BOND COUNSEL
Nixon Peabody LLP
Los Angeles, California
_________________
DISCLOSURE COUNSEL
Best Best & Krieger LLP
Riverside, California
_____________
MUNICIPAL ADVISOR
NHA Advisors
San Rafael, California
_________________
TRUSTEE
Computershare Trust Company, N.A.
[CITY, STATE]
_________________
VERIFICATION AGENT
Causey Demgen & Moore P.C.
Denver, Colorado
_________________
530
TABLE OF CONTENTS
-i-
INTRODUCTION ...................................................... 1 SOURCES AND USES OF FUNDS ......................... 4
THE FINANCING PLAN .......................................... 5 Series 2022A Bonds .............................................. 5 Series 2022B Bonds .............................................. 5 THE REFUNDING PLAN ......................................... 5 Series 2022A Bonds .............................................. 5 Series 2022B BondsError! Bookmark not defined.
Verification ........................................................... 5 DEBT SERVICE SCHEDULES ................................ 6 THE LEASED PROPERTY ...................................... 7 THE BONDS ............................................................. 7 General .................................................................. 7 Redemption ........................................................... 8 Book-Entry Only System .................................... 10 BOND INSURANCE ............................................... 11
SECURITY AND SOURCES OF
PAYMENT FOR THE BONDS ......................... 11
Pledge of Revenues ............................................. 11 Base Rental Payments ......................................... 12 Additional Payments ........................................... 12 Abatement ........................................................... 13 Substitution and Removal of Property ................ 13 Action on Default ................................................ 14 Bond Insurance ................................................... 16 Reserve Funds ..................................................... 16 Insurance ............................................................. 17 Additional Bonds ................................................ 18 THE AUTHORITY .................................................. 18 THE CITY ................................................................ 19 RISK FACTORS ...................................................... 19 General Considerations – Security for the
Bonds ............................................................ 19 Abatement ........................................................... 19 Substitution or Release of Leased Property ........ 20
Limited Secondary Market .................................. 20 Seismic Activity .................................................. 20 Wildfire Conditions ............................................. 21 Risks Associated with Global Climate
Change .......................................................... 21 Hazardous Substances ......................................... 21 Cybersecurity ...................................................... 22 Limited Recourse on Default; No
Acceleration of Base Rental Payments ......... 22
Limitations on Remedies ..................................... 23 Bankruptcy .......................................................... 23 Possible Insufficiency of Insurance Proceeds .......... 24 No Liability of Authority to the Owners ............. 24 Loss of Tax Exemption ....................................... 25 COVID-19 ........................................................... 25 Dependence on State for Certain Revenues ........ 25
Current Initiatives................................................ 26
CONSTITUTIONAL AND STATUTORY
LIMITATIONS ON TAXES AND
APPROPRIATIONS ........................................... 26 Article XIIIA of the State Constitution ............... 26 Legislation Implementing Article XIIIA ............. 26 Article XIIIB of the State Constitution ............... 27 Articles XIIIC and XIIID of the State
Constitution ................................................... 27 Proposition 62 ..................................................... 28 Proposition 1A .................................................... 29 Proposition 22 ..................................................... 29 Proposition 26 ..................................................... 29 Proposition 19 ..................................................... 30 Possible Future Initiatives ................................... 30 TAX MATTERS ...................................................... 30 Series 2022A BondsError! Bookmark not defined.
Series 2022B Bonds [TBD]Error! Bookmark not defined.
The Bonds ............ Error! Bookmark not defined.
CERTAIN LEGAL MATTERS ............................... 30 ABSENCE OF LITIGATION .................................. 41 UNDERWRITING ................................................... 42 RATINGS ................................................................. 42 MUNICIPAL ADVISOR ......................................... 42 CONTINUING DISCLOSURE ............................... 42 FINANCIAL STATEMENTS OF THE CITY ........ 43
MISCELLANEOUS ................................................. 43
APPENDIX A – INFORMATION
REGARDING THE CITY OF OXNARD ........ A-1
APPENDIX B – SUMMARY OF THE
PRINCIPAL LEGAL DOCUMENTS .............. B-1
APPENDIX C – AUDITED FINANCIAL
STATEMENTS OF THE CITY FOR THE
YEAR ENDED JUNE 30, 2021 ........................ 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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MAP OF THE CITY OF OXNARD
532
1 OFFICIAL STATEMENT
CITY OF OXNARD FINANCING AUTHORITY
$[____]
LEASE REVENUE BONDS
SERIES 2022A
(TAX-EXEMPT)
$[____]
LEASE REVENUE BONDS
SERIES 2022B
(FEDERALLY TAXABLE)
INTRODUCTION
This Official Statement (which includes the cover page and the appendices hereto) (the ―Official Statement‖), provides certain information concerning the sale and delivery of the City of Oxnard Financing Authority $[____] Lease Revenue Bonds, Series 2022A (Tax-Exempt) (the ―Series 2022A Bonds‖), and the City of Oxnard Financing Authority $[____] Lease Revenue Bonds, Series 2022B (Tax-Exempt) (the ―Series 2022B Bonds,‖ and together with the Series 2022A Bond, the ―Bonds‖).
The Series 2022A Bonds are being issued to provide funds to (i) finance certain street improvement projects of the City, (ii) refund in full the Authority’s outstanding obligations under that certain 2012 Lease/Purchase Agreement (the ―2012 Lease‖), [(iii) purchase a municipal bond insurance policy and debt service reserve surety policy for the Series 2022A Bonds], and (iv) pay the costs incurred in connection with the issuance of the Series 20 22A Bonds. The Series 2022B Bonds are being issued to provide funds to (i) finance the second phase of implementation costs of an enterprise resource planning software replacement project, [(ii) purchase a municipal bond insurance policy and debt service reserve surety policy for the Series 2022B Bonds], and (iii ) pay the costs incurred in connection with the issuance of the Series 2022B Bonds. See ―THE FINANCING PLAN‖ and ―THE REFUNDING PLAN.‖
The Bonds are payable from certain revenues and other money s pledged under that certain Indenture, dated as of December 1, 2019 (the ― Original Indenture‖), by and among the City of Oxnard (the ―City‖), the City of Oxnard Financing Authority (the ―Authority‖) and Computershare Trust Company, N.A., as successor in interest to Wells Fargo Bank National Association , as supplemented by that certain First Supplement to Indenture, dated as of [DATE] (the ―First Supplement to Indenture,‖ and together with the Original Indenture, the ―Indenture‖), by and among the City of Oxnard (the ―City‖), the City of Oxnard Financing Authority (the ―Authority‖) and Computershare Trust Company, N.A., as trustee (the ―Trustee‖). Revenues consist primarily of base rental payments (the ―Base Rental Payments‖) to be made by the City for the right to use certain real property consisting of City Hall, a library, and the City’s administrative annex (the ―Leased Property‖) pursuant to that certain Facility Lease, dated as of December 1, 2019 (the ―2019 Facility Lease‖), as amended by that certain First Amendment to Facility Lease, dated as of [DATE] (the ―2022 Facility Lease,‖ and together with the 2019 Facility Lease, the ―Facility Lease‖), each by and between the Authority, as lessor, and the City, as lessee.
The Authority has previously issued certain lease revenue bonds pursuant to the Original Indenture (the ―2019 Bonds ‖), of which $25,655,000 principal amount is outstanding. Subject to satisfaction of certain conditions precedent, the Autho rity may issue additional bonds (the ―Additional Bonds‖) under the Original Indenture. The Bonds will be issued as Additional Bonds under the Indenture. The 2019 Bonds and the Bonds will be payable from Revenues on a parity with all other Additional Bond s issued under the Indenture. See ―SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Parity Obligations; Additional Bonds‖ herein.
Preliminary, subject to change.
533
2 Pursuant to that certain Site Lease, dated as of December 1, 2019 (the ―2019 Site Lease‖), as amended by that certain First Amendment to Site Lease, dated as of [DATE] (the ―Amendment to Site Lease, and together with the Site Lease, the ―Site Lease‖), each by and between the City and the Authority, the City will lease the Leased Property to the Authority. Simultaneously with the execution and delivery of the Amendment to Site Lease, the Authority will sublease the Leased Property to the City under the 2022 Facility Lease. The Facility Lease will obligate the City to make Base Rental Payments to the Authority.
