The Trustee, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Authority or the City, and may act as agent, depository or trustee for any committee or body of Owners or of owners of obligations of the Authority or the City as freely as if it were not the Trustee hereunder.
The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers hereof and perform any rights and obligations required of it hereunder by or through agents, attorneys or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its rights and obligations hereunder, and the Trustee shall not be answerable for the negligence or misconduct of any such agent, attorney or receiver selected by it with reasonable care; provided, however, that in the event of any negligence or misconduct of any such attorney, agent or receiver, the Trustee shall in a commercially reasonable manner pursue all remedies of the Trustee against such agent, attorney or receiver. The Trustee shall not be liable for any error of judgment made by it in good faith unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
The Trustee shall not be answerable for the exercise of any trusts or powers hereunder or for anything whatsoever in connection with the funds established hereunder, except only for its own willful misconduct, negligence or breach of an obligation hereunder.
The Trustee shall not be deemed to have knowledge of an event of default unless it has actual knowledge thereof.
The Trustee may, on behalf of the Owners, intervene in any judicial proceeding to which the Authority or the City is a party and which, in the opinion of the Trustee and its counsel, affects the Bonds or the security therefor, and shall do so if requested in writing by the Owners of at least 5% of the aggregate principal amount of Bonds then Outstanding, provided that the Trustee shall have no duty to take such action unless it has been indemnified to its reasonable satisfaction against all risk or liability arising from such action.
The Trustee’s rights to immunities and protection from liability hereunder and its rights to payment of its fees and expenses shall survive its resignation or removal and final payment or defeasance of the Bonds.
All indemnifications and releases from liability granted herein to the Trustee shall extend to the directors, officers, employees and agents of the Trustee.
The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty, and the Trustee shall not be answerable for other than its negligence or willful default. The Trustee shall have no responsibility or liability with respect to any information, statements or recitals in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of these Bonds. The Trustee shall not be accountable for the use or application by the Borrower of any of the Bonds or the proceeds thereof or for the use or application of any money paid over by the Trustee in accordance with the provisions of this Indenture or for the use and application of money received by any paying agent. 951
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The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered using Electronic Means. (“Electronic Means ” shall mean the following communications methods: e -mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder). The Authority and the City shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions (“ Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the Authority whenever a person is to be added or deleted from the listing. If the Authority elects to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s understanding of such Instructions shall be deemed controlling. The Authority understands and agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Authority shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the Authority and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Authority. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Instructions notwithstanding the fact that such directions conflict or are inconsistent with a subsequent written instruction. The Authority agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Authority; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.
The Trustee shall not be liable to the parties hereto or deemed in breach or default hereunder if and to the extent its performance hereunder is prevented by reason of force majeure. The term “force majeure” means an occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care. Force majeure shall include but not be limited to acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences.
In acting or omitting to act pursuant to the Lease Agreement or Ground Lease, the Trustee shall be entitled to all of the rights, immunities and indemnities accorded to it under this Indenture and the Lease Agreement, including, but not limited to, this Article VIII. 952
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ARTICLE IX
MODIFICATION OR AMENDMENTS
Section 9.01 Modifications and Amendments Permitted.
(a) This Indenture and the rights and obligations of the Authority, the City, the Owners of the Bonds and the Trustee may be modified or amended from time to time and at any time by a Supplemental Indenture, which the Authority, the City and the Trustee may enter into with the written consent of the Owners of a majority in aggregate principal amount of all Bonds then Outstanding. No such modification or amendment shall: (i) extend the fixed maturity of any Bonds, or reduce the amount of principal thereof or the rate of interest thereon, or extend the time of payment, without the consent of the Owner of each Bond so affected; or (ii) reduce the aforesaid percentage of Bonds the consent of the Owners of which is required to effect any such modification or amendment; or (iii) permit the creation of any lien on the Base Rental Payments and other assets pledged under this Indenture prior to or on a parity with the lien created by this Indenture or deprive the Owners of the Bonds of the lien created by this Indenture on such Base Rental Payments and other assets (except as expressly provided in this Indenture), without the consent of the Owners of all of the Bonds then Outstanding. It shall not be necessary for the consent of the Bond Owners to approve the particular form of any Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance thereof.
(b) This Indenture and the rights and obligations of the Authority, the City, the Trustee and the Owners of the Bonds may also be modified or amended from time to time and at any time by a Supplemental Indenture, which the Authority, the City and the Trustee may enter into without the consent of any Bond Owners for any one or more of the following purposes:
(i) to add to the covenants and agreements of the Authority or the City in this Indenture contained other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Authority or the City; (ii) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision contained in this Indenture;
(iii) to provide for the issuance of one or more Series of Additional Bonds, and to provide the terms and conditions under which such Series of Additional Bonds may be issued, subject to and in accordance with the provisions of Article III hereof; (iv) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute;
(v) to modify, amend or supplement this Indenture in such manner as to cause interest on the Bonds to be excludable from gross income for purposes of federal income taxation by the United States of America; and
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(vi) in any other respect whatsoever as the Authority and the City may deem necessary or desirable, provided that such modification or amendment does not materially adversely affect the interests of the Bond Owners hereunder. (c) Promptly after the execution by the Authority, the City and the Trustee of any Supplemental Indenture, the Trustee shall mail a notice (the form of which shall be furnished to the Trustee by the Authority), by first class mail postage prepaid, setting forth in general terms the substance of such Supplemental Indenture, to the Owners of the Bonds at the respective addresses shown on the Registration Books. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture. (d) No Supplemental Indenture shall modify any of the rights or obligations of the Trustee without its prior written consent.
(e) In executing, or accepting the additional trusts created by, any Supplemental Indenture permitted by this Article or the modification thereby of the trusts created by this Indenture, the Trustee shall receive, and shall be fully protected in relying upon, an opinion addressed and delivered to the Trustee stating that the execution of such Supplemental Indenture is permitted by and in compliance with this Indenture and that the execution and delivery thereof will not in and of itself adversely affect the exclusion from federal gross income tax of interest on the Bonds.
Section 9.02 Effect of Supplemental Indenture . Upon the execution of any Supplemental Indenture pursuant to this Article, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Authority, the City, the Trustee and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Section 9.03 Endorsement of Bonds; Preparation of New Bonds . Bonds delivered after the execution of any Supplemental Indenture pursuant to this Article may, and if the Authority so determines shall, bear a notation by endorsement or otherwise in form approved by the Authority and the Trustee as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the Owner of any Bonds Outstanding at the time of such execution and presentation of his Bonds for the purpose at the Office of the Trustee a suitable notation shall be made on such Bonds. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the Authority and the Trustee, to any modification or amendment contained in such Supplemental Indenture, shall be prepared and executed by the Authority and authenticated by the Trustee, and upon demand of the Owners of any Bonds then Outstanding shall be exchanged at the Office of the Trustee, without cost to any Bond Owner, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in equal aggregate principal amount of the same interest rate and maturity.
Section 9.04 Amendment of Particular Bonds . The provisions of this Article shall not prevent any Bond Owner from accepting any amendment as to the particular Bonds held by such Owner.
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ARTICLE X
DEFEASANCE
Section 10.01 Discharge of Indenture . If the Authority shall pay or cause to be paid or there shall otherwise be paid to the Owners of all Outstanding Bonds the principal thereof and the interest and premium, if any, thereon at the times and in the manner stipulated herein and therein, then the Owners of such Bonds shall cease to be entitled to the pledge of the Base Rental Payments and the other assets as provided herein, and all agreements, covenants and other obligations of the Authority and the City to the Owners of such Bonds hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Authority and the City all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the City all money or securities held by it pursuant hereto which are not required for the payment of the principal of and interest and premium, if any, on such Bonds.
Subject to the provisions of the above paragraph, when any of the Bonds shall have been paid and if, at the time of such payment, the Authority and the City shall have kept, performed and observed all of the covenants and promises in such Bonds and in this Indenture required or contemplated to be kept, performed and observed by them on or prior to that time, then this Indenture shall be considered to have been discharged in respect of such Bonds and such Bonds shall cease to be entitled to the lien of this Indenture and such lien and all covenants, agreements and other obligations of the Authority and the City hereunder shall cease, terminate become void and be completely discharged as to such Bonds.
Notwithstanding the satisfaction and discharge of this Indenture or the discharge of this Indenture in respect of any Bonds, those provisions of this Indenture relating to the maturity of the Bonds, interest payments and dates thereof, exchange and transfer of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, non-presentment of Bonds, and the duties of the Trustee in connection with all of the foregoing, shall remain in effect and shall be binding upon the Trustee and the Owners of the Bonds and the Trustee shall continue to be obligated to hold in trust any moneys or investments then held by the Trustee for the payment of the principal of and interest and premium, if any, on the Bonds, to pay to the Owners of Bonds the funds so held by the Trustee as and when such payment becomes due. Notwithstanding the satisfaction and discharge of this Indenture or the discharge of this Indenture in respect of any Bonds, those provisions of this Indenture relating to the compensation and indemnity of the Trustee shall remain in effect and shall be binding upon the Trustee, the City and the Authority.
Section 10.02 Bonds Deemed To Have Been Paid . If moneys shall have been set aside and held by the Trustee for the payment or redemption of any Bonds and the interest thereon at the maturity or redemption date thereof, such Bonds shall be deemed to have been paid within the meaning and with the effect provided in Section 10.01 hereof. Any Outstanding Bonds shall, prior to the maturity date or redemption date thereof, be deemed to have been paid within the meaning of and with the effect expressed in Section 10.01 hereof if: (a) in case any of such Bonds are to be redeemed on any date prior to their maturity date, the Authority shall have given to the Trustee in form satisfactory to it irrevocable instructions to mail, on a date in accordance with the provisions of Section 4.02 hereof, notice of redemption of such Bonds on said redemption date, said notice to be given in accordance with Section 4.02 hereof; (b) there shall have been deposited with the Trustee either: (i) money in an amount which shall be sufficient; or (ii) Federal Securities that are not subject 955
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to redemption other than at the option of the holder thereof, the interest on and principal of which when paid will provide money which, together with the money noted in previous subsection (i) , if any deposited with the Trustee at the same time, shall, as verified by an independent certified public accountant, be sufficient to pay when due the interest to become due on such Bonds on and prior to the maturity date or redemption date thereof, as the case may be, and the principal of and premium, if any, on such Bonds; and (c) in the event that such Bonds are not by their terms subject to redemption within the next succeeding 60 days, the Authority shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the owners of such Bonds that the deposit required by clause (b) above has been made with the Trustee and that such Bonds, are deemed to have been paid in accordance with this Section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and premium, if any, on such Bonds.
Section 10.03 Payment of Bonds After Discharge of Indenture . Notwithstanding any provisions of this Indenture, to the extent permitted by law, any moneys held by the Trustee in trust for the payment of the principal of, or premium or interest on, any Bonds and remaining unclaimed for two years after the date of deposit of such moneys, shall be repaid to the Authority (without liability for interest) free from the trusts created by this Indenture, and all liability of the Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of such moneys to the Authority as aforesaid, the Trustee may (at the cost of the Authority) first mail, by first class mail postage prepaid, to the Owners of Bonds which have not yet been paid, at the respective addresses shown on the Registration Books, a notice, in such form as may be deemed appropriate by the Trustee with respect to the Bonds so payable and not presented and with respect to the provisions relating to the repayment to the Authority of the moneys held for the payment thereof.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Benefits of Indenture Limited to Parties . Nothing contained herein, expressed or implied, is intended to give to any person other than the Authority, the City, the Trustee and the Owners any claim, remedy or right under or pursuant hereto, and any agreement, condition, covenant or term required herein to be observed or performed by or on behalf of the Authority or the City shall be for the sole and exclusive benefit of the Trustee and the Owners.
Section 11.02 Successor Deemed Included in all References to Predecessor . Whenever the Authority, the City or the Trustee, or any officer thereof, is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Authority, the City or the Trustee, or such officer, and all agreements, conditions, covenants and terms required hereby to be observed or performed by or on behalf of the Authority, the City or the Trustee, or any officer thereof, shall bind and inure to the benefit of the respective successors thereof whether so expressed or not.
Section 11.03 Execution of Documents by Owners . Any declaration, request or other instrument which is permitted or required herein to be executed by Owners may be in one or more instruments of similar tenor and may be executed by Owners in person or by their attorneys appointed in writing. The fact and date of the execution by any Owner or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authori zed to take acknowledgments of deeds to 956
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be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer, or by such other proof as the Trustee may accept which it may deem sufficient.
The ownership of any Bonds and the amount, payment date, number and date of owning the same may be proved by the Registration Books.
Any declaration, request or other instrument in writing of the Owner of any Bond shall bind all future Owners of such Bond with respect to anything done or suffered to be done by the Authority, the City or the Trustee in good faith and in accordance therewith.
Section 11.04 Waiver of Personal Liability. Notwithstanding anything contained herein to the contrary, no member, officer or employee of the Authority or the City shall be individually or personally liable for the payment of any moneys, including without limitation, the principal of or interest on the Bonds, but nothing contained herein shall relieve any member, officer or employee of the City or the Authority from the performance of any official duty provided by any applicable provisions of law, by the Lease Agreement or hereby.
Section 11.05 Destruction of Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Authority of any Bonds, the Trustee may, in lieu of such cancellation and delivery, destroy such Bonds.
Section 11.06 Funds and Accounts . Any fund or account required to be established and maintained herein by the Trustee may be established and maintained in the accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund, but all such records with respect to all such funds and accounts shall at an times be maintained in accordance with sound accounting practice and with due regard for the protection of the security of the Bonds and the rights of the Owners.
The Trustee may commingle any of the moneys held by it hereunder for investment purposes only; provided, however, that the Trustee shall account separately for the moneys in each fund or account established pursuant to this Indenture. The Trustee may establish such funds and accounts as it deems necessary or appropriate to perform its obligations hereunder.
Section 11.07 Article and Section Headings Gender and References . The singular form of any word used herein, including the terms defined in Section 1.01 hereof, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include correlative words of the other genders. The headings or titles of the several Articles and Sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references herein to “Articles,” “Sections,” subsections or clauses are to the corresponding Articles, Sections, subsections or clauses hereof, and the words “hereby,” “herein,” “hereof,” “hereto,” “herewith,” “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section, subsection or clause thereof.
Section 11.08 Partial Invalidity . If any one or more of the agreements, conditions, covenants or terms required herein to be observed or performed by or on the part of the Authority, 957
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the City or the Trustee shall be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants or such term or terms shall be null and void to the extent contrary to law and shall be deemed separable from the remaining agreements, conditions, covenants and terms hereof and shall in no way affect the validity hereof or of the Bonds, and the Owners shall retain all the benefit, protection and security afforded to them under any applicable provisions of law.
The Authority, the City and the Trustee hereby declare that they would have executed this Indenture, and each and every Article, Section, paragraph, subsection, sentence, clause and phrase hereof and would have authorized the execution and delivery of the Bonds pursuant hereto irrespective of the fact that any one or more Articles, Sections, paragraphs, subsections, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid.
Section 11.09 Disqualified Bonds . In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are actually known by the Trustee to be owned or held by or for the account of the Authority or the City, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; except that, in determining whether the Trustee shall be protected in relying upon any such demand, request, direction, consent or waiver of an Owner, only Bonds which the Trustee actually knows to be owned or held by or for the account of the Authority or the City, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City, shall be disregarded unless all Bonds are so owned or held, in which case such Bonds shall be considered Outstanding for the purpose of such determination. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Authority and the City shall specify in a Written Certificate of the City and Authority those Bonds disqualified pursuant to this Section and the Trustee may conclusively rely on such Certificate.
Section 11.10 Money Held for Particular Bonds . The money held by the Trustee for the payment of the interest, principal or premium due on any date with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owners of the Bonds entitled thereto, subject, however, to the provisions of Section 10.03 hereof but without any liability for interest thereon.
Section 11.11 Payment on Non-Business Days. In the event that any payment is required to be made hereunder on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day with the same effect as if made on such non-Business Day.
Section 11.12 California Law . This Indenture shall be construed and governed in accordance with the laws of the State of California.
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Section 11.13 Notices. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely:
If to the City: City of Ontario
303 East B Street
Ontario, California 91764
Attention: City Manager
If to the Authority: Ontario Public Financing Authority c/o City of Ontario
303 East B Street
Ontario, California 91764
Attention: Executive Director
If to the Trustee: Zions Bancorporation, National Association 550 South Hope Street, Suite 2875
Los Angeles, California 90071
Attention: ___________
Ref: ____________
If to the Series 2025A Bond Insurer:
Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed: (a) if personally served or delivered, upon delivery; (b) if given by electronic communication, whether by telex, telegram or telecopier, upon the sender’s receipt of an appropriate answer back or other written acknowledgment; (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail; (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier; or (e) if given by any other means, upon delivery at the address specified in this Section.
Section 11.14 Notice to Rating Agencies. The Trustee shall provide S&P, if the Bonds are then rated by S&P, and Moody’s, if the Bonds are then rated by Moody’s, with prompt notice of any substitution or release of property pursuant to Section 9.03 of the Lease Agreement.
Section 11.15 Execution in Counterparts . This Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument.
Section 11.16 Bond Insurer as Third Party Beneficiary; Notices to Bond Insurer . The Series 2025A Bond Insurer is explicitly recognized as and will be deemed to be a Bond Owner entitled to all notices provided to Bond Owners and a third party beneficiary of the Indenture. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF , the Authority and the City have caused this Indenture to be signed in their respective names by their representative thereunto duly authorized, and the Trustee, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written.
ONTARIO PUBLIC FINANCING AUTHORITY
By:
Executive Director
ATTEST:
Secretary
CITY OF ONTARIO
By:
City Manager
ATTEST:
City Clerk
[SIGNATURES CONTINUED ON NEXT PAGE.]
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[SIGNATURE PAGE CONTINUED.]
ZIONS BANCORPORATION, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Officer
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EXHIBIT A
FORM OF SERIES 2025A BOND
No. ____ $___________
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE TRUSTEE FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
ONTARIO PUBLIC FINANCING AUTHORITY
2025A LEASE REVENUE BOND
INTEREST RATE MATURITY DATE DATED DATE CUSIP
______% November 1, 20____ ___________ 68304R ___
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: _________________________ DOLLARS
The Ontario Public Financing Authority (the “Authority”), for value received, hereby promises to pay, solely from the Base Rental Payments (as hereinafter defined) or amounts in certain funds and accounts held under the Indenture (as hereinafter defined), to the Registered Owner identified above or registered assigns (the “Registered Owner”); on the Maturity Date identified above or on any earlier redemption date, the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Interest Rate identified above in like lawful money from the date hereof payable semiannually on May 1 and November 1 in each year, commencing _____ 1, 2025 (the “Interest Payment Dates”), until payment of such Principal Amount in full. This Bond shall bear interest from the Interest Payment Date next preceding the date of authentication of this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the close of business on the fifteenth calendar day of the month next preceding such Interest Payment Date, whether or not such day is a Business Day, in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to April 15, 2018, in which event it shall bear interest from the Dated Date identified above; provided, however, that if, at the time of authentication of this Bond, interest is in default on this Bond, interest on this Bond shall be payable from the date to which interest hereon has be en paid in full, payable on each Interest Payment Date). The Principal Amount hereof is payable upon surrender hereof upon maturity or earlier redemption at the Office of the Trustee (as hereinafter defined). Interest hereon is payable by wire or check of Zions Bancorporation, National Association , as trustee (the “Trustee”), mailed by first class mail, postage prepaid, on each Interest Payment Date to the Registered Owner hereof at the 962
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address of the Registered Owner shown on the Registration Books at the close of business on the fifteenth calendar day of the month next preceding such Interest Payment Date. “Office of the Trustee” means the principal corporate trust office of the Trustee in Los Angeles, California, or such other office as may be specified to the Authority and the City of Ontario (the “City”) by the Trustee in writing, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange, such term shall mean the office or the agency of the Trustee at which, at any particular time, its corporate trust agency shall be conducted as specified to the Authority and the City by the Trustee in writing.
This Bond is one of a series of a duly authorized issue of bonds issued for the purpose of financing the acquisition, construction and installation of certain capital improvements of the City, and is one of the series of bonds designated “Ontario Public Financing Authority 2025A Lease Revenue Refunding Bonds” (the “ Series 2025A Bond s”) in the aggregate principal amount of $_____________. The Series 2025A Bonds are issued pursuant to that certain Indenture, dated as of _____ 1, 2025 (the “Indenture”), by and among the Authority, the City and the Trustee, and this reference incorporates the Indenture herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. Pursuant to and as more particularly provided in the Indenture, additional bonds (“Additional Bonds”), may be issued by the Authority secured by a lien on a parity with the lien securing the Series 2025A Bonds. The Series 2025A Bonds and any Additional Bonds are collectively referred to as the “Bonds.” The Indenture is entered into, and this Bond is issued under, the Marks -Roos Local Bond Pooling Act of 1985 (the “Act”) and the laws of the State of California.
Pursuant to the Indenture, the principal of and interest on the Bonds are payable solely from certain base rental payments (the “Base Rental Payments”) under and pursuant to that certain Lease Agreement, dated as of _____ 1, 2025 (the “Lease Agreement”), by and between the City, as lessee, and the Authority, as lessor, all of which rights to receive such Base Rental Payments have been assigned without recourse by the Authority to the Trustee. Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, all of the Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Principal Fund and the Redemption Fund established under the Indenture are 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. Said pledge constitutes a first lien on such assets.
The Series 2025A Bond s are authorized to be issued in the form of fully registered bonds without coupons in denominations of $5,000 or any integral multiple thereof (“Authorized Denominations”).
The Series 2025A Bonds shall be subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of any net insurance proceeds received with respect to all or a portion of the property leased under the Lease Agreement, remaining after payment therefrom of all reasonable expenses incurred in the collection thereof, deposited by the Trustee in the Redemption Fund established under the Indenture, at a Redemption Price equal to the principal amount of the Series 2025A Bond s to be redeemed, plus accrued interest thereon to the date of redemption, without premium.
The Series 2025A Bonds maturing on or after November 1, 20 __, shall be subject to optional redemption, in whole or in part, on November 1, 20 __ or any date thereafter, in Authorized 963
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Denominations, 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 Series 2025A Bond s to be redeemed, plus accrued interest thereon to the date of redemption.
The Series 2025A Bond s with stated maturities on November 1 , 20__ are subject to mandatory sinking fund redemption in part (by lot) on each November 1 on and after November 1, 20__, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule:
Redemption Date
(November 1)
Principal
Amount
* Maturity.
The Series 2025A Bond s with stated maturities on November 1 , 20__ are subject to mandatory sinking fund redemption in part (by lot) on each November 1 on and after November 1, 20__, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule:
Redemption Date
(November 1)
Principal
Amount
* Final Maturity.
If, during the Fiscal Year immediately preceding one of the redemption dates specified above, the Authority purchases Series 2025A Bonds, at least 45 days prior to the redemption date, the Authority will notify the Trustee as to the principal amount purchased and the amount of Series 2025A Bonds so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming mandatory sinking fund redemption payment for the Series 2025A Bonds so purchased. All Series 2025A Bond s purchased pursuant to the Indenture will be cancelled.
The Trustee on behalf and at the expense of the Authority shall mail (by first class mail) notice of any redemption to the respective owners of any Series 2025A Bond s designated for redemption, at their respective addresses appearing on the Registration Books, at least 20 but not more than 60 days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed, nor any defect therein, shall affect the validity of the proceedings for the redemption of such Series 2025A Bond s or the cessation of accrual of interest thereon from and after the date fixed for redemption. The Redemption Price of the Series 2025A Bond s to be redeemed shall be paid only upon presentation and surrender thereof at the Office of the Trustee.
From and after the date fixed for redemption of any Series 2025A Bond s, interest on such Series 2025A Bonds will cease to accrue and become payable.
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Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, fully registered Series 2025A Bond s may be exchanged at the Office of the Trustee for a like aggregate principal amount and maturity of fully registered Series 2025A Bonds of other authorized denominations.
This Bond is transferable by the Registered Owner hereof, in person or by his duly authorized attorney, 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 such transfer a new fully registered Series 2025A Bond or Series 2025A Bond s, in Authorized Denominations, for the same aggregate principal amount will be issued to the transferee in exchange herefor. The Authority, the City and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority, the City and the Trustee shall not be affected by any notice to the contrary.
The Indenture and the rights and obligations of the Authority, the City, the owners of the Bonds and the Trustee may be modified or amended from time to time and at any time in the manner, to the extent, and upon the terms provided in the Indenture; provided that no such modification or amendment shall: (a) extend the fixed maturity of any Bonds, or reduce the principal thereof or the rate of interest thereon, or extend the time of payment, without the consent of the owner of each Bond so affected; or (b) reduce the percentage of Bonds the consent of the owners of which is required to effect any such amendment or modification; or (c) permit the creation of any lien on the Base Rental Payments and other assets pledged under the Indenture prior to or on a parity with the lien created by the Indenture or deprive the owners of the Bonds of the lien created by the Indenture on such the Base Rental Payments and such other assets (except as expressly provided in the Indenture), without the consent of the owners of all Bonds then outstanding.
The Indenture contains provisions permitting the Authority to make provision for the payment of interest on, and the principal and premium, if any, of any of the Bond so that such Bonds shall no longer be deemed to be outstanding under the terms of the Indenture.
All obligations of the Authority under the Indenture shall be special obligations of the Authority, payable solely from Rental Payments and the other assets pledged therefor under the Indenture; provided, however, that all obligations of the Authority under the Bonds shall be special obligations of the Authority, payable solely from 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 Bonds.
It is hereby certified 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 Joint Exercise of Powers Agreement, 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 under 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 manually signed by the Trustee.
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IN WITNESS WHEREOF, the Authority has caused this Bond to be signed in its name and on its behalf by the facsimile signatures of its Chair and Secretary, all as of the Dated Date identified above.
ONTARIO PUBLIC FINANCING AUTHORITY
By:
Executive Director
Attest:
Secretary
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION]
This is one of the Series 2025A Bond s described in the within -mentioned Indenture and registered on the Registration Books.
Date: _________ ZIONS BANCORPORATION, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Signatory
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[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office.
Secretary of the Ontario Public Financing Authority
[FORM OF STATEMENT OF INSURANCE]
[TO COME]
[FORM OF ASSIGNMENT]
For value, received the undersigned hereby sells, assigns and transfers unto ____________________________________________ whose address and social security or other tax identifying number is ______________________, the within -mentioned Bond and hereby irrevocably constitute(s) and appoint(s) ____________________________________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises.
Dated: ____________________
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible
guarantor.
Note: The signature(s) on this Assignment must
correspond with the name(s) as written on the face of the within pond in every particular without alteration or
enlargement or any change whatsoever.
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EXHIBIT B
FORM OF PROJECT FUND REQUISITION
REQUISITION NO. _____ FOR
DISBURSEMENT FROM PROJECT FUND
The undersigned hereby states and certifies:
(i) that he/she is the duly appointed, qualified and acting _________ of the City of Ontario, 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 (the “City”), and as such, is familiar with the facts herein certified and is authorized to certify the same; (ii) that, pursuant to Section 3.04 of th at certain Indenture, dated as of ______ 1, 2025 (the “Indenture”), by and among the Ontario Public Financing Authority (the “Authority”), the City and Zions Bancorporation, National Association, as trustee (the “Trustee”), related to the Authority’s 2025A Lease Revenue Bonds , the undersigned hereby requests the Trustee to disburse this date the following amounts from the Project Fund established under the Indenture, to the payees designated on the attached Exhibit 1;
(iii) that each obligation mentioned herein has been incurred by the City and is a proper charge against the Project Fund; and
(iv) that there has not been filed with or served upon the City notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable to any of the payees named on the attached Exhibit 1, which has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen’s or mechanics’ liens accruing by mere operation of law.
All capitalized terms used herein and not defined herein shall have the meanings ascribed thereto in the Indenture.
Dated: ______________ CITY OF ONTARIO
By:
Its:
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EXHIBIT 1
PROJECT FUND DISBURSEMENTS
Item
Number Payee Name and Address
Purpose of
Obligation Amount
969
C-1
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EXHIBIT C
DESCRIPTION OF SERIES 2025A PROJECT
Capital improvements of the City, including but not limited to on site and offsite improvements to The Ontario Sports Empire, improvements to The Continuum of Care – West Mission Campus, The Real Time Information Center, Anthony Munoz Hall of Fame Park, De Anza Park, John Galvin Park, James Galanis Park, Veterans Park, Ontario Museum of History & Art, storm drain improvements and other capital improvements identified in the City’s Capital Improvement Plan.
970
1 $___________
ONTARIO PUBLIC FINANCING AUTHORITY
2025A LEASE REVENUE BONDS
BOND PURCHASE AGREEMENT
________, 2025
Ontario Public Financing Authority
303 East B Street
Ontario, California 91764
City of Ontario
303 East B Street
Ontario, California 91764
Ladies and Gentlemen:
The undersigned Samuel A. Ramirez & Co., Inc. (the “Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (which, together with Exhibit A, is referred to as this “Purchase Agreement”) with the Ontario Public Financing Authority (the “Authority”) and the City of Ontario (the “City”), which, upon the acceptance by the Authority and the City, will be binding upon the parties hereto. By execution of this Purchase Agreement, the Authority, the City and the Underwriter acknowledge the terms hereof and recognize that they will be bound by certain of the provisions hereof, and to the extent binding thereupon, acknowledge and agree to such terms. This offer is made subject to acceptance by the Authority and by the City by the execution of this Purchase Agreement and delivery of the same to the Underwriter prior to 11:59 P.M., Pacific time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Authority and the City at any time prior to the acceptance hereof by the Authority and the City. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Indenture (defined herein).
The City and Authority acknowledge and agree that: (i) the purchase and sale of the Bonds (defined herein), pursuant to this Purchase Agreement is an arm’s -length commercial transaction between the City and the Authority, on one hand, and the Underwriter, on the other; (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and is not acting as a Municipal Advisor (as defined in Section 15B of the Securities Exchange Act of 1934, as amended); (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the City or the Authority with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the City or the Authority on other matters); (iv) the Underwriter has financial and other interests that differ from those of the City and the Authority; and (v) the City and the Authority have consulted their own legal, financial and other advisors to the extent they have deemed appropriate.
971
2 Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements herein set forth, the Underwriter hereby agrees to purchase from the Authority, and the Authority hereby agree s to issue, sell and deliver to the Underwriter all (but not less than all) of the Ontario Public Financing Authority 2025A Lease Revenue Bonds (the “Bonds”). The Bonds will be dated as of their date of delivery. Interest on the Bonds shall be payable semiannually in each year on May 1 and November 1, commencing November 1, 2025 (each an “Interest Payment Date”), and will bear interest at the rates and on the dates as set forth in Exhibit A attached hereto.
The purchase price for the Bonds shall be $______ (which represents the principal amount of the Bonds, plus a net original issue premium in the amount of $______, less an Underwriter’s discount of $______) (the “Purchase Price”).
The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under the Policy (defined below) to be issued concurrently with the delivery of the Bonds by _______ (the “ Insurer”). The Insurer will also issue the Reserve Policy concurrently with the delivery of the Bonds. As an accommodation to the Authority and City, the Underwriter will wire from the Purchase Price the premium for the Policy and a portion of the premium for the Reserve Policy in the aggregate amount of $______ on the date of Closing (defined below).
The Underwriter agrees to make a bona fide public offering of the Bonds at the initial offering yields set forth in the Official Statement (defined herein); however, the Underwriter reserves the right to make concessions to dealers and to change such initial offering yields as the Underwriter shall deem necessary in connection with the marketing of the Bonds. The Underwriter agrees that, in connection with the public offering and initial delivery of the Bonds to the purchasers thereof from the Underwriter, the Underwriter will deliver or cause to be delivered to each purchaser a copy of the final Official Statement prepared in connection with the Bonds, for the time period required under Rule 15c2 -12 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 15c2 - 12”). Terms defined in the Official Statement are used herein as so defined.
Section 2. The Bonds. The Bonds shall be secured by revenues consisting primarily of base rental payments (the “ Base Rental Payments”) to be paid by the City pursuant to the Lease Agreement, dated as of _____ 1, 2025 (the Lease Agreement”), by and between the Authority and the City. The Authority’s right to receive the Base Rental Payments due under the Lease Agreement and to exercise remedies upon default under such Lease Agreement shall be assigned to Zions Bancorporation, National Association, as trustee (the “Trustee”) for the benefit of the owners of the Bonds pursuant to an Assignment Agreement, dated as of _____ 1, 2025 (the “Assignment Agreement”), by and between the Authority and the Trustee. The Bonds shall be as described in and secured under and pursuant to an Indenture, dated as of _____ 1, 2025 (the “Indenture”), by and among the Authority, the City, and the Trustee. The Bonds will be subject to redemption as set forth in the Indenture and Official Statement herein described.
The Bonds are being issued to provide funds to: (i) finance the acquisition, construction and installation of various public capital improvements of the City ; (ii) purchase a municipal bond insurance policy to guarantee the payment of principal and interest on the Bonds (the “Policy”); (iii) purchase a debt service reserve insurance policy for deposit in a reserve fund for the Bonds (the “Reserve Policy”); and (iv) pay the costs incurred in connection with the issuance of the Bonds. 972
3 Section 3. Public Offering. The Underwriter agrees to make an initial public offering of all the Bonds at the public offering prices (or yields) set forth on Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Exhibit A attached hereto. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices.
Section 4. Establishment of Issue Price of the Bonds.
(a) The Underwriter agrees to assist the Authority in establishing the issue price of the Bonds and shall execute and deliver to the Authority at Closing 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 Underwriter, the Authority 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. (b) Except as otherwise set forth in Exhibit B, the Authority 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. At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the Authority the price or prices at which it has sold to the public each maturity of Bonds.
If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Authority the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that, the Underwriter’s reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Authority or Bond Counsel. For purposes of this Section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds.
(c) The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A , except as otherwise set forth therein. Exhibit A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the 10% test has not been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”).
So long as the hold -the-offering-price rule remains applicable to any maturity of the Bonds , the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (i) the close of the 5th business day after the sale date; or (ii) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. 973
4 The Underwriter will advise the Authority promptly after the close of the 5th business day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. (d) The Underwriter confirms that:
(i) any selling group agreement and any third-party 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 third-party distribution agreement, as applicable:
(A)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter, and (ii) to comply with the hold -the-offering-price rule, if applicable, if and for so long as directed by the Underwriter,
(B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and
(C) to acknowledge that, unless otherwise advised by the dealer or broker- dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(ii) any selling group 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 that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third- party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold- the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires. (e) The Authority acknowledges that, in making the representations set forth in this section, the Underwriter 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 requirements for establishing issue price of the Bonds , including, but not limited to, its agreement to comply with the hold -the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the 974
5 Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds , including, but not limited to, its agreement to comply with the hold -the-offering-price rule, if applicable to the Bonds , as set forth in the third -party distribution agreement and the related pricing wires. The Authority further acknowledges that the Underwriter 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 third -party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the -offering- price rule, if applicable to the Bonds.
(f) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section.
Further, for purposes of this section:
(i) “public” means any person other than an underwriter or a related party, (ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third -party distribution agreement participating in the initial sale of the Bonds to the public),
(iii) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 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), (B) 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 (C) 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 Purchase Agreement by all parties.
Section 5. The Official Statement. By their acceptance of this Purchase Agreement, the Authority and the City ratify, confirm and approve of the use and distribution by the Underwriter prior to the date hereof of the Preliminary Official Statement relating to the Bonds, dated ______, 2025 (including the cover page, all appendices and all information incorporated therein and any supplements or amendments thereto and as disseminated in its printed physical form or in electronic form in all respects materially consisten t with such physical form, the “Preliminary Official Statement”) that authorized officers of the City deemed “final” as of its date, for purposes of Rule 15c2-12 except for certain omissions permitted to be omitted therefrom by Rule 15c2 -12. The Authority and the City hereby agree to deliver or cause to be delivered to the Underwriter, within seven (7) business days of the date hereof, copies of the final official statement, dated the date hereof, relating to the Bonds (including all information previously permitted to have been omitted by 975
6 Rule 15c2-12, the cover page, all appendices, all information incorporated therein and any amendments or supplements as have been approved by the Authority, the City and the Underwriter (the “Official Statement”)) in such quantity as the Underwriter shall reasonably request to comply with Securities and Exchange Commission Rule 15c2-12(b)(4) and the rules of the Municipal Securities Rulemaking Board (the “MSRB”).
