Section 7.02 Unclaimed Moneys. Anything herein to the contrary notwithstanding, and subject to applicable escheatment laws of the State, any moneys held by the Trustee in trust for the payment and discharge of any of the Bonds which remain unclaimed for three years after the date when such Bonds have become due and payable, either at maturity or by call for redemption, if such moneys are held by the Trustee at said date, or for three years after the date of deposit of such moneys if deposited with the Trustee after the date when such Bonds became due and payable, shall be paid by the Trustee to the Borrower as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the holders of such Bonds shall loo k only to the Borrower for the payment thereof; provided, however, that before being required to make any such payment to the Borrower, the Trustee shall cause to be mailed to the holders of such Bonds, at their addresses shown on the Bond Register, notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall be not less than 30 nor more than 60 days after the date of mailing such notice, the balance of such moneys then unclaimed will be paid to the Borrower; and provided further, that the provisions of this Section shall not apply to the extent disposition of any moneys so held b y the Trustee shall be governed by any laws applicable to the Trustee or the Issuer dealing with the disposition of such unclaimed property.
Section 7.03 No Release of MBS. Except as provided in this Section, the Trustee shall not release and discharge the MBS from the lien of this Indenture until the principal of, premium, if any, and interest on the Bonds shall have been paid or duly provided for under this Indenture. The Trustee shall not release or assign the MBS to any person other than a successor Trustee so long as Fannie Mae shall not be in default thereunder.
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Section 7.04 Transfer of MBS . While the Bonds are Outstanding, the Trustee shall maintain the MBS in book-entry form in the name of the Trustee and may not sell, assign, transfer or otherwise dispose of the MBS.
Section 7.05 Issuance of Additional Obligations. The Issuer shall not hereafter create or permit the creation of or issue any obligations or create any additional indebtedness secured by a charge and lien on the Trust Estate, consisting of MBS Revenues and other moneys, securities, funds and property pledged by this Indenture, other than the Bonds authorized under Section 2.01.
ARTICLE VIII
DEFAULT PROVISIONS AND REMEDIES
OF TRUSTEE AND BONDHOLDERS
Section 8.01 Events of Default. Each of the following shall constitute an Event of Default under this Indenture:
(a) On and after the MBS Delivery Date, failure by Fannie Mae to pay principal, interest or premium, if any, due under the MBS (upon such failure, the Trustee shall notify Fannie Mae not later than the next Business Day (all such notices to be promptly confirm ed in writing) and require the failure to be remedied);
(b) Failure to pay the principal, interest or premium, if any, on the Bonds when the same shall become due; or
(c) Default in the observance or performance of any other covenant, agreement or condition on the part of the Issuer in this Indenture and the continuation of such default for a period of 90 days after written notice to the Issuer from the Trustee or the registered owners of not less than 75% in aggregate principal amount of the Bonds Outstanding at such time specifying such default and requiring the same to be remedied.
The Trustee will promptly notify in writing the Issuer, the Bondholders, the Lender and Fannie Mae after an Authorized Officer obtains actual knowledge or receives written notice of the occurrence of an Event of Default or an event which would become an Event of Default with the passage of time or the giving of notice, or both.
Section 8.02 Acceleration; Rescission of Acceleration.
(a) Upon the occurrence of an Event of Default under Section 8.01(a) or, prior to the delivery of the MBS, Section 8.01(b) hereof, the Trustee may, and upon the written request of the holders of not less than seventy -five percent (75%) in aggregate principal a mount of the Bonds Outstanding, shall declare (and shall deliver written notice of such declaration to the Issuer, the Lender, the Borrower and Fannie Mae) the principal of all Bonds Outstanding, premium, if any, and the interest accrued thereon immediately due and payable. (b) An Event of Default under Section 8.01(b) hereof following the delivery of the MBS or under Section 8.01(c) hereof shall not give rise to an acceleration pursuant to Section 8.02(a), provided, however, that following such an Event of Default, the holder(s) of one hundred percent (100%) of the Bonds Outstanding may direct the Trustee in writing to transfer the MBS to it or its
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designee, in which case, the Trustee shall transfer and deliver to such requesting Beneficial Owner the Trustee’s beneficial ownership interest in the MBS. The transfer described in this Section 8.02(b) shall take effect as set forth in, and shall be governed by, the following terms. (i) The Trustee shall transfer and deliver to such requesting owner the Trustee’s beneficial ownership interest in the MBS promptly following (i) delivery to the Trustee (via DTC withdrawal or of the Bonds being exchanged, and (i i) payment by the requesting owner of the Trustee’s exchange fee ($1,000) with respect to such Bonds; (ii) The MBS will be in book-entry form;
(iii) Transfers of the MBS will be made in accordance with current market practices, including the applicable provisions of the SIFMA’s Uniform Practices for the Clearance and Settlement of Mortgage Backed Securities and Other Related Securities; (iv) Upon receipt of the Bonds from or on behalf of the requesting Beneficial Owner, the Trustee will promptly cancel all Bonds, which will not be reissued; (v) The MBS delivered in such an exchange will not be exchangeable for Bonds;
(vi) The MBS delivered in such an exchange will also be subject to any applicable disclosure requirements concerning MBSs that have been issued in connection with the multifamily mortgage lending program of a governmental housing finance agency and financed by tax- exempt obligations; and
(vii) Interest on the MBS is not excludable from gross income for federal income tax purposes. Owners of Bonds should consult their own tax advisors concerning that and other tax consequences of any exchange of the Bonds for the MBS. (c) The acceleration of the Bonds will not constitute a default under, or by itself cause the acceleration of, the MBS. If at any time after the Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of the money due shall have been obtained or entered, the Issuer, the Borrower, or Fannie Mae, as applicable, shall pay to or deposit with the Trustee a sum sufficient to pay all principal of the Bonds then due (other than solely by reason of such declaration) and all unpaid installments of interest (if any) on all the Bonds then due with interest at the rate borne by the Bonds on such overdue principal and (to the extent legally enforceable) on such overdue installments of interest, and the reasonable expenses of the Trustee shall have been made good or cured or adequate provisions shall have been made therefor, and all other defaults hereunder have been made good or cured or waived in writing by the holders of a majority in principal amount of the Bonds Outstanding, th en and in every case, the Trustee on behalf of the holders of all the Bonds shall rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent Event of Default, nor shall it impair or exhaust any right or power consequent thereon.
Section 8.03 Other Remedies; Rights of Bondholders. Subject to Section 8.13, upon the happening and continuance of an Event of Default the Trustee in its own name and as trustee of an express trust, on behalf and for the benefit and protection of the holders of all Bonds, may also proceed to protect and enforce any rights of the Trustee and, to the full extent that the holders of such Bonds
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themselves might do, the rights of such Bondholders under the laws of the State or under this Indenture by such of the following remedies as the Trustee shall deem most effectual to protect and enforce such rights:
(a) By pursuing any available remedies under the Financing Agreement, the Regulatory Agreement or the MBS;
(b) Upon an Event of Default under Section 8.01(a) only, by realizing or causing to be realized through sale or otherwise upon the security pledged hereunder (including the sale or disposition of the MBS); and
(c) By action or suit in equity, to enjoin any acts or things which may be unlawful or in violation of the rights of the Bondholders and to execute any other papers and documents and do and perform any and all such acts and things as may be necessary or advisa ble in the opinion of the Trustee in order to have the respective claims of the Bondholders against the Issuer allowed in any bankruptcy or other proceeding.
If an Event of Default shall have occurred, and if requested by the holders of not less than 75% (or 100% as set forth in Section 8.02(b) hereof) in aggregate principal amount of the Bonds then Outstanding, and upon being indemnified to its satisfaction, the Trustee shall be obligated to exercise one or more of the rights and powers conferred by this Article as the Trustee, being advised by counsel, shall deem to be in the best interests of the Bondholders subject to the limitations set forth above and in this Indenture.
No right or remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to the Bondholders) is intended to be exclusive of any other right or remedy, but each and every such right and remedy shall be cumulative and shall be in addition to any other right or remedy given to the Trustee or to the Bondholders hereunder or under the Financing Agreement, the Regulatory Agreement or the MBS or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or acquiescence therein and every such right and power may be exercised from time to time as often as may be deemed expedient.
No waiver of any default or Event of Default hereunder, whether by the Trustee or by the Bondholders, shall extend to or shall affect any subsequent default or Event of Default or shall impair any rights or remedies consequent thereon.
Section 8.04 Representation of Bondholders by Trustee . The Trustee is hereby irrevocably appointed (and the Bondholders, by accepting and holding their Bonds, shall be conclusively deemed to have so appointed the Trustee and to have mutually covenanted and agreed, each with the other, not to revoke such app ointment) the true and lawful attorney -in-fact of the Bondholders with power and authority, in addition to any other powers and rights heretofore granted the Trustee, at any time to make and file, in any proceeding in bankruptcy or judicial proceedings for reorganization or liquidation of the affairs of the Issuer, either in the respective names of the Bondholders or on behalf of all the Bondholders as a class, any proof of debt, amendment of proof of debt, petition or other document, to receive payment of any sums becoming distributable to the Bondholders, and to execute any other papers and documents and do and perform any and all such acts
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and things as may be necessary or advisable in the opinion of the Trustee in order to have the respective claims of the Bondholders against the Issuer allowed in any bankruptcy or other proceeding.
In the enforcement of any rights and remedies hereunder, the Trustee in its own name and as trustee of an express trust on behalf of and for the benefit of the holders of all Bonds, shall be entitled to sue for, enforce payment on and receive any and all a mounts then or during any Event of Default becoming, and at any time remaining, due from the Issuer for principal, premium, if any, interest or other moneys, under any provision hereof or of the Bonds, and unpaid, with interest on overdue payments at the r ate or rates of interest specified in such Bonds, together with any and all costs and expenses of collection and of all proceedings hereunder and under such Bonds, without prejudice to any other right or remedy of the Trustee or of the Bondholders.
Section 8.05 Action by Trustee. All rights of action hereunder or upon any of the Bonds enforceable by the Trustee may be enforced by the Trustee without the possession of any of the Bonds, or the production thereof at the trial or other proceedings relative thereto, and any such suit , action or proceeding instituted by the Trustee may be brought in its name for the ratable benefit of the holders of such Bonds subject to the provisions hereof.
In any action, suit or other proceeding by the Trustee, the Trustee shall be paid fees, counsel fees and expenses in accordance with Section 9.02.
Section 8.06 Accounting and Examination of Records After Default . The Issuer covenants with the Trustee and the Bondholders that, if an Event of Default shall have happened and shall not have been remedied, the books of record and account of the Issuer relating to the Bonds and the Project shall at all times during no rmal business hours be subject to the inspection and use of the Trustee and of its agents and attorneys.
Section 8.07 Restriction on Bondholder Action . No holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of any provision hereof or for the execution of any trust hereunder or for any other remedy hereunder, unless (a)(i) such holder previously shall have given to the Issuer and the Trustee written notice of the Event of Default on account of which such suit, action or proceeding is to be instituted, and (i i) after the occurrence of such Event of Defa ult, a written request shall have been made of the Trustee to institute such suit, action or proceeding by the holders of not less than 25% in aggregate principal amount of the Bonds then Outstanding and there shall have been offered to the Trustee securit y and indemnity satisfactory to it against the costs and liabilities to be incurred therein or thereby, and (ii i) the Trustee shall have been enjoined or restrained from complying or shall have refused or neglected or otherwise failed to comply with such request within a reasonable time; or (b)(i) such holder previously shall have obtained the written consent of the Trustee to the institution of such suit, action or proceeding, and (ii) such suit, action or proceeding is brought for the ratable benefit of the Bondholders subject to the provisions hereof.
Nothing contained in this Article shall affect or impair the right of any Bondholder to enforce the payment of the principal of, premium, if any, and interest on his or her Bonds or the obligation of the Issuer to pay the principal of, premium, if any, and interest on each Bond to the holder thereof, at the time and place and from the source expressed in such Bonds and pursuant to the terms of the Bonds and this Indenture.
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No holder of any Bond shall have any right in any manner whatever by his or her action to affect, disturb or prejudice the pledge of the Trust Estate, consisting of MBS Revenues and any other moneys, funds or securities hereunder, or, except in the manner and on the conditions in this Section provided, to enforce any right or duty hereunder.
Section 8.08 Application of Moneys After Default . All moneys collected by the Trustee at any time pursuant to this Article shall, except to the extent, if any, otherwise directed by a court of competent jurisdiction, be credited by the Trustee to the Revenue Fund. Such moneys so credited to the Revenue Fund and all other moneys from time to time credited to the Revenue Fund shall at all times be held, transferred, withdrawn and applied as prescribed by the provisions of Article V and this Section.
Subject in all instances to the provisions of Section 8.11, in the event that at any time the moneys credited to the Revenue Fund, or any other funds held by the Issuer or the Trustee available for the payment of interest or principal then due with respect to the Bonds, shall be insufficient for such payment, such moneys and funds (other than funds held for the payment or redemption of particular Bonds as provided in Section 5.13 hereof) shall be applied as follows:
(a) Only in the event that there has been an Event of Default hereunder pursuant to Section 8.01(a) as a result of a failure by Fannie Mae to make payments under the MBS, for payment of all amounts due to the Trustee incurred in performance of its duties under this Indenture and the other documents executed in connection therewith, including, without limitation, the payment of all reasonable fees and expenses of the Trustee incurred in exercising any remedies under this Indenture and the other documents executed in connection herewith; (b) Unless the principal of all of the Bonds shall have become or have been declared due and payable:
First: To the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the amount available is not sufficient to pay in full any installment, then to the payment thereof ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or preference; and
Second: To the payment to the persons entitled thereto of the unpaid principal of and premium, if any, on any Bonds which shall have become due, whether at maturity or by call for redemption, in the order in which they became due and payable, and, if the amount available is not sufficient to pay in full all the principal of and premium, if any, on the Bonds so due on any date, then to the payment of principal ratably, according to the amounts due on such date, to the persons entitled thereto, without any discrimination or preference and then to the payment of any premium due on the Bonds, ratably, according to the amounts due on such date, to the persons entitled thereto, without any discrimination or preference; and
(c) If the principal of all of the Bonds shall have become or have been declared due and payable, to the payment of the principal of, premium, if any, and interest then due and unpaid upon the Bonds without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the persons
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entitled thereto without any discrimination or preference except as to any difference in the respective rates of interest specified in the Bonds.
Section 8.09 Control of Proceedings . In the case of an Event of Default pursuant to Sections 8.01(a) or 8.01(b), the holders of at least 75% in aggregate principal amount of the Bonds then Outstanding shall have the right, subject to the provisions of Section 8.07, by an instrument in writing executed and delivered to the Trustee, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee; provided, however, that the Trustee shall have the right to decline to follow any such direction if the Trustee shall be advised by counsel that the action or proceeding so directed may not be taken lawfully, or if the Trustee in good faith shall determine that the action or pro ceeding so directed would involve the Trustee in personal liability or otherwise adversely affect the Trustee or be unjustly prejudicial to Bondholders not parties to such direction.
Section 8.10 Waivers of Events of Default. The Trustee shall waive any Event of Default hereunder and its consequences and rescind any declaration of maturity of principal of, premium, if any, and interest on the Bonds upon the written request of the holders of a majority in aggregate principal amount of all Bonds then Outstanding with respect to which there is an Event of Default; provided, however, that there shall not be waived (a) any default in the payment of the principal amount of any Bonds at the date of maturity specified therein or upon proceedings for mandatory redemption, or (b) any default in the payment when due of the interest or premium, if any, on any such Bonds, unless prior to such waiver or rescission all arrears of interest, with interest (to the extent permitted by law) at the rate borne by the Bonds in respect of which such Event of Default shall have occurred on overdue installments of interest or all arrears of payments of principal or premium, if any, when due (whether at the stated maturity thereof or upon proceedings for mandatory redemption) as the case may be, and all expenses of the Trustee in connection with such monetary default, shall have been paid or provided for, and in case of any such waiver or rescission, the Issuer, the Borrower, t he Trustee and the Bondholders shall be restored to their former positions and rights hereunder respectively.
No such waiver or rescission shall extend to any subsequent or other default, or impair any right consequent thereto; and no delay or omission of the Trustee or of any Bondholders to exercise any right or power accruing upon any Event of Default shall impa ir any right or power or shall be construed to be a waiver of any such Event of Default, or acquiescence therein.
Section 8.11 Subordination. No claim for interest on any of the Bonds which claim in any way at or after maturity shall have been transferred or pledged by the holder thereof separate and apart from the Bond to which it relates, unless accompanied by such Bond, shall be entitled i n case of an Event of Default hereunder to any benefit by or from this Indenture except after the prior payment in full of the principal of and premium, if any, on all of the Bonds then due and of all claims for interest then due not so transferred or pledged.
Section 8.12 Termination of Proceedings. In case any proceeding taken by the Trustee on account of any Event of Default shall have been discontinued or abandoned for any reason or determined adversely to the Trustee, then in every such case the Issuer, the Borrower, the Trustee and the Bondholders shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies, powers and duties of the Trustee shall continue as though no such proceeding had been taken.
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Section 8.13 No Int erference or Impairment of MBS . Notwithstanding any other provision of this Indenture to the contrary, following the MBS Delivery Date, so long as the MBS remains outstanding and Fannie Mae is not in default in its payment obligations thereunder, neither the Issuer, the Trustee nor any person under their control shall, without the prior written consent of Fannie Mae, exercise any remedies or direct any proceedings under this Indenture other than to (a) enforce rights under the MBS, (b) enforce the Issuer’s Reserved Rights, (c) enforce the tax covenants in this Indenture and the Financing Agreement, or (d) enforce rights of specific performance under the Regulatory Agreement; provided, however, that any enforcement under subsections (c) or (d) above shall not include seeking monetary damages other than actions for the Trustee Fees and Expenses.
Nothing contained in this Indenture shall affect or impair the right of any Bondholder to enforce the payment of the principal of, the premium, if any, and interest on any Bond at the maturity thereof or the obligation of the Trustee to pay the principal o f, premium, if any, and interest on the Bonds issued hereunder to the respective holders thereof, at the time, in the place, from the sources and in the manner expressed herein and in said Bonds.
ARTICLE IX
THE TRUSTEE
Section 9.01 Acceptance of the Trusts . The Trustee hereby accepts the trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions and no implied covenants or conditions shall be read into this Indenture against the Trustee:
(a) The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default has occurred (which has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) The Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers or employees but shall not be answerable for the conduct of the same if appointed with reasonable care, and shall be entitled to the advice of counsel concerning all matters of the trusts hereof and the duties hereunder, and may in all cases pay such reasonable compensation and fees to all such attorneys, agents, receivers and employees as may reasonably be employed in connection with the trusts hereof. The Trustee may act upon the opinion or advice of any attorneys (who may be the attorney or attorneys for the Issuer, the Borrower or Fannie Mae) approved by the Trustee in the exercise of reasonable care. The Trustee shall not be responsible for any loss or damage resulting from any action or non -action taken in good faith in reliance upon such opinion or advice.
(c) The Trustee shall not be responsible for any recital herein, or in the Bonds (except in respect to the certificate of the Trustee endorsed on the Bonds), or for insuring the Project or collecting any insurance moneys, or for the registration, filing or rec ording or re registration, re - filing or re-recording of this Indenture or the Mortgage or any financing statements relating hereto or thereto or for the validity of the execution by the Issuer of this Indenture or of any supplements hereto or instruments o f further assurance, or for the sufficiency of the security for the Bonds issued
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hereunder or intended to be secured hereby, or for the value or title of the Project or otherwise as to the maintenance of the security hereof. The Trustee shall not be bound to ascertain or inquire as to the performance or observance of any covenants, conditions or agreements on the part of the Issuer or on the part of the Borrower under the Financing Agreement, except as hereinafter set forth; but the Trustee may require of the Issuer or the Borrower full information and advice as to their performance of the covenants, conditions and agreements aforesaid. The Trustee acknowledges it has assumed certain duties of the Issuer under the Financing Agreement and the Regulatory Agreement. (d) The Trustee shall not be accountable for the use of any Bonds authenticated or delivered hereunder. The Trustee may become the owner of Bonds secured hereby with the same rights which it would have if it were not Trustee hereunder. To the extent permitted by law, the Trustee may act as depository for, and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Bondholders or to effect or aid in any reorganizatio n growing out of the enforcement of the Bonds or this Indenture, whether or not any such committee shall represent the holders of a majority in aggregate principal amount of the Bonds Outstanding.
(e) The Trustee shall be protected in acting under any notice, request, consent, certificate, order, affidavit, letter, facsimile transmission, direction or other paper or document believed to be genuine and correct and to have been signed or sent by the prope r person or persons.
Any action taken by the Trustee pursuant to this Indenture upon the request, authority or consent of any person who at the time of making such request or giving such authority or consent is the owner of any Bond, shall be conclusive and binding upon all fu ture owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof.
(f) As to the existence or nonexistence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely (unless other evidence in respect thereof is herein specifically prescribed) upon an Officer’s Certificate as sufficient evidence of the facts therein contained and prior to the occurrence of an Event of Default of which the Trustee has been notified as provided in subsection (h) of this Section, or of which by said subsection it is deemed to have notice, shall also be at liberty to accept an Officer’s Certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further evidence deemed necessary or advisable, but shall in no case be bound to secure the same.
(g) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and it shall not be answerable for other than its own negligence or willful misconduct.
(h) The Trustee shall not be required to take notice or be deemed to have notice of any default or Event of Default hereunder except a default in payment when due of the principal of, premium, if any, or interest on any Bond or the failure of the Issuer or the Borrower to file with the Trustee any documents required by this Indenture, the Financing Agreement or the Regulatory Agreement to be so filed subsequent to the issuance of the Bonds unless the Trustee shall be specifically notified in writing of such def ault or Event of Default by the Issuer or by the holders of at least 75% in aggregate principal amount of Bonds then Outstanding and all notices or other instruments required by this Indenture to be delivered to the Trustee must, in order to be effective, be delivered at the designated office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no default or Event of Default except as aforesaid.
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(i) At any and all reasonable times the Trustee and its duly authorized agents, attorneys, experts, engineers, accountants and representatives shall have the right (but no obligation) fully to inspect any and all of the property herein conveyed, including the Project and all books, papers and records of the Issuer pertaining to the Project and the Bonds, and to take such memoranda from and in regard thereto as may be desired, provided that such inspection be made and any such memoranda be taken and used on a basis that will insure the confidentiality thereof and of any results thereof.
(j) The Trustee shall not be required to give any bond or surety in respect of the execution of the trusts and powers or otherwise in respect of the premises granted in this Indenture. (k) Notwithstanding anything elsewhere in this Indenture contained, the Trustee shall have the right, but shall not be required, to demand, in respect of the authentication of any Bonds, the withdrawal of any cash, the release of any property or any action wha tsoever within the purview of this Indenture (other than enforcement of the Regulatory Agreement), any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, in addition to that by the terms hereof requi red as a condition of such action by the Trustee, deemed desirable for the purpose of establishing the right of the Issuer to the authentication of any Bonds, the withdrawal of any cash, the release of any property or the taking of any other action by the Trustee, but the resolutions, opinions, certificates and other instruments provided for in this Indenture may be accepted by the Trustee as conclusive evidence of the facts and conclusions stated therein and shall be full warranty, protection and authority to the Trustee for the release of property and the withdrawal of cash hereunder.
(l) Before taking any action under Article VIII of this Indenture, the Trustee may require that a satisfactory indemnity bond or other indemnity satisfactory to the Trustee be furnished for the reimbursement of all reasonable expenses to which it may be put a nd to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful misconduct in conjunction with any action so taken.
(m) All moneys received by the Trustee, until used, applied or invested as herein provided, shall be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law. (n) The immunities extended to the Trustee also extend to its directors, officers, employees and agents.
(o) The Trustee’s rights to immunities and protection from liability hereunder and its rights to payment of its Ordinary Trustee Fees and Expenses and Extraordinary Trustee Fees and Expenses as set forth in the applicable Financing Documents shall survive its resignation or removal and the final payment or the defeasance of the Bonds (or the discharge of the Bonds or the defeasance of the lien of this Indenture).
(p) None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur individual financial liability in the performance of any of its duties or in the exercise of any of its rights or powers.
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(q) The Trustee shall have no responsibility, opinion or liability with respect to any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. (r) In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit), irrespective of whether the Trustee has been advised of the likel ihood of such loss or damage and regardless of the form of action.
(s) The Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused, directly or indirectly, by circumstances beyond its control, including without limitation, any act or provision of any present or future law or regulation or governmental authority; acts of God; earthquakes; fires; floods; wars; terrorism; civil or military disturbances; sabotage; epidemics; quarantine restrictions; riots; interruptions, loss or malfunc tions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority or governmental actions; or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility.
The Trustee agrees to accept and act upon instructions or directions pursuant to the Financing Documents sent by unsecured email, facsimile transmission or other similar unsecured electronic methods, provided, however, that, the Trustee shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If the Issuer or the Borrower elect to give the Trustee email or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s under standing of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions. The Borrower agrees: (i) to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting instructions to the Trustee and that there may be more secure methods of transmitting instructions than the method(s) selected by the Issuer or the Borrower; and (iii) that the security procedures (if any) to be followed in connection with its transmission of instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances.
Section 9.02 Fees, Charges and Expenses of Trustee . Notwithstanding any provision to the contrary herein, but subject to the limitations set forth in the definition Ordinary Trustee Fees and Expenses as defined in Section 1.01 hereof, the Trustee shall be entitled to payment for reasonable fees for its s ervices rendered hereunder and under the Financing Agreement and reimbursement for all advances, counsel fees and other expenses reasonably made or incurred by the Trustee (including any co-Trustee) in connection with such services which shall be paid from time to time as provided in the Financing Agreement; provided that no such amounts shall be paid to the Trustee from the proceeds of the MBS or the MBS Revenues. Prior to the MBS Delivery Date, upon an Event of Default under Section 8.01(b), or after the MBS Delivery Date, upon an Event of Default under Section 8.01(a) as a result of a failure by Fannie Mae to make payment under the MBS, but only upon such an Ev ent of Default, the Trustee shall have a lien upon the Tru st Estate for Extraordinary Trustee Fees and Expenses incurred by it. The Issuer shall require the Borrower to indemnify and save harmless the
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Trustee against any liabilities which the Trustee may incur in the exercise and performance of its powers and duties hereunder, under the Financing Agreement and under the Regulatory Agreement which are not due to its own negligence or willful misconduct, and to reimburse the Trustee for any fees and expenses of the Trustee (including counsel fees and expenses) to the extent they exceed funds available under this Indenture for the payment thereof, subject only to the right of the Borrower to contest the reasonableness of any such fees or the necessity for any such expenses. The Trustee shall continue to perform its duties and obligations hereunder until such time as its resignation or removal is effective pursuant to Section 9.05 or Section 9.06, respectively.
Section 9.03 Intervention by Trustee. In any judicial proceeding to which the Issuer is a party and which in the opinion of the Trustee and its counsel has a substantial bearing on the interests of owners of the Bonds, the Trustee may intervene on behalf of the Bondholders and shall do so i f requested in writing by the owners of at least 75% in aggregate principal amount of Bonds then Outstanding, subject to receipt of indemnity as provided in Section 9.01(l). The rights and obligations of the Trustee under this Secti on are subject to receipt of any approval of a court of competent jurisdiction which may be required by law as a condition to such intervention.
Section 9.04 Merger or Consolidation of Trustee . Any corporation or association into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, ipso facto shall be and become successor Trustee hereunder and vested with all of the title to the Trust Estate and all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding.
Section 9.05 Resignation by Trustee. The Trustee and any successor Trustee may at any time resign from the trusts hereby created by giving 30 calendar days’ written notice to the Issuer and Fannie Mae, and such resignation shall only take effect upon the appointment, pursuant to Section 9.07, of, and acceptance by, a successor Trustee. The successor Trustee shall give notice of such succession by first class mail, postage prepaid, to each Bondholder at the address of such Bondholder shown on the Bond Register.
Section 9.06 Removal of Trustee . The Trustee may be removed at any time by an instrument or concurrent instruments in writing delivered to the Trustee and to Fannie Mae, and signed by the Issuer (or if an Event of Default shall have occurred and be continuing, by the owners of a majority in aggregate principal amount of the Bonds then Outstanding, in which event such instrument or instruments in writing shall also be delivered to the Issuer) , provided that such removal shall not take effect until the appointment of a successor Trustee by the Issuer (or by the Bondholders).
Section 9.07 Appointment of Successor Trustee . In case at any time the Trustee or any successor thereto shall resign or shall be removed or shall become incapable of acting, or shall be adjudged as bankrupt or insolvent, or if a receiver, liquidator or conservator of such Trustee or of its property shall be appointed, or if any public officer shall take charge or control of such Trustee or of its property or affairs, a successor may be appointed by the Issuer with the approval of Fannie Mae (if it is not in default in its obligations under the MBS), or if Fannie Mae does not approve a successor the Issuer proposes to appoint, or if the Issuer is in default hereunder, by the holders of a majority in aggregate principal amount of the Bonds then Outstanding, excluding any Bonds held by or for the
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account of the Issuer, by an instrument or concurrent instruments in writing signed by such Bondholders, or their attorneys duly authorized in writing, and delivered to such successor Trustee, notification thereof being given to the Issuer, Fannie Mae, the Borrower, and the predecessor Trustee.
If in a proper case no appointment of a successor Trustee shall have been made pursuant to the foregoing provisions of this Section within 45 days after the Trustee shall have given to the Issuer written notice as p rovided in Section 9.05 or after the occurrence of any other event requiring or authorizing such appointment, the Trustee or any Bondholder may, at the expense of the Borrower, apply to any court of competent jurisdiction to appoint a successor. The court may thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a successor Trustee.
Any Trustee appointed under the provisions of this Section shall be a bank, trust company or national banking association, having a designated office within the State, having trust powers, with prior experience as trustee under indentures under which multifamily housing revenue bonds of public agencies or authorities are issued, and having a capital and surplus acceptable to the Issuer, the Lender and Fannie Mae, willing and able to accept the office on reasonable and customary terms in light of the circumstances under which the appointment is tendered and authorized by law to perform all the duties imposed upon it hereby, if there be such an institution meeting such qualifications willing to accept such appointment.
Section 9.08 Transfer of Rights and Property to Successor Trustee . Any successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor Trustee, and also to the Issuer and Fannie Mae, and any Bondholder which shall request the same, an instrument accepting such appointment, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become fully vested with all moneys, estates, properties, rights, powers, duties and obligations of such predecessor Trustee, wit h like effect as if named herein as such Trustee, but the Trustee ceasing to act shall nevertheless, on the written request of the Issuer, Fannie Mae or the successor Trustee, execute, acknowledge and deliver such instruments of conveyance and further assurance and do such other things as reasonably may be required for more fully and certainly vesting and confirming in such successor Trustee all the right, title and interest of the predecessor Trustee in and to any properties held by it under this Indenture , and shall pay over, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth.
Should any deed, conveyance or instrument in writing from the Issuer be required by such successor Trustee for more fully and certainly vesting in and confirming to such successor Trustee any such moneys, estates, properties, rights, powers and duties, any and all such deeds, conveyances and instruments in writing, on request, and so far as may be authorized b y law, shall be executed, acknowledged and delivered by the Issuer.
Section 9.09 Successor Trustee as Bond Registrar, Custodian of Funds and Paying Agent. In the event of a change in the Trustee, the Trustee which has resigned or been removed shall cease to be Bond Registrar, custodian of the Funds and Accounts created under this Indenture and paying agent for the Bonds, and the successor Trustee shall be come such Bond Registrar, custodian and paying agent.
Section 9.10 Collection of MBS Payments . The Trustee shall cause the MBS to be registered in the name of the Trustee or in the name of the nominee of the Trustee with such additional recitals as appropriate to indicate that the MBS is to be held by the Trustee in its capacity as Trustee hereunder subject to the provisions of Sections 7.03 and 7.04. In the event that any amount payable to the Trustee under the MBS is not received by the Trustee within one Business Day of the date such payment is due, the Trustee shall notify Fannie Mae or (if directed by Fannie Mae) the paying agent
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for the MBS by telephone (such notification to be immediately confirmed by Electronic Means) that such payment has not been received in a timely manner and request that such payment be made by wire transfer of immediately available funds to the account of the Trustee or such custodian, as the case may be.
Section 9.11 Requests from Rating Agency . The Trustee shall promptly respond in writing, or in such other manner as may be reasonably requested, to requests from the Rating Agency for information deemed necessary by the Rating Agency in order to maintain the rating assigned thereby to the Bonds . The Trustee shall promptly furnish any such requested information in its possession to the Rating Agency and shall, as may be reasonably requested by the Rating Agency, assist in efforts to obtain any necessary information from the Issuer or the Borrower or Fannie Mae as applicable.
Section 9.12 Arbitrage Covenants.
(a) Moneys and securities held by the Trustee in the Rebate Fund are not pledged or otherwise subject to any security interest in favor of the Trustee to secure the Bonds or any other payments required to be made hereunder or any other document executed and delivered in connection with the issuance of the Bonds.
(b) Moneys in the Rebate Fund shall be held separate and apart from all other Funds and Accounts established under this Indenture and shall be separately invested and reinvested by the Trustee in Eligible Investments. The interest accruing thereon and any profit realized therefrom shall be credited to the Rebate Fund, and any loss resulting therefrom shall be charged to the Rebate Fund. The Trustee shall sell and reduce to cash a sufficient amount of such Eligible Investments whenever the cash balance in the Rebate Fund is insufficient for its purposes. (c) The Trustee covenants that it will invest funds held under this Indenture in accordance with the covenants and terms of this Indenture and the Tax Certificate (this covenant shall extend through the Bond Maturity Date to all Funds and Accounts created unde r this Indenture and all money on deposit to the credit of any such Fund or Account). The Trustee covenants that, notwithstanding any other provisions of this Indenture or of any other Financing Document, it will not knowingly make or cause to be made any investment or other use of the money in the funds or accounts created hereunder which would cause the Bonds to be classified as “arbitrage bonds” within the meaning of Sections 103(b) and 148 of the Code or would cause the interest on the Bonds to be includable in gross income for federal income tax purposes. This covenant shall extend through the Bond Maturity Date to all Funds and Accounts created under this Indenture and all money on deposit to the credit of any such Fund or Account. Pursuant to this covenant, with respect to the investments of the Funds and Accounts under this Indenture, the Trustee obligates itself to comply, so long as any Bonds remain Outstanding, with the requirements of Sections 103(b) and 148 of the Code; provided that the Trustee shall be deemed to have complied with such requirements and shall have no liability to the extent it reasonably follows the written directions of the Borrower, the Issuer, Bond Counsel or the Rebate Analyst. The Trustee further covenants that should th e Issuer or the Borrower file with the Trustee (it being understood that neither the Issuer nor the Borrower has an obligation to so file), or should the Trustee receive, an opinion of Bond Counsel to the effect that any proposed investment or other use of proceeds of the Bonds would cause the Bonds to become “arbitrage bonds,” then the Trustee will comply with any written instructions of the Issuer, the Borrower or Bond Counsel regarding such investment (which shall, in any event, be an Eligible Investment) or use so as to prevent
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the Bonds from becoming “arbitrage bonds,” and the Trustee will bear no liability to the Issuer or the Borrower for investments made in accordance with such instructions. (d) The Issuer hereby covenants to provide, or to cause the Borrower to provide, at the Borrower’s expense, for the calculation by the Rebate Analyst, and rebate to the federal government, in accordance with the Code, the Rebate Amount to the extent required by Section 148(f) of the Code.
(e) The determination of the Rebate Amount shall be made by the Rebate Analyst in accordance with the Tax Certificate and the Rebate Amount shall be paid at such times and in such installments as provided therein. As further provided in the Tax Certificate, t he Borrower shall be responsible for calculating or causing to be calculated and paying the Rebate Amount. (f) In order to provide for the administration of this Section, the Trustee may, but shall not be obligated to, provide for the employment of independent attorneys, accountants and consultants compensated on a reasonable basis and in addition and without limitation of the provisions of Section 9.01, the Trustee may rely conclusively upon and be fully protected from all liability in relying upon the opinions, determinations, calculations and advice of such attorneys, accountants and consultants employed hereunder. The Trustee shall have no obligation to engage the Rebate Analyst or other third party for arbitrage calculations.
(g) The Borrower shall be responsible for any fees and expenses incurred by the Issuer or the Trustee under or pursuant to this Section. (h) Withdrawals from the Rebate Fund may be made to the extent the Rebate Analyst determines that amounts on deposit therein exceed amounts required to be on deposit therein pursuant to this Section. All amounts so withdrawn shall be transferred to the Revenue Fund. (i) The provisions of this Section may be amended or deleted from this Indenture upon receipt by the Issuer and the Trustee of an Opinion of Bond Counsel substantially to the effect that such amendment or deletion will not, in and of itself, adversely affect the exclusion of interest on the Bonds from gross income for Federal income tax purposes. Any moneys on deposit in the Rebate Fund may be applied by the Trustee as permitted in such Opinion. Fees and expenses incurred in connection with the determination of rebatable arbitrage shall be paid by the Borrower pursuant to the provisions of the Financing Agreement.
(j) In the event of a conflict between the provisions of this Section 9.12 and the Tax Certificate, the provisions of the Tax Certificate shall control.
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 10.01 Supplemental Indentures Effective Upon Acceptance. For any one or more of the following purposes and at any time or from time to time, the Issuer and the Trustee may enter into a Supplemental Indenture which, upon the execution and delivery thereof by the Issuer and by the Trustee, and with the prior written consent of Fannie Mae, but without the necessity of consent of the Bondholders, shall be fully effective in accordance with its terms:
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(a) To add to the covenants or agreements of the Issuer herein contained other covenants or agreements to be observed by the Issuer or to otherwise revise or amend this Indenture in a manner which are/is not materially adverse to the interests of the Bondholders; (b) To add to the limitations or restrictions herein contained other limitations or restrictions to be observed by the Issuer which are not contrary to or inconsistent with the provisions hereof as theretofore in effect;
(c) To surrender any right, power or privilege reserved to or conferred upon the Issuer herein, provided that the surrender of such right, power or privilege is not contrary to or inconsistent with the covenants and agreements of the Issuer contained herein an d is not materially adverse to the interests of the Bondholders;
(d) To confirm, as further assurance, any pledge of the Trust Estate hereunder and the subjection to any lien on or pledge of the Trust Estate created or to be created hereby; (e) To appoint a co-trustee or successor Trustee or successor co-trustee; (f) To cure any ambiguity, supply any omission or cure or correct any defect or inconsistent provision herein; and
(g) To insert such provisions clarifying matters or questions arising hereunder as are necessary or desirable and are not materially adverse to the interests of the Bondholders.
Section 10.02 Supplemental Indentures Requiring Consent of Bondholders . In addition to those amendments to this Indenture which are authorized by Section 10.01, any modification or amendment of this Indenture may be made by a Supplemental Indenture with the written consent, given as hereinafter provided in Section 10.03, of Fannie Mae and the holders of at least two thirds in aggregate principal amount of the Bonds Outstanding at the time such consent is given; provided, however, that no such modification or amendment shall (a) permit a change in the terms of redemption or maturity of the principal amount of any Outstanding Bond or an extension of the date for payment of any installment of interest thereon or a reduction in the principal amount of, premium, if any, or the rate of interest on any Outstanding Bond without the consent of the holder of such Bond, (b) reduce the proportion of Bonds the consent of the holders of which is required to effect any such modification or amendment or to effectuate an acceleration of the Bonds prior to maturity, (c) permit the creation of a lien on the Trust Estate pledged under this Indenture prior to or on a parity with the lien of this Indenture, (d) deprive the holders of the Bonds of the lien created by this Indenture upon the Trust Estate (except as expressly provided in this Indenture), without (with respect to (b) through (d)) the consent of the holders of all Bonds then Outstanding, or (e) change or modify any of the rights or obligations of the Trustee without the written consent thereto of the Trustee.
Section 10.03 Consent of Bondholders. The Issuer and the Trustee may, at any time, execute and deliver a Supplemental Indenture making a modification or amendment permitted by the provisions of Section 10.02, to take effect when and as provided in this Section. A copy of such Supplemental Indenture (or brief summary thereof or reference thereto in a form approved by the Trustee), together with a request to Bondholders for their consent thereto in form satisfactory to the Trustee, shall be mailed by the Trustee to the Bondholders. Such Supplemental Indenture shall not be effective unless there shall have been filed with the Trustee (a) the written consents of Fannie Mae and the holders of the proportion of Outstanding Bonds specified in Section 10.02, and (b) an Opinion of
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Bond Counsel stating that such Supplemental Indenture has been duly and lawfully entered into by the Issuer in accordance with the provisions of this Indenture, is authorized or permitted by the provisions of this Indenture, and, when effective, will be valid and binding upon the Issuer. Each such consent of the Bondholders shall be effective only if accompanied by proof of the holding, at the date of such consent, of the Bonds with respect to which such consent is given, which proof shall be such as is permitted by Section 11.01. A certificate or certificates by the Trustee that it has examined such proof and that such proof is sufficient under the provisions of Section 11.01 shall be conclusive that the consents have been given by the Bondholders describ ed in such certificate or certificates. Any such consent shall be binding upon the Bondholder giving such consent and upon any subsequent holder of such Bonds and of any Bonds issued in exchange therefor (whether or not such subsequent holder thereof has notice thereof). At any time after the holders of the required proportion of Bonds shall have filed their consents to such Supplemental Indenture, the Trustee shall make and file with the Issuer a written statement that the holders of such required propor tion of Bonds have filed and given such consents. Such written statement shall be conclusive that such consents have been so filed and have been given. Within 90 days after filing such statement, the Trustee shall mail to the Bondholders a notice stating in substance that such Supplemental Indenture (which may be referred to as a Supplemental Indenture executed by the Issuer on a stated date, a copy of which is on file with the Trustee) has been consented to by the holders of the required proportion of Bonds and will be effective as provided in this Section, but failure to mail such notice shall not prevent such Supplemental Indenture from becoming effective and binding as provided in this Section 10.03. The Trustee shall file with the Issuer proof of the mailing of such notice to the Bondholders. A record, consisting of the papers required or permitted by this Section to be filed with the Trustee, shall be proof of the matters therein stated. Such Supplemental Indenture making such modification or amendment shall be deemed conclusively binding upon the Issuer, the Trustee and the holders of all Bonds upon the execution thereof and the filing by the Trustee with the Issuer of the statement that the required proportion of Bondholders have consented thereto.
The Issuer may conclusively rely upon the Trustee’s determination that the requirements of this Section have been satisfied.
Section 10.04 Modification by Unanimous Consent. Notwithstanding anything contained in the foregoing provisions of this Article, the terms and provisions hereof and the rights and obligations of the Issuer and the Bondholders hereunder, in any particular, may be modified or amended in any respect upon execution and delivery of a Supplemental Indenture by the Issuer and the Trustee making such modification or amendment and the consent to such Supplemental Indenture of Fannie Mae and the holders of all of the Bonds then Outstanding, such consent to be given and proved as provided in Section 10.03 except that no notice to Bondholders shall be required; provided, however, that no such modification or amendment shall change or modify any of the rights or obligations of the Trustee without the written assent thereto of the Trustee, in addition to the consent of the Bondholders.
Section 10.05 Exclusion of Bonds. Bonds owned or held by or for the account of the Issuer or the Borrower shall be excluded and shall not be deemed Outstanding for the purpose of consent or other action or any calculation of Outstanding Bonds provided for in this Article, unless all of the Bonds are owned or held by or for the account of the Issuer or the Borrower. In the event that not all of the Bonds are owned or held by or for the account of the Issuer or the Borrower, then neither the Issuer nor the Borrower, as t he case may be, shall be entitled with respect to such Bonds to give any consent or take any other action provided for in this Article. At the time of any consent or other action under this Article, in the event that any Bonds (but not all of the Bonds) a re then owned by or for the account of the Issuer, the Issuer shall furnish to the Trustee an Officer’s Certificate, upon which the
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Trustee may rely, describing all Bonds so to be excluded. The Trustee shall be obligated to exclude as aforesaid only such Bonds as are shown by the Bond Register or are otherwise known by the Trustee to be so owned or held.
Section 10.06 Notation on Bonds . Bonds delivered after the effective date of any action taken as provided in this Article may, and if the Trustee so determines shall, bear a notation by endorsement or otherwise in form approved by the Issuer and the Trustee as to such action, and in that case upon demand of the holder of any Bond Outstanding at such effective date and presentation of such Bond for such purpose at the principal office of the Trustee, suitable notation shall be made on such Bond by the Trustee as to any s uch action. If the Issuer or the Trustee shall so determine, new Bonds notated as in the opinion of the Trustee and the Issuer may be required to conform to such action shall be prepared and delivered, and upon demand of the holder of any Bond then Outsta nding, shall be exchanged, without cost to such Bondholder, for Bonds of the same series, designation, maturity and interest rate then Outstanding upon surrender of such Bonds.
Section 10.07 Additional Contracts or Indentures . The Issuer, so far as it may be authorized by law, may enter, and if requested by the Trustee, shall enter into additional contracts or indentures with the Trustee giving effect to any modification or amendment of this Indenture as provided in this Article.
Section 10.08 Opinion of Bond Counsel Concerning Supplemental Indentures . The Trustee shall not execute or consent to any Supplemental Indenture unless, prior to the execution and delivery thereof, the Trustee shall have received the written Opinion of Bond Counsel to the effect that the modifications or amendments effected b y such Supplemental Indenture will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes or adversely affect the exemption of interest of the Bonds from personal income taxation by the State and are authorized and permitted under the provisions of this Indenture.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Evidence of Signatures of Bondholders and Ownership of Bonds . Any request, consent, revocation of consent or other instrument which this Indenture may require or permit to be signed and executed by Bondholders may be in one or more instruments of similar tenor, and shall be signed or executed by such Bondholders i n person or by their attorneys duly authorized in writing. Proof of the execution of any such instrument, or of an instrument appointing or authorizing any such attorney, or the holding by any person of any Bonds, shall be sufficient for any purpose hereof if made in the following manner or in any other manner satisfactory to the Trustee which may nevertheless in its discretion require further or other proof in cases where it deems the same desirable:
(a) The fact and date of the execution by any Bondholder or his or her attorney of any such instrument (other than the Bond) may be proved ( i) by the certificate of a notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he or she purports to act that the person signing such instrument acknowledged to him or her the execution thereof, or by the affidavit of a witness of such execution, duly sworn to before such a notary public or other officer, or (ii) by the certificate, which need not be acknowledged or verified, of an officer of a bank, trust company or duly licensed securities broker or dealer satisfactory to the Trustee that the
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person signing such instrument acknowledged to such bank, trust company, broker or dealer the execution thereof;
(b) The authority of a person or persons to execute any such instrument on behalf of a corporate Bondholder may be established without further proof if such instrument is authorized by a corporate resolution (a copy of which shall be delivered to the Trustee) and signed by a person purporting to be the president or a vice president of such corporation; and (c) The holding of Bonds, the amount, numbers and other identification thereof, and the date of holding the same, shall be proved by the Bond Register.
Any request, consent or other instrument executed by the registered owner of any Bond shall bind all future owners of such Bond in respect of anything done or suffered to be done hereunder by the Issuer or the Trustee in accordance herewith in reliance on such request, consent or other instrument.
Section 11.02 Details of Documents Delivered to Trustee. Matters required to be stated in any document signed by any Authorized Officer or in any accountant’s certificate, Counsel’s Opinion or Officer’s Certificate may be stated in separate documents of the required description or may be included in one or more thereof.
Section 11.03 Preservation and Inspection of Documents . All reports, certificates, statements and other documents received by the Trustee under the provisions hereof shall be retained in its possession and shall be available at all reasonable times for the inspection of the Issuer, Fannie Mae or any Bondholder and their agents and representatives, any of whom may make copies thereof, but any such reports, certificates, statements or other documents may, at the election of the Trustee, be destroyed or otherwise disposed of at any time six years after such date as the pledge of the Trust Estate created hereby shall be discharged as provided in Section 7.01.
Section 11.04 No Recourse on Bonds. All covenants, stipulations, promises, agreements and obligations of the Issuer contained in this Indenture shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Issuer and not of any of its officers or employees or members of its governing body, past, present or future, in his or her individual capacity, and no recourse shall be had for the payment of the principal of, premium, if any, or Redemption Price or purchase price of or interest on the Bonds or for any claim based thereon or on this Indenture or any other Issuer Document or the Financing Documents against any such member, officer, employee or agent of the Issuer, past present or future, or any natural person executing the Bonds.
Section 11.05 Severability. If any one or more of the provisions, covenants or agreements in this Indenture on the part of the Issuer or the Trustee to be performed should be illegal, inoperative, unenforceable or contrary to law, then such provision or provisions, covenant or covenants, agreement or agreements, shall be deemed severable from the remaining provisions, covenants and agreements, and shall in no way affect the validity of the other provisions hereof or of the Bonds.
Section 11.06 Notices. Unless otherwise specified in this Indenture, it shall be sufficient service or giving of any notice, request certificate, demand or other communication if the same is sent by (and all notices required to be given by mail will be given by) first-class registered or certified mail, postage prepaid, return receipt requested, or by private courier service which provides evidence of delivery, or sent by Electronic Means which produces evidence of transmission, and in each case will
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be deemed to have been given on the date evidenced by the postal or courier receipt or other written evidence of delivery or electronic transmission. Unless a different address is given by any party as provided in this Section, all such communications will be addressed as follows:
To the Issuer: MARINA JOINT POWERS FINANCING AUTHORITY
c/o City of Marina
211 Hillcrest Avenue
Marina, CA 93933
Attn: Executive Director
Telephone: (831) 884-1278
Email: [email protected]
With a copy to: Stradling Yocca Carlson & Rauth LLP
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92626
Attn: Vanessa S. Legbandt
Telephone: (949) 725-4073
Email: [email protected]
To the Trustee: U.S. BANK TRUST COMPANY , NATIONAL
ASSOCIATION
1 California St, Suite 1000
San Francisco, CA 94111
Attn: Sonia N. Flores
Telephone: (415) 774-2273
Email: [email protected]
To the Borrower: Preston Park Sustainable Community Nonprofit Corporation c/o City of Marina
211 Hillcrest Avenue
Marina, CA 93933
Attn: Executive Director
Telephone: (831) 884-1278
Email: [email protected]
With copies to: Stradling Yocca Carlson & Rauth LLP
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92626
Attn: Vanessa S. Legbandt
Telephone: (949) 725-4073
Email: [email protected]
And
Goldfarb & Lipman LLP
1300 Clay Street, Eleventh Floor
Oakland CA 94612
Attn: Karen M. Tiedemann
Email: [email protected]
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And
Shute, Mihaly & Weinberger LLP
396 Hayes Street
San Francisco, CA 94102-4421
Attn: René A. Ortega
Email: [email protected]
To the Rating Agency: Moody’s Investors Service, Inc.
7 World Trade Center
250 Greenwich Street, 16th Floor
New York, NY 10007
Attention: Public Finance Group – Housing Team
Email: [email protected]
To Fannie Mae: Fannie Mae
1100 15th Street, NW
Washington, DC 20005
Attention: Director, Multifamily Asset Management
Telephone: (202) 752-6634
Facsimile: (240) 699-3880|
RE: [Project Name]; [Lender Name]
with a copy to: Norton Rose Fulbright US LLP
799 9th Street, N.W., Suite 1000
Washington, D.C. 20001
Attn: Peter Canzano
Telephone: 202-662-4760
Email: [email protected]
To the Underwriter: Stifel, Nicolaus & Company, Incorporated [Underwriter Notice Address]
Attn:
Telephone:
Email:
with a copy to: Tiber Hudson LLC
1800 M Street NW, Suite 350 South
Washington, DC 20036
Attention: Kent S. Neumann
Telephone: (202) 973-0107
Email: [email protected]
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To the Lender: Berkadia Commercial Mortgage LLC
[Lender Notice Address]
Attn:
Copies of all notices given to Fannie Mae must be given concurrently to the Lender. By notice given under this Indenture, any entity whose address is listed in this Section may designate any different address to which subsequent notices, certificates, requests, demands or other communications shall be sent, but no notice directed to any one such entity (except for Fannie Mae) will be required to be sent to more than two addresses. All approvals required under this Indenture will be given in writing. In a ddition, any notification received by the Trustee from the Lender shall be sent by the Trustee to the Bondholders as soon as practical after receipt thereof.
Section 11.07 Notification of Issuer of Amount of Outstanding Bonds . Upon request of the Issuer, the Trustee shall promptly notify the Issuer of the outstanding aggregate principal amount of the Outstanding Bonds. Such request by the Issuer and notification by the Trustee may be via mutually acceptable electronic means or by mail.
Section 11.08 Certain Notices to be Provided to the Rating Agency . In addition, the Trustee shall provide notice to the Rating Agency under the following circumstances: (i) prepayments with respect to the MBS, in whole or in part; (ii) defeasance or discharge of this Indenture; (iii) release from the Trust Estate of (A) the pledge of the MBS or (B) the assignment of the MBS Revenues received; (iv) supplements or amendments to the Financing Documents or Mortgage Note; (v) extension of the MBS Delivery Date Deadline; (v i) appointment of a successor Trustee; (vi i) sale of Eligible Investments at a price below par; (viii) any change in the investment of funds subject to the lien of this Indenture; (ix) Events of Default of which the Trustee has actual notice or is deemed or required to take notice pursuant to Section 9.01(h) herein; and (x) Delivery of the MBS pursuant to Article IV hereof.
Section 11.09 Action Required to be Taken on a Non -Business Day. In any case where any Payment Date, any other date fixed for the payment of interest on or principal of the Bonds, any maturity date or any date fixed for redemption of any Bonds, shall be a day other than a Business Day, then any payment of interest or principal (and premium, if any) required to be made on such date need not be taken or made on such date but may be taken or made on the next succeeding Business Day with the same force and effect as if made or taken on the date herein otherwise provided and, in the case of any Payment Date, no interest shall accrue for the period from and after such date.
Section 11.10 Parties Interested Herein. Nothing in this Indenture expressed or implied is intended or shall be construed to confer upon, or to give to, any person, other than the Issuer, the Trustee, Fannie Mae and the holders of the Bonds, any right, remedy or claim under or by reason hereof, and any covenants, stipulations, obligations, promises and agreements in this Indenture contained by and on behalf of the Issuer shall be for the sole and exclusive benefit of the Issuer, the Trustee, Fannie Mae and the Bondholders.
