Agenda packet — Ontario City Council, May 17, 2022 (part 2 of 3)

SECTION 15.06 Net Proceeds of Insurance; Form of Policies. (a) Each policy of insurance maintained pursuant to Sections 15.02, 15.03,

15.04 and 15.05 shall name the Trustee as loss payee so as to provide that all proceeds thereunder shall be payable to the Trustee and shall name the Authority, the City and the Trustee as insureds. The City shall pay or cause to be paid when due the premiums for all insurance policies required by this Lease Agreement Supplement. All such policies shall provide that the Trustee shall be given thirty (30) days’ notice of each expiration, any intended cancellation thereof or reduction of the coverage provided thereby. The Trustee shall not be responsible for the sufficiency or amount of any insurance or self-insurance herein required and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss. The City shall cause to be delivered to the Trustee annually, no later than July 1 in each year, beginning on July 1, 2022, a certificate stating that all of the insurance policies required by the Lease Agreement are in full force and effect and identifying whether any such insurance is then maintained in the form of self-insurance.
(b) In the event that any insurance maintained pursuant to Section 15.02 shall be provided in the form of self-insurance, the City shall file with the Trustee annually, within ninety (90) days following the close of each Fiscal Year, a statement of the risk manager of the City or an independent insurance adviser engaged by the City identifying the extent of such self-insurance and stating the determination that the City maintains sufficient reserves with respect thereto. In the event that any such insurance shall be provided in the form of self-insurance by the City, the City shall not be obligated to make any payment with respect to any insured event except from such reserves. The Trustee shall not be responsible for the sufficiency or adequacy of any insurance herein required and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the Trustee. (c) If the City shall fail to perform any of its obligations under this Article XV, the Authority or the Trustee may, but shall not be obligated to, take such action as may be necessary to cure such failure, including the advancement of money, and the City shall be obligated to repay all such advances as soon as possible, with interest at the rate payable by the Authority on the Series 2022 Bonds from the date of the advance to the date of repayment.

SECTION 15.07 Tax Covenants.
302
46700.50029\34827295.3
13 The City shall use the portion of the Facilities or Project financed with the Series 2022 Bonds in furtherance of its governmental activities and further covenants for the benefit of the Authority and the Owners of the Series 2022 Bonds that:
(a) It will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of the initial issuance and delivery of the Series 2022 Bonds, would have caused any of the Series 2022 Bonds to be “arbitrage bonds” within the meaning of Section 103(b) and Section 148 of the Code; (b) It will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of initial issuance and delivery of the Series 2022 Bonds, would result in loss of exclusion from gross income for purposes of federal income taxation under Section 103(a) of the Code of interest to the Series 2022 Bonds; (c) In order to maintain the exclusion from gross income for purposes of federal income taxation of interest paid with respect to the Series 2022 Bonds, it will comply with each applicable requirement of Section 103 and Sections 141 through 150 of the Code.

The covenants of the City contained in this Section 15.07 shall survive the payment, redemption or defeasance of the Series 2022 Bonds.

SECTION 15.08 Payment of Rebatable Amounts . The City agrees to furnish all information to, and cooperate fully with, the Authority and their respective officers, employees, agents and attorneys, in order to assure compliance with the provisions of Section 16.06 of the Indenture. In the event that the Authority shall determine, pursuant to Section 16.06 of the Indenture, that any amounts are due and payable to the United States of America thereunder and that neither the Authority nor the Trustee has on deposit an amount of available moneys (excluding moneys on deposit in the funds and accounts established for the payment of the principal of or interest or redemption premium, if any, on the Series 2022 Bonds) to make such payment, the Authority shall promptly notify the City of such fact. Upon receipt of any such notice, the City shall promptly pay the amounts determined by the Authority to be due and payable to the United States of America under such Section 16.06 of the Indenture, such payments to be made in accordance with the applicable provisions of the Code.

SECTION 15.09 Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of its Continuing Disclosure Certificate with respect to the Series 2022 Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. Notwithstanding any other provision of the Lease Agreement, failure of the City to comply with such Continuing Disclosure Certificate shall not be considered an Event of Default; however, any Owner may take such actions, as provided in such Continuing Disclosure, Certificate as may be necessary and appropriate to cause the City to comply with its obligations under such Continuing Disclosure Certificate. 303
46700.50029\34827295.3
14 ARTICLE XVI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN;

USE OF NET PROCEEDS
SECTION 16.01 Eminent Domain . If all of the Leased Premises shall be taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the Term of this Lease Agreement Supplement shall cease as of the day possession shall be so taken. If less than all of the Leased Premises shall be taken permanently, or if all of the Leased Premises or any part thereof shall be taken temporarily under the power of eminent domain, (a) this Lease Agreement Supplement shall continue in full force and effect and shall not be terminated by virtue of such taking and the parties waive the benefit of any law to the contrary, and (b) there shall be a partial abatement of 2022 Base Rental Payments in an amount to be agreed upon by the City and the Authority such that the resulting 2022 Base Rental Payments for the Leased Premises represent fair consideration for the use and occupancy of the remaining usable portion of the Leased Premises.

SECTION 16.02 Application of Net Proceeds.
(a) From Insurance Award. The Net Proceeds of any insurance award resulting from any damage to or destruction of the Leased Premises by fire or other casualty shall be deposited in the Net Insurance Proceeds Fund by the Trustee and applied in accordance with Section 5.08 of the 2017 Indenture and Section 15.01(c) of the Indenture Supplement. (b) From Eminent Domain Award. The Net Proceeds of any eminent domain award resulting from any event described in Section 16.01 shall be deposited in the Redemption Fund, as applicable, by the Trustee and applied in accordance with Section

5.08 of the 2017 Indenture and Section 15.01(c) of the Indenture Supplement.

SECTION 16.03 Abatement of 2022 Base Rental Payment in the Event of Damage or Destruction. The 2022 Base Rental Payments allocable to the Leased Premises shall be abated during any period in which by reason of damage or destruction (other than by eminent domain which is hereinbefore provided for) there is substantial interference with the use and occupancy by the City of the Leased Premises or any portion thereof. The amounts of the 2022 Base Rental Payments under such circumstances may not be less than the amounts of the unpaid 2022 Base Rental Payments, unless such unpaid amounts are determined to be greater than the fair rental value of the portions of the Leased Premises not damaged or destroyed, based upon the opinion of an MAI appraiser with expertise in valuing such properties or other appropriate method of valuation, in which event the 2022 Base Rental Payments shall be abated such that they represent said fair rental value. Such abatement shall continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction.

In the event of any such damage or destruction, the Lease Agreement shall continue in full force and effect and the City waives any right to terminate the Lease Agreement by virtue of any such damage and destruction. Notwithstanding the foregoing, there may be no abatement of 2022 Base Rental Payments to the extent that (a) the proceeds of rental interruption insurance are available to pay 2022 Base Rental Payments, or (b) amounts in the Base Rental Payment Fund are available to pay 2022 Base Rental Payments which would otherwise be abated. 304
46700.50029\34827295.3
15 ARTICLE XVII
DISCLAIMER OF WARRANTIES; ACCESS
SECTION 17.01 Disclaimer of Warranties . Neither the Authority nor the Trustee makes any warranty or representation, either express or implied, as to the value, design, condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by the City of the Leased Premises, or any other representation or warranty with respect to the Leased Premises. In no event shall the Authority, the Trustee, and their respective assigns be liable for incidental, indirect, special or consequential damages in connection with or arising out of this Lease Agreement Supplement or the Indenture Supplement for the existence, furnishing, functioning or the City’s use of the Leased Premises.

SECTION 17.02 Rights of Access . The City agrees that the Authority and any Authorized Representative of the Authority, and the Authority’s successors or assigns, shall have the right at all reasonable times to enter upon and to examine and inspect the Leased Premises.

The City further agrees that the Authority, any Authorized Representative of the Authority, and the Authority’s successors or assigns shall have such rights of access to the Leased Premises as may be reasonably necessary to cause the proper maintenance of the Leased Premises in the event of failure by the City to perform its obligations hereunder.

SECTION 17.03 Release and Indemnification Covenants. The City shall and hereby agrees to indemnify and save the Authority, the Trustee, and their respective officers, agents, successors and assigns, harmless from and against all claims, losses and damages, including legal fees and expenses, arising out of (a) the use, maintenance, condition or management of, or from any work or thing done on the Leased Premises by the City, (b) any breach or default on the part of the City in the performance of any of its obligations under this Lease Agreement Supplement, (c) any act or negligence of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Leased Premises, (d) the use, presence, storage, disposal of any Hazardous Substances on or about the Leased Premises, or (e) any act or negligence of any sublessee of the City with respect to the Leased Premises. No indemnification is made under this Section 17.03 or elsewhere in this Lease Agreement Supplement for willful misconduct, negligence under this Lease Agreement Supplement by the Authority or the Trustee or any of their respective officers, agents, employees, successors or assigns.

ARTICLE XVIII

ASSIGNMENT, SUBLEASING AND AMENDMENT
SECTION 18.01 Assignment by the Authority . The Authority’s rights under this Lease Agreement Supplement, including the right to receive and enforce payment of the 2022 Base Rental Payments to be made by the City under this Lease Agreement Supplement, have been pledged and assigned to the Trustee for the benefit of the Owners of the Series 2022 Bonds pursuant to the Indenture Supplement, to which pledge and assignment the City hereby consents.

The assignment of this Lease Agreement Supplement to the Trustee is solely in its capacity as Trustee under the Indenture and the duties, powers and liabilities of the Trustee in acting hereunder shall be subject to the provisions of the Indenture Supplement, including, without limitation, the provisions of Article XIX thereof.
305
46700.50029\34827295.3
16 ARTICLE XIX

MISCELLANEOUS
SECTION 19.01 Notices. All written notices to be given under this Lease Agreement shall be given by first class mail, overnight mail, facsimile transmission, electronic mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) 48 hours after deposit in the United States mail, postage prepaid, or (c) otherwise, upon actual receipt.

The Authority, the City, the Insurer or the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.

SECTION 19.02 Binding Effect. This Lease Agreement Supplement shall inure to the benefit of and shall be binding upon the Authority and the City and their respective successors and assigns.

SECTION 19.03 Severability. In the event any provision of this Lease Agreement Supplement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

SECTION 19.04 Net-net-net Lease . The 2017 Lease Agreement and this Lease Agreement Supplement shall be deemed and construed to be a “net-net-net lease” and the City hereby agrees that the 2022 Base Rental Payments shall be an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever.

SECTION 19.05 Further Assurances and Corrective Instruments. The Authority and the City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Leased 306
46700.50029\34827295.3
17 Premises hereby leased or intended so to be or for carrying out the expressed intention of the 2017 Lease Agreement and this Lease Agreement Supplement.

SECTION 19.06 Execution in Counterparts . This Lease Agreement Supplement 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 19.07 Applicable Law . This Lease Agreement Supplement shall be governed by and constructed in accordance with the laws of the State.

SECTION 19.08 Authorized Representatives. Whenever under the provisions of this Lease Agreement Supplement the approval of the Authority or the City is required, or the Authority or the City is required to take some action at the request of the other, such approval or such request shall be given for the Authority by an Authorized Representative of the Authority and for the City by an Authorized Representative of the City, and any party hereto shall be authorized to rely upon any such approval or request.

SECTION 19.09 Captions. The captions or headings in this Lease Agreement are Supplement for convenience only and in no way define, limit or describe the scope or intent of any provisions or Section of this Lease Agreement.
(Signature page follows)
307
46700.50029\34827295.3
S-1
IN WITNESS WHEREOF, the Authority has caused this Lease Agreement Supplement to be executed in its corporate name by its duly authorized officers; and the City has caused this Lease Agreement Supplement to be executed in its name by its duly authorized officers, as of the date first above written.

ONTARIO PUBLIC FINANCING AUTHORITY
By________________________________
Scott Ochoa
Executive Director
Attest:
______________________________
Sheila Mautz
Secretary

CITY OF ONTARIO
By_________________________________
Scott Ochoa
City Manager
Attest:
______________________________
Sheila Mautz
City Clerk
-Signature Page-
First Amended and Supplement to Lease Agreement
308
46700.50029\34827295.3
CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT CIVIL CODE § 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA )
)
COUNTY OF ________________ )
On ___________________, before me, _____________________________, a Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature _____________________________ (Seal)
309
46700.50029\34827295.3
A-1

EXHIBIT A

DESCRIPTION OF THE LEASED PREMISES
310
46700.50029\34827295.3
B-1

EXHIBIT B
SCHEDULE OF 2022 BASE RENTAL PAYMENTS
Interest
Payment Date
Principal
Component
Interest
Component
Semi-Annual
2022 Base
Rental Payment
311
46700.50029\34828149.3

FIRST AMENDMENT AND SUPPLEMENT TO INDENTURE
Dated as of ________________, 2022
by and between
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as trustee
and the

ONTARIO PUBLIC FINANCING AUTHORITY
Authorizing the Issuance of
$___________
Ontario Public Financing Authority
2022 Lease Revenue Bonds
Series A
(Civic Center Improvements)
312
46700.50029\34828149.3

TABLE OF CONTENTS
Page
-i-

ARTICLE XII
DEFINITIONS; RULES OF INTERPRETATION
SECTION 12.01 DEFINITIONS........................................................................................... 2 SECTION 12.02 INTERPRETATION.................................................................................. 4

ARTICLE XIII
THE SERIES 2022 BONDS
SECTION 13.01 AUTHORIZATION OF BONDS.............................................................. 4 SECTION 13.02 TERMS OF THE SERIES 2022 BONDS ................................................. 5 SECTION 13.03 FORM AND EXECUTION OF BONDS.................................................. 6

ARTICLE XIV
ISSUANCE OF SERIES 2022 BONDS; APPLICATION OF PROCEEDS; RESERVE FUND SECTION 14.01 ISSUANCE OF THE SERIES 2022 BONDS ........................................... 6 SECTION 14.02 APPLICATION OF PROCEEDS AT CLOSING ..................................... 6 SECTION 14.03 ESTABLISHMENT AND APPLICATION OF COSTS OF ISSUANCE FUND .................................................................................... 6 SECTION 14.04 IMPROVEMENT FUND .......................................................................... 6 SECTION 14.05 DEPOSIT TO RESERVE FUND AND PROVISIONS
RELATING TO RESERVE FUND SURETY BOND.............................. 7 SECTION 14.06 PROVISIONS RELATING TO MUNICIPAL BOND
INSURANCE............................................................................................. 7 SECTION 14.07 VALIDITY OF SERIES 2022 BONDS .................................................... 7

ARTICLE XV
REDEMPTION OF SERIES 2022 BONDS
SECTION 15.01 TERMS OF REDEMPTION. .................................................................... 7 SECTION 15.02 SELECTION OF SERIES 2022 BONDS FOR REDEMPTION .............. 8 SECTION 15.03 NOTICE OF REDEMPTION.................................................................... 9 SECTION 15.04 PARTIAL REDEMPTION OF SERIES 2022 BONDS............................ 9 SECTION 15.05 EFFECT OF REDEMPTION .................................................................... 9

ARTICLE XVI

PARTICULAR COVENANTS
SECTION 16.01 PUNCTUAL PAYMENT........................................................................ 10 SECTION 16.02 EXTENSION OF PAYMENT OF SERIES 2022 BONDS..................... 10 SECTION 16.03 AGAINST ENCUMBRANCES .............................................................. 10 SECTION 16.04 POWER TO ISSUE SERIES 2022 BONDS AND MAKE PLEDGE AND ASSIGNMENT.............................................................. 10 313
46700.50029\34828149.3

TABLE OF CONTENTS
(continued)
Page
-ii-
SECTION 16.05 ACCOUNTING RECORDS AND FINANCIAL STATEMENTS ........ 10 SECTION 16.06 TAX COVENANTS. ............................................................................... 11 SECTION 16.07 LEASE AGREEMENT ........................................................................... 12 SECTION 16.08 WAIVER OF LAWS ............................................................................... 12 SECTION 16.09 FURTHER ASSURANCES .................................................................... 12 SECTION 16.10 LEASED PREMISES .............................................................................. 12

ARTICLE XVII

MISCELLANEOUS
SECTION 17.01 LIABILITY OF AUTHORITY LIMITED TO 2022 BASE RENTAL PAYMENTS ........................................................................... 12 SECTION 17.02 LIMITATION OF RIGHTS TO PARTIES AND BOND
OWNERS................................................................................................. 12 SECTION 17.03 FUNDS AND ACCOUNTS .................................................................... 13 SECTION 17.04 SEVERABILITY OF INVALID PROVISIONS..................................... 13 SECTION 17.05 NOTICES................................................................................................. 13 SECTION 17.06 THE INSURER AS THIRD PARTY BENEFICIARY........................... 14 SECTION 17.07 WAIVER OF PERSONAL LIABILITY................................................. 14 SECTION 17.08 BENEFIT OF PARTIES.......................................................................... 14 SECTION 17.09 SUCCESSOR IS DEEMED INCLUDED IN ALL REFERENCES TO PREDECESSOR ............................................................................... 14 SECTION 17.10 EXECUTION IN SEVERAL COUNTERPARTS .................................. 14 SECTION 17.11 GOVERNING LAW................................................................................ 14 EXHIBIT A - FORM OF BOND................................................................................................ A-1 EXHIBIT B – DESCRIPTION OF PROJECT............................................................................B-1 314
46700.50029\34828149.3
1 FIRST AMENDMENT AND SUPPLEMENT TO INDENTURE
This FIRST AMENDMENT AND SUPPLEMENT TO INDENTURE (this “Indenture Supplement”), made and entered into _____________, 2022, is by and between the ONTARIO PUBLIC FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of the State of California (the “Authority”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, organized and existing under the laws of the United States of America, as trustee (the “Trustee”); WI T N E S S E T H :

WHEREAS, under Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Act”) the Authority is authorized to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations of, or for the purpose of making loans to, public entities including the City, and to provide financing for public capital improvements of public entities including the City and to lease and lease back such public capital improvements including the land on which the public capital improvements are or will be located; and
WHEREAS, for the purpose of refinancing the acquisition and construction of capital projects of the City (the “2017 Project”), the Authority has previously issued 2017 Lease Revenue Refunding Bonds (the “2017 Bonds”) under a certain Indenture dated as of July 1, 2017 (the “2017 Indenture”) by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee; and
WHEREAS, the 2017 Bonds are payable and secured from Base Rental Payments made by the City with respect to the lease of certain real property and the facilities thereon (the “Leased Premises”) pursuant to a Lease Agreement dated as of July 1, 2017 (the “2017 Lease Agreement”); and
WHEREAS, the City has previously leased the Leased Premises to the Authority under a Ground Lease, dated as of July 1, 2017 (the “2017 Ground Lease”); and WHEREAS, for the purpose of financing the acquisition and construction of capital projects of the City (the “Project”), the Authority desires to issue its 2022 Lease Revenue Bonds, Series A (Civic Center Improvements) (the “Series 2022 Bonds”) under the 2017 Indenture as amended and supplemented by a First Amendment and Supplement to Indenture dated as of ______________, 2022 (the “Indenture Supplement,” and together, the “Indenture”) by and between the Authority and the Trustee; and
WHEREAS, the City intends to amend and supplement the Leased Premises under the 2017 Lease Agreement by adding property to the description of the Leased Premises thereunder and to the 2017 Ground Lease, and to issue Additional Bonds on a parity lien with the 2017 Bonds as specified under the provisions of the 2017 Indenture; and WHEREAS, the Authority has assigned its right to receive 2022 Base Rental Payments and the right to enforce remedies under the Lease Agreement to the Trustee pursuant to an 315
46700.50029\34828149.3
2 Assignment Agreement, dated the date hereof and by and between the Authority and the Trustee; and
WHEREAS, the Leased Premises, the 2017 Project, and the Project constitute a public capital improvement, as that term is defined in the Act; and WHEREAS, the City wishes to finance the 2017 Project; and WHEREAS, the Authority and the City propose to lease and lease back the Leased Premises as provided in the Lease Agreement (defined herein), such lease back to the City being for the purpose (among others) of providing amounts sufficient to provide for the payment of the principal of and interest on the Bonds (as defined herein); and WHEREAS, the Authority hereby certifies that all acts and proceedings required by law necessary to make the Bonds, when executed by the Authority, authenticated and delivered by the Trustee, and duly issued, the valid, binding and legal special obligations of the Authority, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of the Indenture have been in all respects duly authorized;

NOW, THEREFORE, THIS FIRST AMENDMENT AND SUPPLEMENT TO
INDENTURE WITNESSETH, that in order to secure the payment of the principal of and the interest and premium (if any) on all Series 2022 Bonds at any time issued and outstanding under this Indenture Supplement, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Series 2022 Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Series 2022 Bonds by the owners thereof, and for other valuable considerations, the receipt and adequacy whereof is hereby acknowledged, the Authority does hereby covenant and agree with the Trustee, for the benefit of the respective Owners from time to time of the Series 2022 Bonds, as follows:

ARTICLE XII
DEFINITIONS; RULES OF INTERPRETATION
SECTION 12.01 Definitions. Unless the context otherwise requires, the terms defined in this Section 12.01 shall, for all purposes of this Indenture Supplement and of any certificate, opinion or other document herein mentioned, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined. In addition, all capitalized terms used herein and not otherwise defined in this Section 12.01 shall have the respective meanings given such terms in the 2017 Indenture and Section 11.01 of the Lease Agreement Supplement.
“Bond Counsel” means (a) Best Best & Krieger LLP, or (b) any other attorney or firm of attorneys appointed by or acceptable to the Authority of nationally-recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Code.
316
46700.50029\34828149.3
3 “Bond Year” means each twelve-month period extending from November 2 in one calendar year to November 1 of the succeeding calendar year, both dates inclusive; except that the first Bond Year shall commence on the Closing Date and extend to and including November 1, 2022. “Closing Date” means ___________, 2022, being the date of delivery of the Bonds to the Original Purchaser.
“Code” means the Internal Revenue Code of 1986, as amended. “Costs of Issuance” means all expenses incurred in connection with the authorization, issuance, sale and delivery of the Bonds and the application of the proceeds of the Bonds, including but not limited to all compensation, fees and expenses (including but not limited to fees and expenses for legal counsel) of the Authority, initial fees and expenses of the Trustee and its counsel, title insurance premiums, appraisal fees, compensation to any financial consultants or underwriters, legal fees and expenses, filing and recording costs, rating agency fees, costs of preparation and reproduction of documents and costs of printing. “Costs of Issuance Fund” means the fund by that name established and held by the Trustee pursuant to Section 3.03.
“Fiscal Year” means any twelve-month period extending from July 1 in one calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month period selected and designated by the Authority as its official fiscal year period. “Improvement Fund” means the fund by that name established pursuant to Section 3.04 hereof.
[“Insured Series 2022 Bonds” means the Bonds which mature November 1, ____ through and including November 1, ____.]
[“Insurer” means _________________, or any successor thereto.] “Interest Payment Date” means each May 1 and November 1 commencing November 1, 2022.
“Lease Agreement Supplement” means that certain First Amendment and Supplement to Lease Agreement, dated as of ______________, 2022, by and between the Authority, as lessor, and the City, as lessee.
“Original Purchaser” ________________________, as the original purchasers of the Series 2022 Bonds upon their delivery by the Trustee on the Closing Date. [“Policy” shall mean the Municipal Bond Insurance Policy issued by the Insurer that guarantees the scheduled payment of principal of and interest on the Insured Series 2022 Bonds when due.]
“Serial Series 2022 Bonds” means the Bonds maturing on November 1 in each of the years ____ through ____.
317
46700.50029\34828149.3
4 “Series 2022 Bonds” means the $___________ aggregate principal amount of Ontario Public Financing Authority 2022 Lease Revenue Bonds, Series A (Civic Center Improvements), authorized by and at any time Outstanding pursuant to this Indenture. “Term Series 2022 Bonds” means the Bonds maturing on November 1, ______ and on November 1, ______.
“2022 Assignment Agreement” means the Assignment Agreement, dated as of __________, 2022, by and between the Authority, as assignor, and the Trustee, as assignee. “Written Certificate,” “Written Request” and “Written Requisition” of the Authority or the City mean, respectively, a written certificate, request or requisition signed in the name of the Authority by its Authorized Authority Representative or the City by its Authorized City Representative. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument.

SECTION 12.02 Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and shall be deemed to include the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof.
(c) All references herein to “Articles”, “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; the words “herein”, “hereof”, “hereby”, “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.

ARTICLE XIII
THE SERIES 2022 BONDS
SECTION 13.01 Authorization of Bonds . The Authority hereby authorizes the issuance hereunder of the Series 2022 Bonds, which shall constitute special obligations of the Authority, for the purpose of providing funds to the Authority to finance the Project and the acquisition of the Leased Premises by the City under the Lease Agreement. The Series 2022 Bonds are hereby designated the “Ontario Public Financing Authority 2022 Lease Revenue Bonds, Series A (Civic Center Improvements).” The aggregate principal amount of Series 2022 Bonds initially issued and Outstanding under this Indenture Supplement shall equal ________________________ Dollars ($___________). This Indenture Supplement, together with the 2017 Indenture, constitutes a continuing agreement with the Trustee and the Owners from time to time of the Series 2022 Bonds to secure the full payment of the principal of and interest and premium (if any) on all the Series 2022 Bonds, subject to the covenants, provisions and conditions herein contained. 318
46700.50029\34828149.3
5 SECTION 13.02 Terms of the Series 2022 Bonds . The Series 2022 Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof. The Series 2022 Bonds shall mature on November 1 in each of the years and in the amounts set forth below and shall bear interest on each Interest Payment Date at the rates set forth below:

Maturity Date
(November 1) Amount Interest Rate
__________________________
* Insured maturities
T Term Series 2022 Bonds
Interest on the Series 2022 Bonds shall be payable semi-annually calculated based on a 360-day year of twelve thirty day months on each Interest Payment Date to the person whose name appears on the Registration Books as the Owner thereof as of the Record Date immediately preceding each such Interest Payment Date, such interest to be paid by check of the Trustee mailed by first class mail to the Owner at the address of such Owner as its appears on the Registration Books; provided however, that payment of interest may be by wire transfer in immediately available funds to an account in the United States of America to any Owner of Series 2022 Bonds in the aggregate principal amount of $1,000,000 or more who shall furnish written wire instructions to the Trustee at least five (5) days before the applicable Record Date. Principal of any Series 2022 Bond and any premium upon redemption shall be paid by check of the Trustee upon presentation and surrender thereof at the Office of the Trustee. Principal of and interest and premium (if any) on the Series 2022 Bonds shall be payable in lawful money of the United States of America.

Each Series 2022 Bond shall be dated as of the Closing Date, and shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (b) unless it is authenticated on or before October 15, 2022, in which event it shall bear interest from the Closing Date; provided, however, that if, as of the date of authentication of any Series 2022 Bond, interest thereon is in default, such Series 2022 Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. 319
46700.50029\34828149.3
6 SECTION 13.03 Form and Execution of Bonds. Only such of the Series 2022 Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A, manually executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture Supplement, and such certificate of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture Supplement.

ARTICLE XIV
ISSUANCE OF SERIES 2022 BONDS; APPLICATION OF PROCEEDS; RESERVE FUND
SECTION 14.01 Issuance of the Series 2022 Bonds. At any time after the execution of this Indenture Supplement, the Authority may execute and the Trustee shall authenticate and, upon the Written Request of the Authority, deliver Series 2022 Bonds in the aggregate principal amount of ________________ Dollars ($___________).

SECTION 14.02 Application of Proceeds at Closing. The proceeds received from the sale of the Series 2022 Bonds (being $___________ in par amount of Series 2022 Bonds, less $________ in underwriter’s discount, [and less the premium of $_________ for the issuance of the Municipal Bond Insurance Policy, and less the amount of $__________ for the payment of the premium for the Reserve Fund Surety Bond], shall be deposited in trust with the Trustee, who shall further deposit or transfer such proceeds as follows:
(i) the Trustee shall deposit the amount of $________________ to the Improvement Fund; and
(ii) the Trustee shall deposit the amount of $__________ in the Costs of Issuance Fund.

For record keeping purposes, the Trustee may establish such accounts as may be necessary to reflect such transfer of proceeds.

SECTION 14.03 Establishment and Application of Costs of Issuance Fund . The Trustee shall establish, maintain and hold in trust a separate fund designated as the “Costs of Issuance Fund.” The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee to pay the Costs of Issuance upon submission of Written Requisitions of the Authority stating the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against said fund. On _________ 1, 2022, or upon the earlier Written Request of the Authority, all amounts remaining in the Costs of Issuance Fund shall be transferred by the Trustee to the Interest Fund and the Costs of Issuance Fund shall be closed.

SECTION 14.04 Improvement Fund. The Trustee shall establish, maintain and hold in trust a separate fund to be known as the “Improvement Fund.” The Trustee shall disburse moneys in each account of the Improvement Fund from time to time upon receipt by the Trustee of a Written Requisition of the City, as agent of the Authority, which: (a) states with respect to each disbursement to be made (i) the requisition number, (ii) the name and address of the person, firm or corporation to whom payment will be made, (iii) the amount to be disbursed, (iv) that each 320
46700.50029\34828149.3
7 obligation mentioned therein is a proper charge against the respective account of the Improvement Fund and has not previously been disbursed by the Trustee from amounts in the Improvement Fund, (v) that all conditions precedent set forth in the Lease Agreement Supplement with respect to such disbursement have been satisfied, and (vi) that the amount of such disbursement is to purchase additional property or to improve or construct the Project; and (b) specifies in reasonable detail the nature of the obligation. Each such Written Requisition of the City or Authority shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. Upon the filing with the Trustee of a Written Certificate of the Authority stating that the construction of any Project or the acquisition of any additional property has been completed or that all Written Requisitions intended to be filed by the Authority have been filed, the Trustee shall withdraw all amounts then on deposit in the Improvement Fund and transfer such amounts to the Base Rental Payment Fund. Any funds deposited into the Principal Fund of the Base Rental Payment Fund shall cause a corresponding proportionate credit to 2022 Base Rental Payments due from the City.

SECTION 14.05 Deposit to Reserve Fund and Provisions Relating to Reserve Fund Surety Bond. [To Come]
SECTION 14.06 Provisions Relating to Municipal Bond Insurance. [To Come].

SECTION 14.07 Validity of Series 2022 Bonds. The validity of the authorization and issuance of the Series 2022 Bonds is not dependent on and shall not be affected in any way by any proceedings taken by the Authority or the Trustee with respect to or in connection with the Lease Agreement. The recital contained in the Series 2022 Bonds that the same are issued pursuant to the Constitution and laws of the State shall be conclusive evidence of their validity and of compliance with the provisions of law in their issuance.

ARTICLE XV
REDEMPTION OF SERIES 2022 BONDS
SECTION 15.01 Terms of Redemption.
(a) Mandatory Sinking Fund Redemption. The Term Series 2022 Bonds are subject to mandatory redemption, in part by lot, from Principal Fund payments set forth in the following schedule on November 1, ____ and on November 1, ____, respectively, and each respective November 1 thereafter at a redemption price equal to the principal amount thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption; provided, however, that if some but not all of the Term Series 2022 Bonds have been redeemed pursuant to subsections (b) or (c) below, the total amount of Principal Fund payments to be made subsequent to such redemption shall be reduced in an amount equal to the principal amount of the Term Series 2022 Bonds so redeemed pursuant to this subsection (a) by reducing each such future Principal Fund payment on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, as shall be designated pursuant to written notice filed by the Authority with the Trustee. 321
46700.50029\34828149.3
8 Term Series 2022 Bonds Maturing November 1, ____
Mandatory
Sinking Fund
Redemption Date
(November 1)
Principal
Amount
to Be Redeemed
Term Series 2022 Bonds Maturing November 1, ____
Mandatory
Sinking Fund
Redemption Date
(November 1)
Principal
Amount
to Be Redeemed
In lieu of such redemption, the Trustee may apply amounts in the Principal Fund to the purchase of Term Series 2022 Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as may be directed by the Authority prior to the selection of Series 2022 Bonds for redemption, except that the purchase price (exclusive of accrued interest) may not exceed the redemption price then applicable to the Term Series 2022 Bonds, as set forth in a Written Request of the Authority.
(b) Optional Redemption. The Series 2022 Bonds maturing on or before November 1, ____ shall not be subject to redemption prior to their respective stated maturities. The Series 2022 Bonds maturing on or after November 1, ____, shall be subject to redemption at the option of the Authority as a whole or in part, on any date on or after November 1, ____, upon at least 45 days’ prior notice to the Trustee or shorter period as acceptable to Trustee from any available source of funds, a redemption price equal to the principal amount of the Series 2022 Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium. (c) Special Mandatory Redemption From Net Proceeds of Insurance or Condemnation Proceeds. The Series 2022 Bonds shall also be subject to redemption as a whole or in part on any date, from Net Proceeds of Insurance or proceeds of condemnation required to be used for such purpose as provided in Section 16.02 of the Lease Agreement Supplement, at a redemption price equal to the principal amount thereof plus interest accrued thereon to the date fixed for redemption, without premium.

SECTION 15.02 Selection of Series 2022 Bonds for Redemption . Except for Mandatory Sinking Fund Redemption pursuant to Section 15.01(a) hereof, whenever provision is 322
46700.50029\34828149.3
9 made in this Indenture Supplement for the redemption of less than all of the Series 2022 Bonds, the Trustee shall select the Series 2022 Bonds to be redeemed from all Series 2022 Bonds or such given portion thereof not previously called for redemption from such maturities as shall be set forth in a Written Request of the Authority filed with the Trustee. For purposes of such selection, the Trustee shall treat each Series 2022 Bond as consisting of separate $5,000 portions and each such portion shall be subject to redemption as if such portion were a separate Series 2022 Bond.

SECTION 15.03 Notice of Redemption. Notice of redemption shall be mailed by first class mail, postage prepaid, not less than twenty (20) nor more than sixty (60) days before any redemption date, to the respective Owners of any Series 2022 Bonds designated for redemption at their addresses appearing on the Registration Books, and to the Securities Depositories and to one or more of the Information Services. Each notice of redemption shall state the date of the notice, the redemption date, the place or places of redemption, whether less than all of the Series 2022 Bonds (or all Series 2022 Bonds of a single maturity) are to be redeemed, the CUSIP numbers and, if less than all of the Series 2022 Bonds of a maturity are to be redeemed, Bond numbers of the Series 2022 Bonds to be redeemed, the maturity or maturities of the Series 2022 Bonds to be redeemed and in the case of Series 2022 Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. In case of a redemption under Section 15.01(b), notice of redemption may be given if moneys sufficient to pay the redemption price are on deposit with the Trustee or available for such purpose on the date that notice of redemption is given or if such notice expressly states that such redemption is conditional on receipt by the Trustee of sufficient moneys. A conditional notice of redemption may be rescinded in the event that there are insufficient moneys to redeem such Series 2022 Bonds. Each such notice shall also state that on the redemption date there will become due and payable on each of said Series 2022 Bonds the redemption price thereof, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Series 2022 Bonds be then surrendered. Neither the failure to receive any notice nor any defect therein shall affect the proceedings for such redemption or the cessation of accrual of interest from and after the redemption date. Notice of redemption of Series 2022 Bonds shall be given by the Trustee, at the expense of the Authority, for and on behalf of the Authority.

SECTION 15.04 Partial Redemption of Series 2022 Bonds . Upon surrender of any Series 2022 Bonds redeemed in part only, the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Series 2022 Bond or Series 2022 Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Series 2022 Bonds surrendered.

SECTION 15.05 Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the redemption price of, together with interest accrued to the date fixed for redemption on, the Series 2022 Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Series 2022 Bonds (or portions thereof) so called for redemption shall become due and payable, interest on the Series 2022 Bonds so called for redemption shall cease to accrue, said Series 2022 Bonds (or portions thereof) shall cease to be entitled to any benefit or security under this Indenture Supplement, and the Owners of said Series 2022 Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof. 323
46700.50029\34828149.3
10 All Series 2022 Bonds redeemed pursuant to the provisions of this Article shall be cancelled by the Trustee upon surrender thereof and destroyed.

ARTICLE XVI

PARTICULAR COVENANTS
SECTION 16.01 Punctual Payment. The Authority shall punctually pay or cause to be paid the principal of and interest and premium (if any) on all the Series 2022 Bonds in strict conformity with the terms of the Series 2022 Bonds and of the Indenture, according to the true intent and meaning thereof, but only out of 2022 Base Rental Payments and other assets pledged for such payment as provided in the Indenture.

SECTION 16.02 Extension of Payment of Series 2022 Bonds . The Authority shall not directly or indirectly extend or assent to the extension of the maturity of any of the Series 2022 Bonds or the time of payment of any claims for interest by the purchase of such Series 2022 Bonds or by any other arrangement, and in case the maturity of any of the Series 2022 Bonds or the time of payment of any such claims for interest shall be extended, such Series 2022 Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of the Indenture, except subject to the prior payment in full of the principal of all of the Series 2022 Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section 16.02 shall be deemed to limit the right of the Authority to issue Series 2022 Bonds for the purpose of refunding any Outstanding Series 2022 Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the Series 2022 Bonds.

SECTION 16.03 Against Encumbrances. The Authority shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the 2022 Base Rental Payments and other assets pledged or assigned under the Indenture while any of the Series 2022 Bonds are Outstanding, except the pledge and assignment created by the Indenture. Subject to this limitation, the Authority expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, and reserves the right to issue other obligations for such purposes.

SECTION 16.04 Power to Issue Series 2022 Bonds and Make Pledge and Assignment. The Authority is duly authorized pursuant to law to issue the Series 2022 Bonds and to enter into this Indenture Supplement and to pledge and assign the 2022 Base Rental Payments and other assets purported to be pledged and assigned, respectively, under the Indenture in the manner and to the extent provided in the Indenture. The Series 2022 Bonds and the provisions of the Indenture are and will be the legal, valid and binding special obligations of the Authority in accordance with their terms, and the Authority and the Trustee shall at all times, subject to the provisions of Article VIII and to the extent permitted by law, defend, preserve and protect said pledge and assignment of 2022 Base Rental Payments and other assets and all the rights of the Series 2022 Bond Owners under the Indenture against all claims and demands of all persons whomsoever.

SECTION 16.05 Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with corporate trust industry standards, in which complete and accurate entries shall be made of all transactions made by it relating to the proceeds of Series 2022 Bonds, the 2022 Base Rental 324
46700.50029\34828149.3
11 Payments, the Lease Agreement and all funds and accounts established pursuant to the Indenture.

Such books of record and account shall be available for inspection by the Authority and the City, during business hours, upon reasonable notice, and under reasonable circumstances. The Trustee shall furnish the Authority a monthly cash transaction statements which include detail for all investment transactions effected by the Trustee or brokers selected by the Authority, provided that the Trustee shall not be obligated to deliver any accounting of any fund or account that (a) has a balance of zero and (b) has not had any activity since the last reporting date. Upon the Authority’s election, such statements will be delivered via the Trustee’s online service and upon electing such service, paper statements will be provided only upon request. The Authority waives the right to receive brokerage confirmations of security transactions effected by the Trustee as they occur, to the extent permitted by law. The Authority further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker.

SECTION 16.06 Tax Covenants.
(a) The Authority shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Series 2022 Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code.
(b) The Authority covenants and agrees that it will not make or permit any use of the proceeds of the Series 2022 Bonds or other funds of the Authority which would cause the Series 2022 Bonds to be “arbitrage bonds” within the meaning of Section 148(a) of the Code, and further covenants that it will observe and not violate the requirements of Sections 145 and 148 of the Code. The Trustee shall be entitled to receive and to rely upon an opinion of Bond Counsel as to the conformity of any use or proposed use of the proceeds of the Series 2022 Bonds with the requirements of said Sections 145 and 148 of the Code.
(c) The Authority shall not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the proceeds of the Series 2022 Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Series 2022 Bonds would have caused the Series 2022 Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code. (d) The Authority shall take all actions necessary to assure the exclusion of interest on the Series 2022 Bonds from the gross income of the owners of the Series 2022 Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Series 2022 Bonds.
(e) Notwithstanding any provision of this Section, if the Authority shall provide to the Trustee an opinion of Bond Counsel that any action required under Section 15.07 of the Lease Agreement or this Section 16.06 is no longer required, or that some further action is required to maintain the tax-exempt status of interest on the Series 2022 Bonds, the Trustee and the Authority may rely conclusively on such opinion in complying with the requirements of this Section, and the covenants contained herein shall be deemed to be modified to that extent. 325
46700.50029\34828149.3
12 SECTION 16.07 Lease Agreement. Subject to the provisions of Article VIII of the Indenture, the Trustee shall promptly collect all amounts due from the City pursuant to the Lease Agreement Supplement. Subject to the provisions of Article VIII of the Indenture, the Trustee shall enforce, and take all steps, actions and proceedings which the Trustee determines to be reasonably necessary for the enforcement of all of its rights thereunder as assignee of the Authority and for the enforcement of all of the obligations of the City under the Lease Agreement.

SECTION 16.08 Waiver of Laws. The Authority shall not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law now or at any time hereafter in force that may affect the covenants and agreements contained in this Indenture Supplement or in the Series 2022 Bonds, and all benefit or advantage of any such law or laws is hereby expressly waived by the Authority to the extent permitted by law.

SECTION 16.09 Further Assurances. The Authority will make, execute and deliver any and all such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture Supplement and for the better assuring and confirming the rights and benefits provided in this Indenture Supplement to the Series 2022 Bond Owners.

SECTION 16.10 Leased Premises. If an event of abatement occurs pursuant to Section 16.03 of the Lease Agreement Supplement, the City shall use its best efforts to the extent permissible under the laws of the State of California to make all 2022 Base Rental Payments in excess of the amount of rental interruption insurance, if necessary, in order to ensure the reconstruction, repair, restoration, modification or improvement of the Leased Premises.

ARTICLE XVII

MISCELLANEOUS
SECTION 17.01 Liability of Authority Limited to 2022 Base Rental Payments .

Notwithstanding anything in this Indenture Supplement or in the Series 2022 Bonds contained, the Authority shall not be required to advance any moneys derived from any source other than the 2022 Base Rental Payments and other assets pledged under the Indenture for any of the purposes in this Indenture Supplement mentioned, whether for the payment of the principal of or interest on the Series 2022 Bonds or for any other purpose of this Indenture Supplement. Nevertheless, the Authority may, but shall not be required to, advance for any of the purposes hereof any funds of the Authority which may be made available to it for such purposes.

SECTION 17.02 Limitation of Rights to Parties and Bond Owners . Nothing in this Indenture Supplement or in the Series 2022 Bonds expressed or implied is intended or shall be construed to give to any person other than the Authority, the Trustee, the City and the Owners of the Series 2022 Bonds, any legal or equitable right, remedy or claim under or in respect of the Indenture or this Indenture Supplement or any covenant, condition or provision therein or herein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Authority, the Trustee, the City and the Owners of the Series 2022 Bonds.
326
46700.50029\34828149.3
13 SECTION 17.03 Funds and Accounts. Any fund or account required by the Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with corporate trust industry standards to the extent practicable, and with due regard for the requirements of Section 16.05 and for the protection of the security of the Series 2022 Bonds and the rights of every Owner thereof.

SECTION 17.04 Severability of Invalid Provisions . If any one or more of the provisions contained in this Indenture Supplement or in the Series 2022 Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Indenture Supplement and such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture Supplement, and this Indenture Supplement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Authority hereby declares that it would have entered into this Indenture Supplement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Series 2022 Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable.

SECTION 17.05 Notices. All written notices to be given under this Indenture Supplement shall be given by first class mail, overnight mail, facsimile transmission, electronic mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) 48 hours after deposit in the United States mail, postage prepaid, or (c) otherwise, upon actual receipt. The Authority, the City or the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.

If to the Authority: Ontario Public Financing Authority 303 East B Street
Ontario, CA 91764
Attention: Executive Director of Finance
Fax No.: (909) 395-2385
If to the City: City of Ontario
303 East B Street
Ontario, CA 91764
Attention: City Manager
Fax No.: (909) 395-2385
If to the Trustee: The Bank of New York Mellon Trust Company, N.A. 333 South Hope Street, Suite 2525
Los Angeles, CA 90071
Attention: Corporate Trust
327
46700.50029\34828149.3
14 [If to the Insurer: See Section ____ hereof.]
SECTION 17.06 The Insurer As Third Party Beneficiary . The Insurer is recognized as and shall be deemed to be a third party beneficiary of this Indenture and may enforce the provisions of this Indenture Supplement and the Indenture as if it were a party thereto.

SECTION 17.07 Waiver of Personal Liability . No member, officer, agent or employee of the Authority shall be individually or personally liable for the payment of the principal of or interest or premium (if any) on the Series 2022 Bonds or be subject to any personal liability or accountability by reason of the issuance thereof; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law or by this Indenture.

SECTION 17.08 Benefit of Parties. Nothing in the Indenture expressed or implied is intended or shall be construed to confer upon, or to give or grant to, any person or entity, other than the Authority, the Trustee, and the registered Owners of the Series 2022 Bonds, any right, remedy or claim under or by reason of the Indenture or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in the Indenture contained by and on behalf of the Authority shall be for the sole and exclusive benefit of the Authority, the Trustee and the registered Owners of the Series 2022 Bonds.

SECTION 17.09 Successor Is Deemed Included in All References to Predecessor .

Whenever in this Indenture either the Authority and the Trustee are named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the Authority and the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.

SECTION 17.10 Execution in Several Counterparts. This Indenture Supplement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the Authority and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument.

SECTION 17.11 Governing Law. This Indenture Supplement shall be governed by and construed in accordance with the laws of the State. [Signature pages follows]
328
46700.50029\34828149.3
S-1
IN WITNESS WHEREOF, the ONTARIO PUBLIC FINANCING AUTHORITY has caused this Indenture Supplement to be signed in its name by its Executive Director and attested to by its Secretary, and The Bank of New York Mellon Trust Company, N.A. in token of its acceptance of the trusts created hereunder, has caused this Indenture Supplement to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written.

ONTARIO PUBLIC FINANCING AUTHORITY
By______________________________________
Scott Ochoa
Executive Director
Attest:

By_________________________________
Sheila Mautz
Secretary
-Signature Page-
First Amendment and Supplement to Indenture
329
46700.50029\34828149.3
S-2

THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
By______________________________________
Authorized Signatory
-Signature Page-
First Amendment and Supplement to Indenture
330
46700.50029\34828149.3
A-1

EXHIBIT A

FORM OF BOND
No. R-_____ ***$________***

UNITED STATES OF AMERICA

STATE OF CALIFORNIA

ONTARIO PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE BONDS, SERIES A
(CIVIC CENTER IMPROVEMENTS)

INTEREST RATE MATURITY DATE DATED DATE CUSIP
____% November 1, ____
REGISTERED OWNER:

PRINCIPAL AMOUNT: DOLLARS
The ONTARIO PUBLIC FINANCING AUTHORITY, a joint powers authority duly organized and existing under and by virtue of the laws of the State of California (the “Authority”), for value received, hereby promises to pay to the Registered Owner specified above or registered assigns (the “Registered Owner”), on the Maturity Date specified above (subject to any right of prior redemption hereinafter provided for), the Principal Amount specified above, in lawful money of the United States of America, and to pay interest thereon in like lawful money from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this Bond unless (i) this Bond is authenticated on or before an Interest Payment Date and after the close of business on the fifteenth day of the month preceding such interest payment date, in which event it shall bear interest from such Interest Payment Date, or (ii) this Bond is authenticated on or before October 15, 2022 in which event it shall bear interest from the Dated Date; provided, however, that if at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on this Bond, at the Interest Rate per annum specified above, payable semiannually on each May 1 and November 1, commencing November 1, 2022 (collectively, the “Interest Payment Dates”), calculated on the basis of a 360-day year composed of twelve 30-day months. Principal hereof and premium, if any, upon early redemption hereof are payable upon presentation and surrender hereof at the corporate trust office (the “Office”) of The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), in Los Angeles, California. Interest hereon is payable by check of the Trustee mailed to the Registered Owner hereof at the Registered Owner’s address as it appears on the registration books of the Trustee as of the close of business on the fifteenth day of the month preceding each Interest Payment Date (a “Record Date”), or, upon written request filed with the Trustee (at least five days prior) to such Record Date by a Registered Owner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer in immediately available funds to an account in the United States designated by such Registered Owner in such written request.
331
46700.50029\34828149.3
A-2
This Bond is one of a duly authorized issue of bonds of the Authority designated as the “Ontario Public Financing Authority 2022 Lease Revenue Bonds, Series A (Civic Center Improvements)” (the “Bonds”), in an aggregate principal amount of ______________________________ Dollars ($___________), all of like tenor and date (except for such variation, if any, as may be required to designate varying numbers, maturities, interest rates or redemption provisions) and all issued pursuant to the provisions of the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Act”), and pursuant to an Indenture dated as of July 1, 2017, as supplemented by that First Amendment and Supplement to Indenture, dated as of ________________, 2022, each by and between the Authority and the Trustee (together, the “Indenture”) and a resolution of the governing body of the Authority adopted on __________________, 2022, authorizing the issuance of the Bonds. Reference is hereby made to the Indenture (copies of which are on file at the office of the Authority) and all supplements thereto for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the 2022 Base Rental Payments, and the rights thereunder of the owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Authority thereunder, to all of the provisions of which the Registered Owner of this Bond, by acceptance hereof, assents and agrees.

The Bonds have been issued by the Authority to finance the leasing by the Authority of certain public facilities to be leased back to the City of Ontario (the “City”) pursuant to the hereinafter described Lease Agreement, by and between the Authority and the City, for the purpose of financing certain improvements to the Civic Center of the City.

This Bond and the interest and premium, if any, hereon and all other Bonds and the interest and premium, if any, thereon (to the extent set forth in the Indenture) are special obligations of the Authority, and are payable from, and are secured by a charge and lien on the 2022 Base Rental Payments, as defined in the Indenture, consisting primarily of 2022 Base Rental Payments payable by the City for the use and possession of certain land and improvements (the “Leased Premises”) pursuant to a Lease Agreement, dated as of July 1, 2017, as amended and supplemented by that First Amendment and Supplement to Lease Agreement, dated as of ________________, 2022, by and between the Authority as lessor and the City as lessee (together, the “Lease Agreement”). As and to the extent set forth in the Indenture, all of the 2022 Base Rental Payments are exclusively and irrevocably pledged in accordance with the terms hereof and the provisions of the Indenture, to the payment of the principal of and interest and premium (if any) on the Bonds. Such payments are payable on a parity with payments to be made with respect to the Ontario Public Financing Authority 2017 Lease Revenue Refunding Bonds.

The rights and obligations of the Authority and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture, but no such modification or amendment shall extend the fixed maturity of any Bonds, or reduce the amount of principal thereof or premium (if any) thereon, or extend the time of payment, or change the method of computing the rate of interest thereon, or extend the time of payment of interest thereon, without the consent of the owner of each Bond so affected.

The Bonds maturing on or before November 1, ____, are not subject to redemption prior to their respective stated maturities. The Bonds maturing on or after November 1, ____, are subject to redemption at the option of the Authority as a whole or in part, on any date on or after November 1, ____, from any available source of funds, at a redemption price equal to the principal amount 332
46700.50029\34828149.3
A-3
of the Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium.

The Bonds maturing on November 1, ____, and on November 1, ____, are each subject to mandatory redemption, in part by lot, from Sinking Account payments on November 1, ____, and on November 1, ____, respectively, and on each respective November 1 thereafter, in the amounts as set forth in the Indenture, at a redemption price equal to one hundred percent (100%) of the principal amount thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption.