The Underwriter hereby agrees that it will not request that payment be made by any purchaser of the Bonds prior to delivery by the Underwriter to the purchaser of a copy of the Official Statement. The Underwriter agrees to (i) provide the Authority and the City with final pricing information on the Bonds on a timely basis and (ii) promptly file a copy of the final Official Statement, including any supplements prepared by the Authority or the City with the MSRB on its Electronic Municipal Markets Access (“EMMA”) system at http://emma.msrb.org. The Authority and the City hereby approve of the use and distribution by the Underwriter of the final Official Statement in connection with the offer and sale of the Bonds. The Authority and the City will cooperate with the Underwriter in the filing by the Underwriter of the Official Statement with EMMA.
Section 6. Closing. At 8:00 a.m., California time, on [Closing Date], or at such other time or date as the Authority, the City and the Underwriter agree upon, the Authority shall deliver or cause to be delivered to the Trustee, and the Trustee shall deliver or cause to be delivered through the facilities of The Depository Trust Company, New York, New York (“DTC”), the Bonds in definitive form, duly executed and authenticated. Concurrently with the delivery of the Bonds, the Authority and the City shall deliver the documents hereinafter mentioned at the offices of Stradling Yocca Carlson & Rauth LLP , Newport Beach, California or another place to be mutually agreed upon by the Authority, the City and the Underwriter. The Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof by wire transfer in immediately available funds. This payment for and delivery of the Bonds, together with the delivery of the aforementioned documents referenced herein, is called the “Closing.”
The Bonds shall be registered in the name of Cede & Co., as nominee of DTC in denominations of five thousand dollars ($5,000) or any integral multiple thereof, and shall be made available to the Underwriter at least one (1) business day before the Closing for purposes of inspection and packaging. The Authority and the City acknowledge that the services of DTC will be used initially by the Underwriter to permit the issuance of the Bonds in book-entry form, and agree to cooperate fully with the Underwriter in employing such services.
Section 7. Representations, Warranties and Covenants of the Authority. The Authority represents, warrants and covenants to the Underwriter and the City that:
(a) The Authority is and will be at the date of Closing a joint exercise of powers authority organized and existing under the laws of the State of California, including Section 6500 et seq. of the California Government Code (the “JPA Act”) with all necessary power and authority to enter into and perform its duties under the Ground Lease, dated as of ______ 1, 2025 (the “Ground Lease”), by and between the City and the Authority, the Lease Agreement, the Indenture, the Assignment Agreement and this Purchase Agreement. The Ground Lease , Lease Agreement, Indenture, Assignment Agreement and this Purchase Agreement are collectively referred to herein as the “Authority Documents”.
(b) The Authority has complied with all filing requirements of the JPA Act. 976
7 (c) By official action of the Authority prior to or concurrently with the acceptance hereof, the Authority has duly approved the distribution of the Preliminary Official Statement and the distribution of the Official Statement (including in electronic form), and has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations on its part contained, in the Authority Documents. When executed and delivered, each Authority Document will constitute the legal, valid and binding obligation of the Authority enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights generally.
(d) Prior to the date hereof, the Authority has provided to the Underwriter for its review the Preliminary Official Statement that an authorized officer of the Authority has deemed final for purposes of Rule 15c2-12, has approved the distribution of the Preliminary Official Statement and the Official Statement and has duly authorized the execution and delivery of the Official Statement (including in electronic form). The Preliminary Official Statement, at the date thereof, did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein (other than the information relating to the Insurer, the Policy, the Reserve Policy, DTC and its book- entry system, as to which no view is expressed), in light of the circumstances under which they were made, not misleading. At the date hereof and on the Closing, the final Official Statement did not and will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein (other than the information relating to the Insurer, the Policy, the Reserve Policy, DTC and its book- entry system, as to which no view is expressed), in light of the circumstances under which they were made, not misleading.
(e) To the knowledge of the undersigned officer of the Authority, the execution and delivery by the Authority of the Authority Documents and the approval and execution by the Authority of the Official Statement and compliance with the provisions on the Authority’s part contained in the Authority Documents, will not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject to, which conflict, breach or default has or may have a material adverse effect on the ability of the Authority to carry out its obligations under the Authority Documents, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any material lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the Authority under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument, except as provided by the Authority Documents.
(f) The Authority will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement. The Authority will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds.
(g) To the knowledge of the undersigned officer of the Authority, the Authority is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument to which the 977
8 Authority is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument, in each case which breach or default has or may have a material adverse effect on the ability of the Authority to perform its obligations under the Authority Documents. (h) As of the time of acceptance hereof and as of the date of Closing, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, is pending or, to the knowledge of the officers of the Authority, threatened (i) in any way questioning the corporate existence of the Authority or the titles of the officers of the Authority to their respective offices, (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the execution or delivery of any of the Bonds, or in any way contesting or affecting the validity of the Bonds or the Authority Documents or the consummation of the transactions contemplated thereby, or contesting the exclusion of the interest on the Bonds from gross income for federal income tax purposes or contesting the powers of the Authority to enter into the Authority Documents or (iii) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clause (i) through (iii) of this sentence.
(i) Any certificate signed by any officer of the Authority authorized to execute such certificate in connection with the issuance, sale and delivery of the Bonds and delivered to the Underwriter shall be deemed a representation and warranty of the Authority to the Underwriter and the City as to the statements made therein but not of the person signing such certificate.
Section 8. Representations, Warranties and Covenants of the City. The City represents, warrants and covenants to the Underwriter and the Authority that:
(a) The City is and will be at the date of Closing a municipal corporation and charter city duly organized and existing pursuant to and under the Constitution and laws of the State of California and has all necessary power and authority to enter into and perform its duties under the Continuing Disclosure Certificate relating to the Bonds (the “Continuing Disclosure Certificate”), the Indenture, the Ground Lease, the Lease Agreement and this Purchase Agreement (together, the “ City Documents” and, together with the Authority Documents, the “Legal Documents”) and has by official action duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained in the City Documents for the purpose of refinancing the Prior Certificates.
(b) By official action of the City prior to or concurrently with the acceptance hereof, the City has duly approved the distribution of the Preliminary Official Statement and the distribution of the Official Statement (including in electronic form), and has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained, in the City Documents. When executed and delivered, each City Document will constitute the legally valid and binding obligation of the City enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights generally. 978
9 (c) The Preliminary Official Statement heretofore delivered to the Underwriter is hereby deemed final by the City as of its date and as of the date hereof, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(i) of Rule 15c2-12.
The Preliminary Official Statement, at the date thereof, did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein (other than the information relating to the Insurer, the Policy, the Reserve Policy, DTC and its book- entry system, as to which no view is expressed), in the light of the circumstances under which they were made, not misleading. At the date hereof and on the Closing, the final Official Statement did not and will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein (other than the information relating to the Insurer, the Policy, the Reserve Policy, DTC and its book-entry system, as to which no view is expressed), in the light of the circumstances under which they were made, not misleading. (d) To the knowledge of the undersigned officer of the City, the execution and delivery by the City of the City Documents and the approval by the City of the Official Statement and compliance with the provisions on the City’s part contained in the City Documents, will not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject to, which conflict, breach or default has or may have a material adverse effect on the ability of the City to carry out its obligations under the City Documents, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any material lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the City under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument, except as provided by the City Documents. (e) The City will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement. The City will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental Authority prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. (f) To the knowledge of the undersigned officer of the City, after reasonable inquiry, the City is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument, in each case which breach or default has or may have a material adverse effect on the ability of the City to perform its obligations under the City Documents. (g) The financial statements relating to the receipts, expenditures and cash balances of the City as of June 30, 2024 as set forth in the Official Statement fairly represent the revenues, expenditures and fund balances of the General Fund. Except as disclosed in the Preliminary Official Statement, the Official Statement or otherwise disclosed in writing to the Underwriter, there has not been any materially adverse change in the financial condition of the General Fund or in its operations since June 30, 2024 and, except as disclosed in the Preliminary Official Statement, the Official Statement or otherwise disclosed in writing to the Underwriter, there has been no occurrence, circumstance or combination thereof which is reasonably expected to result in any such materially adverse change.
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10 (h) As of the time of acceptance hereof and as of the date of Closing, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, is pending or, to the knowledge of the officers of the City, threatened (i) in any way questioning the corporate existence of the City or the titles of the officers of the City to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the execution or delivery of any of the Bonds, or in any way contesting or affecting the validity of the Bonds or the City Documents or the consummation of the transactions contemplated thereby, or contesting the exclusion of the interest on the Bonds from gross income for federal income tax purposes or contesting the power of the City to enter into the City Documents; (iii) which may result in any material adverse change to the financial condition of the City or to its ability to pay the Base Rental Payments when due; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clause (i) through (iv) of this sentence.
(i) To the extent required by law, the City will undertake, pursuant to the Continuing Disclosure Certificate , to provide annual reports and notices of certain events. A description of this undertaking is set forth as an appendix to the Preliminary Official Statement and will also be set forth in an appendix to the final Official Statement. Except as otherwise disclosed in the Preliminary Official Statement and the Official Statement, the City has never failed to comply in all material respects with any previous undertakings with regard to Rule 15c2-12 to provide annual reports or notices of enumerated events with respect to the last five years. (j) Any certificate signed by any officer of the City authorized to execute such certificate in connection with the issuance, sale and delivery of the Bonds and delivered to the Underwriter shall be deemed a representation and warranty of the City to the Underwriter and the Authority as to the statements made therein but not of the person signing such certificate. (k) As of the date hereof, the City does not have any material obligations secured by payments from the General Fund of the City, except as disclosed in the Preliminary Official Statement and the Official Statement.
Section 9. Conditions to the Obligations of the Underwriter. The Underwriter has entered into this Purchase Agreement in reliance upon the representations and warranties of the Authority and the City contained herein. The obligations of the Underwriter to accept delivery of and pay for the Bonds on the date of the Closing shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the statements of the officers and other officials of the Authority and of the City, as well as authorized representatives of Bond Counsel, the Trustee, Disclosure Counsel and the m unicipal advisor made in any Bonds or other documents furnished pursuant to the provisions hereof; to the performance by the Authority and the City of their obligations to be performed hereunder at or prior to the date of the Closing; and to the following additional conditions:
(a) The representations, warranties and covenants of the City and the Authority contained herein shall be true, complete and correct at the date hereof and at the time of the Closing, as if made on the date of the Closing;
980
11 (b) At the time of Closing, the Legal Documents shall be in full force and effect as valid and binding agreements between or among the various parties thereto, and the Legal Documents and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter, and all such reasonable actions as, in the opinion of Bond Counsel, shall reasonably deem necessary in connection with the transactions contemplated hereby;
(c) At the time of the Closing, no default shall have occurred or be existing under the Authority Documents, the City Documents, or any other agreement or document pursuant to which any of the City’s financial obligations were executed and delivered, and the City shall not be in default in the payment of principal or interest with respect to any of its financial obligations, which default would adversely impact the ability of the City to make the Base Rental Payments; (d) In recognition of the desire of the Authority, the City and the Underwriter to effect a successful public offering of the Bonds, and in view of the potential adverse impact of any of the following events on such a public offering, this Purchase Agreement shall be subject to termination in the absolute discretion of the Underwriter by notification, in writing, to the Authority and the City prior to delivery of and payment for the Bonds, if at any time prior to such time, regardless of whether any of the following statements of fact were in existence or known of on the date of this Purchase Agreement:
(i) any event shall occur which makes untrue any statement or results in an omission to state a material fact necessary to make the statements in the Official Statement, in the light of the circumstances under which they were made, not misleading, which event, in the reasonable opinion of the Underwriter would materially or adversely affect the ability of the Underwriter to market the Bonds; (ii) the marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States or by any legislation in or by the Congress of the United States or by the State of California, or the amendment of legislation pending as of the date of this Purchase Agreement in the Congress of the United States, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any decision of any federal or state court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or State authority affecting the federal or State tax status of the Authority or the City, or the interest on or with respect to bonds or notes (including the Bonds); 981
12 (iii) any proceeding shall be pending or threatened by the Securities and Exchange Commission against the Authority or the City;
(iv) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the State of California, or a decision by any court of competent jurisdiction within the State of California shall be rendered which materially adversely affects the market price of the Bonds;
(v) an order, decree or injunction issued by any court of competent jurisdiction, or order, ruling, regulation (final, temporary or proposed), official statement or other form of notice or communication issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that: (i) obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under the Trust Indenture Act of 1939, as amended; or (ii) the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including any or all underlying obligations, as contemplated hereby or by the Official Statement, is or would be in violation of the federal securities laws as amended and then in effect; (vi) a decision by a court of the United States shall be rendered, or a stop order, release, regulation or no-action letter by or on behalf of the SEC or any other governmental agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the issuance, offering or sale of the Bonds, including the underlying obligations as contemplated by this Bond Purchase Agreement or by the Official Statement, or any document relating to the issuance, offering or sale of the Bonds, is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act, the Exchange Act and the Trust Indenture Act;
(vii) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, to the effect that obligations of the general character of the Bonds, or the Bonds are not exempt from registration under or other requirements 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 that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended and as then in effect; (viii) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any domestic governmental authority or by any domestic national securities exchange, which are material to the marketability of the Bonds;
(ix) there shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (2) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis;
982
13 (x) a general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the SEC or any other governmental authority having jurisdiction;
(xi) the New York Stock Exchange or other national securities exchange, or any governmental or regulatory 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 the Underwriter; (xii) any rating of the Insurer shall have been downgraded, suspended or withdrawn or placed on negative outlook or negative watch by a national rating service, which, in the Underwriter’s reasonable opinion, materially adversely affects the marketability or market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds;
(xiii) any rating of the Bonds or the rating of any obligations of the City secured by the City’s general fund shall have been downgraded, suspended or withdrawn by a national rating service, which, in the reasonable opinion of the Underwriter, materially adversely affects the market price of the Bonds; (xiv) a general banking moratorium shall have been established by federal or State authorities;
(xv) a material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; or
(xvi) the commencement of any action, suit or proceeding described in Section 7(h) or Section 8(h).
(e) At or prior to the Closing, the Underwriter shall receive the following documents, in each case to the reasonable satisfaction in form and substance of the Underwriter:
(i) all resolutions relating to the Bonds adopted by the Authority and certified by an authorized official of the Authority authorizing the issuance of the Bonds, the Authority Documents and the Official Statement; (ii) all resolutions relating to the Bonds adopted by the City and certified by an authorized official of the City authorizing the execution and delivery of the City Documents and the issuance of the Bonds and the Official Statement; (iii) the Legal Documents duly executed and delivered by the respective parties thereto, with only such amendments, modifications or supplements as may have been agreed to in writing by the Underwriter;
(iv) the approving opinion of Bond Counsel, dated the date of Closing and addressed to the Authority and the City, in substantially the form attached as 983
14 Appendix D to the Official Statement, and a reliance letter thereon addressed to the Underwriter;
(v) a supplemental opinion of Bond Counsel dated the date of Closing and addressed to the Underwriter, in substantially the form attached hereto as Exhibit C;
(vi) the Official Statement, executed on behalf of the Authority and the City;
(vii) evidence that the rating on the Bonds is as described in the Official Statement;
(viii) a certificate, dated the date of Closing, signed by a duly authorized officer of the Authority satisfactory in form and substance to the Underwriter to the effect that: (A) the representations, warranties and covenants of the Authority contained in this Purchase Agreement are true and correct in all material respects on and as of the date of Closing with the same effect as if made on the date of the Closing by the Authority, and the Authority has complied with all of the terms and conditions of this Purchase Agreement required to be complied with by the Authority at or prior to the date of Closing; (B) to such officer’s knowledge, no event affecting the Authority has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purposes for which it is to be used or which is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; (C) the information and statements contained in the Official Statement (other than information relating to the Insurer, the Policy, the Reserve Policy, DTC and its book-entry system) did not as of its date and do not as of the Closing contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect; and (D) to its knowledge, the Authority is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, which would have a material adverse impact on the Authority’s ability to perform its obligations under 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 a default or an event of default under any such instrument;
(ix) a certificate, dated the date of Closing, signed by a duly authorized officer of the City satisfactory in form and substance to the Underwriter to the effect that: (A) the representations, warranties and covenants of the City contained in this Purchase Agreement are true and correct in all material respects on and as of the date of Closing with the same effect as if made on the date of the Closing by the City, and the City has complied with all of the terms and conditions of the Purchase Agreement required to be complied with by the City at or prior to the date of Closing; (B) to such officer’s knowledge, no event affecting the City has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the 984
15 purposes for which it is to be used or which is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; (C) the information and statements contained in the Official Statement (other than information relating to the Insurer, the Policy, the Reserve Policy, DTC and its book-entry system) did not as of its date and do not as of the Closing contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect; (D) to its knowledge after reasonable investigation, the City is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement (including but not limited to the Lease Agreement) or other instrument to which the City is a party or is otherwise subject, which would have a material adverse impact on the City’s ability 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 a default or an event of default under any such instrument; and (E) no further consent is required for inclusion of its audited financial statements in the Official Statement; (x) an opinion dated the date of Closing and addressed to the Underwriter, the Trustee and Bond Counsel, of the City Attorney of the City, as counsel to the Authority, to the effect that:
(A) the Authority is a joint exercise of powers authority organized and existing under the laws of the State of California; (B) the resolution of the Authority approving and authorizing the execution and delivery of the Authority Documents, the Bonds and the Official Statement and other actions of the Authority was duly adopted at a meeting of the governing body of the Authority which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the resolution is now in full force and effect and has not been amended or superseded in any way; (C) to the knowledge of such counsel there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or public body pending with respect to which the Authority has been served or, to such counsel’s knowledge, threatened against or affecting the Authority, except as may be disclosed in the Official Statement, which would materially adversely impact the Authority’s ability to complete the transactions contemplated by the Authority Documents, the Official Statement or any other document or certificate related to such transactions, restrain or enjoin the collection of Base Rental Payments with respect to the Lease Agreement, or in any way contesting or affecting the validity of the Bonds, the Official Statement, the Authority Documents or the transactions described in and contemplated thereby wherein an unfavorable decision, ruling or finding would materially adversely affect the validity and enforceability of the Bonds or the Authority Documents or in which a final 985
16 adverse decision could materially adversely affect the operations of the Authority;
(D) the Authority Documents have been duly authorized, executed and delivered by the Authority, and (assuming due execution and delivery by parties other than the Authority) are valid, legal and binding agreements of the Authority enforceable in accordance with their terms, except that the rights and obligations under the Authority Documents are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State;
(E) the execution and delivery of the Authority Documents and the issuance of the Bonds and compliance with the provisions thereof, do not and will not in any material respect conflict with or constitute on the part of the Authority a breach of or default under any agreement or other instrument to which the Authority is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the Authority is subject, which breach or default has or may have a material adverse effect on the ability of the Authority to perform its obligations under the Authority Documents;
(F) no authorization, approval, consent, or other order of the State of California or any other governmental body within the State of California is required for the valid authorization, execution and delivery of the Authority Documents or the Official Statement by the Authority or the consummation by the Authority of the transactions on its part contemplated therein, except such as have been obtained and except such as may be required under state securities or blue sky laws in connection with the purchase and distribution of the Bonds by the Underwriter; and
(G) based on the information made available to such counsel 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 caption entitled “ THE AUTHORITY,” nothing has come to its attention which would lead it to believe that the statements contained in the above - referenced caption as of the date of the Official Statement and as of the date of Closing 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;
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17 (xi) an opinion dated the date of Closing and addressed to the Underwriter, the Trustee and the Bond Counsel, of the City Attorney , to the effect that:
(A) the City is duly organized and validly existing as a municipal corporation under the Constitution and laws of the State of California; (B) the resolution of the City approving and authorizing the execution and delivery of the City Documents and approving and authorizing the issuance of the Bonds and the delivery of the Official Statement and other actions of the City was duly adopted at a meeting of the governing body of the City which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the resolution is now in full force and effect and has not been amended or superseded in any way;
(C) there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or public body pending with respect to which the City has been served or, to such counsel’s knowledge, threatened against or affecting the City, except as may be disclosed in the Official Statement, which would materially adversely impact the City’s ability to complete the transactions contemplated by the City Documents, the Official Statement or any other document or certificate related to such transactions, restrain or enjoin the collection of Base Rental Payments with respect to the Lease Agreement, or in any way contesting or affecting the validity of the Bonds, the Official Statement or the City Documents;
(D) the execution and delivery of the City Documents and compliance with the provisions thereof, do not and will not in any material respect conflict with or constitute on the part of the City a breach of or default under any agreement or other instrument to which the City is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the City is subject, which breach or default has or may have a material adverse effect on the ability of the City to perform its obligations under the City Documents;
(E) the City Documents have been duly authorized, executed and delivered by the City, and (assuming due execution and delivery by parties other than the City) are valid, legal and binding agreements of the City enforceable in accordance with their terms, except that the rights and obligations under the City Documents are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State; and
(F) no authorization, approval, consent, or other order of the State of California or any other governmental body within the State of California is 987
18 required for the valid authorization, execution and delivery of the City Documents, except such as have been obtained and except such as may be required under state securities or blue sky laws in connection with the purchase and distribution of the Bonds by the Underwriter. (xii) a letter of Best Best & Krieger LLP , Disclosure Counsel to the Authority and the City dated the date of Closing and addressed to the Underwriter, in substantially the form attached hereto as Exhibit D;
(xiii) an opinion of counsel to the Trustee, addressed to the Underwriter and the Authority, dated the date of the Closing, to the effect that:
(A) the Trustee is a national banking association duly organized and validly existing under the laws of the United States, having full corporate power to undertake the trust created under the Indenture; (B) the Indenture and the Assignment Agreement (together, the “Trustee Documents”) have each been duly authorized, executed and delivered by the Trustee and, assuming due authorization, execution and delivery by the other parties thereto, the Trustee Documents constitute the valid, legal and binding obligations of the Trustee enforceable in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and by the application of equitable principles, if equitable remedies are sought;
(C) the Trustee has duly authenticated the Bonds upon the order of Authority;
(D) the Trustee’s actions in executing and delivering the Trustee Documents are in full compliance with, and do not conflict with any applicable law or governmental regulation and, to the best of such counsel’s knowledge, after reasonable inquiry with respect thereto, do not conflict with or violate any contract to which the Trustee is a party or any administrative or judicial decision by which the Trustee is bound; and
(E) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the banking or trust powers of the Trustee that has not been obtained is or will be required for the execution and delivery of the Bonds or the consummation by the Trustee of its obligations under the Trustee Documents; (xiv) a certificate, dated the date of Closing, signed by a duly authorized officer of the Trustee satisfactory in form and substance to the Underwriter, to the effect that:
(A) the Trustee is duly organized and existing as a national banking association under the laws of the United States of America, having 988
19 the full corporate power and authority to enter into and perform its duties under the Trustee Documents;
(B) the Trustee is duly authorized to enter into the Trustee Documents and has duly executed and delivered the Trustee Documents, and assuming due authorization and execution by the other parties thereto, the Trustee Documents are legal, valid and binding upon the Trustee and enforceable against such party in accordance with its terms; (C) the Trustee has duly authenticated the Bonds under the Indenture and delivered the Bonds to or upon the order of the Underwriter; and
(D) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the banking or trust powers of the Trustee that has not been obtained is required for the execution and delivery of the Bonds or the consummation by the Trustee of its obligations under the Trustee Documents;
(xv) the preliminary and final Statement of Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 53583 of the California Government Code and Section 8855(g) of the Government Code; (xvi) a copy of the executed Blanket Issuer Letter of Representations by and between the City or the Authority and DTC relating to the book-entry system; (xvii) the tax certificate executed by the Authority and the City relating to the Bonds in form and substance to the reasonable satisfaction of Bond Counsel and the Underwriter;
(xviii) a title policy with respect to the Property in form and substance acceptable to Bond Counsel, the Underwriter and Underwriter’s Counsel; (xix) evidence of insurance in compliance with the requirements of the Lease Agreement in form and substance acceptable to the Underwriter; (xx) an opinion of Kutak Rock LLP (“Underwriter’s Counsel”) in form and substance acceptable to the Underwriter;
(xxi) a certificate, dated the date of the Preliminary Official Statement, of the City, as required under Rule 15c2-12;
(xxii) a certificate, dated the date of the Preliminary Official Statement, of the Authority, as required under Rule 15c2-12;
(xxiii) the Policy duly executed by the Insurer;
(xxiv) the Reserve Policy duly executed by the Insurer; 989
20 (xxv) an opinion of counsel to the Insurer, dated the Closing Date, addressed to the Authority, the City and the Underwriter, in form and substance satisfactory to the Underwriter and Bond Counsel;
(xxvi) a certificate or certificates of the Insurer, dated the Closing Date, as to the accuracy of the information relating to the Insurer, the Reserve Policy and the Policy included in the Official Statement and such other matters reasonably requested by the Underwriter and Bond Counsel; and
(xxvii) such additional legal opinions, Bonds, proceedings, instruments or other documents as the Underwriter or Underwriter’s Counsel may reasonably request.
Section 10. Changes in Official Statement. Within 90 days after the Closing or within 25 days following the “end of the underwriting period” (as defined in Rule 15c2-12), whichever occurs first, if any event shall occur as a result of which it is necessary, in the reasonable opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in any material respect in the light of the circumstances existing at the time it is delivered to a purchaser, the Authority will forthwith prepare and furnish to the Underwriter an amendment or supplement that will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to purchaser, not misleading. The City and the Authority shall cooperate with the Underwriter in the filing by the Underwriter of such amendment or supplement to the Official Statement with the EMMA. The Underwriter acknowledges that the “end of the underwriting period” will be the date of Closing unless the Underwriter otherwise notifies the City in writing that it still owns some or all of the Bonds.
Section 11. Expenses. Whether or not the transactions contemplated by this Purchase Agreement are consummated, the Underwriter shall be under no obligation to pay, and the Authority shall pay only from the proceeds of the Bonds, but only as the Authority and such other party providing such services may agree, all expenses and costs of the Authority and the City incident to the performance of their obligations in connection with the authorization, issuance, sale and delivery of the Bonds to the Underwriter, including, without limitation, printing costs, rating agency fees and charges, initial fees of the Trustee, including fees and disbursements of its counsel, if any, fees and disbursements of Bond Counsel, Disclosure Counsel, the m unicipal advisor and other professional advisors employed by the Authority or the City, title insurance and costs of preparation, printing, signing, transportation, delivery and safekeeping of the Bonds. The Underwriter shall pay all out -of- pocket expenses of the Underwriter, including, without limitation, the fees and expenses of its counsel, advertising expenses, the California Debt and Investment Advisory Commission fee, CUSIP Services Bureau charges, regulatory fees imposed on new securities issuers and any and all other expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds.
Section 12. Notices. Any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Samuel A.
Ramirez & Co., Inc., 12130 Millennium Drive, Suite 300, Los Angeles, California 90094; Attention:
Public Finance. Any notice or other communication to be given to the Authority or the City pursuant 990
21 to this P urchase Agreement may be given by delivering the same in writing to such entity, at the addresses set forth on the cover page hereof.
Section 13. Parties in Interest. This Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriter (including the successors or assigns thereof) and no other person shall acquire or have any right hereunder or by virtue hereof. All representations, warranties and agreements of the Authority and the City in this Purchase Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriter and shall survive the delivery of and payment for the Bonds.
Section 14. Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
991
22 Section 15. Governing Law. This Purchase Agreement shall be governed by and construed in accordance with the laws of the State of California.
SAMUEL A. RAMIREZ & CO., INC.
By:
Managing Director
The foregoing is hereby agreed to and accepted as of the date first above written:
ONTARIO PUBLIC FINANCING AUTHORITY
By:
Name: Armen Harkalyan
Title: Treasurer
Time of Execution: _____________ p.m. California time
Accepted:
CITY OF ONTARIO
By:
Name: Armen Harkalyan
Title: Executive Director of Finance
Time of Execution: _____________ p.m. California time
992
A-1
EXHIBIT A
MATURITY SCHEDULE
$________
ONTARIO PUBLIC FINANCING AUTHORITY
2025A LEASE REVENUE BONDS
Maturity
(November 1)
Principal
Amount
Interest
Rate Yield Price
10% Test
Satisfied*
10% Test
Not
Satisfied
Subject to
Hold-The-
Offering-
Price Rule
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
20__(T)
20__(T)
(T) Term Bond.
(C) Priced to optional call at [par] on November 1, 20__. * At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement.
993
B-1
EXHIBIT B
FORM OF ISSUE PRICE CERTIFICATE
$_______
ONTARIO PUBLIC FINANCING AUTHORITY
2025A LEASE REVENUE BONDS
The undersigned, Samuel A. Ramirez & Co., Inc. (“Ramirez”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”).
1. Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.
2. Initial Offering Price of the Hold-the-Offering-Price Maturities. (a) Ramirez offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.
(b) As set forth in the Bond Purchase Agreement, dated [BPA Date] , by and among Ramirez, the Issuer and the City of Ontario, Ramirez has agreed in writing that, (i) for each Maturity of the Hold- the-Offering-Price Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the -offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold-the-offering-price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold-the - Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.
3. Defined Terms.
(a) Issuer means the Ontario Public Financing Authority. (b) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(c) Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.” (d) Holding Period means, with respect to a Hold-the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date, or (ii) the date on which Ramirez has sold at least 10% of such Hold-the -Offering-Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the - Offering-Price Maturity.
994
B-2
(e) 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.
(f) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (g) 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 [BPA Date]. (h) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the interpretation by Ramirez of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the attached Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Bond Counsel, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
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: [Closing Date] SAMUEL A. RAMIREZ & CO., INC., as underwriter
By:
Authorized Signatory
995
B-3
SCHEDULE A
SALE PRICES OF THE GENERAL RULE MATURITIES AND INITIAL OFFERING
PRICES OF THE HOLD-THE-OFFERING-PRICE MATURITIES
[TO BE ATTACHED]
996
B-4
SCHEDULE B
PRICING WIRE OR EQUIVALENT COMMUNICATION
997
C-1
EXHIBIT C
FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL
On the Closing Date, Bond Counsel expects to deliver a supplemental opinion in substantially the following form:
[Closing Date]
Samuel A. Ramirez & Co., Inc.
Los Angeles, California
Re: $______ Ontario Public Financing Authority 2025A Lease Revenue Bonds Ladies and Gentlemen:
We have examined certified copies of proceedings taken for the sale and issuance of the above-referenced bonds (the “Bonds”), and we have rendered our opinion to the Ontario Public Financing Authority (the “Authority”) this day regarding the validity and enforceability of the Bonds (the “Approving Opinion”). The Bonds are being issued pursuant to an Indenture dated as of ____ 1, 2025 (the “Indenture”), by and among the Authority, the City of Ontario (the “City”) and Zions Bancorporation, National Association, as Trustee. You may rely upon our Approving Opinion as if it were addressed to you. Capitalized terms used herein and not otherwise defined shall have the meaning given to such terms in the Bond Purchase Agreement dated [BPA Date] (the “Purchase Agreement”), among the Authority, the City and Samuel A. Ramirez & Co., Inc. (the “Underwriter”).
We have assumed, but not independently verified, that the signatures on all documents, letters, certificates and instructions which we have examined are genuine, that all documents submitted to us are authentic and were duly and properly executed by the parties thereto and that all representations made in the documents that we have reviewed are true and accurate.
We express no opinion herein with respect to any indemnification, contribution, choice of law, choice of forum, penalty or waiver provisions contained in the Bonds, the Indenture, the Ground Lease, the Lease Agreement , the Assignment Agreement or the Purchase Agreement (collectively, the “Legal Documents”), nor do we express any opinion with respect to the state or quality of title to any of the real or personal property described in the Ground Lease, the Lease Agreement or the Indenture, or the accuracy or sufficiency of the description of any such property contained therein.
Based upon the foregoing and such other information and documents as we consider necessary to render this opinion, we are of the opinion that:
(1) The Purchase Agreement has been duly authorized, executed and delivered by the Authority and the City and is a valid and binding agreement of the Authority and the City. (2) The statements on the cover of the Official Statement and in the Official Statement under the captions “INTRODUCTION,” “THE SERIES 202 5A BONDS,” “ PLAN OF 998
C-2
FINANCE,” “THE PROPERTY,” “SECURITY AND SOURCES OF PAYMENT FOR THE 202 5A BONDS,” and “TAX MATTERS,” and in “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” and “APPENDIX D –FORM OF BOND COUNSEL OPINION,” excluding any material that may be treated as included under such captions and appendices by any cross -reference, insofar as such statements expressly summarize provisions of the Bonds, the Ground Lease, the Lease Agreement, the Assignment Agreement, the Indenture and Bond Counsel’s final opinion concerning certain federal tax matters relating to the Bonds, are accurate in all material res pects as of the date of Closing.
(3) The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Indenture is exempt from qualification as an indenture pursuant to the Trust Indenture Act of 1939, as amended.
The opinions expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. This opinion is limited to matters governed by the laws of the State of California and federal securities laws, and we assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.
We call attention to the fact that the rights and obligations under the Legal Documents are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State of California.
We express no opinion herein regarding any tax consequences with respect to the Bonds. No opinion is expressed herein with respect to the compliance with, or applicability of, any “blue sky” laws of any state as they relate to the offer or sale of the Bonds.
We call attention to the fact that the foregoing opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken (or not taken) or occur (or do not occur).
This opinion is furnished by us to you and is solely for your benefit, and may not be used, circulated, quoted or otherwise referred to or relied upon by others without our prior written consent.
This letter is not intended to be, and may not be, relied upon by the owners of the Bonds or any beneficial ownership interest therein. You have acknowledged that no attorney-client relationship exists between us and you with respect to any matters related to the Bonds.
Our engagement with respect to the Bonds has concluded with their delivery, and we disclaim any obligation to update this opinion or other matters discussed in the Official Statement.
Respectfully submitted,
999
D-1
EXHIBIT D
FORM OF DISCLOSURE COUNSEL LETTER
On the Closing Date, Disclosure Counsel expects to deliver a negative assurance letter in substantially the following form:
[TO COME FROM DISCLOSURE COUNSEL]
1000
4916-6028-1372v3/022249-0062
RECORDING REQUESTED BY:
Ontario Public Financing Authority
AND WHEN RECORDED RETURN TO:
Stradling Yocca Carlson & Rauth LLP
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attention: Brian P. Forbath, Esq.
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.
ASSIGNMENT AGREEMENT
by and between
ONTARIO PUBLIC FINANCING AUTHORITY
and
ZIONS BANCORPORATION, NATIONAL ASSOCIATION
as Trustee
Dated as of ______ 1, 2025
Relating to
$_____________
ONTARIO PUBLIC FINANCING AUTHORITY
2025A LEASE REVENUE BONDS
1001
1 4916-6028-1372v3/022249-0062
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this “Assignment Agreement”), executed and entered into as of ______ 1, 2025, is by and between the ONTARIO PUBLIC FINANCING AUTHORITY, a joint exercise of powers entity organized and existing under and by virtue of the laws of the State of California (the “Authority”), and ZIONS BANCORPORATION, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States, as Trustee (the “Trustee”).
RECITALS
A. The City of Ontario (the “City”) and the Authority desire to finance a portion of the costs of the acquisition, construction and installation of certain public improvements (collectively, the “Project”).
B. In order to finance the Project, the City will lease certain real property and the improvements located thereon (the “Property”) to the Authority pursuant to that certain Ground Lease, dated as of the date hereof (the “Ground Lease”), by and between the City and Authority, and the City will sublease the Property back from the Authority pursuant to that certain Lease Agreement, dated as of the date hereof (the “Lease Agreement”), by and between the City and the Authority.
C. The Property is more particularly described in Exhibit A hereto.
D. Under the Lease Agreement, the City is obligated to make Base Rental Payments (as such term is defined in the Lease Agreement) to the Authority.
E. The Authority desires to assign without recourse certain of its rights in the Ground Lease and the Lease Agreement, including its right to receive the Base Rental Payments, to the Trustee for the benefit of the owners of bonds (the “Bonds”) to be issued pursuant to the Indenture, dated as of the date hereof (the “Indenture”), by and among the Authority, the City and the Trustee.
F. 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 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 good and valuable consideration, the receipt of which is hereby acknowledged, does hereby sell, assign and transfer to the Trustee, irrevocably and absolutely, without recourse, for the benefit of the owners of the Bonds, all of its right, title and interest in and to the Ground Lease and the Lease Agreement including, without limitation, its right to receive the Base Rental Payments to be paid by the City under and pursuant to the Lease Agreement; provided, however, that the Authority shall retain its obligations under the Lease Agreement and Ground Lease, the rights to indemnification, to give approvals and consents under the 1002
2 4916-6028-1372v3/022249-0062
Lease Agreement and the Ground Lease and to payment or reimbursement of its reasonable costs and expenses under the Lease Agreement.