Upon the issuance of the Bonds, the Trustee and the Authority will execute and deliver that certain First Amendment to Assignment Agreement, dated as of [DATE] (the ―Amendment to Assignment‖), which amends that certain Assignment Agreement, dated as of December 1, 2019 (the ―2019 Assignment Agreement,‖ and together with the Amendment to Assignment, the ―Assignment Agreement‖ ), pursuant to which the Authority will grant, transfer, and assign to the Trustee (i) all the Authority’s rights to receive the Base Rental Paym ents under and pursuant to the Facility Lease, (ii) the right to take all actions under the Facility Lease, (iii) the right of access more particularly described in the Facility Lease, and (iv) any and all other rights and r emedies of the Authority in the Facility Lease as lessor thereunder.
The City will covenant under the Facility Lease to take such action as may be necessary to include all Base Rental Payments and Additional Payments due under the Facility Lease in its operating budget for each fiscal year and to make all necessary appropriations for such Base Rental Payments and Additional Payments, subject to abatement as provided in the Facility Lease. Additional Payments consist of fees, costs and expenses and all administrative costs of the Authority relating to the Leased Property including, without limiting the generality of the foregoing, salaries and wages of employees, overhead, insurance premiums, taxes and assessments (if any), expenses, compensation and indemnification of the Trustee (to the extent not paid or otherwise provided for out of the proceeds of the sale of the Bonds), fees of auditors, accountants, attorneys or engineers, insurance premiums, and all other reasonable and necess ary administrative costs of the Authority or charges required to be paid by it to comply with the terms of the Bonds or the Indenture.
Base Rental Payments and Additional Payments are subject to complete or partial abatement in the event and to the extent that there is substantial interference with the City ’s right to use and occupy the Leased Property or any portion thereof. See ―RISK FACTORS — Abatement.‖ Abatement of Base Rental Payments under the Facility Lease, to the extent that payment is not made from alternative sources as set forth below, would result in all Owners receiving less than the full amount of principal of and interest on the Bonds. To the extent that proceeds of insurance are available, Base Rental Payments (or a portion thereof) may be made during periods of abatement.
THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY , PAYABLE SOLELY FRO M REVENUES AND THE OTH ER ASSETS PLEDGED TH EREFOR UNDER THE IND ENTURE. NEITHER
THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE C ITY, OR THE STATE OF CALIFOR NIA (THE ―STATE‖), OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE BONDS. THE AUTHORITY HAS NO TAXING POWER.
THE OBLIGATION OF TH E CITY TO PAY BASE R ENTAL PAYMENTS DOES NOT
CONSTITUTE A DEBT OF THE CITY, THE STATE, OR ANY OF ITS POLITI CAL SUBDIVISIONS IN
CONTRAVENTION OF ANY CONSTITUTIONA L OR STATUTORY DEBT LIMIT OR RESTRICTION ,
AND DOES NOT CONSTIT UTE AN OBLIGATION FO R WHICH THE CITY OR THE STATE IS
OBLIGATED TO LEVY OR PLEDGE ANY FORM OF T AXATION OR FOR WHICH THE CITY OR TH E STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.
[THE SCHEDULED PAYMENT OF PRINCIPAL AND INTEREST ON A PORTIO N, OR ALL, OF THE SERIES 2022A BON DS AND THE SERIES 20 22B BONDS (SUCH MATU RITIES INSURED TO BE
SPECIFIED IN THE FIN AL OFFICIAL STATEMENT) WHEN D UE WILL BE GUARANTEE D UNDER MUNICIPAL BOND INSURANCE POLICIES (TOGETHER, THE ―POLICIES‖) FOR EACH RESPECTIVE 534
3 SERIES TO BE ISSUED CONCURRENTLY WITH TH E DELIVERY OF THE SE RIES 2022A BONDS AND THE SERIES 2022B BONDS BY [INSURER]. SEE ―BOND INSURANCE‖ HEREIN.] The Indenture establishes the 2022A Reserve Fund and the 2022B Reserve Fund (together, the ―Reserve Fund‖) which will serve as security for the applicable payments payable by the Authority under the Indenture with respect to the respective Bonds. Concurrently with the delivery of the Bonds, municipal bond debt service reserve insurance policies relating to the Series 2022A Bonds and the Series 2022B Bonds will be issued by [INSURER] (together, the ―Reserve Policy‖) which the Trustee will credit to the respective reserve fund.
The City has agreed to provide, or cause to be provided, to the Municipal Securities Rulemaking Board for purposes of Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission certain annual financial information and operating data and, in a timely manner, notice of certain listed events. These covenants have been made in orde r to assist the Underwriter in complying with SEC Rule 15c2 -12(b)(5). See ―CONTINUING DISCLOSURE‖ herein for a description of the specific nature of the annual report and notices of listed events and a summary description of the terms of the disclosure ce rtificate pursuant to which such reports are to be made.
Computershare Trust Company, N.A. [CITY, STATE] , will act as Trustee with respect to the Bonds.
The Bonds will be issued subject to the approval as to their legality by Nixon Peabody LLP , Bond Couns el.
Certain legal matters will be passed upon for the City and the Authority by Best Best & Krieger LLP, as Disclosure Counsel. The City Attorney will pass on certain legal matters for the City and the Authority. Certain legal matters will be passed upo n for the Underwriter by Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California, and for the Trustee by its counsel.
Certain events could affect the ability of the City to make the Base Rental Payments when due. See ―RISK FACTORS‖ for a discussion of certain factors that should be considered, in addition to other matters set forth herein, in evaluating an investment in the Bonds.
The presentation of information, including tables of receipt of revenues, is intended to show recent historical information and, except for a budget discussion for f iscal years 2022-23 through 2026-27, is not intended to indicate future or continuing trends in the financial position or other affairs of the City. No representation is made that past experience, as it might be shown by such financial and other information, will necessarily continue or be repeate d in the future. See Appendix C for financial and operating information related to the City.
The summaries or references to the Indenture, th e Facility Lease , the Site Lease , the Assignment Agreement and other documents, agreements , and statutes referred to herein, and the description of the Bonds included in this Official Statement, do not purport to be comprehensive or definitive, and such su mmaries, references, and descriptions are qualified in their entireties by reference to each such document or statute. All capitalized terms used in this Official Statement (unless otherwise defined herein) which are defined in the Indenture or the Facility Lease shall have the meanings set forth therein, some of which are summarized in APPENDIX B — ―SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS.‖ 535
4 SOURCES AND USES OF FUNDS
The sources and uses of funds with respect to the Bonds and prepayment of the 2012 Lease are shown below.
Series 2022A Bonds Series 2022B Bonds Total
Sources
Principal Amount
[Plus/Less] [Net] Original Issue
[Premium/Discount]
Total Sources
Uses
2012 Lease Prepayment
Construction Fund
Cost of Issuance(1)
Total Uses
________________________
(1) Includes legal, municipal advisory, rating agency, premium for municipal bond insurance policies and debt service reserve surety policies, Underwriter’s Discount, printing fees, and other miscellaneous costs of issuance. 536
5 THE FINANCING PLAN
Series 2022A Bonds
The City intends to apply a portion of the proceeds of the sale of the Series 2022A Bonds to finance certain street improvement projects in the City. The City currently maintains approximately 905 lane miles of streets and 132 miles of alleys. The City has identified certain roadways that require repair and maintenance and is undertaking roadway improvement projects (the ―Street Project‖). The Street Project is anticipated to be funded with revenues from t he City’s Road Maintenance and Rehabilitation Account, revenues from the City’s Measure ―O,‖ an allocation of 2022 -23 reserve funds of the City , and a portion of the proceeds of the Series 2022A Bonds. [ADDITIONAL DETAILS OF THE STREET PROJECT TO COME] Series 2022B Bonds
The City intends to apply a portion of the proceeds of the sa le of the Series 2022B Bonds to finance phase two of its enterprise resource planning system (the ―ERP System‖). The City has contracted with Tyler Technologies, Inc. to establis h and maintain the ERP System . The ERP System software will replace paper - based processes and 1980s green -screen technology. It offers significant efficiencies to residents, businesses , and City support operations. For example, the resident portal, which is available in Spanish, will allow for online sign-up or discontinuation of water, sewer, and solid waste utility services, online permit applications, inspection scheduling and fee payment with a single customer account. Businesses and residents alike w ill be able to utilize electronic plan review and to track the permitting and plan check process online. City vendors will be able to submit invoices online and track payments. Also, various internal support processes such as timesheets, payroll, procureme nt, budgeting and various accounting workflows will become automated, which will increase accuracy, efficiency and transparency. The City anticipates the total cost of the ERP System to be approximately $15 million, which includes certain one-time implementation costs as well as annual maintenance costs. The Cit y will be implementing the ERP S ystem in [four] phases over five years , the first and second phases of which were financed with a portion of the proceeds of the Authority’s Lease Revenue Bonds, Series 2019A (Federally Taxable) (the ―2019A Bonds‖) in the amount of $6.9 million . A portion of the proceeds of the Series 2022B Bonds are financing the phases 3 and 4 of the ERP System implementation.