Section 11.11 Counterparts. This Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
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Section 11.12 Tax Certificate. In the event of any conflict between this Indenture and the Tax Certificate, the requirements of the Tax Certificate shall control.
Section 11.13 Applicable Provisions of Law; Venue . This Indenture and the Bonds are contracts made under the laws of the State and shall be construed in accordance with and governed by the Constitution and the laws of the State applicable to contracts made and performed in the State.
This Indenture and the Bonds shall be enforceable in the State, and any action arising hereunder or in connection with the Bonds shall (unless waived by the Issuer in writing) be filed and maintained in the Superior Court of California, County of Monterey.
Section 11.14 Patriot Act Notice . The Trustee hereby notifies the Issuer that to help the government fight the funding of terrorism and money laundering activities pursuant to the requirements of the Patriot Act it is required to obtain, verify and record information that identifies the Issuer, which information includes the name and address of the Issuer and other information that will allow the Trustee to identify the Issuer in accordance with the Patriot Act. The Issuer hereby agrees that it shall promptly provide such information upon request by the Trustee.
Section 11.15 Reserved.
Section 11.16 Reserved.
Section 11.17 Electronic Transactions; Electronic Signatures. The transactions described in this Indenture may be conducted and related documents may be sent, received or stored by electronic means. Copies, telecopies, facsimiles, electronic files and other reproductions of original executed documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law . The parties agree that the electronic signature of a party to this Indenture shall be as valid as an original signature of such party and shall be effective to bind such party to this Indenture. For purposes hereof:
“electronic signature” means a manually signed original signature that is then transmitted by Electronic Means.
EXHIBIT D
84 [Issuer Signature Page to Indenture of Trust]
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IN WITNESS WHEREOF, the Issuer has caused this Indenture to be executed on its behalf by its Authorized Officers and the Trustee, to evidence its acceptance of the trusts created hereunder, has caused this Indenture to be executed in its name by its duly authorized signatories, all as of the day and year first above written.
Issuer
MARINA JOINT POWERS FINANCING
AUTHORITY,
as Issuer
By: __________________________________
Layne Long, Executive Director
EXHIBIT D
85 [Trustee Signature Page to Indenture of Trust]
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Trustee
U.S. BANK TRUST COMPANY , NATIONAL
ASSOCIATION,
By:
[Name/Title]
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EXHIBIT A
FORM OF BOND
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
MARINA JOINT POWERS FINANCING AUTHORITY
MULTIFAMILY HOUSING REVENUE BONDS
(FANNIE MAE MBS-SECURED) SERIES 2026
(PRESTON PARK APARTMENTS)
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY (AS DEFINED IN THE INDENTURE OF TRUST) TO THE TRUSTEE FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR V ALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
No. R-1 $[Par Amount]
Bond Interest Rate Bond Maturity Date Bond Dated Date Bond CUSIP Number [___]% [_______] [_______] [_____]
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: [_______] DOLLARS
Marina Joint Powers Financing Authority (together with its successors and assigns, the “Issuer”), a joint exercise of powers authority created by Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the California Government Code (the “Act”) and that certain Joint Exercise of Powers Agreement dated as of July 1, 1990, by and between the City of Marina and the Successor Agency to the Marina Redevelopment Agency (as successor to the Marina Redevelopment Agency) for value re ceived, hereby promises to pay by check (but only from the sources specified in the Indenture hereinafter referred to) to the Registered Owner named above or registered assigns, on the Bond Maturity Date stated above subject to the provisions of the Indent ure, including, but not limited to, the definition of Payment Date therein and as hereinafter defined (unless this Bond shall have been previously called for redemption and payment of the Redemption Price shall have been made or duly provided for), the principal amount set forth in the Indenture in lawful money of the United States of America, and to pay interest thereon in like lawful money at the Bond Interest Rate specified above in the amounts as accrued and for the periods interest is paid as set forth in the Indenture, payable on each Payment Date. Interest shall be calculated on the basis of a year of 30/360.
The payment of interest on a Payment Date shall relate to the interest accrued during the preceding six (6) calendar months; provided that the payment of interest on the Initial Payment Date
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shall relate to the interest accrued from the Closing Date to and including the calendar day immediately preceding such Initial Payment Date.
“Initial Payment Date” means [September 1, 2026].
“Payment Date” means ( i) with respect to interest, March 1 and September 1 of each year, commencing on the Initial Payment Date, and (i i) with respect to principal and interest, the stated maturity date for any of the Bonds or any earlier date of redemption of any of the Bonds.
Interest hereon is payable by U.S. Bank Trust Company, National Association (the “Trustee”).
On each Payment Date, payment of the principal of and interest or premium, if any, on any Bond shall be made to the person appearing on the Bond Register as the registered owner thereof on the applicable Record Date. The principal of and the interest on the Bonds shall be payable in coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts of the United States of America. Unless the Bonds are Book-Entry Bonds, the principal of the Bonds shall be payable to the registered owners thereof upon presentation (except in connection with a redemption of Bonds from principal payments or prepaym ents on the MBS) at the designated corporate trust office of the Trustee or its successors. Unless the Bonds are Book -Entry Bonds, payments of interest on the Bonds and redemption of Bonds from principal payments or prepayments on the MBS shall be paid by check or draft mailed to the registered owner thereof at such owner’s address as it appears on the registration books maintained by the Trustee on the applicable Record Date or at such other address as is furnished to the Trustee in writing by such owner. All payments of principal of and interest on Book-Entry Bonds shall be made and given at the times and in the manner set out in the representation letter of The Depository Trust Company, Brooklyn, New York, and the provisions of the Indenture related the reto, or any replacement securities depository appointed under the Indenture.
The date of authentication of each Bond shall be the date such Bond is registered.
The Bonds shall be subject to redemption prior to maturity in such manner and with notice as is set forth in the Indenture. Notices in connection with any redemption of Bonds shall be required as set forth in the Indenture.
This Bond is one of the duly authorized bonds of the Issuer designated as Multifamily Housing Revenue Bonds (Fannie Mae MBS-Secured) Series 2026 (Preston Park Apartments) (the “Bonds”), limited in aggregate principal amount to $[Par Amount] issued pursuant to the Act and pursuant to an Indenture of Trust, dated as of [Date], by and between the Issuer and the Trustee (the “Indenture”) and a resolution duly adopted by the gov erning body of the Issuer. The Bonds are limited obligations of the Issuer payable f rom and all equally secured by the lien of the Indenture, and the other security pledged thereby, including certain funds and accounts created pursuant thereto. The Bonds are issued for the benefit of Preston Park Sustainable Community Nonprofit Corporation, a California nonprofit corporation (the “Borrower”), to finance a multifamily rental housing development within the City of Marina, California, known as “ Preston Park Apartments ” (the “Project”). Capitalized terms used herein and not otherwise defined shall have the meanings assigned in the Indenture.
The payment and other obligations of the Issuer with respect to the Bonds are intended to be, and shall be, independent of the payment and other obligations of the issuer or maker of the Mortgage Note and the MBS (as hereafter defined).
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The Bonds are secured by certain funds held under the Indenture as described therein, and after the MBS Delivery Date, if any, by ( i) the pledge of a Fannie Mae Certificate as described in the Indenture (the “MBS”) issued by the Federal National Mortgage Association (“Fannie Mae”) and delivered to the Trustee, under the terms of which timely payment of principal of and interest on the MBS is guaranteed by Fannie Mae regardless of whether corresponding payments on the Mortgage Loan are paid when due, and (i i) amounts payable under and pursuant to the MBS. After the MBS Delivery Date, the MBS is held in trust and pledged under the Indenture to secure the payment of the Bonds.
Reference is hereby made to the Act and to the Indenture, a copy of which is on file at the principal office of the Trustee, and all indentures supplemental thereto for a description of the rights thereunder of the registered owners of the Bonds, of the payments and funds pledged and assigned as security for payment of the Bonds and the nature and extent thereof, of the terms on which the Bonds are issued and the terms and conditions on which the Bonds will be deemed to be paid at or prior to maturity or redemption upon provision for payment thereof in the manner set forth in the Indenture, of the rights, duties and immunities of the Trustee and of the rights and obligations of the Issuer thereunder, to all of the provisions of which Indenture the registered owner of this Bond, by acceptance hereof, assents and agrees.
THE BONDS AND THE INTEREST THEREON ARE LIMITED OBLIGATIONS OF THE
ISSUER, PAYABLE SOLELY FROM THE TRUST ESTATE PLEDGED THEREFOR UNDER THE INDENTURE. NEITHER THE ISSUER, THE STATE, NOR ANY POLITICAL SUBDIVISION
THEREOF (EXCEPT THE ISSUER, TO THE LIMITED EX TENT SET FORTH IN THE
INDENTURE) NOR ANY PUBLIC AGENCY SHALL IN ANY EVENT BE LIABLE FOR THE
PAYMENT OF THE PRINCIPAL OF, PREMIUM (IF ANY) OR INTEREST ON THE BONDS OR
FOR THE PERFORMANCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT OF ANY KIND
WHATSOEVER EXCEPT AS SET FORTH IN THE INDENTURE, AND NONE OF THE BONDS OR ANY OF THE ISSUER’S AGREEMENTS OR OBLIGATIONS SHALL BE CONSTRUED TO
CONSTITUTE AN INDEBTEDNESS OF OR A PLEDGE OF THE FAITH AND CREDIT OF OR A
LOAN OF THE CREDIT OF OR A MORAL OBLIGATION OF ANY OF THE F OREGOING
WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER. THE ISSUER HAS NO TAXING POWER.
NO OFFICER, AGENT, EMPLOYEE OR ATTORNEY OF THE ISSUER, INCLUDING
ANY PERSON EXECUTING THE INDENTURE OR THIS BOND, SHALL BE LIABLE
PERSONALLY ON THIS BOND OR FOR ANY REASON RELATING TO THE ISSUANCE OF THIS BOND. NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF
OR THE INTEREST ON THIS BOND, OR FOR ANY CLAIM BASED ON THIS BOND, OR
OTHERWISE IN RESPECT OF THIS BOND, OR BASED ON OR IN RESPECT OF THE
INDENTURE, AGAINST ANY OFFICER, EMPLOYEE OR AGENT, AS SUCH, OF THE ISSUER
OR ANY SUCCESSOR, WHETHER BY VIRTUE OF ANY CONSTITUTION, STATUTE OR RULE
OF LAW, OR BY THE ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR
OTHERWISE, ALL SUCH LIABILITY BEING, AND AS PART OF THE CONSIDERATION FOR THE ISSUANCE OF THIS BOND, IS EXPRESSLY WAIVED AND RELEASED.
The registered owner of this Bond shall have no right to enforce the provisions of the Indenture or to institute actions to enforce the pledge, assignments in trust or covenants made therein or to take any action with respect to an Event of Default under t he Indenture or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided in the Indenture.
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If an Event of Default shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture. The Indenture provides that in certain events such declaration and its consequences may be rescinded by the holders of at least a majority in aggregate principal amount of the Bonds then Outstanding.
The Bonds are issuable only as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple of $5,000 in excess thereof (an “Authorized Denomination”). Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Indenture, Bonds may be exchanged at the designated corporate trust office of the Trustee for Bonds in the same aggregate principal amount.
The registration of this Bond is transferable by the registered owner hereof in person or by its attorney duly authorized in writing at the designated corporate trust office of the Trustee. Upon surrender for registration of transfer of this Bond at such office, the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Bond of the same maturity or maturities and Authorized Denomination for the same aggregate principal amount. Bonds to be exchanged shall be surrendered at said designated corporate trust office of the Trustee, and the Trustee shall authenticate and deliver in exchange therefore a Bond of equal aggregate principal amount of the same maturity and Authorized Denomination.
In any case where any Payment Date, any other date fixed for the payment of interest on or principal of the Bonds, any maturity date or any date fixed for redemption of any Bonds, shall be a day other than a Business Day, then any payment of interest or principal (and premium, if any) required to be made on such date need not be taken or made on such date but may be taken or made on the next succeeding Business Day with the same force and effect as if made or taken on the date herein otherwise provided and, in the case of any Payment Date, no interest shall accrue for the period from and after such date.
The Issuer and the Trustee shall treat the registered owner of this Bond as the owner hereof for all purposes, and any notice to the contrary shall not be binding on the Issuer and the Trustee.
The Indenture contains provisions permitting the Issuer and the Trustee, with the written consent of Fannie Mae and the registered owners of not less than two thirds in aggregate principal amount of the Bonds Outstanding, as specified in the Indenture, and in certain instances without such consent, to execute supplemental indentures adding any provisions to, or changing in any manner, or eliminating any of the provisions of, the Indenture; provided, however, that no such supplemental indenture shall (a) permit a change in the terms of redemption or maturity of the principal amount of any Outstanding Bond or an extension of the date for payment of any installment of interest thereon or a reduction in the principal amount of, premium, if any, or the rate of interest on any Outstanding Bond without the consent of the holder of such Bond, (b) reduce the proportion of Bonds the consent of the holders of which is required to effect any such modification or amendment or to effectuate an acceleration of the Bonds prior to maturity, (c) permit the creation of a lien on the Trust Estate pledged under the Indenture prior to or on a parity with the lien of the Indenture, (d) deprive the holders of the Bonds of the lien created by the Indenture upon such Trust Estate (except as expressly provided in the Indenture), without (with respect to clauses (b) through (d)) the consent of the holders of all Bonds then Outstanding, or (e) change or modify any of the rights or obligations of the Trustee without the written consent thereto of the Trustee.
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Neither the members of the governing body of the Issuer nor any officer, agent, representative or employee of the Issuer nor any person executing this Bond shall be subject to any personal liability or accountability by reason of the issuance hereof, wheth er by virtue of any Constitution, statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability being expressly waived as a condition of and in consideration for the execution of the Indenture and the issuance of the Bonds.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been manually signed by the Trustee.
It is hereby certified and recited by the Issuer that all conditions, acts and things required by the Indenture or by the laws of the State of California, including the Act, to exist, to have happened or to have been performed precedent to or in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law, and that the issuance of this Bond and the issue of which it forms a part is within every debt and other limit prescribed by said Constitution or statutes.
In the event of any inconsistencies between the provisions of this Bond and the provisions of the Indenture, the provisions of the Indenture shall control.
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IN WITNESS WHEREOF , the Marina Joint Powers Financing Authority has caused this Bond to be executed on its behalf by the manual or facsimile signature of its [Executive Director], and attested to by the manual or facsimile signature of its Secretary, all as of the Bond Dated Date above.
MARINA JOINT POWERS FINANCING
AUTHORITY, as Issuer
By:
Title: [Executive Director]
Attest:
Title: Secretary
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[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION]
This Bond is one of the bonds described in the within mentioned Indenture.
Date of Authentication:
U.S. BANK TRUST COMPANY ,
NATIONAL ASSOCIATION, as Trustee
By:
Authorized Signatory
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[FORM OF ASSIGNMENT]
For value received, the undersigned do(es) hereby sell, assign and transfer unto
(Name, Address and Tax Identification or Social
Security Number of Assignee)
the within registered Bond and do(es) hereby irrevocably constitute and appoint, attorney, to transfer the same on the registration books of the Trustee, with full power of substitution in the premises.
Dated: ____________________
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed by
an eligible guarantor.
NOTICE: The signature on this assignment
must correspond with the name(s) as written
on the face of the within Bond in every
particular without alteration or enlargement
or any change whatsoever.
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EXHIBIT B
RESERVED
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SCHEDULE I TO REQUISITION FORM
ITEM: AMOUNT:
1 2
3 4
5 6
7 8
9 10
11 12
13 14
15 16
17 18
19 20
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96 4901-0683-7111v3/202027-0004
FINANCING AGREEMENT
by and among
MARINA JOINT POWERS FINANCING AUTHORITY,
as Issuer,
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee,
and
PRESTON PARK SUSTAINABLE COMMUNITY NONPROFIT CORPORATION, as Borrower
relating to
$[Par Amount]
MARINA JOINT POWERS FINANCING AUTHORITY
MULTIFAMILY HOUSING REVENUE BONDS
(FANNIE MAE MBS-SECURED) SERIES 2026
(PRESTON PARK APARTMENTS)
Dated as of January 1, 2026
EXHIBIT E
97 TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01 Definitions ............................................................................................................ 1 Section 1.02 Rules of Construction .......................................................................................... 2 Section 1.03 Effective Date ...................................................................................................... 3
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01 Representations, Warranties and Covenants by the Borrower ............................. 3 Section 2.02 Representations, Warranties and Covenants of the Issuer .................................... 7
ARTICLE III
THE BONDS AND THE PROCEEDS THEREOF
ARTICLE IV
THE BONDS, THE MORTGAGE LOAN AND FEES
Section 4.01 Sources, Deposits and Uses ................................................................................. 8 Section 4.02 Payment of Fees and Expenses ............................................................................ 9 Section 4.03 Notification of Prepayment of Mortgage Note .................................................. 10
ARTICLE V
COVENANTS, UNDERTAKINGS AND OBLIGATIONS OF THE BORROWER Section 5.01 Taxes, Other Governmental Charges and Utility Charges ................................. 10 Section 5.02 Compliance With Laws ...................................................................................... 10 Section 5.03 Maintenance of Legal Existence ........................................................................ 11 Section 5.04 Operation of Project ........................................................................................... 11 Section 5.05 Tax Covenants .................................................................................................... 11 Section 5.06 Further Assurances and Corrective Instruments ................................................ 12 Section 5.07 Compliance With Other Documents .................................................................. 12 Section 5.08 Notice of Certain Events .................................................................................... 13 Section 5.09 Indemnification .................................................................................................. 13 Section 5.10 Right to Perform Borrower’s Obligations .......................................................... 14 Section 5.11 Nonrecourse Provisions ..................................................................................... 14 Section 5.12 Trust Indenture ................................................................................................... 15
ARTICLE VI
MORTGAGE LOAN DOCUMENTS
Section 6.01 Assurances ......................................................................................................... 15 Section 6.02 Financial Obligations Personal to the Borrower ................................................ 15
ARTICLE VII
TRUSTEE’S INTEREST IN AGREEMENT
Section 7.01 Issuer Assignment of Financing Agreement ...................................................... 15
EXHIBIT E
98 TABLE OF CONTENTS
(Continued)
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ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.01 Events of Default ............................................................................................... 16 Section 8.02 Remedies Upon an Event of Default .................................................................. 16 Section 8.03 Default Under Regulatory Agreement ............................................................... 18 Section 8.04 Limitation on Waivers ........................................................................................ 18 Section 8.05 Notice of Default: Rights To Cure .................................................................... 19 Section 8.06 Rights Cumulative ............................................................................................. 19
ARTICLE IX
MISCELLANEOUS
Section 9.01 Notices ............................................................................................................... 19 Section 9.02 Amendment ........................................................................................................ 19 Section 9.03 Entire Agreement ............................................................................................... 19 Section 9.04 Binding Effect .................................................................................................... 20 Section 9.05 Severability ........................................................................................................ 20 Section 9.06 Execution in Counterparts .................................................................................. 20 Section 9.07 Governing Law; Venue ...................................................................................... 20 Section 9.08 Limited Liability of the Issuer ........................................................................... 20 Section 9.09 Term of Financing Agreement ........................................................................... 21 Section 9.10 Electronic Signatures ......................................................................................... 22 Section 9.11 Patriot Act .......................................................................................................... 22
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99 4901-0683-7111v3/202027-0004
FINANCING AGREEMENT
THIS FINANCING AGREEMENT (this “ Financing Agreement”), is dated as of [January 1, 2026 ], and entered into by and among MARINA JOINT POWERS FINANCING AUTHORITY (the “Issuer”), U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as trustee under the Indenture referred to below (together with its successors and assigns, the “Trustee”), and PRESTON PARK SUSTAINABLE COMMUNITY NONPROFIT CORPORATION (together with its successors and assigns, the “Borrower”).
RECITALS:
A. Pursuant to the Act (as defined in the Indenture), the Issuer is authorized to issue revenue bonds, notes or other evidence of indebtedness for the purpose of, among other things, financing the acquisition, construction, rehabilitation and equipping of public capital improvements, including publicly-owned multifamily rental housing.
B. As more fully set forth in the Indenture of Trust, of even date herewith, between the Issuer and the Trustee (the “Indenture”), the Issuer is issuing its Multifamily Housing Revenue Bonds (Fannie Mae MBS-Secured) Series 2026 (Preston Park Apartments), in the aggregate principal amount of $[Par Amount] (herein, the “Bonds”).
C. To secure the payment of all of the principal of and premium, if any, and interest on the Bonds, the Issuer has assigned (with certain exceptions described herein and in the Indenture) its rights, title and interests in, and delegated its duties under, this Financing Agreement, without recourse, to the Trustee.
D. The obligation of the Borrower to pay all amounts necessary to pay principal of, premium, if any, and interest on the Bonds will be evidenced by this Financing Agreement and the Mortgage Note.
E. The parties hereto acknowledge the matters set forth in the Recitals to the Indenture.
NOW, THEREFORE, the parties hereto, in consideration of the premises and the mutual covenants and commitments of the parties set forth herein, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01 Definitions. Capitalized terms used herein without definition shall have the respective meanings set forth in the Indenture. In addition to the terms elsewhere defined in this Financing Agreement, the following terms used in this Financing Agreement (including the Recitals) shall have the following meanings unless the context indicates another or different meaning or intent, and such definitions shall be equally applicable to both the singular and plural forms of any of the terms herein defined:
“City” means the City of Marina, California.
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“Event of Default” means any event of default specified and defined in Section 8.01 of this Financing Agreement.
“Mortgage Note Rate” means a per annum rate of interest calculated in accordance with the Mortgage Note.
“Permitted Liens” shall mean any easements and restrictions listed in a schedule of exceptions to coverage in the title insurance policy delivered with respect to the Project as required by the Mortgage Loan Documents.
“Person” means any natural person, firm, partnership, association, limited liability company, corporation or public body.
“Single Purpose Entity” means an entity that ( i) is formed solely for the purpose of owning and operating a single asset, (ii) does not engage in any business unrelated to such asset, (iii) keeps its own books and records and its own accounts separate and apart from the books, records and accounts of any other Person, and (iv) holds itself out as being a legal entity, separate and apart from any other Person.
Section 1.02 Rules of Construction.
(a) The singular form of any word used herein, including the terms defined in Section 1.01, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include correlative words of the other genders. (b) All references herein to “Articles,” “Sections” and other subdivisions hereof are to the corresponding Articles, Sections or subdivisions of this Financing Agreement as originally executed; and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Financing Agreement as a whole and not to any particular Article, Section or subdivision hereof. (c) The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not limit or otherwise affect the meaning, construction or effect of this Financ ing Agreement or describe the scope or intent of any provisions hereof.
(d) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with applicable generally accepted accounting principles as in effect from time to time.
(e) Every “request,” “order,” “demand,” “application,” “appointment,” “notice,” “statement,” “certificate,” “consent,” or similar action hereunder by any party shall, unless the form thereof is specifically provided, be in writing signed by a duly authorized representative of such party with a duly authorized signature.
(f) The parties hereto acknowledge that each such party and their respective counsel have participated in the drafting and revision of this Financing Agreement and the Indenture.
Accordingly, the parties agree that any rule of construction which disfavors the drafting party shall not apply in the interpretation of this Financing Agreement or the Indenture or any amendment or supplement or exhibit hereto or thereto.
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Section 1.03 Effective Date. The provisions of this Financing Agreement shall be effective on and as of the Closing Date, immediately upon the effectiveness of the Indenture.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01 Representations, Warranties and Covenants by the Borrower . The Borrower represents, warrants and covenants as follows:
(a) The Borrower is a nonprofit corporation and is qualified to do business in the State. The City is a California municipal corporation and general law city and is qualified to do business in the State. Each of the Borrower and the City has full power and authority to own its properties and to carry on its business as now being conducted and as contemplated to be conducted with respect to the Project, and to enter into, and to perform and carry out the transactions provided for in this Financing Agreement, all other Financing Documents contemplated hereby to be executed by the Borrower and/or the City and the Mortgage Loan Documents. This Financing Agreement, the other Financing Documents to which the Borrower or the City is a party, the Mortgage Loan Documents and all other documents to which the Borrower or the City is a party and contemplated hereby or thereby have been duly authorized, executed and delivered by the Borrower or the City and constitute the legal, valid and binding obligations of the Borrowe r or the City, respectively, enforceable against the Borrower or the City, each in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally and general equitable principles. The officers of the Borrower and/or the City executing this Financing Agreement, all other Financing Documents contemplated hereby to be executed by the Borrower or the City and the Mortgage Loan Documents are duly and proper ly in office and fully authorized to execute the same.
(b) Neither the execution and delivery of this Financing Agreement, all other Financing Documents to be executed by the Borrower, the Mortgage Loan Documents or any other documents contemplated hereby or thereby, the consummation of the transactions contemplated hereby or thereby, nor the fulfillment of or compliance with the terms and conditions of this Financing Agreement, all other Financing Documents to be executed by the Borrower, the Mortgage Loan Documents or any other documents contemplated hereby or th ereby, will violate or contravene any provision of law, any order of any court or other agency of government, or any of the organizational or other governing documents of the Borrower, or any indenture, agreement or other instrument to which the Borrower is now a party or by which it or any of its properties or assets is bound, or be in conflict with, result in a breach of or constitute a default (with due notice or the passage of time or both) under any such indenture, agreement or other instrument or any license, judgment, decree, law, statute, order, rule or regulation of any governmental agency or body having jurisdiction over the Borrower or any of its activities or properties, or, except as provided hereunder, result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Borrower, except for Permitted Liens.
(c) The Borrower has and will have leasehold title to the Project, subject to the Permitted Liens. The Borrower is the sole borrower under the Mortgage Loan. The Borrower enjoys the peaceful and undisturbed possession of all of the premises upon which it is operating its facilities.
The Borrower possesses, and will at all times possess, all franchises, patents, copyrights, trademarks, trade names, licenses and permits, and rights in respect of the foregoing, adequate for the conduct of
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its business substantially as now conducted or as it is intended to be conducted with respect to the Project, without known conflict with any rights of others. (d) As of the Closing Date, no litigation or proceeding is pending or, to the knowledge of the Borrower or the City, threatened against or affecting the Borrower or the City or any of the Borrower’s properties (including, without limitation, the Project) which has a reasonable probability of having a material adverse effect on its financial condition or business, or the transactions contemplated by this Financing Agreement, t he Indenture, the other Financing Documents or the Mortgage Loan Documents, or which in any way would adversely affect the validity or enforceability of the Bonds, the Indenture, this Financing Agreement, the other Financing Documents or the Mortgage Loan Documents, or the exclusion from gross income for federal income tax purposes of interest on the Bonds, or the ability of the Borrower to perform its obligations under this Financing Agreement, the other Financing Documents or the Mortgage Loan Documents executed by the Borrower.
(e) The Project and the operation of the Project (in the manner contemplated by the Financing Documents) conform in all material respects with all applicable zoning (or a legal non- conforming use), planning, building and environmental laws, ordinances and regu lations of governmental authorities having jurisdiction over the Project, all necessary utilities are available to the Project, and the Borrower will obtain all requisite zoning, planning, building and environmental and other permits which may become necessary with respect to the Project. The Borrower has obtained all licenses, permits and approvals necessary for the ownership, operation and management of the Project, including all approvals essential to the transactions contemplated by this Financing Agre ement, the Indenture, the other Financing Documents, the Mortgage Loan Documents and any other documents contemplated hereby or thereby.
(f) The financial statements which have been furnished by or on behalf of the Borrower to the Issuer, are complete and accurate in all material respects and present fairly the financial condition of the Borrower as of their respective dates in accordance with generally accepted accounting methods applied by the Borrower on a consistent basis, and since the date of the most recent of such financial statements there has not been any material adverse change, financial or otherwise, in the condition of the Borrower , and there have not been any material transactions entered into by the Borrower other than transactions in the ordinary course of business, and the Borrower does not have any material contingent obligations which are not otherwise disclosed in its financial statements. There (i) is no completed, pending or threatened bankruptcy, reorganization, receivership, insolvency or like proceeding, whether voluntary or involuntary, affecting the Project, the Borrower, or the City; and (ii) has been no assertion or exercise of jurisdiction over the Project, the Borrower or the City by any court empowered to exercise bankruptcy powers.
(g) No event has occurred and no condition exists with respect to the Borrower or the Project that would constitute an Event of Default or which, with the lapse of time, if not cured, or with the giving of notice, or both, would become an Event of Default. The Borrower is not in default under the Regulatory Agreement.
(h) The Borrower has complied with all the terms and conditions of the Tax Certificate, including the terms and conditions of the exhibits thereto, and the representations and warranties set forth in the Tax Certificate and the Regulatory Agreement pertaining to the Borrower and the Project are true and accurate. The Borrower has furnished to the Issuer in the Tax Certificate
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all information necessary for the Issuer to file an IRS Form 8038-G with respect to the Bonds, and all of such information is and will be on the date of filing, true, complete and correct. (i) The Project is, as of the Closing Date, in compliance with all requirements of the Regulatory Agreement, including all applicable requirements of the Act and the Code. The Borrower intends to cause the residential units in the Project to be rented or avai lable for rental on a basis which satisfies the requirements of the Regulatory Agreement, including all applicable requirements of the Act and the Code. All leases will comply with all applicable laws and the Regulatory Agreement. The Project meets the r equirements of this Financing Agreement, the Regulatory Agreement, the Act and the Code with respect to multifamily rental housing. (j) No information, statement or report furnished in writing to the Issuer, Fannie Mae, the Lender or the Trustee by the Borrower in connection with this Financing Agreement, the other Financing Documents or the Mortgage Loan Documents or the consummation of the transactions contemplated hereby and thereby (including, without limitation, any information furnished by the Borrower in connection with the preparation of any materials related to the issuance, delivery or offering of the Bonds on the Closing Date) contains any material misstatement of fact or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading; and the representations and warranties of the Borrower and the statements, information and descriptions contained in the Borrower’s closing certificates, as of the Closing Date, are true, correct and complete, do not and will not contain any untrue statement or misleading statement of a material fact, and do not and will not omit to state a material fact required to be stated therein or necessary to make the certifications, representations, warranties, statements, information and descriptions contained therein, in the light of the circumstances under which they were made, not misleading; and the estimates and the assumptions contained herein and in any certificate of the Borrower delivered as of the Closing Date are reasonable and based on the best information available to the Borrower. Each of the certificatio ns, representations, warranties, statements, information and descriptions contained in the Tax Certificate is hereby incorporated into this Financing Agreement by reference, as if fully set forth herein.
(k) To the best knowledge of the Borrower, no member, officer, agent or employee of the Issuer has been or is in any manner interested, directly or indirectly, in that person’s own name or in the name of any other person, in the Bonds, the Financing Documents, the Mortgage Loan Documents, the Borrower or the Project, in any contract for property or materials to be furnished or used in connection with the Project, or in any aspect of the transactions contemplated by the Financing Documents or the Mortgage Loan Documents.
(l) No authorization, consent, approval, order, registration declaration or withholding of objection on the part of or filing of or with any governmental authority not already obtained or made (or to the extent not yet obtained or made the Borrower has no reason to believe that such authorizations, consents, approvals, orders, registrations or declarations will not be obtained or made in a timely fashion) is required for the execution and delivery or approval, as the case may be, of this Financing Agreement, th e other Financing Documents, the Mortgage Loan Documents or any other documents contemplated by this Financing Agreement, the other Financing Documents or the Mortgage Loan Documents, or for the performance of the terms and provisions hereof or thereof by the Borrower.
(m) The Borrower is not presently under any cease or desist order or other orders of a similar nature, temporary or permanent, of any federal or state authority which would have the
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effect of preventing or hindering performance of its duties hereunder, nor are there any proceedings presently in progress or to its knowledge contemplated which would, if successful, lead to the issuance of any such order.
(n) The Borrower acknowledges, represents and warrants that it understands the nature and structure of the transactions relating to the financing of the Project; that it is familiar with the provisions of all of the documents and instruments relating to such f inancing to which it or the Issuer is a party or of which it is a beneficiary including, without limitation, the Indenture; that it approves the initial appointment of the Trustee under the Indenture; that it understands the risks inherent in such transact ions, including, without limitation, the risk of loss of the Project; and that it has not relied on the Issuer, the Lender or Fannie Mae for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Financing Agreement and the Indenture or otherwise relied on the Issuer, the Lender or Fannie Mae in any manner. (o) The Borrower has not received any notice that it is not in compliance with all provisions of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (“CERCLA”); the Resource Conservation and Recovery Act; the Superfund Amendments and Reauthorization Act of 1986; the Toxic Substances Control Act and all environmental laws of the State (the “ Environmental Laws”), or with any rules, regulations and administrative orders of any governmental agency, or with any judgments, decrees or orders of any court of competent jurisdiction with respect thereto; and the Borrower has not received any assessment, notice (primary or secondary) of liability or financial responsibility, and no notice of any action, claim or proceeding to deter mine such liability or responsibility, or the amount thereof, or to impose civil penalties with respect to a site listed on any federal or state listing of sites containing or believed to contain “hazardous materials” (as defined in the Environmental Laws) , nor has the Borrower received notification that any hazardous substances (as defined under CERCLA) that it has disposed of have been found in any site at which any governmental agency is conducting an investigation or other proceeding under any Environmental Law.
(p) The Borrower has not received any notice that it is not in full compliance with the Employment Retirement Income Security Act of 1974 (“ ERISA”), as amended, and the Department of Labor regulations thereunder, with the Code and Regulations thereunder and with terms of such plan or plans with respect to each pension or welfare benefit plan to which the Borrower is a party or makes any employer contributions with respect to its employees, for the current or prior plan years of such plans.
(q) [Reserved.]
(r) The Bonds are not and shall not be “federally guaranteed” as defined in Section 149(b) of the Code.
(s) The Borrower intends to hold the Project for its own account and has no current plans to sell and has not entered into any agreement to sell all or any portion of the Project. (t) All tax returns (federal, state and local) required to be filed by or on behalf of the Borrower have been filed, and all taxes shown thereon to be due, including interest and penalties, except such, if any, as are being actively contested by the Borrower i n good faith, have been paid or adequate reserves have been made for the payment thereof which reserves, if any, are reflected in the audited financial statements described therein.
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(u) The Borrower shall make no changes to the Project or to the operation thereof which would affect the qualification of the Project under the Act or impair the exclusion from gross income for federal income tax purposes of the interest on the Bonds. The Bor rower shall operate the Project as required by the Regulatory Agreement.
(v) The Borrower is exempt from payment of federal income tax under Section 115 of the Internal Revenue Code.
(w) The Borrower is, and will at all times be, a Single Purpose Entity. (x) The Project is located wholly within the State and within the jurisdiction of the Issuer.
(y) None of the Issuer, the Trustee or any director, member, officer or employee of the Issuer or the Trustee has any interest, financial, employment or other, in the Borrower, the Project or the transactions contemplated hereby.
(z) The Borrower is not an “employee benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none of the assets in the Borrower constitutes or will constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101. (aa) No part of the proceeds of the loan to the Borrower evidenced by this Financing Agreement will be used for the purpose of acquiring any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any oth er purpose that would be inconsistent with such Regulation U or any other Regulation of such Board of Governors, or for any purpose prohibited by any Mortgage Loan Document. (bb) The Borrower is not ( i) an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; (ii) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a “subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935, as amended; or (ii i) subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money. (cc) Each requisition submitted by the Borrower shall contain an affirmation that the foregoing representations and warranties remain true and correct as of the date thereof.
Section 2.02 Representations, Warranties and Covenants of the Issuer . The Issuer represents, warrants and covenants as follows:
(a) Authority. The Issuer is a joint exercise of powers authority of the State of California, duly organized, validly existing and in good standing under the laws of the State, is authorized and empowered by the provisions of the Act and the Resolution to enter into the transactions contemplated by this Financing Agreement and the Indenture and to carry out its obligations hereunder and thereunder, and by proper action of its governing body has been duly authorized to execute and deliver this Financing Agreement, the Indenture and the Tax Certificate, and this Financing Agreement, the Indenture and the Tax Certificate have been duly executed and delivered by the Issuer and are valid and binding obligations of the Issuer enforceable in accordance with their terms.
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(b) Pledge. The Bonds are to be issued and secured by the Indenture, pursuant to which certain of the Issuer’s interests in this Financing Agreement and the Indenture, and the revenues and income to be derived by the Issuer pursuant to this Financing Agreement and the Indenture, will be pledged and assigned to the Trustee as security for payment of the principal, premium, if any, and interest on the Bonds. The Issuer covenants that it has not and will not pledge or assign its interest in the Indenture or this Financing Agreement, or the revenues and income derived pursuant to this Financing Agreement or the Indenture, excepting the Reserved Rights of the Issuer, other than to the Trustee under the Indenture to secure the Bonds. The Issuer will comply with all provisions of the Act (and the rules promulgated thereunder) applicable to the Bonds and the transactions contemplated by this Financing Agreement and the Indenture.
(c) Conflicts. To the best knowledge of the Issuer, neither the execution and delivery of this Financing Agreement, the Indenture, the Regulatory Agreement and the Tax Certificate, the consummation of the transactions contemplated hereby and thereby, nor the fulfillment of or compliance with the terms and conditions of this Financing Agreement, the Indenture, the Regulatory Agreement or the Tax Certificate conflicts with or results in a breach of the terms, conditions or provisions of any material restriction, agreement or instrument to which the Issuer is a party, or by which it or any of its property is bound, or constitutes a default under any of the foregoing.
ARTICLE III
THE BONDS AND THE PROCEEDS THEREOF
The Issuer has authorized the issuance of the Bonds in the aggregate principal amount of $[Par Amount] and Bonds in such amount shall be issued and Outstanding as of the Closing Date. The obligations of the Issuer, the Trustee and the Borrower under this Financing Agreement are expressly conditioned upon ( i) the sale, issuance and delivery of the Bonds, (i i) receipt by the Trustee of the amounts set forth in Section 5.04 of the Indenture, and (ii i) the making of the Mortgage Loan by the Lender. Neither the Issuer, the Lender, the Trustee nor Fannie Mae shall have any liability for any fees, costs or expenses, including, without limitation, issuance costs relating to the Bonds; all of such fees, costs and expenses shall be paid by the Borrower.
ARTICLE IV
THE BONDS, THE MORTGAGE LOAN AND FEES
Section 4.01 Sources, Deposits and Uses . Upon the issuance and delivery of the Bonds, the Lender will make the Mortgage Loan to the Borrower. Proceeds of the Mortgage Loan shall be applied to pay the Prior Loan in full on the Prior Loan Payment Date. To the extent proceeds of the Mortgage Loan remain undisbursed following disbursements made on the Closing Date and the Prior Loan Payment Date, the Lender will deliver funds to the Trustee for deposit into the Revenue Fund to be applied in accordance with to Section 5.05 of the Indenture. The Trustee shall apply the proceeds of the Bonds as provided in Section 5.08 of the Indenture ( i) to secure the Bonds until the MBS Delivery Date, and (ii) to purchase the MBS on the MBS Delivery Date. The Borrower accepts the Mortgage Loan from the Lender, upon the terms and conditions set forth herein, in the Mortgage Loan Documents and in the Indenture, and subject to the terms and conditions of the Regulatory Agreement.
The Issuer has caused the proceeds of the Bonds to be provided to the Trustee for deposit to the Bond Proceeds Fund. The Borrower acknowledges its obligation to pay all amounts necessary to pay principal of, premium, if any, and interest on the Bonds as provided in the Indenture. The Borrower
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has made arrangements for the delivery to the Trustee of the Bond proceeds, the MBS and of certain other Eligible Funds as contemplated herein and in the Indenture. Payments on the MBS received by the Trustee shall be credited to amounts due from the Borrower for payment of principal of, premium, if any, and interest on the Bonds.
Section 4.02 Payment of Fees and Expenses . In addition to all fees, costs, expenses and other amounts required to be paid by the Borrower under the Mortgage Loan Documents, the Borrower shall pay, without duplication, the following fees and expenses:
(a) All amounts required to (i) pay the fees of the Trustee for its duties and services as Trustee in connection with the Bonds (as such duties and services are set out in the Indenture), and (ii) reimburse the Trustee for all out of -pocket expenses, fees, costs and other charges, including reasonable counsel fees and taxes (excluding income, value added and similar business taxes), reasonably and necessarily incurred by the Trustee in performing it s duties as Trustee under the Indenture.
(b) The reasonable fees and expenses of the Issuer or any agents, attorneys, accountants, and consultants selected by the Issuer to act on its behalf in connection with the Financing Documents, the Mortgage Loan Documents or the Bonds, including, without limi tation, any and all reasonable expenses incurred in connection with the authorization, issuance, sale and delivery of the Bonds or in connection with any litigation which may at any time be instituted involving the Financing Documents, the Mortgage Loan Documents or the Bonds or any of the other documents contemplated thereby, or in connection with the reasonable supervision or inspection of the Borrower, its properties, assets or operations or otherwise in connection with the administration of the foregoing. (c) All taxes and assessments of any type or character charged to the Issuer or to the Trustee affecting the amount available to the Issuer or the Trustee from payments to be received hereunder or in any way arising due to the transactions contemplated hereby or thereby (including taxes and assessments assessed or levied by any public agency or governmental authority of whatsoever character having power to levy taxes or assessments) but excluding franchise taxes based upon the capital and/or income of the Trustee and taxes based upon or measured by the net income of the Trustee; provided, however, that the Borrower shall have the right to protest any such taxes or assessments and to require the Issuer or the Trustee, at the Borrower’s expense, to protest and contest any such taxes or assessments levied upon them and that the Borrower shall have the right to withhold payment of any such taxes or assessments pending disposition of any such protest or contest unless such withholding, protest or contest would adverse ly affect the rights or interests of the Issuer or the Trustee.
(d) The fees of the Rebate Analyst as required by the Indenture and all out -of- pocket expenses of the Rebate Analyst.
(e) To the extent not paid with proceeds of the Bonds, all Costs of Issuance of the Bonds, including, but not limited to, Rating Agency fees, printing expenses, attorneys’ fees and the Underwriter’s fees, and all expenses of originating the Mortgage Loan by the Lender, the Borrower acknowledging that all such fees, costs and expenses must be paid by the Borrower separate and apart from payments due under the Mortgage Loan and will not be included in the Mortgage Note Rate.
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(f) These obligations and those in Section 5.09 hereof shall remain valid and in effect notwithstanding repayment of the Mortgage Loan hereunder or termination of this Financing Agreement or the Indenture.
All fees and expenses not included in the Mortgage Note Rate shall not be secured by the Mortgage, except as provided for therein, and shall be subordinate to the Borrower’s obligations under the Mortgage Loan in all respects. No such fees or expenses payable to the Issuer or the Trustee shall be paid from the proceeds of the MBS.
Section 4.03 Notification of Prepayment of Mortgage Note . The Borrower shall notify the Trustee promptly of any prepayment of the Mortgage Note, whether upon acceleration, by reason of application of insurance or condemnation proceeds, optional prepayment or otherwise. If such prepayment results in revisions to the Mortgage Loan Amortization Schedule, the Borrower shall direct the Lender to provide the revised Mortgage Loan Amortization Schedule to the Trustee.
ARTICLE V
COVENANTS, UNDERTAKINGS AND OBLIGATIONS OF THE BORROWER Section 5.01 Taxes, Other Governmental Charges and Utility Charges . The Borrower shall pay, or cause to be paid, promptly as the same become due and payable, every lawful cost, expense and obligation of every kind and nature, foreseen or unforeseen, for the payment of which the Issuer, the Trustee, the Lender or Fannie Mae is or shall become liable by reason of its or their estate or interest in the Project or any portion thereof, by reason of any right or interest of the Issuer, the Trustee, the Lender or Fannie Mae i n or under this Financing Agreement, or by reason of or in any manner connected with or arising out of the possession, operation, maintenance, alteration, repair, rebuilding, use or occupancy of the Project or any portion thereof, including, without limitation, all taxes (except income and similar taxes of such entities), assessments, whether general or special, all costs of maintenance and repair, insurance premiums (including public liability insurance and insurance against damage to or destruction of the Project) concerning or in any way related to the Project, or any part thereof, and any expenses or renewals thereof, all utility and other charges and assessments concerning or in any way related to the Project, and governmental charges and impositions of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Project or any machinery, equipment or other property installed or brought by the Borrower therein or thereon; provided that any amounts payable hereund er that are also required to be paid by the terms of the Mortgage shall be paid without duplication on the terms provided in the Mortgage.
Upon request, the Borrower shall furnish to the Issuer, the Trustee, Fannie Mae and the Lender proof of the payment of any such tax, assessment or other governmental or similar charge, or any other charge which is payable by the Borrower as set forth above.
Section 5.02 Compliance With Laws . The Borrower shall, throughout the term of this Financing Agreement and at no expense to the Issuer, the Trustee, the Lender or Fannie Mae promptly comply or cause compliance with all laws, ordinances, rules, regulations and requirements of duly constituted public authorities which may be applicable to the Project or to the repair and alteration thereof, or to the use or manner of use of the Project, including, but not limited to, the applicable provisions of the Americans With Disabi lities Act and all applicable federal, State and local environmental, labor, health and safety laws, rules and regulations.
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Section 5.03 Maintenance of Legal Existence . During the term of this Financing Agreement, the Borrower shall maintain its existence as set forth in Section 2.01(a) and shall not terminate, dissolve or dispose of all or substantially all of its assets; provided, however, that the Borrower may, with the written permission of the Issuer, consolidate with or merge into another entity or permit one or more other entities to consolidate with or merge into it, or transfer all or substantially all of its assets to another entity, but only on the condition that the assignee entity or the entity resulting from or surviving such merger or consolidation (if other than the Borrower), or the entity to which such transfer shall be made, shall be duly organized and existing, in good standing and qualified to do business under the laws of the State, shall remain so continuously during the term hereof, and shall expressly assume in writing and agree to perform all of the Borrower’s obligations hereunder and under all other documents executed by the Borrower in connection with the issuance of the Bonds; provided, further, that (i) the Borrower delivers an opinion of Bond Counsel to the effect that such consolidation or merger shall not cause interest on the Bonds to be included in gross income for federal income tax purposes, and (i i) any transfer of the Project shall be effected in accordance with the Mortgage.
Nothing in this Section 5.03 shall be deemed to relieve the Borrower of its obligations to comply with the provisions of the Mortgage Loan Documents.
Section 5.04 Operation of Project . The Borrower will not sell, transfer or otherwise dispose of the Project except as provided in the Regulatory Agreement, the Mortgage Loan Documents and Section 5.03 of this Financing Agreement.
Section 5.05 Tax Covenants. The Borrower hereby covenants and agrees as follows:
(a) It shall (a) take or cause to be taken all actions necessary or appropriate in order to ensure fully and timely compliance with Section 9.12 of the Indenture, and (b) if required to do so under Section 9.12 of the Indenture, select at the Borrower’s expense, a Rebate Analyst reasonably acceptable to the Issuer for the purpose of making any and all calculations required under Section 9.12 of the Indenture. Such calculations, if required, shall be made in the manner and at such times as specified in Section 9.12 of the Indenture. The Borrower shall cause the Rebate Analyst to provide such calculations to the Trustee and the Issuer at such times and with such directions as are necessary to comply fully with the arbitrage and rebate requirements set forth in t he Indenture and to comply fully with Section 148 of the Code, including the timely payment of any arbitrage rebate owed. (b) It will at all times comply with the terms of the Tax Certificate and the Regulatory Agreement.
(c) It will not take, or permit to be taken on its behalf, any action which would cause the interest payable on the Bonds to be included in gross income of the holders thereof for federal income tax purposes, and will take such action as may be necessary in the opinion of Bond Counsel to continue such exclusion from gross income, including, without limitation, the preparation and filing of all statements required to be filed by it in order to maintain the exclusion (including, but not limited to, the filing of all reports and certifications required by the Regulatory Agreement). (d) No changes will be made to the Project, no actions will be taken by the Borrower and the Borrower will not omit to take any actions, which will in any way adversely affect the tax-exempt status of interest on the Bonds.
(e) It will comply with the requirements of Section 148 of the Code and the Regulations issued thereunder so long as any Bonds remain Outstanding and will not make any use of
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the proceeds of the Bonds, or of any other funds which may be deemed to be proceeds of the Bonds under the Code and the related regulations of the United States Treasury, which would cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code. (f) If the Borrower becomes aware of any situation, event or condition which would, to the best of its knowledge, result in the interest on the Bonds becoming includable in gross income of the holders thereof for federal income tax purposes, it will promptly g ive written notice of such circumstance, event or condition to the Issuer, the Trustee, the Lender and Fannie Mae. (g) The full amount of the proceeds of the Bonds will be applied as provided in Sections 5.03, 5.04, 5.05, 5.07, 5.08, and 5.09 of the Indenture. (h) The Borrower will cause all of the residential units in the Project to be rented or available for rental on a basis which satisfies the requirements of the Code and the Regulatory Agreement.
(i) All leases will comply with all applicable laws and the Regulatory Agreement. (j) In connection with any lease or grant by the Borrower of the use of the Project, the Borrower will require that the lessee or user of any portion of the Project not use that portion of the Project in any manner which would violate the covenants set forth i n this Financing Agreement , the Tax Certificate, or the Regulatory Agreement.
In the event of a conflict between the terms and requirements of this Section 5.05 and the Tax Certificate, the terms and requirements of the Tax Certificate shall control.
Section 5.06 Further Assurances and Corrective Instruments. The parties hereto agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and to the other documents contemplated hereby as may reasonably be required to ca rry out the intention of or to facilitate the performance of this Financing Agreement, the Mortgage Loan Documents or the other Financing Documents or to perfect or give further assurances of any of the rights g ranted or provided for herein, the Mortgage Loan Documents or the other Financing Documents.
The Borrower shall execute and file, or shall cause to be executed and filed, any and all financing statements, or any amendments thereof or continuation statements thereto, to perfect the security interests granted in the Indenture, in the manner prescrib ed in the Indenture. The Borrower shall pay all costs of filing such instruments and any fees and expenses (including reasonable attorney’s fees) associated therewith.
Section 5.07 Compliance With Other Documents. The Borrower shall make all payments and shall observe and perform all covenants, conditions and agreements required to be paid, observed or performed by the Borrower under the Financing Documents, the Mortgage Note, the Mortgage, the other Mortgage Loan Documents, the Regulatory Agreement and all other documents, instruments or agreements which may at any time, or from time to time, be entered into by the Borrower with respect to the Project or the operation, occupancy or use thereof. The Indenture has been submitted to the Borrower for examination, and the Borrower, by execution of this Financing Agreement, acknowledges and agrees that it has participated in the negotiation of the Indenture that it has approved and agreed to each of the provisions of the Indenture and that it is bound by, shall adhere to the
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provisions of, and shall have the rights set forth by the terms and conditions of, the Indenture and covenants and agrees to perform all obligations required of the Borrower pursuant to the terms of the Indenture.
The Borrower hereby grants to the Trustee for the benefit of the Lender, Fannie Mae and the Bondholders a security interest in all of its rights in and to all funds created or established by the Trustee under the Indenture (other than the Rebate Fund) in t he manner and subject to the terms and conditions of the Indenture.
Section 5.08 Notice of Certain Events . The Borrower hereby covenants to advise the Lender, the Issuer and the Trustee promptly in writing of the occurrence of any default by the Borrower in the performance or observance of any covenant, agreement, representation, warranty or obligation of the Borrower set forth in this Financing Agreement, in any of the other Financing Documents or any other documents contemplated hereby or thereby, or of any Event of Default hereunder known to it or of which it has received notice, or any event which, with the passage of time or service of notice, or both, would constitute an Event of Default hereunder, specifying the nature and period of existence of such event and the actions being taken or proposed to be taken with respect thereto. Such notice shall be given promptly, and in no event less than ten (10) Business Days after the Borrower receives notice or has knowledge of the occurrence of any such event. The Borrower further agrees that it will give prompt written notice to the Trustee and the Lender if insurance proceeds or condemnation awards are received with respect to the Project and are not used to repair or replace the Project, which notice shall state the amount of such proceeds or award.
Section 5.09 Indemnification. The Borrower covenants and agrees to indemnify, hold harmless and defend the Issuer, the Trustee, the Lender, Fannie Mae, the Underwriter and their respective officers, members, directors, officials, agents and employees and each of them (each an “indemnified party”) from and against, (a) any and all claims, joint or several, by or on behalf of any person arising from any cause whatsoever in connection with transactions contemplated hereby or otherwise in connection with the Project, the B onds or the execution or amendment of any document relating thereto, including, but not limited to, the Financing Documents; (b ) any and all claims, joint or several, arising from any cause whatsoever in connection with the approval of financing for the Project or the making of the Mortgage Loan, or the execution or amendment of any document related thereto, including, but not limi ted to, the Mortgage Loan Documents; (c ) any and all claims, joint or several, arising from any act or omission of the Borrower or any of its agents, servants, employees or licensees, in connection with the Project or the Mortgage Loan, including but not limited to, the Mortgage Loan Documents; (d ) all reasonable costs, counsel fees, expenses or liabilities incurred in connection with any such claim, or proceeding brought thereon; (e ) any and all claims arising in connection with the issuance and sale, resale or remarketing of any Bonds or any certifications or representations made by any Person other than the party seeking indemni fication in connection therewith and the carrying out by the Borrower of any of the transactions contemplated by the Bonds, the Financing Documents, and the Mortgage Loan Documents; (f ) any and all claims arising in connection with the operation of the Project, or the conditions thereof, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, rehabi litation, equipping, installation or construction of, the Project or a ny part thereof; and (g) any and all losses, claims, damages, liabilities or expenses, joint or several, arising out of or connected with the Trustee’s acceptance or administration of the trusts created by the Indenture and the exercise of its powers or duties thereunder or under this Financing Agreement, the Regulatory Agreement or any other agreements in connection therewith to which it is a party; except (i) in the case of the foregoing indemnification of the Trustee or the Lender or any of their respect ive officers,
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members, directors, officials and employees, to the extent such damages are caused by the negligence or willful misconduct of such Person; or (ii) in the case of the foregoing indemnification of the Issuer or any of its officers, members, directors, officials and employees, to the extent such damages are caused by the willful misconduct of such Person. In the event that any action or proceeding is brought against any indemnified party with respect to which indemnity may be sought hereunder, the Borrower, upon written notice from the indemnified party, shall assume the investigation and defense thereof, including the employment of counsel selected by the Borrower, subject to the approval of the indemnified party in such party’s sole but reasonable discretion , and shall assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same in its sole discretion; provided that the Trustee and the Lender shall have the right to review and approve or disapprove any such compromise or settlement. Each indemnified party shall have the right to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and the Borrower shall pay the reasonable fees and expenses of such separate counsel; provided, however, that unless such separate counsel is employed with the approval of the Borrower, which approval shall not be unreasonably withheld, the Borrower shall not be required to pay the fees and expenses of such separate counsel.
