City pursuant to Section 1951.2 of the California Civil Code to accelerate payment of the Lease Payments under the Lease Agreement) and (b) the Authority shall have no right to re-lease any portion of the Leased Property that constitutes a City street.
Each covenant in the Lease Agreement to be kept and performed by the City is expressly made a condition and upon the breach thereof the Authority may exercise any and all rights granted under the Lease Agreement; except that no termination of the Lease Agreement may be effected either by operation of law or acts of the parties hereto, except only in the manner therein expressly provided.
Insurance
Liability Insurance. Under the Lease Agreement, the City is required to maintain or cause to be maintained throughout the Term of the Lease Agreement, but only if and to the extent available from reputable insurers at reasonable cost in the reasonable opinion of the City, a standard commercial general liability insurance policy or policies in protection of the Authority, the City, and their respective members, officers, agents, employees and assigns . Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Leased Property.
Such policy or policies shall provide coverage in such liability limits and be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of self-insurance by the City, subject to the provisions of the Lease Agreement, or in the form of the participation by the City in a joint powers agency or other program providing pooled insurance.
The proceeds of such liability insurance must be applied toward extinguishment or satisfaction of the liability with respect to which paid.
Property Insurance. Solely to the extent the Leased Property is property other than the City’s streets, the City shall procure and maintain, or cause to be procured and maintaine d, throughout the Term of the Lease Agreement, property insurance against loss or damage to all improvements situated on the Leased Property, in an amount at least equal to the lesser of (a) 100% of the replacement value of the improvements, or (b) 100% of the aggregate principal amount of the Outstanding Bonds. Such insurance must, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance; provided, that such coverage shall include Lynwood Public Financing Authority - Page 150 of 242 Agenda Item # 3
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earthquake insurance only if available at reasonable cost from reputable insurers in the judgment of the City. Such insurance may be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers agency or other program providing pooled ins urance; provided that such insurance may not be maintained by the City in the form of self-insurance. The Net Proceeds of such insurance must be applied as provided in the Lease Agreement and described below.
No Rental Interruption Insurance. The City is neither required nor will it maintain rental interruption insurance with respect to the Leased Property.
Application of Net Proceeds . The Trustee, as assignee of the Authority under the Assignment Agreement, has the right to receive all Net Proceeds. As provided in the Indenture, the Trustee will deposit all Net Proceeds in the Insurance and Condemnation Fund to be applied to the redemption of Bonds as set forth in the Indenture.
Additional Lease Payments and Additional Bonds
The City may a mend or supplement the Lease Agreement to obligate itself to pay additional amounts of rental for the use and occupancy of the Leased Property, subject to the following:
(A) such additional amounts of rental are pledged or assigned for the payment of any bonds, notes, leases or other obligations the proceeds of which are applied to finance authorized expenditures of the City for the common benefit, and
(B) the City has obtained and filed with the Trustee an appraisal or other evidence of value satisfactory to the City showing that the estimated value of the Leased Property is at least equal to the aggregate principal amount of the Outstanding Bonds and all such other bonds, notes, leases or other obligations.
Accordingly, the City and the Authority have the ability to enter into other long -term obligations secured by the payment of lease payments on the Leased Property without the prior consent of the Trustee or the Owners of the Bonds.
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THE AUTHORITY
The Authority was formed pursuant to the provisions of Articles 1 through Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Act”) and the Join Exercise of Powers Agreement, dated as of December 1, 1992, by and between the City and the Lynwood Redevelopment Agency (which has been succeeded by the Successor Agency to the former Lynwood Redevelopment Agency), to assist in financing s undertaken by either member.
The City Council of the City serves as the governing body of the Authority.
THE CITY
General
The City of Lynwood (the “City”) was incorporated in 1921 under the general laws of the State of California (the “State”). The City is situated approximately 13 miles south of downtown Los Angeles at the intersection of two major freeways. The local economy represents a diverse blend of industrial, commercial, agricultural and residential development. The City covers 4.9 square miles and serves a population of 69,880.
The City provides the full range of municipal services contemplated by statute, including those functions delegated to cities under State law. These services including public safety (which are contracted to Los Angeles County), public works, recreational and cultural activities, public improvements, planning, zoning, and general administrative services. Other services -such as sanitation, flood control and transportation are provides by special districts with the City being a member.
City Government
The City has a Council -Manager form of government made up of five council members elected to four-year, overlapping terms. The Mayor and the Council appoint a City Manager who is responsible for daily administration of City affairs, including preparation and submission of the annual budget, which is done under the direction of the Mayor and the City Council for the Mayor’s submission to the City Council. The City Treasurer, an elected position, invests public funds in a prudent manner that provides maximum security while meeting daily cash flow demands and conforming to all statutes governing the investment of public funds.
The City Attorney, directly appointed by the City Council, and the deputy city attorney are responsible for administration of all legal affairs of the city, including the City Council, the various city commissions, as well as all city departments and officers.
Member Position Term Expires
Jorge Casanova Mayor December 20__
José Luis Solache Mayor Pro Tem December 20__
Oscar Flores Council Member December 20__
Marisela Santana Council Member December 20__
Rita Soto Council Member December 20__
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Following are short biographies of the City Manager and Finance Director:
Ernie, Hernandez , City Manager . Mr. Hernandez was City Manager in neighboring Hawaiian Gardens where he served in that position for four years. Prior to that he was Deputy City Manager in Norwalk for nearly a decade. He has extensive experience in leading and directing municipal administrative and operational functions. Mr. Hernandez, who also worked for the cities of Santa Ana, Long Beach and South El Monte, holds a Master ’s Degree in Public Administration from Long Beach State University, and a Bachelor of Arts Degree fro m the California State University Dominguez Hills.
Harry Wong , Finance Director . Mr. Wong has more than 10 years of financial management experience in municipalities , together with more than 3 years of audit experience with PWC and a Big -4 Accounting firm. Mr. Wong also has a bachelor’s in accountancy from California State University Northridge , an MBA from University of Irvine and has been a CPA since 2004.
Labor Relations
As of May 3, 2022, the City employed 100 full-time equivalent (FTE) employees and 21 part-time employees. Two unions represent 109.5 of the FTEs. The following table identifies the number of employees covered and the current status of the contracts with the bargaining units.
Labor Organization
Employees
Current Contract
Expiration Date
LEA Association 93.5 June 30, 2023
LEA Management Group 16.0 June 30, 2023
CITY FINANCIAL INFORMATION
Accounting and Financial Reporting
The City maintains its accounting records in accordance with Generally Accepted Accounting Principles (“GAAP”) and the standards established by the Governmental Accounting Standards Board (“GASB”).
The Governmental Accounting Standards Board published its Statement No. 34, Basic Financial Statements – and Management ’s Discussion and Analysis – for State and Local Governments, on June 30, 1999 (“GASB Statement No. 34”). GASB Statement No. 34 provides guidelines to auditors, state and local governments and special purpose governments such as school districts and public utilities, on new requirements for financial reporting for all governmental agencies in the United States. Generally, the basic financial statements and required supplementary information should include (i) Management ’s Discussion and Ana lysis; (ii) government-wide financial statements prepared using the economic measurement focus and the accrual basis of accounting and fund financial statements prepared using both the current financial resources measurement focus and the modified accrual method of accounting (governmental funds) and funds using the economic measurement focus and the accrual basis of accounting (proprietary funds) and (iii) required supplementary information. The City ’s financial statements are prepared in conformance with the requirements of GASB Statement No. 34.
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In the government-wide Statement of Net Position and Statement of Activities in the City’s audited financial statements for the Fiscal Year ending June 30, 2021, both governmental and proprietary activities are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset is used.
Revenues, expenses, gains, losses, assets and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place.
In the fund financial statements, governmental funds are presented on the modified accrual basis of accounting. Under the modified accrual bas is of accounting, revenues are recognized when “measurable and available. ” Measurable means knowing or being able to reasonably estimate the amount. Available means collectible within the current period or soon enough thereafter to pay current liabilities. The City defines available to be within 60 days of year- end. Expenditures (including capital outlay) are recorded when the related fund liability is incurred, except for principal and interest on long-term liabilities, claims and judgments, and compensated absences, which are reported when due. Governmental capital asset acquisitions are reported as expenditures in governmental funds. Proceeds for governmental long -term liabilities and acquisitions under capital leases are reported as other financing sources.
Those revenues susceptible to accrual include taxes and intergovernmental revenues. All other revenue items are considered to be measurable and available only when cash is received by the government. Impact fees are received and recognized as revenue upon project completion and inspection. Certain indirect costs are included in program expenses reported for individual functions and activities.
Grant revenues are recognized in the Fiscal Year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost -reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net position are available to finance program expenditures. The City’s policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary.
All proprietary funds utilize the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset is used. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and pr oducing and delivering goods in connection with a proprietary funds ’ principal operations. The principal operating revenues of the enterprise and internal service funds are charges for services. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non -operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed.
The City’s fiduciary funds consist of a private-purpose trust fund, which is reported using the economic resources measurement focus, and agency funds, which have no measurement focus, but utilizes the accrual basis for reporting assets and liabilities.
The City Council employs, at the beginning of each Fiscal Year, an independent certified public accounting firm which, at such time or times as sp ecified by the City Council, at least Lynwood Public Financing Authority - Page 154 of 242 Agenda Item # 3
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annually, at such other times as such firm shall determine, examines the books, records, inventories and reports of all officers and employees who receive, control, handle or disburse public funds and of all such other officers, employees or departments as the City Council may direct. As soon as practicable after the end of the Fiscal Year, a final audit and report is submitted by such firm to the City Council and a copy of the financial statements as of the close of the Fiscal Year is published.
Pension Tax Override; Bartel Report
Overview. On April 9, 1946, the voters in the City approved the Pension Tax Override, which is accounted for in a special fund, separate and apart from the General Fund, and available only for its authorized purposes. The Pension Tax Override is accounted for in the Retirement Special Revenue Fund maintained by the City. Pension Tax Override revenues for the fiscal year ended June 30, 2021 were $___________.
AB 377 Limitation. Although t he 1946 ballot measure approving the Pension Tax Override authorizes the City to levy the Pension Tax Override in an amount sufficient to provide revenues to meet all of the City’s obligations for contributions to CalPERS under the Retirement Law, the maximum tax rate for the Pension Tax Override was capped by Assembly Bill 377 (“AB 377”), enacted in July 1983 as Chapter 491 of Statutes of 1983, now codified as Section 96.31 of the California Revenue and Taxation Code. AB 377 prohibits the levying of a ret irement tax to pay for pension system costs in excess of the rate imposed in Fiscal Year 1982 -83 or 1983-84, whichever is higher. The Fiscal Year ________ rates were $_____ per $100 of assessed valuation, which established the maximum rate of the Pension Override Tax per AB 377. In addition, the City was previously involved in litigation regarding the amount of the Pension Tax Override. In accordance with a settlement of the lawsuit relating to the Pension Tax Override, the City fixed the rate of tax at $0.125 per $100 of assessed valuation.
California courts have held that Proposition 13, discussed further herein, permits additional property taxation to pay for pension plans with special tax authority approved by the voters prior to July 1, 1978; prov ided, the imposition of such tax is limited to the funding of employee retirement benefits at a level not in excess of the retirement benefits in existence prior to July 1, 1978.
Bartel Report. In order to ascertain the amount or revenues that may be pledged to the payment of Lease Payments in accordance with applicable limitations, the City commissioned Bartel Associates, LLC to prepare a report, dated __________, 2022 (the “Bartel Report”).
General Fund Overview and Budget
Overview. The City’s General Fund is its primary operating fund, and is where the City accounts for all its general -purpose revenues. It is distinguished from the City ’s other governmental funds that are used to account for special purpose revenues, capital projects, debt service activities, and monies held for the benefit of others.
The City operates on a Fiscal Year basis that begins on the first day of July of each year and ends on the thirtieth day of June the following year. The annual budget adopted by the City Council provides for the general operation of the City. Development of the City ’s annual budget is a process which generally begins in February and March and continues until the budget is adopted by the City Council in June. The General City Budget includes program s which are provided on a largely city -wide basis. The programs and services are financed primarily by the Lynwood Public Financing Authority - Page 155 of 242 Agenda Item # 3
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City’s share of sales tax, property tax, revenues from the State and/or federal government, and charges for services provided.
The City Council appr oves total budgeted appropriations and any amendments to appropriations throughout the Fiscal Year. Appropriations lapse at Fiscal Year -end. The City Council generally reauthorizes appropriations for continuing projects and activities. The City Council has the legal authority to amend the budget of any fund at any time during the Fiscal Year. The budgetary level of control (the level on which expenditures may not legally exceed appropriations) is generally at the fund level. The City Manager is authorized to transfer budgeted amounts within departments within any fund; however, any revisions that alter the total expenditures of any fund must be approved by the City Council.
Long-Term Financial Planning . The City continues to explore additional sources of revenue to meet expectations for community services. The City utilizes a combination of expenditure spending limits, budget cuts, some increases in fees and the prudent use of reserves to balance each year’s budget. The City must continue to be conservative and manage its fiscal affairs in a prudent manner.
Budgetary Control Policy. The City maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the general fund, special revenue funds, debt service funds, capital projects funds, enterprise funds, and internal service funds are included in the annual appropriated budget. The level of budgetary control (the level at which expenditures cannot legally exceed the appropriated amount) is established by function and activity within an individual fund.
The City’s budgetary records are maintained on a modified accrual basis. Revenues are recorded when measurable and available and expenditures are recorded when goods or services are received and the liability incurred. Based on the City’s financial management policies, the City is required to maintain a balanced operating budget, which is adopted by resolution on or before June 30th for the ensuing Fiscal Year.
Following the adoption of the budget, it is sometimes necessary to amend the budget.
Appropriations in the budget may be adjusted by recommendation of the Finance Director and approval by the City Manager when the budget is not increased in total amount. Savings from appropriations in one section of a department budget may be used to fund another section of a department budget. Any increase in appropriations that increases the total adopted budget must be approved by the City Council. The City Council formally reviews the City’s fiscal condition and amends appropriations, if necessary, six months after the beginning of each fiscal year.
COVID-19 Pandemic. The City continues to monitor the spread of COVID -19 and has been working with local, state, and national agencies to address the potential impact of the pandemic upon the City since its outbreak in the United States in 2020. There can be no assurances that the spread of COVID-19 and/or responses intended to slow the spread of COVID- 19 such as declining business and travel activity, will not materially adversely impact the state and national economies and, accordingly, materially adversely impact the financial condition of the City and the City’s General Fund. In a ddition, the City may experience increased personnel costs and/or reduced revenues due to the COVID-19 situation and the related impact on economic and other activity in and around the City. See the references to COVID -19 in the following subsection in connection with the unknown impacts on the City’s budgeting process.
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Most Recently Adopted Budget. The adopted biannual budget for fiscal years 2021-22 and 2022-23 was approved on July 20, 2021 (the “Adopted Budget”). The Fiscal Year 2021-22 and Fiscal Year 2022-23 Proposed Budgets were developed in the context of the City gradually recovering from the impact of the Covid-19 pandemic. The adopted Fiscal Year 2021-22 operating revenues for all funds, excluding the Successor Agency, is $97.77M and $42.24M for adopted transfers in, for a total of $140.01M. The approved Fiscal Year 2022 -23 operating revenues for all funds, excluding the Successor Agency, is $91.03M and $18.38M for approved transfers in, for a total of $109.42M.
The adopted Fiscal Year 2021 -22 op erating expenditures for all funds, excluding the Successor Agency, is $110.27M and $42.24M for adopted transfers out, for a total of $152.51M.
The approved Fiscal Year 2022-23 operating expenditures for all funds, excluding the Successor Agency, is $89.57M and $18.38M for approved transfers out, for a total of $107.96M. The adopted General Fund operating revenue budget for Fiscal Year 2021 -22 is $35.95M with an additional $2.09M for non -operating transfers in for a total of $38.04M. The approved General Fu nd operating revenue budget for Fiscal Year 2022-23 is $36.56M with an additional $2.21M for non- operating transfers in for a total of $38.77M.
The adopted General Fund operating expenditure budget for Fiscal Year 2021 -22 is $36.26M with an additional $3. 14M for non -operating transfers out for a total of $39.40M. The approved operating expenditure budget for Fiscal Year 2022 -23 is $37.65M with an additional $2.42M for non-operating transfers out for a total of $40.07M.
Current Budget and Historical Budget Information. Set forth in Table 1 are the General Fund budgets that were adopted for Fiscal Years 2020-21 through 2022-23, as well as the audited actuals for Fiscal Year 2020-21. The budget may be amended and revised as necessary by the City Council.
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TABLE 1
City of Lynwood General Fund Budget Summary
Fiscal Years 2020-21 through 2022-23
2020-21
Revised
Budget
2020-21
Audited
2021-22
Adopted
Budget
2022-23
Approved
Budget
Revenues
Property taxes $11,646,501 $12,237,047 $11,844,069 $11,749,505 Sales taxes 9,228,862 12,886,776 12,173,400 12,558,100
Utility users tax 5,270,000 5,225,838 5,270,000 5,270,000 Franchise fees 833,144 1,103,890 973,144 973,144
Licenses and permits 786,000 1,038,026 594,820 614,600
Revenues from other agencies 124,229 144,666 149,929 159,929 Charges for current services 1,210,064 953,382 1,604,025 1,933,450 Other revenue 1,128,650 2,412,879 2,036,001 1,885,474
Fines and Forfeitures 1,210,000 2,323,943 906,000 1,016,000 Use of money and property 442,997 246,191 395,497 395,497 Transfers in - - -
Total Revenues 34,922,283 38,572,647 35,946,885 36,555,699
Expenditures
Current:
General Government 4,609,215 3,951,512 4,772,211 5,037,430 Public safety 19,660,906 19,042,384 20,541,020 21,544,072 Public works 6,764,664 6,201,299 7,063,923 7,289,390
Community development 229,467 88,181 467,414 307,644
Parks and recreation 3,188,630 2,334,105 3,419,876 3,472,725 Capital outlay - - - -
Debt Service: - - - -
Principal retirement - - - -
Interest and fiscal charges - - - -
Total expenditures 34,452,882 31,617,481 36,264,444 37,651,261
Excess (deficiency) of revenues over (under)
expenditures 469,401 6,955,166 (317,559)
(1,095,562)
Other financing sources(uses)
Transfers in 3,446,240 2,725,050 2,097,474 2,218,674
Transfers out (5,417,574) (4,505,549) (3,138,612) (2,421,931) Proceeds from sale of land 2,000,000 - - -
Total other financing sources 28,666 (1,780,499) (1,041,138) (203,257)
Net Change in fund balances 498,067 5,174,667 (1,358,697) (1,298,819)
Beginning of year 5,529,106 5,529,106 6,253,309 4,894,611 End of year 6,027,173 10,703,773 4,894,611 3,595,793
____________________
Source: City of Lynwood Finance Department.
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General Fund Key Revenue Sources. The three major general fund revenue sources of the City for Fiscal Year 2020 -21 (collectively, the “Key Revenue Sources ”), are Sales Tax (approximately 39.6% of total general fund revenue), Property Tax (approximately 36.3% of total general fund revenue) and Utility User ’s Taxes (approximately 16.1% of total general fund revenue). Also see “APPENDIX A – AUDITED FINANCIAL STATEMENTS OF THE CITY FOR FISCAL YEAR 2020-21” herein.
The following Table 2 sets forth the audited revenues received by the City for each of the Key Revenue Sources for Fiscal Years 2016 -17 through 2020-21, which have been totaled and compared to the prior Fiscal Year to illustrate the amount and percent of change.
Table 2
CITY OF LYNWOOD
Fiscal Years 2016-17 through 2020-21
General Fund Key Revenue Sources and Change From Prior Year(1)
Fiscal
Year
Property
Taxes
Utility
User’s
Taxes
Sales
Taxes
Franchise
Taxes
Business
License
Taxes
Other
Taxes
Total of
Key Tax
Sources
Taxes
%
Change
From
Prior
Year
2016-17 $9,265,676 $5,169,598 $4,814,034 $577,959 $876,656 $185,814 $20,889,737 --% 2017-18 9,795,477 5,196,640 9,176,594 671,343 885,191 143,648 25,868,893 23.8 2018-19 10,683,709 5,014,483 10,236,088 673,766 896,212 192,692 27,696,950 7.1 2019-20 10,877,603 4,736,649 10,107,253 702,844 800,001 201,617 27,425,967 (1.0) 2020-21 11,807,523 5,225,838 12,886,776 652,305 764,016 410,021 31,746,479 15.8
(1) Includes transfers in from other funds.
Source: City of Lynwood - audited financial statements 2018-19 through 2020-21.
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The following Table 3 sets forth the audited revenues received by the City for the total of Key Revenue Sources and total of Other General Fund Revenue Sources for Fiscal Years 2018- 19 through 2020-21.
TABLE 3
City of Lynwood
General Fund Revenues by Revenue Source
Fiscal Years 2018-19 through 2020-21
2018-19 2019-20 2020-21
Category Revenues
% of
Total Revenues
% of
Total Revenues
% of
Total
Taxes:
Property tax $10,683,709 32.2% $10,877,603 32.3% $11,807,523 36.3% Utility users 5,014,483 15.1 4,736,649 14.1 5,225,838 16.1 Sales Tax 10,236,088 30.8 10,107,253 30.1 12,886,776 39.6 Franchise taxes 673,766 2.0 702,844 2.1 652,305 2.0
Business license tax 896,212 2.7 800,001 2.4 764,016 2.3 Other taxes 192,692 0.6 201,617 0.6 410,021 1.3
Use of money and property 4,371,883 13.2 6,076,939 18.1 (11,930) 0.0 Miscellaneous 1,158,007 3.5 127,625 0.4 823,915 2.5
Total Revenues(1) $33,226,840 100% $33,630,531 100% $32,558,464 100% ________________
(1) Totals may not add due to rounding.
Source: City of Lynwood - audited financial statements 2018-19 through 2020-21.
Sales and Use Taxes
Sales & Use Taxes represented the largest source of tax revenues to the City ’s General Fund for the most recent fiscal year , accounting for approximately 39.6% of total General Fund revenues for Fiscal Year 2020-21. Sales & uses taxes are less stable sources of revenues to the City, given that they are based on consumer spending within the City which is impacted by a variety of factors including the overall economy and other factors.
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Historic Taxable Transactions. The following table shows historical taxable transactions in the City for the most recent five years available.
TABLE 4
City of Lynwood
Taxable Transactions
Fiscal Years 2017 through 2021
(In Thousands)
2017 2018 2019 2020 2021
Motor Vehicle and Parts Dealers $23,702 $23,316 $26,389 $24,852 $28,014 Home Furnishings and Appliances 6,776 11,044 18,895 16,012 21,848 Building Materials 32,762 37,310 35,596 38,410 46,570
Food and beverage stores 41,736 42,863 43,481 46,957 47,257 Gasoline stations 51,543 63,082 69,490 53,414 73,906
Apparel stores 26,020 26,990 26,025 22,780 37,981
General merchandise stores 17,089 14,057 5,670 5,586 7,566 Food services and drinking places 85,634 88,206 94,000 86,974 102,747 Other retail stores 22,323 24,146 24,819 31,344 41,606
All other outlets 43,605 40,403 49,275 57,571 97,330
Total All Outlets $351,191 $371,417 $393,641 $383,880 $504,825 ____________________
Source: California Department of Tax and Fee Administration (as of January 11, 2022).
State-Wide Sales Tax Law. Taxable transactions in the City are currently subject to the following sales and use tax, of which the City ’s share is only a portion. The City collects a percentage of taxable sales in the City (minus certain administrative costs) pursuant to the Bradley-Burns Uniform Local Sales and Use Tax (the “Sales Tax Law”). The State collects and administers the sales tax under the Sales Tax Law, and makes distributions on taxes collected within the City, as shown in the following table.
TABLE 5
City of Lynwood
Sales Tax Rate
Effective April 1, 2022
Statewide Rate 6.00%
Los Angeles County Sales Tax 0.25
Los Angeles County Special Tax 3.00
City of Lynwood Transactions and Use Tax 1.00
Total 10.25%
____________
Source: City of Lynwood Finance Department.
Sales and use taxes are complementary taxes; when one applies, the other does not. In general, the statewide sales tax applies to gross receipts of retailers from the sale of tangible personal property in the State. The use tax is imposed on the purchase, for storage, use or other consumption in the State of tangible personal property from any retailer. The use tax generally applies to purchases of personal property from a retailer outside the State where the use will occur within the State. The sales t ax is imposed upon the same transactions and items as the statewide sales tax and the statewide use tax.
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Certain transactions are exempt from the State sales tax, including sales of the following products:
• food products for home consumption;
• prescription medicine;
• newspapers and periodicals;
• edible livestock and their feed;
• seed and fertilizer used in raising food for human consumption; and • gas, electricity and water when delivered to consumers through mains, lines and pipes.
This is not an exhaustive list of exempt transactions. A comprehensive list can be found in the State Board of Equalization’s Publication No. 61 (February 2017) entitled “Sales and Use Taxes: Exemptions and Exclusions, ” which can be found on the State Board of Equalization’s website at http://www.boe.ca.gov/. The reference to this Internet website is provided for reference and convenience only. The information contained within the website may not be current, has not been reviewed by the City and is not incorporated in this Official Statement by reference.
Sales Tax Collection Procedures. Collection of the sales and use tax is administered by the California Department of Tax and Fee Administration (the “CDTFA”). This process was formerly administered by t he State Board of Equalization. The Taxpayer Transparency and Fairness Act of 2017, which took effect July 1, 2017, restructured the State Board of Equalization and separated its functions among three separate entities: the State Board of Equalization, th e CDTFA and the Office of Tax Appeals. The State Board of Equalization will continue to perform the duties assigned to it by the State Constitution, while all other duties will be transferred to the newly established CDTFA and the Office of Tax Appeals. C DTFA will handle most of the taxes and fees previously collected by the State Board of Equalization, including sales and use tax.
Under the Sales and Use Tax Law, all sales and use taxes collected by the CDTFA under a contract with any city, city and coun ty, or county are required to be transmitted by the CDTFA to such city, city and county, or county periodically as promptly as feasible. These transmittals are required to be made at least twice in each calendar quarter.
Under its procedures, the CDTFA projects receipts of the sales and use tax on a quarterly basis and remits an advance of the receipts of the sales and use tax to the City on a monthly basis. The amount of each monthly advance is based upon the CDTFA ’s quarterly projection.
During the last month of each quarter, the CDTFA adjusts the amount remitted to reflect the actual receipts of the sales and use tax for the previous quarter.
The CDTFA receives an administrative fee based on the cost of services provided by the Board to the City in administering the City’s sales tax, which is deducted from revenue generated by the sales and use tax before it is distributed to the City.
As part of the State government ’s response to the COVID -19 pandemic, certain businesses were able to defer the payment of their sales taxes due to the City.
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Property Taxes
Property Taxes represents the second-largest sources of taxes to the City’s General Fund, after sales/use taxes. Property taxes represent a very stable source of revenue to the City, and are based in large part on assessed valuations of property located in the City.
General Method of Property Tax Calculations . Proposition 13 , passed in 1978, established the current property tax regime for local agencies, including the City, throughout the State. Under Proposition 13, subject to voter -approved debt and certain other exceptions, the base property tax rate on a parcel is limite d to 1% of its assessed value and the property tax collected by this 1% County-wide rate is shared by the local agencies eligible to receive property taxes within the applicable County pursuant to applicable State law. Under Proposition 13, the 1975-76 fiscal year serves as the original base year used in determining the assessment for real property. Thereafter, annual increases to the base year value are limited to the inflation rate, as measured by the California Consumer Price Index, or 2%, whichever is less. A new base year value, however, is also established whenever a property, or portion thereof, has had a change in ownership or has been newly constructed. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Article XIIIA of the State Constitution” for additional information.
Proposition 8, enacted in 1978, allows for a temporary reduction in assessed value when a property suffers a “decline-in-value.” As of the January 1st (lien date) each year, the Assessor must enroll eith er a property ’s Proposition 13 value (adjusted annually for inflation by no more than 2%) or its current market value, whichever is less. When the current market value replaces the higher Proposition 13 value, the lower value is commonly referred to as a “Proposition 8 Value.” “Proposition 8 values” are temporary and, once enrolled, must be reviewed annually by the assessor until the Proposition 13 adjusted base year value is enrolled.
The California Tax on Commercial and Industrial Properties for Educati on and Local Government Funding Initiative has qualified to appear on the ballot in California as an initiated Constitutional amendment on November 3, 2020. The ballot initiative would amend the State Constitution to require commercial and industrial prop erties, except those zoned as commercial agriculture, to be taxed based on their market value. The proposal to assess taxes on commercial and industrial properties at market value, while continuing to assess taxes on residential properties based on purchase price as described above, is known as “split roll.” At this time, the City is unable to determine the likelihood of passage of the measure or the impact on the City ’s property tax receipts from passage.