THE REFUNDING PLAN
Series 2022A Bonds
Pursuant to that certain Lease/Purchase Agreement, dated as of August 1, 2012, by and between the City and the Authority, the City delivered obligations in the aggregate principal amount of $5,570,838 (the ―2012 Lease‖). The 2012 Lease refunded in full the City’s Certificates of Participation, Series 1999.
Upon delivery of the Series 2022A Bonds, a portion of the proceeds of the Series 2022 A Bonds will be transferred to Capital One Public Funding, LLC (the ―2012 Lender‖), as assignee of the Authority in connection with the 2012 Lease, for the prepayment in full of the 2012 Lease. The 2012 Lease is outstanding in the amount of $2,303,516, which will be prepaid in full by a portion of the Series 2022A Bonds.
Verification
Upon delivery of the Bonds, Causey Demgen & Moore P.C. will deliver its independent certified public accountants verification report on the mathematical a ccuracy of certain computations contained in schedules provided to them which were prepared on behalf of the City by the Underwriter, relating to the sufficiency of the amounts transferred to the 2012 Lender to prepay in full the 2012 Lease. 537
6 DEBT SERVICE SCHEDULES
Set forth below is the annualized debt service with respect to the 2019 Bonds and the Bonds, assuming no optional redemptions prior to maturity.
Fiscal
Year
Total Base
Rental Payment
Series
2019 Bonds
Total Base
Rental Payment
Series
2022A Bonds
Total Base
Rental Payment
Series
2022B Bonds
Total Base
Rental
Payments
2023 1,610,876
2024 1,644,386
2025 1,681,000
2026 1,709,775
2027 1,745,952
2028 1,783,908
2029 1,814,017
2030 1,851,299
2031 1,885,323
2032 1,925,952
2033 1,964,858
2034 2,003,293
2035 2,048,150
2036 2,085,600
2037 2,099,578
2038 2,095,816
2039 2,097,154
2040 2,095,829
2041 2,096,841
Fiscal
Year
Series 2022A
Bonds
Principal
Series 2022A
Bonds
Interest
Total Base
Rental Payment
Series
2022A Bonds
Fiscal
Year
Series 2022B
Bonds
Principal
Series 2022B
Bonds
Interest
Total Base
Rental Payment
Series
2022B Bonds
538
7 THE LEASED PROPERTY
The Leased Property consists of the City buildings listed below:
Building Address Insured Value
City Hall/Council Chambers and
Civic Center
305 W. 3rd Street $18,928,691
Administrative Offices 214 S. ―C‖ Street $20,157,566
Fire Administration Building 360 W. 2nd Street $6,821,783 South Oxnard Branch Library 4300 S. Saviers Road $18,716,042 South Oxnard Center 200 E. Bard Road $7,340,094
TOTAL $71,964,176
The total insured value of the Leased Property is approximately $71,964,176. The insured value of the buildings does not include the value of the land underlying the buildings.
Under the Facility Lease , the City has the right to substitute or release all or portion of the Leased Property subject to the prior written consent of [INSURER] and certain conditions precedent. The City will have the right to f urther amend the Facility Lease to provide for additional lease payments so long as, among other conditions, the value of the Leased Property is sufficient . See ―SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Additional Bonds‖ and ―— Substitution and Removal of Property.‖
THE BONDS
General
The Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof. The Bonds shall bear interest from their date of delivery and such interest shall be computed on the basis of a 360 -day year of twelve 30 -day months. Interest on the Bonds will be paid semiannually on June 1 and December 1 (each, an ―Interest Payment Date‖) of each year, commencing [June 1, 2023].
The interest on the Bonds will be paid in lawful money of the United States. The interest on the Bonds shall be payable on each Interest Payment Date by check sent by first class mail by the Trustee to the Owners of the Bonds as of the Record Date for such Interest Payment Date at their ad dresses shown on the books required to be kept by the Trustee pursuant to the provisions of the Indenture. The principal and premium, if any, of the Bonds shall be payable upon presentation and surrender thereof on maturity or on redemption prior thereto at the Principal Corporate Trust Office of the Trustee. The term ―Record Date,‖ as defined in the Indenture, means the close of business on the 15th day of the month preceding any Interest Payment Date, whether or not such day is a Business Day.
The Owner of $1,000,000 or more in ag gregate principal amount of the Bonds may request in writing that the Trustee pay the interest on the Bonds by wire transfer to an account in the United States of America, and 539
8 the Trustee shall comply with such request for all Interest Payment Dates following the 15th day after receipt of such request.
Redemption
Series 2022A Bonds
Optional Redemption. The Series 2022A Bonds maturing on or before June 1, 20__, are not subject to optional redemption. The Series 2022 A Bonds maturing on or after June 1, 20 __ are subject to optional redemption prior to maturity on or after June 1, 20__ at the option of the City, in whole, or in part, on any date, at a redemption price equal to the principal amount of the Series 2022A Bonds to be redeemed, plus accrued but unpaid interest to the redemption date.
Mandatory Sinking Account Redemption . The Series 2022 A Bonds maturing on June 1, ____ (the ―Series 2022A Term Bonds‖) shall be subject to redemption from Mandatory Sinking Account Payments in part on June 1, ____, and on each June 1 thereafter, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest thereon to the date fixed for redempt ion, without premium, as follows; provided, however, that in lieu of redemption thereof, such Series 2022A Term Bonds may be purchased by the Authority and tendered to the Trustee:
Sinking Fund
Redemption Date
(June 1)
Principal Amount to be
Redeemed or Purchased
If some but not all of the Series 2022A Term Bonds have been redeemed pursuant to extraordinary or optional redemptions, the total amount of Mandatory Sinking Account Payments to be made subsequent to such redemption shall be reduced in an amount equal to the principal amount of the Series 2022A Term Bonds so redeemed by reducing each such future Mandatory Sinking Account Payment on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, as shall be designated pursuant to written notice which shall include a revised Mandatory Sinking Account Payment schedule filed by Authority with the Trustee.
Extraordinary Redemption from Condemnation Award or Insurance Proceeds . To the extent permitted or required by the Indenture, the Series 2022 A Bonds are subject to redemption on any date prior to their respective maturity dates, as a whole, or in part, at the written direction of the City, from the net proceeds of any insurance or condemnation award with respect to the Leased Property or portions thereof, at a redemption price equal to the princip al amount of the Series 2022 A Bonds plus accrued interest thereon to the date fixed for redemption, without premium. See ―RISK FACTORS – Possible Insufficiency of Insurance Proceeds.‖ Series 2022B Bonds
Optional Redemption. The Series 2022B Bonds maturing on or before June 1, 20__, are not subject to optional redemption. The Series 2022B Bonds maturing on or after June 1, 20 __ are subject to optional redemption prior to maturity on or after June 1, 20__ at the option of the City, in whole, or in p art, on any date, at a redemption price equal to the principal amount of the Series 2022B Bonds to be redeemed, plus accrued but unpaid interest to the redemption date.
Preliminary, subject to change.
540
9 Mandatory Sinking Account Redemption . The Series 2022B Bonds maturing on June 1, ____ (the ―Series 2022B Term Bonds‖) shall be subject to redemption from Mandatory Sinking Account Payments in part on June 1, ____, and on each June 1 thereafter, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium, as follows; provided, however, that in lieu of redemption thereof, such Series 2022B Term Bonds may be purchased by the Authority and tendered to the Trustee:
Sinking Fund
Redemption Date
(June 1)
Principal Amount to be
Redeemed or Purchased
If some but not all of the Series 2022B Term Bonds have been redeemed pursuant to extraordinary or optional redemptions, the total amount of Mandatory Sinking Account Payments to be made subsequent to such redemption shall be reduced in an amount equal to the principal amount of the Series 2022B Term Bonds so redeemed by reducing each such future Mandatory Sinking Account Payment on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, as shall be designated pursuant to written notice which shall include a revised Mandatory Sinking Account Payment schedule filed by Authority with the Trustee.