Section 2. Acceptance. The Trustee hereby accepts the foregoing assignment, subject to the terms and provisions of the Indenture, and all such Base Rental Payments shall be applied and the rights so assigned shall be exercised by the Trustee as provided in the Lease Agreement and the Indenture.
Section 3. Conditions. This Assignment Agreement shall impose no obligations upon the Trustee beyond those expressly provided in the Indenture.
Section 4. Further Assurances. The Authority shall make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Assignment Agreement, and for the better assuring and confirming to the Trustee, for the benefit of the owners of the Bonds, the rights intended to be conveyed pursuant hereto.
Section 5. Governing Law. THIS ASSIGNMENT AGREEMENT SHALL BE
GOVERNED EXCLUSIVELY BY THE PROVISIONS HEREOF AND BY THE LAWS OF THE STATE OF CALIFORNIA AS THE SAME FROM TIME TO TIME EXIST.
Section 6. Execution. This Assignment Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same Assignment Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
1003
S-1
4916-6028-1372v3/022249-0062
IN WITNESS WHEREOF, the Authority and the Trustee have caused this Assignment Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first above-written.
ONTARIO PUBLIC FINANCING AUTHORITY
By:
Scott Ochoa
Executive Director
ATTEST:
Sheila Mautz
Secretary
[SIGNATURES CONTINUED ON NEXT PAGE.]
1004
S-2
4916-6028-1372v3/022249-0062
[SIGNATURE PAGE CONTINUED.]
ZIONS BANCORPORATION, NATIONAL
ASSOCIATION, as Trustee
By:
[_______________________]
Authorized Officer
1005
4916-6028-1372v3/022249-0062
ACKNOWLEDGMENT
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 SAN BERNARDINO
On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(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 OF NOTARY PUBLIC
1006
4916-6028-1372v3/022249-0062
ACKNOWLEDGMENT
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 LOS ANGELES
On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(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 OF NOTARY PUBLIC
1007
A-1
4916-6028-1372v3/022249-0062
EXHIBIT A
DESCRIPTION OF THE PROPERTY
Ovitt Family Community Library
Municipal Services Corporation Yard
Creekside Park
Kimball Community Park
Bon View Park
Homer F. Briggs Memorial Park
Anthony Munoz Hall of Fame Park
De Anza Park
Westwind Park
John Galvin Park
Ontario Motor Speedway Park
Celebration Park (North and South)
1008
46700.50047\43675257.1
FORM OF CONTINUING DISCLOSURE CERTIFICATE
Upon issuance of the 2025A 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 2025A Lease Revenue Bonds (the “Bonds”). The Bonds are being issued pursuant to an Indenture, dated as of ________, 2025 (the “ Indenture”), by and between the Authority and Zion’s Bancorporation, National Association, 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 [to come].
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 ______, 2025 delivered in connection with the issuance of the Bonds.
Participating Underwriter. The term “Participating Underwriter” means the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.
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. 1009
46700.50047\43675257.1
3. Provision of Annual Reports.
(a) The City shall provide not later than each April 1 following the end of its Fiscal Year (commencing April 1, 2026 with the Annual Report for Fiscal Year 2025) to EMMA an Annual Report relating to the immediately preceding Fiscal Year which is consisten t 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 Boa rd. 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 conta ined 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.
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;
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46700.50047\43675257.1
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 ob ligated 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 a ction or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms;
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.
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(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 additio n 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 Certificat e. 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: ________, 2025 CITY OF ONTARIO
By:
Its: City Manager
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This Preliminary Official Statement and the information contained herein are subject to completion and amendment. 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 _______ __, 2025
NEW ISSUE – BOOK-ENTRY ONLY Insured Rating: S&P: “___”
Underlying Rating: S&P “___”
Underlying Rating: Fitch “___”
See the caption “RATINGS.”
In the opinion of Stradling Yocca Carlson & Rauth LLP, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements descri bed in this Official Statement, interest on the 2025A Bond s is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest on the 2025A Bond s is exempt from State of California personal income tax. See “TAX MATTERS ” with respect to certain tax consequences relating to the 2025A Bonds, including with respect to the alternative minimum tax imposed on certain large corporations.” $_____________
ONTARIO PUBLIC FINANCING AUTHORITY
2025A LEASE REVENUE BONDS
Dated: Date of Delivery Due: November 1, as shown on inside cover The Ontario Public Financing Authority 2025A Lease Revenue Bonds (the “2025A Bonds”) will be issued pursuant to an Indenture, dated as of ___________, 2025, by and between the Ontario Public Financing Authority and Zions Bancorporation, National Association, as trustee.
The 2025A Bonds are payable from 2025 Base Rental Payments to be made by the City for the right to the use of cer tain real property pursuant to a Lease Agreement, dated as of _______________, 2025, by and between the City, as lessee, and the Authority, as lessor.
The 2025A Bonds are being issued to provide funds: (i) to finance the acquisition and construction of capital projects of the City; and (ii) to pay the costs of issuing the 2025A Bonds, including the premium for a municipal bond insurance policy insuring the 2025A Bonds 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 2025 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 2025 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 Property, or any defect in title thereto, there is substantial interference with the use and occupancy by the City of the Property or any portion thereof.
The 2025A 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 2025A Bonds is payable semiannually commencing November 1, 2025 and each May 1 and November 1 thereafter . Purchasers will not receive certificates representing their interest in the 2025A Bonds. Individual purchases will be in principal amounts of integral multiples of $5,000. Principal of and interest and premium, if any, on th e 2025A 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 2025A Bonds.
The Authority may issue Additional Bonds payable from Base Rental Payments. The 2025A Bond s and any Additional Bonds are collectively referred to herein as the “Bonds.”
The 2025A Bonds are subject to redemption prior to maturity as described in this Official Statement.
The 2025A Bonds are special obligations of the Authority, payable solely from the 2025 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 2025A Bonds. The Authority has no taxing power.
The obligation of the City to make 2025 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 n ot 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 2025A Bonds are not subject to acceleration in the event of a payment default.
The scheduled p ayment of principal of and interest on the 2025A Bonds when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the 2025A 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.
The 2025A Bonds will be offered when, as and if issued and received by the Underwriter, subject to the approval as to their validity by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, 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 .
Best Best & Krieger LLP, Riverside, California, is acting as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by Kutak Rock, Irvine, California, as Underwriter’s Counsel, for the Insurer by its counsel and for the Trustee by its counsel. It is anticipated that the 2025A Bonds in definitive form will be available for delivery to DTC on or about ______________, 2025.
Ramirez & Co., Inc.
Dated: ________________, 2025
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MATURITY SCHEDULE
BASE CUSIP:*C
$_____________
ONTARIO PUBLIC FINANCING AUTHORITY
2025A LEASE REVENUE BONDS
Maturity Date
(November 1) Principal Amount Interest Rate Yield Price CUSIP*C
Suffix
$___ _ % Term 2025A Bonds due November 1, 20__, Yield: _____%, Price: _____, CUSIP®* Suffix $___ _ % Term 2025A Bonds due November 1, 20__, Yield: _____%, Price: _____, CUSIP®* Suffix $___ _ % Term 2025A Bonds due November 1, 20__, Yield: _____%, Price: _____, CUSIP®* Suffix
* 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 fo r the CGS database.
CUSIP® numbers are provided for convenience of reference only. None of the City, the Authority, the Underwriter or their age nts or counsel assume responsibility for the accuracy of such numbers.
C Priced to first optional redemption date of November 1, 20__ at par. 1014
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 2025A 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 2025A 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 2025A 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 Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter ha s 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 Underwriter do es 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, cre ate 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 2025A 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 statemen ts 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 DI FFERENT 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 EVAL UATING 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 2025A BOND S, THE UNDERWRITER MAY
OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2025A BOND S AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE 2025A 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 AN D SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.
THE 2025A BOND S 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 and certain social media accounts ; 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 2025A Bonds.
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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 Porada, Councilmember and Authority Board Member
Daisy Macias, 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
Stradling Yocca Carlson & Rauth LLP
Newport Beach, California
Disclosure Counsel
Best Best & Krieger LLP
Riverside, California
Municipal Advisor
Urban Futures, Inc.
Walnut Creek, California
Trustee
Zions Bancorporation, National Association
Los Angeles, California
1016
i
TABLE OF CONTENTS
Page
INTRODUCTION 1
General ..................................................................................... 1 Security for the 2025A Bonds; Base Rental Payments .................. 1 Limited Obligation ........................................................................ 2 Bond Insurance.............................................................................. 2 Additional Bonds .......................................................................... 2 The City 2
Continuing Disclosure ................................................................... 2 Risk Factors................................................................................... 3 Summaries Not Definitive ............................................................. 3 PLAN OF FINANCE 3
2025 Project .................................................................................. 3 Estimated Sources and Uses of Funds ........................................... 4 THE PROPERTY 4
General ..................................................................................... 4 BASE RENTAL PAYMENT SCHEDULE 7
THE 2025A BONDS 8
General ..................................................................................... 8 Registration, Transfers and Exchanges .......................................... 8 Redemption ................................................................................... 9 Book-Entry Only System ............................................................ 11 SECURITY AND SOURCES OF PAYMENT FOR THE 2025A
BONDS 11
Pledge of Base Rental Payments ................................................. 11 Additional Bonds ........................................................................ 13 Base Rental Payments ................................................................. 14 Additional Rental Payments ........................................................ 15 Abatement 16
Substitution or Release of the Property ....................................... 16 Action on Default ........................................................................ 17 No Reserve Fund ......................................................................... 17 Insurance 17
BOND INSURANCE 18
Bond Insurance Policy................................................................. 18 THE CITY 18
General ................................................................................... 18 Employees 18
Government and Administration ................................................. 19 Ontario International Airport ....................................................... 19 CITY FINANCIAL INFORMATION 20
Accounting and Financial Reporting ........................................... 20 General Economic Condition and Outlook of the City ................ 21 Budget Procedure, Current Budget and Historical
Budget Information.................................................... 23 Change in Fund Balance of the City General Fund ..................... 27 General Fund Balance Sheets of the City .................................... 28 Property Taxes ............................................................................ 29 Sales Taxes .................................................................................. 32 Transient Occupancy Taxes ........................................................ 33 Other Taxes ................................................................................. 33 Services ................................................................................... 33 State of California Motor Vehicle In-Lieu Payments .................. 33 Federal Funding .......................................................................... 34 Other Indebtedness ...................................................................... 34 Capital Improvement Program .................................................... 36 Retirement Contributions ............................................................ 37 Other Post-Employment Benefits ................................................ 43 City Investment Policy ................................................................ 44 City Insurance ............................................................................. 45 Economic Development in the City ............................................. 46 THE AUTHORITY 47
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON
TAXES AND APPROPRIATIONS 47
Article XIIIA of the State Constitution ........................................ 48 Article XIIIB of the State Constitution ........................................ 48 Proposition 62 .............................................................................. 49 Proposition 218 ............................................................................ 49 Unitary Property .......................................................................... 50 Proposition 22 .............................................................................. 50 Proposition 26 .............................................................................. 50 Future Initiatives .......................................................................... 50 RISK FACTORS 50
General Considerations – Security for the 2025A Bonds ............. 51 Abatement 51
Initiative and Referendum............................................................ 52 Insurance on the Property ............................................................ 52 Condemnation of the Property ..................................................... 52 Value of Property ......................................................................... 53 No Acceleration of Base Rental Payments ................................... 53 Certain Risks Associated with Sales Tax and Other
Local Tax Revenues ................................................... 53 Assessed Value of Taxable Property ............................................ 53 Dependence on State for Certain Revenues ................................. 54 Litigation 54
Natural Disasters .......................................................................... 54 Climate Change ........................................................................... 55 Cybersecurity ............................................................................... 55 Hazardous Substances.................................................................. 56 Additional City Obligations ......................................................... 56 Remedies 56
Limitation on Trustee’s Obligations under the Indenture ............. 57 Release of Property; Additional Bonds ........................................ 57 Limitations on Enforceability ...................................................... 57 Secondary Market ........................................................................ 59 Covenant to Budget and Appropriate ........................................... 59 Federal Funding ........................................................................... 59 Risks Associated with Bond Insurance ........................................ 60 TAX MATTERS 60
CERTAIN LEGAL MATTERS 62
MUNICIPAL ADVISOR 62
LITIGATION 62
UNDERWRITING 62
RATINGS 62
CONTINUING DISCLOSURE 63
FINANCIAL INTERESTS 64
MISCELLANEOUS 65
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
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1 $________________
ONTARIO PUBLIC FINANCING AUTHORITY
2025A LEASE REVENUE BONDS
INTRODUCTION
General
This Official Statement, which includes the cover page and appendices (the “Official Statement”), provides certain information concerning the above-captioned bonds (the “2025A Bonds”). The 2025A 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 2025A 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 _________________, 2025 (the “Indenture”), by and between the Authority and Zions Bancorporation, National Association, as trustee (the “Trustee”). Additional Bonds may also be issued under the Indenture. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2025A BONDS—Additional Bonds.” The 2025A 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 2025A Bonds. Individual purchases will be in integral multiples of $5,000. Principal of and interest on the 2025A Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the be neficial owners of the 2025A Bonds. See the caption “THE 2025A BONDS—Book-Entry Only System.” The 2025A Bonds are subject to redemption prior to maturity as described under the caption “THE 2025A BONDS—Redemption.”
The 2025A Bonds are being issued to provide funds: (i) to finance the acquisition , construction and installation of capital projects of the City (collectively, the “2025 Project”), as described under the caption “PLAN OF FINANCE —2025 Project;” and (ii) to pay the costs of issuing the 2025A Bonds, including the premium for a municipal bond insurance policy (the “Policy”) insuring the 2025A Bonds to be issued by the Insurer. See the caption “PLAN OF FINANCE.”
Security for the 2025A Bonds; Base Rental Payments
Pursuant to a Ground Lease, dated as of ______________, 2025 (the “Ground Lease”), by and between the City, as lessor, and the Authority, as lessee, t he City has leased certain real property of the City and the improvements thereon ( collectively, the “Property”) to the Authority in consideration for the Authority ’s assistance in issuing the 2025A Bonds.
Pursuant to a Lease Agreement, dated as of _________________, 2025 (the “Lease Agreement”), by and between the City, as lessee, and the Authority, as lessor, the Authority has subleased the Property back to the City in consideration for the City ’s payment of semiannual lease payments (the “2025 Base Rental Payments”) to be made by the City for the right to use the Property as sublessee.
See the caption “THE PROPERTY” for a description of the Property.
Under an Assignment Agreement, dated as of ________________, 2025 (the “Assignment Agreement”), by and between the Authority and the Trustee , the Authority has assigned to the Trustee for the benefit of the 2025A Bond Owners substantially all of the Authority’s right, title and interest in and to the Lease Agreement, including its right to receive the 2025 Base Rental Payments due under the Lease Agreement and to enforce any remedies in the event of a default by the City. 1018
2 The City has covenanted under the Lease Agreement to take such action as may be necessary to include all Rental Payments (including the 2025 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 2025A BOND S— 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 Property, or any defect in title to the Property, there is substantial interference with the City ’s right to use and occupy any portion of the Property, 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 Property available for use and occupancy by the City during such Rental Period. See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE 2025A B ONDS—Abatement” and “RISK FACTORS — Abatement.”
Limited Obligation
THE 2025A BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM THE 2025 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 2025A BONDS. THE AUTHORITY HAS NO TAXING POWER.
THE OBLIGATION OF THE CITY TO MAKE 2025 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.
Bond Insurance
Concurrently with the issuance of the 2025A Bonds, the Insurer will issue the Policy. The Policy guarantees the scheduled payment of principal of and interest on the 2025A Bonds when due as set forth in the form of the Policy set forth in Appendix G.
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 2025A Bonds. The 2025A 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 2025A 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.
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 1019
3 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 2025 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 2025A 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, 303 East B Street, Ontario, California 91764, Attention: Finance Department.
PLAN OF FINANCE
2025 Project
The 2025 Project is comprised of the City’s capital improvement for the 2025 -26 and 2026-27 fiscal years. Many of the improvements will relate to the Ontario Sports Empire, which is currently under construction and expected to be completed in 2026. The Ontario Sports Empire is a 200 acre sports and entertainment complex designed to attract 1.2 million visitors annually. The facility will feature the new Los Angeles Dodgers single-A team. The development will feature a 6,000 -seat Minor League Baseball sta dium, a vibrant stadium village with restaurants, entertainment venues, and a hotel, as well as professional-quality soccer, baseball, and softball fields. Additionally, the complex will include a state-of-the-art youth sports training facility.
The improvements may include, but not be limited to the following:
Ontario Sports Empire Off Site Improvements and Street Improvements. Includes off site public improvements and on site and off site street improvements. Estimated Cost $65,000,000.
Storm Drain Improvements. Includes San Antonio Avenue Storm Drain, Sultana Avenue and J Street, Campus Avenue, Fourth Street , Euclid Avenue and Storm Drain Pipe Replacement. The improvements are master planned facilities which will connect to the existing San Bernardino County Flood Control District East State Street Storm Drain. Estimated Cost $67,000,000.
Continuum of Care – West Mission Campus. The City plans to acquire and convert a motel on Mission Boulevard into a temporary housing space for unhoused individuals and their families as a temporary campus, and then acquire property design and construct a new Access Center to assist unhoused individuals and families by providing supportive and educational resources, case management, assistance in finding temporary shelter, transitional housing or long-term Section 8 housing. Estimated Cost $43,200,000.
Real Time Information Center will serve as the City of Ontario’s centralized hub for aggregating and monitoring data, video, audio, and other critical information. Its primary objective is to enhance public safety by supporting crime reduction efforts and enabling real-time situational awareness throughout the City. The project will be completed in two phases: Phase One will consist of facility construction, and Phase Two will involve software implementation and personnel onboarding. Estimated Cost $6,300,000.
Anthony Munoz Hall of Fame Park. Improvements include upgrading concession area and remodel the storage area, demolition of existing restroom and install a pre -fabricated restroom and c onstruction of a gymnasium, fitness room, and teen lounge. Estimated Cost $21,200,000 1020
4 De Anza Park. Improvements include the addition of a skate park and splash pad, renovation of a picnic shelter, upgrade soccer field to synthetic turf, replacement of existing tot lot playground equipment and rubber surface installation, and improvements to the walkway and lighting. Estimated Cost $13,000,000.
John Galvin Park/ James Galanis Park/ Veterans Memorial Park . Improvements include ballfield renovations, installation of fitness course, replacement of existing tot lot playground and installation of new rubber surface, design and construction of new skate park, native garden, splash pad, improvements to park lighting, and a master plan for a new community center. Estimated Cost $28,000,000.
Ontario Museum of History & Art. Improvements include those included in the approved master plan such as waterproofing the basement, adding an elevator, and renovation of the North Gallery. Estimated Costs $6,900,000.
The City will have the ability to use the proceeds of the bonds on the projects listed above and on any other component of the capital improvement program not listed above. See, “CITY FINANCIAL INFORMATION – Capital Improvement Plan,” herein. The City may alter the scope of the capital improvements or reprioritize the facilities to be constructed in the capital improvement plan at any time.
The City intends to apply proceeds of the 2025A Bonds, together with other available City moneys, to pay for the costs of the 2025 Project. The City expects to comply with all governmental approval, environmental review, public bidding and other permitting requirements for each component of the 2025 Project as required by law, and to complete all components of the 2025 Project by June 30, 2028 . The City plans to use currently owned assets as the leased assets and does not intend to capitalize interest on the 2025A Bonds during the period in which the 2025 Project is being designed and constructed.
Upon or after completion of the 2025 Project, the City may reevaluate the pool of leased assets that is described under the caption “THE PROPERTY” and may substitute the properties that comprise the 2025 Project for certain properties that currently comprise the Property. 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 Property.
See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2025A BONDS - Substitution or Release of the Property.”
Estimated Sources and Uses of Funds
The estimated sources and uses of funds with respect to the 2025A Bonds are shown below.
Sources(1):
Principal Amount
Plus Original Issue Premium
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 Underwriter’s discount, premium for the Policy and certain legal, municipal advisory, rating agency, title insurance, printing and other financing-related costs.
THE PROPERTY
General
1021
5 The Property 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 Property back to the City pursuant to the Lease Agreement. The Property consist of the below-described properties.
Ovitt Family Community Library has served the community since 1894 and is currently 52,268 square feet of building space on 1.2 acres located on the northeast corner of East C Street and N Lemon Street. The Ovitt Family Community Library is Ontario’s main library which contains over 315,000 items, including books, magazines, DVDs, audio books, and a local history collection. The library also provides public computers, a children’s area, smaller meeting/study rooms, reading areas, and program rooms. The library includes the Model Colony History Room, Makerspace, and a Veterans Resource Center. The community makerspace has dedicated equipment and software to create digital media projects, 3D prints, laser cutting and etching, CNC carving, sewing crafts, robotics, electronics and virtual reality.
Municipal Services Corporation Yard has a 67,284 square foot corporation building, a 3,600 square foot welding and paint shop, a 3,466 square foot storage shed, a 1,240 truck wash, a 2,000 square foot training room, a 12,000 square foot municipal building and a 1,440 municipal training center. All buildings are on 21.1 acres located at 1425 S. Bon View Ave.
Creekside Park is a 6.9 acre park located at the northeast corner of Riverside Drive and Turner Avenue.
Creekside Park opened in August 1990 and serves as an outlet for recreation Grace Yokley Middle School.
Amenities at Creekside Park include a zip -line, playground, basketball courts, tennis & pickleball courts, volleyball sand court, large open turf area, pedestrian/bike paths, barbecues, shade structure, picnic tables, benches, and restrooms.
Kimball Community Park is a 7.1 acre park located at the southeast corner of Campus Avenue and Walnut Drive. Kimball Community Park was built in 1955 and includes baseball fields, volleyball courts, and restrooms.
Bon View Park is a 10.3 acre park located on the northwest corner of South Bon View Avenue and East Belmont Street. Bon View Park includes the Dorothy A. Quesada Community Center which is a 10,200 square foot facility with weight/fitness rooms, classrooms, a teen lounge and game room, and a multi-purpose room.
Bon View Park amenities also include an ADA compliant tot lot, playground, concession building, basketball court, baseball fields, soccer field, outdoor exercise equipment, swimming pool, water conse rvation area, walking trail, barbecues, picnic tables, benches, and restrooms.
Homer F. Briggs Memorial Park is a 14.4 acre park located on Oaks Avenue, one block north of Philadelphia Street. Homer F. Briggs Memorial Park has the only equestrian facility in the City. Amenities also include an ADA compliant play structure, children’s play area, concession building, horse arena and equestrian trail, walking trail/bike path, turf area/multi-use, horseshoe pit, basketball court, baseball field, barbecues, picnic shelters, picnic tables, benches, and restrooms.
Anthony Munoz Hall of Fame Park is a 15.8 acre park located between Fourth and Fifth Street, one block west of Mountain Avenue. Anthony Munoz Hall of Fame Park includes a 15,973 square foot community center which features a large multi-purpose room with a modern kitchen, activity rooms, a tot room with a tot playground, a youth playground, 6 -lane swimming pool with a large deck and a paved courtyard. Other amenities include a multi-use court, soccer fields, softball fields, basketball court, playground, ADA compliant play structure, swimming pool, and restrooms
De Anza Park is a 19.2 acre park located at the corner of Phillips Street and South Euclid Avenue. De Anza Park includes a community center, banquet halls, meeting rooms, gym & fitness rooms, basketball courts, pickleball courts, volleyball sand court, futsal court, horseshoe courts, softball field, pedestrian/bike path, ADA compliant play structure, children’s play area, water conservation area, barbecues, shade structure, picnic tables, benches, and restrooms.
1022
6 Westwind Park is a 23.0 acre park located on the north side of Riverside Drive, adjacent to the east side of the Ontario National Golf Course (Whispering Lakes Golf Course). Westwind Park includes a 28,000 square foot community center featuring a large gymnasium for basketball and volley ball, a game room with billiards, foosball, ping pong tables and a multi -purpose meeting room. A 2,400 square foot outdoor swimming pool is adjacent to the building. The park also offers pedestrian/bike paths and sports f ields, a concession building, baseball and softball fields, soccer fields, basketball courts, tennis courts, ADA compliant play structure, barbecues, shade structures, picnic tables, benches, and restrooms.
John Galvin Park is a 25.6 acre park located between Fourth Street and G Street in the northeast section of the City. Amenities include an ADA compliant play structure, children’s play area, baseball fields, concession building, basketball courts, horseshoe courts, multi-use court, pedestrian/bike path, water conservation area, dog park, picnic shelters, picnic tables, benches, and restrooms.
Ontario Motor Speedway Park is a 6.2 acre park located on the corner of N . Center Avenue and Concours Street. Ontario Motor Speedway Park is a joint-use facility, a park/school complex and features typical neighborhood park equipment. Amenities include playground, exercise equipment, soccer field, softball field, pedestrian/bike path, barbecues, picnic tables, benches, and restrooms.
Celebration Park (North and South) is a 10.5 acre park located on the corner of S. Celebration Avenue and Merrill Avenue. The park celebrates the City of Ontario's history with a concrete walkway with a timeline documenting historic events in the City. Amenities include picnic tables conveniently placed all throughout the park, picnic shelters for shaded afternoons, and two demonstration gardens. Additional amenities include a rose garden and maze, walking trail, playground with sunshade, tot lot, basketball courts, turf area/multi-use, picnic shelters, barbecues, picnic tables, benches, and restrooms.
The combined insured replacement value of the structures on the Property and the land value of the Property is $246,272,358. The City has certified in the Lease Agreement that the annual fair rental value of the Property is at least equal to the sum of the annual Base Rental Payments payable under the Lease Agreement with respect to the 2025 Base Rental Payments.
For a discussion of the insurance required to be maintained on the Property, see the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2025A BONDS—Insurance.”
Upon or after completion of the 2025 Project, the City may reevaluate the pool of leased assets listed above and may substitute the properties that comprise the 2025 Project for certain properties that currently comprise the Property. 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 Property. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2025A BONDS - Substitution or Release of the Property,” and “THE 2025 PROJECT.”
1023
7 BASE RENTAL PAYMENT SCHEDULE
Set forth below is a schedule of Base Rental Payments, which secure the 2025A Bonds, assuming no optional or extraordinary prepayments.
2025 Base Rental Payments
Base Rental
Payment Date(1) Principal Interest
Total 2025 Base
Rental Payments
Total Base Rental
Payments
_________________________
(1) The Base Rental Payment Date is the fifth Business Day prior to the date shown.
Source: Underwriter.
1024
8 THE 2025A BONDS
General
The 2025A Bonds will be issued in fully registered form without coupons in denominations of integral multiples of $5,000. The 2025A 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 2025A Bonds will be paid semiannually commencing November 1, 2025 and each May 1 and November 1 thereafter (each, an “Interest Payment Date”).
Interest on the 2025A 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 2025A 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 2025A 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 2025A Bonds will be payable in lawful money of the United States of America.
Each 2025A 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, 2025, in which event it will bear interest from the Closing Date; provided, however, that if, as of the date of authentication of any 2025A Bond, interest thereon is in default, such 2025A 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 2025A 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 2025A 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 2025A Bonds. See the caption “—Book-Entry Only System.”
In the event that the book-entry system that is described herein is discontinued, the 2025A Bonds will be printed and delivered as provided in the Indenture. Thereafter, any 2025A 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 2025A Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any 2025A Bond or Bonds shall be surrendered for transfer, the Authority will execute and the Trustee will authenticate and deliver a new 2025A 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 2025A Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of 2025A Bonds of other authorized denominations. The Trustee will require the payment by the 2025A Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange.
1025
9 The Trustee is not obligated to make any transfer or exchange of 2025A Bonds pursuant to the Indenture during the period established by the Trustee for the selection of 2025A Bonds for redemption, or with respect to any 2025A Bonds selected for redemption.
Redemption
Optional Redemption. The 2025A Bonds maturing on or before November 1, 20__ are not subject to redemption prior to their respective stated maturities. The 2025A 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 November 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 2025A 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 2025A 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 2025A Bond s maturing on November 1, 20 __ and November 1, 20__ (collectively, the “Term Series 2025A Bonds”) are subject to mandatory redemption, in part by lot, from Principal Fund payments set forth in the following schedules on November 1, 20__, and November 1, 20__, respectively, 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 S eries 2025A 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 2025A 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.
Term Series 2025A Bonds Maturing November 1, 20__
Redemption Date
(November 1)
Principal
Amount
_____________________
* Maturity.
Term Series 2025A Bonds Maturing November 1, 20__
Redemption Date
(November 1)
Principal
Amount
______________________
* Final Maturity.
1026
10 In lieu of such redemption, the Trustee may apply amounts in the Principal Fund to the purchase of Term Series 2025A 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 2025A Bonds for redemption, except that the purchase price (exclusive of accrued interest) may not exceed the redemption price then applicable t o the Term Series 2025A 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 2025A Bonds, the Trustee will select the 2025A Bonds to be redeemed from all 2025A 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. For purposes of such selection, the Trustee will treat each 2025A Bond as consisting of separate $5,000 portions and each such portion will be subject to redemption as if such portion were a separate 2025A 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 2025A 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 2025A Bonds (or all 2025A Bonds of a single maturity) are to be redeemed, the CUSIP numbers and, if less than all of the 2025A Bonds of a maturity are to be redeemed, Bond numbers of the 2025A Bonds to be redeemed, the maturity or maturities of the 2025A Bonds to be redeemed and in the case of 2025A 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 2025A 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 2025A Bonds. Each such notice will also state that on the redemption date there will become due and payable on each of said 2025A Bonds the redemption price thereof, and that from and after such redemption date interest thereon will cease to accrue, and will require that such 2025A 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 2025A 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 2025A Bond s 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 2025A Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the 2025A 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 2025A Bond s (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the 2025A Bonds (or portions thereof) so called for redemption will become due and payable, interest on the 2025A Bonds so called for redemption will cease to accrue, said 2025A Bonds (or portions thereof) will cease to be entitled to any benefit or security under the First Supplemental Indenture, and the Owners of said 2025A Bonds will have no rights in respect thereof except to receive payment of the redemption price thereof. All 2025A Bonds redeemed pursuant to the provisions of the First Supplemental Indenture will be cancelled by the Trustee upon surrender thereof and destroyed.
1027
11 Book-Entry Only System
The 2025A Bonds are registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository for the 2025A Bonds. Ownership interests in the 2025A 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 2025A Bonds, all payments on the 2025A 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 2025A Bonds, references herein to the Owners of the 2025A 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 2025A Bonds or notices concerning the 2025A Bonds to the Beneficial Owners or that DTC will otherwise serve and 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 2025A 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 2025A Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Principal Fund, and the Redemption 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 t he 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, th e 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 2025A Bond Owners substantially all of the Authority’s right, title and interest in and to the Lease Agreement, including its right to receive the 2025 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 2025 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” 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 i nterest 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 1028
12 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 i n 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 amo unt of moneys representing the portion 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 2025A Bond s redeemed pursuant to the provisions of the 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) Application of Net Proceeds of Insurance or Condemnation . If the Property or any portion thereof shall be damaged or destroy, the City shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof, unless the City elects not to repair or replace the Property or the affected portion thereof in accordance with the Indenture.
The Net Insurance Proceeds (other than Net Insurance Proceeds of rental interruption insurance), including the proceeds of any self-insurance, received on account of any damage or destruction of the Property or a portion thereof shall as soon as possible be deposited with the Trustee and be held by the Trustee in the Net Insurance Proceeds Fund and made available for and, to the extent necessary, shall be applied to the cost of repair or replacement of the Property or the affected portion thereof upon recei pt of a Written Request of the City, together with invoices therefor. Each such Written Request of the City 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.
Pending such application, such proceeds may be invested by the Trustee as directed by the City in Permitted Investments that mature not later than such times moneys are expected to be needed to pay such costs of repair or replacement.
Notwithstanding the foregoing, the City shall, within 60 days of the occurrence of the event of damage or destruction, notify the Trustee in writing as to whether the City intends to replace or repair the Property or the portions of the Property which were damaged or destroyed. If the City does intend to replace or repair the Property or portions thereof, the City shall deposit with the Trustee the full amount of any insurance deductible to be credited to the Net Insurance Proceeds Fund.
In the event of any damage to or destruction of the Property caused by one of the perils covered by the insurance required by the Lease Agreement which would result in an abatement of rental payments or any portion thereof under the Lease Agreement, then the City shall apply the Net Insurance Proceeds, together with other legally available funds that the City elects to contribute, to the repair, reconstruction or replacement of the damaged or destroyed portions of the Property; provided, however, that the City shall not be required to repair or replace any portion of the Property under the Indenture if such Net Insurance Proceeds, together with any other amounts held under the Indenture and any other legally available funds made available by the City at its election, are sufficient to prepay: (i) all of the Outstanding Bonds; or (ii) a portion of the Outstanding Bonds such that the resulting Base Rental Payments due under the Lease Agreement in any Rental Period following such partial prepayment are sufficient to pay in such Rental Period the principal of and interest on all Bonds to 1029
13 remain Outstanding immediately after such partial redemption. If the City is not required to replace or repair the Property, or the affected portion thereof, or to use such amounts to redeem Bonds, in each case a s set forth in the Indenture, then such proceeds shall, if there is first delivered to the Trustee a Written Certificate of the City to the effect that the annual fair rental value of the Property after such damage or destruction, and after any repairs or replacements made as a result of such damage or destruction, is at least equal to 100% of the maximum amount of Base Rental Payments becoming due under the Lease Agreement in the then current Rental Period or any subsequent Rental Period and the fair replacement value of the Property after such damage or destruction is at least equal to the principal amount of the Outstanding Bonds, be paid to the City to be used for any lawful purpose.
The proceeds of any award in eminent domain received in respect to the Property shall be deposited by the Trustee in the Redemption Fund and applied to the redemption of Bonds pursuant to the Indenture and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued.
Notwithstanding anything in the Indenture or in the 2025A Bonds, the Authority is not required to advance any moneys derived from any source other than the 2025 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 2025A 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 2025A BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM THE 2025 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 OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE 2025A 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 2025A 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; 1030
14 (5) The form of such Additional Bonds; and
(6) 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 Additio nal 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, 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 Property 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 is 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 t hat, 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 2025A 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 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.
Base Rental Payments
General. In consideration of the lease and leaseback by the Authority of the Property and in consideration of the issuance of the 2025A Bonds by the Authority for the purpose of financing the 2025 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 Property during each Fiscal Year, the Base Rental Payments (denominated into components of principal and interest) for the Property 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 Property 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 Property and the benefits therefrom which will accrue to the City and the general public. Payments of the Rental Payments for the Property during each Rental Period will constitute the total rental for said Rental Period. 1031
15 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 Bas e 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.
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 Property 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 2025A 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 CONSTI TUTE 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 Property or the respective interests or estates of the Authority or the City therein; (b) all reasonable administrative costs of the Authority relating to the Property 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, interest on Insurer Advances related to the Policy and any other amounts due to the Insurer not payable as a Base Rental Payment in accordance with the Indenture and the Lease Agreement. 1032
16 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.
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 Property, or any defect in title to the Property, there is substantial interference with the City ’s right to use and occupy any portion of the Property, 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 Agreemen t 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 Property 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 Property, ending with the substantial completion of the work of repair or replacement of the Property, 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 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 Property
The City has the right to substitute alternate real property for any portion of the Property or to release a portion of the Property 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 Property 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 s uch substitution or release of any portion of the Property 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 Insurer setting forth its findings that the Property, 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 the Property (as such term will be defined after such substitution or addition) that when taken together with other title insurance policies covering the Property, will be 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; and
(c) the City, the Authority and the Trustee shall have executed, and the City shall have caused to be recorded with the San Bernardino County Recorder, any document necessary to reconvey to the City the 1033
17 portion of the Property being released and to include any substituted real property in the description of the Property contained in the Lease Agreement and in the Ground Lease.
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 Property.
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 2025A Bond Owners under the Indenture and Lease Agreement, such as certain consents and amendments and the direction of remedies following default, such 2025A 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.
No Reserve Fund
A Reserve Fund has not been established for the 2025A Bonds.
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 da mage occasioned by reason of the use or ownership of the Property. 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 Property 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 c asualty 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 1034
18 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 Property 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 Property 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 th an 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 City will maintain property insurance in an amount sufficient to cover the loss or damage to any tenant improvements or betterments on the Property.
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.
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 Underwriter ha ve reviewed this information, nor do the Authority, the City or the Underwriter 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.
Bond Insurance Policy
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 covers approximately 50 square miles and is adjacent to the cities of Upland, Montclair, Chino and Rancho Cucamonga. The City had a population of approximately 181,224 as of January 1, 2024. The City is one of Southern California’s fastest growing cities over the last 25 years and is poised to be the largest city in the County and the second-largest city in the Inland Empire. 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 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).