Levy and Collection of Property Taxes. Property taxes are levied for each fiscal year on taxable real and personal property as of the preceding January 1. For assessment and collection purposes, property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts of the assessment roll. The “secured roll ” is that part of the assessment roll containing State-assessed public utilities property and real property the taxes on which have a viable tax lien, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.”
Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year, and become delinquent on December 10 and April 10, respectively.
A penalty of 10% attaches immediately to all delinquent payments. Property on the secured roll with respect to which taxes are delinquent become tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of a penalty of 1% per month to the Lynwood Public Financing Authority - Page 163 of 242 Agenda Item # 3
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time of redemption, plus costs and a redemption fee. If taxes are unpaid for a period of five years or more, the property is deeded to the State and may be sold at public auction.
Property taxes on the unsecured roll are due as of the January 1 lien dates and become delinquent on August 31. A 10% pen alty attaches to delinquent unsecured taxes. If unsecured taxes are unpaid at 5:00 p.m. on October 31, an additional penalty of 1% attaches to them on the first day of each month until paid. The County has four ways of collecting delinquent unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a judgment in the office of the County Clerk specifying certain facts in order to obtain a lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Recorder’s office in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee.
Beginning in 1978-79, Proposition 13 and its implementing legislation shifted the function of property tax allocation to the counties, except for levies to support prior voted debt, and prescribed how levies on county-wide property values are to be shared with local taxing entities within each county.
Historical Assessed Valuations . The table below presents the assessed valuation of taxable property in the City from fiscal year 2012-13 through fiscal year 2021-22.
TABLE 6
City of Lynwood
Assessed Valuations of All Taxable Property
Fiscal Years 2012-13 through 2021-22
Fiscal Year Local Secured Utility Unsecured Total
%
Change
2012-13 $2,683,399,346 $977 $87,408,507 $2,770,808,830 --% 2013-14 2,589,115,897 191 90,514,780 2,679,630,868 (3.3) 2014-15 2,694,961,056 182 89,872,751 2,784,833,989 3.9
2015-16 2,831,887,191 177 91,500,901 2,923,388,269 5.0
2016-17 2,960,766,716 159 87,435,655 3,048,202,530 4.3
2017-18 3,112,901,366 153 86,372,576 3,199,274,095 5.0
2018-19 3,388,317,977 0 125,816,908 3,514,134,885 9.8
2019-20 3,475,747,092 0 131,942,448 3,607,689,540 2.7
2020-21 3,761,035,322 0 98,013,824 3,859,049,146 7.0
2021-22 4,017,350,210 0 102,846,558 4,120,196,768 6.8
Source: California Municipal Statistics Inc.
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Historical Secured Property Tax Levies and Collections. The table below presents secured property tax collections and delinquencies in the City for the for fiscal years shown.
TABLE 7
City of Lynwood
Secured Property Tax Levies and Collections
Fiscal Years 2016-17 through 2020-21
Fiscal Year
Secured Tax
Charge(1)
Amount
Delinquent
June 30
%
Delinquent
June 30
2016-17 $3,504,433.67 $41,620.71 1.19%
2017-18 3,694,410.57 45,896.21 1.24
2018-19 4,035,343.98 55,151.38 1.37
2019-20 4,157,736.12 93,766.39 2.26
2020-21 4,440,356.83 75,698.69 1.70
(1) 1% General Fund apportionment. Excludes redevelopment agency impounds.
Source: California Municipal Statistics Inc.
Assessed Valuations and Parcels by Land Use . The following table shows secured assessed valuations and parcels by land use for fiscal year 2021 -22. As shown in the table, approximately 89.15% of the parcels in the City, representing almost 70.87% of the assessed valuation in the City, has residential uses.
Table 8
City of Lynwood
Secured Assessed Valuation and Parcels by Land Use
Fiscal Year 2021-22
2021-22 % of No. of % of
Non-Residential: Assessed Valuation (1) Total Parcels Total Commercial $502,075,052 12.50% 564 5.40%
Vacant Commercial 13,232,592 0.33 83 0.80
Industrial 407,752,814 10.15 206 1.97
Vacant Industrial 16,359,725 0.41 31 0.30
Recreational 4,097,904 0.10 3 0.03
Government/Social/Institutional 217,602,947 5.42 174 1.67 Miscellaneous 9,272,788 0.23 72 0.69
Subtotal Non-Residential $1,170,393,822 29.13% 1,133 10.85%
Residential:
Single Family Residence $1,936,833,150 48.21% 7,187 68.85% Condominium/Townhouse 16,768,067 0.42 59 0.57
Mobile Home 928,203 0.02 35 0.34
Mobile Home Park 1,671,868 0.04 1 0.01
2-4 Residential Units 567,853,557 14.14 1,543 14.78
5+ Residential Units/Apartments 312,520,698 7.78 373 3.57 Vacant Residential 10,380,845 0.26 108 1.03 Subtotal Residential $2,846,956,388 70.87% 9,306 89.15%
Total $4,017,350,210 100.00% 10,439 100.00%
_________________
(1) Local Secured Assessed Valuation, excluding tax exempt property.
Source: California Municipal Statistics, Inc.
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Per Parcel Assessed Valuation of Single-Family Homes. Table 8 below shows the per parcel assessed valuation for improved single -family homes (according to 2021 -22 assessed valuation) in the City. The average assessed valuation is $ 269,491, and the median assessed valuation is $252,366.
Table 9
CITY OF LYNWOOD
Fiscal Year 2021-22
Per Parcel Assessed Valuation of Single-Family Homes
No. of 2021-22 Average Median
Parcels Assessed Valuation Assessed Valuation Assessed Valuation Single Family Residential 7,187 $1,936,833,150 $269,491 $252,366
2021-22 No. of % of Cumulative Total % of Cumulative
Assessed Valuation Parcels (1) Total % of Total Valuation Total % of Total $0 - $24,999 17 0.237% 0.237% $340,684 0.018% 0.018%
$25,000 -$49,999 275 3.826 4.063 11,200,788 0.578 0.596 $50,000 - $74,999 310 4.313 8.376 18,971,861 0.980 1.575 $75,000 - $99,999 194 2.699 11.076 16,818,626 0.868 2.444 $100,000 - $124,999 201 2.797 13.872 22,578,936 1.166 3.610 $125,000 - $149,999 250 3.479 17.351 34,428,099 1.778 5.387 $150,000 - $174,999 384 5.343 22.694 62,715,499 3.238 8.625 $175,000 - $199,999 524 7.291 29.985 98,646,645 5.093 13.718 $200,000 - $224,999 703 9.782 39.766 149,957,684 7.742 21.461 $225,000 - $249,999 686 9.545 49.311 162,746,521 8.403 29.863 $250,000 - $274,999 537 7.472 56.783 140,765,197 7.268 37.131 $275,000 - $299,999 471 6.553 63.337 135,507,953 6.996 44.128 $300,000 - $324,999 405 5.635 68.972 126,414,420 6.527 50.654 $325,000 - $349,999 323 4.494 73.466 108,616,571 5.608 56.262 $350,000 - $374,999 291 4.049 77.515 105,375,216 5.441 61.703 $375,000 - $399,999 284 3.952 81.467 110,108,037 5.685 67.388 $400,000 - $424,999 267 3.715 85.182 110,040,568 5.681 73.069 $425,000 - $449,999 254 3.534 88.716 111,082,076 5.735 78.805 $450,000 - $474,999 235 3.270 91.986 108,453,204 5.600 84.404 $475,000 - $499,999 160 2.226 94.212 77,833,212 4.019 88.423 $500,000 and greater 416 5.788 100.000 224,231,353 11.577 100.000 7,187 100.000% $1,936,833,150 100.000%
(1) Improved single-family residential parcels. Excludes condominiums and parcels with multiple family units.
Source: California Municipal Statistics, Inc.
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Principal Property Taxpayers. The top twenty largest local secured property taxpayers in the City, as shown on the 2021-22 secured tax roll, are listed in the table below. For fiscal year 2021-22, the total assessed valuation of the twenty largest local secured taxpayers is 10.60% of the total City fiscal year 2021-22 assessed valuation of $425,931,536.
TABLE 10
City of Lynwood
Principal Property Taxpayers (Secured Roll)
Fiscal Year 2021-22
2021-22 % of
Property Owner Primary Land Use Assessed Valuation Total (1)
1. Duke Lynwood LP Industrial $72,417,502 1.80%
2. Terreno Lynwood LLC Industrial 64,887,602 1.62
3. Plamex Investment LLC Shopping Center 48,220,864 1.20
4. Rexford Industrial Industry Way Industrial 24,427,126 0.61
5. Prime Desert Properties LLC Professional Building 24,336,813 0.61
6. Primrose 19 LP Office Building 21,641,910 0.54
7. Earl M. Jorgensen Co. Industrial 20,682,478 0.51
8. EK Lynwood LLC Shopping Center 16,640,575 0.41
9. Lee Riviera Enterprises LLC Professional Building 15,282,705 0.38
10. Albi Lynwood Investments LLC Commercial 14,937,452 0.37
11. 805 Property LLC Shopping Center 14,816,150 0.37
12. Shapco Partnership Industrial 11,864,476 0.30
13. Lynwood MFT LLC Professional Building 11,232,643 0.28
14. Jones Holdings I, II & III LLC Industrial 11,101,937 0.28
15. El Segundo Boulevard Property Apartments 10,742,115 0.27
16. Yousuf H. Haroon Industrial 8,840,650 0.22
17. Deborah Drooz Commercial 8,712,380 0.22
18. Tony Trinh Trust Commercial 8,639,796 0.22
19. Nova Storage Lynwood LP Industrial 8,316,163 0.21
20. NP Wright LLC Industrial 8,190,199 0.20
$425,931,536 10.60%
_________________________________
(1) The total City secured assessed valuation for fiscal year 2021-22 is $4,017,350,210.
Source: California Municipal Statistics, Inc.
Other Sources of Revenues
Utility Tax. It is the third largest, which comprises about 14% of the City’s total annual General Fund revenues. Currently, a 9% utility users tax is imposed on the City’s water, telephone, gas, electricity and cable television services.
Business License Tax and Permit Fee. The City collects fees for licenses and permits provided by the City, including, but not limited to, regulatory permits, development permits, plan check and permitting, building permits and inspections and other development fees. The business license tax is an annual charge that is applied to either gross receipts of payroll for each business or more commonly, the number of employees per business depending on the type of business.
There are some exceptions and additional fees that may apply to certain specialty or professional businesses. The permit fee is project based.
Franchise Tax. The City levies a franchise tax on its pipelines, cable, towing, and utility services franchises. A franchise tax of 5% is imposed on any franchise holder operating within the boundaries of the City.
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Financial Statements
General. The City ’s accoun ting policies conform to generally accepted accounting principles and reporting standards set forth by the State Controller. The audited financial statements also conform to the principles and standards for public financial reporting established by GASB.
Basis of Accounting and Financial Statement Presentation. The government -wide financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of t he timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due.
Most Recent Audited Financial Statements. Set forth in the following tables is the City’s General Fund balance sheets and statements of revenues, expenditures and changes in General Fund Balance for fiscal years 2016-17 through 2020-21, which are based on the City ’s audited financial statements. The balance sheets and statements presented in this Official Statement are subject to the various notes attached to the City ’s financial statements for the respective years.
The City’s Annual Comprehensive Financial Report (“ACFR”) for Fiscal Year 2020-21, including the City’s audited financial statements, is set forth in Appendix A.
General Fund Historical Financial Data
The following Tables 11 and 12 provide a five-year history of (i) the City ’s General Fund revenues, expenditures, and changes in fund balances for Fiscal Years 2016 -17 through 2020- 21 and (ii) the City’s Comparative Balance Sheet for Fiscal Years 2016-17 through 2020-21.
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TABLE 11
City of Lynwood
Statements of Revenues, Expenditures and Changes in General Fund Balance Fiscal Years 2016-17 through 2020-21
2016-17 2017-18 2018-19 2019-20 2020-21
Revenues
Taxes and assessments $20,005,982 $24,941,479 $28,505,748 $26,806,601 $31,453,560 Licenses and permits 943,700 815,194 945,896 942,376 1,038,026 Fines, penalties and forfeitures 1,601,620 1,751,217 2,344,777 1,654,693 2,323,943 Use of money and property 298,652 346,348 588,774 618,797 246,191 Intergovernmental 131,653 118,915 119,595 137,311 144,666 Charges for service 1,720,903 1,546,418 1,872,551 1,907,408 953,382 Administrative support 1,118,246 1,118,246 1,118,246 1,118,674 1,118,674 Miscellaneous 1,086,943 1,924,946 1,192,765 370,148 1,294,205 Total Revenues 26,907,699 32,562,763 36,688,352 33,556,008 38,572,647
Expenditures
Current:
General Government 4,306,522 5,330,570 4,433,873 5,100,825 3,951,512 Public safety 16,326,446 17,437,065 17,729,040 18,742,412 19,042,384 Public works 4,293,658 5,495,132 6,841,748 6,822,296 6,201,299 Community development 113,187 48,519 138,816 -- 88,181
Parks and recreation 2,935,450 3,377,729 3,453,952 3,393,928 2,334,105 Capital outlay 1,191 7,893 138,883 83,100 --
Total expenditures 27,976,454 31,696,908 32,736,312 34,142,561 31,617,481
Excess (deficiency) of revenues over (under)
expenditures (1,068,755) 865,855 3,952,040 (586,553) 6,955,166
Other financing sources(uses)
Transfers in 2,635,588 3,094,178 2,677,967 1,105,160 2,725,050 Transfers out (1,457,756) (1,650,331) (4,446,163) (2,052,818) (4,505,549) Total other financing sources 1,177,832 1,443,847 (1,768,196) (947,658) (1,780,499)
Net Change in fund balances 109,077 2,309,702 2,183,844 (1,534,211) 5,174,667
Beginning of year 2,460,694 2,569,771 4,879,473 7,063,317 5,529,106 End of year $2,569,771 $4,879,473 $7,063,317 $5,529,106 $10,703,773 ____________
Source: City Finance Department and City of Lynwood - audited financial statements for fiscal years 2016-17 through 2020-21.
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TABLE 12
City of Lynwood
General Fund Balance Sheets
Fiscal Years 2016-17 through 2020-21
2016-17 2017-18 2018-19 2019-20 2020-21
Assets
Cash and investments $4,454,157 $4,644,238 $9,177,157 $5,516,506 $8,633,865 Receivables:
Accounts 1,161,134 1,329,982 1,374,808 1,170,756 2,763,310 Interest 8,160 12,927 97,159 40,433 5,813
Intergovernmental 1,299,671 2,076,734 1,936,313 2,289,577 2,873,421 Due from other funds 3,604,714 5,021,046 3,125,668 4,681,451 4,998,943 Other assets 19,161 -- -- -- --
Restricted cash and investments:
Cash and investments 7,329 7,330 7,330 7,331 7,331
Cash and investments with fiscal agents -- -- -- -- --
Total Assets 10,554,326 13,092,257 15,718,435 13,706,054 19,282,683
Deferred Inflow of Resources
Unavailable revenues 627,166 687,255 515,820 505,722 1,078,424 Total Deferred Outflow of Resources 627,166 687,255 515,820 505,722 1,078,424
Liabilities
Accounts payable and accrued liability 3,074,338 3,171,269 3,755,016 3,513,809 3,420,166 Deposits 1,242,826 1,314,035 1,344,057 1,117,192 1,040,095 Advances from successor agency 3,040,225 3,040,225 3,040,225 3,040,225 3,040,225 Total Liabilities 7,357,389 7,525,529 8,139,298 7,671,226 7,500,486
Fund Balances
Restricted 7,329 7,330 7,330 7,331 7,331
Committed 75,372 561,594 1,621,084 3,159,083 4,828,977
Unassigned 2,487,070 4,310,549 5,434,903 2,362,692 5,867,465 Total Fund Balance 2,569,771 4,879,473 7,063,317 5,529,106 10,703,773 Total Liabilities & Fund Balance $10,554,326 $13,092,257 $15,718,435 $13,706,054 $19,282,683 _____________
Source: City of Lynwood - Audited Financial Statements for fiscal years 2016-17 through 2020-21.
Relevant Fiscal Policies
Reserve Policy . Pursuant to the City’s adopted fiscal and budget policies, the City maintain General Operating Reserves at a level equal to at least 10% of the total General Fund budgeted revenue. These reserves are created and maintained to provide sufficient cash flow to meet daily financial needs and sustain City services in the event of a catastrophic event such as a natural/manmade disaster ( for example, earthquake, windstorm, flood, terrorist attack) or a major downturn in the economy.
In general, the City endea vors to support ongoing operations with ongoing revenue but uses reserves on a one-time basis to support City services pending the development of a longer- term financial solution. However, in no event will reserves be used longer than one biennium to support City operation. If reserves are used, the City will begin to replenish these reserves at the end of biennium if a surplus exists, but no later than biennium following their use.
Surplus balances in the General Fund are used to fund one -time operations and capital expenditures, dedicated to the Capital Improvement Program or places in an economic Lynwood Public Financing Authority - Page 170 of 242 Agenda Item # 3
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contingency account if there are surplus balances remaining after all current expenditu re obligations and reserve requirements are met and if the City has made a determination that revenues for the ensuing biennium are sufficient to support budgeted General Fund operations.
Debt Policy. The City has adopted Debt Management Policies in com pliance with California Government Code Section 8855. The Debt Management Policies sets forth the purposes for which long-term debt financings may be undertaken (i.e., for projects that will provide benefit to constituents over multiple years). The Debt Management Policies provide that short - term financings may be undertaken for operational cash flow purposes and for short-lived capital projects (i.e. equipment leases).
City Investment Policy. To maximize interest income and maintain liquidity, the City pools operating cash for its various funds and invests the monies in securities of various maturities. City and Agency funds are invested pursuant to the City ’s Investment Policy in compliance w ith Section 53601 of the California Government Code. The investment types authorized for investment by the City include the Local Agency Investment Fund (State Pool), U.S. Treasury Obligations, U.S. Government Agency Issues, Certificates of Deposit, Commercial Paper, as well as Mutual Funds and Money Market Funds comprised of eligible securities. The objectives of the Investment Policy are to preserve capital, provide adequate liquidity to meet cash disbursements of the City, and to achieve market- average rates of return. Investments are secured by collateral as required under law, with maturity dates staggered to ensure that cash is available as needed. The City Council receives regular reports from the City Treasurer on the performance of the City’s pooled investment program.
Investment of debt proceeds held by bond trustees are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City ’s Investment Policy.
The City manages its exposure to interest rate risk by purchasing a combination of shorter term and longer-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.
Risk Management
The City is a member of Independent Cities Risk Management Authority (“ ICRMA”).
ICRMA was established in 1980 to provide excess insurance coverage, risk management and self-insurance services for California cities. ICRMA is a Joint Powers Authority (“ JPA”) directed by a Governing Board consisting of one representative from each Member City.
ICRMA offers members excess liability, excess workers’ compensation, property and special events coverage. Currently there are 22 member cities. ICRMA maintains a management services agreement with Bickmore Risk Services to provide staff services to the Authority. See APPENDIX A Note 12 for additional details regarding the City’s Risk Management.
Employee Retirement System; CalPERS
This caption contains certain information relating to California Public Employees ’ Retirement System (“CalPERS”). The information is primarily derived from information produced by CalPERS, its independent accountants and actuaries. The City has not independently verified Lynwood Public Financing Authority - Page 171 of 242 Agenda Item # 3
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the information provided by CalPERS and makes no representations and expresses no opinion as to the accuracy of the information provided by CalPERS.
The annual comprehensive financial reports of CalPERS are available on its Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS ’ most recent actuarial valuation reports and other information concerning benefits and other matters. Such information is not incorporated by reference in this Official Statement. None of the Authority, City or Underwriter can guarantee the accuracy of such information. Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or may be changed in the future. Actuarial assessments will change with the future experience of the pension plans.
General Information about the Pensi on Plans. The City contributes to two defined benefit pension plans: Employees Retirement Plan (“Miscellaneous Plan”) and Fire Retirement Plan (“Safety Plan”). Each plan provides retirement and disability benefits, annual cost -of-living adjustments, and death benefits to plan members and beneficiaries. The Miscellaneous Plan is part of the Public Agency portion of the California Public Employees Retirement System (“CalPERS”), an agent multiple -employer plan administered by CalPERS, which acts as a common investment and administrative agent for the participating public employers within the State of California. Benefit provisions under the Plan are established by State statute and City resolution. CalPERS’ audited financial statements can be obtained at CalPE RS’ website under Forms and Publications
Effective November 1, 2000, the City’s fire department was transferred to the County. As a result, certain safety members (employees of the fire department) of CalPERS have ceased to be employed by the fire department of the City and have been employed by the County, and upon such transfer, these safety members have become members of Los Angeles County Employees Retirement Association ( “LACERA”). This transfer did not apply to safety members who have retired on or before the effective date of the transfer. Those retirees will continue to receive their pension benefits from the City ’s Safety Plan with CalPERS. The City ’s Safety Plan is currently part of the CalPERS Inactive Agency Risk Pool, a cost-sharing multiple-employer defined benefit plan.
Employees Covered. At the June 30, 2019 Valuation date, the following employees were covered by the benefit terms for each Plan:
Miscellaneous Safety
Active employees 120 0
Transferred and terminated employees 191 5
Retired employees and beneficiaries 255 111
Total 566 116
Source: City of Lynwood.
PEPRA. On September 12, 2012, the California Governor signed AB 340, a bill that enacted the California Public Employees’ Pension Reform Act of 2012 ( “PEPRA”) and that also amended various sections of the California Education and Government Codes, including the County Employees Retirement Law of 1937. Effective January 1, 2013, PEPRA: (i) requires public retirement systems and their participating employers to share equally with employees the normal cost rate for such retirement systems; (ii) prohibits employers from paying employer paid Lynwood Public Financing Authority - Page 172 of 242 Agenda Item # 3
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member contributions to such retirement systems for employees hired after January 1, 2013; (iii) establishes a compulsory m aximum non safety benefit formula of 2.5% at age 67; (iv) defines final compensation as the highest average annual pensionable compensation earned during a 36 month period; and (v) caps pensionable income at $110,100 ($132,120 for employees not enrolled in Social Security) subject to Consumer Price Index increases. Other provisions reduce the risk of the City incurring additional unfunded liabilities, including prohibiting retroactive benefits increases, generally prohibiting contribution holidays, and prohibiting purchases of additional non- qualified service credit.
Benefits Provided. CalPERS provides retirement and disability benefits, annual cost-of- living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions under both plans are established by the State statute and City resolution as follows:
Miscellaneous Plan
Hire Date Prior to January 1, 2013 On or after January 1, 2013 Benefit Formula 2.0% @ 55 2.0% @ 60
Benefit Vesting Schedule 5 years of service 5 years of service Benefit Payments Monthly for life Monthly for life
Retirement Age 50-55 52-67
Monthly Benefits, As a % of Eligible
Compensation
2.0% to 2.7%
1.0% to 2.5%
Required Employee Contribution Rates 8.000% 5.250%
Required Employer Contributions Rates 27.244% 27.244%
Safety Plan
Hire Date Prior to January 1, 2013 On or after January 1, 2013 Benefit Formula 2.0% @ 50 2.0% @ 57
Benefit Vesting Schedule 5 years of service 5 years of service Benefit Payments Monthly for life Monthly for life
Retirement Age 50 50-57
Monthly Benefits, As a % of Eligible
Compensation
3.0%
2.0% to 2.7%
Required Employee Contribution Rates 0.000% 0.000%
Required Employer Contributions Rates 0.000% 0.000%
_____________
Source: City of Lynwood Audit Fiscal Year ended June 30, 2021.
See APPENDIX A Note 9 for additional details regarding the City ’s pension and other employee benefits.
Contributions. Section 20814(c) of the California Public Employees ’ Retirement Law (“PERL”) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.
The City is required to contribute at an actuarially determined rate of annual covered payroll, plus a fixed payment of unfunded liability. The actuarially determined normal cost rates Lynwood Public Financing Authority - Page 173 of 242 Agenda Item # 3
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and UAL contribution amounts for each Plan for the Fiscal Years ended June 30, 2022, through June 30, 2023, are as follows:
CITY’S REQUIRED EMPLOYER CONTRIBUTION RATES & PAYMENTS
Fiscal Year 2021-22 Fiscal Year 2022-23
Pension Plan
Employer
Normal
Cost Rate
Employer
Normal
Cost
Payment
Employer
Normal
Cost Rate
Employer
Normal
Cost
Payment
Miscellaneous 10.940% $3,530,648 10.81% $3,887,362
Safety 11.003 2,642,352 0.00 797,804
Source: CalPERS Annual Valuation Report as of June 2019 and 2020.
Projected Employer Contributions . The following tables show the City ’s actuarially- determined required employer contribution for Fiscal Year 2022 -23 and projected employer contributions (before cost sharing) for Fiscal Years 2023 -24 through 2027 -28 for each Plan by normal cost (expressed as a percentage of total active payroll) and amortization of the unfunded accrued liability (expressed as a dollar amount).
Miscellaneous
Required
Contribution
Projected Future Employer Contributions
(Assumes 7.00% Return for Fiscal Year 2020-21)
Fiscal Year 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 Normal Cost % 10.81% 10.6% 10.5% 10.3% 10.2% 10.0% UAL Payment $3,887,362 $3,373,000 $3,567,000 $3,415,000 $3,549,000 $3,617,000 Safety
Required
Contribution Projected Future Employer Contributions
(Assumes 7.00% Return for Fiscal Year 2020-21)
Fiscal Year 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 Normal Cost % 0.00% 0.0% 0.0% 0.0% 0.0% 0.0%
UAL Payment $797,804 $798,000 $798,000 $798,000 $798,000 $798,000
Source: CalPERS Annual Valuation Report as of June 30, 2020.
Funding History. The funding history for the Miscellaneous Pension Plan and the Safety Pension Plan is shown in the tables below, listing for each plan the actuarial accrued liability, share of the pool’s market value of assets, share of the pool’s unfunded liability, funded ratio, and annual covered payroll.
MISCELLANEOUS PLAN
Valuation
Date
Accrued
Liability (AL)
Market Value
of Assets
(MVA)
Unfunded
Liability
Funded
Ratio
Annual
Covered
Payroll
6/30/2018 $98,338,645 $70,958,787 $27,379,858 72.2% $5,143,023 6/30/2019 108,448,698 74,444,764 34,003,934 68.6 8,089,873 6/30/2020 113,717,205 76,893,685 36,823,520 67.6 8,484,551
Source: CalPERS Annual Valuation Report as of June 30, 2020.
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SAFETY PLAN
Valuation
Date
Accrued
Liability (AL)
Market Value
of Assets
(MVA)
Unfunded
Liability
Funded
Ratio
Annual
Covered
Payroll
06/30/2018 $20,965,985 $13,130,338 $7,835,647 62.6% $0 06/30/2019 19,787,845 11,982,990 7,804,855 60.6 0
06/30/2020 19,193,302 11,225,642 7,967,660 58.5 0
Source: CalPERS Annual Valuation Report as of June 30, 2020.
Payable to the Pension Plan. At June 30, 2021, the City reported a payable of $51,444 for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2021.
Actions Taken by CalPERS Related to Discount Rate and Other Assumptions . In 2013, the CalPERS ’ Board of Administration (the “Board of Administration ”) approved a recommendation to change the CalPERS amortization and smoothing policies. In 2018, the Board of Administration voted to shorten the period over which CalPERS will amortize actuarial gains and losses from 30 years to 20 years for new pension liabilities. In 2014, the Board of Administration approve d new demographic actuarial assumptions based on a 2013 study of recent experience. The largest impact, applying to all benefit groups, is a new 20 -year mortality projection reflecting longer life expectancies and that longevity will continue to increase. Because retirement benefits will be paid out for more years, the cost of those benefits will increase as a result. In 2015, the Board of Administration adopted a funding risk mitigation policy intended to incrementally lower its discount rate – its assumed rate of investment return – in years of good investment returns, help pay down the pension fund ’s unfunded liability, and provide greater predictability and less volatility in contribution rates for employers. In 2016, the Board of Administration voted to lower its discount rate for local agencies per the following schedule:
Fiscal Year
Discount
Rate
2018-19 7.375%
2019-20 7.250
2020-21 7.000
On July 12, 2021, CalPERS announced it had achieved a preliminary investment return of 21.3% for the 12-month period ending June 30, 2021. Under the Funding Risk Mitigation Policy approved by the CalPERS Board of Administration in 2015, the double -digit return triggered a November 2021 reduction in the discount rate from 7.00% to 6.80%.
Lowering the discount rate means employers that contract with CalPERS to administer their pension plans will see increases in their normal costs and unfunded actuarial l iabilities.
Active members hired after January 1, 2013, under PEPRA will also see their contribution rates rise. PEPRA included certain other provisions to try to minimize pension costs for covered employees. The three -year reduction of the discount rate will result in average employer rate increases of about 1 percent to 3 percent of normal cost as a percent of payroll for most miscellaneous retirement plans, and a 2 percent to 5 percent increase for most safety plans.
