Jones Hall Draft of October 6, 2026
PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER ___, 2026
NEW ISSUE – FULL BOOK-ENTRY S&P RATING: “___”
See “RATING”
In the opinion of Jones Hall LLP, as Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. Interest on the Bonds may be subject to the corporate alternative minimum tax. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “TAX MATTERS.”
$_____________*
MANTECA FINANCING AUTHORITY
2026 Lease Revenue Bonds
Dated: Date of Delivery Due: June 1, as shown on inside cover Authority for Issuance. The bonds captioned above (the “Bonds”) are being issued by the Manteca Financing Authority (the “Authority”) pursuant to an Indenture of Trust dated as of November 1, 2026 (the “Indenture”) by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), which was authorized by a resolution adopted by the Board of Directors of the Authority as described herein. See “THE BONDS – Authority for Issuance.” Use of Proceeds. The Bonds are being issued to finance public capital improvements of the City of Manteca (the “City”), as described herein, and to pay costs of issuance of the Bonds. See “FINANCING PLAN.” Security for the Bonds. Under the Indenture, the Bonds are payable from and secured by a first pledge of and lien on “Revenues” (as defined in this Official Statement) received by the Authority under the Lease Agreement dated as of November 1, 2026, by and between the Authority, as lessor, and the City, as lessee (the “Lease”), consisting primarily of semi-annual lease payments (the “Lease Payments”) made by the City under the Lease with respect to the lease of certain real property, as further described herein. See “SECURITY FOR THE BONDS.”
Bond Terms; Book-Entry Only. The Bonds will bear interest at the rates shown on the inside cover page, payable semiannually on June 1 and December 1 of each year, commencing on June 1, 2027, and will be issued in fully registered form without coupons in the denomination of $5,000 or any integral multiple of $5,000. The Bonds will be issued in book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). Purchasers of the Bonds will not receive certificates representing their interests in the Bonds. Payments of the principal of and interest on the Bonds will be made to DTC, which is obligated in turn to remit such principal and interest to its DTC Participants for subsequent disbursement to the beneficial owners of the Bonds. See “THE BONDS – General Provisions.” Redemption. The Bonds are subject to redemption prior to maturity. See “THE BONDS – Redemption.” No Reserve Fund. Neither the Authority nor the City is funding a debt service reserve fund for the Bonds.
NEITHER THE BONDS, NOR THE OBLIGATION OF THE AUTHORITY TO PAY PRINCIPAL OF OR INTEREST
THEREON, NOR THE OBLIGATION OF THE CITY TO MAKE THE LEASE PAYMENTS, CONSTITUTE A DEBT OR A
LIABILITY OF THE AUTHORITY, THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS
WITHIN THE MEANING OF ANY CONSTITUTIONAL LIMITATION ON INDEBTEDNESS, OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY. THE BONDS ARE SECURED SOLELY BY THE PLEDGE OF REVENUES AND CERTAIN FUNDS HELD UNDER THE INDENTURE. THE BONDS ARE NOT SECURED BY A PLEDGE OF THE TAXING POWER OF THE CITY.
MATURITY SCHEDULE
(see inside cover)
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR GENERAL REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE OF BONDS. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN
INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION WITH RESPECT TO THE PURCHASE OF THE BONDS.
The Bonds are offered when, as and if issued and received by the Underwriter and subject to the approval as to their legality by Jones Hall LLP, as Bond Counsel. Certain legal matters will also be passed upon for the Authority and the City by Jones Hall LLP, as Disclosure Counsel. Certain legal matters will be passed upon for the City by the City Attorney. Certain legal matters will be passed upon for the Underwriter by its counsel, Stradling Yocca Carlson & Rauth LLP. It is anticipated that the Bonds will be delivered in book-entry form through the facilities of DTC on or about November 12, 2026*.
Ramirez & Co., Inc.
The date of this Official Statement is: ______, 2026.
* Preliminary; subject to change.
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances will this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor will there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
MATURITY SCHEDULE
MANTECA FINANCING AUTHORITY
2026 Lease Revenue Bonds
$_________ Serial Bonds
Maturity Principal Interest
(June 1) Amount Rate Yield Price CUSIP†
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
$___________ ____% Term Bonds due June 1, 20___; Price: _____%; Yield: ______; CUSIP†: _______
* Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database.
CUSIP® numbers are provided for convenience of reference only. None of the City, the Authority nor the Underwriter takes any responsibility for the accuracy of such numbers.
MANTECA FINANCING AUTHORITY
(San Joaquin County, California)
_______________________
AUTHORITY BOARD / CITY COUNCIL
Gary Singh, Mayor (At-Large)
Charlie Halford, Councilmember (District 1)
Regina Lackey, Councilmember (District 2)
David Breitenbucher, Councilmember (District 3)
Mike Morowit, Councilmember (District 4)
CITY / AUTHORITY STAFF
Toni Lundgren, City Manager/Chief Administrative Officer Matthew Boring, Finance Director/Treasurer
Andy Pinasco, Interim City Attorney
Cassandra Candini-Tilton, City Clerk/Secretary
PROFESSIONAL SERVICES
Municipal Advisor
Urban Futures, Inc.
Walnut Creek, California
Bond Counsel and Disclosure Counsel
Jones Hall LLP
San Mateo, California
Trustee
U.S. Bank Trust Company, National Association
Los Angeles, California
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations with respect to the Bonds other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized.
This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.
This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the City or any other parties described in this Official Statement, or in the condition of the security for the Bonds since the date of this Official Statement.
This Official Statement is submitted in connection with the sale of the Bonds referred to in this Official Statement and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract with the purchasers of the Bonds. Prospective investors should not construe the contents of this Official Statement as legal, tax or investment advice.
The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness.
The Underwriter has submitted the following statement for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
All references to and summaries of the Indenture or other documents contained in this Official Statement are subject to the provisions of those documents and do not purport to be complete statements of those documents.
The Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for the issuance and sale of municipal securities provided under Section 3(a)(2) of the Securities Act of 1933 and Section 3(a)(12) of the Securities Exchange Act of 1934.
Certain statements included or incorporated by reference in this Official Statement constitute forward-looking statements. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget” or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. No assurance is given that actual results will meet the forecasts of the City in any way, regardless of the level of optimism communicated in the information. The City is not obligated to issue any updates or revisions to the forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur.
The references to internet websites in this Official Statement are shown for reference and convenience only; unless explicitly stated to the contrary, the information contained within the websites and any links contained within those websites are not incorporated herein by reference and do not constitute part of this Official Statement. i
INTRODUCTION........................................ 1
FINANCING PLAN ..................................... 4
General ................................................... 4 Estimated Sources and Uses.................. 4
THE LEASED PROPERTY ........................ 5
General ................................................... 5 Substitution and Release........................ 6
DEBT SERVICE SCHEDULE..................... 9
THE BONDS............................................. 10 Authority for Issuance ........................... 10
General Provisions................................ 10
Transfer, Registration and Exchange ... 11
Redemption*......................................... 11 Book-Entry Only System....................... 13
SECURITY FOR THE BONDS................. 14
Revenues; Pledge of Revenues ........... 14
Assignment to Trustee.......................... 14
Allocation of Funds by Trustee ............. 15
No Reserve Fund.................................. 15
Lease Payments ................................... 16
Limited Obligation ................................. 17 Additional Obligations ........................... 17
Source of Lease Payments; Covenant
to Budget and Appropriate ................ 18
Abatement............................................. 18 Remedies on Default ............................ 18
Property Insurance................................ 19
THE AUTHORITY..................................... 21
THE CITY ................................................. 21 General ................................................. 21 City Government................................... 21
CITY FINANCIAL INFORMATION ........... 22
Accounting and Financial Reporting ..... 22
General Fund, the Budget Process and
Information ........................................ 24 Financial Statements ............................ 25
Sales and Use Taxes............................ 28
Property Taxes...................................... 31 Transient Occupancy Tax ..................... 34
Other Sources of Revenues ................. 35
Relevant Fiscal Policies ........................ 35
Employee Relations...............................37
Employee Retirement System;
CalPERS............................................38
Direct and Overlapping Bonded Debt....43
General Fund Long-Term
Indebtedness .....................................44
Capital Improvement Program...............44
CONSTITUTIONAL AND STATUTORY
LIMITATIONS ON TAXES AND
APPROPRIATIONS...............................45
Article XIIIA of the State Constitution ....45
Article XIIIB of the State Constitution ....46
Articles XIIIC and XIIID of the State
Constitution........................................46
Proposition 1A; Proposition 22 ..............47
Unitary Property.....................................48 Possible Future Initiatives......................48
BOND OWNERS’ RISKS..........................49
No Pledge of Taxes...............................49
Abatement .............................................49 Limited Recourse on Default; No Right
to Foreclose or Sell; No Acceleration
of Lease Payments ............................50
Additional Obligations of the City...........51
Sales Taxes...........................................51 Property Taxes ......................................52 Natural Calamities .................................53
Pandemic Diseases...............................54
Cyber Security.......................................54 Limitations on Remedies Available to
Bond Owners .....................................54
Secondary Market for Bonds.................55
TAX MATTERS.........................................55
CERTAIN LEGAL MATTERS ...................57
LITIGATION ..............................................57 RATING ....................................................57 CONTINUING DISCLOSURE...................58
MUNICIPAL ADVISOR .............................58
UNDERWRITING......................................59
CONTINGENT FEES................................59
EXECUTION .............................................59 APPENDIX A: AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2025 APPENDIX B: GENERAL INFORMATION ABOUT THE CITY OF MANTECA AND THE COUNTY OF SAN JOAQUIN APPENDIX C: SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS APPENDIX D: FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX E: FORM OF OPINION OF BOND COUNSEL
APPENDIX F: DTC AND THE BOOK-ENTRY ONLY SYSTEM
ii
[REGIONAL LOCATION MAP]
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__________________________________
OFFICIAL STATEMENT
__________________________________
$_______________*
MANTECA FINANCING AUTHORITY
2026 Lease Revenue Bonds
INTRODUCTION
This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement.
The offering of the Bonds to potential investors is made only by means of the entire Official Statement. Capitalized terms used but not defined in this Official Statement have the meanings set forth in the Indenture (as defined below). See “APPENDIX C – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”
Authority for Issuance. The Manteca Financing Authority (the “Authority”) is issuing the bonds captioned above (the “Bonds”) under the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 (commencing with Section 6584) of Chapter 5, Division 7, Title 1 of the California Government Code (the “Bond Law”), a resolution adopted by the Board of Directors (the “Board”) of the Authority on October [20], 2026 (the “Authority Resolution”), a resolution adopted by the City Council (the “City Council”) of the City of Manteca (the “City”) on October [20], 2026 (the “City Resolution”), and an Indenture of Trust (the “Indenture”) dated as of November 1, 2026, by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
Purpose of the Bonds. The Bonds are being issued to finance public capital improvements of the City anticipated to consist of, but not limited to, a new police headquarters and a new fire station, and to pay costs of issuance of the Bonds. See “FINANCING PLAN.” The Authority and the City. The Authority is a joint powers authority established pursuant to that certain Joint Exercise of Powers Agreement dated as of May 1, 1991, by and between the City and the Successor Agency to the Manteca Redevelopment Agency (as successor to the Manteca Redevelopment Agency). The Authority is governed by a five-member Board of Directors (the “Board”), which consists of the members of the City Council of the City. The Authority was created for the purpose of assisting the financing or refinancing of certain public capital facilities of benefit to the City. Under the Bond Law, the Authority has the power to lease real property in furtherance of the acquisition of public improvements necessary or convenient for the operation of the City, or to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or negotiated sale. See “THE AUTHORITY.”
* Preliminary; subject to change.
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The City, incorporated in 1918, is centrally located in the State, in the San Joaquin Valley between the San Francisco Bay Area and the Sierra Nevada foothills. The City’s strategic location at the intersection of Interstate 5, Highway 99, and SR-120 has made it a popular spot for Bay Area commuters. For additional background, and certain demographic and economic information regarding the City and the County, see APPENDIX B.
Bond Terms; Book-Entry Only. The Bonds will bear interest at the rates shown on the inside cover page, payable semiannually on June 1 and December 1 of each year, commencing on June 1, 2027. The Bonds will be issued in fully registered form, registered in the name of The Depository Trust Company (“DTC”), or its nominee, which will act as securities depository for the Bonds. Purchasers of the Bonds will not receive certificates representing the Bonds that are purchased. See “THE BONDS – Book-Entry Only System” and “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
Security for the Bonds. The City and the Authority will enter into a Site Lease dated as of November 1, 2026 (the “Site Lease”), under which the City will lease certain real property to the Authority, as described herein (the “Leased Property”) and as further described herein under the caption “THE LEASED PROPERTY.” The net proceeds of the Bonds will be used by the Authority to fund the payment obligation under the Site Lease.
In order to secure the payments of principal of and interest on the Bonds, the Authority will lease the Leased Property back to the City under a Lease Agreement (the “Lease”), under which the City is obligated to pay semiannual lease payments (the “Lease Payments”) as rental for the Leased Property, and the Authority will assign substantially all of its rights under the Lease to U.S. Bank Trust Company, National Association as trustee for the Bonds. The Bonds are payable from and secured by a first pledge of and lien on the Revenues received by the Authority under the Lease, consisting primarily of the Lease Payments.
Under the Lease, the City covenants to take all actions required to include the Lease Payments in each of its budgets during the Term of the Lease and to make the necessary appropriations for all Lease Payments and Additional Rental Payments. This covenant of the City constitutes a duty imposed by law and each and every public official of the City is required to take all actions required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in the Lease agreed to be carried out and performed by the City. See “SECURITY FOR THE BONDS.” Redemption. The Bonds are subject to redemption prior to their stated maturity dates.
See “THE BONDS – Redemption.”
Abatement. The Lease Payments are subject to complete or partial abatement in the event and to the extent that there is substantial interference with the City’s use and possession of the Leased Property or any portion thereof. If the Lease Payments are abated under the Lease, the Bond Owners may receive less than the full amount of principal of and interest on the Bonds.
See “SECURITY FOR THE BONDS – Abatement” and “BOND OWNERS’ RISKS.” Additional Obligations. Under the Indenture, the Authority covenants that no additional bonds, notes or other indebtedness shall be issued or incurred by the Authority which are payable out of the Revenues in whole or in part. However, the City is permitted to enter into other obligations which constitute additional charges against its revenues, including pursuant to additional subleases of the Leased Property to support additional bond issuance, without the consent of Owners of the Bonds.
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Risks of Investment. Debt service on the Bonds is payable only from Lease Payments and other amounts payable by the City to the Authority under the Lease. The Lease Payments are payable from revenues available in the City’s general fund, which revenues may be materially adversely affected by numerous factors outside the City’s control. For a discussion of some of the risks associated with the purchase of the Bonds, see “BOND OWNERS’ RISKS.”
NEITHER THE BONDS, THE OBLIGATION OF THE AUTHORITY TO PAY PRINCIPAL
OF OR INTEREST THEREON, NOR THE OBLIGATION OF THE CITY TO MAKE THE LEASE
PAYMENTS, CONSTITUTE A DEBT OR A LIABILITY OF THE AUTHORITY, THE CITY, THE
STATE OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY
CONSTITUTIONAL LIMITATION ON INDEBTEDNESS, OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY. THE BONDS ARE SECURED SOLELY BY THE PLEDGE OF REVENUES AND CERTAIN FUNDS HELD UNDER THE INDENTURE. THE BONDS ARE NOT SECURED BY A PLEDGE OF THE TAXING POWER OF THE CITY.
[Remainder of page intentionally left blank]
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FINANCING PLAN
General
The Bonds are being issued to finance development of a new police headquarters facility and new fire station, and to pay costs of issuance for the Bonds.
Police Headquarters Facility. The City is constructing a new police headquarters at the 600 block of S. Main Street in the City, with approximately 50,000 square feet across multiple buildings (the “Police Headquarters”). The project will also include modifications to local traffic patterns. The total project cost is estimated to be approximately $90 million, with funding from Measure Q revenues (a local sales tax measure), government facility fees, and a portion of the proceeds of the Bonds. The project completion is planned for 2028.
Fire Station No. 6. The City is constructing a sixth fire station at the intersection of Joshua Street and Oak Trail drive in the City, with approximately 6,700 square feet (the “Fire Station No. 6”). The station will be able to accommodate nine additional firefighters. The total project cost is estimated to be approximately $12 million, with funding from a federal grant, Measure Q revenues, fire facility fees, and a portion of the proceeds of the Bonds. The project completion is planned for 2028.
Estimated Sources and Uses
The estimated sources and uses of funds relating to the Bonds are as follows:
Sources:
Principal Amount of Bonds $
Plus/Less [Net] Original Issue Premium/Discount
TOTAL SOURCES $
Uses:
Project Fund
Costs of Issuance(1)
TOTAL USES $
(1) Represents funds to be used to pay Costs of Issuance, which include rating agency fees, bond counsel, disclosure counsel, Trustee fees, Underwriter’s discount and other costs of issuing the Bonds. -5-
THE LEASED PROPERTY
General
Simultaneously with the delivery of the Bonds, the Authority will acquire a leasehold interest in the Leased Property from the City. The Authority will sublease the Leased Property to the City pursuant to the Lease. Under the Lease, the City has agreed to maintain the Leased Property in good working condition. The City estimates that the Leased Property has a value of at least the aggregate principal amount of the Bonds. The City and the Authority, based on records they maintain, estimate the current annual fair rental value of the Leased Property to be not less than the amount of the annual Lease Payments.
Bondholders do not have a mortgage on any portion of the Leased Property and no ability to foreclose on the Leased Property or accelerate the Lease Payments in the event of a default.
See “BOND OWNERS’ RISKS – Limited Recourse on Default; No Right to Foreclose or Sell; No Acceleration of Lease Payments” and “SECURITY FOR THE BONDS – Remedies on Default” herein.
Initial Leased Property. The initial Leased Property consists of the following buildings and sites owned by the City. The total estimated insured building value for the Leased Property is approximately $53.1 million and the total estimated land value is $20.7 million, resulting in a total estimated value of land and property of $73.8 million.
The initial Leased Property consists of the following:
• City Hall Complex (1001 West Center Street) – The City Hall Complex serves as the administrative headquarters of the City, housing the City Council chambers and core departments responsible for municipal governance and public administration, including the Manteca Police Department, the Parks and Recreation offices, classrooms and picnic tables. The first phase of the City Hall Complex was completed in 1976. The total square footage of the City Hall Complex is 67,347 square feet.
• City Corp Yard (208 East Wetmore Street) – The City Corporation Yard functions as a primary operations hub for Public Works activities, including storage, staging, and maintenance of equipment used for city infrastructure and services. • Vehicle Maintenance Yard (120 East Wetmore Street) – The Vehicle Maintenance Yard supports the City’s fleet operations by providing maintenance, repair, and servicing for municipal vehicles and equipment used across departments.
• Animal Shelter (115 East Wetmore Street) – The Animal Shelter is operated by the City’s police-related animal services unit and provides intake, care, and adoption services for stray and surrendered animals.