Notwithstanding any transfer of the Project to another owner in accordance with the provisions of the Regulatory Agreement, the Borrower shall remain obligated to indemnify each indemnified party pursuant to this Section if such subsequent owner fails to i ndemnify any party entitled to be indemnified hereunder, unless such indemnified party has consented to such transfer and to the assignment of the rights and obligations of the Borrower hereunder.
During any period that the Lender or Fannie Mae owns the Project and that this Section 5.09 is applicable to the Lender and Fannie Mae, the obligations of the Lender or Fannie Mae, as applicable, under this Section 5.09 shall be limited to acts and omissions of the Lender or Fannie Mae occurring during the period of the Lender’s or Fannie Mae’s ownership of the Project.
Nothing contained in this Section 5.09 shall in any way be construed to limit the indemnification rights of the Issuer contained in the Regulatory Agreement. With respect to the Issuer, the Regulatory Agreement shall control in any conflicts between this Section 5.09 and the Regulatory Agreement.
Section 5.10 Right to Perform Borrower’s Obligations . In the event the Borrower fails to perform any of its obligations under this Financing Agreement, the Issuer, the Lender, Fannie Mae and/or the Trustee, after giving the requisite notice, if any, may, but shall be under no obligation to, perform such obligation and pay all costs related thereto, and all such costs so advanced by the Issuer, the Lender, Fannie Mae or the Trustee shall become an additional obligation of the Borrower hereunder, payable on demand with i nterest thereon at the default rate of interest payable under the Mortgage Loan Documents.
Section 5.11 Nonrecourse Provisions . Notwithstanding anything to the contrary, the obligations of the Borrower pursuant to this Financing Agreement shall not be secured by or create a lien or charge on in any manner the property of the Borrower or the City, including the Project or the rents, issues and profits thereof, and except with respect to Sections 4.02 and 5.09 hereof shall be non- recourse to the Borrower and the City. Sections 4.02 and 5.09 shall be recourse to the Borrower but non-recourse to the City.
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Section 5.12 Trust Indenture. The provisions of the Indenture concerning the Bonds and other matters therein are an integral part of the terms and conditions of the Mortgage Loan, and this Financing Agreement shall constitute conclusive evidence of approval of the Indenture by the Borrower to the extent it relates to the Borrower. Additionally, the Borrower agrees that, whenever the Indenture by its terms imposes a duty or obligation upon the Borrower, such duty or obligation shall be binding upon the Borrower to the same extent as if the Borrower were an express party to the Indenture, and the Borrower agrees to carry out and perform all of its obligations under the Indenture as fully as if the Borrower were a party to the Indenture.
ARTICLE VI
MORTGAGE LOAN DOCUMENTS
Section 6.01 Assurances. The Borrower, the Issuer and the Trustee mutually agree that no party hereto shall enter into any contract or agreement, perform any act, or request any other party hereto to enter into any contracts or agreements or perform any acts, which shall advers ely affect the Mortgage Loan Documents.
Section 6.02 Financial Obligations Personal to the Borrower. The Issuer acknowledges that the Project shall be encumbered by the Mortgage Loan Documents. Notwithstanding any provisions of this Financing Agreement or the Regulatory Agreement to the contrary, all obligations of the Borrower under this Financing Ag reement and the Regulatory Agreement for the payment of money and all claims for damages against the Borrower occasioned by breach or alleged breach by the Borrower of its obligations under the Regulatory Agree ment or this Financing Agreement, including indemnification obligations, shall not be payable from the Trust Estate and shall not be secured by or in any manner constitute a lien on the Project and no Person shall have the right to enforce such obligations other than directly against the Borrower. No subsequent owner of the Project shall be liable or obligated for the breach or default of any obligation of any prior owner under the Regulatory Agreement or this Financing Agreement, including but not limited to any payment or indemnification obligation. Such obligations are personal to the Person who was the owner at the time the default or breach was alleged to have occurred and such Person shall remain liable for any and all damages occasioned thereby even after such Person ceases to be the owner.
ARTICLE VII
TRUSTEE’S INTEREST IN AGREEMENT
Section 7.01 Issuer Assignment of Financing Agreement.
(a) Pursuant to the Indenture, the Issuer shall pledge, assign and transfer all of its right, title and interest in this Financing Agreement (other than the Reserved Rights of the Issuer), and the revenues, receipts and collections hereunder and thereunder, to the Trustee in the manner and to the extent provided in the Indenture as security for the payment of the principal of, premium, if any, and interest on the Bonds, and the parties hereby acknowledge that the covenants and agreements contained herein are for the benefit of the registered owners from time to time of the Bonds and may be enforced on their behalf by the Trustee. The Issuer shall execute and deliver from time to time, in addition to the instruments of assignment herein specifically provided for , such other and further instruments and documents as may be reasonably requested by the Trustee from time to time to further evidence, effect or perfect such pledge and assignment for the purposes contemplated in the Indenture.
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(b) The Borrower hereby acknowledges and consents to the assignment and pledge (subject to the reservation by the Issuer of its Reserved Rights) by the Issuer to the Trustee in the manner and to the extent provided in the Indenture. The Borrower further acknowledges and consents to the right of the Trustee to enforce all rights of the Issuer and the Bondholders assigned under the Indenture.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.01 Events of Default. Each of the following shall constitute an event of default under this Financing Agreement, and the term “Event of Default” shall mean, whenever used in this Financing Agreement, any one or more of the following events:
(a) Failure by the Borrower to pay any amounts due under this Financing Agreement at the times and in the amounts required hereby; or (b) Failure by the Borrower to observe or perform any covenants, agreements or obligations in this Financing Agreement on its part to be observed or performed (other than as provided in clause (a) above) for a period of thirty (30) days after receipt of written notice specifying such failure and requesting that it be remedied, given to the Borrower by any party to this Financing Agreement; provided, however, that if said failure shall be such that it cannot be corrected within such period, it shall not constitute an Event of Default if the failure is correctable without material adverse effect on the Bonds and if corrective action is instituted by the Borrower within such period and diligently pursued until the failure is corrected, and provided further that any such failure shall have been cured within ninety (90) days of receipt of notice of such failure; or (c) Breach of any of the covenants, agreements or obligations of the Borrower under or the occurrence of a default which is continuing under the Regulatory Agreement, including any exhibits to any of the foregoing; or
(d) The occurrence of an Event of Default caused by the Borrower under and as defined in the Indenture or under any of the other Financing Documents.
Nothing contained in this Section 8.01 is intended to amend or modify any of the provisions of the Mortgage Loan Documents or to bind the Borrower, the Lender or Fannie Mae to any notice and cure periods other than as expressly set forth in the Mortgage Loan Documents.
Section 8.02 Remedies Upon an Event of Default.
(a) Subject to Section 8.02(d), whenever any Event of Default shall have occurred and be continuing, the Issuer or the Trustee may take any one or more of the following remedial steps:
(i) By any suit, action or proceeding, pursue all remedies now or hereafter existing at law or in equity to collect all amounts then due and thereafter to become due under this Financing Agreement, to enforce the performance of any covenant, obligation or agre ement of the Borrower under this Financing Agreement (subject to the nonrecourse provisions of this Financing Agreement and the Regulatory Agreement) or to enjoin acts or things which may be unlawful or in violation of the rights of the Issuer or the Trustee.
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(ii) Take whatever other action at law or in equity may appear necessary or desirable to enforce any monetary obligation of the Borrower under this Financing Agreement or to enforce any other covenant, obligation or agreement of the Borrower under (1 ) this Financing Agreement or (2) the Regulatory Agreement.
(iii) Have access to and inspect, examine, audit and make copies of the books and records and any and all accounts, data and income tax and other tax returns of the Borrower. (b) The provisions of subsection (a) hereof are subject to the condition that if, after any Event of Default, except a default under the Regulatory Agreement, ( i) all amounts which would then be payable hereunder by the Borrower if such Event of Default had not occurred and was not continuing shall have been paid by or on behalf of the Borrower, and (ii) the Borrower shall have also performed all other obligations in respect of which it is then in default hereunder and shall have paid the reasonable charges and expenses of the Issuer and the T rustee, including reasonable attorney fees and expenses paid or incurred in connection with such default, then and in every such case, such Event of Default may be waived and annulled by the Trustee, but no such waiver or annulment shall extend to or affect any subsequent Event of Default or impair any right or remedy consequent thereon. (c) Subject to the limitations of the Regulatory Agreement and this Financing Agreement, the Issuer, without the consent of the Trustee, but only after written notice to the Trustee, the Borrower, the Lender and Fannie Mae, may take whatever action at law or i n equity may appear necessary or desirable to enforce performance and observance of any Reserved Right of the Issuer; provided that, the Issuer may not (i) terminate this Financing Agreement or cause the Mortgage Loan to become due and payable, (ii) cause the Trustee to declare the principal of all Bonds then Outstanding and the interest accrued thereon to be immediately due and payable, or cause the Trustee to accelerate, foreclose or take any other action or seek other remedies under the Financing Documents, the Mortgage Loan Documents or any other documents contemplated hereby or thereby to obtain such performance or observance, (iii) cause the acceleration, foreclosure or taking of any other action or the seeking of any remedies under the Mortgage Loan Documents, (iv) initiate or take any action which may have the effect, directly or indirectly, of impairing the ability of the Borrower to timely pay the principal, interest and other amounts due under the Mortgage Loan, or ( v) interfere with or attempt to influence the exercise by Fannie Mae of any of its rights under the Financing Documents or the Mortgage Loan Documents.
(d) Except as required to be deposited in the Rebate Fund pursuant to the Financing Documents, any amounts collected pursuant to action taken under this Section 8.02 shall, after the payment of the costs and expenses of the proceedings resulting in the collection of such moneys and of the expenses, liabilities and advances incurred or made by the Trustee, the Issuer, the Lender or Fannie Mae and their respective counsel, be applied in accordance with the provisions of the Indenture.
No action taken pursuant to this Section shall relieve the Borrower from the Borrower’s obligations pursuant to Section 5.09 hereof.
(e) No remedy herein conferred upon or reserved to the Issuer or the Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy now or hereaft er existing pursuant to any other agreement at law or in equity or by statute. (f) Notwithstanding any other provision of this Financing Agreement to the contrary, after the MBS Delivery Date, so long as Fannie Mae is not in default under the MBS, none
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of the Issuer, the Trustee or any Person under their control shall exercise any remedies or direct any proceedings under this Financing Agreement or the Mortgage Loan Documents, other than to (i) enforce rights under the MBS, (i i) enforce the tax covenants in the Indenture, in this Financing Agreement, and in the Tax Certificate or (ii i) enforce rights of specific performance under the Regulatory Agreement; provided, however, that any enforcement under (i i) or (ii i) above shall not include seeking monetary damages.
Section 8.03 Default Under Regulatory Agreement.
(a) If the Borrower fails, at any time for any reason, to comply with the requirements of the Regulatory Agreement, then within thirty (30) days after the earlier of the date the violation is discovered by the Issuer or the Trustee or the date the Issuer or the Trustee received notice thereof, the Issuer (if necessary to preserve the exclusion of interest on the Bonds from gross income for federal income tax purposes) or the Trustee, on behalf and at the request of the Issuer, shall institute an action for spec ific performance to correct the violation. The Borrower hereby acknowledges and agrees that were money damages a remedy under the Regulatory Agreement, money damages alone would not be an adequate remedy at law for a default by the Borrower arising from a failure to comply with the Regulatory Agreement, and therefore the Borrower agrees that the remedy of specific performance (subject to the provisions of Section 8.02(c) hereof) shall be available to the Issuer and/or the Trustee in any such case.
(b) Notwithstanding the availability of the remedy of specific performance provided for in subsection (a ) of this Section, promptly upon determining that a violation of the Regulatory Agreement has occurred, the Issuer shall, by notice in writing to the Lender, inform the Lender that a violation of the Regulatory Agreement has occurred; notwithstanding the occurrence of such violation, neither the Issuer nor the Trustee shall have, and each of them acknowledges that they shall not have, any right to cause or direct acceleration of the Mortgage Loan, to enforce the Mortgage Note or to foreclose on the Mortgage.
Section 8.04 Limitation on Waivers.
(a) No delay or omission to exercise any right or power occurring upon any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed appropriate.
The Issuer and the Trustee agree to give only such notices as may be herein expressly required. (b) In the event any covenant, agreement or condition contained in this Financing Agreement shall be breached by a party and thereafter waived by another party, such waiver shall not bind any party which has not waived the breach and shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder nor be a waiver of the same breach on a future occasion. By reason of the assignment and pledge of certain of the Issuer’s rights and interests in this Financing Agreeme nt to the Trustee, the Issuer shall have no power to waive or release the Borrower from any Event of Default or the performance or observance of any obligation or condition of the Borrower under this Financing Agreement without first requesting and receiving the prior written consent of the Trustee, but shall do so if, requested by the Trustee; provided that the Issuer shall not be required to grant such waiver or release unless it shall have been provided with ( i) if deemed necessary, in the sole discretion of the Issuer, an Opinion of Counsel that such action will not result in any pecuniary liability to it and an Opinion of Bond Counsel that such waiver shall not cause interest on the Bonds to be included in the gross income of the Bondholders thereof for federal income tax
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purposes, (i i) such indemnification as the Issuer shall deem reasonably necessary, and (ii i) written notice from the Trustee of the request for such waiver or release.
Section 8.05 Notice of Default: Rights To Cure . The Issuer and the Trustee shall each give notice to the other and to the City and the Lender of the occurrence of any Event of Default by the Borrower hereunder of which it has actual knowledge. The Lender and the City shall each have the right, but not the obligation, to cure any such default by the Borrower, and upon performance by the Lender or the City to the satisfaction of the Issuer and the Trustee of the covenant, agreement or obligation of the Borrower with respect to which an Event of Default has occurred, the parties hereto shall be restored to their former respective positions, it being agreed that the Lender and the City shall each have the right to repayment from the Borrower of moneys it has expended and any other appropriate redress for actions it has taken to cure any default by the Borrower; provided that the Borrower’s reimbursement obligation shall be non -recourse to the same extent as the underlying obligation is non-recourse to the Borrower.
Section 8.06 Rights Cumulative. All rights and remedies herein given or granted to the Issuer and the Trustee are cumulative, nonexclusive and in addition to any and all rights and remedies that the Issuer and the Trustee may have or may be given by reason of any law, statute, ordinan ce or otherwise. Notwithstanding anything to the contrary contained in this Financing Agreement, neither the Trustee nor the Issuer may commence any action against the Borrower for specific performance or any other remedy at law or in equ ity, other than to enforce performance and observance of any Reserved Right of the Issuer and its rights under Section 8.03, without first obtaining the prior written consent of Fannie Mae.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Notices. All notices, certificates or other communications herein provided shall be given in writing to the Issuer, the Borrower, the Trustee, Fannie Mae, the Lender and, for notices under Section 8.05 only, the City, and shall be sufficiently given and shall be deemed given if given in the manner provided in the Indenture. Except as otherwise provided in the preceding sentence, copies of each notice, certificate or other communication given hereunder by any party hereto shall be given to all parties here to. By notice given hereunder, any party may designate further or different addresses to which subsequent notices, certificates or other communications are to be sent. A duplicate copy of each notice, certificate, request or other communication given her eunder to the Issuer, the Borrower, the Lender or the Trustee shall also be given to Fannie Mae.
Section 9.02 Amendment. This Financing Agreement and all other documents contemplated hereby to which the Issuer is a party may be amended or terminated only if permitted by the Indenture, and no amendment to this Financing Agreement shall be binding upon, any party hereto until such amendment is reduced to writing and executed by the parties hereto; provided that no amendment, supplement or other modification to this Financing Agreement or any other Financing Document shall be effective without the prior written consent of Fannie Mae.
Section 9.03 Entire Agreement. Except as provided in the other Financing Documents and the Mortgage Loan Documents, this Financing Agreement contains all agreements among the parties hereto, and there are no other representations, warranties, promises, agreements or understandings,
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oral, written or implied, among the parties hereto, unless reference is made thereto in this Financing Agreement or the Indenture.
Section 9.04 Binding Effect. This Financing Agreement shall be binding upon the Issuer, the Borrower and the Trustee and their respective successors and assigns. Notwithstanding anything herein to the contrary, to the extent Fannie Mae or its designee shall become the owner of the Project as a result of a foreclosure or a deed in lieu of foreclosure or similar conveyance, Fannie Mae, and its designee, if applicable, shall not be liable for any breach or default or any of the obligations of any prior owner of the Project under this Financing Agreement, and shall only be responsible for defaults and obligations incurred during the period Fannie Mae or its designee, if applicable, is the owner of the Project.
Section 9.05 Severability. If any clause, provision or section of this Financing Agreement shall be ruled invalid or unenforceable by any court of competent jurisdiction, the invalidity or unenforceability of such clause, provision or section shall not affect any of the remaining clauses, provisions or sections.
Section 9.06 Execution in Counterparts. This Financing Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 9.07 Governing Law; Venue . This Financing Agreement shall be construed in accordance with and governed by the laws of the State applicable to contracts made and performed in the State. This Financing Agreement shall be enforceable in the State, and any action arising hereunder shall (unless waived by the Issuer in writing) be filed and maintained in the Superior Court of California, County of Monterey.
Section 9.08 Limited Liability of the Issuer.
(a) Reliance by Issuer on Facts or Certificates . Anything in this Financing Agreement to the contrary notwithstanding, it is expressly understood and agreed by the parties hereto that the Issuer may rely conclusively on the truth and accuracy of any certificate, opinion, notice, or other instrument furnished to the Issuer by the Lender, the Trustee or the Borrower as to the existence of any fact or state of affairs required hereunder to be noticed by the Issuer. (b) Waiver of Personal Liability . No member, officer, agent or employee of the Issuer or any of its members or any director, officer, agent or employee of the Borrower shall be individually or personally liable for the payment of any principal of (or Redemption Price), premium, if any, or interest on the Bonds or any other sum hereunder or be subject to any personal liability or accountability by reason of the execution and delivery of this Financing Agreement; but nothing herein contained shall relieve any such member, director, officer, agent or employee from the performance of any official duty provided by law or by this Financing Agreement. (c) Non-Liability of Issuer. The Issuer shall not be obligated to pay the principal (or Redemption Price) of or interest on the Bonds, except from the Trust Estate. Neither the faith and credit nor the taxing power of the State or any political subdivision thereof, nor the faith and credit of the Issuer or any member is pledged to the payment of the principal (or Redemption Price) of, premium, if any, or interest on the Bonds. The Issuer shall not be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in
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connection with this Financing Agreement, the Bonds or the Indenture, except only to the extent amounts are received for the payment thereof from the Borrower under this Financing Agreement or from the MBS.
The Borrower hereby acknowledges that the Issuer’s sole source of moneys to repay the Bonds will be provided by the Trust Estate, and hereby agrees that if the payments to be made hereunder shall ever prove insufficient to pay all principal (or Redemption Price) of, premium, if any, and interest on the Bonds as the same shall become due (whether by maturity, redemption, acceleration or otherwise), then upon notice from the Trustee, the Borrower shall pay such amounts as are required from time to time to prevent any deficiency or default in the payment of such principal (or Redemption Price) of, premium, if any, or interest, including, but not limited to, any deficiency caused by acts, omissions, nonfeasance or malfeasance on the part of the Trustee, the Borr ower, the Issuer or any third party, subject to any right of reimbursement from the Trustee, the Issuer or any such third party, as the case may be, therefor.
(d) Expenses. The Borrower shall pay and indemnify the Issuer and the Trustee against all reasonable fees, costs and charges, including reasonable fees and expenses of attorneys, accountants, consultants and other experts, incurred in good faith (and with respect to the Trustee, without negligence) and arising out of or in connection with the Financing Documents and the Mortgage Loan Documents. These obligations and those in Section 5.09 hereof shall remain valid and in effect notwithstanding repayment of the Mortgage Loan hereunder or termination of this Financing Agreement or the Indenture.
(e) No Warranty by Issuer . The Borrower recognizes that, because the components of the Project have been and are to be designated and selected by it, THE ISSUER HAS
NOT MADE AN INSPECTION OF THE PROJECT OR OF ANY FIXTURE OR OTHER ITEM
CONSTITUTING A PORTION THEREOF, AND THE ISSUE R MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED OR OTHERWISE, WITH RESPECT TO THE
SAME OR THE LOCATION, USE, DESCRIPTION, DESIGN, MERCHANTABILITY, FITNESS
FOR USE FOR ANY PARTICULAR PURPOSE, CONDITION OR DURABILITY THEREOF, OR
AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, IT BEING AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY THE OWNER. IN
THE EVENT OF ANY DEFECT OR DEFICIENCY OF ANY NATURE IN THE PROJECT OR
ANY FIXTURE OR OTHER ITEM CONSTITUTING A POR TION THEREOF, WHETHER
PATENT OR LATENT, THE ISSUER SHALL HAVE NO RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION HAVE BEEN
NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION
OF ANY WARRANTIES OR REPRESENTA TIONS BY THE ISSUER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PROJECT OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A
PORTION THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM COMMERCIAL
CODE OF THE STATE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE.
Section 9.09 Term of Financing Agreement . This Financing Agreement shall be in full force and effect from its date to and including such date as all of the Bonds shall have been fully paid or retired (or provision for such payment shall have been made as provided in the Indenture); provided, however, that the provisions of Sections 2.01, 5.05 and 5.09 of this Financing Agreement shall survive the termination hereof.
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Section 9.10 Electronic Signatures. The parties agree that the electronic signature of a party to this Financing Agreement shall be as valid as an original signature of such party and shall be effective to bind such party to this Financing Agreement. For purposes hereof: (a ) “electronic signature” means a manually signed original signature that is then transmitted by electronic means; and (b) “transmitted by electronic means” means sent in the form of a facsimile or sent via the internet as a portable document format (“pdf”) or other replicating image attached to an electronic mail or internet message.
Section 9.11 Patriot Act. The Trustee hereby notifies all the parties hereto that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 the “Act”), it is required to obtain, verify and record information that identifies the other parties hereto, which information includes the name and address of the other parties hereto and other information that will allow the Trustee to identify the other parties hereto in accordance with the Act. In addition, changes to federal banking regulations require all U.S. financial institutions to collect information regarding the beneficial ownership of our legal entity customers. At account opening, and at times during the life of the account, the Borrower shall provide, upon request, identifying information for all natural persons who, directly or indirectly, own 20 percent or more of the equity interests in the legal entity. In certain situations, the Trustee may request identifying information below 20 percent. The Trustee will also request identifying information for a controlling person, such as an executive officer or senior manager, or another individual who regularly performs similar functions.
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[Signatures continue on the following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Financing Agreement to be executed by their duly authorized representatives as of the date of execution set forth below.
MARINA JOINT POWERS FINANCING
AUTHORITY
By:
Title: Executive Director
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[Trustee signature page to Financing Agreement]
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U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION
By:
Title:
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[Borrower signature page to Financing Agreement]
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PRESTON PARK SUSTAINABLE
COMMUNITY NONPROFIT
CORPORATION
By:
Title: Executive Director
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Marina
211 Hillcrest Avenue
Marina, California
Attention: Executive Director
No fee for recording pursuant to
Government Code Section 27383
______________________________________________________________________________ A.P.N._________________
DEED RESTRICTION AND
REGULATORY AGREEMENT
PRESTON PARK
This Deed Restriction and Regulatory Agreement (the "Agreement") is made and entered into as of this __ day of _______, 2026 by and between the City of Marina, a municipal corporation (the "City"), and the Preston Park Sustainable Community Nonprofit Corporation, a California nonprofit public benefit corporation ("Owner").
RECITALS
A. The City is the owner of that certain property commonly referred to as Preston Park as more particularly described in Exhibit A attached hereto (the "Property"). The City and the Owner have entered into a Lease Agreement dated September 15, 2015 , as amended (“Ground Lease”) whereby the City leased to the Owner the Property and the improvements located thereon. There is currently located on the Property 352 residential units which are operated by the Owner.
B. The Property provides an important source of affordable housing to the community. In order to ensure that the Property continues to provide affordable housing, the City requires that the Owner, in compliance with this Regulatory Agreement, restrict the occupancy of certain Units on the Property to low income households.
THEREFORE, the City and the Owner hereby agree as follows.
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. When used in this Agreement, the following terms shall have the respective meanings assigned to them in this Article 1.
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(a) "Actual Household Size" shall mean the actual number of persons in the applicable household
(b) "Adjusted Income" shall mean the total anticipated annual income of all persons in a household, as calculated in accordance with 25 California Code of Regulations Section 6914 or pursuant to a successor State housing program that utilizes a reasonably similar method of calculation of adjusted income. In the event that no such program exists, the City shall provide the Owner with a reasonably similar method of calculation of adjusted income as provided in said Section 6914.
(c) "Affordable Units" shall mean the Low Income Units. (d) "Agreement" shall mean this Regulatory Agreement.
(e) "Assumed Household Size" shall mean a household of one person in the case of a studio unit, two persons in the case of a one bedroom unit, 3 persons in the case of a two-bedroom unit, 4 persons in the case of a three-bedroom unit, and 5 persons in the case of a four-bedroom unit.
(f) "City" shall mean the City of Marina.
(g) "Development" shall mean the Property and the 354 residential units located on the Property, as well as all landscaping, roads and parking spaces existing thereon, as the same may from time to time exist.
(h) "Low Income Household" means a household with an Adjusted Income that does not exceed eighty percent (80%) of Median Income. (i) "Low Income Units" shall mean the Units that, pursuant to Section 2.1 below, are required to be occupied by Low Income Households. (j) "Median Income" shall mean the median gross yearly income, adjusted for household size, in the County of Monterey, California, as published from time to time by the State of California. In the event that such income determinations are no longer published, or are not updated for a period of at least eighteen (18) months, the City shall provide other income determinations which are reasonably similar with respect to methods of calculation to those previously published by the State.
(k) "Property" shall mean the parcel of real property located in Marina, California, as more particularly described in Exhibit A. (l) "Qualifying Household" shall mean a Low Income Household. (m) "Rent" shall mean the total of monthly payments by the Tenant of a Unit for the following: (1) use and occupancy of the Unit and land and associated facilities, including parking; (2) any separately charged fees or service charges assessed which are required of all Tenants, other than security deposits; (3) the cost of an adequate level of service for utilities paid by the Tenant, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuel, but not telephone service, cable television service or any other
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utility or service permitted to be excluded from the calculation of Rent pursuant to the terms of 25 California Code of Regulations Section 6918; and (4) any other interest, taxes, fees or charges for use of the land or associated facilities and assessed by a public or private entity, and paid by the Tenant.
(n) "Tenant" shall mean a household occupying a Unit.
(o) "Term" shall mean the term of this Agreement, which shall commence on the date of this Agreement and shall continue until the fifty fifth (55) anniversary of the date of this Agreement.
(p) "Unit" shall mean one of the 354 units located on the Property.
ARTICLE 2
AFFORDABILITY AND OCCUPANCY COVENANTS
Section 2.1 Occupancy Requirement. Twenty percent (20%) of the Units shall be rented to and occupied by or, if vacant, available for occupancy by Low Income Households.
The remaining Units may be rented at market rate rents. Notwithstanding anything in this Agreement, no Tenant occupying a Unit as of the date of this Agreement shall be required to vacate such Unit in order to ensure compliance with the occupancy requirements of this Section.
Section 2.2 Allowable Rent. Subject to the provisions of Section 2.3 below, the Rent charged to Tenants of the Low Income Units shall not exceed one-twelfth (1/12) of thirty percent of eighty (80%) of Median Income, adjusted for Assumed Household Size. Initial rents for the Affordable Units shall be approved by the City prior to occupancy, which shall be approved if they comply with this Agreement. All rent increases for the Affordable Units shall also be subject to City approval. The City shall provide the Owner with a schedule of maximum permissible rents for the Affordable Units annually.
Section 2.3 Increase Income of Tenants.
(a) Non-Qualifying Household. If, upon recertification of the income of a Tenant of an Affordable Unit, the Owner determines that a former Low Income Household has an Adjusted Income exceeding the maximum qualifying income for a Low Income Household , such Tenant shall be permitted to continue occupying the Unit and upon expiration of the Tenant's lease and upon sixty (60) days written notice, the Rent may be increased to the fair market rent, and the next available Unit shall be rented to a Low Income Household, as applicable, to meet the requirements of Section 2.1 above. (b) Termination of Occupancy. Upon termination of occupancy of an Affordable Unit by a Tenant, such Affordable Unit shall be deemed to be continuously occupied by a Low Income Household until such Affordable Unit is reoccupied by a Low Income Household. In any event, the occupancy requirements set forth in section 2.1 above shall be maintained for the Term of this Agreement.
Section 2.4 Other Rules. If the Development is subject to state or federal rules governing funding sources such as low-income housing tax credits (the "Other Rules"), the
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provisions of the Other Rules regarding assumed household size, shall apply in place of the provisions set forth in the applicable sections of this Agreement. Upon such time as the requirements of the Other Rules no longer apply to the Development, the terms and conditions of this Agreement shall govern the occupancy of this Development.
Section 2.5 Nondiscrimination. The Owner shall not discriminate or segregate in the development, construction, use, enjoyment, occupancy, conveyance, lease, sublease, or rental of any part of the Property on the basis of race, color, ancestry, national origin, religion, sex, sexual preference or orientation, age, marital status, family status, source of income, physical or mental disability, Acquired Immune Deficiency Syndrome (AIDS) or AIDS-related conditions (ARC) acquired or perceived, or any other arbitrary basis. Owner shall otherwise comply with all applicable local, state, and federal laws concerning discrimination in housing.
ARTICLE 3
INCOME CERTIFICATION AND REPORTING
Section 3.1 Income Certification. The Qualifying Households renting any of the Affordable Units shall complete and provide to the Owner, immediately prior to initial occupancy and annually thereafter, income certifications. The Owner shall make a good faith effort to verify that the income provided by an applicant or occupying household in an income certification is accurate by taking two or more of the following steps as a part of the verification process: (a) obtain a pay stub for the most recent pay period; (b) obtain an income tax return for the most recent tax year; (c) conduct a credit agency or similar search; (d) obtain an income verification form from the applicant's current employer; (e) obtain an income verification form from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either of such agencies; or (f) if the applicant is unemployed and has no such tax return, obtain another form of independent verification.
ARTICLE 4
MISCELLANEOUS
Section 4.1 Nondiscrimination. All of the Units shall be available for occupancy on a continuous basis to members of the general public who are income eligible. No preference shall be given to any particular class or group of persons in renting or selling the Units, except to the extent that the Affordable Units are required to be leased to Low Income Households and to the extent the City requires a local preference conforming to the limits of State and federal fair housing laws. There shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin, source of income (e.g. SSI), age, ancestry, or disability, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of any Unit nor shall the Owner or any person claiming under or through the Owner, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of any Unit or in connection with the employment of persons for the construction, operation and management of any Unit.
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Section 4.2 Section 8 Certificate Holders. Persons who are recipients of federal certificates for rent subsidies pursuant to the existing housing program under Section 8 of the United States Housing Act, or its successor shall be accepted as Tenants on the same basis as all other prospective Tenants. Section 8 certificate or voucher holders shall not be subject to selection criteria that is more burdensome than criteria applied to all other prospective Tenants, and management policies or lease provisions with respect to the Development which have the effect of precluding occupancy of units by such prospective Tenants shall not be allowed.
Section 4.3 Term. The provisions of this Agreement shall apply to the Property for the entire Term. This Agreement shall bind any successor, heir or assign of the Owner, whether a change in interest occurs voluntarily or involuntarily, by operation of law or otherwise, except as expressly released by the City.
Section 4.4 Covenants to Run With the Land. The City and the Owner hereby declare their express intent that the covenants and restrictions set forth in this Agreement shall run with the land, and shall bind all successors in title to the Property, provided, however, that on the expiration of the Term of this Agreement said covenants and restrictions shall expire.
Section 4.5 Enforcement by the City. The City shall have the right to enforce this Agreement by any or all of the following actions, or any other remedy provided by law:
(a) Action to Compel Performance or for Damages. The City may bring an action at law or in equity to compel performance of the obligations under this Agreement, and/or for damages.
(b) Other Remedies. The City may exercise any other remedy provided under this Agreement to the extent applicable by law.
Section 4.6 Attorneys Fees and Costs. In any action brought to enforce this Agreement, the prevailing party shall be entitled to all costs and expenses of suit, including attorneys' fees. This section shall be interpreted in accordance with California Civil Code Section 1717 and judicial decisions interpreting that statute.
Section 4.7 Recording and Filing. The Owner shall cause this Agreement, and all amendments and supplements to it, to be recorded in the Official Records of the County of Monterey.
Section 4.8 Governing Law. The laws of the State of California shall govern this Agreement.
Section 4.9 Waiver of Requirements. Any of the requirements of this Agreement may be expressly waived by the City in writing, but no waiver by the City of any requirement of this Agreement shall, or shall be deemed to, extend to or affect any other provision of this Agreement.
Section 4.10 Amendments. This Agreement may be amended only by a written instrument executed by all the parties hereto or their successors in title, and duly recorded in the real property records of the County of Monterey.
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Section 4.11 Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions of this Agreement shall not in any way be affected or impaired thereby.
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IN WITNESS WHEREOF, the City and Owner have executed this Agreement by duly authorized representatives, all on the date first written above.
OWNER:
PRESTON PARK SUSTAINABLE COMMUNITY
NONPROFIT COPORATION,
a California nonprofit public benefit corporation
By: _______________________________
Its: _______________________________
ATTEST: CITY:
By: _______________________ CITY OF MARINA,
a municipal corporation
By: ______________________________
Its: ______________________________
APPROVED AS TO FORM:
By: ______________________
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EXHIBIT A
PROPERTY DESCRIPTION
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132
BOND PURCHASE AGREEMENT
Dated January __, 2026
by and among
STIFEL, NICOLAUS & COMPANY, INCORPORATED,
MARINA JOINT POWERS FINANCING AUTHORITY
and
PRESTON PARK SUSTAINABLE COMMUNITY NONPROFIT CORPORATION Relating to:
$_________
Marina Joint Powers Financing Authority
Multifamily Housing Revenue Bonds
(Fannie Mae MBS-Secured) Series 2026
(Preston Park Apartments)
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TABLE OF CONTENTS
Page
Section 1. Definitions and Background. .............................................................................................. 1 Section 2. Purchase and Sale. .............................................................................................................. 1 Section 3. Issue Price. .......................................................................................................................... 2 Section 4. Closing. ............................................................................................................................... 2 Section 5. Official Statement; Disclosure Matters. .............................................................................. 2 Section 6. Representations of the Issuer. ............................................................................................. 5 Section 7. Representations and Warranties of the Borrower. .............................................................. 6 Section 8. Covenants of the Issuer. ...................................................................................................... 8 Section 9. Covenants of the Borrower. ................................................................................................ 9 Section 10. Conditions of Closing. ...................................................................................................... 10 Section 11. Actions and Events at the Closing. ................................................................................... 13 Section 12. Termination of Agreement. ............................................................................................... 14 Section 13. Fees and Expenses. ........................................................................................................... 15 Section 14. Limitation of Liability. ..................................................................................................... 16 Section 15. Miscellaneous. .................................................................................................................. 16 Section 16. Survival of Certain Representations and Obligations. ...................................................... 17 EXHIBIT A TERMS OF BONDS ...................................................................................................... A-1 EXHIBIT B PROPOSED FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL .......... B-1 EXHIBIT C FORM OF OPINION OF COUNSEL TO THE BORROWER ..................................... C-1 EXHIBIT D FORM OF BORROWER’S RULE 15c2-12 CERTIFICATE ........................................ D-1 EXHIBIT E FORM OF ISSUE PRICE CERTIFICATE .................................................................... E-1 EXHIBIT F FORM OF CERTIFICATE OF FANNIE MAE .............................................................. F-1 EXHIBIT G FORM OF CERTIFICATE OF LENDER ...................................................................... G-1
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BOND PURCHASE AGREEMENT
Stifel, Nicolaus & Company, Incorporated (the “Underwriter”), on its own behalf and not as your fiduciary, hereby offers to enter into this Bond Purchase Agreement dated January __, 2026 (this “Purchase Contract”) with the Marina Joint Powers Financing Authority (together with its successors and assigns, the “Issuer”) and Preston Park Sustainable Community Nonprofit Corporation, a California nonprofit corporation (the “Borrower”), for the sale by the Issuer and the purchase by the Underwriter of the Bonds defined below which are being issued by the Issuer for the benefit of the Borrower. The Underwriter is an “underwriter” as defined in Section 2(a)(11) of the Securitie s Act of 1933, as amended (the “1933 Act”).
This offer is made subject to the written acceptance hereof by the Issuer and the Borrower and delivery of such acceptance (in the form of one or more counterparts hereof) at or prior to 5:00 p.m., Pacific Time, on the date hereof, and will expire if not so accepted at or prior to such time (or such later time as the Underwriter may agree in writing). Upon such acceptance, this Purchase Contract will be binding upon each of the Issuer, the Borrower and the Underwriter.
Section 1. Definitions and Background.
1.1 Capitalized terms used in this Purchase Contract but not defined herein have the meanings assigned to them in the Indenture of Trust by and between the Issuer and U.S. Bank Trust Company, National Association, a national banking association (the “Trustee”) dated as of January 1, 2026 (the “Indenture”).
1.2 This Purchase Contract is for the sale and delivery of the Issuer’s Multifamily Housing Revenue Bonds (Fannie Mae MBS-Secured) Series 2026 (Preston Park Apartments) (the “Bonds”), which are being issued by the Issuer to provide refinancing for the Project. The Bonds will be issued pursuant to (i) that certain resolution of the Issuer adopted December 16, 2025 (the “Bond Resolution”), (ii) Article 4 (commencing with Section 6584) of Chapter 5, Division 7, Title 1 of the Government Code of the State (the “Act”), and (iii) the terms of the Indenture. The Bonds will be payable from sources pledged under the Indenture, including the moneys and securities from time to time held by the Trustee in the funds and accounts established under the terms of the Indenture (collectively, the “Trust Estate”). In connection with the issuance of the Bonds, the Issuer will execute and deliver this Purchase Contract ; the Indenture; the Financing Agreement among the Issuer, the Trustee and the Borrower (the “Financing Agreement”) dated as of January 1, 2026; the Tax Certificate executed by the Issuer and the Borrower (the “Tax Certificate”) dated January __, 2026; and the Deed Restriction and Regulatory Agreement by and between the Borrower and the City of Marina, California (the “City”) (the “Regulatory Agreement ”) (collectively, the “Issuer Documents”) and the Borrower will execute and deliver this Purchase Contract, the Financing Agreement, the Continuing Disclosure Agreement, the Tax Certificate, and the Regulatory Agreement (collectively, the “Borrower Documents”). The Issuer Documents and the Borrower Documents are referred to herein as the “Financing Documents.”
Section 2. Purchase and Sale.
2.1 Subject to the terms and conditions set forth in this Purchase Contract , the Underwriter hereby agrees to p urchase from the Issuer and the Issuer hereby agrees to sell to the Underwriter, at the Closing (as hereafter defined), $_________ aggregate principal amount of its Bonds at a price set forth in Exhibit A attached hereto, [ plus an additional amount equal to $ ___________ (the “Underwriter’s Advance”) for initial deposits established under the Indenture . The Underwriter will be reimbursed on or before the Closing Date by the Borrower for the Underwriter’s Advance].
2.2 The Bonds will (i) be issued pursuant to the Indenture and (ii) have the payment related terms (that is, the dated date, maturity date, interest rate and price) set forth in Exhibit A attached hereto,
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2 and will otherwise correspond to the description thereof contained in the hereinafter-defined Official Statement.
2.3 The Issuer, the Borrower, and the Underwriter each acknowledges and agrees that (i) the purchase and sale of the Bonds pursuant to this Purchase Contract is an arm’s-length commercial transaction among the Issuer, the Borrower, and the Underwriter, (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as a principal and is not acting as the agent, municipal advisor, financial advisor, or fiduciary of the Issuer or the Borrower, (iii) the Underwriter has not assumed individually or collectively any advisory or fiduciary responsibility in favor of the Issuer or the Borrower with respect to the offering contemplated hereby or the discus sions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has advised or provided other services or is currently advising or providing other services to the Issuer or the Borrower on other matters) and the Underwriter has no contractual obligation to the Issuer or the Borrower with respect to the offering contemplated hereby except the obligations expressly set forth in this Purchase Contract, and (iv) the Issuer and the Borrower have consulted their own legal, financial, accounting, tax and other advisors to the extent they deem appropriate in connection with the offering of the Bonds. The primary role of the Underwriter is to purchase the Bonds in an arm’s-length commercial transaction among the Issuer, the Borrower and the Underwriter, for resale to investors . The Underwriter has financial and other interests that differ from those of the Issuer . Nothing in the foregoing paragraph is intended to limit the Underwriter’s obligations of fair dealing under MSRB Rule G-17.
Section 3. Issue Price.
The Underwriter will provide to the Issuer an executed Issue Price Certificate dated the Closing Date (as defined herein) in the form attached as Exhibit E hereto or other form reasonably required by Stradling Yocca Carlson & Rauth LLP (the “Bond Counsel”) in order to establish the issue price of the Bonds.
The Underwriter reserves the right to change such prices as it deems necessary in connection with the offering of the Bonds. Concessions from the public offering price may be allowed to selected dealers and special purchasers. The Borrower authorizes the Underwriter to complete the supplement to the Official Statement to insert the reoffering price for the Bonds selected by the Underwriter in its complete discretion.
Section 4. Closing.
Subject to the terms and conditions hereof, the delivery of the Bonds and the payment of the purchase price of the Bonds as set forth in Exhibit A hereof (the “Closing”) will take place at 10:00 a.m.
Eastern Time on January __, 2026, or at such other time or on such other date mutually agreed upon by the Issuer, the Borrower and the Underwriter, which date shall be referred to herein as the “Closing Date.” Section 5. Official Statement; Disclosure Matters.
5.1 The Issuer and the Borrower each hereby (a) confirms its consent to the use by the Underwriter of the Preliminary Official Statement dated January __, 2026 , relating to the Bonds (the “Preliminary Official Statement”) in the marketing of the Bonds and (b) authorizes the Underwriter to prepare, use and distribute (at the expense of the Borrower) the Official Statement dated January __, 2026, relating to the Bonds (the “Official Statement”) in final form in connection with the offering and sale of the Bonds.
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3 5.2 The Issuer and the Borrower each agrees to the extent required and permitted by applicable law to cooperate (at the sole cost and expense of the Borrower) with the Underwriter so as to enable the Underwriter to comply with the requirements of Rule 15c2 -12 (“Rule 15c2 -12”) under the Securities Exchange Act of 1934 , as amended (the “1934 Act”) , and any other rules of the Securities and Exchange Commission (the “ SEC”) and the Municipal Securities Rulemaking Board (the “ MSRB”), in connection with the offer and sale of the Bonds.
5.3 The Issuer and the Borrower hereby make the following representations in subsection (a) and (b) respectively:
(a) The Issuer hereby certifies and agree s that the information in the Preliminary Official Statement under the captions “THE ISSUER” a nd “NO LITIGATION – The Issuer” has been “deemed final” by the Issuer as of the date of the Preliminary Official Statement , except for final information as to the offering prices, interest rates, selling compensation, amount of proceeds, delivery dates, other terms depending on such factors, and other information permitted to be omitted under part (b)(1) of Rule 15c2-12.
(b) The Borrower hereby certifies and agrees that the Preliminary Official Statement has been “deemed final” by the Borrower as of its date, except for final information as to the offering prices, interest rates, selling compensation, amount of proceeds, delivery dates, other terms depending on such factors, and other information permitted to be omitted under part (b)(1) of Rule 15c2-12.
5.4 The Issuer and the Borrower hereby make the following representations in subsection (a) and (b), respectively:
(a) The Issuer hereby represents that the information in the Preliminary Official Statement and the Official Statement under the captions “THE ISSUER” and “ NO LITIGATION – The Issuer” is true and correct and does not contain any untrue statement of a material fact and does not omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. (b) The Borrower hereby represents that the information in the Preliminary Official Statement and the Official Statement (excluding information regarding the Depository Trust Company and its Book -Entry system, information under the caption “UNDERWRITING,” information regarding Fannie Mae and the MBS, and Appendices A and F, as to which no representations or warranties are ma de) is true and correct and does not contain any untrue statement of a material fact and does not omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.
5.5 The Issuer and the Borrower will, at the expense of the Borrower, supply to the Underwriter the Official Statement, in such quantity as may be requested by the Underwriter no later than the earlier of (i) seven (7) business days after the date of this Purchase Contract or (ii) one (1) business day prior to the Closing Date, in order to permit the Underwriter to comply with Rule 15c2-12, and the applicable rules of the MSRB, with respect to distribution of the Official Statement . The Borrower shall provide to the Underwriter the Official Statement, including any amendments thereto, in word-searchable PDF format as described in the MSRB’s Rule G-32 no later than one (1) business day prior to the Closing Date to enable the Underwriter to comply with MSRB Rule G-32.
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4 5.6 During the period commencing on the date of this Purchase Contract and ending on the earlier of (a) 90 days from the End of the Underwriting Period or (b) the time when the Official Statement is available to any person from the MSRB, but in no case less than 25 days following the End of the Underwriting Period (the “Update Period”), if any event shall occur which would cause the Official Statement to contain any untrue statement of a material fact or to omit to state any material fact necessary to make the statements contained therein, in light of the circumstance s under which they were made, not misleading, and in the judgment of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Issuer (to the extent of the provisions referred to in Section 5.4(a) hereof) and the Borrower will, at the expense of the Borrower, prepare or cooperate in the preparation of such supplement or amendment to the Official Statement in a form approved by the Underwriter and furnish or cooperate in the furnishing to the Underwriter (at the sole expense of t he Borrower) a reasonable number of copies of an amendment of, or a supplement to, the Official Statement so that, as supplemented or amended, it will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. If the Official Statement is so supplemented or amended prior to the Closing, the approval by the Underwriter of a supplement or amendment t o the Official Statement shall not preclude the Underwriter from thereafter terminating this Purchase Contract in accordance with the provisions of Section 12(c) hereof. The “End of the Underwriting Period” means the later of the delivery of the Bonds by the Issuer to the Underwriter or when the Underwriter no longer retains (directly or as a syndicate member) an unsold balance of the Bonds for sale to the public; provided, that the “End of the Underwriting Period” shall be deemed to be the Closing Date, unless the Underwriter expressly notifies the Issuer and the Borrower in writing prior to such date that there is an unsold balance of the Bonds, in which case the End of the Underwriting Period shall be deemed to be extended for 30 days. The deemed End of the Underwriting Period may be extended for two additional periods of 30 days each upon receipt of an additional written notification from the Underwriter containing the same information as required in the initial written notice.
5.7 If, during the Update Period, the Issuer become s aware of any event relating to the information concerning the Issuer under the captions “THE ISSUER” and “NO LITIGATION – The Issuer” of the Official Statement which would cause such portions of the Official Statement to contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading, the Issuer will promptly notify the Underwriter of such event.
5.8 The Issuer shall promptly advise the Underwriter, during the Update Period, of any action, suit, proceeding, inquiry or investigation against the Issuer , of which the Issuer has actual knowledge, seeking to prohibit, restrain or otherwise affect the use of the Preliminary Official Statement or the Official Statement in connection with the offering, sale or distribution of the Bonds.
5.9 If, during the Update Period, the Borrower becomes aware of any event which would cause the Official Statement (excluding information regarding the Depository Trust Company and its Book-Entry system, information under the caption “UNDERWRITING,” information regarding Fannie Mae and the MBS, and Appendices A and F, as to which no representations or warranties are ma de) to contain any untrue statement of a material fact or to omit to state any material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading, the Borrower will promptly notify the Underwriter and the Issuer of such event.
5.10 The Borrower shall promptly advise the Underwriter, during the Update Period, of any action, suit, proceeding, inquiry or investigation against the Borrower, of which they receive written or actual notice, seeking to prohibit, restrain or otherwise affect the use of the Official Statement in connection with the offering, sale or distribution of the Bonds.
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5 5.11 The Borrower represents and warrants to the Underwriter and the Issuer that neither the Borrower, the City, nor the Abrams B corporation are in default under any undertakings with respect to continuing disclosure requirements designed to comply with Rule 15c2-12 in connection with any issue of municipal securities, except as disclosed in the Preliminary Official Statement and the Official Statement.
Section 6. Representations of the Issuer.
6.1 In addition to the representations contained in Section 5 herein, the Issuer hereby makes the following representations to the Underwriter:
(a) The Issuer is a public instrumentality and political subdivision of the State of California (the “State”), and has full power and authority under the Act to adopt the Bond Resolution and to enter into and to perform its obligations under the Issuer Documents; and when executed and delivered by the respective parties thereto, the Issuer Documents will constitute the legal, valid and binding obligations of the Issuer enforceable against the Issuer in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitation on legal remedies against units of government of the State;
(b) By the Resolution of the Board of Directors of the Issuer adopted prior to or concurrently with the acceptance hereof, the Issuer has approved and authorized the distribution of the Preliminary Official Statement and the Official Statement and authorized and approved the execution and delivery of the Issuer Documents and the consummation by the Issuer of the transactions contemplated thereby;
(c) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body pending or threatened against the Issuer seeking to restrain or enjoin the sale or issuance of the Bonds, or in any way contesting or affecting any proceedings of the Issuer taken concerning the sale thereof, the pledge or application of any moneys or security provided for the payment of the Bonds, in any way contesting the validity or enforceability of the I ssuer Documents or contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement or the existence or powers of the Issuer relating to the sale of the Bonds; (d) The execution and delivery by the Issuer of the Issuer Documents and compliance with the provisions on the Issuer’s part contained therein will neither (i) conflict with or constitute a material breach of or default under any law, admin istrative regulation, judgment or decree to which the Issuer is subject , (ii) conflict with any loan agreement, financing agreement, indenture, bond, note, resolution, agreement or other instrument to which the Issuer is a party or is otherwise subject, nor (iii) result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the Issuer under the terms of any such law, administrative regulation, judgment, decree, loan agreement, financing agreement, indenture, bond, security, note, resolution, agreement or other instrument, except as provided by the Issuer Documents;
(e) Except as may be required under Blue Sky or other securities laws of any state and for filings to be made with the Internal Revenue Service on Form 8038, to the Issuer’s knowledge, there is no consent, approval, authorization or other order of, or filing with, or certification by, any state court, or state or federal governmental agency, or public body of any state required for the
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6 execution and delivery of the Issuer Documents or the consummation by the Issuer of the transactions on its part contemplated herein or therein, which has not been duly obtained or made on or prior to the date hereof;
(f) Upon delivery of the Bonds, the Issuer will have good right, full power and lawful authority to pledge and assign the Trust Estate described in the Indenture to the Trustee as provided in the Indenture and the Bond Resolution;
(g) The Issuer has complied in all material respects with the Bond Resolution and the Issuer Documents; and
(h) The Bonds, when delivered in accordance with the Indenture and paid for by the Underwriter on the Closing Date as provided herein, will be validly issued and outstanding special, limited obligations of the Issuer entitled to all the benefits and security of the Indenture.
6.2 The execution and delivery of this Purchase Contract by the Issuer shall constitute a representation by the Issuer to the Underwriter that the representations and agreements contained in this Section 6 are true as of the date hereof; provided, however, that as to information furnished by the Borrower pursuant to this Purchase Contract, the Issuer is relying solely on such information in making the Issuer’s representations and agreements, and as to all matters of law the Issuer is relying on the advice of Bond Counsel; and provided further, that no member, officer, agent or employee of the Issuer shall be individually liable for the breach of any representation, or agreement contained herein.
6.3 It is understood that the representations and covenants of the Issuer contained in this Section 6 and elsewhere in this Purchase Contract shall not create any general obligation or liability of the Issuer, and that any obligation or liability of the Issuer hereunder or under the Issuer Documents is payable solely out of the Trust Estate established under the Indenture. It is further understood and agreed that the Issuer makes no representations, except as set forth in paragraph 5.4(a) above, as to the Official Statement, or as to (i) the financial condition, results of operation, business or prospects of the Borrower or the Project, (ii) any statements (financial or otherwise), representations, documents or certification provided or to be provided by the Borrower in connection with the offer or sale of the Bonds, or (iii) the correctness, completeness or accuracy of such statements, representations, documents or certifications.
Section 7. Representations and Warranties of the Borrower.
7.1 In addition to the representations and warranties made in Section 5 herein, the Borrower hereby makes the following representations and warranties to the Underwriter and the Issuer, all of which will continue in effect subsequent to the purchase of the Bonds:
(a) The Borrower is a nonprofit corporation duly organized and existing under and pursuant to the laws of the State and is qualified to own the Project and conduct its business in the State.
(b) By resolution of the Board of Directors of the Borrower adopted prior to the acceptance hereof, the Borrower has, and as of the Closing Date will have, full legal right, power and authority to (i) execute and deliver the Borrower Documents, (ii) assist in the preparation , distribution and use of the Preliminary Official Statement and the Official Statement , and (iii) otherwise consummate the transactions contemplated by the Borrower Documents. (c) The Borrower has duly authorized the (i) execution and delivery of the Borrower Documents, (ii) performance by the Borrower of the obligations contained in the Borrower
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7 Documents, (iii) preparation of the Preliminary Official Statement and the Official Statement, and (iv) consummation by the Borrower of all of the transactions contemplated by the Borrower Documents.