The Bonds are also subject to redemption as a whole or in part, on any date, from any Net Proceeds (as such term is defined in the Indenture) of hazard or title insurance proceeds not used to repair or replace any portion of the Leased Premises or condemnation proceeds received with respect to the Leased Premises and elected by the City to be used for such purpose pursuant to the Lease Agreement, at a redemption price equal to the principal amount thereof plus interest accrued thereon to the date fixed for redemption, without premium.

As provided in the Indenture, notice of redemption shall be mailed by the Trustee by first class mail not less than twenty (20) nor more than sixty (60) days prior to the redemption date to the respective owners of any Bonds designated for redemption at their addresses appearing on the registration books of the Trustee, but neither failure to receive such notice nor any defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption or the cessation of accrual of interest thereon from and after the date fixed for redemption. In case of an optional redemption, notice of redemption may be given if moneys sufficient to pay the redemption price are on deposit with the Trustee or available for such purpose on the date that notice of redemption is given or if such notice expressly states that such redemption is conditional on receipt by the Trustee of sufficient moneys. A conditional notice of redemption may be rescinded in the event that there are insufficient moneys to redeem such bonds.

If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest shall cease to accrue hereon from and after the date fixed for redemption.

This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon registration of such transfer, a new Bond or Bonds, of authorized denomination or denominations, for the same aggregate principal amount and of the same maturity will be issued to the transferee in exchange herefor. This Bond may be exchanged at the Office of the Trustee for Bonds of the same tenor, aggregate principal amount, interest rate and maturity, of other authorized denominations.

The Authority and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any notice to the contrary.

This Bond is not a debt of the City, the County of San Bernardino, the State of California, or any of its political subdivisions, and neither the City, said Authority, said County, said State, nor any of its political subdivisions, is liable hereon nor in any event shall this Bond be payable 333
46700.50029\34828149.3
A-4
out of any funds or properties of the Authority other than the 2022 Base Rental Payments as such term is defined in the Indenture.

It is hereby certified, recited and declared by the Authority that all of the things, conditions and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time, form and manner as required by the Act and the laws of the State of California and that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Act or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.

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 signed by the Trustee.

IN WITNESS WHEREOF, the Ontario Public Financing Authority has caused this Bond to be executed in its name and on its behalf with the facsimile signature of its Executive Director and attested to by the facsimile signature of its Secretary, all as of the Dated Date specified above.

ONTARIO PUBLIC FINANCING AUTHORITY
By_________________________________
Scott Ochoa
Executive Director
ATTEST:
______________________________
Sheila Mautz
Secretary
334
46700.50029\34828149.3
A-5

CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture.

Dated:

THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
By_________________________________
Authorized Signatory
335
46700.50029\34828149.3
A-6
(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 Bond and do(es) hereby irrevocably constitute and appoint ______________________ _________________________________________ attorney, to transfer the same on the books of the Trustee, with full power of substitution in the premises.

Dated: _______________________
Signature Guaranteed:

Note: Signature guarantee shall be made by a
guarantor institution participating in
the Securities Transfer Agents
Medallion Program or in such other
guarantee program acceptable to the
Trustee.

Note: The signature(s) on this Assignment
must correspond with the name(s) as
written on the face of the within Bond
in every particular, without alteration
or enlargement or any change
whatsoever.
336
46700.50029\34828149.3
A-7

BOND INSURANCE
337
46700.50029\34828149.3
B-1

EXHIBIT B

DESCRIPTION OF PROJECT
338
46700.50029\34828169.3
RECORDING REQUESTED BY:

Ontario Public Financing Authority
AND WHEN RECORDED RETURN TO:

Kim A. Byrens, Esq.

Best Best & Krieger LLP
3390 University Avenue, Suite 400
Riverside, CA 92502
[Space above for Recorder’s use.]

THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11921 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.

FIRST AMENDMENT TO GROUND LEASE
by and between

CITY OF ONTARIO
and

ONTARIO PUBLIC FINANCING AUTHORITY
Dated as of _______________, 2022
Relating to
$____________________

ONTARIO PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE BONDS (CIVIC CENTER IMPROVEMENTS)

SERIES A
339
46700.50029\34828169.3

FIRST AMENDMENT TO GROUND LEASE
THIS FIRST AMENDMENT TO GROUND LEASE (this “First Amended Ground Lease”), executed and entered into as __________________, 2022, is by and between the CITY OF ONTARIO (the “City”), a municipal corporation and general law city duly organized and existing under and by virtue of the Constitution and laws of the State of California, as lessor, and the ONTARIO PUBLIC FINANCING AUTHORITY (the “Authority”), a joint exercise of powers entity duly organized and existing under the laws of the State of California, as lessee.

WITNESSETH:

WHEREAS, the City and the Authority desire to finance a portion of the costs of the acquisition, construction and installation of various public improvements (the “ Project”); WHEREAS, the City has previously leased certain real property and the improvements located thereon (the “Property”) to the Authority pursuant to Ground Lease dated July 1, 2017, and the City has subleased the Property back from the Authority pursuant to a Lease Agreement, dated July 1, 2017 (the “Lease Agreement”);
WHEREAS, the City and the Authority have determined that it would be in the best interests of the City and the Authority to provide the funds necessary to finance the Project through the issuance by the Authority of bonds payable from the base rental payments (the “Base Rental Payments”) to be made by the City under the Lease Agreement, as amended and supplemented by that First Amendment and Supplement to Lease Agreement (the “Lease Agreement Supplement”), by and between the City and the Authority, dated __________, 2022;
WHEREAS, the City and the Authority have determined that it would be in the best interests of the City and the Authority to provide for the issuance of additional bonds under the Indenture, payable on a parity with the Base Rental Payments, and that additional property should be added to the Ground Lease and the Lease Agreement to accommodate the increased size of the proposed bond issue; WHEREAS, the additional property to be added to the Ground Lease is described in Exhibit A attached hereto;
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this First Amended Ground Lease do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this First Amended Ground Lease;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS
Except as otherwise defined herein, or unless the context clearly otherwise requires, words and phrases defined in Article I of the Lease Agreement shall have the same meaning in this First Amended Ground Lease.
340
46700.50029\34828169.3
2 ARTICLE II
LEASE OF THE PROPERTY; RENTAL
Section 2.01 Lease of Property . The City hereby leases to the Authority, and the Authority hereby leases from the City, for the benefit of the Owners of the Bonds, the Property, subject only to Permitted Encumbrances, to have and to hold for the term of this First Amended Ground Lease. The Property shall include all of the Property described in the 2017 Ground Lease and the Property described in Exhibit A hereto.

Section 2.02 Rental. The Authority shall pay to the City as and for rental of the Property hereunder, the sum of $1.00, the receipt of which is hereby acknowledged.

ARTICLE III

QUIET ENJOYMENT
The parties intend that the Property will be leased back to the City pursuant to the Lease Agreement, and the Lease Agreement Supplement for the term thereof. It is further intended that, to the extent provided herein and in the Lease Agreement, if an event of default occurs under the Lease Agreement, the Authority, or its assignee, will have the right, for the then remaining term of this First Amended Ground Lease to: (a) take possession of the Property; (b) if it deems it appropriate, cause an appraisal of the Property and a study of the then reasonable use thereof to be undertaken; and (c) relet the Property. Subject to any rights the City may have under the Lease Agreement (in the absence of an event of default) to possession and enjoyment of the Property, the City hereby covenants and agrees that it will not take any action to prevent the Authority from having quiet and peaceable possession and enjoyment of the Property during the term hereof and will, at the request of the Authority and at the City’s cost, to the extent that it may lawfully do so, join in any legal action in which the Authority asserts its right to such possession and enjoyment.

ARTICLE IV

SPECIAL COVENANTS AND PROVISIONS
Section 4.01 Waste. The Authority agrees that at all times that it is in possession of the Property, it will not commit, suffer or permit any waste on the Property, and that it will not willfully or knowingly use or permit the use of the Property for any illegal purpose or act.

Section 4.02 Further Assurances and Corrective Instruments . The City and the Authority agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Property hereby leased or intended so to be or for carrying out the expressed intention of this First Amended Ground Lease, the Indenture, as supplemented, and the Lease Agreement, as supplemented.

Section 4.03 Waiver of Personal Liability . All liabilities under this First Amended Ground Lease on the part of the Authority shall be solely liabilities of the Authority as a joint exercise of powers entity, and the City hereby releases each and every director, officer and employee of the Authority of and from any personal or individual liability under this First Amended Ground Lease. No director, officer or employee of the Authority shall at any time or under any circumstances be individually or personally liable under this First Amended Ground Lease to the City or to any other party whomsoever for anything done or omitted to be done by the Authority hereunder.
341
46700.50029\34828169.3
3 All liabilities under this First Amended Ground Lease on the part of the City shall be solely liabilities of the City as a public corporation, and the Authority hereby releases each and every member, officer and employee of the City of and from any personal or individual liability under this First Amended Ground Lease. No member, officer or employee of the City shall at any time or under any circumstances be individually or personally liable under this First Amended Ground Lease to the Authority or to any other party whomsoever for anything done or omitted to be done by the City hereunder.

Section 4.04 Taxes. The City covenants and agrees to pay any and all assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Property.

Section 4.05 Right of Entry . The City reserves the right for any of its duly authorized representatives to enter upon the Property at any reasonable time to inspect the same.

Section 4.06 Representations of the City. The City represents and warrants to the Authority and the Trustee as follows:
(a) the City has the full power and authority to enter into, to execute and to deliver this First Amended Ground Lease, and to perform all of its duties and obligations hereunder, and has duly authorized the execution of this First Amended Ground Lease; (b) except for Permitted Encumbrances, the Property is not subject to any dedication, easement, right of way, reservation in patent, covenant, condition, restriction, lien or encumbrance which would prohibit or materially interfere with the use of the Property for governmental purposes as contemplated by the City;
(c) all taxes, assessments or impositions of any kind with respect to the Property, except current taxes, have been paid in full; and
(d) the Property is necessary to the City in order for the City to perform its governmental functions.

Section 4.07 Representations of the Authority. The Authority represents and warrants to the City and the Trustee that the Authority has the full power and authority to enter into, to execute and to deliver this First Amended Ground Lease, and to perform all of its duties and obligations hereunder, and has duly authorized the execution and delivery of this First Amended Ground Lease.

ARTICLE V

ASSIGNMENT, SUBLEASING, MORTGAGING AND SELLING
Section 5.01 Assignment and Subleasing. This First Amended Ground Lease may be sold or assigned and the Property subleased, as a whole or in part, by the Authority without the necessity of obtaining the consent of the City, if an event of default occurs under the Lease Agreement. The Authority shall, within 30 days after such an assignment, sale or sublease, furnish or cause to be furnished to the City a true and correct copy of such assignment, sale or sublease, as the case may be.

Section 5.02 Restrictions on City . The City agrees that, except with respect to Permitted Encumbrances, it will not mortgage, sell, encumber, assign, transfer or convey the Property or any portion thereof during the term of this First Amended Ground Lease. 342
46700.50029\34828169.3
4 ARTICLE VI
TERM; TERMINATION
Section 6.01 Term. The term of this First Amended Ground Lease shall commence as of the date of commencement of the term of the Lease Agreement Supplement and shall remain in full force and effect from such date to and including November 1, ____, unless such term is extended or sooner terminated as hereinafter provided.

Section 6.02 Extension; Early Termination. If, on November 1, ____,the Series 2022 Bonds shall not be fully paid, or provision therefor made in accordance with Article X of the Indenture, as supplemented, or the Indenture shall not be discharged by its terms, or if the Rental Payments payable under the Lease Agreement, as supplemented, shall have been abated at any time, then the term of this First Amended Ground Lease shall be automatically extended until the date upon which all Series 2022 Bonds shall be fully paid, or provision therefor made in accordance with Article X of the Indenture, as supplemented, and the Indenture shall be discharged by its terms, except that the term of this First Amended Ground Lease shall in no event be extended more than ten years. If, prior to November 1, ____, all Series 2022 Bonds shall be fully paid, or provisions therefor made in accordance with Article X of the Indenture, as supplemented, and the Indenture shall be discharged by its terms, the term of this First Amended Ground Lease shall end simultaneously therewith.

ARTICLE VII

MISCELLANEOUS
Section 7.01 Binding Effect. This First Amended Ground Lease shall inure to the benefit of and shall be binding upon the City, the Authority and their respective successors and assigns.

Section 7.02 Severability. In the event that any provision of this First Amended Ground Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

Section 7.03 Amendments, Changes and Modifications. This First Amended Ground Lease may be amended, changed, modified, altered or terminated only in accordance with the provisions of the Lease Agreement, as supplemented.

Section 7.04 Assignment to Trustee. The Authority and City acknowledge that the Authority has assigned its right, title and interest in and to this First Amended Ground Lease (but none of its obligations and none of its rights to provide consents or approvals hereunder) to the Trustee pursuant to certain provisions of the Assignment Agreement. The City consents to such assignment.

Section 7.05 Execution In Counterparts . This First Amended Ground Lease 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.

Section 7.06 Applicable Law. This First Amended Ground Lease shall be governed by and construed in accordance with the laws of the State of California. 343
46700.50029\34828169.3
5 Section 7.07 Captions. The captions or headings in this First Amended Ground Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this First Amended Ground Lease.
(Signature page follows.)
344
46700.50029\34828169.3
S-1
IN WITNESS WHEREOF, the Authority and the City have caused this First Amended Ground Lease to be executed by their respective officers hereunto duly authorized, all as of the day and year first above written.

CITY OF ONTARIO
By:

Scott Ochoa
City Manager
ATTEST:

Sheila Mautz
City Clerk

ONTARIO PUBLIC FINANCING AUTHORITY
By:

Paul S. Leon
Chairperson
ATTEST:

Sheila Mautz
Secretary
-Signature Page-
First Amendment to Ground Lease
345
46700.50029\34828169.3
CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT CIVIL CODE § 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature _____________________________ (Seal)
346
46700.50029\34828169.3
CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT CIVIL CODE § 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature _____________________________ (Seal)
347
46700.50029\34828169.3
A-1

EXHIBIT A

DESCRIPTION OF THE PROPERTY
348
46700.50029\34828265.2

RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:

Kim A. Byrens, Esq.

Best Best & Krieger LLP
3390 University Avenue, Suite 400
Riverside, CA 92502

THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.

ASSIGNMENT AGREEMENT
by and between the

ONTARIO PUBLIC FINANCING AUTHORITY
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Assignee
Dated as of ________________, 2022
349
46700.50029\34828265.2
1 ASSIGNMENT AGREEMENT
This Assignment Agreement (the “Assignment Agreement”), dated as of ___________, 2022, by and between the ONTARIO PUBLIC FINANCING AUTHORITY, a joint exercise of powers agency, duly organized and existing under and by virtue of the Constitution and laws of the State of California (the “Authority”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Assignee (the “Assignee”);
W I T N E S S E T H:

WHEREAS, the Authority and the City of Ontario, a municipal corporation organized and existing under and by virtue of the Constitution and laws of the State of California (the “City”), have executed and entered into a Lease Agreement, dated as of July 1, 2017, as amended and supplemented by that First Amendment and Supplement to Lease Agreement, dated as of __________, 2022, by and between the Authority as lessor and the City as lessee (together, the “Lease Agreement”), a memorandum of which is recorded concurrently herewith, whereby the parties have leased certain property (the “Leased Premises”), which is described more fully in Exhibit A attached hereto and by this reference incorporated herein; WHEREAS, under and pursuant to the Lease Agreement, the City is obligated to make scheduled base rental payments (the “Base Rental Payments”) to the Authority; WHEREAS, for the purpose of financing the acquisition and construction of capital projects of the City (the “Project”), the Authority desires to issue its 2022 Lease Revenue Bonds, Series A (Civic Center Improvements) (the “Bonds”) under a certain Indenture of Trust dated as of July 1, 2017, as amended and supplemented by that First Amendment and Supplement to Indenture, dated as of ______________, 2022 (together, the “Indenture”) by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee; WHEREAS, the Authority desires to assign to the Assignee without recourse all its rights to receive the Base Rental Payments to be paid by the City under and pursuant to the Lease Agreement and certain other rights thereunder and under the Lease Agreement to the Trustee in order to pay all of the Bonds as and when payment thereof becomes due; and WHEREAS, the Authority hereby certifies that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution of and entering into the Assignment Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Assignment Agreement;

NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE

MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR

OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS:

SECTION 1. Assignment . The Authority, for $__________and for other good and valuable consideration in hand received, does hereby sell, assign and transfer, without recourse, to the Assignee each and all of its rights under the Lease Agreement (but not including the right of 350
46700.50029\34828265.2
2 the Authority to receive payment of its fees, expenses and reimbursements), including its right to receive the Base Rental Payments from the City under the Lease Agreement and its right to exercise such rights and remedies conferred on the Authority under the Lease Agreement as may be necessary to enforce payment of the Base Rental Payments when due or otherwise to protect its interests in the event of a default by the City, and all rights of entry in and upon the Leased Premises, as defined in the Lease Agreement, as provided in the Lease Agreement (the “Assigned Property”). This assignment is absolute and irrevocable and is presently effective, and all Base Rental Payments shall be applied and the rights so assigned shall be exercised by the Assignee as provided therein.

SECTION 2. Acceptance . The Assignee hereby accepts the foregoing assignment for the benefit of the registered owners of the Bonds, subject to the conditions and terms of the Indenture, and all Base Rental Payments received by the Trustee shall be applied and all such rights so assigned shall be exercised by the Trustee as provided in the Indenture.

SECTION 3. California Law . The Assignment Agreement shall be governed by and construed and interpreted in accordance with the law of the State of California.

SECTION 4. Severability . If any agreement, condition, covenant or term thereof or any application hereof shall be held by a court of competent jurisdiction to be invalid, void or unenforceable, in whole or in part, all agreements, conditions, covenants and terms hereof and all applications thereof not held invalid, void or enforceable shall continue in full force and effect and shall in no way be affected, impaired or invalidated thereby.

SECTION 5. Execution in Counterparts . The Assignment Agreement may be executed and entered into in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
351
46700.50029\34828265.2
3 IN WITNESS WHEREOF the parties hereto have executed and entered into the Assignment Agreement by their officers thereunto duly authorized as of the day and year first above written.

ONTARIO PUBLIC FINANCING AUTHORITY
By: ______________________________________
Scott Ochoa, Executive Director

THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.

By: ______________________________________
Authorized Agent
[EXECUTION PAGE OF ASSIGNMENT AGREEMENT]
352
46700.50029\34828265.2
A-1

EXHIBIT A
(See attached)
353
46700.50029\34828265.2

STATE OF CALIFORNIA )
)
COUNTY OF _________________ )
On ___________________, before me, __________________________, a Notary Public, personally appeared _______________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature _____________________________ (Seal)
354
46700.50029\34828265.2

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature _____________________________ (Seal)
355
46700.50029\34828265.2

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature _____________________________ (Seal)
356
46700.50029\34828396.2

AGENCY AGREEMENT

RELATING TO ONTARIO PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE BONDS, SERIES A
(CIVIC CENTER IMPROVEMENTS)
Dated as of __________, 2022
by and between

ONTARIO PUBLIC FINANCING AUTHORITY
and

THE CITY OF ONTARIO
357
46700.50029\34828396.2
1 AGENCY AGREEMENT
THIS AGENCY AGREEMENT is made and entered into as of the 1st day of ________, 2022 by and between the ONTARIO PUBLIC FINANCING AUTHORITY, a joint powers agency duly organized and existing under and by virtue of the laws of the State of California (the “Authority”), and the CITY OF ONTARIO, a city and municipal corporation, duly organized and existing under and by virtue of the Constitution and laws of the State of California (the “City”).

W I T N E S S E T H
WHEREAS, the Authority and the City have entered into a First Amendment and Supplement to Lease Agreement (the “Lease Agreement Supplement”), dated as of _____________, 2022, whereby the Authority agrees to lease various public facilities in order to finance the acquisition and construction of the Project, described in Exhibit A hereto (the “Project”);
WHEREAS, it is in the interests of the Authority and the City that the Authority appoint the City as its agent for the purposes of the acquisition, construction and installation of the Project, and the Authority has agreed in the Lease Agreement Supplement to appoint the City as its agent for such purposes;

C O V E N A N T S
NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other valuable consideration, the parties agree as follows:

Section 1. Definitions. All words and phrases defined in Article I of the Lease Agreement (the “Lease Agreement”), dated as of July 1, 2017, and Article XI of the Lease Agreement Supplement shall have the same meaning in this Agency Agreement.

Section 2. Appointment of City. The Authority hereby appoints the City as its agent to carry out all phases of the acquisition, construction and installation of the Project and the City, as agent of the Authority, assumes all rights, duties, responsibilities and liabilities of the Authority regarding the acquisition, construction and installation of the Project, except as limited herein. The appointment by the Authority of the City as its agent as provided in this Section and the acceptance by the City of such appointment results in the assumption by the City of duties, responsibilities and liabilities which are separate and apart from its duties, responsibilities and liabilities under the Lease Agreement, as supplemented, and such assumption does not include or transfer to the City any of the rights or obligations of the Authority under the Lease Agreement, as supplemented, which have been assigned by the Authority to the Trustee pursuant to the Indenture. It is recognized by the parties that the Authority has appointed the City for the purposes specified in this Agreement, rather than appoint another firm or entity for said purposes, based upon the Authority’s determination that the City is suitable to perform the duties, responsibilities and liabilities delegated to and assumed by it pursuant to this Agreement due to the expertise, knowledge and ability of the City’s personnel with respect to similar undertakings. 358
46700.50029\34828396.2
2 Section 3. Contracts and Payments. The City, as agent of the Authority, may enter into any purchase order, construction management agreement, architecture or engineering contract or construction contract required for the design, construction, installation and completion of the Project upon being assured that moneys sufficient for the payment thereof are then on deposit in the Improvement Fund established pursuant to Section 14.04 of the Indenture Supplement. In the event that moneys on hand in the Improvement Fund are insufficient to complete the Project, then the City shall use its lawfully available funds to complete the Project.

Section 4. Description of Project. The City, as agent of the Authority, shall have the right to make any changes in the description of the Project or of any component thereof whenever the City deems such changes to be necessary and appropriate; provided that any such change shall not alter the essential nature of the Project or impair the ability of the City to make additional 2022 Base Rental Lease Payments, and that an increase in the construction costs shall not result from such change, unless the City deposits in the Improvement Fund an amount sufficient to pay such increase.

Section 5. Supervision of Construction and Installation. The City, as agent of the Authority, shall have sole responsibility for and shall supervise construction of the Project and the purchase and installation of any personal property constituting a part of the Project. The City shall monitor the performance by any construction manager and by the construction contractors to the extent the City deems appropriate. The City shall permit the Authority, or its assignee, to inspect construction at any and all reasonable times which are deemed appropriate by the Authority, or its assignee.

Section 6. Enforcement of Contracts. The Authority hereby assigns to the City all rights and powers to enforce in its own name or the name of the Authority such purchase orders or contracts as are required for design, construction, purchase and completion of the Project, which enforcement may be at law or in equity; provided that the assignment made by the Authority herein shall not prevent the Authority, or its assignee, from asserting such rights and powers in its own behalf.

Section 7. Limited Obligation. The Authority shall not be responsible for providing, nor shall it or the Trustee provide from the proceeds of the Series 2022 Bonds, for the payment of project costs in an amount greater than the amount of said proceeds and other funds to be deposited by the Trustee in the Improvement Fund pursuant to the Indenture Supplement.

Section 8. Inspection of Records. The Authority shall have the right to inspect periodically the books and records of the City relating to the design, acquisition, construction and installation of the Project, and the City shall permit the Authority to make such inspections thereof at all reasonable times as the Authority shall deem appropriate.

Section 9. Time of Completion and Liquidated Damages. The construction and installation of the Project shall be completed on or prior to _________, 2025. It is agreed that if the City does not cause the completion of the acquisition, construction and installation of the Project by the completion date, as specified in the specifications therefor, by construction contractors or a construction manager, whichever the City deems appropriate, liquidated damages 359
46700.50029\34828396.2
3 will be assessed against the construction contractors or construction manager for each day completion is delayed in an amount not less than the maximum amount of debt service accruing on the Bonds on a daily basis. The City shall assure that all construction contracts or the construction management agreement, whichever the City deems appropriate, shall contain a provision for liquidated damages in compliance with this Section.

Section 10. Plans and Specifications. The City agrees that it will assure that the Project will be acquired, constructed and installed in accordance with final plans and specifications approved by the City. No changes or modifications which require an amendment to a pre-existing building permit shall be made in or to the final plans and specifications unless such changes or modifications are approved in writing by the City. Before approving any such changes to be undertaken, the City shall assure that there has been deposited in the Improvement Fund moneys sufficient to pay any increased costs resulting from such changes or modifications. Upon completion of construction and installation of the Project, the City will assure that there is filed with the Trustee a certificate of completion executed by the City Representative and stating that such construction and installation has been completed in accordance with the plans and specifications therefor approved by the City.

Section 11. Prevailing Wages. Each contract entered into between the City, as the agent for the Authority, and any contractor shall provide that such contractor shall pay not less than the general prevailing rate of wages as determined in accordance with Sections 1770 et seq. of the Labor Code.

Section 12. Nondiscrimination. Each contract entered into between the City, as the agent for the Authority, and any contractor shall provide that such contractor shall not discriminate against any other contractor or any employee or applicant for employment because of the race, religious creed, color, national origin or sex of such person, unless based upon a bona fide occupational qualification. In addition, in selecting contractors or in employing persons for the purposes of construction or construction management, the City shall not discriminate on the basis of race, religious creed, color, national origin, or sex of such person, unless based upon a bona fide occupational qualification.

Section 13. Performance Security. Each construction contractor hired by the City, on behalf of the Authority, shall be required to provide payment and performance bonds in amounts equal to the maximum price under its contract.

Section 14. Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon the Authority, the City and their respective successors and assigns.

Section 15. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

Section 16. Amendments, Changes and Modifications. This Agreement may not be effectively amended, changed, modified, altered or terminated without the written agreement of both parties hereto.
360
46700.50029\34828396.2
4 Section 17. Execution in Counterparts. This Agreement 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.

Section 18. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

Section 19. Headings. The captions or headings in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement.

Section 20. Notices. Any notices or filings required to be given or made under this Agreement shall be served, given or made in writing upon the City by personal delivery or registered mail addressed to:

City of Ontario
303 East “B” Street
Ontario, CA 91764
Attention: City Manager
and upon the Authority by personal delivery or registered mail addressed to:

Ontario Public Financing Authority
303 East “B” Street
Ontario, CA 91764
Attention: Executive Director
or at such other place as may be designated by either party in writing. (Signature Page follows)
361
46700.50029\34828396.2
S-1
IN WITNESS WHEREOF, the City has caused this Agreement to be executed by its officers and its corporate seal affixed, and the Authority has caused this Agreement to be executed by its officers and its corporate seal affixed, all as of the day and year first above written.

CITY OF ONTARIO
By: ____________________________________
Scott Ochoa, City Manager
ATTEST:
___________________________________
City Clerk
(SEAL)

ONTARIO PUBLIC FINANCING AUTHORITY
By: ____________________________________
Scott Ochoa, Executive Director
ATTEST:
______________________________
Secretary
-Signature Page-
Agency Agreement
362
46700.50029\34828396.2
A-1

APPENDIX A
[Description to come]
363
Stradling Yocca Carlson & Rauth
Draft of 4/29/22
4864-5835-3938v8/022249-0054
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the 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.

PRELIMINARY OFFICIAL STATEMENT DATED _____ __, 2022
NEW ISSUE – BOOK-ENTRY ONLY Insured Bonds Rating: S&P: “[__]” Underlying Rating: S&P “[__]”
See the caption “RATINGS.”
In the opinion of Best Best & Krieger LLP, Riverside, California, Bond Counsel, subject to certain qualifications described herein, under existing statutes, regulations, rules and court decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, the interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum taxes. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes. See the caption “TAX MATTERS.” $_____*

ONTARIO PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE BONDS, SERIES A
(CIVIC CENTER IMPROVEMENTS)
Dated: Date of Delivery Due: November 1, as shown on inside cover The 2022 Bonds will be issued pursuant to an Indenture, dated as of July 1, 2017, as amended and supplemented by a First Amendment and Supplement to Indenture, dated as of ____ 1, 2022, each by and between the Ontario Public Financing Authority and The Bank of New York Mellon Trust Company, N.A., as trustee. The 2022 Bonds are payable from 2022 Base Rental Payments to be made by the City for the right to the use of certain real property pursuant to a Lease Agreement, dated as of July 1, 2017, as amended and supplemented by a First Amendment and Supplement to Lease Agreement, dated as of ____ 1, 2022, each by and between the City, as lessee, and the Authority, as lessor.

The 2022 Bonds are being issued to provide funds: (i) to finance the acquisition and construction of capital projects of the City; (ii) to pay the premium for a debt service reserve surety policy to be issued by ____ and deposited in the Reserve Fund; and (iii) to pay the costs of issuing the 2022 Bonds, including the premium for a municipal bond insurance policy insuring the 2022 Bonds maturing on November 1 of the years 20__ through 20__, inclusive, to be issued by _______.

The City has covenanted under the Lease Agreement to take such action as may be necessary to include all Rental Payments (including 2022 Base Rental Payments and Additional Rental Payments) due thereunder as a separate line item in its annual budgets and to make necessary annual appropriations for all such Rental Payments. The City’s obligation to make 2022 Base Rental Payments under the Lease Agreement is subject to abatement during any period in which by reason of material damage to, or destruction or condemnation of the Leased Premises, or any defect in title thereto, there is substantial interference with the use and occupancy by the City of the Leased Premises or any portion thereof.

The 2022 Bonds are being issued in fully registered book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York. Interest on the 2022 Bonds is payable semiannually on November 1, 2022 and each May 1 and November 1 thereafter. Purchasers will not receive certificates representing their interest in the 2022 Bonds. Individual purchases will be in principal amounts of integral multiples of $5,000. Principal of and interest and premium, if any, on the 2022 Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the beneficial owners of the 2022 Bonds.

The Authority may issue Additional Bonds payable from Base Rental Payments. The 2022 Bonds, the 2017 Bonds and any Additional Bonds are collectively referred to herein as the “Bonds.” The 2022 Bonds are subject to redemption prior to maturity as described in this Official Statement.

The 2022 Bonds are special obligations of the Authority, payable solely from the 2022 Base Rental Payments and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California, or any political subdivision thereof, is pledged to the payment of the 2022 Bonds. The Authority has no taxing power.

The obligation of the City to make 2022 Base Rental Payments does not constitute a debt of the City or the State of California or any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State of California is obligated to levy or pledge any form of taxation or for which the City or the State of California has levied or pledged any form of taxation.

The 2022 Bonds are not subject to acceleration in the event of a payment default.

The scheduled payment of principal of and interest on the 2022 Bonds maturing on November 1 of the years 20__ through 20__, inclusive (collectively, the “Insured Bonds”), when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Insured Bonds by _______.
[INSURER LOGO]
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.

* Preliminary, subject to change.
364
4864-5835-3938v8/022249-0054
The 2022 Bonds will be offered when, as and if issued and received by the Underwriters, subject to the approval as to their validity by Best Best & Krieger LLP, Riverside, California, Bond Counsel. Certain legal matters will be passed upon for the City and the Authority by Best Best & Krieger LLP, Ontario, California, as City Attorney and General Counsel to the Authority. Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California is acting as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriters by Quint & Thimmig LLP, Larkspur, California, as Underwriters’ Counsel, for the Insurer by its counsel and for the Trustee by its counsel. It is anticipated that the 2022 Bonds in definitive form will be available for delivery to DTC on or about _____ __, 2022.

Ramirez & Co., Inc. Cabrera Capital Markets, LLC
Dated: _____ __, 2022
365
4864-5835-3938v8/022249-0054

MATURITY SCHEDULE
BASE CUSIP®†: 68304R
$_____*

ONTARIO PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE BONDS, SERIES A
(CIVIC CENTER IMPROVEMENTS)
Maturity Date
(November 1) Principal Amount Interest Rate Yield Price CUSIP®†
Suffix
20__ $ % %
$____ ___% Term 2022 Bonds due November 1, 20__(I), Yield: _____%, Price: _____, CUSIP®† Suffix ___

* Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the City, the Authority, the Underwriters or their agents or counsel assume responsibility for the accuracy of such numbers. (I) Insured Bond.
366
4864-5835-3938v8/022249-0054
No dealer, broker, salesperson or other person has been authorized by the City or the Authority to give any information or to make any representations in connection with the offer or sale of the 2022 Bonds 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 the City or the Authority. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sale of the 2022 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers or owners of the 2022 Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described in this Official Statement, are intended solely as such and are not to be construed as representations of fact.

The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as a part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.

This Official Statement and the information contained in this Official Statement are subject to completion or amendment without notice and neither delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the affairs of the City or the Authority or any other parties described in this Official Statement since the date hereof. These securities may not be sold, nor may an offer to buy be accepted, prior to the time that the Official Statement is delivered in final form. This Official Statement is being submitted in connection with the sale of the 2022 Bonds referred to in this Official Statement and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the City. All summaries of documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions.

Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “assume,” “project,” “budget,” “intend” or similar words. Such forward-looking statements include, but are not limited to, certain statements contained under the captions “THE CITY” and “CITY FINANCIAL INFORMATION.”

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS

CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND

UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL

RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY

DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES

NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. IN EVALUATING SUCH

STATEMENTS, POTENTIAL INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS

FACTORS THAT COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.

IN CONNECTION WITH THE OFFERING OF THE 2022 BONDS, THE UNDERWRITERS

MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2022 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITERS MAY OFFER AND SELL THE 2022 367
4864-5835-3938v8/022249-0054

BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AND

OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER

PAGE HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITERS.

THE 2022 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT AND

HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

The City maintains a website; however, information presented there is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the 2022 Bonds. [BOND INSURANCE DISCLOSURE TO COME]
368
4864-5835-3938v8/022249-0054

CITY OF ONTARIO

COUNTY OF SAN BERNARDINO

STATE OF CALIFORNIA

CITY COUNCIL AND AUTHORITY BOARD OF DIRECTORS
Paul S. Leon, Mayor and Authority Chair
Alan D. Wapner, Mayor Pro Tem and Authority Vice Chair
Jim W. Bowman, Councilmember and Authority Board Member Debra Dorst-Porada, Councilmember and Authority Board Member Ruben Valencia, Councilmember and Authority Board Member STAFF
Scott Ochoa, City Manager and Authority Executive Director James R. Milhiser, City Treasurer
Armen Harkalyan, Executive Director of Finance and Authority Treasurer Doreen Nunes, Assistant Finance Director
Sheila Mautz, City Clerk and Authority Secretary

SPECIAL SERVICES
City Attorney and Authority General Counsel
Best Best & Krieger LLP
Ontario, California
Bond Counsel
Best Best & Krieger LLP
Riverside, California
Disclosure Counsel
Stradling Yocca Carlson & Rauth,
a Professional Corporation
Newport Beach, California
Municipal Advisor
CSG Advisors Incorporated
San Francisco, California
Trustee
The Bank of New York Mellon Trust Company, N.A.

Los Angeles, California
369
i
4864-5835-3938v8/022249-0054

TABLE OF CONTENTS
INTRODUCTION .................................................1 General ...............................................................1 Security for the 2022 Bonds; Base
Rental Payments..............................................1 Limited Obligation .............................................2 Reserve Fund......................................................3 2017 Bonds.........................................................3 Bond Insurance...................................................3 Additional Bonds................................................3 The City..............................................................3 Continuing Disclosure........................................4 Risk Factors........................................................4 Summaries Not Definitive..................................4 PLAN OF FINANCE.............................................4 2022 Project........................................................4 Estimated Sources and Uses of Funds................5
THE LEASED PREMISES ...................................5 General ...............................................................5 Convention Center..............................................7 City Hall .............................................................7 Fire Department Buildings .................................8

BASE RENTAL PAYMENT
SCHEDULE ..........................................................9 THE 2022 BONDS ..............................................10 General .............................................................10 Registration, Transfers and Exchanges ............10
Redemption ......................................................11 Book-Entry Only System .................................12

SECURITY AND SOURCES OF
PAYMENT FOR THE 2022 BONDS .................13
Pledge of Base Rental Payments ......................13 Additional Bonds..............................................15 Base Rental Payments ......................................16 Additional Rental Payments .............................17 Abatement ........................................................18 Substitution or Release of the Leased
Premises........................................................18 Action on Default .............................................19 Reserve Fund....................................................19 Insurance ..........................................................20 BOND INSURANCE ..........................................21 THE CITY ...........................................................21 General .............................................................21 Largest Employers............................................22 Government and Administration ......................22
Ontario International Airport............................23 Risk Management ............................................ 23 COVID-19 Outbreak........................................ 24 CITY FINANCIAL INFORMATION ................ 27
Accounting and Financial Reporting ............... 27
General Economic Condition and
Outlook of the City....................................... 28 Budget Procedure, Current Budget and
Historical Budget Information...................... 31
Change in Fund Balance of the City
General Fund ................................................ 37 General Fund Balance Sheets of the
City ............................................................... 38 Property Taxes ................................................. 38 Sales Taxes ...................................................... 41 Transient Occupancy Taxes............................. 42 Other Taxes...................................................... 42 Services............................................................ 42 State of California Motor Vehicle In-
Lieu Payments .............................................. 42 Other Indebtedness........................................... 43 Retirement Contributions................................. 46 Other Post-Employment Benefits .................... 54
City Investment Policy..................................... 56 THE AUTHORITY............................................. 56

STATE OF CALIFORNIA BUDGET
INFORMATION................................................. 57 General............................................................. 57 Budget for State Fiscal Year 2021-22.............. 57
Proposed 2022-23 State Budget....................... 58 Potential Impact of State Financial
Condition on the City ................................... 60 Redevelopment Dissolution ............................. 60 Future State Budgets........................................ 62

CONSTITUTIONAL AND

STATUTORY LIMITATIONS ON
TAXES AND APPROPRIATIONS.................... 62
Article XIIIA of the State Constitution............ 62
Article XIIIB of the State Constitution ............ 63 Proposition 62.................................................. 63 Proposition 218 ................................................ 64 Unitary Property............................................... 64 Proposition 22.................................................. 65 Proposition 26.................................................. 65 Future Initiatives .............................................. 65 RISK FACTORS................................................. 65 General Considerations – Security for
the 2022 Bonds............................................. 66 Abatement........................................................ 66 370
ii
4864-5835-3938v8/022249-0054
Initiative and Referendum ................................67 Insurance on the Leased Premises....................67
Condemnation of the Leased Premises.............67
Value of Property .............................................68 No Acceleration of Base Rental
Payments.......................................................68 Certain Risks Associated with Sales Tax
and Other Local Tax Revenues.....................68
Assessed Value of Taxable Property................69
Dependence on State for Certain
Revenues.......................................................69 Litigation ..........................................................70 Natural Disasters ..............................................70 Climate Change ................................................71 Cybersecurity....................................................71 Hazardous Substances ......................................71 Economy of City and State...............................72 Split Roll Initiative ...........................................72 Additional City Obligations .............................72 Remedies ..........................................................72 Limitation on Trustee’s Obligations
under the Indenture .......................................73 Release of Property; Additional Bonds ............73
Limitations on Enforceability...........................73 Secondary Market.............................................75 Covenant to Budget and Appropriate ...............75
Risks Associated with Bond Insurance ............76
TAX MATTERS..................................................76 CERTAIN LEGAL MATTERS ..........................77
MUNICIPAL ADVISOR ....................................77 LITIGATION ...................................................... 78 UNDERWRITING.............................................. 78 RATINGS............................................................ 78 CONTINUING DISCLOSURE .......................... 79
FINANCIAL INTERESTS ................................. 79 MISCELLANEOUS............................................ 80

APPENDIX A DEMOGRAPHIC AND

ECONOMIC
INFORMATION....................A-1

APPENDIX B SUMMARY OF

PRINCIPAL LEGAL
DOCUMENTS....................... B-1

APPENDIX C AUDITED FINANCIAL
STATEMENTS...................... C-1

APPENDIX D FORM OF BOND
COUNSEL OPINION............D-1

APPENDIX E FORM OF

CONTINUING

DISCLOSURE
CERTIFICATE ...................... E-1

APPENDIX F BOOK-ENTRY ONLY
SYSTEM.................................F-1

APPENDIX G SPECIMEN

MUNICIPAL BOND
INSURANCE POLICY .........G-1
371
1 4864-5835-3938v8/022249-0054
$_____*

ONTARIO PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE BONDS, SERIES A
(CIVIC CENTER IMPROVEMENTS)

INTRODUCTION
General
This Official Statement, which includes the cover page and appendices (the “ Official Statement”), provides certain information concerning the above-captioned bonds (the “2022 Bonds”). The 2022 Bonds are being issued by the Ontario Public Financing Authority (the “ Authority”), a joint exercise of powers agency the members of which are the City of Ontario, California (the “ City”) and the Ontario Housing Authority (the “Housing Authority”).

The 2022 Bonds will be issued pursuant to Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the California Government Code, and an Indenture, dated as of July 1, 2017 (the “Original Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “ Trustee”), as amended and supplemented by a First Amendment and Supplement to Indenture, dated as of ____ 1, 2022 (the “ First Supplemental Indenture ” and, together with the Original Indenture, the “ Indenture”), by and between the Authority and the Trustee. The 2022 Bonds constitute “Additional Bonds” under the Original Indenture. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS—Additional Bonds.”
The 2022 Bonds are being issued in fully registered book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“ DTC”).

Purchasers will not receive certificates representing their interest in the 2022 Bonds. Individual purchases will be in integral multiples of $5,000. Principal of and interest on the 2022 Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the beneficial owners of the 2022 Bonds. See the caption “THE 2022 BONDS—Book-Entry Only System.” The 2022 Bonds are subject to redemption prior to maturity as described under the caption “THE 2022 BONDS—Redemption.”
The 2022 Bonds are being issued to provide funds: (i) to finance the acquisition and construction of capital projects of the City (collectively, the “ 2022 Project ”), as described under the caption “PLAN OF FINANCE—2022 Project;” (ii) to pay the premium for a debt service reserve surety policy (the “ Reserve Policy”) to be issued by ____ (“___” or the “Insurer”) and deposited in the Reserve Fund; and (iii) to pay the costs of issuing the 2022 Bonds, including the premium for a municipal bond insurance policy (the “ Policy”) insuring the 2022 Bonds maturing on November 1 of the years 20__ through 20__, inclusive (collectively, the “Insured Bonds”), to be issued by the Insurer. See the caption “PLAN OF FINANCE.” Security for the 2022 Bonds; Base Rental Payments
Pursuant to a Ground Lease, dated as of July 1, 2017 (the “Original Ground Lease”), by and between the City, as lessor, and the Authority, as lessee, as amended and supplemented by a First Amendment to Ground Lease, dated as of ____ 1, 2022 (the “ Supplemental Ground Lease” and, together with the Original Ground Lease, the “Ground Lease”), by and between the City, as lessor, and the Authority, as lessee, the City has leased certain real property of the City and the improvements thereon (collectively, the “ Leased Premises”) to the Authority in consideration for the Authority’s assistance in issuing the 2022 Bonds.

* Preliminary, subject to change.
372
2 4864-5835-3938v8/022249-0054
Pursuant to a Lease Agreement, dated as of July 1, 2017 (the “ Original Lease Agreement”), by and between the City, as lessee, and the Authority, as lessor, as amended and supplemented by a First Amendment and Supplement to Lease Agreement, dated as of ____ 1, 2022 (the “ Supplemental Lease Agreement” and, together with the Original Lease Agreement, the “Lease Agreement”), by and between the City, as lessee, and the Authority, as lessor, the Authority has subleased the Leased Premises back to the City in consideration for the City’s payment of semiannual lease payments (the “2022 Base Rental Payments”) to be made by the City for the right to use the Leased Premises as sublessee.

See the caption “THE LEASED PREMISES” for a description of the Leased Premises.

Under an Assignment Agreement, dated as of ____ 1, 2022 (the “ Assignment Agreement”), by and between the Authority and the Trustee, the Authority has assigned to the Trustee for the benefit of the 2022 Bond Owners substantially all of the Authority’s right, title and interest in and to the Lease Agreement, including its right to receive the 2022 Base Rental Payments due under the Lease Agreement and to enforce any remedies in the event of a default by the City.

The City has covenanted under the Lease Agreement to take such action as may be necessary to include all Rental Payments (including the 2022 Base Rental Payments and Additional Rental Payments) due thereunder as a separate line item in its annual budgets and to make necessary annual appropriations for all such Rental Payments. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS—Additional Rental Payments” for a description of Additional Rental Payments.

During any period in which, by reason of material damage to, or destruction or condemnation of, the Leased Premises, or any defect in title to the Leased Premises, there is substantial interference with the City’s right to use and occupy any portion of the Leased Premises, Rental Payments will be abated proportionately, and the City waives the benefits of Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other rights to terminate the Lease Agreement by virtue of any such interference, and the Lease Agreement will continue in full force and effect. The amount of such abatement will be agreed upon by the City and the Authority; provided, however, that the Rental Payments due for any Rental Period may not exceed the annual fair rental value of that portion of the Leased Premises available for use and occupancy by the City during such Rental Period. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS— Abatement” and “RISK FACTORS—Abatement.”
Limited Obligation
THE 2022 BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM THE 2022 BASE RENTAL PAYMENTS AND THE OTHER ASSETS PLEDGED THEREFOR UNDER THE INDENTURE. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE CITY OR THE STATE OF CALIFORNIA (THE “ STATE”), OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE 2022 BONDS. THE AUTHORITY HAS NO TAXING POWER.

THE OBLIGATION OF THE CITY TO MAKE 2022 BASE RENTAL PAYMENTS DOES NOT

CONSTITUTE A DEBT OF THE CITY OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF

WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR

RESTRICTION, AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY OR THE

STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. 373
3 4864-5835-3938v8/022249-0054
Reserve Fund
Upon issuance of the 2022 Bonds, the Reserve Policy will be deposited into the Reserve Fund in satisfaction of the Reserve Requirement. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS—Reserve Fund.”
2017 Bonds
In addition to the 2022 Bonds, the Leased Premises serve as the leased property with respect to the Authority’s 2017 Lease Revenue Refunding Bonds (the “2017 Bonds”).

The Authority has previously issued the 2017 Bonds under the Original Indenture. In connection with the issuance of the 2017 Bonds, the City leased the Leased Premises to the Authority under the Original Ground Lease and subleased the Leased Premises back from the Authority under the Original Lease Agreement. The 2017 Bonds are payable from Base Rental Payments (as such term is defined in Appendix B) made by the City under the Original Lease Agreement.

At the time of issuance of the 2022 Bonds, the City and the Authority will certify that the sum of the 2022 Base Rental Payments and the Base Rental Payments payable under the Original Lease Agreement in connection with the 2017 Bonds do not exceed the fair rental value of the Leased Premises. See the caption “THE LEASED PREMISES” for a detailed description of the Leased Premises, including the insured value thereof.

See the caption “CITY FINANCIAL INFORMATION—Other Indebtedness—General Fund Supported Debt—2017 Bonds” for further information with respect to the 2017 Bonds.

Bond Insurance
Concurrently with the issuance of the 2022 Bonds, the Insurer will issue the Policy for the Insured Bonds, consisting of the 2022 Bonds maturing on November 1 of the years 20__ through 20__, inclusive. The Policy guarantees the scheduled payment of principal of and interest on the Insured Bonds when due as set forth in the form of the Policy set forth in Appendix G. The Bonds maturing on November 1 of the years 20__ through 20__, inclusive, are not insured by the Policy.

Additional Bonds
Under the Lease Agreement, the Authority may issue additional bonds (the “ Additional Bonds ”) payable from Base Rental Payments on a parity basis with the 2022 Bonds and the 2017 Bonds. The 2022 Bonds and any Additional Bonds are collectively referred to in this Official Statement as the “Bonds.” See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS—Additional Bonds.” The City
See the captions “THE CITY” and “CITY FINANCIAL INFORMATION,” as well as Appendices A and C for information with respect to the City and the General Fund, including other obligations which are payable from general revenues of the City.

The City notes that much of the historical information related to the City is the latest available but does not in certain instances reflect the impact of the COVID-19 pandemic. See the caption “THE CITY— COVID-19 Outbreak.” Accordingly, such historical information below does not necessarily reflect present economic conditions and future information could be significantly different from such historical information. 374
4 4864-5835-3938v8/022249-0054
Continuing Disclosure
The City has agreed to provide, or to cause to be provided, to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for purposes of Securities and Exchange Commission Rule 15c2-12 certain annual financial information and operating data and, in a timely manner, notice of certain listed events. See the caption “CONTINUING DISCLOSURE.” Risk Factors
Certain events could affect the ability of the City to make the 2022 Base Rental Payments when due.

See the caption “RISK FACTORS” for a discussion of certain factors that should be considered, in addition to other matters that are set forth in this Official Statement, in evaluating an investment in the 2022 Bonds.

Summaries Not Definitive
The summaries of and references to documents, statutes, reports and other instruments in this Official Statement do not purport to be complete, comprehensive or definitive, and each such summary and reference is qualified in its entirety by the complete document, statute, report or instrument. The capitalization of any word that is not conventionally capitalized, or otherwise defined in this Official Statement, indicates that such word is defined in a particular agreement or other document and, as has the meaning that is given to such word in Appendix B. Copies of the documents described in this Official Statement will be available at the City of Ontario, 303 East B Street, Ontario, California 91764, Attention: Finance Department.

PLAN OF FINANCE
2022 Project
The City intends to undertake the following capital improvements, which collectively comprise the 2022 Project:
(i) the design and full reconstruction of Fire Station #1 and the Fire Department’s administrative offices, which will be located on the site of the Fire Training Station, at a cost of approximately $69,200,000; (ii) the design and construction of a 700-space municipal parking structure at a cost of approximately $25,080,000; and
(iii) the design and construction of a 40,000 square foot municipal annex that is expected to house approximately 200 City employees at a cost of approximately $36,000,000; and (iv) other capital improvements, as well as a contingency amount (approximately 6,000,000).

The City intends to apply proceeds of the Bonds, together with other available City reserves, to pay for the costs of the 2022 Project. The City expects to comply with all governmental approval, environmental review, public bidding and other permitting requirements for each component of the 2022 Project as required by law, and to complete all components of the 2022 Project by mid-2025. The City does not intend to capitalize interest on the 2022 Bonds during the period in which the 2022 Project is being designed and constructed.

Upon or after completion of the 2022 Project, the City expects to evaluate the pool of leased assets that is described under the caption “THE LEASED PREMISES” and to substitute the properties that comprise the 2022 Project for certain properties that currently comprise the Leased Premises. There can be no assurance as to whether or when any such substitution will occur, or as to which properties may be substituted out from the current pool of Leased Premises.
375
5 4864-5835-3938v8/022249-0054
Estimated Sources and Uses of Funds
The estimated sources and uses of funds with respect to the 2022 Bonds are shown below.

Sources(1):

Principal Amount $
Plus/Less Net Original Issue Premium/Discount
Total Sources $
Uses(1):

Deposit to Improvement Fund $
Costs of Issuance(2)
Total Uses $
(1) All amounts rounded to the nearest dollar. Totals may not add due to rounding. (2) Includes Underwriters’ discount, premium for the Policy and the Reserve Policy and certain legal, municipal advisory, rating agency, printing and other financing-related costs.