Additionally, many CalPERS employer s will see a 30 to 40 percent increase in their current unfunded accrued liability payments. These payments are made to amortize unfunded liabilities over 20 years to bring the pension fund to a fully funded status over the long-term.
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Fiscal Year 2020 -21 investment returns and changes to the discount rate and other assumptions, including demographic changes, will be reported on the June 30, 2021 CalPERS actuarial reports. These changes, including the newly determined discount rate, will be reflected in contribution levels for cities, counties, and special districts in Fiscal Year 2023-24.
Asset Volatility Ratio (AVR) . Plans that have higher asset -to-payroll ratios experience more volatile employer contributions (as a percentage of payroll) due to investme nt return. For example, a plan with an asset-to-payroll ratio of 8 may experience twice the contribution volatility due to investment return volatility, than a plan with an asset-to-payroll ratio of 4. Shown below is the asset volatility ratio for the Miscellaneous Plan which measure the plan’s current contribution volatility. It should be noted that this ratio is a measure of the current situation. It increases over time but generally tends to stabilize as the plan matures.
Liability Volatility Ratio (LVR). Plans that have higher liability -to-payroll ratios experience more volatile employer contributions (as a percentage of payroll) due to investment return and changes in liability. For example, a plan that has a higher LVR experience more volatile employer contribution (as a percentage of payroll) due to changes in liability. For example, a plan with LVR of 8 is expected to have twice the contribution volatility of a plan with LVR of 4 when there is a change in accrued liability, such as when there is a change in actuarial assumptions. It should be noted that this ratio indicates a longer-term potential for contribution volatility, since the AVR, described above, will tend to move closer to the LVR as the funded status approaches 100%.
Rate Volatility
Miscellaneous
Plan* Safety Plan*
Market Value of Assets $76,461,330 $11,225,642
Payroll 8,484,551 --
Asset Volatility Ratio (AVR) 9.0 N/A
Accrued Liability 113,717,205 19,193,302
Liability Volatility Ratio (LVR) 13.4 N/A
* As of June 30, 2020
Source: CalPERS Annual Valuation Report as of June 30, 2020.
Deferred Compensation Plan. The City offers a deferred compensation plan (the “Plan”), created in accordance with the Internal Revenue Code Section 457, to its employees. Amounts deferred may no t be paid to the employee during employment with the City, except for a catastrophic circumstance creating an undue financial hardship for the employee. The Plan is administered by an independent financial institution that has fiduciary responsibilities ov er the Plan assets. Consistent with the amended IRC Section 457, which took effect on January 1, 1997, the City no longer reports the Plan assets and liabilities on its financial statements.
Other Post-Employment Benefits (OPEB)
Plan Description. In addition to the retirement plan described in Note 10, the City provides healthcare and life insurance benefits, in accordance with memorandum of understandings, to eligible retired employees. The City joined and contributed to CalPERS California Employers ’ Retiree Benefit Trust ( “CERBT”) Fund. As of June 2018, there is no separate audited financial report available for the said plan.
Employees Covered. At the June 30, 2020 measurement date, the following employees were covered by the benefit terms for each Plan:
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Active employees 113
Transferred and terminated employees 30
Retired employees and beneficiaries 111
Total 254
Source: City of Lynwood.
Contributions. The City contributed $1,170,498 during the measurement period and $1,245,311 during the fiscal year ended June 30, 2021.
Changes in OPEB Liability of the District. The changes in OPEB liability of the City as of June 30, 2019 measurement date, is shown in the following table:
CHANGES IN TOTAL OPEB LIABILITY
City of Lynwood
Total OPEB Liability
Balance at June 30, 2018 $27,299,477
Service Cost 509,557
Interest 1,837,851
Changes of assumptions or other inputs (503,935)
Benefit payments (1,163,219)
Net changes 680,254
Balance at June 30, 2019 $27,979,731
Source: City of Lynwood - 2020-21 Audit Report.
OPEB Expense. For the year ended June 30, 2021, the City recognized OPEB expenses of $1,671,742. See Note 10 to the City ’s audited financial statements for the fiscal year ending June 30, 2021 attached hereto as Appendix A for more information.
General Fund Long-Term Indebtedness
The following table shows the outstanding long -term obligations of the City and the Authority payable from the City’s general fund.
Governmental Activities Final Maturity
Original Par
Amount
Par Amount
Outstanding
2017 Lease Revenue Bonds September 1, 2035 7,685,000 6,015,567 2019A PFA Lease Revenue Bonds October 1, 2040 8,465,000 8,013,703 2019B PFA Lease Revenue Bonds October 1, 2040 13,955,000 13,643,666 2020A PFA Lease Revenue Bonds October 1, 2040 13,500,000 13,388,185 Total $85,615,000 $78,086,901
2017 Lease Revenue Bonds. In April 2017, the City issued $7,685,000 Lease Revenue Bonds to current refund Lynwood Public Financing Authority 2003 Lease Revenue Refunding Bonds Series A and B, to finance the costs of the 2017 capital improvements projects (“ 2017 Project”), and to pay for the cost of issuance. Interest on the bonds is payable semi -annually each March 1 and September 1, beginning September 1 , 2017 at a rate of 3.72% annum.
Principals matures each September 1 beginning 2017 and maturing in 2035. The refunding resulted in economic gain in the amount of $60,285 and the saving in debt service in the amount of $74,625. The principal balance outstanding at June 30, 2021 was $6,015,567.
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2019 Lease Revenue Bonds . On November 26, 2019 , the Lynwood Public Financing Authority issued $ 8,465,000 Lynwood Public Financing Authority Lease Revenue Refunding Bonds, Series 2019A (federally taxable) to provide funds to refund Lease Revenue Bonds, 2010 Series A (Civic Center Improvement Project), and to pay cost of issuance of the bonds. Interest will be payable on April 1, and October 1 of each year commencing April 1, 2020. Interest rate on the bonds will be payable on June 1 and October 1 of each year commencing October 1, 2020 to 2040. Interest rates on the bonds vary between 2.153% and 3.961%. The principal balance outstanding at June 30, 2021, including unamortized discount of $11,297 was $8,013,703.
On N ovember 26, 2019, the Lynwood Public Financing Authority issued $13,955,000 Lynwood Public Financing Authority Lease Revenue Refunding Bonds, Series 2019B (tax - exempt) to provide funds to finance a portion of the costs associated with certain park improvements within the City limits and to pay cost of issuance of the bonds. Interest will be payable on April 1, and October 1 of each year commencing April 1, 2020. Interest rate on the bonds will be payable on June 1 and October 1 of each year commencing October 1, 2020.
Interest rates on the bonds vary between 2.750% and 3.150%. The principal balance outstanding at June 30, 2021, including unamortized discount of $311,334 was $13,643,666.
2020 Lease Revenue Bonds . On December 10, 2020, the City issued the $13,500,000 Lynwood Public Financing Authority Lease Revenue Bonds Series 2020A to provide funds to finance working capital for the City’s General Fund or such other purposes as the City may determine including public capital improvements and to fund a debt service reserve fund for the bonds, and to pay costs of issuance of the bonds. Interest on the bonds is payable semiannually on April 1, and October 1 of each year commencing April 1, 202 1. Interest rates on t he bonds vary between 1.793% and 4.195%. The principal balance outstanding at June 30, 2021, including unamortized discount of $111,815 was $13,388,185.
See Note 8 to the City ’s audited financial statements for the fiscal year ending June 30, 2021 attached hereto as Appendix A for more information.
Direct and Overlapping Bonded Debt
Set forth on the following page is a direct and overlapping debt report for the City (the “Debt Report”) prepared by California Municipal Statistics, Inc. and dated as of May 1, 2022. The Debt Report is included for general information purposes only. The City has not reviewed the Debt Report for completeness or accuracy and makes no representations in connection therewith.
The Debt Report generally includes long term obliga tions sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term obligations generally are not payable from revenues of the City (except as indicated) nor are they necessari ly obligations secured by land within the City. In many cases long -term obligations issued by a public agency are payable from the general fund or other revenues of such public agency. The total 2021-22 assessed valuation of $ 4,120,196,768 reflected in t he Debt Report is provided by California Municipal Statistics, Inc. Neither the City, the Authority nor the Underwriter has verified this information.
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TABLE 13
City of Lynwood
Direct and Overlapping Debt Statement
(as of May 1, 2022)
2021-22 Assessed Valuation: $4,120,196,768
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 5/1/22 Metropolitan Water District 0.121% $24,412
Compton Community College District 16.181 17,679,496
Los Angeles Community College District 0.006 248,791
Compton Unified School District 0.722 1,745,823
Los Angeles Unified School District 0.007 753,904
Lynwood Unified School District 98.242 120,801,783
TOTAL GROSS OVERLAPPING TAX AND ASSESSMENT DEBT $141,254,209 Less: Los Angeles Unified School District General Obligation Bonds, Election of 2005, Series J (2010) Qualified School Construction Bonds:
Election of 2005, Series H (2009) Qualified School Construction Bonds:
Amount accumulated in Interest and Sinking Fund and Set Asides for Repayment 10,841 TOTAL NET OVERLAPPING TAX AND ASSESSMENT DEBT $141,243,368
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
Los Angeles County General Fund Obligations 0.233% $6,614,118 Los Angeles County Superintendent of Schools Certificates of Participation 0.233 9,255 Compton Unified School District Certificates of Participation 0.722 210,066 Los Angeles Unified School District Certificates of Participation 0.007 8,450 Lynwood Unified School District Certificates of Participation 98.242 15,988,886 City of Lynwood General Fund Obligations 100.000 40,861,044 (1) Los Angeles County Sanitation District No. 1 Authority 11.307 111,154 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $63,802,973
OVERLAPPING TAX INCREMENT DEBT (Successor Agency): 100.000% $38,300,000
GROSS COMBINED TOTAL DEBT $243,357,182 (2)
NET COMBINED TOTAL DEBT $243,346,341
Ratios to 2021-22 Assessed Valuation:
Total Gross Overlapping Tax and Assessment Debt ............. 3.43% Total Net Overlapping Tax and Assessment Debt ................. 3.43% Total Direct Debt ($40,861,044) .......................................... 0.99% Gross Combined Total Debt ................................................... 5.91% Net Combined Total Debt ....................................................... 5.91%
Ratios to Redevelopment Successor Agency Incremental Valuation ($1,236,716,919) Overlapping Tax Increment Debt ........................................... 3.10% ____________________________________
(1) Excludes issue to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Source: California Municipal Statistics, Inc.
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CONSTITUTIONAL AND STATUTORY
LIMITATIONS ON TAXES AND APPROPRIATIONS
The constitutional and statutory provisions discussed in this section have the potential to affect the ability of the City to levy taxes and spend tax proceeds for operating and other purposes.
Limitations on Revenues
Article XIIIA of the California Constitution . Article XIIIA of the State Constitution, adopted and known as Proposition 13, was a pproved by the voters in June 1978 and has been amended on occasions, including most recently on November 7, 2000 to reduce the voting percentage required for the passage of school bonds. Section 1(a) of Article XIIIA limits the maximum ad valorem tax on real property to one percent of “full cash value,” and provides that such tax shall be collected by the counties and apportioned according to State statutes. Section 1(b) of Article XIIIA provides that the one -percent limitation does not apply to ad valor em taxes levied to pay interest and redemption charges on (i) indebtedness approved by the voters prior to July 1, 1978, or (ii) bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two -thirds of the votes cast by the voters voting on the proposition, or (iii) bonded indebtedness incurred by a school district or community college district or county office of education for the construction, reconstruction, rehabilitation or replacement of school facilities, including the furnishing and equipping of school facilities or the acquisition or lease of real property for school facilities, approved by 55% of the voters voting on the proposition.
The tax for payment of the City ’s general obligation bonds falls within the exception for bonds approved by a two-thirds vote.
Section 2 of Article XIIIA defines “full cash value” to mean the county assessor’s valuation of real property as shown on the 1975 -76 Fiscal Year tax bill, or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred. The full cash value may be adjusted annually to reflect inflation at a rate not to exceed two percent per year, or to reflect a reduction in the consumer price index or comparable data for the area under taxing jurisdiction, or may be reduced in the event of declining property value caused by substantial damage, destruction or other factors. See “Litigation Relating to Two Percent Limitation” below. Legislation implementing Article XIIIA provides that, notwithstanding any other law, local agencies may not levy any ad valorem property tax except the 1% base tax levied by each County and taxes to pay debt service on indebtedness approved by the voters as described above. Such legislation further provides that each county will levy the maximum tax permitted by Article XIIIA, which is $1.00 per $100 of assessed market value.
Since its adoption, Article XIIIA has been amended a number of times. These amendments have cre ated a number of exceptions to the requirement that property be reassessed when it is purchased, newly constructed or undergoes a change in ownership has occurred. These exceptions include certain transfers of real property between family members, certain purchases of replacement dwellings for persons over age 55 and by property owners whose original property has been destroyed in a declared disaster, and certain improvements to accommodate disabled persons and for seismic upgrades to property. These amendments have resulted in marginal reductions in the property tax revenues of the City.
Both the California State Supreme Court and the United States Supreme Court have upheld the validity of Article XIIIA.
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Articles XIIIC and XIIID of the California Constitution.
General. On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 adds Articles XIIIC and XIIID to the California Constitution and contains a number of interrelated provisi ons affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges.
On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. The amendments to Article XIIIC define “taxes” that are subject to voter approval as “any levy, charge, or exaction of any kind imposed by a local government,” with certain exceptions.
Taxes. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City ( “general taxes”) require a majority vote; taxes for specific purposes ( “special taxes”), even if deposited into the City’s General Fund, require a two-thirds vote. The voter approval requirements of Article XIIIC reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase such taxes in the future to meet increased expenditure needs.
Property-Related Fees, Charges and Assessments . Article XIIID also adds several provisions making it generally more difficult for local agencies to levy and maintain property - related fees, charges, and assessments for municipal servic es and programs. These provisions include, among other things, (i) a prohibition against assessments which exceed the reasonable cost of the proportional special benefit conferred on a parcel, (ii) a requirement that assessments must confer a “special benefit,” as defined in Article XIIID, over and above any general benefits conferred, (iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tab ulation of ballots weighted according to the proportional financial obligation of the affected party, and (iv) a prohibition against fees and charges which are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners.
Reduction or Repeal of Taxes, Fees and Charges. Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund. If such repeal or reduction occurs, the City’s ability to pay debt service on the Bonds could be adversely affected.
Burden of Proof. Article XIIIC provides that local government “bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a f air or reasonable relationship to the payor ’s burdens on, or benefits received from, the governmental activity. ” Lynwood Public Financing Authority - Page 181 of 242 Agenda Item # 3
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Similarly, Article XIIID provides that in “any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance” with Article XIIID.
Impact on City ’s General Fund . The approval requirements of Articles XIIIC and XIIID reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase the taxes, fees, charges or taxes in the future that it may need to meet increased expenditure needs.
The City does not believe that any material source of General Fund revenue is subject to challenge under Proposition 218 or Proposition 26.
Judicial Interpretation. The interpretation and application of Articles XIIIC and XIIID will ultimately be determined by the courts with respect to a number of the matters discussed below, and it is not possible at this time to predict with certainty the outcome of such determination.
Expenditures and Appropriations
In addition to the limits Article XIIIA imposes on property taxes that may be collected by local governments, certain other revenues of the State and local governments are subject to an annual “appropriations limit” or “Gann Limit” imposed by Article XIIIB of the State Constitution, which effectively limits the amount of such revenues that government entities are permitted to spend. Article XIIIB, approved by the voters in June 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each government entity applies to “proceeds of taxes,” which consist of tax revenues, state subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed “the cost reasonably borne by such entity in providing the regulation, product or service.” “Proceeds of taxes ” exclude tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the appropriation of funds which are not “proceeds of taxes,” such as reasonable user charges or fees, and certain other non-tax funds.
Article XIIIB also does not limit appropriation of local revenues to pay debt service on bonds existing or authorized by January 1, 1979, o r subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990, levels. The appropriations limit may also be exceeded in cases of emergency; however, the appropriations limit for the three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two -thirds of the legislative body of the local government.
The State and each local government entity has its own appropriations limit. Each year, the limit is adjusted to allow for changes, if any, in the cost of living, the population of the jurisdiction, and any transfer to or from another government entity of financial responsibility fo r providing services. Each school district is required to establish an appropriations limit each year.
In the event that a school district ’s revenues exceed its spending limit, the district may increase its appropriations limit to equal its spending by taking appropriations limit from the State.
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exceed the aggregate limit, the excess must be returned to the agency ’s taxpayers through tax rate or fee reductions over the following two years.
Statutory Revenue Limitations - Proposition 62
Proposition 62 was adopted by the voters at the November 4, 1986, general election and (a) requires that any new or higher taxes for general governmental purposes imposed by local governmental entities such as the City be approved by a two -thirds vote of the governmental entity’s legislative body and by a majority vote of the voters of the governmental entity voting in an election on the tax, (b) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two - thirds vote of the voters of the gove rnmental entity voting in an election on the tax, (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was imposed, (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA, (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities, and (f) requires that any tax imposed by a local governmental entity on o r after August 1, 1985, be ratified by a majority vote of the voters voting in an election on the tax within two years of the adoption of the initiative or be terminated by November 15, 1988.
Following its adoption by the voters, various provisions of Pro position 62 were declared unconstitutional at the appellate court level . On September 28, 1995, however, the California Supreme Court, in Santa Clara City Local Transportation Authority v . Guardino, upheld the constitutionality of the portion of Proposition 62 requiring a two –thirds vote in order for a local government or district to impose a special tax and, by implication, upheld a parallel provision requiring a majority vote in order for a local government or district to impose any general tax. The Guardino decision did not address whether it should be applied retroactively.
In response to Guardino, the California Legislature adopted Assembly Bill 1362, which provided that Guardino should apply only prospectively to any tax that was imposed or increased by an ordinance or resolution adopted after December 14, 1995. Assembly Bill 1362 was vetoed by the Governor; hence the application of the Guardino decision on a retroactive basis remains unclear.
Proposition 62, as an initiative statute, does not have the same level of authority as a constitutional initiative. It is analogous to legislation adopted by the State Legislature, except that it may be amended only by a vote of the State ’s electorate. However, Proposition 218, as a constitutional amendment, is applicable to charter cities and supersedes many of the provisions of Proposition 62.
Proposition 1A
Proposition 1A, proposed by the Legislature in connection with the State ’s Fiscal Year 2004-2005 Budget, approved by the voters in November 20 04 and generally effective in fiscal year 2006-2007, provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year, as set forth under the laws in effect as of November 3, 2004.
Any change in the allocation of property tax revenues among local governments within a county must be approved by two -thirds of both houses of the Legislature. Proposition 1A provides, Lynwood Public Financing Authority - Page 183 of 242 Agenda Item # 3
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however, that beginning in fiscal year 2008-2009, the State may shift to schools and community colleges up to 8% of local government property tax revenues, which amount must be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a severe state financial hardship, the shift is approved by two-thirds of both houses and certain other conditions are met. The State may also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Proposition 1A also provides that if the State reduces the motor vehicle license fee rate currently in effect, 0.65 percent of vehicle value, the State must provide local governments with equal replacement revenues. Further, Proposition 1A requires the State, beginning July 1, 2005, to suspend Stat e mandates affecting cities, counties and special districts, excepting mandates relating to employee rights, schools or community colleges, in any year that the State does not fully reimburse local governments for their costs to comply with such mandates.
Proposition 1A may result in increased and more stable City revenues. The magnitude of such increase and stability is unknown and would depend on future actions by the State.
However, Proposition 1A could also result in decreased resources being avail able for State programs. This reduction, in turn, could affect actions taken by the State to resolve budget difficulties. Such actions could include increasing State taxes, decreasing spending on other State programs or other action, some of which could be adverse to the City.
Proposition 22
Proposition 22, entitled “The Local Taxpayer, Public Safety and Transportation Protection Act,” was approved by the voters of the State in November 2010 . Proposition 22 amended the state Constitution to eliminate or reduce the State’s authority to (i) temporarily shift property taxes from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for State-mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues .
This Proposition was intended to, among other things, stabilize local government revenue sources by restricting the State’s control over local property taxes.
Unitary Property
AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from most utility property assessed by the State Board of Equalization ( “Unitary Property”), commencing with Fiscal Year 1988-89, are allocated as follows: (i) each jurisdiction will receive up to 102% of its prior year State –assessed revenue; and (ii) if county –wide revenues generated from Unitary Property are less than the previous year’s revenues or greater than 102% of the previous year’s revenues, each jurisdiction will share the burden of the shortfall or benefit of the excess revenues by a specified formula . This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas.
The provisions of AB 454 constitute neither an elimination of the assessment of any State– assessed properties nor a revision of the methods of assessing utilities by the State Board of Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all jurisdictions in a county.
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Possible Future Initiatives
Articles XIIIA, XIIIB, XIIIC and XIIID and Propositions 62, 111, 218 and 1A were each adopted as measures that qualified for the ballot pursuant to the State ’s initiative process. From time to time other initiative measures could be adopted, further affecting revenues of the City or the City ’s ability to expend revenues. There is no assurance that the California electorate or Legislature will not at some future time approve additional limitations.
BOND OWNERS’ RISKS
The following describes certain special considerations and risk factors affecting the payment of and security for the Bonds. The following discussion is not meant to be an exhaustive list of the risks associated with the purchase of any Bonds and does not necessarily reflect the relative importance of the various risks. Potential investors in the Bonds are advised to consider the following special factors along with all other information in this Official Statement in evaluating the Bonds. There can be no assurance that other considerations will not materialize in the future.
The Bonds are limited obligations of the Authority payable solely from and secured solely by the Revenues pledged therefor under the Indenture, together with amounts on deposit from time to time in certain funds and accounts held by the Trustee. Revenues consist primarily of Lease Payments. If for any of the reasons described below, or for any other reason, the Authority does not receive sufficient Lease Payments to pay debt service on the Bonds, the Authority will not be obligated to utilize any other of its funds, other than amounts on deposit in certain fu nds and accounts established under the Indenture, to pay debt service on the Bonds.
The Lease Payments are payable from all funds lawfully available to the City , which includes is the Pension Override Tax . The City has the capacity to enter into other ob ligations that may constitute additional obligations against its revenues. In the event the City ’s revenue sources are less than its total obligations, the City could choose to fund other obligations before making Lease Payments; in that case, the failure to pay Lease Payments in full would constitute a default under the Lease Agreement . The same result could occur if, because of State constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues; in that case, the failure to pay Lease Payments in full would constitute a default under the Lease Agreement. The City must adopt a balanced Budget each year, and has covenanted in the Lease Agreement to budget for, appropriate and make the Lease Payments in each year that it has possession and use of the Leased Property.
Abatement of Lease Payments
Under California law, the obligation of the City to make Lease Payments is contingent upon the availability of th e Leased Property for use and occupancy by the City. The Lease Payments will be abated proportionately during any period in which by reason of material damage or destruction, there is substantial interference with the use and occupancy of any portion of t he Leased Property by the City, and such abatement will continue until substantial completion of the work of repair or replacement of the portion of the Leased Property damaged or destroyed; provided that, in determining the amount of abatement. Any abatement of Lease Payments could affect the Authority’s ability to pay debt service on the Bonds.
In the event Lease Payments are abated, no assurances can be given that moneys on deposit in the Revenue Fund or the proceeds of property insurance (which is not expected to be Lynwood Public Financing Authority - Page 185 of 242 Agenda Item # 3
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available to cover earthquake damage) will be sufficient to pay the debt service on the Bonds during the period of such abatement. The City is neither required nor will it maintain rental interruption insurance with respect to the Leased Property.
Notwithstanding the provisions of the Lease Agreement specifying the extent of abatement in the event of the City ’s failure to have full use and occupancy of the Leased Property, such provisions may be superseded by operat ion of law, and, in such event, the resulting Lease Payments of the City may not be sufficient to pay all of the remaining principal and interest with respect to the Bonds.
Limitation on Remedies
The enforcement of a ny remedies provided for in the Lease Agreement and in the Indenture could prove to be both expensive and time-consuming. The Lease Agreement provides that upon the occurrence and during the continuance of the City ’s failure to deposit with the Trustee any Lease Payments when due, the bankruptcy of the City, or if the City breaches any other terms, covenants, conditions or agreements contained in the Lease Agreement (subject to a cure period as described in the Lease Agreement), neither the Authority nor th e Trustee may accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable, and the Authority shall have no right to re-lease any portion of the Leased Property that constitutes a City street. See “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”
In addition to the limitations on remedies contained in the Lease Agreement and the Indenture, the rights and remedies provided in those documents may be limited by and are subject to provisions of federal bankruptcy laws, as now or hereafter enacted, and to other laws or equitable principles that may affect creditors ’ rights generally. The various legal opinions to be delivered concurrently with the issuance of the Bonds will be qualified as to th e enforceability of the various legal instruments by limitations imposed by State and federal laws, rulings and decisions affecting remedies, and by bankruptcy, reorganization or other laws of general application affecting the enforcement of creditors ’ rights, including equitable principles. See “– Bankruptcy Risks” below.
No Acceleration Upon Default
In the event of a default, there is no remedy of acceleration of the total Lease Payments for the term of the Lease. Any suit for money damages would be subject to the legal limitations on remedies against cities and counties in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. See “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”
Early Prepayment Risk
Early payment of the Lease Payments and early prepayment of the Bonds may occur in whole or in part, without premium, from the proceeds of title insurance, on any date, if the Leased Property, or a portion thereof, is lost, destroyed or damaged beyond repair or taken by eminent domain and if the City exercises it right to prepay the Lease Payments in whole or in part pursuant to the provisions of the Lease Agreement and the Indenture.
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Bankruptcy Risks
The rights of the owners of the Bonds and the enforceability of the Authority ’s obligation to make payments on the Bonds may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights under currently existing law or laws enacted in the future, and may also be subject to the exercise of judicial discretion under certain circumstances.
Under existing law, the City is eligible to file for bankruptcy. Sh ould the City file for bankruptcy, there could be adverse effects on the holders of the Bonds. In a bankruptcy of the City, the Authority or the Trustee as its assignee and the owners of the Bonds may be prohibited from taking any action against the City, any official of the City, or any property of the City (including the Leased Property) to enforce the terms of the Lease Agreement, unless the consent of the bankruptcy court is first obtained. The bankruptcy court is not required to give its consent. This prohibition on action may even prohibit the Trustee from using funds in its possession to make payments on the Bonds. As a result, Owners may experience temporary or permanent delays in the payment of the Bonds.
In a bankruptcy case, a plan of adjustment for the City could be confirmed that would allow for enforcement of the Lease Agreement, but the priority, interest rate, payment terms, collateral, maturity dates, payment sources, covenants and other terms or provisions of the Lease Agreement and the Bo nds may be altered by the bankruptcy court. Such a plan could be confirmed even over the objections of the Authority or the Trustee as its assignee and the owners of the Bonds, and without their consent. Additionally, the resulting plan could adjust some o r all of the City’s financial obligations, which include the City ’s lease payment obligations under the Lease Agreement and the City’s obligation to fund certain retirement benefits.
The adjustment plans approved by the Bankruptcy Courts in connection wi th the bankruptcies of the cities of Vallejo, San Bernardino and Stockton resulted in significant reductions in the amounts payable by the cities under lease revenue obligations substantially identical or similar to the Bonds. The City can provide no assur ance about the outcome of the bankruptcy cases of other California municipalities of the nature of any adjustment plan it if were to file for bankruptcy.
In addition, if the Lease Agreement is determined to constitute a “true lease ” by the bankruptcy court (rather than a financing lease providing for the extension of credit), the City could choose not to perform under the Lease Agreement and the claim of the owners of the Bonds could be substantially limited. An allowable claim could be substantially less than the amount of the Bonds outstanding, resulting in the owners of the Bonds suffering a substantial loss.
The opinions of counsel, including Bond Counsel, delivered in connection with the issuance and delivery of the Bonds will be so qualified. Bankruptcy proceedings, or the exercising of powers by the federal or state government, if initiated, could subject the owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification of their rights.
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State Audits
Pursuant to the California State Auditor’s “high -risk local government agency audit program,” the California State Auditor released its audit report 2018 -803 regarding the City (the “State Audit Report”) in December 2018. According to the State Audit Report, the audit alleged that the City was a “high -risk city” due to its financial and organizational risks. Specifically, the State Audit Report alleged that t he City’s general fund operating revenues were projected to exceed its operating expenditures in Fiscal Year 2018-19, that the City had violated State law by using restricted funds to pay for certain personnel costs, and that organizational inefficiencies (for example, high turnover in key leadership positions and an inability to effectively measure staffing needs) limited the City’s ability to provide public services. The State Audit Report also included several recommendations for improvements.
A follow-on report for the City, Report 2021 -808, was released by the California State Auditor in September 2021, and concluded the City remained high-risk. It acknowledged that the City had taken actions to address risk areas identified in the State Audit Report , but there was uncertainty regarding the City’s long -term fiscal outlook. It further alleged the City had violated State law by subsidizing the General Fund with restricted revenue from water and sewer fees.