Extraordinary Redemption from Condemnation Award or Insurance Proceeds . To the extent permitted or required by the Indenture, the Series 2022 B Bonds are subject to redemption on any date prior to their respective maturity dates, as a whole, or in part, at the written direction of the City, from the net proceeds of any insurance or condemnation award with respect to the Leased Property or portions thereof, at a redemption price equal to the principal amount of the Series 2022 B Bonds plus accrued interest thereon to the date fixed for redemption, without premium. See ―RISK FACTORS – Possible Insufficiency of Insurance Proceeds.‖ Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption (other than sinking account redemption) of less than all of the Bonds of a series , the Trustee shall select the Bonds of such series to be redeemed from all Bonds of such series not previously called for redemption, in such maturities as the Authority shall designate (and randomly within any maturity). For purposes of such selection, all Bonds shall be deemed to be comprised of individual Bonds of denominations of $5,000 principal amount and such portions shall be treated as separate Bonds, which may be separately redeemed.
Notice of Redemption. Notice of redemption shall be mailed by first class mail by the Trustee, on behalf and at the expense of the City, not less than 30 nor more than 60 days prior to the redemption date to the respective Owners of Bonds designated for redemption at their addresses appearing on the bond registration books of the Trustee and, unless otherwise instructed by the Authority, provided by the Trustee to the MSRB.
Each notice of redemption shall state the date of such notice, the Bonds to be redeemed, the Series and date of issue of such Bonds, the redemption date, the redemption price, the place or places of redemption (including the name and appropriate address or addresses), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such maturity are to be redeemed, the distincti ve certificate numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice of optional redemption shall also state tha t such redemption may be rescinded by the City and that, unless such redemption is so rescinded, and provided that on said date funds are available for payment in full of the Bonds then called for redemption, on said date there will become due and payable on each of such Bonds the redemption price thereof or of said specified portion of the principal amount thereof in the case of a Bond to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such r edemption date interest thereon shall cease to accrue, and shall require that such Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice.
541
10 Failure by the Trustee to give notice of redemption pursuant to Inde nture to any one or more of the information services or securities depositories, or the insufficiency of any such notice shall not affect the sufficiency of the proceedings for redemption. The failure of any Owner to receive any redemption notice mailed to such Owner and any defect in the notice so mailed shall not affect the sufficiency of the proceedings for redemption.
The City has the right to send a conditional optional redemption notice and such conditional notice may be rescinded by providing written notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption shall be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under the Indenture. The Trustee shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent. Further, the City may rescind any optional redemption and notice thereof for any reason on any date prior to the date fixed for redemption by causing written notice of the rescission to be given to the Owners of the Bonds so called for redemption. The actual receipt by the Owner of any Bond of such notice of rescission will not be a condition precedent to rescission, and failure to receive such notice or any defect in such notice will not affect the validity of the rescission.
Partial Redemption of Bonds. Whenever le ss than all the Outstanding Bonds of a series maturing on any one date are called for redemption at any one time, the Trustee shall select the Bonds to be redeemed from the Outstanding Bonds of such series maturing on such date not previously selected for redemption, randomly in any manner which the Trustee deems appropriate.
Effect of Redemption . If notice of redemption has been duly given as set forth in the Indenture and moneys for the payment of the redemption price of the Bonds to be redeemed are held by the Trustee, then on the redemption date designated in such notice the Bonds so called for redemption shall become payable at the redemption price specified in such notice; and from and after the date so designated , interest on the Bonds so called for redemption shall cease to accrue, such Bonds shall cease to be entitled to any benefit or security under the Indenture, and the Owners of such Bonds shall have no rights in respect thereof except to receive payment of the redemption price represented thereby. The Trustee shall, upon surrender for payment of any of the Bonds to be redeemed, pay such Bonds at the redemption price thereof.
Book-Entry Only System
General. DTC will act as securities depository for the Bonds. The 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 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 herein. Beneficial Owners will not be entitled to receive physical delivery of the Bonds.
Transfer and Exchange of Bonds . The following provisions regarding the exchange and transfer of the Bonds apply only during any period in which the Bonds are not subject to DTC’s book-entry system. While the Bonds are subject to DTC ’s book-entry system, their exchange and transfer will be effected through DTC and the Participants and will be subject to the procedures, rules and requirements established by DTC.
All Bonds may be presented for transfer by the Owner thereof, in person or by his attorney duly authorized in writing, at the Principal Corporate Trust Office of the Trustee, on the books required to be kept by the Trustee pursuant to the provisions of the Indenture, upon surrender of such Bonds for cancellation accompanied by delivery of a duly executed written instrument of trans fer in a form acceptable to the Trustee.
The Trustee may treat the Owner of any Bond as the absolute owner of such Bond for all purposes, whether or not such Bond shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the principal of, premium, if any, and interest on such Bond shall be made only to such 542
11 Owner, which payments shall be valid and effectual to satisfy and discharge the liability of by such Bond to the extent of the sum or sums so paid.
Whenever any Bonds shall be surrendered for transfer, the Trustee shall execute and deliver new Bonds in the same principal amount in Authorized Denominations. The Trustee shall require the payment by any Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer.
The Bonds may be presented for exchange at the Principal Corporate Trust Office of the Trustee, for a like aggregate principal amount of Bonds of other Authorized Denominations. Th e Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange.
The Trustee shall not be required to transfer or exchange any Bond during the period in whi ch the Trustee is selecting Bonds for redemption, nor shall the Trustee be required to transfer or exchange any Bond or portion thereof selected for redemption from and after the date of mailing the notice of redemption thereof.
BOND INSURANCE
[TO COME]
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
Pledge of Revenues
Pursuant to the Site Lease, the City leases the Leased Property to the Authority. The Authority leases the Leased Property back to the City pursuant to the Facility Lease in exchange for the payment of Base Rental Payments. The Base Rental Payments are e qual to the principal of and interest on the Bonds when due. The Bonds shall be special obligations of the Authority, payable solely from the Revenues and other assets pledged therefor under the Indenture.
Under the Indenture, ―Revenues‖ includes all Base Rental Payments pursuant to the Facility Lease, and all other benefits, charges, income, proceeds, profits, receipts, rents and revenues derived by the Authority from the operation or use of the Leased Property, including interest or profits from the investment of money in certain accounts or funds pursuant to the Indenture. See ―RISK FACTORS‖ and Appendix A. The City will covenant in the Facility Lease to take such action as may be necessary to include all Base Rental Payments and Additional Payments due under the Facility Lease as a separate line item in its annual budgets and to make the necessary annual appropriations therefor, subject to abatement as provided in the Facility Lease.
It is the intent of the parties to the Indenture that the Authority shall not have any right, title, or interest in or to the Revenues. In the event, however, that it should be determined that the Authority has any right, title , or interest in or to the Revenues, then the Authority irrevocably pledges and transfers to the Trustee, for the benefit of the Owners, all of such right, title , and interest, which shall be used for the punctual payment of the interest and principal of the Bonds. These pledges shall constitute a first and exclusive lien on certain funds established under the Indenture and the Revenues in accordance with the terms thereof.
The Authority, pursuant to the Assignment Agreement, will unconditionally grant, transfer , and assign to the Trustee without recourse (i) all its rights to receive the Base Rental Payments under and pursuant to the Facility Lease, (ii) the right to take all actions under the Facility Lease, (iii) the right of access more particularly described in the Facility Lease, and (iv) any and all other rights and remedies of the Authority in the Facility Lease as lessor thereunder; provided, that so long as no default in payment of Base Rental Payments under the Facility Lease shall have occurred or be continuing, the Authority shall have and may exercise all rights of the Authority under the Facility Lease other than the right to receive the Base Rental Payments (which rights to receive have been assigned to the Trustee). The City will pay Base Rental Payments directly to the Trustee, as 543
12 assignee of the Authority. See ―— Base Rental Payments ‖ below. Pursuant to the Facility Lease and the Indenture, the Authority may issue Additional Bonds payable from the Base Rental Payments on a parity with the Bonds. See APPENDIX B — ―SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS — INDENTURE — Proceedings for Authorization of Additional Bonds.‖
THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY , PAYABLE SOLELY FRO M REVENUES AND THE OTH ER ASSETS PLEDGED TH EREFOR UNDER THE IND ENTURE. NEITHER
THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE AUTHORITY, THE C ITY, OR
THE STATE, OR ANY PO LITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE BONDS. THE AUTHORITY HAS NO TAXING POWER.
Base Rental Payments
The City will agree under the Facility Lease to pay to the Trustee, as assignee of the Authority, the Base Rental Payments no later than the 3rd Business Day prior to each Interest Payment Date (the ―Base Rental Payment Date‖) on which such Base Rental Payment is due. All Base Rental Payments received by the Trustee will be deposited by the Trustee in the Revenue Fund to be established under the Indenture (the ―Revenue Fund‖). Such payments of Base Rental Payments will be paid or payable by the City for and in consideration of the right of the use and possession of, and the continued quiet use and enjoyment of, the Leased Property.