THE LEASED PREMISES
General
The Leased Premises are currently owned by the City and have been leased to the Authority pursuant to the Ground Lease, with the Authority in turn subleasing the Leased Premises back to the City pursuant to the Lease Agreement. The Leased Premises consist of the below-described properties. 376
6 4864-5835-3938v8/022249-0054

ONTARIO PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE BONDS, SERIES A
(CIVIC CENTER IMPROVEMENTS)

DESCRIPTION OF LEASED PREMISES
Property Description
Building Size
(Square Feet)(1) Location Asset Value(1)(2)
Ontario Convention Center Two story building constructed in 1997
225,000 2000 E. Convention
Center Way
$ 77,032,705
City Hall Two story building constructed
in 2011
53,260 303 East B Street 24,947,000
Fire Department Buildings
Fire Training Station(3) Three buildings constructed in 2020
29,754 1408 E. Francis
Street
7,474,000
Fire House #3(3) One story building constructed
in 1973
5,800 1408 E. Francis
Street
2,109,000
Fire Station #6(4) Two story building constructed
in 1993
10,575 2931 E. Philadelphia
Street
4,247,000
Fire House #7(4) One story building constructed
in 2005
10,893 4901 E. Vanderbilt
Street
3,918,000
Fire House #8 Two story building constructed
in 1998
10,229 3429 E. Shelby 3,665,000
Fire House #9 One story building constructed
in 2022
10,157 2661 Park Vista
Drive
4,006,000
TOTAL(5) $127,398,705
(1) Figures are approximate.
(2) Reflects insured value of improvements and contents. Land values are not reflected. (3) This property is the site of the new administrative offices of the Fire Department, which are being financed from proceeds of the 2022 Bonds. See the caption “PLAN OF FINANCE—2022 Project.” The Fire Training Station will continue to be occupied while the new administrative offices are being constructed. (4) These properties are subject to deed restrictions which prohibit residential uses. (5) Total asset value is greater than the combined principal amount of the 2022 Bonds and the 2017 Bonds.

Source: City.

The City has certified in the Lease Agreement that the annual fair rental value of the Leased Premises is at least equal to the sum of the annual Base Rental Payments payable under the Original Lease Agreement with respect to the 2017 Bonds and the 2022 Base Rental Payments.

For a discussion of the insurance required to be maintained on the Leased Premises, see the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS—Insurance.” The City has the right to substitute or release all or portion of the Leased Premises subject to certain conditions precedent. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDSSubstitution or Release of the Leased Premises.”
Upon or after completion of the 2022 Project, the City expects to evaluate the pool of leased assets that is described in the table above and to substitute the properties that comprise the 2022 Project for certain properties that currently comprise the Leased Premises. There can be no assurance as to whether or when any such substitution will occur, or as to which properties may be substituted out from the current pool of Leased Premises. See the caption “THE 2022 PROJECT.”
377
7 4864-5835-3938v8/022249-0054
Convention Center
The Ontario Convention Center (the “Convention Center”) is a two story building that is located on a

17.26-acre landscaped site in the City, at 2000 East Convention Center Way. The Convention Center, which opened in December 1997, consists of approximately 225,000 square feet of flexible exhibit, meeting and function space and is ideal for conventions, trade shows, exhibits and meetings. The Convention Center also includes approximately 1,336 parking spaces that may be utilized for event parking.

The Convention Center regularly hosts trade shows, exhibitions and conventions, public admission shows, and major meetings and banquets. The benefits to the City from use and occupancy of the Convention Center come primarily from hotel transient occupancy tax revenues and, to a lesser degree, from sales tax revenues. For the past several Fiscal Years, including throughout the duration of the COVID-19 pandemic, transient occupancy tax revenues have never been less than $10,000,000 per Fiscal Year. The Convention Center generates revenue from its operations, but not in sufficient amounts to cover operating costs and capital requirements. The City covers such deficits from its General Fund.

More than 2,500 hotel rooms exist within close proximity of the Convention Center. The Convention Center is considered to be an integral part of the economy of the City, and is a central element of the City’s tourism industry.

The City currently contracts with SMG, an independent contractor, to promote, manage, operate and market the Convention Center. SMG has broad experience providing management, operating and marketing services for public assembly facilities, including arenas, stadiums, theaters, and convention, exhibition, and trade centers. SMG currently operates over 230 facilities worldwide. The City’s original operating agreement with SMG was, in an amended form, in effect from October 1, 1999, to March 31, 2005, and provided for a City option to extend the agreement for an additional two-year term. The City and SMG subsequently entered into a second management agreement as of July 1, 2005 that was, in amended form, in effect from July 1, 2005 to June 30, 2012. Most recently, the City and SMG entered into a new management, dated as of May 1, 2012, as amended by a First Amendment to Management Agreement, dated as of June 29, 2016 (the “ 2016 Management Agreement”). The 2016 Management Agreement provides for a term ending at midnight on June 30, 2029.

The Convention Center has an insured value of $77,032,705.

Access to the Convention Center by members of the public has been restricted or subject to significant limitations during the COVID-19 pandemic, and the number of events held at the Convention Center has been lower than in years prior to the onset of the pandemic. See the caption “THE CITY—COVID-19 Outbreak.” However, the Convention Center has been fully accessible to the public, with limitations on use lifted, since the second half of 2021, and the City expects the number of events to be held at the Convention Center to return to pre-pandemic levels by mid-2022, although many events include a smaller number of attendees than prior to the pandemic.

City Hall
The City Hall complex consists of multiple administrative office buildings, the City Council chambers, a Senior Center and park and landscaping areas. Only the main City Hall building comprises a part of the Leased Premises. The main City Hall building is a two story building that was originally constructed in 1979 and fully reconstructed in 2011 with an area of 53,260 square feet. It houses administrative offices, conference rooms and kitchen facilities.

The building holds a Silver LEED (Leadership in Energy and Environmental Design) certification from the United States Green Building Council. Among other features, the building has floor, carpeting and materials with a high percentage of recycled content, paints and coating with low amounts of volatile organic 378
8 4864-5835-3938v8/022249-0054
compounds and indoor plants with high toxin-filtering abilities to improve indoor/outdoor air quality, PVC- free upholstery on furnishings, energy-efficient lighting, a variable-speed heating, ventilation and air conditioning system, high-efficiency restroom fixtures, waterless urinals and low flow toilets, drought-tolerant landscaping and automated sprinklers low-emission vehicle and high occupancy vehicle designated parking spots.

Fire Department Buildings
The City’s Fire Department serves residents from 10 strategically located fire stations, including a fire station at Ontario International Airport (“ ONT”), with a daily staffing level of approximately 60 sworn firefighters. The City’s fire stations house nine 4-person paramedic engine companies, three 4-person truck companies, a 8-person aircraft rescue fire station at ONT, a fire investigation supervisor and 2 battalion chiefs.

The Leased Premises include the Fire Department’s Fire Training Station, which consists of a one story classroom building constructed in 2020 (3,780 square feet) and two training towers constructed in 2020 (10,854 square feet and 15,120 square feet, respectively). As part of the 2022 Project, the City will design and construct a new administrative office building for the Fire Department on the site of the Fire Training Station and Fire Station #3. Operations at the Fire Training Station and Fire Station #3 will not be affected by the construction.

The Leased Premises also include Fire Stations #6-#9, which are described in detail in the table under the caption “—General.”
379
9 4864-5835-3938v8/022249-0054

BASE RENTAL PAYMENT SCHEDULE
Set forth below is a schedule of Base Rental Payments, which secure the 2022 Bonds and the 2017 Bonds, assuming no optional or extraordinary prepayments. 2022 Base Rental Payments
Base Rental
Payment
Date(1)
Base Rental
Payments
Related to 2017
Bonds Principal Interest
Total 2022 Base
Rental Payments
Total Base
Rental Payments
5/1/2022 $ 555,065.63 $ $ $ 11/1/2022 1,140,065.63
5/1/2023 540,440.63
11/1/2023 1,320,440.63
5/1/2024 520,940.63
11/1/2024 1,340,940.63
5/1/2025 500,440.63
11/1/2025 1,365,440.63
5/1/2026 478,815.63
11/1/2026 1,383,815.63
5/1/2027 456,190.63
11/1/2027 1,406,190.63
5/1/2028 432,440.63
11/1/2028 1,432,440.63
5/1/2029 407,440.63
11/1/2029 1,457,440.63
5/1/2030 381,190.63
11/1/2030 1,481,190.63
5/1/2031 353,690.63
11/1/2031 1,508,690.63
5/1/2032 336,365.63
11/1/2032 1,526,365.63
5/1/2033 318,515.63
11/1/2033 1,543,515.63
5/1/2034 300,140.63
11/1/2034 1,565,140.63
5/1/2035 280,375.00
11/1/2035 1,585,375.00
5/1/2036 259,168.75
11/1/2036 1,604,168.75
5/1/2037 225,543.75
11/1/2037 1,635,543.75
5/1/2038 201,750.00
11/1/2038 1,661,750.00
5/1/2039 165,250.00
11/1/2039 1,700,250.00
5/1/2040 126,875.00
11/1/2040 1,736,875.00
5/1/2041 86,625.00
11/1/2041 1,776,625.00
5/1/2042 44,375.00
11/1/2042 1,819,375.00
Total: $38,963,281.38 $ $ $
(1) The Base Rental Payment Date is the fifth Business Day prior to the date shown.

Source: Underwriters.
380
10 4864-5835-3938v8/022249-0054
THE 2022 BONDS
General
The 2022 Bonds will be issued in fully registered form without coupons in denominations of integral multiples of $5,000. The 2022 Bonds will be dated as of and bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) from the dated date thereof at the rates set forth on the inside cover page. Interest on the 2022 Bonds will be paid semiannually on November 1, 2022 and each May 1 and November 1 thereafter (each, an “Interest Payment Date”).

Interest on the 2022 Bonds will be payable semi-annually calculated based on a 360-day year of twelve thirty-day months on each Interest Payment Date to the person whose name appears on the Registration Books as the Owner thereof as of the fifteenth day of the month preceding each Interest Payment Date (each, a “Record Date”), such interest to be paid by check of the Trustee mailed by first class mail to the Owner at the address of such Owner as its appears on the Registration Books; provided however, that payment of interest may be by wire transfer in immediately available funds to an account in the United States of America to any Owner of 2022 Bonds in the aggregate principal amount of $1,000,000 or more who will furnish written wire instructions to the Trustee at least five days before the applicable Record Date. Principal of any 2022 Bond and any premium upon redemption will be paid by check of the Trustee upon presentation and surrender thereof at the Office of the Trustee. Principal of and interest and premium (if any) on the 2022 Bonds will be payable in lawful money of the United States of America.

Each 2022 Bond will be dated as of the Closing Date, and will bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless: (a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it will bear interest from such Interest Payment Date; or (b) unless it is authenticated on or before October 15, 2022, in which event it will bear interest from the Closing Date; provided, however, that if, as of the date of authentication of any 2022 Bond, interest thereon is in default, such 2022 Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.

Registration, Transfers and Exchanges
The 2022 Bonds will be issued as fully registered bonds, registered in the name of Cede & Co. as nominee of DTC, and will be available to actual purchasers of the 2022 Bonds (the “ Beneficial Owners”) in the denominations set forth above, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants (as defined in Appendix F) as described in this Official Statement. Beneficial Owners will not be entitled to receive physical delivery of the 2022 Bonds. See the caption “—Book-Entry Only System.”
In the event that the book-entry system that is described herein is discontinued, the 2022 Bonds will be printed and delivered as provided in the Indenture. Thereafter, any 2022 Bond may, in accordance with its terms, be transferred upon the Registration Books by the Person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such 2022 Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any 2022 Bond or Bonds shall be surrendered for transfer, the Authority will execute and the Trustee will authenticate and deliver a new 2022 Bond or Bonds in a like aggregate principal amount, in any Authorized Denomination. The Trustee will require the Bond Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer.

The 2022 Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of 2022 Bonds of other authorized denominations. The Trustee will require the payment by the 2022 Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange.
381
11 4864-5835-3938v8/022249-0054
The Trustee is not obligated to make any transfer or exchange of 2022 Bonds pursuant to the Indenture during the period established by the Trustee for the selection of 2022 Bonds for redemption, or with respect to any 2022 Bonds selected for redemption.

Redemption
Optional Redemption. The 2022 Bonds maturing on or before November 1, 20__ are not subject to redemption prior to their respective stated maturities. The 2022 Bonds maturing on or after November 1, 20__, are subject to redemption at the option of the Authority as a whole or in part, on ____ 1, 20__ or any date thereafter, upon at least 45 days’ prior notice to the Trustee or shorter period as acceptable to Trustee from any available source of funds, a redemption price equal to the principal amount of the 2022 Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium.

Extraordinary Redemption from Condemnation Award or Insurance Proceeds. The 2022 Bonds are also subject to redemption as a whole or in part on any date, from Net Insurance Proceeds or proceeds of condemnation required to be used for such purpose as provided in the Supplemental Lease Agreement, at a redemption price equal to the principal amount thereof plus interest accrued thereon to the date fixed for redemption, without premium.

Mandatory Sinking Fund Redemption. The 2022 Bonds maturing on November 1, 20__ (the “Term Series 2022 Bonds ”) are subject to mandatory redemption, in part by lot, from Principal Fund payments set forth in the following schedule on November 1, 20__, and each November 1 thereafter at a redemption price equal to the principal amount thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption; provided, however, that if some but not all of the Term Series 2022 Bonds have been redeemed as described under the subcaptions “—Optional Redemption” or “—Extraordinary Redemption from Condemnation Award or Insurance Proceeds,” above, the total amount of Principal Fund payments to be made subsequent to such redemption will be reduced in an amount equal to the principal amount of the Term Series 2022 Bonds so redeemed pursuant to the First Supplemental Indenture by reducing each such future Principal Fund payment on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, as designated pursuant to written notice filed by the Authority with the Trustee.

Redemption Date
(November 1)
Principal
Amount
$
*
* Final Maturity.

In lieu of such redemption, the Trustee may apply amounts in the Principal Fund to the purchase of Term Series 2022 Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as may be directed by the Authority prior to the selection of Term Series 2022 Bonds for redemption, except that the purchase price (exclusive of accrued interest) may not exceed the redemption price then applicable to the Term Series 2022 Bonds, as set forth in a Written Request of the Authority.

Selection of Bonds for Redemption . Except for mandatory sinking fund redemption as described under the subcaption “—Mandatory Sinking Fund Redemption” above, whenever provision is made in the First Supplemental Indenture for the redemption of less than all of the 2022 Bonds, the Trustee will select the 2022 Bonds to be redeemed from all 2022 Bonds or such given portion thereof not previously called for redemption from such maturities as are set forth in a Written Request of the Authority filed with the Trustee. 382
12 4864-5835-3938v8/022249-0054
For purposes of such selection, the Trustee will treat each 2022 Bond as consisting of separate $5,000 portions and each such portion will be subject to redemption as if such portion were a separate 2022 Bond.

Notice of Redemption. Notice of redemption will be mailed by first class mail, postage prepaid, not less than 20 nor more than 60 days before any redemption date, to the respective Owners of any 2022 Bonds designated for redemption at their addresses appearing on the Registration Books, and to the Securities Depositories and to one or more of the Information Services. Each notice of redemption will state the date of the notice, the redemption date, the place or places of redemption, whether less than all of the 2022 Bonds (or all 2022 Bonds of a single maturity) are to be redeemed, the CUSIP numbers and, if less than all of the 2022 Bonds of a maturity are to be redeemed, Bond numbers of the 2022 Bonds to be redeemed, the maturity or maturities of the 2022 Bonds to be redeemed and in the case of 2022 Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. In case of an optional redemption of 2022 Bonds as described under the subcaption “—Optional Redemption” above, notice of redemption may be given if moneys sufficient to pay the redemption price are on deposit with the Trustee or available for such purpose on the date that notice of redemption is given or if such notice expressly states that such redemption is conditional on receipt by the Trustee of sufficient moneys. A conditional notice of redemption may be rescinded in the event that there are insufficient moneys to redeem such 2022 Bonds. Each such notice will also state that on the redemption date there will become due and payable on each of said 2022 Bonds the redemption price thereof, and that from and after such redemption date interest thereon will cease to accrue, and will require that such 2022 Bonds be then surrendered. Neither the failure to receive any notice nor any defect therein will affect the proceedings for such redemption or the cessation of accrual of interest from and after the redemption date. Notice of redemption of 2022 Bonds will be given by the Trustee, at the expense of the Authority, for and on behalf of the Authority.

Partial Redemption of Bonds . Upon surrender of any 2022 Bonds redeemed in part only, the Authority will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Authority, a new 2022 Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the 2022 Bonds surrendered.

Effect of Notice of Redemption . Notice of redemption having been duly given described under the subcaption “—Notice of Redemption” above, and moneys for payment of the redemption price of, together with interest accrued to the date fixed for redemption on, the 2022 Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the 2022 Bonds (or portions thereof) so called for redemption will become due and payable, interest on the 2022 Bonds so called for redemption will cease to accrue, said 2022 Bonds (or portions thereof) will cease to be entitled to any benefit or security under the First Supplemental Indenture, and the Owners of said 2022 Bonds will have no rights in respect thereof except to receive payment of the redemption price thereof. All 2022 Bonds redeemed pursuant to the provisions of the First Supplemental Indenture will be cancelled by the Trustee upon surrender thereof and destroyed.

Book-Entry Only System
The 2022 Bonds are registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository for the 2022 Bonds. Ownership interests in the 2022 Bonds may be purchased in book- entry form only. So long as DTC, or Cede & Co. as its nominee, is the registered owner of all 2022 Bonds, all payments on the 2022 Bonds will be made directly to DTC, and disbursement of such payments to the DTC Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of the Participants, as more fully described in Appendix F.

As long as Cede & Co. is the registered owner of the 2022 Bonds, references herein to the Owners of the 2022 Bonds will refer to Cede & Co. and not to the Beneficial Owners. Neither the Authority nor the City gives any assurance that DTC, DTC Participants nor others will distribute payments with respect to the 2022 Bonds or notices concerning the 2022 Bonds to the Beneficial Owners or that DTC will otherwise serve and 383
13 4864-5835-3938v8/022249-0054
act in the manner described in this Official Statement. See Appendix F for a further description of DTC and its book-entry system. The information presented therein is based solely on information provided by DTC.

SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS
Pledge of Base Rental Payments
Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, all of the Base Rental Payments and any other amounts (including proceeds of the sale of the 2022 Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Principal Fund, the Redemption Fund and the Reserve Fund have been pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of the Indenture and the Act. Such pledge constitutes a first lien on such assets.

All obligations of the Authority under the Indenture will be special obligations of the Authority, payable solely from Rental Payments and the other assets pledged therefor thereunder. Neither the faith and credit nor the taxing power of the Authority, the City or the State, or any political subdivision thereof, is pledged to the payment of the Bonds.

Under the Assignment Agreement, the Authority has assigned to the Trustee for the benefit of the 2022 Bond Owners substantially all of the Authority’s right, title and interest in and to the Lease Agreement, including its right to receive the 2022 Base Rental Payments due under the Lease Agreement and to enforce any remedies in the event of a default by the City. The City will pay 2022 Base Rental Payments directly to the Trustee, as assignee of the Authority. See the caption “—Base Rental Payments.” The Trustee will establish and maintain separate funds designated the “Base Rental Payment Fund,” the “Interest Fund,” the “Principal Fund,” the “Redemption Fund,” the “Reserve Fund” and the “Net Insurance Proceeds Fund.”
All Base Rental Payments will be paid directly by the City to the Trustee, and if received by the Authority at any time will be transferred by the Authority with the Trustee within one Business Day after the receipt thereof. All Base Rental Payments received by the Trustee will be deposited by the Trustee in the Base Rental Payment Fund.

The Trustee will transfer the amounts on deposit in the Base Rental Payment Fund, at the times and in the manner provided in the Indenture, to the following respective funds:
(i) Interest Fund. On the Business Day immediately preceding each Interest Payment Date, the Trustee will transfer from the Base Rental Payment Fund to the Interest Fund the amount, if any, necessary to cause the amount on deposit in the Interest Fund to be equal to the interest due on the Bonds on such Interest Payment Date.
(ii) Principal Fund. On the Business Day immediately preceding each November 1, the Trustee will transfer from the Base Rental Payment Fund to the Principal Fund the amount, if any, necessary to cause the amount on deposit in the Principal Fund to be equal to the principal amount of the Bonds due on such November 1 either as a result of the maturity thereof or mandatory sinking fund redemption payments required to be made with respect thereto. Moneys in the Principal Fund will be used by the Trustee for the purpose of paying the principal of the Bonds when due and payable at their maturity dates or upon earlier mandatory sinking fund redemption.
(iii) Redemption Fund. The Trustee, on the redemption date specified in the Written Request of the City filed with the Trustee at the time that any prepaid Base Rental Payment is paid to the Trustee pursuant to the Lease Agreement, will deposit in the Redemption Fund that amount of moneys representing the portion 384
14 4864-5835-3938v8/022249-0054
of the Base Rental Payments designated as prepaid Base Rental Payments. Additionally, the Trustee will deposit in the Redemption Fund any amounts required to be deposited therein constituting Net Insurance Proceeds. Moneys in the Redemption Fund will be used by the Trustee for the purpose of paying the principal of and interest and premium, if any, on 2017 Bonds redeemed pursuant to the provisions of the Original Indenture, 2022 Bonds redeemed pursuant to the provisions of the First Supplemental Indenture and Additional Bonds redeemed pursuant to the corresponding provisions of the Supplemental Indenture pursuant to which such Additional Bonds are issued; provided, however, that moneys deposited in the Redemption Fund may also be used to purchase Outstanding Bonds in the manner provided in the Indenture. Purchases of Outstanding Bonds may be made by the Authority at public or private sale as and when and at such prices as the Authority may in its discretion determine, but only at prices (including brokerage or other expenses) not more than par plus accrued interest, plus, in the case of moneys set aside for an optional redemption or an extraordinary redemption, the premium applicable at the next following call date according to the premium schedule established pursuant to the Indenture, as applicable,. Any accrued interest payable upon the purchase of Bonds may be paid from the amount reserved in the Interest Fund. (iv) Reserve Fund. On each Interest Payment Date, the Trustee will, from the remaining moneys in the Base Rental Payment Fund, thereafter transfer to the Reserve Fund that sum, if any, necessary to restore the Reserve Fund to an amount equal to the Reserve Requirement; provided, however, that the Authority may provide for the Reserve Requirement with respect to the Reserve Fund by means other than cash and Permitted Investments pursuant to the Indenture, and the deposit of the Reserve Policy will for all purposes of the Indenture be deemed to satisfy the Authority’s and the City’s obligation to fund the Reserve Fund in the amount of the Reserve Requirement with respect to the 2022 Bonds. See the caption “—Reserve Fund” for a further discussion of the Reserve Policy.
(v) Surplus. Moneys on deposit in the Base Rental Payment Fund not necessary to make any of the payments required above may be expended by the Authority at any time: (a) to pay [Policy Costs and Bond Insurer Reimbursement Amounts], provided that: (i) the Rental Payments are not in abatement pursuant to the Lease Agreement; and (ii) the amount of Rental Payments due in each year does not exceed the annual fair rental value of the Leased Premises (and if the amount of Rental Payments due in any year exceeds the annual fair rental value of the Leased Premises, the payment of Policy Costs in such year will not exceed fair rental value and Policy Costs in excess thereof will be paid in subsequent years in accordance with the Indenture; and thereafter (b) for any purpose permitted by law as directed by the Authority.

Upon receipt of a Written Certificate of the City pursuant to the Lease Agreement that the City has commenced repairs of the Leased Premises, the Trustee will transfer moneys from the Redemption Fund at the times and in the manner required by clause (iii) above if and to the extent there are insufficient funds in the Base Rental Payment Fund to make such transfers. Upon receipt of a Written Certificate of the City pursuant to the Lease Agreement that the City has completed repairs of the Leased Premises and will recommence to make Base Rental Payments or that the City has determined not to make such repairs and made the certifications required pursuant to the Lease Agreement, the Trustee will transfer any funds remaining on deposit in the Redemption Fund to the City for any lawful use.

Notwithstanding anything in the Indenture or in the 2022 Bonds, the Authority is not required to advance any moneys derived from any source other than the 2022 Base Rental Payments and other assets pledged under the Indenture for any of the purposes of the Indenture, whether for the payment of the principal of or interest on the 2022 Bonds or for any other purpose of the Indenture. Nevertheless, the Authority may, but is not required to, advance for any of the purposes of the Indenture any funds of the Authority which may be made available to it for such purposes.

THE 2022 BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM THE 2022 BASE RENTAL PAYMENTS AND THE OTHER ASSETS PLEDGED THEREFOR UNDER THE INDENTURE. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE 385
15 4864-5835-3938v8/022249-0054

AUTHORITY, THE CITY OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE 2022 BONDS. THE AUTHORITY HAS NO TAXING POWER.

Additional Bonds
The Authority may at any time issue one or more Series of Additional Bonds (in addition to the 2022 Bonds and the 2017 Bonds) payable from Base Rental Payments as provided in the Indenture on a parity with all other Bonds theretofore issued thereunder, but only subject to the following conditions, which have been made conditions precedent to the issuance of such Additional Bonds:
(a) The issuance of such Additional Bonds has been authorized under and pursuant to the Indenture and has been provided for by a Supplemental Indenture which specifies the following:
(1) The application of the proceeds of the sale of such Additional Bonds; (2) The principal amount and designation of such Series of Additional Bonds and the denomination or denominations of the Additional Bonds;
(3) The date, the maturity date or dates, the interest payment dates and the dates on which mandatory sinking fund redemptions, if any, are to be made for such Additional Bonds; provided, however, that: (i) the serial Bonds of such Series of Additional Bonds will be payable as to principal annually on November 1 of each year in which principal falls due, and the term Bonds of such Series of Additional Bonds will have annual mandatory sinking fund redemptions on November 1; (ii) the Additional Bonds will be payable as to interest semiannually on May 1 and November 1 of each year, except that the first installment of interest may be payable on either May 1 or November 1 and will be for a period of not longer than twelve months and the interest will be payable thereafter semiannually on May 1 and November 1; (iii) all Additional Bonds of a Series of like maturity will be identical in all respects, except as to number or denomination; and (iv) serial maturities of serial Bonds or mandatory sinking fund redemptions for term Bonds, or any combination thereof, will be established to provide for the redemption or payment of such Additional Bonds on or before their respective maturity dates;
(4) The redemption premiums and terms, if any, for such Additional Bonds; (5) The form of such Additional Bonds;
(6) Upon the issuance of such Additional Bonds, the amount on deposit in the Reserve Fund will be equal to the Reserve Requirement, taking into account the issuance of the Additional Bonds; and (7) Such other provisions that are appropriate or necessary and are not inconsistent with the provisions of the Indenture;
(b) The Authority is in compliance with all agreements, conditions, covenants and terms contained in the Indenture, in the Lease Agreement and in the Ground Lease required to be observed or performed by it;
(c) The City is in compliance with all agreements, conditions, covenants and terms contained in the Indenture, in the Lease Agreement and in the Ground Lease required to be observed or performed by it; (d) The Ground Lease has been amended, to the extent necessary, and the Lease Agreement has been amended so as to increase the Base Rental Payments payable by the City thereunder by an aggregate amount equal to the principal of and interest on such Additional Bonds, payable at such times and in such manner as may be necessary to provide for the payment of the principal of and interest on such Additional Bonds; provided, however, that no such amendment will be made such that the sum of Base Rental Payments, 386
16 4864-5835-3938v8/022249-0054
including any increase in the Base Rental Payments as a result of such amendment, plus Additional Rental Payments, in any Rental Period is in excess of the annual fair rental value of the Leased Premises after taking into account the use of the proceeds of any Additional Bonds issued in connection therewith (evidence of the satisfaction of such condition will be made by a Written Certificate of the City); and (e) So long as the [Policy and the] bond insurance policy relating to the 2017 Bonds are in full force and effect and the Insurer has not defaulted on its obligations thereunder, the written consent of the Insurer has been received prior to the issuance of Additional Bonds, which consent may not be unreasonably withheld or delayed; provided that, notwithstanding the foregoing, the written consent of the Insurer is not required to issue Additional Bonds the proceeds of which are applied to effect a full refunding of the 2022 Bonds or the 2017 Bonds.

Nothing contained in the Indenture limits the issuance of any bonds or other obligations payable from Base Rental Payments if, after the issuance and delivery of such bonds or other obligations, none of the Bonds theretofore issued thereunder will be Outstanding.

Notwithstanding satisfaction of the other conditions to the issuance of Additional Bonds set forth in the Indenture, Additional Bonds may not be issued: (1) if an Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) exists, unless such default will be cured upon such issuance; and (2) unless the Reserve Policy in the full amount of the Reserve Requirement has been deposited in the Reserve Fund, in either case unless otherwise permitted by the Insurer.

Base Rental Payments
General. In consideration of the lease and leaseback by the Authority of the Leased Premises and in consideration of the issuance of the 2022 Bonds by the Authority for the purpose of financing the 2022 Project, and subject to the provisions of the Lease Agreement relating to condemnation or damage (as described under the caption “—Abatement,” the City has agreed to pay to the Authority, its successors and assigns, as rental for the use and occupancy of the Leased Premises during each Fiscal Year, the Base Rental Payments (denominated into components of principal and interest) for the Leased Premises in the respective amounts specified in the Lease Agreement, to be due and payable each respective Base Rental Payment Date specified in the Lease Agreement. Rental Payments, including Base Rental Payments, will be paid by the City to the Authority for and in consideration of the right to use and occupy the Lease and in consideration of the continued right to the quiet use and enjoyment thereof during each Rental Period for which such Rental Payments are to be paid.

Fair Rental Value. The City and the Authority have agreed and determined that the annual fair rental value of the Leased Premises is not less than the maximum annual Rental Payments due in any year. In making such determination of fair rental value, consideration has been given to the uses and purposes that may be served by the Leased Premises and the benefits therefrom which will accrue to the City and the general public. Payments of the Rental Payments for the Leased Premises during each Rental Period will constitute the total rental for said Rental Period.

Covenant to Budget and Appropriate . The City has covenanted to take such action as may be necessary to include all Rental Payments due under the Lease Agreement as a separate line item in its annual budgets and to make necessary annual appropriations for all such Rental Payments. The City will deliver to the Authority and the Trustee a Certificate of the City stating that its final annual budget includes all Base Rental Payments due in such Fiscal Year within ten days after the filing or adoption thereof. The covenants on the part of the City contained in the Lease Agreement will be deemed to be and will be construed to be duties imposed by law and it is the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in the Lease Agreement agreed to be carried out and performed by the City.
387
17 4864-5835-3938v8/022249-0054
Limited Obligation. The obligation of the City to pay Base Rental Payments and other payments under the Lease Agreement constitutes a current expense of the City and will not in any way be construed to be a debt of the City in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by the City, nor does anything contained in the Lease Agreement constitute a pledge of the general tax revenues, funds or moneys of the City. Base Rental Payments due under the Lease Agreement will be payable only from current funds which are budgeted and appropriated, or otherwise legally available, for the purpose of paying Base Rental Payments or other payments due thereunder as consideration for use of the Leased Premises during the Fiscal Year for which such funds were budgeted and appropriated or otherwise made legally available for such purpose. The Lease Agreement will not create an immediate indebtedness for any aggregate payments which may become due thereunder. The City has not pledged the full faith and credit of the City, the State or any agency or department thereof to the payment of the Base Rental Payments or any other payments due under the Lease Agreement, the 2022 Bonds or the interest thereon.

THE OBLIGATION OF THE CITY TO MAKE THE BASE RENTAL PAYMENTS DOES NOT

CONSTITUTE A DEBT OF THE CITY OR OF THE STATE, OR OF ANY POLITICAL SUBDIVISION

THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR

RESTRICTION, AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY OR THE

STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.

Additional Rental Payments
In addition to the Base Rental Payments, the City will pay when due the following items of Additional Rental Payments:
(a) all taxes and assessments of any type or nature charged to the Authority or the City or affecting the Leased Premises or the respective interests or estates of the Authority or the City therein; (b) all reasonable administrative costs of the Authority relating to the Leased Premises including, but without limiting the generality of the foregoing, salaries, wages, fees and expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture, fees of auditors, accountants, attorneys or engineers, and all other necessary and reasonable administrative costs of the Authority or charges required to be paid by it in order to maintain its existence or to comply with the terms of the Indenture or the Lease Agreement or to defend the Authority and its members, officers, agents and employees; (c) insurance premiums for all insurance required pursuant to the Lease Agreement; (d) any amounts with respect to the Lease Agreement or the Bonds required to be rebated to the federal government in accordance with Section 148(f) of the Code; and (e) all other payments required to be paid by the City under the provisions of the Lease Agreement or the Indenture, including but not limited to the [Policy Costs, Bond Insurer Advances and reimbursements to the Insurer for payments under the Policy or the Reserve Policy] in accordance with the Indenture.

Amounts constituting Additional Rental Payments payable under the Lease Agreement will be paid by the City directly to the person or persons to whom such amounts are payable. The City will pay all such amounts when due or at such later time as such amounts may be paid without penalty or, in any other case, within 60 days after notice in writing from the Trustee to the City stating the amount of Additional Rental Payments then due and payable and the purpose thereof.
388
18 4864-5835-3938v8/022249-0054
Abatement
Except as otherwise specifically provided in the Lease Agreement, during any period in which, by reason of material damage to, or destruction or condemnation of, the Leased Premises, or any defect in title to the Leased Premises, there is substantial interference with the City’s right to use and occupy any portion of the Leased Premises, Rental Payments will be abated proportionately, and the City waives the benefits of Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other rights to terminate the Lease Agreement by virtue of any such interference, and the Lease Agreement will continue in full force and effect. The amount of such abatement will be agreed upon by the City and the Authority; provided, however, that the Rental Payments due for any Rental Period may not exceed the annual fair rental value of that portion of the Leased Premises available for use and occupancy by the City during such Rental Period. The City and the Authority will calculate such abatement and provide the Trustee with a certificate setting forth such calculation and the basis therefor. Such abatement will continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation or title defect and, with respect to damage to or destruction of the Leased Premises, ending with the substantial completion of the work of repair or replacement of the Leased Premises, or the portion thereof so damaged or destroyed; and the term of the Lease Agreement will be extended as provided therein, except that the term will in no event be extended beyond the Maximum Lease Term.

Notwithstanding the foregoing, to the extent that moneys are available for the payment of Rental Payments in any of the funds and accounts established under the Indenture, including but not limited to the Reserve Fund, Rental Payments will not be abated as provided above but, rather, will be payable by the City as a special obligation payable solely from said funds and accounts.

See the caption “RISK FACTORS—Abatement.”
Substitution or Release of the Leased Premises
The City has the right to substitute alternate real property for any portion of the Leased Premises or to release a portion of the Leased Premises from the Lease Agreement. All costs and expenses incurred in connection with such substitution or release will be borne by the City. Notwithstanding any substitution or release of the Leased Premises pursuant to the Lease Agreement, there will be no reduction in or abatement of the Base Rental Payments due from the City thereunder as a result of such substitution or release. Any such substitution or release of any portion of the Leased Premises is subject to the following specific conditions, which have been made conditions precedent to such substitution or release:
(a) The City has delivered a certificate to the Trustee and the Bond Insurer setting forth its findings that the Leased Premises, as constituted after such substitution or release: (i) has an annual fair rental value at least equal to the maximum Base Rental Payments payable by the City in any Rental Period; and (ii) has a useful life in excess of the final maturity of any Outstanding Bonds; (b) the City has obtained or caused to be obtained a CLTA or ALTA title insurance policy or policies with respect to any substituted property in the amount at least equal to the aggregate principal amount of any Outstanding Bonds of the type and with the endorsements described in the Lease Agreement; (c) the City has provided the Trustee with an Opinion of Counsel to the effect that such substitution or release will not, in and of itself, cause the interest on the Bonds to be included in gross income for federal income tax purposes;
(d) the City, the Authority and the Trustee have executed, and the City has caused to be recorded with the San Bernardino County Recorder, any document necessary to reconvey to the City the portion of the Leased Premises being released and to include any substituted real property in the description of the Leased Premises contained in the Lease Agreement and in the Ground Lease; 389
19 4864-5835-3938v8/022249-0054
(e) the City has provided notice of such substitution to each rating agency then rating the Bonds; and
(f) so long as the [Policy and the] bond insurance policy relating to the 2017 Bonds are in full force and effect and the Insurer has not defaulted on its obligations thereunder, the prior written consent of the Insurer has been received.

Action on Default
Should the City default under the Lease Agreement, the Trustee, as assignee of the Authority under the Lease Agreement, may terminate the Lease Agreement and recover certain damages from the City, or may retain the Lease Agreement and hold the City liable for all Base Rental Payments thereunder on an annual basis, and will have the right to re-enter and re-let the Leased Premises.

Base Rental Payments may not be accelerated upon a default under the Lease Agreement . See the caption “RISK FACTORS—No Acceleration of Base Rental.”
For purposes of certain actions of 2022 Bond Owners under the Indenture and Lease Agreement, such as certain consents and amendments and the direction of remedies following default, such 2022 Bond Owners do not act alone and may not control such matters to the extent that such matters are not supported by the requisite number of the Owners of all Bonds and Additional Bonds, if any.

For a detailed description of events of default and permitted remedies of the Trustee (as assignee of the Authority) contained in the Lease Agreement and the Indenture, see Appendix B.

Reserve Fund
The Trustee has established and will hold in trust the Reserve Fund. There will be maintained in the Reserve Fund the Reserve Policy and a debt service reserve surety policy relating to the 2017 Bonds (the “2017 Reserve Policy”), the aggregate amount of which policies is equal to the Reserve Requirement (as such term is defined below). The deposit of the Reserve Policy and the 2017 Reserve Policy will satisfy for all purposes the Authority’s and the City’s obligation to fund the Reserve Fund in the amount of the Reserve Requirement with respect to the 2022 Bonds and the 2017 Bonds. Amounts drawn under the Reserve Policy will be used solely to pay scheduled payments of principal of and interest on the 2022 Bonds and amounts drawn under the 2017 Reserve Policy will be used solely to pay scheduled payments of principal of and interest on the 2017 Bonds.

The term “ Reserve Requirement ” means initially: (a) $____; and thereafter (b) the least of the amount set forth in clause (a), 75% of the maximum payments of principal of and interest on the Bonds payable in any bond year of the Authority, 125% of the average annual debt service on the Bonds or 10% of the initial principal amount of the Bonds.

For the purpose of determining the amount of cash and investments other than the Reserve Policy, if any, in the Reserve Fund, all Permitted Investments credited to the Reserve Fund will be valued at the lower of cost or market value. To the extent of any valuation of Permitted Investments made by the Trustee, notwithstanding anything to the contrary contained in the Indenture, the Trustee may utilize computerized securities pricing services that may be available to it, including those available through its regular accounting system, and may conclusively rely thereon.

The City and the Authority have no obligation to replenish the Reserve Fund with cash or other Permitted Investments in the event of a lowering of the rating of the Insurer or the Insurer’s noncompliance with a draw request under the Reserve Policy or the 2017 Reserve Policy. 390
20 4864-5835-3938v8/022249-0054
See Appendix B under the caption “INDENTURE—Security for Bonds; Flow of Funds; Investments—Reserve Fund” for a discussion of the procedures to be followed in the event of a draw upon the Reserve Fund and the policies deposited therein.

Insurance
Commercial General Liability and Property Damage Insurance . The City will maintain or cause to be maintained, throughout the term of the Lease Agreement, a standard commercial general liability insurance policy or policies in protection of the City, the Authority and their respective members, officers, agents and employees. Said policy or policies must provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the use or ownership of the Leased Premises. Said policy or policies must provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in a single accident or event, and in a minimum amount of $500,000 for damage to property (subject to a deductible clause of not to exceed $100,000) resulting from a single accident or event.

Such commercial general liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried or required to be carried by the City, and may be maintained in whole or in part in the form of self-insurance by the City, provided that such self-insurance complies with the provisions of the Lease Agreement. The Net Insurance Proceeds of such liability insurance will be applied toward extinguishment or satisfaction of the liability with respect to which the Net Insurance Proceeds of such insurance have been paid.

The City will also maintain or cause to be maintained, fire, lightning and special extended coverage insurance (which includes coverage for vandalism and malicious mischief, but need not include coverage for earthquake damage) on all improvements constituting any part of the Leased Premises in an amount equal to the greater of 100% of the replacement cost of such improvements or 100% of the outstanding principal amount of the Bonds. The City has an insurance policy which provides replacement cost coverage. All casualty insurance required to be maintained under the Lease Agreement may be subject to a deductible in an amount not to exceed $500,000. The City’s obligations to maintain casualty insurance may be satisfied by self-insurance, provided that such self-insurance complies with the provisions of the Lease Agreement.

Workers’ Compensation Insurance. The City will maintain or cause to be maintained, throughout the term of the Lease Agreement, workers’ compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure employers against liability for compensation under the California Labor Code, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers’ compensation insurance to cover all persons employed by the City in connection with the Leased Premises and to cover full liability for compensation under any such act; provided, however, that the City’s obligations to maintain workers’ compensation insurance may be satisfied by self-insurance, provided that such self-insurance complies with the provisions of the Lease Agreement.

Rental Interruption Insurance . The City will maintain rental interruption insurance to cover the Authority’s loss, total or partial, of Base Rental Payments resulting from the loss, total or partial, of the use of any part of the Leased Premises as a result of any of the hazards required to be covered by casualty insurance (as described in the second paragraph under the subcaption “—Commercial General Liability and Property Damage Insurance” above) in an amount sufficient at all times to pay an amount not less than the product of two times the maximum amount of Base Rental Payments scheduled to be paid during any Rental Period. The City is not permitted to self-insure its obligation to maintain rental interruption insurance.

The insurance required by the Lease Agreement must be provided by reputable insurance companies with claims paying abilities determined, in the reasonable opinion of a professionally certified risk manager or an independent insurance consultant, to be adequate for the purposes thereof. 391
21 4864-5835-3938v8/022249-0054

BOND INSURANCE
The information under this caption has been prepared by the Insurer for inclusion in this Official Statement. None of the Authority, the City or the Underwriters have reviewed this information, nor do the Authority, the City or the Underwriters make any representation with respect to the accuracy or completeness thereof. The following information is not a complete summary of the terms of the Policy and reference is made to Appendix G for a specimen of the Policy.
[TO COME].

THE CITY
General
The City is located in southwestern San Bernardino County (the “ County”), approximately 35 miles east of Los Angeles near the intersection of Interstates 10 and 15 in the area of southern California known as the “Inland Empire.” The City is adjacent to the cities of Upland, Montclair, Chino and Rancho Cucamonga.

The City had a population of approximately 182,004 as of January 1, 2021 and covers approximately 50 square miles. The City was incorporated in 1891 and is a general law city operating under a council/manager form of government. Further information concerning the City is set forth below and in Appendix A.

The City had 1,219 full-time equivalent employees as of June 30, 2021. City employees are represented by seven labor associations which collectively represent 1,078 employees. Relations between the City and its labor associations are governed by memoranda of understanding (each, an “MOU”) that expire on June 30, 2023. A total of approximately 141 management and confidential employees are exempt from collective bargaining. Salaries for exempt employees are set by the City Council. The City has never experienced a strike, slowdown or work stoppage.

The City provides a full range of services, including police and fire protection, construction and maintenance of streets, parks, water and sewer lines, traffic signals and other infrastructure, water, sewer and integrated waste services, recreation and community services and arts, cultural and social programs. The City also operates a municipal golf course, the Convention Center and a sports and entertainment arena (the Toyota Arena, which opened in 2008). The Leased Premises securing the 2022 Bonds include (among other properties) the Convention Center, which is described in detail under the caption “THE LEASED PREMISES.”
392
22 4864-5835-3938v8/022249-0054
Largest Employers
The table below sets forth the largest employers within the City as of June 30, 2021, the latest date for which such information is available.

CITY OF ONTARIO
LARGEST EMPLOYERS – FISCAL YEAR 2021
Employer Approximate Number
of Employees
Type of Business
United Parcel Service 5,000-9,999 Shipping Service
Workforce Personnel, Inc. 1,000-4,999 Employment Agency Ontario-Montclair School District 1,000-4,999 Public Agency Chaffey Union High School District 1,000-4,999 Public Agency Federal Express Corporation 500-999 Shipping Service
QVC Ontario LLC 500-999 Distribution
Auto Zoners, Inc. 500-999 Retail
Home Depot USA, Inc. 500-999 Retail
Cardenas Markets, Inc. 500-999 Retail
ULINE, Inc. 250-499 Distribution
Source: State of California Employment Development Department.

Government and Administration
The City operates under a council-manager form of government. Councilmembers and the Mayor are currently elected at large for four-year alternating terms. The City Treasurer and City Clerk are also elected by City voters. Beginning with the November 5, 2024 Statewide election, two Councilmembers will be elected by district, with the other two Councilmembers elected by district at the November 3, 2026 Statewide election; the Mayor will continue to be elected Citywide.

The City Manager, appointed by the City Council, serves as the City’s chief administrative officer and is responsible for overseeing the daily operations of City departments and efficient management of all City business. Functions of the City Manager’s Office include coordination of the implementation of City Council policies and programs; providing overall direction to the departments that administer City programs and services; coordinating intergovernmental relations and legislative advocacy; and administration of the City’s communications, media relations and public information programs.

Scott Ochoa has served as the City Manager since October 2017. In this capacity he leads the daily operation of City government. Prior to coming to the City, Mr. Ochoa served as the City Manager of Glendale, California and Monrovia, California. Mr. Ochoa has a Bachelor’s degree from Claremont McKenna College and a Masters in Public Administration degree from the University of Southern California.

Other key personnel responsible for management of the City include the City Treasurer and the Executive Director of Finance. In addition, the City Attorney provides legal services to the City and the Authority.

James R. Milhiser has served as the elected City Treasurer since 1998. Mr. Milhiser has over 40 years of experience in financial services. He has a Bachelor’s degree from California State Polytechnic University, Pomona, and successfully completed a three year program at Pacific Coast Banking School, held at the University of Washington.
393
23 4864-5835-3938v8/022249-0054
Armen Harkalyan serves as the Executive Director of Finance of the City. Mr. Harkalyan was appointed Executive Director of Finance in January 2019. Prior to coming to the City, Mr. Harkalyan served as the Deputy Director of Finance and Revenue Manager for the City of Glendale, California. Mr. Harkalyan has a Bachelor’s degree from the California State University, Los Angeles, and a Master’s degree from the University of Phoenix.

Ruben Duran has been City Attorney since 2020. Mr. Duran has been an attorney for more than 22 years in private practice specializing in municipal law. He has a Bachelor’s degree from the University of California, San Diego and a Juris Doctorate degree from University of California, Hastings.

Ontario International Airport
The City is home to ONT. ONT is served by approximately 10 commercial carriers with connections to approximately 18 domestic and international destinations. It is also a major cargo airport given the City’s proximity to the large logistics and distribution hub in the Inland Empire.

ONT was developed prior to World War II and was owned by the federal government until 1967, when it was acquired by a joint powers authority the members of which were the City and the City of Los Angeles Department of Airports (“ LAWA”). LAWA operated ONT on behalf of the joint powers authority, eventually acquiring ONT outright in 1985.

In 2016, the City and the Ontario International Airport Authority (“ OIAA”), a joint powers authority the members of which are the City and the County, acquired ONT from LAWA and assumed operation and management of ONT. The City paid a portion of the purchase price of ONT to LAWA as well as salaries and legal, consulting and administrative fees associated with the negotiations leading up to the acquisition of ONT from LAWA. The payments made by the City for these purposes totaled $42,373,148 as of June 30, 2019, which amount has been written off by the City and recorded as a capital contribution by OIAA.

The City and OIAA have entered into a number of agreements related to the provision of law enforcement, fire protection, information technology and other services by the City for the benefit of ONT.

Currently, approximately 80 police and other public safety officers provide law enforcement and fire protection services at ONT. The City’s charges to ONT for such services are intended to recoup the City’s associated expenses in providing such services.

Risk Management
The City is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors and omissions, injuries to employees and natural disasters. The City has established self-insurance funds to finance uninsured risks of loss up to a maximum of $750,000 for each workers’ compensation claim and $1,000,000 for each general liability claim. For workers’ compensation claims in excess of amounts provided by its internal fund, the City maintains coverage from a private carrier for claims up to the statutory requirements. For general liability claims in excess of amounts provided by its internal fund, the City maintains coverage from the Authority for California Cities Excess Liability (“ ACCEL”).

ACCEL maintains a shared risk pool for claims up to $4,000,000, with private carriers covering amounts in excess thereof. City is self-insured for unemployment liability claims. The City will pay all claims based on the individual reimbursement account method, as provided by the State. Claims have not exceeded the City’s insurance coverage in any of the last three years.

The City purchases all-risk, replacement cost value property insurance coverage through ACCEL up to a maximum amount of $500,000,000. All property and improvements comprising the Leased Premises are insured under the City’s property insurance coverage. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS—Insurance.”
394
24 4864-5835-3938v8/022249-0054
No assurance can be given as to the adequacy of the insurance maintained now or in the future by the City to fund necessary repairs or replacement of any portion of the Leased Premises, and the City does not have any obligation under the Lease Agreement to maintain earthquake coverage or other coverage in the current coverage amounts. Significant damage to any of the Leased Premises could cause Base Rental Payments to be abated. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS—Abatement” and “RISK FACTORS—Natural Disasters.”
COVID-19 Outbreak
The spread of the novel strains of coronavirus collectively called SARS-CoV-2, which cause the disease known as COVID-19 (“ COVID-19”), and local, State and federal actions in response to COVID-19, have impacted the City’s operations and finances. In response to the increasing number of COVID-19 infections and fatalities, health officials and experts have recommended, and some governments have mandated, a variety of responses ranging from travel bans and social distancing practices to complete shutdowns of certain services and facilities. The World Health Organization has declared the COVID-19 outbreak to be a pandemic and, on March 4, 2020, as part of the State’s response to address the outbreak, the Governor declared a state of emergency. On March 13, 2020, the President declared a national emergency, freeing up funding for federal assistance to state and local governments. Many school districts across the State temporarily closed some or all school campuses (including schools within the City) in response to local and State directives or guidance.

On March 19, 2020, the Governor issued Executive Order N-33-20, a mandatory Statewide shelter-in- place order applicable to all non-essential services. Certain aspects of the shelter-in-place directives were extended indefinitely until indicators for modifying the stay-at-home order were met. The County also declared a state of emergency in response to the COVID-19 outbreak. On May 4, 2020, the Governor issued an executive order informing local health jurisdictions and industry sectors that they could gradually re-open under new modifications and guidance provided by the State. A phased re-opening of various sectors was underway beginning in mid-2020 in accordance with a four-stage re-opening plan that ended with a full reopening of the State’s economy on June 15, 2021. Although pursuant to the re-opening plan certain restrictions on activities were eased, restrictions were also re-imposed in various jurisdictions (including neighboring Los Angeles County) as local conditions warranted, and such restrictions may be renewed as the pandemic continues.

In addition, the Governor extended the deadline to file and pay spring 2020 property taxes for residential and certain commercial property owners and first quarter 2020 sales and use tax returns by 90 days for all but the very largest taxpayers. As a result of the extended deadline to file sales and use tax returns, it is estimated that up to 361,000 California businesses with less than $5 million in taxable annual sales were permitted to defer up to $50,000 in sales tax payments and enter into 12-month payment plans at zero interest.

These actions have resulted in delays in the receipt by the City of its portion of such tax payments.

On March 27, 2020, the President signed the $2.2 trillion Coronavirus Aid, Relief, and Economic Stabilization Act (the “CARES Act”) which provides, among other measures, $150 billion in financial aid to states, tribal governments and local governments to provide emergency assistance to those most significantly impacted by COVID-19. Under the CARES Act, local governments are eligible for reimbursement of certain costs which were expended to address the impacts of the pandemic. The City received a total reimbursement of $5,609,826 under the CARES Act. The funds received by the City under the CARES Act are not available for payment of the 2022 Bonds and cannot be used to backfill any City revenue losses related to COVID-19.