Employees
As of June 30, 2024, the City had approximately 1,517 full -time equivalent employees, of which 139 worked for the City’s Municipal Utilities Company (serving both the Water System and the City’s municipal wastewater system) and 1,378 worked in general gove rnment services, including finance. City employees are represented by seven labor associations which collectively represent approximately 1,331 employees. Relations between the City and its labor associations are governed by memoranda of understanding (each, an “MOU”) that expire on June 30, 2027, with the exception of the American Federation of State, County and Municipal 1035
19 Employees Local 3061 (“AFSCME”), which has an MOU which expires on June 30, 2026, and the Association of Ontario Management Employees (“AOME”), which has an MOU which expires on June 30, 2025. A total of approximately 186 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.
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 were elected by district, and the other two Councilmembers will be 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 adm inistration 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.
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 2 5 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 the Ontario International Airport (“ ONT”). ONT is served by approximately 1 3 commercial carriers with connections to approximately 30 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.
1036
20 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.
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 p rocedures 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.
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, 2024 is set forth in Appendix C.
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21 General Economic Condition and Outlook of the City
Fiscal Policies.
The City has adopted several policies which are designed to ensure the prudent and effective management of City operations, including a Fund Balance and Reserve Policy, Debt Management Policy, Capital Asset Management Policy, Economic Uncertainty Reserve, Strategic Plan, Cost Allocation Plan and Investment Policy. Further information about these policies is set forth below.
Fund Balance and Reserve Policy. The City Council adopted a Fund Balance and Reserve Policy on June 17, 2024, that forms the overall framework within which the City ’s General Fund operating budget is formulated. The Fund Balance and 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 protec t the City against un foreseen circumstances and events such as revenue shortfalls and unanticipated expenditures. The policy also authorizes and directs the Financial Services Agency 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 am ount 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 budget guidelines and processes that are included in the annual operating budget documents , the City Council has delegated the authority to assign amounts to be used for specific purposes to the City Manager and/or the Executive Director of Finance for the purpose of reporting these amounts on the annual financial statemen ts and the annual and quarterly budgetary reports.
Included in the Fund Balance and 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 disrup tion of municipal services to citizens. However, included as part of the City’s General Fund balancing strategies for Fiscal Year 2021-22 was the reduction of the General Fund stabilization assignment from 18% (the previous target amount) to 15%. As of June 30, 202 4, the City ’s General Fund had an assigned fund balance for the stabili zation arrangement of $73.35 million, which achieved the 20% goal for Fiscal Year 2023-24. Currently, the assigned fund balance is at approximately 20% of annual General Fund appropriations. 1038
22 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.
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 $15,000,000 representing moneys transferred from the City’s other post-employment benefits fund. An additional $4,500,000 was added in Fiscal Year 2021 -22 and $500,000 in Fiscal Year 2022 -23 to bring the Economic Uncertainty Reserve to the current target of $20,000,000. The Economic Uncertainty Reserve was established to smooth out revenue and expenditure contingencies. As of June 30, 2024, the balance in the Economic Uncertainty Reserve was $20,000,000.
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 reg ulations 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.
Action Plan – Five Year Forecast. 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 sou rces 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 managing the City’s finances during future economic recessions.
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. 1039
23 • 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 t he City. The first customer was connected in 2015 and there are currently more than 1,400 residential users and 250 commercial customers. The City continues increase and improve its wide fiber and wireless solutions.
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 s pecial 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, 2024, the General Fund had a year- end surplus (revenues in excess of expenditures) of approximately $ 9,940,603 million (inclusive of interfund transfers), which was significantly more than the year-end deficit of $3.8 million that was projected in the Fiscal Year 2023-24 General Fund budget.
For Fiscal Year 202 4-25, the adopted General Fund operating budget projects revenues of $ 428.8 million, which is approximately $7.9 million above audited Fiscal Year 2023-24 revenues. The adopted Fiscal Year 2024-25 General Fund operating budget projects expenditures of $427.4 million, which is approximately $16.4 million (3.99%) above audited Fiscal Year 2023-24 expenditures.
Based on current information to date, the City expects actual Fiscal Year 202 4-25 General Fund revenues to come in at approximately $433.6 million, or $4.7 million (1.1%) higher than budgeted, and actual Fiscal Year 202 4-25 General Fund expenditures to come in at approximately $433.9 million, or $6.4 million (1.5%) higher than budgeted. The increase in General Fund expenditures reflects approximately $1.0 million in Transfers Out, which included allocation of the significant budget surplus in Fiscal Year 202 3-24. In the first quarter of Fiscal Year 2024-25, there was no surplus funds allocated for additional funding of programs.
See the caption “—Budget Procedure, Current Budget and Historical Budget Information” for additional information relating to the adopted budget for Fiscal Year 2024-25.
Budget Procedure, Current Budget and Historical Budget Information Budget Timeline. The City ’s Fiscal Year 202 4-25 budget was approved on June 17, 2024, and the City’s Fiscal Year 202 5-26 budget is scheduled to be approved on June 18, 2025. The budget includes all 1040
24 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 an d City Council adopts the Annual Operating Budget at a public budget workshop.
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 agency/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 agency/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 agency/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.
Guidelines
Disseminated
Dissemination of
Budget Preparation
Guidelines
Kick-off Meeting
Meeting with
Agency/Department
Heads and Key Staff
Review
Financial Services
Budget Office Reviews
Agency/Department
Requests
Budget Meetings
City Manager and
Budget Office Meets
with Agency/
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
1041
25 Set forth in Table 1 are recent General Fund budgets and results of the City, including transfers in and out. During the course of each Fiscal Year, the budget is amended and revised as necessary by the City Council. 1042
26 TABLE 1
CITY OF ONTARIO
GENERAL FUND BUDGETS AND RESULTS
Fiscal Year
2021-22
Audited Results
Fiscal Year
2022-23
Adopted Budget
Fiscal Year
2022-23
Amended Budget
Fiscal Year
2022-23
Audited Results
Fiscal Year
2023-24
Adopted Budget
Fiscal Year
2023-24
Amended Budget
Fiscal Year
2023-24
Audited Results
Fiscal Year
2024-25
Adopted Budget
Fiscal Year
2024-25
Amended Budget
Revenues
Property Taxes $ 55,463,804 $ 58,460,000 $ 58,669,000 $ 63,349,812 $ 62,219,000 $ 70,584,000 $ 69,404,912 $ 74,525,000 $ 74,525,000 Property Taxes In Lieu 23,564,478 24,707,000 26,650,000 26,634,620 27,191,000 29,549,314 29,560,538 31,725,000 31,725,000 Sales Tax 129,332,341 109,900,000 144,400,000 140,501,064 226,857,000 187,142,000 184,307,995 194,375,000 194,375,000 Franchise Taxes 3,561,004 3,000,000 4,000,000 4,337,193 3,555,000 4,000,000 4,456,617 4,250,000 4,250,000 Transient Occupancy Tax 16,400,754 16,500,000 16,500,000 16,964,564 16,500,000 16,500,000 16,625,996 17,000,000 17,000,000 Business License Tax 8,856,928 8,763,000 8,763,000 9,729,862 8,914,000 9,264,000 10,902,568 10,150,000 10,150,000 Other Taxes 5,997,517 4,500,000 5,500,000 5,572,064 5,000,000 5,800,000 5,883,421 5,500,000 5,500,000 Licenses and Permits 10,772,502 6,192,000 9,295,000 12,608,106 8,477,000 8,477,000 7,879,656 7,057,000 7,057,000 Intergovernmental 15,306,488 18,620,387 19,504,642 16,401,508 23,299,481 23,144,061 23,173,611 18,260,721 17,548,589 Fines and Forfeitures 1,060,576 753,000 771,000 959,216 741,000 901,000 1,141,324 901,000 901,000 Use of Money and Property (2,618,811 1,341,992 1,340,392 1,224,323 1,401,379 1,487,379 5,137,055 1,480,000 1,480,000 Charges for Services- ONT 19,371,918 20,902,300 20,902,300 20,902,300 21,529,369 22,723,451 22,723,450 24,500,591 23,866,579 Charges for Services 28,071,740 23,793,354 29,075,254 31,021,010 28,875,200 28,307,118 32,659,893 30,494,370 30,561,295 Other Revenue 9,466,875 1,720,000 7,883,256 6,607,104 2,020,000 5,651,773 7,098,255 5,647,747 11,164,359 Transfers In 2,508,769 - 2,000,000 2,000,000 2,000,000 15,000,000 17,000,000 3,000,000 3,459,374 Total Revenues $327,116,883 $299,153,033 $355,253,844 $358,812,746 $438,579,429 $428,531,096 437,955,291 $428,866,429 $433,563,196
Expenditures
General Government $ 33,878,368 $ 33,013,472 $ 35,001,141 $ 29,686,747 $ 42,805,793 $ 44,125,417 $ 38,712,927 $ 44,078,515 $ 44,782,309 Public Safety 194,515,870 189,262,577 198,356,864 196,602,479 219,976,081 221,468,253 230,431,183 235,219,570 236,139,085 Community Development 39,299,440 61,697,434 73,854,292 63,535,293 83,697,907 90,470,377 85,809,117 79,992,747 83,267,006 Public Works 13,895,991 8,466,127 9,866,530 8,908,679 10,573,585 11,081,094 9,460,576 20,992,839 21,534,997 Debt Service 1,681,331 - - 3,953,662 - - 3,289,102 - - Transfers Out 58,025,730 9,438,410 57,232,079 80,167,806 70,874,441 71,494,441 60,311,783 47,146,250 48,138,582 Total Expenditures $341,296,730 $301,878,020 $374,310,906 $382,854,666 $427,927,807 $438,639,582 428,014,688 $427,429,921 $433,861,979
Excess (Deficiency) of
Revenues
(14,179,847) (2,724,987) (19,057,062) (24,041,920) 10,651,622 (10,108,486) (9,940,603) 1,436,508 (298,783) Over (Under) Expenditures
Sources: Adopted budgets of the City for Fiscal Years 2021 -22 through 2024-25; audited financial statements of the City for Fiscal Years 2021 -22 through 2023-24. 1043
27 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
2020 2021 2022 2023 2024
Revenues
Property Taxes(1) $ 46,749,275 $ 50,622,447 $ 55,463,804 $ 63,349,812 $ 69,404,912 Property Taxes In Lieu (2) 20,072,659 21,557,460 23,564,478 26,634,620 29,560,538 Sales Tax 90,290,690 105,424,829 129,332,341 140,501,064(3) 184,307,995 Franchise Taxes 3,164,111 3,251,867 3,561,004 4,337,193 4,456,617 Transient Occupancy Tax 12,160,235 10,614,109 16,400,754 16,964,564 16,625,996 Business License Tax 7,793,962 8,559,248 8,856,928 9,729,862 10,902,568 Other Taxes 4,044,908 3,507,185 5,997,517 5,572,064 5,883,421 Licenses and Permits 5,488,023 8,423,831 10,772,502 12,608,106(4) 7,879,656 Intergovernmental 1,268,005 28,289,322 15,306,488 16,401,508 23,173,611(5) Fines and Forfeitures 786,630 656,407 1,060,576 959,216 1,141,324 Use of Money and Property 8,476,572 1,066,572 (2,618,811) 1,224,323 5,137,055 Charges for Services- ONT(6) 24,017,776 16,292,913 19,371,918 20,902,300 22,723,450 Charges for Services(7) 12,150,526 15,429,490 28,071,740 31,021,010 32,659,893 Other Revenue 4,969,244 13,644,767 9,466,875 6,589,628 7,098,255 Total Revenues $241,432,616 $287,340,447 $324,608,114 $356,795,270 $420,955,291
Expenditures
General Government $ 28,322,100 $ 29,847,243 $ 33,878,368 $ 29,686,747 $ 38,712,927 Public Safety 166,873,394 169,458,528 194,515,870 196,602,479 230,431,183(9) Community Development 35,829,045 36,989,671 39,299,440 63,535,293 85,809,117 Public Works 21,303,770 13,535,675(5) 13,895,991 8,908,679 9,460,576 Debt Service 3,852,938 3,887,687 1,681,331 3,953,662 3,289,102 Total Expenditures $256,181,247 $253,718,804 $283,271,000 $302,686,860 $367,702,905(8)
Excess (Deficiency) of Revenues $ (14,748,631) $ 33,621,643 $ 41,337,114 $ 54,108,410 $ 53,252,386 Over (Under) Expenditures
Other Financing Sources (Uses)
Transfers In $ 48,168,298 $21,300,682 $ 2,508,769 $ 2,000,000 $ 17,000,000 Transfers Out (14,894,106) (22,966,841) (58,025,730) (80,167,806) (60,311,783) Other financing sources - - - 17,476 - Total other financing sources (uses) 33,274,192 (1,666,159) (55,516,961) (78,150,330) (43,311,783) Special Item $(42,373,148) - - - -
Net Change in Fund Balances $(23,847,587) $ 31,955,484 $ (14,179,847) $ (24,041,920) $ 9,940,603
Fund Balances, Beginning of Year $131,397,957 $107,338,096 $128,162,049 $113,982,202 $ 89,940,282 Fund Balances, End of Year $107,550,370 $139,293,580 $113,982,202 $ 89,940,282 $ 99,880,885 ________________________
(1) Property tax revenues include residual incremental property taxes from former redevelopment agency and penalties. (2) See the caption “—State of California Motor Vehicle In-Lieu Payments.” (3) Measure Q local services sales tax increase of 1.0% effective 4/1/2023. (4) Licenses and permits revenue increase in 2023 due to pulled permits for large commercial projects. (5) American Rescue Plan Act (ARPA) revenue recognition in 2024. (6) Revenue is generated by the public safety services provided by the City to ONT. Services decreased in 2021 due to COVID. Public safety service contracts with Ontario International Airport Authority (OIAA) increased in 2024. (7) Includes fees for plan checks and other planning related services, recreational program fees, Special District, Toyota Arena and Convention Center service charges. Increased CFD contributions to General Fund Services in 2024 due to increased development. Also, increase in number of events held at Toyota Arena and the Convention Center resulted in increased security revenue. (8) Increases to personnel expenditures due to an increase in the number of positions, vacant positions being filled, and labor contractual increases. (9) Public Safety increase due to footnote 8 above and the opening of a new Fire Station located in Ontario Ranch, resulting in the addition of new personnel and equipment.
1044
28 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,
2020 2021(1) 2022 2023 2024
Assets
Cash and Investments $54,108,152 $ 79,898,830 $ 58,992,190 $80,525,740 $ 72,817,759 Receivables
Accounts 21,493,884 29,751,184 40,313,187 42,236,552 50,966,077 Taxes 200,483 241,320 1,461,851 - 87,958
Notes and Loans 75,000 63,000 66,851 60,373 365,462
Leases - 3,045,533 2,731,213 2,679,513
Accrued Interest 685,878 607,249 512,326 648,798 534,768 Prepaid Costs 103,754 161,659 158,153 140,299 397,755
Deposits 72,400 92,400 - -
Due from Other Governments 120,081 809,285 - - 4,951,505 Due from Other Funds 495,315 - 3,701,965 9,490,170 20,739,430 Advances to Other Funds 58,180,692 56,120,738 54,040,183 Advances to Successor Agency 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 Restricted Cash and Investments - - - -
Inventories 300,943 301,530 282,742 253,007 259,474 Total Assets $139,336,582 171,547,195 $166,074,692 $139,586,152 $157,299,701 Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities
Accounts Payable $11,305,415 $ 13,055,785 $ 7,126,415 $ 9,813,476 $ 14,006,703 Accrued Liabilities 6,688,007 3,687,718 5,182,079 5,193,921 9,575,824 Unearned Revenues - 12,862,997 21,579,294 17,606,106 9,260,625 Deposits Payable 12,846,099 15,239,488 15,251,827 14,446,446 16,729,265 Total Liabilities $30,839,521 $ 44,845,986 $ 49,139,615 $ 47,059,949 $ 49,572,417 Deferred Inflows of Resources
Unavailable Revenues $ 946,691 $ - - $ 5,411,969 Leases - - $ 2,952,875 $ 2,585,921 2,434,430 Total Deferred Inflows of Resources $ 946,691 $ $ 2,952,875 $ 2,585,921 $ 7,846,399 Fund Balances
Nonspendable $ 4,052,097 $ 4,001,189 $ 57,981,078 $ 3,893,306 $ 4,522,691 Restricted 417,464 361,579 361,579 373,447 383,445
Committed 595,469 - - - -
Assigned 99,862,976 122,338,441 55,639,545 85,673,529 94,974,749 Unassigned 2,622,364 - - - - Total Fund Balances $107,550,370 $126,701,209 $113,982,202 $ 89,940,282 $ 99,880,885 Total Liabilities, Deferred Inflows of Resources and Fund Balances $139,336,582 $171,547,195 $166,074,692 $139,586,152 $157,299,701
Sources: Audited financial statements of the City.
(1) Fiscal Year 2020-21 annual financial statements of the City, restated as of August 22, 2022 1045
29 Property Taxes
Property tax receipts of $98,965,450 (including 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 202 3-24, contributing approximately 30.8% of General Fund tax revenues and approximately 22.6% of total General Fund revenues during Fiscal Year 2023-24.
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.
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 p ersonal 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 in terests 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 p enalty of 1.5% per month accrues with respect to such taxes beginning on the varying dates related to the tax billing date.
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.
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 bonds, to borrow or change the distribution of fuel tax revenues or to use veh icle 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 1046
30 pursuant to State legislation enacted. 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. 1047
31 Set forth in Table 4 are the secured and unsecured assessed valuations for property in the City for the last ten Fiscal Years, including valuations attributed to the City’s redevelopment successor agency.
TABLE 4
CITY OF ONTARIO ASSESSED VALUATION HISTORY(1)
City Successor for Redevelopment
Fiscal Year
Ended
June 30 Secured Unsecured
Less:
Exemptions
Taxable
Assessed
Value Secured Unsecured
Taxable
Assessed
Value
Total
Direct
Tax Rate
2015 12,413,859 2,552,384 (108,252) 14,857,991 4,295,948 786,273 5,082,221 1.0035 2016 13,124,582 2,611,079 (105,864) 15,629,797 4,494,605 786,273 5,280,877 1.0035 2017 13,781,901 2,543,624 (109,080) 16,216,435 4,697,741 781,204 5,478,946 1.0035 2018 14,844,332 2,624,317 (108,915) 17,359,734 5,060,484 781,204 5,841,689 1.0035 2019 16,575,762 2,814,842 (108,701) 19,281,903 5,458,072 781,204 6,239,276 1.0035 2020 18,181,749 2,910,729 (110,654) 20,981,823 5,754,326 781,204 6,535,530 1.0035 2021 19,529,581 3,147,303 (111,223) 22,565,661 6,217,924 781,204 6,999,129 1.0035 2022 21,666,906 3,257,643 (112,096) 24,812,452 6,723,763 781,204 7,504,967 1.0035 2023 25,470,365 2,423,770 (109,103) 27,785,032 7,347,228 982,294 8,329,522 1.0035 2024 28,446,187 2,547,814 (109,714) 30,884,287 8,045,807 1,071,101 9,116,908 1.0035 __________________________
(1) Figures are in thousands of dollars.
Sources: San Bernardino County Assessor Combined Tax Rolls.
1048
32 Set forth in Table 5 are property tax collections and delinquencies in the City as of June 30 for the last ten 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 pena lties and interest on delinquent collections. The City also receives supplemental taxes throughout the year.
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
2015 $25,868,724 $25,584,269 98.90% $ 768,052 101.87% 2016 27,397,660 27,022,201 98.63 755,577 101,39
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 39,726,163 39,415,629 99.22 341,296 100.80
2022 43,670,142 43,624,885 99.87 496,967 101.01
2023 49,348,272 49,693,817 100.70 948,837 102.62
2024 55,422,768 54,818,657 98.91 1,336,307 101.32
_______________________
(1) The amounts shown in this column do not reflect property tax revenues that are attributable to the City ’s redevelopment successor agency.
Source: Annual Comprehensive Financial Report of the City for Fiscal Year Ended June 30, 2024. Information with respect to the ten largest property taxpayers in the City as shown on the Fiscal Year 2023-24 tax roll is set forth in Table 6.
TABLE 6
CITY OF ONTARIO
TEN LARGEST PROPERTY TAXPAYERS
Taxpayer
2024 Taxable
Assessed Valuation
% of Total
Assessed
Valuation(1)
Prologis $1,438,166,872 3.57%
United Parcel Service Company 526,706,551 1.31%
Ontario Mills LP 438,295,832 1.09%
Costco Wholesale Corporation 402,837,408 1.00%
Ontario Lan Ventures LLC 378,882,004 0.94%
Rexford Express Corporation 375,759,895 0.93%
Federal Express Corporation 352,759,895 0.88%
WRPV XIV Ontario TA LLC 316,287,710 0.79%
Vineyard Industrial LLC 308,296,317 0.77%
Palmer Ontario Properties LP 290,893,063 0.72%
Total Top Ten Taxpayers $4,828,954,601 12.00%
________________________
Source: HDL, Coren & Cone
Sales Taxes
Sales tax receipts of $184,307,995 provided the largest tax revenue source for the City in Fiscal Year 2023-24 contributing approximately 57.4% of General Fund tax revenues and approximately 42.1% of total General Fund revenues during Fiscal Year 2023-24. Retail sales at the Ontario Mills Mall and automobile sales at the Ontario Auto Center contribute significantly to such receipts. Additionally, a large increase in sales tax was due to the recent passage of Measure Q, the one percent additional sales tax in Ontario that became effective April 1, 2023.
1049
33 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 rate is established by the State Legislature, and local overrides may be approved by voters. The current sales tax rate in the City is 8.75%.
Transient Occupancy Taxes
Transient occupancy tax receipts of $16,625,996 provided the fourth largest tax revenue source for the City in Fiscal Year 2023-24, contributing approximately 5.2% of General Fund tax revenues and approximately
3.8% of total General Fund revenues during Fiscal Year 2023-24. 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.
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.
Services
Charges of $55,383,343 collected for services provided by the City in Fiscal Year 2023-24, including but not limited to fees for plan checks and other planning services, police services and recreational program fees, provided approximately 12.6% of General Fund revenues during Fiscal Year 202 3-24. 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 at $22,723,450 for Fiscal Year 2023-24. Additionally, the City receives moneys from community facilities districts which p ay for public safety and public maintenance services.
Amounts received from communities facilities districts for were $9,417,637 for Fiscal Year ending 2022; $10,667,454 for Fiscal Year ending 2023; and $13,509,864 for Fiscal Year 2024.
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 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.
VLF receipts, comprising Property Tax and In Lieu amounts, totaled $29,560,538 in Fiscal Year 2023-
24. Such revenues provided the third largest tax revenue source for the City in Fiscal Year 2023-24, contributing approximately 9.2% of General Fund tax revenues and approximately 6.7% of total General Fund revenues.
TABLE 7
CITY OF ONTARIO
STATE OF CALIFORNIA MOTOR VEHICLE IN-LIEU PAYMENTS
Fiscal Year Ended June 30,
Source 2020 2021 2022 2023 2024
Motor Vehicle In-Lieu Payments $20,213,750 $21,691,584 $23,774,739 $26,634,620 $29,560,538 _________________________
Source: City.
1050
34 Federal Funding
The City receives funding from the federal government for several programs, including CDBG and HOME, Asset Forfeiture, and various grants for a total of approximately $11.3 million for Fiscal Year 2024-25.
The City has received notification that the federal grants are earmarked for funding. See “RISK FACTORS – Federal Funding,” herein.
Other Indebtedness
The table below shows outstanding long-term obligations of the City’s General Fund. Below the table is a brief narrative of each obligation.
CITY OF ONTARIO
OUTSTANDING LONG TERM GENERAL FUND OBLIGATIONS
Long-Term Debt
Issuance Date
Maturity Date
Interest Rate
Principal
Balance as of
June 30, 2024
2017 Lease Revenue Refunding Bonds July 11, 2017 November 1, 2042 3.0%- 5.0% $ 23,655,000 2020 Pension Obligation Bonds May 21, 2020 June 1, 2050 2.071%- 3.979% 217,815,000 2020 Lease/Purchase Agreement September 30, 2020 November 1, 2040 2.320%- 2.961% 26,755,517 2021 California Energy Commission Loan May 11, 2021 June 22, 2031 1.00% 2,301,770 2021 Lease/Purchase Agreement August 11, 2021 August 12, 2042 3.55% 17,399,584 2021 Lease Revenue Refunding Bonds December 16, 2021 October 1, 2043 0.665%- 3.283% 32,560,000 2022 Lease Revenue Bonds June 15, 2022 November 1, 2052 1.890%- 3.780% 89,495,000 2023 Lease Revenue Bonds March 21, 2023 March 1, 2053 4.39%- 12.00% 100,000,000 2023 Land Purchase Agreement March 31, 023 March 31, 2033 3.68% 89,655,862 $599,637,733
Issued after June 30, 2024 Issuance Date Maturity Date Interest Rate Issuance Amount 2024 Land Purchase Agreement July 11, 2024 January 5, 2034 4.56% $28,690,200 2024 Land Purchase Agreement September 12, 2024 January 4, 2034 4.75% 18,805,500 $47,495,700
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 201 7 Bonds are payable from rental payments payable from the City to the Authority under the Original Lease Agreement. As of June 30, 2024, the 2017 Bonds were outstanding in the aggregate principal amount of $23,655,000.
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, 2024, the 2020 Bonds were outstanding in the aggregate principal amount of $217,815,000.
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 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, 2024, the 2020 Lease/Purchase Agreement was outstanding in the principal amount of $26,755,517. 2021 Energy Commission. In June 2021, the City entered into a direct borrowing loan agreement with the California Energy Commission in the amount of $2,898,220. The purpose of the loan is to provide funding for the installation of LED lights. The loan bears a 1% interest rate and is due in semi -annual payments in 1051
35 December and June through June 2031. Annual payments are $341,295 and the obligation matures in 2031. As of June 30, 2024, the 2021 Energy Commission Loan was outstanding in the principal amount of $2,301,770. 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 repa yment source is expected to be the City ’s Broadband/Fiber Optic Fund. As of June 30, 2024, the 2021 Lease/Purchase Agreement was outstanding in the principal amount of $17,399,584.
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”). As of June 30, 2024, the 2021 Bonds are currently outstanding in the aggregate principal amount of $32,560,000. 2022 Bonds. In 2022 the Authority issued its 2022 Lease Revenue Bonds, Series A (the “2022 Bonds”) in the amount of $90,830,000 to finance the acquisition and construction of capital projects. The 2022 Bonds dated June 15, 2022, are payable semiannually on May 1 and November 1 of each year, commencing November 1, 2022, and mature in 2052. The bonds are payable from base rental payments to be made by the City for the right to the use certain real property and improvements of the City pursuant to a Lease Agr eement, dated June 1, 2022 (the “2022 Lease”). Annual lease payments are approximately $5.8million. As of June 30, 202 4, the 2022 Bonds are currently outstanding in the aggregated principal amount of $89,495,000. 2023 Bonds. In March 2023, the Ontario Public Financing Authority issued its 2023 Lease Revenue Bonds (the “2023 Bonds ”) in the amount of $100,000,000 to finance land acquisition and infrastructure improvements. The bonds are payable semiannually on September 1 and March 1 of each year, commencing September 1, 2023 with a mandatory tender date of March 1, 2026. The current rate is 4.39%, with a maximum rate of 12%. As of June 30, 2024, the 2023 Bonds are currently outstanding in the aggregate principal amount of $100,000,000.
Other Long Term Debt Payable from General Fund.
In February 2023 the City entered into a purchase and loan agreement with the Ronald and Kristine Pietersma Family Trust in the principal amount of $100,269,446. The purpose of the loan is to provide funding for the purchase of a property located in the City to be used for construction of a sports complex. The loan bears a 3.68% interest rate and is due in monthly payments of $1,000,000 from April 2023 to March 2033. As of June 30, 2024, the loan was outstanding in the principal amount of $89,655,862.
On July 11, 2024, the City entered into a purchase agreement with 15 Dairy River, LLC, for the principal amount of $28,690,200.00, with interest accruing at a rate of 4.56%. The purpose was to acquire vacant land by the City for the future development of the Ontario Sports Empire project. The City will make annual payments of principal and interest in the amount of $3,556,359.76 for a period of ten years beginning on January 5, 2025.
The City has the right to prepay this obligation at any time without penalty.
On September 12, 2024, the City entered into a purchase arrangement with Ontario WF Farm, LLC, for the principal amount of $18,805,500.00 together with interest accruing at a rate of 4.75% . The purpose was to acquire vacant land by the City for the future development of the Ontario Sports Empire project. The City will make annual payments of principal and interest in the amount of $ 2,331,368.13 for a period of ten years. The City has the right to prepay this obligation at any time without penalty.
Short-Term Debt. The City currently has no short-term debt outstanding.
Anticipated Borrowings and Capital Program.
1052
36 In furtherance of the City ’s capital program for park s and other amenities, the City has entered into a purchase and sale agreements for an animal shelter site in the City and additional land for the planned Phase 1 of the Great Park. The obligation relating to the acquisition of the parcel for the Great Park is the principal amount of $21,820,500, payable over ten years at an interest rate of ___%, and is prepayable on any date. The obligation relating to the acquisition of the parcel for an animal shelter the principal amount of $7,056,823, payable over ten years at an interest rate of ____%, and is prepayable on any date. The animal shelter site will be leased to the Animal Resource Center of the Inland Empire, which is a joint powers authority comprised of the City and other surrounding cities and the County of San Bernardino , and which will pay lease payments to the City for its occupancy and use of the site.
Additionally, t he City has a robust capital improvement program which will be funded from a combination of pay -as-you-go and additional lease revenue bonds and is discussed below . See, “CITY FINANCIAL INFORMATION – Capital Improvement Program,” herein.
Capital Improvement Program
The City is undertaking a series of significant public infrastructure projects designed to enhance public amenities and support regional growth. These projects include the Ontario Sports Empire, Ontario Grand Park, and the Toyota Arena , among others. For fiscal years 2024 -25 through 2029 -30, the City has budgeted approximately $1.6 billion in capital improvements.
A major component of this program is the Ontario Sports Empire, which includes land acquisition for the new stadium, construction of surrounding sports fields and parking facilities, and associated public infrastructure. The total estimated investment for this project over the current and following five fiscal years is $577 million.
Additionally, the City is investing heavily in civic center enhancement and fire station construction, with projected costs exceeding $300 million during the same period. Other key infrastructure investments include park and playground improvements, public infrastructure upgrades, downtown revitalization efforts, and the renovation and expansion of museum and library facilities.
The City plans to finance these improvements through a combination of public financing and pay -as- you-go funding. In addition to the 2025 Bonds, the City anticipates issuing an additional $150 million of lease revenue bonds in December 2025 and an additional $200 million of lease revenue bonds in calendar year 2026. 1053
37 Estimated Direct and Overlapping Bonded Debt . The estimated direct and overlapping bonded debt of the City as of June 30, 202 4 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 Underwriter have independently verified the information in Table 8 and do not guarantee its accuracy.
TABLE 8
CITY OF ONTARIO
ESTIMATED DIRECT AND OVERLAPPING BONDED DEBT AS OF JUNE 30, 2024
Outstanding
Debt
Governmental Activities Debt Est.
Share
of Overlapping
Percentage Debt
6/30/2024 Applicable 6/30/2024
City Assessed Valuation $30,994,001,113
Redevelopment Agency Incremental Valuation 9,116,907,878 Total Assessed Valuation 40,110,908,991 *
Overlapping Debt Repaid with Property Taxes:
Metropolitan Water District $ 18,210,000 1.036% $ 188,656 Chaffey Community College District 278,160,000 24.764 68,883,542 Chino Valley Unified School District 763,817,971 8.018 61,242,925 Chaffey Union High School District 587,088,245 # 43.864 257,520,388 Ontario-Montclair School District 128,010,015 70.419 90,143,372 Mountain View School District School Facilities Improvement District No. 1 $ 5,829,676 99.457% $ 5,798,021 Mountain View School District School Facilities Improvement District No. 2 $ 18,490,000 $ 98.881% $ 18,283,097 Mountain View School District CFD No. 1997-1 304,000 100.000 304,000 Ontario Community Facilities District No. 13 2,930,000 100.000 2,930,000 Ontario Community Facilities District No. 24 13,890,000 100.000 13,890,000 Ontario Community Facilities District No. 25 7,915,000 100.000 7,915,000 Ontario Community Facilities District No. 26 8,205,000 100.000 8,205,000 Ontario Community Facilities District No. 28 7,940,000 100.000 7,940,000 Ontario Community Facilities District No. 30 12,595,000 100.000 12,595,000 Ontario Community Facilities District No. 31 4,455,000 100.000 4,455,000 Ontario Community Facilities District No. 33 5,675,000 100.000 5,675,000 Ontario Community Facilities District No. 34 7,120,000 100.000 7,120,000 Ontario Community Facilities District No. 38 9,705,000 100.000 9,705,000 Ontario Community Facilities District No. 39 4,705,000 100.000 4,705,000 Ontario Community Facilities District No. 40 6,000,000 100.000 6,000,000 Ontario Community Facilities District No. 41 13,430,000 100.000 13,430,000 Ontario Community Facilities District No. 42 6,975,000 100.000 6,975,000 Ontario Community Facilities District No. 43 14,985,000 100.000 14,985,000 Ontario Community Facilities District No. 45 8,525,000 100.000 8,525,000 Ontario Community Facilities District No. 46 6,865,000 100.000 6,865,000 Ontario Community Facilities District No. 53 21,050,000 100.000 21,050,000 Ontario Community Facilities District No. 54 6,035,000 100.000 6,035,000 Ontario Community Facilities District No. 55 9,305,000 100.000 9,305,000 Ontario Community Facilities District No. 56 19,490,000 100.000 19,490,000 Ontario Community Facilities District No. 57 12,795,000 100.000 12,795,000 Total overlapping debt repaid with property taxes $2,010,499,907 $712,954,001 Overlapping General Fund Debt:
San Bernardino County General Fund Obligations $ 131,565,000 12.592% $ 16,566,665 San Bernardino County Flood Control District GF Obligation 37,295,000 12.592 4,696,186 Chaffey Community College District Certificates of Participation 23,835,000 24.764 5,902,499 Cucamonga School District Certificate of Participation 1,776,000 50.927 904,464 City of Ontario General Fund Obligations 245,710,000 100.000 245,710,000 City of Ontario Pension Obligation Bonds 217,815,000 100.000 217,815,000 City of Ontario General Fund Obligations-Unamortized
Bond Premium and Discount $ 12,449,217 $ 12,449,217 Loans Payable 141,096,202 141,096,202
West Valley Vector Control District Certificate of Participation 1,491,876 34.641% 516,801 Total overlapping general fund debt $ 813,033,295 $645,657,034 Overlapping Tax Increment Debt (Successor Agency): 10,952,200 100.00% 10,952,200 Total overlapping debt 752,492,816
City direct debt 617,070,419
Total direct and overlapping debt 1,369,563,235
______________________
* Does not include deduction of the homeowner’s exception of $109,713,888 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 incorporates 1054
38 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, 2024 are summarized as follows:
1055
39 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 3.0% 2.4% - 3.0% 2.0% - 2.7%
Employee Normal Cost 9.00%(1) 9.00%(1) 12.00%(1)
Employer Normal Cost Rate 23.12% 23.12% 23.12%
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 3.0% 2.4% - 3.0% 2.0% - 2.7%
Employee Normal Cost 9.00%(1) 9.00%(1) 12.00%(1)
Employer Normal Cost Rate 19.93% 19.93% 19.93%
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 2.0% - 2.5% 1.0% - 2.5%
Employee Normal Cost 8.00%(1) 6.25%(1)
Employer Normal Cost Rate 10.56% 10.56%
________________________
(1) Employees are required to make the full employee contribution themselves. The City does not make any portion of the employee contribution.
Source: City.
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 1056
40 340 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 2024
(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 $345,000 $181,734
Maximum Pensionable Income if
also Participating in Social Security N/A 151,446
_______________________
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 a ctuarial 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 2024-25, required employer normal cost rates as a percentage of payroll were 22.90% for Police Safety Plan employees, 19.55% for Fire Safety Plan employees and 10. 44% for Miscellaneous Plan employees. For Fiscal Year 2025-26, required employer normal cost rates as a percentage of payroll are 22.82% for Police Safety Plan employees, 19.94% for Fire Safety Plan employees and 10. 09% for Miscellaneous Plan employees.