(d) The Borrower Documents are, and, when executed and delivered by the Borrower and the other parties thereto, will be, the legal, valid and binding obligations of the Borrower, enforceable in accordance with their respective terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency or other similar laws affecting creditors’ rights generally, or by the exercise of judicial discretion in accordance with general principles of equity. (e) All consents, approvals, orders or authorizations of, notices to, or filings, registrations or declarations with any governmental authority, board, agency, commission or body having jurisdiction which are required on behalf of the Borrower for the execution and delivery by the Borrower of the Borrower Documents or the consummation by the Borrower of the transactions contemplated hereby or thereby, have been obtained or will be obtained prior to Closing. (f) The execution and delivery by the Borrower of the Borrower Documents and the consummation by the Borrower of the transactions contemplated hereby and thereby are not prohibited by, do not violate any provision of, and will not result in the breach of or default under (i) the organizational documents of the Borrower, (ii) any applicable law, rule, regulation, judgment, decree, order or other requirement to which the Borrower is subject, or (iii) any contract, indenture, agreement, mortgage, lease, note, commitment or other obligation or instrument to which the Borrower is a party or by which the Borrower or its properties are bound. (g) There is no legal action, suit, proceeding, investigation or inquiry at law or in equity, before or by any court, agency, arbitrator, public board or body or ot her entity or person, pending or, to the best knowledge of the Borrower, threatened against or affecting the Borrower or any partner or member of the Borrower, in their respective capacities as such, nor, to the knowledge of the Borrower, any basis therefor, (i) which would restrain or enjoin the issuance or delivery of the Bonds, the use of the Preliminary Official Statement or the Official Statement in the marketing of the Bonds or the collection of revenues pledged under or pursuant to the Borrower Documents or (ii) which would in any way contest or affect the organization or existence of the Borrower or the entitlement of any officer of the Borrower to its position or (iii) which would contest or have a material and adverse effect upon (A) the due performance by the Borrower of the transactions contemplated by the Preliminary Official Statement , the Official Statement or the Borrower Documents, (B) the validity or enforceability of the Bonds, the Borrower Documents or any other agreement or instrument to which the Borrower is a party and that is used or contemplated for use in the consummation of the transactions contemplated hereby and thereby, (C) the exclusion from gross income for federal income tax purposes of the interest on the Bonds or (D) the financial condition or operations of the Borrower, (iv) which contests in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement or (v) which questions the power or authority of the Borrower to carry out the transactions on its part contemplated by the Preliminary Official Statement, the Official Statement and the Borrower Documents, or the power of the Borrower to own or operate the Project. The Borrower is not subject to any judgment, decree or order entered in any lawsuit or proceeding brought against it that would have such an effect. (h) On the Closing Date, the Borrower shall not have granted any interests in or rights or options to sell the Bonds to any other party.
(i) All permits (including building permits), licenses and authorizations necessary for the ownership and operation of its Project in the manner contemplated by the Preliminary Official
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8 Statement, the Official Statement and each of the Borrower Documents have been obtained or will be obtained, and said ownership and operation are not in conflict with any zoning or similar ordinance applicable to the Project. The Project conforms to all material environmental regulations. (j) None of the Borrower, any guarantor of the Borrower or any “related person” to the Borrower within the meaning of Section 147 of the Code has acquired or shall acquire, pursuant to any arrangement, formal or informal, any Bonds.
(k) The Borrower has not taken or omitted to take on or prior to the date hereof any action that would adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bonds.
(l) On the Closing Date, each of the representations and warranties of the Borrower contained in the Borrower Documents and all other documents executed by the Borrower in connection with the Bonds shall be true, correct and complete in all material respects. (m) As of the Closing Date, the Borrower will not be in material default under any document, instrument or commitment to which the Borrower is a party or to which any of its property is subject which default would or could reasonably be expected to adversely affect the ability of the Borrower to carry out its obligations under the Borrower Documents. As of the Closing Date, the Borrower will be in compliance with all of its obligations under the Regulatory Agreement.
(n) The Borrower is in compliance with all of its prior continuing disclosure undertakings entered into pursuant to Rule 15c2-12, if any.
7.2 Each of the representations and warranties set forth in this Section 7 will survive the Closing.
7.3 Any certificate signed by any officer of the Borrower and delivered to the Underwriter in connection with the delivery of the Bonds will be deemed to be a representation and warranty by the Borrower to the Underwriter as to the statements made therein.
Section 8. Covenants of the Issuer.
The Issuer hereby makes the following covenants with the Underwriter:
(a) Prior to the Closing, the Issuer will not supplement or amend the Official Statement or cause the Official Statement to be supplemented or amended without providing reasonable notice of such proposed supplement or amendment to the Underwriter. Neither the receipt by the Underwriter of notice of a proposed supplement or amendment nor the consent by the Underwriter to such supplement or amendment shall abrogate the Underwriter’s rights under Section 12(c) hereof.
(b) Prior to the Closing, the Issuer will not amend, terminate or rescind, and will not agree to any amendment, termination or rescission of the Issuer Documents without the prior written consent of the Underwriter.
(c) Prior to the Closing, except as provided in the Issuer Documents, the Issuer will not create, assume or guarantee any indebtedness payable from, or pledge or otherwise encumber,
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9 the revenues, assets, properties, funds or interests which will be pledged pursuant to the Indenture, including, without limitation, the Bonds or the Issuer Documents. (d) The Issuer will not take any action which will in any way cause the proceeds of the Bonds to be applied in a manner other than as provided in the Indenture and described in the Official Statement or which would cause the interest on the Bonds to be includable in the gross income of the holders thereof for federal income tax purposes. (e) Prior to the Closing, the Issuer will obtain all governmental consents, approvals, orders or authorizations of any governmental authority or agency that would constitute a condition precedent to the performance by it of its obligations under the Issuer Documents and the Bonds. (f) The Issuer will reasonably cooperate with the Underwriter upon request, without cost to the Issuer, in the qualification of the Bonds for offering and sale and the determination of their eligibility for investment under the laws of such jurisdictions as the Underwriter may designate; provided that the foregoing shall not require the Issuer to expend its own funds, execute a general or special consent to service of process or to qualify as a foreign corporation in connection with such qualification in any foreign jurisdiction.
(g) The Issuer will not adopt any amendment of or supplement to the Official Statement to which, after having been furnished a copy, the Underwriter shall reasonably object in writing and if any event relating to or affecting the Issuer or the Borrower shall occur as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement so that it does not contain any untrue statement of a material fact or omit to state a mater ial fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, the Issuer shall cause to be forthwith prepared and furnished (at the sole expense of the Borrower) to the Underwriter a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to the Underwriter) that will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fa ct or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
Section 9. Covenants of the Borrower.
The Borrower hereby makes the following covenants with the Underwriter and the Issuer:
(a) The Borrower will not supplement or amend the Official Statement or cause the Official Statement to be supplemented or amended without providing reasonable notice of such proposed supplement or amendment to the Underwriter and the Issuer. It is understood pursuant to Section 12(c) that, in the event there arises an event or condition which, in the reasonable judgment of the Underwriter, requires the Official Statement to be amended or supplemented or has a material and adverse effect upon the marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds, the Underwriter shall have the right, pursuant to Section 12(c) hereof, to terminate this Purchase Contract without liability. Neither the receipt by the Under writer of notice of a proposed supplement or amendment nor the consent by the Underwriter to such supplement or amendment shall abrogate the Underwriter’s rights under Section 12(c) hereof.
(b) The Borrower will not adopt any amendment of or supplement to the Official Statement to which, after having been furnished a copy, the Underwriter shall reasonably object in
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10 writing and if any event relating to or affecting the Issuer or the Borrower shall occur as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in light of the circumstances existing at the time it is delivered to the Underwriter, the Borrower shall cause to be forthwith prepared and furnished (at the sole expense of the Borrower) to the Underwriter a reasonable number of copies of an amend ment of or supplement to the Official Statement (in form and substance satisfactory to the Issuer and the Underwriter) that will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(c) Prior to the Closing, the Borrower will not amend, terminate or rescind, and will not agree to any amendment, termination or rescission of the Borrower Documents without the prior written consent of the Underwriter.
(d) Prior to the Closing, the Borrower will not create, assume or guarantee any indebtedness payable from, or pledge or otherwise encumber, the revenues, assets, properties, funds or interests which will be pledged pursuant to the Indenture, the Bonds, the Financing Documents or any indebtedness allowed under the loan from the Lender. (e) The Borrower will cooperate with the Issuer to cause the Bonds to be delivered to the address and at the time specified by the Underwriter in conjunction with the Closing. (f) The Borrower will not take or omit to take any action which will in any way cause the proceeds of the Bonds, or other moneys on deposit in any fund or account in connection with the Bonds, to be applied in a manner other than as provided in the Indenture and described in the Preliminary Official Statement or the Official Statement and will not take or omit to take any action which would cause the interest on the Bonds to be includable in the gross income of the holders thereof for federal income tax purposes.
(g) The Borrower will cooperate with the Underwriter in the qualification of the Bonds for offering and sale and the determination of their eligibility for investment under the laws of such jurisdictions as the Underwriter may designate.
(h) Except to the extent such amounts will be paid from proceeds of the Bonds, t he Borrower agrees to cause the necessary amount to be paid to the Trustee and/or the escrow agent on the Closing Date to pay costs of issuance.
(i) The Borrower agrees to provide the Underwriter, at the Borrower’s expense, a reasonable number of additional copies of the Financing Documents as the Underwriter shall request.
Section 10. Conditions of Closing.
10.1 The obligations of the Underwriter to consummate at the Closing the transactions contemplated hereby are subject to receipt by the Underwriter of the items described in Section 10.2 hereof and to the satisfaction of the following conditions:
(a) The Underwriter will not have discovered any material error, misstatement or omission in the representations and warranties made in this Purchase Contract , which
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11 representations and warranties will be deemed to have been made again at and as of the time of the Closing and will then be true in all material respects. (b) The Issuer and the Borrower will have performed and complied with all agreements and conditions required by this Purchase Contract to be performed or complied with by such respective parties at or prior to Closing.
(c) The Bonds, the Financing Documents and the Official Statement shall each have been executed and delivered by each of the parties thereto, shall be in full force and effect on and as of the Closing Date and shall not have been amended, modified or supplemented prior to the Closing except as may have been agreed to in writing by the Underwriter and no event of default shall exist under any such documents.
(d) The Underwriter will have received orders for all of the Bonds (or such amount of the Bonds as is acceptable to the Underwriter) and (a) such orders have not been withdrawn at the time of the Closing and (b) the market price or marketability, at the initial offering price set forth in the Official Statement, of the Bonds shall not have been adversely affected, in the reasonable judgment of the Underwriter.
(e) The Borrower shall have entered into the Continuing Disclosure Agreement containing covenants meeting the requirements of Rule 15c2-12 under the 1934 Act. (f) The Issuer shall have received the executed Issue Price Certificate of the Underwriter, substantially in the form attached to this Purchase Contract as Exhibit E.
10.2 In addition to the co nditions set forth in Section 1 0.1 hereof, the obligations of the Underwriter to consummate at the Closing the transactions contemplated hereby are subject to receipt by the Underwriter of the following items:
(a) An approving opinion of Bond Counsel, dated the Closing Date, relating to the validity of the Bonds and the tax-exempt status of the Bonds, substantially in the form attached to the Official Statement as Appendix I and a letter of such counsel, addressed to the Federal National Mortgage Association (“Fannie Mae”) and the Trustee to the effect that such opinion may be relied upon, together with a supplemental opinion of Bond Counsel, satisfactory in form and substance to the Underwriter and the Issuer, dated the Closing Date, substantially in the form attached hereto as Exhibit B.
(b) An opinion of counsel to the Borrower, dated the Closing Date, satisfactory in form and substance to the Underwriter, the Trustee, Fannie Mae, Bond Counsel and the Issuer and in substantially the form attached hereto as Exhibit C.
(c) An opinion of Tiber Hudson LLC, counsel to the Underwriter, dated the Closing Date, satisfactory in form and substance to the Underwriter. (d) A certificate of the Issuer, dated the Closing Date and signed by an authorized official or officer of the Issuer, to the effect that (i) each of the Issuer’s representations contained herein and in all other Issuer Documents, which representations will be deemed to have been made again at and as of th e time of Closing, are true and correct in all material respects; (ii) the Issuer has performed and complied with all agreements and conditions required by this Purchase Contract to be performed or complied with by it at or prior to the Closing (except to the extent waived by the Underwriter); and (iii) the information contained in the Preliminary Official Statement as of its
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12 date and as of the date hereof and the Official Statement as of the date hereof and as of the Closing Date under the captions “THE ISSUER” and “NO LITIGATION – The Issuer” is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. (e) Evidence that a public hearing has been duly held and the issuance of the Bonds has been duly approved and a finding of significant public benefit has been made by the City Council as required by Section 6586.5 of the California Government Code. (f) A certificate of the Issuer, dated the Closing Date and signed by an authorized officer of the Issuer, in form and substance satisfactory to the Issuer, the Underwriter and Bond Counsel, respecting certain tax matters as may be reasonably required by Bond Counsel to enable it to give its opinion.
(g) A certificate of the Borrower, dated the Closing Date and signed by its authorized representative, to the effect that:
(i) each of the Borrower’s representations and warranties contained herein and in all Borrower Documents, which representations and warranties will be deemed to have been made again at and as of the time of Closing, are true and correct in all material respects;
(ii) the Borrower has performed and complied with all agreements and conditions required by this Purchase Contract to be performed or complied with by it at or prior to the Closing (except to the extent waived by the Underwriter); (iii) since the date of the Official Statement and except as set forth therein, there has not been any material adverse change in the Borrower’s operations, financial or otherwise;
(iv) the information contained in the Preliminary Official Statement, as of its date and as of the date hereof, and the Official Statement as of the date hereof and as of the Closing Date (excluding information regarding the Depository Trust Company and its Book-Entry system, information under the caption “UNDERWRITING,” information regarding Fannie Mae and the MBS, and Appendices A and F, as to which no representations or warranties are made) is true and correct and does not contain any untrue statement of a material fact and does not omit to state a material fact necessar y in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading;
(v) there is no action, suit, proceeding, inquiry or investigation, at law or in equity, or before or by any court, public board or body pending or, to the best knowledge of the Borrower, threatened against or affecting the Borrower or any of its affiliates, no r, to the best knowledge of the Borrower, is there any basis therefor, wherein an unfavorable decision, ruling or finding would, in any way, adversely affect the transactions contemplated by the Financing Agreement or the operation and management of the Project, or that might result in any material adverse change in the business, operations, properties, assets, liabilities or condition (financial or other) of the Borrower or that materially affects the information in the Preliminary Official Statement and the Official Statement; and
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13 (vi) such other matters as the Underwriter may reasonably request. (h) A certificate of the Borrower dated the Closing Date and signed by its authorized representative, in form and substance satisfactory to the Underwriter and Bond Counsel, respecting certain tax matters as may be reasonably required by Bond Counsel to enable it to give its opinion. (i) A certificate of the Trustee, dated the Closing Date and signed by an authorized officer of the Trustee, in form and substance satisfactory to the Underwriter. (j) The Borrower’s 15c2-12 Certificate, substantially in the form attached hereto as Exhibit D, duly executed by the Borrower.
(k) Certified copies of the organizational documents of the Borrower and copies of the resolutions of its Board of Directors authorizing the execution and delivery of the Borrower Documents.
(l) The Financing Documents (or certified copies thereof) duly executed and delivered by the respective parties thereto, with such amendments, modifications or supplements as may have been agreed to by the Issuer, Bond Counsel and the Underwriter. (m) A certificate of Fannie Mae dated the Closing Date, delivered to the Issuer, Bond Counsel and the Underwriter, substantially in the form attached hereto as Exhibit F. (n) A certificate of the Lender dated the Closing Date, delivered to the Issuer, Bond Counsel and the Underwriter, substantially in the form attached hereto as Exhibit G. (o) Written evidence satisfactory to the Underwriter that Moody’s Investors Service, Inc. (the “Rating Agency”) has issued a rating of “[Aa1]” for the Bonds and such rating shall be in effect on the Closing Date.
(p) Such additional legal opinions, certificates, instruments and other documents as the Underwriter, the Issuer or Bond Counsel may reasonably deem necessary to evidence the truth and accuracy as of the Closing Date of the respective representations and warranties of the Issuer and the Borrower herein contained and of the Official Statement, and to evidence compliance by the Issuer and the Borrower with this Purchase Contract and all applicable legal requirements, and the due performance and satisfaction by the Issuer and the Borrower at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Issuer and the Borrower.
10.3 If any of the co nditions set forth in Section 1 0.1 or 10.2 hereof have not been met on the Closing Date, the Underwriter may, at its sole option, terminate this Purchase Contract or proceed to Closing upon waiving any rights under this Purchase Contract with respect to any such condition. If this Purchase Contract is terminated pursuant to this Section 10, no party will have any rights or obligations to any other, except as provided in Section 13 hereof.
Section 11. Actions and Events at the Closing.
The following events will take place at the Closing:
(a) The Issuer will cause the Trustee to deliver the Bonds to the Underwriter. The Bonds so delivered will be in the form required by the Indenture, duly authenticated by the Trustee,
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14 and will be fully registered in the name of C ede & Co., as nominee of The Depository Trust Company, Brooklyn, New York.
(b) The Issuer and the Borrower, as applicable, will deliver or cause to be delivered to the Underwriter at the offices of Bond Counsel , or at such other place or places as the Issuer, the Borrower and the Underwriter may mutually agree upon, the materials described in Sectio n 10.1 and Section 10.2 hereof.
(c) The Underwriter will deliver to the Trustee, for the account of the Issuer, a wire, payable in immediately available funds, in an amount equal to the purchase price of the Bonds as set forth in Exhibit A hereto.
Section 12. Termination of Agreement.
The Underwriter may terminate this Purchase Contract, without liability therefor, by notifying the Issuer and the Borrower at any time prior to the Closing, if:
(a) Legislation is enacted or introduced in the Congress or recommended to the Congress for passage by the President of the United States, or favorably reported for passage to either house of the Congress of the United States by a committee of such house to wh ich such legislation has been referred for consideration, or a decision is rendered by a court established under Article III of the Constitution of the United States or by the Tax Court of the United States, or an order, ruling, regulation (final, temporar y or proposed) , press release, statement or other form of notice or official statement is issued or made: (i) by or on behalf of the President, the Treasury Department of the United States or the Internal Revenue Service with the purpose or effect, directly or indirectly, of imposing federal income taxation upon such interest as would be received by the owners of the Bonds, or (ii) by or on behalf of the SEC, or any other governmental entity having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds or any arrangements underlying the Bonds, are not exempt from registration under the 1933 Act, or that the Indenture is not exempt from qualification under the Trust Indenture Act of 1939, as amended;
(b) The declaration of a general banking moratorium by federal, New York or State authorities, or general suspension of trading in securities on the New York Stock Exchange any other national securities exchange, or the establishment by the New York Stock Exchange, by the SEC, by any federal or state agency or by the decision of any court, of any limitation on prices for such trading, or any outbreak or escalation of hostilities or occurrence of any other national or international calamity or crisis or escalation of such calamity or crisis , the effect of which on the financial markets of the United States shall be such as to make it impracticable for the Underwriter to proceed with the purchase and offering of the Bonds; (c) Any event or condition which, in the reasonable judgment of the Underwriter, (i) renders untrue any statement of a material fact in the Official Statement, and the Issuer and the Borrower do not agree to supplement or amend the Official Statement to correct the deficiency, or (ii) causes the Official Statement to omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Issuer and the Borrower do not agree to supplement or amend the Official Statement to correct the deficiency, or (iii) has a material adverse effect upon the marketability of the Bonds, or (iv) would materially and adversely affect the ability of the Underwriter to enforce contracts for the sale of the Bonds;
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15 (d) The imposition by the New York Stock Exchange or other national securities exchange, or any governmental entity, of any restrictions not now in forc e with respect to any of the Bonds or obligations of the general character of the Bonds or securities generally, or the increase of any such restrictions now in force, including those relating to the extension of credit by, or the change to the net capital requirements of the Underwriter; (e) An order, decree or injunction of any court of competent jurisdiction, or order, filing, regulation or official statement by the SEC, or any other governmental entity having jurisdiction of the subject matter, issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds or the issuance, offering or sale of the Bonds or any arrangements underlying the Bonds, as contemplated hereby or by the Preliminary Official Statement or the Official Statement, is or would be in violation of the federal securities laws as then in effect;
(f) The rating on the Bonds shall have been downgraded or withdrawn by the Rating Agency; or
(g) A material disruption in commercial banking, securities settlement, payment, or clearance services shall have occurred.
Section 13. Fees and Expenses.
13.1 The Borrower shall pay to the Underwriter a fee in the amount of $_________ plus $_____ for certain fees and expenses (the “Underwriter’s Fee”), payable in immediately available funds on the Closing Date from which the Underwriter will pay certain expenses. The Underwriter’s Fee shall not include the fee of the Underwriter’s counsel. The Borrower acknowledges that it has had an opportunity, in consultation with such advisors as it may deem appropriate, if any, to evaluate and consider the fees and expenses being incurred in connection with the issuance of the Bonds. The Borrower has agreed to pay the Underwriter’s Fee set forth in this Section 13.1 , and inclusive in the expense component of the Underwriter’s Fee are actual expenses incurred or paid for by the Underwriter on behalf of the Borrower in connection with the marketing, issua nce, and delivery of the Bonds, including, but not limited to, advertising expenses, the costs of any preliminary and final blue sky memoranda, CUSIP fees, California Debt and Investment Advisory Commission fees and transportation, lodging, and meals for the Borrower’s employees and representatives, if any.
13.2 The Borrower shall pay the costs of issuance of the Bonds, including all expenses incident to the performance of the Underwriter’s and the Issuer’s obligations hereunder, including, but not limited to, (i) the cost of the preparation, printing or other reproduction of this Purchase Contract, the Preliminary Official Statement and the Official Statement, as either may be supplemented or amended , the Indenture and the other Financing Documents in reasonable quantities for distribution; (ii) the cost of engrav ing, reproducing and signing the definitive Bonds; (iii) the reasonable fees and disbursements of all applicable legal counsel, including Bond Counsel, counsel to the Issuer, counsel to the Trustee (if any), and counsel to the Underwriter; (iv) the initial fees and costs of paying the Trustee and all paying agents, transfer agents and registrars; (v) the fees and expenses of the Issuer ; (v) any fees of the Municipal Advisor; (vi) any required insurance related fees; (vii) CUSIP fees; (viii) the cost of qualifying the Bonds for sale in various states chosen by the Underwriter and the cost of preparing or printing any Preliminary Blue Sky Survey to be used in connection with such sale; ( ix) the fees and expenses of the experts retained by the Borrower with respect to the acquisition, rehabilitation and financing of the Project; (x) the fees of the Rating Agency in connection with the rating of the Bonds; (xi) normal travel costs, including reasonable transportation and lodging; (x ii) ordinary and reasonable meals hosted by the Underwriter that are directly related to the offering contemplated by this Purchase Contract ; (xiii) all other applicable fees of professionals hired in
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16 conjunction with the issuance of the Bonds; and [(xiv) reimbursement to the Underwriter for the Underwriter’s Advance ]. Notwithstanding anything to the contrary, in the event the transaction contemplated hereby does not close, the Borrower shall pay all fees and expenses described in this section
13.2 incurred in connection with the transaction.
13.3 In the event that the Issuer, the Borrower or the Underwriter shall have paid obligations of the other as set forth in this Section, appropriate adjustments will promptly be made.
13.4 [The Borrower and Underwriter acknowledge that expenses included in the expense component of the Underwriter’s Fee may be based upon estimates. The Borrower and Underwriter agree that in the event the aggregate estimated expenses exceed the aggregate actual expenses incurred by the Underwriter in an amount equal to or greater than $1,000 (the “Reimbursement Threshold”), the Underwriter shall reimburse to the Borrower the amount that the aggregate estimated expenses exceed the aggregate actual expenses. For t he avoidance of doubt, the Borrower acknowledges and agrees that in the event the aggregate estimated expenses exceed the aggregate actual expenses incurred by the Underwriter in an amount less than the Reimbursement Threshold, no reimbursement will be made by the Underwriter.
The Borrower acknowledges that it has had an opportunity, in consultation with such advisors as it may deem appropriate, if any, to evaluate and consider the fees and expenses being incurred as part of the issuance of the Bonds.]
Section 14. Limitation of Liability.
Notwithstanding any provision herein to the contrary, any member, officer, director, partner, agent, commissioner, board members or employee of the Issuer, the Underwriter or the Borrower, including any person executing this Purchase Contract, shall not bear any liability as a result of any failure of the Issuer , the Underwriter or the Borrower to perform the obligations of each, respectively, set forth in this Purchase Contract.
Section 15. Miscellaneous.
15.1 All notices, demands and formal actions hereunder will be in writing and mailed, telecopied or delivered to the following address or such other address as either of the parties shall specify:
If to the Underwriter: Stifel, Nicolaus & Company, Incorporated One Montgomery Street, 35th Floor
San Francisco, CA 94104
Attention: Brad Edgar
If to the Issuer: Marina Joint Powers Financing Authority c/o City of Marina
211 Hillcrest Avenue
Marina, CA 93933
Attention: Executive Director
If to the Borrower: Preston Park Sustainable Community Nonprofit Corporation
c/o City of Marina
211 Hillcrest Avenue
Marina, CA 93933
Attention: Executive Director
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17 15.2 This Purchase Contract will inure to the benefit of and be binding upon the parties hereto and their successors and assigns and, will not confer any rights upon any other person. The terms “successor” and “assigns” will not include any purchaser of any of the Bonds from the Underwriter merely because of such purchase.
15.3 This Purchase Contract may not be assigned by any of the parties hereto prior to the Closing.
15.4 If any provision of this Purchase Contract is held or deemed to be or is, in fact, inoperative, invalid or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any provision of any constitution, statute, rule of public policy, or any other reason, such circumstances will not have the effect of rendering the provision in question inoperable or unenforceable in any other case or circumstance or of rendering any other provision or provisions of this Purchase Contract invalid, inoperative or unenforceable to any extent whatever.
15.5 This Purchase Contract will be construed in accordance with and governed by the internal laws of the State, without regard to conflict of law principles of the State.
15.6 This Purchase Contract may be executed in several counterparts (including counterparts exchanged by email in PDF format) , each of which will be regarded as an original and all of which will constitute one and the same document.
Section 16. Survival of Certain Representations and Obligations.
The respective agreements, covenants, representations, warranties and other statements of the Issuer and the Borrower and each of their respective officers set forth in or made pursuant to this Purchase Contract shall survive delivery of and payment for the Bonds and shall remain in full force and effect, regardless of any investigation, or statements as to the results thereof, made by or on behalf of the Underwriter.
[Signature pages to follow]
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If the foregoing is in accordance with your understanding, please sign and return to us two counterparts hereof and, upon the acceptance hereof by the Issuer and the Borrower, this Purchase Contract and such acceptance shall constitute the binding agreement among us as to the matters set forth above.
Very truly yours,
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Name:
Title:
[Signatures continue on following page]
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[Issuer’s signature page to Purchase Contract]
MARINA JOINT POWERS FINANCING
AUTHORITY, AS ISSUER
By:
Layne Long
Executive Director
[Signatures continue on following page]
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[Borrower’s signature page to Purchase Contract]
PRESTON PARK SUSTAINABLE COMMUNITY
NONPROFIT CORPORATION, a California nonprofit
corporation
By;
Layne Long
Executive Director
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A-1
EXHIBIT A
TERMS OF BONDS
Multifamily Housing Revenue Bonds
(Fannie Mae MBS-Secured) Series 2026
(Preston Park Apartments)
Dated Date Maturity Date Principal Amount Interest Rate Price January __, 2026 March 1, 2036 $_________ ___% 100%
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B-1
EXHIBIT B
PROPOSED FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL
January ___, 2026
Stifel, Nicolaus & Company, Incorporated
San Francisco, California
Re: $_________ Marina Joint Powers Financing Authority Multifamily Housing Revenue Bonds (Fannie Mae MBS-Secured) Series 2026 (Preston Park Apartments) Ladies and Gentlemen:
We have examined certified copies of proceedings taken for the sale and issuance of the above - referenced bonds (the “Bonds”), and we have rendered our opinion to the Marina Joint Powers Financing Authority (the “Authority”) this day regarding the validity and enforceability of the Bonds (the “Approving Opinion”). The Bonds are being issued pursuant to an Indenture of Trust dated as of January 1, 2026 (the “Indenture”), by and between the Authority and U.S. Bank Trust Company, National Association, as Trustee. You may rely upon our Approving Opinion as if it were addressed to you. Capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Bond Purchase Agreement dated January __, 2026 (the “Purchase Agreement ”), among the Authority, the Preston Park Sustainable Community Nonprofit Corporation (the “Borrower”) and Stifel, Nicolaus & Company, Incorporated (the “Underwriter”).
We have assumed, but not independently verified, that the signatures on all documents, letters, certificates and instructions which we have examined are genuine, that all documents submitted to us are authentic and were duly and properly executed by the pa rties thereto and that all representations made in the documents that we have reviewed are true and accurate.
We express no opinion herein with respect to any indemnification, contribution, choice of law, choice of forum, penalty or waiver provisions contained in the Bonds, the Indenture, the Financing Agreement, the Regulatory Agreement (defined in the Indenture) or the Purchase Agreement (collectively, the “Legal Documents”), nor do we express any opinion with respect to the state or quality of title to any of the real or personal property described in the Financing Agreement or the Indenture, or the accuracy or sufficiency of the description of any such property contained therein.
Based upon the foregoing and such other information and documents as we consider necessary to render this opinion, we are of the opinion that:
1. The Purchase Agreement has been duly authorized, executed and delivered by the Authority and is a valid and binding agreement of the Authority.
2. The statements on the cover of the Official Statement and in the Official Statement under the captions “INTRODUCTION,” “DESCRIPTION OF THE BONDS,” “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS,” and “TAX MATTERS,” and in “APPENDIX C – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE,” “APPENDIX D – SUMMARY OF CERTAIN PROVISIONS OF THE FINANCING AGREEMENT,” and “APPENDIX I – PROPOSED FORM OF OPINION OF BOND COUNSEL,” excluding any material that may be treated as included under such captions and appendices by any cross-reference, insofar as such statements expressly summarize provisions of the Bonds, the Financing Agreement, the Indenture and Bond Counsel’s final opinion concerning certain
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B-2
federal tax and state tax matters relating to the Bonds, are accurate in all material respects as of the date of Closing.
3. The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Indenture is exempt from qualification as an indenture pursuant to the Trust Indenture Act of 1939, as amended.
The opinions expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. This opinion is limited to matters governed by the laws of the State of California and federal securities laws, and we assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.
We call attention to the fact that the rights and obligations under the Legal Documents are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer and other similar laws affecting creditors’ rights, to the applicat ion of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State of California.
We express no opinion herein regarding any tax consequences with respect to the Bonds. No opinion is expressed herein with respect to the compliance with, or applicability of, any “blue sky” laws of any state as they relate to the offer or sale of the Bonds.
We call attention to the fact that the foregoing opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken (or not taken) or occur (or do not occur).
This opinion is furnished by us to you and is solely for your benefit, and may not be used, circulated, quoted or otherwise referred to or relied upon by others without our prior written consent. This letter is not intended to be, and may not be, relied upon by the owners of the Bonds or any beneficial ownership interest therein. You have acknowledged that no attorney-client relationship exists between us and you with respect to any matters related to the Bonds.
Our engagement with respect to the Bonds has concluded with their delivery, and we disclaim any obligation to update this opinion or other matters discussed in the Official Statement.
Respectfully submitted,
EXHIBIT G
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C-1
EXHIBIT C
FORM OF OPINION OF COUNSEL TO THE BORROWER
[To be provided]
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D-1
EXHIBIT D
FORM OF BORROWER’S RULE 15c2-12 CERTIFICATE
$_________
Marina Joint Powers Financing Authority
Multifamily Housing Revenue Bonds
(Fannie Mae MBS-Secured) Series 2026
(Preston Park Apartments)
The undersigned hereby certifies and represents to Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) that the undersigned is authorized to execute and deliver this certificate on behalf of Preston Park Sustainable Community Nonprofit Corporation, a California nonprofit corporation (the “Borrower”), and hereby further certifies to the Underwriter as follows:
(a) This certificate is delivered to enable the Underwriter to comply with Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934 (the “Rule”) in connection with the issuance and sale of the above-captioned securities (the “Bonds”). (b) In connection with the issuance and sale of the Bonds, there has been prepared a Preliminary Official Statement, dated January __, 2026 , relating to the Bonds (the “Preliminary Official Statement”), setting forth information concerning the Bonds and the Borrower. (c) As used herein, “Permitted Omissions” shall mean the offering price(s), interest rate(s), accreted values, yield to maturity, selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters and the identity of the Underwriter(s), all with respect to the issuance and sale of the Bonds. (d) The Preliminary Official Statement is, as of the date thereof, deemed final within the meaning of the Rule, except for Permitted Omissions.
(e) The section of the Preliminary Official Statement entitled “CONTINUING DISCLOSURE” describes the agreement the Borrower expects to make for the benefit of the Bondholders in the Continuing Disclosure Agreement dated as of January 1, 2026, executed by the Borrower and Applied Best Practices, LLC, as dissemination agent, by which the Borrower will undertake to provide continuing disclosure in accordance with the Rule.
Dated: January __, 2026
[Signature page to follow]
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D-2
[Signature page to Rule 15c2-12 Certificate]
IN WITNESS WHEREOF, I have hereunto set my hand as of the date set forth above.
PRESTON PARK SUSTAINABLE COMMUNITY
NONPROFIT CORPORATION, a California nonprofit
corporation
By;
Layne Long
Executive Director
EXHIBIT G
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E-1
EXHIBIT E
FORM OF ISSUE PRICE CERTIFICATE
$_________
Marina Joint Powers Financing Authority
Multifamily Housing Revenue Bonds
(Fannie Mae MBS-Secured) Series 2026
(Preston Park Apartments)
The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (the “Underwriter”), on behalf of itself, hereby certifies as set forth below with respect to the sale and issuance of the above - captioned obligations (the “Bonds”).
1. Sale of the Bonds. As of the date of this certificate, for each Maturity of the Bonds, the first price at which at least 10% of such Maturity of the Bonds was sold to the Public is the respective price listed in Exhibit A attached to the Bond Purchase Agreement dated January __, 2026 , among the Underwriter, Preston Park Sustainable Community Nonprofit Corporation, a California nonprofit corporation (the “Borrower”), and Marina Joint Powers Financing Authority (the “Issuer”).
2. Defined Terms.
(a) “Issuer” means the Marina Joint Powers Financing Authority, a public instrumentality and political subdivision of the State of California.
(b) “Maturity” means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(c) “Public” means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than the Underwriter or a related party to the Underwriter. The term “related party” for purposes of this certificate generally means any t wo or more persons who have greater than 50 percent common ownership, directly or indirectly.
(d) “Underwriter” means (i) Stifel, Nicolaus & Company, Incorporated , (ii) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (iii) any person that agrees pursuant to a writte n contract directly or indirectly with a person described in clause (ii) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the Underwriter’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, a s amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer and the Borrower with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Stradling Yocca Carlson & Rauth LLP, Bond Counsel, Bond Counsel, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form
EXHIBIT G
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E-2
8038, and other federal income tax advice that it may give to the Issuer and the Borrower from time to time relating to the Bonds.
Capitalized terms used but not defined herein have the meanings assigned to them in the Indenture of Trust dated as of January 1, 2026 , between the Issuer and U.S. Bank Trust Company, National Association, a national banking association, as trustee.
Except as expressly set forth above, the certifications set forth herein may not be relied upon or used by any third party or for any other purpose.
Dated: January __, 2026
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E-3
[Underwriter’s signature page to Issue Price Certificate] Dated as of the date hereof.
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Name:
Title:
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E-4
[Underwriter’s signature page to Issue Price Certificate] Dated as of the date hereof.
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Benjamin Stern
Managing Director
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F-1
EXHIBIT F
FORM OF CERTIFICATE OF FANNIE MAE
$_________
Marina Joint Powers Financing Authority
Multifamily Housing Revenue Bonds
(Fannie Mae MBS-Secured) Series 2026
(Preston Park Apartments)
This Certificate, dated as of January __, 2026 , is being furnished to the Marina Joint Powers Financing Authority (the “Issuer”) and Stifel, Nicolaus & Company, Incorporated , as underwriter (the “Underwriter”), pursuant to the terms of the Bond Purchase Agreement dated January __, 2026 (the “Bond Purchase Agreement ”) among the Underwriter, the Issuer and Preston Park Sustainable Community Nonprofit Corporation, a California nonprofit corporation , regarding the purchase by the Underwriter of the Marina Joint Powers Financing Authority Multifamily Housing Revenue Bonds (Fannie Mae MBS- Secured) Series 2026 (Preston Park Apartments) (the “Bonds”) , issued by the Issuer. All terms not otherwise defined herein shall have the meanings ascribed to such terms in the Bond Purchase Agreement.
The undersigned hereby certifies to the Issuer and the Underwriter that (A) Fannie Mae has provided the link which includes a template of the Fannie Mae MBS Prospectus (Multifamily Fixed Rate Yield Maintenance) set forth in the first paragraph under the caption “APPENDIX A – FANNIE MAE MORTGAGE-BACKED SECURITIES PROGRAM ” in the Preliminary Official Statement and the Official Statement , (B) if the MBS had been issued by Fannie Mae on the date of this Certificate, the disclosure in the Additional Disclosure Addendum provided in connection with the MBS would be substantially the same in all material respects as the Additional Disclosure Addendum provided in Schedule I to Appendix A of the Official Statement, and (C) Fannie Mae consents to the inclusion, but makes no representation as to the suitability of such information under the caption “APPENDIX A – FANNIE MAE MORTGAGE-BACKED SECURITIES PROGRAM ” in the Preliminary Official Statement and the Official Statement, for use in connection with the marketing of the Bonds.
EXHIBIT G
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F-2
FANNIE MAE
By:
Name:
Title:
FANNIE MAE CERTIFICATE (Preston Park Apartments)
EXHIBIT G
166
G-1
EXHIBIT G
FORM OF CERTIFICATE OF LENDER
$_________
Marina Joint Powers Financing Authority
Multifamily Housing Revenue Bonds
(Fannie Mae MBS-Secured) Series 2026
(Preston Park Apartments)
January __, 2026
The undersigned, Berkadia Commercial Mortgage LLC, a Delaware limited liability company (the “Lender”), in connection with the issuance, sale and delivery by the Marina Joint Powers Financing Authority (the “Issuer”) of its Multifamily Housing Revenue Bonds (Fannie Mae MBS -Secured) Series 2026 (Preston Park Apartments) in the aggregate principal amount of $ _________ (the “Bonds”), does hereby certify as of the date hereof as follows:
1. Each MBS delivered to U.S. Bank Trust Company, National Association, a national banking association (the “Trustee”) shall be issued by Fannie Mae and guaranteed, as to timely payment of interest at the applicable Pass -Through Rate on the unpaid principal balance of the Mortgage Loan pertaining to such MBS, and guaranteed as to timely payment of principal in accordance w ith the terms of the principal amortization schedule of the Mortgage Loan.
2. The Trustee shall be furnished with (i) an MBS, registered in the name of the Trustee (or its nominee), as Trustee under the Indenture and (ii) any prospectus for the MBS.
3. The Lender has provided and/or reviewed the informati on under the caption s “THE MORTGAGE LOAN ,” “FANNIE MAE ,” “APPENDIX A — FANNIE MAE MORTGAGE -BACKED SECURITIES PROGRAM,” and “APPENDIX H — TERM SHEET” in the Official Statement, and the information under such captions in the Official Statement is accurate as of the date of the Official Statement and as of the Closing Date, and that the Lender has authorized the inclusion of such information in the Official Statement for use in connection with the marketing of the Bonds.
All terms not otherwise defined herein shall have the meanings ascribed to such terms in the Bond Purchase Agreement dated January __, 2026 , among Stifel, Nicolaus & Company, Incorporated , Preston Park Sustainable Community Nonprofit Corporation, a California nonprofit corporation, and the Issuer.
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G-2
[Signature page to Certificate of Lender]
IN WITNESS WHEREOF, I have hereunto set my hand as of the date set forth above.
BERKADIA COMMERCIAL MORTGAGE LLC ,
a Delaware limited liability company
By:
Name:
Title:
EXHIBIT G
168
PRELIMINARY OFFICIAL STATEMENT DATED JANUARY __, 2026
NEW ISSUE -- BOOK ENTRY ONLY RATING: Moody’s “[Aa1]”
See “RATING” herein
In the opinion of Stradling Yocca Carlson & Rauth LLP, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described in this Official Statement, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on indi viduals. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See the caption “TAX MATTERS” herein with respect to tax consequences relating to the Bonds, including with respect to the alternative minimum tax imposed on certain large corporations.
$30,825,000*
Marina Joint Powers Financing Authority
Multifamily Housing Revenue Bonds
(Fannie Mae MBS-Secured) Series 2026
(Preston Park Apartments)
Dated: January __, 2026
Interest Rate: ___% Bond Maturity Date: March 1, 2036* Offering Price: 100.00%* CUSIP: _______
The Marina Joint Powers Financing Authority Multifamily Housing Revenue Bonds (Fannie Mae MBS-Secured) Series 2026 (Preston Park Apartments) (the “Bonds”) will be issued under and pursuant to an Indenture of Trust, dated as of January 1, 2026 (the “Indenture”), between the Marina Joint Powers Financing Authority (the “Issuer”) and U.S. Bank Trust Company, National Association, a national banking association, as trustee (in such capacity, the “Trustee”).
The Bonds are issuable only as fully registered bonds without coupons and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), Brooklyn, New York. DTC will act as securities depository of the Bonds. Individual purchases will be made in book-entry form only, in the denominations of $ 5,000 or any integral multiple of $ 5,000 in excess thereof. Purchasers will not receive certificates representing their interest in Bonds purchased. Principal and interest on the B onds are payable by the Trustee to DTC, which will be responsible for remitting such principal and interest to its Participants, which will be responsible for remitting such principal and interes t to the Beneficial Owners of the Bonds, as described under “APPENDIX F — BOOK-ENTRY SYSTEM” herein.
The Bonds will be issued to refinance the cost of acquiring a multifamily rental housing development through the purchase by the Trustee of a single mortgage pass -through certificate (the “MBS”) guaranteed as to timely payment of principal and interest by the Federal National Mortgage Association, if and when issued. It is anticipated that, prior to the MBS Delivery Date, the Bonds will be secured by, and the principal of and interest thereon will be paid from amounts on deposit in the Revenue Fund and the Bond Proceeds Fund along with the investment earnings thereon. See “SECURITY FOR AND SOURCES OF PAYMENT FOR THE BONDS” herein.
The aggregate principal amount, maturity date, interest rate and delivery date for the Bonds shall be as set forth in the Indenture and as described on the cover page hereof.
The MBS is expected to be delivered by the MBS Delivery Date Deadline, initially defined as February 25, 2026*. From and after the MBS Delivery Date, the Bonds will be secured by, and the principal of and interest thereon will be paid from, payments made on the MBS. Principal, and interest on the Bonds will be payable semiannually on the 1st day of each March and September, or the next succeeding Business Day if such 1st day is not a Business Day, commencing September 1, 2026*.
THE BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY FROM THE TRUST ESTATE UNDER THE INDENTURE. NONE OF THE ISSUER, THE CITY OF MARINA, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT THE ISSUER, TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE) NOR ANY PUBLIC AGENCY SHALL IN
ANY EVENT BE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM (IF ANY) OR INTEREST ON THE BONDS OR
FOR THE PERFORMA NCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT OF ANY KIND WHATSOEVER EXCEPT AS SET FORTH IN THE INDENTURE, AND NONE OF THE BONDS OR ANY OF THE ISSUER’S AGREEMENTS OR OBLIGATIONS SHALL
BE CONSTRUED TO CONSTITUTE AN INDEBTEDNESS OF OR A PLEDGE OF THE FAITH AND CREDIT OF OR A LOAN OF THE
CREDIT OF OR A MORAL OBLIGATION OF ANY OF THE FOREGOING WITHIN THE MEAN ING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER. THE ISSUER HAS NO TAXING POWER.
The Bonds are offered when, as and if received by Stifel, Nicolaus & Company, Incorporated (the “Underwriter”), subject to the approval of legality by Stradling Yocca Carlson & Rauth LLP, Bond Counsel. Certain legal matters will be passed upon for the Borrower by its counsel, Goldfarb & Lipman LLP, Oakland, California, and for the Underwriter by its counsel, Tiber Hudson LLC, Washington, D.C. It is expected that the Bonds will be available in book-entry form through the facilities of DTC in Brooklyn, New York, on or about January __, 2026.
Dated: January __, 2026
* Preliminary; subject to change.
This Preliminary Official Statement and certain of the information contained herein is in a form deemed final for purposes of Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (except for the omission of certain information permitted to be omitted under Rule 15c2-12(b)(1)). The information herein is subject to revision, completion or amendment in a final Official Statement. These securities may not be sold nor may offers to buy be accepted prior to the time of formal award by the Issuer. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
EXHIBIT H
169
ii
No dealer, broker, salesman or other person has been authorized by the Issuer or the Underwriter to give any information or to make any representations other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.
Prospective purchasers must read this entire Official Statement (including the cover page and all appendices hereto) to obtain all of the information essential to the making of an informed investment decision.
References to website addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader’s convenience. Neither the Issuer nor the Underwriter has been able to verify the accuracy or completeness of the information contained in website addresses set forth in this Official Statement or to verify that such information is accurate and complete as of the date of this Official Statement. Investors reviewing such information must rely on the providers of su ch information for its accuracy and completeness in making any investment decisions regarding the Bonds . Unless specified otherwise, such websites and the information or links contained therein are not incorporated into, and are not part of, this Official Statement.
The information set forth herein has been obtained from the Borrower, the Issuer and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Underwriter. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change i n the affairs of the Borrower, the Issuer or any other parties described herein since the date as of which such information is presented.
In connection with this offering, the Underwriter may over -allot or effect transactions which stabilize or maintain the market price of the Bonds offered hereby at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal s ecurities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
Fannie Mae has not reviewed or undertaken to determine the accuracy of any of the information contained in this Official Statement, other than providing a link to the template Fannie Mae MBS Prospectus in Appendix A and the Additional Disclosure Addendum in Schedule I to Appendix A, and makes no representation or warranty, express or implied, as to any of the other matters contained in this Official Statement, including, but not limited to (i) the accuracy or completeness of such information, (ii) the suitability of the Bonds for any investor, (iii) the feasibility or performance of any project, (iv) the structure, provisions or terms of the Bonds and any cash flows related thereto, or (v) compliance with any securities, tax or other laws or regulations incl uding but not limited to the validity of the Bonds and the tax-exempt status of the Bonds. Fannie Mae’s role with respect to the Bonds is limited to issuing and discharging its obligations under the MBS if and when delivered.
No registration statement relating to the Bonds has been filed with the United States Securities and Exchange Commission (the “Commission”) or with any state securities agency. The Bonds have not been approved or disapproved by the Commission or any state securities agency, nor has the Commission or any state securities agency passed upon the accuracy or adequacy of this Official Statement. Any representation to the contrary is a criminal offense.
CUSIP data herein are provided by CUSIP Global Services, managed by FactSet Research Systems Inc. on behalf of the American Bankers Association. CUSIP numbers have been assigned by an independent company not affiliated with the Issuer and are included sol ely for the convenience of the holders of the Bonds. The Issuer is not responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions.
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iii
TABLE OF CONTENTS
Page
INTRODUCTION ....................................................................................................................................................... 1 THE ISSUER ............................................................................................................................................................... 3 DESCRIPTION OF THE BONDS ............................................................................................................................. 3 THE MORTGAGE LOAN ......................................................................................................................................... 7 FANNIE MAE ............................................................................................................................................................. 7 SECURITY FOR AND SOURCES OF PAYMENT FOR THE BONDS ............................................................... 7 PRIVATE PARTICIPANTS ...................................................................................................................................... 8 THE PROJECT ......................................................................................................................................................... 10 CERTAIN BONDHOLDERS’ RISKS ..................................................................................................................... 13 TAX MATTERS ........................................................................................................................................................ 17 NO LITIGATION...................................................................................................................................................... 18 CERTAIN LEGAL MATTERS ............................................................................................................................... 19 UNDERWRITING .................................................................................................................................................... 19 RATING ..................................................................................................................................................................... 20 CONTINUING DISCLOSURE ................................................................................................................................ 20 THE TRUSTEE ......................................................................................................................................................... 21 ENFORCEABILITY OF REMEDIES .................................................................................................................... 21 RELATIONSHIP AMONG PARTIES .................................................................................................................... 21 ADDITIONAL INFORMATION ............................................................................................................................. 22
APPENDIX A FANNIE MAE MORTGAGE-BACKED SECURITIES PROGRAM
APPENDIX B DEFINITIONS OF CERTAIN TERMS
APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE FINANCING AGREEMENT
APPENDIX E SUMMARY OF CERTAIN PROVISIONS OF THE REGULATORY AGREEMENT
APPENDIX F BOOK-ENTRY SYSTEM
APPENDIX G FORM OF CONTINUING DISCLOSURE AGREEMENT
APPENDIX H TERM SHEET
APPENDIX I PROPOSED FORM OF OPINION OF BOND COUNSEL
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1 OFFICIAL STATEMENT
relating to
$30,825,000*
Marina Joint Powers Financing Authority
Multifamily Housing Revenue Bonds
(Fannie Mae MBS-Secured) Series 2026
(Preston Park Apartments)
INTRODUCTION
This Official Statement (which includes the cover page and appendices hereto) provides certain information in connection with the issuance and sale of the $ 30,825,000* Marina Joint Powers Financing Authority Multifamily Housing Revenue Bonds (Fannie Mae MBS-Secured) Series 2026 (Preston Park Apartments) (the “Bonds”) issued by the Marina Joint Powers Financing Authority (the “Issuer”). The Bonds will be issued pursuant to Article 4 (commencing with Section 6584) of Chapter 5, Division 7, Title 1 of the Government Code of the State of California (the “Act”), and that certain resolution No. ____ of the Board of Directors of the Issuer adopted on December 16, 2025 (the “Resolution”) and secured by an Indenture of Trust, dated as of January 1, 2026 (the “Indenture”), between the Issuer and U.S. Bank Trust Company, National Association, as trustee (in such capacity, the “Trustee”). Pursuant to the Indenture and the Financing Agreement, dated as of January 1, 2026 (the “Financing Agreement”), among the Issuer, the Trustee and Preston Park Sustainable Community Nonprofit Corporation, a California nonprofit corporation (the “Borrower”), the Issuer is issuing the Bonds to provide refinancing for a certain multifamily rental housing development known as Preston Park Apartments (the “Project”) in the City of Marina, County of Monterey, California (the “State”), and to facilitate the delivery of the MBS (as defined below) guaranteed by the Federal National Mortgage Association (“Fannie Mae”).
All capitalized terms used in this Official Statement that are defined in the Indenture shall have the respective meanings set forth in the Indenture. See “APPENDIX B — DEFINITIONS OF CERTAIN TERMS.” The Issuer, the Borrower and Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) have entered into a Bond Purchase Agreement (the “Bond Purchase Agreement”), pursuant to which the Issuer will agree to sell the Bonds to the Underwriter. The transaction entered into under the Bond Purchase Agreement will provide for the issuance and sale to the Underwriter of the Bonds in a specified principal amount, with a specified interest rate, on a specified date and at a specified price. The delivery of the Bonds is subject to the satisfaction of a number of conditions set forth in the Bond Purchase Agreement.
The Bonds will be issued to refinance the costs of acquiring the Project through the purchase of a single mortgage pass-through certificate (the “MBS”) guaranteed as to principal and interest by Fannie Mae, if and when issued. The MBS will not be available for purchase on the date of issuance of the Bonds (the “Closing Date”) but is expected to be available for acquisition by the Trustee on or prior to the MBS Delivery Date Deadline. The MBS will be backed by a 10*-year, fixed-rate mortgage loan (the “Mortgage Loan”) which is to be evidenced by a multifamily note (the “Mortgage Note”), and secured by a mortgage constituting a first lien on the Project (as further defined herein, the “Mortgage”). The Mortgage Loan will be made to the Borrower as mortgagor and owner of the Project on the Closing Date. See “THE MORTGAGE LOAN” herein and “APPENDIX A — FANNIE MAE MORTGAGE- BACKED SECURITIES PROGRAM” attached hereto.
On the Closing Date, and prior to the date of delivery by Fannie Mae of the MBS (the “MBS Delivery Date”), the Bonds will be secured by (i) the proceeds of the Bonds delivered to the Trustee and deposited into the Bond Proceeds Fund established under the Indenture and (ii) Eligible Funds, delivered to the Trustee and deposited into the Negative Arbitrage Account of the Revenue Fund established under the Indenture, in an amount at least equal to the interest on the Bonds at the rate set forth on the cover page hereof (the “Bond Interest Rate”) from the Bond Dated Date to, but not including, the date that is five (5) calendar days after the MBS Delivery Date Deadline (collectively, the “Cash Collateral”). Prior to the MBS Delivery Date, the Bonds will be secured by, and the principal of, premium,
* Preliminary; subject to change.
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2 if any, and interest thereon will be paid from amounts on deposit in the Revenue Fund and the Bond Proceeds Fund along with the investment earnings thereon. From and after the MBS Delivery Date, the Bonds will be secured by, and the principal of and interest thereon will be paid from, payments made on the MBS. See “SECURITY FOR AND SOURCES OF PAYMENT FOR THE BONDS” herein.
On the MBS Delivery Date, amounts on deposit in the Bond Proceeds Fund and the Revenue Fund will be used by the Trustee to purchase the MBS, which will then secure the payment of the Bonds. On or prior to the Closing Date, Fannie Mae will enter into a commitment with Berkadia Commercial Mortgage LLC, a Delaware limited liability company (the “Lender”), the Fannie Mae-approved lender of the Mortgage Loan, to deliver the MBS to the Trustee for purchase. The commitment to deliver the MBS is subject to the satisfaction of certain requirements and preconditions and does not extend to the benefit of any other third party, including the beneficial owners of the Bonds, the Issuer or the Trustee. No representations or assurances can be provided as to whether or not such conditions can or will be satisfied.
If the MBS is not delivered on or before the MBS Delivery Date Deadline (as defined herein), as such date may be extended pursuant to the terms of the Indenture, then funds then on deposit in the Bond Proceeds Fund and the Revenue Fund will be used to redeem the Bonds as set forth in the Indenture. The Bonds are also subject to mandatory redemption in whole or in part as further described herein. See “DESCRIPTION OF THE BONDS — Redemption of Bonds.”