On December 27, 2020, the President signed the $900 billion Coronavirus Response and Relief Supplemental Appropriations Act. Although the act did not provide additional financial assistance to state and local governments, it did extend the deadline (to October 2021) for them to use unspent funds that were previously approved under the CARES Act.
395
25 4864-5835-3938v8/022249-0054
On March 11, 2021, the President signed the American Rescue Plan Act of 2021 (the “ ARP Act”), a $1.9 trillion economic stimulus package designed to help the United States’ economy recover from the adverse impacts of the COVID-19 pandemic. The ARP Act includes approximately $350 billion in aid to state and local governments such as the City, consisting of both direct funding from the United States Department of Treasury and program moneys that will flow from other federal agencies. Half of the aid to state and local governments was distributed in spring 2021, with the other half following in 2022. [UPDATE IF FUNDS RECEIVED PRIOR TO POSTING] The City has been allocated a total of approximately $45,609,291, of which approximately half was received in spring 2021. This funding is available for a broad range of uses, including responding directly to the health emergency, addressing its negative economic impacts with assistance to households and small businesses, restoring government services that were reduced in response to pandemic-related revenue losses and making certain necessary infrastructure improvements. The City approved a spending plan that allocates ARP Act funds as follows: $25,609,291 toward the funding of public health and economic impacts; $10,000,000 for allowable premium pay to recognize the diligent work performed by City employees during the COVID-19 pandemic; and $10,000,000 earmarked as replacement of lost public sector revenue to fund essential services provided to the community The outbreak of COVID-19 in early 2020 and governmental actions responsive to it altered the behavior of businesses and people in a manner that had significant negative impacts on global and local economies. In addition, financial markets in the United States and globally experienced significant volatility attributed to COVID-19 concerns. Volatility in the financial markets caused the California Public Employees Retirement System’s (“CalPERS”) earnings to fall below its investment targets in Fiscal Year 2020, although CalPERS returns rebounded to 21.3% in Fiscal Year 2021. See the caption “CITY FINANCIAL INFORMATION—Retirement Contributions.” The outbreak also resulted in short-term pressure on State finances as budgetary resources were directed towards containing the pandemic and tax revenues sharply declined in early 2020. Identified cases of COVID-19 and deaths attributable to the COVID-19 outbreak continue to occur throughout the United States, including the County.

Potential impacts to the City associated with the COVID-19 outbreak include, but are not limited to, increasing costs and challenges to the public health system in and around the City, cancellations of public events and disruption of the regional and local economy, with corresponding decreases in General Fund revenues, including as a result of reduced sales and the cancellation of events at the Convention Center (which, as described under the caption “THE LEASED PREMISES,” constitutes the Leased Premises under the Lease Agreement) and sports and entertainment arena, all of which are subject to sales and other taxes, reduced hotel occupancy, which is subject to transient occupancy taxes, reduced parking tax revenues as a result of reduced levels of passenger traffic at ONT and fewer business license applications. See the captions “CITY FINANCIAL INFORMATION—Sales Taxes,” “CITY FINANCIAL INFORMATION—Property Taxes” and “CITY FINANCIAL INFORMATION—Other Taxes.”
In response to the COVID-19 outbreak, the City modified its operations to implement remote work opportunities for employees and provide City services online, closed many City facilities to the public, cancelled many programs, rentals and community events and deferred several non-essential capital improvement projects. With improvements in local case rates, the City has phased in the resumption of normal operations and activities while complying with public health orders and California Occupational Safety and Health Administration COVID-19 Prevention Plan mandates. Large gatherings of City personnel at any one time were prohibited for much of 2020 and early 2021 per health officer orders and on-site personnel wore masks and practiced social distancing while working. City Council and other board meetings occurred via teleconference, and public comment and participation for City Council meetings was also conducted via teleconference and electronic means. The City has not experienced and does not at this time foresee a future negative impact on the execution of City services as a result of the COVID-19 outbreak. The City has worked diligently to provide its employees with personal protective equipment and voluntary access to vaccinations.

However, there can be no assurance that absences of employees or City leadership due to COVID-19 will not adversely impact City operations.
396
26 4864-5835-3938v8/022249-0054
The COVID-19 outbreak is ongoing, and the duration and severity of the outbreak and the economic and other actions that may be taken by governmental authorities to contain the outbreak or to treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the City and the General Fund is unknown.

The City reports that Fiscal Year 2019-20 General Fund expenditures were lower than originally budgeted by approximately $9.6 million (3.4%) as the City implemented measures to reduce expenditures in response to the COVID-19 pandemic in the last quarter of Fiscal Year 2019-20, including reducing levels of police services at ONT, suspending recruitments, suspending elective spending as well as offering a Retirement/Separation Incentive program (the “RSIP”) and not filling the majority of the positions that were vacated by the program. However, Fiscal Year 2019-20 General Fund revenues came in higher than budgeted by approximately $10.4 million (3.7%) as certain revenues, including Transfers In, Use of Money and Property and Charges for Services, were higher than budgeted. As a result of certain tax revenues, including sales tax and transient occupancy tax revenues, coming in lower than budgeted, the City withdrew approximately $11.4 million from its Economic Uncertainty Reserve (as described under the caption “CITY FINANCIAL INFORMATION—General Economic Condition and Outlook of the City—Fiscal Policies—Economic Uncertainty Reserve”) to balance the Fiscal Year 2019-20 budget. See the caption “CITY FINANCIAL INFORMATION—Budget Procedure, Current Budget and Historical Budget Information.” The budget for Fiscal Year 2020-21 was developed conservatively to account for the projected impacts of the continuing COVID-19 outbreak, including suspending new hires for the entirety of the Fiscal Year. As amended, the Fiscal Year 2020-21 budget reflected: (i) a decrease in General Fund expenditures of approximately $26.8 million (9.9%) below audited Fiscal Year 2019-20 General Fund expenditures; and (ii) a decrease in General Fund revenues of approximately $47.5 million (16.4%) below audited Fiscal Year 2019-20 General Fund revenues. Audited Fiscal Year 2020-21 General Fund expenditures were approximately $32.4 million higher than budgeted (and approximately $5.6 million higher than audited Fiscal Year 2019-20 General Fund expenditures) as the economy recovered and City spending on programs and public safety increased, while audited Fiscal Year 2020-21 General Fund revenues were approximately $76.9 million higher than budgeted (and approximately $19.0 million higher than Fiscal Year 2019-20 audited General Fund revenues), reflecting a more robust economic recovery than the City conservatively budgeted for. No CARES Act or ARP Act funding was included in the City’s adopted budget for Fiscal Year 2020-21.

The budget for Fiscal Year 2021-22 reflected: (i) a return to General Fund revenues approximating revenues prior to the outbreak of COVID-19, with revenues projected to come in approximately $44.5 million (19.2%) higher than Fiscal Year 2020-21 budgeted revenues; such projections were still conservative ($32.5 million, or 10.5%, lower) relative to audited Fiscal Year 2020-21 results; and (ii) a return to General Fund expenditures approximating expenditures prior to the outbreak of COVID-19, with Fiscal Year 2021-22 expenditures projected to come in approximately $27.6 million (11.3%) higher than Fiscal Year 2020-21 budgeted expenditures; such projections were $4.8 million (1.7%) lower than actual Fiscal Year 2020-21 results.

Based on current information to date, the City expects actual Fiscal Year 2021-22 General Fund revenues to come in at approximately $298.9 million, or $22.7 million (8.2%) higher than budgeted, and actual Fiscal Year 2021-22 General Fund expenditures to come in at approximately $348.5 million, or $76.7 million (28.2%) higher than budgeted. The increase in General Fund expenditures reflects approximately $65.6 million in Transfers Out, which included allocation of the significant budget surplus in Fiscal Year 2020-21.

In the first quarter of Fiscal Year 2021-22, the surplus was allocated as follows: approximately $15.8 million for economic development activities, $15.0 million for future pension unfunded actuarial liability costs under the RSIP (as discussed above), $8.2 million for information technology funding and $5.4 million toward the Economic Uncertainty Reserve (as discussed under the caption “FINANCIAL INFORMATION—General Economic Condition and Outlook of the City—Fiscal Policies—Economic Uncertainty Reserve”). In addition, the Fiscal Year 2021-22 Year-End Budget Update included an additional $4.5 million allocation to the Economic Uncertainty Reserve, additional allocations of $3 million toward internal service funds (Equipment 397
27 4864-5835-3938v8/022249-0054
Services, Information Technology and Facilities Maintenance), and $4 million for future pension unfunded actuarial liability costs under the RSIP.

The City’s Fiscal Year 2022-23 budget is scheduled to be approved by the City Council on May 26, 2022. The proposed budget, which remains subject to public input and adjustment by the City Council, reflects: (i) General Fund revenues projected to come in approximately $23.0 million (8.3%) higher than Fiscal Year 2021-22 budgeted revenues, and approximately $9.5 million (3.1%) lower than actual Fiscal Year 2020-21 revenues; and (ii) General Fund expenditures projected to come in approximately $30.0 million (11.0%) higher than Fiscal Year 2021-22 budgeted expenditures, and approximately $25.2 million (9.1%) higher than actual Fiscal Year 2020-21 revenues. There can be no assurance that the adopted budget will not change prior to approval by the City Council on May 26, 2022.

See the captions “CITY FINANCIAL INFORMATION—General Economic Condition and Outlook of the City” and “CITY FINANCIAL INFORMATION—Budget Procedure, Current Budget and Historical Budget Information.”
The City continues to actively monitor General Fund revenues and expenditures so that any further impacts of the COVID-19 pandemic can be anticipated. The City does not currently expect that the COVID-19 outbreak will have a material adverse effect on the City’s ability to repay the 2022 Bonds.

CITY FINANCIAL INFORMATION
Accounting and Financial Reporting
The City maintains its accounting records in accordance with Generally Accepted Accounting Principles (“ GAAP”) and the standards established by the Governmental Accounting Standards Board (“GASB”). On a quarterly basis, a report is prepared for the City Council and City staff which reviews fiscal performance to date against the budget. Combined financial statements of the City and its component units are produced following the close of each Fiscal Year.

The City Council employs an independent certified public accountant who examines at least annually the financial statements of the City in accordance with generally accepted auditing standards, including tests of the accounting records and other auditing procedures as such accountant considers necessary. As soon as practicable after the end of the Fiscal Year, a final audit and report is submitted by the independent certified public accountant to the City Council.

The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures, or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

The City’s government-wide financial statements are reported using the economic resource measurement focus and the accrual basis of accounting, under which revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows.

The City’s governmental fund (including the General Fund) financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting, under which revenues are recognized as soon as they are both measurable and available (i.e. collectible within the current period or soon enough thereafter to pay liabilities of the current period), and expenditures are recorded when a liability is incurred.
398
28 4864-5835-3938v8/022249-0054
The General Fund is the general operating fund of the City. It is used to account for all financial resources except those that are required to be accounted for in another fund. Base Rental Payments will be paid from any legally available funds of the City. Tables 1 through 4 below set forth certain historical and current Fiscal Year budget information for the General Fund. Information on the remaining governmental funds of the City as of June 30, 2021 is set forth in Appendix C.

General Economic Condition and Outlook of the City
Fiscal Policies.

Fund Balance Reserve Policy. The City Council has adopted a Fund Balance Reserve Policy that forms the overall framework within which the City’s General Fund operating budget is formulated. The Fund Balance Reserve Policy establishes the procedures for reporting unrestricted fund balances in the General Fund financial statements. Certain commitments and assignments of the fund balance will help ensure that there will be adequate financial resources to protect the City against unforeseen circumstances and events such as revenue shortfalls and unanticipated expenditures. The policy also authorizes and directs the Financial Services/Fiscal Services Department to prepare financial reports which accurately categorize fund balance in accordance with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions.

Fund balance is essentially the difference between the assets, deferred outflows and deferred inflows of resources and liabilities reported in a governmental fund. There are five separate components of fund balance, each of which identifies the extent to which the City is bound to honor constraints on the specific purposes for which amounts can be spent:
 Nonspendable fund balance (inherently nonspendable, i.e., inventory)  Restricted fund balance (externally enforceable limitations on use, i.e., restricted by law or terms of grant)
 Committed fund balance (self-imposed limitations on use)  Assigned fund balance (limitation resulting from intended use)  Unassigned fund balance (residual net resources)
The City Council, as the City’s highest level of decision-making authority, may commit fund balances for specific purposes pursuant to constraints imposed by the adoption of a resolution. These committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use through the same type of formal action that was originally taken to establish the commitment. City Council action to commit fund balances must occur within the fiscal reporting period; however, the amount can be determined subsequently.

Amounts that are constrained by the City’s intent to be used for specific purposes, but are neither restricted nor committed, are reported as assigned fund balances. Pursuant to the City’s fund balance policy established by the City Council on June 22, 2011, by resolution, the City Council has delegated the authority to assign amounts to be used for specific purposes to the City Manager or Executive Director of Finance for the purpose of reporting these amounts on the annual financial statements.

Included in the Fund Balance Reserve Policy is the 20% Stabilization Plan. This plan reflects the goal of the City Council to achieve a minimum of 20% of annual General Fund appropriations as an assigned fund balance in the General Fund. Based on the current year appropriations, the amount assigned to the 20% Stabilization Plan will either increase or decrease accordingly. This assigned balance is intended to be used for specific and defined emergency services and to minimize the potential for disruption of municipal services to citizens. However, included as part of the City’s General Fund balancing strategies for Fiscal Year 2020-21 was the reduction of the General Fund stabilization assignment from 18% (the previous target amount) to 15%.

As of June 30, 2021, the City’s General Fund had an assigned fund balance for the stabilization arrangement of 399
29 4864-5835-3938v8/022249-0054
$108.3 million, which achieved the 15% goal for Fiscal Year 2021-22. Currently, the assigned fund balance is at approximately 18% of annual General Fund appropriations.

The General Fund is the only City fund that can report a positive unassigned fund balance; this is the residual positive net resources in excess of what can properly be classified in one of the other four categories.

Debt Management Policy . The City has adopted a Debt Management Policy in accordance with California Government Code Section 8855 to establish guidelines and parameters for the effective governance, management and administration of debt issued by the City and its related entities and to ensure compliance with legislation, statutes and laws that place regulations on local agency debt. The following elements have been incorporated into this policy:
 The purposes for which debt may be incurred.
 The types of debt that may be issued.
 Assessment of debt limits generally and for General Fund-supported debt.  Debt structuring and issuance practices.
 Debt management practices, including the investment of proceeds and post-issuance compliance.

Capital Asset Management Policy. The City’s Capital Asset Management Policy is intended to: (1) describe the policies and procedures utilized in the City’s capital asset management system; (2) establish guidelines for accounting and depreciating the City’s capital assets; and (3) list and describe suitable capital assets and their estimated useful life.

The primary goals of the Capital Asset Management Policy are: (i) to ensure that the City’s capital assets are properly accounted for; (ii) to establish a consistent and cost-effective method for accounting for the City’s capital assets; and (iii) to assure compliance with GAAP.

Economic Uncertainty Reserve . In Fiscal Year 2019-20, the City established an Economic Uncertainty Reserve with a target amount of $15,000,000. The reserve was initially funded with a deposit of $20,000,000 (which is in excess of the target amount), representing moneys transferred from the City’s other post-employment benefits fund. The Economic Uncertainty Reserve was established to smooth out revenue and expenditure contingencies. As of June 30, 2021, the balance in the Economic Uncertainty Reserve was $9.6 million, as $10.4 million was utilized to offset a Fiscal Year 2019-20 General Fund operating deficit. See the caption “THE CITY—COVID-19 Outbreak.” A deposit of $5.4 million was approved on November 16, 2021 in the First Quarter Budget Update for Fiscal Year 2021-22, bringing the Economic Uncertainty Reserve balance to $15 million. In addition, a deposit of $4.5 million is included in the Year-End Budget Update slated for City Council consideration on May 26, 2022, which, if approved by the City Council, would bring the Economic Uncertainty Reserve balance to $19.5 million.

Action Plan. In the wake of the 2008 financial crisis, the City developed a Five-Year Budget Action Plan (the “Action Plan”), which was designed to minimize the negative impacts of the global economy on the City’s fiscal health so that the City could continue to preserve public safety levels, meet community and cultural needs and deliver capital projects.

The Action Plan included budget cuts in non-essential expenditures, partnering with vendors and suppliers to limit cost increases, freezing vacant positions, transferring City staff from General Fund-supported positions to vacant positions with funding sources and negotiating with employee groups to forgo contracted raises and merit increases. Implementation of the Action Plan enabled the City to manage its finances after the 2008 financial crisis without layoffs and furloughs and by using accumulated reserves to balance its budgets.

Although the Action Plan covered a five-year period that ended in 2015, the City has continued to utilize the tools that it developed during the Action Plan (now referred to as a Five-Year Forecast) to assist in 400
30 4864-5835-3938v8/022249-0054
managing the City’s finances during future economic recessions. As discussed under the caption “THE CITY—COVID-19 Outbreak,” the City applied many of the tools that were first developed during the Action Plan to stabilize its finances during the onset of the COVID-19 pandemic.

Strategic Plan. The City’s Strategic Plan, which serves as a framework for developing the City’s budget, includes the following goals established by the City Council:
 Invest in the Growth and Evolution of the City’s Economy.  Maintain the Current High Level of Public Safety.
 Operate in a Businesslike Manner.
 Pursue City’s Goals and Objectives by Working with Other Governmental Agencies.  Focus Resources in Ontario’s Commercial and Residential Neighborhoods.  Invest in the City’s Infrastructure (Water, Streets, Sewers, Parks, Storm Drains and Public Facilities).
 Encourage, Provide or Support Enhanced Recreational, Educational, Cultural and Healthy City Programs, Policies and Activities.
 Ensure the Development of a Well Planned, Balanced, and Self-Sustaining Community in Ontario Ranch.

The City is also developing a Fiber Optic Master Plan to guide the design, construction and operation of a fiber optic backbone infrastructure. The fiber optic network is intended to create cost-effective, secure, fast and reliable communications capabilities throughout the City. There can be no assurance as to whether when the Fiber Optic Master Plan will be completed or implemented, or as to the substance of the plan that is ultimately adopted.

Cost Allocation Plan. The City’s Cost Allocation Plan is a basic information tool in a number of financial and budgetary decision-making situations. The Cost Allocation Plan can be used to identify indirect costs incurred by the City in administering and providing support services to special projects, funds and contracts. By identifying total project costs, the Cost Allocation Plan can be used to determine the level of support and to reimburse the General Fund for the indirect costs incurred.

An indirect cost rate is a means for determining fairly and conveniently, within the boundaries of sound administrative principles, what proportion of indirect costs each project or activity should bear. It is the ratio of total indirect expenses to a direct cost base. By applying the indirect cost rate to any particular cost objective, the total cost of the project or activity can be calculated. Indirect costs are categorized as Departmental Overhead and General & Administrative (“ G&A”) expenses. Departmental Overhead is allocated on the basis of direct personnel costs, while G&A is allocated based on the total project or activity costs (excluding G&A).

The Cost Allocation Plan is utilized in charging the City’s utility funds, including water, sewer and integrated waste, for the costs of General Fund administrative activities that benefit such utility funds. The Cost Allocation Plan is updated on an annual basis.

Summary of General Fund Results and Budgets. As of June 30, 2021, the General Fund had a year- end surplus (revenues in excess of expenditures) of approximately $32.0 million (inclusive of interfund transfers), which was significantly more than the year-end deficit of $12.6 million that was projected in the Fiscal Year 2020-21 General Fund budget. The budget surplus was the result of renewed economic activity during the second half of Fiscal Year 2021 as the COVID-19 outbreak that is discussed under the caption “THE CITY—COVID-19 Outbreak” waned in and around the City.

In June 2020, just before the close of Fiscal Year 2019-20, the City implemented a new billing system which the City believes understated Fiscal Year 2019-20 revenues and overstated Fiscal Year 2020-21 revenues for several City funds. Staff continues to gain proficiency in the new billing system, but the 401
31 4864-5835-3938v8/022249-0054
preparation and reconciliation of the City’s financial results was delayed. The City’s effort to compile its financial results was also slowed by the suspension of recruitments and the Retirement/Separation Incentive program that was offered to City employees, both of which initiatives were intended to reduce operating expenses during the COVID-19 pandemic. See the caption “THE CITY—COVID-19 Outbreak.” As a result of the foregoing the City’s audited financial statements for Fiscal Year 2020-21 were not released until late April 2022, which was after the time by which such financial statements were required to be filed pursuant to certain continuing disclosure undertakings of the City. See the caption “CONTINUING DISCLOSURE.” For Fiscal Year 2021-22, the adopted General Fund operating budget projects revenues of $276.2 million, which is approximately $32.5 million (10.5%) below audited Fiscal Year 2020-21 revenues. The adopted Fiscal Year 2021-22 General Fund operating budget projects expenditures of $271.9 million, which is approximately $4.8 million (1.7%) below audited Fiscal Year 2020-21 expenditures.

In the first quarter of Fiscal Year 2021-22, the surplus was allocated as follows: approximately $15.8 million for economic development activities, $15.0 million for future pension unfunded actuarial liability costs under the RSIP (as discussed under the caption “THE CITY—COVID-19 Outbreak”), $8.2 million for information technology funding and $5.4 million toward the Economic Uncertainty Reserve (as discussed under the caption “—Fiscal Policies—Economic Uncertainty Reserve” above). In addition, the Fiscal Year 2021-22 Year-End Budget Update included an additional $4.5 million allocation to the Economic Uncertainty Reserve, additional allocations of $3 million toward internal service funds (Equipment Services, Information Technology and Facilities Maintenance), and $4 million for future pension unfunded actuarial liability costs under the RSIP.

See the caption “—Budget Procedure, Current Budget and Historical Budget Information” for additional information relating to the adopted budget for Fiscal Year 2021-22.

Budget Procedure, Current Budget and Historical Budget Information Budget Timeline. The City’s Fiscal Year 2021-22 budget was approved on June 21, 2021, and the City’s Fiscal Year 2022-23 budget is scheduled to be approved on May 26, 2022. The budget includes all funding sources of the City, including the General Fund and the Ontario Housing Authority. The City’s budget process is described below.

The Ontario Municipal Code requires that the City Manager present the annual operating budget to the Mayor and City Council for approval. The City’s Financial Services Agency (i.e., department), under the direction of the Executive Director of Finance, is responsible for compiling the estimated revenues and appropriations for the City Manager. Prior to the beginning of each Fiscal Year, the Mayor and City Council adopts the Annual Operating Budget at a public budget workshop. 402
32 4864-5835-3938v8/022249-0054
The development of the Annual Operating Budget begins in February with the dissemination of budget preparation guidelines, including policies and procedures to ensure that the preparation of the budget conforms to fiscal policies and guidelines established by the Mayor and City Council. Following the distribution of the budget development guidelines, a budget “kick-off’ meeting is held with department heads and other key City staff members to review the budget development guidelines.

Before department budget requests are submitted to the City Manager, the Financial Services Agency’s Budget Office reviews and analyzes all department budget requests. This review includes a comparative analysis of historical and current expenditure levels. The City Manager and Budget Office staff then hold budget meetings with each department head to discuss the budget requests and obtain additional information to assist in the assessment of the requests. Following the meetings, the Budget Office adjusts line item requests in accordance with the City Manager’s direction. Finally, the budget is presented to the Mayor and City Council for consideration and approval at a public budget workshop.

The City Council can make amendments to an adopted budget at any time during a Fiscal Year.

Quarterly budget update reports include appropriation adjustments and revised revenue projections as needed.

The City Manager may authorize budget transfers between line items, programs and agencies within a fund as long as the total budget has not exceeded the amount approved by City Council. Budgetary changes between funds require City Council approval.

A summary of the actions taken during the budgetary process is set forth below:

CITY OF ONTARIO

BUDGET PROCESS
Source: City.

Current Budget . For Fiscal Year 2021-22, the adopted General Fund operating budget projects revenues of $276.2 million, which is approximately $32.5 million (10.5%) below audited Fiscal Year 2020-21 revenues. The adopted Fiscal Year 2021-22 General Fund operating budget projects expenditures of $271.9 million, which is approximately $4.8 million (1.7%) below audited Fiscal Year 2020-21 expenditures. The General Fund operating budget for Fiscal Year 2021-22 reflects the following significant assumptions: (a) the City will not hire any additional employees; (b) assessed valuations of property will increase by 7.8% above budgeted Fiscal Year 2020-21 assessed valuations; (c) sales tax revenues will increase by 22.6% (before Guidelines
Disseminated
Dissemination of
Budget Preparation
Guidelines
Kick-off Meeting
Meeting with
Department Heads and
Key Staff
Review
Financial Services
Budget Office Reviews
Department Requests
Budget Meetings
City Manager and
Budget Office Meets
with Department Heads
Adjustments
Budget Requests are
Adjusted Per City
Manager Direction
Workshop
Proposed Budget
Submitted to City
Council/Hold Public
Hearing
Approval
Budget Approved
Implementation/
Adjustments
City Council may Amend
Budget during Fiscal
Year/City Manager may
Transfer within Funds
February February March March/April
April May June July
403
33 4864-5835-3938v8/022249-0054
adjustments) above budgeted Fiscal Year 2020-21 sales tax revenues; (d) transient occupancy tax revenues will increase by 22.2% ($2 million) above budgeted Fiscal Year 2020-21 transient occupancy tax revenues; and (e) charges for services at ONT will increase by 15.2% above budgeted Fiscal Year 2020-21 charges for services at ONT.

In the first quarter of Fiscal Year 2021-22, the surplus was allocated as follows: approximately $15.8 million for economic development activities, $15.0 million for future pension unfunded actuarial liability costs under the RSIP (as discussed under the caption “THE CITY—COVID-19 Outbreak”), $8.2 million for information technology funding and $5.4 million toward the Economic Uncertainty Reserve (as discussed under the caption “—General Economic Condition and Outlook of the City—Fiscal Policies—Economic Uncertainty Reserve” above). In addition, the Fiscal Year 2021-22 Year-End Budget Update included an additional $4.5 million allocation to the Economic Uncertainty Reserve, additional allocations of $3 million toward internal service funds (Equipment Services, Information Technology and Facilities Maintenance), and $4 million for future pension unfunded actuarial liability costs under the RSIP.

CITY OF ONTARIO

GENERAL FUND BUDGETS AND RESULTS
Fiscal Year
2018-19
Adopted Budget
Fiscal Year
2018-19
Audited Results
Fiscal Year
2019-20
Amended Budget
Fiscal Year
2019-20
Audited Results
Fiscal Year
2020-21
Adopted Budget
Fiscal Year
2020-21
Audited Results
Fiscal Year
2021-22
Adopted Budget
Fiscal Year
2021-22
Estimated Results
Fiscal Year
2022-23
Proposed Budget(15)
Revenues
Property Taxes $ 40,700,000 $ 43,086,107 $ 45,875,000 $ 46,749,275 $ 47,800,000 $ 50,622,447 $ 51,421,754 $ 56,481,477 $ 58,460,000 Property Taxes in lieu(1) 17,200,000 18,621,838 19,450,000 20,072,659 20,700,000 21,557,460 22,400,000 23,564,478 24,507,000 Sales Taxes 89,400,000 94,486,731 96,155,000 90,290,690 82,000,000 105,424,829(5) 100,500,000 111,700,000 109,900,000 Franchise Taxes 3,300,000 3,161,540 3,200,000 3,164,111 3,000,000 3,251,867 3,000,000 3,400,000 3,000,000 Transient Occupancy Taxes 15,000,000 14,945,483 15,500,000 12,160,235 9,000,000 10,614,109 11,000,000 16,237,675 16,500,000 Business License Taxes 7,600,000 7,786,821 8,211,000 7,793,962 7,786,820 8,559,248 7,700,000 8,662,980 8,763,000 Other Taxes(2) 3,700,000 4,506,129 4,150,000 4,044,908 2,880,000 3,507,185 3,180,000 5,000,000 4,500,000 Licenses and Permits 3,295,000 5,067,374 3,675,000 5,488,023 4,085,000 8,423,831(6) 4,752,000 9,737,125 6,192,000 Intergovernmental 34,150,887(3) 3,132,474 307,700 1,268,005 257,500 28,289,322(7) 14,953,623 3,796,010 10,005,742 Fines and Forfeitures 953,800 1,185,028 928,800 786,630 728,800 656,407 703,000 966,788 753,000 Use of Money and Property 3,852,920 7,072,112 2,864,185 8,476,572 2,000,000 1,066,572 1,661,198 1,462,798 1,341,992 Charges for Services – ONT 22,876,078 24,115,412 21,833,115 24,017,776 17,760,013 16,292,913(8) 20,465,576 21,819,106 20,902,300 Charges for Services 9,301,880 14,662,285 9,242,500 12,150,526 8,375,000 15,429,490(9) 21,006,178 26,971,308 23,963,354 Other Revenue 2,409,430 4,002,652 5,162,359 4,969,244 14,202,295 13,644,767 9,417,060 9,072,672 10,364,645 Transfers In 33,182,530 29,182,877 42,633,335 48,168,298 11,132,206 21,300,682 4,000,000 - - Total Revenues $ 286,922,525 $ 275,014,863 $ 279,187,994 $ 289,600,914 $ 231,707,634 $ 308,641,129 $ 276,160,389 $ 298,872,417 $ 299,153,033 Expenditures
General Government $ 29,017,664 $ 27,251,880 $ 28,764,887 $ 28,322,100 $ 29,302,475 $ 29,847,243 $ 30,066,985 $ 35,154,859 $ 46,391,235 Public Safety 161,206,627 157,310,539 172,355,187 166,873,394 158,919,543 169,458,528(10) 173,053,603 185,703,783 189,262,577 Community Development 67,171,125 31,597,820 34,501,473 35,829,045 32,573,092 36,989,671(11) 39,388,870 43,840,288 48,319,671 Public Works 22,178,286 20,679,198 23,082,801 21,303,770 13,793,596(12) 13,535,675(12) 14,572,002 14,300,435 8,466,127 Debt Service 2,985,337 2,989,049 3,852,940 3,852,938 3,887,688 3,887,687 3,916,571 3,916,751 - Transfers Out 5,154,000 18,618,087 18,159,588 14,894,106 5,798,525 22,966,841(13) 10,860,303 65,616,457 9,438,410 Total Expenditures $ 287,713,039 $ 258,446,573 $ 280,716,876 $ 271,075,353 $ 244,274,919 $ 276,685,645 $ 271,858,334 $ 348,532,573 $ 301,878,020 Excess (Deficiency) of Revenues
Over (Under) Expenditures $ (790,514)(4) $ 16,568,290 $ (1,528,882)(4) $ 18,525,561 $ (12,567,285)(4)

$ 31,955,484 $ 4,302,055 $(49,660,156)(14) $ (2,724,987) (4) (1) See the caption “—State of California Motor Vehicle In-Lieu Payments.” (2) Includes parking tax and property transfer tax revenues. See the caption “—Other Taxes.” (3) Budgeted amount reflects a five-year grant from the State. The proceeds of such grant are not displayed as General Fund revenues in the City’s audited financial statements. (4) Budgeted deficiencies reflect the application of the assigned General Fund balance. (5) Increase from Fiscal Year 2020-21 budgeted amount reflects increased online purchases and sales of building materials. (6) Increase from Fiscal Year 2020-21 budgeted amount reflects increased levels of development activity. (7) Increase from Fiscal Year 2020-21 budgeted amount reflects receipt of CARES Act and ARP Act funding. See the caption “THE CITY—COVID-19 Outbreak.” (8) Decrease from Fiscal Year 2020-21 budgeted amount reflects reduced public safety services provided at ONT as passenger traffic remained low during the COVID-19 pandemic. See the captions “THE CITY—Ontario International Airport” and “THE CITY—COVID-19 Outbreak.” (Footnotes Continued on Following Page)
406
36 4864-5835-3938v8/022249-0054
(Footnotes Continued from Prior Page)
(9) Increase from Fiscal Year 2020-21 budgeted amount reflects increased levels of development activity. (10) Increase from Fiscal Year 2020-21 budgeted amount reflects increased additional public safety service costs during the COVID-19 pandemic. (11) Increase from Fiscal Year 2020-21 budgeted amount reflects increased levels of contractual, plan check and inspection services provided as a result of increased levels of development activity.

These costs are partially offset by increased revenues from development activity. See footnotes (6) and (9) above. (12) Decrease from prior Fiscal Years reflects reallocation of certain Public Works functions from the General Fund to various other City funds. (13) Increase from Fiscal Year 2020-21 budgeted amount reflects increased transfers of General Fund reserves to other funds. (14) Reflects increase in Transfers Out to allocate of Fiscal Year 2020-21 budget surplus, as detailed under the caption “—Budget Procedure, Current Budget and Historical Budget Information— Current Budget.”
(15) Scheduled to be adopted by the City Council on May 26, 2022, subject to public input and adjustment by the City Council. There can be no assurance that the above numbers will be reflected in the adopted budget.

Sources: Adopted budgets of the City for Fiscal Years 2017-18 through 2021-22, including amended budget for Fiscal Year 2019-20; audited financial statements of the City for Fiscal Years 2017-18 through 2020-21; City for Fiscal Years 2021-22 and 2022-23. 407
37 4864-5835-3938v8/022249-0054
Change in Fund Balance of the City General Fund
Set forth in Table 2 are the City’s General Fund statements of revenues, expenditures and changes in fund balance for the last five Fiscal Years.

TABLE 2

CITY OF ONTARIO

GENERAL FUND STATEMENT OF

REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
Fiscal Year Ended June 30,
2017 2018 2019 2020 2021
Revenues
Taxes
Property Taxes $ 37,136,654 $ 38,701,353 $ 43,086,107 $ 46,749,275 $ 50,622,447 Property Taxes in lieu(1) 15,838,993 16,935,018 18,621,838 20,072,659 21,557,460 Sales Taxes 86,168,797 87,910,014 94,486,731 90,290,690 105,424,829 Franchise Taxes 3,020,829 3,352,120 3,161,540 3,164,111 3,251,867 Transient Occupancy Taxes 13,886,637 14,586,233 14,945,483 12,160,235 10,614,109 Business License Taxes 7,167,613 7,478,153 7,786,821 7,793,962 8,559,248 Other Taxes(2) 4,047,435 4,642,529 4,506,129 4,044,908 3,507,185 Licenses and Permits 4,384,727 4,887,991 5,067,374 5,488,023 8,423,831 Intergovernmental 5,170,893 4,540,398 3,132,474 1,268,005 28,289,322 Fines and Forfeitures 1,136,159 1,007,271 1,185,028 786,630 656,407 Use of Money and Property 1,063,385 1,758,523 7,072,112 8,476,572 1,066,572 Charges for Services – ONT(3) - 18,739,184 24,115,412 24,017,776 16,292,913 Charges for Services 9,960,386 12,028,971 14,662,285 12,150,526 15,429,490 Other Revenue 5,776,786 7,445,883 4,002,652 4,969,244 13,644,767 Total Revenues $ 194,759,294 $ 224,013,641 $ 245,831,986 $ 241,432,616 $287,340,447 Expenditures
Current
General Government $ 24,500,521 $ 23,517,450 $ 27,251,880 $ 28,322,100 $ 29,847,243 Public Safety 134,053,016 156,245,698 157,310,539 166,873,394 169,458,528 Community Development 24,285,744 25,914,561 31,597,820 35,829,045 36,989,671 Library(4) 4,654,465 4,768,627 - - -
Public Works 18,105,811 19,337,803 20,679,198 21,303,770 13,535,675(5) Debt Service 3,222,190 4,289,158 2,989,049 3,852,938 3,887,687 Total Expenditures $ 208,821,747 $ 234,073,297 $ 239,828,486 $ 256,181,247 $253,718,804 Excess (Deficiency) of Revenues
Over (Under) Expenditures $ (14,062,453) $ (10,059,656) $ 6,003,500 $ (14,748,631) $ 33,621,643 Other Financing Sources (Uses)
Transfers In $ 32,183,311 $ 35,308,019 $ 29,182,877 $ 48,168,298 $ 21,300,682 Transfers Out (25,859,833) (25,300,348) (18,618,087) (14,894,106) (22,966,841) Total Other Financing Sources
(Uses) $ 6,323,478 $ 10,007,671 $ 10,564,790 $ 33,274,192 $ (1,666,159) Special Item(6) - - - $ (42,373,148) - Net Change in Fund Balances $ (7,738,975) $ (51,985) $ 16,568,290 $ (23,847,587) $ 31,955,484 Fund Balances, Beginning of Year $ 123,016,201 $ 115,277,226 $ 114,822,486(7) $ 131,397,957(7) $107,338,096(7) Fund Balances, End of Year $ 115,277,226 $ 115,225,241 $ 131,390,776 $ 107,550,370 $139,293,580 (1) See the caption “—State of California Motor Vehicle In-Lieu Payments.” (2) Includes parking tax and property transfer tax revenues. See the caption “—Other Taxes.” (3) Primarily reflects police services provided by the City at ONT. Such services commenced in Fiscal Year 2017-18. (4) Beginning in Fiscal Year 2018-19, Library expenses are included in the Community Development line item. (5) Decrease from prior Fiscal Years reflects reallocation of certain Public Works functions from the General Fund to various other City funds. (6) Reflects contribution by the City to the purchase price of ONT and associated salaries and legal, consulting and administrative fees. See the caption “THE CITY—Ontario International Airport.”
(7) As restated.

Sources: Audited financial statements of the City.
408
38 4864-5835-3938v8/022249-0054
General Fund Balance Sheets of the City
Set forth in Table 3 are the City’s General Fund balance sheets for the last five Fiscal Years.

TABLE 3

CITY OF ONTARIO

GENERAL FUND BALANCE SHEETS
Fiscal Year Ended June 30,
2017 2018 2019 2020 2021
Assets
Cash and Investments $ 53,196,528 $ 55,397,144 $ 76,720,178 $ 54,108,152 $ 79,898,830 Receivables
Accounts 24,238,656 24,018,468 35,262,054 21,493,884 48,448,697 Taxes 359,610 523,253 121,303 200,483 241,320
Notes and Loans 42,413,324 42,429,148 42,418,148 75,000 63,000 Accrued Interest 550,105 817,533 915,735 685,878 607,249 Prepaid Costs 211,360 243,305 280,083 103,754 161,659
Deposits - - - 72,400 92,400
Due from Other Governments 540,287 - - 120,081 809,285
Due from Other Funds 31,809,083 12,627,426 717,325 495,315 - Advances to Other Funds - - - 58,180,692 56,120,738
Advances to Successor Agency 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 Restricted Cash and Investments - 145,506 - - - Inventories 144,481 145,989 274,571 300,943 301,530
Total Assets $ 156,963,434 $ 139,847,772 $ 160,209,397 $ 139,336,582 $ 190,244,708 Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities
Accounts Payable $ 4,561,951 $ 6,433,656 $ 6,214,226 $ 11,305,415 $ 13,055,785 Accrued Liabilities 16,878,345 4,393,669 4,996,221 6,688,007 3,687,718 Unearned Revenues 5,617,144 765,283 3,138,187 - 58,352
Deposits Payable 8,434,626 9,291,886 11,726,555 12,846,099 15,239,488 Total Liabilities $ 35,492,066 $ 20,884,494 $ 26,075,189 $ 30,839,521 $ 32,041,343 Deferred Inflows of Resources
Unavailable Revenues $ 6,194,142 $ 3,738,037 $ 2,743,432 $ 946,691 $ 18,697,512 Total Deferred Inflows of Resources $ 6,194,142 $ 3,738,037 $ 2,743,432 $ 946,691 $ 18,697,512 Fund Balances
Nonspendable $ 33,893,841 $ 46,318,442 $ 46,472,802 $ 4,052,097 $ 4,001,189 Restricted 424,497 430,484 438,872 417,464 361,579
Committed 28,877,191 21,066,012 415,884 595,469 -
Assigned 52,081,697 47,410,303 84,063,218 99,862,976 135,143,086 Unassigned - - - 2,622,364 -
Total Fund Balances $ 115,277,226 $ 115,225,241 $ 131,390,776 $ 107,550,370 $ 139,505,854 Total Liabilities, Deferred Inflows of
Resources and Fund Balances $ 156,963,434 $ 139,847,772 $ 160,209,397 $ 139,336,582 $_190,244,708 Sources: Audited financial statements of the City.

Property Taxes
Property tax receipts of $50,622,447 (excluding motor vehicle license fee in-lieu payments, which are discussed under the caption “—State of California Motor Vehicle In-Lieu Payments”), provided the second largest tax revenue source of the City in Fiscal Year 2020-21, contributing approximately 24.9% of General Fund tax revenues and approximately 17.7% of total General Fund revenues during Fiscal Year 2020-21.

Property in the State which is subject to ad valorem taxes is classified as “secured” or “unsecured.” The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax that is levied on unsecured property may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on the secured property, regardless of the time of the creation of other liens. 409
39 4864-5835-3938v8/022249-0054
The exclusive means of compelling the payment of delinquent taxes with respect to secured property is the sale of the property securing the taxes for the amount of taxes that are delinquent. The taxing authority has three methods of collecting unsecured personal property taxes: (1) filing a civil action against the taxpayer; (2) obtaining a judgment lien on certain property of the taxpayer from the county clerk or county recorder; and (3) seizing and selling personal property, improvements or possessory interests belonging or taxable to the assessee.

A 10% penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, beginning on the July 1 following a delinquency, interest begins accruing at the rate of 1.5% per month on the amount delinquent. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the county tax collector. A 10% penalty also applies to the delinquent taxes or property on the unsecured roll, and an additional penalty of 1.5% per month accrues with respect to such taxes beginning on the varying dates related to the tax billing date.

In an attempt to mitigate the effects of the COVID-19 pandemic on State property taxpayers, on May 6, 2020, the Governor signed Executive Order N-61-20 (“ Order N-61-20”). Under Order N-61-20, certain provisions of the State Revenue and Taxation Code were suspended until May 6, 2021 to the extent that they required a tax collector to impose penalties, costs or interest for the failure to pay secured or unsecured property taxes, or to pay a supplemental bill, before the date that such taxes become delinquent. Such penalties, costs and interest were cancelled under the conditions that were provided for in Order N-61-20, including if the property was residential real property which was occupied by the taxpayer or qualified as a small business under certain State laws, the taxes were not delinquent prior to March 4, 2020, the taxpayer filed a claim for relief with the tax collector and the taxpayer demonstrated economic hardship or other circumstances that have arisen due to the COVID-19 pandemic or due to a local, state, or federal governmental response thereto. See the caption “THE CITY—COVID-19 Outbreak.” These actions prevented the City from receiving penalties and interest on delinquent property tax payments in 2020 and 2021, but did not have a material impact on total property tax revenues received by the City during such period.

State law also provides for the supplemental assignment and taxation of property as of the occurrence of a change in ownership or completion of new construction. Collection of taxes based on supplemental assessments occurs throughout the year. Taxes due are prorated according to the amount of time remaining in the tax year.

See the caption “RISK FACTORS—Split Roll Initiative” for a discussion of an initiative that appeared on the November 2020 Statewide ballot which sought to amend provisions of State law relating to property taxes, including the provisions that are discussed above.

For a number of years, the State Legislature shifted property taxes from cities, counties and special districts to the Educational Revenue Augmentation Fund (“ ERAF”). In Fiscal Years 1993 and 1994, in response to serious budgetary shortfalls, the State Legislature and administration permanently redirected over $3 billion of property taxes from cities, counties, and special districts to schools and community college districts pursuant to ERAF shifts. The Fiscal Year 2004-05 State Budget included an additional $1.3 billion shift of property taxes from certain local agencies, including the City, in Fiscal Years 2004-05 and 2005-06.

On July 27, 2009, the Governor signed a revised Fiscal Year 2010 State budget that included an ERAF shift of approximately 8% of 1% ad valorem property tax revenues from certain local agencies, including the City.

On November 2, 2010, State voters approved Proposition 22, which: (i) prohibits the State of California from shifting or delaying the distribution of funds from special districts to schools and community colleges; (ii) eliminates the authority to shift property taxes temporarily during a severe financial hardship of the State; and (iii) restricts the State’s authority to use fuel tax revenues to pay debt service on transportation 410
40 4864-5835-3938v8/022249-0054
bonds, to borrow or change the distribution of fuel tax revenues or to use vehicle license fee revenues to reimburse local governments for state-mandated costs.

Despite the passage of Proposition 22, there can be no assurance that 1% ad valorem property tax revenues which the City currently expects to receive will not be temporarily shifted from the City or reduced pursuant to State legislation enacted in the future, including in response to State budget deficits in the wake of the COVID-19 pandemic. See the caption “STATE OF CALIFORNIA BUDGET INFORMATION.” If the property tax formula is permanently changed in the future, it could have a material adverse effect on the receipt of its share of 1% ad valorem property tax revenues by the City.

Set forth in Table 4 are the secured and unsecured assessed valuations for property in the City for the last five Fiscal Years, including valuations attributed to the City’s redevelopment successor agency.

TABLE 4

CITY OF ONTARIO
ASSESSED VALUATION HISTORY(1)
Fiscal
Year Secured Value
Unsecured
Value Non-Unitary
Taxable
Assessed
Value
Percentage
Increase in
Taxable
Assessed Value
Direct Tax
Rate
2017 $19,151,045 $2,589,867 $15,822 $21,756,734 N/A% 1.0035% 2018 20,576,386 2,666,784 13,344 23,256,514 6.89 1.0035 2019 22,705,622 2,859,078 12,340 25,577,040 9.98 1.0035 2020 24,605,502 2,950,582 12,748 27,568,832 7.79 1.0035 2021 26,416,367 3,178,164 10,444 29,604,975 7.39 1.0035 (1) Figures are in thousands of dollars.

Sources: San Bernardino County Assessor Combined Tax Rolls.

Set forth in Table 5 are property tax collections and delinquencies in the City as of June 30 for the last five Fiscal Years. Although the County has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (known as the Teeter Plan), as provided for in Section 4701 et seq. of the Revenue and Taxation Code of the State, the City does not participate in such plan. As a result, the City is exposed to the risk of property tax payment delinquencies but receives penalties and interest on delinquent collections. The City also receives supplemental taxes throughout the year. 411
41 4864-5835-3938v8/022249-0054
TABLE 5

CITY OF ONTARIO

PROPERTY TAX LEVIES AND COLLECTIONS
Fiscal Year
Total
Tax Levy
Collections within
the Fiscal Year
of Levy(1)
Percent of Levy
Collected within the
Fiscal Year of Levy
Collections in
Subsequent Years
Percent of Levy
Collected to Date
2017 $28,598,396 $28,237,630 98.74% $628,491 100.94%
2018 30,476,605 30,258,907 99.29 662,586 101.46
2019 33,855,137 33,811,751 99.87 275,397 100.69
2020 36,873,998 36,420,730 98.77 332,350 99.67
2021 39,751,526 39,728,385 99.94 341,296 100.80
(1) The amounts shown in this column do not reflect property tax revenues that are attributable to the City’s redevelopment successor agency.

Source: Comprehensive Annual Financial Report of the City for Fiscal Year Ended June 30, 2020; County Assessor for Fiscal Year 2021.

Information with respect to the ten largest property taxpayers in the City as shown on the Fiscal Year 2020-21 tax roll is set forth in Table 6.

TABLE 6

CITY OF ONTARIO

TEN LARGEST PROPERTY TAXPAYERS
Taxpayer
2021 Taxable
Assessed Valuation
% of Total
Assessed
Valuation(1)
United Parcel Service Company(2) $ 636,618,427 2.15%
Prologis(2) 628,443,766 2.12
Ontario Mills LP(2) 417,203,243 1.41
Vineyard Industrial I LLC 293,286,349 0.99
Watson Land Company 254,340,995 0.86
Costco Wholesale Corporation(2) 159,055,523 0.54
ROC II California Terracina LLC 153,862,113 0.52
Rexford Industrial-Safari LLC 149,842,571 0.51
Comref So California Industrial LLC 149,617,376 0.51
Majestic-CCC IV Partners 142,470,927 0.48
TOTAL $ 2,984,741,290 10.08%
(1) Fiscal Year 2020-21 total taxable assessed value: approximately $29,604,975,381. (2) This taxpayer has a pending property tax appeal. See the caption “RISK FACTORS—Assessed Value of Taxable Property.”
Source: San Bernardino County Assessor 2020/21 Combined Tax Rolls and SBE Non Unitary Tax Roll.

Sales Taxes
Sales tax receipts of $105,424,829 provided the largest tax revenue source for the City in Fiscal Year 2020-21, contributing approximately 51.8% of General Fund tax revenues and approximately 36.7% of total General Fund revenues during Fiscal Year 2020-21. Retail sales at the Ontario Mills Mall and automobile sales at the Ontario Auto Center contribute significantly to such receipts.

A sales tax is imposed on retail sales or consumption of personal property and collected and distributed by the California Department of Tax and Fee Administration (the “ CDTFA”). The basic sales tax 412
42 4864-5835-3938v8/022249-0054
rate is established by the State Legislature, and local overrides may be approved by voters. The current sales tax rate in the City is 7.75%.

As discussed under the caption “THE CITY—COVID-19 Outbreak,” the Governor extended the deadline to file and pay first quarter sales and use tax returns by 90 days for all but the very largest taxpayers, and up to 361,000 California businesses with less than $5 million in taxable annual sales will be allowed to defer up to $50,000 in sales tax and enter into 12-month payment plans at zero interest. These actions resulted in delays in the receipt by the City of its portion of such tax payments.

Transient Occupancy Taxes
Transient occupancy tax receipts of $10,614,109 provided the fourth largest tax revenue source for the City in Fiscal Year 2020-21, contributing approximately 5.3% of General Fund tax revenues and approximately 3.7% of total General Fund revenues during Fiscal Year 2020-21. Transient occupancy taxes are imposed upon hotel guests at a rate of 11.75% of room rental rates. The City is a popular leisure and conference destination in the Inland Empire, having both a sports and entertainment arena (the Toyota Arena) and the Convention Center. As discussed under the caption “THE LEASED PREMISES,” the Convention Center serves as the leased property under the Lease Agreement.

Other Taxes
Other taxes collected by the City include parking taxes, property transfer taxes, franchise taxes and business license taxes. Parking taxes are levied at the rate of $1.75 per vehicle per day or 12.5% of monthly parking charges. Nearly 80% of the City’s parking tax revenues come from parking structures at ONT.

Franchise taxes are levied on gas, electric, cable television and fiber optic service providers within the City.

Business license taxes are based on either a flat rate or a gross receipts basis.

With the exception of parking tax revenues, which were down as passenger traffic at ONT was reduced, the City has not experienced material declines in other tax revenues since the onset of the COVID-19 pandemic in March 2020.

Services
Charges of $31,722,403 collected for services provided by the City in Fiscal Year 2020-21, including but not limited to fees for plan checks and other planning services, police services and recreational program fees, provided approximately 11.1% of General Fund revenues during Fiscal Year 2020-21. The largest proportion of such charges consists of payments received from the operator of ONT for law enforcement and fire protection services provided by the City at ONT.

The City notes that most recreation programs were cancelled in 2020 as a result of the COVID-19 outbreak, resulting in reduced fees and other revenues from such programs, and that passenger traffic at ONT was down significantly during such period, resulting in a reduced need for law enforcement services.

Although the City reassigned public safety personnel from ONT to other budgeted but unfilled safety positions in the City during this period, charges for services were down by approximately 12.3% in Fiscal Year 2020-21 compared to Fiscal Year 2019-20.

State of California Motor Vehicle In-Lieu Payments
The State imposes a Vehicle License Fee (the “VLF”), which is the portion of the fees paid in lieu of personal property taxes on a vehicle. The VLF is based on vehicle value and declines as the vehicle ages.