For Fiscal Year 2024-25, the total required employer payment of the unfunded accrued liability for the City’s Police Safety Plan was $1,936,800. For Fiscal Year 2025-26, the total required employer payment of the unfunded accrued liability for the City’s Police Safety Plan is $3,058,059, 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.” For Fiscal Year 2024-25, the total required employer payment of the unfunded accrued liability for the City’s Fire Safety Plan was $ 1,228,001. For Fiscal Year 2025-26, the total required employer payment of the unfunded accrued liability for the City ’s Fire Safety Plan is $ 2,370,845, 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 2024-25, the total required employer payment of the unfunded accrued liability for the City’s Miscellaneous Plan was $ 1,470,627. For Fiscal Year 2025-26, the total required employer payment of the unfunded accrued liability for the City’s Miscellaneous Plan is $2,799,398, 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.” 1057
41 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 act ive members in the plan. Funding the unfunded liability as a percentage of payroll could lead to underfunding of pension plans. Due to stakeholder fee dback 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 2011-12 through 2022-23 report investment gains of approximately 1.0%, 12.5%, 18.4%, 2.4%, 0.6%, 11.2%, 8.6%, 6.7%, 4.7%,
21.3%, -6.1% and 5.8%, respectively. Future earnings performance may increase or decrease future contribution rates for plan participants, including the City.
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 payme nts 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 a n 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 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 e xpresses 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 ass essments 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.
A summary of principal assumptions and methods used to determine the total pension liability for Fiscal Year 2022-23 is shown below.
1058
42 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 6.80%
Inflation 2.30%
Salary Increases Varies by entry age and service
Investment Rate of Return 6.80% net of pension plan investment and administrative expenses; includes projected inflation rate of 2.30%
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.
Changes in the pension liability and funded ratio 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 PENSION LIABILITY
Police Safety Plan
June 30, 2022 June 30, 2023
Present Value of Benefits $646,564,455 $671,911,214
Entry Age Accrued Liability 525,276,255 545,512,302
Market Value of Assets 464,080,440 479,898,062
Unfunded Accrued Liability $61,195,815 $65,614,240
Funded Ratio 88.3% 88.0%
Fire Safety Plan
June 30, 2022 June 30, 2023
Present Value of Benefits $463,649,308 $483,846,676
Entry Age Accrued Liability 378,164,851 392,782,632
Market Value of Assets 333,060,160 342,226,523
Unfunded Accrued Liability $ 45,104,691 $50,556,109
Funded Ratio 88.1% 87.1%
Miscellaneous Plan
June 30, 2022 June 30, 2023
Present Value of Benefits $580,103,457 $610,083,322
Entry Age Accrued Liability 483,988,774 505,029,913
Market Value of Assets 436,735,780 449,133,287
Unfunded Accrued Liability $47,252,994 $55,896,626
Funded Ratio 90.2% 88.9%
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 2022-23 (6.80%), as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower ( 5.80%) or 1 percentage point higher (7.80%) than the Fiscal Year 2022-23 rate:
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43 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% (5.80%)
Applicable Discount
Rate (6.80%)
Discount Rate +
1% (7.80%)
Police Safety Plan $143,743,047 $65,614,240 $ 2,045 Fire Safety Plan 103,849,016 50,556,109 6,814,900
Miscellaneous Plan 125,087 55,896,626 (938,057)
Source: City.
For additional information relating to the City’s pension plans, see Note 9 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, 2023 (the census date), the following employees were covered by the benefit terms:
Category Count
Active employees 1,067
Inactive employees or beneficiaries currently receiving benefit payments 731 Inactive employees entitled to but not yet receiving benefit payment 1,798
Source: City.
The City funds benefits under the OPEB Plan based on an Actuarially Determined Contribution (the “ADC”). For the year ended June 30, 2023, the City ’s funded rate was 90.3% 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 November 22, 2024 (the “Report”), the Actuarial Consultant concluded that the City ’s Net OPEB liability is $25,244,194. 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, 202 3, the City held $ 164,683,608in the OPEB Trust. Based on the most recent actuarial valuation, the actuarial unfunded liability of the OPEB Plan was estimated to be approximately $25,244,194using a methodology that is compliant with GASB 75. For Fiscal Year 2022-23, the City also paid $13,100,303 in post-employment health care benefits. 1060
44 Changes in the total liability for the City’s OPEB Benefit plan for Fiscal Year 2022-23 were as follows.
CITY OF ONTARIO
CHANGES IN OPEN PLAN LIABILITY
Increase / (Decrease)
Total
OPEB Plan Liability
Plan Fiduciary
Net Position
Net OPEB Plan
Liability / (Asset)
Balance at June 30, 2022 $168,188,787 $ 149,077,163 $19,111,624 Net Changes for period from July
1, 2022 through June 30, 2023
21,739,015 15,606,445 6,132,570
Balance at June 30, 2023 $ 189,927,802 $ 164,683,608 $ 25,244,194
Source: City.
The following table presents the net liability of the OPEB Plan, calculated using the discount rate applicable to Fiscal Year 2022-23 (6.25%), 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 .25%) or 1 percentage point higher (7. 25%) than the current rate:
CITY OF ONTARIO
SENSITIVITY OF THE OPEB PLAN TOTAL LIABILITY
TO CHANGES IN THE DISCOUNT RATE
Discount Rate –
1% (5.25%)
Current Discount
Rate (6.25%)
Discount Rate +
1% (7.25%)
Plan’s Total Liability/(Asset) $52,488,181 $25,244,194 $3,053,816
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 2025A Bonds.
For additional information relating to the City’s OPEB Plan, see Note 10 to the City’s audited financial statements set forth in Appendix C.
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 3, 2024. 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 funct ion 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:
1061
45 • 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, 2024 is set forth in the below table. Approximately $72.8 million (7.8%) of the total investment portfolio as of June 30, 2024 was attributed to the General Fund.
CITY OF ONTARIO
SUMMARY OF INVESTMENTS(1)
Investment Maturity
Investment Type
6 Months
to 1 Year 1 to 3 Years 3 to 5 Years Total
United States Treasury Obligations $ 137,492,690 $ 133,688,570 $ 53,862,050 $325,043,310 Federal Agency Obligations 47,633,660 114,941,700 55,856,024 218,431,384 Medium Term Corporate Notes 31,729,174 44,473,877 9,857,900 86,060,951 Municipal Bonds 7,216,200 7,216,200
Supranational 9,844,500 9,317,200 9,748,150 28,909,850
California Asset Management Program 30,302,994 - - 30,302,994 Local Agency Investment Fund 68,767,282 - - 68,767,282 Subtotals $332,986,500 $302,421,347 $129,324,124 $764,731,971 Investment with Fiscal Agents:
Money Market Funds $163,454,996 - - $163,454,996 Totals $496,441,496 $302,421,347 $129,324,124 $928,186,967 ____________________
(1) Totals may not add due to rounding.
Source: City.
For additional information relating to the City’s investments, see Note 2 to the City’s audited financial statements set forth in Appendix C.
City Insurance
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 m aximum 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 accou nt method, as provided by the State of California. 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, including a $750,000 sublimit for unscheduled assets. Certain portions of the Water System, including pipeline s that are located more than 1,000 feet from City -owned above-ground infrastructure, are not covered by the City’s property insurance except for the $750,000 sublimit that is described in the previous sentence . In addition, the City does not maintain insurance cover age for earthquake damage.
See the caption “CERTAIN RISKS TO BONDHOLDERS—Natural Disasters.” 1062
46 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 Water System, and the City does not have any obligation under the Indenture to maintain earthquake coverage or other coverage in the current coverage amounts. Significant damage to the Water System c ould affect the City ’s ability to generate sufficient Net Revenues to pay the 2025A Bond s. See the caption “CERTAIN RISKS TO BONDHOLDERS —Natural Disasters.”
The City has not paid or settled any claims that exceeded its insurance coverage in the past three years.
See Appendix B under the caption “COVENANTS OF THE CITY —Insurance” for a description of insurance coverages that are required to be maintained while the 2025A Bonds are outstanding.
Economic Development in the City
The City of Ontario has established itself as a premier destination for corporate expansion into the Western United States, supported by a diverse and growing economic base. Home to more than 14,000 businesses, Ontario benefits from a strategic location an d an extensive transportation network. Ontario International Airport continues to be a major driver of economic activity, offering both commercial and cargo services. The City is also connected to three major highways -Interstate 10, Interstate 15, and St ate Route 60- providing seamless access to regional and national markets. Additionally, two major rail lines further enhance Ontario’s logistical capabilities, while the proximity to the Ports of Los Angeles and Long Beach facilitates international trade.
These advantages have attracted significant investment and development, leading to a growing tax base and increasing property values. Several major residential, commercial, and industrial projects currently underway will further bolster the City’s economi c strength by increasing property tax revenues and sales tax collections.
Ontario Ranch. Ontario Ranch is located in the southern portion of the City near the western boundary of the County. Ontario Ranch spans 13.5 square miles and is the largest master-planned community in Southern California. The area covers 8,200 acres of the former 14,000 -acre San Bernardino Agricultural Preserve, historically used for dairy and cattle farming by Dutch, French Basque, Portuguese, and Mexican families. In 1999, the preserve was divided, with portions incorporated into Chino, Chino Hills, and Ontario. Ontario Ranch, named after the original Model Colony of Ontario established in 1882 by the Chaffey Brothers, continues the legacy of innovative land development, including water rights distribution with land purchases, the grand boulevard (Euclid Avenue), and Chaffey College (1885).
While much of Ontario Ranch remains undeveloped, construction of numerous planned communities on the east side are either completed or in progress. At full buildout, Ontario Ranch is expected to include approximately 6 0,000 residential units, approximately 12 million square feet of commercial and office development, approximately 22.7 million square feet of industrial space, and approximately 5.8 million square feet of retail space. Ontario Ranch will also feature ten new schools and over 400 acres of public parkland.
Currently, Ontario Ranch has a population of 30,000 with 2,150 employed in the area. Population growth is accelerating at an annual rate of 11.26%, and the community has been consistently ranked as California’s top-selling master-planned community by John Burns Research and Consulting. The future Ontario Sports Empire will further enhance Ontario Ranch’s status as a premier residential and recreational destination.
Ontario Sports Empire. Currently under construction and expected to be completed in 2026, the Ontario Sports Empire is a 200 acre sports and entertainment complex designed to attract 1.2 million visitors annually.
The facility will feature the new Los Angeles Dodgers single-A team. The development will feature a 6,000 - seat Minor League Baseball stadium, a vibrant stadium village with restaurants, entertainment venues, and a hotel, as well as professional-quality soccer, baseball, and softball fields. Additionally, the complex will include a state-of-the-art youth sports training facility. This project is anticipated to generate substantial tax revenue and create more than 600 full-time jobs. Its completion will further solidify Ontario’s position as a regional center for sports and entertainment.
1063
47 Ontario Grand Park. Ontario Grand Park, an integral part of Ontario Ranch, will span approximately 340 acres and extend over 3.7 miles, serving as a major recreational and open space asset for the City. Phase 1, covering approximately 130 acres in the eastern portion of Ontario Ranch, is currently under construction and is expected to be completed by 2030. Once fully developed, the park will provide a variety of public amenities, enhancing the quality of life for Ontario residents and visitors alike.
Toyota Arena. The City is significantly upgrading the Toyota Arena and its surrounding entertainment district to enhance its role as a major sports and entertainment hub. Planned improvements include a new plaza with 26,000 square feet of commercial, office, and retail space, as well as the development of approximately 384 multi-family residential units. The plaza will also feature outdoor entertainment areas, concession kiosks, and dedicated public gathering spaces. These enhancements will increase visi tor engagement and generate long - term economic benefits for the City.
Ontario International Airport Redevelopment . Between 1994 to 2011, the City acquired multiple residential properties that were adversely impacted by noise from Ontario International Airport operations. The City has since initiated efforts to redevelop these properties with land uses that align with Ontario International Airport’s long -term growth strategy. As part of this initiative, the Ontario International Airport Authority (“Airport Authority”) has received 226 parcels under its noise land program, with plans to sell these properties for commercial and industrial development in Fiscal Year 2025-2026. This effort is expected to drive business activity, support regional economic growth, and further establish Ontario as a leading logistics hub.
Manufacturing and Distribution. With 120 million square feet of industrial space and over 240 logistics establishments, Ontario remains a key player in global trade and distribution. The City continues to attract major industrial investments, creating job opportunities and expanding econ omic base. The HUB at Ontario International Airport is a logistics complex that a private developer is building on 215 acres ONT owns just east of the airport. When complete, the complex will include nine warehouses totaling 4.3 million square feet of logistics space that will support goods movement, generate revenue and create jobs for the region.
Ontario Ranch recently welcomed the world’s largest Amazon fulfillment center, a 4.5 million-square- foot facility capable of processing up to 50 million items for local, national, and global distribution. Once fully operational, the facility is expected to create 2,000 new jobs, reinforcing Ontario’s status as a critical logistics and distribution hub in the Western United States.
Ontario International Airport . Ontario International Airport Authority (OIAA) continues to expand services and investment in ONT. The Southern California gateway reported 7,084,864 passengers in 2024,
10.2% more than 2023 and 27% more than pre-pandemic 2019, making it the fastest growing among medium- and large-size airports in California. The 2024 count also represents a 67% increase since 2016, when ONT was transferred to local control from the City of Los Angeles. OIAA will upgrade and expand the TSA security area for a faster and smoother travel experience and is repaving and adding underground infrastructure improvements to Airport Drive in front of ONT to accommodate continued growth of the airport.
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 June 1, 2013, by and between the City and the Housing Authority. The Authority has no financial liability to the Owners of the 2025A Bonds with respect to the payment of 2025 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.
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.
1064
48 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 certain school facilities).
Property taxes that are subject to Proposition 13 are a significant source of the City ’s General Fund re venues.
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 co nstruction, 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. 1065
49 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) imp osed 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 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 Novem ber 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 tha t 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 sew er, 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 Proposit ion 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 a n 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 initiati ve 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 1066
50 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 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 revenue s 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 loc al 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 tha t 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 ma nner 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 2025A Bonds should consider carefully all possible factors that may affect the ability of the City to pay 2025 Base Rental Payments under the Lease Agreement. The 2025A Bonds may not be a suitable investment for all prospective purchasers. 1067
51 The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating the purchase of the 2025A Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the 2025A 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 intend ed to reflect the relative importance of any such risks.
General Considerations – Security for the 2025A Bonds
The 2025A Bond s are special obligations of the Authority, payable solely from 2025 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 2025A 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 s uch 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, bec ause 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 Property by reason of damage to or destruction or condemnation of the Property, or any defects in title to the Property, the Base Rental Payments will be subject to abatement. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE 2025A 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 Property 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 Property, 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 Property or redemption of the 2025A Bonds, there could be insufficient funds to make payments to Owners in full.
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. 1068
52 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 Property could be substantially higher or lower than its value at the time of the issuance of the 2025A Bonds. Abatement, therefore, could have an uncertain and material adverse effect on the security for and payment of the 2025A Bonds.
If damage, destruction, title defect or eminent domain proceedings with respect to the Property 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 2025A Bonds during the period that the Property 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 2025A 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 referend um, 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 Property
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 Property up to replacement costs and covering title defects.
If the Property is damaged or destroyed, there can be no assurance that the insurance proceeds will be sufficient to repair or restore the Property, or to redeem or defease all of the then-Outstanding 2025A 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 2025A 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 Property
If all of the Property (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 Property is taken permanently, or if the Property 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 amou nt to be agreed upon by the City and the Authority such that the resulting Base Rental Payments represent fair consideration for the use and occupancy of the remaining usable portion of the Property.
If all or a portion of the Property 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 2025A Bonds. If the award is less than the amounts remaining on such Outstanding 2025A Bonds, then the Owners will be paid less than the amounts remaining on such Outstanding 2025A Bonds. 1069
53 Value of Property
In the event that the Trustee re-enters or re-lets the Property 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 2025A Bonds. The security under the Lease Agreement extends only to the Authority ’s leasehold interest in the Property and is subject to the restrictions of the Lease Agreement and all other use restrictions applicable to the Property. The Property have not been appraised in connection with the issuance of the 2025A Bonds.
No Acceleration of Base Rental Payments
Nothing in the Lease Agreement permits the Authority or the Trustee to accelerate Base Rent al 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 2025A 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 “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.
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. Othe r 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, e conomic 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 1070
54 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, 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 l ocal governments as part of the State’s efforts to address any such related State financial difficulties.
Although t he 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 STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS —Proposition 22 ,” declining revenues and fiscal difficulties that arose in the State commencing in 2009 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 me asures 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. 1071
55 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 2025A 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 a n 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 i n 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 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 Property which, in turn, could substantially reduce General Fund revenues and affect the ability of the City to make Base Rental P ayments or cause an abatement in Base Rental Payments if the City is unable to use and occupy the Property. The City maintains liability insurance, rental interruption insurance and property casualty insurance for the Property. 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, dupli cate 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 1072
56 makes internal system changes as needed. Over eight years ago, the City experienced a successful ransomware attack that affected a small number of files. The City was able to immediately isolate the issue and recover. The City has not experienced a successful attack against its network and serv ers since the above security measure have been put in place. There can be no assurance that a future attack or attempted attack would not result in the disruption of City operations. However, the City expects that any such disruptions would be temporary in nature due to its backup/restore procedures and disaster recovery planning.
The City has not experienced a successful attack against its network and servers since the above security measure have been put in place. Over eight years ago, the City experienced a successful ransomware attack that affected a small number of files. The City was able to immediately isolate the issue and recover. However, there can be 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 n ature due to its backup/restore procedures and disaster recovery planning.
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.
The City and the Authority have not independently verified, but are not aware of, the presence of any hazardous substances on the Property. 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 subst ance 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.
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 Property. 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 2025A 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 Property, and the Trustee may hold, operate and manage the Property and apply revenues therefrom toward payment of the 2025A 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 pr incipal of and interest on the 2025A Bonds. In addition, the Trustee may incur significant operating costs in connection with the Property. 1073
57 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 Property 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 Property upon compliance with all of the conditions set forth in the Lease Agreement. After a substitution or release, the portion of the Property 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 caption s “SECURITY AND SOURCES OF PAYMENT FOR THE 2025A BOND S―Substitution or Release of the Property” and “SECURITY AND SOURCES OF PAYMENT FOR THE 2025A BONDS—Additional Bonds.” Although the Lease Agreement requires, among other things, that the Property, as constituted after such substitution or release, have an annual fair rental value at least equal to the maximum Base Rental Payments for the Property coming due in the then-current Fiscal Year or in any subsequent Fiscal Year, it does not require that the Property have an annual fair rental value equal to the annual fair rental value of the Property prior to the substitution release of any portion thereof. Thus, a portion of the Property 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 2025A 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 Rent al 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 Property 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 2025A 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 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 2025A Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of dela y, limitation or modification of their rights.
The legal opinions that will be delivered concurrently with the issuance of the 2025A Bonds will be qualified, as to the enforceabil ity of the 2025A Bonds, the Indenture , the Lease Agreement and other related 1074
58 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 C ity by the Trustee constitute Events of D efault 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 circums tances 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 Property, 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 Rent al Payments with respect to such Property, the Trustee must sue to recover Base Rent al Payments on an annual basis.
Alternatively, the Authority or the Trustee may terminate the Lease Agreement, retake possession of the Property and proceed against the City to recover damages pursuant to the Lease Agreement. Due to the specialized and limited nature of the Property (as discussed under the caption “THE PROPERTY”), it is unlikely that 2025A Bond Owners would be able to generate rental income that is sufficient to make all payments of principal of and interest on the 2025A Bonds when due. Moreover, the Trustee is not empowered to sell the fee interest in the Property (which is owned by the City) for the benefit of the Owners of the 2025A 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 2025A 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 2025A Bond s 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 2025A 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.
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 exis tence of unsecured or secured debt which may have a priority of payment that is superior to that of Owners of the 2025A 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 2025A 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 1075
59 the cities under lease revenue obligations that were substantially identical or similar to the 2025A 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 2025A 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 2025A 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 2025A Bonds, or, if a secondary market exists, that the 2025A 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 2025A Bonds. Any material failure to comply with such undertaking in the future may adversely affect the liquidity of the affected 2025A 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 su ch 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 2025A 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.
Federal Funding
The federal government provides funding for several City programs. On January 20, 2025, President Trump issued a series of executive orders, which include ensuring that federal funds are used in a manner approved by the current administration. In response to and in an effort to carry out such orders, on January 27, 2025, the White House Office of Management and Budget (“OMB”) released its Memorandum M -25-13, Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs (the “OMB Memorandum”).
The OMB Memorandum directed federal agencies to temporarily pause all activities related to obligation or disbursement of all federal financial assistance, and said temporary pause was to become effective at 5:00 p.m. on January 28, 2025. The OMB Memorandum caused mass confusion as to whether certain Federal funding and grants would be paused. On January 28, 2025, shortly before the OMB Memorandum became effective, a federal judge blocked the pause on federal funding. On January 29, 2025, OMB resci nded the OMB Memorandum.
Although the OMB Memorandum was rescinded, the executive orders are in effect and the matter is ongoing as spending reviews continue. On January 31, 2025, a federal judge issued a temporary restraining order prohibiting the admin istration from pausing, freezing, impeding, blocking, canceling, or terminating federal financial assistance obligations to the states. Responding to the petition of several state Attorneys General, on February 10, 2025, a federal judge issued an Enforcem ent Order clarifying the scope of temporary restraining order and ordering the Trump Administration to release federal funds and comply with the earlier order. The Trump Administration’s request to stay the temporary restraining order was denied. The City cannot predict any action 1076
60 to be taken in carrying out the executive orders, but anticipates that any termination in federal funding will not have a material impact on the City’s finances.
Risks Associated with Bond Insurance
In the event that the Authority defaults in the payment of principal of or interest on the 2025A Bonds when due, the owners of the 2025A 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 2025A Bonds, no assurance can be given that such event will not adversely affect the market for the 2025A Bonds. In the event that the Insurer is unable to make payment of principal of and interest on the 2025A Bonds when due under the Policy, the 2025A 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 2025A BONDS.”
The long-term rating on the 2025A 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 2025A Bonds. See the caption “RATINGS.” None of the Authority, the City or the Underwriter 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 bein g made by the Authority, the City or the Underwriter in this Official Statement. Therefore, when making an investment decision with respect to the 2025A 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 2025A Bonds, and the claims -paying ability of the Insurer through final maturity of the 2025A 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 2025A Bonds. The Insurer is not required to obtain the consent of the owners of the 2025A Bonds with respect to the exercise of remedies. See Appendix B.
TAX MATTERS
In the opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest on the 2025A Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. However, it should be noted that, with respect to applicable corporations as defined in Section 59(k) of the Internal Revenue Code of 1986, as amended (the “Code”), generally certain corporations with more than $1,000,000,000 of average annual adjusted financial statement income, interest (and original issue discount) with respect to the 2025A Bonds might be taken into account in determining adjusted financial statement income for purposes of computing the alternative minimum tax imposed by Section 55 of the Code on such corporations. In the further opinion of Bond Counsel, interest on the 2025A Bonds is exempt from State of California personal income tax.
Bond Counsel’s opinion as to the exclusion from gross income for federal income tax purposes of interest on the 2025A Bond s is based upon certain representations of fact and certifications made by the Authority, the City and others and is subject to the condition that the Authority and the City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the 2025A Bonds to assure that interest on the 2025A Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest on the 2025A Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the 2025A Bonds. The Authority and the City have covenanted to comply with all such requirements.
The amount by which a Bond Owner ’s original basis for determining loss on sale or exchange in the applicable 2025A Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier 1077
61 call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Code; such amortizable bond premium reduces the Bond Owner’s basis in the applicable 2025A Bond (and the amount of tax-exempt interest received with respect to the 2025A Bonds), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a 2025A Bond Owner realizing a taxable gain when a 2025A Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the 2025A Bond to the Owner. Purchasers of the 2025A Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium.
The IRS has initiated an expanded program for the auditing of tax exempt bond issues, including both random and targeted audits. It is possible that the 2025A Bonds will be selected for audit by the IRS. It is also possible that the market value of the 2025A Bonds might be affected as a result of such an audit of the 2025A Bonds (or by an audit of similar municipal obligations). No assurance can be given that in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the issuance of t he 2025A Bonds to the extent that it adversely affects the exclusion from gross income of interest on the 2025A Bonds or their market value.
SUBSEQUENT TO THE ISSUANCE OF THE BONDS, THERE MIGHT BE FEDERAL, STATE OR
LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR
INTERPRETATIONS OF FEDERAL, STATE OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE
OR LOCAL TAX TREATMENT OF THE BONDS, I NCLUDING THE IMPOSITION OF ADDITIONAL
FEDERAL INCOME OR STATE TAXES ON OWNERS OF TAX -EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE 2025A BONDS. THESE CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE 2025A BONDS. NO ASSURANCE CAN BE GI VEN THAT SUBSEQUENT TO THE ISSUANCE OF THE 2025A BONDS STATUTORY CHANGES WILL NOT BE
INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS WILL NOT OCCUR HAVING THE EFFECTS DESCRIBED ABOVE. BEFORE PURCHASING ANY OF THE 2025A
BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING
POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE 2025A BONDS.
Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Indenture and the Tax Certificate relating to the 2025A Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income of interest for federal income tax purposes with respect to any 2025A Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth LLP.
Although Bond Counsel has rendered an opinion that interest on the 2025A Bonds is excluded from gross income for federal income tax purposes provided that the Authority and the City continue to comply with certain requirements of the Code, the ownership of the 2025A Bonds and the accrual or receipt of interest on the 2025A Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the 2025A Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the 2025A Bonds.
Should interest on the 2025A Bonds become includable in gross income for federal income tax purposes, the 2025A Bonds are not subject to early redemption and will remain outstanding until maturity or until redeemed in accordance with the Indenture.
A copy of the proposed form of opinion of Bond Counsel is set forth in Appendix D. 1078
62 CERTAIN LEGAL MATTERS
The valid, legal and binding nature of the 2025A Bonds is subject to the approval of Stradling Yocca Carlson & Rauth LLP, Newport Beach, 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 2025A Bond. Certain legal matters will be passed upon for the City by Best Best & Krieger LLP, Riverside, California, as Disclosure Counsel, and by Best Best & Krieger LLP, Ontario, California, the City Attorney, for the Underwriter by its counsel, Kutak Rock, Irvine, California, for the Insurer by its counsel and for the Trustee by its counsel.
From time to time Bond Counsel and Disclosure Counsel serve as counsel to the Underwriter with respect to transactions other than the issuance of the 2025A Bonds.
MUNICIPAL ADVISOR
The Authority has retained Urban Futures, Inc., Walnut Creek, California (the “Municipal Advisor”) as municipal advisor in connection with the sale of the 2025A 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.
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 2025A Bond s, 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 2025A Bonds or in any way contesting or affecting the validity of the 2025A Bonds, the Lease Agreement, any proceedings of the Authority or the City taken with respect to the delivery or sale of the 2025A Bonds, the pledge or application of any money or security provided for the payment of the 2025A 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 2025A Bonds will be purchased by Samuel A. Ramirez & Co., Inc. (the “Underwriter”), 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. Under the Purchase Contract, the Underwriter ha s agreed to purchase all, but not less than all, of the 2025A Bonds for an aggregate purchase price of $________________ (representing the principal amount of the 2025A Bonds, less an Underwriter’s discount of $_____________, plus an original premium of $_____________). The Purchase Contract provides that the Underwriter will purchase all of the 2025A 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 Underwriter. The Underwriter may offer and sell the 2025A Bonds to certain dealers (including dealers depositing 2025A 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 insured rating of “__” (stable outlook) and Fitch has assigned to insured rating of “__” to the 2025A Bonds based upon the delivery of the Policy by the Insurer at the time of issuance of the 2025A Bonds. S&P has also assigned the 2025A Bonds its underlying rating of “___” notwithstanding the delivery of the Policy.
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63 There is no assurance that any credit rating that is given to the 2025A 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 or Fitch if, in the judgment of S&P or Fitch, circumstances so warrant. Any such qualification, downgrade, lowering or withdrawal of a rating may have an adverse effect on the market price of the 2025A Bonds. The ratings reflect only the views of S&P or Fitch (which views and criteria could change at any time), and an explanation of the significance of such ratings may be obtained from S&P or Fitch, as applicable. 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 2025A Bond s 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 2025A 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 obligated to file a notice of rating change. Purchasers of the 2025A Bonds are directed to the rating agencies and their respective websites and official media outlets for the most current ratings with respect to the 2025A Bonds after the initial issuance of the 2025A Bonds.
None of the Authority, the City or the Underwriter 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, and to Fitch for additional information on Fitch ’s evaluation 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 2025A Bonds, for the benefit of the holders and Beneficial Owners of the 2025A Bonds, to provide certain financial information and operating data relating to the City by not later than April 1 following the end of the City’s Fiscal Year (currently its Fiscal Year ends on June 30) (the “Annual Report”), commencing on April 1, 2026 with the report for the Fiscal Year ending June 30, 2025, 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 containe d 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 Underwriter in complying with subsection (b)(5) of Rule 15c2-12.
The City and its related governmental entities (the “City Entities”) for whom City staff is responsible for undertaking compliance with continuing disclosure undertakings have previously entered into numerous disclosure undertakings under Rule 15c2-12 in connection with the issuance of long-term obligations. In order to ensure ongoing compliance with its continuing disclosure undertakings, the City has designated staff members within the Investments & Revenue Resources Department with the responsibility of ensuring timely and complete filings. In addition, the City has retained an outside consultant to conduct periodic reviews of City compliance. 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.”
Within the last five years, the City and the City Entities have not failed to timely comply with their respective prior continuing disclosure obligations under Rule 15c2-12 in all material respects except that certain information with respect to outstanding indebtedness of the City was not included in the Fiscal Year 2021 annual report for the Ontario Public Financing Authority 2017 Lease Revenue Refunding Bonds, the City of Ontario 2020 Taxable Pension Obligations Bonds and the Ontario Public Financing Aut hority 2021 Lease Revenue Refunding Bonds, Series A (Federally Taxable); the City’s Fiscal Years 2020-21 and 2022-23 audited financial 1080
64 statements were not available at the time of the filing of 2021 and 2023 respective annual reports, but have since been posted and such information is included in the notes to the City’s Fiscal Year 2020-21 and 2022-23 audited financial statements.
FINANCIAL INTERESTS
The fees being paid to the Underwriter, Bond Counsel, Disclosure Counsel and counsel to the Underwriter are contingent upon the issuance and delivery of the 2025A Bonds. 1081
65 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 2025A Bonds.
ONTARIO PUBLIC FINANCING AUTHORITY
By:
Executive Director
CITY OF ONTARIO
By:
City Manager
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APPENDIX A
DEMOGRAPHIC AND ECONOMIC INFORMATION
The following information is presented as general background data. The 2025A 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 2025A Bonds.
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 181,224 as of January 1, 2024, and covers approximately 50 square miles. The City was incorporated in 1891 and is a general law city o perating 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 ten calendar years.
CITY OF ONTARIO, SAN BERNARDINO COUNTY AND CALIFORNIA
Population
Year
City of Ontario
San Bernardino
County
State of
California
2015 166,556 2,114,182 38,810,306
2016 166,515 2,124,990 39,036,749
2017 169,285 2,142,339 39,273,915
2018 170,593 2,153,258 39,429,439
2019 173,450 2,169,538 39,503,656
2020 175,297 2,185,348 39,541,722
2021 176,070 2,183,756 39,246,702
2022 178,564 2,179,263 39,146,273
2023 179,555 2,170,593 39,109,070
2024 181,224 2,180,503 39,119,734
______________________
Source: California Department of Finance, E-4 Population Estimate for Cities, Counties, and the State, 2015-2024. 1083
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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)
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
2021 San Bernardino County 990,000 916,600 73,500 7.4
California 18,956,600 17,568,700 1,387,800 7.3
United States 161,204,000 152,581,000 8,623,000 5.3
2022 San Bernardino County 1,003,000 961,200 41,700 4.2 California 19,169,300 18,348,900 820,400 4.3
United States 164,287,000 158,291,000 5,996,000 3.6
2023 San Bernardino County 1,013,700 966,500 47,200 4.7 California 19,308,300 18,388,300 920,000 4.8
United States 167,116,000 161,037,000 6,080,000 3.6
(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 2010-23, March 2020 Benchmark, and US Department of Labor.
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Major Industries in the City and County
The table below sets forth the ten largest industries by employment in the City in Fiscal Year 2023-24.
CITY OF ONTARIO
MAJOR INDUSTRIES
FY 2023-24
Employer Number of Employees(1)
Ontario International Airport 5,000 - 9,999
United Parcel Service 5,000 - 9,999
Workforce Personnel, Inc 5,000 - 9,999
Chaffey Union High School 1,000 - 4,999
City of Ontario 1,000 - 4,999
Ontario-Montclair School District 1,000 - 4,999
Primary Care Assoc Med Group 1,000 - 4,999
FedEx 500 - 999
The Home Depot 500 - 999
QVC, Inc 500 - 999
(1) Per EDD, the Employment numbers are confidential and only the data for the range of numbers of employees are available.
Source: State of California Employment Development Department.
The following table sets out the largest employers in the County:
COUNTY OF SAN BERNARDINO
MAJOR INDUSTRIES
FY 2023-24
Employer Name Location Industry
Amazon Fulfillment Ctr Redlands Mail Order Fulfillment Service Amazon Fulfillment Ctr San Bernardino Mail Order Fulfillment Service Arrowhead Regional Medical Ctr Colton Hospitals
Bear Mountain Big Bear Lake Skiing Centers & Resorts
Burlington Distribution Ctr San Bernardino Distribution Centers (whls) California State Univ Sn San Bernardino Schools-Universities & Colleges Academic Dignity Health Cmnty Hosp-Sn San Bernardino Hospitals
Dignity Health-St Bernardine San Bernardino Hospitals
Environmental Systems Research Redlands Geographics Information Systems Fedex Ground Bloomington Delivery Service
Inland Empire Health Plan Rancho Cucamonga Health Plans Kaiser Permanente Fontana Med Fontana Hospitals
Loma Linda Univ Health Board Loma Linda Univ/Clg-Governing Body/Regent/Trustee Loma Linda University Med Ctr Loma Linda Hospitals
Mountain High Ski Resort Wrightwood Skiing Centers & Resorts Ontario International Airport Ontario Airports
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Ontario-Montclair School Dist Ontario School Districts
Patton State Hospital Patton Hospitals
Primary Care Assoc Med Group Ontario Physicians & Surgeons Radial Rialto Mail Order Fulfillment Service
Redlands Community Hospital Redlands Hospitals
San Antonio Regional Hospital Upland Hospitals
San Bernardino County Sch Supt San Bernardino Schools & Educational Services NEC San Bernardino County Sheriff San Bernardino General Justice Public Order & Safety Activit Snowline Joint Unified Sch Dst Phelan Schools
Source: State of California Employment Development Department.
Construction Activity
The following table reflects building permit valuations for the City for the five most recent calendar years for which information is available.
CITY OF ONTARIO
Building Permits and Valuation
(Dollars in Thousands)
2020 2021 2022 2023 2024
Permit Valuation:
New Single-family $ 101,990 $ 134,735 $133,332 $182,845 $ 36,582 New Multi-family 8,459 15,378 38,669 147,416 60,710
Res. Alterations/Additions 3,709 6,315 4,884 6,218 4,884 Total Residential 114,158 156,428 176,885 336,479 102,176 Total Nonresidential 125,537 516,481 371,120 421,377 514,186 Total All Building $ 239,695 $672,909 $548,005 $757,856 $616,362
New Dwelling Units:
Single Family 472 737 737 581 193
Multiple Family 74 22 40 369 399
Total 546 759 777 950 592
Note: Columns may not sum to totals due to independent rounding.
Source: City of Ontario.
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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]
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APPENDIX C
AUDITED FINANCIAL STATEMENTS
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APPENDIX D
FORM OF BOND COUNSEL OPINION
Upon the issuance of the 2025A Bonds, Bond Counsel, proposes to render its final approving opinion in substantially the following form:
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
Upon issuance of the 2025A 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 2025A Lease Revenue Bonds (the “Bonds”). The Bonds are being issued pursuant to an Indenture, dated as of ________, 2025 (the “Indenture”), by and between the Authority and Zion’s Bancorporation, National Association, 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 [to come].
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 ______, 2025 delivered in connection with the issuance of the Bonds.
Participating Underwriter. The term “Participating Underwriter” means the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. 1090
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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 April 1 following the end of its Fiscal Year (commencing April 1, 2026 with the Annual Report for Fiscal Year 2025) 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 comprisin g 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 Boa rd. 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 conta ined 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.
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:
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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 ob ligated 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 acti on or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms;
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.