• Fire Station No. 2 (1154 South Union Road) – Fire Station No. 2 provides fire suppression and emergency medical response services to southern portions of the City and surrounding growth areas.
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• Fire Station No. 3 (399 West Louise Avenue) – Fire Station No. 3 supports emergency response coverage for western neighborhoods and key transportation corridors within Manteca.
• Fire Station No. 4 (1465 West Lathrop Road) – Fire Station No. 4 extends fire and emergency response services to northwest areas of the City, including developing residential and commercial zones.
• Fire Station No. 5 (1675 East Woodward Avenue) – Fire Station No. 5 provides coverage for eastern Manteca, supporting both residential communities and nearby industrial areas.
• New Police Headquarters Site (682 South Main Street) – The New Police Headquarters site is intended for development of a modern public safety facility to replace or supplement existing police operations and accommodate future service needs.
Planned Release of Portions of Initial Leased Property. Upon final completion of the construction of the City’s new Police Headquarters, the City has the right (and plans to utilize the right) to release all of the initial Leased Property other than the land and buildings comprising the new Police Headquarters. The City shall accomplish this release by (1) filing with the Authority and Trustee a written certificate of the City or other written evidence stating that (i) the estimated value of the Leased Property following such release is at least equal to the aggregate principal amount of the Lease Payments then due under the Lease, (ii) the estimated fair rental value of the Leased Property following such release is at least equal to the remaining Lease Payments due under the Lease, (iii) the City has use and occupancy of the Leased Property following such release and (2) filing with the San Joaquin County Recorder’s Office a Termination and Release substantially in the form attached to the Lease. Upon the satisfaction of these conditions precedent, the term of the Lease would end as to the portions of the initial Leased Property that have been released, with the land and buildings comprising the new Police Headquarters remaining. The City would not be entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such release.
Substitution and Release
Substitution of Leased Property. Under the Lease, the City has the option at any time and from time to time, to substitute other real property (the “Substitute Property”) for the Leased Property or any portion thereof (the “Former Property”), upon satisfaction of all of the conditions set forth in the Lease, which consist of the following:
• No Event of Default has occurred and is continuing.
• The City has filed with the Authority and the Trustee, and caused to be recorded in the office of the San Joaquin County Recorder’s Office, sufficient memorialization of an amendment of the Lease, the Site Lease and the Assignment Agreement, which adds the legal description of the Substitute Property to the Lease and deletes therefrom the legal description of the Former Property. • The City has obtained a CLTA policy of title insurance insuring the City’s leasehold estate under the Lease in the Substitute Property, subject only to Permitted -7-
Encumbrances, in an amount at least equal to the then-aggregate principal amount of Lease Payments then due under the Lease.
• The City has certified in writing to the Authority and the Trustee that the Substitute Property serves the municipal purposes of the City, constitutes property which the City is permitted to lease under the laws of the State of California, and has been determined to be important to the proper, efficient and economic operation of the City.
• The Substitute Property does not cause the City to violate any of its covenants, representations and warranties made in the Lease.
• The City has filed with the Authority and the Trustee a written certificate of the City or other written evidence stating that (i) the estimated value of the Leased Property following such substitution is at least equal to the aggregate principal amount of the Lease Payments then due under the Lease, (ii) the estimated fair rental value of the Leased Property following such substitution is at least equal to the remaining Lease Payments due under the Lease, (iii) the City has use and occupancy of the Leased Property following such substitution and (iv) the useful life of the Substitute Property at least extends to the stated termination date of the Lease.
Upon the satisfaction of all such conditions precedent, the Term of the Lease will thereupon end as to the Former Property and commence as to the Substitute Property, and all references to the Former Property will apply with full force and effect to the Substitute Property.
The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of any substitution of property as set forth above.
Release of Leased Property. Under the Lease, the City has the option at any time and from time to time to release any portion of the Leased Property from the Lease (the “Released Property”) provided that the City has satisfied all of the requirements under the Lease that are conditions precedent to such release, which consist of the following:
• No Event of Default has occurred and is continuing.
• The City has filed with the Authority and the Trustee, and caused to be recorded in the office of the San Joaquin County Recorder’s Office, sufficient memorialization of an amendment of the Lease, the Site Lease and the Assignment Agreement, which removes the Released Property therefrom. • The City has filed with the Authority and the Trustee a written certificate of the City or other written evidence stating that (i) the estimated value of the Leased Property following such release is at least equal to the aggregate principal amount of the Lease Payments then due under the Lease, and (ii) the estimated fair rental value of the Leased Property following such release is at least equal to the remaining Lease Payments due under the Lease.
Upon the satisfaction of all the conditions precedent set forth in the Lease, the term of the Lease will end as to the Released Property. The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such release. -8-
As noted above, upon final completion of the construction of the City’s new Police Headquarters the City has the right (and plans to utilize the right) to release all of the initial Leased Property other than the land and buildings comprising the new Police Headquarters. -9-
DEBT SERVICE SCHEDULE
The table below shows annual debt service payments on the Bonds.
Year Ending
June 1 Principal Interest
Total
Debt Service
Total:
___________
Source: Underwriter.
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THE BONDS
This section provides summaries of the Bonds and certain provisions of the Indenture.
See APPENDIX C for a more complete summary of the Indenture. Capitalized terms used but not defined in this section have the meanings given in APPENDIX C.
Authority for Issuance
The Bonds are being issued under the Bond Law and the Indenture, approved pursuant to the Authority Resolution and the City Resolution.
General Provisions
Bond Terms. The Bonds will be dated their date of delivery and issued in fully registered form without coupons in denominations of $5,000 or any integral multiple of $5,000. The Bonds will mature in the amounts and on the dates, and bear interest at the annual rates, set forth on the inside cover page of this Official Statement.
Payments of Principal and Interest. Interest on the Bonds will be payable on June 1 and December 1 in each year, beginning June 1, 2027 (each an “Interest Payment Date”).
Interest on the Bonds is payable from the Interest Payment Date next preceding the date of its authentication unless: a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it will bear interest from such Interest Payment Date, a Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the Closing Date, or interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been paid in full, payable on each Interest Payment Date.
Interest is computed on the basis of a 360-day year composed of 12 months of 30 days each and payable on each Interest Payment Date to the persons in whose names the ownership of the Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest on any Bond which is not punctually paid or duly provided for on any Interest Payment Date is payable to the person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which is given to such Owner by first-class mail not less than 10 days prior to such special record date.
The Trustee will pay interest on the Bonds by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. At the written request of the Owner of Bonds in an aggregate principal amount of at least $1,000,000, which written request is on file with the Trustee as of any Record Date, the Trustee will pay interest on such Bonds on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account of a financial institution within the United States of America as specified in such written request, which written request will remain in effect until rescinded in writing by the Owner.
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. -11-
Record Date. Under the Indenture, “Record Date” means, with respect to any Interest Payment Date, the 15th calendar day of the month preceding such Interest Payment Date, whether or not such day is a Business Day.
Transfer, Registration and Exchange
The following provisions regarding the exchange and transfer of the Bonds apply only during any period in which the Bonds are not subject to DTC’s book-entry system. While the Bonds are subject to DTC’s book-entry system, their exchange and transfer will be affected through DTC and the Participants and will be subject to the procedures, rules and requirements established by DTC. See “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY SYSTEM.” Bond Register. The Trustee will keep or cause to be kept, at the Office of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds, which will upon reasonable notice as agreed to by the Trustee, be open to inspection during regular business hours by the Authority; and, upon presentation for such purpose, the Trustee will, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such records, the ownership of the Bonds as provided in the Indenture.
Transfer and Exchange. Any Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of such Bond to the Trustee at its Office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. The Trustee will require the Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer.
Whenever any Bond is or Bonds are surrendered for transfer, the Authority will execute and the Trustee will authenticate and deliver to the transferee a new Bond or Bonds of like series, interest rate, maturity and aggregate principal amount. The Authority will pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any transfer of Bonds.
The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of other authorized denominations and of the same series, interest rate and maturity. The Trustee will require the Owner requesting such exchange to pay any tax or other governmental charge required to be paid with respect to such exchange. The Authority will pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any exchange of Bonds.
The Trustee may refuse to transfer or exchange, under the provisions of the Indenture described above, any Bonds selected by the Trustee for redemption under the Indenture, or any Bonds during the period established by the Trustee for the selection of Bonds for redemption.
Redemption*
Optional Redemption. The Bonds maturing on or before June 1, 2036, are not subject to optional redemption prior to their respective stated maturities. The Bonds maturing on or after June 1, 2037, are subject to optional redemption in whole, or in part at the election of the Authority * Preliminary; subject to change.
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among maturities on such basis as designated by the Authority and by lot within a maturity, at the option of the Authority, on any date on or after June 1, 2036, from any available source of funds, at a redemption price equal to 100% of the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium.
Mandatory Sinking-Fund Redemption. The Bonds maturing June 1, _____ (the “Term Bonds”) are subject to mandatory redemption in part by lot, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts and on June 1 in the respective years as set forth in the following tables; provided, however, that if some but not all of the Term Bonds have been redeemed pursuant to an optional redemption or special mandatory redemption from insurance or condemnation proceeds, the total amount of all future sinking fund payments shall be reduced by the aggregate principal amount of the Term Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral multiples of $5,000 (as set forth in a schedule provided by the Authority to the Trustee).
Term Bonds Maturing June 1, ______
Sinking Fund
Redemption Date
(June 1)
Principal Amount
To Be Redeemed
Extraordinary Mandatory Redemption. The Bonds are subject to mandatory redemption prior to maturity in whole or in part among maturities as determined by the Authority, on any date, at a redemption price equal to 100% of the principal amount thereof to be redeemed (plus accrued but unpaid interest to the redemption date), without premium, from Net Proceeds received under the Lease and from amounts deposited in the Insurance and Condemnation Fund pursuant to the Indenture, and any other funds available for such purpose under the Indenture.
Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, the Bonds shall be selected for redemption on a prorata basis among outstanding maturities. For purposes of such selection, the Trustee will treat each Bond as consisting of separate $5,000 portions and each such portion will be subject to redemption as if such portion were a separate Bond.
Notice of Redemption. The Trustee will mail notice of redemption of the Bonds by first class mail, postage prepaid, not less than 20 nor more than 60 days before any redemption date, to the respective Owners of any Bonds designated for redemption at their addresses appearing on the Registration Books and to one or more Securities Depositories and to the Information Services.
Neither the failure to receive any notice nor any defect therein will affect the sufficiency of the proceedings for such redemption or the cessation of accrual of interest from and after the redemption date. Notice of redemption of Bonds will be given by the Trustee, at the expense of the Authority, for and on behalf of the Authority.
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However, while the Bonds are subject to DTC’s book-entry system, the Trustee will be required to give notice of redemption only to DTC as provided in the letter of representations executed by the Authority and received and accepted by DTC. DTC and the Participants will have sole responsibility for providing any such notice of redemption to the beneficial owners of the Bonds to be redeemed. Any failure of DTC to notify any Participant, or any failure of Participants to notify the Beneficial Owner of any Bonds to be redeemed, of a notice of redemption or its content or effect will not affect the validity of the notice of redemption, or alter the effect of redemption set forth in the Indenture.
Rescission of Redemption Notice. The Authority has the right to rescind any notice of the redemption of Bonds under the Indenture by written notice to the Trustee on or prior to the dated fixed for redemption. Any notice of optional redemption will be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation will not constitute an Event of Default. The Authority and the Trustee have no liability to the Bond Owners or any other party related to or arising from such rescission of redemption. The Trustee will mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent under the Indenture.
Effect of Redemption. When notice of redemption has been duly given as set forth in the Indenture, and moneys for payment of the redemption price of, together with interest accrued to the date fixed for redemption on, including any applicable premium, the Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions thereof) so called for redemption will become due and payable, interest on the Bonds so called for redemption will cease to accrue, said Bonds (or portions thereof) will cease to be entitled to any benefit or security under the Indenture, and the Owners of said Bonds will have no rights in respect thereof except to receive payment of the redemption price thereof.
Book-Entry Only System
The Bonds will be issued as fully registered bonds in book-entry only form, registered in the name of Cede & Co. as nominee of DTC, and will be available to ultimate purchasers in the denomination of $5,000 or any integral multiple of $5,000, under the book-entry system maintained by DTC. While the Bonds are subject to the book-entry system, the principal, interest and any redemption premium with respect to a Bond will be paid by the Trustee to DTC, which in turn is obligated to remit such payment to its DTC Participants for subsequent disbursement to Beneficial Owners of the Bonds. Purchasers of the Bonds will not receive certificates representing their interests therein, which will be held at DTC. See “APPENDIX F – DTC AND THE BOOKENTRY ONLY SYSTEM” for further information regarding DTC and the book-entry system. -14-
SECURITY FOR THE BONDS
The principal of and interest on the Bonds are not a debt of the Authority or the City, nor a legal or equitable pledge, charge, lien or encumbrance, upon any of their respective property, or upon any of their income, receipts, or revenues except the Revenues and other amounts pledged under the Indenture.
This section provides summaries of the security for the Bonds and certain provisions of the Indenture, the Lease and the Site Lease. See “APPENDIX C – Summary of Principal Legal Documents” for a more complete summary of the Indenture, the Lease, the Site Lease and the Assignment Agreement. Capitalized terms used but not defined in this section have the meanings given in APPENDIX C.
Revenues; Pledge of Revenues
Pledge of Revenues and Other Amounts. Under the Indenture, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, all of the Revenues and all amounts held in any fund or account established under the Indenture (excluding amounts in the Cost of Issuance Fund and the Project Fund) are pledged to secure the payment of the principal of and interest on the Bonds in accordance with their terms and the provisions of the Indenture. This pledge constitutes a lien on and security interest in the Revenues and such amounts and will attach, be perfected and be valid and binding from and after the Closing Date, without the need for any physical delivery thereof or further act.
“Revenues” are defined in the Indenture as (a) all amounts received by the Authority or the Trustee under or with respect to the Lease, including, without limiting the generality of the foregoing, all of the Lease Payments (including both timely and delinquent payments, any late charges, and whether paid from any source), but excluding (i) any amounts the City is obligated to pay under the Lease or under another lease as additional amounts of rental for the use and occupancy of the Leased Property if such additional amounts of rental are pledged or assigned for the payment of any bonds, notes, leases or obligations other than the Bonds, and (ii) any Additional Rental Payments; and (b) all interest, profits or other income derived from the investment of amounts in any fund or account established under the Indenture.
Assignment to Trustee
Under the Assignment Agreement, the Authority will transfer to the Trustee all of the rights of the Authority in the Lease (other than the rights of the Authority under the provisions of the Lease regarding Additional Rental Payments, repayment of advances, indemnification, and the payment of attorneys’ fees). The Trustee is entitled to collect and receive all of the Revenues, and any Revenues collected or received by the Authority will be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and will immediately be paid by the Authority to the Trustee. The Trustee is also entitled to and will, subject to the provisions of the Indenture regarding the duties of the Trustee, take all steps, actions and proceedings which the Trustee determines to be reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, all of the rights of the Authority and all of the obligations of the City under the Lease.
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Allocation of Funds by Trustee
Deposit of Revenues into Bond Fund. All Revenues shall be promptly deposited by the Trustee upon receipt thereof in a special fund designated as the “Bond Fund” which the Trustee shall establish, maintain and hold in trust; except that all moneys received by the Trustee and required under the Indenture or under the Lease to be deposited in the Redemption Fund or the Insurance and Condemnation Fund shall be promptly deposited in such funds. All Revenues deposited with the Trustee shall be held, disbursed, allocated and applied by the Trustee only as provided in the Indenture. Any surplus remaining in the Bond Fund, after payment in full of (i) the principal of and interest on the Bonds or provision therefore under the Indenture, and (ii) any applicable fees and expenses to the Trustee, shall be withdrawn by the Trustee and remitted to the City.
Transfers from the Bond Fund. On or before each Interest Payment Date, the Trustee will transfer from the Bond Fund and deposit into the following respective accounts (each of which the Trustee will establish and maintain within the Bond Fund), the following amounts in the following order of priority:
Deposit to Interest Account. The Trustee will deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to be at least equal to the amount of interest becoming due and payable on such Interest Payment Date on all Bonds then Outstanding.
Deposit to Principal Account. The Trustee will deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of the Bonds coming due and payable on such Interest Payment Date, including the principal amount of Bonds which are subject to mandatory sinking fund redemption on such Interest Payment Date.
Application of Accounts within Bond Fund.
Application of Interest Account. All amounts in the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it comes due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity).
Application of Principal Account. All amounts in the Principal Account will be used and withdrawn by the Trustee solely to pay the principal amount of the Bonds at their respective maturity dates, and the principal amount of Bonds which are subject to mandatory sinking fund redemption on such Interest Payment Date.
Application of Redemption Fund. The Trustee will establish and maintain the Redemption Fund, into which the Trustee shall deposit a portion of the Revenues received, in accordance with a Written Request of the Authority, amounts in which shall be used and withdrawn by the Trustee solely for the purpose of paying the principal and premium (if any) of the Bonds to be redeemed under the Indenture.
No Reserve Fund
Neither the Authority nor the City is funding a debt service reserve fund for the Bonds. -16-
Lease Payments
Requirement to Make Lease Payments. Under the Lease, subject to the provisions of the Lease concerning rental abatement (see – “Abatement,” below) and prepayment of Lease Payments, the City agrees to pay to the Authority, its successors and assigns, the Lease Payments in the respective amounts specified in the Lease, to be due and payable in immediately available funds on the Interest Payment Dates immediately following each of the respective Lease Payment Dates specified in the Lease, and to be deposited by the City with the Trustee on each of the Lease Payment Dates specified in the Lease (defined as the 5th Business Day immediately preceding each Interest Payment Date).
Any amount held in the Bond Fund, the Interest Account and the Principal Account on any Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments in part but not in whole under the Lease, and amounts required for payment of past due principal or interest on any Bonds not presented for payment) will be credited towards the Lease Payment then required to be paid under the Lease.
The City is not required to deposit any Lease Payment with the Trustee on any Lease Payment Date if the amounts then held in the Bond Fund, the Interest Account and the Principal Account are at least equal to the Lease Payment then required to be deposited with the Trustee.
The Lease Payments payable in any Rental Period are for the use of the Leased Property during that Rental Period.
Rate on Overdue Lease Payments. If the City fails to make any of the payments of Lease Payments required in the Lease, the payment in default will continue as an obligation of the City until the amount in default has been fully paid, and the City agrees to pay the same with interest thereon, from the date of default to the date of payment at the highest rate of interest on any Outstanding Bond.
Fair Rental Value. The aggregate amount of the Lease Payments and Additional Rental Payments coming due and payable during each Rental Period constitute the total rental for the Leased Property for such Rental Period, and are payable by the City in each Rental Period for and in consideration of the right of the use and occupancy of, and the continued quiet use and enjoyment of the Leased Property during each Rental Period. The Authority and the City have agreed and determined that the total Lease Payments represent the fair rental value of the Leased Property. In making that determination, consideration has been given to the estimated value of the Leased Property, other obligations of the City and the Authority under the Lease, the uses and purposes which may be served by the Leased Property and the benefits therefrom which will accrue to the City and the general public.