Prior to the adoption of the Fiscal Year 2004-05 State Budget, the VLF was 2% of the value of a vehicle.

Through legislation in prior Fiscal Years, the State enacted VLF reductions under which the State was required to “backfill” local governments for their revenue losses resulting from the lowered fee. The Fiscal Year 413
43 4864-5835-3938v8/022249-0054
2004-05 State Budget permanently reduced the VLF from 2% to 0.65% of the value of a vehicle and deleted the requirement for backfill payments, providing instead that the amount of the backfill requirement will be met by an increase in the property tax allocation to cities and counties. See the caption “STATE OF CALIFORNIA BUDGET INFORMATION.”
VLF receipts totaled $21,557,460 in Fiscal Year 2020-21. Such revenues provided the third largest tax revenue source for the City in Fiscal Year 2020-21, contributing approximately 10.6% of General Fund tax revenues and approximately 7.5% of total General Fund revenues.

TABLE 7

CITY OF ONTARIO

STATE OF CALIFORNIA MOTOR VEHICLE IN-LIEU PAYMENTS
Fiscal Year Ended June 30,
Source 2017 2018 2019 2020 2021
Motor Vehicle In-Lieu Payments $15,838,933 $16,935,018 $18,621,838 $20,072,659 $21,557,460 Source: City.

Other Indebtedness
General Fund-Supported Debt.
2017 Bonds . In 2017, the Authority issued the 2017 Bonds to refinance certain capital improvements of the City. The 2017 Bonds mature on November 1, 2042 and bear interest at rates varying from 3% to 5% per annum. The 2017 Bonds are payable from rental payments payable from the City to the Authority under the Original Lease Agreement. As of June 30, 2021, the 2017 Bonds were outstanding in the aggregate principal amount of $25,580,000.

The leased assets under the Original Lease Agreement consist of the same Leased Premises that relate to the 2022 Bonds, namely the Convention Center. See the caption “INTRODUCTION—2017 Bonds.” At the time of issuance of the 2022 Bonds, the City and the Authority will certify that the sum of the 2022 Base Rental Payments and the Base Rental Payments payable under the Original Lease Agreement in connection with the 2017 Bonds do not exceed the fair rental value of the Leased Premises. See the caption “THE LEASED PREMISES” for a detailed description of the Leased Premises, including the insured value thereof.

The City has covenanted in the Original Lease Agreement to budget and appropriate moneys annually for the lease payments payable thereunder from legally available funds, including the General Fund, together with the 2022 Base Rental Payments payable under the Lease Agreement in connection with the 2022 Bonds. 2020 Bonds. In 2020, the City issued its 2020 Taxable Pension Obligation Bonds (the “ 2020 Bonds”) to pay a portion of the City’s unfunded pension liabilities. The 2020 Bonds mature on June 1, 2050 and bear interest at rates varying from 2.071% to 3.979% per annum. The 2020 Bonds are payable from legally available funds of the City, including the General Fund. As of June 30, 2021, the 2020 Bonds were outstanding in the aggregate principal amount of $233,215,000.

The City has covenanted in the trust agreement pursuant to which the 2020 Bonds were issued to budget and appropriate moneys annually for the payments payable thereunder from legally available funds, including the General Fund, on a basis that is substantially similar to the payment of Base Rental Payments under the Lease Agreement in connection with the 2022 Bonds. 2020 Lease/Purchase Agreement. In 2020, the City entered into a lease/purchase agreement (the “2020 Lease/Purchase Agreement”) with Banc of America Public Capital Corp to finance certain energy 414
44 4864-5835-3938v8/022249-0054
efficiency improvements to City facilities. The agreement matures in 2040 and bears interest at rates of

2.320% (tax-exempt component) and 2.961% (taxable component). The 2020 Lease/Purchase Agreement is payable from legally available funds of the City, including the General Fund; the City notes that the financed improvements are expected to generate energy efficiency cost savings for the General Fund. As of June 30, 2021, the 2020 Lease/Purchase Agreement was outstanding in the principal amount of $30,546,423. 2021 Lease/Purchase Agreement . In August 2021, the City entered into a lease/purchase agreement (the “ 2021 Lease/Purchase Agreement ”) with Citizens Business Bank to finance certain improvements to the City’s broadband fiber optic network. The agreement matures in 2042 and bears interest at the rate of 3.55% per annum. The 2021 Lease/Purchase Agreement is payable from legally available funds of the City, including the General Fund, although the primary repayment source is expected to be the City’s Broadband/Fiber Optic Fund. As of the date of this Official Statement, the 2021 Lease/Purchase Agreement was outstanding in the principal amount of $18,031,000. 2021 Real Estate Investment Financing . In March 2021, the City approved a real estate investment financing in the Pension Benefits Fund utilizing available cash totaling $65 million from various City funds, including the Water Capital Fund, the Sewer Capital Fund, the Equipment Services Fund, the General Liability Fund, the Workers Compensation Fund and the Other Post-Employment Benefits Fund. The financing was structured as a lease/leaseback arrangement through the Ontario Industrial Development Authority that was scheduled to be paid back from the Pension Benefit Fund within 3 years at an interest rate of 1.50% per annum. The City’s goal was to generate income beyond what the City portfolio can earn given the current interest rate environment. The City invested the transferred funds in real estate assets and repaid the loan on November 17, 2021 (prior to maturity) from the proceeds of the successful sale of a City-owned asset; this action was included in the First Quarter Budget Update for Fiscal Year 2020-21 that was approved by the City Council on November 16, 2021.
2021 Bonds. In 2021, the Authority issued its 2021 Lease Revenue Refunding Bonds, Series A (Federally Taxable) (the “ 2021 Bonds”) to refinance certain capital improvements of the City. The 2021 Bonds mature on October 1, 2043 and bear interest at rates varying from 0.665% to 3.283% per annum. The 2021 Bonds are payable from rental payments payable by the City to the Authority under an Amended and Restated Lease Agreement, dated as of December 1, 2021 (the “ 2021 Lease”). The 2021 Bonds are currently outstanding in the aggregate principal amount of $35,045,000.

The City has covenanted in the 2021 Lease to budget and appropriate moneys annually for the payments payable thereunder from legally available funds, including the General Fund, on a basis that is substantially similar to the payment of 2022 Base Rental Payments due under the Lease Agreement.

Other Long Term Debt. In 2013, the City entered into an Installment Purchase Agreement, dated as of September 1, 2013 (the “ 2013 Water ISA”), with the Authority. The 2013 Water ISA matures on July 1, 2043 and bears interest at rates varying from 4% to 5.25% per annum. The 2013 Water ISA is payable from net revenues of the City’s municipal water utility. As of June 30, 2021, the 2013 Water ISA outstanding in the aggregate principal amount of $64,420,000. The 2013 Water ISA was paid in full in December 2021 from proceeds of the 2021 Water Bonds (as discussed in the following paragraph) and is no longer outstanding.

In 2021, the City issued its Water Revenue Refunding Bonds, Series 2021 (Federally Taxable) (the “2021 Water Bonds ”) to prepay the 2013 Water ISA in full. The 2021 Water Bonds mature on August 1, 2043 and bear interest at rates varying from 0.541% to 2.949% per annum. The 2021 Water Bonds are payable from net revenues of the City’s municipal water utility. The 2021 Water Bonds were issued on December 16, 2021 in the original aggregate principal amount of $67,550,000.

In addition, in 2019, the City entered into an Agreement for Purchase and Sale and Joint Escrow Instructions (the “ Great Park Purchase Agreement ”) pursuant to which the City agreed to purchase a property to be developed into a park. The Great Park Purchase Agreement is payable in annual installments of 415
45 4864-5835-3938v8/022249-0054
$5,000,000 each through January 15, 2025. Although there is no specific source of repayment pledged in the Great Park Purchase Agreement, the City expects to make payments thereunder from park development impact fees and does not expect to apply General Fund moneys to pay the remaining purchase price. As of June 30, 2021, the Great Park Purchase Agreement is outstanding in the principal amount of $19,182,739.

Short-Term Debt. The City currently has no short-term debt outstanding.

Estimated Direct and Overlapping Bonded Debt . The estimated direct and overlapping bonded debt of the City as of June 30, 2021 is set forth in Table 8. The information in Table 8 has been derived from data assembled and reported to the City by California Municipal Statistics, Inc. None of the City, the Authority or the Underwriters have independently verified the information in Table 8 and the City, the Authority and the Underwriters do not guarantee its accuracy.
416
46 4864-5835-3938v8/022249-0054
TABLE 8

CITY OF ONTARIO
ESTIMATED DIRECT AND OVERLAPPING BONDED DEBT AS OF JUNE 30, 2021 Fiscal Year 2020-21 Assessed Valuation: $29,564,789,984(1) Total Debt City’s Share of
OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/21 % Applicable(2) Debt 6/30/21 Metropolitan Water District $26,830,000 0.906% $ 243,080 Chaffey Community College District 315,490,000 23.195 73,177,906 Chino Valley Unified School District 557,230,000 5.914 32,954,582 Chaffey Union High School District 530,528,431 41.376 219,511,444 Ontario-Montclair School District 109,165,015 70.213 76,648,032 Mountain View School District School Facilities Improvement District No. 1 9,899,676 100.000 9,890,865 Mountain View School District Community Facilities District No. 1997-1 499,000 100.000 499,000 City of Ontario Community Facilities District No. 13 3,205,000 100.000 3,205,000 City of Ontario Community Facilities District No. 24 14,935,000 100.000 14,935,000 City of Ontario Community Facilities District No. 25 8,365,000 100.000 8,365,000 City of Ontario Community Facilities District No. 26 8,670,000 100.000 8,670,000 City of Ontario Community Facilities District No. 28 8,500,000 100.000 8,500,000 City of Ontario Community Facilities District No. 30 13,465,000 100.000 13,465,000 City of Ontario Community Facilities District No. 31 4,785,000 100.000 4,785,000 City of Ontario Community Facilities District No. 33 5,990,000 100.000 5,990,000 City of Ontario Community Facilities District No. 34 7,615,000 100.000 7,615,000 City of Ontario Community Facilities District No. 38 10,270,000 100.000 10,270,000 City of Ontario Community Facilities District No. 39 5,015,000 100.000 5,015,000 City of Ontario Community Facilities District No. 40 6,340,000 100.000 6,340,000 City of Ontario Community Facilities District No. 43 15,795,000 100.000 15,795,000 City of Ontario Community Facilities District No. 45 9,000,000 100.000 9,000,000 City of Ontario Community Facilities District No. 46 7,130,000 100.000 7,130,000 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $542,004,909
DIRECT AND OVERLAPPING GENERAL FUND DEBT:

San Bernardino County General Fund Obligations $214,095,000 11.811% $ 25,286,760 San Bernardino County Pension Obligation Bonds 180,825,585 11.811 21,357,310 San Bernardino County Flood Control District General Fund Obligations 51,360,000 11.811 6,066,130 Chaffey Community College District General Fund Obligations 28,935,000 23.195 6,711,473 Cucamonga School District General Fund Obligations 4,207,000 52.497 2,208,549 City of Ontario General Fund Obligations 57,865,000 100.000 57,865,000(3) City of Ontario Pension Obligation Bonds 233,215,000 100.000 233,215,000 West Valley Vector Control District General Fund Obligations 2,046,710 32.065 656,278 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $353,366,500 OVERLAPPING TAX INCREMENT DEBT (Successor Agency): $30,222,600 100.000% $30,222,600(4) TOTAL DIRECT DEBT $291,080,000
TOTAL OVERLAPPING DEBT $634,514,009
COMBINED TOTAL DEBT $925,594,009(5)
Ratios to Fiscal Year 2020-21 Assessed Valuation:

Total Overlapping Tax and Assessment Debt........................................................ 1.83% Total Direct Debt ($291,080,000)........................................................................ 0.98% Combined Total Debt............................................................................................ 3.13% Ratios to Redevelopment Successor Agency Incremental Valuation ($6,999,128,565):

Total Overlapping Tax Increment Debt................................................................. 0.43% (1) Differs from assessed valuation shown in Tables 4 and 6 under the caption “—Property Taxes” as a result of slight differences in methodology. (2) The percentage of overlapping debt applicable to the City is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of each overlapping district’s assessed value that is within the boundaries of the City divided by each such district’s total taxable assessed value.
(3) Excludes 2022 Bonds.
(4) Excludes accreted interest on capital appreciation bonds. (5) Excludes tax and revenue anticipation notes, enterprise revenue bonds, mortgage revenue bonds and non-bonded capital lease obligations.

Source: California Municipal Statistics, Inc.

Retirement Contributions
Accounting and financial reporting by state and local government employers for defined benefit pension plans is governed by GASB Statement No. 68 (“ GASB 68 ”). GASB 68 includes the following components: (i) unfunded pension liabilities are included on the employer’s balance sheet; (ii) pension expense 417
47 4864-5835-3938v8/022249-0054
incorporates rapid recognition of actuarial experience and investment returns and is not based on the employer’s actual contribution amounts; (iii) lower actuarial discount rates are required to be used for underfunded plans in certain cases for purposes of the financial statements; (iv) closed amortization periods for unfunded liabilities are required to be used for certain purposes of the financial statements; and (v) the difference between expected and actual investment returns will be recognized over a closed five-year smoothing period. GASB 68 affects the City’s accounting and reporting requirements, but it does not change the City’s pension plan funding obligations.

The City participates in three plans to fund pension benefits for employees: (i) a Police Safety Plan for police personnel; (ii) a Fire Safety Plan for fire department personnel; and (iii) a Miscellaneous Plan for all other eligible personnel. The City’s pension plans are administered by CalPERS. CalPERS administers agent multiple-employer public employee defined benefit pension plans for all of the City’s full-time and certain part-time employees. CalPERS provides retirement, disability and death benefits to plan members and beneficiaries and acts as a common investment and administrative agent for participating public entities within the State, including the City. CalPERS plan benefit provisions and all other requirements are established by State statute and the City Council.

City employees are subject to different benefit levels based on their hire date. The plans’ provisions and benefits in effect at June 30, 2020 are summarized as follows:
418
48 4864-5835-3938v8/022249-0054

CITY OF ONTARIO
CALPERS PENSION PLANS – SUMMARY OF BENEFIT PROVISIONS
Police Safety Plan
Employees Hired
Before July 1, 2012
Employees Hired
between July 1, 2012 and
December 31, 2012
Employees Hired after
December 31, 2012 (Not
Previously CalPERS
members)
Benefit Formula 3.0% @ age 50 3.0% @ age 55 2.7% @ age 57 Benefit Vesting 5 years of service 5 years of service 5 years of service Benefit Payments Monthly for life Monthly for life Monthly for life Minimum Retirement Age 50 50 50
Monthly Benefits as % of
Eligible Compensation
3% 2.4% - 3% 2% - 2.7%
Employee Normal Cost 9.00%(1) 9.00%(1) 13.25%(1)
Employer Normal Cost
Rate

21.88% 21.88% 21.88%
Fire Safety Plan
Employees Hired
Before July 1, 2012
Employees Hired
between July 1, 2012 and
December 31, 2012
Employees Hired after
December 31, 2012 (Not
Previously CalPERS
members)
Benefit Formula 3.0% @ age 50 3.0% @ age 55 2.7% @ age 57 Benefit Vesting 5 years of service 5 years of service 5 years of service Benefit Payments Monthly for life Monthly for life Monthly for life Minimum Retirement Age 50 50 50
Monthly Benefits as % of
Eligible Compensation
3% 2.4% - 3% 2% - 2.7%
Employee Normal Cost 9.00%(1) 9.00%(1) 11.25%(1)
Employer Normal Cost
Rate

19.36% 19.36% 19.36%
Miscellaneous Plan
Employees Hired on or before
December 31, 2012
Employees Hired after December 31,
2012 (Not Previously CalPERS
members)
Benefit Formula 2.5% @ age 55 2.0% @ age 62
Benefit Vesting 5 years of service 5 years of service
Benefit Payments Monthly for life Monthly for life
Minimum Retirement Age 50 52
Monthly Benefits as % of
Eligible Compensation
2% - 2.5% 1% - 2.5%
Employee Normal Cost 8.00%(1) 6.25%(1)
Employer Normal Cost
Rate

10.07% 10.07%
(1) Employees are required to make the full employee contribution themselves. The City does not make any portion of the employee contribution.

Source: City.
419
49 4864-5835-3938v8/022249-0054
Contributions to the City’s pension plans consist of contributions from plan participants (i.e., employees) and contributions by the City.

City employees who were hired after December 31, 2012 and who were not previously CalPERS members receive benefits based on a 2.7% at age 57 formula (for Police Safety Plan and Fire Safety Plan employees) or a 2.0% at age 62 formula (for Miscellaneous Plan employees). Such employees are required to make the full amount of required employee contributions themselves under the California Public Employees’ Pension Reform Act of 2013 (“ AB 340”), which was signed by the State Governor on September 12, 2012.

AB 340 established a new pension tier for such employees. Benefits for such participants are calculated on the highest average annual compensation over a consecutive 36-month period. Employees are required to pay at least 50% of the total normal cost rate. AB 340 also capped pensionable income as noted below. Amounts are set annually, subject to Consumer Price Index increases, and retroactive benefits increases are prohibited, as are contribution holidays and purchases of additional non-qualified service credit.

CITY OF ONTARIO
PENSIONABLE INCOME CAPS FOR CALENDAR YEAR 2022
(AB 340 AND NON-AB 340 EMPLOYEES)
Employees Hired On or Before
December 31, 2012
(Non-AB 340 Employees)
Employees Hired After
December 31, 2012
(AB 340 Employees)
Maximum Pensionable Income $305,000 $161,969
Maximum Pensionable Income if
also Participating in Social Security N/A 134,974
Source: City.

Additional employee contributions, limits on pensionable compensation and higher retirement ages for new members as a result of the passage of AB 340 are expected to reduce the City’s unfunded pension lability and potentially reduce City contribution levels in the long term.

The City is also required to contribute the actuarially determined remaining amounts necessary to fund benefits for its members. Employer contribution rates for all public employers are determined on an annual basis by the CalPERS actuary and are effective on the July 1 following notice of a change in the rate. Total plan contributions are determined through the CalPERS annual actuarial valuation process. The total minimum required employer contribution is the sum of: (i) the plan’s employer normal cost rate, which funds pension benefits for current employees for the upcoming Fiscal Year (expressed as a percentage of payroll); plus (ii) the employer unfunded accrued liability contribution amount, which funds pension benefits that were previously earned by current and former employees (billed monthly).

For Fiscal Year 2020-21, required employer normal cost rates as a percentage of payroll were

22.318% for Police Safety Plan employees, 19.811% for Fire Safety Plan employees and 10.266% for Miscellaneous Plan employees. For Fiscal Year 2021-22, required employer normal cost rates as a percentage of payroll are 21.88% for Police Safety Plan employees, 19.36% for Fire Safety Plan employees and 10.07% for Miscellaneous Plan employees.

For Fiscal Year 2020-21, the total required employer payment of the unfunded accrued liability for the City’s Police Safety Plan was $8,826,947. For Fiscal Year 2021-22, the total required employer payment of the unfunded accrued liability for the City’s Police Safety Plan is $824,395, reflecting the City’s issuance of the 2020 Bonds, the proceeds of which were applied to pay down a portion of the unfunded accrued liability of $139,203,264. See the caption “—Other Indebtedness—General-Fund Supported Debt—2020 Bonds.” 420
50 4864-5835-3938v8/022249-0054
For Fiscal Year 2020-21, the total required employer payment of the unfunded accrued liability for the City’s Fire Safety Plan was $5,332,971. For Fiscal Year 2021-22, the total required employer payment of the unfunded accrued liability for the City’s Fire Safety Plan is $647,660, reflecting the City’s issuance of the 2020 Bonds, the proceeds of which were applied to pay down a portion of the unfunded accrued liability of $94,180,092. See the caption “—Other Indebtedness—General-Fund Supported Debt—2020 Bonds.” For Fiscal Year 2020-21, the total required employer payment of the unfunded accrued liability for the City’s Miscellaneous Plan was $7,056,966. For Fiscal Year 2021-22, the total required employer payment of the unfunded accrued liability for the City’s Miscellaneous Plan is $244,928, reflecting the City’s application of available cash balances to pay down a portion of the unfunded accrued liability of $102,069,092. See footnote (14) to Table 1 under the caption “—Budget Procedure, Current Budget and Historical Budget Information.”
Beginning in Fiscal Year 2017-18, CalPERS began collecting employer contributions toward a pension plan’s unfunded liability as dollar amounts instead of the prior method of a percentage of payroll.

According to CalPERS, this change was intended to address potential funding issues that could arise from a declining payroll or a reduction in the number of active members in the plan. Funding the unfunded liability as a percentage of payroll could lead to underfunding of pension plans. Due to stakeholder feedback regarding internal needs for total contributions expressed as an estimated percentage of payroll, the CalPERS reports include such results in the contribution projection for informational purposes only. Contributions toward a pension plan’s unfunded liability will continue to be collected as set dollar amounts.

The City’s required contributions to CalPERS fluctuate each year and, as noted, include a normal cost component and a component equal to an amortized amount of the unfunded liability. Many assumptions are used to estimate the ultimate liability of pensions and the contributions that will be required to meet those obligations. The CalPERS Board of Administration has adjusted and may in the future further adjust certain assumptions used in the CalPERS actuarial valuations, which adjustments may increase the City’s required contributions to CalPERS in future years. Accordingly, the City cannot provide any assurances that the City’s required contributions to CalPERS in future years will not significantly increase (or otherwise vary) from any past or current projected levels of contributions. CalPERS earnings reports for Fiscal Years 2009-10 through 2020-21 report investment gains of approximately 13.3%, 21.7%, 0.1%, 13.2%, 18.4%, 2.4%, 0.6%, 11.2%,

8.6%, 6.7%, 4.7% and 21.3%, respectively. Future earnings performance may increase or decrease future contribution rates for plan participants, including the City. The City notes that CalPERS’ earnings in Fiscal Year 2019-20 were below its investment targets as a result of stock market declines in the wake of the COVID-19 outbreak, which could increase future contribution rates for plan participants, including the City.

See the caption “THE CITY—COVID-19 Outbreak.”
On December 21, 2016, the CalPERS Board of Administration voted to lower its discount rate from

7.50% to 7.00% over a three period. For public agencies such as the City, the new discount rate took effect July 1, 2017. Lowering the discount rate means that employers which contract with CalPERS to administer their pension plans will see increases in their normal costs and unfunded actuarial liabilities. Active members hired after January 1, 2013 will also see their contribution rates rise under AB 340. The reduction of the discount rate will result in average employer rate increases of approximately 1% to 3% of normal cost as a percentage of payroll for most retirement plans such as the City’s plans. Additionally, many employers will see a 30% to 40% increase in their current unfunded accrued liability payments (relative to the unfunded accrued liability payments projected in the June 30, 2015 valuation report) for pension plans. These payments are made to amortize unfunded liabilities over 20 years to bring pension funds to a fully funded status over the long-term.

The announcement on July 12, 2021 that CalPERS achieved an investment return of 21.3% for the period from July 1, 2020 through June 30, 2021 caused the CalPERS Board of Administration to lower CalPERS’ discount rate from 7.00% to 6.80% on November 15, 2021 in accordance with a risk mitigation 421
51 4864-5835-3938v8/022249-0054
policy that was adopted in 2015, which calls for the discount rate to be lowered if returns exceed the then- current discount rate by two or more percentage points.

Portions of the above disclosures are primarily derived from information that has been produced by CalPERS, its independent accountants and its actuaries. The City has not independently verified such information and neither makes any representations nor expresses any opinion as to the accuracy of the information that has been provided by CalPERS.

The comprehensive annual financial reports of CalPERS are available on CalPERS’ Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information that concerns benefits and other matters. The textual reference to such Internet website is provided for convenience only. None of the information on such Internet website is incorporated by reference herein. The City cannot guarantee the accuracy of such information. Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or be changed in the future.

The City’s Police Safety Plan had a total net pension liability of approximately $6,879,502 for Fiscal Year 2020-21 (as of the measurement date of June 30, 2020). The net pension liability is the difference between the total pension liability and the fair market value of pension assets. The City’s total pension assets include funds that are held by CalPERS, and its net pension asset or liability is based on such amounts. For Fiscal Year 2020-21, the City incurred Police Safety Plan pension expenses of $154,440,411 (reflecting the issuance of the 2020 Bonds). See the caption “—Other Indebtedness—General-Fund Supported Debt—2020 Bonds.”
The City’s Fire Safety Plan had a total net pension liability of approximately $5,414,056 for Fiscal Year 2020-21 (as of the measurement date of June 30, 2020). The net pension liability is the difference between the total pension liability and the fair market value of pension assets. The City’s total pension assets include funds that are held by CalPERS, and its net pension asset or liability is based on such amounts. For Fiscal Year 2020-21, the City incurred Fire Safety Plan pension expenses of $103,651,019 (reflecting the issuance of the 2020 Bonds). See the caption “—Other Indebtedness—General-Fund Supported Debt—2020 Bonds.”
The City’s Miscellaneous Plan had a total net pension liability of approximately $2,306,182 for Fiscal Year 2020-21 (as of the measurement date of June 30, 2020). The net pension liability is the difference between the total pension liability and the fair market value of pension assets. The City’s total pension assets include funds that are held by CalPERS, and its net pension asset or liability is based on such amounts. For Fiscal Year 2020-21, the City incurred Miscellaneous Plan pension expenses of $113,590,085 (reflecting the City’s application of available cash balances to pay down a portion of the unfunded accrued liability. See footnote (14) to Table 1 under the caption “—Budget Procedure, Current Budget and Historical Budget Information.”
A summary of principal assumptions and methods used to determine the total pension liability for Fiscal Year 2020-21 is shown below.
422
52 4864-5835-3938v8/022249-0054

CITY OF ONTARIO

ACTUARIAL ASSUMPTIONS FOR CALPERS PENSION PLAN
Actuarial Cost Method Entry Age Normal in accordance with the requirements of GASB 68 Asset Valuation Method Market Value of Assets
Actuarial Assumptions:

Discount Rate 7.15%
Inflation 2.625%
Salary Increases Varies by entry age and service
Investment Rate of Return 7.25% net of pension plan investment and administrative expenses; includes projected inflation rate of 2.625%
Mortality Rate Table(1) Derived using CalPERS’ membership data for all funds (1) The mortality table used was developed based on CalPERS-specific data from a 2017 actuarial experience study for the period from 1997-2015.

Source: City.
423
53 4864-5835-3938v8/022249-0054
Changes in the net pension liability for the City’s pension plans in the most recent Fiscal Year for which information is available were as follows:

CITY OF ONTARIO

CHANGES IN CALPERS PENSION PLANS NET PENSION LIABILITY
Police Safety Plan
Increase / (Decrease)
Total
Pension Liability
Plan Fiduciary
Net Position
Net Pension
Liability / (Asset)
Balance at June 30, 2019 $ 407,587,625 $ 276,775,252 $ 130,812,373 Balance at June 30, 2020 437,334,944 430,455,442 6,879,502 Net Changes for period from July 1, 2019
through June 30, 2020
$ 29,747,319 $ 153,680,190 $(123,932,871)
Fire Safety Plan
Increase / (Decrease)
Total
Pension Liability
Plan Fiduciary
Net Position
Net Pension
Liability / (Asset)
Balance at June 30, 2019 $ 298,784,661 $ 210,779,084 $ 88,005,577 Balance at June 30, 2020 318,027,395 312,613,339 5,414,056 Net Changes for period from July 1, 2019
through June 30, 2020
$ 19,242,734 $ 101,834,255 $(82,591,521)
Miscellaneous Plan
Increase / (Decrease)
Total
Pension Liability
Plan Fiduciary
Net Position
Net Pension
Liability / (Asset)
Balance at June 30, 2019 $ 389,132,091 $ 293,850,595 $ 95,281,496 Balance at June 30, 2020 411,510,229 409,204,047 2,306,182 Net Changes for period from July 1, 2019
through June 30, 2020
$ 22,378,138 $ 115,353,452 $(92,975,314)
Source: City.

The table below presents the net pension liability of the City’s pension plans, calculated using the discount rate applicable to Fiscal Year 2020-21 (7.15%), as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.15%) or 1 percentage point higher (8.15%) than the Fiscal Year 2020-21 rate:
424
54 4864-5835-3938v8/022249-0054

CITY OF ONTARIO

SENSITIVITY OF THE CALPERS PENSION PLANS NET PENSION LIABILITY

TO CHANGES IN THE DISCOUNT RATE
Plan’s Net Pension Liability/(Asset)
Discount Rate – 1%
(6.15%)
Applicable Discount
Rate (7.15%)
Discount Rate + 1%
(8.15%)
Police Safety Plan $68,191,268 $6,879,502 $(43,266,592) Fire Safety Plan 47,519,238 5,414,056 (29,330,812)
Miscellaneous Plan 57,939,305 2,306,182 (43,708,428)
Source: City.

For additional information relating to the City’s pension plans, see Note 10 to the City’s audited financial statements set forth in Appendix C.

Other Post-Employment Benefits
The City provides post-employment health care benefits to qualified retired employees. Employees are eligible for such benefits in accordance with applicable MOUs with employee bargaining units. The City administers a single-employer defined benefit post-employment healthcare plan (the “OPEB Plan”). A menu of benefit provisions, as well as other requirements, are established by state statutes within the Public Employees’ Retirement Law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance.

At June 30, 2020 (the census date), the following employees were covered by the benefit terms:

Category Count
Active employees 1,071
Inactive employees or beneficiaries currently receiving benefit payments 831 Inactive employees entitled to but not yet receiving benefit payment 182 Source: City.

The City funds benefits under the OPEB Plan based on an Actuarially Determined Contribution (the “ADC”). For the year ended June 30, 2021, the City’s ADC contribution rate was 102.8% of covered employee payroll. Employees do not contribute to the plan, but may pay the difference between the benefit that they receive and monthly premiums for that benefit.

GASB has issued two pronouncements, known as GASB 74 and GASB 75, related to funding and accounting for the OPEB Plan. Under these pronouncements, OPEB Plan benefits are intended to be accounted for in a manner that is similar to the accounting treatment of pensions under GASB 68. See the caption “—Retirement Contributions.” Under GASB 74 and 75, unfunded OPEB Plan benefits will be recognized on the City’s financial statements and the City is required to use the Entry Age actuarial cost method when calculating OPEB Plan liabilities. In addition, a 20-year municipal bond rate is used to discount unfunded OPEB Plan payments and the long-term rate of return on plan investments is used to discount benefits that are projected to be paid by plan assets.

The City retained a consultant (the “ Actuarial Consultant”) to calculate the City’s post-employment benefits funding status. In a report dated June 30, 2021 (the “ Report”), the Actuarial Consultant concluded that the City’s ADC is $7,470,000. According to the Actuarial Consultant, the City’s unfunded actuarial accrued liability for post-employment benefits was $0 as of June 30, 2020, the most recent date that such liability was calculated.
425
55 4864-5835-3938v8/022249-0054
The City is not required to fund the amortization of the unfunded actuarial liability. Prior to Fiscal Year 2019-20, the City’s policy was to pay for OPEB Plan costs as they are incurred. In Fiscal Year 2019-20, the City Council approved the establishment of an irrevocable trust to fund OPEB Plan benefits (the “ OPEB Trust”) with the California Employers’ Retiree Benefit Trust, an agent multiple-employer plan that is administered by CalPERS, and approved and authorized an agreement with CalPERS to administer the OPEB Trust on its behalf. As of June 30, 2021, the City held $180,490,001 in the OPEB Trust. Based on the most recent actuarial valuation, the actuarial unfunded liability of the OPEB Plan was estimated to be approximately $27,185,786 using a methodology that is compliant with GASB 75.

Changes in the total liability for the City’s OPEB Benefit plan for Fiscal Year 2019-20 were as follows.

CITY OF ONTARIO

CHANGES IN OPEB PLAN LIABILITY
Increase / (Decrease)
Total
OPEB Plan Liability
Plan Fiduciary
Net Position
Net OPEB Plan
Liability / (Asset)
Balance at June 30, 2020 $162,628,638 $ N/A $162,628,638 Net Changes for period from July
1, 2020 through June 30, 2021
6,194,563 141,637,415 (135,442,852)
Balance at June 30, 2021 $168,823,201 $141,637,415 $ 27,185,786 Source: City.

The following table presents the net liability of the OPEB Plan, calculated using the discount rate applicable to Fiscal Year 2020-21 (6.75%), as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.75%) or 1 percentage point higher (7.75%) than the current rate:

CITY OF ONTARIO

SENSITIVITY OF THE OPEB PLAN TOTAL LIABILITY

TO CHANGES IN THE DISCOUNT RATE
Discount Rate – 1%
(5.75%)
Current Discount Rate
(6.75%)
Discount Rate + 1%
(7.75%)
Plan’s Total Liability/(Asset) $51,747,760 $27,185,786 $7,250,526 Source: City.

Future changes in funding policies and assumptions, including those related to assumed rates of investment return and healthcare cost inflation, could trigger increases in the City’s annual required OPEB Plan contributions, and such increases could be material to the finances of the City. No assurance can be provided that such expenses will not increase significantly in the future. The City does not expect that any increased funding of OPEB Plan benefits will have a material adverse effect on the ability of the City to pay the 2022 Bonds.

For additional information relating to the City’s OPEB Plan, see Note 11 to the City’s audited financial statements set forth in Appendix C.
426
56 4864-5835-3938v8/022249-0054
City Investment Policy
The City invests its funds in accordance with the City’s investment policy (the “Investment Policy”), which was most recently reviewed and revised by the City Council on December 7, 2021. The Investment Policy: (a) describes the policies and procedures to be utilized in the City’s investment management system; (b) establishes guidelines for the prudent investment of the City’s funds, and (c) lists and describes suitable investments. The goals of the City’s investment policy and investment management function are compliance with law, enhancement of the economic status of the City and protection of the City’s funds by limiting credit and market risks.

In accordance with Section 53600 et seq. of the California Government Code, idle cash management and investment transactions are the responsibility of the City Treasurer. Eligible investments are generally limited to the Local Agency Investment Fund which is operated by the California State Treasurer, local agency bonds, United States Treasury bills, notes and bonds, obligations issued by United States Government agencies, FDIC-insured or negotiable certificates of deposit, repurchase agreements, banker’s acceptances and commercial paper rated A1/P1, as applicable, or better, and issued by a domestic corporation having assets in excess of $500 million. Funds are invested in the following order of priority:
 Safety of Principal;
 Liquidity; and
 Return on Investment.

The City Treasurer is required to provide a quarterly report to the City Manager and the City Council showing the type of investment, date of maturity, amount invested, current market value, rate of interest, and other such information as may be required by the City Council.

A summary of the City’s investments as of June 30, 2021 is set forth in the below table.

Approximately $80.9 million (12.8%) of the total investment portfolio as of June 30, 2021 was attributed to the General Fund.

CITY OF ONTARIO
SUMMARY OF INVESTMENTS(1)
Investment Maturity
Investment Type
6 Months
or Less
6 Months
to 1 Year 1 to 3 Years 3 to 5 Years Total
United States Treasury Obligations $104,932,845 $100,644,164 $214,498,572 $ - $420,075,581 Federal Agency Obligations - - 10,000,450 49,738,492 59,738,942 Medium Term Corporate Notes 5,029,165 - 30,722,625 23,121,424 58,873,214 Asset-Backed Securities - - 9,230,231 - 9,230,231
Municipal Bonds - - 4,094,881 7,501,850 11,596,731
Local Agency Investment Fund 72,551,503 - - - 72,551,503 Totals $182,513,513 $100,644,164 $268,546,759 $ 80,361,766 $632,066,202 (1) Totals may not add due to rounding.

Source: City.

For additional information relating to the City’s investments, see Note 3 to the City’s audited financial statements set forth in Appendix C.

THE AUTHORITY
The Authority was organized pursuant to the provisions of Articles 1 through 4 of Chapter 5 of Division 7 of Title 1 of the State Government Code and a Joint Exercise of Powers Agreement, dated as of 427
57 4864-5835-3938v8/022249-0054
June 1, 2013, by and between the City and the Housing Authority. The Authority has no financial liability to the Owners of the 2022 Bonds with respect to the payment of 2022 Base Rental Payments by the City or with respect to the performance by the City of the other agreements and covenants that the City is required to perform.

STATE OF CALIFORNIA BUDGET INFORMATION
Although the State is not a significant source of City revenues, there can be no assurance that the State’s annual budget or other legislation will not materially adversely affect the financial condition of the City, in particular given that the City receives certain revenues such as sales tax proceeds and VLF from the State. The following information describes the State budget process and the current and upcoming State budgets.

General
Information about the State budget is regularly available at various State-maintained websites. Text of proposed and adopted budgets may be found at the website of the State Department of Finance (the “ DOF”), http://www.dof.ca.gov, under the heading “California Budget.” An impartial analysis of the budget is posted by the Legislative Analyst’s Office (the “LAO”) at http://www.lao.ca.gov. In addition, various State Official Statements, many of which contain a summary of the current and past State budgets and the impact of those budgets on cities in the State, may be found at the website of the State Treasurer, http://www.treasurer.ca.gov.

The information referred to is prepared by the respective State agency maintaining each website and not by the City or the Authority, and the City and the Authority take no responsibility for the continued accuracy of these Internet addresses or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated herein by these references.

Budget for State Fiscal Year 2021-22
On July 16, 2021, the Governor signed a series of bills representing the State budget for State fiscal year 2021-22 (the “2021-22 Budget”). The Governor’s signing followed negotiations between the Governor and the State Legislature regarding the final provisions of the 2021-22 Budget, including the expenditure of a large projected State general fund surplus. The State Legislature passed temporary budgetary legislation in June 2021 to meet the required State Constitutional budget deadline. The following is drawn from the DOF summary of the 2021-22 Budget.

The 2021-22 Budget indicates that revenues are up significantly from the forecast included in the Governor’s proposed State budget for State fiscal year 2021-22, resulting in a large budgetary surplus. This is a result of strong cash trends, two major federal relief bills since the beginning of 2021 (as discussed under the caption “THE CITY—COVID-19 Outbreak”), continued stock market appreciation and a significantly upgraded economic forecast from the prior State fiscal year. The 2021-22 Budget also reports that the State has received approximately $285 billion in federal COVID-19 stimulus funding for State programs. Although the 2021-22 Budget acknowledges that building reserves and paying down debts are critical, the 2021-22 Budget allocates approximately 85% of discretionary funds to one-time spending. The multi-year forecast reflects a budget roughly in balance, although the 2021-22 Budget assumes that risks remain to the economic forecast, including a stock market decline that could reduce State revenues.

For State fiscal year 2020-21, the 2021-22 Budget projects total general fund revenues and transfers of $188.8 billion and authorizes expenditures of $166.1 billion. The State is projected to end State fiscal year 2020-21 with total available reserves of $39.8 billion, including $25.1 billion in the traditional general fund reserve, $12.3 billion in the State’s basic reserve fund, known as the Budget Stabilization Account (the “BSA”), $1.9 billion in the Public School System Stabilization Account and $450 million in the Safety Net Reserve Fund. For State fiscal year 2021-22, the 2021-22 Budget projects total general fund revenues and transfers of $175.3 billion and authorizes expenditures of $196.4 billion. The State is projected to end State 428
58 4864-5835-3938v8/022249-0054
fiscal year 2021-22 with total available reserves of $25.2 billion, including $4 billion in the traditional general fund reserve, $15.8 billion in the BSA, $4.5 billion in the Public School System Stabilization Account (the “PSSSA”) and $900 million in the Safety Net Reserve Fund.

The 2021-22 Budget sets the Proposition 98 minimum funding guarantee for State fiscal year 2021-22 at $93.7 billion. This results in per-pupil funding of $13,976 from Proposition 98 funding, growing to $21,555 when accounting for all funding sources. The 2021-22 Budget also makes retroactive increases to the minimum school funding guarantee in fiscal years 2019-20 and 2020-21, setting them at $79.3 billion and $93.4 billion, respectively. Collectively, this represents a three-year increase in the minimum funding guarantee of $47 billion from the level projected by the 2020-21 Budget.

Other significant features of the 2021-22 Budget include the following:
• General Apportionments – An increase of $395 million in ongoing Proposition 98 funding for general apportionments, comprised of: (i) $371.2 million to fund a 5.07% cost of living adjustment; and (ii) $23.8 million to fund 0.50% enrollment growth.
• Deferrals – $1.453 billion in Proposition 98 funding to repay apportionment deferrals, of which $144.6 million is from State fiscal year 2019-20, $1.1 billion is from State fiscal year 2020-21 and $229.8 million is from State fiscal year 2021-22.
• Student Assistance – $250 million in one-time ARP Act funds to support emergency student financial assistance grants. The 2021-22 Budget also provides $160 million in Proposition 98 funding for student assistance, comprised of $100 million in one-time funding available over three years to address student basic needs including food and housing insecurity, $30 million in ongoing funding to support student mental health services and $30 million in ongoing funding for colleges to establish basic needs centers and hire basic needs coordinators.
• Workforce Programs – $42.4 million in ongoing Proposition 98 funding to increase program funding and enable community college districts to support work-based learning opportunities. The 2021-22 Budget also provides $20 million in one-time Proposition 98 funding to support community college participation in High Road Training Partnerships and regional partnerships developed by the California Workforce Development Board.
• Facilities – $581.4 million in State general obligation bond funding, including $8.2 million to start nine new capital outlay projects and $573.2 million for the construction phase of 32 projects anticipated to complete design by the spring 2022. In addition, the 2021-22 Budget provides $511 million in one-time Proposition 98 funding to address deferred maintenance.

Proposed 2022-23 State Budget
On January 10, 2022, the Governor released his proposed State budget for State fiscal year 2022-23 (the “Proposed 2022-23 Budget”). The following information is drawn from the DOF and LAO overviews of the Proposed 2022-23 Budget.

The Proposed 2022-23 Budget reports that, since the passage of the prior fiscal year’s budgetary legislation, the State’s economy has continued to recover from the recession occasioned by the COVID-19 pandemic. Before accounting for certain required transfers (such as those to the BSA), State revenues are higher than the projections included in the 2021-22 Budget by almost $28.7 billion over a three-year span from State fiscal years 2020-21 through 2022-23. The Proposed 2022-23 Budget attributes this increase to four main factors: (1) a more robust economic recovery; (2) a greater share of wage gains going to high-wage sectors; (3) a stronger than forecast stock market; and (4) higher inflation. The Proposed 2022-23 Budget identifies several risk factors that could affect the current economic and revenue forecasts, including the 429
59 4864-5835-3938v8/022249-0054
impact of the COVID-19 Omicron variant or other potential future COVID-19 variants, persistent supply chain issues, increased inflation, stock market volatility and the lack of affordable housing.

For State fiscal year 2021-22, the Proposed 2022-23 Budget projects total general fund revenues and transfers of $196.7 billion and authorizes expenditures of $210 billion. The State is projected to end State fiscal year 2021-22 with total reserves of $47.4 billion, including $20.5 billion in the traditional general fund reserve, $19.3 billion in the BSA, $6.7 billion in the PSSSA and $900 million in the Safety Net Reserve Fund.

For fiscal year 2022-23, the Proposed 2022-23 Budget projects total general fund revenues and transfers of $195.7 billion and authorizes expenditures of $213 billion. The State is projected to end the 2022-23 fiscal year with total reserves of $34.6 billion, including $3.1 billion in the traditional general fund reserve, $20.9 billion in the BSA, $9.7 billion in the PSSSA and $900 million in the Safety Net Reserve Fund.

The upward revisions of State general fund revenues results in significant increases to the Proposition 98 minimum funding guarantee. Proposition 98 funding for K-14 school districts for State fiscal year 2022-23 is set at $102 billion (including $73.1 billion from the State general fund and $28.9 billion from other sources), an increase of $8.2 billion (or 8.8%) from the level set by the 2021-22 Budget.

As a result of increased revenues, the Proposed 2022-23 Budget would also make certain retroactive adjustments to the minimum funding guarantee in State fiscal years 2020-21 and 2021-22, setting them at $95.9 billion and $99.1 billion, respectively. Together with the funding level for State fiscal year 2022-23, this represents a three-year increase in the guarantee of $16.1 billion over the level included in the 2021-22 Budget.

The Proposed 2022-23 Budget would set total funding for K-12 education at $119 billion, including $70.5 billion from the State general fund and $48.5 billion from other sources. K-12 per-pupil funding would total $20,855 from all sources, including $15,261 from Proposition 98 sources. Other significant features of the Proposed 2022-23 Budget include the following:
• Universal Transitional Kindergarten – $639.2 million to expand eligibility for transitional kindergarten to include all children turning five years old between September 2 and February 2, beginning in State fiscal year 2022-23. Additionally, the Proposed 2022-23 Budget includes $383 million in Proposition 98 funding to add one additional certificated or classified employee to every transitional kindergarten class, which is expected to reduce student-to-adult ratios to more closely align with the State’s preschool program. • Literacy – $500 million in one-time Proposition 98 funding for grants to high-needs schools to train and hire literacy coaches and reading specialists and $200 million in one-time Proposition 98 funding to enable local educational agencies to create and expand multi-lingual school or classroom libraries. • Expanded Learning Time – $3.4 billion in ongoing Proposition 98 funding to continue funding a multi-year plan to implement expanded-day, full-year instruction and enrichment for all elementary school students. The Proposed 2022-23 Budget also includes $937 million in one-time Proposition 98 funding to support expanded learning opportunities infrastructure, with a focus on integrating arts and music programming into enrichment opportunities for students. • Special Education – $500 million to increase in the State-wide base funding rate for special education funding.
• College and Career Pathways – $1.5 billion in one-time Proposition 98 funding, over four years, to support the development of college and career pathways for high schoolers focused on technology (including computer science, green technology and engineering), health care, education and climate-related fields. Additionally, the Proposed 2022-23 Budget includes $500 million in one-time Proposition 98 funding, also available over four years, to strengthen and expand student access and participation in dual enrollment opportunities that are also coupled with student advising and support services. 430
60 4864-5835-3938v8/022249-0054
• Transportation – $1.5 billion in one-time Proposition 98 funding, available over three years, to support school transportation programs with a focus on greening school bus fleets. • Facilities – $1.4 billion in State general obligation bond funding to support school construction projects. The Proposed 2022-23 Budget also provides $1.3 billion in one-time State general funds in fiscal year 2022-23, and $925 million of such funds in 2023-24, to support new construction and modernization projects through the State’s school facility program.

Additional information regarding the 2021-22 Budget and the Proposed 2022-23 Budget, see the DOF and LAO websites. The information presented on such websites is not incorporated herein by reference.

None of the websites or webpages that are referenced above is in any way incorporated into this Official Statement. They are cited for informational purposes only. The City, the Authority and the Underwriters make no representation whatsoever as to the accuracy or completeness of any of the information on such websites.

There can be no assurance that additional legislation will not be enacted in the future to implement provisions relating to the State budget, address the COVID-19 outbreak or otherwise that may affect the City or its General Fund revenues.

Potential Impact of State Financial Condition on the City The State has experienced significant financial stress in recent years, with budget shortfalls in the several billions of dollars. The COVID-19 outbreak materially adversely impacted the financial condition of the State and the waning of the infection crisis is expected to be followed by increases in unfunded liabilities of the two main retirement systems managed by State entities, CalPERS and CalSTRS. The State also has a significant unfunded liability with respect to other post-employment benefits.

Current and future State budgets will be significantly affected by the COVID-19 outbreak and other factors over which the City has no control. The City cannot determine what actions will be taken in the future by the State Legislature and the Governor to deal with the COVID-19 outbreak, future recessions and resulting changing State revenues and expenditures. There can be no assurance that, as a result of the COVID-19 outbreak or otherwise, the State will not significantly reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of its efforts to address State financial conditions. Although the State is not a significant source of City revenues, there can be no assurance that State actions to respond to the COVID-19 outbreak will not materially adversely affect the financial condition of the City. The State’s ability to undertake such revenue reductions or shifting has been limited by provisions of the State Constitution. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Proposition 22.” Redevelopment Dissolution
General. On December 29, 2011, the State Supreme Court upheld Assembly Bill 1x26 (“ AB 1x26”), which dissolved redevelopment agencies in the State. The effect of AB 1x26 upon the City is the termination of the redevelopment functions of the Ontario Redevelopment Agency (the “ Former Agency ”) and the transfer of such functions to a successor agency (the City, referred to in this context as the “ Successor Agency”), which was tasked with winding down the Former Agency’s redevelopment activities. Under AB 1x26, the Successor Agency cannot enter into new redevelopment projects or obligations and its assets can be used only to pay enforceable obligations, which enforceable obligations are generally limited to obligations in existence in mid-2011, when AB 1x26 was signed by the Governor. In addition, the Successor Agency will receive tax increment revenues in amounts that are sufficient to pay 100% (but no greater amount) of such enforceable obligations until such obligations (including accrued interest, as applicable) are paid in full, at which time the Successor Agency will be dissolved. Certain tax revenues formerly allocable to the Former 431
61 4864-5835-3938v8/022249-0054
Agency will continue to be available to the Successor Agency to pay certain obligations, and a portion of such revenues may be redirected to other taxing agencies, such as the County, the local school districts and the City.

The Successor Agency’s activities are subject to review by an oversight board established under AB 1x26.

Under AB 1x26, liabilities of the Successor Agency are not liabilities of the City.

On June 27, 2012, the Governor signed Assembly Bill 1484 (“ AB 1484 ”), which made certain amendments to AB 1x26. Under AB 1484, the County Auditor-Controller, the DOF and the State Controller may require the return of funds that were improperly spent or transferred to a public entity in conflict with the provisions of the Community Redevelopment Law, as amended by AB 1x26 and AB 1484, and if such funds are not returned within 60 days, they may be recovered through an offset of sales and use tax or property tax allocations to the relevant local agency, which, in the case of the Successor Agency, is the City.

On September 22, 2015, the following amendments to AB 1x26 and AB 1484 were enacted as Senate Bill 107 (“SB 107”): (1) redevelopment successor agencies that enter into a written agreement with the DOF to remit unencumbered cash to the county auditor-controller will receive a finding of completion, which provides successor agencies with additional fiscal tools and reduced State oversight; (2) successor agencies that that have a “Last and Final” ROPS (as discussed below) may expend a portion of proceeds of bonds issued in 2011, which proceeds are currently frozen; (3) pension or State Water Project override revenues that are not pledged to or not needed for redevelopment bond debt service will be returned to the entity that levies the override; (4) agreements relating to State highway improvements and money loaned to successor agencies to pay costs associated with redevelopment dissolution litigation will be considered enforceable obligations; and (5) reentered agreements entered into after the passage of AB 1484 are unenforceable unless entered into for the purpose of providing administrative support.

SB 107 also: (a) requires the preparation of a Recognized Obligation Payment Schedule with respect to enforceable obligations (a “ROPS”), which are required to be submitted to the oversight board and the DOF in accordance with AB 1x26, once a year beginning with the ROPS period that commenced on July 1, 2016 (rather than twice a year under prior law); (b) establishes an optional “Last and Final” ROPS process beginning in September 2015; under this process, a successor agency that elected to submit a “Last and Final ROPS would no longer submit a periodic ROPS and the enforceable obligations set forth in the “Last and Final” ROPS would be binding on all parties; and (c) clarifies that former tax increment caps and plan limits do not apply for the purposes of paying approved enforceable obligations.