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(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 additio n 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, includ ing 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 Indentu re, 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: ________, 2025 CITY OF ONTARIO
By:
Its: City Manager
1093
F-1
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 2025A Bonds, payment of principal, premium, if any, accreted value, if any, and interest on the 2025A Bond s to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the 2025A 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 2025A Bonds. The 2025A 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 2025A Bond will be issued for each annual maturity of the 2025A Bond s, 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 2025A Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2025A Bonds on DTC’s records. The ownership interest of each actual purchaser of each 2025A Bond s (“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 t ransaction, 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 2025A 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 2025A Bonds, except in the event that use of the book-entry system for the 2025A Bonds is discontinued.
To facilitate subsequent transfers, all 2025A 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 2025A 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 Beneficial Owners of the 2025A Bonds; DTC’s records reflect only the ide ntity of the Direct Participants to whose 1094
F-2
accounts such 2025A 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 2025A Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2025A Bonds, such as redemptions, tenders, defaults, and proposed amendments to the 2025A Bonds documents. For example, Beneficial Owners of 2025A Bonds may wish to ascertain that the nominee holding the 2025A 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 2025A 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 2025A 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 2025A Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the 2025A 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 instr uctions 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 D TC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursem ent of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
A 2025A Bond Owner shall give notice to elect to have its 2025A Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such 2025A Bond by causing the Direct Participant to transfer the Participant’s interest in the 2025A Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of 2025A Bond in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the 2025A Bond are transferred by Direct Participants on DTC’s records and followed by a book- entry credit of tendered 2025A Bond to the Trustee’s DTC account.
DTC may discontinue providing its services as depository with respect to the 2025A 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, 2025A Bonds will be printed and delivered to DTC.
THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE 2025A 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 2025A BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. 1095
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APPENDIX G
SPECIMEN MUNICIPAL BOND INSURANCE POLICY
1096
Department: Economic Development
Prepared By: Karen Khukoyan
Department:
Prepared By: Karen Khukoyan
Staff Member Presenting: Jennifer McLain
Hiramoto, Economic Development Director
Approved By:
Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 24
SUBJECT:
APPROVAL OF RESOLUTIONS FOR SALE OF PROPERTY AT 100 BLOCK OF NORTH
EUCLID AVENUE FROM ONTARIO HOUSING AUTHORITY TO CITY OF ONTARIO
CITY OF ONTARIO
Agenda Report
April 15, 2025
SECTION:
PUBLIC HEARINGS
RECOMMENDATION:
That the Ontario Housing Authority and the City Council take the following actions:
A
.
Adopt a Resolution declaring certain Ontario Housing Authority-owned real property at 100 Block of North Euclid Avenue (APN's 1048-553-01,1048-553-05 Through 1048-553-15) to be exempt surplus land; approve the transfer of real property at 100 Block North Euclid Avenue (APN's 1048-553-01,1048-553-05 Through 1048-553-15) from the Ontario Housing Authority to the City of Ontario; and declare the conveyance of the property exempt from environmental review under the California Environmental Quality Act pursuant to CEQA Guidelines Section 15312.
B
.
Adopt a Resolution approving and accepting the transfer of real property at 100 Block North Euclid Avenue (APN's 1048-553-01,1048-553-05 Through 1048-553-15) from the Ontario Housing Authority to the City of Ontario.
THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:
Invest in the Growth and Evolution of the City's Economy Operate in a Businesslike Manner
Focus Resources in Ontario's Commercial and Residential Neighborhoods FISCAL IMPACT:
If approved, Quarterly Budget update will be presented to City Council to reflect land sale proceeds in the amount of
$3,699,325.61 transferred into the Ontario Housing Authority Low and Moderate Income Housing Asset Fund and $3,699,326 expense from the Economic Development Fund. The payments will be made over a 10-year period, with annual installments of $369,933. If the City pays the loan in advance, there will be no prepayment penalty. The first payment will be made on December 31, 2025.
1097
BACKGROUND & ANALYSIS:
Prior to the Great Recession, the Ontario Housing Authority (the "Authority") acquired a portion of the 100 Block of North Euclid Avenue, as depicted in Exhibit "A" as part of a redevelopment initiative. The vision was to incorporate the historic buildings—formerly housing the Yangtzee, Lerch, and Bridal Shop—into a mixed-use development that would include high-density affordable housing, retail spaces, commercial services, and a public commons area.
This adaptive reuse was intended to enable the occupancy of businesses such as a restaurants and other retail establishments that would serve local workers, shoppers, and residents, thereby contributing to the City's broader goal of revitalizing and enhancing the Downtown area both economically and aesthetically while providing integrated affordable housing.
However, due to the
economic downturn, the planned redevelopment did not move forward as originally envisioned.
Given that the Property will no longer be developed into affordable housing and is currently owned by the Authority, it is recommended that the City of Ontario (the "City") acquire the Property from the Authority with the intent of repaying the Authority for the purchase price of the property when it was acquired. Under Health and Safety Code Section 34312.3(b), the Authority is permitted to sell the Property provided that the sale proceeds are
allocated toward affordable housing in the future.
T
he conveyance is exempt from CEQA pursuant to the Class 12 exemption – Surplus Government Property Sales. The property isn’t located in an area of statewide, regional, or areawide concern identified in Section15206(b)(4).
The Authority has met all public hearing notice requirements as outlined in Section 33430 of the Health and Safety Code.
Staff recommends approval of the attached Resolutions facilitating the transfer of the Property from the Authority to the City.
1098
RESOLUTION NO. OHA-____
A RESOLUTION OF THE GOVERNING BOARD OF THE ONTARIO
HOUSING AUTHORITY, OF THE CITY OF ONTARIO, CALIFORNIA,
PURSUANT TO GOVERNMENT CODE SECTION 54221 DECLARING
THAT CERTAIN REAL PROPERTY (100 BLOCK NORTH EUCLID
AVENUE) IS EXEMPT SURPLUS LAND AND APPROVING THE
CONVEYANCE OF 100 BLOCK NORTH EUCLID AVENUE (APN’S
1048-553-01, 1048-553-05 THROUGH 1048-553-15) FROM THE
ONTARIO HOUSING AUTHORITY TO THE CITY OF ONTARIO AND
FINDING SUCH ACTION / DECLARATION IS EXEMPT FROM
ENVIRONMENTAL REVIEW UNDER THE CALIFORNIA
ENVIRONMENTAL QUALITY ACT PURSUANT TO SECTION 15312 OF
THE CEQA GUIDELINES.
WHEREAS, the Ontario Housing Authority (“Authority”) is owner of certain real property in the County of San Bernardino, State of California, generally located at 100 BLOCK NORTH EUCLID AVENUE in the City of Ontario, California (APN’S 1048-553-01, 1048-553-05 through 1048-553-15) (the “Property”). The Property is currently not being utilized to provide affordable housing in the City to qualified low- and moderate-income persons; and
WHEREAS, the Authority is the owner of the Property within the corporate limits of the City of Ontario.
WHEREAS, the Surplus Land Act, Government Code sections 54220 et seq. (the “Act”) applies when a local agency disposes of “surplus land,” which is defined in the Act as “land owned in fee simple by any local agency for which the local agency’s governing body takes formal action in a regular public meeting declaring that the land is surplus and is not necessary for the agency’s use.” (Government Code section 54221(b)(1).) WHEREAS, the Act expressly does “not apply to the disposal of exempt surplus land.” (Government Code section 54222.3.)
WHEREAS, under the Act, “exempt surplus land” includes land that a local agency is transferring to another local, state, or federal agency for the transferee agency’s use. (Government Code section 54221(f)(1)(D).)
WHEREAS, the Act requires local agencies such as the Authority to declare certain real property they own as either “surplus land” or “exempt surplus land,” as supported by written findings, prior to any disposition of the real property.
WHEREAS, pursuant to the provisions of the California Housing Authority Law (Part 2 of Division 24 of the Health and Safety Code [herein, the "Housing Authority Law"]), the City of Ontario (“City”) has designated the Authority as the housing entity for the City.
1099
WHEREAS, pursuant to the Housing Authority Law, the Authority is a housing authority duly established and operating as a local housing authority performing a public function and may make and execute contracts necessary or convenient to the exercise of its powers.
WHEREAS, the Authority desires to transfer the Property to the City, which is a “local agency” under the Act;
WHEREAS, the Authority Board has reviewed this Resolution and now desires to declare the Property as exempt surplus land under the Act, based on the findings and justifications contained in this Resolution.
WHEREAS, the Authority wishes to convey the Property to the City of Ontario (“City”) for Three Million Six Hundred Ninety-Nine Thousand Three Hundred Twenty-Five Dollars and Sixty-One Cents ($3,699,325.61), with the intent of recovering costs. The payments will be interest free and the first payment will be made on December 31, 2025.
If the City were to complete all payments ahead of schedule as shown in Exhibit “A” Loan Amortization Schedule, there will be no prepayment penalty. The Authority will use the proceeds of the sale of the Property for future development of low-income housing in accordance with Health and Safety Code section 34312.3(b); and WHEREAS, the City desires to purchase the Property from the Authority for the intent of repayment of the purchase price when acquired by the Authority and for future development to benefit the City and its residents.
NOW, THEREFORE, BE IT RESOLVED by the Governing Board of the Ontario Housing Authority as follows:
SECTION 1. Recitals. The Recitals set forth above are true and correct and are incorporated into this Resolution by this reference.
SECTION 2. The Authority Board hereby declares that the Property is exempt from the Act as exempt surplus land pursuant to Government Code section 54221(f)(1)(D), based on the findings contained in this Resolution for the Property, namely that the Authority intends to transfer the Property to the City, another local agency, for future development to benefit the City and its residents.
SECTION 3. Approval of Conveyance of Property by Grant Deed. The Authority Board hereby directs and approves the transfer of the Property from the Authority to the City pursuant to the Grant Deed attached as Exhibit “B” to this Resolution.
The Executive Director is hereby authorized to execute the Grant Deed for the Property following approval of the exemption from the Surplus Land Act by the California Department of Housing and Community Development.
1100
SECTION 4. CEQA EXEMPTION. This Resolution has been reviewed with respect to the applicability of the California Environmental Quality Act (Public Resources Code Section 21000 et seq.) (“CEQA”). Housing Authority has determined that the declaration of the Property as “exempt surplus land” under the Act does not constitute a project under CEQA, and no environmental assessment is required. Furthermore, the sale of the Property to a third-party purchaser is categorically exempt under CEQA Guidelines section 15312 (Surplus Government Property Sales). Pursuant to CEQA, the Housing Authority directs staff to file a Notice of Exemption with the County Clerk within five (5) working days of adoption of this resolution.
SECTION 5. Further Acts. The Executive Director, or his designee, is hereby authorized and directed to take any action necessary to carry out the purposes of this Resolution and comply with applicable law.
SECTION 6. Effective Date. This Resolution will take effect immediately upon its adoption.
SECTION 7. Certification. The Authority Secretary shall certify as to the adoption of this Resolution.
PASSED, APPROVED, AND ADOPTED this 15th day of April 2025. _____________________________________
PAUL S. LEON, CHAIRMAN
ATTEST:
____________________________________
SHEILA MAUTZ, AUTHORITY SECRETARY
APPROVED AS TO LEGAL FORM:
_______________________________
BEST BEST & KRIEGER LLP
AUTHORITY COUNSEL
1101
STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO )
CITY OF ONTARIO )
I, SHEILA MAUTZ, Secretary of the Ontario Housing Authority, DO HEREBY CERTIFY that foregoing Resolution No. OHA- was duly passed and adopted by the Board Members of the Ontario Housing Authority at their regular meeting held April 15, 2025 by the following roll call vote, to wit:
AYES: CHAIRMAN/BOARD MEMBERS:
NOES: BOARD MEMBERS:
ABSENT: BOARD MEMBERS:
____________________________________
SHEILA MAUTZ, AUTHORITY SECRETARY
(SEAL)
The foregoing is the original of Resolution No. OHA duly passed and adopted by the Ontario Housing Authority at their regular meeting held April 15, 2025. _____________________________________
SHEILA MAUTZ, AUTHORITY SECRETARY
(SEAL)
1102
EXHIBIT “A”
Ontario Housing Authority Loan- Purchase 100 Block of N Euclid Computation Interval: Annual
Nominal Annual Rate: 0.000%
Cash Flow Data - Loans and Payments
Event Date Amount Number Period End Date
1 Loan 04/15/2025 3,699,325.61 1
2 Payment 12/31/2025 369,932.56 10 Annual 12/31/2034
TValue Amortization Schedule - U.S. Rule, 360 Day Year
Date Payment Interest Principal Balance
Loan 04/15/2025 3,699,325.61
1 12/31/2025 369,932.56 0.00 369,932.56 3,329,393.05
2 12/31/2026 369,932.56 0.00 369,932.56 2,959,460.49
3 12/31/2027 369,932.56 0.00 369,932.56 2,589,527.93
4 12/31/2028 369,932.56 0.00 369,932.56 2,219,595.37
5 12/31/2029 369,932.56 0.00 369,932.56 1,849,662.81
6 12/31/2030 369,932.56 0.00 369,932.56 1,479,730.25
7 12/31/2031 369,932.56 0.00 369,932.56 1,109,797.69
8 12/31/2032 369,932.56 0.00 369,932.56 739,865.13
9 12/31/2033 369,932.56 0.00 369,932.56 369,932.57
10 12/31/2034 369,932.56 -0.01 369,932.57 0.00
Grand Totals 3,699,325.60 -0.01 3,699,325.61
1103
EXHIBIT “B”
RECORDING REQUESTED BY
City of Ontario
AND WHEN RECORDED MAIL TO:
City of Ontario
City Clerk/Records Management Dept.
303 East “B” Street
Ontario, CA 91764
Parcel No.
SPACE ABOVE THIS LINE FOR RECORDER’S USE
FORM OF GRANT DEED
THE UNDERSIGNED GRANTOR(s) DECLARE(s)
Documentary Transfer Tax is $0.00
unincorporated area computed on full value of interest or property conveyed, or
the City of Ontario full value less value of liens or encumbrances remaining at the time of sale
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, THE ONTARIO HOUSING AUTHORITY, a public body, corporate and politic hereby GRANT(s) to THE CITY OF ONTARIO, a municipal corporation, the following real property in the County of San Bernardino, State of California:
ONTARIO HOUSING AUTHORITY, a public body,
corporate and politic
Date: _______________
By: _____________________________________
Scott Ochoa
Executive Director
ATTEST:
______________________________
Claudia Y. Isbell
Assistant Authority Secretary
1104
RESOLUTION NO. _______
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ONTARIO, CALIFORNIA, APPROVING THE CONVEYANCE OF 100 BLOCK NORTH EUCLID AVENUE (APN’S 1048-553-01, 1048-553-05 THROUGH
1048-553-15) FROM THE ONTARIO HOUSING AUTHORITY TO THE
CITY OF ONTARIO AND APPROPRIATING FUNDS THEREFORE.
WHEREAS, the Ontario Housing Authority (“Authority”) is owner of certain real property in the County of San Bernardino, State of California, generally located at 100 BLOCK NORTH EUCLID AVENUE in the City of Ontario, California (APN’S 1048-553-01, 1048-553-05 THROUGH 1048-553-15) (the “Property”). The Property is currently not being utilized to provide affordable housing in the City to qualified low- and moderate- income persons; and
WHEREAS, the Authority wishes to convey the Property to the City of Ontario (“City”) for Three Million Six Hundred Ninety-Nine Thousand Three Hundred Twenty-Five Dollars and Sixty-One Cents ($3,699,325.61), with the intent of recovering costs. The payments will be interest free and the first payment will be made on December 31, 2025.
If the City were to complete all payments ahead of schedule as shown in Exhibit “A” Loan Amortization Schedule, there will be no prepayment penalty. The Authority will use the proceeds of the sale of the Property for future development of low-income housing in accordance with Health and Safety Code section 34312.3(b); and WHEREAS, the City desires to purchase the Property from the Authority for future development to benefit the City and its residents.
WHEREAS, the Housing Authority has declared that the sale of the Property from the Authority to the City is exempt from the Surplus Land Act pursuant to California Government Code Section 54221(f)(1)(D), property transferred to another local agency for the local agency’s use.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Ontario, as follows:
SECTION 1. The recitals above are true and correct and are incorporated into this Resolution by reference and are expressly made a part hereof.
SECTION 2. The City Council hereby directs and approves the transfer of the Property from the Housing Authority to the City pursuant to the Acceptance of Grant Deed attached as Exhibit “B” to this Resolution. The City Manager is hereby authorized to execute the Grant Deed for the Property.
SECTION 3. The City Manager, or his designee, is hereby authorized, subject to City Attorney review, to execute any and all documents to implement the sale of the Property.
1105
SECTION 4. The City Council hereby appropriates $3,699,325.61 from the fund for the acquisition of the Property.
SECTION 5. This Resolution shall become effective immediately upon its passage.
The City Clerk of the City of Ontario shall certify as to the adoption of this Resolution.
PASSED, APPROVED, AND ADOPTED this 15th day of April 2025. _____________________________________
PAUL S. LEON, MAYOR
ATTEST:
________________________________
SHEILA MAUTZ, CITY CLERK
APPROVED AS TO LEGAL FORM:
_______________________________
BEST BEST & KRIEGER LLP
CITY ATTORNEY
1106
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 Resolution No. 2025- was duly passed and adopted by the City Council of the City of Ontario at their regular meeting held April 15, 2025 by the following roll call vote, to wit:
AYES: MAYOR/COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
____________________________________
SHEILA MAUTZ, CITY CLERK
(SEAL)
The foregoing is the original of Resolution No. 2025- duly passed and adopted by the Ontario City Council at their regular meeting held April 15, 2025. _____________________________________
SHEILA MAUTZ, CITY CLERK
(SEAL)
1107
EXHIBIT “A”
Ontario Housing Authority Loan- Purchase 100 Block of N Euclid Computation Interval: Annual
Nominal Annual Rate: 0.000%
Cash Flow Data - Loans and Payments
Event Date Amount Number Period End Date
1 Loan 04/15/2025 3,699,325.61 1
2 Payment 12/31/2025 369,932.56 10 Annual 12/31/2034
TValue Amortization Schedule - U.S. Rule, 360 Day Year
Date Payment Interest Principal Balance
Loan 04/15/2025 3,699,325.61
1 12/31/2025 369,932.56 0.00 369,932.56 3,329,393.05
2 12/31/2026 369,932.56 0.00 369,932.56 2,959,460.49
3 12/31/2027 369,932.56 0.00 369,932.56 2,589,527.93
4 12/31/2028 369,932.56 0.00 369,932.56 2,219,595.37
5 12/31/2029 369,932.56 0.00 369,932.56 1,849,662.81
6 12/31/2030 369,932.56 0.00 369,932.56 1,479,730.25
7 12/31/2031 369,932.56 0.00 369,932.56 1,109,797.69
8 12/31/2032 369,932.56 0.00 369,932.56 739,865.13
9 12/31/2033 369,932.56 0.00 369,932.56 369,932.57
10 12/31/2034 369,932.56 -0.01 369,932.57 0.00
Grand Totals 3,699,325.60 -0.01 3,699,325.61
1108
EXHIBIT “B”
ACCEPTANCE OF
GRANT DEED
This is to certify that all of the estates and/or interests in real property conveyed by the foregoing Grant Deed from Ontario Housing Authority, a public agency, to the City of Ontario, a California municipal corporation (“City”), are hereby accepted by the undersigned authorized officer on behalf of City, pursuant to authority conferred on such authorized officer by City, and City consents to recordation of such Grant Deed in the Official Records of the Recorder of the County of San Bernardino, California.
CITY:
CITY OF ONTARIO, a California municipal corporation
By: _____________________________
City Manager
Dated: ____________________, 2025
1109
1110
Computation Interval:
Annual
Nominal Annual Rate:
0.000%
Cash Flow Data - Loans and Payments
Event
Date
Amount
Number
Period
End Date
1 Loan
04/15/2025
3,699,325.61
1 2
Payment
12/31/2025
369,932.56
10 Annual
12/31/2034
TValue Amortization Schedule - U.S. Rule, 360 Day Year
Date
Payment
Interest
Principal
Balance
Loan
04/15/2025
3,699,325.61
1 12/31/2025
369,932.56
0.00 369,932.56
3,329,393.05
2 12/31/2026
369,932.56
0.00 369,932.56
2,959,460.49
3 12/31/2027
369,932.56
0.00 369,932.56
2,589,527.93
4 12/31/2028
369,932.56
0.00 369,932.56
2,219,595.37
5 12/31/2029
369,932.56
0.00 369,932.56
1,849,662.81
6 12/31/2030
369,932.56
0.00 369,932.56
1,479,730.25
7 12/31/2031
369,932.56
0.00 369,932.56
1,109,797.69
8 12/31/2032
369,932.56
0.00 369,932.56
739,865.13
9 12/31/2033
369,932.56
0.00 369,932.56
369,932.57
10 12/31/2034
369,932.56
-0.01
369,932.57
0.00 Grand Totals
3,699,325.60
-0.01
3,699,325.61
Ontario Housing Authority Loan- Purchase 100 Block of N Euclid Page
1 of
1 1111
Department: Management Services
Prepared By: Michael
Krouse
Staff Member Presenting: Darlene M. Sanchez,
Assistant City Manager
Approved By:
Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 25
SUBJECT:
RENEWAL OF THE GREATER ONTARIO TOURISM MARKETING DISTRICT
CITY OF ONTARIO
Agenda Report
April 15, 2025
SECTION:
ADMINISTRATIVE
REPORTS/DISCUSSION/ACTION
RECOMMENDATION:
That the City Council take testimony and accept public comment that will result in a public hearing on May 20, 2025, on the renewal of the Greater Ontario Tourism Marketing District (GOTMD) and the levy of assessments on lodging businesses, including short- term rentals, located within the boundaries of the GOTMD.
THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:
Invest in the Growth and Evolution of the City's Economy Operate in a Businesslike Manner
Pursue City's Goals and Objectives by Working with Other Governmental Agencies FISCAL IMPACT:
There is no immediate fiscal impact associated with this action. Continuation of the Greater Ontario Tourism Marketing District (GOTMD) programs are intended to increase visitation to the Greater Ontario area, there may be an increase in transient occupancy tax and sales tax collections in the future.
BACKGROUND & ANALYSIS:
The Greater Ontario Tourism Marketing District (GOTMD) is a benefit assessment district proposed to continue as a revenue source to help fund Sales & Marketing and Tourism Development & Enhancement efforts for Greater Ontario lodging
businesses. This
approach has been used successfully in other destination areas throughout the state to improve tourism and drive additional room nights to assessed businesses. The renewed GOTMD includes all lodging businesses, including short-term rentals, existing and in the future, available for public occupancy within the boundaries of the cities of Ontario and Rancho Cucamonga.
Lodging
business owners decided to pursue renewal of the GOTMD in order to continue a revenue source devoted to marketing Greater Ontario as a tourist, meeting and event destination. If renewed, the GOTMD would generate approximately $6,000,000 on an annual basis for promotion of travel and tourism specific to Greater Ontario.
Tourism Marketing Districts
Tourism Marketing Districts (TMDs) utilize the efficiencies of private sector operation in the market- based promotion of tourism. These special assessment districts allow assessed business owners to 1112
organize their efforts to increase tourism. Business owners within the TMD fund the TMD, and those funds are used to provide services that are desired by and benefit the assessed businesses within the TMD.
TMD benefits:
Funds cannot be diverted for other government programs; They are customized to fit the needs of each destination; They allow for a wide range of services; including: destination marketing, tourism promotion, and sales lead generation;
They are designed, created and governed by those who will pay the assessment; and They provide a stable funding source for tourism promotion.
In California, TMDs are primarily formed pursuant to the Property and Business Improvement District Law of 1994 (94 Law). This law allows for the creation of special benefit assessment districts to raise funds within a specific geographic area. The key difference between TMDs and other special benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the TMD.
MANAGEMENT DISTRICT PLAN
The Management District Plan
(Attachment 1)
includes the proposed boundary of the GOTMD, a
service plan and budget and a proposed means of governance. The GOTMD will include all lodging businesses, including short-term rentals, existing and in the future, available for public occupancy within the boundaries of the cities of Ontario and Rancho Cucamonga.
The annual assessment rate is three percent (3%) of gross short-term sleeping room rental revenue.
Because the marketing programs will not promote or seek certain stays, assessments will not be collected on revenue resulting from: stays of more than thirty (30) consecutive days; stays by any Federal officer or employee when on official Federal government business; nor on stays by any officer or employee of a foreign government who is exempt by express provision of Federal law or international treaty.
The renewed GOTMD will have a ten (10) year term, beginning July 1, 2028, or as soon as possible thereafter, and ending ten (10) year from its start date. The assessment will be implemented beginning July 1, 2028 or as soon as possible thereafter. Once per year beginning on the anniversary of GOTMD renewal there is a thirty (30) day period in which business owners paying fifty percent (50%) or more of the assessment may protest and begin proceedings to terminate the GOTMD.
The Greater Ontario Convention and Visitors Bureau dba GOCAL (GOCAL) or the cities of Ontario and Rancho Cucamonga will be responsible for collecting the assessment on a monthly basis from each assessed business located in each respective jurisdiction. GOCAL shall have the responsibility of managing GOTMD programs as provided in the Management District Plan.
1113
GOTMD
renewal PROCESS
March 18, 2025 RESOLUTION OF INTENTION HEARING (COMPLETED)
Upon the submission of a written petition, signed by the business owners in the renewed GOTMD who will pay more than fifty percent (50%) of the assessments proposed to be levied, the Ontario City Council (Council) may initiate proceedings to renew the GOTMD by the adoption of a resolution expressing its intention to renew the GOTMD.
Petition Status:
Petitions in favor of GOTMD renewal were submitted by assessed businesses which represent over 50% of the total GOTMD assessment. This majority petition allows the Council to initiate proceedings for GOTMD renewal at the March 18, 2025 meeting.
No later than
April 4, 2025 NOTICE
(COMPLETED)
The 94 Law requires the City of Ontario to mail written notice to the owners of all businesses proposed to be assessed within the GOTMD. Mailing the notice begins a mandatory forty-five (45) day period in which assessed business owners may protest GOTMD renewal.
April 15, 2025 PUBLIC MEETING
Allow public testimony on the renewal of the GOTMD and levy of assessments. No Council action required.
May 20, 2025 FINAL PUBLIC HEARING
If written protests are received from the owners of businesses in the renewed GOTMD which will pay fifty percent (50%) or more of the assessments proposed to be levied, and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such businesses shall be taken for a period of one (1) year from the date of the finding of a majority protest by the Council.
If the Council, following the public hearing, decides to establish the renewed GOTMD, the Council shall adopt a Resolution of Formation.
ALTERNATIVES
The Council could choose not to hold the public meeting. Staff does not recommend this option. 1114
1115
CONTENTSI. Overview ............................................................................................................................3II. Background........................................................................................................................4III. Accomplishments ..............................................................................................................5IV. Boundary............................................................................................................................7V. Assessment Budget And Services......................................................................................8A. Annual Service Plan .............................................................................................................................8B. Annual Budget ....................................................................................................................................10C. California Constitutional Compliance.............................................................................................10D. Assessment..........................................................................................................................................13E. Interest And Overdue Charges ........................................................................................................13F. Time And Manner For Collecting Assessments............................................................................14VI. Governance................................................................................................................... 15A...........................................................................................................................15B. Brown Act And California Public Records Act Compliance.......................................................15C. Annual Report ....................................................................................................................................15Appendix 1 Law .................................................................................................................... 16Appendix 2 Assessed Businesses .........................................................................................28Prepared byCivitas(800)999-7781www.civitasadvisors.com 1116
GOTMD Management District Plan 3 March 5, 2025
I. OVERVIEW Developed by Greater Ontario area lodging businesses and the Greater Ontario Convention and Visitors Bureau dba GOCAL, the Greater Ontario Tourism Marketing District (GOTMD) is an assessment district proposed to continue to provide specific benefits to payors, by funding marketing and sales promotion efforts for assessed businesses. This approach has been used successfully in other destination areas throughout the country to provide the benefit of additional room night sales directly to payors. The GOTMD was formed in 2013 for an initial five (5) year term and was subsequently renewed in 2018 for a ten (10) year term. Lodging businesses now wish to renew the GOTMD for an additional ten (10) year term. Location: The renewed GOTMD includes all lodging businesses, including short-term rentals, existing and in the future, available for public occupancy within the boundaries of the cities of Ontario and Rancho Cucamonga (Cities), as shown on the map in Section IV. Services: The GOTMD is designed to provide specific benefits directly to payors by increasing awareness and demand for room night sales. Sales & Marketing and Tourism Development & Enhancement programs will increase demand for overnight tourism and market payors as tourist, meeting and event destinations, thereby increasing demand for room night sales. Budget: The total GOTMD annual assessment budget for the initial year of its ten (10) year operation is anticipated to be approximately $6,000,000. A similar assessment budget is expected to apply to subsequent years, but this assessment budget is expected to fluctuate as room sales do, and as businesses open and close. Cost: The annual assessment rate is three percent (3%) of gross short-term sleeping room rental revenue. Because the marketing programs will not promote or seek certain stays, assessments will not be collected on revenue resulting from: stays of more than thirty (30) consecutive days; stays by any Federal officer or employee when on official Federal government business; nor on stays by any officer or employee of a foreign government who is exempt by express provision of Federal law or international treaty. Collection: GOCAL or Cities will be responsible for collecting the assessment on a monthly basis (including any delinquencies, interest, and overdue charges) from each lodging business located in each respective jurisdiction. GOCAL and Cities shall take all reasonable efforts to collect the assessments from each lodging business. Duration: The renewed GOTMD will have a ten (10) year life, beginning July 1, 2028, or as soon as possible thereafter, and ending ten (10) years from its start date. After ten (10) years, the GOTMD may be renewed pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq. (94 Law) if lodging business owners support continuing the GOTMD programs. Management: GOCAL shall continue to serve as the GOTMDAssociation is charged with managing funds and implementing programs in accordance with this Plan and must provide annual reports to the City Council. 1117
GOTMD Management District Plan4March 5, 2025
II. BACKGROUNDTourism Marketing Districts (TMDs) are an evolution of the traditional Business Improvement District. The first TMD was formed in West Hollywood, California in 1989. Since then, over 100 California destinations have followed suit. In recent years, other states have begun adopting the California model Illinois, Minnesota, Massachusetts, Montana, South Dakota, Washington, Colorado, Texas and Louisiana have adopted TMD laws. Several other states are in the process of adopting their own legislation. The cities of Wichita, Kansas and Newark, New Jersey used an existing business improvement district law to form a TMD. Additionally, some cities, like Portland, Oregon and Memphis, Tennessee have utilized their home rule powers to create TMDs without a state law. TMDs collectively raise over $300 million annually for local destination marketing. With competitors raising their budgets, and increasing rivalry for visitor dollars, it is important thatthe Greater Ontario area lodging businesses continue to invest in stable, commerce-specific marketing programs. TMDs utilize the efficiencies of private sector operation in the market-based promotion of tourism districts. TMDs allow tourism business owners to organize their efforts to increase commerce. Lodging business owners within the TMD pay an assessment and those funds are used to provide services that increase commerce. In California, most TMDs are formed pursuant to the Property and Business Improvement District Law of 1994. This law allows for the creation of a benefit assessment district to raise funds within a specific geographic area. The key difference between TMDs and other benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the district. There are many benefits to TMDs:Funds must be spent on services and improvements that provide a specific benefit only to those who pay; Funds cannot be diverted to general government programs;They are customized to fit the needs of payors in each destination;They allow for a wide range of services;They arethe assessment; andThey provide a stable, long-term funding source for tourism promotion. 020406080100120Number of Districts Operating in California 1118
GOTMD Management District Plan 5 March 5, 2025
III. ACCOMPLISHMENTS & FUTURE OUTLOOK Since its formation, the GOTMD has played a pivotal role in strengthening and enhancing the local tourism economy to drive overnight visitation to assessed businesses. As the GOTMD looks ahead to its next chapter, this section highlights key accomplishments from the most recent term, and looks to the future for the renewed GOTMD. The following charts illustrate the economic impact and tourism activity generated by the GOTMD over the past decade. The first chart demonstrates the total economic impact by fiscal year, while the second chart provides data on sales leads and room nights generated, showing the number of leads pursued and hotel room nights booked as a result of GOTMD efforts. GOCAL is attracting new hotel development and increasing its hotel supply, with 5 new hotels in the works with the Ontario Planning Department. In addition, GOCAL will be experiencing anticipated convention destination. Hotels in development are: Hyatt House/Hyatt Place 256 Rooms (anticipated opening in March/April 2026) Residence Inn A-Loft 225 Rooms (anticipated opening in October 2026) Ontario Hotel 650 Rooms (anticipated opening in Fall 2027) Hilton Hampton Inn 124 (anticipated opening in Spring 2026) Everhome Suites 113 Rooms (anticipated opening in Winter 2025) Upon completion of the properties above, hotel rooms for the Greater Ontario area will increase by another 1,369 hotel inventory to a total of over 8,000 rooms. In addition to the anticipated add of more hotels: Michael Krouse, President & CEO of GOCAL, led the Centers Coalition for the reopening of convention center to begin hosting meetings and conventions and recovery for the industry. GOCAL received a grant for $974,768 combined from the US Department of Commerce Economic Development Administration to assist in those efforts of restoring the meetings and conventions. Plans are in the works to expand the Ontario Convention Center to include a 650-room headquarter hotel onsite and a newly constructed parking structure. Construction to begin in 2026.
Fiscal Year Sales Leads Room Nights Generated 2013-2014 325 58,584 2014-2015 316 49,417 2015-2016 290 54,540 2016-2017 389 65,937 2017-2018 383 65,937 2018-2019 295 39,456 2019-2020 -------- --------- 2020-2021 58 DOWN 75% No data due to COVID2021-2022 350 60,009 2022-2023 425 59,000 2023-2024 320 87147 Fiscal Year Economic Impact 2013-2014 $52M 2014-2015 $69M 2015- 2016 $97M 2016-2017 $94M 2017-2018 $95M 2018-2019 $92M 2019-2020 -------- 2020-2021 $76.5M LOSS 2021-2022 $77.7M 2022-2023 $96.5M 2023-2024 $110M TOTAL $792.2M 1119
GOTMD Management District Plan 6 March 5, 2025
Ontario Convention Center has 300 active days per year and has attracted larger conventions for multiple years. This expansion to double the size of the center will allow us to secure meetings and conventions in a next higher tier in size. Coupled with new hotel products, this also supports our ability to grow in the meetings and convention sector. , established in 2013, is a two-day classic car show that attracts enthusiasts from all over the country. Each year, we see an increase in classic car participants, and in 2024, an all-time record of over 1,300 cars were on display. This event attracts over 100,000 attendees from several states nationwide over the two days. The development of the 200-acre Ontario Sports Empire, a new minor league baseball stadium in South Ontario and future home of a minor league team and LA Dodger affiliate, will increase demand for overnight stays for the projected 1.4 million new visitors. The Adept project surrounding the Toyota Arena will be a world-class entertainment district with plans for a Performing Arts Center, open spaces and an outdoor concert venue, restaurants, dining, and a new hotel. Ontario International Airport continues to add domestic flights to destinations such as El Paso, Nashville, Washington DC, and Hawaii. The airport is working on future plans for expansion and development of a dedicated state-of-the-art international Terminal 3. Our convention center is located within one mile of the Ontario International Airport. Brightline West will provide high-speed rail service to and from Cucamonga Station in Rancho Cucamonga and Las Vegas in 2028, with connectivity to all of Southern California via Metrolink and Amtrak. Having established the Greater Ontario Sports and Entertainment Authority, we have dedicated sales and marketing staff booking and marketing to this specific growing industry for professional and youth sports of all kinds. Since 2013, we have produced over $1B in economic impact to our region. The State of the Region Event hosted annually at the Ontario Convention Center is a premier event for the region to discuss current statistics, provide an economic forecast for the coming year learn about the dynamic strength of our economy, how to adapt to changing conditions, and build a network of forward-thinking professionals as we plan for the future. 1120
GOTMD Management District Plan 7 March 5, 2025
IV. BOUNDARY The GOTMD will include all lodging businesses, including short-term rentals, existing and in the future, available for public occupancy within the boundaries of the Cities of Ontario and Rancho Cucamonga, as shown in the map below. Lodging business definition: any structure, or any portion of any structure, which is occupied, or intended or designed for occupancy, by transients for dwelling, lodging, or sleeping purposes and shall include any hotel, inn, tourist home, motel, studio hotel, bachelor hotel, lodging house, rooming house, apartment house, dormitory, public or private club, mobile home or house trailer at a fixed location, or other similar structure, or portion thereof. Short-term rental definition: a dwelling unit, or any portion thereof, that is rented by the host to another party for a period of not more than 30 consecutive days in exchange for any form of monetary or non--ental activity in which the host remains on the site of his or her primary residence throughout the duration of the -site for so--room occupancy buildings and a dwelling unit for which a tenant has a month-to-month rental agreement and the rental payments are made on a monthly basis, or corporate housing. A complete listing of assessed lodging businesses within the renewed GOTMD can be found in Appendix 2. 1121
GOTMD Management District Plan 8 March 5, 2025 Total Square Miles: 90.21 Distance to Los Angeles: 37 Miles Distance to Palm Springs: 72 Miles Distance to San Diego: 113 Miles 1122
GOTMD Management District Plan9March 5, 2025
V. ASSESSMENT BUDGET AND SERVICESA. Annual Service PlanAssessment funds will be spent to provide specific benefits conferred or privileges granted directly to the payors that are not provided to those not charged, and which do not exceed the reasonable cost to the City of Ontario (City) of conferring the benefits or granting the privileges. The privileges and services provided with the GOTMD funds are Sales & Marketing and Tourism Development & Enhancement programs available only to assessed businesses. A service plan assessment budget has been developed to deliver services that benefit the assessed businesses. A detailed annual assessment budget will be developed and approved by GOCAL. The chart below illustrates the initial annual assessment budget allocations. These activities and allocations will also apply in subsequent years. The total initial assessment budget is estimated to be $6,000,000.