Additional Rental Payments. In addition to the Lease Payments, the City shall pay when due the following amounts of Additional Rental Payments in consideration of the lease of the Leased Property by the City from the Authority:
(a) All fees and expenses incurred by the Authority in connection with or by reason of its leasehold estate in the Leased Property, when due;
(b) All reasonable compensation to the Trustee for all services rendered under the Indenture and for all reasonable expenses, charges, costs, liabilities, legal fees and -17-
other disbursements incurred in and about the performance of its powers and duties under the Indenture;
(c) The reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the Authority or the Trustee to prepare audits, financial statements, reports, opinions or provide such other services required under the Lease or the Indenture;
(d) Amounts coming due and payable as Excess Investment Earnings in accordance with the Lease; and
(e) The reasonable out-of-pocket expenses of the Authority in connection with the execution and delivery of the Lease or the Indenture, or in connection with the issuance of the Bonds, including but not limited to any and all expenses incurred in connection with the authorization, sale and delivery of the Bonds, or incurred by the Authority in connection with any litigation which may at any time be instituted involving the Lease, the Bonds, the Indenture or any of the other documents contemplated thereby, or otherwise incurred in connection with the administration of the Lease.
Limited Obligation
THE OBLIGATION OF THE CITY TO MAKE THE LEASE PAYMENTS DOES NOT
CONSTITUTE A DEBT OF THE CITY, THE AUTHORITY OR THE STATE OR OF ANY
POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR
STATUTORY DEBT LIMIT OR RESTRICTION, AND DOES NOT CONSTITUTE AN
OBLIGATION FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF
TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.
Additional Obligations
Under the Indenture, the Authority covenants that no additional bonds, notes or other indebtedness will be issued or incurred which are payable out of the Revenues in whole or in part.
Notwithstanding the foregoing, additional bonds, notes and obligations may be issued by the Authority that are secured by lease payments payable under the Lease in accordance with the Lease.
The Lease provides that the Lease may be amended without consent by Holders of the Bonds to obligate the City to pay additional amounts of rental for the use and occupancy of the Leased Property, but only if
(a) such additional rent payments are pledged or assigned for the payment of any bonds, notes or other obligations the proceeds of which are applied to finance or refinance the acquisition or construction of any real or personal property for which the City is authorized to expend funds subject to its control, and
(b) the City has filed with the Trustee a written certificate stating that the estimated value of the Leased Property is, or following the completion of the acquisition and construction of any improvements to be financed from the proceeds of such bonds, notes or other obligations will -18-
be, at least equal to the aggregate then-outstanding principal amount of the Bonds and all such other bonds, notes or other obligations.
Source of Lease Payments; Covenant to Budget and Appropriate The Lease Payments are payable from any source of available funds of the City, subject to the provisions of the Lease regarding abatement. See “– Abatement” herein.
Under the Lease, the City covenants to take all actions required to include the Lease Payments in each of its budgets during the Term of the Lease and to make the necessary appropriations for all Lease Payments and Additional Rental Payments. The foregoing covenant of the City constitutes a duty imposed by law and each and every public official of the City is required to take all actions required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in the Lease.
Abatement
Termination or Abatement Due to Eminent Domain. Under the Lease, if the Leased Property is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the Term of the Lease thereupon ceases as of the day possession is taken. If less than all of the Leased Property is taken permanently and the remainder is useable for the City’s purposes, or if the Leased Property is taken temporarily, under the power of eminent domain, then:
(a) the Lease will continue in full force and effect with respect thereto and does not terminate by virtue of such taking, and the parties waive the benefit of any law to the contrary; and
(b) the Lease Payments are subject to abatement in an amount determined by the City such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property.
Abatement Due to Damage or Destruction. The Lease Payments are subject to abatement during any period in which by reason of damage or destruction (other than by eminent domain which is hereinbefore provided for) there is substantial interference with the use and occupancy by the City of the Leased Property or any portion thereof. The Lease Payments are subject to abatement in an amount determined by the City, such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portions of the Leased Property not damaged or destroyed. Such abatement will continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, the Lease continues in full force and effect and the City waives any right to terminate the Lease by virtue of any such damage and destruction.
Remedies on Default
Failure by the City to make Lease Payments or failure to pay Additional Rental Payments constitute Events of Default under the Lease. Failure to observe and perform any other terms, covenants or conditions contained in the Lease or in the Indenture for a period of 30 days after written notice of such failure and request that it be remedied has been given to the City by the Authority or the Trustee, also constitute Events of Default under the Lease. Such events permit -19-
the Trustee or the Authority to pursue any and all available remedies. During the term of the Site Lease, the Authority has the right to re-enter and re-lease or terminate and re-lease all or any portion of the Leased Property. However, notwithstanding anything in the Lease or in the Indenture to the contrary, neither the Authority nor the Trustee have any right, under the Lease, the Site Lease or otherwise, to foreclose or sell the Leased Property, nor is there any right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments that are not then in default to be immediately due and payable. See “BOND OWNERS’ RISKS – Limited Recourse on Default; No Right to Foreclose or Sell; No Acceleration of Lease Payments” herein.
Following an event of default, the Authority or the Trustee may elect either to terminate the Lease and seek to collect damages from the City or to maintain the Lease in effect and seek to collect the Lease Payments as they become due. Under the Assignment Agreement, the Authority assigns all of its rights with respect to remedies in an Event of Default to the Trustee, so that all such remedies will be exercised by the Trustee and the Bond Owners as provided in the Indenture. See “BOND OWNERS’ RISKS – Limited Recourse on Default; No Right to Foreclose or Sell; No Acceleration of Lease Payments” herein.
In the Event of Default, there is no remedy of acceleration of the total Lease Payments due over the term of the Lease and neither the Authority nor the Trustee are empowered to sell the Leased Property.
The City will be liable only for Lease Payments on an annual basis and, in the Event of Default, the Authority or Trustee would be required to seek a separate judgment each year for that year’s defaulted Lease Payments. Any such suit for money damages would be subject to limitations on legal remedies against municipalities in California, including a limitation on enforcement of judgments against funds of a Fiscal Year other than the Fiscal Year in which the Lease Payments were due and against funds needed to serve the public welfare and interest.
Property Insurance
Liability Insurance. Under the Lease, the City is required to maintain or cause to be maintained throughout the Term of the Lease, a standard commercial general liability insurance policy or policies in protection of the Authority, the City, and their respective members, officers, agents, employees and assigns. Such policy or policies must provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Leased Property. Such policy or policies must provide coverage in such liability limits and be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of self-insurance by the City, subject to the provisions of the Lease regarding self-insurance, or in the form of the participation by the City in a joint powers agency or other program providing pooled insurance. The proceeds of such liability insurance must be applied toward extinguishment or satisfaction of the liability with respect to which paid.
Casualty Insurance. The City is required to procure and maintain, or cause to be procured and maintained, throughout the Term of the Lease, casualty insurance against loss or damage to all buildings situated on the Leased Property, in an amount at least equal to the lesser of (a) 100% of the replacement value of the insured buildings, or (b) 100% of the aggregate principal amount of the then-outstanding Lease Payments. Such insurance must, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke -20-
and such other hazards as are normally covered by such insurance, and must include earthquake insurance if available at reasonable cost from reputable insurers in the judgment of the City. Such insurance may be subject to such deductibles as the City deems adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers agency or other program providing pooled insurance; provided that such insurance may not be maintained by the City in the form of self-insurance. The Net Proceeds of such insurance must be applied as provided in the Lease.
Rental Interruption Insurance. The City is required to procure and maintain, or cause to be procured and maintained, throughout the Term of the Lease, rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of any portion of the Leased Property constituting buildings or other improvements as a result of any of the hazards covered in the insurance required by the Lease, in an amount at least equal to the maximum such Lease Payments coming due and payable during any consecutive two Fiscal Years. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers agency or other program providing pooled insurance; provided that such insurance may not be maintained by the City in the form of self-insurance. The Net Proceeds of such insurance, if any, must be paid to the Trustee and deposited in the Bond Fund, to be applied as a credit towards the payment of the Lease Payments allocable to the insured improvements as the same become due and payable.
Title Insurance. The City is required to obtain a CLTA title insurance policy insuring the City’s leasehold estate under the Lease in the Leased Property, subject only to Permitted Encumbrances, in an amount at least equal to the aggregate principal amount of the Bonds. All Net Proceeds received under any such title insurance policy must be deposited with the Trustee in the Bond Fund to be credited towards the prepayment of the remaining Lease Payments under the Lease.
Insurance Net Proceeds; Form of Policies. Each policy of casualty insurance, rental interruption insurance, and title insurance if any, maintained under the Lease must name the Trustee as loss payee so as to provide that all proceeds under the Lease are payable to the Trustee. The City shall pay or cause to be paid when due the premiums for all insurance policies required by the Lease. All such policies shall provide that the Trustee is given 30 days’ notice of each expiration, any intended cancellation thereof or reduction of the coverage provided thereby.
The Net Proceeds of such insurance must be applied as provided in the Lease.
The City must file with the Trustee annually, within 90 days following the close of each Fiscal Year, a certificate of the City stating that all policies of insurance required under the Lease are then in full force and effect. The Trustee has no responsibility for the sufficiency, adequacy or amount of any insurance or self-insurance herein required and is fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss.
If any liability and property damage insurance maintained under the Lease is provided in the form of self-insurance, the City must file with the Trustee annually, within 90 days following the close of each Fiscal Year, a statement of the risk manager of the City or an independent insurance adviser engaged by the City identifying the extent of such self-insurance and stating the determination that the City maintains sufficient reserves with respect thereto. If any such insurance is provided in the form of self-insurance by the City, the City has no obligation to make any payment with respect to any insured event except from those reserves. -21-
THE AUTHORITY
The Authority is a joint exercise of powers authority duly organized and existing under and pursuant to that Joint Exercise of Powers Agreement dated as of May 1, 1991, as amended, by and between the City and the Successor Agency to the Manteca Redevelopment Agency (as successor to the Manteca Redevelopment Agency), and under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the California Government Code.
The Authority was formed for the purpose, among others, of assisting the City in the acquisition, construction and financing of public improvements that are of public benefit to the City. Under the Law, the Authority has the power to lease real property in furtherance of the acquisition of public improvements necessary or convenient for the operation of the City, or to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or negotiated sale.
The Authority is governed by a five-member Board of Directors (the “Board”), which consists of the members of the City Council of the City. The Mayor serves as the Chairman, the City Manager serves as the Executive Director, the City Clerk serves as the Secretary, and the City’s Finance Director serves as the Authority Treasurer.
THE CITY
General
The City is a general law city located in the County of San Joaquin (the “County”) and is centrally located in the State, in the San Joaquin Valley between the San Francisco Bay Area and the Sierra Nevada foothills. The City’s strategic location at the intersection of Interstate 5, Highway 99, and SR-120 has made it a popular spot for Bay Area commuters. The City now hosts key facilities like the ACE Train, Manteca Transit Center, and a growing list of attractions such as Great Wolf Lodge and Big League Dreams Sports Park. The City population was estimated to be 96,511 as of January 1, 2026. The City’s boundaries span 21.4 square miles.
For additional background, and certain demographic and economic information regarding the City and the County, see APPENDIX B.
City Government
The City operates under a Council-Manager structure of government. Policy making and legislative authority are vested in the City Council, which is responsible, among other matters, for passing resolutions and ordinances, adopting the City budget, appointing committees, and hiring the City Manager. The City Council is comprised of five members, including a City-wide-elected Mayor and four Councilmembers elected by district. Each member serves a staggered 4-year term. The Mayor serves a 4-year term. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing the heads of the various departments.
The City Council of the City currently consists of the following persons:
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Name and Office
Current Term
Expires
Gary Singh, Mayor November 2026
Regina Lackey, Vice Mayor (District 2) November 2028
Charlie Halford, Councilmember (District 1) November 2028 David Breitenbucher Councilmember (District 3) November 2026 Mike Morowit, Councilmember (District 4) November 2026
Following are short biographies of the City Manager and Finance Director:
Toni Lundgren, City Manager. Ms. Lundgren is the City Manager for the City. She has 25 years of experience in municipal government, and previously worked in various cities such as Stockton, Lodi, and Escalon before joining Manteca 19 years ago. Ms. Lundgren was appointed as City Manager on a permanent basis in June 2023, after serving on an interim basis for over a year.
Matthew Boring, Finance Director. Mr. Boring is the Finance Director for the City. In that role, he oversees the finance department, including budget, accounting and audit functions.
He joined the City in September 2024 as the Assistant Finance Director and served as Interim Director from April 2025 to November 2025. Prior to that, he was Director of Finance for the City of Galt for 2.5 years, Finance and Budget Manager for Stanislaus County Community Services Agency for 1.5 years and Accounting Manager for the City of Galt for 8 years. He has a degree from California State University – Stanislaus and a Master of Business Administration (MBA) from LSU Shreveport.
Development Activity
The City has experienced substantial residential and commercial development in recent years, and there are various additional projects currently under development. Since 2016 an average of 714 single-family building permits have been issued each calendar year. As of August 2026, the City has 17 projects which are Finalized Subdivision Lots with 1,533 remaining lots, 11 projects which are Finalized Apartment Units with a total of 1098 units, 16 projects which are Entitled Subdivisions with a total of 6,472 lots and 14 projects which are Under Application (10 subdivision, 4 apartment), with a combined 3,280 total lots/units.
The City also has approximately 30 ongoing commercial construction projects comprising over 2.6 million square feet, including the Gateway Solar RV and Boat Storage (607,226 square feet), 407 Spreckels (Prologis #2) (278,300 square feet) and Manteca Crossings (201,247 square feet).
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”).
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Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on longterm debt, including lease liabilities and subscription liabilities, as well as claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Governmental capital asset acquisitions, including entering into contracts giving the City the right to use leased assets and right-to-use subscription assets, are reported as expenditures in governmental funds. Proceeds of governmental long-term debt and acquisitions under financing through leases are reported as other financing sources.
Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include taxes, grants, entitlements, and donations.
On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. In addition, contributions from state and federal agencies, developers and others are recorded as revenue.
The City may fund programs with a combination of cost-reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenditures. The City’s policy is to first apply restricted resources to such programs, followed by general revenues if necessary.
Certain indirect costs are included in program expenses reported for individual functions and activities.
Those revenues susceptible to accrual are intergovernmental revenues, use of money and property revenue, charges for services and fines and penalties. Sales taxes collected and held by the State at year-end on behalf of the City also are recognized as revenue.
Expenditures are also generally recognized under the modified accrual basis of accounting. An exception to this rule is principal and interest on long-term debt, which is not recognized by debt service funds until it is due. Financial resources usually are appropriated in funds responsible for repaying debt for transfer to a debt service fund in the period in which maturing debt principal and interest must be paid. Thus, the liability is recognized by the fund responsible for paying the debt, not the debt service fund.
The City Council employs, at the beginning of each Fiscal Year, an independent certified public accounting firm which, at such time or times as specified by the City Council, at least annually, at such other times as such firm shall determine, examines the books, records, inventories and reports of all officers and employees who receive, control, handle or disburse public funds and of all such other officers, employees or departments as the City Council may direct. As soon as practicable after the end of the Fiscal Year, a final audit and report is submitted by such firm to the City Council and a copy of the financial statements as of the close of the Fiscal Year is published.
For additional details, see APPENDIX A.
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General Fund, the Budget Process and Information
General Fund. The General Fund is the primary operating fund for the City. It finances essential services such as public safety, parks and recreation, community development, and administrative functions. Revenues in the General Fund are derived primarily from sales taxes, property taxes, other taxes, fees and charges for services.
Measure Q, a voter-approved local sales tax, provides a separate, locally controlled source of funding for public safety, roadway and infrastructure improvements, parks and recreation, technology and other community priorities. Fiscal Year 2025-26 represented the first full Fiscal Year of Measure Q collections. Measure Q revenues are accounted for in a separate fund and are not included as General Fund revenues in the Budget, although they support services and capital projects that might otherwise require General Fund resources. Measure Q revenues are consolidated with General Fund revenues in the City’s audited financials. See “Sales and Use Taxes – City of Manteca Measure Q (0.75%)”.
Fiscal Year Budget Process. The City operates on a Fiscal Year basis that begins on July 1 of each year and ends on June 30 of the following year. The annual budget adopted by the City Council provides for the general operation of the City. Development of the City’s annual budget is a process which generally begins each winter and continues until the budget is adopted by the City Council in June.
As part of the annual budget process, the City prepares five-year financial forecasts for its major funds. These forecasts evaluate projected revenues, expenditures, fund balances, reserves, debt obligations and other financial trends and are intended to assist the City in identifying longer-term financial pressures and evaluating the sustainability of current services and planned expenditures. The City also prepares a five-year Capital Improvement Program (the “CIP”), which identifies proposed investments in infrastructure, public facilities, utilities, equipment and other capital assets. The CIP is updated annually and reflects anticipated project costs, schedules and funding sources. See “Capital Improvement Program.” Budget Administration and Reporting. The City Council approves total budgeted appropriations and any amendments to appropriations throughout the Fiscal Year. Appropriations lapse at Fiscal Year-end. The City Council generally reauthorizes appropriations for continuing projects and activities. The City Council has the legal authority to amend the budget of any fund at any time during the Fiscal Year with a majority vote, but any changes to total appropriations require formal City Council approval, unless specific authority to increase appropriations has been delegated by the City Council. The budgetary level of control (the level on which expenditures may not legally exceed appropriations) is generally at the fund level. The City Manager, or, if so designated, the Finance Director, Assistant Finance Director, or the Budget Manager) is authorized to make certain budget adjustments, such as transfers within a fund or department, and reserve appropriations, as permitted by policy or Council resolution.
Throughout the Fiscal Year, the City monitors actual revenues and expenditures against the adopted budget and provides quarterly financial information to the City Council and City staff.
The City also conducts a mid-year budget review to evaluate financial performance, update projections and recommend any adjustments necessary to maintain service levels, advance priority projects and preserve the City’s financial condition. -25-
Fiscal Year 2026-27 Adopted Budget. The adopted budget for Fiscal Year 2026-27 was approved on June 17, 2026. The adopted budget projects General Fund revenues to be approximately $87.02 million and expenditures to be approximately $84.84 million. The vast majority of these revenues come from taxes and assessments. The adopted budget includes budgeted revenues from Measure Q of approximately $15.5 million.
Financial Statements
The City’s accounting policies conform to generally accepted accounting principles and reporting standards set forth by the State Controller. The audited financial statements also conform to the principles and standards for public financial reporting established by GASB. The City’s Annual Comprehensive Financial Report (“ACFR”) for Fiscal Year 2024-25, including the City’s audited financial statements, is set forth in Appendix A. -26-
Statements of Revenues and Expenditures. The following table provides a five-year history of the City’s General Fund revenues, expenditures, and changes in fund balances for Fiscal Years 2021-22 through 2025-26. Sales tax revenues in the table below include Measure Q and exclude Measure M, which is a special tax separately accounted for outside the General Fund in the City’s Fund 320.