Impact on the City. Significant provisions of AB 1x26, AB 1484, SB 107 and implementing actions of affected parties, including the Successor Agency, the oversight board, the County and the DOF, may be subject to legal challenge, statutory or administrative changes and other clarifications which could affect the impact of the dissolution of redevelopment on the City and its General Fund. The DOF has periodically proposed additional legislation which would modify statutes affecting redevelopment dissolution; it is not known whether additional legislation will be enacted. The full extent of the impact of the implementation of AB 1x26, AB 1484 and SB 107 or potential future legislation on the City’s General Fund is unknown at this time. While certain administrative costs previously charged to the Former Agency by the General Fund will no longer be supported by the Successor Agency, certain property tax revenues formerly allocated to the Former Agency will now be received by the City’s General Fund.

The City does not believe that it has received material amounts from the Former Agency or the Successor Agency which may be asserted to be in violation of AB 1x26 or AB 1484, and the City is not currently engaged in any disputes with the DOF with respect to amounts received from the Former Agency.

Successor Agency Obligations to the General Fund . Although AB 1x26 generally invalidates agreements between host cities and their former redevelopment agencies, provision is made for the enforcement of agreements entered into with respect to obligations which meet certain specified criteria. The City believes that the Successor Agency’s payment obligations under an advance from the General Fund in the amount of $3,500,000 and miscellaneous other advances from the City (collectively, the “ Advances”) to the 432
62 4864-5835-3938v8/022249-0054
Former Agency constitute enforceable obligations of the Successor Agency. The City expects that the Successor Agency will continue to be able to apply tax increment revenues to the payment of the Advances.

The City lists the Advances in each Successor Agency ROPS, and the Advances have been approved as enforceable obligations by the Successor Agency’s oversight board and the DOF. However, there can be no assurance that such entities, the State Controller, other State or County bodies implementing the dissolution of redevelopment or a court will not disagree with the City’s interpretation and seek to prohibit the Successor Agency from making the payments on the Advances in the future, or that additional legislation could be enacted which will not be consistent with the City’s interpretation. There can also be no assurance that AB 1x26, AB 1484 and/or subsequent implementing statutes will not interfere with the receipt by the City from the Successor Agency of the amounts contemplated to be received by the City pursuant to the Advances or otherwise.

As of June 30, 2021, the Advances were collectively outstanding in the principal amount of $3,500,000. The Advances were used by the Former Agency for various redevelopment purposes and are payable from available Successor Agency moneys. The Advances bear interest at the rate of 12% per annum but do not have a specific maturity date.

To the extent that the Successor Agency’s assets are liquidated for distribution of proceeds to the affected taxing entities, the City currently expects that the City’s General Fund will receive approximately

16.75% of such assets.

Future State Budgets
No prediction can be made by the City as to whether the State will continue to encounter budgetary problems in future years, and if it were to do so, it is not clear what measures would be taken by the State to balance its budget, as required by law. In addition, the City cannot predict the final outcome of future State budget negotiations, the impact that such budgets will have on City finances and operations or what actions will be taken in the future by the State Legislature and the Governor to deal with changing State revenues and expenditures. There can be no assurance that actions taken by the State to address its financial condition will not materially adversely affect the financial condition of the City. Current and future State budgets will be affected by national and State economic conditions and other factors, including the current economic downturn, over which the City has no control.

CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS There are a number of provisions of the State Constitution that limit the ability of the City to raise and expend tax revenues.

Article XIIIA of the State Constitution
On June 6, 1978, State voters approved an amendment (commonly known as both Proposition 13 and the Jarvis-Gann Initiative) to the State Constitution. The amendment, which added Article XIIIA to the State Constitution, among other things affects the valuation of real property for the purpose of taxation in that it defines the full cash property value to mean “the county assessor’s valuation of real property as shown on the 1975/76 tax bill under ‘full cash value’, or thereafter, the appraised value of real property newly constructed, or when a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or a reduction in the consumer price index or comparable local data at a rate not to exceed 2% per year, or reduced in the event of declining property value caused by damage, destruction or other factors including a general economic downturn. The amendment further limits the amount of any ad valorem tax on real property to 1% of the full cash value, except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to December 1, 1978, and bonded indebtedness for the acquisition or improvement of real property approved on or after December 1, 1978 by two-thirds of the votes cast by the voters voting on the proposition (55% in the case of 433
63 4864-5835-3938v8/022249-0054
certain school facilities). Property taxes that are subject to Proposition 13 are a significant source of the City’s General Fund revenues. See the caption “CITY FINANCIAL INFORMATION.” Legislation enacted by the State Legislature to implement Article XIIIA provides that all taxable property is shown at full assessed value as described above. Tax rates for voter approved bonded indebtedness are also applied to 100% of assessed value.

Future assessed valuation growth allowed under Article XIIIA (for new construction, change of ownership or 2% annual value growth) is allocated on the basis of “situs” among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and school districts share the growth of “base” revenue from the tax rate area. Each year’s growth allocation becomes part of each agency’s allocation the following year. Article XIIIA effectively prohibits the levying of any other ad valorem property tax above the 1% limit except for taxes to support indebtedness approved by the voters as described above.

Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the event of declining property values caused by damage, destruction or other factors, and to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster and in certain other limited circumstances.

Article XIIIB of the State Constitution
At the Statewide special election on November 6, 1979, the voters approved an initiative entitled “Limitation on Government Appropriations,” which added Article XIIIB to the State Constitution. Under Article XIIIB, State and local government entities have an annual “appropriations limit” which limits the ability to spend certain money which are called “appropriations subject to limitation” (consisting of tax revenues and investment proceeds thereof, certain State subventions and regulatory license fees, user charges and user fees to the extent that the proceeds thereof exceed the costs of providing such services, together called “proceeds of taxes,” and certain other funds) in an amount higher than the “appropriations limit.” Article XIIIB does not affect the appropriation of moneys which are excluded from the definition of “appropriations limit,” including debt service on indebtedness existing or authorized as of October 1, 1979, or bonded indebtedness subsequently approved by the voters. In general terms, the “appropriations limit” is to be based on certain 1978-79 expenditures and is to be adjusted annually to reflect changes in the consumer price index, population and services provided by these entities. Among other provisions of Article XIIIB, if those entities’ revenues in any year exceed the amounts permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years.

To the best of the City’s knowledge, the City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB of the State Constitution.

Proposition 62
A statutory initiative (“ Proposition 62”) was adopted by the voters of the State at the November 4, 1986 general election which: (a) requires that any tax for general governmental purposes imposed by local governmental entities be approved by resolution or ordinance adopted by two-thirds vote of the governmental agency’s legislative body and by a majority of the electorate of the governmental entity; (b) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two-thirds vote of the voters within the jurisdiction; (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax is imposed; (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA; (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities; and (f) requires that any tax that is imposed by a local governmental entity on or after August 1, 1985 be ratified by a majority vote of the electorate within two years of the adoption of the initiative or be terminated by November 15, 1988. The requirements imposed by Proposition 434
64 4864-5835-3938v8/022249-0054
62 were upheld by the State Supreme Court in Santa Clara County Local Transportation Authority v.

Guardino, 11 Cal.4th 220 (1995).

Proposition 62 applies to the imposition of any taxes or the implementation of any tax increases after its enactment in 1986, but the requirements of Proposition 62 are largely subsumed by the requirements of Proposition 218 for the imposition of any taxes or the effecting of any tax increases after November 5, 1996.

See the caption “—Proposition 218” below.

Proposition 218
On November 5, 1996, State voters approved Proposition 218, an initiative measure entitled the “Right to Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the State Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. Proposition 218 states that all taxes imposed by local governments are deemed to be either general taxes or special taxes. Special purpose districts, including school districts, have no power to levy general taxes. No local government may impose, extend or increase any general tax unless and until such tax is submitted to the electorate and approved by a majority vote. No local government may impose, extend or increase any special tax unless and until such tax is submitted to the electorate and approved by a two-thirds vote.

Proposition 218 also provides that no tax, assessment, fee or charge may be assessed by any agency upon any parcel of property or upon any person as an incident of property ownership except: (a) the ad valorem property tax imposed pursuant to Articles XIII and XIIIA of the State Constitution; (b) any special tax receiving a two-thirds vote pursuant to the State Constitution; and (c) assessments, fees and charges for property-related services as provided in Proposition 218. Proposition 218 then goes on to add voter requirements for assessments and fees and charges imposed as an incident of property ownership, other than fees and charges for sewer, water, and refuse collection services. In addition, all assessments and fees and charges imposed as an incident of property ownership, including sewer, water and refuse collection services, are subjected to various additional procedures, such as hearings and stricter and more individualized benefit requirements and findings.

Proposition 218 also extended the initiative power to reducing or repealing any local taxes, assessments, fees and charges. This extension of the initiative power is not limited to taxes imposed on or after November 6, 1996, the effective date of Proposition 218, and could result in retroactive repeal or reduction in any existing taxes, assessments, fees and charges, subject to overriding federal constitutional principles relating to the impairments of contracts. Legislation implementing Proposition 218 provides that the initiative power provided for in Proposition 218 “shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after (the effective date of Proposition 218) assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights” protected by the United States Constitution. However, no assurance can be given that the voters of the City will not, in the future, approve an initiative which reduces or repeals local taxes, assessments, fees or charges that currently are deposited into the City’s General Fund.

Although a portion of the City’s General Fund revenues are derived from general taxes purported to be governed by Proposition 218, as discussed under the caption “CITY FINANCIAL INFORMATION — Other Taxes,” all of such taxes were imposed in accordance with the requirements of Proposition 218. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges which support the City’s General Fund.

Unitary Property
Some amount of property tax revenue of the City is derived from utility property which is considered part of a utility system with components located in many taxing jurisdictions (“unitary property”). Under the 435
65 4864-5835-3938v8/022249-0054
State Constitution, such property is assessed by the CDTFA as part of a “going concern” rather than as individual pieces of real or personal property. State-assessed unitary and certain other property is allocated to the counties by the CDTFA, taxed at special county-wide rates, and the tax revenues distributed to taxing jurisdictions (including the City) according to a statutory formula that is generally based on the distribution of taxes in the prior year.

Proposition 22
On November 2, 2010, State voters approved Proposition 22, which eliminates the State’s ability to borrow or shift local revenues and certain State revenues that fund transportation programs. Proposition 22 restricts the State’s authority over a broad range of tax revenues, including property taxes allocated to cities (including the City), counties and special districts, the VLF, State excise taxes on gasoline and diesel fuel, the State sales tax on diesel fuel, and the former State sales tax on gasoline. It also makes a number of significant other changes, including restricting the State’s ability to use motor vehicle fuel tax revenues to pay debt service on voter-approved transportation bonds.

Proposition 26
On November 2, 2010, State voters approved Proposition 26. Proposition 26 amends Article XIIIC of the State Constitution to expand the definition of “tax” to include “any levy, charge, or exaction of any kind imposed by a local government” except the following: (a) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (b) a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (c) a charge imposed for the reasonable regulatory costs of a local government for issuing licenses and permits, performing investigations, inspections and audits, enforcing agricultural marketing orders and the administrative enforcement and adjudication thereof; (d) a charge imposed for entrance to or use of local government property, or the purchase, rental or lease of local government property; (e) a fine, penalty or other monetary charge imposed by the judicial branch of government or a local government as a result of a violation of law; (f) a charge imposed as a condition of property development; and (g) assessments and property-related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity. The City does not believe that Proposition 26 will adversely affect its General Fund revenues.

Future Initiatives
Articles XIIIA and XIIIB and Propositions 62, 218, 22 and 26 were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time other initiative measures could be adopted, further affecting the City’s current revenues or its ability to raise and expend revenues.

RISK FACTORS
Prospective purchasers of the 2022 Bonds should consider carefully all possible factors that may affect the ability of the City to pay 2022 Base Rental Payments under the Lease Agreement. The 2022 Bonds may not be a suitable investment for all prospective purchasers.

The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating the purchase of the 2022 Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to an 436
66 4864-5835-3938v8/022249-0054
investment in the 2022 Bonds and there can be no assurance that other risk factors will not become material in the future. In addition, the order in which the following factors are presented is not intended to reflect the relative importance of any such risks.

General Considerations – Security for the 2022 Bonds
The 2022 Bonds are special obligations of the Authority, payable solely from 2022 Base Rental Payments. Neither the faith and credit nor the taxing power of the Authority, the City, the State or any political subdivision thereof is pledged to the payment of the 2022 Bonds. The Authority has no taxing power.

The obligation of the City to make the Base Rental Payments does not constitute a debt of the City, the County, the State or any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City, the County or the State is obligated to levy or pledge any form of taxation or for which the City, the County or the State has levied or pledged any form of taxation.

Although the Lease Agreement does not create a pledge, lien or encumbrance upon the funds of the City, the City is obligated under the Lease Agreement to pay the Base Rental Payments and Additional Rental Payments from any source of legally available funds, and the City has covenanted in the Lease Agreement to take such action as may be necessary to include all such Base Rental Payments and Additional Rental Payments due thereunder in its annual budgets, and to make necessary annual appropriations for all such Base Rental Payments and Additional Rental Payments, subject to abatement. The City is currently liable and may become liable on other obligations payable from general revenues. See the caption “CITY FINANCIAL INFORMATION—Other Indebtedness—General Fund-Supported Debt.” The City has the capacity to enter into other obligations which may constitute additional charges against its revenues, including pension obligations and essential services. To the extent that additional obligations are incurred by the City, the funds available to make Base Rental Payments may be decreased. In the event that the City’s revenue sources are less than its total obligations, the City could choose to fund other activities before making Base Rental Payments. The same result could occur if, because of State Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues. However, to the best of the City’s knowledge, the City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB of the State Constitution. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS— Article XIIIB of the State Constitution.”
Abatement
In the event of substantial interference with the City’s right to use and occupy any portion of the Leased Premises by reason of damage to or destruction or condemnation of the Leased Premises, or any defects in title to the Leased Premises, the Base Rental Payments will be subject to abatement. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS—Abatement.” The amount of abatement will be such that the resulting payments of Base Rental Payments and Additional Rental Payments do not exceed the fair rental value for the use and possession of the remaining portions of the Leased Premises as to which the City has beneficial use and occupancy and as to which such damage or destruction or defect in title do not substantially interfere.

In the event that such portion of the Leased Premises, if damaged or destroyed by an insured casualty, could not be replaced during the period of time in which proceeds of the City’s rental interruption insurance will be available in lieu of the Base Rental Payments, plus the period in which funds are available from the funds and accounts established under the Indenture, or in the event that casualty insurance proceeds are insufficient to provide for complete repair or replacement of such portion of the Leased Premises or redemption of the 2022 Bonds, there could be insufficient funds to make payments to Owners in full. 437
67 4864-5835-3938v8/022249-0054
It is not always possible to predict the circumstances under which abatement of rental may occur. In addition, there is no statute, case or other law specifying how such an abatement of rental should be measured.

For example, it is not clear whether fair rental value is established as of commencement of the lease or at the time of the abatement. If the latter, the value of the Leased Premises could be substantially higher or lower than its value at the time of the issuance of the 2022 Bonds. Abatement, therefore, could have an uncertain and material adverse effect on the security for and payment of the 2022 Bonds.

If damage, destruction, title defect or eminent domain proceedings with respect to the Leased Premises results in abatement of the Base Rental Payments and if such abated Base Rental Payments, if any, together with moneys from rental interruption or use and occupancy insurance (in the event of any insured loss due to damage or destruction), and eminent domain proceeds, if any, are insufficient to make all payments of principal and interest with respect to the 2022 Bonds during the period that the Leased Premises is being replaced, repaired or reconstructed, then all or a portion of such payments of principal and interest may not be made. Under the Lease Agreement and the Indenture, no remedy is available to the 2022 Bond Owners for nonpayment under such circumstances.

Initiative and Referendum
The ability of the City to comply with its covenants under the Lease Agreement and to generate revenues that are sufficient to pay Base Rental Payments may be adversely affected by actions and events outside the control of the City, including without limitation actions taken (or not taken) by voters. Under the State Constitution, voters of the State have the ability to initiate legislation and require a public vote on legislation passed by the State Legislature through the powers of initiative and referendum, respectively. The Authority and the City are unable to predict whether any such initiatives might be submitted to or approved by the voters, the nature of such initiatives, or their potential impact on the City and its operations. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Future Initiatives.”
Insurance on the Leased Premises
Under the Lease Agreement, the City is required to maintain through the term of the Lease Agreement policies of insurance covering loss or damage to the Leased Premises up to replacement costs and covering title defects. If the Leased Premises is damaged or destroyed, there can be no assurance that the insurance proceeds will be sufficient to repair or restore the Leased Premises, or to redeem or defease all of the then- Outstanding 2022 Bonds. In addition, neither the Authority nor the City can provide any assurance as to whether the provider of an insurance policy will pay under such policy. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS—Insurance” for a description of the insurance coverages that are required by the Lease Agreement. See the caption “THE CITY—Risk Management” for a description of the City’s current insurance coverages. Certain risks, such as earthquakes and floods, are not required to be covered under the Lease Agreement unless available at reasonable rates and the City does not currently maintain such coverage.

Condemnation of the Leased Premises
If all of the Leased Premises (or portions thereof such that the remainder is not usable for the public purposes by the City) is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the term of the Lease Agreement will cease as of the day possession is taken. If less than all of the Leased Premises is taken permanently, or if the Leased Premises or any part thereof is taken temporarily, under the power of eminent domain, and the remainder is usable for public purposes by the City at the time of such taking: (a) the Facilities Sublease will continue in full force and effect as to such remainder, and will not be terminated by virtue of such taking; and (b) there will be a partial abatement of Base Rental Payments as a result of the application of insurance proceeds of any eminent domain award to the prepayment of the Base Rental Payments, in an amount to be agreed upon by the City and the 438
68 4864-5835-3938v8/022249-0054
Authority such that the resulting Base Rental Payments represent fair consideration for the use and occupancy of the remaining usable portion of the Leased Premises.

If all or a portion of the Leased Premises were condemned, there can be no assurance that any such award or payment will be sufficient at the time to prepay or defease all of the then-Outstanding 2022 Bonds. If the award is less than the amounts remaining on such Outstanding 2022 Bonds, then the Owners will be paid less than the amounts remaining on such Outstanding 2022 Bonds.

Value of Property
In the event that the Trustee re-enters or re-lets the Leased Premises upon the occurrence of an Event of Default, there can be no assurance such actions will provide funds in an amount that is sufficient to pay the principal of and interest on the 2022 Bonds. The security under the Lease Agreement extends only to the Authority’s leasehold interest in the Leased Premises and is subject to the restrictions of the Lease Agreement and all other use restrictions applicable to the Leased Premises. The Leased Premises have not been appraised in connection with the issuance of the 2022 Bonds.

No Acceleration of Base Rental Payments
Nothing in the Lease Agreement permits the Authority or the Trustee to accelerate Base Rental Payments. Although the Trustee is entitled to pursue all available remedies under the Indenture, there can be no assurance that sufficient funds will be available at the time to redeem or defease all of the then-Outstanding 2022 Bonds.

Certain Risks Associated with Sales Tax and Other Local Tax Revenues Sales and use tax revenues are consistently among the largest sources of General Fund revenues of the City. See the caption “CITY FINANCIAL INFORMATION.”
Sales and use tax revenues are based upon the gross receipts of retail sales of tangible goods and products by retailers with taxable transactions in the City, which could be impacted by a variety of factors. For example, in times of economic recession, the gross receipts of retailers often decline, and such a decline would cause the sales tax revenues received by the City to decline. An economic recession would also be expected to affect hotel occupancy within the City, and consequently, the City’s receipt of transient occupancy taxes. See the captions “THE CITY—COVID-19 Outbreak” and “CITY FINANCIAL INFORMATION.” In addition, changes or amendments in the laws applicable to the City’s receipt of sales tax revenues or other local taxes, whether implemented by State legislative action or voter initiative, could have an adverse effect on sales tax revenues received by the City. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.”
Many categories of transactions are exempt from the Statewide sales tax, and additional categories could be added in the future. Currently, most sales of food products for human consumption are exempt; this exemption, however, does not apply to liquor or to restaurant meals. The rate of sales tax levied on taxable transactions in the City or the fee charged by the CDTFA for administering the City’s sales tax could also be changed.

As discussed under the caption “THE CITY—COVID-19 Outbreak,” the Governor extended the deadline to file and pay first quarter 2020 sales and use tax returns by 90 days for all but the very largest taxpayers, and up to 361,000 California businesses with less than $5 million in taxable annual sales were allowed to defer up to $50,000 in sales tax and enter into 12-month payment plans at zero interest. The extension resulted in a delay in the receipt by the City of its portion of sales tax payments for 2020. There can 439
69 4864-5835-3938v8/022249-0054
be no assurance that additional extensions of payment deadlines will not be ordered should the COVID-19 outbreak continue or economic recessions occur in the future.

Assessed Value of Taxable Property
Property taxes are consistently among the largest sources of General Fund revenues of the City.

Natural and economic forces can affect the assessed value of taxable property within the City. The City is located in a seismically active region, and damage from an earthquake in or near the area could cause extensive damage to taxable property. Other natural or manmade disasters, such as flood, fire, wildfire, ongoing drought, toxic dumping, erosion, civil unrest or acts of terrorism, could cause a reduction in the assessed value of taxable property within the City. See the captions “—Natural Disasters” and “—Hazardous Substances.” In addition, economic and market forces, such as a downturn in the regional economy, could affect assessed values, particularly as these forces might reverberate in the residential housing and commercial property markets as has been experienced in the past. The total assessed value could also be reduced through the reclassification of taxable property to a class exempt from taxation, whether by ownership or use (such as exemptions for property owned by State and local agencies and property used for qualified educational, hospital, charitable or religious purposes).

Reductions in the market values of taxable property may cause property owners to appeal assessed values and may also be associated with an increase in delinquency rates for property taxes. Section 2(b) of Article XIIIA of the State Constitution and Section 51 of the State Revenue and Taxation Code, which were adopted pursuant to Proposition 8 in 1978, require the County assessor to annually enroll either a property’s adjusted base year value (the “ Proposition 13 Value”) or its current market value, whichever is less. When the current market value replaces the higher Proposition 13 Value on the assessor’s roll, such lower value is referred to as the “Proposition 8 Value.”
Although the annual increase for a Proposition 13 Value is limited to no more than 2%, the same restriction does not apply to a Proposition 8 Value. The Proposition 8 Value of a property is reviewed annually as of January 1; the current market value must be enrolled as long as the Proposition 8 Value falls below the Proposition 13 Value. Thus, any subsequent increase or decrease in market value is enrolled regardless of any percentage increase or decrease. Only when a current Proposition 8 Value exceeds the Proposition 13 Value attributable to a piece of property (adjusted for inflation) does a county assessor reinstate the Proposition 13 Value.

Decreases in the assessed value of taxable property within the City resulting from a natural disaster or other calamity, economic recession, reclassification by ownership or use or as a result of the implementation of Proposition 8 all may have an adverse impact on property tax collections by the City, and consequently, the General Fund revenues that are available to make Base Rental Payments.

Dependence on State for Certain Revenues
A number of the City’s revenues are collected and dispersed by the State (such as sales taxes and the VLF) or allocated in accordance with State law (most importantly, property taxes). Therefore, State budget decisions can have an impact on City finances. In the event of a material economic downturn in the State, including as a result of the COVID-19 outbreak that is discussed under the caption “THE CITY—COVID-19 Outbreak,” there can be no assurance that any resulting revenue shortfalls to the State will not reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of the State’s efforts to address any such related State financial difficulties. See the caption “STATE OF CALIFORNIA BUDGET INFORMATION.”
Although the State’s ability to undertake such revenue reductions or shifting has been limited by provisions of the State Constitution, as described under the caption “CONSTITUTIONAL AND 440
70 4864-5835-3938v8/022249-0054
STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Proposition 22,” declining revenues and fiscal difficulties that arose in the State commencing in 20099 led the State to undertake a number of budgeting strategies, which had subsequent impacts on local agencies within the State. These techniques included the issuance of IOUs in lieu of warrants (checks), the enactment of statutes deferring amounts owed to public schools until a later date in the fiscal year or even into the following fiscal year (known as statutory deferrals), trigger reductions, which were budget cutting measures which were implemented or could have been implemented if certain State budgeting goals were not met and the dissolution of local redevelopment agencies in part to make available additional funding for local agencies.

Although recent State budgets have been balanced, largely attributable to improvements in the economy, the additional revenues generated due to the passage of Proposition 30 at the November 6, 2012, Statewide election as well as other spending cuts, there can be no certainty that budget-cutting strategies such as those used in prior years will not be used in the future, should the State budget again be stressed and if projections included in such budget do not materialize, or that Proposition 30 will be renewed.

Litigation
The City may be or become a party to litigation that has an impact on the General Fund. Although the City maintains certain insurance policies that provide liability coverage under certain circumstances and with respect to certain types of incidents (as discussed under the caption “THE CITY—Risk Management”), the City cannot predict what types of liabilities may arise in the future. See the caption “LITIGATION.” Natural Disasters
The occurrence of any natural disaster in the City, including, without limitation, fire, wildfire, windstorm, drought, earthquake, landslide, mudslide or flood, could have an adverse material impact on the economy within the City, its General Fund and the revenues available for the payment of Base Rental Payments. The City is not required to do maintain earthquake insurance by the Lease Agreement unless such insurance is available at reasonable rates. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS—Insurance” and “THE CITY—Risk Management.” Earthquakes are considered a threat to the City due to the highly active seismic region and the proximity of fault zones, which could influence the entire coastal portion of the State. There are also likely to be unmapped faults in or near the City. Seismically induced ground shaking has affected the City in the past and is expected to affect the City in the future.

An earthquake along one of the faults in the vicinity of the City, either known or unknown, could cause a number of casualties and extensive property damage. The effects of an earthquake could be aggravated by aftershocks and secondary effects such as fires, landslides, dam failure, liquefaction, floods and other threats to public health, safety and welfare. The potential direct and indirect consequences of a major earthquake could easily exceed the resources of the City and would require a high level of self-help, coordination and cooperation.

In recent years, wildfires have caused extensive damage throughout the State. In some instances, entire neighborhoods have been destroyed. Several of the fires that occurred in recent years damaged or destroyed property in areas that were not previously considered to be at risk from such events. Some commentators believe that climate change will lead to even more frequent and more damaging wildfires in the future. Additionally, wildfires increase the risk of mudslides in areas that are surrounded by hillsides because, when wildfires scorch land, they destroy all vegetation on mountains and hillsides. As a result, when heavy rain falls in the winter, there is nothing to stop the rain from penetrating directly into the soil. In addition, waxy compounds in plants and soil that are released during fires create a natural barrier in the soil that prevents rain water from seeping deep into the ground. The result is erosion, mudslides and excess water running off 441
71 4864-5835-3938v8/022249-0054
the hillsides often causing flash flooding. In general, property damage due to wildfire or mudslides could result in a significant decrease property tax and other revenues received by the City.

The occurrence of natural disasters in the City could result in substantial damage to the City and the Leased Premises which, in turn, could substantially reduce General Fund revenues and affect the ability of the City to make Base Rental Payments or cause an abatement in Base Rental Payments if the City is unable to use and occupy the Leased Premises. The City maintains liability insurance, rental interruption insurance and property casualty insurance for the Leased Premises. See the caption “THE CITY—Risk Management.” However, there can be no assurance that specific losses will be covered by insurance or, if covered, that claims will be paid in full by the applicable insurers.

Climate Change
The State has historically been susceptible to wildfires and hydrologic variability. As greenhouse gas emissions continue to accumulate in the atmosphere as a result of economic activity, climate change is expected to intensify, increasing the frequency, severity and timing of extreme weather events such as coastal storm surges, drought, wildfires, floods and heat waves, and raising sea levels. The future fiscal impact of climate change on the City is difficult to predict, but it could be significant and it could have a material adverse effect on the General Fund by requiring greater expenditures to counteract the effects of climate change or by changing the operations and activities of City residents and business establishments.

Cybersecurity
Municipal agencies, like other business entities, face significant risks relating to the use and application of computer software and hardware. Recently, there have been significant cybersecurity incidents affecting municipal agencies, including a freeze affecting computer systems of the City of Atlanta, an attack on the City of Baltimore’s 911 system, an attack on the Colorado Department of Transportation’s computers and an attack that resulted in the temporary closure of the Port of Los Angeles’ largest terminal.

The City employs a multi-layer cyber protection scheme that includes third party consultant assistance, next-generation firewalls, anti-virus software, anti-spam/malware software, intrusion detection/prevention, domain name system filtering services, duplicate systems in a disaster recovery site and multiple copies of all information that is backed up. The City implements recommended strategies suggested by security vendors and makes internal system changes as needed. To date, the City has not experienced a significant attack on its computer operating systems. However, there is no assurance that a future attack or attempted attack would not result in disruption of City operations. The City expects that any such disruptions would be temporary in nature.

Hazardous Substances
A condition that may result in the reduction in the assessed value of property, and therefore property tax revenue available to pay Base Rental Payments, would be the discovery of a hazardous substance that would limit the beneficial use of taxable property within the City. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but State laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner or operator may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the City be affected by a hazardous substance, could be to reduce the marketability and value of such property by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.
442
72 4864-5835-3938v8/022249-0054
The City and the Authority have not independently verified, but are not aware of, the presence of any hazardous substances on the Leased Premises. Hazardous substance liabilities may arise in the future with respect to any of the property in the City resulting from the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise from the method of handling such substance. These possibilities could significantly affect the value of a parcel.

Economy of City and State
A deterioration in the level of economic activity in the City, the County, the State or the United States, including as a result of the COVID-19 outbreak that is discussed under the caption “THE CITY—COVID-19 Outbreak,” is not currently expected to have a material adverse effect on the City’s general revenues or on the ability of the City to pay principal of and interest on the 2022 Bonds. See the caption “CITY FINANCIAL INFORMATION—General Economic Condition and Outlook of the City.” However, there can be no assurance that adverse economic conditions will not have a negative effect on the City. See the caption “STATE OF CALIFORNIA BUDGET INFORMATION” for information about the State economy and State budget.

Split Roll Initiative
An initiative measure (the “ Split Roll Initiative ”) to amend Article XIIIA of the State Constitution qualified for the State’s November 2020 ballot. See the caption “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Article XIIIA of the State Constitution.” Although it was not adopted by State voters, the Split Roll Initiative would have based property taxes for commercial and industrial properties on periodic analyses of market values beginning in tax year 2020-21. Such market values would have been reassessed by the applicable county assessor’s office at least once every three years. The Split Roll Initiative included exceptions for businesses with a total market value of less than $2 million (adjusted for inflation), which would have continued to be subject to property taxes based on purchase price, and exempted from property tax assessments up to $500,000 of the value of personal property, or all personal property for businesses with fewer than 50 employees. Although the Split Roll Initiative was not adopted, there can be no assurance that a similar initiative will not be brought before voters in the future. The City is unable to predict how the adoption of such a future initiative would affect the level of commercial building activity within the City and the relationship between the assessed value of different land use types (i.e. residential versus commercial) in the City, or what other impacts such an initiative might have on the local economy or the City’s financial condition, including the receipt of property tax revenues.

Additional City Obligations
The Base Rental Payments under the Lease Agreement are payable from funds that are lawfully available to the City. The City is currently liable for other obligations payable from general revenues of the City. The City has the authority to enter into other obligations that constitute additional claims on such general revenues, including Additional Bonds payable from a lease of the Leased Premises. To the extent that the City incurs additional obligations, the funds available to make Base Rental Payments may be decreased. See the captions “CITY FINANCIAL INFORMATION—Other Indebtedness—General Fund-Supported Obligations” and “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS—Additional Bonds.” Remedies
Upon an Event of Default under the Indenture, the Trustee may exercise certain remedies under the Indenture and the Lease Agreement. In the event of a monetary default under the Indenture, the Trustee has the right to enter and take possession of the Leased Premises, and the Trustee may hold, operate and manage 443
73 4864-5835-3938v8/022249-0054
the Leased Premises and apply revenues therefrom toward payment of the 2022 Bonds. There can be no assurance that the Trustee will be able to realize from such actions an amount that is sufficient to pay the principal of and interest on the 2022 Bonds. In addition, the Trustee may incur significant operating costs in connection with the Leased Premises.

Limitation on Trustee’s Obligations under the Indenture The Trustee has no obligation to advance its own funds to pursue any remedies. As a consequence, the Trustee’s willingness and ability to pursue any of the remedies provided in the Indenture and the Lease Agreement may be dependent upon the availability of funds from an interested party. Additionally, the Trustee is not required to acquire possession of the Leased Premises if doing so subjects it to potential liability.

There can be no assurance that the Trustee will be willing and able to perform its duties under the Indenture.

Release of Property; Additional Bonds
The Authority and the City may amend the Lease Agreement to substitute or release a portion of the Leased Premises upon compliance with all of the conditions set forth in the Lease Agreement. After a substitution or release, the portion of the Leased Premises for which the substitution or release has been effected will be released from the leasehold encumbrance of the Lease Agreement. Moreover, the City may issue Additional Bonds secured by Base Rental Payments which are increased above current levels. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS―Substitution or Release of the Leased Premises” and “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS— Additional Bonds.”
Although the Lease Agreement requires, among other things, that the Leased Premises, as constituted after such substitution or release, have an annual fair rental value at least equal to the maximum Base Rental Payments for the Leased Premises coming due in the then-current Fiscal Year or in any subsequent Fiscal Year, it does not require that the Leased Premises have an annual fair rental value equal to the annual fair rental value of the Leased Premises prior to the substitution release of any portion thereof. Thus, a portion of the Leased Premises could be replaced with less valuable real property, or could be released altogether. Such a substitution or release could have an adverse impact on the security for the 2022 Bonds, particularly if an event requiring abatement of the Base Rental Payments were to occur subsequent to such substitution or release.

Upon the issuance of Additional Bonds, the Lease Agreement will be amended, to the extent necessary, so as to increase the Base Rental Payments payable by the City thereunder by an aggregate amount that is sufficient to pay the principal of and interest on such Additional Bonds; provided, however, that no such amendment may be made such that the sum of such Base Rental Payments, including any increase in Base Rental Payments as a result of such amendment, plus Additional Rental Payments, in any Fiscal Year is in excess of the annual fair rental value of the Leased Premises after taking into account the use of the proceeds of any Additional Bonds issued in connection therewith. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS—Additional Bonds” for a full description of the requirements that must be met in order for the City to deliver Additional Bonds.

Limitations on Enforceability
General. The enforcement of any remedies that are provided for in the Lease Agreement and the Indenture could prove both expensive and time consuming. The rights and remedies provided in the Lease Agreement and the Indenture may be limited by and are subject to: (i) the limitations on legal remedies against cities in the State, including State constitutional limits on expenditures and limitations on the enforcement of judgments against funds that are needed to serve the public welfare and interest; (ii) federal bankruptcy laws, as now or later enacted, as discussed in detail under the subcaption “—Bankruptcy” below; (iii) applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or later in effect; (iv) equity principles which may limit the specific 444
74 4864-5835-3938v8/022249-0054
enforcement under State law of certain remedies; (v) the exercise by the United States of America of the powers delegated to it by the federal Constitution; and (vi) the reasonable and necessary exercise, in certain exceptional situations, of the police powers that are inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or State government, if initiated, could subject the Owners of the 2022 Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation or modification of their rights.

The legal opinions that will be delivered concurrently with the issuance of the 2022 Bonds will be qualified, as to the enforceability of the 2022 Bonds, the Indenture, the Lease Agreement and other related documents, by bankruptcy, insolvency, reorganization, moratorium, arrangement, fraudulent conveyance 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 limitations on legal remedies against counties in the State.

Failure by the City to pay Base Rental Payments or failure to observe and perform any other terms, covenants or conditions of the Lease Agreement for a period of 30 days after written notice of such failure and request that it be remedied has been given to the City by the Trustee constitute Events of Default under the Indenture and permit the Trustee or the Authority to pursue the remedies that are described in the Lease Agreement and Indenture. Upon an Event of Default, there is no right under any circumstances to accelerate Base Rental Payments or otherwise declare any Base Rental Payment that is not then in default to be immediately due and payable, nor do the Authority or the Trustee have any right to re-enter or re-let the affected Leased Premises, except to the limited extent that is described in the Lease Agreement, and only to the extent of the Authority’s leasehold interest under the Lease Agreement. Rather, if the City defaults on its obligation to pay Base Rental Payments with respect to such Leased Premises, the Trustee must sue to recover Base Rental Payments on an annual basis.

Alternatively, the Authority or the Trustee may terminate the Lease Agreement, retake possession of the Leased Premises and proceed against the City to recover damages pursuant to the Lease Agreement. Due to the specialized and limited nature of the Leased Premises (as discussed under the caption “THE LEASED PREMISES”), it is unlikely that 2022 Bond Owners would be able to generate rental income that is sufficient to make all payments of principal of and interest on the 2022 Bonds when due. Moreover, the Trustee is not empowered to sell the fee interest in the Leased Premises (which is owned by the City) for the benefit of the Owners of the 2022 Bonds. Any suit for money damages against the City would be subject to limitations on legal remedies against cities in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest.

Bankruptcy. Enforceability of the rights and remedies of the Owners of the 2022 Bonds, and the obligations incurred by the City, may become subject to the provisions of Title 11 of the United States Code (the “Bankruptcy Code”) and applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or later in effect, equity principles which may limit the specific enforcement under State law of certain remedies, the exercise by the United States of America of the powers delegated to it by the federal Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose and the limitations on remedies against cities in the State. Bankruptcy proceedings, or the exercise of powers by the federal or State government, if initiated, could subject the Owners of the 2022 Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation or modification of their rights. Under Chapter 9 of the Bankruptcy Code, which governs the bankruptcy proceedings of public agencies such as the City, involuntary petitions are not permitted. If the City were to file a petition under Chapter 9 of the Bankruptcy Code, the Owners of the 2022 Bonds, the Trustee and the Authority could be prohibited from taking any steps to enforce their rights under the Lease Agreement or from taking any steps to collect amounts due from the City under the Lease Agreement. 445
75 4864-5835-3938v8/022249-0054
In particular, if the City were to become a debtor under the Bankruptcy Code, the City would be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 case. Among the adverse effects of such a bankruptcy might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the City or the commencement of any judicial or other action for the purpose of recovering or collecting a claim against the City, and which could prevent the Trustee from making payments from funds in its possession; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or secured debt which may have a priority of payment that is superior to that of Owners of the 2022 Bonds; and (iv) the possibility of the adoption of a plan (an “Adjustment Plan”) for the adjustment of the City’s various obligations over the objections of the Trustee or all of the Owners of the 2022 Bonds and without their consent, which Adjustment Plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court finds that such Adjustment Plan is “fair and equitable” and in the best interests of creditors. The Adjustment Plans approved by the Bankruptcy Courts in connection with the bankruptcies of the cities of Vallejo, San Bernardino and Stockton resulted in significant reductions in the amounts payable by the cities under lease revenue obligations that were substantially identical or similar to the 2022 Bonds. The City can provide no assurances about the outcome of the bankruptcy cases of other California municipalities or the nature of any Adjustment Plan if it were to file for bankruptcy.

In addition, the City could either reject the Lease Agreement or assume the Lease Agreement despite any provision of such documents that makes the bankruptcy or insolvency of the City an event of default thereunder. If the City rejects the Lease Agreement, the Trustee, on behalf of the Owners of the 2022 Bonds, would have a pre-petition unsecured claim that may be substantially limited in amount, and this claim would be treated in a manner under an Adjustment Plan over the objections of the Trustee or Owners of the 2022 Bonds. Moreover, such rejection would terminate the Lease Agreement and the City’s obligations to make payments thereunder. The City may also be permitted to assign the Lease Agreement to a third party, regardless of the terms of the transaction documents.

Secondary Market
There can be no guarantee that there will be a secondary market for the 2022 Bonds, or, if a secondary market exists, that the 2022 Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing in connection with a particular issue is suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances. Such prices could be substantially different from the original purchase price.

In addition, the City has entered into a continuing disclosure undertaking in connection with the 2022 Bonds. Any material failure to comply with such undertaking in the future may adversely affect the liquidity of the affected 2022 Bonds and their market price in the secondary market.

Covenant to Budget and Appropriate
Under the Lease Agreement, the City has covenanted to take such actions as are necessary to include the Base Rental Payments and the estimated Additional Rental Payments in its annual budgets and to make the necessary annual appropriations for all Base Rental Payments. Such covenant is deemed to be a duty imposed by law, and it is the duty of the public officials of the City to take such actions and do such things as are required by law in the performance of the official duty of such officials to enable such entity to carry out and perform such covenants. A court, however, in its discretion may decline to enforce such covenant. Upon execution and delivery of the 2022 Bonds, Bond Counsel will render its opinion (substantially in the form of Appendix D) to the effect that, subject to certain limitations and qualifications, the Lease Agreement constitutes a valid and binding obligation of the City. 446
76 4864-5835-3938v8/022249-0054
Risks Associated with Bond Insurance
In the event that the Authority defaults in the payment of principal of or interest on the Insured Bonds when due, the owners of the Insured Bonds will have a claim under the Policy for such payments. See the caption “BOND INSURANCE.” In the event that the Insurer becomes obligated to make payments with respect to the Insured Bonds, no assurance can be given that such event will not adversely affect the market for the 2022 Bonds. In the event that the Insurer is unable to make payment of principal of and interest on the Insured Bonds when due under the Policy, the Insured Bonds will be payable solely from Base Rental Payments and amounts held in certain funds and accounts established under the Indenture, as described under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS.” The long-term rating on the Insured Bonds is dependent in part on the financial strength of the Insurer and its claims-paying ability. The Insurer’s financial strength and claims-paying ability are predicated upon a number of factors which could change over time. If the long-term ratings of the Insurer are lowered, such event could adversely affect the market for the 2022 Bonds. See the caption “RATINGS.” None of the Authority, the City or the Underwriters have made an independent investigation of the claims-paying ability of the Insurer and no assurance or representation regarding the financial strength or projected financial strength of the Insurer is being made by the Authority, the City or the Underwriters in this Official Statement. Therefore, when making an investment decision with respect to the Insured Bonds, potential investors should carefully consider the ability of the City to pay Base Rental Payments, assuming that the Policy is not available to make payments on the Insured Bonds, and the claims-paying ability of the Insurer through final maturity of the Insured Bonds.

So long as the Policy remains in effect and the Insurer is not in default of its obligations thereunder, the Insurer has certain notice, consent and other rights under the Indenture and will have the right to control all remedies for default under the Indenture with respect to the Insured Bonds. The Insurer is not required to obtain the consent of the owners of the Insured Bonds with respect to the exercise of remedies. See Appendix B.

TAX MATTERS
In the opinion of Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the 2022 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended, and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the 2022 Bonds is not a specific preference item for purposes of federal alternative minimum taxes.

The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the 2022 Bonds. The City has covenanted to comply with certain restrictions designed to insure that interest on the 2022 Bonds will not be included in federal gross income. Failure to comply with these covenants may result in interest on the 2022 Bonds being included in federal gross income, possibly from the date of original issuance of the 2022 Bonds.

The opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the 2022 Bonds may adversely affect the value of, or the tax status of interest on, the 2022 Bonds.

Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the 2022 Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Owners from realizing the full current benefit of the tax status of such interest. For example, legislative proposals are announced from time to 447
77 4864-5835-3938v8/022249-0054
time which generally would limit the exclusion from gross income of interest on obligations like the 2022 Bonds to some extent for taxpayers who are individuals and whose income is subject to higher marginal income tax rates. Other proposals have been made that could significantly reduce the benefit of, or otherwise affect, the exclusion from gross income of interest on obligations like the 2022 Bonds. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the 2022 Bonds. Prospective purchasers of the 2022 Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, and regarding the impact of future legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.

Certain requirements and procedures contained or referred to in the Indenture, the tax certificate, and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the 2022 Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to the exclusion from gross income of interest on any 2022 Bond if any such change occurs or action is taken or omitted upon the advice or approval of counsel other than Best Best & Krieger LLP.

The Internal Revenue Service (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 2022 Bonds will be selected for audit by the IRS. It is also possible that the market value of the 2022 Bonds might be affected as a result of such an audit of the 2022 Bonds (or by an audit of other similar bonds).

Although Bond Counsel is of the opinion that interest on the 2022 Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the 2022 Bonds may otherwise affect an Owner’s federal or state tax liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the 2022 Bond Owner or the Owner’s other items of income or deduction, and Bond Counsel expresses no opinion regarding any such other tax consequences.

A copy of the proposed form of opinion of Bond Counsel for the 2022 Bonds is attached hereto as Appendix D.

CERTAIN LEGAL MATTERS
The valid, legal and binding nature of the 2022 Bonds is subject to the approval of Best Best & Krieger LLP, Riverside, California, acting as Bond Counsel. The form of such legal opinion is attached hereto as Appendix D, and such legal opinion will be attached to each 2022 Bond. Certain legal matters will be passed upon for the City by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel, and by Best Best & Krieger LLP, Ontario, California, the City Attorney, for the Underwriters by their counsel, Quint & Thimmig LLP, Larkspur, California, for the Insurer by its counsel and for the Trustee by its counsel.

From time to time Disclosure Counsel serves as counsel to the Underwriters with respect to transactions other than the issuance of the 2022 Bonds.

MUNICIPAL ADVISOR
The Authority has retained CSG Advisors Incorporated, San Francisco, California (the “ Municipal Advisor”) as municipal advisor in connection with the sale of the 2022 Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained herein. 448
78 4864-5835-3938v8/022249-0054
The Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.

LITIGATION
At the time of issuance of the 2022 Bonds, the Authority and the City will deliver certificates substantially to the effect that there is no litigation then pending or threatened to restrain or enjoin the issuance of the 2022 Bonds or in any way contesting or affecting the validity of the 2022 Bonds, the Lease Agreement, any proceedings of the Authority or the City taken with respect to the delivery or sale of the 2022 Bonds, the pledge or application of any money or security provided for the payment of the 2022 Bonds, the existence or powers of the Authority or the City or the title of any officers of the Authority or the City to their respective positions, or the outcome of which could materially adversely affect the ability of the City to make the Base Rental Payments.

UNDERWRITING
The 2022 Bonds will be purchased by Samuel A. Ramirez & Co., Inc. and Cabrera Capital Markets, LLC (collectively, “ Underwriters”), pursuant to a purchase contract, dated the date hereof (the “ Purchase Contract”), by and among the City, the Authority and Samuel A. Ramirez & Co., Inc., as representative of the Underwriters. Under the Purchase Contract, the Underwriters have agreed to purchase all, but not less than all, of the 2022 Bonds for an aggregate purchase price of $_____ (representing the principal amount of the 2022 Bonds, less an Underwriters’ discount of $_____, plus/less a net original premium/discount of $______). The Purchase Contract provides that the Underwriters will purchase all of the 2022 Bonds if any are purchased, the obligation to make such a purchase being subject to certain terms and conditions set forth in the Purchase Contract, the approval of certain legal matters by counsel and certain other conditions.

The initial public offering prices stated on the inside cover page of this Official Statement may be changed from time to time by the Underwriters. The Underwriters may offer and sell the 2022 Bonds to certain dealers (including dealers depositing 2022 Bonds into investment trusts), dealer banks, banks acting as agents and others at prices lower than said public offering prices.

RATINGS
S&P has assigned the rating of “[__]” to the Insured Bonds based upon the delivery of the Policy by the Insurer at the time of issuance of the 2022 Bonds. S&P has also assigned the 2022 Bonds the rating of “[__]” notwithstanding the delivery of the Policy for the Insured Bonds.

Future events, including the impacts of the COVID-19 pandemic that is described under the caption “THE CITY—COVID-19 Outbreak,” could have an adverse impact on the ratings of the 2022 Bonds, and there is no assurance that any credit rating that is given to the 2022 Bonds will be maintained for any period of time or that a rating may not be qualified, downgraded, lowered or withdrawn entirely by S&P if, in the judgment of S&P, circumstances so warrant. Any such qualification, downgrade, lowering or withdrawal of a rating may have an adverse effect on the market price of the 2022 Bonds. The ratings reflect only the views of S&P (which views and criteria could change at any time), and an explanation of the significance of such ratings may be obtained from S&P. Generally, a rating agency bases its ratings on the information and materials furnished to it (which may include information and material from the City that is not included in this Official Statement) and on investigations, studies and assumptions of its own.

The City has covenanted in a Continuing Disclosure Certificate to file notices of any rating changes on the 2022 Bonds with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system. See the caption “CONTINUING DISCLOSURE” and Appendix E. Notwithstanding such covenant, information relating to rating changes on the 2022 Bonds may be publicly available from the rating agencies prior to the time that such information is provided to the City and prior to the date by which the City is 449
79 4864-5835-3938v8/022249-0054
obligated to file a notice of rating change. Purchasers of the 2022 Bonds are directed to the rating agencies and their respective websites and official media outlets for the most current ratings with respect to the 2022 Bonds after the initial issuance of the 2022 Bonds.

None of the Authority, the City or the Underwriters make any representation as to the Insurer’s creditworthiness and no representation that the Insurer’s credit rating will be maintained in the future. S&P has previously taken action to downgrade the ratings of certain municipal bond insurers and has published various releases outlining the processes that S&P intends to follow in evaluating the ratings of financial guarantors. For some financial guarantors, the result of such evaluations could be a rating affirmation, a change in rating outlook, a review for downgrade or a downgrade. Potential investors are directed to S&P for additional information on S&P’s evaluations of the financial guaranty industry and individual financial guarantors, including the Insurer. See the caption “BOND INSURANCE” for further information relating to the Insurer.

CONTINUING DISCLOSURE
The City has covenanted in a Continuing Disclosure Certificate, dated the date of issuance of the 2022 Bonds, for the benefit of the holders and Beneficial Owners of the 2022 Bonds, to provide certain financial information and operating data relating to the City by not later than March 31 following the end of the City’s Fiscal Year (currently its Fiscal Year ends on June 30) (the “ Annual Report”), commencing on March 31, 2023 with the report for the Fiscal Year ending June 30, 2022, and to provide notices of the occurrence of certain enumerated events. The Annual Report and the notices of enumerated events will be filed by the City with EMMA, which is maintained on the Internet at http://emma.msrb.org/. The specific nature of the information to be contained in the Annual Report and the notices of enumerated events is set forth in Appendix E. These covenants have been made in order to assist the Underwriters in complying with subsection (b)(5) of Rule 15c2-12.

The City and certain related entities have entered into several prior continuing disclosure undertakings. In the previous five years, the City believes that it has complied in all material respects with all undertakings made pursuant to Rule 15c2-12, except as follows: (i) with respect to the City’s Community Facilities District No. 13 Special Tax Bonds, semiannual filings due April 30, 2017, October 31, 2017 and April 30, 2019 were not timely filed; (ii) the City did not provide notice of certain rating changes on a timely basis; (iii) certain tabular information which was required to be updated in connection with the undertaking for the City’s 2020 Bonds was not included in the 2021 annual report for such obligations; (iv) one table which was required to be updated in connection with the undertaking for 1995 bonds of the City’s Assessment District No. 108 was not included in the 2017-2020 annual reports for such obligations; and (v) information with respect to outstanding indebtedness of the City was not timely filed, as it was included in the City’s audited financial statements for Fiscal Year 2020-21, which were filed in late April 2022. See the caption “CITY FINANCIAL INFORMATION—General Economic Condition and Outlook of the City—Summary of General Fund Results and Budgets” for a discussion of the audit of the City’s Fiscal Year 2020-21 financial statements.

In order to ensure compliance with its continuing disclosure obligations in the future, the City has designated staff members within the City’s Financial Services Agency (e.g., department) with the responsibility of ensuring timely and complete filings and has retained an outside consultant to conduct periodic reviews of City compliance. In addition, the City’s debt management policy includes continuing disclosure compliance policies and procedures. See the caption “CITY FINANCIAL INFORMATION— General Economic Condition and Outlook of the City—Fiscal Policies—Debt Management Policy.”