The Bonds shall bear interest on the outstanding principal amount thereof at the interest rate set forth on the cover page hereof. The MBS is expected to be delivered by the MBS Delivery Date Deadline, initially defined as February 25, 2026*. Principal and interest on the Bonds will be payable semiannually on the 1st day of each March and September, or the next succeeding Business Day if such 1st day is not a Business Day, commencing September 1, 2026* (the “Initial Payment Date”). Following the delivery of the MBS, MBS payments will be made monthly on the 25th of each month, or if not a Business Day, the following Business Day. Fannie Mae’s role with respect to the Bonds is limited to issuing and discharging its obligations under the MBS if and when delivered . Fannie Mae has no responsibility for the structuring and timing of Bond payments from MBS Revenues. Principal and interest on the Bonds are payable by the Trustee to DTC, which will be responsible for remitting such principal and interest to its Participants, which will be responsible for remitting such principal and interest to the Beneficial Owners of the Bonds. [The payment of interest on each Payment Date shall relate to the interest accrued during the preceding six calendar months; provided that the payment of interest on the Initial Payment Date shall relate to the interest accrued on the Bonds from the Closing Date to but not including such Initial Payment Date.] On or after the Closing Date, the Borrower, the Lender and Fannie Mae, collectively, have the ability to increase the amount of debt on the Project to exceed the outstanding principal amount of the Bonds. Although such additional debt is not guaranteed to be either supportable by the Project or approved by the Lender or Fannie Mae, any security instrument issued in connection therewith will not relate to or serve as additional security for the Bonds.
The Bonds are limited obligations of the Issuer, payable solely from and secured by the pledge pursuant to the Indenture of the Trust Estate, consisting of revenues from the MBS , if issued and delivered to the Trustee (the “MBS Revenues”), and other funds pledged therefor under the Indenture. See “SECURITY FOR AND SOURCES OF PAYMENT FOR THE BONDS.”
THE BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY FROM THE TRUST ESTATE UNDER THE INDENTURE. NONE OF THE ISSUER, THE CITY OF MARINA, THE
STATE, OR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT THE ISSUER, TO THE LIMITED
EXTENT SET FORTH IN THE INDENTURE) NOR ANY PUBLIC AGENCY SHALL IN ANY EVENT BE
LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM (IF ANY) OR INTEREST ON THE
BONDS OR FOR THE PERFORMANCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT OF ANY
KIND WHATSOEVER EXCEPT AS SET FORTH IN THE INDENTURE, AND NONE OF THE BONDS OR ANY OF THE ISSUER’S AGREEMENTS OR OBLIGATIONS SHALL BE CONSTRUED TO
CONSTITUTE AN INDEBTEDNESS OF OR A PLEDGE OF THE FAITH AND CREDIT OF OR A LOAN
OF THE CREDIT OF OR A MORAL OBLIGATION OF ANY OF THE FOREGOING WITHIN THE
* Preliminary; subject to change.
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3 MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER. THE ISSUER HAS NO TAXING POWER.
Descriptions, certain definitions and final terms of the Bonds, the Borrower, the Project, the Mortgage Loan and the MBS are included herein. All summaries or descriptions herein of documents and agreements are qualified in their entirety by reference to such documents and agreements and all summaries herein of the Bonds are qualified in their entirety by reference to the Indenture and the pr ovisions with respect thereto included in the aforesaid documents and agreements. Copies of the Indenture and the Financing Agreement are available for inspection at the office of the Trustee. The Borrower will provide certain information on an ongoing basis to the Municipal Securities Rulemaking Board (the “MSRB”). For a description of the Borrower’s undertaking with respect to ongoing disclosure, see “CONTINUING DISCLOSURE” herein.
THE ISSUER
The following information has been provided by the Issuer for use herein. While the information is believed to be reliable, none of the Trustee, the Borrower, the Underwriter, the Lender, Fannie Mae nor any of their respective counsel, members, officers or employees makes any representations as to the accuracy or sufficiency of such information.
The Issuer is a joint exercise of powers authority created pursuant to Joint Exercise of Powers Agreement dated as of July 1, 1990, by and between the City of Marina and the Successor Agency to the Marina Redevelopment Agency (as successor to the former Ma rina Redevelopment Agency), and Articles 1 to 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government Code (the “Act”). The Issuer is authorized to issue bonds and to loan the proceeds thereof to qualified borrowers in accordance with the Act.
The Issuer may sell and deliver obligations other than the Bonds, which other obligations are and will be secured by instruments separate and apart from the Indenture and the Bonds. The Owners of the Bonds will have no claim on the security for such other obligations issued by the Issuer.
The Issuer has not reviewed any appraisal for the Mortgaged Property or any feasibility study or other financial analysis of the Mortgaged Property and has not undertaken to review or approve expenditures of the Mortgaged Property, to supervise the operati on of the Mortgaged Property, or to obtain any financial statements of the Borrower.
THE ISSUER HAS NOT REVIEWED THIS OFFICIAL STATEMENT AND IS NOT RESPONSIBLE
FOR ANY INFORMATION CONTAINED HEREIN, EXCEPT FOR THE INFORMATION IN THIS SECTION AND UNDER THE CAPTION “NO LITIGATION — THE ISSUER” HEREIN.
DESCRIPTION OF THE BONDS
General
The Bonds will be issued in the denominations of $5,000 or any integral multiple of $5,000 in excess thereof.
The Bonds are issuable only as fully registered bonds without coupons and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), Brooklyn, New York. DTC will act as securities depository for the Bonds. Individual purchases will be made in book -entry form only. Purchasers will not receive bonds representing their interest in the Bonds purchased. See “APPENDIX F — BOOK-ENTRY SYSTEM.” The Bonds will be dated January __, 2026 and have maturity date(s) and final payment date(s) as identified on the cover page hereof and in the Term Sheet attached as APPENDIX H. The Bonds shall bear interest from their dated date on the outstanding principal amount thereof at the interest rate set forth on the cover page hereof. Interest on the Bonds shall be computed on the basis of a 360 -day year consisting of twelve 30-day months (“30/360”). The payment of interest on each Payment Date shall relate to the interest accrued on the Bonds during the preceding six calendar months; provided that the payment of interest on the Initial Payment Date shall relate to the interest accrued on the Bonds from the Closing Date to but not including such Initial Payment Date.
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4 Interest on the Bonds will be payable on each Payment Date to the Bondholders of record as of the applicable Record Date.
All payments of interest with respect to the Bonds will be paid to the Bondholders by the Trustee from funds held in the Revenue Fund under the Indenture. All payments of principal and interest with respect to the Bonds will be paid to the Bondholders in proportion to the principal amount of each Bond owned by each such owner as set forth on the records of the Trustee as of the applicable Record Date.
So long as Cede & Co. or another nominee designated by DTC is the registered owner of the Bonds, principal and interest on the Bonds are payable by the Trustee to DTC, which will be responsible for remitting such principal and interest to its Participants, which will be responsible for remitting such principal and interest to the Beneficial Owners of the Bonds. See “APPENDIX F — BOOK-ENTRY SYSTEM.” So long as Cede & Co. is the registered owner of the Bonds, all references in this Official Statement to the owners or holders of the Bonds, means Cede & Co. and not the Beneficial Owners of the Bonds.
Transfer of Bonds
While DTC is securities depository for book-entry Bonds, the transfer of beneficial ownership of Bonds shall take place as described in “APPENDIX F — BOOK-ENTRY SYSTEM.” If DTC were to terminate its status as securities depository for the Bonds and, as a result, the Bonds were no longer book-entry securities, no transfer of a Bond will be made unless made upon the records of the Issuer kept for that purpose at the corporate trust office of the Trustee, by the registered owner of the Bond or by its attorney duly authorized in writing, upon surr ender thereof together with a written instrument of transfer satisfactory to the Trustee. Upon the transfer of any s uch Bond, the Issuer shall issue and the Trustee shall authenticate and deliver to and in the name of the transferee a new fully registered Bond, of the same series, aggregate principal amount, interest rate, maturity and other terms as the surrendered Bond.
At all times, the Issuer and the Trustee may deem and treat the person in whose name any Bond shall be registered upon the records of the Issuer as the absolute owner of such Bond, whether such Bond shall be a book-entry security or not, for the purpose of receiving payment of, or on account of, the principal of, premium, if any, and interest on such Bond and for all other purposes and all such payments so made to any such registered owner or upon his order shall be valid and effectual to satisfy and discha rge the liability upon such Bond to the extent of the sum or sums so paid.
Redemption of Bonds
The Bonds shall be subject to mandatory redemption prior to maturity under the Indenture as follows.
Mandatory Redemption Prior to MBS Delivery Date . In the event the MBS Delivery Date Deadline is extended in accordance with the terms of the Indenture, it is possible that sinking fund payments may commence on or before the MBS Delivery Date Deadline, as so extended. On any Payment Date that occurs prior to or during the month in which the MBS is delivered to the Trustee, the Bonds are subject to mandatory redemption as shown in the sinking fund schedule below set forth under the heading “Mandatory Sinking Fund Redemption,” payable with respect to principal first, from money on deposit in the Bond Proceeds Fund, and with respect to interest, and premium, if any, from money on deposit in the Revenue Fund or other Eligible Funds or other Eligible Funds.
Mandatory Redemption in Whole Upon Failure to Purchase the MBS by the MBS Delivery Date Deadline .
The Bonds are subject to mandatory redemption in whole five (5) calendar days after the MBS Delivery Date Deadline at a Redemption Price equal to 100% of the Outstanding principal amount thereof, plus interest accrued but unpaid from the first day of the month in which the last Payment Date occurred (or, if no Payment Date has occurred, from the Bond Dated Date) to, but not including, such redemption date, if the MBS Delivery Date has not occurred on or prior to the MBS Delivery Date Deadline, payable with respect to principal first, from money on deposit in the Bond Proceeds Fund, and with respect to premium, if any, and interest, from money on deposit in the Revenue Fund and other Eligible Funds.
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5 Mandatory Redemption in Part on the MBS Delivery Date. The Bonds are subject to mandatory redemption in part on the MBS Delivery Date at a Redemption Price equal to 100% of the principal amount of the Bonds to be redeemed, plus interest accrued but unpaid from the first day of the month in which the last Pa yment Date occurred to, but not including, the MBS Delivery Date, in an amount equal to the difference between (i) the principal amount of the MBS purchased on the MBS Delivery Date and (ii) the aggregat e principal amount of the Bonds Outstanding as of the first day of the month in which the MBS Delivery Date occurred, payable with respect to principal first, from money on deposit in the Bond Proceeds Fund, and with respect to interest and premium, if any, from money on deposit in the Revenue Fund and other Eligible Funds.
Mandatory Sinking Fund Redemption *. The Bonds are subject to mandatory redemption on the respective dates set forth in the schedule below , at the Redemption Price equal to the principal amount thereof, plus accrued interest to, but not including, the redemption date:
Sinking Fund Payment Date Amount Sinking Fund Payment Date Amount $ $
______†
Average Life ____ years
Any scheduled principal payments made pursuant to the Mortgage Loan Amortization Schedule shall be retained by the Trustee and used to make sinking fund payments as set forth above.
Mandatory Redemption Following Unscheduled Prepayment of the Mortgage Loan. (i) The Bonds are subject to mandatory redemption in whole or in part one Business Day after the date on which any unscheduled MBS principal payment or prepayment is received by the Trustee, at a Redemption Price equal to 100% of the principal amount thereof, plus accrued interest and premium, if any, received pursuant to the MBS.
(ii) The Mortgage Loan is subject to optional prepayment by the Borrower. Any yield maintenance or prepayment penalty incurred in connection with prepayment of the Mortgage Loan that is received by the Trustee as
* Preliminary; subject to change.
† Final maturity.
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6 holder of the MBS will be distributed to Bondholders, as applicable ; however, no assurance can be given that all or any portion of such yield maintenance or prepayment penalty will be received by the Trustee as holder of the MBS.
Selection of Bonds for Redemption . If less than all of the Bonds are redeemed pursuant to “Mandatory Sinking Fund Redemption” above , the Bonds shall be redeemed in accordance with the schedule set forth in the Indenture. In the event the Bonds are redeemed in part and not in whole other than pursuant to the heading “Mandatory Sinking Fund Redemption” above , the Bonds shall be redeemed ratably across all maturities and the scheduled principal payments on the Bonds to remain outstanding and the mandatory redemption requirements for each maturity described in the Indenture shall be adjusted so that the resulting debt service on the Bonds (including scheduled mandatory redemption payments) during each six-month period commencing on each Payment Date is proportional, as nearly as practicable, to the payments on the MBS during each such six -month period, without exceeding the amount available from MB S payments, and other available funds under the Indenture that may be used to pay debt service on the Bonds, during each such six -month period. All Bonds to be redeemed within the same maturity shall be selected by lot. Any redemption in part shall be in Authorized Denominations and the Lender shall furnish the Trustee with a revised Mortgage Loan Amortization Schedule in connection with such redemption in part, other than pursuant to mandatory sinking fund redemption.
Except as otherwise described above, any Bonds to be called for redemption shall be selected by the Trustee ratably among maturities and within a maturity by lot, such selection to be made prior to the date on which notice of such redemption must be given and Bonds shall be redeemed as soon as practicable after an event causing a redemption shall have occurred. The Trustee shall have no liability for such selections made without gross negligence or willful misconduct.
If it is determined that less than all of the principal amount represented by any Bond is to be called for redemption, then, following notice of intention to redeem such principal amount, the holder thereof shall surrender such Bond to the Trustee on or before the applicable redemption date for (a) payment on the redemption date to such Bondholder of the Redemption Price of the amount called for redemption and (b) delivery to such Bondholder of a new Bond or Bonds of such Series in an aggregate principal am ount equal to the unredeemed balance of such Bond.
A new Bond representing the unredeemed balance of such Bond shall be issued to the registered owner thereof, without charge therefor. If the registered owner of any Bond selected for redemption shall fai l to present such Bond to the Trustee for payment and exchange as aforesaid, such Bond shall, nevertheless, become due and payable on the date fixed for redemption to the extent of the amount called for redemption (and to that extent only).
See “APPENDIX C – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE – Redemption of Bonds” attached hereto.
Extension of MBS Delivery Date Deadline
At any time prior to the MBS Delivery Date Deadline , the Borrower may extend the MBS Delivery Date Deadline by (i) providing to the Trustee, the Lender, the Issuer, the Rating Agency and the Underwriter written notice of any extension of the MBS Delivery Date Deadline, (ii) depositing with the Trustee Eligible Funds for the credit of the Negative Arbitrage Account of the Revenue Fund in an amount, taking into account amounts already on deposit therein, sufficient to pay interest due on the Bonds to the date that is five (5) calendar days after the extended MBS Delivery Date Deadline (the “Extension Deposit”), and (iii) delivering to the Trustee and the Rating Agency a Cash Flow Projection establishing the sufficiency of the Extension Deposit. Extension Deposits may continue to be made by or on behalf of the Borrower until the MBS Delivery Date occurs or the Borrower declines to make an Extension Deposit resulting in the mandatory redemption pursuant to the Indenture; provided, however, the MBS Delivery Date Deadline may not be extended to a date that is later than the fourth anniversary of the Bond Dated Date unless, prior to any extension beyond such date, there shall be filed with the Trustee and the Issuer an opinion of Bond Counsel to the effect that such extension will not , in and of itself, adversely affect the exclusion of interest on the Bonds from gross income for Federal income tax purposes. The cost of such opinion shall be the sole responsibility of the Borrower. See “APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Extension of MBS Delivery Date Deadline” attached hereto.
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7 THE MORTGAGE LOAN
General
The Indenture authorizes the Issuer to issue the Bonds to refinance the cost of acquiring the Project through the acquisition of the MBS and to pay certain additional costs related thereto. The Bonds will be secured initially by the Cash Collateral, and then by the MBS, if issued and delivered to the Trustee. Fannie Mae is expected to deliver the MBS to the Trustee on or before the MBS Delivery Date Deadline, and the MBS is to be purchased by the Trustee with the Cash Collateral on deposit under the Inden ture. The Lender has undertaken to certify that the MBS meets the requirements set forth in the Indenture, on which certification the Trustee may rely and act without further investigation. The Mortgage Loan is to be evidenced by the Mortgage Note, executed by the Borrower in favor of the Lender and secured , by the Leasehold Multifamily Deed of Trust , Assignment of Leases and Rents, Security Agreement and Fixture Filing (the “Mortgage”). The Borrower is required under the Mortgage Note to make monthly payments sufficient in the aggregate to pay debt service on the Mortgage Loan.
MBS Payments
Following the MBS Delivery Date, if such date occurs, payments on the MBS will be made on the 25 th day of each month (beginning with the month following the month in which the MBS is issued and delivered to the Trustee), or, if such 25th day is not a Business Day, on the first Business Day next succeeding such 25 th day. With respect to the MBS, Fannie Mae will distribute to the Trustee an amount equal to the total of (i) the principal due on the Mortgage Loan underlying the MBS during the period beginning on the second day of the month prior to the month of such distribution and ending on the first day of such month of distribution, (ii) the stated principal balance of the Mortgage Loan that was prepaid in full during the calendar month next preceding the month of such distribution (including as prepaid for this purpose at Fannie Mae’s election the Mortgage Loan after it is delinquent, in whole or in part, with respect to four consecutive installments of principal and interest; or because of Fannie Mae’s election to repurchase the Mortgage Loan under certain other circumstances), (iii) the amount of any partial prepayment of the Mortgage Loan received in the calendar month next preceding the month of distribution, and (iv) one month’s interest at the MBS Pass-Through Rate on the principal balance of the MBS as reported to the Trustee (assuming the Trustee is the registered holder) in connection with the previous distribution (or, respecting the first distribution, the principal balance of the MBS on its issue date). For purposes of distribution, the Mortgage Loan will be considered to have been prepaid in full if, in Fannie Mae’s reasonable judgment, the full amount finally recoverable on account of the Mortgage Loan has been received, whether or not such full amount is equal to the stated principal balance of the Mortgage Loan. See also “APPENDIX A — FANNIE MAE MORTGAGE-BACKED SECURITIES PROGRAM.”
FANNIE MAE
The MBS, if issued by Fannie Mae and acquired by the Trustee as described herein, will be an obligation of Fannie Mae. The securities of Fannie Mae, including the MBS, if issued, are not guaranteed by the United States and do not constitute a debt or obligation of the United States or any agency or instrumentality thereof other than Fannie Mae.
Information on Fannie Mae and its financial condition are contained in periodic reports that are filed with the U.S. Securities and Exchange Commission (the “SEC”). Fannie Mae’s SEC filings are available at the SEC’s website at www.sec.gov and are also available on Fannie Mae’s website at http://www.fanniemae.com or from Fannie Mae at the Office of Investor Relations at 202-752-7115.
SECURITY FOR AND SOURCES OF PAYMENT FOR THE BONDS
In order to secure the payment of the principal of, premium, if any, and interest on the Bonds, the Issuer has pledged to the Trustee the Trust Estate for the Bonds, subject to terms and provisions of the Indenture, the following:
(i) All right, title and interest of the Issuer in and to (a) amounts on deposit in the Bond Proceeds Fund (as defined in the Indenture) , to be funded on the Closing Date in an amount equal to the
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8 principal amount of the Bonds , and (b) Eligible Funds on deposit in the Revenue Fund (including but not limited to the Negative Arbitrage Account thereof);
(ii) (a) 100% of the beneficial ownership interest in the MBS, if the MBS is issued by Fannie Mae and acquired by the Trustee, and (b) all MBS Revenues; (iii) All right, title and interest of the Issuer now owned or hereafter acquired in, to and under the Financing Agreement (except Reserved Rights) and the Regulatory Agreement (as defined in the Indenture); and
(iv) All other funds, accounts and property which by the express provisions of the Indenture is required to be subject to the lien of the Indenture, and any additional property that from time to time, by delivery or by writing of any kind, may be subjected to the lien of the Indenture, by the Issuer or by anyone on its behalf (and the Trustee is authorized by the Indenture to receive the same at any time as additional security under the Indenture; provided, however, that the Trust Estate shall not include amount s on deposit in the Rebate Fund or the Prior Loan Payment Fund).
The foregoing pledge is made for the equal and proportionate benefit, security and protection of the registered owners from time to time of any of the Bonds authenticated and delivered under the Indenture and issued by the Issuer and Outstanding, without preference, priority or distinction as to lien, or otherwise of any one Bond over any other Bond by reason of priority in the issue, sale or negotiation thereof, or of any other cause, and for the benefit of Fannie Mae as provided in the Indenture.
Prior to the delivery of the MBS, the Bonds will be secured by the deposit with the Trustee of the proceeds of the Bonds and other Eligible Funds held under the Indenture by the Trustee in an aggregate amount equal to the outstanding principal amount of the Bonds. The Trustee will use Eligible Funds held under the Indenture along with interest earnings thereon to (a) pay principal, premium, if any, and interest on the Bonds when due, and (b) acquire, if and when issued, the MBS, upon satisfaction of the conditions set forth in the Indenture and upon satisfaction of the conditions precedent to the issuance of the MBS and compliance with the commitment between Fannie Mae and the Lender.
It is anticipated that if the conditions to the issuance of the MBS are satisfied, the MBS will be available for acquisition by the Trustee on or before the MBS Delivery Date Deadline, as such date may be extended as provided in the Indenture. Following t he delivery of the MBS to the Trustee, if delivered, payments of principal and interest on the Bonds will be payable from principal and interest payments received by the Trustee on the MBS as provided in the Indenture.
If the MBS is not acquired by the Trustee on or prior to the MBS Delivery Date Deadline (as such date may be extended pursuant to the Indenture), the Bonds will be redeemed from Eligible Funds held under the Indenture as set forth in “DESCRIPTION OF THE BONDS — Redemption of Bonds — Mandatory Redemption in Whole Upon Failure to Purchase the MBS by the MBS Delivery Date Deadline” hereto.
PRIVATE PARTICIPANTS
The following information has been provided by the Borrower and has not been independently confirmed or verified by either the Underwriter or Fannie Mae. No representation is made herein as to the accuracy or adequacy of such information or as to the abse nce of material adverse changes in such information subsequent to the date hereof.
The Borrower
The Borrower is a Section 115 corporation [few words to let the reader know what this means is forthcoming] known as the Preston Park Sustainable Community Nonprofit Corporation, a California nonprofit public benefit corporation (the “Borrower”). The Borrower was formed on April 10, 2015 for the benefit of, and to carry out the purposes of, the City of Marina, California (the “City”), specifically to acquire, own, and operate the Project (as
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9 defined below). The City of Marina Council Members serve as the Board of Directors of the Borrower and the day - to-day operations of the Borrower are performed by City staff members.
The Property Manager
Greystar California, Inc., a Delaware corporation, serves as the property manager (the “Property Manager”) for the Project. The Property Manager entered into an amended management agreement with the Borrower (as amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Management Agreement”), pursuant to which the Property Manager will manage, operate, supervise, and cause the Project to be leased and perform actions necessary to fulfill the Borrower’s obligations. The Manag ement Agreement outlines the staffing plan for the Project and the role of key personnel. The Project’s day-to-day finances will be managed by the Property Manager pursuant to the Management Agreement, which includes the collection of all monthly rents an d fees, preparation of annual budget recommendations for the Borrower, and financial reporting.
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10 THE PROJECT
The following information has been provided by the Borrower and has not been independently confirmed or verified by either the Underwriter or Fannie Mae. No representation is made herein as to the accuracy or adequacy of such information or as to the abse nce of material adverse changes in such information subsequent to the date hereof.
General. The Project is a multifamily housing development consisting of 352 townhome units known as Preston Park (the “Project”). The Project includes with two - and three-bedroom units, ranging from 1,150 to 1,572 square feet. The Project units are rented to hous eholds with a mix of income levels: very low income, low income, and market. Amenities and features include a community center, open landscaping, winding walkways, and close proximately to the beach, restaurants, and shopping. Each unit includes an enclo sed garage and driveway, and the Project includes ___ additional surface parking spaces for use by residents and guests. Two additional units at the Project are used as a property management office and community center. As of December 4, 2025, the Projec t is
99.4% occupied.
The Project was built in the 1980s as military housing for families assigned to Fort Ord. The Project was acquired by the City from the Fort Ord Reuse Authority (an entity formed for the purpose of redeveloping the former Fort Ord military base) on September 15, 2015, and the City immediately leased the Project to the Borrower pursuant to a Lease Agreement, dated as of September 15, 2015 (as amended, the “Lease Agreement”). The Lease Agreement has a term of 50 years, expiring on September 15, 2065. See “—Lease Agreement” below. The property management services are provided through a contract with a professional property management firm as described below under the caption “—Property Manager.”
The unit mix of the Project is as follows:
Unit Type
Approximate
Square Feet
Total Number
of Units
Number of Units
Occupied by Very Low
or Low-Income
Households(1)(2)
2 BD, 1 BA 1,150 10(3) 4
2 BD, 1.5 BA 1,278 95 23
2 BD, 1.5 BA 1,323 122 22
3 BD, 2.5 BA 1,572 125 36
Total 352(3) 85
Project Location. The Project is generally located on approximately 95.54 acres, [south of Reservation Road and northwest of Imjin Parkway] in the City of Marina, California.
Affordability Restrictions. The Project is subject to income limits set forth in that certain Deed Restriction and Regulatory Agreement dated as of ______, 202__ (the “City Regulatory Agreement”), by and between the City and the Borrower, which generally requires 20% of the units at the Project to be restricted to occupancy by households earning 80% or less of the Area Median Income for Monterey County, with such households paying an Affordable Rent (as defined in the City Regulatory Agreement), and the Deed Restriction and Regulatory Agreement dated as of December 6, 2007 (the “FORA Regulatory Agreement”), by and between the former Redevelopment Agency of the
(1) Includes 21 households with tenant-based section 8 vouchers, pursuant to which the tenant pays 30% of the tenant household’s gross income and the Borrower receives a payment from the federal government (through the County of Monterey) in the amount of the difference between 30% of the tenant household’s gross income and the lower of the actual rent charged to the tenant under the residential rental agreement and the fair market rent payment standard set by the U.S. Department of Housing and Urban Development for housing units in the County. [To be confirmed]. Because tenant-based section 8 vouchers are held by individual tenants, who may move from the Project, the Borrower cannot provide any assurance that the Project will continue to rent the same number of units to households holding section 8 vouchers in the future. (2) The Borrower is not required to rent specified unit types as income- and rent-restricted units. Accordingly, the mix of unit types at the project that are income- and rent-restricted units will change from time to time. (3) Excluding two 1,150 square foot units that are designated as a Property Management Office and Community Center.
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11 City of Marina and the former Fort Ord Reuse Authority, which requires that 19 of the units of the Project be rented to and occupied by Vey Low Income Households (as defined in the FORA Regulatory Agreement) and 32 of the units at the Project be rented to and occupied by Low Income Households (as defined in the FORA Regulatory Agreement), with such households paying an affordable rent calculated in accordance with the FORA Regulatory Agreement.
Lease Agreement. The Borrower and the City entered into the Lease Agreement for an initial term of fifty years, expiring September 15, 2065, which gave possession of the Project to the Borrower for the long-term operation of the Project. The Lease Agreement requires the Borrower to operate the Project and make periodic rental payments to the City, consisting of an initial amount that constituted the price of the Borrower’s acqui sition of its leasehold interest in the Project, monthly payments of all net revenues, and any real property taxes and other fees and costs of ownership.
Historic Occupancy . Based on information obtained from the Borrower, the historic average annual occupancy rates for the Project for the last five years was as follows:
Fiscal Year
Average Number of
Occupied Units
Average Number of
Vacant Units
Average %
Vacancy
2021 350 2 0.6%
2022 350 2 0.6
2023 349 3 0.9
2024 349 3 0.9
2025 350 2 0.6
Historical Financials. The following tables show the historical assets, liabilities, and net position of the Project and the historic revenues, expenses, and change in net position of the Project for Fiscal Years 2019 20 through 2024-25 (collectively, the “Historical Financia ls”). The Historical Financials were provided by the Borrower. The Underwriter has not undertaken to verify the accuracy of the information presented herein.
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12 City of Marina
Preston Park Apartments
Statement of Net Position
(Fiscal Years 2019-20 through 2024-2025)
Fiscal Year
2019-20
Fiscal Year
2020-21
Fiscal Year
2021-22
Fiscal Year
2022-23
Fiscal Year
2023-24
Fiscal Year 2024-
25 (Unaudited
Actual)
ASSETS
Current assets:
Cash with fiscal agent $ 7,148,324 $ 8,583,202 $ 9,137,808 $ 11,096,057 $ 12,733,470 $ 15,079,939 Accounts receivable, net 152,125 212,577 353,712 47,305 12,670 151,595 Prepaid expenses:
Replacement reserves 237,665 237,754 237,825 237,931 238,101 5,434 Insurance escrow 92,728 65,696 60,512 74,077 132,239 115,243 Tax escrow 98,896 121,244 134,575 119,146 123,763 126,053 Total current assets $ 7,729,738 $ 9,220,473 $ 9,924,432 $ 11,574,516 $ 13,240,243 $ 15,478,264 Noncurrent assets:
Capital assets (depreciable, net) 31,962,292 31,255,292 30,548,292 29,841,292 29,134,292 28,427,292 Total assets $ 39,692,030 $ 40,475,765 $ 40,472,724 $ 41,415,808 $ 42,374,535 $ 43,905,556
LIABILITIES
Current liabilities:
Accrued liabilities $ 855,377 $ 845,755 $ 847,313 $ 895,798 $ 834,256 $ 1,075,297 Noncurrent liabilities:
Loans payable, due in more than one year 35,950,000 35,950,000 35,950,000 35,950,000 35,950,000 35,950,000 Total liabilities $ 36,805,377 $ 36,795,755 $ 36,797,313 $ 36,845,798 $ 36,784,256 $ 37,025,297
NET POSITION
Net investment in capital assets $ (3,987,708) $ (4,694,708) $ (5,401,708) $ (6,108,708) $ (6,815,708) $ (7,522,708) Unrestricted 6,874,361 8,374,718 9,077,119 10,678,718 12,405,987 14,402,967 Total net position $ 2,886,653 $ 3,680,010 $ 3,675,411 $ 4,570,010 $ 5,590,279 $ 6,880,259
Source: City of Marina Audited Financial Statements for Fiscal Years 2019-20 through 2023-24; City of Marina on behalf of Borrower for Fiscal Year 2024-25.
City of Marina
Preston Park Apartments
Statement of Revenues, Expenses and Changes in Fund Net Position (Fiscal Years 2019-20 through 2024-25)
Fiscal Year|
2019-20
Fiscal Year
2020-21
Fiscal Year
2021-22
Fiscal Year
2022-23
Fiscal Year
2023-24
Fiscal Year
2024-25
(Unaudited Actual)
OPERATING REVENUES
Rental income $ 6,843,782 $ 7,058,160 $ 7,190,772 $ 7,388,417 $ 7,555,990 $ 7,886,235 Other revenue 46,740 12,293 93,346 41,451 47,397 47,293 Total operating revenues $ 6,890,522 $ 7,070,453 $ 7,284,118 $ 7,429,868 $ 7,603,387 $ 7,933,528
OPERATING EXPENSES
Service and supplies 913,352 1,024,477 1,329,855 1,540,996 1,267,043 1,330,244 Repairs and maintenance 781,752 867,745 1,608,793 693,916 1,227,876 1,192,376 Utilities 115,726 129,264 135,706 212,580 208,161 243,109 Taxes 300,124 331,783 265,631 277,392 195,160 181,744
Rent 1,748,651 1,744,096 1,744,821 1,742,671 1,969,163 1,988,551 Depreciation and amortization 707,000 707,000 707,000 707,000 707,000 707,000 Total operating expenses 4,566,605 4,804,365 5,791,806 5,174,555 5,574,403 5,643,024 Operating income (loss) 2,323,917 2,266,088 1,492,312 2,255,313 2,028,984 2,290,504
NON-OPERATING REVENUES
(EXPENSES)
Interest expense $ (1,516,790) $ (1,512,646) $ (1,512,646) $ (1,512,646) $ (1,516,790) $ (1,512,646) Investment earnings 43,921 39,915 15,735 151,932 508,075 512,122 Total nonoperating revenues (expenses) (1,472,869) (1,472,731) (1,496,911) (1,360,714) (1,008,715) (1,000,524) Income (loss) before transfers 851,048 793,357 (4,599) 894,599 1,020,269 1,289,980 Change in net position 851,048 793,357 (4,599) 894,599 1,020,269 1,289,980 Total net position - beginning $ 2,035,605 $ 2,886,653 $ 3,680,010 $ 3,675,411 $ 4,570,010 5,590,279 Total net position - ending $ 2,886,653 $ 3,680,010 $ 3,675,411 $ 4,570,010 $ 5,590,279 $ 6,880,259
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13 Source: City of Marina Audited Financial Statements for Fiscal Years 2019-20 through 2023-24; City of Marina on behalf of Borrower for Fiscal Year 2024-25.
PLAN OF FINANCING
The estimated sources and uses for the Project are projected to be approximately as follows:
Sources of Funds*
Principal Amount of Bonds $30,825,000
City Equity 8,105,125
UW Advance
Mortgage Loan
190,000
30,825,000
Total $69,945,125
Uses of Funds*
Existing Loan Payoff
MBS Purchase
Repayment of UW Advance
Required Indenture Deposit
Financing Costs
$36,500,000
30,825,000
190,000
190,000
865,125
Total $68,570,125
All costs of issuing the Bonds, including the Underwriter’s fee, will be paid by the Borrower.
The Mortgage Loan and the Bonds. The Project will utilize a mortgage loan (the “Mortgage Loan”) from Berkadia Commercial Mortgage LLC, a Delaware limited liability company (the “Lender”). The obligation to repay the Mortgage Loan will be set forth in a promissory note (the “Mortgage Note”) from the Borrower to the Lender, which Mortgage Note will have a term of not less than ___* months, will bear interest at a rate of ___ %* and will amortize over ___ years. Following the MBS Delivery Date, payments on the Bonds will be made by the Trust ee from payments received by the Trustee pursuant to the MBS and other amounts available for such purpose under the Indenture.
CERTAIN BONDHOLDERS’ RISKS
The purchase of the Bonds will involve a number of risks. The following is a summary, which does not purport to be comprehensive or definitive, of some of such risk factors.
Limited Security; Investment of Funds
The Bonds are special limited obligations of the Issuer payable solely from the Trust Estate, which includes certain funds pledged to and held by the Trustee pursuant to the Indenture.
The Bonds are offered solely on the basis of the amounts pledged to and held by the Trustee under the Indenture, together with investment earnings thereon, and the MBS, if issued and delivered to the Trustee, and are not offered on the basis of the credit of the Borrower, the feasibility of the Project or any other security. As a consequence, limited information about the Project and no information about the financial condition or results of operations of the Borrower is included in this Official Statement . The Bonds are offered only to investors who, in making their investment decision, rely solely on the amounts held under the Indenture, together with investment earnings thereon, and not on the credit of the Borrower, the feasibility of the Project or any other security.
The principal of and interest on the Bonds are payable from and secured by certain revenues and funds pledged thereto under the Indenture, and, following the MBS Delivery Date, from payments on the MBS and other amounts available for such purpose under the Indenture. On the date of delivery of the Bonds, an amount equal to the
* Preliminary; subject to change.
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14 principal amount of the Bonds is to be deposited into the Bond Proceeds Fund . The Trustee is required to invest amounts held in the Bond Proceeds Fund and the Revenue Fund in Eligible Investments, as defined in the Indenture.
See “APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Investment of Funds.” Failure to receive a return of the amounts so invested could affect the ability to pay the principal of and interest on the Bonds.
No Acceleration or Early Redemption Upon Loss of Tax Exemption on the Bonds [Under review] The Borrower will covenant and agree, pursuant to the Regulatory Agreement by and among the City and the Borrower (the “Regulatory Agreement”), to comply with the provisions of the Code relating to the exclusion from gross income for federal income tax purposes of the interest payable on the Bonds. In particular, the Borrower is required to rent at l east twenty percent (20%) of the Project residential units to certain qualified tenants whose income does not exceed eighty percent (80%) of the area median income where the Project is located. The Borrower’s failure to comply with such provisions will not constitute a default under the Bonds and will not give rise to a redemption or acceleration of the Bonds and is not the basis for an increase in the rate of interest payable on the Bonds. Furthermore, the Borrower’s failure to comply with the Regulatory Agreement will not give rise to a prepayment or acceleration of amounts due under the MBS or the Mortgage, unless directed by Fannie Mae in its sole discretion. Consequently, interest on the Bonds may become includable in gross income for purposes of federal income taxation retroactive to the date of issuance of the Bonds by reason of the Borrower’s failure to comply with the requirements of federal tax law.
Payments Prior to MBS Delivery Date
Prior to the MBS Delivery Date, payment of principal and interest, and the Borrower’s obligations with respect to principal and interest on the Bonds, will be primarily secured by and payable from Bond proceeds held in the Bond Proceeds Fund and moneys deposited into the Revenue Fund, including the Negative Arbitrage Account therein. It is not expected, prior to the MBS Delivery Date, that any revenues from the Project or other amounts, except moneys on deposit in the Bond Proceeds Fund and the Revenue Fund, will be available to satisfy that obligation. Prior to the MBS Delivery Date, it is expected that moneys on deposit in the Bond Proceeds Fund and the Negative Arbitrage Account of the Revenue Fund, and the interest earnings thereon, will be sufficient to pay the debt service on the Bonds.
Mandatory Redemption of Bonds Prior to Maturity
Pursuant to the Indenture, under certain circumstances, the Bonds may be subject to mandatory redemption prior to maturity. See “DESCRIPTION OF THE BONDS — Redemption of Bonds” herein and Appendix C hereto.
Eligible Investments
Proceeds of the Bonds deposited into the Bond Proceeds Fund and amounts deposited in the Revenue Fund are required to be invested in Eligible Investments. See “APPENDIX B — DEFINITIONS OF CERTAIN TERMS” hereto for the definition of Eligible Investments. There can be no assurance that there will not be a loss resulting from any investment held for the credit of the Bond Proceeds Fund and the Revenue Fund , and any failure to receive a return of the amounts so invested could affect the ability to pay the principal of and interest on the Bonds.
Rating
Prior to the MBS Delivery Date, the rating on the Bonds is based on the investment in Eligible Investments of amounts on deposit in the Bond Proceeds Fund and the Revenue Fund. If one or more of such investments fail to meet the rating standards for Eligible Investments after their acquisition and prior to maturity, such a change may result in a downgrade or withdrawal of the rating on the Bonds. Following the MBS Delivery Date, the rating on the Bonds is based primarily on the credit rating of Fannie Mae. If any event occurs that causes an adverse change to the credit rating of Fannie Mae, such a change may result in a downgrade or withdrawal of the rating on the Bonds.
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15 Repayment of Mortgage Loan
The ability of the Borrower to pay the Mortgage Loan is dependent on the revenues derived from the Project.
Due to the inherent uncertainty of future events and conditions, no assurance can be given that revenues generated by the Project will be sufficient to pay expenses of the Project, including without limitation, debt service on the Mortgage Loan, operating expenses, servicing fees, fees due to Fannie Mae, Trustee fees, and fees owed to the Issuer. The ability of the Project to generate sufficient revenues may be affected by a variety of factors including, but not limited to, completion of repairs to such Pr oject, the maintenance of a sufficient level of occupancy, the ability to achieve increases in rents, the level of operating expenses, project management, adverse changes in applicable laws and regulations, general economic conditions and other factors in the surrounding market area for the Project. The Borrower intends to rent at least 20% of the units in the Project to persons or families of low income, and 19 of those units must be rented to persons and families of very low income to comply with the FOR A Regulatory Agreement and the amount of rent that may be charged for such units may be materially less than market rates. In addition to these factors, other adverse events may occur from time to time which may have a negative impact on the occupancy level and rental income of the Project.
Failure of the Borrower to make payments when due under the Mortgage Loan , including payments under the Mortgage Note, will result in an event of default under the Mortgage Loan and the Financing Agreement and may result in a mandatory prepayment of all or a portion of the Bonds. The Mortgage Loan will not be accelerated unless directed by Fannie Mae in its sole discretion in which case the Bonds will remain outstanding and will remain secured by the MBS guaranteed as to timely payment of principal and int erest by Fannie Mae. See “SECURITY FOR AND SOURCES OF PAYMENT FOR THE BONDS” herein. If Fannie Mae accelerates the Mortgage Loan as a result of any event of default under the Mortgage Loan, the Mortgage Loan will be paid in full, and the stated principal balance of the MBS will be passed through to the holder of the MBS. In this case, no yield maintenance or other prepayment premiums will be payable to the Trustee as holder of the MBS.
The Mortgage Loan is a non-recourse obligation of the Borrower with respect to the Borrower has no personal liability and as to which the Borrower has not pledged for the benefit of the Lender any of its assets, other than the Project and its rents, profits and proceeds.
Payments on the Bonds Made From Payments Received on MBS As described elsewhere herein, following the MBS Delivery Date, principal and interest on the Bonds will be paid to registered owners thereof from principal and interest payments received by the Trustee pursuant to the MBS. Although interest accrues on the MBS during a calendar month, the Trustee will not receive such payment on the MBS until the 25th day in the following calendar month, or the next succeeding Business Day if such day is not a Business Day.
MBS Certificate
If the MBS is issued by Fannie Mae and acquired by the Trustee as collateral for the Bond s, Fannie Mae’s obligations will be solely as provided in the MBS and in the Fannie Mae MBS Prospectus and the related form of Prospectus Supplement for MBS Certificate. The obligations of Fannie Mae under the MBS will be obligations solely of Fannie Mae, a federally chartered corporation, and will not be backed by the full faith and credit of the United States of America. The Bonds are not and will not be a debt of t he United States of America or any other agency or instrumentality of the United States of America or of Fannie Mae. The Bonds are not and will not be guaranteed by the full faith and credit of Fannie Mae or the United States of America.
It is possible, in the event of the insolvency of Fannie Mae, or the occurrence of some other event precluding Fannie Mae from honoring its obligations to make payments as stated in the MBS, if issued, that the financial resources of the Borrower will be the only source of payment on the Bond s. There can be no assurance that the financial resources of the Borrower will be sufficient to pay the principal of, premium if any, and interest on the Bonds in the event the Trustee is forced to seek recourse agains t the Borrower. See “SECURITY FOR AND SOURCES OF PAYMENT FOR THE BONDS” herein.
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16 Performance of the Project and Estimated Rental Revenue Vacancies The economic feasibility of the Project depends in large part upon the Project’s maintaining a high occupancy rate of the rentals at sufficient rents and to cover all operating expenses of the Project and debt service on the Mortgage Loan. Although representatives of the Borrower believe, that a substantial number of persons currently need housing facilities such as the Project, occupancy of the Project may be affected by competition from existing housing facilities or from housing facilities which may be constructed in the area served by the Project. The Project to date has maintained a high occupancy rate but that could change over time. Furthermore, no assurance can be given that tenants are able to afford the rental rates of the Project. Restrictions imposed under the Code on tenant income and the rent that can be charged could have an adverse effect on the Borrower’s ability to satisfy its obligations under the Financing Agreement, especially if operating expenses should increase beyond what was anticipated.
Limited Liability of Issuer
Notwithstanding anything in the Indenture or in the Bonds, the Issuer shall not be required to advance any money derived from any source other than the Trust Estate, consisting of MBS Revenues and other assets pledged under the Indenture for any of the purposes of the Indenture.
No agreements or provisions contained in the Indenture, nor any agreement, covenant or undertaking by the Issuer contained in any document executed by the Issuer in connection with the Project, or the issuance, sale and delivery of the Bonds shall give rise to any pecuniary liability of the Issuer or a charge against its general credit, or shall obligate the Issuer financially in any way except from the application o f the Trust Estate, consisting of MBS Revenues and other proceeds pledged to the payment of the Bonds and the proceeds of the Bonds. No failure of the Issuer to comply with any term, condition, covenant or agreement in the Indenture or in any document executed by the Issuer in connection with the Project, or the issuance, sale and delivery of the Bonds shall subject the Issuer to liability for any claim for damages, costs or other financial and pecuniary charge except to the extent that the same can be paid or recovered from the Financing Agreement or the Trust Estate, consisting of MBS Revenues and other assets pledged to the payment of the Bonds or the proceeds of the Bonds. THE ISSUER HAS NO TAXING POWER.
Secondary Markets and Prices
No representation is made concerning the existence of any secondary market for the Bonds. The Underwriter will not be obligated to repurchase any of the Bonds, nor can any assurance be given that any secondary market will develop following the completion of the offering of the Bonds. Further, there can be no assurance that the initial offering prices for the Bonds will continue for any period of time. Furthermore, the Bonds should be purchased for their projected returns only and not for any resale potential, which may or may not exist.
Future Legislation; IRS Examination
The Project, its operation and the treatment of interest on the Bonds are subject to various laws, rules and regulations adopted by the local, State and federal governments and their agencies. There can be no assurance that relevant local, State or federal laws, rules and regulations will not be amended or modified or interpreted in the future in a manner that could adversely affect the Bonds, the Trust Estate created under the Indenture, the Project, or the financial condition of or ability of the Borrowe r to comply with its obligations under the various transaction documents.
In recent years, the Internal Revenue Service ( the “IRS”) has increased the frequency and scope of its examination and other enforcement activity regarding tax exempt bonds. Currently, the primary penalty available to the IRS under the Code is a determination that interest on bonds is subject to federal i ncome taxation. Such event could occur for a variety of reasons, including, without limitation, failure to comply with certain requirements imposed by the Code relating to investment restrictions, periodic payments of arbitrage profits to the United States of America, the timely and proper use of Bond proceeds and the facilities financed therewith and certain other matters. See “TAX MATTERS” herein. No assurance can be given that the IRS will not examine the Issuer, the Borrower, the Project or the Bonds. If the Bonds are examined, it may have an adverse impact on their price and marketability.
EXHIBIT H
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17 Potential Impact of Pandemics or Public Health Crises The spread of the strain of a virus and resulting disease could alter the behavior of businesses and people in a manner that could have negative effects on global, state and local economies. There can be no assurances that the spread of a pandemic would n ot materially impact both local and national economies and, accordingly, have a materially adverse impact on the Project’s operating and financial viability. The effects of a pandemic could include, among other things, increased delinquencies and vacancies, all of which could impact the Borrower’s ability to make payments on the Mortgage Loan and result in a default and acceleration thereof.
Limitation of Remedies
Remedies available under the Indenture, the Financing Agreement, and the Regulatory Agreement are limited in certain respects. See “ENFORCEABILITY OF REMEDIES” herein.
Summary
The foregoing is intended only as a summary of certain risk factors attendant to an investment in the Bonds.
In order for potential investors to identify risk factors and make an informed investment decision, potential investors should be thoroughly familiar with this entire Official Statement and the Appendices hereto.
TAX MATTERS
In the opinion of Stradling Yocca Carlson & Rauth LLP (the “Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. However, it should be noted that with respect to applicable corporations as defined in Section 59(k) of the Internal Revenue Code of 1986, as amended (the “Code”), generally certain corporations with more than $1,000,000,000 of average annual adjusted finan cial statement income, interest (and original issue discount) with respect to the Bonds might be taken into account in determining adjusted financial statement income for purposes of computing the alternative minimum tax imposed by Section 55 of the Code on such corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State personal income tax.
Bond Counsel’s opinion as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Bonds is based upon certain representations of fact and certifications made by the Authority, the Borrower, and others and is subject to the condition that the Authority and the Borrower comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds to assure that interest (and original issue discount) on the Bonds will not bec ome includable in gross income for federal income tax purposes.
Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Authority and the Borrower have covenanted to comply with all such requirements.
In the opinion of Bond Counsel, the difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity of such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Beneficial Owner before receipt of cash attributable to such excludable income.
The amount of original issue discount deemed r eceived by a Beneficial Owner will increase the Beneficial Owner’s basis in the applicable Bond. The amount of original issue discount that accrues to the Beneficial Owner of a Bond is excluded from the gross income of such Beneficial Owner for federal inc ome tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals, and is exempt from State personal income tax.
The amount by which a Bond Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date)
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18 constitutes amortizable bond premium, which must be amortized under Section 171 of the Code; such amortizable bond premium reduces the Bond Owner’s basis in the applicable Bond (and the amount of tax-exempt interest received with respect to the Bonds), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the Owner for an amount equal to or less (under certain circu mstances) than the original cost of the Bond to the Owner.
Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium.
The IRS has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds mig ht be affected as a result of such an audit of the Bonds (or by an audit of similar municipal obligations). No assurance can be given that in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the issuance of the Bonds to the extent that it adversely affects the exclusion from gross income of interest (and original issue discount) on the Bonds or their market value.
SUBSEQUENT TO THE ISSUANCE OF THE BONDS THERE MIGHT BE FEDERAL, STATE OR
LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR INTERPRETATIONS
OF FEDERAL, STATE OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE OR LOCAL TAX
TREATMENT OF THE BONDS, IN CLUDING THE IMPOSITION OF ADDITIONAL FEDERAL INCOME OR
STATE TAXES BEING IMPOSED ON OWNERS OF TAX -EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE BONDS. THESE CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE BONDS. NO ASSURANCE CAN BE GIV EN THAT SUBSEQUENT TO THE ISSUANCE
OF THE BONDS STATUTORY CHANGES WILL NOT BE INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS WILL NOT OCCUR HAVING THE EFFECTS DESCRIBED ABOVE.
BEFORE PURCHASING ANY OF THE BONDS, ALL POTENTIAL PURCHASERS SH OULD CONSULT
THEIR TAX ADVISORS REGARDING POSSIBLE STATUTORY CHANGES OR JUDICIAL OR
REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE BONDS.
Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Indenture and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclus ion from gross income of interest (and original issue discount) for federal income tax purposes with respect to any Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth LLP.
Although Bond Counsel has rendered an opinion that interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes provided that the Authority and the Borrower continue to comply with certain requirements o f the Code, the ownership of the Bonds and the accrual or receipt of interest (and original issue discount) on the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Bonds. Should interest (and original issue discount) on the Bonds become includable in gross income for federal income tax purposes, the Bonds are not subject to early redemption and will remain outstanding until maturity or until redeemed in accordance with the Indenture.
A complete copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix I.
NO LITIGATION
The Issuer
To the knowledge of the Issuer, there is no proceeding or litigation of any nature now pending or threatened against the Issuer restraining or enjoining the issuance, sale, execution or delivery of the Bonds or the Financing
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19 Documents to which the Issuer is a party , or in any way contesting or affecting the validity of the Bonds, any proceedings of the Issuer taken with respect to the issuance or sale thereof, the pledge or application of any money or security provided for the payment of the Bonds, the existence or powers of the Issuer relating to the Bonds or the title of any officers of the Issuer to their respective positions.
The Borrower
There is no legal action, suit, proceeding, investigation or inquiry at law or in equity, before or by any court, agency, arbitrator, public board or body or other entity or person, pending or, to the best knowledge of the Borrower, threatened against or affect ing the Borrower, nor, to the knowledge of the Borrower, any basis therefor, (i) which would restrain or enjoin the issuance or delivery of the Bonds, the use of this Official Statement in the marketing of the Bonds or the collection of revenues pledged un der or pursuant to the Indenture or (ii) which would in any way contest or affect the organization or existence of the Borrower or the entitlement of any officer of the Borrower to its position or (iii) which would contest or have a material and adverse ef fect upon (A) the due performance by the Borrower of the transactions contemplated by this Official Statement, (B) the validity or enforceability of the Bonds or any other agreement or instrument to which the Borrower is a party and that is used or contemplated for use in the consummation of the transactions contemplated hereby and thereby, (C) the exclusion from gross income for federal income tax purposes of the interest on the Bonds or (D) the financial condition or operations of the Borrower, (iv) which contests in any way the completeness or accuracy of this Official Statement or (v) which questions the power or authority of the Borrower to carry out the transactions on its part contemplated by this Official Statement, or the power of the Borrower to ow n or operate the Project. The Borrower is not subject to any judgment, decree or order entered in any lawsuit or proceeding brought against it that would have such an effect.
CERTAIN LEGAL MATTERS
The validity of the Bonds and certain other legal matters are subject to an approving opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California , Bond Counsel to the Issuer. A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix I hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the Borrower by its counsel, Goldfarb & Lipman LLP, Oakland, California, and for the Underwriter by its counsel, Tiber Hudson LLC, Washington, D.C. Payment of the fees of certain counsel to the transaction is contingent upon the issuance and delivery of the Bonds as described herein.
UNDERWRITING
Pursuant and subject to the terms and conditions set forth in the Bond Purchase Agreement (the “Bond Purchase Agreement”), among Stifel, Nicolaus & Company, Incorporated (the “Underwriter”), the Issuer and the Borrower, the Underwriter has agreed to purcha se the Bonds at the price set forth on the cover page hereof. For its services relating to the transaction, the Underwriter will receive a fee of $_____ plus $_____, payable in immediately available funds on the Closing Date, from which the Underwriter sh all pay certain fees and expenses relating to the issuance of the Bonds[, plus an additional amount of $______ (the “Underwriter’s Advance ”) for initial deposits established under the Indenture]. The Underwriter’s fee shall not include the fee of its counsel. [The Borrower will reimburse the Underwriter for the Underwriter’s Advance on or before the Closing Date.] The Underwriter’s obligations are subject to certain conditions precedent, and the Underwriter will purchase all the Bonds, if any are purchased. Pursuant to the Bond Purchase Agreement, the Borrower has agreed to indemnify the Underwriter and the Issuer against certain civil liabilities, including liabilities under federal securities laws. It is intended that the Bonds will be offered to the public initially at the offering prices set forth on the cover page hereof and that such offering prices subsequently may change without any requirement of prior notice. The Underwriter may offer the Bonds to other dealers at prices lower than those offered to the public.
The Underwriter does not guarantee a secondary market for the Bonds and is not obligated to make any such market in the Bonds. No assurance can be made that such a market will develop or continue. Consequently, investors may not be able to resell Bonds should they need or wish to do so for emergency or other purposes.
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20 The Underwriter and its affiliates comprise a full -service financial institution engaged in activities which may include securities sales and trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. The Underwriter and its affiliates may have provided, and may in the future provide, a variety of these services to the Issuer and/or the Borr ower and to persons and entities with relationships with the Issuer and/or the Borrower, for which they received or will receive customary fees and expenses. The Underwriter is not acting as financial advisor to the Issuer or the Borrower in connection with the offer and sale of the Bonds.
In the ordinary course of these business activities, the Underwriter and its affiliates may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the Issuer and/or the Borrower (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the Issuer and/or the Borrower.