Base Rental Payments for each Lease Year (as defined in the Facility Lease) or portion thereof during the term of the Facility Lease shall constitute, together with the Additional Payments, the total amount due for such Lease Year or portion thereof and shall be paid or payable by the City for and in consideration of the right of the use and possession of, and the continued quiet use and enjoyment of, the Leased Property. Pursuant to the Indenture, on each Interest Payment Date, the Trustee will transfer amounts in the Revenue Fund as are necessary to the Interest Fund and the Principal Fund to provide for the payment of the interest on and principal of the Bonds.
The City will covenant in the Facility Lease to take such action as may be necessary to include all Base Rental Payments and Additional Payments in its operating budget for each fiscal year and to make all necessary appropriations for such Base Rental Payments and Additional Payments, subject to abatement as provided in the Facility Lease. See ―DEBT SERVICE SCHEDULE.‖
THE OBLIGATION OF THE CITY TO MAKE THE BASE RENTAL PAYMENTS DOES NOT
CONSTITUTE A DEBT OF THE CITY OR THE STATE OR OF ANY POLITICAL SUBDIVISION
THEREOF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR
RESTRICTION, AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY OR THE
STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.
Additional Payments
The Facility Lease requires the City to pay to the Authority or the Trustee, as Additional Payments thereunder in addition to the Base Rental Payments, such amounts as shall be required for the payment all costs and expenses incurred in connection with the execution, performance , or enforcement of the Facility Lease or the assignment thereof, the Indenture, or the respective interests in the Leased Property and the lease of the Leased Property by the Authority to the City thereunder, including but not limited to all fees, costs , and expenses and all administrative costs of the Authority rel ating to the Leased Prope rty. Such fees and costs include, without limitation, salaries and wages of employees, overhead, insurance premiums, taxes and assessments (if any), expenses, compensation and indemnification of the Trustee (to the extent not paid or otherwise provided for out of the proceeds of the sale of the Bonds), fees of auditors, accountants, attorneys or engineers, insurance premiums, and all other reasonable and necessary administrative costs of the Authority or charges required to be paid by it to comply with the terms of the Bonds or the Indenture. 544
13 Additional Payments will be billed to the City by the appropriate party from time to time, together with a statement certifying that the amount billed has been incurred or paid for one or more of the items constituting Additional Payments, or that such amount is then so payable for such items. Amounts so billed shall be paid by the City not later than the latest time as such amounts may be paid without penalty or, if no penalty is associated with a late payment of such amounts, within thirty (30) days after receipt of a bill by the City for such amounts.
Abatement
Base Rental Payments and Additional Payments are paid by the City in each Lease Year or portion thereof for and in consideration of the right of the use and p ossession of, and the continued quiet use and enjoyment of, the Leased Property. During any period in which, by reason of material damage, destruction, title defect, or condemnation, there is substantial interference with the use and possession by the Cit y of any portion of the Leased Property, rental payments due under the Facility Lease with respect to the Leased Property shall be abated to the extent that the annual fair rental value of the portion of the Leased Property in respect of which there is no substantial interference is less than the annual Base Rental Payments, in which case rental payments shall be abated only by an amount equal to the difference.
In the event the City assigns, transfers , or subleases any or all of the Leased Property or othe r rights under the Facility Lease, as permitted by the Facility Lease, for purposes of determining the annual fair rental value available to pay Base Rental Payments, annual fair rental value of the Leased Property shall first be allocated to payments required under the Facility Lease. The City waives the benefits of California Civil Code Sections 1932(2) and 1933(4) and any and all other rights to terminate the Facility Lease by virtue of any such interference and the Facility Lease shall continue in full force and effect.
Abatement shall continue for the period commencing with the date of such damage, destruction, title defect, or condemnation and ending with the substantial completion of the work of repair or replacement of the portions of the Leased Property so damaged, destroyed, defective, or condemned.
Notwithstanding the foregoing, to the extent there are (a) amounts held by the Trustee in the Revenue Fund, (b) amounts received in respect of rental interruption insurance, and (c) amounts, if any, otherwise legally available to the Trustee for payments in respect of the Bonds, Base Rental Payments and Additional 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.
Any abatement of rental payments pursuant to the Facility Lease is not considered an Event of Default as defined in the Facility Lease. See “RISK FACTORS – Abatement,” herein. See APPENDIX B — ―SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS — FACILITY LEASE — Rental Abatement.‖ Substitution and Removal of Property
The Authority and the City may amend the Facility Lease, upon prior written consent of [INSURER], to substitute other real property and/or improvements (the ―Substituted Property‖) for existing Leased Property and/or to remove real property (including undivided interests therein) and/or improvements from the definition of Leased Property, upon compliance with all of the conditions set forth in the Facility Leas e. After a substitution or removal, the part of the Leased Property for which the s ubstitution or removal has been effected shall be released from the leasehold under the Facility Lease and under the Site Lease . No s ubstitution or removal shall take plac e under the Facility Lease until the City delivers to the Authority and the Trustee the following:
(a) A c ertificate of the City containing a description of all or part of the Leased Property to be released and, in the event of a substitution, a description of the Substituted Property to be substituted in its place; (b) A certificate of the City (i) stating that the annual fair rental value of the Leased Property after a substitution or removal, in each year during the remaining term of the Facility Lease, is at least equal to the 545
14 maximum annual Base Rental Payments payable thereunder attributable to the Leased Property prior to said substitution or removal, as determined by the City on the basis of commercially reasonable evidence of the fair rental value of the Leased Property after said s ubstitution or removal; and (ii) demonstrating that the useful lif e of the Leased Property after substitution or removal equals or exceeds the remaining term of the Facility Lease; (c) An opinion of counsel to the effect that the amendments to the Facility Lease and to the Site Lease contemplating substitution or removal have been duly authorized, executed and delivered and constitute the valid and binding obligations of the City and the Authority enforceable in accordance with their terms; (d) (1) In the event of a s ubstitution, a policy of title insurance in an amount equal to the same proportion of the principal amount as the principal portion of the Base Rental Payments for the Substituted Property bears to the total principal portion of the Base Rental Payments payable under the Facility Lease , insuring the City ’s leasehold interest in the Substituted Property (except any portion thereof which is not real property) subject only to Permitted Encumbra nces, together with an endorsement thereto making said policy payable to the Trustee for the benefit of the Owners of the Bonds, and (2) in the event of a partial Removal, evidence that the title insurance in effect immediately prior thereto is not affected; (e) In the event of a s ubstitution, a certificate of the City to the effect that the exceptions, if any, contained in the title insurance policy referred to in (d) above do not interfere with the beneficial use and occupancy of the Substituted Property described in such policy by the City for the purposes of leasing or using the Substituted Property; and
(f) Evidence that the City has complied with the covenants to secure and maintain the insurance coverage with respect to the Substituted Property as set forth in the Facility Lease.
See APPENDIX B — ―SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS.‖ Action on Default
If the City defaults under the Facility Lease it shall be lawful for the Authority to exercise any and all remedies available pursuant to law or in equity, or granted pursuant to the Facility Lease; provided, however, that notwithstanding anything in the Facility Lease or in the Indenture to the contrary, there shall be no right under any circumstances to accelerate the Base Rental Payments or otherwise declare any Base Rental Payments not then in default to be immediately due and payab le. After the occurrence of an Event of Default hereunder, the City will surrender possession of the Leased Proper ty to the Authority, if requested to do so by the Authority, or by the Trustee or the Owners of the Bonds in accordance with the provisions of the Indenture. (1) No Termination: Repossession and Re -Letting on Behalf of City . In the event the Authority does not elect to terminate the Faci lity Lease in the manner hereinafter provided for in subparagraph (2) below, the Authority with the consent of the City, which consent is irrevocably given under the Facility Lease , may repossess the Leased Propert y and re-let for the account of the City, in which event the City ’s obligation will continue to accrue from year to year in accordance with the Facility Lease and the City will continue to receive the value of the use of the Leased Property fr om year to year in the form of credits against its obli gation to pay Base Rental Payment s. The obligations of the City shall remain the same as prior to such default to pay Ba se Rental Payments whether the Authority re-enters or not. The City agrees to and shall re main liable for the payment of all Base Rental Payments and the performance of all c onditions contained herein and shall reimburse the Authority for any deficiency arising out o f the re -letting of the Leased Property, or, in the event the Authority is unable to re-let the Leased Property, then for th e full amount of all Base Rental Payments to the end of the term of the Facility Lease, but said Base Rental Payments and/or deficiency shall be payable only at the same time and in the same manner as provided above for the payment of Base Rental Payments hereunder, notwithstanding such repossession by the Author ity or any suit brought by the Authority for 546
15 the purpose of effecting such repossession of the Leased Property or the exercise of any other remedy by the Authority.