FINANCIAL INTERESTS
The fees being paid to the Underwriters, Bond Counsel, Disclosure Counsel and counsel to the Underwriters are contingent upon the issuance and delivery of the 2022 Bonds. 450
80 4864-5835-3938v8/022249-0054

MISCELLANEOUS
The Authority and the City have approved and authorized the preparation, execution and distribution of this Official Statement. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such, and are not representations of fact. This Official Statement is not to be construed as an agreement or contract among any of the City, the Authority and the purchasers or holders of any 2022 Bonds.

ONTARIO PUBLIC FINANCING AUTHORITY
By:

Executive Director

CITY OF ONTARIO
By:

City Manager
451
A-1
4864-5835-3938v8/022249-0054

APPENDIX A

DEMOGRAPHIC AND ECONOMIC INFORMATION
The following information is presented as general background data. The 2022 Bonds are payable solely from moneys of the City as described in the Official Statement. The taxing power of the City, the County, the State of California or any political subdivision thereof is not pledged to the payment of the 2022 Bonds.

The City also notes that the below information is the latest available but does not in any instance reflect the impact of the COVID-19 pandemic. See the Official Statement under the caption “THE CITY— COVID-19 Outbreak.” Accordingly, the historical information below does not necessarily reflect present economic conditions and future information could be significantly different from the historical information below.

Introduction
City of Ontario . The City is located in southwestern San Bernardino County (the “ County”), approximately 35 miles east of Los Angeles near the intersection of Interstates 10 and 15 in the area of southern California known as the “Inland Empire.” The City is adjacent to the cities of Upland, Montclair, Chino and Rancho Cucamonga. The City had a population of approximately 182,004 as of January 1, 2021 and covers approximately 50 square miles. The City was incorporated in 1891 and is a general law city operating under a council/manager form of government.

The City is a full service city and provides police and fire protection, street construction and maintenance, parks and recreational programs, water and sewer utilities and arts, cultural and social programs.

The City also operates a municipal golf course, convention center and sports and entertainment arena (the Toyota Arena, which opened in 2008).

San Bernardino County. The County was established by an act of the State Legislature on April 26, 1853. Located in the southern portion of the State, the County covers 20,105 square miles, making it the largest county in the United States. The County has a population of over 2 million and extends from dense suburban development in the southwest portion of the County near the Los Angeles urban area to large expanses of desert and federally owned land in the eastern portion of the County, which stretches to the Nevada border.

Population
The table below summarizes population of the City, the County, and the State of California for the last five calendar years.
452
A-2
4864-5835-3938v8/022249-0054

CITY OF ONTARIO, SAN BERNARDINO COUNTY AND CALIFORNIA
Population
Year City of Ontario San Bernardino County State of California 2017 172,858 2,139,520 39,352,398
2018 175,083 2,150,017 39,519,535
2019 178,606 2,165,876 39,605,361
2020 180,788 2,175,424 39,648,938
2021 182,004 2,175,909 39,466,855
Source: California Department of Finance, E-4 Population Estimate for Cities, Counties, and the State, 2011-21, with 2010 Census Benchmark.

Employment
The following table summarizes historical employment and unemployment for the County, the State of California and the United States for the last five calendar years.

SAN BERNARDINO COUNTY, CALIFORNIA AND UNITED STATES
Civilian Labor Force, Employment, and Unemployment
(Annual Averages)
Year Area Labor Force Employment Unemployment
Unemployment
Rate(1)
2016 San Bernardino County 930,200 875,400 53,900 5.8
California 19,012,000 17,965,400 1,046,600 5.5
United States 159,187,000 151,436,000 7,751,000 4.9
2017 San Bernardino County 942,700 895,900 46,800 5.0
California 19,173,800 18,246,800 927,000 4.8
United States 160,320,000 153,337,000 6,982,000 4.4
2018 San Bernardino County 955,100 915,700 39,400 4.1
California 19,263,900 18,442,400 821,500 4.3
United States 162,075,000 155,761,000 6,314,000 3.9
2019 San Bernardino County 965,000 927,400 37,600 3.9
California 19,353,700 18,550,500 803,200 4.2
United States 163,539,000 157,538,000 6,001,000 3.7
2020 San Bernardino County 966,200 874,900 91,300 9.4
California 18,821,200 16,913,100 1,908,100 10.1
United States 160,742,000 147,795,000 12,947,000 8.1
(1) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures available in this table.

Source: California Employment Development Department, Monthly Labor Force Data for Counties, Annual Average 2010-20, March 2020 Benchmark, and US Department of Labor.
453
A-3
4864-5835-3938v8/022249-0054
Major Industries in the County
The table below sets forth the ten largest industries by employment in San Bernardino County in Fiscal Year 2020-21.

SAN BERNARDINO COUNTY
Major Employers – Fiscal Year 2020-21
Employer Number of Employees % of Total
County of San Bernardino >10,000 1.11%
Loma Linda University Medical Center >10,000 1.11%
Amazon 5,000-9,999 0.55% - 1.11%
Ontario International Airport 5,000-9,999 0.55% - 1.11% Plaxicon Holding Corporation 5,000-9,999 0.55% - 1.11%
California State University, San Bernardino 5,000-9,999 0.55% - 1.11% James Jones Company 2,500-4,999 0.28% - 0.55%
Barrett Business Services Inc. 2,500-4,999 0.28% - 0.55% Damao Luggage International Inc. 2,500-4,999 0.28% - 0.55% San Manuel Tribe & Casino 2,500-4,999 0.28% - 0.55%
Source: San Bernardino County Annual Financial Report Fiscal Year Ended June 30, 2021.

Construction Activity
The following tables reflect building permit valuations for the City and the County for the five most recent calendar years for which information is available.

CITY OF ONTARIO
Building Permits and Valuation
(Dollars in Thousands)
2016 2017 2018 2019 2020
Permit Valuation:

New Single-family $ 88,899 $123,192 $478,674 $282,287 $101,990 New Multi-family 25,065 111,621 33,348 40,635 8,459
Res. Alterations/Additions 5,490 5,118 5,376 5,916 3,709 Total Residential 119,454 239,931 517,398 328,838 114,158 Total Nonresidential 197,787 122,243 185,202 268,019 125,537 Total All Building $317,241 $362,174 $702,600 $596,857 $239,695 New Dwelling Units:

Single Family 446 648 1,056 1,091 472
Multiple Family 206 1,010 273 322 74
Total 652 1,658 1,329 1,413 546
Note: Columns may not sum to totals due to independent rounding.

Source: Construction Industry Research Board: “Building Permit Summary.” 454
A-4
4864-5835-3938v8/022249-0054

SAN BERNARDINO COUNTY
Building Permits and Valuation
(Dollars in Thousands)
2016 2017 2018 2019 2020
Permit Valuation:

New Single-family $ 706,602 $ 1,009,451 $ 1,114,778 $ 1,078,798 $ 934,304 New Multi-family 119,498 278,761 268,565 232,079 143,366 Res. Alterations/Additions 62,042 77,812 71,938 139,761 61,789 Total Residential 888,142 1,366,024 1,455,281 1,450,638 1,139,459 Total Nonresidential 994,282 1,285,596 1,080,129 1,377,099 1,062,072 Total All Building $ 1,882,424 $ 2,651,620 $ 2,535,410 $ 2,827,737 $ 2,201,531 New Dwelling Units:

Single Family 2,896 4,253 3,311 4,096 3,631
Multiple Family 976 2,578 1,775 1,884 910
Total 3,872 6,831 5,086 5,980 21,622
Note: Columns may not sum to totals due to independent rounding.

Source: Construction Industry Research Board: “Building Permit Summary.” 455
B-1
4864-5835-3938v8/022249-0054

APPENDIX B

SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
The following is a summary of certain definitions and provisions of the Amended and Restated Lease Agreement and 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 Lease Agreement and the Indenture for a full and complete statement of their provisions.
[TO COME FROM BOND COUNSEL]
456
C-1
4864-5835-3938v8/022249-0054

APPENDIX C

AUDITED FINANCIAL STATEMENTS
457
D-1
4864-5835-3938v8/022249-0054

APPENDIX D

FORM OF BOND COUNSEL OPINION
Upon the issuance of the 2022 Bonds, Best Best & Krieger LLP, Bond Counsel, proposes to render its final approving opinion in substantially the following form:
[TO BE UPDATED BY BOND COUNSEL]
[Closing Date]
Ontario Public Financing Authority
303 East B Street
Ontario, California 91764
Re: $_____ Ontario Public Financing Authority 2022 Lease Revenue Bonds, Series A (Civic Center Improvements)
Ladies and Gentlemen:

We have reviewed the Constitution and laws of the State of California and certain proceedings taken by the Ontario Public Financing Authority (the “Authority”) in connection with the issuance by the Authority of the Ontario Public Financing Authority 2022 Lease Revenue Bonds, Series A (Civic Center Improvements) (the “Bonds”), pursuant to the provisions of Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Law”) and pursuant to an Indenture, dated as of July 1, 2017 (as amended and supplemented by the First Amendment and Supplement to Indenture, dated as of ____ 1, 2022, the “Indenture of Trust”), by and between The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), and the Authority. The proceeds of the Bonds will be applied by the Authority to finance the acquisition and construction of capital projects of the City and to pay the costs of issuing the Bonds. The Authority and the City of Ontario (the “City”) have entered into a Lease Agreement, dated as of July 1, 2017 (as amended and supplemented by the First Amendment and Supplement to Lease Agreement, dated as of ____ 1, 2022, the “Lease Agreement”), whereby the City has leased to the Authority certain City facilities and property (the “Leased Premises”) and the Authority has leased the Leased Premises back to the City. The City will make 2022 Base Rental Payments for the Leased Premises to the Authority. Pursuant to the Indenture of Trust, the Lease Payments have been assigned by the Authority to the Trustee and will be used by the Trustee to pay the principal of and interest on the Bonds. We have examined the Indenture of Trust, the Lease Agreement and such certified proceedings and other documents and materials as we deem necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation.

Based upon the foregoing, we are of the opinion, under existing law, that:
(1) The Authority is a joint powers authority duly organized and validly existing under the laws of the State of California, with power to enter into the Indenture of Trust and the Lease Agreement, to perform the agreements on its part contained therein and to issue the Bonds; (2) The Bonds constitute the valid and legally binding special obligations of the Authority enforceable in accordance with their terms and payable solely from the sources provided therefor in the Indenture of Trust;
458
D-2
4864-5835-3938v8/022249-0054
(3) The Indenture of Trust and the Lease Agreement have been duly approved by the Authority and constitute the valid and legally binding obligations of the Authority enforceable against the Authority in accordance with their respective terms;
(4) The Indenture of Trust establishes a lien on and pledge of the Revenues (as such term is defined in the Indenture of Trust) which consist of Lease Payments and other funds pledged thereby for the security of the Bonds, in accordance with the terms of the Indenture of Trust; and (5) Interest on the Bonds is exempt from California personal income taxation. (6) The Internal Revenue Code of 1986, as amended (the “Code”), sets forth certain investment, rebate and related requirements which must be met subsequent to the delivery of the Bonds for the interest received by the owners of the Bonds to be and remain excluded from gross income for purposes of federal income taxation. Noncompliance with such requirements could cause the interest on the Bonds to be subject to federal income taxation retroactive to the date of delivery of the Bonds. Pursuant to the Indenture of Trust, the Authority has covenanted to comply with the requirements of the Code. Assuming compliance with the aforementioned covenant, we are of the opinion that, under existing statutes, regulations, rulings and court decisions, the interest on the Bonds is excluded from gross income for purposes of federal income taxation.

Interest on the Bonds is not a specific preference item for purposes of the alternative minimum tax provisions of the Code. Although the interest on the Bonds is excluded from gross income for purposes of federal income taxation, the accrual or receipt of interest on the Bonds, or any portion thereof, may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend on the recipient’s particular tax status or other items of income or deduction. We express no opinion regarding any such consequences.

Our opinions, expressed herein, may be affected by action taken (or not taken) on events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or occur.

The rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture of Trust may be subject to bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity.

Respectfully submitted,
459
E-1
4864-5835-3938v8/022249-0054

APPENDIX E

FORM OF CONTINUING DISCLOSURE CERTIFICATE
Upon issuance of the 2022 Bonds, the City proposes to enter into a Continuing Disclosure Certificate in substantially the following form:

This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the City of Ontario (the “City”) in connection with the issuance by the Ontario Public Financing Authority (the “Authority”) of the Authority’s 2022 Lease Revenue Bonds, Series A (Civic Center Improvements) (the “ Bonds”). The Bonds are being issued pursuant to an Indenture, dated as of July 1, 2017 (as amended by the First Amendment and Supplement to Indenture, dated as of ____ 1, 2022, the “ Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee. The City covenants and agrees as follows:

1. Purpose of this Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule.

2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

Annual Report. The term “Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.

Beneficial Owner. The term “Beneficial Owner” means 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.

EMMA. The term “EMMA” means the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/.

Financial Obligation. The term “Financial Obligation” means a: (A) debt obligation; (B) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (C) guarantee of (A) or (B). The term “Financial Obligation” does not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule.

Fiscal Year. The term “Fiscal Year” means the one-year period ending on the last day of June of each year.

Holder. The term “Holder” means a registered owner of the Bonds.

Insurer. The term “Insurer” means _____.

Listed Events. The term “Listed Events” means any of the events listed in Sections 5(a) and (b) of this Disclosure Certificate.

Official Statement. The term “Official Statement” means the Official Statement relating to the Bonds dated _____ __, 2022 delivered in connection with the issuance of the Bonds.

Participating Underwriter. The term “Participating Underwriter” means the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. 460
E-2
4864-5835-3938v8/022249-0054
Rule. The term “Rule” means Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

3. Provision of Annual Reports.
(a) The City shall provide not later than each March 31 following the end of its Fiscal Year (commencing March 31, 2023 with the Annual Report for Fiscal Year 2022) to EMMA an Annual Report relating to the immediately preceding Fiscal Year which is consistent with the requirements of Section 4 of this Disclosure Certificate, which Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate. (b) If the City is unable to provide to EMMA an Annual Report by the date required in subsection (a), the City shall send to EMMA a notice in substantially the manner prescribed by the Municipal Securities Rulemaking Board.

4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following:
(a) The audited financial statements of the City for the prior Fiscal Year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If such audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) Principal amount of the Bonds outstanding.
(c) To the extent not already included in the City’s audited financial statements, an update of the information substantially in the form of the following tables or captions in the Official Statement for the Fiscal Year prior to the filing of such Annual Report:

1. Table 2 – General Fund Statement of Revenues, Expenditures and Charges in Fund Balance;

2. Table 3 – General Fund Balance Sheets;

3. Table 4 – Assessed Valuation History;

4. Table 5 – Property Tax Levies and Collections; and

5. Information under the caption “CITY FINANCIAL INFORMATION—Other Indebtedness—General Fund Supported Debt” (provided that such information may be located in the notes to the City’s audited financial statements).

Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been submitted to EMMA or the Securities and Exchange Commission; provided that if any document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board; and provided further that the City shall clearly identify each such document so included by reference. 461
E-3
4864-5835-3938v8/022249-0054

5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not more than ten (10) Business Days after the event:

1. principal and interest payment delinquencies;

2. unscheduled draws on debt service reserves reflecting financial difficulties;

3. unscheduled draws on credit enhancements reflecting financial difficulties;

4. substitution of credit or liquidity providers, or their failure to perform;

5. issuance by the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB);

6. tender offers;

7. defeasances;

8. ratings changes;

9. bankruptcy, insolvency, receivership or similar proceedings; Note: For the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person 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 obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person; and

10. default, event of acceleration, termination event, modification of terms or other similar events under the terms of a Financial Obligation of the City, any of which reflect financial difficulties. (b) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:

1. unless described in Section 5(a)(5), other notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other events affecting the tax status of the Bonds;

2. modifications to the rights of Bondholders;

3. optional, unscheduled or contingent Bond calls;

4. release, substitution or sale of property securing repayment of the Bonds;

5. non-payment related defaults;

6. the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms;
462
E-4
4864-5835-3938v8/022249-0054

7. appointment of a successor or additional trustee or the change of the name of a trustee; and

8. incurrence of a Financial Obligation of the City, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the City, any of which affect security holders.
(c) If the City determines that knowledge of the occurrence of a Listed Event under Section 5(b) would be material under applicable federal securities laws, the City shall file a notice of such occurrence with EMMA in a timely manner not more than ten (10) Business Days after the event.

6. Customarily Prepared and Public Information. Upon request, the City shall provide to any person financial information and operating data regarding the City which is customarily prepared by the City and is publicly available.

7. Termination of Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).

8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that, in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted by the Rule.

9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall not thereby have any obligation under this Disclosure Certificate to update such information or include it in any future notice of occurrence of a Listed Event.

10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, any Holders or Beneficial Owners of at least 50% aggregate principal amount of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.

No Holder or Beneficial Owner of the Bonds may institute such action, suit or proceeding to compel performance unless they shall have first delivered to the City satisfactory written evidence of their status as such, and a written notice of and request to cure such failure, and the City shall have refused to comply therewith within a reasonable time.

11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Authority, the City, the Insurer, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Dated: _____ __, 2022 CITY OF ONTARIO
By:

Its: City Manager
463
F-1
4864-5835-3938v8/022249-0054

APPENDIX F

BOOK-ENTRY ONLY SYSTEM
The information in this section concerning DTC and DTC’s book-entry only system has been obtained from sources that the Authority and the City believe to be reliable, but the Authority and the City take no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the 2022 Bonds, payment of principal, premium, if any, accreted value, if any, and interest on the 2022 Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the 2022 Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the 2022 Bonds. The 2022 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 2022 Bond will be issued for each annual maturity of the 2022 Bonds, each in the aggregate principal amount of such annual maturity, and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC is rated AA+ by Standard & Poor’s. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of 2022 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2022 Bonds on DTC’s records. The ownership interest of each actual purchaser of each 2022 Bonds (“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 2022 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive bonds representing their ownership interests in 2022 Bonds, except in the event that use of the book-entry system for the 2022 Bonds is discontinued.

To facilitate subsequent transfers, all 2022 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 2022 Bonds 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 464
F-2
4864-5835-3938v8/022249-0054
Beneficial Owners of the 2022 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such 2022 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 2022 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2022 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the 2022 Bonds documents. For example, Beneficial Owners of 2022 Bonds may wish to ascertain that the nominee holding the 2022 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the 2022 Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to 2022 Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts 2022 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the 2022 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 Authority or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

A 2022 Bond Owner shall give notice to elect to have its 2022 Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such 2022 Bond by causing the Direct Participant to transfer the Participant’s interest in the 2022 Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of 2022 Bond in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the 2022 Bond are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered 2022 Bond to the Trustee’s DTC account.

DTC may discontinue providing its services as depository with respect to the 2022 Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, physical certificates are required to be printed and delivered.

The Authority may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, 2022 Bonds will be printed and delivered to DTC.

THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE 2022 BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY

FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY

ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE 2022 BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. 465
G-1
4864-5835-3938v8/022249-0054

APPENDIX G

SPECIMEN MUNICIPAL BOND INSURANCE POLICY
466
Quint & Thimmig LLP 03/03/22 04/19/22

$________ ONTARIO PUBLIC FINANCING AUTHORITY 2022 Lease Revenue Bonds, Series A (Civic Center Improvements) BOND PURCHASE AGREEMENT May 25, 2022 Ontario Public Financing Authority 303 East B Street Ontario, CA 91764 City of Ontario 303 East B Street Ontario, CA 91764 Ladies and Gentlemen: Samuel A. Ramirez & Co., Inc. (the “Representative), on behalf of itself and Cabrera Capital Markets, LLC (collectively, the “Underwriters”), hereby offer to enter into this bond purchase agreement (the “Bond Purchase Agreement”) with the Ontario Public Financing Authority (the “Authority”) and the City of Ontario (the “City”). Upon the acceptance hereof by the Authority and the City, this offer will be binding upon the Authority, the City and the Underwriters. This offer is made subject to (a) the written acceptance hereof by the Authority and the City and (b) withdrawal by the Underwriters upon written notice (by telecopy or otherwise) delivered to the Authority and the City at any time prior to each of their acceptance hereof by the Authority and the City. 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements set forth herein, the Underwriters hereby agree to purchase on the Closing Date (as defined herein), and the Authority and the City hereby agree to sell and deliver to the Underwriters on the Closing Date, $________ principal amount of Ontario Public Financing Authority 2022 Lease Revenue Bonds, Series A (Civic Center Improvements) (the “Bonds”). The Bonds are being issued pursuant to Article 4, Chapter 5, Division 7, Title 1 of the California Government Code, a resolution of the Authority authorizing the issuance of the Bonds, adopted on June 1, 2022 (the “Authority Resolution”), and an Indenture of Trust, dated as of July 1, 2017, as amended and supplemented by the First Amendment and Supplement to Indenture, dated as of June 1, 2022 (together, the “Indenture”), each by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). The City will lease certain real property and all buildings and other improvements installed thereon (collectively, the “Leased Property”) to the Authority pursuant to a Ground Lease, dated as of July 1, 2017, as amended by the First Amendment to Ground Lease, dated as of June 1, 2022 (together, the “Ground Lease”), each by and between the City 467

-2-
and the Authority. The Authority will lease the Leased Property to the City pursuant to a Lease Agreement, dated as of July 1, 2017, as amended and supplemented by the Amended and Restated Lease Agreement, dated as of June 1, 2022 (the “Lease Agreement”), each by and between the Authority and the City. Under the Lease Agreement, the City is required to make Base Rental Payments and Additional Rent Payments from legally available funds in amounts calculated to be sufficient to pay principal of and interest on the Bonds when due. Pursuant to an Assignment Agreement, dated as of June 1, 2022 (the “Assignment Agreement”), by and between the Authority and the Trustee, the Authority will assign, for the benefit of the owners of the Bonds, its right to receive lease payments (the ”Base Rental Payments”) made by the City under the Lease Agreement and its right to exercise rights and remedies of the Authority under the Lease Agreement. All of the Authority’s right, title and interest in and to the Lease Agreement (except for the right to receive Additional Rental Payments to the extent payable to the Authority and certain rights to indemnification), including the right to receive Base Rental Payments under the Lease Agreement, are assigned to the Trustee for the benefit of the Owners of the Bonds. The Bonds are being issued to (a) to finance the cost of the public capital improvements, specifically improvements to the City’s Civic Center and the City’s Fire Station No. 1, and (b) pay costs of issuance of the Bonds. The aggregate purchase price to be paid by the Underwriters for the Bonds is hereby agreed to be $___________, which amount represents the principal amount of the Bonds of $__________, plus net original issue premium of $________, less $_________, representing the Underwriters’ discount (such payment and delivery of the Bonds and the other actions contemplated hereby to take place at the time of such payment and delivery being herein sometimes called the “Closing”). As an accommodation to the Authority and the City, the Underwriters will pay, from the purchase price of the Bonds, the sum of $_________ to Assured Guaranty Municipal Corp. (the “Municipal Bond Insurer”) as the premium for the Municipal Bond Insurer’s municipal bond insurance policy issued for the Bonds (the “Municipal Bond Insurance Policy”). The Authority and the City acknowledge and agree that (i) the purchase and sale of the Bonds pursuant to this Bond Purchase Agreement is an arm’s-length commercial transaction between the Authority and the City and the Underwriters; (ii) in connection with such transaction, the Underwriters are acting solely as principals and not as agents or fiduciaries of the Authority or the City; (iii) the Underwriters have not assumed a fiduciary responsibility in favor of the Authority or the City with respect to the offering of the Bonds or the process leading thereto (whether or not the Underwriters, or any affiliates of the Underwriters, have advised or are currently advising the Authority or the City on other matters) nor have they assumed any other obligation to the Authority or the City except the obligations expressly set forth in this Bond Purchase Agreement, (iv) the Underwriters have financial and other interests that differ from those of the Authority and the City; and (v) the Authority and the City have consulted with their own legal and financial advisors to the extent they deemed appropriate in connection with the offering of the Bonds. The Authority and the City hereby acknowledge receipt from the Underwriters of disclosures required by the Municipal Securities Rulemaking Board (“MSRB”) Rule G-17 (as set forth in MSRB Notice 2012-25 (May 7, 2012), relating to disclosures concerning the Underwriters’ role in the transaction, disclosures concerning the Underwriters’ compensation, conflict disclosures, if any, and disclosures concerning complex municipal securities financing, if any. 468

-3-
A Preliminary Official Statement of the City and the Authority, dated May 18, 2022 (together with the Appendices thereto, any documents incorporated therein by reference and any supplements or amendments thereto and as disseminated in its printed physical form or in electronic form in all respects materially consistent with such physical form, the “Preliminary Official Statement”), has been prepared for use in marketing the Bonds, and a final Official Statement relating to the Bonds, to be dated the date hereof, as amended to conform to the terms of this Purchase Contract, and with such changes and amendments as are mutually agreed to by the Authority, the City and the Representative, including the cover page, inside cover page, the appendices and all information incorporated therein by reference, is herein collectively referred to as the “Official Statement,” which shall be in substantially the form of the Preliminary Official Statement, with such changes and amendments thereto as may be mutually agreed upon by the Representative, the Authority and the City. The Bonds shall be dated their date of delivery, and shall have the maturities, bear interest at the rates, have reoffering yields, and be subject to redemption as shown on Exhibit A hereto. It shall be a condition to the Authority’s obligation to sell and to deliver the Bonds to the Underwriters and to the obligation of the Underwriters to purchase, to accept delivery of and to pay for the Bonds that the entire $__________ principal amount of the Bonds as authorized by the Indenture shall be sold and delivered by the Authority and accepted and paid for by the Underwriters at the Closing. The Underwriters may change the offering prices (or yields) of the Bonds from time to time at any time. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. The obligation of the Authority to sell and deliver the Bonds to the Underwriters shall also be conditioned upon the delivery by Best Best & Krieger, Riverside, California, Bond Counsel (“Bond Counsel”), of its approving legal opinion with respect to the Bonds. The Authority and the City hereby authorize the Underwriters to use and distribute the Lease Agreement, the Indenture and the Preliminary Official Statement, and the information contained in such documents in connection with the public offering and sale of the Bonds. The Authority and the City have authorized the use of the Preliminary Official Statement in connection with the public offering of the Bonds by the Underwriters prior to the date hereof. The obligation of the City to make Base Rental Payments under the Lease Agreement does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the Bonds nor the obligation of the City to make Base Rental Payments under the Lease Agreement constitutes a debt of the Authority, the City, the State of California or any of its political subdivisions in contravention of any constitutional or statutory debt limitation or restriction. The obligation of the City to make Base Rental Payments, as set forth in the Lease Agreement, shall be deemed to be and shall be construed to be a ministerial duty imposed by law and it shall be the ministerial duty of each and every public official of the City to take such actions and do such things as are required by law in the performance of such duty, subject to abatement in the event of damage or destruction to, or condemnation of, the Leased Property or a portion thereof. 2. Bona Fide Public Offering. The Underwriters agree to make a bona fide public offering of all of the Bonds, at prices not in excess of the initial public offering yields or prices set forth on the inside cover page of the Official Statement. Subject to Section 3(c), the Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices; provided, however, that the Underwriters may offer a portion of the Bonds for sale to selected 469

-4-
dealers who are members of the Financial Industry Regulatory Authority, and the Underwriters reserve the right to change such offering prices or yields as the Underwriters shall deem necessary in connection with the marketing of the Bonds and to offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) and others at prices lower than the initial offering prices or at yields higher than the initial yields set forth on Exhibit A attached hereto. The Underwriters also reserve the right to over-allot or effect transactions that stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market and to discontinue such stabilizing, if commenced, at any time. None of such activities shall affect the principal amounts, maturity dates, interest rates, redemption or other provision of the Bonds or the amount to be paid by the Underwriters to the Authority for the Bonds. 3. Establishment of Issue Price. (a) The Underwriters agree to assist the Authority and the City in establishing the issue price of the Bonds and shall execute and deliver to the Authority and the City at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Representative, the Authority, the City and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. All actions to be taken by the Authority and the City under this Section 3 to establish the issue price of the Bonds may be taken on behalf of the Authority and the City by the City’s municipal advisor identified herein and any notice or report to be provided to the Authority and the City may be provided to the City’s municipal advisor. (b) The Authority and the City will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Bond Purchase Agreement, the Representative shall report to the Authority and the City the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Representative agrees to promptly report to the Authority and the City the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public. (c) The Underwriters confirm that any selling group agreement and any retail distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such retail distribution agreement, as applicable, to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the Representative that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (B) comply with the hold-the-offering-price rule, if applicable, in each case if and for so long as directed by the Representative. The Authority and the City acknowledge that, in making the representation set forth in this subsection, the Underwriters will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold-the-offering-price rule, if applicable, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a retail distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer 470

-5-
that is a party to such agreement to comply with the hold-the-offering-price rule, if applicable, as set forth in the retail distribution agreement and the related pricing wires. The Authority and the City further acknowledge that the Underwriters shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a retail distribution agreement, to comply with its corresponding agreement regarding the hold-the-offering-price rule as applicable to the Bonds. (d) The Underwriters acknowledge that sales of any Bonds to any person that is a related party to the Underwriters shall not constitute sales to the public for purposes of this Section 3. Further, for purposes of this Section 3: (i) “public” means any person other than an underwriter or a related party, (ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the Authority and the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the public), (iii) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and (iv) “sale date” means the date of execution of this Bond Purchase Agreement by all parties. 4. The Bonds. The Bonds will be issued, executed and delivered pursuant to the Indenture. The City Council of the City has adopted a resolution on May 17, 2022, relating to the Bonds (the “City Resolution”). This Bond Purchase Agreement, the Ground Lease, the Lease Agreement and the Continuing Disclosure Certificate (hereinafter defined) are collectively referred to as the “City Documents.” This Bond Purchase Agreement, the Indenture, the Ground Lease, the Lease Agreement and the Assignment Agreement are collectively referred to as the “Authority Documents.” 5. Official Statement, Continuing Disclosure. (a) The Authority and the City represent that they have deemed the Preliminary Official Statement to be final as of its date, except for either revisions or additions to the offering price(s), interest rate(s), yield(s) to maturity, selling compensation, aggregate principal amount, principal amount per maturity, delivery date, rating(s) and other terms of the Bonds which depend upon the foregoing as provided in and pursuant to Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”). 471

-6-
(b) The Underwriters agree that, prior to the time the final Official Statement is available, the Underwriters will send to any potential purchaser of the Bonds, upon the request of such potential purchaser, a copy of the most recent Preliminary Official Statement. Such Preliminary Official Statement shall be sent by first class mail (or other equally prompt means) not later than the second business day following the date upon which each such request is received. (c) The Authority agrees to deliver to the Underwriters, at such addresses as the Underwriters shall specify, as many copies of the final Official Statement relating to the Bonds as the Underwriters shall reasonably request as necessary to comply with paragraph (b)(4) of the Rule and with Rule G-32, Rule G-36 and all other applicable rules of the Municipal Securities Rulemaking Board. The Authority agrees to deliver such copies of the Official Statement within seven business days after the execution hereof. The Underwriters agree to give notice to the Authority on the date after which the Underwriters shall no longer be obligated to deliver copies of the Official Statement pursuant to paragraph (b)(4) of the Rule, which date shall be no earlier than 25 days after the “end of the underwriting period,” as determined in accordance with Section 15 herein. (d) Prior to the earlier of (i) receipt of notice from the Underwriters that no participating underwriter, as such term is defined in the Rule, remains obligated to deliver Official Statements pursuant to paragraph (b)(4) of the Rule or (ii) 25 days after the date of the Closing (as defined below), the Authority and the City shall provide the Underwriters with such information regarding the Authority and the City, each of their current financial conditions and ongoing operations as the Underwriters may reasonably request. (e) The City hereby covenants and agrees that it will, on or prior to the Closing Date, enter into an undertaking for the benefit of the owners of the Bonds in which the City will undertake to provide financial information, operating data and notices of material events as required by paragraph (d)(2)(ii) of the Rule substantially in the form of Appendix E to the Official Statement (the “Continuing Disclosure Certificate”). 6. Representations, Warranties and Agreements of the City. The City represents, warrants and agrees as follows: (a) The City is a municipal corporation and general law city duly organized and validly existing under the Constitution and laws of the State of California. (b) The City has full legal right, power and authority (i) to enter into, execute and deliver the City Documents; and (ii) to carry out and consummate the transactions on its part contemplated by the City Documents and the Official Statement. (c) By all necessary official action, the City has duly authorized and approved the City Documents, has duly authorized and approved the Preliminary Official Statement and the Official Statement and approved the distribution thereof (including in electronic form), has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations in connection with the execution and delivery of the Bonds on its part contained in the City Documents, and the consummation by it of all other transactions contemplated by the City Documents in connection with the execution and delivery of the Bonds, all pursuant to the City Resolution adopted at a meeting duly called and held in accordance with the requirements of all applicable laws and at which a quorum of the members of the City Council was continuously present. The City Resolution has not been modified, amended or rescinded since the date of its adoption. 472

-7-
(d) The City is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of the State of California or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement (including, without limitation, the City Documents) or other instrument to which the City is a party which breach or default has or may have an adverse effect on the ability of the City to perform its obligations under the City Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the execution and delivery of the Bonds and the City Documents, and compliance with the provisions on the City’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City or under the terms of any such law, regulation or instrument, except as provided by the Bonds and the City Documents. (e) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations in connection with the execution and delivery of the Bonds under the City Documents or the consummation by it of all other transactions contemplated by the City Documents have been duly obtained, except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations under the City Documents have been duly obtained. (f) There is no action, suit, proceeding, inquiry or investigation, notice of which has been duly served on the City, at law or in equity before or by any court, government agency, public board or body, pending or to the best knowledge of the officer of the City executing this Bond Purchase Agreement, threatened against the City, affecting the existence of the City or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, execution or delivery of the Bonds pursuant to the Indenture, or contesting or affecting as to the City the validity or enforceability of the City Documents, or contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the City to cause the execution and delivery or adoption by the City of the City Documents, or in any way contesting or challenging the consummation of the transactions contemplated hereby or thereby; nor, to the best knowledge of the City, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity of the Bonds or the authorization, execution, delivery or performance by the City of the City Documents. (g) The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriters as the Underwriters may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate and (ii) to determine the eligibility of the Bonds for investment under the laws of such 473

-8-
states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that the City shall not be required to execute a general or special consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction, and the Underwriters shall bear all costs in connection with the foregoing. (h) As of the date thereof, the Preliminary Official Statement (other than information therein regarding DTC or its book-entry system, information relating to the Municipal Bond Insurer and the Municipal Bond Insurance Policy, or any information provided by the Underwriters) did not, except for the omission of certain information permitted to be omitted in accordance with the Rule, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (i) At the time of the City’s acceptance hereof, and (unless an event occurs of the nature described in paragraph (k) of this Section 6) at all times subsequent thereto up to and including the Closing Date, the Official Statement (other than information therein regarding DTC or its book-entry system, information relating to the Municipal Bond Insurer and the Municipal Bond Insurance Policy or any information provided by the Underwriters) did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (j) If the Official Statement is supplemented or amended pursuant to paragraph (k) of this Section 6, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto up to and including the Closing Date, the Official Statement (other than information therein provided by the Underwriters) as so supplemented or amended will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (k) If between the date of this Bond Purchase Agreement and that date which is 25 days after the end of the underwriting period (as determined in accordance with Section 15 hereof) any event of which the officer of the City executing this Bond Purchase Agreement has knowledge shall occur affecting the City which might adversely affect the marketability of the Bonds or the market prices thereof, or which might cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the City shall notify the Underwriters thereof, and if in the opinion of the Representative such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will at its expense prepare and furnish to the Underwriters a reasonable number of copies of such supplement to, or amendment of, the Official Statement in a form and in a manner approved by the City, Bond Counsel, Disclosure Counsel and the Representative. (l) Any certificate signed by any officer of the City and delivered to the Underwriters pursuant to the City Documents or any document contemplated thereby or required for the valid execution and delivery of the Bonds shall be deemed a representation and warranty by the City to the Underwriters as to the statements made therein. (m) The City will cause the proceeds from the sale of the Bonds to be paid to the Trustee for the purposes specified in the Indenture and the Official Statement. So long as any of the Bonds are outstanding and except as may be authorized by the Lease Agreement, the City will 474

-9-
not issue or sell, or cause to be issued or sold, any bonds or other obligations, other than the Bonds delivered thereunder, the interest on and premium, if any, or principal of which will be payable from Base Rental Payments. 7. Representations, Warranties and Agreements of the Authority. The Authority represents, warrants and agrees as follows: (a) The Authority is a joint exercise of powers entity duly organized and validly existing under the laws of the State of California pursuant to a Joint Exercise of Powers Agreement between the City and the Ontario Housing Authority, dated as of June 1, 2013 (the “JPA Agreement”). (b) The Authority has full legal right, power and authority (i) to enter into, execute and deliver the Authority Documents and to sell and deliver the Bonds to the Underwriters as provided herein; and (ii) to carry out and consummate the transactions on its part contemplated by the Authority Documents and the Official Statement. (c) By all necessary official action, the Authority has duly authorized and approved the issuance of the Bonds and the Authority Documents, has duly authorized and approved the Preliminary Official Statement and the Official Statement and approved the distribution thereof (including in electronic form), has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations in connection with the execution and delivery of the Bonds on its part contained in the Bonds and the Authority Documents, and the consummation by it of all other transactions contemplated by the Authority Documents in connection with the execution and delivery of the Bonds, all pursuant to the Authority Resolution adopted at a regular meeting duly called and held in accordance with the requirements of all applicable laws and at which a quorum of the board members of the Authority was continuously present. The Authority Resolution has not been modified, amended or rescinded since the date of its adoption and each Authority Document is or will be, when delivered, as applicable, the valid and binding obligation of the Authority. (d) The Authority is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of the State of California or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or the JPA Agreement, or any loan agreement, indenture, bond, note, resolution, agreement (including, without limitation, the Authority Documents) or other instrument to which the Authority is a party which breach or default has or may have an adverse effect on the ability of the Authority to perform its obligations under the Bonds or the Authority Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the execution and delivery of the Bonds and the Authority Documents, and compliance with the provisions on the Authority’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Authority or under the terms of any such law, regulation or instrument, except as provided by the Bonds and the Authority Documents. (e) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a 475

-10-
condition precedent to or the absence of which would materially adversely affect the due performance by, the Authority of its obligations in connection with the issuance of the Bonds under the Authority Documents or the consummation by it of all other transactions contemplated by the Authority Documents, including all filings with the California Secretary of State, have been duly obtained, except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the Authority of its obligations under the Bonds and the Authority Documents have been duly obtained. (f) The Bonds, when executed, issued, authenticated and delivered in accordance with the Indenture, and sold to the Underwriters as provided herein, will be validly executed and outstanding obligations, entitled to the benefits of the Indenture, and upon such execution and delivery, the Indenture will provide, for the benefit of the Owners from time to time of the Bonds, the legally valid and binding security interest it purports to create. (g) There is no action, suit, proceeding, inquiry or investigation, notice of which has been duly served on the Authority, at law or in equity before or by any court, government agency, public board or body, pending or to the best knowledge of the officer of the Authority executing this Bond Purchase Agreement, threatened against the Authority, affecting the existence of the Authority or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance, execution or delivery of the Bonds pursuant to the Indenture, or contesting or affecting as to the Authority the validity or enforceability of the Bonds or the Authority Documents, or contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the Authority to issue the Bonds, or the execution and delivery or adoption by the Authority of the Authority Documents, or in any way contesting or challenging the consummation of the transactions contemplated hereby or thereby; nor, to the best knowledge of the Authority, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity of the Bonds or the authorization, execution, delivery or performance by the Authority of the Bonds or the Authority Documents. (h) The Authority will furnish such information, execute such instruments and take such other action in cooperation with the Underwriters as the Underwriters may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that the Authority shall not be required to execute a general or special consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction, and the Underwriters shall bear all costs in connection with the foregoing. (i) As of the date thereof, the information in the Preliminary Official Statement under the caption “THE AUTHORITY” did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 476

-11-
(j) At the time of the Authority’s acceptance hereof, and (unless an event occurs of the nature described in paragraph (l) of this Section 5) at all times subsequent thereto up to and including the Closing Date, the information under the caption “THE AUTHORITY” in the Official Statement (other than information therein regarding DTC or its book-entry system, information relating to the Municipal Bond Insurer and the Municipal Bond Insurance Policy or any information provided by the Underwriters) did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (k) If the Official Statement is supplemented or amended pursuant to paragraph (l) of this Section 7, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto up to and including the Closing Date, the Official Statement (other than information therein regarding DTC or its book-entry system, information relating to the Municipal Bond Insurer and the Municipal Bond Insurance Policy or any information provided by the Underwriters) as so supplemented or amended will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (l) If between the date of this Bond Purchase Agreement and that date which is 25 days after the end of the underwriting period (as determined in accordance with Section 15 hereof) any event of which the officer of the Authority executing this Bond Purchase Agreement has knowledge shall occur affecting the Authority which might adversely affect the marketability of the Bonds or the market prices thereof, or which might cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Authority shall notify the Underwriters thereof, and if in the opinion of the Representative such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will at its expense prepare and furnish to the Underwriters a reasonable number of copies of such supplement to, or amendment of, the Official Statement in a form and in a manner approved by the City, Bond Counsel, Disclosure Counsel and the Representative. (m) Any certificate signed by any officer of the Authority and delivered to the Underwriters pursuant to the Authority Documents or any document contemplated thereby or required for the valid execution and delivery of the Bonds shall be deemed a representation and warranty by the Authority to the Underwriters as to the statements made therein. (n) The Authority will cause the proceeds from the sale of the Bonds to be paid to the Trustee for the purposes specified in the Indenture and the Official Statement. So long as any of the Bonds are outstanding and except as may be authorized by the Indenture, the Authority will not issue or sell any bonds or other obligations, other than the Bonds delivered thereunder, the interest on and premium, if any, or principal of which will be payable from the Revenues. (o) The Authority shall honor all other covenants on its part contained in the Indenture and the Lease Agreement which are incorporated herein and made a part of this Bond Purchase Agreement. (p) The requirements of Section 3.07(e) and (f) of the Indenture relating to Additional Bonds have been met. 8. Closing. At 8:00 A.M., Pacific Daylight time, on June 8, 2022, or on such other date time, as may be mutually agreed upon by the Authority, the City and the Representative (the 477

-12-
“Closing Date”), the Authority will, subject to the terms and conditions hereof, deliver to the Underwriters, through the facilities of The Depository Trust Company (“DTC”), or at such other place as the Authority, the City and the Representative may mutually agree, the Bonds in definitive, fully registered form (one Bond for each maturity), duly executed and registered in the name of Cede & Co. as nominee of DTC; and, subject to the terms and conditions hereof, the Representative shall wire to the Trustee Federal Reserve Bank Funds in the amount of the purchase price of the Bonds. 9. Closing Conditions. The Underwriters have entered into this Bond Purchase Agreement in reliance upon the representations and warranties of the Authority and the City contained herein, and in reliance upon the representations and warranties to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the Authority and the City of its obligations hereunder, both as of the date hereof and as of the Closing Date. Accordingly, the Underwriters’ obligations under this Bond Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the Authority and the City of their respective obligations to be performed hereunder and under such documents and instruments at or prior to the Closing Date, shall be subject, at the option of the Underwriters, to the accuracy in all material respects of the statements of the officers and other officials of the Authority and of the City, authorized representatives of Bond Counsel, the Trustee, and the City Attorney made in any certification or other documents furnished pursuant to the provisions hereof, and shall also be subject to the following additional conditions: (a) The respective representations and warranties of the Authority and the City contained herein shall be true, complete and correct on the date hereof and on and as of the Closing Date, as if made on the Closing Date; (b) At the time of Closing, the City Documents and the Authority Documents shall be in full force and effect in accordance with their terms and shall not have been amended, modified or supplemented and the Official Statement shall not have been supplemented or amended, except in any such case as may have been agreed to by the Representative; (c) All necessary official action of the Authority, the City and of the other parties thereto relating to the City Documents and the Authority Documents shall have been taken and shall be in full force and effect and shall not have been amended, modified or supplemented in any material respect; (d) Subsequent to the date hereof, there shall not have occurred any change in or affecting particularly the Authority, the City or the Bonds, as the foregoing is described in the Official Statement, which in the reasonable opinion of the Representative materially impairs the investment quality of the Bonds; and (e) At or prior to the Closing Date, the Underwriters shall have received copies of each of the following documents: (i) The Official Statement and each supplement or amendment, if any, thereto, executed by authorized officers of the Authority and the City; (ii) A copy of the Indenture, executed by the parties thereto; (iii) A copy of the Ground Lease, executed by the parties thereto; (iv) A copy of the Lease Agreement, executed by the parties thereto; 478

-13-
(v) A copy of the Assignment Agreement, executed by the parties thereto; (vi) A copy of the Continuing Disclosure Certificate, executed by the City; (vii) A certified copy of the JPA Agreement; (viii) A certificate or certificates of the City, dated the Closing Date, to the effect that: (A) the representations and warranties of the City contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date and the City has complied with all of the terms and conditions of this Purchase Agreement required to be complied with by the City at or prior to the Closing Date; (B) none of the proceedings or authority for (i) the authorization, sale, execution and delivery of the Bonds, (ii) the adoption of the City Resolution, or (iii) the execution and delivery of the City Documents and performance of its obligations thereunder, has been repealed, modified, amended, revoked or rescinded; (C) except as described in the Official Statement, subsequent to June 30, 20__, and prior to Closing, there have been no material adverse changes in the financial position of the City; (D) no event affecting the City has occurred since the date of the Official Statement that should be disclosed in the Official Statement for the purposes for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; and (E) No consent is required for the inclusion of the City’s 20__ audited financial statements in the Official Statement; (ix) A certificate or certificates of the Authority, dated the Closing Date, to the effect that: (A) the representations and warranties of the Authority contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date and the Authority has complied with all of the terms and conditions of this Purchase Agreement required to be complied with by the Authority at or prior to Closing Date; (B) none of the proceedings or authority for (i) the authorization, sale, execution and delivery of the Bonds, (ii) the adoption of the Authority Resolution, or (iii) the execution and delivery of the Authority Documents, has been repealed, modified, amended, revoked or rescinded; and (C) no event affecting the Authority has occurred since the date of the Official Statement that should be disclosed in the Official Statement for the purposes for which it is to be used or which it is necessary to disclose therein in 479

-14-
order to make the statements and information therein not misleading in any material respect; (x) An opinion or opinions, dated the Closing Date and addressed to the Underwriters and the Trustee, of the City Attorney, to the effect that: (A) The City is a municipal corporation and general law city duly organized and validly existing under the Constitution and laws of the State of California; (B) The City Documents have been duly approved by a resolution of the City adopted at a meeting duly called and held in accordance with the requirements of all applicable laws, with all public notice required by law, and at which a quorum of the members of the City Council was continuously present and such resolution has not been modified, amended or rescinded since the date of its adoption; (C) Except as described in the Official Statement, there is no litigation, inquiry, or investigation pending or to the best of such counsel’s knowledge after due inquiry, threatened, which: (1) challenges the right or title of any member or officer of the City to hold his or her office or exercise or perform the powers and duties pertaining thereto; (2) challenges the validity or enforceability of the Bonds or the City Documents; (3) seeks to restrain or enjoin the sale of the Bonds or the execution and delivery by the City of, or the performance by the City of its legal obligations under, the City Documents or in which a final adverse decision could materially adversely affect the operations of the City with respect to the Leased Property; or (4) contests in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, nor, to the best of such counsel’s knowledge, is there any basis therefor; (D) The execution and delivery by the City of, and the performance by the City of its obligations under, the City Documents, do not conflict with, violate or constitute a default under any provision of any law, court order or decree or any contract, instrument or agreement to which the City is a party or by which it is bound and of which such counsel has knowledge; (E) The City Documents have been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery of the City Documents by the parties thereto other than the City, the City Documents constitute legal, valid and binding agreements of the City, enforceable against the City in accordance with their respective terms except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights and remedies in general, or by the application of equitable principles if equitable remedies are sought; (F) Except as may be required under the “blue sky” or securities laws of the United States or any state, there is no authorization, approval, consent or other order of, or filing with, or certification by, the State or any other governmental authority or agency within the State having jurisdiction over the City required for the issuance of the Bonds or the consummation by the City of the other financial transactions contemplated by the Official Statement and the City Documents; and 480

-15-
(G) Based on the information made available to the City Attorney in its role as City Attorney to the City, and without having undertaken to determine independently or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement, nothing has come to its attention which would lead it to believe that the Official Statement as of its date and as of the date of Closing (excluding therefrom the financial and statistical data and forecasts included therein, and information relating to the Authority and the Depository Trust Company and its book entry system, as to which no opinion is expressed) contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (xi) An opinion or opinions, dated the Closing Date and addressed to the Underwriters and the Trustee, of the City Attorney, as counsel for the Authority, to the effect that: (A) The Authority is a joint exercise of powers authority duly organized and validly existing under the laws of the State of California pursuant to the JPA Agreement; (B) The Authority Documents have been duly approved by the Authority Resolution adopted at a regular meeting duly called and held in accordance with the requirements of all applicable laws, with all public notice required by law, and at which a quorum of the members of the Board of the Authority was continuously present and such resolution has not been modified, amended or rescinded since the date of its adoption; (C) Except as described in the Official Statement, there is no litigation, inquiry, or investigation pending to the best of such counsel’s knowledge after due inquiry, or threatened, which: (1) challenges the right or title of any Board member or officer of the Authority to hold his or her office or exercise or perform the powers and duties pertaining thereto; (2) challenges the validity or enforceability of the Bonds or the Authority Documents; (3) seeks to restrain or enjoin the sale of the Bonds or the execution and delivery by the Authority of, or the performance by the Authority of its legal obligations under, the Authority Documents or in which a final adverse decision could materially adversely affect the operations of the Authority with respect to the Leased Property; or (4) contests in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, nor, to the best of such counsel’s knowledge, is there any basis therefor; (D) The execution and delivery by the Authority of, and the performance by the Authority of its obligations under, the Authority Documents, do not conflict with, violate or constitute a default under any provision of any law, court order or decree or any contract, instrument or agreement to which the Authority is a party or by which it is bound and of which such counsel has knowledge; (E) The Authority Documents have been duly authorized, executed and delivered by the Authority and, assuming due authorization, execution and delivery of the Authority Documents by the parties thereto other than the Authority, the Authority Documents constitute legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance 481

-16-
with their respective terms except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights and remedies in general, or by the application of equitable principles if equitable remedies are sought; (F) Except as may be required under the “blue sky” or securities laws of the United States or any state, there is no authorization, approval, consent or other order of, or filing with, or certification by, the State or any other governmental authority or agency having jurisdiction over the Authority required for the issuance of the Bonds or the consummation by the Authority of the other financial transactions contemplated by the Official Statement and the Authority Documents; and (G) Based on the information made available to such City Attorney in its role as counsel to the Authority, and without having undertaken to determine independently or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement under the captions entitled “THE AUTHORITY,” and “LITIGATION”, nothing has come to such City Attorney’s attention that would lead it to believe that the statements contained in the above-referenced captions as of the date of the Official Statement and as of the date of Closing (excluding therefrom the financial and statistical data and forecasts included therein, as to which no opinion is expressed) contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (xii) An opinion, dated the Closing Date and addressed to the Authority, of Bond Counsel, substantially in the form set forth in Appendix D to the Official Statement, together with a letter or letters from such counsel, dated the Closing Date and addressed to the Underwriters and the Trustee, to the effect that the foregoing opinion may be relied upon by the Underwriters and the Trustee to the same extent as if such opinion was addressed to them; (xiii) A supplemental opinion, dated the Closing Date and addressed to the Underwriters, of Bond Counsel, to the effect that: (A) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; (B) the Bond Purchase Agreement has been duly executed and delivered by the Authority and the City and is a valid and binding agreement of the Authority and the City; and (C) the statements contained in the Official Statement under the captions “THE 2022 BONDS,” “SECURITY AND SOURCES OF PAYMENT FOR THE 2022 BONDS” and “TAX MATTERS” and in APPENDIX B–SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” and APPENDIXD—FORM OF BOND COUNSEL OPINION, insofar as such statements expressly summarize certain provisions of the Indenture, the Lease Agreement and the final opinion of Bond Counsel concerning certain tax matters relating to the Bonds, are accurate in all material respects; 482