TABLE 1
City of Manteca
Statements of Revenues, Expenditures and Changes in General Fund Balance Fiscal Years 2021-22 through 2025-26
Audited
2021-22
Audited
2022-23
Audited
2023-24
Audited
2024-25
Estimated
2025-26
Revenues
Property taxes $21,443,545 $25,660,666 $27,637,304 $30,296,255 $33,721,957 Sales taxes(1) 18,299,132 19,091,153 19,131,748 23,129,313 34,507,927 Other taxes 11,075,340 11,323,915 11,324,601 11,930,796 8,870,628 Licenses and permits 960,888 1,049,436 1,319,650 1,902,176 1,997,368 Fines and forfeitures 468,601 442,332 422,302 618,015 1,326,896 Use of money and property (684,243) 1,018,498 1,304,252 3,005,795 1,300,695 Revenue from other agencies 1,073,083 605,140 2,151,062 533,652 961,138 Charges for current services 9,587,843 9,094,572 9,211,048 10,058,081 9,031,702 Other revenue 364,841 1,216,013 570,489 807,428 991,819 Total Revenues $62,589,030 $69,501,725 $73,072,456 $82,281,511 $92,710,130 Expenditures
Current
General government $7,932,106 $9,347,022 $11,182,703 $11,588,188 $11,954,474 Community development 90,146 - - - 279,959
Public safety 33,168,392 34,539,334 37,321,035 41,111,652 43,688,851 Library 135,760 153,898 159,214 584,431 712,370
Public works 7,225,542 7,743,314 8,989,948 9,252,956 8,950,457 Parks and recreation 1,234,042 736,556 531,630 102,796 - Nondepartmental 9,770,845 9,351,502 9,541,249 9,587,616 9,443,097 Capital outlay(2) 1,831,930 2,637,117 3,328,303 1,403,575 14,137,542 Debt service(3):
Principal 1,450 79,898 138,668 147,112 1,230,272
Interest and fiscal charges 14 1,201 1,297 11,469 113,578 Total expenditures $61,390,227 64,589,842 $71,194,047 $73,789,795 $90,510,600 Excess (deficiency) of revenues over expenditures $1,198,803 4,911,883 $1,878,409 $8,491,716 $2,199,530 Other financing sources(uses)
Proceeds from sale of property $97,262 $67,500 $385,307 $67,500 $615,373 Issuance of lease 10,474 - - 103,416 -
Issuance of SBITA - - 446,372 18,165 4,798,299
Transfers in - 53,386 - 24,640 -
Transfers (out)(4) (1,272,327) (1,581,870) (2,521,766) (1,458,394) (5,232,792) Total other financing sources $(1,164,591) $(1,460,984) $(1,690,087) $(1,244,673) $180,880 Net Change in fund balances $34,212 $3,450,899 $188,322 $7,247,043 $2,380,410 Beginning of year, as adjusted(5) $37,023,019 $37,057,231 $47,459,312 $47,647,634 $54,894,677 End of year $37,057,231 $40,508,130 $47,647,634 $54,894,677 $57,275,087 __________
Source: City; City of Manteca - Audited Financial Statements for Fiscal Years 2021-22 through 2024-25. (1) [to come]
(2) Includes the following purchases: Bed quarters building; Fire Station #3 roof repairs; Tennis Court Modular Buildings; Type 1 Fire Engine; Fire Conex training container; Radio communications infrastructure; Shasta Park improvements; Safe routes to school; multiple vehicles and outfitting’s; SCBA masks; Two Toro Mower, (3) These payments reflect accounting treatment of lease obligations, and are not debt issued or incurred by the General Fund. See “--General Fund Long-Term Indebtedness.” (4) Includes the following Transfers: to Parks $1,096,024; to Golf $1,002,909; Sewer $339,173; Streets $1,196,317; Equipment and IT $462,353,
(5) For Fiscal Year 2023-24, there were adjustments for a change within the financial reporting entity and for correction of an error, which is reflected in the difference between the end of year balance for Fiscal Year 2022-23 and the beginning of year balance for Fiscal Year 2023-24.
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Balance Sheets. The following table provides a five-year history of the City’s General Fund Balance Sheets for Fiscal Years 2021-22 through 2025-26.
TABLE 2
City of Manteca
General Fund Balance Sheets
Fiscal Years 2021-22 through 2025-26
Audited
2021-22
Audited
2022-23
Audited
2023-24
Audited
2024-25
Estimated
2025-26
Assets
Cash and investments $30,761,116 25,915,351 44,672,005 $48,601,183 $58,083,300 Restricted cash and investments 455,838 448,821 427,774 423,373 419,502 Accounts receivables 1,171,727 851,745 734,812 794,148 1,670,960 Taxes receivable 6,172,244 7,541,932 6,846,638 10,543,711 8,568,809 Interest receivable 67,269 526,001 784,721 576,874 536,208 Employee notes receivable - - 41,525 24,374 28,952
Due from other funds 1,859,230 9,203,477 6,470,680 6,407,001 - Prepaids and deposits - 80,000 4,124 4,124 17,588
Advances to other funds 1,081,780 1,081,780 1,081,780 1,081,780 1,081,780 Long-term notes receivable 607,500 540,000 472,500 405,000 337,500 Total Assets $42,176,704 $46,189,107 $61,536,559 $68,861,568 $70,744,599 Liabilities
Accounts payable $2,854,311 $4,031,599 $3,748,436 $3,425,189 $3,400,561 Contracts payable 5 5 - - -
Refundable deposits 1,183,221 880,186 882,744 912,974 949,759 Accrued liabilities 20,518 22,060 3,541,338 3,937,278 8,609,095 Unearned revenue - - 5,048,287 5,102,337 -
Total Liabilities $4,058,055 $4,933,850 $13,220,805 $13,377,778 $12,959,415 Deferred Inflow of Resources
Unavailable revenue accounts receivable $453,918 $207,127 $195,620 $184,113 $172,606 Unavailable revenue - notes receivable 607,500 540,000 472,500 405,000 337,500 Total Deferred Inflows of Resources $1,061,418 $747,127 $668,120 $589,113 $510,106 Fund Balances
Nonspendable $1,081,780 $1,161,780 $1,085,904 $1,085,904 Restricted 455,838 448,821 427,774 423,373
Assigned 26,188,105 28,411,565 30,542,921 33,357,433
Unassigned 9,331,508 10,485,964 15,591,035 20,027,967 57,275,078 Total Fund Balance $37,057,231 $40,508,130 $47,647,634 $54,894,677 $57,275,078 Total Liabilities & Fund Balance $42,176,704 $46,189,107 $61,536,559 $68,861,568 $70,744,599 _____________
Source: City; City of Manteca - Audited Financial Statements for Fiscal Years 2021-22 through 2024-25. -28-
Governmental Activities Key Revenue Components. The following table sets forth the components of the City largest category of revenues, encompassing the General Fund and funds related to other governmental activities.
TABLE 3
City of Manteca
Governmental Activities – General Revenues by Source
All Governmental Fund Types
Fiscal Years 2021-22 through 2025-26
Type of Tax or
Other Revenue
Audited
2021-22
Audited
2022-23
Audited
2023-24
Audited
2024-25
Estimated
2025-26
Taxes $60,957,368 $66,308,748 $68,203,283 $75,591,593 $87,759,397 Licenses and Permits 12,795,149 12,139,086 16,458,942 20,231,672 15,996,066 Revenue From Other Agencies 17,348,818 15,927,169 26,565,537 27,820,096 19,925,393 Use of Money and Property (3,083,699) 4,379,982 9,385,646 19,312,902 11,782,171 Charges for Services 37,963,370 33,373,777 41,833,465 49,721,056 40,417,608 Fines, Forfeits and Other Revenue 1,321,515 1,986,956 2,599,574 2,263,039 2,838,278 Total $127,302,521 $134,115,718 $165,046,447 $194,940,358 $178,718,913 ____________
Source: City; City of Manteca - Audited Financial Statements for Fiscal Years 2020-21 through 2024-25.
The following table sets forth the components of the City largest category of revenues, for the General Fund only:
TABLE 4
City of Manteca
General Fund – General Revenues by Source
Fiscal Years 2021-22 through 2025-26
Type of Tax or
Other Revenue
Audited
2021-22
Audited
2022-23
Audited
2023-24
Audited
2024-25
Estimated
2025-26
Property Tax $21,443,545 $25,660,666 $27,637,304 $30,296,255 $33,721,957 Sales Taxes(1) 18,299,132 19,091,153 19,131,748 23,129,313 34,507,927 Other Taxes(2) 11,075,340 11,323,915 11,324,601 11,930,796 8,870,628 Licenses and Permits 960,888 1,049,436 1,319,650 1,902,176 1,997,368 Revenue From Other Agencies 1,073,083 605,140 2,151,062 533,652 961,138 Use of Money and Property (684,243) 1,018,498 1,304,252 3,005,795 1,300,695 Charges for Services 9,587,843 9,094,572 9,211,048 10,058,081 9,031,702 Fines, Forfeits and Other Revenue 833,442 1,658,345 992,791 1,425,443 2,318,688 Total $62,589,030 $69,501,725 $73,072,464 $82,281,511 $92,710,130 ____________
(1) [to come]
(2) [to come]
Source: City.
Sales and Use Taxes
Overview. Sales and use taxes now represent the largest source of tax revenues to the City’s General Fund following the increased revenues attributable to Measure Q. In Fiscal Year 2025-26 sales taxes are estimated to be $34.5 million or 37.2% of General Fund revenues. Sales and use taxes can be a volatile source 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 5
City of Manteca
Taxable Transactions
Fiscal Years 2020 through 2024
(In Thousands of Dollars)
2020 2021 2022 2023 2024
Apparel Stores $38,668 $62,539 $62,144 $62,017 $66,041
General Merchandise 213,182 262,639 297,348 281,795 277,903 Food Stores 38,458 37,431 39,132 40,347 39,554
Eating and Drinking Places 131,768 177,421 196,009 202,745 212,599 Building Materials 138,684 162,761 174,245 158,037 152,366 Auto Dealers and Supplies 188,657 238,976 227,734 185,562 156,712 Service Stations 111,817 165,463 209,413 190,702 182,794 Other Retail Stores 134,618 171,905 184,931 180,448 185,247 All Other Outlets 333,889 452,350 510,963 588,088 602,731 Total $1,329,741 $1,731,485 $1,901,919 $1,889,741 $1,875,947 ____________
Source: City of Manteca - Audited Financial Statements for Fiscal Year 2024-25.
Statewide Sales Tax Law. Taxable transactions in the City are currently subject to the following sales and use tax, of which the City’s share is only a portion. The City collects a percentage of taxable sales in the City (minus certain administrative costs) pursuant to the Bradley-Burns Uniform Local Sales and Use Tax (the “Sales Tax Law”). The State collects and administers the sales tax under the Sales Tax Law, and makes distributions on taxes collected within the City, as shown in the following table. Measure Q, a 0.75% general sales tax measure for essential city services and projects, was passed by the voters of the City in November 2024, as a further additional sales tax add-on to Measure M, a 0.50% special sales tax measure passed by the voters in November 2006. Additional information on Measure Q and Measure M follows below. As of April 1, 2026, local sales tax rate in the City is 9.00%, of which the City is allocated
2.25%.
TABLE 6
City of Manteca
Sales Tax Rate as of August 1, 2026
State of California 6.00%
San Joaquin County 0.25
City of Manteca Measure Q 0.75
City of Manteca Measure M(1) 0.50
San Joaquin County Local Tax(2) 1.00
San Joaquin County District Tax(3) 0.50
Total 9.00%
____________
(1) Measure M is a special tax and not included in the General Fund for accounting purposes, to be used primarily to support police and fire personnel costs.
(2) County’s Bradley-Burns Uniform Local Sales and Use Tax. (3) Measure K, the County’s half-cent sales tax for transportation projects, which was renewed in 2006 for an additional 30 year period.
Source: California Department of Tax and Fee Administration (CDTFA).
City of Manteca Measure Q (0.75%). In November 2024, voters in the City approved Measure Q, which established an additional 0.75% sales and use tax on taxable transactions -30-
within the City. Measure Q became effective on April 1, 2025, and expires in 2045. Revenues from Measure Q are primarily intended for enhancing public services and infrastructure, including street and road maintenance. The City rolls Measure Q revenues into its General Fund for accounting purposes, and intends to use a portion of Measure Q revenues to pay the lease payments securing the Bonds. The Bonds are structured with a final maturity in 2045, coinciding with the expiration of Measure Q.
City of Manteca Measure M (0.50%). In November 2006, voters in the City approved Measure M – A Public Safety Sales Tax. Measure M is a special tax and not included in the General Fund for accounting purposes. A separate fund has been established to track the ½-cent sales tax the City receives to fund additional Public Safety Police and Fire personnel. A Councilapproved public oversight committee evaluates the expenditure plan to ensure the City adheres to the ordinance. In the adopted budget for Fiscal Year 2026-27, Measure M revenues are budgeted at approximately $10.4 million with expenditures budgeted at $11.7 million, which primarily support police and fire personnel costs, including salaries and benefits associated with maintaining existing public safety staffing levels. In the absence of Measure M revenues, some of these expenses may otherwise have been payable out of the General Fund.
Sales Tax Collection Procedures. Collection of the sales and use tax is administered by the California Department of Tax and Fee Administration (the “CDTFA”). This process was formerly administered by the State Board of Equalization. The Taxpayer Transparency and Fairness Act of 2017, which took effect July 1, 2017, restructured the State Board of Equalization and separated its functions among three separate entities: the State Board of Equalization, the CDTFA and the Office of Tax Appeals. The State Board of Equalization will continue to perform the duties assigned to it by the State Constitution, while all other duties will be transferred to the newly established CDTFA and the Office of Tax Appeals. CDTFA will handle most of the taxes and fees previously collected by the State Board of Equalization, including sales and use tax.
Under the Sales and Use Tax Law, all sales and use taxes collected by the CDTFA under a contract with any city, city and county, or county are required to be transmitted by the CDTFA to such city, city and county, or county periodically as promptly as feasible. These transmittals are required to be made at least twice in each calendar quarter.
Under its procedures, the CDTFA projects receipts of the sales and use tax on a quarterly basis and remits an advance of the receipts of the sales and use tax to the City on a monthly basis. The amount of each monthly advance is based upon the CDTFA’s quarterly projection.
During the last month of each quarter, the CDTFA adjusts the amount remitted to reflect the actual receipts of the sales and use tax for the previous quarter.
The CDTFA receives an administrative fee based on the cost of services provided by the Board to the City in administering the City’s sales tax, which is deducted from revenue generated by the sales and use tax before it is distributed to the City.
Applicability of Sales and Use Tax. Sales and use taxes are complementary taxes; when one applies, the other does not. In general, the statewide sales tax applies to gross receipts of retailers from the sale of tangible personal property in the State. The use tax is imposed on the purchase, for storage, use or other consumption in the State of tangible personal property from any retailer. The use tax generally applies to purchases of personal property from a retailer outside the State where the use will occur within the State. The sales tax is imposed upon the same transactions and items as the statewide sales tax and the statewide use tax. -31-
Certain transactions are exempt from the State sales tax, including sales of the following products:
• food products for home consumption;
• prescription medicine;
• newspapers and periodicals;
• edible livestock and their feed;
• seed and fertilizer used in raising food for human consumption; and • gas, electricity and water when delivered to consumers through mains, lines and pipes.
This is not an exhaustive list of exempt transactions. A comprehensive list can be found in the CDTFA’s Publication 61 (December 2022) entitled “Sales and Use Taxes: Exemptions and Exclusions,” which can be found on the CDTFA’s website at http://www.cdtfa.ca.gov/. The reference to this Internet website is provided for reference and convenience only. The information contained within the website may not be current, has not been reviewed by the City and is not incorporated in this Official Statement by reference.
Shopping Center Parking Lease Agreement. In Fiscal Year 2006-07, the City entered into a lease agreement to lease public parking at a local shopping center. The lease became effective in Fiscal Year 2011-12 and the City is to make annual lease payments by September 1 of each year equal to 55% of the previous Fiscal Year’s actual local sales taxes generated from the shopping center. Although the lease payments are based on the sales taxes collected, they can be made from any source of legally available funds. If the local sales taxes are insufficient in one year for the City to make the full scheduled lease payment, the shortfall carries to the next year without interest. Payments in excess of the scheduled annual lease payments are credited first to any outstanding shortfall and then against the total amount due under the lease. The total amount of lease payments to be made under the agreement is $61,704,140; however, the agreement terminates in 2047, regardless of whether this amount has been paid to the developer.
Therefore, the City has not recorded a liability for the lease, since the payments are contingent upon the collection of sales taxes. During Fiscal Year 2024-25, payments made to the developer under the agreement were $323,1713 and payments to date total $4,974,992. See Note 14 to the City’s audited financial statements for the fiscal year ending June 30, 2025.
Property Taxes
Property taxes represent the second largest source of revenues to the City’s General Fund. In Fiscal Year 2025-26 property taxes are estimated to be $33.7 million or 36.3% of General Fund Revenues. 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 limited to 1% of its assessed value and the property tax collected by this 1% County-wide rate is shared by the local agencies eligible to receive property taxes within the applicable County pursuant to applicable State law. Under Proposition 13, the 1975-76 fiscal year serves as the original base year used in determining the assessment for real -32-
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 January 1st (the lien date) each year, the Assessor must enroll either a property’s Proposition 13 value (adjusted annually for inflation by no more than 2%) or its current market value, whichever is less. When the current market value replaces the higher Proposition 13 value, the lower value is commonly referred to as a “Proposition 8 Value.” “Proposition 8 values” are temporary and, once enrolled, must be reviewed annually by the assessor until the Proposition 13 adjusted base year value is enrolled.
Levy and Collection of Property Taxes. Property taxes are levied for each fiscal year on taxable real and personal property as of the preceding January 1. For assessment and collection purposes, property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing State-assessed public utilities property and real property the taxes on which have a viable tax lien, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.” Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year, and become delinquent on December 10 and April 10, respectively.
A penalty of 10% attaches immediately to all delinquent payments. Property on the secured roll with respect to which taxes are delinquent become tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of a penalty of 1% per month to the time of redemption, plus costs and a redemption fee. If taxes are unpaid for a period of five years or more, the property is deeded to the State and may be sold at public auction.
Property taxes on the unsecured roll are due as of the January 1 lien dates and become delinquent on August 31. A 10% penalty attaches to delinquent unsecured taxes. If unsecured taxes are unpaid at 5:00 p.m. on October 31, an additional penalty of 1% attaches to them on the first day of each month until paid. The County has four ways of collecting delinquent unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a judgment in the office 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.
Property Tax Delinquencies; Teeter Plan. The Board of Supervisors of San Joaquin County has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”), as provided for in Section 4701 et seq. of the California Revenue and Taxation Code. Under the Teeter Plan, each entity levying property taxes in San Joaquin County may draw on the amount of uncollected secured taxes credited to its fund, in the -33-
same manner as if the amount credited had been collected. As a result, participating entities receive 100% of secured property taxes levied in exchange for foregoing any interest and penalties collected on delinquent taxes.