Under the Facility Lease, the City irrevocably appoints the Authority as the agent and attorney- in-fact of the City to repossess and re -let the Leased Property in the event of default by the City in the performance of any covenants contained in the Facility Lease to be performed by th e City and to remove (any removal to be done with reasonable prudence) all personal property connected to or made a part of the Leased Prope rty, to place such property in storage or other suitable place in the City for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Authority from any costs, loss, or damage whatsoever arising or occasion ed by any such repossession and re-letting of the Leased Property. Additionally, pursuant to the Facility Lease, t he City has waived any and all claims for damages caused or which may be caused by the Authority in repos sessing the Leased Property as provided in the Facility Lease and all claims for damages that may result from the destruction of or the injury to the L eased Property and all claims for dam age to or loss of any property belonging to the City that may be in or upon the Leased Property.
The City has agreed that the terms of the Facility Lease constitute full and sufficient notice of the right of the Author ity to re -let the Leas ed Property in the event of such repossession without effecting a surrender of the Facility Lease, and further agrees that no acts of the Authority in effecting such re-letting shall constitute a surrender or termination of the Facility Lease irrespective of the ter m for which such re-letting is made or the terms and conditions of such re-letting or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate the Facility Lease shall vest in the Authority to be effected in the sole and exclusive manner provided for in subparagraph (2) below.
The City has further waived the right to any rental amounts obtained by the Authority in excess of the Base Rental Payments and hereby conveys and releases such excess to the Authority as compensation to the Authority for its services in re -letting the Leased Property. In the event that the liability of the City under the corresponding subsection of the Facility Lease is held to constitute indebtedness or liability in any year exceeding the income and revenue provided for such year, the Authority, or the Trustee , or the Owners as assignees of the Authority, shall not exercise the remedies provided in this subsection. (2) Termination: Repossession and Re-Letting. In the event of the termination of the Facility Lease by the Authority at its option and in the manner provided in the Facility Lease on account of default by the City (and notwithstanding any repossession of the Leased Property by the Authority in any manner whatsoever or the sale or re-letting of the Leased Property), the City nevertheless agrees to pay to the Authority all costs, losses , or damages, but not Base Rental Payments, howsoever aris ing or occurring payable at the same time and in t he same manner as is provided in the Facility Lease in the case of payment of Base Rental Payments. Any proceeds of the re -letting or o ther disposition of the Leased Property or the sale of the improvements located on the Le ased Property by the Authority shall, after payment of the fees and expenses of th e Trustee and other Additional Payments, be deposited into the Revenue Fund and be applied in accordance with the provisions of the Indenture. Any surplus received by t he Authority from such sale or re-letting shall be the absolute property of the Authority , and the C ity shall have no right thereto nor shall the City be entitled to any credit in the ev ent of a surplus in the rentals received by the Authority for the Leased Property. Neither n otice to pay rent or to deliver up possession of the Leased Property given pursuant to law nor any proceeding taken by the Authority to recover possession of the Leased Prope rty shall by itself operate to terminate the Facility Lease, and no termination of the Facility L ease on account of default by the City shall be or become effective by operation of law, or otherwise, unless and until the Authority shall have given written notice to the City of t he election on the part of the Authority to terminate the Facility Lease. The City covenants and agrees that no surrender of the Leased Property or of the remainder of the term of the Facility Lease or any termination of the Facility Lease shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by such written notice. No such termination shall be effected whether by operation of law or acts of the part ies to the Facility Lease , except only in the manner expressly provided in the Facility Lease . There is no provision for the accelera tion of debt 547
16 service on the Bonds in the Indenture or of Base Rental Payments in the Facility Lease upon the happening of an event of default. See ―RISK FACTORS — Limited Recourse on Default; No Acceleration of Base Rental.‖
In each and every case during the continuance of an event of default under the Indenture, the Trustee or the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding (subject to the provisions of the Indenture) shall be entitled, upon notice in writing to the City and the Authority, to exercise any of the remedies granted to the City under the Facility Lease to the Authority under the Facility Lease and, in addition, to take whatever action at law or in equity may appear necessary or desirabl e to enforce its rights as assignee pursuant to the Assignment Agreement or to protect and enforce any of the rights vested in the Trustee or the Owners by the Indenture or by the Bonds, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right.
For purposes of certain actions of Owners under the Indenture and the Facility Lease, such as certain consents and amendments and the direction of remedies following default, Owners do not act alone and may not control such matters to the extent such matters are not supported by the requisite number of the Owners of all Bonds and Additional Bonds, if any.
For a description of the events of de fault and permitted remedies of the Trustee (as assignee of the Authority) contained in the Facility Lease and the Indenture, see APPENDIX B — ―SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS — FACILITY LEASE — Maintenance; Taxes; Insurance and Other Charges — Insurance.‖
Bond Insurance
[TO COME]
Reserve Funds
The Original Indenture established the 2019A Reserve Fund, which is maintained as a separate fund, and is separate and district from the 2022A Reserve Fund and 2022B Reserve Fund, and serves solely as security for payments payable by the Authority with respect to the 2019 Bonds.
Concurrently with the closing of the Series 2022A Bonds, the Trustee shall credit the 2022 A Reserve Policy in the amount of $ [__________] to the 2022 A Reserve Fund. The 2022A Reserve Fund is to be maintained as a separate fund, and is separate and distinct from the 2019A Reserve Fund and the 2022B Reserve Fund. The Trustee shall draw on the 2022A Reserve Policy and shall transfer such amounts to the Series 2022A Interest Fund and the Series 2022A Principal Fund, in such order, to the extent required to make the deposits then required to be made pursuant to the Indenture to pay debt service on the Series 2022 A Bonds. Neither the Authority nor the City will have any obl igation to repla ce the 2022 A Re serve Policy or to fund the 2022 A Reserve Fund with cash if, at any time that the Series 2022 A Bonds are Outstanding (i) any rating assigned to [INSURER], the insurer, is downgraded, suspended , or withdrawn, or (ii) amounts a re not available for a ny reason under the 2022A Reserve Policy.
Concurrently with the closing of the Series 2022B Bonds, the Trustee shall credit the 2022 B Reserve Policy in the amount of $ [__________] to the 2022 B Reserve Fund. The 2022B Reserve Fund is t o be maintained as a separate fund, and is separate and distinct from the 2019A Reserve Fund and the 2022A Reserve Fund. The Trustee shall draw on the 2022B Reserve Policy and shall transfer such amounts to the Series 2022B Interest Fund and the Series 2022B Principal Fund, in such order, to the extent required to make the deposits then required to be made pursuant to the Indenture to pay debt service on the Series 2022B Bonds. Neither the Authority nor the City will have any obligation to repla ce the 202 2B Reserve Policy or to fund the 2022B Reserve Fund with cash if, a t any time that the Series 2022B Bonds are Outstanding, (i) any rating assigned to 548
17 [INSURER], the insurer, is downgraded, suspended or withdrawn, or (ii) amounts are not available for a ny reason under the 2022B Reserve Policy.
Insurance
General. The Facility Lease requires that the City maintain certain insurance coverages on the Leased Property for loss due to property damage, title defect, loss of use, and other liability as follows:
All Risk Insurance . A policy or policies of insurance (excluding earthquake and flood insurance) against loss or damage to the Property known as ―all risk.‖ Such insurance shall be provided by an insurer rated no less than ―A‖ by A. M. Best and shall be maintained at all times in an amount not less than the greater of the full replacement value of the Leased Property or the aggregate principal amount of the principal component of the then-remaining Base Rental Payments payable under the Facility Lease.
General Liability Insurance . General liability coverage against claims for damages including death, personal injury, bodily injury, or property damage arising from operations involving the Leased Property. Such insurance shall afford protection with a combin ed single limit of not less than $2,000,000 per occurrence with respect to bodily injury, death, or property damage liability, or such greater amount as may from time to time be recommended by the City’s risk management officer or an independent insurance consultant retained by the City for that purpose; provided, however, that such obligations may be satisfied by self-insurance.
Workers’ Compensation Insurance. Workers ’ compensation insurance issued by a responsible carrier authorized under the laws of the State to insure employers against liability for compensation under the California Labor Code, or any act hereafter 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 liability for compensation under any such act; provided, however, that such obligations may be satisfied by self-insurance.