Although actual revenues will fluctuate due to market conditions, the proportional allocations of the budget shall remain the same. However, the City and the GOCAL board shall have the authority to adjust budget allocations between the categories by no more than fifteen percent (15%) of the total budget per year. A description of the proposed improvements and activities for the initial year of operation is below. The same activities are proposed for subsequent years. In the event of a legal challenge against the GOTMD, any and all assessment funds may be used for the costs of defending the GOTMD. Each budget category includes all costs related to providing that service. For example, the Sales &Marketing budget includes the cost of staff time dedicated to overseeing and implementing the sales and marketing program. Staff time dedicated purely to administrative tasks is allocated to the Administration & Advocacy portion of the budget. The costs of an individual staff member may be allocated to multiple budget categories. The staffing levels necessary to provide the services below will be determined by GOCAL on an as-needed basis.Sales & Marketing, 4,080,000, 68.0%Tourism Development & Enhancement, $500,000 , 8.3%Administration & Advocacy, $880,000 , 14.7%Contingency / Renewal, $540,000 , 9.0%Initial Annual Assessment Budget -$6,000,000 1123
GOTMD Management District Plan 10 March 5, 2025
Sales & MarketingA Sales & Marketing program will promote assessed businesses as tourist, meeting, and event destinations. The Sales & Marketing program will have a central theme of promoting Ontario and Rancho Cucamonga as desirable places for overnight visits to leisure travelers and meeting planners. The program will have the goal of increasing overnight visitation and room night sales at assessed businesses, and may include the following activities: Internet marketing efforts to increase awareness and optimize internet presence to drive overnight visitation and room sales to assessed businesses; Print ads in magazines and newspapers targeted at potential visitors to drive overnight visitation and room sales to assessed businesses; Television ads targeted at potential visitors to drive overnight visitation and room sales to assessed businesses; Promotion and production of special events that draw overnight visitors to assessed businesses; Radio ads targeted at potential visitors to drive overnight visitation and room sales to assessed businesses; Attendance of trade shows to promote assessed businesses; Sales blitzes for assessed businesses; Familiarization tours of assessed businesses; Preparation and production of collateral promotional materials such as brochures, flyers and maps featuring assessed businesses; Attendance of professional industry conferences and affiliation events to promote assessed businesses; Market research to identify targets and opportunities to attract overnight visitors to assessed businesses; Incentivizing conferences and meetings to book at the destination to increase overnight visitation at assessed businesses. Partnership with both local, state and national tourism organizations to target key domestic and international markets to increase overnight visitation at assessed businesses; Development and implementation of a public relations and communications strategy, inclusive of social media outlets and press release distribution designed to drive overnight visitation at assessed businesses; Lead generation activities designed to attract tourists and group events to assessed businesses; and Director of Sales and General Manager meetings to plan and coordinate tourism promotion efforts for assessed businesses Tourism Development & Enhancement A Tourism Development & Enhancement program will be designed to improve the visitor experience in an effort to increase overnight visitation at assessed lodging businesses and short-term rentals. It will provide potential funding for programs and initiatives based on criteria to be developed. The focus of the program will be on the entire destination brand footprint to ensure a consistent brand experience. The program may include the following activities, but is not limited to: A transportation program connecting hotels with points of interest, the airport and tourism assets, to increase room night sales and enhance the visitor experience; An ambassador program with stakeholders to improve the overall destination experience and encourage overnight visitation; and 1124
GOTMD Management District Plan 11 March 5, 2025
Operation of a California Welcome Center (WC) to provide visitor resources and ensure a consistent brand experience throughout the destination. Administration & Advocacy The Administration & Advocacy portion of the budget will be utilized to provide the activities and improvements for the GOTMD. These costs may include rent, telephone charges, legal fees, accounting fees, postage, administrative staff, insurance, and other general office expenses. A small portion of the budget may be utilized towards dedicated staff time to provide unified attention, communication and responsiveness throughout the GOTMD and provide a unified voice to represent Contingency / Renewal A prudent portion of the budget will be allocated to a contingency fund, to account for lower than anticipated collections. If there are contingency funds collected and near the expiration of the GOTMD there are contingency funds remaining, and businesses wish to renew the GOTMD, the contingency funds may be used for renewal costs. B. Annual Budget The total ten (10) year assessment budget is projected at approximately $6,000,000 annually, or $60,000,000 through June 2038. A similar budget is expected to apply to subsequent years, but this budget is expected to fluctuate as room sales do and as businesses open and close. C. California Constitutional Compliance The GOTMD assessment is not a property-based assessment subject to the requirements of Proposition 218. Courts have found property.1 Rather, the GOTMD assessment is a business-based assessment, and is subject to Proposition 26. Pursuant to Proposition 26 all levies are a tax unless they fit one of seven exceptions. Two of these exceptions apply to the GOTMDservice.City of conferring the benefits or providing the services. 1. Specific Benefit Proposition 26 requires that assessment funds be expea 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 privilege2 The services in this Plan are designed to provide targeted specific benefits directly to assessed businesses, and are intended only to provide specific benefits and services directly to those businesses paying the assessment. These services are tailored not to serve the general public, businesses in general, or parcels of land, but rather to serve the specific businesses within the GOTMD. The activities described in this Plan are specifically targeted to increase demand for room night sales for assessed lodging businesses within the boundaries of the GOTMD and are narrowly tailored. GOTMD funds will be used exclusively to provide the specific benefit of increased demand for room night sales directly to the assessees. Assessment funds shall not be used to feature non-assessed lodging businesses in GOTMD programs, or to directly generate sales for non-assessed businesses. The activities paid for from assessment revenues are business services constituting and providing specific benefits to the assessed businesses. Nothing in this Plan limits the ability of the 1 Jarvis v. the City of San Diego 72 Cal App. 4th 230 2 Cal. Const. art XIII C § 1(e)(1) 1125
GOTMD Management District Plan 12 March 5, 2025
to enter into private contracts with non-assessed lodging businesses for the provision of services to those businesses. The assessment imposed by this GOTMD is for a specific benefit conferred directly to the payors that are not provided to those not charged. The specific benefit conferred directly to the payors is an increase in demand for room night sales. The specific benefit of an increase in demand for room night sales for assessed lodging businesses will be provided only to lodging businesses paying the district assessment, with Sales & Marketing programs promoting lodging businesses paying the GOTMD assessment. The Sales & Marketing programs will be designed to increase room night sales at each assessed lodging businesses. Because they are necessary to provide the Sales & Marketing programs that specifically benefit the assessed lodging businesses, the Administration & Advocacy and Contingency/Renewal services also provide the specific benefit of increased demand for room night sales to the assessed lodging businesses. Although the GOTMD, in providing specific benefits to payors, may produce incidental benefits to non-paying businesses, the incidental benefit does not preclude the services from being considered a specific benefit. as a merely because an indirect benefit to a nonpayor occurs incidentally and without 3 Specific Government Service The assessment may also be utilized to provide, 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.4 The legislature has recognized that marketing and promotions services like those to be provided by the GOTMD are government services within the meaning of Proposition 265. Further, the legislature has determined payor as a co6 3. Reasonable Cost GOTMD services will be implemented carefully to ensure they do not exceed the reasonable cost of such services. The full amount assessed will be used to provide the services described herein. Funds will be managed by GOCAL, and reports submitted on an annual basis to the City. Only assessed lodging businesses will be featured in marketing materials, receive sales leads generated from GOTMD-funded activities, be featured in advertising campaigns, and benefit from other GOTMD-funded services. Non-assessed lodging businesses will not receive these, nor any other, GOTMD-funded services and benefits. The assessed lodging business list was compiled from records provided by each jurisdiction and complies with the requirements of the 94 Law. Pursuant to Streets and Highways Code Section 36615, the City Council's determination of ownership is final and conclusive, with no obligation to obtain other information. The GOTMD-funded programs are targeted directly to benefit assessed businesses. It is, however, possible that there will be a spillover benefit to non-assessed businesses. If non-assessed lodging businesses receive incremental room nights, that portion of the promotion or program generating 3 Government Code § 53758(a) 4 Cal. Const. art XIII C § 1(e)(2) 5 Government Code § 53758(b) 6 Government Code § 53758(b) 1126
GOTMD Management District Plan 13 March 5, 2025
those room nights shall be paid with non-GOTMD funds. GOTMD funds shall only be spent to benefit the assessed businesses and shall not be spent on that portion of any program which directly generates incidental room nights for non-assessed businesses. D. Assessment The annual assessment rate is three percent (3%) of gross short-term sleeping room rental revenue. Because the marketing programs will not promote or seek certain stays, assessments will not be collected on: stays of more than thirty (30) consecutive days; stays by any Federal officer or employee when on official Federal government business; nor on stays by any officer or employee of a foreign government who is exempt by express provision of Federal law or international treaty. The assessment was calculated based on the total cost of the activities to be provided for the benefit of the businesses within the GOTMD, with costs allocated based on the proportional benefit conferred to each assessed business. Activities funded by the GOTMD, are specifically targeted to increase room nights at assessed businesses. All room night sales do not represent the same benefit to the payors. For example, a higher priced room night is of greater benefit than a lower priced room night because the assesses derive greater revenue. To account for this benefit differential and to make sure the benefits are proportional, an assessment formula based on a percentage of revenue has been selected. The proposed formula accurately reflects greater benefit to assessed businesses with higher priced room nights. sleeping for the occupancy of space in a lodging business valued in money. Gross sleeping room rental revenue shall not include any federal, state or local taxes collected, including but not limited to transient occupancy taxes. The assessment is levied upon and a direct obligation of the assessed lodging business. However, the assessed lodging business may, at its discretion, pass the assessment on to transients. The amount of assessment, if passed on to each transient, shall be disclosed in advance and separately stated from the amount of rent charged and any other applicable taxes, and each transient shall receive a receipt for payment from the business. If the GOTMD assessment is identified separately it shall be disclosed aGOTMD GOTMD assessment and the amount of the assessment imposed pursuant to the California Tourism The assessment is imposed solely upon and is the sole obligation of the assessed lodging business even if it is passed on to transients. The assessment shall not be considered revenue for calculation of transient occupancy taxes. Bonds shall not be issued. E. Interest and Overdue Charges The GOTMD shall reimburse the Cities of Ontario and Rancho Cucamonga for any costs associated with collecting unpaid assessments. If sums in excess of the delinquent GOTMD assessment are sought to be recovered in the same collection action by the Cities, the GOTMD shall bear its pro rata share of such collection costs. 1. Any business which fails to remit any assessment within thirty (30) days shall pay an overdue charge in the amount of one-half of one percent (0.5%) per day of the assessment due and owning in addition to the amount of the assessment. 1127
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2. Any business which fails to remit any delinquent assessment on or before a period of thirty (30) days following the date on which the assessment first became delinquent (or sixty [60] days after the initial due date) shall pay a second delinquency overdue charge in the amount of ten percent (10%) of the assessment due and owing in addition to the amount of the assessment and the one-half of one percent (0.5%) overdue charge first imposed pursuant to section 1 above. 3. If the collecting City determines that the non-payment of any assessment is due to fraud, an overdue charge in the amount of twenty-five (25%) of the amount of assessment due and owning shall be added thereto in addition to the overdue charges set forth in section 1 and 2 above. 4. In addition to the overdue charges imposed, any business which fails to remit any assessment shall pay interest at the rate of one-half of one percent (0.5%) per month, or fraction thereof, on the amount of the assessment due and owing, exclusive of overdue charges, from the date on which the assessment first became delinquent until paid. F. Time and Manner for Collecting Assessments The GOTMD assessment will be implemented beginning July 1, 2028 or as soon as possible thereafter, and end ten (10) years from its start date. The Cities or GOCAL will be responsible for collecting the assessment on a monthly basis (including any delinquencies, overdue charges and interest) from each assessed lodging business located in their respective jurisdictions. GOCAL and Cities shall take all reasonable efforts to collect the assessments from each lodging business within the GOTMD. 1. GOCAL and/or Cities shall make all reasonable efforts to enter into an agreement with all Hosting Platforms to collect and remit the GOTMD assessment on behalf of assessed businesses using the hosting platform. 2. An assessed business, using a Hosting Platform, reserves the right to have the Hosting Platform collect the assessment based on information supplied by the assessed business, and remit such assessment to the assessed business for ultimate reporting and remittance by the assessed business to GOCAL and/or Cities. In such case, the Hosting Platform, upon request from GOCAL and/or Cities, and not more than once per consecutive twelve-month period, shall provide GOCAL and/or Cities with copies of documentation related to assessed business which have provided acknowledgement of its obligation to collect all assessments owed on a gross short-term room rental revenue and to remit and report any assessments collected directly to GOCAL and/or Cities. 1128
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VI. GOVERNANCE A. The Ontario City Council, through adoption of this Plan, has the right, pursuant to Streets and Highways Code §36651, to identify the body that shall implement the proposed program, which shall be the OAssociation of the GOTMD as defined in Streets and Highways Code §36612. The Ontario City Council has determined that GOCAL Association for the GOTMD. B. Brown Act and California Public Records Act Compliance Association is, however, subject to government regulations relating to transparency, namely the Ralph M. Brown Act and the California Public Records Act. These regulations are designed to promote Act (Government Code §54950 et seq.). Thus, meetings of the Board and certain committees must be held in compliance with the public notice and other requirements of the Brown Act. Accordingly, the of each member present and disclosure requirements of the California Public Records Act. C. Annual Report GOCAL shall present an annual report at the end of each year of operation to the City Council pursuant to Streets and Highways Code §36650 (see Appendix 1). The annual report shall include: Any proposed changes in the boundaries of the improvement district or in any benefit zones or classification of businesses within the district. The improvements and activities to be provided for that fiscal year. An estimate of the cost of providing the improvements and the activities for that fiscal year. The method and basis of levying the assessment in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for that fiscal year. The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year. The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part. 1129
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APPENDIX 1 LAW *** THIS DOCUMENT IS CURRENT THROUGH THE 2023 EXTRA SESSION CH 1, 2023 REGULAR SESSION CH. 890*** (ALL 2023 LEGISLATION) STREETS AND HIGHWAYS CODE DIVISION 18. PARKING PART 7. PROPERTY AND BUSINESS IMPROVEMENT DISTRICT LAW OF 1994 CHAPTER 1. General Provisions ARTICLE 1. Declarations 36600. Citation of part 36601. Legislative findings and declarations; Legislative guidance The Legislature finds and declares all of the following: economically disadvantaged, are underutilized, and are unable to attract customers due to inadequate facilities, services, and activities in the business districts. (b) It is in the public interest to promote the economic revitalization and physical maintenance of business districts in order to create jobs, attract new businesses, and prevent the erosion of the business districts. (c) It is of particular local benefit to allow business districts to fund business related improvements, maintenance, and activities through the levy of assessments upon the businesses or real property that receive benefits from those improvements. (d) Assessments levied for the purpose of conferring special benefit upon the real property or a specific benefit upon the businesses in a business district are not taxes for the general benefit of a city, even if property, businesses, or persons not assessed receive incidental or collateral effects that benefit them. (e) Property and business improvement districts formed throughout this state have conferred special benefits upon properties and businesses within their districts and have made those properties and businesses more useful by providing the following benefits: (1) Crime reduction. A study by the Rand Corporation has confirmed a 12-percent reduction in the incidence of robbery and an 8-percent reduction in the total incidence of violent crimes within the 30 districts studied. (2) Job creation. (3) Business attraction. (4) Business retention. (5) Economic growth. (6) New investments. (f) With the dissolution of redevelopment agencies throughout the state, property and business improvement districts have become even more important tools with which communities can combat blight, promote economic opportunities, and create a clean and safe environment. (g) Since the enactment of this act, the people of California have adopted Proposition 218, which added Article XIII D to the Constitution in order to place certain requirements and restrictions on the formation of, and activities, expenditures, and assessments by property-based districts. Article XIII D of the Constitution provides that property-based districts may only levy assessments for special benefits. its interaction with the provisions of Article XIII D of the Constitution, and the determination of special benefits in property-based districts. (1) The lack of legislative guidance has resulted in uncertainty and inconsistent application of this act, which discourages the use of assessments to fund needed improvements, maintenance, and activities in property-based districts, contributing to blight and other underutilization of property. 1130
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(2) Activities undertaken for the purpose of conferring special benefits upon property to be assessed inherently produce incidental or collateral effects that benefit property or persons not assessed. Therefore, for special benefits to exist as a separate and distinct category from general benefits, the incidental or collateral effects of those special benefits are inherently part of those special benefits. The mere fact that special benefits produce incidental or collateral effects that benefit property or persons not assessed does not convert any portion of those special benefits or their incidental or collateral effects into general benefits. (3) It is of the utmost importance that property-based districts created under this act have clarity regarding restrictions on assessments they may levy and the proper determination of special benefits. Legislative clarity with regard to this act will provide districts with clear instructions and courts with legislative intent regarding restrictions on property-based assessments, and the manner in which special benefits should be determined. 36602. Purpose of part The purpose of this part is to supplement previously enacted provisions of law that authorize cities to levy assessments within property and business improvement districts, to ensure that those assessments conform to all constitutional requirements and are determined and assessed in accordance with the guidance set forth in this act. This part does not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or the raising of revenue for these purposes. 36603. Preemption of authority or charter city to adopt ordinances levying assessments Nothing in this part is intended to preempt the authority of a charter city to adopt ordinances providing for a different method of levying assessments for similar or additional purposes from those set forth in this part. A property and business improvement district created pursuant to this part is expressly exempt from the provisions of the Special Assessment Investigation, Limitation and Majority Protest Act of 1931 (Division 4 (commencing with Section 2800)). 36603.5 Part prevails over conflicting provisions Any provision of this part that conflicts with any other provision of law shall prevail over the other provision of law, as to districts created under this part. 36604. Severability This part is intended to be construed liberally and, if any provision is held invalid, the remaining provisions shall remain in full force and effect. Assessments levied under this part are not special taxes. ARTICLE 2. Definitions 36606. (a) Promotion of public events. (b) Furnishing of music in any public place. (c) Promotion of tourism within the district. (d) Marketing and economic development, including retail retention and recruitment. (e) Providing security, sanitation, graffiti removal, street and sidewalk cleaning, and other municipal services supplemental to those normally provided by the municipality. (f) Other services provided for the purpose of conferring special benefit upon assessed real property or specific benefits upon assessed businesses located in the district. 36606.5. providing activities that will provide certain benefits to properties or businesses located within a property and business improvement district. 1131
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36607. 36608. Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code, the public member agencies of which includes only cities, counties, or a city and county, or the State of California. 36609. or board created pursuant to a joint powers agreement and which is a city within the meaning of this part. 36609.4. 36609.5. -defined in Section 36615.5. 36610. estimated useful life of five years or more including, but not limited to, the following: (a) Parking facilities. (b) Benches, booths, kiosks, display cases, pedestrian shelters and signs. (c) Trash receptacles and public restrooms. (d) Lighting and heating facilities. (e) Decorations. (f) Parks. (g) Fountains. (h) Planting areas. (i) Closing, opening, widening, or narrowing of existing streets. (j) Facilities or equipment, or both, to enhance security of persons and property within the district. (k) Ramps, sidewalks, plazas, and pedestrian malls. (l) Rehabilitation or removal of existing structures. 36611. 36612. be an existing nonprofit enmay not be considered a public entity for any purpose, nor may its board members or staff be considered to be public officials for any purpose. Notwithstanding this secM. Brown Act (Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code), at all times when matters within the subject matter of the district are heard, discussed, or deliberated, and with the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code), for all records relating to activities of the district. 36614. 1132
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36614.5. established pursuant to this part. 36614.6. - - part upon real property. 36614.7. - - -based assessment. 36615. obligation to obtain other information as to the ownership of land or businesses, and its determination of ownership shall be final and conclusive for the purposes of this part. Wherever this part requires the signature of the property owner, the signature of the authorized agent of the property owner shall be sufficient. Wherever this part requires the signature of the business owner, the signature of the authorized agent of the business owner shall be sufficient. 36615.5. -based district, a particular and distinct benefit over and above general benefits conferred on real property located in a district or to the public at large. Special benefit includes incidental or collateral effects that arise from the improvements, maintenance, or activities of property-based districts even if those incidental or collateral effects benefit property or persons not assessed. Special benefit excludes general enhancement of property value. -based district, a particular and distinct benefit provided directly to each assessed parcel within the district. Merely because parcels throughout an assessment district share the same special benefits does not make the benefits general. 36616. ARTICLE 3 Prior Law 36617. Alternate method of financing certain improvements and activities; Effect on other provisions This part provides an alternative method of financing certain improvements and activities. The provisions of this part shall not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or the raising of revenue for these purposes. Every improvement area established pursuant to the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500) of this division) is valid and effective and is unaffected by this part. CHAPTER 2. Establishment 36620. Establishment of property and business improvement district A property and business improvement district may be established as provided in this chapter. 36620.5. Requirement of consent of city council 1133
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A county may not form a district within the territorial jurisdiction of a city without the consent of the city council of that city. A city may not form a district within the unincorporated territory of a county without the consent of the board of supervisors of that county. A city may not form a district within the territorial jurisdiction of another city without the consent of the city council of the other city. 36621. Initiation of proceedings; Petition of property or business owners in proposed district (a) Upon the submission of a written petition, signed by the property or business owners in the proposed district who will pay more than 50 percent of the assessments proposed to be levied, the city council may initiate proceedings to form a district by the adoption of a resolution expressing its intention to form a district. The amount of assessment attributable to property or a business owned by the same property or business owner that is in excess of 40 percent of the amount of all assessments proposed to be levied, shall not be included in determining whether the petition is signed by property or business owners who will pay more than 50 percent of the total amount of assessments proposed to be levied. (b) The petition of property or business owners required under subdivision (a) shall include a summary of the management district plan. That summary shall include all of the following: (1) A map showing the boundaries of the district. (2) Information specifying where the complete management district plan can be obtained. (3) Information specifying that the complete management district plan shall be furnished upon request. (c) The resolution of intention described in subdivision (a) shall contain all of the following: (1) A brief description of the proposed improvements, maintenance, and activities, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property or businesses within the district, a statement as to whether bonds will be issued, and a description of the exterior boundaries of the proposed district, which may be made by reference to any plan or map that is on file with the clerk. The descriptions and statements do not need to be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements, maintenance, and activities, and the location and extent of the proposed district. (2) A time and place for a public hearing on the establishment of the property and business improvement district and the levy of assessments, which shall be consistent with the requirements of Section 36623. 36622. Contents of management district plan The management district plan shall include, but is not limited to, all of the following: (a) If the assessment will be levied on property, a map of the district in sufficient detail to locate each parcel of property and, if businesses are to be assessed, each business within the district. If the assessment will be levied on businesses, a map that identifies the district boundaries in sufficient detail to allow a business owner to reasonably determine whether a business is located within the district boundaries. If the assessment will be levied on property and businesses, a map of the district in sufficient detail to locate each parcel of property and to allow a business owner to reasonably determine whether a business is located within the district boundaries. (b) The name of the proposed district. (c) A description of the boundaries of the district, including the boundaries of benefit zones, proposed for establishment or extension in a manner sufficient to identify the affected property and businesses included, which may be made by reference to any plan or map that is on file with the clerk. The boundaries of a proposed property assessment district shall not overlap with the boundaries of another existing property assessment district created pursuant to this part. This part does not prohibit the boundaries of a district created pursuant to this part to overlap with other assessment districts established pursuant to other provisions of law, including, but not limited to, the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500)). This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with another business assessment district created pursuant to this part. This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with a property assessment district created pursuant to this part. (d) The improvements, maintenance, and activities proposed for each year of operation of the district and the estimated cost thereof. If the improvements, maintenance, and activities proposed for each year of operation are the same, a description of the f 1134
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and a statement that the same improvements, maintenance, and activities are proposed for subsequent years shall satisfy the requirements of this subdivision.(e) The total annual amount proposed to be expended for improvements, maintenance, or activities, and debt service in each year of operation of the district. If the assessment is levied on businesses, this amount may be estimated based upon the assessment rate. If the total annual amount proposed to be expended in each year of operation of the district is not significantly different, the amount proposed to be expended in the initial year and a statement that a similar amount applies to subsequent years shall satisfy the requirements of this subdivision. (f) The proposed source or sources of financing, including the proposed method and basis of levying the assessment in sufficient detail to allow each property or business owner to calculate the amount of the assessment to be levied against their property or business. The plan also shall state whether bonds will be issued to finance improvements. (g) The time and manner of collecting the assessments. (h) The specific number of years in which assessments will be levied. In a new district, the maximum number of years shall be five. Upon renewal, a district shall have a term not to exceed 10 years. Notwithstanding these limitations, a district created pursuant to this part to finance capital improvements with bonds may levy assessments until the maximum maturity of the bonds. The management district plan may set forth specific increases in assessments for each year of operation of the district. (i) The proposed time for implementation and completion of the management district plan. (j) Any proposed rules and regulations to be applicable to the district. (k) for properties to be assessed, and a statement of the method or methods by which the expenses of a district will be imposed upon benefited real property or businesses, in proportion to the benefit received by the property or business, to defray the cost thereof. (2) In a property-based district, the proportionate special benefit derived by each identified parcel shall be determined exclusively in relationship to the entirety of the capital cost of a public improvement, the maintenance and operation expenses of a public improvement, or the cost of the activities. An assessment shall not be imposed on any parcel that exceeds the reasonable cost of the proportional special benefit conferred on that parcel. Only special benefits are assessable, and a property-based district shall separate the general benefits, if any, from the special benefits conferred on a parcel. Parcels within a property-based district that are owned or used by any city, public agency, the State of California, or the United States shall not be exempt from assessment unless the governmental entity can demonstrate by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit. The value of any incidental, secondary, or collateral effects that arise from the improvements, maintenance, or activities of a property-based district and that benefit property or persons not assessed shall not be deducted from the entirety of the cost of any special benefit or affect the proportionate special benefit derived by each identified parcel. (3) In a property-based district, properties throughout the district may share the same special benefits. In a district with boundaries that define which parcels are to receive improvements, maintenance, or activities over and above those services provided by the city, the improvements, maintenance, or activities themselves may constitute a special benefit. The city may impose assessments that are less than the proportional special benefit conferred, but shall not impose assessments that exceed the reasonable costs of the proportional special benefit conferred. Because one or more parcels pay less than the special benefit conferred does not necessarily mean that other parcels are assessed more than the reasonable cost of their special benefit. (l) In a property-certified by the State of California supporting all assessments contemplated by the management district plan. (m) Any other item or matter required to be incorporated therein by the city council. 36623. Procedure to levy assessment (a) If a city council proposes to levy a new or increased property assessment, the notice and protest and hearing procedure shall comply with Section 53753 of the Government Code. (b) If a city council proposes to levy a new or increased business assessment, the notice and protest and hearing procedure shall comply with Section 54954.6 of the Government Code, except that notice shall be 1135
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mailed to the owners of the businesses proposed to be assessed. A protest may be made orally or in writing by any interested person. Every written protest shall be filed with the clerk at or before the time fixed for the public hearing. The city council may waive any irregularity in the form or content of any written protest. A written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Each written protest shall contain a description of the business in which the person subscribing the protest is interested sufficient to identify the business and, if a person subscribing is not shown on the official records of the city as the owner of the business, the protest shall contain or be accompanied by written evidence that the person subscribing is the owner of the business or the authorized representative. A written protest that does not comply with this section shall not be counted in determining a majority protest. If written protests are received from the owners or authorized representatives of businesses in the proposed district that will pay 50 percent or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than 50 percent, no further proceedings to levy the proposed assessment against such businesses, as contained in the resolution of intention, shall be taken for a period of one year from the date of the finding of a majority protest by the city council. (c) If a city council proposes to conduct a single proceeding to levy both a new or increased property assessment and a new or increased business assessment, the notice and protest and hearing procedure for the property assessment shall comply with subdivision (a), and the notice and protest and hearing procedure for the business assessment shall comply with subdivision (b). If a majority protest is received from either the property or business owners, that respective portion of the assessment shall not be levied. The remaining portion of the assessment may be levied unless the improvement or other special benefit was proposed to be funded by assessing both property and business owners. 36624. Changes to proposed assessments At the conclusion of the public hearing to establish the district, the city council may adopt, revise, change, reduce, or modify the proposed assessment or the type or types of improvements, maintenance, and activities to be funded with the revenues from the assessments. Proposed assessments may only be revised by reducing any or all of them. At the public hearing, the city council may only make changes in, to, or from the boundaries of the proposed property and business improvement district that will exclude territory that will not benefit from the proposed improvements, maintenance, and activities. Any modifications, revisions, reductions, or changes to the proposed assessment district shall be reflected in the notice and map recorded pursuant to Section 36627. 36625. Resolution of formation (a) If the city council, following the public hearing, decides to establish a proposed property and business improvement district, the city council shall adopt a resolution of formation that shall include, but is not limited to, all of the following: (1) A brief description of the proposed improvements, maintenance, and activities, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property, businesses, or both within the district, a statement on whether bonds will be issued, and a description of the exterior boundaries of the proposed district, which may be made by reference to any plan or map that is on file with the clerk. The descriptions and statements need not be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements, maintenance, and activities and the location and extent of the proposed district. (2) The number, date of adoption, and title of the resolution of intention. (3) The time and place where the public hearing was held concerning the establishment of the district. (4) A determination regarding any protests received. The city shall not establish the district or levy assessments if a majority protest was received. (5) A statement that the properties, businesses, or properties and businesses in the district established by the resolution shall be subject to any amendments to this part. (6) A statement that the improvements, maintenance, and activities to be conferred on businesses and properties in the district will be funded by the levy of the assessments. The revenue from the levy of assessments within a district shall not be used to provide improvements, maintenance, or activities outside the district or for any purpose other than the purposes specified in the resolution of intention, as modified by the city council at the hearing concerning establishment of the district. Notwithstanding the foregoing, improvements and activities that must be provided outside the 1136