The City also failed to develop a strategic plan or other efforts to provide meaningful guidance to its departments on aligning resources with Citywide goals and priorities. Certain recommendations were proposed by the California State Auditor in the follow-up report.
The City has reviewed the State Audit Report and follow -on report, and taken certain actions to address the alleged deficiencies included therein. More specifically, in response to the State Audit, the City Manager submitted a Corrective Action Plan on November 22, 2021, which outlined and itemized corrective actions towards the State Audit findings. These corrective actions include updating the City’s policies to beef up the City’s internal controls and preparing a new cost allocation to properly substantiate all inter -fund charges/tra nsfers. Moreover, both the City Manager and the Finance Director of the City have been recently hired and were not employees of the City during the time periods described in the reports.
State Law Limitations on Appropriations
Article XIIIB of the California Constitution limits the amount that local governments can appropriate annually. The ability of the City to make Lease Payments may be affected if the City should exceed its appropriations limit. The State may increase the appropriation limit of cities in the State by decreasing the State ’s own appropriation limit. The City does not anticipate exceeding its appropriations limit in the foreseeable future. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUES AND APPROPRIATIONS – Limitations on Revenues – Expenditures and Appropriations.”
Limitations on Taxes and Fees
General. Certain taxes, assessments, fees and charges presently imposed by the City could be subject to the voter approval requirements of Article XIIIC and Article XIIID of the State Constitution. Based upon the outcome of an election by the voters, such fees, charges, assessments and taxes might no longer be permitted to be imposed, or may be reduced or eliminated and new taxes, assessments fees and charges may not be approved . The City has assessed the potential impact on its financial condition of the provisions of Article XIIIC and Article XIIID of the State Constitution respecting the imposition and increase of taxes, fees, charges and assessments and does not believe that an election by the voters to reduce or eliminate the Lynwood Public Financing Authority - Page 188 of 242 Agenda Item # 3
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imposition of certain existing fees, charges, assessments and taxes would substantially affect its financial condition. However, the City believes that if the initiative power was exercised so that all local taxes, assessments, fees and charges that may be subject to Article XIIIC and Article XIIID of the State Constitution are eliminated or substantially reduced, the financial condition of the City, including its General Fund, could be materially adversely affected.
Although the City does not currently anticipate that the provisions of Article XIIIC and Article XIIID of the State Constitution would adversely affect its ability to pay Lease Payments and its other obligations payable from the General Fund, no assurance can be given regarding the ultimate interpretation or effect of Article XIIIC and Article XIIID of the State Constitution on the City’s finances. See “CONSTITUTIONAL AND STAT UTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.”
Pension Tax Override. On April 9, 1946, the voters in the City approved the Pension Tax Override, which is accounted for in a special fund, separate and apart from the General Fund, and available only for its authorized purposes. In furtherance of its authorized purposes, under the Lease Agreement, the City pledges the Pension Tax Override to the payment of the Lease Payments. In accordance with a settlement of a lawsuit relating to the Pension Tax Override, the City fixed the rate of tax at $0.125 per $100 of assessed valuation. See “CITY FINANCIAL INFORMATION – Pension Tax Override” for additional information regarding the City’s ability to levy and collect the Pension Tax Override.
Additional Obligations of the City
The City has existing obligations payable from its General Fund . See “APPENDIX A – “FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY – Outstanding General Fund Lease Obligations. ” The City is permitted to enter into other oblig ations which constitute additional charges against its revenues without the consent of Owners of the Bonds.
To the extent that additional obligations are incurred by the City, the funds available to pay Lease Payments may decline.
The Lease Payments and other payments due under the Lease Agreement (including payment of costs of repair and maintenance of the Leased Property , taxes and other governmental charges levied against the Leased Property ) are payable from funds lawfully available to the City. If the amounts that the City is obligated to pay in a fiscal year exceed the City’s revenues for such year, the City may choose to make some payments rather than making other payments, including Lease Payments and Additional Rental, based on the perceived needs of the City. The same result could occur if, because of California Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues or is required to expend available revenues to preserve the public health, safety and welfare.
Property Taxes
Levy and Collection . Any reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the City’s property tax revenues, and accordingly, could have an adverse impact on the ability of the City to make Lease Payments.
Likewise, delinquencies in the payment of property taxes could have an adverse effect on the City’s ability to pay principal of and interest on the Bonds when due.
Reduction in Inflationary Rate. Article XIIIA of the California Constitution provides that the full cash value base of real property used in determining assessed value may be adjusted Lynwood Public Financing Authority - Page 189 of 242 Agenda Item # 3
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from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data .
See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.” Such measure is computed on a calendar year basis . Because Article XIIIA limits inflationary assessed value adjustments to the lesser of the actual inflationary rate or 2%, there have been years in which the assessed values were adjusted by actual inflationary rates, which were less than 2% . Since Article XIIIA was approved , the annual adjustment for inflation has fallen below the 2% limitation a limited number of times.
The City is unable to predict if any adjustments to the full cash value base of real property within the City, whether an increase or a reduction, will be realized in the future.
Appeals of Assessed Values. There are two types of appeals of assessed values that could adversely impact property tax revenues:
Proposition 8 Appeals. Most of the appeals that might be filed in the City would be based on Section 51 of the Revenue and Taxation Code, which requires that for each lien date the value of real property must be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution or its fu ll cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value.
Under California law, property owners may apply for a reduction of their prop erty tax assessment by filing a written application, in form prescribed by the State Board of Equalization, with the appropriate county board of equalization or assessment appeals board. In most cases, the appeal is filed because the applicant believes th at present market conditions (such as residential home prices) cause the property to be worth less than its current assessed value. These market-driven appeals are known as “Proposition 8” appeals.
Any reduction in the assessment ultimately granted as a Proposition 8 appeal applies to the year for which application is made and during which the written application was filed. These reductions are often temporary and are adjusted back to their original values when market conditions improve. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA.
Base Year Appeals . A second type of assessment appeal is called a base year appeal, where the property owners challenge the original (basis) value of their property .
Appeals for reduction in the “base year” value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter . The base year is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date.
No assurance can be given that property tax appeals in the future will not significantly reduce the City’s property tax revenues.
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Public Health Emergencies
In recent years, public health authorities have warned of threats posed by outbreaks of disease and other public health threats. The spre ad of the novel strain of coronavirus called COVID-19 is having significant negative impacts throughout the world, including within the City.
The COVID -19 pandemic has negatively affected travel, commerce, and is widely expected to continue to negatively affect economic output worldwide and within the City. See “BOND OWNERS ’ RISK – U.S. Economic Recession. ” While federal and state governments (including California) have enacted legislation and taken executive actions seeking to mitigate the negative public health and economic impacts of the COVID -19 pandemic, the City offers no assurances that these interventions will have the intended effects. These negative economic impacts may reduce or otherwise negatively affect revenues to the City’s General Fund and result in unexpected increases in expenditures. See “APPENDIX A – FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY – CITY FINANCES – Management Discussion Regarding COVID-19 Impacts.” The City cannot predict the magnitude of these impacts on such revenues, but such impacts could be materially adverse.
The financial and operating data contained in this Official Statement are the latest available, but unless otherwise indicated are as of dates and for periods before the economic impact of the COVID-19 pandemic and measures instituted to slow it. Accordingly, they are not necessarily indicative of the current financial condition or future prospects of the City and the region. While the overall potential impact of the COVID -19 pandemic on the City cannot be fully quantified at this time, the continued outbreak of COVID -19 could lead to additional or modified public health restrictions and have an adverse effect on the City ’s operations and financial condition, and the effect could be material. Prospe ctive investors should assume that the restrictions and limitations related to COVID -19, and the current disruption to the national and global economies, will increase at least over the near term, recovery may be prolonged and, therefore, may have an adverse impact on the City’s finances.
Certain Risks Associated with Sales Tax and Other Local Tax Revenues
For fiscal year 2020-21, sales tax revenues were the second largest source of revenue to the City. See “APPENDIX A – FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY – Sales Taxes.” Sales tax revenues are based upon the gross receipts of retail sales of tangible goods and products by retailers with taxable transactions in the City, which could be impacted by a variety of factors.
For example, in times of economic recession, the gross receipts of retailers often decline, and such a decline would cause the sales tax revenues received by the City to also decline. As described further below, there has been volatility in the United States and global financial markets associated with the COVID-19 outbreak, resulting in significant declines and a national and global recession.
In addition, changes or amendments in the laws applicable to the City ’s receipt of sales tax revenues or other local taxes, whether implemented by State legislative action or voter initiative, could have an adverse effect on sales tax revenues received by the City. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Proposition 218 – Article XIIIC and Article XIIID.”
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For example, many categories of transactions are exempt from the statewide sales tax, and additional categories could be added in the future. Currently, most sales of food products for human consumption are exempt; this exemption, however, does not apply to liquor or to restaurant meals. The rate of sales tax levied on taxable transactions in the City or the fee charged by the California Department of Tax and Fee Administration for administering the City’s sales tax could also be changed.
See “APPENDIX A – FINANCIAL, ECONOMIC AND DEMOGRAPHIC INFORMATION FOR THE CITY – CITY FINANCES – Management Discussion Regarding COVID-19 Impacts.”
Natural Calamities
The City, like all California communities, may be subject to unpredictable seismic activity, wildfires, flood, or other natural disasters . Seismic activity, wildfires, floods and other natural disasters represent a potential risk for damage to buildings, roads, bridges and other property within the City. Such natural calamities may adversely affect economic activity in the City, which could have a negative impact on the City’s finances. Additionally, a natural calamity adversely affecting the Leased Property could have a negative impact on the City’s use of such pro perty, which could result in abatement of Lease Payments. See “– Abatement” above.
Fire Hazards. In recent years, wildfires have caused extensive damage throughout the State. Certain of these fires have burned thousands of acres and destroyed hundreds and in some cases thousands of homes. In some instances, entire neighborhoods have been destroyed.
Several fires which occurred in 2017 damaged or destroyed property in areas that were not previously considered to be at risk from such events. In November 2018, the Camp Fire occurred in Butte County, California. The Camp Fire is the deadliest and most destructive wildfire in the recorded history of the State burning more than 150,000 acres and destroying more than 11,500 structures, including most of the structures in the City of Paradise, California. Some commentators believe that climate change will lead to even more frequent and damaging wildfires in the future.
In Los Angeles County, wildland fires historically have occurred in the brush-covered hills that frame many communities, including the Palos Verdes Hills, in the southern portion of the City, and south of the City, in what is now Rolling Hills, Rolling Hills Estates, and Palos Verdes Estates.
Small vegetation fires occasionally still occur on these slopes, but the Fire Department is able to respond quickly and minimize threats to adjacent structures. To prevent fires in the City’s hillside areas, the City ’s municipal code allows the Fire Chief broad authority to carry out preventive measures to minimize fire risks.
Droughts. California is subject to droughts from time -to-time, including currently . On April 1, 2015, for the first time in California ’s history, Governor Edmund G. Brown directed the State Water Resources Control Board to implement mandatory water reductions in cities and towns across California to reduce water usage by 25%. After a few wet years which alleviated drought conditions, California is once again in a drought following a dry 2021-22 winter. The City cannot predict or make any representations regarding the effects that the recent (or future) droughts and related conditions had or may have on the value of taxable property within the City, or to what extent the effects the current (or future) droughts may have had or have on economic activity in the City. See also “– Potential Impact of Climate Change” below.
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Hazardous Substances
Owners and operators of real property may be required by law to remedy conditions of the property 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 area 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. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it . All of these possibilities could significantly and adversely affect assessed values of property in the City and the operations and finances of the City.
Potential Impact of Climate Change
The issue of climate change has become an important factor in water resources planning in the State. There is evidence that increasing concentrations of greenhouse gases have caused and will continue to cause a rise in temperatures around the world, which will result in a wide range of changes in climate patterns. Moreover, there is evidence that a warming trend occurred during the latter part of the 20th century and will likely continue through the 21st century. These changes will have a direct effect on water resources in the State, and numerous studies on climate and water in the State have been conducted to determine the potential impacts. Based on these studies, global warming could result in the following types of water resources impacts in the State, including impacts on the City:
• Changes in the timing, intensity, and variability of precipitation, and an increased amount of precipitation falling as rain instead of as snow,
• Long-term changes in watershed vegetation and increased incidence of wildfires that could affect water quality,
• Sea level rise and an increase in saltwater intrusion,
• Increased water temperatures with accompanying adverse effects on some fisheries,
• Increases in evaporation and concomitant increased irrigation need, and
• Changes in urban and agricultural water demand.
However, other than the general trends listed above, there is no clear scientific consensus on exactly how global warming will quantitatively affect the State’s water supplies.
The City is unable to predict timing or magnitude of the impacts of climate change, if any, or whether they will have a material adverse effect on the business operations or financial condition of the City and the local economy.
COVID-19 Pandemic
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The spread of COVID-19 has impacted governments, businesses and people in a manner that is having negative effects on global and local economies. In response to the pandemic, the City took actions to activate its emergency operations center, temporarily close all non-essential City services, introduced teleworking as and where appropriate, implemented daily screening of all employees, and abided by all state and federal guidelines and orders. The City actively monitors the COVID-19 situation in the communi ty and acts swiftly to issue executive orders to mitigate the spread of the virus. Additionally, the City has forged a strong relationship with the Mendocino County Health Department and local medical clinics to ensure timely sharing of information and coordinated responses to issues.
The City continues to monitor the spread of COVID -19 and is working with local, state, and national agencies to address the potential impact of the pandemic upon the City. There can be no assurances that the spread of COVID-19 and/or responses intended to slow the spread of COVID-19 such as declining business and travel activity, will not materially adversely impact the state and national economies and, accordingly, materially adversely impact the financial condition of the City and the City’s General Fund. In addition, the City may experience increased personnel costs and/or reduced revenues due to the COVID-19 situation and the related impact on economic and other activity in and around the City.
Cyber Security
The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. As a recipient and provider of personal, private or other sensitive electronic information, the City is potentially subject t o 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. The City is also reliant on other entities and service providers in connection with the administration of the Bonds, including without limitation the County tax collector for the levy and collection of property taxes, and the Trustee.
No assurance can be given that the City and the other entities the City relies on will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.
Litigation
The City is and may become a party to litigation that has the potential to have an impact on the City’s General Fund. Although the City maintains certain insurance policies that provide coverage under certain circumstances and with respect to certain types of incidents, the City cannot predict what types of liabilities may arise in the future and whether these may adversely affect the ability of the City to pay Lease Payments under the Lease Agreement when due.
Secondary Market for Bonds
There can be no guarantee tha t there will be a secondary market for the Bonds or, if a secondary market exists, that any Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then-prevailing circumstances. Such prices could be substantially different from the original purchase price.
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TAX MATTERS
The interest on the Bonds is not intended by the Authority to be excluded from gross income for federal income tax purposes. However, in the opinion of Jones Hall, A Professional Law Corporation (“Bond Counsel”), San Francisco, California, interest on the Bonds is exempt from California personal income taxes.
The proposed form of opinion of Bond Counsel with respect to the Bonds to be delivered on the date of issuance of the Bonds is set forth in “APPENDIX D – PROPOSED FORM OF OPINION OF BOND COUNSEL.”
Owners of the Bonds should also be aware that the ownershi p or disposition of, or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Other than as expressly described above, Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the Bonds, the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds.
CERTAIN LEGAL MATTERS
Jones Hall, A Professional Law Corporation, Bond Counsel, will render an opinion with respect to the validity of the Bonds, the form of which is set forth in “APPENDIX D – PROPOSED FORM OF OPINION OF BOND COUNSEL.”
Certain legal matters will also be passed upon for the City and the Authority by Jones Hall, A Professional Law Corporation, as Disclosure Counsel . Certain legal matters will be passed upon for the City and the Authority by the City Attorney. In addition, certain legal matters will be passed on by Quint & Thimmig LLP , as Underwriter ’s Counsel. Payment of the fees and expenses of Special Counsel, Disclosure Counsel and Underwriter’s counsel is contingent upon execution and delivery of the Bonds.
NO LITIGATION
To the best knowledge of the City, there is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending and notice of which has been served on and received by the City or, to the knowledge of the City, threatened against or affecting the City or the assets, properties or operations of the City which, if determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Lease Agreement, the Site Lease or the Indenture, or upon the financial condition, assets, properties or operations of the City.
Neither the City nor the Authority is in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially adversely affect the consummation of the transactions contemplated by the Lease Agreement, the Site Lease or the Lynwood Public Financing Authority - Page 195 of 242 Agenda Item # 3
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Indenture, or the financial conditions, assets, properties or operations of the City, including but not limited to the payment and performance of the City’s obligations under the Lease Agreement.
RATING[S]
[Add Insured Rating, if applicable] S&P Global Ratings (“S&P”) has assigned a rating of “__” to the Bonds. The rating reflects only the views of S&P and any desired explanation of the significance of such rating should be obtained from S&P. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. The City has provided certain additional information and materials to the rating agency (some of which does not appear in this Official Statement).
There is no assurance that such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of the rating agency, circumstances so warrant . Any such downward revision or withdrawal of any rating on the Bonds may have an adverse effect on the market price or marketability of the Bonds.
CONTINUING DISCLOSURE
The City (on behalf of the Authority and itself) will covenant for the benefit of owners of the Bonds to provide certain financial information and operating data relating to the City (the “Annual Report”), by not later than nine months after the end of the City’s fiscal year (presently June 30) and commencing April 1, 2023 with the report for the fiscal year ending June 30, 2022, 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 E — FORM OF CONTINUING DISCLOSURE CERTIFICATE.”
In the last five years, the City did not timely file audited financial statements in connection with various series of bonds and other long-term obligations for Fiscal Years 2015-16 and 2016-
17. The City also failed to timely file no tices of a rating change and to timely file notices of late annual financial information in connection with certain of the bonds and other long -term obligations.
In addition, the City has had continuing disclosure obligation in connection with certain bonds issued by the Lynwood Utility Authority, and within the past five years, the City failed to file in a timely manner its audited financial statements for Fiscal Year 2015-16, and timely notice of a rating change for these bonds.
_________, serving as dissemination agent, will assist the City in timely filing the Annual Reports and notices of certain enumerated events in the future.
UNDERWRITING
The Bonds are being purchased pursuant a bond purchase agreement by and between the Authority, the City and Cabrera Capital Markets, LLC, as underwriter (the “Underwriter”). The Lynwood Public Financing Authority - Page 196 of 242 Agenda Item # 3
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Underwriter has agreed to purchase the Bonds at a purchase price of $________________ (which is equal to the par amount of the Bonds, less a purchaser’s discount of $_____________, and [plus/less] a [net] original issue [premium/discount] of $____________).
The Underwriter may offer the Bonds to the public at the offering prices set forth on the cover page of this Official Statement. The Underwriter may offer and sell to certain dealers and others at a price lower than the offering prices stated on the cover page hereof. The offering price may be changed from time to time by the Underwriter.
MUNICIPAL ADVISOR
The Authority has retained Kosmont Transac tions Services, Inc. , Manhattan Beach , California, as the Authority’s Municipal Advisor in connection with the preparation of this Official Statement and with respect to the issuance of the Bonds. Kosmont Transactions Services, Inc. is not obligated to und ertake, and has not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. Kosmont Transactions Services, Inc. is an independent register ed municipal advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. Kosmont Transactions Services, Inc.’ s compensation is contingent upon the delivery of the Bonds.
EXECUTION
The execution of this Official Statement and its delivery have been authorized by the Board of the Authority and the City Council of the City.
LYNWOOD PUBLIC FINANCING AUTHORITY
By:
Ernie Hernandez
Executive Director
CITY OF LYNWOOD
By:
Ernie Hernandez
City Manager
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APPENDIX A
GENERAL INFORMATION ABOUT THE CITY OF LYNWOOD
AND THE COUNTY OF LOS ANGELES
The following information concerning the County of Los Angeles (the “County”) and the City of Lynwood (the “City”) is included only for the purpose of supplying general information regarding the area. The Bonds are not a debt of the County, the City, the State of California (the “State”) or any of its political subdivisions, and neither the County, the City, the State nor any of its political subdivisions is liable therefor. The City and the Underwriter take no responsibility for the accuracy or completeness of such information.
General
The City. The City of Lynwood (the “City”) was incorporated in 1921 under the general laws of the State of California (the “State”). The City is situated approximately 13 miles south of downtown Los Angeles at the intersection of two major freeways. The local economy represents a diverse blend of industrial, commercial, agricultural and residential development. The City covers 4.9 square miles and serves a population of 69,880.
The County. The County of Los Angeles (the “County”) is located along the southern coast of California, Los Angeles Coun ty covers about 4,080 square miles. It measures approximately 75 miles from north to south and 70 miles from east to west. The county includes Santa Catalina and San Clemente Islands and is bordered by the Pacific Ocean and Ventura, San Bernardino and Orange Counties.
Almost half of the county is mountainous and some 14 percent is a coastal plain known as the Los Angeles Basin. The low Santa Monica Mountains and Hollywood Hills run east and west and form the northern boundary of the Basin and the southern boundary of the San Fernando Valley. The San Fernando Valley terminates at the base of the San Gabriel Mountains whose highest peak is over 10,000 feet. Beyond this mountain range the rest of the county is a semi-dry plateau, the beginning of the vast Mojave Desert.
According to the Los Angeles County Regional Planning Commission, the 86 incorporated cities in the county cover about 1,344 square miles or 27 percent of the total county. About 16 percent of the land in the County is devoted to residential use and over two thirds of the land is open space and vacant.
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Population
The following table lists population estimates for the City, the County and the State for the last five years, as of January 1 each year.
CITY OF LYNWOOD, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA Population Estimates
Years 2017 through 2021, as of January 1
Year
City of
Lynwood
Los Angeles
County
State of
California
2017 71,864 10,181,162 39,352,398
2018 71,972 10,192,593 39,519,535
2019 71,726 10,163,139 39,605,361
2020 71,399 10,135,614 39,648,938
2021 69,880 10,044,458 39,466,855
Source: California Department of Finance, Demographic Research Unit.
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Industry and Employment
The seasonally adjusted unemployment rate in Los Angeles County decreased over the month to 5.8 percent in March 2022, from a revised 6.3 percent in February 2022, and was below the rate of 10.5 percent one year ago. Civilian employment increased by 41,000 to 4,733,000 i n March 2022, while unemployment decreased by 24,000 to 290,000. The civilian labor force increased by 16,000 over the month to 5,023,000 in March 2022. (All of the above figures are seasonally adjusted.) The unadjusted unemployment rate for the county was 4.9 percent in March 2022.
The California seasonally adjusted unemployment rate was 4.9 percent in March 2022,
5.3 percent in February 2022, and 8.4 percent a year ago in March 2021. The comparable estimates for the nation were 3.6 percent in March 2022, 3.8 percent in February 2022, and 6.0 percent a year ago.
The table below lists employment by industry group for the County for the past five years for which data is available.
LOS ANGELES-LONG BEACH-GLENDALE MD (LOS ANGELES COUNTY) Annual Average Civilian Labor Force, Employment and Unemployment, Calendar Years 2017 through 2021
(March 2021 benchmark)
2017 2018 2019 2020 2021
Civilian Labor Force (1) 5,109,800 5,121,300 5,153,100 4,968,900 4,994,100 Employment 4,864,100 4,885,300 4,926,100 4,355,900 4,548,900 Unemployment 245,700 235,900 227,000 613,000 445,200
Unemployment Rate 4.8% 4.6% 4.4% 12.3% 8.9%
Wage and Salary Employment:(2)
Agriculture 5,700 4,600 4,400 4,400 4,600
Mining and Logging 2,000 1,900 1,900 1,700 1,600
Construction 138,700 146,300 149,800 146,500 149,800
Manufacturing 350,400 342,600 340,700 315,100 311,700
Wholesale Trade 221,500 223,200 220,500 200,000 202,000 Retail Trade 425,900 424,600 417,700 380,200 401,400
Transportation, Warehousing, Utilities 198,200 203,600 212,900 207,800 214,200 Information 214,000 214,700 215,300 191,000 213,200
Financial Activities 221,600 223,200 223,600 212,600 210,800 Professional and Business Services 613,200 632,300 647,000 599,800 629,500 Educational and Health Services 797,400 817,900 839,900 820,300 839,600 Leisure and Hospitality 524,600 536,500 547,200 393,500 429,300 Other Services 155,700 158,800 158,400 128,700 134,100
Federal Government 48,000 47,300 47,300 50,200 47,600
State Government 92,500 91,700 86,500 89,000 89,200
Local Government 445,600 451,600 453,000 431,000 421,400 Total all Industries (3) 4,455,000 4,520,700 4,566,100 4,171,700 4,300,000
(1) Labor force data is by place of residence; includes self -employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self -employed individuals, unpaid family workers , household domestic workers, and workers on strike.
(3) Columns may not sum to totals due to rounding.
Source: State of California Employment Development Department.
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Principal Employers
The following table lists the principal employers within the City for fiscal year 2020-21.
CITY OF LYNWOOD
Principal Employers
Fiscal Year 2020-21
Employer Name
No. of
Employees
St. Francis Medical Center 1,853
Lynwood Unified School District 1,468
LA County Sheriff Department 263
City of Lynwood 202
PL Development 175
California Post-Acute Care 174
Granada Post-Acute 145
El Super 130
Superior Warehouse Grocers Inc. 127
Earle M. Jorgensen Company 120
Source: City of Lynwood.
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The following table lists, in alphabetical order, the largest manufacturing and non - manufacturing employers within the County as of April 2022.
COUNTY OF LOS ANGELES
Major Employers
As of April 2022
(In Alphabetical Order)
Employer Name Location Industry
AHMC Healthcare Inc Alhambra Health Care Management
All Nations Church Sylmar Churches
California State Univ NRTHRDG Northridge Schools-Universities & Colleges Academic Cedars-Sinai Health System West Hollywood Health Care Management Infineon Technologies Americas El Segundo Semiconductor Devices (mfrs) Kaiser Permanente Los Angeles Los Angeles Hospitals
Live Nation Los Angeles Entertainment Bureaus
Long Beach City Hall Long Beach City Hall
Longshore Dispatch Wilmington Nonclassified Establishments Los Angeles County Sheriff Monterey Park Government Offices-County Los Angeles Intl Airport-Lax Los Angeles Airports
Los Angeles Medical Ctr Los Angeles Pathologists
Los Angeles Police Dept Los Angeles Police Departments
National Institutes of Health Pasadena Physicians & Surgeons Security Industry Specialist Culver City Security Systems Consultants Six Flags Valencia Amusement & Theme Parks
Sony Pictures Entrtn Inc Culver City Motion Picture Producers & Studios Space Exploration Tech Corp Hawthorne Aerospace Industries (mfrs) Twentieth Century Fox Los Angeles Motion Picture Producers & Studios UCLA Community Based Learning Los Angeles Junior-Community College-Tech Institutes University of Ca Los Angeles Los Angeles Schools-Universities & Colleges Academic University of Ca Los Angeles Los Angeles University-College Dept/Facility/Office Vision X Los Angeles Call Centers
Walt Disney Co Burbank Water Parks
Water Garden Management Santa Monica Office Buildings & Parks
Source: State of California Employment Development Department, extracted from The America ’s Labor Market Information System (ALMIS) Employer Database, 2022 2nd edition.
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Effective Buying Income
“Effective Buying Income ” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor ’s income, rental income (which includes imputed rental income of owner -occupants of non -farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance).
Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.”
The following table summarizes the total effective buying income for the City, the County, the State, and the United States for the period 2018 through 2022.
CITY OF LYNWOOD, LOS ANGELES COUNTY,
STATE OF CALIFORNIA AND UNITED STATES
EFFECTIVE BUYING INCOME
As of January 1, 2018 through 2022
Year
Area
Total Effective
Buying Income
(000’s Omitted)
Median Household
Effective
Buying Income
2018 City of Lynwood $773,863 $43,143
Los Angeles County 271,483,825 56,831
California 1,183,264,399 62,637
United States 9,017,967,563 52,841
2019 City of Lynwood $811,764 $44,123
Los Angeles County 271,483,825 56,831
California 1,183,264,399 62,637
United States 9,017,967,563 52,841
2020 City of Lynwood $854,790 $46,137
Los Angeles County 281,835,290 60,174
California 1,243,564,816 65,870
United States 9,487,165,436 55,303
2021 City of Lynwood $894,319 $48,821
Los Angeles County 289,720,470 62,353
California 1,290,894,604 67,956
United States 9,809,944,764 56,790
2022 City of Lynwood $1,035,105 $57,406
Los Angeles County 327,445,237 71,404
California 1,452,426,153 77,058
United States 11,208,582,541 64,448
Source: The Nielsen Company (US), Inc for year 2018; Claritas, LLC for 2019 through 2022.
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Commercial Activity
A summary of historic taxable sales within the City and the County during the past five years in which data is available is shown in the following tables.
Total taxable sales during the four quarters of calendar year 2021 in the City were reported to be $ 501,930,416, a 24.09% increase over the total taxable sales of $ 374,322,690 reported during the four quarters of calendar year 2020.