So long as the Teeter Plan remains in effect, the City’s receipt of revenues with respect to the levy of ad valorem property taxes levied in San Joaquin County will not be dependent upon actual collections of the ad valorem property taxes by each County. However, under the statute creating the Teeter Plan, a Board of Supervisors can under certain circumstances terminate the Teeter Plan in part or in its entirety with respect to the entire county and, in addition, a Board of Supervisors can terminate the Teeter Plan with respect to the City if the delinquency rate for all ad valorem property taxes levied within the City in any year exceeds 3%. In the event that the Teeter Plan were terminated, the amount of the levy of ad valorem property taxes in the City would depend upon the collections of the ad valorem property taxes and delinquency rates experienced with respect to the parcels within the City.
Historical Assessed Valuations. The following table presents the assessed valuation of taxable property in the City for the prior ten fiscal years.
TABLE 7
City of Manteca
Assessed Valuations of All Taxable Property
Fiscal Years 2017-18 through 2026-27
Fiscal
Year Local Secured Utility Unsecured Total
Percent
Change
2017-18 6,959,399,649 1,282,250 201,066,620 7,161,748,519 N/A 2018-19 7,525,817,457 1,282,250 182,031,432 7,709,131,139 7.64% 2019-20 8,281,265,261 1,282,250 175,611,641 8,458,159,152 9.72 2020-21 9,122,333,106 1,189,640 171,833,647 9,295,356,393 9.90 2021-22 9,806,459,772 1,189,640 173,837,654 9,981,487,066 7.38 2022-23 10,846,165,868 1,189,640 205,709,983 11,053,065,491 10.74 2023-24 11,943,069,680 1,189,640 240,534,813 12,184,794,133 10.24 2024-25 12,983,195,877 3,974,846 269,980,877 13,257,151,600 8.80 2025-26 14,117,411,943 3,974,846 254,710,683 14,376,097,472 8.44 2026-27 15,159,904,004 3,974,846 248,227,095 15,412,105,945 7.21 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 2026-27 secured tax roll, are listed in the table below. See “– Property Taxes” above for additional information on the levy and collection of property taxes in the City.
TABLE 8
City of Manteca
Principal Property Taxpayers (Secured Roll)
Fiscal Year 2026-27
Property Owner Primary Land Use
2026-27
Assessed
Valuation % of Total(1)
1 GWR Manteca LLC Water Park/Resort $200,008,358 1.32%
2 Centerpoint Properties Trust Industrial 168,492,697 1.11 3 Meritage Homes of California Inc. Residential Development 75,914,292 0.50 4 Compton Merger Sub LLC Warehouse 70,039,727 0.46
5 The Atherton Manteca LLC Apartments 69,971,381 0.46
6 Havelock Logistics Assets LLC Warehouse 62,049,586 0.41 7 Valencia Place Apartments LLC Apartments 57,536,652 0.38 8 Lineage Growth Logistics Inc. Cold Storage 51,922,030 0.34 9 DKS Invest Inc. Shopping Center 51,913,369 0.34
10 DRP Solaris Multistate LLC Residential Development 50,066,014 0.33 11 Paseo Apartments LLC Apartments 49,959,891 0.33
12 KB Home North Bay LLC Residential Development 49,496,414 0.33 13 Tesoro Apartments LLC Apartments 48,136,910 0.32
14 Lone Oak Manteca LLC Warehouse 47,716,702 0.31
15 1340 Dupont Court LLC Warehouse 41,876,100 0.28
16 WH Manteca 152 LLC Apartments 41,552,840 0.27
17 Orchard Valley Partners LLC Shopping Center 40,797,906 0.27 18 VFT Family Partnership Apartments 39,885,962 0.26
19 Doctors Hospital of Manteca Hospital 37,388,861 0.25 20 Jana Lynn Woodbridge Apartments LLC Apartments 36,396,611 0.24 TOTAL $1,291,122,303 8.52%
_________________________________
(1) The total City secured assessed valuation for fiscal year 2026-27 is $15,159,904,004.
Source: California Municipal Statistics, Inc.
Transient Occupancy Tax
The City levies a “hotel/motel” tax, which is also known as a transient occupancy tax (“TOT”) on short-term lodging stays in the City in the amount of 12% of the room rates charged by hotels, motels and similar establishments in the City. This revenue is included in the City’s financial statements as Miscellaneous Revenue.
In April 2018, the City entered into agreements with Great Wolf Lodge(“Developer”) to construct a destination resort project. Under the agreements, the City collects 25% of TOT, after which the City allocates the next $2 million of TOT revenues to the Developer each year. The City is reimbursed for the land purchase in the amount of $67,500 per year for a period of ten years, and deferred City fees in the amount of $450,975 per year for a period of twenty years. For the first ten years, remaining TOT is split 75% to the Developer and 25% to the City, and for the next fifteen years remaining TOT is split 50% to the Developer and 50% to the City.
The City began collecting TOT revenue related to the resort project during Fiscal Year 2022-23, and $13,018,575 has been paid to the Developer to date. As of June 30, 2025, the deferred fees due from the Developer total $7,184,206, which have been recorded as accounts receivable in the applicable governmental and enterprise funds, which will be paid as the General -35-
Fund collects the TOT revenue. In addition, the General Fund has recorded a loan receivable in the amount of $405,000 as of June 30, 2025. See Note 16 to the City’s audited financial statements for the fiscal year ending June 30, 2025.
Other Sources of Revenues
Administration and Overhead Fees. In Fiscal Year 2025-26, interdepartmental charges to various departments outside the General Fund for their estimated share of administrative, infrastructure, and operational services provided by the City totaled $___ across enterprise operations (including $___ from Water, $___from Sewer, $___ from Solid Waste, $___ from Golf, and $___ from Transit). In addition, internal service fund interdepartmental charges totaled $___.
Building Fees & Development Services. Total licenses and permits revenue within the Development Services Fund for Fiscal Year 2025-26 was $___, compared to a final budget forecast of $___. Charges for current services in this fund totaled $___, while total Development Services Fund revenues reached $___. Additionally, General Fund licenses and permits generated $___.
Franchise Taxes and Other Taxes. In Fiscal Year 2025-26, the General Fund generated $8,860,628 in other taxes (which includes franchise taxes, and utility user taxes), exceeding the final budget forecast of $___ by __%. Total government-wide other tax revenues across all funds reached $___.
Rents and Use of Money and Property. General Fund use of money and property revenue for Fiscal Year 2025-26 was $1,300,695, significantly exceeding the final budget projection of $___ due to higher prevailing interest rates. Government-wide total interest income across all funds totaled $___. General Fund facilities and real property rentals include communications site leases, cell tower sites, agricultural properties, municipal golf course facilities, and other city-owned facility and park rentals.
Licenses and Permits. This revenue category is mainly comprised of business licenses, animal licenses and other licenses and permits. Total revenues for Fiscal Year 2025-26 in this category are $1,997,368.
Relevant Fiscal Policies
General. The City has adopted a comprehensive set of fiscal policies to provide guidance for all fiscal activities and resource allocation decisions as defined in the annual budget. The policies set forth guidelines for both current activities and long-range planning. In addition, the City Council approved or adopted several other fiscal policies including:
• Investment Policy.
• Debt Management Policy.
• Reserve Policy
The following are certain highlighted aspects of the adopted policies.
City Investment Policy. The investment of the City’s funds is performed in accordance with the adopted Investment Policy, which was most recently adopted by the City Council in August 2025.
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The Investment Policy sets forth the policies and procedures that are applicable to the investment of City funds and designates eligible investments. The Investment Policy also sets forth stated objectives, including the assurance of the safety of invested funds, the maintenance of sufficient liquidity, compliance with law and the attainment of the best yield or returns on investments. Funds are invested in the following order of priority:
• Preservation of Principal (Safety);
• Liquidity; and
• Achieve a reasonable rate of return.
The City Council has delegated the authority to invest City funds to the City Treasurer and, if not appointed as City Treasurer, the Finance Director. The Investment Policy provides a number of permitted investment categories, including (1) United States Treasury Bills, Bonds and Notes, (2) Federal agency or United States government-sponsored enterprise obligations, (3) California State and local agency obligations meeting specified rating criteria, (4) LAIF, and (5) various other investments as detailed therein. The City’s investments are reported quarterly to the City Council.
For additional information relating to the Investment Policy, see Note 3 to the City’s audited financial statements for Fiscal Year 2024-25 set forth in Appendix A.
Debt Management Policy. The City’s debt management policy addresses the matters that are required by California Government Code § 8855(i), including: (i) the purposes for which debt proceeds may be used; (ii) the types of debt that may be issued; (iii) the relationship of the debt to, and integration with, the City’s capital improvement program or budget; (iv) policy goals related to the City’s planning goals and objectives; and (v) the internal control procedures which ensure that the proceeds of each debt issuance are directed to their intended use.
Reserve Policy. The City maintains a comprehensive Fund Balance and Reserve Policy designed to ensure operational continuity, establish long-term financial stabilization, mitigate risks from revenue shortfalls or unexpected expenditures, and comply with Governmental Accounting Standards Board (GASB) Statement No. 54 reporting guidelines. The City’s Fund Balance and Reserve Policy was most recently adopted in August 2026.
To guide prudent resource management, the City maintains a structured hierarchy of General Fund reserve assignments and targets:
• Fiscal Stability Reserve: Targets an unrestricted fund balance of at least 25% of annual General Fund operating expenditures (representing 90 days of cash flow). This reserve serves as "bridge financing" to absorb economic downturns, offset slower revenue growth, and cover cash flow timing needs. As of June 30, 2026, the balance in the Operating Reserve totaled approximately $20.6 million
• Pension Stabilization Reserve: Targets an assigned fund balance of at least 5% of General Fund operating expenditures. The purpose of this reserve is to mitigate the operational impact of employer contribution rate volatility, as well as to set aside funding for strategic opportunities to reduce the City’s pension liability. As of June 30, 2026, the balance in the Pension Stabilization Reserve totaled approximately $4.5 million; • ;
• Economic Development Reserve: Receives residual property tax distributions generated from former redevelopment project areas to support local economic -37-
development, affordable housing, and revitalization programs. Any amounts in excess of $2.5 million as of June 30 of each year are transferred to the General Fund Unassigned Reserve;
• Public Facilities Oversizing Reserve: Financed via designated local business license taxes on residential construction to fund central core infrastructure and public facility oversizing. As of June 30, 2026, the balance in the Public Facilities Oversizing Reserve totaled approximately $3.4 million;
• Capital Facilities Reserve: Financed with an annual contribution equal to 3% of General Fund operating expenditures each year, with a maximum reserve set at %1,500,000. This reserve serves to pre-fund major facility repairs, building systems (e.g., HVAC, roofs), and ADA compliance projects;
• Technology Reserve: Targets an amount equal to 3% of General Fund appropriations, with a maximum reserve set at $1,500,000 to pre-fund critical enterprise software, IT hardware replacements, and infrastructure upgrades.
As of June 30, 2026, the General Fund reported an unassigned fund balance of $20,027,967 (representing approximately 22% of General Fund expenditures) and a total committed General Fund Reserve balance of $33,357,433.16.
The City also maintains reserve policies for other funds, including 25% of operating expenditures for the Public Safety Sales Tax Fund (for Measure M), with a balance of approximately $2.7 million as of June 30, 2026, and 5% of operating expenditures for the Measure Q Fund, with a balance of approximately $0.4 million as of June 30, 2026.
Employee Relations
The City had 483 authorized positions at the beginning of Fiscal Year 2026-27. The City’s employees are represented by the following labor groups:
• Manteca Police Officers’ Association
• Manteca Technical and Support Services Association
• Operating Engineers Local Union No. 3
• Manteca Police Employees’ Association
• Manteca Public Safety Management Association
• Manteca Firefighters IAFF Local 1874
• Manteca Mid-Manager Association
• Unrepresented Groups:
o Confidential Employees’ Unit
o Executive Management
In the previous five years, there have not been any work stoppages by City employees.
The Operating Engineers Local Union No. 3 is currently at an impasse with the City in their ongoing contract negotiations, but the City does not expect this to result in any material impact to the General Fund.
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Employee Retirement System; CalPERS
This caption contains certain information relating to California Public Employees’ Retirement System (“CalPERS”). The information is primarily derived from information produced by CalPERS, its independent accountants and actuaries. The City has not independently verified the information provided by CalPERS and makes no representations and expresses no opinion as to the accuracy of the information provided by CalPERS.
The comprehensive annual financial reports of CalPERS are available on its Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information concerning benefits and other matters. Such information is not incorporated by reference in this Official Statement. None of the Authority, City or Underwriter can guarantee the accuracy of such information. Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or may be changed in the future. Actuarial assessments will change with the future experience of the pension plans.
The City has three defined benefit pension plans, a Miscellaneous Plan, a Safety (Police and Fire) Plan, and a Retirement Enhancement Plan. The Miscellaneous Plan is an AgentMultiple Employer Plan and the Safety Plan is a Cost-Sharing Multiple Employer Plan, both of which are administered by CalPERS. The Retirement Enhancement Plan is an Agent-Multiple Employer Plan administered by the Public Agency Retirement System (“PARS”). Benefit provisions under the Plans are established by State statute and City Ordinance. The PARS Plan is closed to new participants.
Miscellaneous Plan Benefits Provided. CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law. The Pension Reform Act of 2013 (PEPRA), Assembly Bill 340, is applicable to employees new to CalPERS and hired after December 31, 2012.
The Miscellaneous Plan provisions and benefits in effect at June 30, 2025, are summarized as follows:
Miscellaneous Plan
Classic Tier I Classic Tier II PEPRA
Hire Date Prior to Apr. 3, 2012 After Apr. 3, 2012 On or after Jan. 1, 2013 Benefit Formula 2.7% @ 55 2.0% @ 60 2.0% @ 62
Benefit Vesting Schedule 5 years service 5 years service 5 years service Benefit Payments Monthly for life Monthly for life Monthly for life Retirement Age 50 - 55 50 - 63 52 - 67
Monthly Benefits, As a % of Eligible Comp. 2.0% - 2.7% 1.092% - 2.418% 1.0% - 2.5% Required Employee Contribution Rates 8% 7% 7.75%
Required Employer Contributions Rates 11.600% 11.600% 11.600% Source: City of Manteca - Audited Financial Statements for Fiscal Year 2024-25. -39-
Beginning in fiscal year 2016, CalPERS collects employer contributions for the Plan as a percentage of payroll for the normal cost portion as noted in the rates above and as a dollar amount for contributions toward the unfunded liability (UAL). The dollar amounts are billed on a monthly basis or the City can elect a lump sum payment option. The City’s required contribution for the unfunded liability was $5,767,118 in fiscal year 2025, which was made under the lump sum prepayment option.
Employees Covered. The following employees were covered by the benefit terms for the Miscellaneous Plan as of the most recent actuarial valuation date of June 30, 2023 and the measurement date of June 30, 2024. As of June 30, 2025, the City had 325 active employees in the Miscellaneous Plan.
Employees June 30, 2023 June 30, 2024
Inactive employees or beneficiaries receiving benefits 328 339 Inactive employees entitled to but not yet receiving benefits 328 359 Active employees 308 316
Totals 964 964
Source: City of Manteca - Audited Financial Statements for Fiscal Year 2024-25.
Contributions. Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate.
Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions.
Pension Expense. For the year ended June 30, 2024, the City recognized pension expense of $11,200,599 for the Miscellaneous Plan.
Net Pension Liability. The City’s net pension liability for the Miscellaneous Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of June 30, 2024, using an annual actuarial valuation as of June 30, 2023, rolled forward to June 30, 2024 using standard update procedures. The changes in net pension liability for the Miscellaneous Plan from June 30, 2023 to June 30, 2024 are shown in the following table.
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Miscellaneous Plan
Total
Pension Liability
Plan Fiduciary
Net Position
Net Pension
Liability/(Asset)
Balance at June 30, 2023 $226,543,871 $155,073,131 $71,470,740 Changes in the Year:
Service Cost $4,645,118 -- $4,645,118
Interest on the Total Pension Liability 15,556,336 -- 15,556,336 Changes in Benefit Terms -- -- --
Changes of Assumptions -- -- --
Differences Between Actual & Expected Experience 2,155,981 -- 2,155,987 Net Plan to Plan Resource Movement -- -- --
Contributions – Employer -- 9,079,427 (9,079,427)
Contributions – Employees -- 2,152,520 (2,152,520)
Net Investment Income -- 15,025,666 (15,025,666)
Benefit Payments, Including Refunds of Employee Contr. (11,136,538) (11,136,538) -- Administrative Expense -- (126,183) 126,183
Other Misc. Income/(Expense) -- -- --
Net Changes 11,220,897 14,994,892 (3,773,995)
Balance at June 30, 2024 $237,764,768 $170,068,023 $67,696,745 Source: CalPERS GASB 68 Accounting Report.
Safety Plan Benefits Provided. The City’s Safety Plan is part of the public agency costsharing multiple-employer defined benefit pension plan (“PERF C”), which is administered by CalPERS. PERF C consists of a miscellaneous pool and a safety pool (also referred to as “risk pools”), which are comprised of individual employer miscellaneous and safety rate plans, respectively. Individual employers may sponsor more than one miscellaneous and safety rate plan. The employer participates in one cost-sharing multiple-employer defined benefit pension plan regardless of the number of rate plans the employer sponsors. The City sponsors five rate plans (two fire and three police) within the safety risk pool.
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service.
The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law. The Pension Reform Act of 2013 (PEPRA), Assembly Bill 340, is applicable to employees new to CalPERS and hired after December 31, 2012.
The Safety Plan provisions and benefits in effect at June 30, 2025, are summarized as follows:
Safety Plan
First Tier Second Tier PEPRA
Hire Date Prior to Apr. 3, 2012 After Apr. 3, 2012 On or after Jan. 1, 2013 Benefit Formula 3% @ 50 3% @ 55 2.7% @ 57
Benefit Vesting Schedule 5 years service 5 years service 5 years service Benefit Payments Monthly for life Monthly for life Monthly for life Retirement Age 50 50 - 55 50 - 57
Monthly Benefits, As a % of Eligible Comp. 3% 2.4% - 3.0% 2.0% - 2.7% Required Employee Contribution Rates 9% 9% 14.50%
Required Employer Contributions Rates 29.090% 24.790% 14.720% Required UAL Contribution $3,669,888 $15,426 $18,439
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Safety
First Tier PEPRA
Hire Date Prior to/After Apr. 3, 2012 On or after Jan. 1, 2013 Benefit Formula 3% @ 55 2.7% @ 57
Benefit Vesting Schedule 5 years service 5 years service Benefit Payments Monthly for life Monthly for life
Retirement Age 50 - 55 50 - 57
Monthly Benefits, As a % of Eligible Comp. 2.4% - 3.0% 2.0% - 2.7% Required Employee Contribution Rates 9% 14.50%
Required Employer Contributions Rates 26.290% 14.720%
Required UAL Contribution $2,483,544 $10,520
Source: City of Manteca - Audited Financial Statements for Fiscal Year 2024-25.
Beginning in fiscal year 2016, CalPERS collects employer contributions for the costsharing plan as a percentage of payroll for the normal cost portion as noted in the rates above and as a dollar amount for contributions toward the unfunded liability (UAL) as noted in the table above. The dollar amounts are billed on a monthly basis or can be paid in a lump sum at a reduced amount. The City elected to make the lump sum contributions and the required contribution for the unfunded liability was $6,197,817 in fiscal year 2025.