The Underwriter and its affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold , or recommend to clients that they should acquire such assets, securities and instruments. Such investment and securities activities may involve securities and instruments of the Issuer.
RATING
Moody’s Investors Service, Inc., a Delaware corporation (the “Rating Agency”), has assigned to the Bonds the rating set forth on the cover page hereof. An explanation of the significance of such rating may be obtained from the Rating Agency. The rating of the Bonds reflects only the views of the Rating Agency at the time such rating was given, and neither the Issuer nor the Borrower nor the Underwriter makes any representation as to the appropriateness of the rating. The rating is not a recommendation to buy, sell, or hold the Bonds . There is no assurance that such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by the Rating Agency, if in its judgment, circumstances so warrant. Any such downward revision or withdrawal of the rating may have an adverse effect on the market price of the Bonds.
CONTINUING DISCLOSURE
The Borrower , as the only “obligated person” with respect to the Bonds, will enter into a Continuing Disclosure Agreement, dated as of January 1, 2026 (the “Continuing Disclosure Agreement”), with Applied Best Practices, LLC , acting as Dissemination Agent, pursuant to which the Borrower will agree to provide ongoing disclosure pursuant to the requirements of Rule 15c2 -12 of the United States Securities and Exchange Commission (the “Rule”). Financial statements will be provided at least annually to the Muni cipal Securities Rulemaking Board (the “MSRB”) and notices of certain events will be issued pursuant to the Rule. Information will be filed with the MSRB through its Electronic Municipal Market Access (“EMMA”) system, unless otherwise directed by the MSRB.
A form of the Continuing Disclosure Agreement is attached hereto as Appendix G.
A failure by the Borrower to comply with the provisions of the Continuing Disclosure Agreement will not constitute a default under the Financing Agreement (although Bondholders will have any available remedy at law or in equity for obtaining necessary disclosures). Nevertheless, such a failure to comply is required to be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securit ies dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds.
The Borrower has not previously been subject to the continuing disclosure requirements of the Rule.
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21 THE TRUSTEE
The information under this heading has been provided solely by the Trustee and is believed to be reliable, but has not been verified independently by the Issuer or the Underwriter. No representation whatsoever as to the accuracy, adequacy or completeness of such information is made by the Issuer or the Underwriter.
The Issuer has appointed U.S. Bank Trust Company, National Association as Trustee under the Indenture.
The Trustee is a national banking association organized and existing under the laws of the United States of America, having all of the powers of a bank, including fiduciary powers, and is a member of the Federal Deposit Insurance Corporation and the Federal Reserve System.
The Trustee is to carry out such duties as are assigned to it under the Indenture, the Financing Agreement, and the other Financing Documents. Except for the contents of this section, the Trustee has not reviewed or participated in the preparation of this Official Statement and assumes no responsibility for the nature, contents, accuracy or completeness of the information set forth in this Offici al Statement or for the recitals contained in the Indenture or the Bonds (except for the certificate of authenti cation on each Bond), or for the validity, sufficiency, or legal effect of any of such documents.
Furthermore, the Trustee has no oversight responsibility, and is not accountable, for the use or application of any of the Bonds authenticated or delivered pursuant to the Indenture or for the use or application of the proceeds of such Bonds. The Trustee has not evaluated the risks, benefits, or propriety of any investment in the Bonds and makes no representation, and has reached no conclusions, regarding the value or condition of any assets or revenues pledged or assigned as security for the B onds, the te chnical or financial feasibility of the expected uses of proceeds of the Bonds or the investment quality of the Bonds, about all of which the Trustee expresses no opinion and expressly disclaims the expertise to evaluate.
ENFORCEABILITY OF REMEDIES
The remedies available to the Trustee, the Issuer and the Bondholders upon an Event of Default under the Indenture or the Financing Agreement are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law and judicial decisions, including specifically the Federal Bankruptcy Code, the remedies provid e for under the Indenture or the Financing Agreement may not be readily available or may be limited.
In addition, the Financing Agreement provides that the payment obligations of the Borrower contained therein (other than certain obligations to the Issuer and the Trustee) will be limited obligations payable solely from the income and assets of the Borrowe r, and that no affiliate of the Borrower will have any personal liability for the satisfaction of any payment obligation of the Borrower under such agreements or of any claim against the Borrower arising out of such agreements or the Indenture.
The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified as to the enforceability of various legal instruments by limitations imposed by the valid exercise of the constitutional powers of the State and the Un ited States of America and bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally, and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
RELATIONSHIP AMONG PARTIES
In connection with the issuance of the Bonds, the Issuer, the Borrower, and the Underwriter are being represented by the attorneys or law firms identified herein. In other transactions not related to the Bonds, each of these attorneys or law firms may have acted as bond counsel or represented the Issuer, the Underwriter, the Borrower, or their affiliates, in capacities different from those described herein, and there will be no limitations imposed as a result of the issuance of the Bonds on the ability of any of those attorneys or firms to act as bond counsel or represent any of these parties in any future transactions. Potential purchasers of the Bonds should not assume that the Issuer, the Underwriter, the Borrower, or their respective counsel or Bond Co unsel have not previously engaged in, or will
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22 not after the issuance of the Bonds engage in, other transactions with each other or with affiliates of any of them, and no assurance can be given that there are or will be no past or future relationships or transactions between or among any of these parties or these attorneys or law firms.
[Insert specific Lender relationship language here]
ADDITIONAL INFORMATION
Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Issuer and the purchasers or holders of any of the Bonds.
The summaries and explanation of, or references to, the Act, the Indenture and the Bonds included in this Official Statement do not purport to be comprehensive or definitive. Such summaries, explanations and references are qualified in their entirety by reference to each such document, copies of which are on file with the Trustee.
References to website addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader’s convenience. Unless specified otherwise, such websites and the information or links contained therein are not incorporated into, and are not part of, this final official statement for purposes of, and as that term is defined in, SEC Rule 15c2‐12.
The information contained in this Official Statement is subject to change without notice and no implication shall be derived therefrom or from the sale of the Bonds that there has been no change in the affairs of the Issuer, the Borrower or the Project from the date hereof.
This Official Statement has been deemed final in accordance with the Rule. The execution and delivery of this Official Statement has been duly authorized by the Borrower.
[Signature page to follow]
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IN WITNESS WHEREOF, the foregoing Official Statement has been executed by the undersigned as of the date first written above.
PRESTON PARK SUSTAINABLE COMMUNITY NONPROFIT
CORPORATION, a California nonprofit public benefit corporation
By;
Layne Long
Executive Director
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APPENDIX A
FANNIE MAE MORTGAGE-BACKED SECURITIES PROGRAM
This summary of the Fannie Mae Mortgage Backed Securities Program, the Fannie Mae Certificates and the documents referred to herein has not been provided or approved by Fannie Mae, does not purport to be comprehensive and is qualified in its entirety by re ference to the Fannie Mae MBS Prospectus (Multifamily Fixed -Rate Yield Maintenance) for Guaranteed Mortgage Pass-Through Certificates (the “Fannie Mae MBS Prospectus”) which will be available and can be found if and when the MBS is issued, by inputting the CUSIP for the MBS hereto into Fannie Mae’s multifamily disclosure system, DUS Disclose (https://mfdusdisclose.fanniemae.com/#/home). The template for the Fannie Mae MBS Prospectus, as of the date of this Official Statement , can be found at https://capitalmarkets.fanniemae.com/media/25556/display. The template for the Fannie Mae MBS Prospectus may change from time to time. T he Fannie Mae MBS Prospectus , if and when available, will consist of the template for the Fannie Mae MBS Prospectus applicable at the time of the issuance of the MBS with the cover page completed with the MBS-specific information, an Additional Disclosure Addendum substantially in the form attached as Schedule I to this Appendix A, and an Annex A containing information substantially consistent with the Term Sheet attached hereto as Appendix H.
Security ......................................... Guaranteed Mortgage Pass -Through Certificates (Multifamily Residential Mortgage Loans).
General ......................................... Fannie Mae is a government -sponsored enterprise that was chartered by the U.S. Congress in 1938 under the name “Federal National Mortgage Association” to support liquidity and stability in the secondary mortgage market, where existing mortgage loans are purchased and sold. The address of its principal office is 1100 1 5th Street, NW, Washington, DC 20005; the telephone number is 800-2FANNIE (800-232-6643).
Fannie Mae has been under conservatorship since September 6, 2008. The conservator, the Federal Housing Finance Agency (“FHFA”), succeeded to all rights, titles, powers and privileges of Fannie Mae and of any shareholder, officer or director of the company with respect to the company and its assets.
For additional information on the conservatorship, see “FANNIE MAE — Regulation and Conservatorship” in the Fannie Mae MBS Prospectus.
Fannie Mae’s regulators include FHFA, the U.S. Department of Housing and Urban Development (“HUD”), the Securities and Exchange Commission (the “SEC”), and the U.S. Department of the Treasury (the “Treasury”). The Office of Federal Housing Enterprise Oversight, the predecessor of FHFA, was Fannie Mae’s safety and soundness regulator prior to enactment of the Federal Housing Finance Regulatory Reform Act of 2008.
On September 7, 2008, Fannie Mae entered into a senior preferred stock purchase agreement with the Treasury pursuant to which Fannie Mae issued to it one million shares of senior preferred stock and a warrant to purchase, for a nominal price, shares of common stock equal to 79.9% of the outstanding common stock of Fannie Mae. Nevertheless, Fannie Mae alone is responsible for making payments under its guaranty. The MBS if issued by Fannie Mae and acquired by the Trustee and payments of principal and interest on the MBS will not be guaranteed by the United States and do not constitute a debt or obligation of the United States or any of its agencies or instrumentalities other than Fannie Mae.
Sponsor and Depositor ................. Fannie Mae is the sponsor of this offering of certificates and the depositor of the mortgage loans into the trust.
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Description of MBS ...................... The MBS if issued by Fannie Mae and acquired by the Trustee will represent a pro rata undivided beneficial ownership interest in (i) the Mortgage Loan or (ii) the pool of mortgage loan participation interests that comprise the trust .
See “THE MORTGAGE LOAN” in the Official Statement. Fannie Mae will issue the MBS in book -entry form on the book -entry system of the U.S.
Federal Reserve Bank s. The book -entry MBS will not be convertible into physical certificates.
Minimum Denomination .............. Fannie Mae will issue the MBS in minimum denominations of $1,000, with additional increments of $1.
Issue Date ..................................... The date specified on the front cover page, which is the first day of the month in which the MBS is issued.
Settlement Date ............................ The date specified on the front cover page, which is a date no later than the last business day of the month in which the issue date occurs.
Distribution Date .......................... The “Distribution Date” is the 2 5th day of each month which is the date designated for payments to the Trustee as holder of the MBS, if issued. If that day is not a Business Day, payments will be made on the next Business Day.
The first Distribution Date for the MBS will occur in the month following the month in which the MBS is issued. For example, if the issue date is January 1st, the first distribution date is February 25th or, if February 25th is not a Business Day, the first Business Day following February 25th.
Maturity Date ............................... The date specified on the front cover page, which is the date that the final payment is due on the last mortgage loan remaining in the pool.
Use of Proceeds ............................ The MBS is backed by a pool of one or more mortgage loans that Fannie Mae recently acquired or already owned. Fannie Mae is issuing the MBS either in exchange for the recently acquired mortgage loans or for cash proceeds that are generally used for purchasing other mortgage loans or for general corporate purposes.
Interest .......................................... On each Distribution Date, Fannie Mae will pass through on the MBS, if issued, one month’s interest at the “Pass-Through Rate”.
Because Fannie Mae’s guaranty requires it to supplement amounts received by the trust as required to permit timely payment of interest, the amount of interest distributed to certificateholders on a Distribution Date will not be affected by any loss mitigat ion measure, taken with respect to, or other loan modification made to, the Mortgage Loan while it remains in the trust.
As described under the caption “ MATERIAL FEDERAL INCOME TAX CONSEQUENCES” which can be found at
https://capitalmarkets.fanniemae.com/media/25556/display, the MBS and payments on the MBS, including interest payments thereon, are subject to federal income taxation. Such interest payments only become excluded from gross income for federal income tax purposes and excluded from taxation by the State, to the ext ent described elsewhere herein, when applied by the Trustee to pay interest due on the Bonds. See “TAX MATTERS” in the Official Statement herein.
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Principal ....................................... Fannie Mae will receive collections on the Mortgage Loan on a monthly basis.
The period Fannie Mae uses to differentiate between collections in one month and collections in another month is called the due period. The due period is the period from and including the second calendar day of the preceding month in which the Distribution Date occurs to and including the first calendar day of the month in which the Distribution Date occurs.
On each Distribution Date, Fannie Mae will pass through principal of the MBS, if issued, as follows:
• the aggregate amount of the scheduled principal due on the Mortgage Loan in the pool during the related due period; and
• the aggregate amount of all unscheduled principal payments specified below:
o the stated principal balance of the Mortgage Loan as to which prepayment s in full were received during the
calendar month immediately preceding the month in which that Distribution Date occurs;
o the stated principal balance of the Mortgage Loan if it was purchased from the pool during the calendar month
immediately preceding the month in which that
Distribution Date occurs; and
o the amount of any partial prepayments on the Mortgage Loan that were received during the calendar month
immediately preceding the month in which that
Distribution Date occurs.
Because Fannie Mae’s guaranty requires it to supplement amounts received by the trust as required to permit timely payment of the principal amounts specified above, the amount of principal distributed to certificateholders on a Distribution Date will not be affected by any loss mitigation measure, taken with respect to, or other loan modification made to, the Mortgage Loan while it remains in the trust.
Fannie Mae may treat a prepayment in full received on the first Business Day of a month as if the prepayment were received on the last Business Day of the preceding month. If Fannie Mae does so, it passes through these prepayments on the Distribution Date in the same month in which the prepayment actually was received. For example, if a prepayment on the Mortgage Loan in full is actually received on the first Business Day of January, it would be treated as if it had been received on the last Business Day of December and, therefore, would be passed through on January 25 (or the next Business Day, if January 25 is not a Business Day).
The Mortgage Loan permits the reamortization of principal after a permitted voluntary prepayment or an involuntary partial prepayment caused by the receipt of proceeds from insurance or condemnation. A reamortization of the Mortgage Loan will cause a change in the amount of principal that is passed through to holders of the MBS.
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Monthly Pool Factors ................... On or about the fourth Business Day of each month, Fannie Mae publishes the monthly pool factor for each issuance of its certificates. If an investor multiplies the monthly pool factor by the original principal balance of the MBS, the investor will obtain the current principal balance of the MBS, after giving effect to the monthly principal payment to be passed through on the Distribution Date in that month. The most current pool factor is generally available through DUS Disclose on Fannie Mae’s website at https://mfdusdisclose.fanniemae.com/#/home.
Guaranty ....................................... Fannie Mae guarantees to each trust that on each Distribution Date it will supplement amounts received by the trust as required to permit payments on the MBS in an amount equal to:
• the aggregate amounts of scheduled and unscheduled principal payments described in “—Principal” above, and
• an amount equal to one month’s interest on the MBS, as described in “—Interest” above.
In addition, Fannie Mae guarantees to the related trust that it will supplement amounts received by the trust as required to make the full and final payment of the unpaid principal balance of the related certificates on the Distribution Date in the month of the maturity date specified in the prospectus supplement.
Certificateholders have certain limited rights to bring proceedings against the Treasury if Fannie Mae fails to pay under its guaranty. The total amount that may be recovered from the Treasury is subject to limits imposed in the senior preferred stock purch ase agreement. For a description of certificateholders’ rights to proceed against Fannie Mae and the Treasury, see “FANNIE MAE—Certificateholders’ Rights Under the Senior Preferred Stock Purchase Agreement” in the Fannie Mae MBS Prospectus.
Prepayments ................................. A borrower may voluntarily prepay the loan in full. Except during the open period, each mortgage loan in the pool requires payment of a prepayment premium if the loan is prepaid voluntarily, as disclosed on Annex A. A portion of the prepayment premium, if collected, may be shared with certificateholders under the circumstances described in “ YIELD, MATURITY AND PREPAYMENT CONSIDERATIONS —Maturity
and Prepayment Considerations —Prepayment of a Mortgage Loan ” in the Fannie Mae MBS Prospectus. Fannie Mae does not guarantee to any trust the payment of any prepayment premiums.
Master Servicing/Servicing .......... Fannie Mae is responsible as master servicer for certain duties. Fannie Mae has contracted with the mortgage servicer identified on Annex A to perform servicing functions for us subject to our supervision. Fannie Mae refers to this servicer or any successor servicer as its primary servicer. In certain limited circumstances, Fannie Mae may act as primary servicer. For a description of Fannie Mae’s duties as master servicer and the responsibilities of its primary servicer, see “THE TRUST DOCUMENTS —Collections and Other Servicing Practices ” and “FANNIE MAE PURCHASE PROGRAM — Servicing Arrangements” in the Fannie Mae MBS Prospectus.
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Business Day ................................ Any day other than a Saturday or Sunday, a day when the fiscal agent or paying agent is closed or is authorized or obligated by law or executive order to remain closed, a day when the Federal Reserve Bank of New York is closed or is authorized or obligated by law or executive order to remain closed, or, for purposes of withdrawals from a certificate account, a day when the Federal Reserve Bank is closed or is authorized or obligated by law or executive order to remain closed in the district where the certifica te account is maintained if the related withdrawal is being made from that certificate account.
Trust Documents .......................... If issued, the MBS will be issued pursuant to the applicable trust agreement relating to the MBS issued at that time , as supplemented by a trust issue supplement for that issuance. Certain pertinent provisions of the trust agreement in the Fannie Mae MBS Prospectus will apply. Investors should refer to the trust agreement and the related trust issue supplement for a complete description of their rights and obligations as well as those of Fannie Mae in its various capacities. The current form of the trust agreement, as of the date hereof, may be found on Fannie Mae’s website:
http://www.fanniemae.com.
Trustee .......................................... Fannie Mae serves as the trustee for the trust pursuant to the terms of the trust agreement and the related trust issue supplement.
Paying Agent ................................ An entity designated by Fannie Mae to perform the functions of a paying agent. The Federal Reserve Bank of New York currently serves as Fannie Mae’s paying agent for certificates such as the MBS.
Fiscal Agent .................................. An entity designated by Fannie Mae to perform certain administrative functions for the trust. The Federal Reserve Bank of New York currently serves as Fannie Mae’s fiscal agent for certificates such as the MBS.
Multifamily Mortgage Loan Pool . Each mortgage loan in the pool is a fixed -rate loan included in one of the following categories:
• Fixed-rate loans with monthly payments of interest only during their entire loan terms, with a balloon payment of all outstanding principal at maturity;
• Fixed-rate loans with monthly payments of interest only during specified initial periods, followed by monthly payments of principal and interest for their remaining loan terms, with a balloon payment of all outstanding principal at maturity;
• Fixed-rate loans with monthly payments of interest only during specified initial periods, followed by monthly payments of principal and interest that fully amortize over their remaining loan terms; • Fixed-rate loans with monthly payments of interest and principal during their entire loan terms, with a balloon payment of all outstanding principal at maturity; and
• Fixed-rate loans with monthly payments of interest and principal that fully amortize over their loan terms.
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Multifamily Mortgage Loans........ Each mortgage loan in the pool was acquired from a multifamily mortgage loan seller that Fannie Mae has approved. A mortgage loan may have been originated by the seller or may have been acquired by the seller from the originator of the loan, which may or may not be an approved mortgage loan seller. Each mortgage loan that Fannie Mae acquires either meets its published standards or is reviewed by Fannie Mae before delivery to determine its suitability. Fannie Mae may modify its standards or permit waivers on specific transactions from time to time.
Types of Property ......................... Each mortgage loan in the pool is secured by a lien on one or more of the following types of property:
• Multifamily residential properties;
• Cooperative housing projects;
• Dedicated student housing;
• Manufactured housing communities;
• Military housing; or
• Seniors housing
Annex A discloses the type of property securing each mortgage loan in the pool and the priority of each lien. Any type of property may also be considered affordable housing; Annex A discloses certain affordable housing characteristics.
Termination .................................. The trust will terminate when the certificate balance of the certificates has been reduced to zero and all required distributions have been passed through to certificateholders. Fannie Mae has no unilateral option to cause an early termination of the trust other than by purchasing a mortgage loan from the pool for a reason permitted by the trust documents.
Federal Income Tax
Consequences ...............................
The mortgage pool will be classified as a fixed investment trust. Unless otherwise disclosed in the Additional Disclosure Addendum, Fannie Mae will file an election to treat the mortgage pool as a being included in the assets of a real estate mortgage investment conduit (“REMIC”). In that case, for federal income tax pur poses the related certificate will represent ownership of a REMIC regular interest and an interest in any associated prepayment premiums, in each case, in respect of each mortgage loan in th e pool. See “MATERIAL FEDERAL INCOME TAX CONSEQUENCES ” in the
Fannie Mae MBS Prospectus.
Whole Pool Certificates ................ Fannie Mae’s counsel, Katten Muchin Rosenman LLP, has advised Fannie Mae that certificates issued under the trust documents that represent 100% of the beneficial interests in a pool of mortgage loans (or participation interests therein) held in the related trust and with respect to which REMIC elections are made will qualify as “whole pool certificates” to the same extent as certificates that represent 100% of the beneficial interests in a pool of mortgage loans (or participation interests therein) held in a trust with respect to which no REMIC elections are made.
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Resecuritization ............................ Following the assignment of mortgage loans to a trust, the related certificates upon issuance will represent the initial securitization of the mortgage loans.
Any further assignment of the certificates to a REMIC trust or other issuance vehicle will repres ent the initial resecuritization of the mortgage loans.
Certificates backed by mortgage loans with respect to which a REMIC election is made may be resecuritized to the same extent as, and may be commingled freely with, certificates backed by mortgage loan s with respect to which no REMIC election is made.
Legal Investment Considerations . Under the Secondary Mortgage Market Enhancement Act of 1984, the certificates offered by this prospectus will be considered “securities issued or guaranteed by … the Federal National Mortgage Association.” Nevertheless, investors should consult their own legal advisor to determine whether and to what extent the certificates of an issuance constitute legal investments for them.
ERISA Considerations .................. For the reasons discussed in “ERISA CONSIDERATIONS” in the Fannie Mae MBS P rospectus, an investment in the certificates by a plan subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) will not cause the assets of the plan to include the mortgage loans underlying the certificates or the assets of Fannie Mae under the fiduciary provisions of ER ISA or the prohibited transaction provisions of ER ISA or Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”).
Nevertheless, fiduciaries of such plan investors should consult with counsel regarding the applicability of the provisions of ERISA and Section 4975 of the Code before purchasing the certificates.
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SCHEDULE I
FORM OF ADDITIONAL DISCLOSURE ADDENDUM
The following information supplements the information in the Fannie Mae MBS Prospectus. In the event of any inconsistency between the information provided in this Addendum and the information in the Fannie Mae MBS Prospectus, the information in this Addendum shall prevail. [to be provided]
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APPENDIX B
DEFINITIONS OF CERTAIN TERMS
Certain capitalized terms used in this Official Statement are defined below. The following is subject to all the terms and provisions of the Indenture, to which reference is hereby made and copies of which are available from the Issuer or the Trustee.
“30/360” means a computation of interest accrual on the basis of a three hundred sixty (360) day year consisting of twelve 30-day months.
“Act” means Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State.
“Authorized Borrower Representative” means any person who, at any time and from time to time, is designated as the Borrower’s authorized representative by written certificate furnished to the Issuer and the Trustee containing the specimen signature of such person and signed on behalf of the Borrower by any authorized officer of the Borrower, which certificate may designate an alternate or alternates. The Trustee may conclusively presume that a person designated in a written certificate filed with it as an A uthorized Borrower Representative is an Authorized Borrower Representative until such time as the Borrower files with it (with a copy to the Issuer) a written certificate revoking such person’s authority to act in such capacity. The initial Authorized Bor rower Representative is the Executive Director of the Borrower.
“Authorized Denomination” means $5,000 or any integral multiple of $5,000 in excess thereof. “Authorized Officer” means , as applicable, (a) with respect to the Issuer, individually or collectively, the Chair, the Executive Director, the Treasurer, the Secretary, or a duly designated delegate in writing for such purpose by the Executive Director of the Issuer, or such other authorized delegate under the prevailing resolution of the Issuer providing for such authority, and (b) with respect to the Trustee, any Vice President or Assistant Vice President of the Trustee having regular responsibility for corporate trust matters. “Bankruptcy Code” means the Federal Bankruptcy Code, Title 11 of the United States Code. “Beneficial Owner” means the purchaser of a beneficial interest in the Bonds. “Bond” or “Bonds” means the Marina Joint Powers Financing Authority Multifamily Housing Revenue Bonds (Fannie Mae MBS-Secured) Series 2026 (Preston Park Apartments) in the principal amount of $ 30,825,000* authorized under and secured by the Indenture and issued pursuant to the Indenture. “Bond Counsel” means an attorney at law or a firm of attorneys of recognized expertise in the field of federal income tax matters relating to municipal securities selected by the Issuer and acceptable to the Trustee. “Bond Dated Date” means January __, 2026.
“Bond Maturity Date” March 1, 2036*.
“Bond Proceeds Fund” means the Fund of that name created and so designated pursuant to the Indenture. “Bond Purchase Agreement” means the Bond Purchase Agreement, dated January __, 2026 , among the Underwriter, the Issuer and the Borrower.
“Bond Register” means the registration books of the Issuer maintained by the Trustee as provided in th e Indenture on which registration and transfer of the Bonds is to be recorded.
* Preliminary; subject to change.
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“Bondholder” or “holder” or “owner” of any Bond or any similar term shall mean the person in whose name any Bond is registered.
“Book-Entry Bonds” means the Bonds for which a Depository or its Nominee is the Bondholder. “Borrower” means Preston Park Sustainable Community Nonprofit Corporation, a California nonprofit corporation, and any permitted successors or assigns of such entity. “Business Day” means any day other than a Saturday or Sunday, a day when the fiscal agent or paying agent for the MBS is closed, a day when the Federal Reserve Bank of New York is closed, or a day when the Federal Reserve Bank is closed in a district where a securities account is located if the related withdrawal is being made from that securities account, and, with respect to the Bonds, any such day that is also a day on which the Trustee is open for business.
“Cash Flow Projection” means cashflow projections prepared by an independent firm of certified public accountants, a financial advisory firm, a law firm or other independent third party qualified and experienced in the preparation of cash flow projections for structured finance transactions similar to the Bonds, establishing, to the satisfaction of the Rating Agency, as applicable, (i) that following the release of Excess Funds from the Revenue Fund pursuant to the Indenture, there will remain on deposit in the Revenue Fund sufficient funds (without consideration of investment income or Eligible Funds not currently on deposit therein) together with scheduled MBS Payments coming due prior to the next Payment Date, to make the Bond payment on such next Payment Date; and (ii) confirming that the subsequent scheduled MBS Payments will be sufficient, together with any unreleased funds that are retained in the Revenue Fund, to pay the Bonds in the amount due on each subsequent Payment Date. The cost and expense of obtaining such cashflow projections shall be the sole responsibility of the Borrower. “Closing Date” means January __, 2026.
“Code” means the United States Internal Revenue Code of 1986, as amended, and the Regulations thereunder, or any successor statute, together with corresponding and applicable final, temporary or proposed regulations and revenue rulings issued or amended wi th respect thereto by the Treasury Department or Internal Revenue Service of the United States.
“Continuing Disclosure Agreement” means the Continuing Disclosure Agreement dated as of January 1, 2026, between the Borrower and the Dissemination Agent, as originally executed and as it may be amended from time to time in accordance with the terms thereof.
“Costs of Issuance” means costs to the extent incurred in connection with, and allocable to, the issuance of the Bonds within the meaning of Section 147(g) of the Code, including but not limited to the following costs, but only to the extent incurred in connection with, and allocable to, the borrowing, and payable from proceeds of the Bonds up to 2% of the principal amount thereof or as otherwise limited by the Tax Certificate: Underwriter’s fee; counsel fees; financial advisory fees; fees paid to an organization to evaluate the credit quality of an issue; trustee fees; paying agent fees; registrar, certification and authentication fees; accounting fees; printing costs for Bonds and offering documents; public approval process costs; engineering and feasibility study costs; guarantee fees, other than qualified guarantees; and similar costs.
“Costs of Issuance Deposit” means the amount deposited on the Closing Date into the Costs of Issuance Fund. “Costs of Issuance Fund” means the Fund created and so designated in the Indenture. “Counsel’s Opinion,” “Opinion of Counsel,” or “Opinion” means a written opinion, including opinions supplemental thereto, signed by an attorney or firm of attorneys (who may be counsel for the Issuer, the Borrower or Fannie Mae) acceptable to the recipient thereof.
“Depository” means, initially, DTC and any replacement securities depository appointed under the Indenture.
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“Dissemination Agent” means Applied Best Practices, LLC, and its successors and assigns. “DTC” means The Depository Trust Company, Brooklyn, New York. “Electronic Means” means the following communications methods: e -mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the T rustee as available for use in connection with its services hereunder or any other electronic means of communication approved in writing by Fannie Mae. “Eligible Funds” means:
(a) the proceeds of the Bonds or any other amounts received by the Trustee from the Underwriter;
(b) moneys drawn on a letter of credit;
(c) any amounts received by the Trustee representing advances to the Borrower of proceeds of the Mortgage Loan;
(d) any other amounts for which the Trustee has received an Opinion of Counsel to the effect that the use of such amounts to make payments on the Bonds would not violate Section 362(a) of the Bankruptcy Code (or that relief from the automatic stay provisions of such Section 362(a) would be available from the bankruptcy court) or be avoidable as preferential payments under Section 547 or 550 of the Bankruptcy Code should the Borrower become a debtor in proceedings commenced under the Bankruptcy Code;
(e) any payments held by the Trustee for a continuous period of 123 days, provided that no act of bankruptcy with respect to the Borrower has occurred during such period; and (f) investment income derived from the investment of the money described in (a) through (e) above.
“Eligible Investments” means subject to the provisions of the Indenture , any of the following obligations which mature (or are redeemable at the option of the Trustee without penalty) at such time or times as to enable timely disbursements to be made from the fund in which such investment is held or allocated in accordance wi th the terms of the Indenture::
(a) Government Obligations; and
(b) to the extent permitted in the Indenture, shares or units in any money market mutual fund rated “Aaa-mf” by Moody’s (or the equivalent Highest Rating Category given by the Rating Agency for that general category of security) (including mutual funds of the Trustee or its affiliates or for which the Trustee or an affiliate thereof serves as investment advisor or provides other services to such mutual fund and receives reasonable compensation therefor) that are registered under the Investment Company Act o f 1940, as amended, whose investment portfolio consist s solely of direct obligations of the government of the United States of America.
“Event of Default” means any occurrence or event specified in the Indenture as constituting an Event of Default thereunder.
“Excess Funds” means an amount in excess of $_______, or such other amount approved by the Rating Agency as calculated by a Cash Flow Projection.
“Extension Deposit” means the deposit of Eligible Funds described in the Indenture.
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“Extraordinary Issuer Fees and Expenses” means the expenses and disbursements payable to the Issuer under the Indenture for Extraordinary Services and Extraordinary Expenses, including extraordinary fees, costs and expenses incurred by the Issuer, Bond Counsel and counsel to the Issuer which are to be paid by the Borrower pursuant to the Financing Agreement.
“Extraordinary Services” and “Extraordinary Expenses” mean all services rendered and all reasonable expenses properly incurred by the Trustee or the Issuer under th e Indenture or the Financing Agreement, other than Ordinary Services and Ordinary Expenses. Extraordinary Services and Extraordinary Expenses shall specifically include but are not limited to services rendered or expenses incurred by the Trustee or the Iss uer in connection with, or in contemplation of, an Event of Default.
“Extraordinary Trustee Fees and Expenses” means the expenses and disbursements payable to the Trustee under the Indenture for Extraordinary Services and Extraordinary Expenses, including extraordinary fees, costs and expenses incurred by the Trustee and the Trustee’s counsel which are to be paid by the Borrower pursuant to the Financing Agreement.
“Fannie Mae” means Fannie Mae, a corporation organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C., § 1716 et seq., and its successors. “Fannie Mae Certificate” means a guaranteed mortgage pass-through Fannie Mae mortgage-backed security issued by Fannie Mae in book-entry form, recorded in the name of the Trustee or its nominee, guaranteed as to timely payment of principal of and interest by Fannie Mae, and backed by the Mortgage Loan. “Financing Agreement” means the Financing Agreement dated as of January 1, 2026 among the Issuer, the Borrower and the Trustee.
“Financing Documents” means the Financing Agreement, the Regulatory Agreement, the Tax Certificate, the Indenture and the Bond Purchase Agreement.
“Fund” or “Account” means a fund or account created by or pursuant to the Indenture. “Government Obligations” means (i) noncallable, non-redeemable direct obligations of the United States of America for the full and timely payment of which the full faith and credit of the United States of America is pledged, and (ii) obligations issued by a Person controlled or supervised by and acting as an instrumentality of the United States of America, the full and timely payment of the principal of, premium, if any, and interest on which is fully guaranteed as a full faith and credit obligation of the United States of America (including any securities d escribed in (i) or (ii) issued or held in book-entry form on the books of the Department of the Treasury of the United States of America), which obligations, in either case, are not subject to redemption prior to maturity at less than par at the option of anyone other than the holder thereof.
“Highest Rating Category” means, with respect to an Eligible Investment or the Bonds , that the Eligible Investment or the Bonds, as applicable, are rated by a Rating Agency in the highest rating given by that Rating Agency for that Rating Category, provided that such rating shall include but not be below “Aa1” or “Aa1/VMIG 1” if rated by Moody’s or “A-1+” or “AA+” if rated by S&P.
“Indenture” means th e Indenture of Trust dated as of January 1, 2026 , by and between the Issuer and the Trustee, as it may from time to time be amended, modified or supplemented by Supplemental Indentures. “Initial Payment Date” means September 1, 2026*, on which date interest shall be due and payable for the period from the Closing Date to, but not including, September 1, 2026*. “Issuer” means the Marina Joint Powers Financing Authority , a public instrumentality of the State of California (the “State”) created pursuant to the Act and that certain Joint Exercise of Powers Agreement dated as of
* Preliminary; subject to change.
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July 1, 1990, by and between the City of Marina and the Successor Agency to the Marina Redevelopment Agency (as successor to the Marina Redevelopment Agency).
“Issuer Fees and Expenses” means, collectively, the Ordinary Issuer Fees and Expenses and the Extraordinary Issuer Fees and Expenses. The Issuer Fees and Expenses shall be payable by the Borrower, and not from funds pledged to the benefit of the Trust Estate.
“Lender” means Berkadia Commercial Mortgage LLC , a Delaware limited liability company , and any successors and assigns of such entity.
“Maximum Rate” shall mean the lesser of (i) 12% per annum and (ii) the maximum interest rate that may be paid on the Bonds under State law.
“MBS” shall mean the Fannie Mae Certificate identified in the Indenture that is pledged by the Issuer to the Trustee pursuant to the Indenture.
“MBS Dated Date” means the 1st day of the month in which the MBS is delivered. “MBS Delivery Date” means the date on which the Trustee receives the MBS backed by the Mortgage Loan, which shall occur not later than the MBS Delivery Date Deadline. “MBS Delivery Date Deadline” means February 25, 2026 *, or, if such day is not a Business Day, the following Business Day, as such date may be extended pursuant to the Indenture. “MBS Maturity Date” means February 1, 2036*.
“MBS Purchase Price” means the principal amount outstanding on the Mortgage Loan as of the MBS Delivery Date plus accrued interest on the MBS from the MBS Dated Date to the MBS Delivery Date at the Pass - Through Rate.
“MBS Revenues” means all payments made under and pursuant to the MBS. “Moody’s” means Moody’s Investors Service, Inc., a Delaware corporation, and its successors and assigns, or if it is dissolved or no longer assigns credit ratings, then any other nationally recognized statistical rating agency, designated by Fannie Mae, that assigns credit ratings.
“Mortgage” means the [Multifamily Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing], dated as of the Closing Date, together with all riders and exhibits, securing the Mortgage Loan , executed by the Borrower in favor of the Lender, as the same may be amended from time to time. “Mortgage Loan” means the interest-bearing loan for multifamily housing in the aggregate principal amount of $ 30,825,000* funded by the Lender , evidenced by the Mortgage Note and secured by the Mortgage and the Multifamily Loan and Security Agreement.
“Mortgage Loan Amortization Schedule” means the mortgage loan amortization schedule delivered to the Trustee on the Closing Date with respect to the Mortgage Note, as the same may be replaced by an amended mortgage loan amortization schedule delivered to the Trustee pursuant to the Financing Agreement. “Mortgage Loan Documents” means, collectively, the Mortgage Note, the Mortgage, the Multifamily Loan and Security Agreement and all other documents, agreements and instruments evidencing, securing or otherwise relating to the Mortgage Loan, as each such document, agreement or instrument may be amended, supplemented or
* Preliminary; subject to change.
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restated from time to time. Neither the Financing Agreement nor the Regulatory Agreement is a Mortgage Loan Document and neither document is secured by the Mortgage. “Mortgage Note” means the Multifamily Note dated the Closing Date from the Borrower payable to the order of the Lender evidencing the Borrower’s obligation to repay the Mortgage Loan, as the same may be amended from time to time.
“Multifamily Loan and Security Agreement” means the Multifamily Loan and Security Agreement dated the Closing Date, executed by the Borrower and the Lender.
“Negative Arbitrage Account” means the Negative Arbitrage Account of the Revenue Fund created pursuant to the Indenture.
“Negative Arbitrage Deposit” means Eligible Funds in the amount of $_____ to be deposited on the Closing Date into the Negative Arbitrage Account and as otherwise set forth in the Indenture. “Nominee” means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to the Indenture.
“Ordinary Issuer Fees and Expenses” means the fees and expenses due to the Issuer set forth in the Regulatory Agreement. The Ordinary Issuer Fees and Expenses and all amounts due to the Issuer for Extraordinary Services and all Extraordinary Expenses of the Issuer will be paid directly by the Borrower pursuant to the Financing Agreement. “Ordinary Services” and “Ordinary Expenses” mean those services normally rendered, and those expenses normally incurred, by an issuer or a trustee under instruments similar to the Indenture. “Ordinary Trustee Fees and Expenses” means amounts due to the Trustee for the Ordinary Services and the Ordinary Expenses of the Trustee incurred in connection with its duties under the Indenture, payable annually in advance on the Closing Date and on each anniversary thereof in the amount of $[____] (together with an acceptance fee of $[____] and a Trustee’s counsel fee of $ [____] each payable upon execution of the Indenture ), as well as the annual sum of $ [____] in connection with its duties as Dissemination Agent under the Continuing Disclosure Agreement. The Ordinary Trustee Fees and Expenses and all amounts due to the Trustee for Extraordinary Services and all Extrao rdinary Expenses of the Trustee will be paid directly by the Borrower pursuant to the Financing Agreement.
“Outstanding” means, when used with respect to the Bonds and as of any date, all Bonds theretofore authenticated and delivered under the Indenture except:
(a) any Bond cancelled by the Trustee or delivered to the Trustee for cancellation; (b) any Bond for the payment or redemption of which either (i) moneys equal to the principal amount or Redemption Price thereof, as the case may be, with interest to the date of maturity or redemption date, or (ii) specified types of Eligible Investments or moneys in the amounts, of the maturities and otherwise as described and required under the Indenture, shall have theretofore been deposited with the Trustee in trust (whether upon or prior to maturity or the redemption date of such Bond) and, except in the case of a Bond to be paid at maturity, as to which a redemption notice shall have been given or provided for in accordance with the Indenture; and
(c) any Bond in lieu of or in exchange for which another Bond shall have been authenticated and delivered pursuant to the Indenture.
“Participant” means a member of, or a participant in, the Depository. “Pass-Through Rate” means ___% per annum with respect to the MBS.
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“Payment Date” means (i) with respect to interest, March 1 and September 1 of each year, commencing on the Initial Payment Date, and (ii) with respect to principal and interest, the stated maturity date for any of the Bonds or any earlier date of redemption of any of the Bonds.
“Prior Lender” means [Current Lender – Newmark?]
“Prior Loan” means that certain multifamily loan in the original principal amount of $35,950,000 made by Berkeley Point Capital LLC [(and subsequently sold to the Prior Lender)] to the Borrower, pursuant to that certain Multifamily Loan and Security Agreement dated as of January 7, 2016 and evidenced by that certain Multifamily Note made by the Borrower to the order of Berkeley Point Capital LLC [(and subsequently sold to the Prior Lender)], dated January 7, 2016.
“Prior Loan Payment Date” means [February 1, 2026].
“Prior Loan Payment Deposit” means the amount deposited on the Closing Date into the Prior Loan Payment Fund.
“Project” means the multifamily rental housing development, known as Preston Park Apartments, located in the City of Marina, County of Monterey, State of California, on the site described in the Mortgage. “Rating Agency” means Moody’s, S&P or any other nationally recognized securities rating agency rating the Bonds, or such rating agency’s successors or assigns , and initially means Moody ’s so long as Moody ’s is rating the Bonds.
“Rating Category” means one of the rating categories of the Rating Agency for the specific type and duration of the applicable Eligible Investment.
“Rebate Fund” means the Fund created and so designated in the Indenture. “Record Date” means the close of business on the last day of the calendar month prior to the calendar month in which a payment occurs.
“Redemption Price” means the amount required to be delivered to pay principal of, interest on, and redemption premium, if any, in connection with a redemption of the Bonds in accordance with the provisions of the Indenture.
“Regulations” means the income tax regulations promulgated or proposed under the Code by the Department of the Treasury, as the same may hereafter be amended, including without limitation regulations promulgated by the Department of the Treasury to implement the requirements of Section 148 of the Code. “Regulatory Agreement” means the Deed Restriction and Regulatory Agreement relating to the Project, dated as of January 1, 2026, by and among the City and the Borrower, as it may be amended, supplemented or restated from time to time.
“Representation Letter” has the meaning given to such term in the Indenture. “Reserved Rights” means those certain rights of the Issuer under the Financing Documents to which the Issuer is a party to indemnification and to payment or reimbursement of fees and expenses of the Issuer, its right to receive notices and to enforce venue, notice and reporting requirements, its right to inspect and audit the books, records and premises of the Borrower and of the Project, its right to collect attorneys’ fees and related expenses, its right to specifically enforce the Borrower’s covenant to comply with applicable federal tax law and State law (including the Act and the rules and regulations of the Issuer, if any), and its right to give or withhold consent to amendments, changes, modifications and alterations to the Financing Documents relating to the Reserved Rights.
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“Resolution” means that certain resolution no. _____ of the Board of Directors of the Issuer adopted on December 16, 2025, authorizing the issuance and sale of the Bonds. “Revenue Fund” means the Fund created and so designated in the Indenture. “S&P” means S&P Global Ratings, a division of Standard & Poor’s Financial Services LLC, and its successors and assigns, or if it is dissolved or no longer assigns credit ratings, then any other nationally recognized statistical rating agency, designated by Fannie Mae, that assigns credit ratings. “State” means the State of California.
“Substitute Depository” means a securities depository appointed as successor to DTC under the Indenture. “Supplemental Indenture” means any indenture hereafter duly authorized and entered into between the Issuer and the Trustee amending or supplementing the Indenture in accordance with the provisions thereof. “Tax Certificate” means the Tax Certificate executed by the Issuer and the Borrower, as amended, supplemented or otherwise modified from time to time.
“Trust Estate” means all the property, rights, moneys, securities and other amounts pledged and assigned to the Trustee pursuant to the Indenture.
“Trustee” means U.S. Bank Trust Company, National Association, a national banking association. “Trustee Fees and Expenses” means, collectively, the Ordinary Trustee Fees and Expenses and the Extraordinary Trustee Fees and Expenses.
“Underwriter” means Stifel, Nicolaus & Company, Incorporated.
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APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
The following is a summary of certain provisions of the Indenture which are not described elsewhere in the Official Statement . This summary does not purport to be comprehensive, and reference should be made to the Indenture for a full and complete statement of its provisions.
Authorization, Transfer and Registration, and Terms of Bonds Authorization of Bonds. Bonds of the Issuer , to be entitled Multifamily Housing Revenue Bonds (Fannie Mae MBS -Secured) Series 2026 (Preston Park Apartments ) are authorized by the Indenture to be issued in an aggregate principal amount set forth in the Indenture and subject to the terms, conditions and limitations established in the Indenture. The Bonds shall be issued initially as Book -Entry Bonds. The Bonds may be executed by or on behalf of the Issuer, authenticated by the Trustee and delivered or caused to be delivered by the Trustee to the original purchasers thereof upon compliance with the requirements set forth in the Indenture.
Terms of Bonds. The Bonds shall be dated as of the Bond Dated Date and shall be payable on each Payment Date. Interest shall be calculated on the basis of a year of 30/360. Except as otherwise provided in the Indenture, the payment of interest on a Payment Date shall be in an amount equal to the interest accrued during the preceding six calendar months; provided that the payment of interest on the Initial Payment Date shall relate to the interest accrued from the Bond Dated Date to and including the calendar day immediately preceding the Initial Payment Date. Interest payable on the Bonds, if the Bonds are redeemed as described under the heading “Terms of Redemption” shall be paid on the redemption date.
The Bonds shall be issued as registered bonds without coupons in Authorized Denominations. The Bonds shall be lettered “R” and shall be numbered separately from “1” consecutively upwards. The Bonds shall be issued initially as Book-Entry Bonds.
The Bonds shall mature (subject to prior redemption as set forth in the Indenture) on the dates, and shall bear interest at the rates per annum (not to exceed the Maximum Rate), set forth in the Indenture.
On each Payment Date, payment of the principal of and interest or premium, if any, on any Bond shall be made to the person appearing on the Bond Register as the registered owner thereof on the applicable Record Date.
The principal of and the interest on t he Bonds shall be payable in coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts of the United States of America. Unless the Bonds are Book-Entry Bonds, the principal of the Bonds shall be payable to the registered owners thereof upon presentation (except in connection with a redemption of Bonds described under the heading “Terms of Redemption — Mandatory Sinking Fund Redemption” herein and a maturity of Bonds pursuant to the Indenture) at the designated corporate trust office of the Trustee or its successors. Unless the Bonds are Book -Entry Bonds, payments of interest on the Bonds and redemption of the Bonds described under the heading “Terms of Redemption — Mandatory Sinking Fund Redemption” herein shall be paid by check or draft mailed to the registered owner thereof at such owner’s address as it appears on the registration books maintained by the Trustee on the applicable Record Date or at such other address as is furnished to the Trustee in writing by such owner. The Trustee shall cause CUSIP number identification with appropriate dollar amounts for each CUSIP number to accompany all payments of interest, principal or Redemption Price made to such owners, whether such payment is ma de by check or wire transfer. All payments of principal of and interest on Book -Entry Bonds shall be made and given at the times and in the manner set out in the Representation Letter, as more fully specified in the Indenture.
The Bonds shall be subject to redemption prior to maturity as provided in the Indenture.
The date of authentication of each Bond shall be the date such Bond is registered.
Execution; Limited Obligation. The Bonds shall be signed by, or bear the facsimile or manual signature of, an Authorized Officer of the Issuer, and attested to by the manual or facsimile signature of the Secretary of the Board of Directors of the Issuer. In case any one or more of the officers of the Issuer who shall have signed any of the Bonds
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or whose signature appears on any of the Bonds shall cease to be such officer before the Bonds so signed shall have been actually authenticated or delivered or caused to be delivered by the Trustee or issued by the Issuer, such Bonds may, nevertheless, be authenticated by the Trustee and issued and, upon such authentication, delivery and issue, shall be as binding upon the Issuer as if the persons who signed such Bonds or whose signatures appear on any of the Bonds had not ceased to hold such office until s uch delivery. Any Bond may be signed on behalf of the Issuer by such persons as at the actual time of execution of the Bonds shall be duly authorized or hold the proper office in the Issuer, although at the date of issuance and delivery of the Bonds such persons may not have been so authorized or have held such office.
Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Issuer, at the expense of the owner of such Bond shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange and substitution for the Bond so mutilated, but only u pon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be cancelled by it and delivered to, or upon the order of, the Issuer. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence shall be satisfactory to it and indemnity satisfactory to the Trustee shall be given, the Issuer, at the expense of the owner of such Bond, shall execute, and the Trustee shall ther eupon authenticate and deliver, a new Bond of like tenor. The Trustee may require payment of a sum not exceeding the actual cost of preparing each new Bond authenticated and delivered under this section and of the expenses which may be incurred by the Iss uer and the Trustee in connection therewith. Any Bond authenticated and delivered under the provisions of this section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Issuer whether or not the Bond so all eged to be lost, destroyed or stolen shall be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of the Indenture with all other Bonds secured by the Indenture. I f any such Bond shall have matured, or is about to mature, instead of issuing a new Bond the Trustee may pay the same without surrender thereof upon receipt of the aforementioned indemnity.
Registration, Transfer and Exchange of Bonds; Persons Treated as Owners. The Issuer shall cause books for the registration, transfer and exchange of the Bonds as provided in the Indenture to be kept by the Trustee, which under the Indenture is constituted and appointed the bond registrar with respect to the Bonds (the “Bond Registrar”).
At reasonable times and under reasonable regulations established by the Trustee, said books may be inspected and copied by the Issuer or by owners (or a designated representative thereof) of a majority in aggregate principal amount of the Bonds then Outstanding. The Trustee is also appointed as paying agent for the Bonds under the Indenture.
The registration of each Bond is transferable by the registered owner thereof in person or by its attorney duly authorized in writing at the designated corporate trust office of the Trustee. Upon surrender for registration of transfer of any Bond at such office, the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Bond of the same maturity or maturities and Authorized Denomination for the same aggregate principal amount.
Bonds to be exchanged shall be surrendered a t said designated corporate trust office of the Trustee, and the Trustee shall authenticate and deliver in exchange therefor a Bond of equal aggregate principal amount of the same maturity and in Authorized Denominations.
All Bonds presented for registration of transfer, exchange or payment (if so required by the Issuer or the Trustee) shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in form and with guaranty of signature satisfactory to the Trustee, duly executed by the registered owner or by its duly authorized attorney.
The Issuer, the Bond Registrar and the Trustee shall not be required (i) to issue, register the transfer of or exchange any Bonds during a period beginning at the Trustee’s opening of business on the applicable Record Date and ending at the Trustee’s close of business on the applicable Payment Date; or (ii) to register the transfer of or exchange any Bond selected, called or being called for redemption as provided in the Indenture. No charge shall be made to any Bondholder for the privilege of registration of transfer as provided in the Indenture, but any Bondholder requesting any such registration of transfer shall pay any tax or governmental charge required to be paid therefor.
New Bonds delivered upon any registration of transfer or exchange shall be valid obligations of the Issuer, evidencing the same debt as the Bonds surrendered, shall be secured by the Indenture and shall be entitled to all of the security and benefits of the Indenture to the same extent as the Bonds surrendered.
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The person in whose name any Bond is registered shall be deemed the owner thereof by the Issuer and the Trustee, and any notice to the contrary shall not be binding upon the Issuer or the Trustee. Notwithstanding anything in the Indenture to the contrary, to the extent the Bonds are Book -Entry Bonds, the provisions of the Indenture shall govern the exchange and registration of Bonds.
Terms of Redemption
The Bonds shall be subject to redemption prior to maturity under the Indenture as stated under this heading.
Mandatory Redemption Prior to MBS Delivery Date . In the event the MBS Delivery Date Deadline is extended in accordance with the terms of the Indenture, it is possible that sinking fund payments may commence on or before the MBS Delivery Date Deadline, as so extended. On any Payment Date that occurs prior to or during the month in which the MBS is delivered to the Trustee, the Bonds are subject to mandatory redemption occurs as shown in the sinking fund schedule set forth in the Indenture, payable with respect to principal first, from money on deposit in the Bond Proceeds Fund, and with respect to interest, and premium, if any, from money on deposit in the Revenue Fund or other Eligible Funds.
Mandatory Redemption in Whole Upon Failure to Purchase the MBS by the MBS Delivery Date Deadline .
The Bonds are subject to mandatory redemption in whole five (5) calendar days after the MBS Delivery Date Deadline at a Redemption Price equal to 100% of the Outstanding principal amount thereof, plus interest accrued but unpaid from the first day of the month in which the last Payment Date occurred (or, if no Payment Date has occurred, from the Bond Dated Date) to, but not including, such redemption date, if the MBS Delivery Date has not occurred on or prior to the MBS Delivery Date Deadline, payable with respect to principal first, from money on deposit in the Bond Proceeds Fund, and with respect to premium, if any, and interest, from money on deposit in the Revenue Fund and other Eligible Funds.
Mandatory Redemption in Part on the MBS Delivery Date. The Bonds are subject to mandatory redemption in part on the MBS Delivery Date at a Redemption Price equal to 100% of the principal amount of the Bonds to be redeemed, plus interest accrued but unpaid from the first day of the month in which the last Pa yment Date occurred to, but not including, the MBS Delivery Date, in an amount equal to the difference between (i) the principal amount of the MBS purchased on the MBS Delivery Date and (ii) the aggregat e principal amount of the Bonds Outstanding as of the first day of the month in which the MBS Delivery Date occurred, payable with respect to principal first, from money on deposit in the Bond Proceeds Fund, and with respect to interest and premium, if any, from money on deposit in the Revenue Fund and other Eligible Funds.
Mandatory Sinking Fund Redemption . The Bonds are subject to mandatory redemption on the respective dates set forth in the schedule in the Indenture at the Redemption Price equal to the principal amount thereof, plus accrued interest to, but not including, the redemption date. Any scheduled principal payments made pursuant to the Mortgage Loan Amortization Schedule shall be retained by the Trustee and used to make sinking fund payments as set forth in this section.
Mandatory Redemption Following Unscheduled Prepayment of the Mortgage Loan. (i) The Bonds are subject to mandatory redemption in whole or in part one Business Day after the date on which any unscheduled MBS principal payment or prepayment is received by the Trustee, at a Redemption Price equal to 100% of the principal amount thereof, plus accrued interest and premium, if any, received pursuant to the MBS.
(ii) The Mortgage Loan is subject to optional prepayment by the Borrower. Any yield maintenance or prepayment penalty in connection with prepayment of the Mortgage Loan that is received by the Trustee as holder of the MBS will be distributed to Bondholders, as applicable; however, no assurance can be given that all or any portion of such yield maintenance or prepayment penalty will be received by the Trustee as holder of the MBS.