CITY OF LYNWOOD
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions Calendar Years 2016 through 2020
(Dollars in Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2016 797 $288,480 1,159 $331,746
2017 837 307,586 1,199 351,191
2018 879 331,014 1,285 371,417
2019 925 342,942 1,384 387,448
2020 1,040 321,844 1,582 374,323
Source: State Department of Tax and Fee Administration.
Total taxable sales during the four quarters of calendar year 2021 in the County were reported to be $191,825,807,206, a 21.61% increase over the total taxable sales of $157,737,984,456 reported during the four quarters of calendar year 2020.
COUNTY OF LOS ANGELES
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions Calendar Years 2016 through 2020
(Dollars in Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2016 196,929 $109,997,043 311,295 $154,208,333
2017 197,452 113,280,347 313,226 159,259,356
2018 200,603 119,145,054 328,047 166,023,796
2019 206,732 122,137,664 342,359 171,776,327
2020 226,643 112,044,029 376,990 155,678,156
Source: State Department of Tax and Fee Administration.
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Construction Activity
Construction activity in the City and the County for the past five years for which data is available is shown in the following tables.
CITY OF LYNWOOD
Building Permit Valuation
For Calendar Years 2016 through 2020
(Dollars in Thousands)(1)
2016 2017 2018 2019 2020
Permit Valuation
New Single-family $1,260.0 $2,806.0 $1,587.0 $1,458.8 $0.0 New Multi-family 0.0 565.0 0.0 0.0 0.0
Res. Alterations/Additions 0.0 0.0 4,468.0 906.3 240.0 Total Residential 1,260.0 3,371.0 6,055.0 2,365.1 240.0
New Commercial 0.0 0.0 0.0 3,900.0 0.0
New Industrial 0.0 0.0 0.0 0.0 0.0
New Other 0.0 0.0 1,035.4 259.1 55.0
Com. Alterations/Additions 135.0 0.0 12,238.0 751.0 190.0 Total Nonresidential 135.0 0.0 13,273.4 4,910.1 245.0
New Dwelling Units
Single Family 4 14 8 10 0
Multiple Family 0 3 0 0 0
TOTAL 4 17 8 10 0
(1) Totals may not foot due to rounding.
Source: Construction Industry Research Board, Building Permit Summary.
LOS ANGELES COUNTY
Building Permit Valuation
For Calendar Years 2016 through 2020
(Dollars in Thousands)(1)
2016 2017 2018 2019 2020
Permit Valuation
New Single-family $2,162,018.2 $2,352,614.8 $2,277,101.5 $1,967,219.3 $1,874,304.5 New Multi-family 2,774,294.3 3,257,833.4 3,222,530.3 2,61,257.4 2,789,673.9 Res. Alterations/Additions 1,639,294.3 1,757,904.1 1,941,369.5 1,625,839.3 1,014,422.1 Total Residential 6,575,607.5 7,368,352.3 7,441,001.3 6,554,316.0 5,678,400.5
New Commercial 1,728,443.4 2,196,089.2 2,844,173.0 2,675,678.8 1,885,027.0 New Industrial 138,408.6 134,534.3 101,201.3 63,727.8 32,196.2 New Other 791,078.1 563,679.3 952,347.7 446,182.7 354,758.2 Com. Alterations/Additions 2,880,916.6 3,143,200.2 2,796,375.3 3,404,012.3 1,241,068.1 Total Nonresidential 2,657,930.1 6,037,503.0 6,694,097.3 6,589,601.6 3,513,049.5
New Dwelling Units
Single Family 4,780 5,456 6,070 5,738 6,198
Multiple Family 15,589 17,023 17,152 15,884 14,056
TOTAL 20,369 22,479 23,222 21,622 20,254
(1) Totals may not foot due to rounding.
Source: Construction Industry Research Board, Building Permit Summary.
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APPENDIX B
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
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APPENDIX C
AUDITED FINANCIAL STATEMENTS
FOR FISCAL YEAR ENDING JUNE 30, 2021
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APPENDIX D
PROPOSED FORM OF OPINION OF BOND COUNSEL
_______, 2022
Lynwood Public Financing Authority
11330 Bullis Road
Lynwood, CA 90262
OPINION: $___________ Lynwood Public Financing Authority Lease Revenue Bonds, Series 2022 (Federally Taxable)
Members of the Governing Body of the Authority:
We have acted as bond counsel to the Lynwood Public Financing Authority (the “Authority”) in connection with the issuance by the Authority of the captioned bonds dated the date hereof (the “Bonds”). In such capacity, we have examined such law and such certified proceedings, certifications and other documents as we have deemed necessary to re nder this opinion.
The Bonds are issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985, being Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Bond Law”), the Indenture of Trust, dated as of July 1, 2022 (the “Indenture”), by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), and a resolution (the “Resolution”) of the governing body of the Authority adopted [May 17], 2022. Under the Indenture, the Autho rity has pledged certain revenues (the “Revenues”) for the payment of principal, premium (if any), and interest on the Bonds when due, including lease payments made by the City of Lynwood (the “City”) under a Lease Agreement dated as of July 1, 2022 (the “Lease Agreement”) between the Authority and the City.
Regarding questions of fact material to our opinion, we have relied on representations of the Authority contained in the Indenture and the City contained in the Lease Agreement, and in the certified pr oceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.
Based on the foregoing, we are of the opinion that, under existing law:
1. The Authority is a duly created and va lidly existing joint exercise of powers authority with the power to adopt the Resolution, enter into the Indenture and perform the agreements on its part contained therein, and issue the Bonds.
2. The City is a duly created and validly existing general la w city and municipal corporation with the power to enter into the Lease Agreement and perform the agreements on its part contained therein.
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3. The Indenture has been duly authorized, executed and delivered by the Authority, and constitutes a valid and binding obligation of the Authority, enforceable against the Authority.
4. The Lease Agreement has been duly authorized, executed and delivered by the Authority and the City, and constitutes a valid and binding obligation of the Authority and the City, enforceable against the Authority and the City.
5. The Indenture creates a valid lien on the Revenues and other funds pledged by the Indenture for the security of the Bonds, on a parity with other bonds (if any) issued or to be issued under the Indenture.
6. The Bonds have been duly authorized and executed by the Authority, and are valid and binding limited obligations of the Authority, payable solely from the Revenues and other funds provided therefor in the Indenture.
7. Interest on the Bonds is exempt from personal income taxation imposed by the State of California.
We express no opinion regarding any other tax consequences arising with respect to the ownership, sale or disposition of, or the amount, accrual or receipt of interest on, the Bonds.
The r ights 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 cons idered 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 hereaf ter occur. Our engagement with respect to this matter has terminated as of the date hereof.
Respectfully submitted,
A Professional Law Corporation
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
$_________
LYNWOOD PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2022
(FEDERALLY TAXABLE)
This Continuing Disclosure Certificate (this “Disclosure Certificate ”) is executed and delivered by the City of Lynwood (the “City”) in connection with the issuance by the Lynwood Public Financing Authority (the “Authority”) of the bonds captioned above (the “Bonds”). The Bonds are being issued under an Indenture of Trust dated as of July 1, 2022 (the “Indenture”), by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The City hereby covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate . This Disclosure Certificate is being executed and delivered by the City on behalf of itself and the Authority 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, the following capitalized terms shall have the following meanings:
“Annual Report ” means any Annual Report provided by the City pursuant to , and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Annual Report Date” means nine months after the end of the City’s fiscal year (currently April 1, based on the City’s fiscal year-end of June 30).
“Dissemination Agent ” means, initially, ______________, and any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.
“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate.
“MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.
“Official Statement ” means the final official executed by the City and the Authority in connection with the issuance of the Bonds.
“Participating Underwriter” means, Cabrera Capital Markets, LLC, the original purchaser of the Bonds required to comply with the Rule in connection with offering of the Bonds.
“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
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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 April 1, 2023, with the report for Fiscal Year 2021-22, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). The City shall provide a written general fund with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
(b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) a notice to the MSRB, in an electronic format as prescribed by the MSRB.
(c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then -applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.
Section 4 . Content of Annual Reports . The City’s Annual Report shall contain or incorporate by reference the following:
(a) Financial Statements. Audited financial statements of the City for the preceding fiscal year, prepared in accordance generally accepted accounting pr inciples. If the City’s 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) Other Annual Information. To the extent not included in the audited final statements of the City, the Annual Report shall also include financial and operating data with respect to the City for preceding fiscal year, substantially similar to that provided in the corresponding tables and charts in the Official Statement, as follows:
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1. City of Lynwood General Fund Budget Summary in substantially the form of Table 1;
2. Statements of Revenues, Expenditures and Changes in General Fund Balance in substantially the form of Table 11;
3. General Fund Balance Sheets Five Year Comparison shown in Table 12;
4. General Fund Revenues by Revenue Source in substantially the form of Table 3;
5. Assessed Valuation of All Taxable Property in substantially the form of Table 6;
6. Secured Property Levies and Collections in substantially the form of Table 7; and
7. Principal Property Taxpayers in substantially the form of Table 10
(c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
(d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public through the MSRB . The City shall clearly identify each such other document so included by reference . If the document included by reference is a final official statement, it must be available from the MSRB.
Section 5. Reporting of Listed Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform.
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds.
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(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 (without any obligation to provide any notices of changes in the outlook assigned to or associated with any rating).
(12) Bankruptcy, insolvency, receivership or similar event of the City.
(13) The consummation of a merger, consolidation, or acquisition involving the City, or the sale of all or substantially all of the assets of the City (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material.
(14) Appointment of a successor or additional Trustee or the change of name of the Trustee, if material.
(15) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material.
(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties.
(b) Upon the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 Busines s Days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsection (a)(8) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Indenture.
(c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), (a)(14), and (a)(15) of this Section 5 contain the qualifier “if mat erial” and that subparagraph (a)(6) also contains the qualifier “material” with respect to certain notices, determinations or other events affecting the tax status of the Bonds.
The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event’s occurrence is material for purposes of U.S. federal securities law. Upon occurrence of any of these Listed Events, the City will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the City will cause a notice to be filed as set forth in paragraph (b) above.
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(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City.
(e) For purposes of Section 5(a)(15) and (16), “financial obligation ” means a (i) debt obligation; (ii) derivative instrument ent ered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii) . The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule.
Section 6. Identifying Information for Filings with the MSRB . All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by ide ntifying information as prescribed by the MSRB.
Section 7 . Termination of Reporting Obligation . The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5©.
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent.
The initial Dissemination Agent will be the City. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of thi s 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 Lynwood Public Financing Authority - Page 214 of 242 Agenda Item # 3
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counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial informa tion filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial sta tements 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©.
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 11. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent.
(a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent ’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capa city for the Lynwood Public Financing Authority - Page 215 of 242 Agenda Item # 3
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City, the Bond owners or any other part y. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
(b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.
Date: _______, 2022
CITY OF LYNWOOD
By:
City Manager
[_____________________],
as Dissemination Agent
By:
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APPENDIX F
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The following description of the Depository Trust Company ( “DTC”), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership int erest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.
Neither the Authority (the “Issuer”) nor the Trustee (the “Agent”) take any responsibility for the information contained in this Appendix.
No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, i f any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co ., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the securities (the “Securities”). The Securities will be issue d as fully -registered securities registered in the name of Cede & Co . (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.
2. DTC, the world ’s largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC ’s participants ( “Direct Participants ”) deposit with DTC . DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pl edges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates.
Direct Participants include both U .S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations . DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ( “DTCC”). DTCC is the holding Lynwood Public Financing Authority - Page 217 of 242 Agenda Item # 3
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company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are re gistered clearing agencies . DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U .S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securitie s and Exchange Commission . More information about DTC can be found at www .dtcc.com and www .dtc.org. The information contained on this Internet site is not incorporated herein by reference.
3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC ’s records . The ownership interest of each actual purchaser of each Security ( “Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants ’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase . Beneficial Owners are, however, expected to receive written confirmations providing details of the trans action, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co . or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners . The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arra ngements among them, subject to any statutory or regulatory requirements as may be in effect from time to time . Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
6. Redemption notices shall be sent to DTC . If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co . (nor any other DTC nominee) w ill consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC ’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date . The Omnibus Proxy assigns Cede & Co .’s consenting or voting Lynwood Public Financing Authority - Page 218 of 242 Agenda Item # 3
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rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend paymen ts on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name, ” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to the Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant ’s interest in the Securities, on DTC ’s records, to the Agent. The requirement for physical delivery of Se curities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC ’s records and followed by a book - entry credit of tendered Securities to the Agent’s DTC account.
10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent . Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.
11. Issuer may decide to discontinue use of the system of book -entry-only transfers through DTC (or a successor securities depository) . In that event, Security certificates will be printed and delivered to DTC.
12. The information in this section concerning DTC and DTC ’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.
Lynwood Public Financing Authority - Page 219 of 242 Agenda Item # 3 Quint & Thimmig LLP 04/27/22
03095.06
$__________ LYNWOOD PUBLIC FINANCING AUTHORITY Lease Revenue Bonds, Series 2022 (Federally Taxable) BOND PURCHASE AGREEMENT __________, 2022 Lynwood Public Financing Authority 11330 Bullis Road Lynwood, CA 90262 City of Lynwood 11330 Bullis Road Lynwood, CA 90262 Ladies and Gentlemen: Cabrera Capital Markets, LLC (the “Underwriter) hereby offers to enter into this bond purchase agreement (the “Bond Purchase Agreement”) with the Lynwood Public Financing Authority (the “Authority”) and the City of Lynwood (the “City”). Upon the acceptance hereof by the Authority and the City, this offer will be binding upon the Authority, the City and the Underwriter. This offer is made subject to (a) the written acceptance hereof by the Authority and the City and (b) withdrawal by the Underwriter upon written notice (by telecopy or otherwise) delivered to the Authority and the City at any time prior to each of their acceptance hereof by the Authority and the City. 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements set forth herein, the Underwriter hereby agrees to purchase on the Closing Date (as defined herein), and the Authority and the City hereby agree to sell and deliver to the Underwriter on the Closing Date, $__________ principal amount of Lynwood Public Financing Authority Lease Revenue Bonds, Series 2022 (Federally Taxable) (the “Bonds). The Bonds are being issued pursuant to Article 4, Chapter 5, Division 7, Title 1 of the California Government Code, a resolution of the Authority authorizing the issuance of the Bonds, adopted on May 17, 2022 (the “Authority Resolution”), and an Indenture of Trust, dated as of June 1, 2022 (the “Indenture”), by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The City will lease certain real property to the Authority, consisting of various streets throughout the boundaries of the City (collectively, the “Leased Property”) to the Authority pursuant to a Site Lease, dated as of June 1, 2022 (the “Site Lease”). The Leased Property will be leased by the Authority to the City pursuant to the Lease Agreement, dated as of June 1, 2022 (the “Lease Agreement”), by and between the Authority and the City. Pursuant to an Assignment Agreement, dated as of June 1, 2022 (the “Assignment Agreement”), by and between the Authority and the Trustee, the Authority will assign, for the benefit of the owners of the Bonds, its right to receive Lease Lynwood Public Financing Authority - Page 220 of 242 Agenda Item # 3
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Payments (the “Lease Payments”) made by the City under the Lease Agreement and its right to exercise rights and remedies of the Authority under the Lease Agreement. All capitalized terms not defined herein shall have the respective meaning specified in the Indenture. Under the Lease Agreement, the City is required to make Lease Payments and Additional Rental Payments from legally available funds in amounts calculated to be sufficient to pay principal of and interest on the Bonds when due. All of the Authority’s right, title and interest in and to the Lease Agreement (except for the right to receive Additional Rental Payments to the extent payable to the Authority and certain rights to indemnification), including the right to receive Lease Payments under the Lease Agreement, are assigned to the Trustee for the benefit of the Owners of the Bonds. The Bonds are being issued for the purposes of funding: (i) all or a portion of the City’s projected total unfunded accrued actuarial liability to the California Public Employees’ Retirement System for its Miscellaneous and Safety Plans; and (ii) the costs of issuing the Bonds. The purchase price to be paid by the Underwriter for the Bonds is hereby agreed to be $___________, which amount represents the principal amount of the Bonds of $__________.00, less $___________, representing the Underwriter’s discount (such payment and delivery of the Bonds and the other actions contemplated hereby to take place at the time of such payment and delivery being herein sometimes called the “Closing”). The Authority and the City acknowledge and agree that (i) the purchase and sale of the Bonds pursuant to this Bond Purchase Agreement is an arm’s-length commercial transaction between the Authority and the City and the Underwriter; (ii) in connection with such transaction, the Underwriter is acting solely as a principal and not as an agent or a fiduciary of the Authority or the City; (iii) the Underwriter has not assumed a fiduciary responsibility in favor of the Authority or the City with respect to the offering of the Bonds or the process leading thereto (whether or not the Underwriter, or any affiliates of the Underwriter, has advised or is currently advising the Authority or the City on other matters) nor has it assumed any other obligation to the Authority or the City except the obligations expressly set forth in this Bond Purchase Agreement, (iv) the Underwriter has financial and other interests that differ from those of the Authority and the City; and (v) the Authority and the City have consulted with their own legal and financial advisors to the extent they deemed appropriate in connection with the offering of the Bonds. The Authority and the City hereby acknowledge receipt from the Underwriter of disclosures required by the Municipal Securities Rulemaking Board (“MSRB”) Rule G-17 (as set forth in MSRB Notice 2012-25 (May 7, 2012), relating to disclosures concerning the Underwriter’s role in the transaction, disclosures concerning the Underwriter’s compensation, conflict disclosures, if any, and disclosures concerning complex municipal securities financing, if any. A Preliminary Official Statement of the City and the Authority, dated _______, 2022 (together with the Appendices thereto, any documents incorporated therein by reference and any supplements or amendments thereto and as disseminated in its printed physical form or in electronic form in all respects materially consistent with such physical form, the “Preliminary Official Statement”), has been prepared for use in marketing the Bonds, and a final Official Statement relating to the Bonds, to be dated the date hereof, as amended to conform to the terms of this Purchase Contract, and with such changes and amendments as are mutually agreed to by the Authority, the City and the Underwriter, including the cover page, inside cover Lynwood Public Financing Authority - Page 221 of 242 Agenda Item # 3
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page, the appendices and all information incorporated therein by reference, is herein collectively referred to as the “Official Statement,” which shall be in substantially the form of the Preliminary Official Statement, with such changes and amendments thereto as may be mutually agreed upon by the Underwriter, the Authority and the City. The Bonds shall be dated their date of delivery, and shall have the maturities, bear interest at the rates, have reoffering yields, and be subject to redemption as shown on Exhibit A hereto. It shall be a condition to the Authority’s obligation to sell and to deliver the Bonds to the Underwriter and to the obligation of the Underwriter to purchase, to accept delivery of and to pay for the Bonds that the entire $__________ principal amount of the Bonds as authorized by the Indenture shall be sold and delivered by the Authority and accepted and paid for by the Underwriter at the Closing. The Underwriter may change the offering prices (or yields) of the Bonds from time to time at any time. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. The obligation of the Authority to sell and deliver the Bonds to the Underwriter shall also be conditioned upon the delivery by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel (“Bond Counsel”), of its approving legal opinion with respect to the Bonds. The Authority and the City hereby authorize the Underwriter to use and distribute the Site Lease, the Lease Agreement, the Assignment Agreement, the Indenture and the Preliminary Official Statement, and the information contained in such documents in connection with the public offering and sale of the Bonds. The Authority and the City have authorized the use of the Preliminary Official Statement in connection with the public offering of the Bonds by the Underwriter prior to the date hereof. The obligation of the City to make Lease Payments under the Lease Agreement does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the Bonds nor the obligation of the City to make Lease Payments under the Lease Agreement constitutes a debt of the Authority, the City, the State of California or any of its political subdivisions in contravention of any constitutional or statutory debt limitation or restriction. The obligation of the City to make Lease Payments, as set forth in the Lease Agreement, shall be deemed to be and shall be construed to be a ministerial duty imposed by law and it shall be the ministerial duty of each and every public official of the City to take such actions and do such things as are required by law in the performance of such duty, subject to abatement in the event of damage or destruction to, or condemnation of, the Leased Property or a portion thereof. 2. Bona Fide Public Offering. The Underwriter agrees to make a bona fide public offering of all of the Bonds, at prices not in excess of the initial public offering yields or prices set forth on the cover page of the Official Statement. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices; provided, however, that the Underwriter may offer a portion of the Bonds for sale to selected dealers who are members of the Financial Industry Regulatory Authority, and the Underwriter reserves the right to change such offering prices or yields as the Underwriter shall deem necessary in connection with the marketing of the Bonds and to offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) and others at prices lower than the initial offering prices or at yields higher than the initial yields set forth on Exhibit A attached hereto. The Underwriter also reserves the right to over-allot or effect transactions that stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market and to discontinue such stabilizing, if commenced, at any time. None of such activities Lynwood Public Financing Authority - Page 222 of 242 Agenda Item # 3
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shall affect the principal amounts, maturity dates, interest rates, redemption or other provision of the Bonds or the amount to be paid by the Underwriter to the Authority for the Bonds. 3. The Bonds. The Bonds will be issued, executed and delivered pursuant to the Indenture. The City Council of the City has adopted a resolution on May 17, 2022, relating to the Bonds (the “City Resolution”). This Bond Purchase Agreement, the Site Lease, the Lease Agreement and the Continuing Disclosure Agreement (hereinafter defined) are collectively referred to as the “City Documents.” This Bond Purchase Agreement, the Indenture, the Site Lease, the Lease Agreement and the Assignment Agreement are collectively referred to as the “Authority Documents.” 4. Official Statement, Continuing Disclosure. (a) The Authority and the City represent that they have deemed the Preliminary Official Statement to be final as of its date, except for either revisions or additions to the offering price(s), interest rate(s), yield(s) to maturity, selling compensation, aggregate principal amount, principal amount per maturity, delivery date, rating(s) and other terms of the Bonds which depend upon the foregoing as provided in and pursuant to Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”). (b) The Underwriter agrees that, prior to the time the final Official Statement is available, the Underwriter will send to any potential purchaser of the Bonds, upon the request of such potential purchaser, a copy of the most recent Preliminary Official Statement. Such Preliminary Official Statement shall be sent by first class mail (or other equally prompt means) not later than the second business day following the date upon which each such request is received. (c) The Authority agrees to deliver to the Underwriter, at such addresses as the Underwriter shall specify, as many copies of the final Official Statement relating to the Bonds as the Underwriter shall reasonably request as necessary to comply with paragraph (b)(4) of the Rule and with Rule G-32, Rule G-36 and all other applicable rules of the Municipal Securities Rulemaking Board. The Authority agrees to deliver such copies of the Official Statement within seven business days after the execution hereof. The Underwriter agrees to give notice to the Authority on the date after which the Underwriter shall no longer be obligated to deliver copies of the Official Statement pursuant to paragraph (b)(4) of the Rule, which date shall be no earlier than 25 days after the “end of the underwriting period,” as determined in accordance with Section 14 herein. (d) Prior to the earlier of (i) receipt of notice from the Underwriter that no participating underwriter, as such term is defined in the Rule, remains obligated to deliver Official Statements pursuant to paragraph (b)(4) of the Rule or (ii) 25 days after the date of the Closing (as defined below), the Authority and the City shall provide the Underwriter with such information regarding the Authority and the City, each of their current financial conditions and ongoing operations as the Underwriter may reasonably request. (e) The City hereby covenants and agrees that it will, on or prior to the Closing Date, execute a certificate for the benefit of the owners of the Bonds in which the City will undertake to provide financial information, operating data and notices of material events as required by paragraph (d)(2)(ii) of the Rule substantially in the form of Appendix D to the Official Statement (the “Continuing Disclosure Agreement”).
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5. Representations, Warranties and Agreements of the City. The City represents, warrants and agrees as follows: (a) The City is a municipal corporation and general law city duly organized and validly existing under the Constitution and laws of the State of California. (b) The City has full legal right, power and authority (i) to enter into, execute and deliver the City Documents; and (ii) to carry out and consummate the transactions on its part contemplated by the City Documents and the Official Statement. (c) By all necessary official action, the City has duly authorized and approved the City Documents, has duly authorized and approved the Preliminary Official Statement and the Official Statement and approved the distribution thereof (including in electronic form), has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations in connection with the execution and delivery of the Bonds on its part contained in the City Documents, and the consummation by it of all other transactions contemplated by the City Documents in connection with the execution and delivery of the Bonds, all pursuant to the City Resolution adopted at a meeting duly called and held in accordance with the requirements of all applicable laws and at which a quorum of the members of the City Council was continuously present. The City Resolution has not been modified, amended or rescinded since the date of its adoption. (d) The City is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of the State of California or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement (including, without limitation, the City Documents) or other instrument to which the City is a party which breach or default has or may have an adverse effect on the ability of the City to perform its obligations under the City Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the execution and delivery of the Bonds and the City Documents, and compliance with the provisions on the City’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the Leased Property or assets of the City or under the terms of any such law, regulation or instrument, except as provided by the Bonds and the City Documents. (e) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations in connection with the execution and delivery of the Bonds under the City Documents or the consummation by it of all other transactions contemplated by the City Documents have been duly obtained, except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition Lynwood Public Financing Authority - Page 224 of 242 Agenda Item # 3
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precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations under the City Documents have been duly obtained. (f) There is no action, suit, proceeding, inquiry or investigation, notice of which has been duly served on the City, at law or in equity before or by any court, government agency, public board or body, pending or to the best knowledge of the officer of the City executing this Bond Purchase Agreement, threatened against the City, affecting the existence of the City or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, execution or delivery of the Bonds pursuant to the Indenture, or contesting or affecting as to the City the validity or enforceability of the City Documents, or contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the City to cause the execution and delivery or adoption by the City of the City Documents, or in any way contesting or challenging the consummation of the transactions contemplated hereby or thereby; nor, to the best knowledge of the City, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity of the Bonds or the authorization, execution, delivery or performance by the City of the City Documents. (g) The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that the City shall not be required to execute a general or special consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction, and the Underwriter shall bear all costs in connection with the foregoing. (h) As of the date thereof, the Preliminary Official Statement (other than information therein regarding DTC or its book-entry system or any information provided by the Underwriter) did not, except for the omission of certain information permitted to be omitted in accordance with the Rule, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (i) At the time of the City’s acceptance hereof, and (unless an event occurs of the nature described in paragraph (k) of this Section 5) at all times subsequent thereto up to and including the Closing Date, the Official Statement (other than information therein regarding DTC or its book-entry system or any information provided by the Underwriter) did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (j) If the Official Statement is supplemented or amended pursuant to paragraph (k) of this Section 5, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto up to and including the Closing Date, the Official Statement (other than information therein provided by the Underwriter) as so supplemented or amended will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
Lynwood Public Financing Authority - Page 225 of 242 Agenda Item # 3
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(k) If between the date of this Bond Purchase Agreement and that date which is 25 days after the end of the underwriting period (as determined in accordance with Section 14 hereof) any event of which the officer of the City executing this Bond Purchase Agreement has knowledge shall occur affecting the City which might adversely affect the marketability of the Bonds or the market prices thereof, or which might cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the City shall notify the Underwriter thereof, and if in the opinion of the Underwriter such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will at its expense prepare and furnish to the Underwriter a reasonable number of copies of such supplement to, or amendment of, the Official Statement in a form and in a manner approved by the City, Bond Counsel, Disclosure Counsel and the Underwriter. (l) Any certificate signed by any officer of the City and delivered to the Underwriter pursuant to the City Documents or any document contemplated thereby or required for the valid execution and delivery of the Bonds shall be deemed a representation and warranty by the City to the Underwriter as to the statements made therein. (m) The City will cause the proceeds from the sale of the Bonds to be paid to the Trustee for the purposes specified in the Indenture and the Official Statement. So long as any of the Bonds are outstanding and except as may be authorized by the Indenture, the City will not issue or sell, or cause to be issued or sold, any bonds or other obligations, other than the Bonds delivered thereunder, the interest on and premium, if any, or principal of which will be payable from Lease Payments. 6. Representations, Warranties and Agreements of the Authority. The Authority represents, warrants and agrees as follows: (a) The Authority is a joint exercise of powers entity duly organized and validly existing under the laws of the State of California pursuant to a Joint Exercise of Powers Agreement between the City and the Lynwood Redevelopment Agency, dated March 16, 1993 (the “JPA Agreement”). (b) The Authority has full legal right, power and authority (i) to enter into, execute and deliver the Authority Documents and to sell and deliver the Bonds to the Underwriter as provided herein; and (ii) to carry out and consummate the transactions on its part contemplated by the Authority Documents and the Official Statement. (c) By all necessary official action, the Authority has duly authorized and approved the issuance of the Bonds and the Authority Documents, has duly authorized and approved the Preliminary Official Statement and the Official Statement and approved the distribution thereof (including in electronic form), has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations in connection with the execution and delivery of the Bonds on its part contained in the Bonds and the Authority Documents, and the consummation by it of all other transactions contemplated by the Authority Documents in connection with the execution and delivery of the Bonds, all pursuant to the Authority Resolution adopted at a meeting duly called and held in accordance with the requirements of all applicable laws and at which a quorum of the board members of the Authority was continuously present. The Authority Resolution has not been modified, amended or rescinded since the date of its adoption and each Authority Document is or will be, when delivered, as applicable, the valid and binding obligation of the Authority.