Contributions. Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate.
Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions. For the year ended June 30, 2025, the contributions to the Safety Plan were $9,663,435.
Pension Expense. For the year ended June 30, 2025, the City recognized pension expense of $14,987,682 for the Safety Plan.
Changes in Net Pension Liability are subject to various assumptions and are sensitive to changes in the discount rate for the Miscellaneous Plan, Safety Plan, among other things. For additional details on the Miscellaneous Plan, Safety Plan and related matters, see Note 10 to the City’s audited financial statements for the fiscal year ending June 30, 2025, attached hereto as Appendix A.
Potential Impacts on Future Required Contributions. The CalPERS Board of Administration has adjusted and may in the future further adjust certain assumptions used in the CalPERS actuarial valuations, which adjustments may increase the City’s required contributions to CalPERS in future years. Accordingly, the City cannot provide any assurances that the City’s required contributions to CalPERS in future years will not significantly increase (or otherwise vary) from any past or current projected levels of contributions.
Change in Assumptions/Discount Rate. The prescribed discount rate assumption, adopted by the CalPERS board on November 17, 2021, is 6.80% compounded annually (net of investment and administrative expenses) as of June 30, 2023. On April 16, 2024, the CalPERS board took action to modify the Funding Risk Mitigation Policy to remove the automatic change -42-
to the discount rate when the investment return exceeds various thresholds. Rather than an automatic change to the discount rate, a CalPERS board discussion would be placed on the calendar.
Investment Performance. CalPERS earnings reports for Fiscal Years 2016 through 2026 report investment gains of approximately 0.6%, 11.2%, 8.6%, 6.7%, 4.7%, 21.3%, -6.1%, 5.8%,
9.3%, 11.6% and 14.8% respectively. Future earnings performance may increase or decrease future contribution rates for plan participants, including the City.
The CalPERS website contains the most recent actuarial valuation reports for the City’s Miscellaneous Plan and Safety Plan and other information that concerns benefits and other matters. The Comprehensive Annual financial reports of CalPERS are also available on CalPERS’ Internet website at www.calpers.ca.gov. The textual reference to such Internet website is provided for convenience only. None of the information on such Internet website is incorporated by reference herein. Neither the City nor the Underwriter guarantee the accuracy of such information.
See “APPENDIX A – AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING JUNE 30, 2025– Note (10)” for additional information regarding the Plans, including a description of the actuarial methods and assumptions used to measure the City’s net pension liability as of the June 30, 2023 measurement date.
PARS Plan. Effective October 1, 2001, the City contracted with the Public Agency Retirement System (PARS), to sponsor a supplemental Retirement Enhancement Plan created in accordance with IRC Section 401(a), which is a qualified agent multiple-employer defined benefit pension plan covering all eligible employees of the City. All eligible employees covered by this plan are fully vested. As of the June 30, 2024 measurement date, there were 8 employees (all inactive) covered by the PARS Plan. The City contributed $338,000 to the PARS Plan for the fiscal year ended June 30, 2025. The PARS Plan is closed to new participants.
Deferred Compensation Plan. City employees may defer a portion of their compensation under a City sponsored Deferred Compensation Plan created in accordance with Internal Revenue Code Section 457. Under this plan, participants are not taxed on the deferred portion of their compensation until distributed to them; distributions may be made only at termination, retirement, death or in an emergency defined by the plan. The laws governing deferred compensation plan assets require plan assets to be held by a trust for the exclusive benefit of plan participants and their beneficiaries. Since the assets held under these plans are not the City’s property and are not subject to City control, they are excluded from the City’s financial statements.
Other Post-Employment Benefits (OPEB). The City’s Other Post Employment Benefit Plan is a single-employer defined benefit OPEB plan. No assets are accumulated in a trust that meets the criteria in paragraph 4 of Governmental Accounting Standards Board Statement No.
75. The City makes contributions towards its OPEB liability into a Section 115 trust. The City provides postretirement health care benefits to employees who retire in good standing from the City after attaining the age of 50 and to certain employees who retire due to disability. As of June 30, 2025, there were 228 participants receiving these health care benefits.
Benefits Provided. In order to qualify for postemployment medical and dental benefits an employee must retire from the City and maintain enrollment in one of the City’s eligible health plans. In addition, there are eligibility rules and contribution requirements defined in the Memorandum of Understanding (MOU) with each employee group. For all retirements effective -43-
as of January 1, 2012 through June 30, 2012, the City-paid contribution for retiree health will be equal to the Minimum Employer Contribution (MEC) as set by CALPERS. For retirements effective on or prior to December 31, 2011, the benefit is set at the amount the employee or retiree was receiving as of December 31, 2011 for health benefits. For the year ended June 30, 2025, the City’s contributions to the Plan were $2,105,834.
Employees Covered by Benefit Terms. Membership in the plan consisted of the following at the measurement date of June 30, 2024:
Employees June 30, 2024
Active Employees 438
Inactive employees or beneficiaries currently receiving benefit payments 227 Inactive employees or beneficiaries entitled but not yet receiving benefit payments 81 Total 746
Total OPEB Liability. For the year ended June 30, 2025, the City recognized total OPEB liability of $37,410,931.
OPEB Expense. For the year ended June 30, 2025, the City recognized OPEB expense of $2,365,474.
See APPENDIX A, Note 11 for additional details regarding the City’s pension and other employee benefits, including as relates to its CalPERS Plan, PARS Plan and OPEB.
Direct and Overlapping Bonded Debt
Set forth on the following page is a direct and overlapping debt report for the City (the “Debt Report”) prepared by California Municipal Statistics, Inc. The Debt Report is included for general information purposes only. The City has not reviewed the Debt Report for completeness or accuracy and makes no representations in connection therewith. The Debt Report generally includes long term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term obligations generally are not payable from revenues of the City (except as indicated) nor are they necessarily obligations secured by land within the City. In many cases long-term obligations issued by a public agency are payable from the general fund or other revenues of such public agency. Neither the City, the Authority nor the Underwriter has verified this information.
TABLE 9
City of Manteca
Direct and Overlapping Debt Statement
As of October 1, 2026
2026-27 Assessed Valuation: $15,412,105,945
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 10/1/26 San Joaquin Delta Community College District 10.487% $11,339,593 San Joaquin Delta Community College District School Facilities Improvement District No. 1 11.126 17,136,265 Yosemite Community College District 0.296 582,643
Manteca Unified School District 53.368 189,599,789
Ripon Unified School District 6.758 2,077,747
Manteca Unified School District Community Facilities District No. 1989-2 79.601 7,741,197 Manteca Unified School District Community Facilities District No. 2018-5 100.000 39,630,000 Manteca Unified School District Community Facilities District No. 2000-3 100.000 42,785,000 City of Manteca Community Facilities District No. 2023-1, I.A. No. 1 100.000 5,615,000 City of Manteca Community Facilities District No. 2023-1, I.A. No. 2 100.000 10,000,000 City of Manteca Community Facilities District No. 2023-1, I.A. No. 3 100.000 5,505,000 -44-
City of Manteca Community Facilities District No. 2025-1 100.000 5,870,000 California Statewide Communities Development Authority CFD No. 2012-2 100.000 5,345,000 California Statewide Communities Development Authority CFD No. 2024-16 100.000 6,580,000 California Statewide Communities Development Authority CFD No. 2025-17 100.000 4,920,000 California Statewide Communities Development Authority CFD No. 2025-18 100.000 6,435,000 California Statewide Communities Development Authority CFD No. 2026-16 100.000 5,295,000 California Statewide Communities Development Authority CFD No. 2026-17 100.000 2,945,000 California Statewide Communities Development Authority 1915 Act Bonds 100.000 74,550,430 Reclamation District No. 17 Assessment District 14.306 2,579,372 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $446,532,036
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
San Joaquin County Certificates of Participation 11.704% $4,315,265 Manteca Unified School District General Fund Obligations 53.368 4,263,036 Ripon Unified School District General Fund Obligations 6.758 805,317 City of Manteca General Fund Obligations 100.000 0(1)
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $9,383,618 OVERLAPPING TAX INCREMENT DEBT (Successor Agency): 100.000 % $69,820,000 COMBINED TOTAL DEBT $525,735,654(2)
Ratios to 2026-27 Assessed Valuation:
Total Overlapping Tax and Assessment Debt .....................................2.90% Total Direct Debt................................................................................0.00% Combined Total Debt...........................................................................3.41% Ratios to Redevelopment Successor Agency Incremental Valuation ($3,862,158,895):
Total Overlapping Tax Increment Debt................................................1.81% _____________________________
(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.
General Fund Long-Term Indebtedness
There are currently no long-term debt obligations payable from the City’s General Fund.
See Footnote 1 to Table 1 above.
Capital Improvement Program
The Fiscal Year 2027–2031 Capital Improvement Program (“CIP”) serves as the City’s long-term planning framework for investing in essential infrastructure, public facilities, equipment, technology, and community assets. The CIP reflects a strategic multi-year approach intended to support public safety, infrastructure reliability, operational sustainability, economic development, and quality of life throughout the community.
The CIP includes significant planned investment in roadway improvements, water and sewer infrastructure, public safety facilities, parks and recreation amenities, technology systems, and other strategic capital priorities. Project timing and implementation are evaluated based on funding availability, operational capacity, regulatory requirements, and long-term financial sustainability. The CIP includes funding requests of $105 million for Fiscal Year 2026-27, $141 million for Fiscal Year 2027-28, $86 million for Fiscal Year 2028-29, $74 million for Fiscal Year 2029-30 and $22 million for Fiscal Year 2030-31.
The City anticipates that it may issue or incur debt to finance approximately $____ of project costs for a community center or pool.
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CONSTITUTIONAL AND STATUTORY
LIMITATIONS ON TAXES AND APPROPRIATIONS
The constitutional and statutory provisions discussed in this section have the potential to affect the ability of the City to levy taxes and spend tax proceeds for operating and other purposes.
Article XIIIA of the State Constitution
Section 1(a) of Article XIIIA of the State Constitution limits the maximum ad valorem tax on real property to 1% of full cash value (as defined in Section 2 of Article XIIIA), to be collected by counties and apportioned according to law. Section 1(b) of Article XIIIA provides that the 1% limitation does not apply to ad valorem taxes to pay interest or redemption charges on (1) indebtedness approved by the voters prior to June 1, 1978 or (2) any bonded indebtedness for the acquisition or improvement of real property approved on or after June 1, 1978, by two thirds of the votes cast by the voters voting on the Proposition. Section 2 of Article XIIIA defines “full cash value” to mean “the county assessor’s valuation of real property as shown on the 1975–76 tax bill under ‘full cash value’ or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or to reflect a reduction in the consumer price index or comparable data for the area under taxing jurisdiction or reduced in the event of declining property value caused by substantial damage, destruction or other factors. Legislation enacted by the State Legislature to implement Article XIIIA provides that notwithstanding any other law, local agencies may not levy any ad valorem property tax except to pay debt service on indebtedness approved by the voters as described above.
The voters of the State subsequently approved various measures that further amended Article XIIIA. On November 3, 2020, State voters approved a constitutional amendment entitled Property Tax Transfers, Exemptions and Revenue for Wildfire Agencies and Counties Amendment (“Proposition 19”), which: (i) expanded special rules that give property tax savings to homeowners that are over the age of 55, severely disabled, or whose property has been impacted by a natural disaster or contamination, when they buy a different home; (ii) narrowed existing special rules for inherited properties; and (iii) broadened the scope of legal entity ownership changes that trigger reassessment of properties. The City cannot make any assurance as to what effect the implementation of Proposition 19 will have on assessed valuation of real property in the City. Other amendments, as modified by Proposition 19, permit persons over 55, severely disabled homeowners, and victims of a wildfire or other natural disaster to transfer the assessed value of their existing residence to a replacement residence of any value located anywhere in the State, up to three times, with an upward adjustment to the transferred value if the replacement residence has a greater full cash value than the original.
In the November 1990 election, the voters approved the amendment of Article XIIIA to permit the State Legislature to exclude from the definition of “newly constructed” the construction or installation of seismic retrofitting improvements or improvements utilizing earthquake hazard mitigation technologies constructed or installed in existing buildings after November 6, 1990.
Article XIIIA has also been amended to permit reduction of the “full cash value” base in the event of declining property values caused by damage, destruction or other factors, provided that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster.
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Article XIIIB of the State Constitution
Article XIIIB of the State Constitution limits the annual appropriations of the State and of any city, county, school district, special district, authority or other political subdivision of the State to the appropriations limit for the prior Fiscal Year, as adjusted for changes in the cost of living, population and services for which the fiscal responsibility is shifted to or from the governmental entity. The “base year” for establishing this appropriations limit is the 1978–79 Fiscal Year. The appropriations limit may also be adjusted in emergency circumstances, subject to limitations.
Appropriations of an entity of local government subject to Article XIIIB generally include authorizations to expend during a Fiscal Year the “proceeds of taxes” levied by or for the entity, exclusive of certain State subventions, refunds of taxes, and benefit payments from retirement, unemployment insurance and disability insurance funds. “Proceeds of taxes” include but are not limited to, all tax revenues, certain State subventions received by the local governmental entity and the proceeds to the local governmental entity from (1) regulatory licenses, user charges, and user fees (to the extent that such proceeds exceed the cost of providing the service or regulation) and (2) the investment of tax revenues. Article XIIIB provides that if a governmental entity’s revenues in any year exceed the amounts permitted to be spent, the excess must be returned by revising tax rates or fee schedules over the subsequent two fiscal years.
Article XIIIB does not limit the appropriation of moneys to pay debt service on indebtedness existing or authorized as of January 1, 1979, or for bonded indebtedness approved thereafter by a vote of the electors of the issuing entity at an election held for that purpose, or appropriations for certain other limited purposes. Furthermore, Article XIIIB was amended in 1990 to exclude from the appropriations limit “all qualified capital outlay projects, as defined by the Legislature” from proceeds of taxes. The Legislature has defined “qualified capital outlay project” to mean a fixed asset (including land and construction) with a useful life of 10 or more years and a value which equals or exceeds $100,000. As a result of this amendment, the appropriations to pay the lease payments on the City’s long term General Fund lease obligations are generally excluded from the City’s appropriations limit. The City has never exceeded its appropriations limit.
Articles XIIIC and XIIID of the State Constitution
General. On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 adds Articles XIIIC and XIIID to the California Constitution and contains a number of interrelated provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges.
On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. The amendments to Article XIIIC define “taxes” that are subject to voter approval as “any levy, charge, or exaction of any kind imposed by a local government,” with certain exceptions.
Taxes. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City (“general taxes”) -47-
require a majority vote; taxes for specific purposes (“special taxes”), even if deposited in the City’s General Fund, require a two-thirds vote.
Property-Related Fees and Charges. Article XIIID also adds several provisions making it generally more difficult for local agencies to levy and maintain property-related fees, charges, and assessments for municipal services and programs. These provisions include, among other things, (i) a prohibition against assessments which exceed the reasonable cost of the proportional special benefit conferred on a parcel, (ii) a requirement that assessments must confer a “special benefit,” as defined in Article XIIID, over and above any general benefits conferred, (iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party, and (iv) a prohibition against fees and charges which are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners.
Reduction or Repeal of Taxes, Assessments, Fees and Charges. Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund. If such repeal or reduction occurs, the City’s ability to pay debt service on the Bonds could be adversely affected.
Burden of Proof. Article XIIIC provides that local government “bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.” Similarly, Article XIIID provides that in “any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance” with Article XIIID.
Judicial Interpretation of Proposition 218. The interpretation and application of Articles XIIIC and XIIID will ultimately be determined by the courts, and it is not possible at this time to predict with certainty the outcome of such determination.
Impact on City’s General Fund. The City does not believe that any material source of General Fund revenue is subject to challenge under Proposition 218 or Proposition 26.
The approval requirements of Articles XIIIC and XIIID reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase the taxes, fees, charges or taxes in the future that it may need to meet increased expenditure needs.
Proposition 1A; Proposition 22
Proposition 1A. Proposition 1A, proposed by the Legislature in connection with the State’s Fiscal Year 2004-05 Budget, approved by the voters in November 2004 and generally effective in Fiscal Year 2006-07, provided that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibited the State from shifting to schools or community colleges any share of property tax revenues allocated to -48-
local governments for any Fiscal Year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county had to be approved by two-thirds of both houses of the Legislature.
Proposition 22. Proposition 22, entitled “The Local Taxpayer, Public Safety and Transportation Protection Act,” was approved by the voters of the State in November 2010.
Proposition 22 eliminates or reduces the State’s authority to (i) temporarily shift property taxes from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for State-mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues.
Unitary Property
AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from most utility property assessed by the State Board of Equalization (“Unitary Property”), commencing with the 1988–89 Fiscal Year, are allocated as follows: (i) each jurisdiction will receive up to 102% of its prior year State–assessed revenue; and (ii) if county–wide revenues generated from Unitary Property are less than the previous year’s revenues or greater than 102% of the previous year’s revenues, each jurisdiction will share the burden of the shortfall or benefit of the excess revenues by a specified formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas.
The provisions of AB 454 do not constitute an elimination of the assessment of any State– assessed properties nor a revision of the methods of assessing utilities by the State Board of Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all jurisdictions in a county.
Possible Future Initiatives
Article XIIIA, Article XIIIB and Propositions 218, 26, IA and 22 were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time, other initiative measures could be adopted, further affecting the City’s revenues or its ability to expend revenues.
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BOND OWNERS’ RISKS
The following describes certain special considerations and risk factors affecting the payment of and security for the Bonds. The following discussion is not meant to be an exhaustive list of the risks associated with the purchase of any Bonds and does not necessarily reflect the relative importance of the various risks. Potential investors in the Bonds are advised to consider the following special factors along with all other information in this Official Statement in evaluating the Bonds. There can be no assurance that other considerations will not materialize in the future.
No Pledge of Taxes
General. The obligation of the City to pay the Lease Payments and Additional Rental Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay Lease Payments and Additional Rental Payments does not constitute a debt or indebtedness of the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.
The City is currently liable on other obligations payable from general revenues, which are described above under “CITY FINANCIAL INFORMATION – General Fund Long-Term Indebtedness.”
Limitations on Taxes and Fees. Certain taxes, assessments, fees and charges presently imposed by the City could be subject to the voter approval requirements of Article XIIIC and Article XIIID of the State Constitution. Based upon the outcome of an election by the voters, such fees, charges, assessments and taxes might no longer be permitted to be imposed, or may be reduced or eliminated and new taxes, assessments fees and charges may not be approved.
The City has assessed the potential impact on its financial condition of the provisions of Article XIIIC and Article XIIID of the State Constitution respecting the imposition and increase of taxes, fees, charges and assessments and does not believe that an election by the voters to reduce or eliminate the imposition of certain existing fees, charges, assessments and taxes would substantially affect its financial condition. However, the City believes that if the initiative power was exercised so that all local taxes, assessments, fees and charges that may be subject to Article XIIIC and Article XIIID of the State Constitution are eliminated or substantially reduced, the financial condition of the City, including its General Fund, could be materially adversely affected.