-17-
(xiv) A letter, dated the Closing Date and addressed to the Authority, the City and the Underwriters of Stradling Yocca Carlson & Rauth, a Professional Corporation, as disclosure counsel (“Disclosure Counsel”), to the effect that, based on among other things, (i) inquiries and discussions of various legal matters, (ii) review of and reliance on certain documents, certificates, instructions, records and opinions of counsel, and (iii) participation in meetings and telephone conferences with representatives of the Authority and the City, CSG Advisors Incorporated, as municipal advisor to the City, and others including the City Attorney and Underwriters’ counsel, during which the content of the Preliminary Official Statement and the Official Statement and related matters were discussed, no information has come to the attention of Disclosure Counsel with respect to the issuance of the Bonds which caused Disclosure Counsel to believe that (a) the Preliminary Official Statement as of its date or as of the Closing Date (excluding therefrom financial, demographic and statistical data; forecasts, projections, estimates, assumptions and expressions of opinions; information relating to DTC and its book-entry only system; information relating to the Municipal Bond Insurer and the Municipal Bond Insurance Policy; information under the captions “TAX MATTERS” and “UNDERWRITING”; and the Appendices to the Preliminary Official Statement, as to which we express no view) contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except for such information as is permitted to be excluded from the Preliminary Official Statement pursuant to Rule 15c2-12, including but not limited to information as to pricing, yields, interest rates, maturities, amortization, redemption provisions, ratings, debt service requirements, Underwriters’ discount and CUSIP numbers; or (b) the Official Statement as of its date and as of the Closing Date (excluding therefrom financial, demographic, statistical or economic or demographic data; forecasts, numbers, charts, tables, graphs, projections, estimates, assumptions and expressions of opinions; information relating to DTC and its book-entry only system or CUSIP numbers; information relating to the Municipal Bond Insurer and the Municipal Bond Insurance Policy; information under the captions “TAX MATTERS” and “UNDERWRITING”; and the Appendices to the Official Statement, as to which we express no view) contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. However, in providing advice and assistance as Disclosure Counsel, Disclosure Counsel provided no independent diligence on the MSRB’s Electronic Municipal Market Access website, and we express no view regarding the City’s or the City’s related entities’ compliance with any obligation to file annual reports or provide notice of events, each as described in Rule 15c2-12; (xv) the opinion of Quint & Thimmig LLP, as counsel to the Underwriters, dated the Closing Date and addressed to the Underwriters, in form and substance acceptable to the Representative. (xvi) A certificate of an authorized officer of the Trustee satisfactory to the Representative, certifying substantially as follows: (A) The Trustee is a national banking association duly organized and in good standing under the laws of the United States of America and has all necessary power and authority to enter into the Indenture and to perform its duties under the Indenture; (B) The Trustee is duly authorized to enter into the Indenture and to authenticate and deliver the Bonds to the Underwriters pursuant to the terms of 483

-18-
the Indenture and, when executed by the other parties thereto, the Indenture will constitute a legal, valid and binding obligation of the Trustee enforceable in accordance with its terms; (C) The Bonds have been duly authenticated and delivered to the Underwriters pursuant to direction from the Authority; (D) The Trustee is not in breach of or default under any law or administrative rule or regulation of the State of California or of any department, division, agency or instrumentality thereof, of any applicable court or administrative decree or order, or any other material instrument to which the Trustee is a party or is otherwise subject or bound and which would materially impair the ability of the Trustee to perform its obligations under the Indenture; (E) To its knowledge, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, is pending or threatened in any way against the Trustee affecting the existence of the Trustee or the titles of its directors or officers to their respective offices, or seeking to restrain or enjoin the execution, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture, or in any way contesting or affecting the validity or enforceability of the Bonds or the Indenture; (F) The execution and delivery of the Indenture will not conflict with or constitute a breach of or default under the Trustee’s duties under such documents, or any law, administrative regulation, court decree, resolution, articles of association, bylaws or other material agreement to which the Trustee is subject or by which it is bound; and (G) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the authentication and delivery of the Bonds, the execution and delivery of the Indenture, the performance of the Trustee’s duties under the Indenture or the consummation by the Trustee of the other transactions contemplated by the Indenture, except as such may be required under the state securities or blue sky laws in connection with the distribution of the Bonds by the Underwriters; (xvii) An opinion of counsel to the Trustee in form and substance acceptable to the Representative; (xviii) Evidence, satisfactory to Bond Counsel and the Underwriters, of insurance, including a CLTA title insurance policy, in compliance with the Lease Agreement; (xix) 15c2-12 certificates of City and the Authority; (xx) Certified copies of the City Resolution and the Authority Resolution; (xxi) a copy of the Municipal Bond Insurance Policy; (xxii) an opinion of counsel to the Municipal Bond Insurer, addressed to the Authority, the City and the Underwriters to the effect that:
484

-19-
(A) the descriptions of the Municipal Bond Insurer and the Municipal Bond Insurance Policy included in the Official Statement are accurate; (B) the Municipal Bond Insurance Policy constitutes the legal, valid and binding obligation of the Municipal Bond Insurer, enforceable in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditor’s rights generally and by the application of equitable principles if equitable remedies are sought, and (C) as to such other matters as the Authority, the City or the Underwriters may reasonably request; (xxiii) a certificate of the Municipal Bond Insurer, signed by an authorized officer of the Municipal Bond Insurer, to the effect that: (A) the information contained in the Official Statement relating to the Municipal Bond Insurer and the Municipal Bond Insurance Policy is true and accurate and (B) as to such other matters as the Authority, the City or the Underwriter may reasonably request; (xxiv) Evidence, satisfactory to the Representative, that the Bonds have been assigned the insured rating of “AA” and an underlying rating of “___“ by S&P Global Ratings, a Standard & Poor’s Financial Services LLC business; (xxv) The Blanket Letter of Representations of the Authority to DTC, relating to the book-entry only system; (xxvi) Transcripts of all proceedings relating to the authorization, issuance, execution and delivery of the Bonds certified by the City and the Authority as applicable; and (xxvii) Such additional legal opinions, certificates, instruments and other documents as the Underwriters may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the date of the Closing, of the City’s representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the City and the Authority on or prior to the date of the Closing of all the agreements then to be performed and conditions then to be satisfied by each of them. All the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Bond Purchase Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to Bond Counsel, Disclosure Counsel and the Representative. If the City shall be unable to satisfy the conditions to the obligations of the Underwriters to purchase, to accept delivery of and to pay for the Bonds contained in this Bond Purchase Agreement, or if the obligations of the Underwriters to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and none of the Underwriters, the Authority or the City shall be under any further obligation hereunder. 10. Termination. The Underwriters shall have the right to terminate the Underwriters’ obligations under this Bond Purchase Agreement to purchase, to accept delivery of and to pay 485

-20-
for the Bonds by notifying the Authority and the City in writing, of its election to do so, if, after the execution hereof and prior to the Closing: (a) the United States has become engaged in, or there has been an escalation of, hostilities which, in the reasonable opinion of the Underwriters, materially adversely affects the marketability or market price of the Bonds; (b) there shall have occurred the declaration of a general banking moratorium by any authority of the United States or the State of New York or the State of California; (c) an event shall have occurred, or been discovered as described in paragraph (k) of Section 6 or paragraph (l) of Section 7 hereof, which in the opinion of the Underwriters requires the preparation and publication of disclosure material or a supplement or amendment to the Official Statement; (d) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency in the State of California, or a decision by any court of competent jurisdiction within the State of California shall be rendered which, in the Representative’s reasonable opinion, materially adversely affects the market price of the Bonds; (e) there shall have occurred or any notice shall have been given of any intended downgrading, suspension, withdrawal or negative change in credit watch status by any national rating service to any of the Authority’s or the City’s obligations; (f) legislation shall be introduced, by amendment or otherwise, or be enacted by the House of Representatives or the Senate of the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by or on behalf of the Securities and Exchange Commission or other governmental agency having jurisdiction of the subject matter shall be made or proposed, to the effect that the execution, issuance, delivery, offering or sale of obligations of the general character of the Bonds, or the Bonds, as contemplated hereby or by the Official Statement, is or would be in violation of any provision of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect, or with the purpose or effect of otherwise prohibiting the issuance, offering or sale of obligations of the general character of the Bonds, or the Bonds, as contemplated hereby or by the Official Statement; (g) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange; (h) the New York Stock Exchange, or other national securities exchange or association or any governmental authority, shall impose as to the Bonds, or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by or the charge to the net capital requirements of broker-dealers; (i) trading in securities on the New York Stock Exchange or other national securities exchange or association shall have been suspended or limited or minimum prices have been established on either such exchange; (j) any action shall have been taken by any government in respect of its monetary affairs which, in the reasonable opinion of the Underwriters, has a material adverse effect on the 486

-21-
United States municipal securities market; or as of the date hereof that in the Representative’s reasonable opinion materially adversely affects the marketability or market price of the Bonds; or (k) the marketability of the Bonds or the market price thereof, in the reasonable opinion of the Underwriters, has been materially and adversely affected by disruptive events, occurrences or conditions in the securities or debt markets. If this Bond Purchase Agreement shall be terminated pursuant to this Section 10, or if the purchase provided for herein is not consummated because any condition to the Underwriters’ obligations hereunder is not satisfied or because of any refusal, inability or failure on the part of the City or the Authority to comply with any of the terms or to fulfill any of the conditions of this Bond Purchase Agreement, or if for any reason the City or the Authority shall be unable to perform all of its respective obligations under this Bond Purchase Agreement, neither the City nor the Authority shall be liable to the Underwriters for damages on account of loss of anticipated profits arising out of the transactions covered by this Bond Purchase Agreement. The Underwriters may, in their sole discretion, waive any of the conditions set forth in Section 9 or this Section 10. 11. Changes in Official Statement. After the Closing, neither the Authority nor the City will adopt any amendment of or supplement to the Official Statement to which the Underwriters shall reasonably object in writing. 12. Payment of Costs and Expenses. (a) All costs and expenses incident to the sale and delivery of the Bonds to the Underwriters shall be payable by the Authority from the proceeds of the Bonds, including, but not limited to: (i) the fees and expenses of the City, its counsel and consultants; (ii) the fees and expenses of the Authority, its counsel and consultants; (iii) the fees and expenses of Bond Counsel; (iv) the fees and expenses of Disclosure Counsel; (v) the fees and expenses of CSG Advisors Incorporated, the City’s municipal advisor; (vi) all expenses in connection with the preparation and printing of the Bonds; (vii) all expenses in connection with the preparation, printing, distribution and delivery of the Preliminary Official Statement, the Official Statement and any amendment or supplement thereto; (viii) the initial fees and expenses of the Trustee, including the reasonable fees and expenses of its counsel; (ix) the fees and expenses of any rating agency rating the Bonds; and (x) any credit enhancement costs for the Bonds. (b) The Underwriters shall pay all expenses incurred by it in connection with the public offering and distribution of the Bonds including, but not limited to: (i) all advertising expenses in connection with the offering of the Bonds; (ii) the fees and disbursements of Underwriters’ counsel, if any, and (iii) all out-of-pocket disbursements and expenses incurred by the Underwriters in connection with the offering and distribution of the Bonds, including, air travel and hotel accommodations in connection with the pricing of the Bonds; investor meetings, rating agency trips and meetings; the Closing; meals and transportation for the City, the Underwriters and other working group personnel during rating agency, investor meetings; pricing and Closing trips; expenses related to attending working group meetings, such as parking, meals and transportation and any other miscellaneous costs associated with the Closing; (iv) all other expenses incurred by the Underwriters in connection with the public offering and distribution of Bonds, except as provided in (a) above or as otherwise agreed to by the Underwriters and the City, and (v) the fees of the California Debt and Investment Advisory Commission. 487

-22-

13. Notices. Any notice or other communication to be given under this Bond Purchase Agreement may be given by delivering the same in writing: To the Authority: Ontario Public Financing Authority c/o City of Ontario 303 East B Street Ontario, CA 91764 Attention: Executive Director To the City: City of Ontario 303 East B Street Ontario, CA 91764 Attention: City Manager To the Underwriters Samuel A. Ramirez & Co., Inc., as Representative 633 West Fifth Street, Suite 2693 Los Angeles, CA 90071 Attention: _______________ 14. Parties in Interest. This Bond Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriters (including the successors or assigns of the Underwriters) and no other person shall acquire or have any right hereunder or by virtue hereof. All of the Authority’s and the City’s representations, warranties and agreements contained in this Bond Purchase Agreement shall remain operative and in full force and effect, regardless of: (a) any investigations made by or on behalf of the Underwriters; (b) delivery of and payment for the Bonds pursuant to this Bond Purchase Agreement; and (c) any termination of this Bond Purchase Agreement. 15. Determination of End of the Underwriting Period. For purposes of this Bond Purchase Agreement, the end of the underwriting period for the Bonds shall mean the earlier of (a) the Closing Date unless the City and the Authority have been notified in writing by the Representative, on or prior to the Closing Date, that the “end of the underwriting period” for the Bonds for all purposes of the Rule will not occur on the Closing Date, or (b) the date on which notice is given to the City and the Authority by the Representative in accordance with the following sentence. In the event that the Representative has given notice to the City and the Authority pursuant to clause (a) above that the “end of the underwriting period” for the Bonds will not occur on the Closing Date, the Underwriters agree to notify the City and the Authority in writing as soon as practicable following the “end of the underwriting period” for the Bonds for all purposes of the Rule. The Underwriters agree to file a copy of the Official Statement with each of the nationally recognized municipal securities information repositories. 16. No Assignment. This Bond Purchase Agreement is entered into between the City, the Authority and the Underwriters, and is solely for the benefit of the City, the Authority, the Underwriters and their respective successors or assigns, and no person other than the foregoing shall acquire or have any right under or by virtue of this Bond Purchase Agreement. All of the representations, warranties and agreements contained in this Bond Purchase Agreement shall survive the delivery of and payment for the Bonds and any termination thereof. 17. Effectiveness. This Bond Purchase Agreement shall become effective upon the execution of the acceptance by an authorized representative of the City and an authorized representative of the Authority and shall be valid and enforceable at the time of such acceptance. 18. Headings. The headings of the sections of this Bond Purchase Agreement are inserted for convenience only and shall not be deemed to be a part hereof. 488

-23-

19. Governing Law. This Bond Purchase Agreement shall be interpreted, governed and enforced in accordance with the laws of the State of California. 20. Counterparts. This Bond Purchase Agreement may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. If the foregoing is in accordance with your understanding of this Bond Purchase Agreement please sign and return to us the enclosed duplicate copies hereof, whereupon it will become a binding agreement among the City, the Authority and the Underwriters in accordance with its terms. Very truly yours, SAMUEL A. RAMIREZ & CO., INC. and CABRERA CAPITAL MARKETS, LLC and as Underwriters By SAMUEL A. RAMIREZ & CO., INC., as Representative By Name Title ONTARIO PUBLIC FINANCING AUTHORITY By Armen Harkalyan Treasurer Time of Execution: CITY OF ONTARIO By Armen Harkalyan Executive Director of Finance Time of Execution:
489

Exhibit A Page 1
EXHIBIT A MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, PRICES AND YIELDS $___________ ONTARIO PUBLIC FINANCING AUTHORITY 2022 Lease Revenue Bonds, Series A (Civic Center Improvements) Maturity Principal Interest (November 1) Amount Rate Yield Price c Priced to the 11/1/____ par call date. T Term Bonds Redemption Provisions Optional Redemption. The Bonds maturing on or after November 1, ____, are subject to optional redemption, in whole or in part, on any date on or after November 1, ____, in denominations of $5,000 or any integral multiple thereof, from and to the extent of prepaid Base Rental Payments paid pursuant to the Lease Agreement, at a Redemption Price equal to the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. Mandatory Sinking Fund Redemption. The Bonds with a stated maturity on November 1, ____, are subject to mandatory sinking fund redemption in part (by lot) on each November 1 on and after November 1, ____, in integral multiples of $5,000 at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule: Mandatory Sinking Mandatory Account Payment Dates Sinking Account (November 1) Payments † Maturity 490

Exhibit A Page 2
The Bonds with a stated maturity on November 1, ____, are subject to mandatory sinking fund redemption in part (by lot) on each November 1 on and after November 1, ____, in integral multiples of $5,000 at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule: Mandatory Sinking Mandatory Account Payment Dates Sinking Account (November 1) Payments † Maturity Special Mandatory Redemption from Insurance or Condemnation Proceeds. The Bonds shall be subject to redemption, in whole or in part, on any date, in denominations of $5,000 or any integral multiple thereof, from and to the extent of: (i) Net Insurance Proceeds received with respect to all or a portion of the Leased Property, deposited by the Trustee in the Redemption Fund pursuant to the Indenture, and (ii) eminent domain proceeds received pursuant to the Lease Agreement, at a Redemption Price equal to the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. 491

Exhibit B Page 1
EXHIBIT B ISSUE PRICE CERTIFICATE $___________ ONTARIO PUBLIC FINANCING AUTHORITY 2022 Lease Revenue Bonds, Series A (Civic Center Improvements) The undersigned, on behalf of Samuel A. Ramirez & Co., Inc., on behalf of itself and Cabrera Capital Markets, LLC, as underwriters (“Ramirez”), based on the information available to it, hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”). I. General 1. Ramirez and the City of South San Francisco Public Facilities Financing Authority and City of South San Francisco (collectively, the “Issuer”) have executed a bond purchase agreement in connection with the Bonds on the Sale Date. Ramirez has not modified the bond purchase agreement since its execution on the Sale Date. II. Price 1. 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 Schedule A. III. Defined Terms 1. 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. 2. Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriters or a Related Party to an Underwriters. 3. A person is a “Related Party” to an Underwriter if the Underwriter and the person are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other). 4. Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is May 25, 2022. 5. Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with Ramirez to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). All terms not defined herein shall have the same meanings as in the Tax Certificate with respect to the Bonds, to which this Certificate is attached. 492

Exhibit B Page 2
IV. Credit Ramirez has calculated that the present value of the amounts paid to obtain the Assured Guaranty Municipal Corp. (the “Municipal Bond Insurer”) municipal bond insurance policy (the “Policy”), using as the discount factor for this purpose the expected Yield with respect to the Bonds treating the fee paid as interest with respect to the Bonds. To the best of Ramirez’s knowledge, the fee paid to obtain the Policy was determined in arm’s-length negotiations and was required as a condition to the issuance by the Municipal Bond Insurer of the Policy. The Issuer may rely on the statements made herein in connection with its efforts to comply with the conditions imposed by the Internal Revenue Code of 1986, as amended (the “Code”). Bond Counsel may also rely on this Certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. However, notwithstanding the foregoing, we remind you that Ramirez is not an accountant or actuary, nor is Ramirez engaged in the practice of law. Accordingly, while Ramirez believes the calculations described above to be correct, it does not warrant their validity for purposes of Sections 103 and 141 through 150 of the Code or make any representation as to the legal sufficiency of the factual matters set forth herein. 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: June 8, 2022 SAMUEL A. RAMIREZ & CO., INC. and CABRERA CAPITAL MARKETS, LLC and as Underwriters By SAMUEL A. RAMIREZ & CO., INC., as Representative By Name Title 493

Exhibit B Page 3
SCHEDULE A TO ISSUE PRICE CERTIFICATE $___________ ONTARIO PUBLIC FINANCING AUTHORITY 2022 Lease Revenue Bonds, Series A (Civic Center Improvements) Maturity Principal Interest (November 1) Amount Rate Price c Priced to the 11/1/____ par call date. T Term maturity 494
Department: Police Department
Prepared By: Lizceth Zazueta
Staff Member Presenting:

Mike Lorenz, Chief of Police
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 24
SUBJECT:

FIRST READING OF ORDINANCE ADOPTING A MILITARY EQUIPMENT USE POLICY PURSUANT TO GOVERNMENT CODE SECTIONS 7070, ET. SEQ.

CITY OF ONTARIO
Agenda Report
May 17, 2022
SECTION:

ADMINISTRATIVE

REPORTS/DISCUSSION/ACTION

RECOMMENDATION:

That the City Council introduce and waive further reading of an Ordinance adopting the “Military Equipment” policy and approve the itemized military grade equipment currently in possession of the Ontario Police Department.

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Maintain the Current High Level of Public Safety
Pursue City's Goals and Objectives by Working with Other Governmental Agencies Operate in a Businesslike Manner
FISCAL IMPACT:

There is no direct fiscal impact associated with this action.

BACKGROUND & ANALYSIS:

Assembly Bill No. 481 was approved by Governor Newsom on September 30, 2021. The bill requires law enforcement agencies to obtain approval of the applicable governing body, by adoption of a military equipment use policy, as speciﬁed, by Ordinance at a regular meeting held pursuant to speciﬁed open meeting laws, prior to taking certain actions relating to the funding, acquisition, or use of military equipment. The bill also requires similar approval for the continued use of military equipment acquired prior to January 1, 2022. In addition, state or local law enforcement agencies must publish the policy on the agency's internet website and provide a copy of the policy to the Governor or the Governor's designee. The bill allows the governing body to approve the funding, acquisition, or use of military equipment within its jurisdiction only if it determines that the military equipment meets speciﬁed standards.

The bill requires the governing body to annually review the Ordinance and either approve, disapprove a renewal of the authorization for itemized military equipment, or amend the military equipment use policy if it determines, based on an annual military equipment report prepared by the law enforcement agency, that the military equipment does not comply with standards for approval. The second reading of this Ordinance will commence on June 7th, 2022 whereas City Council will be asked to adopt the Ordinance and approve the military grade equipment policy to include the itemized military grade equipment currently in possession of the Ontario Police Department.
495
ORDINANCE NO. _______

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ONTARIO,

CALIFORNIA, ADOPTING A MILITARY EQUIPMENT USE POLICY
PURSUANT TO GOVERNMENT CODE §§ 7070, ET. SEQ.

THE CITY COUNCIL OF THE CITY OF ONTARIO DOES HEREBY FIND AND RESOLVE AS FOLLOWS:

WHEREAS, on September 30, 2021, Governor Gavin Newsom signed into law Assembly Bill 481 (“AB 481”), adding Chapter 12.8, “Funding, Acquisition and Use of Military Equipment”, to Division 7 of Title 1 of the Government Code (sections 7070 – 7075), relating to the use of military equipment by California law enforcement agencies; and
WHEREAS, AB 481 seeks to provide transparency, oversight, and an opportunity for meaningful public input on decisions regarding whether and how military equipment is funded, acquired, or used; and
WHEREAS, the Ontario Police Department is in possession of certain items of equipment that qualify as “military equipment” under AB 481 and further intends to acquire other items of military equipment; and
WHEREAS, AB 481 requires, inter alia, that a law enforcement agency possessing and using such qualifying equipment must prepare a publicly released, written, military equipment use policy document covering the inventory, description, quantity, purpose, capabilities, use, lifespan, acquisition, maintenance, authorized use, fiscal impacts, procedures, training, oversight, and complaint process, applicable to the Department’s use of such equipment; and
WHEREAS, the policy must be approved by the City Council by ordinance, and reviewed annually thereafter; and
WHEREAS, the military equipment inventoried and presented to the City Council is necessary because there is no reasonable alternative that can achieve the same objective of officer and civilian safety; and
WHEREAS, the proposed Military Equipment Use Policy (“Policy”) will safeguard the public’s health, welfare, safety, civil rights, and civil liberties; and WHEREAS, the equipment is reasonably cost effective compared to available alternatives that can achieve the same objective of officer and civilian safety; and WHEREAS, prior military equipment use complied with the applicable equipment use policy (which included equipment now defined as military equipment) that was in effect at the time, or if prior uses did not comply with the accompanying military equipment use policy, corrective action has been taken to remedy nonconforming uses and ensure future compliance; and
496
WHEREAS, the Police Department has submitted the proposed Policy to the City Council and thereafter has made those documents available on the Police Department’s website for at least 30 days prior to the public hearing concerning the military equipment at issue; and
WHEREAS, the Policy satisfies the requirements of Government Code Section 7070(d); and
WHEREAS, the City Council of the City of Ontario, having received the information required under AB 481 regarding the Ontario Police Department’s use of military equipment as defined in said law, deems it to be in the best interest of the City to and hereby does approve the Military Equipment Policy.

WHEREAS, all legal prerequisites prior to the adoption of this Ordinance have occurred.

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF ONTARIO
HERBY ORDAINS AS FOLLOWS:

SECTION 1. Recitals. The City Council finds that all the recitals, facts, findings, and conclusions set forth above in the preamble of this Ordinance are true and correct.

SECTION 2. Approval of Military Equipment Policy.

Military Equipment Policy.
(a) The Military Equipment Policy shall govern the use of military equipment by the Ontario Police Department. (Exhibit A) (b) The Policy shall be made publicly available on the Police Department’s website for as long as the military equipment is available for use or as otherwise ordained by the City Council.
(c) The Police Department shall submit an annual military equipment report to the City Council containing the information required by Government Code Section 7072 and the City Council shall thereafter determine whether each type of military equipment identified therein complied with the standards for approval set forth in Government Code Section 7071(d). (Exhibit B)
(d) The City Council shall on an annual basis and at a regular meeting thereof review this ordinance and vote on whether to renew it pursuant to Government Code Section 7071(e)(2).
(e) The definitions set forth in Government Code section 7070 shall apply to this ordinance. Any provision of state law referred to herein shall mean and include any amended or successor provision thereof.

SECTION 3. Compliance with CEQA. Adoption of this Ordinance is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15061 (b)(3) (General Rule) of the CEQA Guidelines because it is not a “project” and because it can be seen with certainty that there is no possibility that the passage of this Ordinance will have a significant effect on the environment. 497
SECTION 4. Inconsistencies. Any provision of the Ontario Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent necessary to affect the provisions of this Ordinance.

SECTION 5. Uncodified Ordinance. This Ordinance shall not be codified in the Ontario Municipal Code unless and until the City Council so ordains.

SECTION 6. Severability. If any chapter, article, section, subsection, subdivision, sentence, clause, phrase, word, or portion of this Ordinance, or the application thereof to any person, is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portion of this Ordinance or its application to other persons. The City Council hereby declares that it would have adopted this Ordinance and each chapter, article, section, subsection, subdivision, sentence, clause, phrase, word, or portion thereof, irrespective of the fact that any one or more subsections, subdivisions, sentences, clauses, phrases, or portions of the application thereof to any person, be declared invalid or unconstitutional. No portion of this Ordinance shall supersede any local, state, or federal law, regulation, or codes dealing with life safety factors.

SECTION 7. Effective Date. This Ordinance shall become effective thirty (30) days following from its adoption.

SECTION 8. The Mayor shall sign this Ordinance and the City Clerk shall certify as to the adoption and shall cause a summary thereof to be published at least once, in a newspaper of general circulation in the City of Ontario, California within fifteen (15) days of the adoption. The City Clerk shall post a certified copy of this ordinance, including the vote for and against the same, in the Office of the City Clerk, in accordance with Government Code Section 36933.

PASSED, APPROVED, AND ADOPTED this ___ day of __________ 2022. ___________________________________
PAUL S. LEON, MAYOR
ATTEST:
_________________________________

SHEILA MAUTZ, CITY CLERK
498
APPROVED AS TO FORM:
_______________________________

BEST BEST & KRIEGER LLP

CITY ATTORNEY
499

STATE OF CALIFORNIA )

COUNTY OF SAN BERNARDINO )

CITY OF ONTARIO )
I, SHEILA MAUTZ, City Clerk of the City of Ontario, DO HEREBY CERTIFY that foregoing Ordinance No. _______ was duly introduced at a regular meeting of the City Council of the City of Ontario held May 17, 2022 and adopted at the regular meeting held ___________, 2022 by the following roll call vote, to wit:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:
_________________________________

SHEILA MAUTZ, CITY CLERK
(SEAL)
I hereby certify that the foregoing is the original of Ordinance No. _______ duly passed and adopted by the Ontario City Council at their regular meeting held ____________ and that Summaries of the Ordinance were published on ___________ and _____________, in the Inland Valley Daily Bulletin newspaper. __________________________________

Published with permission by Ontario Police Department ***DRAFT*** Military Equipment - 1 Military Equipment
708.1 PURPOSE AND SCOPE
The purpose of this policy ("Policy") is to provide guidelines for the approval, acquisition, and reporting requirements of military equipment pursuant to Assembly Bill 481 ("AB 481") (California Government Code section 7070, et seq.).
708.1.1 DEFINITIONS
Definitions related to this Policy include those provided in Government Code section 7070, and as follows:

Governing body – The City of Ontario City Council ("City Council").

Military equipment – Includes but is not limited to the following:
• Unmanned, remotely piloted, powered aerial or ground vehicles. • Mine-resistant ambush-protected ("MRAP") vehicles or armored personnel carriers. • High mobility multipurpose wheeled vehicles ("HMMWV)", two-and-one-half-ton trucks, five-ton trucks, or wheeled vehicles that have a breaching or entry apparatus attached.
• Tracked armored vehicles that provide ballistic protection to their occupants. • Command and control vehicles that are either built or modified to facilitate the operational control and direction of public safety units. • Weaponized aircraft, vessels, or vehicles of any kind. • Battering rams, slugs, and breaching apparatuses that are explosive in nature. This does not include a handheld, one-person ram.
• Firearms and ammunition of.50 caliber or greater, excluding standard-issue shotguns and standard-issue shotgun ammunition.
• Specialized firearms and ammunition of less than.50 caliber, including firearms and accessories identified as assault weapons in Penal Code section 30510 and Penal Code section 30515, with the exception of standard-issue firearms. • Any firearm or firearm accessory that is designed to launch explosive projectiles. • Noise-flash diversionary devices and explosive breaching tools. • Munitions containing tear gas or OC, excluding standard, service-issued handheld pepper spray.
• TASER® Shockwave, microwave weapons, water cannons, and long-range acoustic devices ("LRADs").
• Kinetic energy weapons and munitions.
• Any other equipment as determined by the City Council to require additional oversight. 501
Ontario Police Department
Ontario PD CA Policy Manual - May 05, 2014
Military Equipment
Copyright Lexipol, LLC 2022/05/12, All Rights Reserved.

Published with permission by Ontario Police Department ***DRAFT*** Military Equipment - 2 708.2 POLICY
It is the Policy of the City of Ontario Police Department ("Department") that members of this Department comply with the provisions of Government Code section 7070 et seq. with respect to the funding, acquisition, and use of military equipment. 708.3 MILITARY EQUIPMENT COORDINATOR
The Chief of Police will designate a member of this Department to act as the military equipment coordinator. The responsibilities of the military equipment coordinator include but are not limited to:
(a) Acting as liaison to the City Council for matters related to the requirements of this Policy.
(b) Identifying Department equipment that qualifies as military equipment in the current possession of the Department, or equipment the Department intends to acquire, that requires approval by the City Council.
(c) Conducting an inventory of all military equipment annually. (d) Collaborating with any allied agency that may use military equipment within the jurisdiction of the Department.
(e) Preparing for, scheduling, and coordinating the annual community engagement meeting to include:

1. Publicizing the details of the meeting; and

2. Preparing for public questions regarding the Department's funding, acquisition, and use of equipment.
(f) Preparing the annual military equipment report for submission to the Chief of Police and ensuring that the report is made available on the Department website (Government Code § 7072).
(g) Establishing the procedure for a person to register a complaint or concern, or how that person may submit a question about the use of a type of military equipment, and how the Department will respond in a timely manner.
708.4 MILITARY EQUIPMENT INVENTORY
The list of qualifying military equipment for the Department is attached to this Policy. 708.5 APPROVAL
The Chief of Police or the authorized designee shall obtain approval from the City Council by way of an ordinance adopting the Policy. As part of the approval process, the Chief of Police or the authorized designee shall ensure the proposed Policy is submitted to the City Council and is available on the Department website at least thirty (30) days prior to any public hearing concerning the military equipment at issue. The Policy must be approved by the governing body prior to engaging in any of the following:
a) Requesting military equipment made available pursuant to 10 USC § 2576(a). 502
Ontario Police Department
Ontario PD CA Policy Manual - May 05, 2014
Military Equipment
Copyright Lexipol, LLC 2022/05/12, All Rights Reserved.

Published with permission by Ontario Police Department ***DRAFT*** Military Equipment - 3 b) Seeking funds for military equipment, including but not limited to applying for a grant, soliciting or accepting private, local, state, or federal funds, in-kind donations, or other donations or transfers. c) Acquiring military equipment either permanently or temporarily, including by borrowing or leasing.
d) Collaborating with another law enforcement agency in the deployment or other use of military equipment within the jurisdiction of this Department.
e) Using any new or existing military equipment for a purpose, in a manner, or by a person not previously approved by the City Council.
f) Soliciting or responding to a proposal for, or entering into an agreement with, any other person or entity to seek funds for, apply to receive, acquire, use, or collaborate in the use of military equipment.
g) Acquiring military equipment through any means not provided above. 708.6 COORDINATION WITH OTHER JURISDICTIONS
On occasion, the Department may be required to assist other law enforcement agencies in a formal Law Enforcement Mutual Aid Request ("LEMA") or support with day-to-day operational collaboration (i.e., pursuits, investigative unit assistance, joint law enforcement operations, etc.).

In certain mutual aid or operational collaboration circumstances, it may be necessary for sworn Department members to utilize military equipment in order to fulfill an assigned mission (i.e., civil unrest, SWAT requests, barricaded suspects in a vehicle, etc.). When sworn Department members utilize military equipment in instances of mutual aid or law enforcement collaboration, the following shall apply:
a) Department members are required to adhere to the Department's Military Equipment Procedure and all policies and procedures outlined within the Department's Policy and Procedures Manual, regardless of operational jurisdiction.
b) Should the Police Department request mutual aid from another law enforcement agency within the City and military equipment is required during the course of the response, the following shall apply:
i. The Department will remain in charge of the overall incident command. ii. The Incident Commander or designee will brief the supervisor from the assisting agency and inform them of the mission, enforcement posture, and any pertinent information related to the incident.
iii. The assisting agency will adhere to their respective policies and procedures, particularly those governing the use of military equipment.
iv. If the Incident Commander or their designee is informed of or witnesses the utilization of military equipment by an assisting agency inconsistent with the guidelines set forth in this 503
Ontario Police Department
Ontario PD CA Policy Manual - May 05, 2014
Military Equipment
Copyright Lexipol, LLC 2022/05/12, All Rights Reserved.

Published with permission by Ontario Police Department ***DRAFT*** Military Equipment - 4 procedure, the Incident Commander may elect to cancel the request for mutual aid or re- assign the assisting agency to a different support mission. 708.7 COMPLIANCE
The use of military equipment is subject to individual Department Policies and Procedures, is restricted for use only in certain instances and, in some cases, only by certain units. It is incumbent upon incident commanders, supervisors, and individual officers to recognize the specific circumstances wherein military equipment should be employed to enhance the safety of the public and officers and to bring a critical incident to a safe resolution.

Department members are bound to adhere to this Department Policies and Procedures, in addition to state and local laws and ordinances when employing the use of themilitary equipment at any time. Violations of the law or Department Policies or Procedures may result in criminal or administrative investigations, and/or actions.

Administrative Investigations concerning complaints related to military equipment will be conducted in accordance with Department policy. These investigations may be subject to review by the Office of the Chief of Police to ensure that compliance with this military equipment procedure is maintained.

Any corrective action or discipline imposed as a result of a violation of this Department Procedure will be administered in accordance with the department policy, relevant employee organization memorandum of understanding (MOU), Civil Service Rules, and state law. 708.8 COMPLAINT PROCESS
In some instances, the application and use of military equipment can cause questions and/ or concerns for members of the community. It is of vital importance that community members' questions regarding the application and use of military equipment are addressed.

The Department is committed to full and fair investigation of citizen complaints. As such, the Department has sound internal procedures for thorough and impartial investigations of citizen complaints. Resolving complaints in a fair, impartial, and expeditious manner will ensure the consistent high level of integrity and efficiency maintained by the Department.

Complaints directly related to the application or use of military equipment shall be handled in accordance with department policy. The Department values open communication and transparency. Community questions and/or concerns regarding the application and use of specified military equipment should be addressed in the following manner:
a) Via the Department internet website where the public can email specific military equipment related questions to the Department.
b) At pre-determined Community Engagement Meetings related to military equipment. c) At City-Council Meetings related to military equipment. 504
Ontario Police Department
Ontario PD CA Policy Manual - May 05, 2014
Military Equipment
Copyright Lexipol, LLC 2022/05/12, All Rights Reserved.

Published with permission by Ontario Police Department ***DRAFT*** Military Equipment - 5 d) In all other circumstances, the public should be directed to the Department Military Equipment Procedure and Annual Military Equipment Report available on the Department's internet website.
708.9 ANNUAL REPORT
The Department shall submit to City Council an annual military equipment report for each type of military equipment approved by the City Council within one (1) year of approval, and annually thereafter for as long as the military equipment is available for use.

The Department shall also make each annual military equipment report required by this section publicly available on its internet website for as long as the military equipment is available for use. The Commanding Officer or their designee shall be responsible for the preparation and submission of the annual military equipment report. The annual military equipment report shall, at a minimum, include the following information for the immediate previous calendar year for each type of military equipment:
a) A summary of how the military equipment was used and the purpose of its use. b) A summary of any complaints or concerns received concerning the military equipment. c) The results of any internal audits, any information about violations of the military equipment use policy, and any actions taken in response, consistent with state law employee privacy restrictions. d) The total annual cost for each type of military equipment, including acquisition, personnel, training, transportation, maintenance, storage, upgrade, and other ongoing costs, and from what source funds will be provided for the military equipment in the calendar year following submission of the annual military equipment report.
e) The quantity possessed for each type of military equipment. f) If the Department intends to acquire additional military equipment in the next year, the quantity sought for each type of military equipment.
g) Within thirty (30) days of submitting and publicly releasing the annual military equipment report, the Department shall hold at least one (1) community engagement meeting, at which the general public may discuss and ask questions regarding the annual military equipment report and the Department's funding, acquisition, or use of military equipment. h) The City Council will determine, based on the annual military equipment report, whether each type of military equipment identified in the report has complied with the standards for approval as set forth by AB 481. If the City Council determines that a type of military equipment identified in the annual military equipment report has not complied with the standards as set forth by AB 481, it may either disapprove a renewal of the authorization for that type of military equipment or require modifications to this military equipment use procedure in a manner that will resolve lack of compliance.
505
- 1 -
Ontario Police Department Military Equipment Inventory

I. MILITARY EQUIPMENT TYPES AND USAGE GUIDELINES
The Department recognizes that critical incidents are unpredictable and can be very dynamic in nature. A variety of military equipment options can greatly assist incident commanders, officers, and specific units in bringing those incidents to a swift resolution in a safe manner. The use of military equipment is restricted for use only in certain instances and in some cases only by certain units. Whil e this procedure is wide -ranging, it is not all inclusive. There may be instances wherein unpredictable critical incidents demand the need for incident commanders to authorize military equipment to be used in a manner not outlined within this procedure. In scrutinizing those particular instances, the judgment of the incident commander influenced by the totality of the circumstances, public safety, officer safety, civil rights, and information available at the time will be used.

It is incumbent upon incident commanders, supervisors, individual officers, and specific units to recognize the particular circumstances wherein military equipment should be employed to enhance the safety of the public and officers, and to bring a critical incident to a safe resolution.

The following are the various types, descriptions, and guidelines for usage of military equipment currently employed by the Department.

A. Unmanned remotely piloted, powered aerial or ground vehicles

1. Small Unmanned Aircraft Systems (sUAS): An unmanned aircraft of any type that is capable of sustaining directed flight, whether pre-programmed or remotely controlled, and all of the supporting or attached systems designed for gathering information through imaging, recording or by any other means.

Capability: sUAS can support first responders in any hazardous incident which would benefit from an aerial perspective. These uses could include search and rescue, barricaded suspects or high-risk tactical operations, disaster response, and video and photographic documentation of crime scenes.

Usage: sUAS are to be used by trained pilots during high-risk operations, tactical operations, disaster response, and video and photographic documentation. These pilots receive regular training and flight hours and when applicable adhere to FAA regulations.

Training Requirements: Drone operators attended continual yearly training.

Fiscal Impact: See Appendix A
Lifespan: Approximately five (5) years.

The Department currently possesses the following types of sUAS:
506
- 2 -
a. Parrot Anafi Thermal (Quantity: 2)
Manufacturer: Parrot
Description: To balance the resolutions of the thermal image and visible image, and therefore benefit from information not visible in thermal, the displayed image is a fusion of the information from the two cameras. b. LOKI 1 (Quantity: 6)
Manufacturer: Sky-Hero
Description: A handheld drone designed for interior searches. The drone is controlled by a handheld remote control.
c. Evo II (Quantity: 1)
Manufacturer: Autel Robotics
Description: A handheld drone designed for exterior searches. The drone is controlled by a handheld remote control. It has the ability to record video for use with evidence collection.

2. Small Unmanned Tracked Robots: An unmanned tracked robot of any type that is capable of being remotely controlled as well as all of the supporting or attached systems designed for gathering information through imaging, recording or by any other means.

Capability: Small Unmanned Tracked Robots can support first responders in any hazardous incident which would benefit from a ground level perspective. These uses could include barricaded suspects or high -risk tactical operations, disaster response, and use in crawl spaces or confined isolated areas to assist in searches for suspects or evidence.

Usage: Small Unmanned Tracked Robots are to be used exclusively by the Special Weapons and Tactics (SWAT) unit during high-risk operations, disaster response, and in crawl spaces or confined isolated areas to assist in searches for suspects or evidence.

Training Requirements: SWAT Officers regularly train on safe robot deployment in a variety of operational settings.

Fiscal Impact: See Appendix A
Lifespan: Dragon Runner – Lifespan varies with operational usage and wear.

The Department currently possesses the following types of Small Unmanned Tracked Robot:
a. Dragon Runner (Quantity: 1)
Manufacturer: QinetiQm

507
- 3 -
Description: Lightweight, expandable, and one-man portable robot that offers protection and support to officers. Designed to provide situational awareness by ‘scouting out’ while the officers remain at a safe distance.

Designed for rapid tactical missions, the robot is simple to operate and quick to deploy for searching rooms, hallways, stairwells, and confined spaces. With rubber tracks, the Dragon Runner effortlessly climbs stairs. It also includes an extendible rotating claw arm that simplifies opening door handles.

B. Armored Personnel Carriers

1. BearCat: An armored rescue vehicle capable of providing high ballistic protection, cover, limited breaching capability, and transport of officers and/or civilians at critical incidents and high-risk tactical operations.

Capability: BearCats can support first responders in any hazardous, high risk, or critical incident which would benefit from having a vehicle that provides a high level of ballistic protection.

Usage: These uses could include active shooters, armed barricaded suspects, hostage situations, high-risk tactical operations, disaster response, officer/citizen rescues, and CBRNE (Chemical, Biological, Radiological, Nuclear, and Explosive) attacks and detection.

Training Requirements: Officers authorized to operate the BearCat are required to successfully complete in house training on its capabilities and must complete a driving assessment during the training period.

Fiscal Impact: See Appendix A
Lifespan: Approximately 20 years depending on operational usage and wear. The Department currently possesses the following types of BearCats:
a. BearCat G2 – 2 Door Model (Quantity: 1)
Manufacturer: Lenco
Description: The Lenco BearCat G2 is the standard armored rescue vehicle for special operations units within the US Law Enforcement community. The G2 has excellent on-road driving characteristics and maneuverability in tight urban settings. The large floor plan seats 10 –12 fully equipped officers or citizens.
b. BearCat G3 – 4 Door Model (Quantity: 1)
Manufacturer: Lenco
Description: The BearCat G3 provides Lenco’s proven armor system in a ruggedized off-road platform. The G3 utilizes the same body design, interior 508
- 4 -
features, and tactical options as the G2, but it comes standard with a heavier duty upgraded suspension and off -road tires, rims & run flats to provide enhanced off -road performance. The increased ground clearance and robust suspension allows for emergency response in rural regions and natural disaster scenarios where standard armored rescue vehicles would experience challenges.
c. BearCat G3 w/ P3E MARS Ramp System – 3 Door Model (Quantity: 1) Manufacturer: Lenco
Description: The BearCat G3 provides Lenco’s proven armor sy stem in a ruggedized off-road platform. The G3 utilizes the same body design, interior features, and tactical options as the G2, but it comes standard with a heavier duty upgraded suspension and off -road tires, rims & run flats to provide enhanced off -road performance. The increased ground clearance and robust suspension allows for emergency response in rural regions and natural disaster scenarios where standard armored rescue vehicles would experience challenges. This armored rescue vehicle is outfitted with the P3E MARS ramp system which allows officers to safely make entry into or rescue citizens from elevated structures.
d. Rook – (Quantity: 1)
Manufacturer: Ring Power
Description: The Rook is a tracked armored vehicle capable of deploying officers into a critical incident or rescue citizens during a critical incident. It features several attachments capable of moving objects, or vehicles to aide in the peace resolution of a critical incident. The attachments and vehicle also can be used in various natural disaster incidents.

C. Command and Control Vehicles

1. Mobile Command Vehicles: Completely self-contained command posts designed to provide the Incident Commander with a mobile base of operation.

Capability: As a mobile base of operation, these vehicles contain specialized command, control, and communications equipment to assist with this mission.

Usage: Mobile Command Vehicles are to be utilized as an Incident Command Post for planned or unplanned events. Vehicles are also equipped with specialized equipment to assist with numerous types of incidents.

Training Requirements: Officers are frequently train in the operations of Command vehicles.

Fiscal Impact: See Appendix A
509
- 5 -
Lifespan: No lifespan indicated by manufacturer. Dependent on operational usage and wear.

The Department currently possesses the following types of Mobile Command Vehicles:
a. SWAT Special Equipment Vehicle – (Quantity: 1)
The SWAT Special Equipment Vehicle is a non-armored vehicle used by SWAT personnel to transport special weapons and equipment to the scene of critical incidents. Once at an incident, it is also used as a SWAT and Tactical Operations Center (TOC).

Manufacturer: Custom Built International Chassis
Description: This vehicle is a custom build. It is capable of transporting various SWAT equipment to a critical incident. It is also outfitted with various radio and computers to aid the Incident Commander.
b. CP131 – Command Post Vehicle - (Quantity: 1)
Manufacturer: Custom Built Freightliner Chassis
Description: This vehicle is a custom-built truck which allows officers to aide in communicating with subjects during critical incidents or can be utilized as a command post during any type of situation.

D. Explosive Breaching Equipment

1. Explosive Breaching Equipment: During crisis situations, it may become necessary for a SWAT team to facilitate an entry into a target location. It is critical the point of entry is breached quickly and as safely as possible. A quick and effective breach is one key to a succes sful tactical mission. In some instances, an explosive breach may be required to provide an added degree of safety and tactical advantage in order to accomplish a mission.

A variety of specialized breaching equipment consisting of explosive materials are possessed by the Department. Explosive Breaching Equipment can only be used exclusively by the SWAT team’s dedicated breaching personnel.

Capability / Usage: Explosive breaching, the use of explosive materials to affect a breach, can be an effective option in SWAT team tactics. An effective breach is a design where the least amount of explosive material is used and still accomplishes its goal. An effective Explosive Breach can defeat fortified doors and walls. Effective breaching techniques allow tactical officers immediate entry with minimal risk to victims, officers, and suspects. An Explosive Breach should only be utilized after taking into consideration the overall mission, officer and citizen safety, the overall construction of the struc ture, the presence of unstable chemicals, explosives, or incendiary materials, and whether other means of 510
- 6 -
mechanical breaching would be effective and safe to use. The option to use an explosive breach shall be at the discretion of the SWAT Commander.

Training Requirements: Only SWAT Officers that are certified Explosive Breachers are authorized to utilize explosive breaches. SWAT Explosive Breachers must successfully complete a certified Explosive Breaching Course.

Additionally, SWAT Explosive Breachers must maintain proficiency with the use and handling of explosives and explosive breaching techniques.

Fiscal Impact: See Appendix A
Lifespan: Approximately five (5) years.

The Department currently possesses the following types of Explosive Breaching Equipment:
a. Explosive Breaching Equipment Kit – (Quantity: Various) Explosive Breaching Equipment consists of:

1. 50 grain Detonation Cord

2. 20 grain Boosters

3. C2 sheets

4. Shock-tube Blasting Cap
Manufacturer: Southwest Explosives
Description: Explosive breaching, the use of explosive materials to affect a breach, can be an effective option in SWAT team tactics. An effective breach is a design where the least amount of explosive material is used and still accomplishes its goal.

2. Breaching Shotguns and Breaching Ammunition: During crisis situations, it may become necessary for a SWAT team to facilitate an entry into a target location. It is critical the point of entry is breached quickly and as safely as possible. A quick and effective breach is one key to a successful tactical mission. In some instances, a breach initiated by a breaching shotgun loaded with specialized breaching rounds may be required to provide an added degree of safety and tactical advantage in order to accomplish a mission.

Specialized Breaching Rounds, also referred to as TKO round, are frangible and are designed to break into a powder form upon impact with a solid object (i.e., dead bolt lock, door frame, etc.)
The Department possesses a limited inventory of Breaching Shotguns and Breaching Shotgun Ammunition. Breaching Shotguns are to be used exclusively by trained members of the SWAT team.

Capability / Usage: Shotgun breaching, the use of a breaching shotgun to affect a breach, can be an effective option in SWAT team tactics. An effective breach is a 511
- 7 -
design where the least amount of breaching shotgun rounds is used and still accomplishes its goal. An effective shotgun breach can defeat fortified doors and locks. Effective breaching techniques allow ta ctical officers immediate entry with minimal risk to victims, officers, and suspects.

Training Requirements: SWAT team members regularly train on the use of shotgun breaching.

Fiscal Impact: See Annual Military Report
Lifespan: Remington 870 Police Magnum – Limited lifetime warranty.

Lifespan varies on operational usage and wear
Breaching Shotgun Ammunition – Five (5) year limited warranty.

Five (5) year shelf life.

The Department currently possesses the following types of breaching shotguns and breaching shotgun ammunition:
a. Remington 870 Police Magnum – (Quantity: 5)
Manufacturer: Remington
Description: The Remington 870 Police Magnum pump -action shotgun is a rugged 12-gauge with a short barrel backed by a stout 3” chamber. The all - matte black gun is parkerized for generalized durability and rust -resistance.

Both the pump action for-end and stock are robust and tough synthetic. b. TKO 12-Gauge Breaching Shotgun Rounds – (Quantity: 60) Manufacturer: Defense Technology
Description: The 12-Gauge TKO Breaching Round is a 12-Gauge shell loaded with a compressed zinc slug, utilizing smokeless powder as a propellant. This is a widely used method to breach door locks or hinges for entry during tactical operations. When properly deployed, the TKO is capable of defeating door lock mechanisms, doorknobs, hinges, dead bolts, safety chains, and pad locks on both wooden or hollow core doors. Upon impact with the target, the zinc slug disintegrates into a fine powder eliminating fragmentation.

Ontario City CouncilMay 17, 2022

Ontario City Council
May 17, 2022