Selection of Bonds for Redemption . If less than all of the Bonds are redeemed pursuant to the heading “Terms of Redemption – Mandatory Sinking Fund Redemption” above, the Bonds shall be redeemed in accordance with the respective schedules set forth in the Indenture. In the event the Bonds are redeemed in part other than pursuant
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to the heading “Terms of Redemption – Mandatory Sinking Fund Redemption” above, the Bonds shall be redeemed ratably across all maturities and the scheduled principal payments on the Bonds to remain outstanding and the mandatory redemption requirements for each maturity described in the Indenture shall be adjusted so that the resulting debt service on the Bonds (including scheduled mandatory redemption payments) during each six -month period commencing on each Payment Date is proportional, as nearly as practicable, to the payments on the MBS during each such six-month period, without exceeding the amount available from MBS payments, and other available funds under the Indenture that may be used to pay debt service on the Bonds, during each such six-month period. All Bonds to be redeemed within the same maturity shall be selected by lot. Any redemption in part shall be in Authorized Denominations and the Lender shall furnish the Trustee with a revised Mortgage Loan Amortization Schedule in connection with such redemption in part (other than pursuant to mandatory sinking fund redemption).
Except as otherwise described above, any Bonds to be called for redemption shall be selected by the Trustee ratably among maturities and within a maturity by lot, such selection to be made prior to the date on which notice of such redemption must be given and Bonds shall be redeemed as soon as practicable after an event causing a redemption shall have occurred. The Trustee shall have no liability for such selections made without gross negligence or willful misconduct.
If it is determined that less than all of the principal amount represented by any Bond is to be called for redemption, then, following notice of intention to redeem such principal amount, the holder thereof shall surrender such Bond to the Trustee on or before the applicable redemption date for (a) payment on the redemption date to such Bondholder of the Redemption Price of the amount called for redemption and (b) delivery to such Bondholder of a new Bond or Bonds of such Series in an aggregate principal am ount equal to the unredeemed balance of such Bond.
A new Bond representing the unredeemed balance of such Bond shall be issued to the registered owner thereof, without charge therefor. If the registered owner of any Bond selected for redemption shall fai l to present such Bond to the Trustee for payment and exchange as aforesaid, such Bond shall, nevertheless, become due and payable on the date fixed for redemption to the extent of the amount called for redemption (and to that extent only).
Notice of Redemption
Anytime the Bonds are subject to redemption in whole or in part pursuant to the Indenture (except for a redemption pursuant to the heading “Terms of Redemption — Mandatory Redemption Following Unscheduled Prepayment of Mortgage Loan,” above), the Trustee, in accordance with the provisions of the Indenture, shall give at least five (5) calendar days’ notice, in the name of the Issuer, of the redemption of the Bonds, which notice shall specify the following: (i) the maturity and principal amounts of the Bonds to be redeemed; (ii) the CUSIP number, if any, of the Bonds to be redeemed; (iii) the date of such notice; (iv) the issuance date for such Bonds; (v) the interest rate on the Bonds to be redeemed; (vi) the redemption date; (vii) any conditions to the occurrence of the redemption; (viii) the place or places where amounts due upon such redemption will be payable; (ix) the Redemption Price; (x) the Trustee’s name and address with a contact person and a phone number; and (xi) that on the redemption date, the Redemption Price shall be paid. Notice delivered as required in this heading “Notice of Redemption” with respect to a redemption described under the heading “ Mandatory Redemption Upon Failure to Purchase the MBS by the MBS Delivery Date Deadline,” above, may be rescinded and annulled on or before the redemption date set forth in such notice if (i) the MBS is delivered on or prior to such redemption date or (ii) the MBS Delivery Date Deadline is extended pursuant to the Indenture. Neither the giving of such notice by the Trustee nor the receipt of such notice by the Bondholders shall be a condition precedent to the effectiveness of any such redemption. Notwithstanding anything in the Indenture to the contrary, no notice of redemption shall be required with respect to redemptions described under the heading “ Terms of Redemption – Mandatory Redemption Following Unscheduled Prepayment of Mortgage Loan,” above.
The Bonds to be redeemed in part pursuant to the Indenture will be selected in accordance with the operational arrangements of DTC or any successor Substitute Depository, and any partial prepayments pursuant thereto shall be made in accordance with the applicable procedures of DTC or comparable procedures of any successor Substitute Depository.
In the event that the MBS has not been purchased by, and delivered to, the Trustee ten (1 0) Business Days prior to the MBS Delivery Date Deadline (as such date may be extended under the Indenture), the Trustee shall provide
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to the Borrower, the Lender, the Issuer and the Underwriter, ten (10) Business Days prior to the MBS Delivery Date Deadline, written notice of such non-purchase.
Notwithstanding this section, no prior notice shall be a prerequisite to the effectiveness of any redemption under the heading “Terms of Redemption” which redemption shall occur and be effective irrespective of whether the Trustee fulfills its obligation to provide the notice with respect to the heading “Terms of Redemption” above required under this heading “Notice of Redemption.”
Payment of Redemption Price
With respect to any redemption pursuant to the heading “Terms of Redemption” above, notice having been given in the manner provided in the heading “Notice of Redemption” above (or not required to be given as a result of a redemption pursuant to the heading “Terms of Redemption – Mandatory Redemption Following Unscheduled Prepayment of Mortgage Loan” above), and all conditions to the redemption contained in such notice, if applicable, having been met, the Bonds so called for redemption shall become due and payable on the redemption date so designated at the Redemption Price specified in the heading “Terms of Redemption” above, and, except in the case of a redemption as described under the heading “Mandatory Sinking Fund Redemption,” above, upon presentation and surrender thereof at the offices specified in such notice, together with, in the case of Bonds presented by other than the registered owner, a written instrument of transfer duly executed by the registered owner or its duly authorized attorney; provided, however, that so long as the Bonds are registered in the name of the Depository, payment for such redeemed Bonds shall be made in accordance with the Representation Letter of the Issuer. If, on the redemption date, moneys for the redemption of all of the Bonds or the Bonds to be redeemed, together with all accrued interest on such Bonds, which shall equ al all interest accrued on the MBS , if delivered, to the redemption date, shall be held by the Trustee so as to be available therefor on said date and if notice of redemption shall have been given as aforesaid, then, from and after the redemption date, interest on the Bonds so called for redemption shall cease to accrue.
Extension of MBS Delivery Date Deadline
At any time prior to the MBS Delivery Date Deadline , the Borrower may extend the MBS Delivery Date Deadline by (i) providing to the Trustee, the Lender, the Issuer, the Rating Agency and the Underwriter written notice of any extension of the MBS Delivery Date Deadline, (ii) depositing with the Trustee Eligible Funds for the credit of the Negative Arbitrage Account of the Revenue Fund in an amount, taking into account amounts already on deposit therein, sufficient to pay interest due on the Bonds to the date that is five (5) calendar days after the extended MBS Delivery Date Deadline (the “Extension Deposit”), and (iii) delivering to the Trustee and the Rating Agency a Cash Flow Projection establishing the sufficiency of the Extension Deposit. Extension Deposits may continue to be made by or on behalf of the Borrower until the MBS Delivery Date occurs or the Borrower declines to make an Extension Deposit resulting in the mandatory redemption pursuant to the heading “Mandatory Redemption in Whole Upon Failure to Purchase the MBS by the MBS Delivery Date Deadline” above; provided, however, the MBS Delivery Date Deadline may not be extended to a date that is later than the fourth anniversary of the Bond Dated Date unless, prior to any extension beyond such date, there shall be filed with the Trustee and the Issuer an opinion of Bond Counsel to the effect that such extension will not , in and of itself, adversely affect the exclusion of interest on the Bonds from gross income for Federal income tax purposes. The cost of such opinion shall be the sole responsibility of the Borrower.
Delivery of MBS
The obligation of the Trustee to purchase the MBS on the MBS Delivery Date shall be subject to receipt by the Trustee of written notification from the Lender upon which the Trustee may rely and act without further investigation certifying that the MBS duly executed by Fannie Mae is available for purchase by the Trustee at the MBS Purchase Price and such other information relating to the MBS as may be reasonably requested by the Trustee, and the Trustee shall confirm that such MBS meets the following requirements:
(a) the MBS shall bear interest at the Pass -Through Rate payable on the 25th day of each month, commencing on the 25th day of the month following the month in which the Trustee purchases the MBS, or if any such 25th day is not a Business Day, the next succeeding Business Day, and shall mature on the MBS Maturity Date; and
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(b) the MBS shall be acquired by the Trustee on behalf of the Issuer, shall be held at all times by the Trustee in trust for the benefit of the Bondholders and shall be held only in book -entry form through the United States Federal Reserve Bank book -entry system, pursuant to which the MBS shall have been registered on the records of the Federal Reserve Bank in the name of the Trustee.
The MBS shall be registered in the name of the Trustee or its designee. Upon purchase of the MBS on the MBS Delivery Date, the Trustee shall post a notification to this effect on the Electronic Municipal Market Access website of the Municipal Securities Rulemaking Board.
Pledge of Trust Estate
The pledge and assignment of and the security interest granted in the Trust Estate pursuant to the granting clauses of the Indenture for the payment of the principal of, premium, if any, and interest on the Bonds, in accordance with their terms and provisions, and for the payment of all other amounts due under the Indenture, shall attach, be perfected and be valid and binding from and after the time of the delivery of the Bonds by the Trustee or by any person authorized by the Trustee to deliver the Bonds. The Trust Estate so pledged and then or thereafter received by the Trustee shall immediately be subject to the lien of such pledge and security interest without any physical delivery thereof or further act, and the lien of such pledge and security interest shall be valid and binding and prior to the claims of any and all parties having claims of any kind in tort, contract or otherwise against the Issuer irrespective of whether such parties have notice thereof.
Establishment of Funds
The Trustee shall establish, maintain and hold in trust the following funds, each of which shall be maintained by the Trustee as a separate and distinct fund or account , and each of which shall be disbursed and applied only as authorized in the Indenture:
(a) Revenue Fund, including therein a Negative Arbitrage Account; (b) Costs of Issuance Fund;
(c) Bond Proceeds Fund;
(d) Prior Loan Payment Fund; and
(e) Rebate Fund.
The Trustee shall, at the written direction of an Authorized Borrower Representative and may, in its discretion, establish such additional accounts within any fund, and subaccounts within any of the accounts, as the Issuer or the Trustee may deem necessary or useful for the purpose of identifying more precisely the sources of payments into and disbursements from that fund and its accounts, or for the purpose of complying with the requirements of the Code, but the establishment of any such account or subacco unt shall not alter or modify any of the requirements of th e Indenture with respect to a deposit or use of money in the respective Funds, or result in commingling of funds not permitted thereunder.
Application of Funds on [MBS Delivery Date and Prior Loan Payment Date] (a) On the MBS Delivery Date, the Trustee shall remit to the Lender, from amounts on deposit in the Bond Proceeds Fund, as payment for the MBS, an amount equal to the aggregate principal amount of the MBS, plus, from the Revenue Fund (and, to the extent amounts in the Revenue Fund, other than amounts in the Negative Arbitrage Account therein, are insufficient for such purposes, from the Negative Arbitrage Account therein), accrued and unpaid interest on the MBS at the Pass-Through Rate from the first of the month in which the MBS was delivered to, but not including, the MBS Delivery Date.
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(b) On the Prior Loan Payment Date, the Trustee shall remit to the Prior Lender, from amounts on deposit in the Prior Loan Payment Fund, as payment in full of the Prior Loan, an amount equal to the outstanding principal amount of the Prior Loan plus accrued interest thereon to the Prior Loan Payment Date.
Revenue Fund
(a) On any Payment Date that occurs prior to or during the month in which the MBS is delivered to the Trustee, the Trustee shall disburse from the Revenue Fund (and, to the extent amounts in the Revenue Fund, are insufficient for such purposes, from the Negative Arbitrage Account therein), an amount equal to the amount of interest due on the Bonds.
(b) There shall be deposited into the Negative Arbitrage Account of the Revenue Fund as and when received, (i) the Negative Arbitrage Deposit and (ii) any Extension Deposit. (c) There shall be deposited into the Revenue Fund, as and when received, (i) following the MBS Delivery Date, all moneys received by the Trustee representing principal payments or prepayments, and premium, if any, under the MBS, together with all other amounts required pursuant to th e Indenture to be deposited therein, (ii) any other amounts specified in the Indenture, and ( iii) all moneys received by the Trustee representing interest payments under the MBS, to be held therein pending distribution in accordance with the terms of the Indenture. (d) On the MBS Delivery Date, the Trustee shall remit from the Revenue Fund (and, to the extent amounts in the Revenue Fund, other than amounts in the Negative Arbitrage Account therein, are insufficient for such purposes, from the Negative Arbitrage Account therein) to the Lender an amount equal to accrued and unpaid interest on the MBS at the Pass-Through Rate from and including the first calendar day of the month in which the MBS was delivered to, but not including, the MBS Delivery Date. (e) On any Payment Date that occurs prior to or during the month in which the MBS is delivered to the Trustee, the Trustee shall disburse from the Revenue Fund (and, to the extent amounts in the Revenue Fund, other than amounts in the Negative Arbitrage Accoun t therein, are insufficient for such purposes, from the Negative Arbitrage Account therein), an amount equal to the amount of principal, if any, and interest due on the Bonds on such Payment Date. On the first Business Day following the first Payment Date following the MBS Delivery Date, the Trustee shall release to the Borrower any remaining balance in the Revenue Fund (including the Negative Arbitrage Account) that exceeds a total of $20,000.
(f) On each Payment Date , the Trustee shall pay to the Bond owners, from the Revenue Fund , the amount listed in the applicable maturity, sinking fund and interest payment schedule set forth in the Indenture. All payments of principal and interest shall be paid to Bond owners in proportion to the principal amount of Bonds owned by each Bond owner as set forth on the records of the Trustee at the close of business on the applicable Record Date. (g) If the Trustee does not receive a scheduled payment on the MBS by 5:00 p.m. Eastern Time on the 25th day of any month (or the next succeeding Business Day if such day of the month is not a Business Day), the Trustee shall promptly notify Fannie Mae and promptly demand payment under the terms of the guaranty thereof. (h) Following the MBS Delivery Date, the Trustee is authorized to release Excess Funds from the Revenue Fund to or upon the direction of the Borrower, upon receipt by the Trustee of (1) a written notice from the Borrower to the Trustee to release such Excess Funds, and (2) a Cash Flow Projection.
Rebate Fund
The Rebate Fund shall not be subject to the lien or encumbrance of th e Indenture, but shall be held in trust for the benefit of the United States of America, and shall be subject to the claim of no other person, including that of the Trustee and Bondholders. The interest on any Eligible Investments representing an investment of moneys in the Rebate Fund and any profit arising from the sale thereof shall be retained in the Rebate Fund. Any moneys deposited therein in accordance with the provisions of the Indenture shall be used for no other purpose than to make payments to the United States Treasury, at the time and in the manner and amount specified in the Indenture.
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Costs of Issuance Fund
The Trustee shall use amounts in the Costs of Issuance Fund on the Closing Date or as soon as practicable thereafter in accordance with written instructions to be given to the Trustee by the Borrower, upon delivery to the Trustee of appropriate invoices for such expenses. The Trustee shall transfer any unexpended amounts remaining on deposit in the Costs of Issuance Fund six months after the Closing Date to the Revenue Fund and upon such transfer the Costs of Issuance Fund shall be closed.
Bond Proceeds Fund
Amounts deposited into the Bond Proceeds Fund shall be used by the Trustee on the MBS Delivery Date to pay the principal portion of the MBS Purchase Price as set forth under the heading “ Application of Funds on MBS Delivery Date,” above. All investment earnings from amounts on deposit in the Bond Proceeds Fund shall be transferred to the Revenue Fund.
[Prior Loan Payment Fund
On the Closing Date, the Borrower shall cause the Lender to deliver to the Trustee the Prior Loan Payment Deposit, from Mortgage Loan proceeds, to be deposited to the Prior Loan Payment Fund. Amounts deposited into the Prior Loan Payment Fund shall be used b y the Trustee on the Prior Loan Payment Date, to pay the outstanding principal and accrued interest due on the Prior Loan in accordance with subsection (b) under the heading “Application of Funds on [MBS Delivery Date and Prior Loan Payment Date],” above.] Investment of Funds
The moneys held by the Trustee shall constitute trust funds for the purposes of the Indenture. Any moneys attributable to each of the Funds and Accounts under the Indenture shall be invested by the Trustee at the written direction or telephonic direction (promptly confirmed in writing) of the Borrower in Eligible Investment s which mature or are redeemable at par, without penalty, on or before the date on which such funds are expected to be needed for the purposes for which they are held. Notwithstanding anything in the Indenture to the contrary except as otherwise set forth in this sentence, (i) prior to the MBS Delivery Date, all amounts in the Bond Proceeds Fund, the Prior Loan Payment Fund and the Revenue Fund shall be invested solely in Eligible Investments, and (ii) following the MBS Delivery Date, payments received with respect to the MBS shall be invested solely in an Eligible Investment described in clause (b) of the definition of Eligible Investments herein which shall mature or be redeemable at par without penalty at the times set forth in the Indenture. All investment earnings from amounts on deposit in the Bond Proceeds Fund, the Prior Loan Payment Fund and the Revenue Fund shall be credited to the Revenue Fund. If the Trustee does not receive written direction or telephonic directions (promptly confirmed in writing) from the Borrower regarding the investment of funds, the Trustee shall invest solely in Eligible Investments described in clause (b) of the definition of Eligible Investments, which shall mature or be redeemable at par without penalty at the times set forth in this section. The Trustee may make any and all such investments through its own banking department or the banking department of any affiliate.
Eligible Investments representing an investment of moneys attributable to any Fund or Account shall be deemed at all times to be a part of such Fund. Such investments shall be sold at the best price obtainable (at least par) whenever it shall be necessary to do so in order to provide moneys to make any transfer, withdrawal, payment or disbursement from such Fund. In the case of any required transfer of moneys to another such Fund, such investments may be transferred to that F und in lieu of the required mo neys if permitted by the Indenture as an investment of moneys in that Fund.
All Eligible Investments acquired by the Trustee pursuant to the Indenture shall be purchased in the name of the Trustee and shall be held for the benefit of the Bondholders pursuant to the terms of th e Indenture. The Trustee shall take such actions as shall be necessary to ensure that such Eligible Investments are held pursuant to the terms of the Indenture and are subject to the trust and security interest created in the Indenture.
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The Trustee shall not be liable or responsible for any loss resulting from any investment made in accordance with the Indenture. The Trustee or its affiliates may act as sponsor, principal or agent in the acquisition or disposition of investments. The Trustee may commingle investments made under the Funds and Accounts established under the Indenture but shall account for each separately.
In computing for any purpose under the Indenture the amount in any Fund or Account on any date, obligations so purchased shall be valued at the lower of cost or par exclusive of accrued interest and may be so valued as of any time within four days prior to such date.
The Issuer acknowledges that regulations of the Comptroller of the Currency grant the Borrower the right to receive brokerage confirmations of the security transactions as they occur. The Borrower specifically waives such notification to the extent permit ted by law and will receive periodic cash transaction statements that will detail all investment transactions.
Particular Covenants
Payment of Bonds. Subject to the other provisions of the Indenture, the Issuer shall duly and punctually pay or cause to be paid, solely, from amounts available in the Trust Estate the principal of, premium, if any, and interest on the Bonds, at the dates and places and in the manner described in the Bonds, according to the true intent and meaning thereof. The Bonds are not a general obligation of the Issuer and are payable solely from the Trust Estate.
The payment and other obligations of the Issuer with respect to the Bonds are intended to be, and shall be, independent of the payment and other obligations of the issuer or maker of the Mortgage Note and the MBS, even though the principal amount of both instruments is expected to be identical, except in the case of a default with respect to one or more of the instruments.
Tax Covenants. The Issuer shall not take any action that will cause the interest paid on the Bonds to be includable in gross income for federal income tax purposes or to be subject to personal income taxation by the State.
In furtherance of the foregoing covenant, the Issuer particularly covenants and agrees with the Bondholders as follows:
(a) No part of the proceeds of the Bonds or any other funds of the Issuer shall be used by the Issuer at any time directly or indirectly to acquire securities or obligations, the acquisition of which, or which in any other manner, would cause any Bond to be an arbitrage bond as defined in Section 148 of the Code and any applicable Regulations promulgated thereunder.
(b) The Issuer will not knowingly take any action or permit or suffer any action to be taken if the result of the same would be to cause the Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code and any applicable Regulations promulgated thereunder.
In the event of a conflict between the provisions under this heading “Tax Covenants” and the Tax Certificate, the provisions of the Tax Certificate shall control.
Extension of Payment of Bonds. The Issuer shall not directly or indirectly extend or assent to the extension of the maturity of the principal due on any of the Bonds or the time of payment of interest due on the Bonds, and if the time for payment of any such claims for interest shall be extended through any other means, such Bonds or claims for interest shall not be entitled in case of any default under the Indenture to any payment out of the Trust Estate or the funds (except funds held in trust for the payment of particular Bonds pursuant to the Indenture) held by the Trustee, except subject to the provisions of the Indenture and subject to the prior payment of the principal of all Bonds issued and Outstanding the maturity of which has occurred and has not been extended and of such portion of the accrued interest on the Bonds which is not represented by such extended claims for interest.
If an Extension Deposit has not been made pursuant to the Indenture, such that the aggregate balance in the Bond Proceeds Fund and the Revenue Fund is equal to 100% of the principal amount of the Bonds plus interest accrued on the Bonds to the date which is five (5) calendar days following the MBS Delivery Date Deadline (as such date may be extended under the Indenture), then the Bonds shall be subject to mandatory redemption as set forth in the Indenture.
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Discharge of Indenture
Defeasance.
(a) If all Bonds shall be paid and discharged as provided in this s ection, then all obligations of the Trustee and the Issuer under th e Indenture with respect to all Bonds shall cease and terminate, except only (i) the obligation of the Trustee to pay or cause to be paid to the owners thereof all sums due with respect to the Bonds and to register, transfer and exchange Bonds pursuant to the Indenture, (ii) the obligation of the Issuer to pay the amounts owing to the Trustee under the Indenture from the Trust Estate, and (iii) the obligation of the Issuer to comply with the Indenture. Any funds held by the Trustee at the time of such termination which are not required for payment to Bondholders or for payment to be made by the Issuer, shall be paid as provided in the Indenture.
Any Bond or portion thereof in an Authorized Denomination shall be deemed no longer Outstanding under the Indenture if paid or discharged in any one or more of the following ways:
(i) by well and truly paying or causing to be paid the principal of, premium, if any, and interest on such Bond which have become due and payable; or
(ii) by depositing with the Trustee, in trust, cash which, together with the amounts then on deposit in the Revenue Fund and dedicated to this purpose, is fully sufficient to pay when due all principal of, and premium, if any, and interest on such Bond to the maturity or earlier redemption date thereof; or (iii) by depositing with the Trustee, in trust, any investments listed under the definition of Eligible Investments in the Indenture, or a combination of cash and such investments, in such amount as in the written opinion of a certified public accountant or nationally recognized verification agent will, together with the interest to accrue on such Eligible Investments without the need for reinvestment, be fully sufficient to pay when due all principal of, and premium, if any, and interest on such Bond to the maturity or earlier redemption date thereof, notwithstanding that such Bond shall not have been surrendered for payment. (b) Notwithstanding the foregoing, no deposit under clauses (ii) and (iii) of subsection (a) above shall be deemed a payment of such Bond until the earlier to occur of:
(i) if such Bond is by its terms subject to redemption within 45 days, proper notice of redemption of such Bond shall have been previously given in accordance with the Indenture to the holder thereof or, in the event such Bond is not by its terms subject to redemption within 45 days of making the deposit under clauses (ii) and (iii) of subsection (a) above, the Issuer shall have given the Trustee irrevocable written instructions to mail by first-class mail, postage prepaid, notice to the holder of such Bond as soon as practicable stating that the deposit required by clauses (ii) or (iii) of subsection (a) above, as applicable, has been made with the Trustee and that such Bond is deemed to have been paid and further stating such redemption date or dates upon which money will be available for the payment of the principal and accrued interest thereon; or
(ii) the maturity of such Bond.
(c) The Trustee shall be entitled to receive and rely upon a report from a nationally recognized accounting firm or other nationally recognized verification agent to provide for the payment of all Bonds t o be defeased pursuant to this section.
Default Provisions and Remedies of Trustee and Bondholders Events of Default. Each of the following events shall constitute an Event of Default under the Indenture:
(a) On and after the MBS Delivery Date, f ailure by Fannie Mae to pay principal, interest or premium, if any, due under the MBS (upon such failure, the Trustee shall notify Fannie Mae not later than
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the next Business Day (all such notices to be promptly confirmed in writing) and require the failure to be remedied);
(b) Failure to pay the principal, interest or premium, if any, on the Bonds when the same shall become due; or
(c) Default in the observance or performance of any other covenant, agreement or condition on the part of the Issuer in the Indenture and the continuation of such default for a period of 90 days after written notice to the Issuer from the Trustee or the regist ered owners of not less than 75% in aggregate principal amount of the Bonds Outstanding at such time specifying such default and requiring the same to be remedied.
The Trustee will promptly notify in writing the Issuer, the Bondholders, the Lender and Fannie Mae after an Authorized Officer of the Trustee obtains actual knowledge or receives written notice of the occurrence of an Event of Default or an event which would become an Event of Default with the passage of time or the giving of notice, or both.
Acceleration; Rescission of Acceleration.
(a) Upon the occurrence of an Event of Default under item (a) under the heading “ Default Provisions and Remedies of Trustee and Bondholders – Events of Default,” above, or , prior to the delivery of the MBS under item (b) under the heading “Default Provisions and Remedies of Trustee and Bondholders – Events of Default,” above the Trustee may, and upon the written request of the holders of not less than seventy-five percent (75%) in aggregate principal amount of the Bonds Outstanding, shall declare (and shall deliver written notice of such declaration to the Issuer, the Lender, the Borrower and Fannie Mae) the principal of all Bonds Outstanding, premium, if any, and the interest accrued thereon immediately due and payable.
(b) An Event of Default under item (b) under the heading “Default Provisions and Remedies of Trustee and Bondholders – Events of Default,” above, following the delivery of the MBS or under item (c) under the heading “Default Provisions and Remedies of Trustee and Bondholders – Events of Default,” above shall not give rise to an acceleration pursuant to paragraph (a) under “Acceleration; Rescission of Acceleration” above , provided, however, that following such an Event of Default, the holder of one hundred p ercent (100%) of the Bonds Outstanding may direct the Trustee in writing to transfer the MBS to it or its designee, in which case, the Trustee shall transfer and deliver to such requesting Beneficial Owner the Trustee’s beneficial ownership interest in the MBS. The transfer described in this paragraph (b) shall take effect as set forth in, and shall be governed by, the following terms:
(i) The Trustee shall transfer and deliver to such requesting owner the Trustee's beneficial ownership interest in the MBS promptly following (i) delivery to the Trustee (via DTC withdrawal or of the Bonds being exchanged, and (ii) payment by the requesting owner of the Trustee's exchange fee ($1,000) with respect to such Bonds;
(ii) The MBS will be in book-entry form;
(iii) Transfers of the MBS will be made in accordance with current market practices, including the applicable provisions of the SIFMA's Uniform Practices for the Clearance and Settlement of Mortgage Backed Securities and Other Related Securities; (iv) Upon receipt of the Bonds from the requesting Beneficial Owner, the Trustee will promptly cancel all Bonds, which will not be reissued;
(v) The MBS delivered in such an exchange will not be exchangeable for Bonds; (vi) The MBS delivered in such an exchange will also be subject to any applicable disclosure requirements concerning MBSs that have been issued in connection with the multifamily mortgage
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lending program of a governmental housing finance agency and financed by tax-exempt obligations; and
(vii) Interest on the MBS is not excludable from gross income for federal income tax purposes.
Owners of Bonds should consult their own tax advisors concerning that and other tax consequences of any exchange of a Bond for the MBS.
(c) The acceleration of the Bonds will not constitute a default under, or by itself cause the acceleration of, the MBS. If at any time after the Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of the money due shall have been obtained or entered, the Issuer, the Borrower or Fannie Mae, as applicable, shall pay to or deposit with the Trustee a sum sufficient to pay all principal of the Bonds then due (other than solely by reason of such declaration) and a ll unpaid installments of interest (if any) on all the Bonds then due with interest at the rate borne by the Bonds on such overdue principal and (to the extent legally enforceable) on such overdue installments of interest, and the reasonable expenses of th e Trustee shall have been made good or cured or adequate provisions shall have been made therefor, and all other defaults under the Indenture have been made good or cured or waived in writing by the holders of a majority in principal amount of the Bonds Ou tstanding, then and in every case, the Trustee on behalf of the holders of all the Bonds shall rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent Event of Default, nor shall it impair or exhaust any right or power consequent thereon.
Other Remedies; Rights of Bondholders. Subject to the Indenture, upon the happening and con tinuance of an Event of Default, the Trustee in its own name and as trustee of an express trust, on behalf and for the benefit and protection of the holders of all Bonds, may also proceed to protect and enforce any rights of the Trustee and, to the full extent that the holders of such Bonds themselves might do, the rights of such Bondholders under the laws of the State or under the Indenture by such of the following remedies as the Trustee shall deem most effectual to protect and enforce such rights:
(a) By pursuing any available remedies under the Financing Agreement, the Regulatory Agreement or the MBS;
(b) Upon an Event of Default under paragraph (a) under the heading “Events of Default” above only, by realizing or causing to be realized through sale or otherwise upon the security pledged under the Indenture (including the sale or disposition of the MBS); and (c) By action or suit in equity, to enjoin any acts or things which may be unlawful or in violation of the rights of the Bondholders and to execute any other papers and documents and do and perform any and all such acts and things as may be necessary or advisable in the opinion of the Trustee in order to have the respective claims of the Bondholders against the Issuer allowed in any ba nkruptcy or other proceeding.
If an Event of Default shall have occurred, and if requested by the holders of not less than 75% (or 100% as set forth in paragraph (b) under “Acceleration; Rescission of Acceleration” above) ) in aggregate principal amount of the Bonds then Outstanding, and upon being indemnified to its satisfaction, the Trustee shall be obligated to exercise one or more of the rights and powers conferred by the Indenture as the Trustee, being advised by counsel, shall deem to be in the best interests of the Bondholders subject to the limitations set forth above and in the Indenture.
No right or remedy by the terms of the Indenture conferred upon or reserved to the Trustee (or to the Bondholders) is intended to be exclusive of any other right or remedy, but each and every such right and remedy shall be cumulative and shall be in addition to any other right or remedy given to the Trustee or to the Bondholders under the Indenture, the Financing Agreement, the Regulatory Agreement or the MBS or now or thereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or
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acquiescence therein and every such right and power may be exercised from time to time as often as may be deemed expedient.
No waiver of any default or Event of Default under the Indenture , whether by the Trustee or by the Bondholders, shall extend to or shall affect any subsequent default or Event of Default or shall impair any rights or remedies consequent thereon.
Waivers of Events of Default . The Trustee shall waive any Event of Default under the Indenture and its consequences and rescind any declaration of maturity of principal of, premium, if any, and interest on the Bonds upon the written request of the holders of a majority in aggregate principal amount of all Bonds then Outstanding with respect to which there is an Event of Default; provided, however, that there shall not be waived (a) any default in the payment of the principal amount of any Bonds at the date of maturity specified therein or upon proceedings for mandatory redemption, or (b) any default in the payment when due of the interest or premium, if any, on any such Bonds, unless prior to such waiver or rescission all arrears of interest, with interest (to the extent permitted by law) at the rate borne by the Bonds in respect of which such Event of Default shall have occurred on overdue installments of interest or all arrears of payments of principal or premium, if any, when due (whether at the stated maturity thereof or upon proceedings for mandatory redemption) as the case may be, and all expenses of the Trustee in connection with such monetary default, shall have been paid or provided for, and in case of any such waiver or rescission, the Issuer, the Borrower, the Trustee and the Bondholders shall be restored to their former positions and rights under the Indenture respectively.
No such waiver or rescission shall extend to any subsequent or other default, or impair any right consequent thereto; and no delay or omission of the Trustee or of any Bondholders to exercise any right or power accruing upon any Event of Default shall impair any right or power or shall be construed to be a waiver of any such Event of Default, or acquiescence therein.
Termination of Proceedings. In case any proceeding taken by the Trustee on account of any Event of Default shall have been discontinued or abandoned for any reason or determined adversely to the Trustee, then in every such case the Issuer, the Borrower, the Trustee and the Bondholders shall be restored to their former positions and rights under the Indenture, respectively, and all rights, remedies, powers and duties of the Trustee shall continue as though no such proceeding had been taken.
Concerning the Trustee
Acceptance of Trusts. The Trustee shall signify its acceptance of the duties and obligations imposed upon it by the Indenture by executing the Indenture , and agrees to perform said trusts, but only upon and subject to the Indenture’s express terms and conditions and no implied covenants or conditions shall be read into the Indenture against the Trustee.
Fees, Charges and Expenses of Trustee. Notwithstanding any provision to the contrary in the Indenture, but subject to the limitations set forth in the definition of Ordinary Trustee Fees and Expenses as defined in the Indenture, the Trustee shall be entitled to payment for reasonable fees for its services rendered under the Indenture and the Financing Agreement and reimbursement for all advances, counsel fees and other expenses reasonably made or incurred by the Trustee (including any co-Trustee) in connection with such services which shall be paid from time to time as provided in the Financing Agreement; provided that no such amounts shall be paid to the Trustee from the proceeds of the MBS. Prior to the MBS Delivery Date, upon an Event of Default under paragraph (b) under the heading “Events of Default” above, or after the MBS Delivery Date, upon an Event of Default under paragraph (a) under the heading “Events of Default” above as a result of a failure by Fannie Mae to make payment under the MBS, but only upon such an Event of Default, the Trustee shall have a lien upon the Trust Estate for Extraordinary Trustee Fees and Expenses incurred by it. The Issuer shall require the Borrower to indemnify and save harmless the Trustee against any liabilities which the Trustee may incur in the exercise and performance of its powers and duties under the Indenture, the Financing Agreement and the Regulatory Agreement which are not due to its own negligence or willful misconduct, and to reimburse the Trustee for any fees and expenses of the Trustee (including counsel fees and expenses) to the extent they exceed funds available under the Indenture for the payment thereof, subject only to the right of the Borrower to contest the reasonableness of any such fees or the necessity for any such expenses. The
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Trustee shall continue to perform its duties and obligations under the Indenture until such time as its resignation or removal is effective pursuant to the Indenture.
Merger or Consolidation of Trustee. Any corporation or association into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, ipso facto shall be and become successor Trustee under the Indenture and vested with all of the title to the Trust Estate and all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties to the Indenture, anything in the Indenture to the contrary notwithstanding.
Resignation by Trustee. The Trustee and any successor Trustee may at any time resign from the trusts created by the Indenture by giving 30 calendar days’ written notice to the Issuer and Fannie Mae, and such resignation shall only take effect upon the appointment, pursuant to the Indenture, of, and acceptance by, a successor Trustee. The successor Trustee shall give notice of such succession by first class mail, postage prepaid, to each Bondholder at the address of such Bondholder shown on the Bond Register.
Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing delivered to the Trustee and to Fannie Mae, and signed by the Issuer (or if an Event of Default shall have occurred and be continuing, by the owners of a majority in aggregate principal amount of the Bonds then Outstanding, in which event such instrument or instruments in writing shall also be delivered to the Issuer) provided that such removal shall not take effect until the appointment of a successor Trustee by the Issuer (or by the Bondholders).
Appointment of Successor Trustee. In case at any time the Trustee or any successor thereto shall resign or shall be removed or shall become incapable of acting, or shall be adjudged a s bankrupt or insolvent, or if a receiver, liquidator or conservator of such Trustee or of its property shall be appointed, or if any public officer shall take charge or control of such Trustee or of its property or affairs, a successor may be appointed by the Issuer with the approval of Fannie Mae (if it is not in default in its obligations under the MBS), or if Fannie Mae does not approve a successor the Issuer proposes to appoint, or if the Issuer is in default under the Indenture, by the holders of a majority in aggregate principal amount of the Bonds then Outstanding, excluding any Bonds held by or for the account of the Issuer, by an instrument or concurrent instruments in writing signed by such Bondholders, or their attorneys duly authorized in writing, and delivered to such successor Trustee, notification thereof being given to the Issuer, Fannie Mae, the Borrower and the predecessor Trustee. If in a proper case no appointment of a successor Trustee shall have been made pursuant to the foregoing provisions of this section within 45 days after the Trustee shall have given to the Issuer written notice as provided in the Indenture or after the occurrence of any other event requiring or authorizing such appointment, the Trustee or any Bondholder may, at the expense of the Borrower, apply to any court of competent jurisdiction to appoint a successor. The court may thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a successor Trustee.
Any Trustee appointed under the provisions of this section shall be a bank, trust company or national banking association, having a de signated office within the State , having trust powers, with prior experience as trustee under indentures under which multifamily housing revenue bonds of public agencies or authorities are issued, and having a capital and surplus acceptable to the Issuer , the Lender and Fannie Mae, willing and able to accept the office on reasonable and customary terms in light of the circumstances under which the appointment is tendered and authorized by law to perform all the duties imposed upon it by the Indenture , if there be such an institution meeting such qualifications willing to accept such appointment.
Transfer of Rights and Property to Successor Trustee. Any successor Trustee appointed under the Indenture shall execute, acknowledge and deliver to its predecessor Trustee, and also to the Issuer and Fannie Mae, and any Bondholder which shall request the same, an instrument accepting such appointment, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become fully vested with all moneys, estates, properties, rights, powers, duties and obligations of such predecessor Trustee, with like effect as if named in the Indenture as such Trustee, but the Trustee ceasing to act shall nevertheless, on the written request of the Issuer, Fannie Mae or the successor Trustee, execute, acknowledge and deliver such instruments of conveyance and further assurance and do such other things as reasonably may be required for more fully and certainly vesting and confirming in such successor Trustee all the right, title and interest of the predecessor Trustee in and to any properties held by it under the Indenture,
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and shall pay over, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions set forth in the Indenture. Should any deed, conveyance or instrument in writing from the Issuer be required by such successor Trustee for more fully and certainly vesting in and confirming to such successor Trustee any such moneys, estates, properties, rights, powers and duties, any and all such deeds, conveyances and instruments in writing, on request, and so far as may be authorized by law, shall be executed, acknowledged and delivered by the Issuer.
Collection of MBS Payments. The Trustee shall cause the MBS to be registered in the name of the Trustee or in the name of the nominee of the Trustee with such additional recitals as appropriate to indicate that the MBS is to be held by the Trustee in its capacity as Trustee under the Indenture subject to the provisions of the Indenture. In the event that any amount payable to the Trustee under the MBS is not received by the Trustee within one Business Day of the date such payment is due, the Trustee shall notify Fannie Mae or (if dir ected by Fannie Mae) the paying agent for the MBS by telephone (such notification to be immediately confirmed by Electronic Means ) that such payment has not been received in a timely manner and request that such payment be made by wire transfer of immediately available funds to the account of the Trustee or such custodian, as the case may be.
Requests from Rating Agency . The Trustee shall promptly respond in writing, or in such other manner as may be reasonably requested, to requests from the Rating Agency for information deemed necessary by the Rating Agency in order to maintain the rating assigned thereby to the Bonds . The Trustee shall promptly furnish any such requested information in its possession to the Rating Agency and shall, as may be reasonably requested by the Rating Agency, assist in efforts to obtain any necessary information from the Issuer or the Borrowe r or Fannie Mae as applicable.
Supplemental Indentures
Supplemental Indentures Effective upon Acceptance. For any one or more of the following purposes and at any time or from time to time, the Issuer and the Trustee may enter into a Supplemental Indenture which, upon the execution and delivery thereof by the Issuer and by the Trustee, and with the prior written consent of Fannie Mae, but without the necessity of consent of the Bondholders, shall be fully effective in accordance with its terms:
(a) To add to the covenants or agreements of the Issuer contained in the Indenture other covenants or agreements to be observed by the Issuer or to otherwise revise or amend the Indenture in a manner which are/is not materially adverse to the interests of the Bondholders; (b) To add to the limitations or restrictions contained in the Indenture other limitations or restrictions to be observed by the Issuer which are not contrary to or inconsistent with the provisions of the Indenture as theretofore in effect;
(c) To surrender any right, power or privilege reserved to or conferred upon the Issuer in the Indenture, provided that the surrender of such right, power or privilege is not contrary to or inconsistent with the covenants and agreements of the Issuer contained in the Indenture and is not materially adverse to the interests of the Bondholders;
(d) To confirm, as further assurance, any pledge of the Trust Estate under the Indenture and the subjection to any lien on or pledge of the Trust Estate created or to be created by the Indenture; (e) To appoint a co-trustee or successor Trustee or successor co-trustee; (f) To cure any ambiguity, supply any omission or cure or correct any defect or inconsistent provision in the Indenture; and
(g) To insert such provisions clarifying matters or questions arising under the Indenture as are necessary or desirable and are not materially adverse to the interests of the Bondholders.
Supplemental Indentures Requiring Consent of Bondholders. In addition to those amendments to the Indenture which are authorized under the heading “Supplemental Indentures Effective Upon Acceptance” above, any
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modification or amendment of the Indenture may be made by a Supplemental Indenture with the written consent, given as thereinafter provided under the heading “Consent of Bondholders” below, of Fannie Mae and the holders of at least two thirds in aggregate principal amount of the Bonds Outstanding at the time such consent is given; provided, however, that no such modification or amendment shall (a) permit a change in the terms of redemption or maturity of the principal amount of any Outstanding Bond or an extension of the date for payment of any installment of interest thereon or a reduction in the principal amount of, premium, if any, or the rate of interest on any Outstanding Bond without the consent of the holder of such Bond, (b) reduce the proportion of Bonds the consent of the holders of which is required to effect any such modification or amendment or to effectuate an acceleration of the Bonds prior to maturity, (c) permit the creation of a lien on the Trust Estate pledged under the Indenture prior to or on a parity with the lien of the Indenture, (d) deprive the holders of the Bonds of the lien created by the Indenture upon the Trust Estate (except as expressly provided in the Indenture), without (with respect to (b) through (d)) the consent of the holders of all Bonds then Outstanding, or (e) change or modify any of the rights or obligations of the Trustee without the written consent thereto of the Trustee.
Consent of Bondholders. The Issuer and the Trustee may, at any time, execute and deliver a Supplemental Indenture making a modification or amendment permitted by the provisions under the heading “Supplemental Indentures Requiring Consent of Bondholders” above, to take effect when and as provided in this section. A copy of such Supplemental Indenture (or brief summary thereof or reference thereto in a form approved by the Trustee), together with a request to Bondholders for their consent thereto in form satisfactory to the Trustee, shall be mailed by the Trustee to the Bondholders. Such Supplemental Indenture shall not be effective unless there shall have been filed with the Trustee (a) the written consents of Fannie Mae and the holders of the proportion of Outstanding Bonds specified under the heading “Supplemental Indentures Requiring Consent of Bondholders” above, and (b) an opinion of Bond Counsel stating that such Supplemental Indenture has been duly and lawfully entered into by the Issuer in accordance with the provisions of the Indenture, is authorized or permitted by the provisions of the Indenture, and, when effective, will be valid and binding upon the Issuer. Each such consent of the Bondholders shall be effective only if accompanied by proof of the holding, at the date of such consent, of the Bonds with respect to which such consent is given, which proof shall be such as is permitted by the Indenture. A certificate or certificates by the Trustee that it has examined such proof and that such proo f is sufficient under the provisions of the Indenture shall be conclusive that the consents have been given by the holders of the Bonds described in such certificate or certificates.
Any such consent shall be binding upon the holder of the Bonds giving such consent and upon any subsequent holder of such Bonds and of any Bonds issued in exchange therefor (whether or not such subsequent holder thereof has notice thereof). At any time after the holders of the required proportion of Bonds shall have filed the ir consents to such Supplemental Indenture, the Trustee shall make and file with the Issuer a written statement that the holders of such required proportion of Bonds have filed and given such consents. Such written statement shall be conclusive that such consents have been so filed and have been given. Within 90 days after filing such statement, the Trustee shall mail to the Bondholders a notice stating in substance that such Supplemental Indenture (which may be referred to as a Supplemental Indenture executed by the Issuer on a stated date, a copy of which is on file with the Trustee) has been consented to by the holders of the required proportion of Bonds and will be effective as provided in this section, but failure to mail such notice shall not prevent such Supplemental Indenture from becoming ef fective and binding as provided in this section. The Trustee shall file with the Issuer proof of the mailing of such notice to the Bondholders.
A record, consisting of the papers required or permitted by this section to be filed with the Trustee, shall be proof of the matters therein stated. Such Supplemental Indenture making such modification or amendment shall be deemed conclusively binding upon the Issuer, the Trustee and the holders of all Bonds upon the execution thereof and the filing by the Trustee with the Issuer of the statement that the required proportion of Bondholders have consented thereto.
The Issuer may conclusively rely upon the Trustee’s determination that the requirements of this section have been satisfied.
Modification By Unanimous Consent . Notwithstanding anything contained in the foregoing provisions of the Indenture , the terms and provisions of the Indenture and the rights and obligations of the Issuer and the Bondholders under the Indenture, in any particular, may be modified or amended in any respect upon execution and delivery of a Supplemental Indenture by the Issuer and the Trustee making such modification or amendment and the consent to such Supplemental Indenture of Fannie Mae and the holders of al l of the Bonds then Outstanding, such consent to be given and proved as provided under the heading “Consent of Bondholders” above except that no notice to Bondholders shall be required; provided, however, that no such modification or amendment shall change or modify
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any of the rights or obligations of the Trustee without the written assent thereto of the Trustee, in addition to the consent of the Bondholders.
Miscellaneous Provisions
No Recourse on Bonds. All covenants, stipulations, promises, agreements and obligations of the Issuer contained in the Indenture shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Issuer and not of any of its officers or employees or members of its governing body, past, present or future, in his or her individual capacity, and n o recourse shall be had for the payment of the principal of, premium, if any, or Redemption Price or purchase price of or interest on the Bonds or for any claim based thereon or on the Indenture or any other Issuer Document or the Financing Documents against any such member, officer, employee or agent of the Issuer, past present or future, or any natural person executing the Bonds.
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APPENDIX D
SUMMARY OF CERTAIN PROVISIONS OF THE FINANCING AGREEMENT The following is a summary of certain provisions of the Financing Agreement which are not described elsewhere in the Official Statement. This summary does not purport to be comprehensive, and reference should be made to the Financing Agreement for a full and complete statement of its provisions.
Definitions
Capitalized terms used but not defined herein shall have the meanings given them in the Indenture and the Financing Agreement.
General Terms of the Financing
The Issuer has authorized the issuance of the Bonds in the aggregate principal amount set forth in the Financing Agreement and Bonds in such amount shall be issued and Outstanding as of the Closing Date . The obligations of the Issuer, the Trustee and the Borrower under the Financing Agreement are expressly conditioned upon (i) the sale, issuance and delivery of the Bonds, (ii) receipt by the Trustee of the amounts set forth in the Indenture, and (iii) the making of the Mortgage Loan by the Lender. Neither the Issuer, the Lender, the Trustee nor Fannie Mae shall have any liability for any fees, costs or expenses, includi ng, without li mitation, issuance costs relating to the Bonds; all of such fees, costs and expenses shall be paid by the Borrower.
Sources, Deposits and Uses
Upon the issuance and delivery of the Bonds, the Lender will make the Mortgage Loan to the Borrower.
Proceeds of the Mortgage Loan shall be applied to pay the Prior Loan in full on the Prior Loan Payment Date. To the extent proceeds of the Mortgage Loan remain undisbursed following disbursements made on the Closing Date and the Prior Loan Payment Date, the Lender will deliver funds to the Trustee for deposit into the Revenue Fund to be applied in accordance with to the Indenture. The Trustee shall apply the proceeds of the Bonds as provided in the Indenture (i) to secure the Bonds until the MBS Delivery Date and (ii) to purchase the MBS on the MBS Delivery Date. The Borrower accepts the Mortgage Loan from the Lender, upon the terms and conditions set for th in the Financing Agreement, in the Mortgage Loan Documents and in the Indenture, and subject to the terms and conditions of the Regulatory Agreement. The Issuer has caused the proceeds of the Bonds to be provided to the Trustee for deposit to the Bond Proceeds Fund. The Borrower acknowledges its obligation to pay all amounts necessary to pay principal of, premium, if any, and interest on the Bonds as provided in the Indenture. The Borrower has made arrangements for the delivery to the Trustee of the Bond proceeds, the MBS and of certain other Eligible Funds as contemplated in the Financing Agreement and in the Indenture. Payments on the MBS received by the Trustee shall be credited to amounts due from the Borrower for payment of principal of, premium, if any, and interest on the Bonds.
Notification of Prepayment of Mortgage Note
The Borrower shall notify the Trustee promptly of any prepayment of the Mortgage Note, whether upon acceleration, by reason of application of insurance or condemnation proceeds, optional prepayment or otherwise. If such prepayment results in revisions to the Mortgage Loan Amortization Schedule, the Borrower shall direct the Lender to provide the revised Mortgage Loan Amortization Schedule to the Trustee.
Events of Default
Each of the following shall constitute an event of default under the Financing Agreement, and the term “Event of Default” shall mean, whenever used in the Financing Agreement, any one or more of the following events:
(i) Failure by the Borrower to pay any amounts due under th e Financing Agreement at the times and in the amounts required by the Financing Agreement; or
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(ii) Failure by the Borrower to observe or perform any covenants, agreements or obligations in the Financing Agreement on its part to be observed or performed (other than as provided in clause (i) above) for a period of thirty (30) days after receipt of written notice specifying such failure and requesting that it be remedied, given to the Borrower by any party to the Financing Agreement; provided, however, that if said failure shall be such that it cannot be corrected within such period, it shall not const itute an Event of Default if the failure is correctable without material adverse effect on the Bonds and if corrective action is instituted by the Borrower within such period and diligently pursued until the failure is corrected, and provided further that any such failure shall have been cured within ninety (90) days of receipt of notice of such failure; or
(iii) Breach of any of the covenants, agreements or obligations of the Borrower under or the occurrence of a default which is continuing under the Regulatory Agreement, including any exhibits to any of the foregoing; or
(iv) The occurrence of an Event of Default caused by the Borrower under and as defined in the Indenture or under any of the other Financing Documents.
Nothing contained in this section is intended to amend or modify any of the provisions of the Mortgage Loan Documents or to bind the Borrower, the Lender or Fannie Mae to any notice and cure periods other than as expressly set forth in the Mortgage Loan Documents.
Remedies Upon an Event of Default
(a) Subject to subsection (d) below, whenever any Event of Default shall have occurred and be continuing, the Issuer or the Trustee may take any one or more of the following remedial steps:
(i) By any suit, action or proceeding, pursue all remedies now or thereafter existing at law or in equity to collect all amounts then due and thereafter to become due under th e Financing Agreement, to enforce the performance of any covenant, obligation or agreement of the Borrower under the Financing Agreement (subject to the nonrecourse provisions of the Financing Agreement and the Regulatory Agreement) or to enjoin acts or things which may be unlawful or in violation of the rights of the Issuer or the Trustee.
(ii) Take whatever other action at law or in equity may appear necessary or desirable to enforce any monetary obligation of the Borrower under the Financing Agreement or to enforce any other covenant, obligation or agreement of the Borrower under (1) the Financing Agreement or (2) the Regulatory Agreement.
(iii) Have access to and inspect, examine, audit and make copies of the books and records and any and all accounts, data and income tax and other tax returns of the Borrower. (b) The provisions of subsection (a) above are subject to the condition that if, after any Event of Default, except a default under the Regulatory Agreement, (i) all amounts which would then be payable under the Financing Agreement by the Borrower if such Event of Default had not occurred and was not continuing shall have been paid by or on behalf of the Borrower, and (ii) the Borrower shall have also performed all other obligations in respect of which it is then in default under the Financing Agreement and shall have paid the reasonable charges and expenses of the Issuer and the Trustee, including reasonable attorney fees and expenses paid or incurred in connection with such default, then and in every such case, such Event of Default may be waived and annulled by the Trustee, but no such waiver or annulment shall extend to or affect any subsequent Event of Default or impair any right or remedy consequent thereon.
(c) Subject to the limitations of the Regulatory Agreement and the Financing Agreement, the Issuer, without the consent of the Trustee, but only after written notice to the Trustee, the Borrower, the Lender and Fannie Mae, may take whatever action at law or in equity may appear necessary or desirable to enforce performanc e and observance of any Reserved Right of the Issuer; provided that, the Issuer may not (i) terminate the Financing
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Agreement or cause the Mortgage Loan to become due and payable, (ii) cause the Trustee to declare the principal of all Bonds then Outstanding and the interest accrued thereon to be immediately due and payable, or cause the Trustee to accelerate, foreclose or take any other action or seek other remedies under the Financing Documents, the Mortgage Loan Documents or any other documents contemplated thereby or by the Financing Agreement to obtain such performance or observance, (iii) cause the acceleration, foreclosure or taking of any other action or the seeking of any remedies under the Mortgage Loan Documents, (iv) initiate or take any action which may have the effect, directly or indirectly, of impairing the ability of the Borrower to timely pay the principa l, interest and other amounts due under the Mortgage Loan, or (v) interfere with or attempt to influence the exercise by Fannie Mae of any of its rights under the Financing Documents or the Mortgage Loan Documents. (d) Except as required to be deposited in the Rebate Fund pursuant to the Financing Documents any amounts collected pursuant to action taken under this section shall, after the payment of the costs and expenses of the proceedings resulting in the collection of such moneys and of the expenses, liabilities and advances incurred or made by the Trustee, the Issuer, the Lender or Fannie Mae and their respective counsel, be applied in accordance with the provisions of the Indenture. No action taken pursuant to this section shall relieve the Borrower from the Borrower’s obligations pursuant to the Financing Agreement.
(e) No remedy conferred upon or reserved to the Issuer or the Trustee in the Financing Agreement is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy now or thereafter existing pursuant to any other agreement at law or in equity or by statute.