Although the City does not currently anticipate that the provisions of Article XIIIC and Article XIIID of the State Constitution would adversely affect its ability to pay Lease Payments and its other obligations payable from the General Fund, no assurance can be given regarding the ultimate interpretation or effect of Article XIIIC and Article XIIID of the State Constitution on the City’s finances. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.”
Abatement
In the event of loss or substantial interference in the use and possession by the City of all or any portion of the Leased Property caused by material damage, title defect, destruction to or condemnation of the Leased Property, Lease Payments will be subject to abatement. See “SECURITY FOR THE BONDS – Abatement” herein. In the event that such component of the Leased Property, if damaged or destroyed by an insured casualty, could not be replaced during the period of in which proceeds of rental interruption insurance, if any, will be available in lieu of -50-
Lease Payments, or in the event that casualty insurance proceeds or condemnation proceeds are insufficient to provide for complete repair or replacement of such component of the Leased Property or prepayment of the Bonds, there could be insufficient funds to make payments to Owners in full. It is not possible to predict all circumstances under which abatement of rental may occur. In addition, there is no statute, case or other law specifying how such an abatement of rental should be measured. For example, it is not clear whether fair rental value is established as of commencement of the Lease or at the time of the abatement. If the latter, it may be that the value of the Leased Property is substantially higher or lower than its value at the time of issuance of the Bonds. Abatement, therefore, could have an uncertain and material adverse effect on the security for and payment of the Bonds.
If damage, destruction, title defect or eminent domain proceedings with respect to the Leased Property results in abatement of the Lease Payments related to such Leased Property and if such abated Lease Payments, if any, together with moneys from rental interruption or use and occupancy insurance, if any (in the event of any insured loss due to damage or destruction), and eminent domain proceeds, if any, are insufficient to make all payments of principal and interest with respect to the Bonds during the period that the Leased Property is being replaced, repaired or reconstructed, then all or a portion of such payments of principal and interest may not be made. Reduction in Lease Payments due to abatement as provided in the Lease does not constitute a default under the Lease, and no remedy is available to the Bond Owners under the Lease or the Indenture for nonpayment under such circumstances. See APPENDIX C – “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Lease – Abatement of Rental.” Limited Recourse on Default; No Right to Foreclose or Sell; No Acceleration of Lease Payments
Failure by the City to make Lease Payments, or failure to pay Additional Rental Payments constitute Events of Default under the Lease. Failure to observe and perform any other terms, covenants or conditions contained in the Lease or in the Indenture for a period of 30 days after written notice of such failure and request that it be remedied has been given to the City by the Authority or the Trustee, also constitute Events of Default under the Lease. Such events permit the Trustee or the Authority to pursue any and all remedies available. During the term of the Lease, the Authority has the right to re-enter and re-lease the Leased Property or terminate the Lease and re-lease all or any portion of the Leased Property. However, notwithstanding anything in the Lease or in the Indenture to the contrary, there is no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments that are not then in default to be immediately due and payable.
Following an Event of Default, the Authority or the Trustee may elect either to terminate the Lease and seek to collect damages from the City or to maintain the Lease in effect and seek to collect the Lease Payments as they become due. See “APPENDIX C – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Lease” herein.
In an Event of Default, there is no remedy of acceleration of the total Lease Payments due over the term of the Lease and neither the Authority nor the Trustee are empowered to sell the Leased Property. The City will be liable only for Lease Payments on an annual basis and, in an Event of Default, the Authority or Trustee would be required to seek a separate judgment each year for that year’s defaulted Lease Payments. Any such suit for money damages would be subject to limitations on legal remedies against municipalities in California, including a limitation on enforcement of judgments against funds of a Fiscal Year other than the Fiscal Year in which the Lease Payments were due and against funds needed to serve the public welfare and interest. -51-
Additional Obligations of the City
General. The City is permitted to enter into other obligations which constitute additional charges against its revenues without the consent of Owners of the Bonds, and may in the future be subject to liabilities payable from the general fund (some of which are described below). To the extent that additional obligations are incurred by (or imposed upon) the City, the funds available to pay Lease Payments may be decreased.
The Lease Payments and other payments due under the Lease (including payment of costs of repair and maintenance of the Leased Property, taxes and other governmental charges levied against the Leased Property) are payable from funds lawfully available to the City. If the amounts that the City is obligated to pay in a fiscal year exceed the City’s revenues for such year, the City may choose to make some payments rather than making other payments, including Lease Payments and Additional Rental Payments, based on the perceived needs of the City. The same result could occur if, because of California Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues or is required to expend available revenues to preserve the public health, safety and welfare.
Litigation. The City is subject to litigation arising in the normal course of business, and no assurance can be provided regarding the financial impact of any future litigation against the City. See “LITIGATION.”
CalPERS Obligations. Many cities and other local agencies in the State have been faced with increased payments due to CalPERS in recent years. The City, like many other cities and local agencies in the State, is responsible for payments to CalPERS for its share of employee pension costs. Amounts owed to CalPERS for pension costs have increased in recent years and are expected to continue to increase, as CalPERS implements changes to its discount rate and other methodologies for calculating pension costs. See “THE CITY – Pension Plans” for additional information on CalPERS.
Sales Taxes
Sales tax revenues are the biggest source of revenue to the City. Sales tax revenues are based upon the gross receipts of retail sales of tangible goods and products by retailers with taxable transactions in the City, which could be impacted by a variety of factors.
For example, before final maturity of the Bonds, the City may enter into an economic recession. In times of economic recession, the gross receipts of retailers often decline, and such a decline would cause the sales tax revenues received by the City to also decline.
In addition, changes or amendments in the laws applicable to the City’s receipt of sales tax revenues, whether implemented by State legislative action or voter initiative, could have an adverse effect on sales tax revenues received by the City. For example, many categories of transactions are exempt from the statewide sales tax, and additional categories could be added in the future. Currently, most sales of food products for human consumption are exempt; this exemption, however, does not apply to liquor or to restaurant meals. The rate of sales tax levied on taxable transactions in the City or the fee charged by the CDTFA for administering the City’s sales tax could also be changed.
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Property Taxes
Property taxes are a significant source of General Fund revenue to the City. Certain risks associated with property tax revenues follow.
Levy and Collection. The City does not have any independent power to levy and collect property taxes. Any reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the City’s property tax revenues, and accordingly, could have an adverse impact on the ability of the City to make Lease Payments. Likewise, delinquencies in the payment of property taxes could have an adverse effect on the City’s ability to pay principal of and interest on the Bonds when due.
Reduction in Inflationary Rate. Article XIIIA of the California Constitution provides that the full cash value base of real property used in determining assessed value may be adjusted from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data.
See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.” Such measure is computed on a calendar year basis. Because Article XIIIA limits inflationary assessed value adjustments to the lesser of the actual inflationary rate or 2%, there have been years in which the assessed values were adjusted by actual inflationary rates, which were less than 2%. Since Article XIIIA was approved, the annual adjustment for inflation has fallen below the 2% limitation a limited number of times.
The City is unable to predict if any adjustments to the full cash value base of real property within the City, whether an increase or a reduction, will be realized in the future.
Appeals of Assessed Values. There are two types of appeals of assessed values that could adversely impact property tax revenues:
Proposition 8 Appeals. Most of the appeals that might be filed in the City would be based on Section 51 of the Revenue and Taxation Code, which requires that for each lien date the value of real property must be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value.
Under California law, property owners may apply for a reduction of their property tax assessment by filing a written application with the appropriate county board of equalization or assessment appeals board. In most cases, the appeal is filed because the applicant believes that present market conditions (such as residential home prices) cause the property to be worth less than its current assessed value. These market-driven appeals are known as Proposition 8 appeals.
Any reduction in the assessment ultimately granted as a Proposition 8 appeal applies to the year for which application is made and during which the written application was filed. These reductions are often temporary and are adjusted back to their original values when market conditions improve. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA.
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Base Year Appeals. A second type of assessment appeal is called a base year appeal, where the property owners challenge the original (basis) value of their property.
Appeals for reduction in the “base year” value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter. The base year is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date.
No assurance can be given that property tax appeals in the future will not significantly reduce the City’s property tax revenues.
Natural Calamities
General. Natural disasters, such as seismic events, flooding, landslides or wildfires, could affect economic activity in the City, and could have a negative impact on City finances. There can be no assurance that the occurrence of any natural calamity would not cause substantial interference to and costs for the City or impact the Leased Property.
Seismic. Like much of the State, the City is located in a seismically active area of California. If there were to be an occurrence of severe seismic activity in the area of the City, such an occurrence may adversely affect economic activity in the City, and could have a negative impact on City finances. The City could be at risk from strong ground motion and secondary effects related to a seismic event, including ground failure and seismically induced flooding caused by dam failures.
Droughts. California is subject to droughts from time-to-time. Although California is not currently in a drought, drought may reoccur in the future, and have a material adverse impact on the economic activity in the City, which in turn could have a material adverse impact on the City’s General Fund finances.
Wildfires and Fire Insurance. In the past, drought conditions in the State (see “– Natural Calamities – Droughts” above) have led to increased risk of wildfire. In particular, certain electrical operators in the State have seen their distribution/transmission lines cause billions of dollars in property damage and the loss of lives. In 2023, as in several prior years, for example, devastating wildfires burned in various communities in California, causing wide-spread damage. In 2025, communities in Los Angeles County, including Pacific Palisades, Malibu and Altadena, experienced widespread devastation from wildfires causing losses of life, thousands of burned homes, and billions of dollars in property damage in areas that were previously not considered to have a high risk of fire damage. Although not located in a very high fire hazard severity zone, no assurance can be given that wildfires will not erupt in the City and damage or destroy property in the City, and negatively impact development of property in the City, or negatively impact the willingness and ability to pay property taxes in the future.
On January 16, 2025, Governor Gavin Newsom issued Executive Order N-10-25 (the “Governor’s Order”) which canceled penalties, costs and interest on overdue property taxes within certain zip codes affected by the Palisades Fire and the Altadena Fire during calendar year 2025. This type of action can cause a delay in the payment of taxes by property owners in areas affected by the Governor’s Order. In the event of a major fire or other natural disaster affecting the City, a similar order affecting the City could materially adversely impact the revenues available to the City to pay Lease Payments.
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Climate Change. City finances may be negatively impacted by climate change. Local impacts of climate change are not definitive, but parcels in the City could experience changes to local and regional weather patterns; increased risk of flooding from severe weather events including heavy rain, hail and thunderstorms; and water restrictions resulting from future drought conditions. See, for example, the discussions above regarding wildfires and droughts.
Pandemic Diseases
In recent years, the COVID-19 pandemic impacted governments, businesses and people in a manner having negative effects on global and local economies. In response to the pandemic, the City took actions to activate its emergency operations center, temporarily closed all nonessential City services, introduced teleworking as and where appropriate, implemented daily screening of all employees, and abided by all state and federal guidelines and orders.
Although the COVID-19 pandemic is now officially over, the City cannot predict the impact that COVID-19 or another future pandemic or other health event may have on the City’s General Fund. There can be no assurances that the spread of future pandemics or other health events, such as declining business and travel activity, will not materially adversely impact the financial condition of the City and the City’s General Fund. In addition, the City may experience increased personnel costs and/or reduced revenues due to any such situation and the related impact on economic and other activity in and around the City.
Cyber Security
The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. As a recipient and provider of personal, private or other sensitive electronic information, the City is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks. No assurance can be given that the City’s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City or the administration of the Bonds.
The City is also reliant on other entities and service providers in connection with the administration of the Bonds, including without limitation the County tax collector for the levy and collection of property taxes, the Trustee, and the dissemination agent. No assurance can be given that the City and/or the other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.
Limitations on Remedies Available to Bond Owners
The ability of the City to comply with its covenants under the Lease may be adversely affected by actions and events outside of the control of the City, and may be adversely affected by actions taken (or not taken) by voters, property owners, taxpayers or payers of assessments, fees and charges. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS” above. Furthermore, any remedies available to the owners of the Bonds upon the occurrence of an event of default under the Lease or the Indenture are in many respects dependent upon judicial actions, which are often subject to discretion and delay and could prove both expensive and time consuming to obtain.
In addition to the limitations on Bondowner remedies contained in the Lease and the Indenture, the rights and obligations under the Bonds, the Lease and the Indenture may be subject -55-
to the following: the United States Bankruptcy Code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect; usual equity principles which may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the Federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the Owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation or modification of their rights.
The opinion to be delivered by Bond Counsel, concurrently with the issuance of the Bonds, will include a qualification that the rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture, the Lease and the Site Lease may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in accordance with principles of equity or otherwise in appropriate cases. See “APPENDIX E — FORM OF OPINION OF BOND COUNSEL.”
Secondary Market for Bonds
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that any Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then-prevailing circumstances. Such prices could be substantially different from the original purchase price.
TAX MATTERS
Federal Tax Status. In the opinion of Jones Hall LLP, as Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. Interest on the Bonds may be subject to the corporate alternative minimum tax.
The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Tax Code”) that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has made certain representations and covenants in order to comply with each such requirement.
Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the Bonds.
Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public at which a Bond is sold is less than the amount payable at maturity thereof, then such -56-
difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “bond premium” for purposes of federal income taxes and State of California personal income taxes.
Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public.
Under the Tax Code, bond premium is amortized on an annual basis over the term of the Bond (said term being the shorter of the Bond’s maturity date or its call date). The amount of bond premium amortized each year reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of bond premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Bonds.
California Tax Status. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes.
Other Tax Considerations. Current and future legislative proposals, if enacted into law, clarification of the Tax Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Tax Code or court decisions may also affect the market price for, or marketability of, the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, such legislation would apply to bonds issued prior to enactment.
The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of such opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the Bonds, or as to the consequences of owning or receiving interest on the Bonds, as of any future date. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. -57-
Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Other than as expressly described above, Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the Bonds, the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds.
CERTAIN LEGAL MATTERS
Jones Hall LLP, as Bond Counsel, will render an opinion with respect to the validity of the Bonds, the form of which is set forth in “APPENDIX E – FORM OF OPINION OF BOND COUNSEL.” Certain legal matters will also be passed upon for the City and the Authority by Jones Hall LLP, as Disclosure Counsel. Certain legal matters will be passed upon for the City by the City Attorney, and for the Underwriter by its counsel, Stradling Yocca Carlson & Rauth LLP.
LITIGATION
To the best knowledge of the City, there is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending and notice of which has been served on and received by the City or, to the knowledge of the City, threatened against or affecting the City or the assets, properties or operations of the City which, if determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Lease, the Site Lease or the Indenture, or upon the financial condition, assets, properties or operations of the City, and the City is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially adversely affect the consummation of the transactions contemplated by the Lease, the Site Lease or the Indenture, or the financial conditions, assets, properties or operations of the City, including but not limited to the payment and performance of the City’s obligations under the Lease.
RATING
S&P Global Ratings (“S&P”), a division of Standard & Poor’s Financial Services LLC, has assigned its municipal bond rating of “___” on the Bonds. This rating reflects only the views of S&P, and an explanation of the significance of this rating, and any outlook assigned to or associated with this 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 this rating will continue for any given period of time or that this 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 may have an adverse effect on the market price or marketability of the Bonds. -58-
CONTINUING DISCLOSURE
The City will covenant for the benefit of owners of the Bonds to provide certain financial information and operating data by not later than nine months after the end of the City’s fiscal year, or April 1, of each year (based on the City’s current fiscal year-end of June 30), commencing April 1, 2027, with the report for the 2025-26 fiscal year (the “Annual Report”) and to provide notices of the occurrence of certain listed events.
These covenants have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5), as amended (the “Rule”). The specific nature of the information to be contained in the Annual Report or the notices of listed events by the City is set forth in “APPENDIX D – Form of Continuing Disclosure Certificate.” A review of the City’s compliance with prior continuing disclosure undertakings in the last five years indicates that the City and its related entities did not comply in all material respects with such undertakings in the last five years. The City failed to file or timely file certain audited financial statements and annual reports or to include certain operating data in the annual reports.
More specifically, the City failed to file in a timely manner its audited financial statements and annual reports for Fiscal Years 2020-21 through 2023-24 with respect to certain water bonds and sewer bonds. The audited financial statements for Fiscal Years 2020-21 through 2023-24, were filed approximately 4 months to 2.5 years after their respective filing due dates. All required information for the annual reports for Fiscal Year 2021-22 through Fiscal Year 2023-24 for certain sewer bonds were filed approximately 4 months to 2.5 years after their respective filing due dates.
The annual reports for Fiscal Year 2021-22 through Fiscal Year 2023-24 were not filed for certain water bonds and the annual reports for Fiscal Year 2020-21 were not timely filed for certain water bonds, sewer bonds and tax allocation bonds. The annual reports filed for Fiscal Year 2020-21 did not include all required operating data. Most of such data was subsequently included in other filings. Failure to file notices were not timely filed in some instances of late filings. The City has subsequently filed all required information with respect to the applicable water bonds, sewer bonds and tax allocation bonds.
The foregoing late filings were a result, in large part, due to the City failing to complete its audited financial statements for the applicable fiscal years in a timely manner, and as a result of changes in City staff responsible for continuing disclosure compliance. The City has endeavored to update its continuing disclosure filings, and there is new City staff (including the current Finance Director) that is responsible for overseeing the City’s continuing disclosure compliance going forward.
The City timely filed its audited financial statements and annual reports for Fiscal Year 2024-25 which were due on or before the date of this Official Statement, and anticipates completing its audited financial statements and filing its annual reports in a timely manner going forward.
The City has retained Urban Futures, Inc. to serve as dissemination agent with respect to the filings to be made with respect to the Bonds and certain other undertakings under the Rule.
NBS serves as dissemination agent for the City’s community facilities district (CFD) bonds.
MUNICIPAL ADVISOR
-59-
The City and the Authority have retained Urban Futures, Inc., of Irvine, California, as municipal advisor (the “Municipal Advisor”) in connection with the offering of the Bonds. All financial and other information presented in this Official Statement has been provided by the City and the Authority from their records, except for information expressly attributed to other sources.
The Municipal Advisor takes no responsibility for the accuracy or completeness of the data provided by the City, Authority or others and has not undertaken to make an independent verification and does not assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. The fee of the Municipal Advisor is contingent upon the successful closing of the Bonds.
UNDERWRITING
Ramirez & Co., Inc., as underwriter (the “Underwriter”), has entered into a Bond Purchase Agreement with the Authority and the City under which it will purchase the Bonds at a purchase price of $________________, which is equal to the par amount of the Bonds, [plus a purchase premium][minus a purchase discount] of $__________, less an Underwriter’s discount of $____________.
The Underwriter will be obligated to take and pay for all of the Bonds if any are taken. The Underwriter intends to offer the Bonds to the public at the offering prices set forth on the inside cover page of this Official Statement. After the initial public offering, the public offering price may be varied from time to time by the Underwriter.
CONTINGENT FEES
In connection with the issuance of the Bonds, fees payable to the following professionals involved in the offering are contingent upon the issuance and delivery of the Bonds: Jones Hall LLP, as Bond Counsel and Disclosure Counsel; Urban Futures, Inc., as municipal advisor; Stradling Yocca Carlson & Rauth LLP, as counsel to the Underwriter; and U.S. Bank Trust Company, National Association, as Trustee.