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district boundaries to create a special or specific benefit to the assessed parcels or businesses may be provided, but shall be limited to marketing or signage pointing to the district.(7) A finding that the property or businesses within the area of the property and business improvement district will be benefited by the improvements, maintenance, and activities funded by the proposed assessments, and, for a property-based district, that property within the district will receive a special benefit. (8) In a property-based district, the total amount of all special benefits to be conferred on the properties within the property-based district. (b) The adoption of the resolution of formation and, if required, recordation of the notice and map pursuant to Section 36627 shall constitute the levy of an assessment in each of the fiscal years referred to in the management district plan. 36627. Notice and assessment diagram Following adoption of the resolution establishing district assessments on properties pursuant to Section 36625, the clerk shall record a notice and an assessment diagram pursuant to Section 3114. No other provision of Division 4.5 (commencing with Section 3100) applies to an assessment district created pursuant to this part. 36628. Establishment of separate benefit zones within district; Categories of businesses The city council may establish one or more separate benefit zones within the district based upon the degree of benefit derived from the improvements or activities to be provided within the benefit zone and may impose a different assessment within each benefit zone. If the assessment is to be levied on businesses, the city council may also define categories of businesses based upon the degree of benefit that each will derive from the improvements or activities to be provided within the district and may impose a different assessment or rate of assessment on each category of business, or on each category of business within each zone. 36628.5. Assessments on businesses or property owners The city council may levy assessments on businesses or on property owners, or a combination of the two, pursuant to this part. The city council shall structure the assessments in whatever manner it determines corresponds with the distribution of benefits from the proposed improvements, maintenance, and activities, provided that any property-based assessment conforms with the requirements set forth in paragraph (2) of subdivision (k) of Section 36622. 36629. Provisions and procedures applicable to benefit zones and business categories All provisions of this part applicable to the establishment, modification, or disestablishment of a property and business improvement district apply to the establishment, modification, or disestablishment of benefit zones or categories of business. The city council shall, to establish, modify, or disestablish a benefit zone or category of business, follow the procedure to establish, modify, or disestablish a property and business improvement district. 36630. Expiration of district; Creation of new district If a property and business improvement district expires due to the time limit set pursuant to subdivision (h) of Section 36622, a new management district plan may be created and the district may be renewed pursuant to this part. CHAPTER 3: Assessments 36631. Time and manner of collection of assessments; Delinquent payments The collection of the assessments levied pursuant to this part shall be made at the time and in the manner set forth by the city council in the resolution levying the assessment. Assessments levied on real property may be collected at the same time and in the same manner as for the ad valorem property tax, and may provide for the same lien priority and penalties for delinquent payment. All delinquent payments for assessments levied pursuant to this part may be charged interest and penalties. 36632. Assessments to be based on estimated benefit; Classification of real property and businesses; Exclusion of residential and agricultural property 1137
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(a) The assessments levied on real property pursuant to this part shall be levied on the basis of the estimated benefit to the real property within the property and business improvement district. The city council may classify properties for purposes of determining the benefit to property of the improvements and activities provided pursuant to this part. (b) Assessments levied on businesses pursuant to this part shall be levied on the basis of the estimated benefit to the businesses within the property and business improvement district. The city council may classify businesses for purposes of determining the benefit to the businesses of the improvements and activities provided pursuant to this part. (c) Properties zoned solely for residential use, or that are zoned for agricultural use, are conclusively presumed not to benefit from the improvements and service funded through these assessments, and shall not be subject to any assessment pursuant to this part. 36633. Time for contesting validity of assessment The validity of an assessment levied under this part shall not be contested in an action or proceeding unless the action or proceeding is commenced within 30 days after the resolution levying the assessment is adopted pursuant to Section 36625. An appeal from a final judgment in an action or proceeding shall be perfected within 30 days after the entry of judgment. 36634. Service contracts authorized to establish levels of city services The city council may execute baseline service contracts that would establish levels of city services that would continue after a property and business improvement district has been formed. 36635. Request to modify management district plan modification of the management district plan shall be made pursuant to this chapter. 36636. Modification of plan by resolution after public hearing; Adoption of the resolution of intention district plan after conducting one public hearing on the proposed modifications. The city council may modify the improvements and activities to be funded with the revenue derived from the levy of the assessments by adopting a resolution determining to make the modifications after holding a public hearing on the proposed modifications. If the modification includes the levy of a new or increased assessment, the city council shall comply with Section 36623. Notice of all other public hearings pursuant to this section shall comply with both of the following: (1) The resolution of intention shall be published in a newspaper of general circulation in the city once at least seven days before the public hearing. (2) A complete copy of the resolution of intention shall be mailed by first class mail, at least 10 days before the public hearing, to each business owner or property owner affected by the proposed modification. (b) The city council shall adopt a resolution of intention which states the proposed modification prior to the public hearing required by this section. The public hearing shall be held not more than 90 days after the adoption of the resolution of intention. 36637. Reflection of modification in notices recorded and maps Any subsequent modification of the resolution shall be reflected in subsequent notices and maps recorded pursuant to Division 4.5 (commencing with Section 3100), in a manner consistent with the provisions of Section 36627. 36638. Assessment as government improvised fee on Civ C § 1770 transaction [Operative July 1, 2024] (a) A business assessment pursuant to this part is a fee imposed by a government on the transaction for purposes of paragraph (29) of subdivision (a) of Section 1770 of the Civil Code. (b) This section shall become operative on July 1, 2024. 1138
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CHAPTER 3.5 Financing 36640. Bonds authorized; Procedure; Restriction on reduction or termination of assessments (a) The city council may, by resolution, determine and declare that bonds shall be issued to finance the estimated cost of some or all of the proposed improvements described in the resolution of formation adopted pursuant to Section 36625, if the resolution of formation adopted pursuant to that section provides for the issuance of bonds, under the Improvement Bond Act of 1915 (Division 10 (commencing with Section 8500)) or in conjunction with MarksRoos Local Bond Pooling Act of 1985 (Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code). Either act, as the case may be, shall govern the proceedings relating to the issuance of bonds, although proceedings under the Bond Act of 1915 may be modified by the city council as necessary to accommodate assessments levied upon business pursuant to this part. (b) The resolution adopted pursuant to subdivision (a) shall generally describe the proposed improvements specified in the resolution of formation adopted pursuant to Section 36625, set forth the estimated cost of those improvements, specify the number of annual installments and the fiscal years during which they are to be collected. The amount of debt service to retire the bonds shall not exceed the amount of revenue estimated to be raised from assessments over 30 years. (c) Notwithstanding any other provision of this part, assessments levied to pay the principal and interest on any bond issued pursuant to this section shall not be reduced or terminated if doing so would interfere with the timely retirement of the debt. CHAPTER 4. Governance 36650. for which assessments are to be levied and collected to pay the costs of the improvements, maintenance, and activities described in the report. Thof operation of the district. The report may propose changes, including, but not limited to, the boundaries of the property and business improvement district or any benefit zones within the district, the basis and method of levying the assessments, and any changes in the classification of property, including any categories of business, if a classification is used. (b) The report shall be filed with the clerk and shall refer to the property and business improvement district by name, specify the fiscal year to which the report applies, and, with respect to that fiscal year, shall contain all of the following information: (1) Any proposed changes in the boundaries of the property and business improvement district or in any benefit zones or classification of property or businesses within the district. (2) The improvements, maintenance, and activities to be provided for that fiscal year. (3) An estimate of the cost of providing the improvements, maintenance, and activities for that fiscal year. (4) The method and basis of levying the assessment in sufficient detail to allow each real property or business owner, as appropriate, to estimate the amount of the assessment to be levied against his or her property or business for that fiscal year. (5) The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year. (6) The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part. particular contained in the report and approve it as modified. Any modification shall be made pursuant to Sections 36635 and 36636. The city council shall not approve a change in the basis and method of levying assessments that would impair an authorized or executed contract to be paid from the revenues derived from the levy of assessments, including any commitment to pay principal and interest on any bonds issued on behalf of the district. 36651. 1139
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improvements, maintenance, and activities described in the management district plan. If the management district ion, the city shall contract with the designated nonprofit corporation to provide services. CHAPTER 5. Renewal 36660. Renewal of district; Transfer or refund of remaining revenues; District term limit (a) Any district previously established whose term has expired, or will expire, may be renewed by following the procedures for establishment as provided in this chapter. (b) Upon renewal, any remaining revenues derived from the levy of assessments, or any revenues derived from the sale of assets acquired with the revenues, shall be transferred to the renewed district. If the renewed district includes additional parcels or businesses not included in the prior district, the remaining revenues shall be spent to benefit only the parcels or businesses in the prior district. If the renewed district does not include parcels or businesses included in the prior district, the remaining revenues attributable to these parcels shall be refunded to the owners of these parcels or businesses. (c) Upon renewal, a district shall have a term not to exceed 10 years, or, if the district is authorized to issue bonds, until the maximum maturity of those bonds. There is no requirement that the boundaries, assessments, improvements, or activities of a renewed district be the same as the original or prior district. CHAPTER 6. Disestablishment 36670. Circumstances permitting disestablishment of district; Procedure (a) Any district established or extended pursuant to the provisions of this part, where there is no indebtedness, outstanding and unpaid, incurred to accomplish any of the purposes of the district, may be disestablished by resolution by the city council in either of the following circumstances: (1) If the city council finds there has been misappropriation of funds, malfeasance, or a violation of law in connection with the management of the district, it shall notice a hearing on disestablishment. (2) During the operation of the district, there shall be a 30-day period each year in which assessees may request disestablishment of the district. The first such period shall begin one year after the date of establishment of the district and shall continue for 30 days. The next such 30-day period shall begin two years after the date of the establishment of the district. Each successive year of operation of the district shall have such a 30-day period. Upon the written petition of the owners or authorized representatives of real property or the owners or authorized representatives of businesses in the district who pay 50 percent or more of the assessments levied, the city council shall pass a resolution of intention to disestablish the district. The city council shall notice a hearing on disestablishment. (b) The city council shall adopt a resolution of intention to disestablish the district prior to the public hearing required by this section. The resolution shall state the reason for the disestablishment, shall state the time and place of the public hearing, and shall contain a proposal to dispose of any assets acquired with the revenues of the assessments levied within the property and business improvement district. The notice of the hearing on disestablishment required by this section shall be given by mail to the property owner of each parcel or to the owner of each business subject to assessment in the district, as appropriate. The city shall conduct the public hearing not less than 30 days after mailing the notice to the property or business owners. The public hearing shall be held not more than 60 days after the adoption of the resolution of intention. 36671. Refund of remaining revenues upon disestablishment or expiration without renewal of district; Calculation of refund; Use of outstanding revenue collected after disestablishment of district (a) Upon the disestablishment or expiration without renewal of a district, any remaining revenues, after all outstanding debts are paid, derived from the levy of assessments, or derived from the sale of assets acquired with the revenues, or from bond reserve or construction funds, shall be refunded to the owners of the property or businesses then located and operating within the district in which assessments were levied by 1140
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applying the same method and basis that was used to calculate the assessments levied in the fiscal year in which the district is disestablished or expires. All outstanding assessment revenue collected after disestablishment shall be spent on improvements and activities specified in the management district plan. (b) If the disestablishment occurs before an assessment is levied for the fiscal year, the method and basis that was used to calculate the assessments levied in the immediate prior fiscal year shall be used to calculate the amount of any refund. 1141
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APPENDIX 2 ASSESSED BUSINESSES LODGING BUSINESS ADDRESS CITY, STATE ZIP 205 N EUCLID LLC 203 N Euclid Ave 1B Ontario CA 91762 205 N EUCLID LLC 203 N Euclid Ave 6A Ontario CA 91762 205 N EUCLID LLC 203 N Euclid Ave 8 Ontario CA 91762 AARON LI 2720 Eagle Creek Pl Ontario CA 91761 ABEL II MORA 223 S Bermuda Dunes St Ontario CA 91762 ABEL MORA 8890 Church St Rancho Cucamonga CA 91730 AIDA SEGURA 2902 Palomino Ct Ontario CA 91761 Airport Stay Motel 1211 North Grove Avenue Ontario CA 91764 ALFRED T FONG 2550 E Canterbury Trail Ontario CA 91761 ALLEN PENG 541 N Vine Ave Ontario CA 91762 Aloft Ontario-Rancho Cucamonga 10480 Fourth Street Rancho Cucamonga CA 91730 American Inn 755 North Euclid Avenue Ontario CA 91762 ANGEL T TONGCO 3159 Clover Ln Ontario CA 91761 ANNETTE DUSSETT 11149 Summerside Ln Rancho Cucamonga CA 91701 Armendariz Family Living TR 12/16/22 2632 E Dunes St Ontario CA 91761 Ayres Suites at the Mills Mall 4370 Mills Circle Ontario CA 91764 Azure Hotel & Suites Ontario Airport 1945 East Holt Boulevard Ontario CA 91761 Baymont Inn & Suite Ontario 1655 East 4th Street Ontario CA 91764 BENJAMIN BINLING CHEN 2246 Loggers Ln Ontario CA 91762 BENNY ANTHONY RAMIREZ AGUILAR 1446 N Campus Ave Ontario CA 91764 Best Ontario Inn 1045 West Mission Boulevard Ontario CA 91762 Best Western Ontario Airport 209 North Vineyard Avenue Ontario CA 91764 Best Western Ontario Mills Mall 4395 Ontario Mills Parkway Ontario CA 91764 Best Western Plus Heritage Inn 8179 Spruce Ave. Rancho Cucamonga CA 91730 BING JIANG 2614 GARFIELD AVE Ontario CA91761 BINGWU GENG 559 E ROSEWOOD CT Ontario CA 91764 BOWEN LI 608 E Joseph Privado Ontario CA 91761 BRANDI GREWAL 6009 JADEITE AVE Alta Loma CA 91737 Bright Star Motel 1530 West Mission Boulevard Ontario CA 91762 CAI LIVING TRUST 6322 Semillon Pl Rancho Cucamonga CA 91737 Canden HEUTON 2637 S Quaker Ridge Pl Ontario CA 91761 Candlewood Suites 1818 East Holt Boulevard Ontario CA 91761 Capri Inn 1217 East Holt Boulevard Ontario CA 91764 CATHY WANG 105 E Rosewood Ct Ontario CA 91764 Chan Phoebe Family Trust 2/11/12 704 W Granada Ct Ontario CA 91762 CHEAN NANCY & MICHAEL FAM TR 908 W 4TH ST Ontario CA 91762 CHESTER GILCHRIST 1004 W PRINCETON ST Ontario Ca 91762 Cheung Family Revocable Trust 8/19/1 845 Virginia Ave Ontario CA 91764 Cheung Family Revocable Trust 9/19/1 638 W Harvard Pl Ontario CA 91762 CHRISTIAN TAI 3684 Hyche Ave Ontario CA 91761 Christmas House Bed and Breakfast Inn 9240 Archibald Avenue Rancho Cucamonga CA 91730 CHU-JAN CHENG 10460 Alta Loma Dr Rancho Cucamonga CA 91737 1142
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CHUNHUA LI 2476 Salem St Ontario CA91761 CLEMONS CARMEN REVOCABLE TRUST 4/20 5219 Cartilla Ave Rancho Cucamonga CA 91737 Comfort Inn & Suites 3333 Shelby Drive Ontario CA 91764 Comfort Suites 1811 E. Holt Blvd. Ontario CA 91761 Country Inn 2359 South Grove Avenue Ontario CA 91761 Country Inn & Suites - Ontario Mills 4674 E. Ontario Mills Pkwy Ontario CA 91764 Courtyard by Marriott Rancho Cucamonga 11525 Mission Vista Dr. Rancho Cucamonga CA 91730 CRT FAMILY TRUST 2/5/13 1105 S Elderberry Ave Ontario CA 91762 CRYSTAL EARWOOD 6963 SHAMROCK LN ALTA LOMA CA 91701 D & R TRUST 3674 S HYCHE AVE Ontario CA 91761 DANIEL T JR CLARK 5554 Glen Ridge Ct Rancho Cucamonga CA 91739 DANIEL VASQUEZ 11618 Mt Hood Ct Rancho Cucamonga CA 91737 DANIEL YANG 2465 E Bennington St Ontario CA 91761 DARRYL R LEVESQUE 1016 E I St Ontario CA 91764 Days Inn 1405 East 4th Street Ontario CA 91764 DEJUN XU 5400 Stoneview Rd Rancho Cucamonga CA 91739 Delta Hotels by Marriott 2200 East Holt Boulevard Ontario CA 91761 DEYANIRA REQUENES 9949 Meadowood Dr Rancho Cucamonga CA 91737 Doubletree by Hilton Ontario Airport 222 North Vineyard Avenue Ontario CA 91764 DO-YOUNG PARK 8623 Adega Dr Rancho Cucamonga CA 91730 DX FAMILY TRUST 750 W Hollowell St Ontario CA 91762 Economy Inn 2301 South Euclid Avenue Ontario CA 91762 Element Ontario 900 Via Piemonte Ontario CA 91764 Embassy Suites Ontario 3663 East Guasti Road Ontario CA 91761 ERIC JAMES HONANIE 1309 W Mission Dr 81 Ontario CA 91762 Express Inn & Suites 1150 North Grove Avenue Ontario CA 91764 Extended Stay America #911 3990 East Inland Empire Boulevard Ontario CA 91764 Fairfield Inn and Suites 9550 Pittsburgh Avenue Rancho Cucamonga CA 91730 FENG ZHU YI 4345 S Amherst Ave Ontario CA91762 Four Points Rancho Cucamonga 11960 Foothill Blvd. Rancho Cucamonga CA 91739 FRANCISCO JAVIER MEZA 307 W 6th St Ontario CA 91762 FRANCISCO PILA 300 N Allyn Ave Ontario CA 91764 GABRIEL SANCHEZ 1138 S Greenwood Ave Ontario CA 91761 GARDUNO MARIA RODRIGUEZ LIV TR 9/9 2107 S Euclid Ave Ontario CA 91762 GEORGINA MILANES FONTANILLA 9472 Sunglow Ct Rancho Cucamonga CA 91730 GEORGINA MILANES FONTANILLA 9472 Sunglow Ct Rancho Cucamonga CA 91730 GUANG SHOU LIN 1609 E DEODAR ST Ontario CA 91764 HAI ZHU 818 W Bonnie Brae Ct Ontario CA 91762 HAICHUCK ZHANG 9743 Woodleaf Dr Rancho Cucamonga CA 91737 HAIFENG WANG 13215 River Oaks Dr Rancho Cucamonga CA 91739 HAIZHU LIN 4835 S Monarch Pl Ontario CA 91762 Hampton Inn & Suites - Ontario 4500 East Mills Circle Ontario CA 91764 Hampton Inn & Suties Rancho Cucamonga 11669 Foothill Blvd Rancho Cucamonga CA 91730 HANA A AL JABARI 11700 BRANDYWINE PL Rancho Cucamonga CA 91730 1143
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HAO ZHANG 7032 Avenida Leon Rancho Cucamonga CA 91701 HARDY NGUYEN 12409 HARWICK DR Rancho Cucamonga Ca 91739 HARDY NGUYEN 13198 FIRESTONE DR Rancho Cucamonga CA 91739 HDK GROUP LLC 2440 E Salem St Ontario CA 91761 HENRY KE 2238 Loggers Ln Ontario CA 91762 Heritage Inn of Rancho Cucamonga 11481 Mission Vista Dr. Rancho Cucamonga CA 91730 Holiday Inn Express & Suites Ontario 2280 South Haven Ave. Ontario CA 91761 Holiday Inn Express Hotel & Suites 9589 Milliken Ave. Rancho Cucamonga CA 91730 Holiday Inn Ontario 2155 E. Convention Center Way Ontario CA 91764 HOLLY QIAOYI HUANG 3342 S NEWTON AVE Ontario CA 91761 Homewood Suites RC 11433 Mission Vista Dr. Rancho Cucamonga CA 91730 HONG BAO 9153 CANDLEWOOD ST Rancho Cucamonga CA 91730 HONG CHU 7676 Marine Ave Rancho Cucamonga CA 91730 HONGWEI SHI 9596 SEASONS DR Rancho Cucamonga Ca 91730 Hotel d'Lins 3400 East Shelby Street Ontario CA 91764 Hotel Hacienda 2425 South Archibald Avenue Ontario CA 91761 Hotel Seville 2441 South Euclid Avenue Ontario CA 91762 Hyatt Place Ontario 4760 East Mills Circle Ontario CA 91764 ICE BLUE LLC 1672 E Harvard Pl A Ontario CA 91764 ICE BLUE LLC 1672 E Harvard Pl B Ontario CA 91764 I-CHUN CHEN 604 W Bonnie Brae Ct Ontario CA 91762 IM STILL WITH YOU TRUST 5/2/22 4381 Amherst Ave Ontario CA 91762 IWINI SURROGACY INC 1153 Whittlers Pl Ontario CA 91762 JENNY LI 3954 E Catalina St Ontario CA 91761 JIA WANG 1013 S EUCLID AVE Ontario Ca 91762 JIAHAO WU 2938 E Arbor Ln Ontario CA 91762 JIAHUI HUANG 938 W GRANADA CT Ontario CA 91762 JIAMING LIU 768 W H St Ontario CA 91762 JIANLI WANG 10663 ORANGE BLOSSOM DR Rancho Cucamonga CA 91730 JIANLI WANG 8602 Stoneside Dr Rancho Cucamonga CA 91730 JIASHUN JI 2714 S Garfield Ave Ontario CA 91761 JILL HUANG WONG 321 E Maple St Ontario CA 91761 JINGTAO GAO 5090 S CENTENNIAL CIR Ontario CA 91762 JINGTAO GAO 5090 S CENTENNIAL CIR EAST Ontario CA 91672 JOANNA D TSAI 11450 Church Street 9 Rancho Cucamonga CA 91730 JORGE RAFAEL GUERRERO MAYO 13178 CHATHAM DR Rancho Cucamonga CA 91739 JOSEPH C NG 11241 Terra Vista Pkwy Rancho Cucamonga CA 91730 JOSEPH XANO & ADELE REV T WANG & TAN 926 W HAWTHORNE ST Ontario CA 91762 JOSEPH XANO WANG 1749 E Yale St Ontario CA 91764 JUMING SUN 9821 La Vine Ct Rancho Cucamonga CA 91701 JUNG KAI LAI 6868 Aberdeen Ct Rancho Cucamonga CA 91739 KATHY A MADISON 3266 Sweetwater Dr Ontario CA 91761 KEITH DION BRATTON 944 Divino Privado N 64 Ontario CA 91764 KE-JIA YU 3255 S Newton Ave Ontario CA 91761 KENNY CHEN 10311 FINCH ST Rancho Cucamonga CA 91737 1144
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Kittitod Pongvattanasomporn 6767 RAMONA AVE Alta Loma Ca 91701 Konomi Marie LLC 2164 E Alondra St Ontario CA 91764 KRISTINE SUZANNE ESCUJURI 7710 EASTWOOD AVE Rancho Cucamonga CA 91730 KUN SHI 11002 Getaway Dr Rancho Cucamonga CA 91730 La Quinta Inn & Suites #170 3555 E. Inland Empire Boulevard Ontario CA 91764 LAI YIM WONG 315 N Marin Privado Ontario CA 91764 LAI YIM WONG 6584 Vianza Pl Rancho Cucamonga CA 91701 LAZARUS SAINT FAMILY TRUST 12/29/16 7639 Archibald Ave 7645 Rancho Cucamonga CA 91730 Le Doux Jennifer Revocable TR 6-26 125 E H St Ontario CA 91764 LI LI 552 E Hawthorne St Ontario CA 91764 LI LI 558 E HAWTHORNE ST A Ontario CA 91764 LIAN HUANG 203 W G St Ontario CA 91762 LIU DONGMEI 4014 E Catalina St Ontario CA 91761 LIUTAO TANG 8510 Monte Vista St Alta Loma California 91701 Lotus Inn & Suites 724 South San Antonio Avenue Ontario CA 91762 MAJID REZA ZEREHI 740 Camalot Ct Ontario CA 91762 MARIO PEREZ 1453 E RIVERSIDE DR Ontario Ca 91761 MAT HO 13062 MALVASIA WAY Rancho Cucamonga CA 91739 MAURICIO GARCIA RECILLAS 540 E D St Ontario CA 91764 Mayfair Inn 1120 East Holt Boulevard Ontario CA 91761 MEI LI 2819 S Euclid Ave Ontario CA 91761 MEIRONG DENG 9313 Valley View St Rancho Cucamonga CA 91737 MENG-HSIEN SUN 715 E Boxwood Ct Ontario CA 91761 Metaverse Kingdom Castle LLC 3099 E Arbor Ln Ontario CA 91762 MICHAEL CARR BARRON 2884 E La Avenida Dr Ontario CA91761 MICHAEL WILLIAMS 6351 CARNABY CT Rancho Cucamonga CA 91739 MICHELE CHADEAYNE 219 E GRANADA CT Ontario Ca 91764 MICHELLE MA 1369 S EUCLID AVE Ontario CA 91762 MICHELLE QIAOLI XU 1985 E Harvard Privado A Ontario CA 91764 MIGUEL A JR NAJERA 1516 W Stoneridge Ct Ontario CA 91762 MINA MICHAEL 2638 S CALAVERAS PL Ontario Ca 91761 MINYANG WANG 4892 S Jordan Ave Ontario CA 91762 Mission Motel 1514 W. Mission Boulevard Ontario CA 91762 Moreno Family Trust 10/27/23 951 E D ST Ontario CA 91764 Motel 6 Ontario Airport 1560 East 4th Street Ontario CA 91764 Mountain Inn 2289 South Mountain Avenue Ontario CA 91762 NADINE ROUFAIL SAMAAN 12183 Appian Dr Rancho Cucamonga CA 91739 New Kansan Motel 9300 Foothill Blvd. Rancho Cucamonga CA 91730 Ontario Airport Hotel 700 North Haven Avenue Ontario CA 91764 Ontario Airport Inn 1801 East G Street Ontario CA 91764 Ontario Golden Bear Inn 661 West Holt Boulevard Ontario CA 91762 Ontario Motor Inn 1522 W Mission Blvd Ontario CA 91762 Ontario SpringHill Suites 3595 E. Guasti Rd. Ontario CA 91761 Pepper Tree Motel 1241 East Holt Boulevard Ontario CA 91761 PING LUO 6235 VALINDA AVE Rancho Cucamonga CA 91737 1145
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QIHE CHEN 543 W Francis St Ontario CA 91762 Quality Inn Ontario Airport 514 North Vineyard Avenue Ontario CA 91764 Ramada Ontario Airport 1841 East G Street Ontario CA 91764 Rancho Cucamonga Garden Inn 11481 Mission Vista Drive Rancho Cucamonga CA 91730 Rancho Motel 1440 West Mission Boulevard Ontario CA 91762 RAQUEL BIANCA ACOSTA 1159 W E St Ontario CA 91762 RAYMOND CALDERON 1004 W YALE ST Ontario Ca 91762 RC DICKSON TRUST 7/11/22 723 W Camalot Ct Ontario CA 91762 Red Carpet Motel 1117 North Baker Avenue Ontario CA 91764 Residence Inn Ontario 2025 E. Convention Center Way Ontario CA 91764 Residence Inn-Rancho Cucamonga 9299 Haven Avenue Rancho Cucamonga CA 91730 RICHARD OPPELAAR 551 E H St Ontario CA 91764 ROCHA EDUARDO & ADRIANA FAM TR 2/16 7376 Reserve Pl Rancho Cucamonga CA 91739 Rodeway Inn - Ontario Mills Mall 4075 East Guasti Road Ontario CA 91761 RUBY Khanal 4491 S GRANT PASEO Ontario CA 91762 RUI JIAN 2942 S Halton Ontario CA 91761 Sands Motel 1240 West Mission Boulevard Ontario CA 91762 SEN LI 1403 N Amador Ave Ontario CA 91764 SHARIF S WAFFIN 9404 Somerset Dr Rancho Cucamonga CA 91701 SHEN KUO HSU 13858 Nash Dr Rancho Cucamonga CA 91739 Sheraton Ontario Airport 429 North Vineyard Avenue Ontario CA 91764 SHILONG LEI 963 Orchard Ln Ontario CA 91764 Sol Investments & Solutions Inc 720 N ALAMEDA AVE Ontario CA 91764 Star Motel 1250 West Mission Boulevard Ontario CA 91762 STEVENS FAMILY TRUST 1/4/19 4869 S MONARCH PL Ontario Ca 91762 Studio 6 231 North Vineyard Avenue Ontario CA 91764 SureStay (Fromerly Fairfield Inn by Marriott) 3201 East Centrelake Drive Ontario CA 91761 TAM NGOC NGUYEN 751 W Holt Blvd Ontario CA 91762 TownePlace Suites 9625 Milliken Ave. Rancho Cucamonga CA 91730 USA LUCKY BABY INC 6998 ETIWANDA AVE Rancho Cucamonga CA 91739 Vandermeer Alan & Isabel Rev TR 9/2 6689 Sevilla Pl Rancho Cucamonga CA 91739 Wayne Tung 3739 Pinto Pl Ontario CA 91761 WEI XIE 1456 E Merion Ct Ontario CA 91761 WEICE CHEN 12792 N Rim Way Rancho Cucamonga CA 91739 WEIJIE XIE 501 E Princeton St Ontario CA 91764 WENDY ELIZABETH BELTRAN 735 N Imperial Ave Ontario CA 91764 WENQING CUI 846 W CHESTNUT ST Ontario Ca 91762 WENYIN ZHANG 4714 S JASMINE LN Ontario CA 91762 WING LUN NG 1952 E Brookside Dr Ontario CA 91761 WING LUN NG 2242 S Augusta Pl Ontario CA 91761 WING LUN NG 734 E J ST Ontario CA 91764 WOLE A ADEGOKE 6229 LAUREL BLOSSOM PL Rancho Cucamonga CA 91739 XIANXING JIANG 6132 CELESTITE AV Rancho Cucamonga CA 91701 XIAO HUANG 4061 E LUNA PASEO 31 Ontario CA 91764 XIAOFANG XIONG 642 W H St Ontario CA 91762 1146
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XIAOGANG SHI 2633 E Clara Ln Ontario CA 91762 XIAOLING YU 11159 ST TROPEZ DR Rancho Cucamonga CA 91730 XIAOMIN XIAN 214 E F St Ontario CA91764 XIAOYU ZHANG 1824 S Fern Ave Ontario CA 91762 XIN ZUO 2492 E WILLIAMSBURG LN Ontario Ca 91761 XU YANHUA FAMILY TRUST 709 W CEDAR ST Ontario CA 91762 YAN RONG ZHENG 8960 LARAMIE DR RANCHO CUCAMONGA CA 91737 YANJUN YANG 9370 Valley View St Rancho Cucamonga CA 91737 YANVESTMENT 1924 S Helen Ave Ontario CA91762 YANYING SUN 5595 Malachite Ave Alta Loma CA 91737 YAO CHEN 12258 MOUNTAIN ASH CT Etiwanda CA 91739 YI Y ROBERTS 14066 Glendale Ct Rancho Cucamonga CA 91739 YING REN 9703 La Vine Ct Rancho Cucamonga CA 91701 YIQIAN ZHOU 213 E F ST Ontario CA 91764 YU & CHIU FAMILY TRUST 03/06/08 10663 WILDROSE DR Rancho Cucamonga CA 91730 YUGUANG YUAN 3275 E BUTTERFLY LN Ontario CA 91762 YUSHENG NI 9387 Shadowgrove Dr Rancho Cucamonga CA 91730 YUYA SUZUKI 4853 S PRINCE WAY Ontario CA 91762 ZHIQIANG QI 9206 Placer St Rancho Cucamonga CA 91730 ZIHUAN LIU 1125 East E Street Ontario CA 91764 ZILIANG GU 1711 E Hawthorne St Ontario CA 91764 ZIYOU HUANG 9553 HAMMOCK PL RANCHO CUCAMONGA CA 91730 Jurisdiction list as of December 2024. 1147
sUAS Service Agreement
This Small Unmanned Aerial System Service Agreement (“sUAS Agreement”) is entered into this Feb 12, 2025 (the “Effective Date”), by and between Grizzly Entertainment LLC ("GRZ"), of 1135 Passage Street, Palm Springs, CA 92262 and CITY OF ONTARIO ("COO"), of 1265 S Palmetto Avenue, Ontario, CA 91762 ("Customer") (collectively referred to as the “Parties”).
WHEREAS GRZ provides photography, videography, and data collection services (“sUAS Services”) using unmanned aerial vehicles (“UAVs”), also known as “drones”.
WHEREAS GRZ will provide sUAS Services and license or provide rights in its copyright protected photographs, video and/or data to Customer under the terms set forth in this Agreement.
WHEREAS GRZ provides sUAS Services and operates under FAA Part 107 Regulations, COAs, waivers and permissions issued by the FAA and/or Section 44807 Exemptions, as required.
WHEREAS GRZ is insured for liability and property damage coverage for its sUAS Services.
WHEREAS Customer wishes to hire GRZ to provide sUAS Services and license or transfer rights to certain photographs, video and/or data from GRZ as provided herein.
THEREFORE, in consideration of the mutual agreements hereinafter contained, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending legally to be bound hereby, agree as follows:
1sUAS Services
GRZ will perform the following Services for Customer at Westwind Park:
a. Provide drones to perform a drone light show. (UP TO 500 drones) b. Provide a sample of animations for pre-approval.
c. Provide pilots and animators to operate the show.
d. FAA Regulatory Compliance & Reporting.
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e. Any location changes must be approved by GRZ prior to agreement completion. f. Other: N/A
2Fee
Customer will pay GRZ a flat fee of SIXTY THOUSAND ($ 60,000.00) (“Flat Fee”) for the sUAS Services and all other services contemplated under the Agreement which includes, operating the UAV, and all other costs or fees associated with licensing, copyright etc.
2.1Animation Design and Lighting Changes
No animation changes can be made 7 days prior to the show.
If, however, a change is required for:
a. 1 formation change: GRZ will need to be notified 8 working days prior to the show. The Cost per formation change would be $1000.
b. Every other additional formation, an additional 5 working days notification would be required. The Cost per formation change would be $1000.
2.2Other Fees
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3 sUAS Service Deliverables
GRZ will license the following item as set forth in the Copyright Agreement set forth in Addendum A, to COO as part of its sUAS Services:
A. Sample animation for approval before proceeding with the final animation.
B. One Drone Show with maximum 8 animations for the duration of 10‐12 minutes maximum.
C. Other: N/A
4 sUAS Service Dates
Customer understands that there are variables, some outside GRZ’s control, which affect GRZ’s ability to fly on any given date and time at any given flight location. These variables include, but are not limited to, compliance with FAA regulations, conditions, and limitations, third party permissions, weather conditions and safety issues.
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A. Subject to these variables, the Parties will in good faith work together to meet the following timelines:
i. the UAV flight related activities will take place on or about Jul 4, 2025 ii. sUAS Deliverables will be provided to Customer before or about Jul 3, 2025.
B. Customer will provide right‐of‐entry on the flight locations(s) for GRZ its agents, representatives, employees, and subcontractors, necessary to perform the sUAS Services. GRZ will obtain all other required permissions to provide the Services. In case of non-performance of the show through the fault of the Customer, its responsibility will be limited to re-scheduling for another jointly available date and all direct damages caused to the Customer.
5 Payment Terms
5.1Customer will pay as follows:
A. A deposit is in the amount of THIRTY THOUSAND ($ 30,000.00) is due upon execution of the Agreement. Remaining balance 3 days prior the Show execution.
B. The sUAS Service Fee is included as part of the Flat Fee.
C. The Copyright License Fee is included as part of the Flat Fee. In case of non-payment or change of plans by the Customer, no show will be held, and the GRZ will not have any responsibility for its cancellation.
5.2Other Payment terms:
A. 50% payment will be applied If cancellation occurs 60 days before the show.
B. 100% payment will be applied If cancellation occurs 30 days before the show.
C. If the show is booked in less than 30 days, then 100% payment will be applied.
D. In case of a cancellation due to weather or any other reason, then GRZ will reschedule the show at a convenient day and time for both parties. The customer will then undertake the cost of travel, accommodation, and local transportation expenses of GRZ 6 FAA Compliance & Insurance
GRZ warrants that it has obtained all required FAA approvals for the sUAS Services and maintains general liability insurance for bodily injury and property damage with an aggregate limit of Two Million Dollars ($2,000,000.00) per occurrence. GRZ will provide Customer upon the execution of the Agreement with certificates of insurance evidencing a policy endorsement naming CITY OF ONTARIO as an additional insured under the policy. GRZ agrees to hold
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Customer harmless from any loss, damage, injury, or liability, including wrongful death, in law or in equity, from negligent acts by GRZ, its employees, agents, and/or its representatives that are within the limits and coverage of said insurance and paid from the policy, and to hold Customer harmless from any third party claims against Customer alleging intellectual property infringement for the use of the Copyright protected Works. In addition to the general liability insurance requirements specified herein, the party shall also maintain Aviation and/or Drone Liability Insurance in the amount of $1,000,000 per occurrence.
7 Intellectual Property
GRZ owns any and all right, title and interest in and to, without exception and broadly defined, Copyright Protected Works (as herein defined), including, without limitation, all rights under copyright law worldwide and all right to exploit the Copyright Protected Works before, after or during the term of any License to Customer and for any purpose and regardless of the exclusivity of Customer’s license and otherwise subject only to the Terms. Works is defined to include all images, videos, graphics, data, and data output, digital or otherwise, including, without limitation, maps, photographs, and videos created and/or generated by GRZ through, or related to, the use of Unmanned Aerial Systems as part of the sUAS Services and/or Deliverables.
8 Term
The Term of this Agreement shall be the Term set forth in Copyright Agreement set forth in Addendum A.
9 sUAS Service Warranty/Limitations
GRZ will perform sUAS Services with that level of care and skill ordinarily exercised by other UAS professionals practicing in the same discipline(s), contemporaneously under the same circumstances and in the same locality as Customer’s project. GRZ represents and warrants that all content created for or used to create the Copyright Protected Works, including but not limited to text, source code, images, photographs, videos, or designs, will not violate the rights of third parties, including without limitation intellectual property rights and rights of publicity or privacy. No other warranties, express or implied, or fitness for a particular purpose are made with respect to this Agreement or the sUAS Services, Deliverables or License provided hereunder.
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10Integration and Modifications
GRZ hereby incorporates Addendum A into this Agreement. This Agreement constitutes the entire agreement between the parties. The parties further acknowledge that this Agreement supersedes all other proposals, agreements, and/or communications, oral or written between the Parties. No modifications of the Terms and/or Proposal are valid, unless the same is made in a written document executed by both parties.
11Governing Law, Venue & Personal Jurisdiction
GRZ and Customer consent to the jurisdiction of the State and/or Federal Courts located in Riverside County, California for the resolution of any and all disputes between the parties arising out of this Drone Services Agreement and agree that venue will be proper and convenient in Riverside County, California, and that neither party shall challenge venue in Riverside County, California. The validity and construction of the Drone Services Agreement, and the rights and duties of the parties thereunder, will be governed in accordance with the laws of the State of California.
This agreement has been signed by the parties.
Grizzly Entertainment LLC CITY OF ONTARIO
Full Name: Themis Violaris
Title: CEO
Date:
Signature:
Full Name:
Title:
Date:
Signature:
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Addendum A: Copyright Agreement
12Incorporation by Reference
This Copyright Agreement is an Addendum to the Agreement.
13The Copyright Protected Works
Customer agrees that the Copyrighted Works, whether registered or unregistered, are defined to include:
1. All photographs and video taken by GRZ as part of the sUAS Services or Deliverables, whether raw, edited, unedited, reproduced, copied, modified or sampled by GRZ, Customer or any third party.
2. All data in whatever form, obtained as part of the sUAS Services or Deliverables including data that is input, output, copied, manipulated, incorporated, edited, reproduced or analyzed into or by any third‐party software.
14Type of License
Subject to the Terms and this Copyright Agreement, GRZ grants to Customer a license to use the Copyright Works provided by GRZ.
14.1Non-Exclusive
Customer shall have non‐exclusive rights in the Copyright Works during the Term of this Agreement
15 Assignment
15.1Non-assignable
Customer may not assign it rights and/or obligations under the Agreement to another party
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without the prior written consent of GRZ which consent shall not be unreasonably withheld.
16 Scope of Use
This license allows Customer to the following rights related to the Copyright Works (“Rights”), and subject to all other License provisions herein:
1. Reproduce the Copyright Works.
2. Distribute copies of the Copyright Works.
3. Display the Copyright Works.
4. Non-commercial use only
17 Territory
The licensed territory wherein the Customer may exercise Rights is limited to the following:
1. United States of America
18 Sublicense
GRZ grants to Customer the right to sublicense licensed Rights to a third party. If the agreement is sub‐licensable, Customer agrees as part of any sub‐license to require the licensee to abide by all the terms of this Agreement.
19 Expressly Prohibited Uses by Customer
1. Use that violates the rights of third parties or violates any applicable local, national, state, provincial, and/or international laws, treaties, and regulations.
2. Claim any proprietary rights of any sort in all or any portion of the Copyright Works or alter or remove any copyright or proprietary noticed contained in or in the Copyright Protected Works.
3. Use all or any portion of the Copyright Works that could be considered offensive, threatening, pornographic, defamatory, or unlawful.
20 Enforcement of Intellectual Property Rights
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GRZ reserves the exclusive right, but not the obligation, to enforce all copyrights against infringers at its own cost and to its exclusive benefit.
21 Term & Termination
Subject to the Terms mentioned above and this Agreement, the Copyright License granted to Customer by GRZ shall be in effect for/until the date below, and all such licenses or sublicenses that may have been granted by Customer are terminated unless expressly renewed or extended in writing:
1. Perpetual and indefinite.
22 Force Majeure
GRZ will not be liable in case of bad weather, force majeure, other restrictive measures or other reasons outside its responsibility and control, which will make the performance of the show impossible. In this case the show will be rescheduled for a commonly available date.
23 Other
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