Rental Interruption Insurance . The Facility Lease requires the City to maintain rental interruption insurance to cover the loss, total or partial, of the use of any part of the Leased Property as a result of any of the hazards covered by the propert y insurance required by the Facility Lease and described under ―— Property Insurance‖ above in an amount equal to twice the maximum annual Base Rental Payments under the Facility Lease. The City is not permitted to self -insure its obligation to maintain r ental interruption insurance. Such rental interruption insurance may be included in the policy or policies for property insurance required by the Facility Lease and described under ―— Property Insurance‖ above without increasing the aggregate limits for coverage with respect to any hazard covered thereby. The net proceeds any rental interruption insurance shall be payable to the Trustee and deposited in the Revenue Fund to be applied to the payment of principal and interest on the Bonds as they become due, in accordance with the Indenture.
Title Insurance. A CLTA policy or policies of title insurance for the Leased Property in an amount not less than the initial aggregate principal amount of the Bonds. Such policy or policies of title insurance shall show fee title and the leasehold estate to the Leased Property in the name of the City and a leasehold estate in the name of the Authority, subject to permitted encumbrances as will not, in the opinion of the Authority, materially adversely affect the use and possession of the Leased Property and will not result in the abatement of Base Rental Payments payable by the City under the Facility Lease. Such policy shall insure the City ’s leasehold estate in the Leased Property subject only to such exceptions as do not materially aff ect the City ’s right to the use and occupancy of the Leased Property.
Notwithstanding the generality of the foregoing, the City shall not be required to maintain or cause to be maintained more insurance than is specifically referred to above or any policies of insurance other than standard policies of insurance with standard deductibles offered by reputable insurers on the open market. 549
18 The City self-insures up to certain amounts and purchases additional coverage from commercial carriers as described in Appe ndix A hereto under ―INFORMATION REGARDING THE CITY OF OXNARD — Risk Management.‖ See also APPENDIX B — ―SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS.‖ Use of Property and Title Insurance and Condemnation Proceeds . If , prior to the termination of the term of the Facility Lease, (a) the Leased Property or any portion thereof is destroyed (in whole or in part) or is damaged by fire or other casualty; or (b) title to, or the temporary use of, the Leased Property or any portion thereof or the estate of the City or the Authority in the Leased Property or any portion thereof is defective or shall be taken under the exercise of the power of eminent domain, then the City and the Authority will cause the net proceeds of any insurance claim or condemnation award to be ap plied to the prompt repair, restoration, modification, improvement, or replacement of the damaged, destroyed, defective , or condemned portion of the Leased Property, and any balance of the net proceeds remaining after such work has been completed shall be paid to the City; provided the proceeds of such insurance or condemnation award together with any other moneys then available for the purpose are at least sufficient to prepay the aggregate annual amounts of principal and interest components of the Base Re ntal Payments due and attributable to the portion of the Leased Property so destroyed, damaged, defective , or condemned (determined by reference to the proportion which the annual fair rental value of the destroyed, damaged, defective , or condemned portion thereof bears to the annual fair rental value of the Leased Property), the City may elect not to repair, reconstruct , or replace the damaged, destroyed, defective , or condemned portion of the Leased Property and instead apply such proceeds to the redemption of Outstanding Bonds pursuant to the Indenture.
The City shall only prepay less than all of the principal component s of the then-remaining Base Rental Payments if the annual fair rental value of the Leased Property after such damage, destruction, title defect , or condemnation is at least equal to the aggregate annual amount of the principal and interest components of the Base Rental Payments not being prepaid.
In the event that the proceeds, if any, of said insurance or condemnation award are insufficient either to (i) repair, rebuild, or replace the Leased Property so that the fair rental value of the Leased Property would be at least equal to the Base Rental Pay ments, or (ii) to redeem all the Outstanding Bonds, then the City may, in its sole discretion, budget and appropriate an amount necessary to effect such repair, rebuilding , or replacement or prepayment; provided that the failure of the City to so budget an d/or appropriate shall not be a breach of or default under the Facility Lease.
Additional Bonds
The Bonds will be issued as Additional Bonds under the Indenture payable from Revenues on parity with all other outstanding Bonds under the Indenture. The Authority has previously issued the 2019 Bonds pursuant to the Original Indenture payable from Reven ues. The Facility Lease and Indenture authorize the Authority to issue other Additional Bonds on a parity with the Bonds and the 2019 Bonds upon the satisfaction of certain conditions precedent set forth in the Indenture; provided that prior to or concurr ently with the execution and delivery of the Additional Bonds, the City and the Authority must enter into an amendment to the Facility Lease and satisfy certain conditions precedent under the Facility Lease, providing for an increase in the Base Rental Pay ments. The Facility Lease , however, may not be amended in a manner such that the sum of Base Rental Payments, including Base Rental Payments payable pursuant to such amendment, in any year is in excess of the annual fair rental value of the Leased Property and other land and improvements leased to the City thereunder. See APPENDIX B — ―SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS.‖
THE AUTHORITY
The Authority is a joint exercise of powers entity duly organized and existing under and by virtue of the laws of the State of California pursuant to a Joint Exercise of Powers Agreement, dated as of October 8, 1991, as amended on April 21, 1992, by and among the City, the Oxnard Community Development Commission (as successor to the Redevelopment Agency of the City of Oxnard), and the Housing Authority of the City of 550
19 Oxnard. The Authority was created to finance the cost of any capital improvement, working capital, or liability and other insurance needs, or projects wherever there are significant public benefits, as determined by the City.
THE CITY
The City is located in western Ventura County (the ―County‖) on the shore of the Pacific Ocean. The City is approximately 65 miles northwest of the City of Los Angeles, 35 miles south east of the City of Santa Barbara, and 6 miles south of the county seat of the County. The City is the most populous city in the County, with a population estimated at 200,050 in 2022, accounting for over 24% of the County’s population. The City has a diversified economic base composed of agricu lture and related business, retail, various services, and governmental agencies.
The City was incorporated as a general law city on June 30, 1903, and operates under a council-manager form of government. The City is governed by an elected mayor holding a two-year term and six councilmembers elected by districts for four -year overlapping terms . For financial and demographic information re garding the City see APPENDIX A — ―INFORMATION REGARDING THE CITY OF OXNARD.‖
RISK FACTORS
The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating the purchase of the Bonds. They do not purport , however, to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the Bonds. In addition, the order in which the following factors are presented is not intended to reflect the relative importance of any such risks.
General Considerations – Security for the Bonds
The Bonds are special obligations of the Authority, payable solely from Revenues and the other assets pledged under the Indenture. Neither the full faith nor credit of the Authority, the City , or the State, o r any political subdivision thereof, is pledged to the payment of the 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 or the State or of any political subdivision thereof in contravention 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.
Although the Facility Lease does not create a pledge, lien , or encumbrance upon the funds of the City, the City is obligated under the Facility Lease to pay the Base Rental Payments and Additional Payments from any source o f legally available funds, subject to abatement as provided in the Facility Lease, and the City will covenant in the Facility Lease that it will take such action as may be necessary to include all Base Rental Payments and Additional Payments due under the Facility Lease in its annual budgets and to make necessary annual appropriations for all such rental p ayments, subject to abatement. The City is currently liable and may become liable on other obligations payable from general revenues. See ―CITY FINANCIA L INFORMATION — Long Term Liabilities‖ in Appendix A attached hereto for a description of the City ’s long- term and other obligations payable from general revenues.
Abatement
In the event of substantial interference with the City’s right to use and occupy any portion of the Leased Property by reason of damage to, or destruction , or condemnation of the Leased Property, or any defects in title to the Leased Property, Base Rental Payments will be subject to abatement. See ―SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Abatement.‖ In the event that such portion of the Leased 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 Base Rental Payments, plus the period for 551
20 which funds are available from (a) amounts hel d by the Trustee in the Revenue Fund, and (b) amounts, if any, otherwise legally available to the Trustee for payments in respect of the Bonds under the Ind enture, or in the event that casualty insurance proceeds are insufficient to provide for complete repair or replacement of such portion of the Leased Property or redemption of the Bonds, there could be insufficient funds to make payments to Owners in full. The City has covenanted in the Facility Lease to maintain rental interruption insurance in an amount equal to twice the maximum annual Base Rental Payments under the Facility Lease.