Lynwood Public Financing Authority - Page 226 of 242 Agenda Item # 3
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(d) The Authority is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of the State of California or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or the JPA Agreement, or any loan agreement, indenture, bond, note, resolution, agreement (including, without limitation, the Authority Documents) or other instrument to which the Authority is a party which breach or default has or may have an adverse effect on the ability of the Authority to perform its obligations under the Bonds or the Authority Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the execution and delivery of the Bonds and the Authority Documents, and compliance with the provisions on the Authority’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, Bond, note, resolution, agreement or other instrument to which the Authority is a party nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the Leased Property or assets of the Authority or under the terms of any such law, regulation or instrument, except as provided by the Bonds and the Authority Documents. (e) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the Authority of its obligations in connection with the issuance of the Bonds under the Authority Documents or the consummation by it of all other transactions contemplated by the Authority Documents, including all filings with the California Secretary of State, have been duly obtained, except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the Authority of its obligations under the Bonds and the Authority Documents have been duly obtained. (f) The Bonds, when executed, issued, authenticated and delivered in accordance with the Indenture, and sold to the Underwriter as provided herein, will be validly executed and outstanding obligations, entitled to the benefits of the Indenture, and upon such execution and delivery, the Indenture will provide, for the benefit of the Owners from time to time of the Bonds, the legally valid and binding security interest it purports to create. (g) There is no action, suit, proceeding, inquiry or investigation, notice of which has been duly served on the Authority, at law or in equity before or by any court, government agency, public board or body, pending or to the best knowledge of the officer of the Authority executing this Bond Purchase Agreement, threatened against the Authority, affecting the existence of the Authority or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance, execution or delivery of the Bonds pursuant to the Indenture, or contesting or affecting as to the Authority the validity or enforceability of the Bonds or the Authority Documents, or contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the Authority to cause the issuance of the Bonds, or the execution and delivery or adoption by the Authority of the Authority Documents, or in any way contesting or challenging the consummation of the transactions contemplated hereby or thereby; nor, to the best Lynwood Public Financing Authority - Page 227 of 242 Agenda Item # 3
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knowledge of the Authority, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity of the Bonds or the authorization, execution, delivery or performance by the Authority of the Bonds or the Authority Documents. (h) The Authority will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that the Authority shall not be required to execute a general or special consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction, and the Underwriter shall bear all costs in connection with the foregoing. (i) As of the date thereof, the Preliminary Official Statement did not, except for the omission of certain information permitted to be omitted in accordance with the Rule, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (j) At the time of the Authority’s acceptance hereof, and (unless an event occurs of the nature described in paragraph (l) of this Section 6) at all times subsequent thereto up to and including the Closing Date, the information under the caption “THE AUTHORITY” in the Official Statement (other than information therein provided by the Underwriter) did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (k) If the Official Statement is supplemented or amended pursuant to paragraph (l) of this Section 6, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto up to and including the Closing Date, the Official Statement (other than information therein provided by the Underwriter) as so supplemented or amended will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (l) If between the date of this Bond Purchase Agreement and that date which is 25 days after the end of the underwriting period (as determined in accordance with Section 14 hereof) any event of which the officer of the Authority executing this Bond Purchase Agreement has knowledge shall occur affecting the Authority which might adversely affect the marketability of the Bonds or the market prices thereof, or which might cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Authority shall notify the Underwriter thereof, and if in the opinion of the Underwriter such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will at its expense prepare and furnish to the Underwriter a reasonable number of copies of such supplement to, or amendment of, the Official Statement in a form and in a manner approved by the City, Bond Counsel, Disclosure Counsel and the Underwriter.
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(m) Any certificate signed by any officer of the Authority and delivered to the Underwriter pursuant to the Authority Documents or any document contemplated thereby or required for the valid execution and delivery of the Bonds shall be deemed a representation and warranty by the Authority to the Underwriter as to the statements made therein. (n) The Authority will cause the proceeds from the sale of the Bonds to be paid to the Trustee for the purposes specified in the Indenture and the Official Statement. So long as any of the Bonds are outstanding and except as may be authorized by the Indenture, the Authority will not issue or sell any bonds or other obligations, other than the Bonds delivered thereunder, the interest on and premium, if any, or principal of which will be payable from the Revenues. (o) The Authority shall honor all other covenants on its part contained in the Indenture and the Lease Agreement which are incorporated herein and made a part of this Bond Purchase Agreement. 7. Closing. At 8:00 A.M., Pacific Daylight time, on _________, 2022, or on such other date time, as may be mutually agreed upon by the Authority, the City and the Underwriter (the “Closing Date”), the Authority will, subject to the terms and conditions hereof, deliver to the Underwriter, through the facilities of The Depository Trust Company (“DTC”), or at such other place as the Authority, the City and the Underwriter may mutually agree, the Bonds in definitive, fully registered form (one Bond for each maturity), duly executed and registered in the name of Cede & Co. as nominee of DTC; and, subject to the terms and conditions hereof, the Underwriter shall wire to the Trustee immediately available funds in the amount of the purchase price of the Bonds. 8. Closing Conditions. The Underwriter has entered into this Bond Purchase Agreement in reliance upon the representations and warranties of the Authority and the City contained herein, and in reliance upon the representations and warranties to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the Authority and the City of its obligations hereunder, both as of the date hereof and as of the Closing Date. Accordingly, the Underwriter’s obligations under this Bond Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the Authority and the City of their respective obligations to be performed hereunder and under such documents and instruments at or prior to the Closing Date, shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the statements the officers and other officials of the Authority and of the City, as the Underwriter, authorized representatives of Bond Counsel, the Trustee, and the City Attorney made in any certification or other documents furnished pursuant to the provisions hereof, and shall also be subject to the following additional conditions: (a) The respective representations and warranties of the Authority and the City contained herein shall be true, complete and correct on the date hereof and on and as of the Closing Date, as if made on the Closing Date; (b) At the time of Closing, the City Documents and the Authority Documents shall be in full force and effect in accordance with their terms and shall not have been amended, modified or supplemented and the Official Statement shall not have been supplemented or amended, except in any such case as may have been agreed to by the Underwriter; (c) All necessary official action of the Authority, the City and of the other parties thereto relating to the City Documents and the Authority Documents shall have been taken and shall be in full force and effect and shall not have been amended, modified or supplemented in any material respect; Lynwood Public Financing Authority - Page 229 of 242 Agenda Item # 3
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(d) Subsequent to the date hereof, there shall not have occurred any change in or affecting particularly the Authority, the City or the Bonds, as the foregoing is described in the Official Statement, which in the reasonable opinion of the Underwriter materially impairs the investment quality of the Bonds; and (e) At or prior to the Closing Date, the Underwriter shall have received copies of each of the following documents: (i) The Official Statement and each supplement or amendment, if any, thereto, executed by authorized officers of the Authority and the City; (ii) A copy of the Indenture, executed by the parties thereto; (iii) A copy of the Lease Agreement, executed by the parties thereto; (iv) A copy of the Site Lease, executed by the parties thereto; (v) A copy of the Continuing Disclosure Agreement, executed by the City and ___________, as dissemination agent; (vi) A certified copy of the JPA Agreement; (vii) A certificate or certificates of the City, dated the Closing Date, to the effect that: (A) the representations and warranties of the City contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date and the City has complied with all of the terms and conditions of this Purchase Agreement required to be complied with by the City at or prior to the Closing Date; (B) none of the proceedings or authority for (i) the authorization, sale, execution and delivery of the Bonds, (ii) the adoption of the City Resolution, or (iii) the execution and delivery of the City Documents and performance of its obligations thereunder, has been repealed, modified, amended, revoked or rescinded; (C) subsequent to June 30, 2019, and prior to Closing, other than as described in the Official Statement, there have been no material adverse changes in the financial position of the City; (D) no event affecting the City has occurred since the date of the Official Statement that should be disclosed in the Official Statement for the purposes for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; and (E) No consent is required for the inclusion of the City’s 2018-19 audited financial statements in the Official Statement. (viii) A certificate or certificates of the Authority, dated the Closing Date, to the effect that:
Lynwood Public Financing Authority - Page 230 of 242 Agenda Item # 3
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(A) the representations and warranties of the Authority contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date 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 Closing Date; (B) none of the proceedings or authority for (i) the authorization, sale, execution and delivery of the Bonds, (ii) the adoption of the Authority Resolution, or (iii) the execution and delivery of the Authority Documents, has been repealed, modified, amended, revoked or rescinded; and (C) no event affecting the Authority has occurred since the date of the Official Statement that should be disclosed in the Official Statement for the purposes for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect. (ix) An opinion or opinions, dated the Closing Date and addressed to the Underwriter and the Trustee, of Jones & Mayer, the City Attorney, to the effect that: (A) The City is a municipal corporation and general law city duly organized and validly existing under the Constitution and laws of the State of California; (B) The City Documents have been duly approved by a resolution of the City adopted at a meeting duly called and held in accordance with the requirements of all applicable laws, with all public notice required by law, and at which a quorum of the members of the City Council was continuously present and such resolution has not been modified, amended or rescinded since the date of its adoption; (C) Except as described in the Official Statement, there is no litigation, inquiry, or investigation pending or to the best of such counsel’s knowledge after due inquiry, threatened, which: (1) challenges the right or title of any member or officer of the City to hold his or her office or exercise or perform the powers and duties pertaining thereto; (2) challenges the validity or enforceability of the Bonds or the City Documents; (3) seeks to restrain or enjoin the sale of the Bonds or the execution and delivery by the City of, or the performance by the City of its legal obligations under, the City Documents or in which a final adverse decision could materially adversely affect the operations of the City with respect to the Leased Property; or (4) contests in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, nor, to the best of such counsel’s knowledge, is there any basis therefor; (D) The execution and delivery by the City of, and the performance by the City of its obligations under, the City Documents, do not conflict with, violate or constitute a default under any provision of any law, court order or decree or any contract, instrument or agreement to which the City is a party or by which it is bound and of which such counsel has knowledge; (E) As of the date hereof, the statements and information relating to the City contained in the Preliminary Official Statement and Official Statement did Lynwood Public Financing Authority - Page 231 of 242 Agenda Item # 3
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not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (F) The City Documents have been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery of the City Documents by the parties thereto other than the City, the City Documents constitute legal, valid and binding agreements of the City, enforceable against the City in accordance with their respective terms except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights and remedies in general, or by the application of equitable principles if equitable remedies are sought. (G) Except as may be required under the “blue sky” or securities laws of the United States or any state, there is no authorization, approval, consent or other order of, or filing with, or certification by, the State or any other governmental authority or agency within the State having jurisdiction over the City required for the issuance of the Bonds or the consummation by the City of the other financial transactions contemplated by the Official Statement and the City Documents. (H) Based on the information made available to the City Attorney in its role as City Attorney to the City, and without having undertaken to determine independently or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement, nothing has come to its attention which would lead it to believe that the Official Statement as of its date and as of the date of Closing (excluding therefrom the financial and statistical data and forecasts included therein, as to which no opinion is expressed and information relating to the Authority and the Depository Trust Company and its book entry system) contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (x) An opinion or opinions, dated the Closing Date and addressed to the Underwriter and the Trustee, of the City Attorney, as counsel for the Authority, to the effect that: (A) The Authority is a joint exercise of powers authority duly organized and validly existing under the laws of the State of California pursuant to the JPA Agreement; (B) The Authority Documents have been duly approved by the Authority Resolution adopted at a meeting duly called and held in accordance with the requirements of all applicable laws, with all public notice required by law, and at which a quorum of the members of the Board of the Authority was continuously present and such resolution has not been modified, amended or rescinded since the date of its adoption; (C) Except as described in the Official Statement, there is no litigation, inquiry, or investigation pending to the best of such counsel’s knowledge after due inquiry, or threatened, which: (1) challenges the right or title of any Board member or officer of the Authority to hold his or her office or exercise or perform Lynwood Public Financing Authority - Page 232 of 242 Agenda Item # 3
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the powers and duties pertaining thereto; (2) challenges the validity or enforceability of the Bonds or the Authority Documents; (3) seeks to restrain or enjoin the sale of the Bonds or the execution and delivery by the Authority of, or the performance by the Authority of its legal obligations under, the Authority Documents or in which a final adverse decision could materially adversely affect the operations of the Authority with respect to the Leased Property; or (4) contests in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, nor, to the best of such counsel’s knowledge, is there any basis therefor; (D) The execution and delivery by the Authority of, and the performance by the Authority of its obligations under, the Authority Documents, do not conflict with, violate or constitute a default under any provision of any law, court order or decree or any contract, instrument or agreement to which the Authority is a party or by which it is bound and of which such counsel has knowledge; and (E) The Authority Documents have been duly authorized, executed and delivered by the Authority and, assuming due authorization, execution and delivery of the Authority Documents by the parties thereto other than the Authority, the Authority Documents constitute legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights and remedies in general, or by the application of equitable principles if equitable remedies are sought. (F) Except as may be required under the “blue sky” or securities laws of the United States or any state, there is no authorization, approval, consent or other order of, or filing with, or certification by, the State or any other governmental authority or agency having jurisdiction over the Authority required for the issuance of the Bonds or the consummation by the Authority of the other financial transactions contemplated by the Official Statement and the Authority Documents. (G) Based on the information made available to such City Attorney in its role as counsel to the Authority, and without having undertaken to determine independently or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement under the captions entitled “THE AUTHORITY,” and “LITIGATION”, nothing has come to such City Attorney’s attention that would lead it to believe that the statements contained in the above-referenced captions as of the date of the Official Statement and as of the date of Closing (excluding therefrom the financial and statistical data and forecasts included therein, as to which no opinion is expressed) contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (xi) An opinion, dated the Closing Date and addressed to the Authority, of Bond Counsel, substantially in the form set forth in Appendix E to the Official Statement, together with a letter or letters from such counsel, dated the Closing Date and addressed to the Underwriter and the Trustee, to the effect that the foregoing opinion may be relied upon by the Underwriter and the Trustee to the same extent as if such opinion was addressed to them; Lynwood Public Financing Authority - Page 233 of 242 Agenda Item # 3
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(xii) A supplemental opinion, dated the Closing Date and addressed to the Underwriter, of Bond Counsel, to the effect that: (A) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; (B) the Bond Purchase Agreement has been duly executed and delivered by the Authority and the City and is a valid and binding agreement of the Authority and the City; and (C) the statements contained in the Official Statement under the captions “DESCRIPTION OF THE BONDS,” “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” and “TAX MATTERS” and in APPENDIX C–”SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS” and APPENDIX E—FORM OF OPINION OF BOND COUNSEL,” insofar as such statements expressly summarize certain provisions of the Indenture, the Lease Agreement, the Site Lease and the final opinion of Bond Counsel concerning certain tax matters relating to the Bonds, are accurate in all material respects; (xiii) A letter, dated the Closing Date and addressed to the Authority, the City and the Underwriter of Jones Hall, A Professional Law Corporation, San Francisco, California, as disclosure counsel (“Disclosure Counsel”), to the effect that, based on among other things, (i) inquiries and discussions of various legal matters, (ii) review of and reliance on certain documents, certificates, instructions, records and opinions of counsel, and (iii) participation in meetings and telephone conferences with representatives of the Authority and the City, Wolf & Company Inc. and NHA Advisors, as municipal advisors to the City, and others including the City Attorney and Underwriter’s counsel, during which the content of the Preliminary Official Statement and the Official Statement and related matters were discussed, no information has come to the attention of Disclosure Counsel with respect to the issuance of the Bonds which caused Disclosure Counsel to believe that (a) the Preliminary Official Statement as of its date (excluding therefrom financial, demographic and statistical data; forecasts, projections, estimates, assumptions and expressions of opinions; information relating to DTC and its book-entry only system; information under the captions “TAX MATTERS” and “UNDERWRITING”; and the Appendices to the Preliminary Official Statement (other than Appendices A and E) as to which we express no view) contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except for such information as is permitted to be excluded from the Preliminary Official Statement pursuant to Rule 15c2-12, including but not limited to information as to pricing, yields, interest rates, maturities, amortization, redemption provisions, ratings, debt service requirements, Underwriter’s discount and CUSIP numbers; or (b) the Official Statement as of its date and as of the Closing Date (excluding therefrom financial, demographic, statistical or economic or demographic data; forecasts, numbers, charts, tables, graphs, projections, estimates, assumptions and expressions of opinions; information relating to DTC and its book-entry only system or CUSIP numbers; information under the captions “TAX MATTERS” and “UNDERWRITING”; and the Appendices to the Official Statement (other than Appendices A and E) as to which we express no view) contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were Lynwood Public Financing Authority - Page 234 of 242 Agenda Item # 3
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made, not misleading. However, in providing advice and assistance as Disclosure Counsel, Disclosure Counsel provided no independent diligence on the MSRB’s Electronic Municipal Market Access website, and we express no view regarding the City’s or the City’s related entities’ compliance with any obligation to file annual reports or provide notice of events, each as described in Rule 15c2-12; (xiv) the opinion of Quint & Thimmig LLP, as counsel to the Underwriter, dated the Closing Date and addressed to the Underwriter, in form and substance acceptable to the Underwriter. (xv) A certificate of an authorized officer of the Trustee satisfactory to the Underwriter, certifying substantially as follows: (A) The Trustee is a national banking association duly organized and in good standing under the laws of the United States of America and has all necessary power and authority to enter into the Indenture and to perform its duties under the Indenture; (B) The Trustee is duly authorized to enter into the Indenture and to authenticate and deliver the Bonds to the Underwriter pursuant to the terms of the Indenture and, when executed by the other parties thereto, the Indenture will constitute a legal, valid and binding obligation of the Trustee enforceable in accordance with its terms; (C) The Bonds have been duly authenticated and delivered to the Underwriter pursuant to direction from the Authority; (D) The Trustee is not in breach of or default under any law or administrative rule or regulation of the State of California or of any department, division, agency or instrumentality thereof, of any applicable court or administrative decree or order, or any other material instrument to which the Trustee is a party or is otherwise subject or bound and which would materially impair the ability of the Trustee to perform its obligations under the Indenture; (E) To its knowledge, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, is pending or threatened in any way against the Trustee affecting the existence of the Trustee or the titles of its directors or officers to their respective offices, or seeking to restrain or enjoin the execution, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture, or in any way contesting or affecting the validity or enforceability of the Bonds or the Indenture; (F) The execution and delivery of the Indenture will not conflict with or constitute a breach of or default under the Trustee’s duties under such documents, or any law, administrative regulation, court decree, resolution, articles of association, bylaws or other material agreement to which the Trustee is subject or by which it is bound; and (G) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the authentication and delivery of the Bonds, the execution and delivery of the Indenture, the performance of the Lynwood Public Financing Authority - Page 235 of 242 Agenda Item # 3
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Trustee’s duties under the Indenture or the consummation by the Trustee of the other transactions contemplated by the Indenture, except as such may be required under the state securities or blue sky laws in connection with the distribution of the Bonds by the Underwriter. (xvi) An opinion of counsel to the Trustee in form and substance acceptable to the Underwriter; (xvii) 15c2-12 certificates of City and the Authority; (xviii) Certified copies of the City Resolution and the Authority Resolution; (xix) Evidence, satisfactory to the Underwriter, that the Bonds have been assigned the rating of “___” by S&P Global Ratings, a Standard & Poor’s Financial Services LLC business; (xx) Transcripts of all proceedings relating to the authorization, issuance, execution and delivery of the Bonds certified by the City and the Authority as applicable; and (xxi) Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the date of the Closing, of the City’s representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the City and the Authority on or prior to the date of the Closing of all the agreements then to be performed and conditions then to be satisfied by each of them. All the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Bond Purchase Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to Bond Counsel, Disclosure Counsel and the Underwriter. If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds contained in this Bond Purchase Agreement, or if the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and none of the Underwriter, the Authority or the City shall be under any further obligation hereunder. 9. Termination. The Underwriter shall have the right to terminate the Underwriter’s obligations under this Bond Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds by notifying the Authority and the City in writing, of its election to do so, if, after the execution hereof and prior to the Closing: (a) the United States has become engaged in, or there has been an escalation of, hostilities which, in the reasonable opinion of the Underwriter, materially adversely affects the marketability or market price of the Bonds; (b) there shall have occurred the declaration of a general banking moratorium by any authority of the United States or the State of New York or the State of California; Lynwood Public Financing Authority - Page 236 of 242 Agenda Item # 3
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(c) an event shall have occurred, or been discovered as described in paragraph (k) of Section 5 or paragraph (l) of Section 6 hereof, which in the opinion of the Underwriter requires the preparation and publication of disclosure material or a supplement or amendment to the Official Statement; (d) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency in the State of California, or a decision by any court of competent jurisdiction within the State of California shall be rendered which, in the Underwriter’s reasonable opinion, materially adversely affects the market price of the Bonds; (e) there shall have occurred or any notice shall have been given of any intended downgrading, suspension, withdrawal or negative change in credit watch status by any national rating service to any of the Authority’s or the City’s obligations; (f) legislation shall be introduced, by amendment or otherwise, or be enacted by the House of Representatives or the Senate of 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 other governmental agency having jurisdiction of the subject matter shall be made or proposed, to the effect that the execution, issuance, delivery, offering or sale of obligations of the general character of the Bonds, or the Bonds, as contemplated hereby or by the Official Statement, is or would be in violation of any provision of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect, or with the purpose or effect of otherwise prohibiting the issuance, offering or sale of obligations of the general character of the Bonds, or the Bonds, as contemplated hereby or by the Official Statement; (g) 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; (h) the New York Stock Exchange, or other national securities exchange or association or any governmental authority, shall impose as to the Bonds, or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by or the charge to the net capital requirements of broker-dealers; (i) trading in securities on the New York Stock Exchange or other national securities exchange or association shall have been suspended or limited or minimum prices have been established on either such exchange; (j) any action shall have been taken by any government in respect of its monetary affairs which, in the reasonable opinion of the Underwriter, has a material adverse effect on the United States municipal securities market; or as of the date hereof that in the Underwriter’s reasonable opinion materially adversely affects the marketability or market price of the Bonds; or (k) the marketability of the Bonds or the market price thereof, in the reasonable opinion of the Underwriter, has been materially and adversely affected by disruptive events, occurrences or conditions in the securities or debt markets. If this Bond Purchase Agreement shall be terminated pursuant to this Section 9, or if the purchase provided for herein is not consummated because any condition to the Underwriter’s obligations hereunder is not satisfied or because of any refusal, inability or failure on the part of Lynwood Public Financing Authority - Page 237 of 242 Agenda Item # 3
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the City or the Authority to comply with any of the terms or to fulfill any of the conditions of this Bond Purchase Agreement, or if for any reason the City or the Authority shall be unable to perform all of its respective obligations under this Bond Purchase Agreement, neither the City nor the Authority shall be liable to the Underwriter for damages on account of loss of anticipated profits arising out of the transactions covered by this Bond Purchase Agreement. The Underwriter may, in its sole discretion, waive any of the conditions set forth in Section 9 or this Section 9. 10. Changes in Official Statement. After the Closing, neither the Authority nor the City will adopt any amendment of or supplement to the Official Statement to which the Underwriter shall reasonably object in writing. 11. Payment of Costs and Expenses. (a) All costs and expenses incident to the sale and delivery of the Bonds to the Underwriter shall be payable by the Authority from the proceeds of the Bonds, including, but not limited to: (i) the fees and expenses of the City, its counsel and consultants; (ii) the fees and expenses of the Authority, its counsel and consultants; (iii) the fees and expenses of Bond Counsel; (iv) the fees and expenses of Disclosure Counsel; (v) the fees and expenses of Wolf & Company, Inc. and NHA Advisors, the City’s municipal advisors; (vi) all expenses in connection with the preparation and printing of the Bonds; (vii) all expenses in connection with the preparation, printing, distribution and delivery of the Preliminary Official Statement, the Official Statement and any amendment or supplement thereto; (viii) the initial fees and expenses of the Trustee, including the reasonable fees and expenses of its counsel; (ix) the fees and expenses of any rating agency rating the Bonds; and (x) any credit enhancement costs for the Bonds. (b) The Underwriter shall pay all expenses incurred by it in connection with the public offering and distribution of the Bonds including, but not limited to: (i) all advertising expenses in connection with the offering of the Bonds; (ii) the fees and disbursements of Underwriter’s counsel, if any, and (iii) all out-of-pocket disbursements and expenses incurred by the Underwriter in connection with the offering and distribution of the Bonds, including, air travel and hotel accommodations in connection with the pricing of the Bonds; investor meetings, rating agency trips and meetings; the Closing; meals and transportation for the City, the Underwriter and other working group personnel during rating agency, investor meetings; pricing and Closing trips; expenses related to attending working group meetings, such as parking, meals and transportation and any other miscellaneous costs associated with the Closing; (iv) all other expenses incurred by the Underwriter in connection with the public offering and distribution of Bonds, except as provided in (a) above or as otherwise agreed to by the Underwriter and the City, and (v) the fees of the California Debt and Investment Advisory Commission.
Lynwood Public Financing Authority - Page 238 of 242 Agenda Item # 3
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12. Notices. Any notice or other communication to be given under this Bond Purchase Agreement may be given by delivering the same in writing: To the Authority: Lynwood Public Financing Authority c/o City of Lynwood 11330 Bullis Road Lynwood, CA 90262 Attention: City Manager To the City: City of Lynwood 11330 Bullis Road Lynwood, CA 90262 Attention: City Manager To the Underwriter: Cabrera Capital Markets, LLC 444 South Flower Street, 13th Floor Los Angeles, CA 90071 Attention: Mr. Brian Corley, Senior Vice President 13. Parties in Interest. This Bond Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriter (including the successors or assigns of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof. All of the Authority’s and the City’s representations, warranties and agreements contained in this Bond Purchase Agreement shall remain operative and in full force and effect, regardless of: (a) any investigations made by or on behalf of the Underwriter; (b) delivery of and payment for the Bonds pursuant to this Bond Purchase Agreement; and (c) any termination of this Bond Purchase Agreement. 14. Determination of End of the Underwriting Period. For purposes of this Bond Purchase Agreement, the end of the underwriting period for the Bonds shall mean the earlier of (a) the Closing Date unless the City and the Authority have been notified in writing by the Underwriter, on or prior to the Closing Date, that the “end of the underwriting period” for the Bonds for all purposes of the Rule will not occur on the Closing Date, or (b) the date on which notice is given to the City and the Authority by the Underwriter in accordance with the following sentence. In the event that the Underwriter has given notice to the City and the Authority pursuant to clause (a) above that the “end of the underwriting period” for the Bonds will not occur on the Closing Date, the Underwriter agrees to notify the City and the Authority in writing as soon as practicable following the “end of the underwriting period” for the Bonds for all purposes of the Rule. The Underwriter agrees to file a copy of the Official Statement with each of the nationally recognized municipal securities information repositories. 15. No Assignment. This Bond Purchase Agreement is entered into between the City, the Authority and the Underwriter, and is solely for the benefit of the City, the Authority, the Underwriter and their respective successors or assigns, and no person other than the foregoing shall acquire or have any right under or by virtue of this Bond Purchase Agreement. All of the representations, warranties and agreements contained in this Bond Purchase Agreement shall survive the delivery of and payment for the Bonds and any termination thereof. 16. Effectiveness. This Bond Purchase Agreement shall become effective upon the execution of the acceptance by an authorized representative of the City and an authorized representative of the Authority and shall be valid and enforceable at the time of such acceptance. 17. Headings. The headings of the sections of this Bond Purchase Agreement are inserted for convenience only and shall not be deemed to be a part hereof.