EXECUTION
The execution of this Official Statement and its delivery have been authorized by the Board of the Authority and the City Council of the City.
MANTECA FINANCING AUTHORITY
By:
Executive Director
CITY OF MANTECA
By:
City Manager
A-1
APPENDIX A
AUDITED FINANCIAL STATEMENTS
FOR FISCAL YEAR ENDING JUNE 30, 2025
APPENDIX B
GENERAL INFORMATION ABOUT THE CITY OF MANTECA
AND THE COUNTY OF SAN JOAQUIN
The following information concerning the City of Manteca (the “City”) and the San Joaquin County (the “County”) is included only for the purpose of supplying general information regarding the area of the City and County. The Bonds are not a debt of the City, the County, the State of California (the “State”) or any of its political subdivisions, and neither the City, the County, the State nor any of its political subdivisions is liable therefor.
General
The City. The City is centrally located in the State, in the San Joaquin Valley between the San Francisco Bay Area and the Sierra Nevada foothills. The City is located one hour east of the San Francisco Bay Area and one hour south of Sacramento, the State capital. Four freeways provide access to the City: U.S. Interstate 5 which links the Pacific states from Mexico to Canada; U.S. Interstate 205, which connects U.S. Interstate 5 to U.S. Interstate 580; State Route 120, which is the primary east-west corridor in the City; and State Route 99, which provides a north-south alternative to U.S. Interstate 5 for most of California’s Central Valley.
The County. The County was established by an act of the State Legislature on February 18, 1850, as one of California’s original 27 counties. The area of the County is 1,448 square miles, and it is the fifteenth largest county in the State, as measured by population. The County seat is the City of Stockton, with an area of 55.1 square miles.
Population
The following table lists population estimates for the cities within the County, including the City, for the last five calendar years, as of January 1, 2026.
CITY OF MANTECA AND SAN JOAQUIN COUNTY
Population Estimates
Calendar Years 2022 through 2026, as of January 1
Area 2022 2023 2024 2025 2026
Escalon 7,392 7,307 7,400 7,359 7,304
Lathrop 31,267 34,673 36,971 38,791 40,942
Lodi 67,012 66,910 68,047 68,468 68,513
Manteca 87,174 89,067 92,521 94,951 96,511
Mountain House -- -- -- 29,048 30,687
Ripon 16,037 15,864 16,071 15,996 15,873
Stockton 320,079 317,486 322,799 323,077 322,436
Tracy 94,859 95,328 97,391 98,776 99,705
Balance of County 162,486 161,726 163,698 138,490 138,154 County Total 786,306 788,361 804,898 814,956 820,125
Source: State Department of Finance estimates.
B-2
Employment and Industry
The unemployment rate in the County was 6.2% in June 2026, up from a revised 5.6% in May 2026, and below the year-ago estimate of 6.8%. This compares with an unadjusted unemployment rate of 5.2% for the State and 4.4% for the nation during the same period.
The County is part of the Stockton-Lodi Metropolitan Statistical Area (the “MSA”). Set forth below is data from 2021 through 2025, reflecting the MSA's civilian labor force, employment, and unemployment.
STOCKTON-LODI MSA
(San Joaquin County)
Annual Average Civilian Labor Force, Employment and Unemployment, Employment by Industry
(March 2025 Benchmark)
2021 2022 2023 2024 2025
Civilian Labor Force (1) 350,300 357,500 364,200 370,400 378,700 Employment 321,200 339,000 342,400 346,400 353,400
Unemployment 29,100 18,500 21,800 24,000 25,300
Unemployment Rate 8.3% 5.2% 6.0% 6.5% 6.7%
Wage and Salary Employment: (2)
Agriculture 14,200 13,800 14,500 14,200 13,300
Mining and Logging 100 0 0 0 0
Construction 13,900 14,900 14,000 14,600 14,300
Manufacturing 21,300 23,000 23,500 23,400 22,800
Wholesale Trade 10,800 11,600 12,300 12,500 12,500
Retail Trade 26,200 27,000 27,100 26,800 26,300
Transportation, Warehousing and Utilities 43,000 48,100 47,300 47,000 48,100 Information 1,200 1,200 1,100 1,000 900
Financial Activities 8,000 8,200 7,900 7,700 7,800
Professional and Business Services 22,500 24,100 23,100 22,900 23,100 Educational and Health Services 38,000 39,700 42,000 45,000 48,100 Leisure and Hospitality 21,300 24,300 24,500 24,300 24,700 Other Services 7,300 7,900 8,100 8,300 8,300
Federal Government 3,100 3,100 3,000 3,000 3,000
State Government 6,000 5,500 5,100 5,100 5,300
Local Government 32,900 34,000 35,300 37,400 40,700
Total All Industries (3) 269,800 286,200 288,700 293,200 299,200 (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 add to totals due to rounding.
Source: State of California Employment Development Department.
B-3
Principal Employers
The following table lists the principal employers within the City as of June 30, 2025.
CITY OF MANTECA
Principal Employers for Fiscal Year Ended June 30, 2025 Employer
Number of
Employees
Manteca Unified School District 687
Amazon.com Services, LLC 683
GWR Manteca, LLC. 453
Doctors Hospital of Manteca 385
Kaiser Foundation Hospital 314
Wal-Mart Store #1840 307
Costco Wholesale #1031 307
Bass Pro Outdoor World 300
Sunvalley Smoked Meats Inc 270
Lassen Canyon Nursery 250
Eckert Cold Storage 250
Karma Inc., (DBA Manteca Care & Rehab) 217
Guardian Care and Rehab Center 217
Home Depot #1006 205
Protech Staffing Services, Inc. 200
Golden Brands - Manteca 200
Harvest Crossing Post Acute 194
Give Every Child a Chance 183
American Modular System 180
Total 5,802
Source: City of Manteca, Annual Comprehensive Financial Report, Fiscal Year Ended June 30, 2025.
B-4
Major Employers
The major employers in the County as of August 2026 are shown below in alphabetical order without regard to the number of employees.
SAN JOAQUIN COUNTY
Major Employers
As of August 2026
Employer Name Location Industry
Amazon Fulfillment Ctr Stockton Mail Order Fulfillment Service Blue Shield of California Lodi Insurance
Dameron Hospital Stockton Hospitals
Foster Care Svc Stockton Foster Care
Leprino Foods Co Tracy Cheese Processors (mfrs)
Lodi Health Home Health Agency Lodi Home Health Service M & R Co Lodi Fruits & Vegetables-Growers & Shippers
Medline Tracy Physicians & Surgeons Equip & Supls-Whls
Morada Produce Stockton Ranches
NA Chaderjian Youth Stockton State Govt-Correctional Institutions O-G Packing & Cold Storage Co Stockton Fruits & Vegetables-Growers & Shippers Prima Frutta Packing Inc Linden Fruit & Produce Packers Safeway Distribution Ctr Tracy Distribution Centers (whls) San Joaquin County CA Pubc Stockton Government Offices-County San Joaquin County Human Svc Stockton Government Offices-County San Joaquin County Sch Stockton School Districts
San Joaquin General Hospital French Camp Hospitals
San Joaquin Sheriff's Office French Camp Government Offices-County Sjgov Stockton Government Offices-County
St Joseph's Regional Health Stockton Health Services
Stockton Police Dept Stockton Police Departments
Stockton Unified Sch Dist Stockton Facilities Management Stockton Unified School Dist Stockton Schools
Walmart Supercenter Stockton Department Stores
Waste Management-Lodi Transfer Lodi Solid Waste Collection Source: California State Employment Development Department, extracted from the America's Labor Market Information System (ALMIS) Employer Database, 2026 2nd Edition.
B-5
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 estimated total effective buying income and the estimated median household effective buying income for the City, the County, the State and the United States for the period 2023 through 2027.
CITY OF MANTECA, SAN JOAQUIN COUNTY,
THE STATE OF CALIFORNIA AND THE UNITED STATES
Estimated Effective Buying Income
As of January 1, 2023 through 2027
Year Area
Total Effective
Buying Income
(000s’ Omitted)
Median Household
Effective Buying
Income
2023 City of Manteca $2,569,884 $74,006
San Joaquin County 22,168,255 68,912
California 1,461,799,662 77,175
United States 11,454,846,397 65,326
2024 City of Manteca $2,935,024 $82,407
San Joaquin County 24,445,200 76,847
California 1,510,708,521 80,973
United States 11,987,185,826 67,876
2025 City of Manteca $3,075,409 $82,106
San Joaquin County 24,833,658 77,622
California 1,557,429,767 82,725
United States 12,525,577,707 69,687
2026 City of Manteca $3,561,247 $90,034
San Joaquin County 28,892,491 85,982
California 1,730,654,738 90,403
United States 13,932,177,817 75,433
2027 City of Manteca $3,731,227 $93,357
San Joaquin County 30,155,151 88,857
California 1,777,381,182 91,733
United States 14,288,950,563 76,807
Source: Claritas, LLC.
B-6
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 reported during calendar year 2025 in the City were reported to be $1,588,516,368, a 2.74% decrease from the total taxable sales of $1,633,305,931 reported during calendar year 2024.
CITY OF MANTECA
Taxable Transactions
(Dollars in Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2021 967 $1,267,680 1,618 $1,496,447
2022 987 1,367,662 1,646 1,654,549
2023 976 1,373,379 1,624 1,643,649
2024 991 1,367,633 1,676 1,633,306
2025 1,035 1,352,036 1,726 1,588,516
Source: State of California, Board of Equalization.
Total taxable sales reported during calendar year 2025 in the County were reported to be $25,379,956,351, a 2.82% increase over the total taxable sales of $24,682,772,928 reported during calendar year 2024.
SAN JOAQUIN COUNTY
Taxable Transactions
(Dollars in Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number of
Permits
Taxable
Transactions
2021 10,642 $15,100,195 17,665 $22,244,519
2022 10,884 15,342,203 18,100 23,625,470
2023 10,632 15,584,742 17,666 23,507,449
2024 10,831 16,862,302 18,099 24,682,773
2025 10,956 17,348,763 18,405 25,379,956
Source: State of California, Board of Equalization.
B-7
Construction Activity
The following tables show a five-year summary of the valuation of building permits issued in the City and the County.
CITY OF MANTECA
Total Building Permit Valuations
(Dollars in Thousands)
2020 2021 2022 2023 2024
Permit Valuation:
New Single-family $199,291 $248,446 $390,392 $285,962 $511,357 New Multi-family 0 13,590 15,727 0 82,853
Res. Alterations/Additions 2,128 3,569 9,421 7,111 3,296 Total Residential 201,420 265,605 415,541 293,073 597,506 New Commercial 12,953 30,464 12,321 53,813 38,144
New Industrial 0 0 0 0 0
New Other 12,307 15,979 15,255 13,107 26,342
Com. Alterations/Additions 1,975 2,028 5,404 11,439 7,366 Total Nonresidential 27,236 48,472 32,982 78,360 71,852 New Dwelling Units:
Single Family 609 729 821 690 1,167
Multiple Family 0 20 106 0 197
TOTAL 609 749 927 690 1,364
Source: Construction Industry Research Board, Building Permit Summary.
SAN JOAQUIN COUNTY
Total Building Permit Valuations
(Dollars in Thousands)
2020 2021 2022 2023 2024
Permit Valuation:
New Single-family $870,859 $1,179,358 $1,281,631 $851,675 $1,487,467 New Multi-family 38,411 69,775 88,457 75,802 141,958
Res. Alterations/Additions 40,144 108,647 182,338 55,378 59,932 Total Residential 949,415 1,357,780 1,552,427 982,856 1,689,357 New Commercial 255,761 272,617 641,696 199,112 19,481
New Industrial 534,199 43,401 249,274 13,931 229,056
New Other 33,112 58,264 107,863 76,524 69,094
Com. Alterations/Additions 135,285 272,064 450,649 193,151 283,920 Total Nonresidential 958,358 646,347 1,449,483 482,719 601,551 New Dwelling Units
Single Family 2,843 3,665 3,168 2,147 3,309
Multiple Family 245 178 338 605 384
TOTAL 3,088 3,843 3,506 2,752 3,693
Source: Construction Industry Research Board, Building Permit Summary.
APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF
PRINCIPAL LEGAL DOCUMENTS
APPENDIX D
FORM OF CONTINUING DISCLOSURE CERTIFICATE
$__________________
MANTECA FINANCING AUTHORITY
2026 Lease Revenue Bonds
This Continuing Disclosure Certificate (this “Disclosure Certificate”) is executed and delivered by the City of Manteca (the “City”) in connection with the issuance by the Authority of the bonds captioned above (the “Bonds”). The Bonds are being issued under an Indenture of Trust dated as of November 1, 2026 (the “Indenture”), by and between the Authority and U.S.
Bank Trust Company, National Association, as trustee (the “Trustee”). The City hereby covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2- 12(b)(5), as amended.
Section 2. Definitions. In addition to the definitions set forth above and in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Annual Report Date” means nine months after the end of the City’s fiscal year, or April 1, of each year (based on the City’s current fiscal year-end of June 30). “Dissemination Agent” means Urban Futures, Inc., or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.
“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. “Official Statement” means the final official statement, executed by the City and the Authority in connection with the issuance of the Bonds. “Participating Underwriter” means Ramirez & Co., Inc., the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. “Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
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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, 2027, with the report for Fiscal Year 2025-26, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). The City shall provide a written certificate with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
(b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) in a timely manner to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A. (c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.
Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following:
(a) Audited Financial Statements of the City prepared in accordance with Generally Accepted Accounting Principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) To the extent not contained in the audited financial statements filed pursuant to the preceding clause (a), the Annual Report shall contain information showing:
(i) the principal amount of Bonds outstanding and the balance in each fund under the Indenture, as of June 30 preceding the Annual Report; and D-3
(ii) updates to the substance of the information contained in the following tables in the Official Statement:
(1) Table 1 – Statements of Revenues, Expenditures and
Changes in General Fund Balance
(2) Table 2 – General Fund Balance Sheets
(3) Table 7 – Assessed Valuations of All Taxable Property (4) Table 8 – Principal Property Taxpayers (Secured Roll) (c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
(d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security. (7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person.
(13) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material.
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(14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.
(15) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material (for definition of “financial obligation,” see clause (f)).
(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties (for definition of “financial obligation,” see clause (f)). (b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsection (a)(8) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Indenture.
(c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), (a)(14), and (a)(15) of this Section 5 contain the qualifier “if material” and that subparagraph (a)(6) also contains the qualifier “material” with respect to certain notices, determinations or other events affecting the tax status of the Bonds.
The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event’s occurrence is material for purposes of U.S. federal securities law. Whenever the City obtains knowledge of the occurrence of any of these Listed Events, the City will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the City will cause a notice to be filed as set forth in paragraph (b) above. (d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City. (e) For purposes of Section 5(a)(15) and (16), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule.
Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.
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Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent.
Any Dissemination Agent may resign by providing 30 days’ written notice to the City.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.
A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Listed Event under Section 5(b).
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other D-6
information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 11. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond owners or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. (b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.
Section 15. Governing Law. This Disclosure Certificate shall be governed by the laws of the state of California.
Date: ________________, 2026
CITY OF MANTECA
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By
Name:_____________
Title:_____________
ACCEPTED AND AGREED:
_______________________,
As Dissemination Agent
By
Authorized Representative
APPENDIX E
FORM OF OPINION OF BOND COUNSEL
[Closing Date]
Board of Directors
Manteca Financing Authority
1001 W Center Street
Manteca, California 95337
OPINION: $____________Manteca Financing Authority
2026 Lease Revenue Bonds
Ladies and Gentlemen:
We have acted as bond counsel to the Manteca Financing Authority (the “Authority”) in connection with the issuance by the Authority of the above-referenced bonds (the “Bonds”). In such capacity, we have examined such law and such certified proceedings, certifications, and other documents as we have deemed necessary to render this opinion.
The Bonds are issued pursuant to (i) Article 4 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, commencing with Section 6584 of said Code (the “Bond Law”), and (ii) the Indenture of Trust (the “Indenture”), dated as of November 1, 2026, by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), which were approved by a resolution adopted by the Board of Directors of the Authority on October 20, 2026 (the “Authority Resolution”). Under the Indenture, the Authority has pledged certain revenues (the “Revenues”) for the payment of principal and interest on the Bonds when due, including primarily lease payments to be made by the City of Manteca (the “City”) pursuant to the Lease Agreement, dated as of November 1, 2026, between the City and the Authority (the “Lease”), which was approved by a resolution adopted by the City Council of the City on October [20], 2026 (the “City Resolution”).
Regarding questions of fact material to our opinion, we have relied on representations of the Authority contained in the Indenture and the City contained in the Lease, and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.
Based on the foregoing, we are of the opinion that, under existing law:
1. The Authority is a duly created and validly existing joint exercise of powers authority with the power to adopt the Authority Resolution, to enter into the Indenture, and to perform the agreements on its part contained therein, and to issue the Bonds.
2. The City is a general law city and municipal corporation duly organized and existing under the Constitution and laws of the State of California, with the power to adopt the City Resolution, to enter into the Lease, and to perform the agreements on its part contained therein.
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3. The Indenture has been duly authorized, executed and delivered by the Authority, and constitutes a valid and binding obligation of the Authority, enforceable against the Authority.
4. The Lease has been duly authorized, executed and delivered by the Authority and the City, and constitutes a valid and binding obligation of the Authority and the City, enforceable against the Authority and the City.
5. The Indenture creates a valid lien on the Revenues and other funds pledged by the Indenture for the security of the Bonds.
6. The Bonds have been duly authorized and executed by the Authority, and are valid and binding limited obligations of the Authority, payable solely from the Revenues and other funds provided therefor in the Indenture.
7. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax.
The opinions set forth in the preceding sentence are subject to the condition that the Authority and the City comply with all requirements of the Internal Revenue Code of 1986, as amended, relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The Authority and the City have made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the Bonds.
8. Interest on the Bonds is exempt from personal income taxation imposed by the State of California.
We express no opinion regarding any other tax consequences arising with respect to the ownership, sale or disposition of, or the amount, accrual or receipt of interest on, the Bonds.
The rights of the owners of the Bonds and the enforceability of the Indenture are limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally, and by equitable principles, whether considered at law or in equity.
This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. Moreover, our opinions are not a guarantee of a particular result, and are not binding on the Internal Revenue Service or any court; rather, our opinions represent our legal judgment based upon our review of existing law that we deem relevant to such opinions, and any assumptions expressed herein, and in reliance upon the representations, and covenants referenced above. Our engagement with respect to this matter has terminated as of the date hereof.
Respectfully submitted,
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APPENDIX F
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.
Neither the issuer of the Bonds (the “Issuer”) nor the trustee appointed with respect to the Bonds (the “Agent”) take any responsibility for the information contained in this Appendix.
No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company (“DTC”) will act as securities depository for the securities (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.
2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates.
Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing F-2
Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information contained on this Internet site is not incorporated herein by reference.
3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting F-3
rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.
10. Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.
11. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.