(f) Notwithstanding any other provision of the Financing Agreement to the contrary, after the MBS Delivery Date, so long as Fannie Mae is not in default under the MBS, none of the Issuer, the Trustee or any Person under their control shall exercise any remedies or direct any proceedings under the Financing Agreement or the Mortgage Loan Documents, other than to (i) enforce rights under the MBS, (ii) enforce the tax covenants in the Indenture, the Financing Agreement and the Tax Certificate, or (iii) enforce rights of specific performance under the Regulatory Agreement; provided, however, that any enforcement under (ii) or (iii) above shall not include seeking monetary damages.
Notice of Default: Rights To Cure
The Issuer and the Trustee shall each give notice to the other and to the City and the Lender of the occurrence of any Event of Default by the Borrower under the Financing Agreement of which it has actual knowledge. The Lender and the City shall each have the right, but not the obligation, to cure any such default by the Borrower, and upon performance by the Lender or the City to the satisfaction of the Issuer and the Trustee of the covenant, agreement or obligation of the Borrower with respect to which an Event of Default has occurred, the parties to the Financing Agreement shall be restored to their former respective positions, it being agreed that the Lender and the City shall each have the right to repayment from the Borrower of moneys it has expended and any other appropriate redress for actions it has taken to cure any default by the Borrower; provided that the Borrower’s reimbursement obligation shall be non-recourse to the same extent as the underlying obligation is non-recourse to the Borrower.
Amendment
The Financing Agreement and all other documents contemplated by the Financing Agreement to which the Issuer is a party may be amended or terminated only if permitted by the Indenture, and no amendment to the Financing Agreement shall be binding upon, any party to the Financing Agreement until such amendment is reduced to writing and executed by the parties thereto; provided that no amendment, supplement or other modification to the Financing Agreement or any other Financing Document shall be effective without the prior written consent of Fannie Mae.
Limited Liability of the Issuer
The Issuer shall not be obligated to pay the principal (or Redemption Price) of or interest on the Bonds, except from the Trust Estate. Neither the faith and credit nor the taxing power of the State or any political subdivision thereof, nor the faith and credit of the Issuer or any member is pledged to the payment of the principal (or Redemption
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Price) of, premium, if any, or interest on the Bonds. The Issuer shall not be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Financing Agreement, the Bonds or the Indenture, except only to the extent amounts are received for the payment thereof from the Borrower under this Financing Agreement or from the MBS.
The Borrower acknowledges that the Issuer’s sole source of moneys to repay the Bonds will be provided by the Trust Estate, and agrees that if the payments to be made under the Financing Agreement shall ever prove insufficient to pay all principal (or Redemption Price) of, premium, if any, and interest on the Bonds as the same shall become due (whether by maturity, redemption, acceleration or otherwise), then upon notice from the Trustee, the Borrower shall pay such amounts as are required from time to time to prevent any deficiency or default in the payment of such principal (or Redemption Price) of, premium, if any, or interest, including, but not limited to, any deficiency caused by acts, omissions, nonfeasance or malfeasance on the part of the Trustee, the Borrower, the Issuer or any third party, subject to any right of reimbursement from the Trustee, the Issuer or any such third party, as the case may be, therefor.
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APPENDIX E
SUMMARY OF CERTAIN PROVISIONS OF THE REGULATORY AGREEMENT The following is a summary of certain provisions of the Regulatory Agreement which are not described elsewhere in the Official Statement. This summary does not purport to be comprehensive, and reference should be made to the Regulatory Agreement for a full and complete statement of its provisions. Capitalized terms used but not defined herein shall have the meanings given them in the Indenture and the Regulatory Agreement.
Occupancy Requirement
Twenty percent (20%) of the Units shall be rented to and occupied by or, if vacant, available for occupancy by Low Income Households. The remaining Units may be rented at market rate rents. Notwithstanding anything in the Regulatory Agreement, no Tenant occupying a Unit as of the date of the Regulatory Agreement shall be required to vacate such Unit in order to ensure compliance with the occupancy requirements of this section.
Allowable Rent
Subject to the provisions of the Regulatory Agreement, the Rent charged to Tenants of the Low Income Units shall not exceed one-twelfth (1/12) of thirty percent of eighty percent (80%) of Median Income, adjusted for Assumed Household Size. Initial rents for the Affordable Units shall be approved by the City prior to occupancy, which shall be approved if they comply with the Regulatory Agreement. All rent increases for the Affordable Units shall also be subject to City approval. The City shall provide the Owner with a schedule of maximum permissible rents for the Affordable Units annually.
Increase Income of Tenants
Non-Qualifying Household. If, upon recertification of the income of a Tenant of an Affordable Unit, the Owner determines that a former Low Income Household has an Adjusted Income exceeding the maximum qualifying income for a Low Income Household, such Tenant shall be permitted t o continue occupying the Unit and upon expiration of the Tenant’s lease and upon sixty (60) days written notice, the Rent may be increased to the fair market rent, and the next available Unit shall be rented to a Low Income Household, as applicable, to meet the requirements of the Regulatory Agreement.
Termination of Occupancy . Upon termination of occupancy of an Affordable Unit by a Tenant, such Affordable Unit shall be deemed to be continuously occupied by a Low Income Household until such Affordable Unit is reoccupied by a Low Income Household. In any event, the occupancy requirements set forth in the Regulatory Agreement shall be maintained for the Term of the Regulatory Agreement.
Other Rules
If the Development is subject to state or federal rules governing funding sources such as low-income housing tax credits (the “Other Rules”), the provisions of the Other Rules regarding assumed household size, shall apply in place of the provisions set for th in the applicable sections of the Regulatory Agreement. Upon such time as the requirements of the Other Rules no longer apply to the Development, the terms and conditions of the Regulatory Agreement shall govern the occupancy of this Development.
Nondiscrimination
The Owner shall not discriminate or segregate in the development, construction, use, enjoyment, occupancy, conveyance, lease, sublease, or rental of any part of the Property on the basis of race, color, ancestry, national origin, religion, sex, sexual preference or orientation, age, marital status, family status, source of income, physical or mental disability, Acquired Immune Deficiency Syndrome (AIDS) or AIDS-related conditions (ARC) acquired or perceived, or any other arbitrary basis. Owner shall otherwise comply with all applicable local, state, and federal laws concerning discrimination in housing.
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Income Certification
The Qualifying Households renting any of the Affordable Units shall complete and provide to the Owner, immediately prior to initial occupancy and annually thereafter, income certifications. The Owner shall make a good faith effort to verify that the incom e provided by an applicant or occupying household in an income certification is accurate by taking two or more of the following steps as a part of the verification process: (a) obtain a pay stub for the most recent pay period; (b) obtain an income tax ret urn for the most recent tax year; (c) conduct a credit agency or similar search; (d) obtain an income verification form from the applicant's current employer; (e) obtain an income verification form from the Social Security Administration and/or the Califor nia Department of Social Services if the applicant receives assistance from either of such agencies; or (f) if the applicant is unemployed and has no such tax return, obtain another form of independent verification.
Covenants to Run With the Land
The City and the Owner declare their express intent that the covenants and restrictions set forth in the Regulatory Agreement shall run with the land, and shall bind all successors in title to the Property, provided, however, that on the expiration of the Term of the Regulatory Agreement said covenants and restrictions shall expire.
Recording and Filing
The Owner shall cause the Regulatory Agreement, and all amendments and supplements to it, to be recorded in the Official Records of the County of Monterey.
Amendments
The Regulatory Agreement may be amended only by a written instrument executed by all the parties thereto or their successors in title, and duly recorded in the real property records of the County of Monterey.
Severability
If any provision of the Regulatory Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions of the Regulatory Agreement shall not in any way be affected or impaired thereby.
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APPENDIX F
BOOK-ENTRY SYSTEM
The information in this section concerning DTC and DTC’s book -entry system has been obtained from sources that the Issuer and the Borrower believe to be reliable, but neither the Issuer, the Underwriter nor the Borrower take responsibility for the accuracy thereof.
The Depository Trust Company (“DTC”), Brooklyn, New York , will act as securities depository for the Bonds. The Bonds 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 bond will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC or held by the Trustee.
DTC, the world’s largest 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 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”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“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 bonds are to be accomplished by entries made on the records of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in bonds, except in the event that use of the book-entry system for the bonds is discontinued.
To facilitate subsequent transfers, all Bonds 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 Bond s 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 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds 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.
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 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the transaction documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. I n the alternative, Beneficial
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Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, the amount of the interest of each Direct Participant in such issue to be redeemed shall be determined in accordance with the applicable procedures of DTC.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the rec ord date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Issuer, 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 or its nominee, or the Issuer, subject to any statutory or regulatory requirements as may be i n effect from time to time. Payment of principal and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer, disbursement of such payments to Direct Participant s will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Issuer. Under such circumstances, in the event that a successor depository is not obtained, bonds are required to be printed and delivered.
The Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, the bonds will be printed and delivered.
The information in this section concerning DTC and DTC’s book -entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof.
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APPENDIX G
FORM OF CONTINUING DISCLOSURE AGREEMENT
$30,825,000*
Marina Joint Powers Financing Authority
Multifamily Housing Revenue Bonds
(Fannie Mae MBS-Secured) Series 2026
(Preston Park Apartments)
This Continuing Disclosure Agreement, dated as of January 1, 2026 (this “Continuing Disclosure Agreement”), is executed and delivered by Preston Park Sustainable Community Nonprofit Corporation, a California nonprofit corporation (the “Borrower”), and Applied Best Practices, LLC, as dissemination agent (the “Dissemination Agent”). The above-captioned bonds (the “Bonds”) are being issued pursuant to a n Indenture of Trust, dated as of January 1, 2026 (the “Indenture”), between the Marina Joint Powers Financing Authority (the “Issuer”) and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). Pursuant to the Indenture and Financing Agreement, dated as of January 1, 2026 , among the Issuer, the Trustee , and the Borrower (the “ Financing Agreement”), the Dissemination Agent and the Borrower covenant and agree as follows:
Section 1. Purpose of this Continuing Disclosure Agreement. This Continuing Disclosure Agreement is being executed and delivered by the Borrower and the Dissemination Agent for the benefit of the holders of the Bonds and in order to assist the Participating Underwriter in complying with the Rule (defined below). The Borrower and the Dissemination Agent acknowledge that the Issuer has undertaken no responsibility with respect to any reports, notices or disclosures provided or required under this Continuin g Disclosure Agreement, and has no liability to any person, including any holder of the Bonds or Beneficial Owner, with respect to any such reports, notices or disclosures.
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Continuing Disclosure Agreement unless otherwise defined in this Section 2, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the Borrower pursuant to, and as described in, Sections 3 and 4 of this Continuing Disclosure Agreement. “Audited Financial Statements” means, in the case of the Borrower, the annual audited financial statements prepared in accordance with generally accepted accounting principles, if any. “Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. “Disclosure Representative” shall mean the administrator of the Project or his or her designee, or such other person as the Borrower shall designate in writing to the Dissemination Agent from time to time. “Dissemination Agent” shall mean Applied Best Practices, LL C, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Borrower and which has filed with the Trustee a written acceptance of such designation. “Listed Events” shall mean any of the events listed in Section 5(a) of this Continuing Disclosure Agreement. “MSRB” means the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934. All documents provided to the MSRB shall be in an electronic format and accompanied by identifying information, as prescrib ed by the MSRB. Initially, all document submissions to the MSRB pursuant to this Continuing Disclosure Agreement shall use the MSRB’s Electronic Municipal Market Access (EMMA) system at www.emma.msrb.org.
* Preliminary; subject to change.
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“Participating Underwriter ” means Stifel, Nicolaus & Company, Incorporated , and its successors and assigns.
“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
Section 3. Provision of Annual Reports.
(a) The Borrower will, or will cause the Dissemination Agent to, not later than 180 days following the end of the Borrower’s fiscal year, commencing with the fiscal year ending on December 31, 2026, provide to the MSRB an Annual Report which is consistent with the requirements described below. No later than 15 Business Days prior to said date, the Borrower will provide the Annual Report to the Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package and may cross reference other information, provided that the audited financial statements for the prior calendar year of the Borrower may be submitted separately from t he balance of the Annual Report.
(b) If by 15 Business Days prior to the date specified in subsection (a) for providing the Annual Report to the MSRB, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent will contact the Disclosure Representative to determine if the Borrower is in compliance with subsection (a). (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection (a), the Dissemination Agent will send in a timely manner a notice to the MSRB in substantially the form attached as Exhibit B to this Continuing Disclosure Agreement. (d) The Dissemination Agent will file a report with the Borrower and (if the Dissemination Agent is not the Trustee) the Trustee certifying that the Annual Report has been provided pursuant to this Continuing Disclosure Agreement, stating the date it was provided.
Section 4. Content of Annual Reports . The Borrower’s Annual Report will contain or incorporate by reference the financial information with respect to the Project, provided at least annually, of the type included in Exhibit A hereto, which Annual Report may, but is not required to, include Audited Financial Statements. If the Borrower’s Audited Financial Statements are not available by the time the Annual Report is required to be filed, the Annual Report will contain unaudited financial statements, and the Audited Financial Statements will be filed in the same manner as the Annual Report when and if they become available.
Any or all of the items described in Exhibit A may be incorporated by reference from other documents, including official statements of debt issues with respect to which the Borrower is an “Obligated Person” (as defined by the Rule), which have been filed with the MSRB. The Borrower will clearly identify each such other document so incorporated by reference.
Each annual report submitted hereunder shall be in readable portable document format (“PDF”) or other acceptable electronic form.
Section 5. Reporting of Listed Events.
(a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events (each, a “Listed Event”):
(i) Principal and interest payment delinquencies;
(ii) Non-payment related defaults, if material;
(iii) Unscheduled draws on debt service reserves reflecting financial difficulty;
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(iv) Unscheduled draws on credit enhancements reflecting financial difficulty; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 -TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;
(vii) Modifications to rights of holders of the Bonds, if material; (viii) Bond calls, if material, and tender offers;
(ix) Defeasances;
(x) Release, substitution or sale of property securing repayment of the Bonds, if material; (xi) Rating changes;
(xii) Bankruptcy, insolvency, receivership or similar event of the Borrower. For purposes of this clause (xii), any such event shall be considered to have occurred when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Borrower in a proceeding under the U.S.
Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Borrower, 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 Borrower; (xiii) The consummation of a merger, consolidation, or acquisition involving the Borrower or the sale of all or substantially all of the assets of the Borrower, 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; (xiv) Appointment of a successor or additional trustee or paying agent or the change of the name of a trustee or paying agent, if material;
(xv) Incurrence of a financial obligation of the Borrower, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the Borrower, any of which affect security holders, if material;
(xvi) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the Borrower, any of which reflect financial difficulties ; and
(xvii) Delivery of the MBS and/or the Pool Number from Fannie Mae and any extension of the MBS Delivery Date Deadline ; notice of any extension of the MBS Delivery Date Deadline will be in the form attached as Exhibit D or such other form as may be approved by the Dissemination Agent.
For purposes of clauses (xv) and (xvi) of this Section 5(a), “financial obligation” is as contemplated by Exchange Act Release No. 34-83885; File No. S7-01-17 (the “Adopting Release”). (b) The Dissemination Agent shall, within three (3) Business Days of obtaining actual knowledge of the occurrence of any potential Listed Event, pursuant to subsection (c) of this Section 5 or otherwise, provide the Disclosure Representative with notice (by telephone or by email). While the Dissemination Agent is also the Trustee, the Dissemination Agent shall be deemed to have actual knowledge of those items listed in clauses (i), (iii) (solely with respect to funds held by the Trustee), (iv), (v), (vii) , (viii), (ix), (x) and (xiv) above without the Dissemination
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Agent having received notice of such event. While the Dissemination Agent is not also the Trustee, the Dissemination Agent shall not be deemed to have actual knowledge of any items listed in clauses (i) - (xiv) above without the Dissemination Agent’s having received written notice of such event. For purposes of providing notice to the Disclosure Representative, the Dissemination Agent shall assume that the unscheduled draws described in clauses (iii) and (iv) reflect financial difficulty.
(c) Whenever the Borrower obtains knowledge of the occurrence of a potential Listed Event , the Borrower shall, within five (5) Business Days of obtaining such knowledge and in any event no more than eight (8) Business Days after the occurrence of such event, determine if such event is in fact a Listed Event that is required by the Rule to be disclosed and provide the Dissemination Agent with notice and instructions pursuant to subsections (d) below.
(d) If the Borrower has determined that a Listed Event is required to be disclosed then the Borrower shall prepare a written notice describing the Listed Event and provide the same to the Dissemination Agent along with instructions to file the same pursuant to subsection (e) below. (e) If the Dissemination Agent has been provided with a written notice describing a Listed Event pursuant to subsection (c) of this Section 5 or otherwise, and is instructed by the Borrower to report the occurrence of such Listed Event, the Dissemination Agent shall, within two (2) Business Days of its receipt of such written notice and in any event no more than ten (10) Business Days after the occurrence of the Listed Event, file the notice with the MSRB and send a copy to the Borrower.
Section 6. Amendment; Waiver . Notwithstanding any other provision of this Continuing Disclosure Agreement, the Borrower and the Dissemination Agent may amend this Continuing Disclosure Agreement (and the Dissemination Agent will agree to any amendment so requested by the Borrower un less such amendment adversely affects its rights, duties, protections, immunities, indemnities or standard of care, as determined by the Dissemination Agent) and any provision of this Continuing Disclosure Agreement may be waiv ed, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions described under paragraph (a) under “Provision of Annual Reports,” “Contents of Annual Reports” or paragraph (a) under “Reporting of Listed Events,” 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 (as defined in the Rule) with respect to the Bonds or the type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) The amendment or waiver either (i) is approved by the Holders of the Bonds in the same manner as 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.
In the event of any amendment or waiver of a provision of this Continuing Disclosure Agreement, the Borrower will describe such amendment in the next Annual Report and will include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information being presented by the Borrower. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change will be given in the same manner as for a Listed Event under Section 5(e) hereof and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting princip les and those prepared on the basis of the former accounting principles.
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Section 7. Default . In the event of a failure of the Borrower or the Dissemination Agent to comply with any provision of this Continuing Disclosure Agreement, and such failure to comply continues beyond a period of thirty (30) days following written notice to the Borrower, the Borrower or any Holder or Beneficial Owner of the Bonds may, take such actions as may be necessary and appropriate, including seeking, or specific performance by court order, to cause the Borrower or the Dissemination Agent, as the case may be, to comply with its obligations under this Continuing Disclosure Agreement. A default under this Continuing Disclosure Agreement will not be deemed an Event of Default under the Indenture or the Financing Agreement, and the sole remedy under this Continuing Disclosure Agreement in the event of any failure of the Borrower or the Dissemination Agent to comply with this Continuing Disclosure Agreement will be an action to compel performance.
Section 8. Beneficiaries . This Continuing Disclosure Agreement will inure solely to the benefit of the Borrower, the Dissemination Agent, the Participating Underwriter and Holders from time to time of the Bonds and will create no rights in any other person or entity.
Section 9. Additional Information. Nothing in this Continuing Disclosure Agreement shall be deemed to prevent the Borrower from disseminating any other information, using the means of dissemination set forth in this Continuing Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Continuing Disclosure Agreement. If the Borrower chooses to include any informa tion in any Annual Report or notice of occurrence of a Listed Event , in addition to that which is specifically required by this Continuing Disclosure Agreement, the Borrower shall have no obligation under this Continuing Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 10. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Continuing Disclosure Agreement. The Dissemination Agent’s obligation to deliver the information at the times and with the contents described herein shall be limited to the extent the Borrower has provided such information to the Dissemination Agent as required by this Continuing Disclosure Agreement. The Dissemination Agent shall have no duty with respect to the content of any disclosures or notice made pursuant to the terms hereof. The Dissemination Agent shall have no duty or obligation to review or verify any information, disclosures or notices provided to it by the Borrower and shall not be deemed to be acting in any fiduciary capacity for the Issuer, the Holders of the Bonds or any other party. The Dissemination Agent shall have no responsibility for the Borrower’s failure to report to the Dissemination Agent a Listed Event or a duty to determine the materiality thereof. The Dissemination Agent shall have no duty to determine, or liability for failing to determine, whether the Borrower has complied with this Continuing Disclosure Agreement. The Dissemination Agent may conclusively rely upon Certifications of the Borrower at all times.
The obligations of the Borrower under this Section 10 shall survive resignation or removal of the Dissemination Agent and defeasance, redemption or payment of the Bonds. (b) The Dissemination Agent may, from time to time, consult with legal counsel (either in -house or external) of its own choosing in the event of any disagreement or controversy, or question or doubt as to the construction of any of the provisions hereof or its respective duties hereunder, and shall not incur any liability and shall be fully protected in acting in good faith upon the advice of such legal counsel. The reasonable fees and expenses of such counsel shall be payable by the Borrower.
(c) All documents, reports, notices, statements, information and other materials provided to the MSRB under this Continuing Disclosure Agreement shall be provided in an electronic format and accompanied by identifying information as prescribed by the MSRB.
Section 11. Notices . All notices, requests, demands or other communications to or upon the respective parties hereto shall be deemed to have been duly given or made when delivered personally or by mail (including electronic mail) to the party to which such notice, request, dem and or other communication is required or permitted to be given or made under this Continuing Disclosure Agreement and addressed as set forth below:
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If to the Borrower:
Preston Park Sustainable Community Nonprofit Corporation c/o City of Marina
211 Hillcrest Avenue
Marina, CA 93933
Attention: Executive Director
Telephone: (831) 884-1278
Email: [email protected]
If to the Dissemination Agent:
Applied Best Practices, LLC
19900 MacArthur Boulevard, Suite 1100
Irvine, CA 92612
Attention: Jim Fabian
Telephone: (949) 246-2344
Email: [email protected]
Section 12. Governing Law. This Continuing Disclosure Agreement shall be governed by the laws of the State of California.
Section 13. Termination of this Continuing Disclosure Agreement. The Borrower or the Dissemination Agent may terminate this Continuing Disclosure Agreement by giving written notice to the other party at least 30 days prior to such termination. The Dissemination Agent shall be fully discharged at the time any such te rmination is effective. The Borrower’s and the Dissemination Agent’s obligations under this Continuing Disclosure Agreement 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 Borrower shall give notice of such termination in a filing with the MSRB.
Section 14. Counterparts. This Continuing Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
[Signature pages to follow]
EXHIBIT H
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IN WITNESS WHEREOF, the parties hereto have caused this Continuing Disclosure Agreement to be executed by their duly authorized representatives as of the date set forth above.
PRESTON PARK SUSTAINABLE COMMUNITY NONPROFIT
CORPORATION, a California nonprofit public benefit corporation
By;
Layne Long
Executive Director
[Signatures continue on following page]
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G-8
[Dissemination Agent’s Signature Page to Continuing Disclosure Agreement]
APPLIED BEST PRACTICES, LLC, as Dissemination
Agent
By:
Authorized Officer
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EXHIBIT A
ANNUAL REPORT
$30,825,000*
Marina Joint Powers Financing Authority
Multifamily Housing Revenue Bonds
(Fannie Mae MBS-Secured) Series 2026
(Preston Park Apartments)
CUSIP: _______
Annual report for the period ending [December 31], ______
THE PROJECT
Name of the Project: Preston Park Apartments
Address: 682 Wahl Court, Marina, CA 93933
Number of Units:
INFORMATION ON THE BONDS AND THE MBS
Original principal amount of Bonds:
Outstanding principal amount of Bonds:
MBS Pool Number:
MBS CUSIP Number:
Original principal amount of the MBS:
Outstanding principal amount of the MBS:
OPERATING HISTORY OF THE PROJECT
The tables set forth below offer a summary of the operating results of the Project for fiscal year ended [December 31], _______, as derived from the Borrower’s audited financial statements [or unaudited financial statements].
Financial Results for
Fiscal Year Ending December 31, ______
Revenues
Operating Expenses1
Net Operating Income
Debt Service on the Bonds
Net Income (Loss)
Debt Service Coverage Ratio
_________________________
1 Excludes depreciation and other non-cash expenses.
Occupancy Results for
Fiscal Year Ending December 31, ______
Physical Occupancy ____%
Economic Occupancy1 _____%
_________________________
1 The physical occupancy rate is the proportion of units that are occupied or leased by tenants. The economic occupancy rate is the proportion of the gross potential rent that is actually collected. As such, the economic occupancy takes into consideration items such as model units, employee units, discounted units, rent incentives, loss to lease and bad debt expense.
* Preliminary; subject to change.
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G-10
AUDITED FINANCIAL STATEMENTS
____ Attached
____ Audited financial statements of the Borrower for the period ending December 31, 20__ are not yet completed; therefore, no audited financial statements of the Borrower are being filed herewith. Unaudited financial statements for such period are attached in lieu of audited financial statements. Audited financial statements will be filed when available.
____ No audited financial statements of the Borrower were prepared for the period ending December 31, 20__; therefore, no audited financial statements of the Borrower are being filed herewith. Unaudited financial statements for such period are attached in lieu of audited financial statements.
EXHIBIT H
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G-11
EXHIBIT B
NOTICE OF FAILURE TO
FILE ANNUAL DISCLOSURE REPORT
Name of Issuer: Marina Joint Powers Financing Authority
Name of Issue: Multifamily Housing Revenue Bonds (Fannie Mae MBS -Secured) Series 2026 (Preston Park Apartments)
Name of Borrower: Preston Park Sustainable Community Nonprofit Corporation
CUSIP: _______
Date of Issuance: January __, 2026
NOTICE IS HEREBY GIVEN that the above -referenced borrower (the “Borrower”) has not provided an Annual Report with respect to the above -named Bonds as required by its Continuing Disclosure Agreement. The undersigned has been informed by the Borrower that it anticipates that Annual Report will be filed by _____________.
DATED: ______________
APPLIED BEST PRACTICES, LLC, as Dissemination
Agent
By:
Authorized Officer
cc: Borrower
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G-12
EXHIBIT D
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF
EXTENSION OF MBS DELIVERY DATE DEADLINE
Name of Issuer: Marina Joint Powers Financing Authority Name of Bond Issue: Multifamily Housing Revenue Bonds (Fannie Mae MBS -Secured) Series 2026 (Preston Park Apartments)
Name of Borrower: Preston Park Sustainable Community Nonprofit Corporation Date of Issuance: January __, 2026
Original MBS Delivery Date Deadline: February 25, 2026* Extended MBS Delivery Date Deadline:
CUSIP: _____
NOTICE IS HEREBY GIVEN as per the requirements of the Continuing Disclosure Agreement, dated as of January 1, 2026 , between the above -referenced borrower (the “Borrower”) and Applied Best Practices, LLC , as Dissemination Agent, that the Borrower has extended the MBS Delivery Date Deadline from the Original MBS Delivery Date Deadline to the Extended MBS Delivery Date Deadline, pursuant to the Indenture of Trust, dated as of January 1, 2026, between the Issuer and U.S. Bank Trust Company, National Association, as trustee.
Dated:
APPLIED BEST PRACTICES, LLC, as Dissemination
Agent
By:
Authorized Officer
cc: Borrower
* Preliminary; subject to change.
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G-13
EXHIBIT E
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF
DELIVERY OF THE MBS
Name of Issuer: Marina Joint Powers Financing Authority Name of Bond Issue: Multifamily Housing Revenue Bonds (Fannie Mae MBS -Secured) Series 2026 (Preston Park Apartments)
Name of Borrower: Preston Park Sustainable Community Nonprofit Corporation Name of Project: Preston Park Apartments
Address of Project: 682 Wahl Court, Marina, CA 93933
Date of Issuance: January __, 2026
CUSIP: _____
NOTICE IS HEREBY GIVEN as per the requirements of the Continuing Disclosure Agreement, dated as of January 1, 2026 , between the above -referenced borrower (the “Borrower”) and Applied Best Practices, LLC , as Dissemination Agent, that the Borrower has certified that the MBS related to the above -referenced Bond Issue has been delivered by Fannie Mae to U.S. Bank Trust Company, National Association, as Trustee.
Dated:
APPLIED BEST PRACTICES, LLC,
as Dissemination Agent
By:
Authorized Officer
cc: Borrower
EXHIBIT H
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H-1
APPENDIX H
TERM SHEET*
This Term Sheet assumes the related Mortgage Loan is originated in an amount equal to the maximum amount available under the Lender Commitment and that all the conditions to delivery of the M BS have been satisfied and have not been waived or modified. See “Multifamily Schedule of Loan Information” herein. $30,825,000
Marina Joint Powers Financing Authority
Multifamily Housing Revenue Bonds
(Fannie Mae MBS-Secured) Series 2026
(Preston Park Apartments)
POOL STATISTICS (AS OF CLOSING DATE)
TAX-EXEMPT BOND AND MBS INFORMATION
(Information provided by Issuer for this Official Statement) BOND ISSUER NAME Marina Joint Powers Financing Authority (“Issuer”) BOND ISSUE SERIES Multifamily Housing Revenue Bonds (Fannie Mae MBS - Secured) Series 2026 (Preston Park Apartments)
BOND ISSUE PAR $30,825,000
BOND DATED DATE January __, 2026
BOND MATURITY DATE March 1, 2036
BOND ISSUE TAX STATUS See “TAX MATTERS” in the Official Statement.
BOND ISSUE CUSIP _________
BLOOMBERG SERIES NAME _________
COLLATERAL FOR THE BOND ISSUE Fannie Mae DUS MBS (see pool info below) MBS DELIVERY DATE DEADLINE February 25, 2026, or, if such day is not a Business Day, the following Business Day, which may be extended in accordance with terms of the Indenture
BOND ISSUE CREDIT RATING Moody’s “___”
BOND CLOSING DATE January __, 2026
BOND PAYMENT DATES March 1 and September 1
BOND FIRST PAYMENT DATE September 1, 2026
BOND INTEREST-ONLY PERIOD 8 months
BOND FIRST PRINCIPAL PAYMENT DATE September 1, 2026, or, if such day is not a Business Day, the next Business Day.
BOND FINAL PAYMENT DATE March 1, 2036
BOND INTEREST ACCRUAL 30/360
BOND PREPAYMENT TERMS See “DESCRIPTION OF THE BONDS — Mandatory Redemption of Bonds” in the Official Statement.
BOND OFFERING PRICE 100%
BOND UNDERWRITER Stifel, Nicolaus & Company, Incorporated
* Preliminary; subject to change.
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MANDATORY REDEMPTION OF BONDS See “ DESCRIPTION OF THE BONDS — Mandatory Redemption of Bonds” in the Official Statement.
OPTIONAL REDEMPTION OF BONDS The Bonds are not subject to optional redemption other than in connection with a prepayment of the Mortgage Loan.
BOND EXCHANGE FEATURE N/A
BOND TRUSTEE U.S. Bank Trust Company, National Association
UNDERLYING FANNIE MAE POOL STATISTICS (AS OF ISSUE DATE) (Information provided by Lender for this Official Statement) NOTE RATE ___%
POOL/LOAN MATURITY DATE February 1, 2036
EXPECTED MBS DELIVERY DATE February 25, 2026
NUMBER OF LOANS 1
POOL SECURITY FUNDS TRANSFER TYPE Fed Wire
TRANSACTION TYPE DUS
POOL FIRST PAYMENT DATE 25th day of the month following the month in which the MBS is delivered, or the following Business Day if such day is not a Business Day
POOL FINAL PAYMENT DATE February 25, 2036, or the following Business Day if such day is not a Business Day
SECURITY TYPE Fannie Mae MBS
SELLER NAMES [Seller Names]
SERVICER NAME [Servicer Name]
POOL NUMBER _______
% OF INITIAL POOL BALANCE 100%
POOL PREFIX [TBD]
MULTIFAMILY SCHEDULE OF LOAN INFORMATION
(Information provided by Lender for this Official Statement) FANNIE MAE LOAN NUMBER _______
TIER 2
TIER DROP ELIGIBLE No
LIEN PRIORITY First
MAXIMUM LTV __%
MINIMUM ALLOWABLE UW NCF DSCR(x) 1.15x
BALLOON [Yes][No]
OTHER DEBT NOT DISCLOSED HEREIN [Yes][No]
ISSUANCE UPB/UNIT $_______
PREPAYMENT PREMIUM OPTION Yield Maintenance — CMT as defined in the Fannie Mae Multifamily MBS Prospectus
PREPAYMENT PREMIUM TERM Fannie Mae yield maintenance premium from closing through May 31, 2034 (100 months).1 Thereafter, a 1% prepayment
1 A portion of this prepayment premium, if collected, may be shared with Certificateholders under the circumstances described in “YIELD, MATURITY AND PREPAYMENT CONSIDERATIONS—Maturity and Prepayment Considerations—Prepayment of a Mortgage Loan—Prepayment Premiums” in the Fannie Mae MBS Prospectus.
EXHIBIT H
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H-3
penalty shall apply through October 31, 2035 (17 months)2.
Thereafter, no prepayment premium shall apply.
FIRST LOAN PAYMENT DATE March 1, 2026
ORIGINAL TERM (MONTHS) 120 months
WEIGHTED AVERAGE AMORTIZATION TERM
(MONTHS)
40 years (480 months)
INTEREST TYPE Fixed
INTEREST ACCRUAL METHOD Actual/360
INTEREST ONLY TERM (MONTHS) [N/A][__ months]
NOTE DATE January __, 2026
LOAN PURPOSE Acquisition
MONTHLY DEBT SERVICE $_________
MONTHLY DEBT SERVICE AMOUNT PARTIAL
IO
N/A
COLLATERAL INFORMATION
(Information provided by Lender for this Official Statement) PROPERTY ID/DEAL ID _______
PROPERTY NAME Preston Park Apartments
PROPERTY STREET ADDRESS 682 Wahl Court
PROPERTY CITY Marina
PROPERTY STATE California
PROPERTY ZIP CODE 93933
PROPERTY COUNTY Monterey
MSA [MSA]
YEAR BUILT [Year]
PHYSICAL OCCUPANCY [___% (as of [Date])]
PASS-THROUGH RATE [TBD]
UNDERWRITTEN ECONOMIC OCCUPANCY ___%
REMAINING AMORTIZATION TERM TO MATURITY From February 1, 2026, to February 1, 2036 ISSUANCE LTV __%, which LTV is based on an underwritten value that is less than the purchase price
ACTUAL NCF DSCR(x) 1.15, estimated
UNDERWRITTEN EFFECTIVE GROSS INCOME $_______
UNDERWRITTEN TOTAL OPERATING EXPENSES $_______
UNDERWRITTEN REPLACEMENT RESERVES $___ per unit per year UW NCF ($) $_______
CROSS-COLLATERALIZED (Y/N) [Yes][No]
CROSS-DEFAULTED (Y/N) [Yes][No]
GENERAL PROPERTY TYPE [Multifamily]
2 No portion of this prepayment premium, if collected, will be shared with Certificateholders under any circumstances as is described in “YIELD, MATURITY AND PREPAYMENT CONSIDERATIONS—Maturity and Prepayment Considerations—Prepayment of a Mortgage Loan—Prepayment Premiums” in the Fannie Mae MBS Prospectus.
EXHIBIT H
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H-4
SPECIFIC PROPERTY TYPE [Garden Style][Mid-Rise][High-Rise] LAND OWNERSHIP RIGHTS [Fee Simple][Leasehold]
PROPERTY VALUE $_______ (as of [Date])
SEISMIC RISK The Project meets Fannie Mae seismic requirements, if any.
TERRORISM INSURANCE COVERAGE (Y/N) [Yes][No]
TOTAL NUMBER OF UNITS ___
TAXES CURRENTLY ESCROWED [Yes][No]
PROPERTY OWNER Preston Park Sustainable Community Nonprofit Corporation, a California nonprofit corporation
SPONSOR [Sponsor]
PROPERTY MANAGER See “PRIVATE PARTICIPANTS — The Property Manager” in the Official Statement.
PROPERTY MANAGER EXPERIENCE See “PRIVATE PARTICIPANTS — The Property Manager” in the Official Statement.
UNIT OF MEASURE Units
CRA INFORMATION
(Information provided by Borrower for this Official Statement) UNITS AT OR BELOW 30% OF MEDIAN INCOME __% (__ units)
UNITS AT OR BELOW 50% OF MEDIAN INCOME __% (__ units)
UNITS AT OR BELOW 60% OF MEDIAN INCOME __% (__ units)
AGE RESTRICTED INDICATOR [Yes][No]
TAX ABATEMENT [Yes][No]
REGULATORY AGREEMENTS OVERSEER [Overseer]
REGULATORY AGREEMENT SET-ASIDES Under the Regulatory Agreement the Borrower is required to rent at least __% of the Project apartment units to certain qualified tenants whose income does not exceed __% of the area AMI where the Project is located.
EXHIBIT H
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I-1
APPENDIX I
PROPOSED FORM OF OPINION OF BOND COUNSEL
Upon the issuance of the Bonds, Stradling Yocca Carlson & Rauth LLP, Bond Counsel for the Issuer, proposes to issue an opinion in substantially the following form:
January __, 2026
Marina Joint Powers Financing Authority
Marina, California
Re: $_________ Marina Joint Powers Financing Authority Multifamily Housing Revenue Bonds (Fannie Mae MBS-Secured) Series 2026 (Preston Park Apartments) Ladies and Gentlemen:
We have acted as bond counsel to the Marina Joint Powers Financing Authority (the “Authority”) in connection with the issuance by the Authority of its $_________ Multifamily Housing Revenue Bonds (Fannie Mae MBS-Secured) Series 2026 (Preston Park Apartments) (the “Series 2026 Bonds”), pursuant to the provisions of Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Bond Law”), and pursuant to an Indenture of Trust, dated as of January 1, 202 6 (the “Indenture”), by and between the Authority and U.S. Bank Trust Company, National Association, as Trustee. The Series 2026 Bonds will be secured by the Trust Estate, pursuant to the Indenture. We have examined the law and such certified proceedings and other documents, agreements, opinions and matters as we deem necessary to render this opinion. This opinion is based on current statutory and constitutional law and published court decisions as of the date hereof. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Indenture.
As to questions of fact material to our opinion, we have relied upon representations of the Authority contained in the Indenture and in the certified proceedings and certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation.
We have assumed the genuineness of all documents and signatures presented to us, the authenticity of documents submitted as originals and the conformity to originals of documents submitted as copies. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions referred to in the preceding paragraphs of this opinion. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture, the Regulatory Agreement (defined in the Indenture) and the Financing Agreement. We call attention to the fact that the rights and obligations under the Series 2026 Bonds, the Indenture, the Fina ncing Agreement, the Regulatory Agreement and the Tax Certificate may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, by the application of equitable principles and the exercise of judicial discretion in appropriate cases and by the limitations on legal remedies against cities and public agencies in the State of California.
We express no opinion herein with respect to any indemnification, contribution, choice of law, choice of forum, penalty or waiver provisions contained in the Series 2026 Bonds, the Indenture, the Regulatory Agreement or the Financing Agreement; nor do we express any opinion with respect to the state or quality of title to any of the real or personal property described in the Indenture or the Financing Agreement, or the accuracy or sufficiency of the description contained therein, or the remedies available to enforce liens on, any such property contained therein.
Based upon the foregoing we are of the opinion, under existing law, as follows:
1. The Authority is a joint exercise of powers authority duly organized and validly existing under the laws of the State of California with the full power to enter into the Indenture and the Financing Agreement, to perform the agreements on its part contained therein and to issue the Series 2026 Bonds.
EXHIBIT H
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2. The Indenture and the Financing Agreement have each been duly authorized and approved by the Authority and the Indenture and the Financing Agreement constitute the valid and binding obligations of the Authority enforceable against the Authority in accordance with their respective terms. The Indenture creates a valid pledge of the Trust Estate, subject to the provisions of the Indenture.
3. The Series 2026 Bonds have been duly and validly authorized by the Authority and are legal, valid and binding limited obligations of the Authority, enforceable in accordance with their terms and the terms of the Indenture. The Series 2026 Bonds are limit ed obligations of the Authority payable solely from the Trust Estate as provided in the Indenture, but are not a debt of the Borrower, the City, the State of California or any other political subdivision thereof within the meaning of any constitutional o r statutory limitation, and, neither the faith and credit nor the taxing power of the Borrower, the City, the State of California, or any of its political subdivisions is pledged for the payment thereof. The Authority has no taxing power.
4. Under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excl uded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals; however, it should be noted that with respect to applicable corporations as defined in Section 59(k) of the Internal Revenue Code of 1986, as amended (the “Code”), interest (and original issue discount) with respect to the Bonds might be taken into account in determining adjusted financial statement income for purposes of comp uting the alternative minimum tax imposed on such corporations.
5. Interest (and original issue discount) on the Bonds is exempt from personal income taxes imposed in the State of California.
6. The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Bond Owne r will increase the Bond Owner’s basis in the applicable Bond. Original issue discount that accrues to the Bond Owner is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of calculat ing the federal alternative minimum tax imposed on individuals (as described in paragraph (5) above) and is exempt from State of California personal income tax.
7. The amount by which a Bond Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Bond Owner’s basis in the applicable Bond (and the amount of tax -exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium.
The opinions expressed in paragraphs (4) and (6) above as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Series 2026 Bonds are based upon certain representations of fact and certification s made by the Borrower and others and are subject to the condition that the Authority and the Borrower comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2026 Bonds to assure that such interest (and original issue discount) will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the Series 2026 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2026 Bonds. The Authority and the Borrower have covenanted to comply with all such requirements. Except as set forth in paragraphs (4), (5), (6) and (7) above, we express no opinion as to any tax consequences related to the Series 2026 Bonds.
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Certain requirements and procedures contained or referred to in the Indenture, the Financing Agreement and the Tax Certificate may be changed, and certain actions may be taken, under the circumstances and subject to the terms and conditions set forth in the Indenture, the Financing Agreement and the Tax Certificate, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax -exempt obligations. We express no opinion as to the effect on the exclusion of interest on the Series 2026 Bonds from gross income for federal income tax purposes on and after the date on which any such change occurs or action is taken upon the advice or approval of counsel other than Stradling Yocca Carlson & Rauth LLP.
Our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.
The opinions expressed herein are based upon an analysis of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the foregoing opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken (or not taken) or do occur (or do not occur). Our engagement with respect to the Series 2026 Bonds terminates upon their issuance, and we disclaim any obligation to update the matters set forth herein.
We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Series 2026 Bonds. We expressly disclaim any duty to advise the owners of the Series 2026 Bonds with respect to the matters contained in the Official Statement and any other offering material relating to the Series 2026 Bonds.
Respectfully submitted,
EXHIBIT H
255
December 10, 2025 Item No. 11b
Honorable Mayor and Members City Council Meeting
of the Marina City Council of December 16, 2025
CITY COUNCIL TO CONSIDER ADOPTING ORDINANCE NO. 2025 -xx, AN URGENCY ORDINANCE TO EXTEND URGENCY ORDINANCE NO. 2025-17 FOR 10 MONTHS AND 15 DAYS TO TEMPORARILY PROHIBIT THE ESTABLISHMENT
AND OPERATION OF NEW FIREARMS AND AMMUNITIONS SALES BUSINESSES IN THE CITY FOR 10 MONTHS AND 15 DAYS PURSUANT TO GOVERNMENT CODE SECTION 65858(a).
REQUEST:
It is recommended that the City Council consider adopting Urgency Ordinance No. 2025-xx to:
1. Extend the timeframe for 10 months and 15 days for Urgency Ordinance No. 2025-17, adopted by the City Council on November 4, 2025 to t emporarily prohibit the establishment and operation of new firearm and ammunition sales businesses pursuant to Government Code Section 65858(a); and
2. Determine that the adoption of the Urgency Ordinance is not subject to environmental review pursuant to the CEQA Guidelines Section 15061(b)(3) because the proposed procedural changes would not result in a direct or a reasonably foreseeable indirect physical change in the environment.
BACKGROUND:
Persons must be licensed by the United States Department of Justice Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) to engage in the business of manufacturing, importing, and/or dealing in firearms. There is currently one business in Marina that is listed as holding a federal firearms license (FFL) from ATF and it also has a City business license. Recent online research has shown that Marina may have at least one additional business that sell s firearms and ammunition that is not permitted or licensed.
The City’s Zoning Code does not currently regulate or restrict the establishment or operation of firearm or ammunition sales as a distinct retail use different from other general retail uses. The C- R, C-1, C-2, PC (with a zoning permit), and BP zoning districts allow retail uses to be principally permitted. These commercial zoning districts specifically allow “[R]etail stores conducted within a building, including appliance stores, bakeries (retail only), bookstores, florist shops, food stores, furniture and millinery shops when incidental to the retail sales of such items, radio sales, restaurants, shoe shops, hardware stores and other uses which are of similar character to those enumerated and which will not be detrimental or obnoxious to the neighborhood in which they are to be located .” Additionally, “Retail Sales, Minor” uses are allowed by right in the Downtown Specific Vitalization Plan area in the Core, Mixed -use Node, and Transition districts, when these general retail uses are conducted entirely within buildings. It is unclear whether retail sales of firearms or ammunition would be considered a “use of similar character” and principally permitted in the City’s commercial zoning districts. If this were to be the case, firearm or ammunition sales would be allowed in nearly every commercial area within the City.
1 California State law, Government Code Section 65858, allows a city to adopt an interim ordinance prohibiting a specified use while the city studies more restrictive land use regulations for that use.1 To utilize this statute, the City Council must find that the use poses a current and immediate threat to the public health, safety, or welfare and it must approve the ordinance by a four-fifths vote. The interim ordinance is valid for a period of 45 days . It may be extended after notice and a public hearing for 10 months and 15 days, and subsequently extended for one year, upon authorization of the City Council.
On November 4, 2025, the City Council adopted an urgency ordinance to establish a temporary 45-day moratorium on the establishment of new firearm or ammunition sales businesses in Marina.
The temporary moratorium, as described in detail in the November 4, 2025 City Council staff report, allows the City time to conduct research and provide analysis on regulations and standards that could be appropriately applied to future businesses. Since this research and analysis is still ongoing, City Staff recommends that the temporary moratorium be extended for an additional 10 months and 15 days, during which time this research and analysis is expected to conclude. At that time, the results of the research and analysis may be presented to the Planning Commission and City Council in the form of proposed amendments to the City’s Municipal Code. In the meantime, continuance of the urgency ordinance is necessary to preserve the health, safety, and welfare of the residents of Marina by preventing any further establishmen t of firearm or ammunition sale businesses in the City without regard to the appropriateness of their location.
FISCAL IMPACT:
There are no fiscal implications in connection with extending the urgency ordinance to establish a temporary moratorium on firearm and ammunition retail establishments by an additional 10 months and 15 days.
ENVIRONMENTAL DETERMINATION:
The City has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CCR, Title 14, Chapter 3 (“CEQA Guidelines”), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.
Because the proposed urgency ordinance and temporary moratorium on establishing and operating a new firearm or ammunition sales business has no potential to cause any direct or any reasonably foreseeable indi rect physical change on or in the environment , adopting this ordinance is not considered a project under CEQA . Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.
EXHIBITS:
Exhibit A – Draft Ordinance 2025-xx
Exhibit B – Adopted Ordinance 2025-17
Exhibit C – November 4, 2025 City Council Staff Report (without attachments)
1 Section 65858(a) provides that “to protect the public safety, health, and welfare,” a legislative body may adopt an interim ordinance “prohibiting any uses that may be in conflict with a contemplated general plan, specific plan, or zoning proposal” that the city “is considering or studying or intends to study within a reasonable time.” 2 Respectfully submitted,
____________________________
Guido Persicone
Community Development Director
City of Marina
REVIEWED/CONCUR:
_____________________________
Randy Hopkins
Chief of Police
City of Marina
_____________________________
Layne P. Long
City Manager
City of Marina
1995469.2
3 ORDINANCE NO. 2025-__
AN URGENCY ORDINANCE OF THE COUNCIL OF THE CITY OF MARINA TO EXTEND URGENCY ORDINANCE NO. 2025 -17 TO TEMPORARILY
PROHIBIT THE ESTABLISHMENT AND OPERATION OF NEW FIREARMS AND AMMUNITIONS SALES BUSINESSES IN THE CITY FOR 10 MONTHS AND 15 DAYS PURSUANT TO GOVERNMENT CODE SECTION 65858
-oOo-
THE CITY COUNCIL OF THE CITY OF MARINA DOES HEREBY ORDAIN AS FOLLOWS:
1. On November 4, 2025, the City Council adopted Ordinance No. 2025 -17 to temporarily suspend the establishment and operation of new firearms and ammunitions sales businesses in Marina. The City Council finds that it is necessary to continue the duration of the urgency ordinance for 10 months and 15 days pursuant to Governme nt Code section 65858(a) to protect the public health, safety, and welfare. This ordinance is intended to temporarily prohibit the approval of any new firearms and ammunitions sales businesses in the City pending further review and study.
2. The City’s Zoning Code does not currently explicitly regulate or restrict the establishment or operation of firearm or ammunition sales as a distinct retail use different from other general retail uses. The C-R, C-1, C-2, PC (with a zoning permit), and BP zoning districts allow “[R]etail stores conducted within a building, including appliance stores, bakeries (retail only), bookstores, florist shops, food stores, furniture and millinery shops when incidental to the retail sales of such items, radio sales, restaurants, shoe shops, har dware stores and other us es which are of similar character to those enumerated and which will not be detrimental or obnoxious to the neighborhood in which they are to be located.” Additionally, “Retail Sales, Minor” uses are allowed by right in the Downtown Specific Vitalization Plan area in the Core, Mixed -use Node, and Transition districts, which also allows general retail uses conducted entirely within buildings . This creates ambiguity as to whether firearm or ammunition sales would be allowed in nearly every commercial area within the City.
3. The City’s Zoning Code does not currently prohibit retail sales as home occupations in residential areas. This results in firearm or ammunition sales potentially being permitted as an accessory use to a permitted residential use in a residential zoning district provided the standards of Section 17.42.110 (Home Occupations) are met.
EXHIBIT A
4 4. Over the past several months, the cities of Monterey, Salinas, and Seaside have each adopted ordinances restricting the establishment of firearm or ammunition sales in their communities. The City of Monterey adopted an urgency ordinance in April 2025 which established a temporary moratorium on new firearm or ammunition sales. Given that nearby communities have increased their regulation of firearm and ammunition sales, nearby cities without clearly defined regulations become more attractive for the establ ishment of such use .
Recent code amendments in other cities to address this use have highlighted the fact that Marina’s Zoning Ordinance needs to consider firearm and ammunition sales as a distinct retail use and establish conditions under which this use could be permitted.
5. There is currently one business in Marina that is listed as holding a federal firearms license (FFL) from ATF. This business also has a City business license. Recent research has shown that Marina may have at least one additional business that sells firearms and ammunition that is neither permitted nor licensed. This has caused legitimate concern about a possible proliferation of both unlicensed and licensed businesses establishing in the community without additional clarity in the code.
6. This matter is urgent , and the subject of a temporary moratorium, because a potentially unlimited number of firearm sales businesses may currently locate in a number of zoning districts throughout the City without clear local regulation.
7. Without a temporary moratorium, and absent zoning regulations that govern the location of future firearms and ammunition retail uses, new firearms and ammunition retail establishments may be established in areas that result in compatibility conflicts. Locating firearm and ammunition sales near residential areas, school, parks, youth center, and community facilities put the City at risk of impairing its substantial interests in community health, the community’s perceptions of safety, and ensuring economically sustainable development in Marina.
8. A temporary moratorium on this use is necessary to preserve the health, safety, and welfare of the residents of Marina by preventing a proliferation of firearm or ammunition retail locations in the City without regard to the appropriateness of their location.
9. Maintaining the current zoning regulations related to firearm and ammunition sales has the potential to result in new retail uses that sell firearms or ammunition without the proper analysis of any potential impacts to public health, safety, and welfare. This temporary moratorium will allow the City to conduct research and provide analysis on potential regulations such as:
• Requiring adequate insurance.
EXHIBIT A
5 • Confining operations to specific commercially zoned areas and prohibiting sales as a home occupation. As the operation of a firearm dealership is a commercial enterprise, there is a rational basis for confining that operation to commercially zoned areas. • Requiring that dealers be located away from residential areas, schools, community facilities, liquor stores and bars.
• Restricting any person under 18 years of age from entering or remaining within the premises without being accompanied by their parent or other adult legally responsible for the minor child where the firearms sales activity is the primary business performed at the site.
10. A temporary moratorium on this use is necessary to prevent firearms and ammunition businesses from locating almost anywhere in the City. Allowing a firearm and ammunition retail sales use to legally establish without sufficient protective measures in code would provides these businesses an entitlement to operate in a location that could have a detrimental effect on the health, safety and welfare of the community. Without this temporary moratorium, the potential exists that establishment of new commercial operations engaged in the retail sale of firearms and ammunition within the City, without addressing appropriate regulation, could result in land use incompatibility and create adverse impacts on residents, businesses and neighborhoods that present a current and immediate threat to the public health, safety, and welfare.
11. This temporary moratorium will not impact any businesses in Marina that are legally established and that have active business licenses for firearm and ammunitions sales.
12. The City Council finds that the foregoing conditions exist , which require the immediate preservation of the public health, safety, and welfare or the community pursuant to California Government Code Section 65858. Ordinance 2025-xx, adopted by the City Council on November 4, 2025, established a moratorium for forty -five (45) days prohibiting the establishment and operation of new retail uses, including home occupations, engaged in firearm and ammunition sales, in all zoning districts. Government Code Sect ion 65858(a) allows the moratorium to be extended an additional 10 months and 15 days so that the City can complete its research and provide analysis on potential regulations to firearm and ammunition sales.
13. The extension of this moratorium is necessary to prevent principally permitted firearms and ammunitions businesses from being located almost anywhere in the City, which then gives these businesses a vested right to operate from those locations in the City and could have a detrimental effect on the health, safety and welfare of the community. Without this moratorium, the potential exists that establishment of new commercial operations engaged in the retail sale of firearms and ammunitions within the City without addressing appropriate regulations could result
EXHIBIT A
6 in incompatibility of land uses and adverse impacts on residents, businesses and neighborhoods that present a current and immediate threat to the public health, safety, and welfare.
14. Environmental. The proposed Ordinance amendments are not subject to environmental review pursuant to the State CEQA Guidelines, California Code of Regulations, Title 14, Article 5, Section 15061(b)(3) because the proposed procedural changes would not result in a direct or a reasonably foreseeable indirect physical change in the environment and the proposed ordinance is covered by the general rule that CEQA applies only to projects which have potential for causing significant effect on the en vironment. Therefore, the adoption of this ordinance is exempt from CEQA, and no further environmental review is necessary.