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18. Governing Law. This Bond Purchase Agreement shall be interpreted, governed and enforced in accordance with the laws of the State of California. 19. Counterparts. This Bond Purchase Agreement may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. If the foregoing is in accordance with your understanding of this Bond Purchase Agreement please sign and return to us the enclosed duplicate copies hereof, whereupon it will become a binding agreement among the City, the Authority and the Underwriter in accordance with its terms. Very truly yours, CABRERA CAPITAL MARKETS, LLC, as Underwriter By Brian Corley Senior Vice President LYNWOOD PUBLIC FINANCING AUTHORITY By Ernie Hernandez Executive Director Time of Signature CITY OF LYNWOOD By Ernie Hernandez City Manager Time of Signature Lynwood Public Financing Authority - Page 240 of 242 Agenda Item # 3
Exhibit A Page 1
EXHIBIT A MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, PRICES AND YIELDS $__________ LYNWOOD PUBLIC FINANCING AUTHORITY Lease Revenue Bonds, Series 2022 (Federally Taxable) Principal Interest Maturity Amount Rate Yield Price Redemption Provisions Optional Redemption. The Bonds maturing on or after August 1, ____ shall be subject to redemption prior to their respective maturity dates as a whole or in part on any date on or after August 1, ____, in any order deemed reasonable by the Authority, and by lot within a maturity, from prepayments of Lease Payments made at the option of the City pursuant to the Lease Agreement, at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued but unpaid interest to the date fixed for redemption, without premium. Mandatory Sinking Fund Redemption. The Bonds maturing on August 1, ____, is subject to mandatory redemption, in part by lot, from sinking account payments set forth in the following schedule commencing August 1, ____, and on August 1 in each year thereafter to and including August 1, ____ at a redemption price equal to the principal amount thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption. Sinking Fund Principal Amount Redemption Date to be Redeemed † Maturity The Bonds maturing on August 1, ____, is subject to mandatory redemption, in part by lot, from sinking account payments set forth in the following schedule commencing August 1, ____, and on August Lynwood Public Financing Authority - Page 241 of 242 Agenda Item # 3
Exhibit A Page 2
1 in each year thereafter to and including August 1, ____ at a redemption price equal to the principal amount thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption. Sinking Fund Principal Amount Redemption Date to be Redeemed † Maturity Extraordinary Mandatory Redemption. The Bonds are subject to redemption prior to their respective maturity dates, upon notice as hereinafter provided, as a whole or in part on any date, from prepayments of Lease Payments made by the City pursuant to the Lease Agreement from funds received by the City due to a taking of the Leased Property or any portion thereof under the power of eminent domain or from insurance proceeds received by the City due to damage to or destruction of the Leased Property or any portion thereof, under the circumstances and upon the conditions and terms prescribed in the Indenture and in the Lease Agreement.
Lynwood Public Financing Authority - Page 242 of 242 Agenda Item # 3 This Agenda contains a brief general description of each item to be considered. Copies of the Staff reports or other written documentation relating to each item of business referred to on the Agenda are on file in the Office of the City Clerk and are available for public inspection. Any person who has a question concerning any of the agenda items may call the City Manager at (310) 603-0220, ext. 200.
Procedures for Addressing the Council
IN ORDER TO EXPEDITE CITY COUNCIL BUSINESS, WE ASK THAT ALL PERSONS WISHING TO ADDRESS THE
COUNCIL SUBMIT YOUR COMMENTS IN ADVANCE TO
[email protected]
OR FILL OUT A FORM
PROVIDED AT THE PODIUM, AND TO TURN IT IN TO THE CITY CLERK PRIOR TO THE START OF THE MEETING. FAILURE TO FILL OUT SUCH A FORM WILL PROHIBIT YOU FROM ADDRESSING THE COUNCIL IN THE ABSENCE OF THE UNANIMOUS CONSENT OF THE COUNCIL.
AGENDA
City of Lynwood as Successor Agency
to the Lynwood Redevelopment Agency
TO BE HELD ON
May 17, 2022
COUNCIL CHAMBERS - 11350 BULLIS RD. LYNWOOD, CA 90262 or Web conference via ZOOM - To participate via Zoom or by telephone: 1-669-900-9128 or 1-253-215-8782 Meeting ID: 835 2029 8238
Duly Posted on 5/13/2022 By MQ
6:00 PM
1. CALL TO ORDER
2. CERTIFICATION OF AGENDA POSTING BY SECRETARY
3. ROLL CALL OF MEMBERS
Jorge Casanova, Mayor
Jose Luis Solache
, Mayor Pro Tem
Oscar Flores, Council Member
Marisela Santana, Council Member
Rita Soto, Council Member
PUBLIC ORAL COMMUNICATIONS
(Regarding Agenda Items Only)
NON-AGENDA PUBLIC ORAL COMMUNICATIONS
THIS PORTION PROVIDES AN OPPORTUNITY FOR THE PUBLIC TO ADDRESS THE LYNWOOD SUCCESSOR
AGENCY ON ITEMS WITHIN THE JURISDICTION OF THE LYNWOOD SUCCESSOR AGENCY AND NOT LISTED ON THE AGENDA. IF AN ITEM IS NOT ON THE AGENDA, THERE SHOULD BE NO SUBSTANTIAL DISCUSSION
OF THE ISSUE BY LYNWOOD SUCCESSOR AGENCY, BUT LYNWOOD SUCCESSOR AGENCY MAY REFER THE Lynwood Successor Agency - Page 1 of 18
MATTER TO STAFF OR SCHEDULE SUBSTANTIVE DISCUSSION FOR A FUTURE MEETING. (The Ralph M.
Brown Act, Government Code Section 54954.2 (a).)
CONSENT CALENDAR
ALL MATTERS LISTED UNDER THE CONSENT CALENDAR WILL BE ACTED UPON BY ONE MOTION AFFIRMING THE ACTION RECOMMENDED ON THE AGENDA. THERE WILL BE NO SEPARATE DISCUSSION ON
THESE ITEMS PRIOR TO VOTING UNLESS MEMBERS OF THE COUNCIL OR STAFF REQUEST SPECIFIC ITEMS TO BE REMOVED FROM THE CONSENT CALENDAR FOR SEPARATE ACTION.
4. TREASURER'S MONTHLY INVESTMENT REPORT
Comments:
The purpose of this item is to have the Honorable Mayor and the Lynwood City Council, as Successor to Lynwood Redevelopment Board review the Treasurer’s Monthly Investment Report as required by State Statutes. (CT)
Recommendation:
It is recommended that the
Honorable Mayor and the Members of Lynwood City Council, as Successor to Lynwood Redevelopment Board
receive and file the attached Monthly Investment
Report. The following information
is provided to ensure the City Council is informed of the cash balances and investment activities for City.
ADJOURNMENT
CITY OF LYNWOOD AS SUCCESSOR AGENCY TO THE LYNWOOD REDEVELOPMENT AGENCY MEETINGS WILL BE POSTED AS NEEDED. THE NEXT MEETING WILL BE HELD IN THE COUNCIL CHAMBERS OF CITY HALL ANNEX, 11350 BULLIS ROAD, CITY OF LYNWOOD, CALIFORNIA.
Lynwood Successor Agency - Page 2 of 18
Agenda Item # 4.
AGENDA STAFF REPORT
DATE:
May 17, 2022
TO:
Honorable Mayor and Members of Lynwood City Council, as Successor to Lynwood Redevelopment Board
APPROVED BY:
Ernie Hernandez, City Manager
PREPARED BY:
Gabriela Camacho, City Treasurer
Sheila Harding, Deputy City Treasurer
SUBJECT:
TREASURER'S MONTHLY INVESTMENT REPORT
Recommendation:
It is recommended that the
Honorable Mayor and the Members of Lynwood City Council, as Successor to Lynwood Redevelopment Board
receive and file the attached Monthly Investment Report. The following information
is provided to ensure the City Council is informed of the cash balances and investment activities for City.
Background:
Government Code Section 53607, last amended 1996, with reference to the reporting of investment transactions states that the Treasurer
shall
make a monthly report of those transaction to the legislative body. Government Code Section 53646 (b) (1), last amended 2004, with reference to discussion related to establishment of an Investment Policy and investment reporting states that “the Treasurer may render a quarterly report”. To determine the applicable code inasmuch as reference to Government Code Section 53607 or non-compliance thereof has never been included in past audit findings. While Government Code Section 53646 (b) (1) which is the most current version related to Investment Reporting utilizes the word “may” indicating the reporting mechanism is optional, to err on the side of caution, and in order to ensure that we are in compliance with all Government Codes, a new procedure of submitting monthly reports to the Council/Agency agenda was implemented. Attached for Council/Agency review is the City’s/Agency’s Monthly Treasurer’s Report.
Subsequent reports will be provided on a monthly basis at the second meeting of each month.
Discussion and Analysis:
The investment transactions were executed in accordance with the City's Investment Policy and the California State Government Code Section 5346(b)(3) that requires the general fund is able to meet its expenditure requirements for the next six months.
Lynwood Successor Agency - Page 3 of 18
Fiscal Impact:
The action recommended in this report will not have a fiscal impact on the City.
Coordinated With:
FHN Financial Main Street Advisors currently monitors the City’s investment activities.
ATTACHMENTS:
Description
ACTIVITY & PERFORMANCE - APRIL 2022
FHN REPORT - APRIL 2022
ECONOMIC REPORT - APRIL 2022
Lynwood Successor Agency - Page 4 of 18
The following is the City’s cash flow and the monthly investment report. The monthly report includes a summary of the City’s investment portfolio, a monthly review of the investment market as prepared by the investment managers and detailed information on monthly transactions, cash flows and investments by issuer.
FHN Investment Advisors manage the portion of investments not invested by LAIF (State Local Agency Investment Fund).
The table below provide key statistics regarding the City’s cash flow and investment portfolio as of April 30, 2022.
Type Balances Held
Cash - US Bank $ 54,147,849.66
Cash - JPMorgan Chase Bank $ 7,518,250.93
Local Agency Investment Fund $ 9,537,751.55
FHN Investment Advisors/BNY $ 16,027,753.18
TOTAL $ 87,231,605.32
ACCOUNT SUMMARY
30-Apr-22 31-Mar-22
Market Value $25,573,021 $25,697,469
Book Value $26,227,898 $26,207,517
Variance ($654,878) ($510,048)
Par Value $26,181,918 $26,159,477
Net Asset Value $97.50 $98.05
Book Yield 1.03% 0.96%
Market Yield 1.80% 1.49%
Years to Maturity 1.49 1.5
Effective Duration 1.44 1.45
INVESTMENT COMPLIANCE
% %
Company Book Value of Portfolio of Total
US Treasuries 6,502,257.27 25% 100%
US Federal Agencies 3,223,961.53 12% 100%
Supranational Obligations 0.00 0% 30%
LAIF 9,545,267.55 36% 100%
Commercial Paper 349,786.09 1% 25%
Money Market Funds 618,649.97 2% 20%
Negotiable Certificates of Deposit 3,966,959.31 15% 30% Corporate Obligations 2,021,016.67 8% 30%
State and Local Governments 0.00 0% 100%
All of the City’s rated investments are rated “A” or higher by at least two rating agencies on April 30, 2022. The City’s investments comply with its current investment policy, which emphasizes the safety, liquidity, and return of its investments, allowing the city to meet its expenditures for the next six months.
Lynwood Successor Agency - Page 5 of 18
Run Date: 5/10/2022 - 10:36 AM
Amortizing Page 2
Portfolio Summary
City of Lynwood 4/30/2022
SECTOR ALLOCATION MATURITY DISTRIBUTION CREDIT QUALITY (MOODY'S)
ACCOUNT SUMMARY MONTH-END PORTFOLIO BOOK YIELD TOP ISSUERS 4/30/22 3/31/22 Issuer % Portfolio
Market Value $25,573,021 $25,697,469 LAIF 36.4%
Book Value $26,227,898 $26,207,517 U.S. Treasury 24.8%
Variance -$654,878 -$510,048 FHLB 3.9%
FNMA 3.8%
Par Value $26,181,918 $26,159,477 FFCB 2.7%
Goldman Sachs Govt MMF 2.4%
Net Asset Value $97.50 $98.05 JPMorgan 1.9%
FHLMC 1.9%
Book Yield 1.03% 0.96% Royal Bank of Canada 1.3%
Exxon Mobil 1.0%
Market Yield 1.80% 1.49% Toyota 1.0%
US Bancorp 1.0%
Years to Maturity 1.49 1.50 Jackson National Life 1.0%
New York Life 1.0%
Effective Duration 1.44 1.45 Charles Schwab 1.0%
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
0.60%
0.65%
0.70%
0.75%
0.80%
0.85%
0.90%
0.95%
1.00%
1.05%
1.10%
1.3%
2.4%
7.7%
12.3%
15.1%
24.8%
36.4%
CP
MMF
CORP
AGY
CD
TSY
LAIF
100%75%50%25%0%
50.5%
12.3% 13.4% 13.2% 10.5%
0-1Y 1-2Y 2-3Y 3-4Y 4-5Y+
0%
10%
20%
30%
40%
50%
60%
70%
51.5%
3.8%
1.9%
1.0%
40.4%
1.3%
NR
A3
A2
A1
Aa3
Aa2
Aa1
Aaa
P-1
100%75%50%25%0%
2 Lynwood Successor Agency - Page 6 of 18
Run Date: 5/10/2022 - 10:36 AM
Amortizing Page 3
Investment Policy Compliance
City of Lynwood 4/30/2022
Category Book Value % of Portfolio % Allowed by Policy In ComplianceReserved row US Treasuries 6,502,257.27 24.79% 100% Yes
US Federal Agencies 3,223,961.53 12.29% 100% Yes
Supranational Obligations 0.00 0.00% 30% Yes
LAIF 9,545,267.55 36.39% 100% Yes
Commercial Paper 349,786.09 1.33% 25% Yes
Money Market Funds 618,649.97 2.36% 20% Yes
Negotiable Certificates of Deposit 3,966,959.31 15.12% 30% Yes Corporate Obligations 2,021,016.67 7.71% 30% Yes
State and Local Governments 0.00 0.00% 100% Yes
Total 26,227,898.39 100.00%
Other Metrics Portfolio Metric In Compliance
Weighted Average Maturity 1.49 Less than 3.0 Years Yes
Liquidity 50.53% 30% Under 365 Days Yes
Ratings Yes
3 Lynwood Successor Agency - Page 7 of 18
Holdings Report
City of Lynwood April 30, 2022
Call Date
Maturity Date
Par Value
Settle Date
Book Value
Original Value
Mkt YTM
Mkt Price
Gain/Loss
% of Port
Fitch
Moody/S&P
Eff. Dur.
WAM
Accrued Int.
Market Value
CUSIP Coupon Rate
Issuer
Book Yield
Remaining
Certificates of Deposit
27002YEM4 248,000.00EagleBank 05/10/2019 248,000.00 100.06 248,141.60 0.95% NR/NR 0.0305/10/2022 141.60 NR 0.03 370.98 2.60% 248,000.00 0.56%2.600%
33847E2J5 248,000.00Flagstar Bank 06/12/2019 248,000.00 100.22 248,546.05 0.95% NR/NR 0.1206/13/2022 546.05 NR 0.12 2,378.08 2.50% 248,000.00 0.67%2.500% 1404203Z1 248,000.00Capital One Bank USA 08/03/2017 247,417.20 100.31 248,759.37 0.95% NR/NR 0.2608/02/2022 789.39 NR 0.26 1,375.21 2.35% 247,969.98 1.11%2.300% 795450D36 248,000.00Sallie Mae Bank 08/24/2017 247,417.20 100.39 248,967.56 0.95% NR/NR 0.3208/23/2022 1,004.29 NR 0.31 1,069.80 2.40% 247,963.28 1.11%2.350% 61747MF63 248,000.00Morgan Stanley Bank 01/12/2018 247,417.20 100.39 248,959.16 0.95% NR/NR 0.7001/11/2023 1,040.91 NR 0.68 1,980.60 2.70% 247,918.25 2.09%2.650% 59013J5Z8 248,000.00Merrick Bank 12/19/2018 247,516.40 100.89 250,214.53 0.95% NR/NR 0.8102/21/2023 2,308.71 NR 0.79 295.90 3.41% 247,905.82 2.24%3.350% 20033AZK5 248,000.00Comenity Capital Bank 06/29/2018 247,427.12 100.71 249,748.40 0.95% NR/NR 1.1606/29/2023 1,881.74 NR 1.12 44.84 3.40% 247,866.66 2.68%3.300%
38148PR33 248,000.00Goldman Sachs Bank 07/09/2018 247,432.08 100.71 249,754.97 0.95% NR/NR 1.1807/06/2023 1,889.55 NR 1.14 2,578.52 3.35% 247,865.42 2.69%3.300% 949763TF3 248,000.00Wells Fargo Bank NA 08/31/2018 247,429.60 100.68 249,677.19 0.94% NR/NR 1.3308/30/2023 1,829.40 NR 1.29 717.50 3.35% 247,847.79 2.78%3.300% 29278TLY4 248,000.00EnerBank 09/30/2019 247,523.84 98.93 245,357.61 0.94% NR/NR 1.4109/27/2023 -2,474.19 NR 1.38 54.36 2.05% 247,831.81 2.77%2.000% 17312Q3B3 248,000.00Citibank 02/28/2019 247,427.12 100.14 248,335.38 0.94% NR/NR 1.8302/27/2024 545.07 NR 1.76 1,284.16 3.05% 247,790.31 2.92%3.000% 32100LCB9 248,000.00First Missouri State Bank 09/13/2019 248,000.00 97.26 241,203.07 0.95% NR/NR 2.3809/13/2024 -6,796.93 NR 2.31 615.92 1.85% 248,000.00 3.06%1.850% 05580AXF6 248,000.00BMW Bank 09/25/2020 248,000.00 91.66 227,312.58 0.95% NR/NR 3.4109/25/2025 -20,687.42 NR 3.37 125.70 0.50% 248,000.00 3.10%0.500% 856283S98 248,000.00State Bank of India 04/27/2021 248,000.00 92.26 228,793.19 0.95% NR/NR 3.9904/27/2026 -19,206.81 NR 3.91 27.18 1.00% 248,000.00 3.08%1.000% 89235MLC3 248,000.00Toyota Financial Savings Bank 07/15/2021 248,000.00 91.69 227,383.13 0.95% NR/NR 4.2107/15/2026 -20,616.87 NR 4.11 684.21 0.95% 248,000.00 3.07%0.950% 90348JR93 248,000.00UBS Bank USA 08/11/2021 248,000.00 91.51 226,956.55 0.95% NR/NR 4.2808/11/2026 -21,043.45 NR 4.18 129.10 0.95% 248,000.00 3.07%0.950% 3,963,007.76 3,888,110.34 15.12% 1.71
3,966,959.31 2.28% 3,968,000.00 2.31% 13,732.06 -78,848.96 1.67Total Certificates of Deposit Commercial Paper
Run Date: 5/10/2022 - 10:37 AM
Amortizing
16Lynwood Successor Agency - Page 8 of 18
Holdings Report
City of Lynwood April 30, 2022
Call Date
Maturity Date
Par Value
Settle Date
Book Value
Original Value
Mkt YTM
Mkt Price
Gain/Loss
% of Port
Fitch
Moody/S&P
Eff. Dur.
WAM
Accrued Int.
Market Value
CUSIP Coupon Rate
Issuer
Book Yield
Remaining
Commercial Paper
78015DG61 350,000.00Royal Bank of Canada, NY 12/20/2021 349,364.75 99.82 349,374.38 1.33% P-1/A-1+ 0.1807/06/2022 -411.71 F1+ 0.19 0.00 0.33% 349,786.09 0.98%0.000%
349,364.75 349,374.38 1.33% 0.18
349,786.09 0.33% 350,000.00 0.98% 0.00 -411.71 0.19Total Commercial Paper Corporate Bonds
46849LSW2 250,000.00Jackson National Life 07/12/2017 247,795.00 100.13 250,322.50 0.95% A2/A 0.1606/27/2022 392.91 A 0.15 2,152.78 2.69% 249,929.59 1.67%2.500%
90331HNV1 250,000.00US Bank 03/01/2019 253,307.50 100.84 252,097.50 0.96% A1/AA- 1.2307/24/2023 1,169.81 AA- 1.15 2,290.28 3.08% 250,927.69 2.70%3.400% 06/23/2023 89236TFS9 250,000.00Toyota Motor Credit 02/28/2019 253,545.00 100.58 251,455.00 0.96% A1/A+ 1.6901/08/2024 223.37 A+ 1.62 2,628.82 3.03% 251,231.63 2.99%3.350% 46625HJX9 500,000.00JPMorgan Chase & Co 05/13/2019 515,115.00 100.86 504,315.00 1.93% A2/A- 2.0405/13/2024 -1,840.16 AA- 1.92 8,458.33 2.97% 506,155.16 3.18%3.625% 64952WDL4 250,000.00New York Life 01/22/2020 249,102.50 96.09 240,217.50 0.95% Aaa/AA+ 2.7301/22/2025 -9,292.86 AAA 2.62 1,375.00 2.08% 249,510.36 3.52%2.000% 30231GBH4 250,000.00Exxon Mobil 06/22/2020 272,752.50 99.09 247,725.00 1.01% Aa2/AA- 2.8903/19/2025 -16,123.77 NR 2.72 872.67 0.99% 263,848.77 3.32%2.992% 02/19/2025 808513BW4 250,000.00Charles Schwab 04/12/2022 249,407.50 98.21 245,520.00 0.95% A2/NR 4.9204/01/2027 -3,893.46 NR 4.43 687.50 3.35% 249,413.46 3.70%3.300% 2,041,025.00 1,991,652.50 7.71% 2.22
2,021,016.67 2.63% 2,000,000.00 3.04% 18,465.38 -29,364.16 2.07Total Corporate Bonds LAIF
9819499 9,545,267.55LAIF 04/15/2022 9,545,267.55 1.00 9,545,267.55 36.39% NR/NR 0.0005/01/2022
0.00 NR 0.00 0.00 0.52% 9,545,267.55 0.52%0.520%
9,545,267.55 9,545,267.55 36.39% 0.00
9,545,267.55 0.52% 9,545,267.55 0.52% 0.00 0.00 0.00Total LAIF Money Market Funds
FGTXX 618,649.97Goldman Sachs Govt MMF 618,649.97 1.00 618,649.97 2.36% Aaa/AAA 0.0005/01/2022
0.00 NR 0.00 98.76 0.31% 618,649.97 0.31%0.308%
Run Date: 5/10/2022 - 10:37 AM
Amortizing
17Lynwood Successor Agency - Page 9 of 18
Holdings Report
City of Lynwood April 30, 2022
Call Date
Maturity Date
Par Value
Settle Date
Book Value
Original Value
Mkt YTM
Mkt Price
Gain/Loss
% of Port
Fitch
Moody/S&P
Eff. Dur.
WAM
Accrued Int.
Market Value
CUSIP Coupon Rate
Issuer
Book Yield
Remaining
618,649.97 618,649.97 2.36% 0.00
618,649.97 0.31% 618,649.97 0.31% 98.76 0.00 0.00Total Money Market Funds U.S. Agencies
3135G0T78 500,000.00FNMA 11/30/2017 497,400.00 100.28 501,415.00 1.91% Aaa/AA+ 0.4310/05/2022 1,645.95 AAA 0.42 722.22 2.11% 499,769.05 1.34%2.000% 3133EKTV8 500,000.00FFCB 07/02/2019 499,900.00 98.48 492,420.00 1.91% Aaa/AA+ 2.1707/01/2024 -7,536.59 AAA 2.10 3,166.67 1.90% 499,956.59 2.62%1.900% 3133EK3B0 200,000.00FFCB 10/17/2019 198,370.00 97.09 194,176.00 0.76% Aaa/AA+ 2.4710/16/2024 -5,021.23 AAA 2.40 125.00 1.67% 199,197.23 2.73%1.500% 3130A4CH3 500,000.00FHLB 10/07/2020 541,330.00 98.61 493,065.00 2.01% Aaa/AA+ 2.8703/14/2025 -33,694.69 AAA 2.75 1,550.35 0.49% 526,759.69 2.88%2.375% 3136G4H71 500,000.00FNMA 08/18/2020 500,000.00 92.52 462,580.00 1.91% Aaa/AA+ 3.2908/12/2025 -37,420.00 AAA 3.24 506.94 0.50% 500,000.00 2.91%0.500% 02/18/2022 3137EAEX3 500,000.00FHLMC 10/20/2020 497,505.00 91.80 458,975.00 1.90% Aaa/AA+ 3.4009/23/2025 -39,303.97 AAA 3.34 197.92 0.48% 498,278.97 2.93%0.375% 3130AQEC3 500,000.00FHLB 12/30/2021 500,000.00 93.96 469,775.00 1.91% Aaa/AA+ 4.6712/30/2026 -30,225.00 AAA 4.31 2,302.36 1.37% 500,000.00 2.76%1.370% 06/30/2022 3,234,505.00 3,072,406.00 12.29% 2.79
3,223,961.53 1.17% 3,200,000.00 2.58% 8,571.46 -151,555.53 2.68Total U.S. Agencies U.S. Treasuries
912828ZD5 500,000.00U.S. Treasury 12/16/2020 504,140.63 98.72 493,615.00 1.91% Aaa/AA+ 0.8703/15/2023 -7,997.77 AAA 0.86 319.29 0.13% 501,612.77 1.98%0.500% 91282CAW1 1,000,000.00U.S. Treasury 07/22/2021 999,960.94 96.58 965,820.00 3.81% Aaa/AA+ 1.5511/15/2023 -34,153.96 AAA 1.52 1,153.31 0.25% 999,973.96 2.52%0.250% 91282CBV2 500,000.00U.S. Treasury 11/22/2021 496,308.59 95.60 478,010.00 1.89% Aaa/AA+ 1.9604/15/2024 -18,969.37 AAA 1.93 81.97 0.69% 496,979.37 2.69%0.375% 912828YV6 1,000,000.00U.S. Treasury 07/22/2021 1,035,742.19 96.68 966,840.00 3.92% Aaa/AA+ 2.5911/30/2024 -60,687.60 AAA 2.50 6,263.74 0.43% 1,027,527.60 2.84%1.500% 912828ZT0 500,000.00U.S. Treasury 06/29/2021 491,542.97 92.25 461,270.00 1.88% Aaa/AA+ 3.0905/31/2025 -32,074.22 AAA 3.04 521.98 0.69% 493,344.22 2.89%0.250% 91282CAZ4 1,000,000.00U.S. Treasury 07/22/2021 989,492.19 91.36 913,590.00 3.78% Aaa/AA+ 3.5911/30/2025 -77,763.50 AAA 3.52 1,565.93 0.62% 991,353.50 2.93%0.375% 91282CBH3 500,000.00U.S. Treasury 02/25/2021 494,433.59 90.96 454,805.00 1.89% Aaa/AA+ 3.7601/31/2026 -40,954.51 AAA 3.68 466.16 0.60% 495,759.51 2.94%0.375% Run Date: 5/10/2022 - 10:37 AM
Amortizing
18Lynwood Successor Agency - Page 10 of 18
Holdings Report
City of Lynwood April 30, 2022
Call Date
Maturity Date
Par Value
Settle Date
Book Value
Original Value
Mkt YTM
Mkt Price
Gain/Loss
% of Port
Fitch
Moody/S&P
Eff. Dur.
WAM
Accrued Int.
Market Value
CUSIP Coupon Rate
Issuer
Book Yield
Remaining
U.S. Treasuries
91282CCF6 1,000,000.00U.S. Treasury 07/22/2021 1,002,382.81 91.61 916,130.00 3.82% Aaa/AA+ 4.0905/31/2026 -85,874.03 AAA 3.97 3,131.87 0.70% 1,002,004.03 2.94%0.750% 91282CCZ2 500,000.00U.S. Treasury 10/19/2021 492,949.22 91.50 457,480.00 1.88% Aaa/AA+ 4.4209/30/2026 -36,222.29 AAA 4.28 370.56 1.17% 493,702.29 2.94%0.875% 6,506,953.13 6,107,560.00 24.79% 2.90
6,502,257.27 0.56% 6,500,000.00 2.76% 13,874.81 -394,697.25 2.83Total U.S. Treasuries 26,258,773.16 25,573,020.73 100.00% 1.49
54,742.47 -654,877.61 1.45 1.80% 26,227,898.39 1.03% 26,181,917.52TOTAL PORTFOLIO TOTAL MARKET VALUE PLUS ACCRUED INTEREST 25,627,763.20 Run Date: 5/10/2022 - 10:37 AM
Amortizing
19Lynwood Successor Agency - Page 11 of 18
Maturity Report
City of Lynwood April 30, 2022
CUSIP Date
Purchase
Value
Book
Rate
Coupon
Date
Maturity
Par
Remaining
Term Value
Market
YTMIssuer
Days to
Maturity
Book
FGTXX 0.308% 1Goldman Sachs Govt MMF 618,649.97 05/01/2022 1 0.31% 618,649.97 618,649.97 9819499 0.520% 1LAIF 05/18/2020 9,545,267.55 05/01/2022 1 0.52% 9,545,267.55 9,545,267.55 27002YEM4 2.600% 1,086EagleBank 05/10/2019 248,000.00 05/10/2022 10 2.60% 248,000.00 248,141.60 33847E2J5 2.500% 1,053Flagstar Bank 06/12/2019 248,000.00 06/13/2022 44 2.50% 248,000.00 248,546.05 46849LSW2 2.500% 1,753Jackson National Life 07/12/2017 249,929.59 06/27/2022 58 2.69% 250,000.00 250,322.50 78015DG61 0.000% 131Royal Bank of Canada, NY 12/20/2021 349,786.09 07/06/2022 67 0.33% 350,000.00 349,374.38 1404203Z1 2.300% 1,731Capital One Bank USA 08/03/2017 247,969.98 08/02/2022 94 2.35% 248,000.00 248,759.37 795450D36 2.350% 1,710Sallie Mae Bank 08/24/2017 247,963.28 08/23/2022 115 2.40% 248,000.00 248,967.56 3135G0T78 2.000% 1,612FNMA 11/30/2017 499,769.05 10/05/2022 158 2.11% 500,000.00 501,415.00 61747MF63 2.650% 1,569Morgan Stanley Bank 01/12/2018 247,918.25 01/11/2023 256 2.70% 248,000.00 248,959.16 59013J5Z8 3.350% 1,228Merrick Bank 12/19/2018 247,905.82 02/21/2023 297 3.41% 248,000.00 250,214.53 912828ZD5 0.500% 500U.S. Treasury 12/16/2020 501,612.77 03/15/2023 319 0.13% 500,000.00 493,615.00 20033AZK5 3.300% 1,401Comenity Capital Bank 06/29/2018 247,866.66 06/29/2023 425 3.40% 248,000.00 249,748.40 38148PR33 3.300% 1,391Goldman Sachs Bank 07/09/2018 247,865.42 07/06/2023 432 3.35% 248,000.00 249,754.97 90331HNV1 3.400% 1,156US Bank 03/01/2019 250,927.69 07/24/2023 450 3.08% 250,000.00 252,097.50 949763TF3 3.300% 1,338Wells Fargo Bank NA 08/31/2018 247,847.79 08/30/2023 487 3.35% 248,000.00 249,677.19 29278TLY4 2.000% 943EnerBank 09/30/2019 247,831.81 09/27/2023 515 2.05% 248,000.00 245,357.61 91282CAW1 0.250% 282U.S. Treasury 07/22/2021 999,973.96 11/15/2023 564 0.25% 1,000,000.00 965,820.00 89236TFS9 3.350% 1,157Toyota Motor Credit 02/28/2019 251,231.63 01/08/2024 618 3.03% 250,000.00 251,455.00 17312Q3B3 3.000% 1,157Citibank 02/28/2019 247,790.31 02/27/2024 668 3.05% 248,000.00 248,335.38 91282CBV2 0.375% 159U.S. Treasury 11/22/2021 496,979.37 04/15/2024 716 0.69% 500,000.00 478,010.00 46625HJX9 3.625% 1,083JPMorgan Chase & Co 05/13/2019 506,155.16 05/13/2024 744 2.97% 500,000.00 504,315.00 3133EKTV8 1.900% 1,033FFCB 07/02/2019 499,956.59 07/01/2024 793 1.90% 500,000.00 492,420.00 32100LCB9 1.850% 960First Missouri State Bank 09/13/2019 248,000.00 09/13/2024 867 1.85% 248,000.00 241,203.07 3133EK3B0 1.500% 926FFCB 10/17/2019 199,197.23 10/16/2024 900 1.67% 200,000.00 194,176.00 912828YV6 1.500% 282U.S. Treasury 07/22/2021 1,027,527.60 11/30/2024 945 0.43% 1,000,000.00 966,840.00 64952WDL4 2.000% 829New York Life 01/22/2020 249,510.36 01/22/2025 998 2.08% 250,000.00 240,217.50 3130A4CH3 2.375% 570FHLB 10/07/2020 526,759.69 03/14/2025 1,049 0.49% 500,000.00 493,065.00 30231GBH4 2.992% 677Exxon Mobil 06/22/2020 263,848.77 03/19/2025 1,054 0.99% 250,000.00 247,725.00 912828ZT0 0.250% 305U.S. Treasury 06/29/2021 493,344.22 05/31/2025 1,127 0.69% 500,000.00 461,270.00 3136G4H71 0.500% 620FNMA 08/18/2020 500,000.00 08/12/2025 1,200 0.50% 500,000.00 462,580.00 3137EAEX3 0.375% 557FHLMC 10/20/2020 498,278.97 09/23/2025 1,242 0.48% 500,000.00 458,975.00 05580AXF6 0.500% 582BMW Bank 09/25/2020 248,000.00 09/25/2025 1,244 0.50% 248,000.00 227,312.58 91282CAZ4 0.375% 282U.S. Treasury 07/22/2021 991,353.50 11/30/2025 1,310 0.62% 1,000,000.00 913,590.00 91282CBH3 0.375% 429U.S. Treasury 02/25/2021 495,759.51 01/31/2026 1,372 0.60% 500,000.00 454,805.00 856283S98 1.000% 368State Bank of India 04/27/2021 248,000.00 04/27/2026 1,458 1.00% 248,000.00 228,793.19 Run Date: 5/10/2022 - 10:37 AM
Amortizing
20Lynwood Successor Agency - Page 12 of 18
Maturity Report
City of Lynwood April 30, 2022
CUSIP Date
Purchase
Value
Book
Rate
Coupon
Date
Maturity
Par
Remaining
Term Value
Market
YTMIssuer
Days to
Maturity
Book
91282CCF6 0.750% 282U.S. Treasury 07/22/2021 1,002,004.03 05/31/2026 1,492 0.70% 1,000,000.00 916,130.00 89235MLC3 0.950% 289Toyota Financial Savings Bank 07/15/2021 248,000.00 07/15/2026 1,537 0.95% 248,000.00 227,383.13 90348JR93 0.950% 262UBS Bank USA 08/11/2021 248,000.00 08/11/2026 1,564 0.95% 248,000.00 226,956.55 91282CCZ2 0.875% 193U.S. Treasury 10/19/2021 493,702.29 09/30/2026 1,614 1.17% 500,000.00 457,480.00 3130AQEC3 1.370% 121FHLB 12/30/2021 500,000.00 12/30/2026 1,705 1.37% 500,000.00 469,775.00 808513BW4 3.300% 18Charles Schwab 04/12/2022 249,413.46 04/01/2027 1,797 3.35% 250,000.00 245,520.00 Net Maturities and Averages 26,227,898.39 545 1.03% 25,573,020.73 26,181,917.52 Run Date: 5/10/2022 - 10:37 AM
Amortizing
21Lynwood Successor Agency - Page 13 of 18
Income Earned
City of Lynwood April 01, 2022 - April 30, 2022
CUSIP Value
Ending Par
Date
Maturity
Book Value
Beginning
Value
Ending Book
Accrued
Beginning
/Purchased
Int.Received
Accrued
Ending
Issuer Earned
Interest Amortization/
Accretion Earned
Net Income
Certificates of Deposit
27002YEM4 05/10/2022 248,000.00EagleBank 248,000.00 248,000.00 388.65 547.64 370.98 529.97 0.00 529.97 33847E2J5 06/13/2022 248,000.00Flagstar Bank 248,000.00 248,000.00 1,868.49 0.00 2,378.08 509.59 0.00 509.59 1404203Z1 08/02/2022 248,000.00Capital One Bank USA 247,960.40 247,969.98 906.39 0.00 1,375.21 468.82 9.58 478.40 795450D36 08/23/2022 248,000.00Sallie Mae Bank 247,953.70 247,963.28 590.78 0.00 1,069.80 479.02 9.58 488.60 61747MF63 01/11/2023 248,000.00Morgan Stanley Bank 247,908.67 247,918.25 1,440.44 0.00 1,980.60 540.16 9.58 549.74 59013J5Z8 02/21/2023 248,000.00Merrick Bank 247,896.30 247,905.82 318.66 705.61 295.90 682.85 9.51 692.36 20033AZK5 06/29/2023 248,000.00Comenity Capital Bank 247,857.25 247,866.66 67.27 695.08 44.84 672.65 9.41 682.06 38148PR33 07/06/2023 248,000.00Goldman Sachs Bank 247,856.07 247,865.42 1,905.86 0.00 2,578.52 672.66 9.35 682.01 949763TF3 08/30/2023 248,000.00Wells Fargo Bank NA 247,838.41 247,847.79 44.84 0.00 717.50 672.66 9.38 682.04 29278TLY4 09/27/2023 248,000.00EnerBank 247,822.01 247,831.81 67.95 421.26 54.36 407.67 9.80 417.47 17312Q3B3 02/27/2024 248,000.00Citibank 247,780.89 247,790.31 672.66 0.00 1,284.16 611.50 9.42 620.92 32100LCB9 09/13/2024 248,000.00First Missouri State Bank 248,000.00 248,000.00 238.83 0.00 615.92 377.09 0.00 377.09 05580AXF6 09/25/2025 248,000.00BMW Bank 248,000.00 248,000.00 23.78 0.00 125.70 101.92 0.00 101.92 856283S98 04/27/2026 248,000.00State Bank of India 248,000.00 248,000.00 1,059.95 1,236.60 27.18 203.83 0.00 203.83 89235MLC3 07/15/2026 248,000.00Toyota Financial Savings Bank 248,000.00 248,000.00 490.56 0.00 684.21 193.65 0.00 193.65 90348JR93 08/11/2026 248,000.00UBS Bank USA 248,000.00 248,000.00 135.55 200.10 129.10 193.65 0.00 193.65 Certificates of Deposit - Sub Total 3,968,000.00 3,966,873.71 3,966,959.31 10,220.66 3,806.29 13,732.06 7,317.69 85.60 7,403.29 Commercial Paper
4497W1DM5 04/21/2022 0.00ING US Funding LLC 349,952.95 0.00 0.00 0.00 0.00 0.00 47.06 47.06 78015DG61 07/06/2022 350,000.00Royal Bank of Canada, NY 349,692.10 349,786.09 0.00 0.00 0.00 0.00 93.99 93.99 Commercial Paper - Sub Total
350,000.00 699,645.04 349,786.09 0.00 0.00 0.00 0.00 141.05 141.05 Corporate Bonds
59217GCD9 04/08/2022 0.00MetLife 250,008.78 0.00 3,183.68 3,312.50 0.00 128.82 -8.78 120.04 46849LSW2 06/27/2022 250,000.00Jackson National Life 249,893.76 249,929.59 1,631.94 0.00 2,152.78 520.84 35.82 556.66 90331HNV1 07/24/2023 250,000.00US Bank 250,988.28 250,927.69 1,581.94 0.00 2,290.28 708.34 -60.59 647.75 89236TFS9 01/08/2024 250,000.00Toyota Motor Credit 251,292.41 251,231.63 1,930.90 0.00 2,628.82 697.92 -60.77 637.15 46625HJX9 05/13/2024 500,000.00JPMorgan Chase & Co 506,398.68 506,155.16 6,947.92 0.00 8,458.33 1,510.41 -243.52 1,266.89 64952WDL4 01/22/2025 250,000.00New York Life 249,495.90 249,510.36 958.33 0.00 1,375.00 416.67 14.46 431.13 30231GBH4 03/19/2025 250,000.00Exxon Mobil 264,235.31 263,848.77 249.33 0.00 872.67 623.34 -386.54 236.80 808513BW4 04/01/2027 250,000.00Charles Schwab 0.00 249,413.46 0.00 -252.08 687.50 435.42 5.96 441.38 Corporate Bonds - Sub Total
2,000,000.00 2,022,313.13 2,021,016.67 16,484.04 3,060.42 18,465.38 5,041.76 -703.96 4,337.80 Run Date: 5/10/2022 - 10:37 AM
Amortizing
24Lynwood Successor Agency - Page 14 of 18
Income Earned
City of Lynwood April 01, 2022 - April 30, 2022
CUSIP Value
Ending Par
Date
Maturity
Book Value
Beginning
Value
Ending Book
Accrued
Beginning
/Purchased
Int.Received
Accrued
Ending
Issuer Earned
Interest Amortization/
Accretion Earned
Net Income
LAIF
9819499 05/01/2022 9,545,267.55LAIF 9,537,751.55 9,545,267.55 7,516.00 7,516.00 0.00 0.00 0.00 0.00 LAIF - Sub Total 9,545,267.55 9,537,751.55 9,545,267.55 7,516.00 7,516.00 0.00 0.00 0.00 0.00 Money Market Funds
FGTXX 05/01/2022 618,649.97Goldman Sachs Govt MMF 253,724.99 618,649.97 28.27 28.27 98.76 98.76 0.00 98.76 Money Market Funds - Sub Total
618,649.97 253,724.99 618,649.97 28.27 28.27 98.76 98.76 0.00 98.76 U.S. Agencies
3135G0T78 10/05/2022 500,000.00FNMA 499,724.36 499,769.05 4,888.89 5,000.00 722.22 833.33 44.70 878.03 3133EKTV8 07/01/2024 500,000.00FFCB 499,954.97 499,956.59 2,375.00 0.00 3,166.67 791.67 1.61 793.28 3133EK3B0 10/16/2024 200,000.00FFCB 199,170.96 199,197.23 1,375.00 1,500.00 125.00 250.00 26.28 276.28 3130A4CH3 03/14/2025 500,000.00FHLB 527,510.20 526,759.69 560.76 0.00 1,550.35 989.59 -750.51 239.08 3136G4H71 08/12/2025 500,000.00FNMA 500,000.00 500,000.00 298.61 0.00 506.94 208.33 0.00 208.33 3137EAEX3 09/23/2025 500,000.00FHLMC 498,238.16 498,278.97 41.67 0.00 197.92 156.25 40.81 197.06 3130AQEC3 12/30/2026 500,000.00FHLB 500,000.00 500,000.00 1,731.53 0.00 2,302.36 570.83 0.00 570.83 U.S. Agencies - Sub Total
3,200,000.00 3,224,598.65 3,223,961.53 11,271.46 6,500.00 8,571.46 3,800.00 -637.12 3,162.88 U.S. Treasuries
912828ZD5 03/15/2023 500,000.00U.S. Treasury 501,764.44 501,612.77 115.49 0.00 319.29 203.80 -151.67 52.13 91282CAW1 11/15/2023 1,000,000.00U.S. Treasury 999,972.57 999,973.96 946.13 0.00 1,153.31 207.18 1.39 208.57 91282CBV2 04/15/2024 500,000.00U.S. Treasury 496,852.81 496,979.37 865.38 937.50 81.97 154.09 126.56 280.65 912828YV6 11/30/2024 1,000,000.00U.S. Treasury 1,028,401.50 1,027,527.60 5,027.47 0.00 6,263.74 1,236.27 -873.89 362.38 912828ZT0 05/31/2025 500,000.00U.S. Treasury 493,167.05 493,344.22 418.96 0.00 521.98 103.02 177.17 280.19 91282CAZ4 11/30/2025 1,000,000.00U.S. Treasury 991,155.49 991,353.50 1,256.87 0.00 1,565.93 309.06 198.01 507.07 91282CBH3 01/31/2026 500,000.00U.S. Treasury 495,666.79 495,759.51 310.77 0.00 466.16 155.39 92.72 248.11 91282CCF6 05/31/2026 1,000,000.00U.S. Treasury 1,002,044.33 1,002,004.03 2,513.74 0.00 3,131.87 618.13 -40.30 577.83 91282CCZ2 09/30/2026 500,000.00U.S. Treasury 493,585.23 493,702.29 11.95 0.00 370.56 358.61 117.06 475.67 U.S. Treasuries - Sub Total
6,500,000.00 6,502,610.22 6,502,257.27 11,466.76 937.50 13,874.81 3,345.55 -352.95 2,992.60 26,181,917.52Grand Total 26,207,517.28 26,227,898.39 56,987.19 21,848.48 54,742.47 19,603.76 -1,467.38 18,136.38 Run Date: 5/10/2022 - 10:37 AM
Amortizing
25Lynwood Successor Agency - Page 15 of 18
Realized Gains and Losses
City of Lynwood April 01, 2022 - April 30, 2022
Par Value Sale Date Days Held Maturity/Sales RealizedCUSIP Coupon Rate Maturity Date Book Value Proceeds Gain/LossPurchase Date TermIssuer Commercial Paper
4497W1DM5 350,000.0012/21/2021 04/21/2022 121 350,000.00 0.00 350,000.00 04/21/2022 121ING US Funding LLC 0.000%
Total Commercial Paper 0.00 350,000.00 350,000.00
Corporate Bonds
59217GCD9 250,000.0011/02/2017 04/08/2022 1,618 250,000.00 0.00 250,000.00 04/08/2022 1,618MetLife 2.650%
Total Corporate Bonds 0.00 250,000.00 250,000.00
Grand Total 0.00 600,000.00 600,000.00
Run Date: 5/10/2022 - 10:37 AM
Amortizing
26Lynwood Successor Agency - Page 16 of 18
Transaction Report
City of Lynwood April 01, 2022 - April 30, 2022
Transaction Transaction Security Security Maturity
Date Type ID Description Date Purchases Redemptions Interest Deposits Withdrawals 04/04/2022 Interest FGTXX GSGF - - 28.27 - -
04/05/2022 Interest 3135G0T78 FNMA 2 10/05/22 10/05/2022 - - 5,000.00 - - 04/08/2022 Interest 59217GCD9 MET 2.65 04/08/22 04/08/2022 - - 3,312.50 - - 04/08/2022 Maturity 59217GCD9 MET 2.65 04/08/22 04/08/2022 - 250,000.00 - - - 04/11/2022 Interest 27002YEM4 EGBN 2.6 05/10/22 05/10/2022 - - 547.64 - - 04/11/2022 Interest 90348JR93 UBS 0.95 08/11/26 08/11/2026 - - 200.10 - - 04/12/2022 Purchase 808513BW4 SCHW 3.3 04/01/27 04/01/2027 -249,407.50 - -252.08 - - 04/15/2022 Interest 9819499 LAIF - - 7,516.00 - - 04/18/2022 Interest 91282CBV2 T 0 3/8 04/15/24 04/15/2024 - - 937.50 - - 04/18/2022 Interest 59013J5Z8 MERICK 3.35 02/21/23 02/21/2023 - - 705.61 - - 04/18/2022 Interest 3133EK3B0 FFCB 1 1/2 10/16/24 10/16/2024 - - 1,500.00 - - 04/21/2022 Maturity 4497W1DM5 ING (US) FUNDING 04/21/2022 - 350,000.00 - - - 04/27/2022 Interest 856283S98 SBIIN 1 04/27/26 04/27/2026 - - 1,236.60 - - 04/27/2022 Interest 29278TLY4 CMS 2 09/27/23 09/27/2023 - - 421.26 - - 04/29/2022 Interest 20033AZK5 ADS 3.3 06/29/23 06/29/2023 - - 695.08 - - Grand Total: -249,407.50 600,000.00 21,848.48 0.00 0.00 Run Date: 5/10/2022 - 10:37 AM
Amortizing
27Lynwood Successor Agency - Page 17 of 18
Consumer Prices
Although U.S. consumer prices rose less than expected in March, inflation remained elevated at a 40-year high. The Consumer Price Index (CPI) was up 8.5% year-over-year in March, versus up 7.9% year-over-year in February. Core CPI (CPI less food and energ y) was up 6.5% year -over-year in March, versus up 6.4% year-over-year in February. Gasoline costs drove half of the monthly increase, while food was also a sizable contributor. Used vehicle prices declined, resulting in lower than forecast core increases f or the month. The Personal Consumption Expenditures (PCE) index was up 6.4% year-over-year in February, up from 6.0% in January. Core PCE was up 5.4% year -over-year in February, versus up 5.2% in January.
Current inflation readings continue to run well abo ve the Fed’s longer-run target of around 2.0%. While gas prices have started to decline in recent weeks in part due to COVID lockdowns in China, we believe pricing pressures may remain elevated longer than anticipated because of the conflict in Europe.
Retail Sales
Retail sales edged higher in February, but there are signs that higher gas prices are affecting discretionary spending. On a year-over-year basis, retail sales were up 17.6% in February versus 14% in January. On a month-over-month basis, retail s ales moderated, rising 0.3% in February versus an upwardly revised increase of 4.9% in January. Excluding vehicles and gas, retail sales were down 0.4% month -over-month.
Although inflation threatens to put a dent in expected growth, we believe high levels of consumer savings along with improvement in the health situation and continued improvement in the labor market should provide a healthy tailwind for consumer spending. The Consumer Confidence Index rebounded to 107.2 in March following declines in Januar y and February, primarily driven by positive assessments of employment. However, while consumers’ evaluations of the present situation were strong, future expectations have been deteriorating.
Labor Market
The U.S. economy added 431,000 jobs in March, with upward revisions from the prior months totaling 95,000. Trends in employment remain strong, with the three-month moving average payrolls at 561,000 and the six -month moving average at 600,000. Job gains were broad based in March, led by leisure, hospitality, professional, and business services. The unemployment rate fell to 3.6% from 3.8%, the lowest level since February 2020. The labor participation rate increased marginally to 62.4% in March from 62.3% in February but remains lower than the pre -pandemic level of 63.4%. The U -6 underemployment rate, which includes those who are marginally attached to the labor force and employed part time for economic reasons, fell to 6.9% in March from 7.2% in February, declining below its pre -pandemic level of 7.0% in February 2020. Wage growth accelerated in March, with average hourly earnings rising 5.6% from 5.2% year-over-year. As more participants enter the labor force, wage inflation dynamics should start to moderate, helping to lower the current elevated inflation readings.
Housing Starts
Total housing starts rebounded 6.8% to an annual rate of 1,769,000 in February. Single -family starts increased 5.7%, and multi -family starts increased 9.3%, month -over-month. On a year -over-year basis, total housing starts were up 22.3% in February driven by multi-family starts. According to the Case-Shiller 20-City home price index, home prices were up 19.1% year -over-year in January versus up 18.6% year - over-year in December, suggesting tight supply may be continuing to support prices. Rising mortgage rates and affordability could be headwinds to further price growth.
Lynwood Successor Agency - Page 18 of 18
This Agenda contains a brief general description of each item to be considered. Copies of the Staff reports or other written documentation relating to each item of business referred to on the Agenda are on file in the Office of the City Clerk and are available for public inspection. Any person who has a question concerning any of the agenda items may call the City Manager at (310) 603-0220, ext. 200.
Procedures for Addressing the Council
IN ORDER TO EXPEDITE CITY COUNCIL BUSINESS, WE ASK THAT ALL PERSONS WISHING TO ADDRESS THE
COUNCIL SUBMIT YOUR COMMENTS IN ADVANCE TO
[email protected]
OR FILL OUT A FORM
PROVIDED AT THE PODIUM, AND TO TURN IT IN TO THE CITY CLERK PRIOR TO THE START OF THE MEETING. FAILURE TO FILL OUT SUCH A FORM WILL PROHIBIT YOU FROM ADDRESSING THE COUNCIL IN THE ABSENCE OF THE UNANIMOUS CONSENT OF THE COUNCIL.
AGENDA
Lynwood Housing Authority
TO BE HELD ON
May 17, 2022
COUNCIL CHAMBERS - 11350 BULLIS RD. LYNWOOD, CA 90262 or Web conference via ZOOM - To participate via Zoom or by telephone: 1-669-900-9128 or 1-253-215-8782 Meeting ID: 835 2029 8238
Duly Posted on 5/13/2022 By MQ
6:00 PM
1. CALL TO ORDER
2. CERTIFICATION OF AGENDA POSTING BY SECRETARY
3. ROLL CALL OF MEMBERS
Jorge Casanova, Chair
Jose Luis Solache
, Vice Chair
Oscar Flores, Commissioner
Marisela Santana, Commissioner
Rita Soto, Commissioner
PUBLIC ORAL COMMUNICATIONS
(Regarding Agenda Items Only)
NON-AGENDA PUBLIC ORAL COMMUNICATIONS
THIS PORTION PROVIDES AN OPPORTUNITY FOR THE PUBLIC TO ADDRESS THE LYNWOOD HOUSING
AUTHORITY ON ITEMS WITHIN THE JURISDICTION OF THE LYNWOOD HOUSING AUTHORITY AND NOT LISTED ON THE AGENDA. IF AN ITEM IS NOT ON THE AGENDA, THERE SHOULD BE NO SUBSTANTIAL
DISCUSSION OF THE ISSUE BY LYNWOOD HOUSING AUTHORITY, BUT LYNWOOD HOUSING AUTHORITY MAY REFER THE MATTER TO STAFF OR SCHEDULE SUBSTANTIVE DISCUSSION FOR A FUTURE MEETING. (The Ralph M. Brown Act, Government Code Section 54954.2 (a).) Lynwood Housing Authority - Page 1 of 7
CONSENT CALENDAR
ALL MATTERS LISTED UNDER THE CONSENT CALENDAR WILL BE ACTED UPON BY ONE MOTION AFFIRMING THE ACTION RECOMMENDED ON THE AGENDA. THERE WILL BE NO SEPARATE DISCUSSION ON
THESE ITEMS PRIOR TO VOTING UNLESS MEMBERS OF THE COUNCIL OR STAFF REQUEST SPECIFIC ITEMS TO BE REMOVED FROM THE CONSENT CALENDAR FOR SEPARATE ACTION.
4. APPROVAL OF THE WARRANT REGISTER-LHA
Comments:
City of Lynwood Housing Authority warrant register dated May 17, 2022 for FY 2021-2022. (FIN)
Recommendation:
Staff respectfully recommends that the Lynwood Housing Authority approve the warrant register dated May 17, 2022 for FY 2021-2022.
ADJOURNMENT
THE LYNWOOD HOUSING AUTHORITY MEETINGS WILL BE POSTED AS NEEDED. THE
NEXT MEETING WILL BE HELD IN THE COUNCIL CHAMBERS OF THE CITY HALL ANNEX, 11350 BULLIS ROAD, CITY OF LYNWOOD, CALIFORNIA.
Lynwood Housing Authority - Page 2 of 7
Agenda Item # 4.
AGENDA STAFF REPORT
DATE:
May 17, 2022
TO:
Honorable Mayor and Members of the City Council
APPROVED BY:
Ernie Hernandez, City Manager
PREPARED BY:
Harry Wong, Director of Finance & Administration
Lilly Hampton, Senior Accounting Technician
SUBJECT:
APPROVAL OF THE WARRANT REGISTER-LHA
Recommendation:
Staff respectfully recommends that the Lynwood Housing Authority approve the warrant register dated May 17, 2022 for FY 2021-2022.
Background:
N/A
Discussion and Analysis:
N/A
Fiscal Impact:
FY 2021-2022
Coordinated With:
City Manager
City Attorney
ATTACHMENTS:
Description
WARRANT RUN 5 17 2022-LHA
WARRANT RESOLUTION
Lynwood Housing Authority - Page 3 of 7
vchlist
04/27/2022
Bank code:
Voucher
10007
5:54:33PM
lhaus2
Date Vendor
Electronic Financial Transaction List
Lynwood Housing Authority
Invoice PO#
--------- ------ --
3/2/2022 012364 LYNWOOD FAMILY APARTMENTS, LP DRAWS &6 11-002070 1 Vouchers for bank code :
1 Vouchers in this report
lhaus2
Description/Account
ATLANTIC AFFORDABLE HOUSING
Total :
Bank total :
Total vouchers :
Page: 1
Amount
1,012,047.00
1,012,047.00
1,012,047 .00
1,012,047.00
Page : 1
Lynwood Housing Authority - Page 4 of 7
vchlist
05/11/2022
Bank code:
Voucher
10275
10276
10277
4:02:19PM
lhaus2
Date Vendor
5/17/2022 003372 CITY OF LYNWOOD
5/17/2022 003547 KANE, BALLMER & BERKMAN
5/17/2022 001329 U.S. BANK
3 Vouchers for bank code :
3 Vouchers in this report
lhaus2
Voucher List
Lynwood Housing Authority
Invoice PO#
B-010569 11-002083
27208 11-002085
100-1 11-002094
Page: 2
Description/Account Amount
ATLANTIC PROJECT- BUILDING PERMIT 88,500.00
Total: 88,500.00
SPECIAL COUNSEL LEGAL SERVICES 3,500.00
Total: 3,500.00
LYNWOOD FAMILY APTS - ADMIN FEES 1,750.00
Total: 1,750.00
Bank total: 93,750.00
Total vouchers : 93,750.00
Page: 2
Lynwood Housing Authority - Page 5 of 7
1 RESOLUTION NO. 2022.XXX
LHA - Warrant Register Dated 05-17-2022
PASSED, APPROVED and ADOPTED this 17th day of May, 2022.
Jorge Casanova, Chair
ATTEST:
_________________________
Maria Quiňonez, Ernie Hernandez,
Secretary Executive Director
APPROVED AS TO FORM:
Noel Tapia,
Authority Counsel
Lynwood Housing Authority - Page 6 of 7
2 STATE OF CALIFORNIA )
) §
COUNTY OF LOS ANGELES )
I, Maria Quiňonez, the undersigned, City Clerk of the City of Lynwood/Secretary to the Lynwood Housing Authority, do hereby certify that the foregoing Resolution was passed and adopted by the Lynwood Housing Authority of the City of Lynwood at a regular meeting held on the _17_th day of _May__, 2022, and passed by the following vote:
AYES: COMMISSIONERS FLORES, SANTANA, SOTO, VICE CHAIR SOLACHE
AND CHAIR CANANOVA
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
__________________________
Maria Quiňonez,
Secretary
STATE OF CALIFORNIA )
) §
COUNTY OF LOS ANGELES )
I, Maria Quiňonez, the undersigned, City Clerk of the City of Lynwood/Secretary to the Lynwood Housing Authority, do hereby certify that the above foregoing is a full, true and correct copy of Lynwood Housing Authority Resolution No. 2022.XXX on file in my office and that said Resolution was adopted on the date and by the vote therein stated.
Dated this 17 th day of May, 2022.
____________________________
Maria Quiňonez,
Secretary
Lynwood Housing Authority - Page 7 of 7