If damage, destruction, title defect , or eminent domain proceedings with respect to the Leased Property results in abatement of the Base Rental Payments related to such Leased Property 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 Outstanding Bonds during the period that the Leased Property is being replaced, repaire d, or reconstructed, then all or a portion of such payments of principal and interest may not be made. Under the Facility Lease and the Indenture, no remedy is available to the Owners for nonpayment under such circumstances. See APPENDIX B – ―SUMMARY OF P RINCIPAL LEGAL DOCUMENTS – FACILITY LEASE – Rental Abatement.‖
Substitution or Release of Leased Property
The Facility Lease provides that, upon the satisfaction of the conditions specified therein, the City may release from the Facility Lease any portion of the Leased Property or substitute alternate real property for any or all of the Leased Property. Thus, all or a portion of the Leased Property could be replaced or could be released altogether , subject to conditions described in the F acility Lease. Such replacement or release could have an adverse impact on the security for the Bonds, particularly if an event requiring abatement of Base Rental Payments were to occur subsequent to such substitution or release. See APPENDIX B ―SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – FACILITY LEASE,‖ AND See ―SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Substitution and Removal of Property.‖
Limited Secondary Market
There can be no guarantee that there will be a secondary market for purchase or sale of the Bonds or, if a secondary market exists, that the Bonds can or could be sold for any particular price.
Seismic Activity
Generally, within the State, some level of seismic activity occurs on a regular basis. Periodically, the magnitude of a single seismic event can cause significant ground shaking and damage to property located at or near the center of such seismic activity. An earthquake along one of the faults in the vicinity, either known or unknown, could cause a number of casualties and extensive property damage. The effects of such a quake could be aggravated by aftershocks and secondary effects such as fires, landslides, dam failure, liquefaction , and other threats to public health, safety , and welfare. The potential direct and indirect consequences of a major earthquake can easily exceed the resources of the City and would require a high level of self -help, coordination, and cooperation.
The City is located in the vicinity of several know n active earthquake faults, heightening the risks associated with seismic events , and the City cannot provide assurances that the Leased Property would not be significantly damaged if a seismic event were to occur . The City does not currently maintain earthquake insurance coverage for the Leased Property.
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21 Wildfire Conditions
Although the City is not located in a very high fire hazard severity zone (as designated by the California Department of Forestry and Fire Protection), the County includes areas where there is high or extreme danger of wildfires during dry months and during periods of prolonged drought. In December 2017, the County, along with neighboring Santa Barbara County experienced a massive wildfire known as the Thomas Fire, which burned approximately 282,000 acres, destroyed over 1,000 structures, and damaged an additional 280 structures.
Additionally, the County experienced the Easy Fir e on October 30, 2019 which burned over 1,500 acres and required evacuations, and on November 1, 2019, the M aria Fire which burned more tha n 9,000 acres and required nearby evacuations. In August 2020, the County experienced the Holser Fire which burned over 3,000 acres and the Moc Fire which burned over 2,800 acres. None of these fires affected the Leased Property.
In recent years, portions of California have experienced wildfires that have burned hundreds of thousands of acres and destroyed thousands of homes and structures, even in areas not previously thought to be prone to wildfires. Such areas affected by wildfires are more prone to flooding and mudslides that can further lead to the destruction of homes . There can be no assurances that wildfires will not occur within the County or within the City. Property damage due to wildfire could result in a significant decrease in the market value of property in the City and in the ability or willingness of property owners to pay property taxes when due.
Risks Associated with Global Climate Change
Numerous scientific studies on global climate change show that, among other effects on the global ecosystem, sea levels will rise, extreme temperatures will become more common and extreme weather events will become more frequent and more intense as a result of increasing global temperatures attributable to atmospheric pollution.
The Fourth National Climate Assessment, published by the U.S. Global Change Research Program in November 2018 (NCA4), finds that rising temperatures, sea level rise, and more frequent and intense extreme weather and climate-related events, as well as changes in average climate conditions, are expected to continue to increasingly disrupt and damag e infrastructure, ecosystems, social systems, property, and regional economies and industries that depend on natural resources and favorable climate conditions.
Coastal portions of the City are located along the Pacific Ocean and have experienced rising sea levels which could cause severe flooding and the loss of property. Additionally, the City could be subject to impacts from tsunamis in the event of an earthquake occurring off-shore.
Beyond the direct adverse material effect of global climate change i tself, present, pending and possible regulations aimed at curbing the effects of climate change may directly or indirectl y materially adversely affect the market value of property in the City and its ability or willingness of property owners to pay propert y taxes when due.
Hazardous Substances
The City is unaware of the existence of hazardous substances which require remedial action on or near the Leased Property. I t is possible, however, such substances do currently or potentially exist and that the City is not aware of them. The existence or discover of hazardous materials may limit the beneficial use of the Leased Property.
Owners and operators of real property may be required by law to remedy conditions of the property relating to releases or threatene d releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as ―CERCLA‖ or the ―Superfund Act,‖ is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance whether or not the owner (or operator) has anything to do with creating or 553
22 handling the hazardous substance. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities co uld significantly and adversely affect the operations and finances of the City, may result in the reduction in the assessed value of property, and therefor property tax revenue.
Cybersecurity
The City relies on computers and technology to conduct its opera tions. The City and its departments face cyber threats from time to time including, but not limited to, hacking, viruses, malware and other forms of technology attacks. The City owns and operates its own enterprise class data network serving the municipal city government and its operations. The City has retained information technology professionals to support, maintain and protect these operations locally in a purpose -built and physically secure environment. This network and its operations are governed by and in compliance with all applicable governmental regulations as well as the City ’s own administrative regulations. Within the City ’s operations and guidance is an active cyber -security program designed to protect from, and to quickly identify and miti gate, a multitude of complex security threats. While no network is completely immune from all possible compromise, the City exercises its due diligence in protecting the data it possesses and the systems it operates.
On April 6, 2020, the City was impacted by a ransomware cyberattack. When the City became aware of the cyber incident, it promptly took steps to secure and contain the system and identify the scope of the impact.
The City immediately engaged multiple external cybersecurity professionals to a ssist in the containment, restoration, and investigation. The incident encrypted files on approximately 15% of the City’s approximately 1,500 Microsoft Windows computers. The City's financial system was not infected by the ransomware virus, as validated by outside security professionals. [There is no forensic evidence, to date, of any access or exfiltration of personal information or any of the City’s financial data.] While this attack initially impacted some of the City’s operations, the City did not incur any material financial consequences as a result of the incident. As part of the recovery and restoration process, the City implemented additional security measures to reduce the risk of future cyberattacks.
While the City is routinely maintaining its tec hnology systems and continuously implementing new information security controls, no assurances can be given that the City ’s security and operational control measures will be successful in guarding against all cyber threats and attacks. The results of any a ttack on the City’s computer and technology could negatively impact the City ’s operations, and the costs related to such attacks could be substantial.
The City currently maintains cybersecurity insurance.
Limited Recourse on Default; No Acceleration of Base Rental Payments Failure by the City to make Base Rental Payments or Additional Payments required to be made under the Facility Lease, or failure to observe and perform any other terms, covenants , or conditions contained in the Facility Lease or in the Indenture for a period of thirty (30) days after written notice of such failure and request that it be remedied has been given to the City by the Authority or the Trustee, constitute events of default under the Facility Lease and permit the Trustee or the Authority to pursue any and all remedies available. In the event of a default, notwithstanding anything in the Facility Lease or in the Indenture to the contrary, there is no right under any circumstances to accelerate the Base Rental Payments or otherwise declare any Base Rental Payments not then in default to be immediately due and payable . See ―SECURITY AND SOURCES OF PAYMENT FOR THE BONDS‖ and APPENDIX B — ―SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.‖ If the City defaults on its obligation to make Base Rental Payments with respect to the Leased Property, the Trustee, as assignee of the Authority, may retain the Facility Lease and hold the City liable for all Base Rental Payments thereunder on an annual basis and enforce any other terms or provisions of the Facility Lease to be kept or performed by the City , and will also have the right to re -enter and re-let the Leased Property. Due 554
23 to the specialized nature of the Leased Property, no assurance can be gi ven that the Trustee will be able to re-let any portion of the Leased Property so as to provide rental income sufficient to make payments of principal of and interest on the Bonds in a timely manner, and the Trustee is not empowered to sell the Leased Property for the benefit of the Owners of the Bonds. In addition, due to the governmental function of the Leased Property, it is not certain whether a court would permit the exercise of the remedies of repossession and re -letting with respect thereto. Any suit for money damages would be subject to limitations on legal remedies against cities in California, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. Moreover, there can be no assurance that such re-letting will not adversely affect the exclusion of any interest component of the Series 2022A Bonds from federal or state income taxation.
Limitations on Remedies
The enforcement of any remedies provided in the Facility Lease and the Indenture cou ld prove both expensive and time consuming. The enforceability of the rights and remedies of the Owners and the obligations of the City may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors ’ rights generally, now or hereafter in effect; usual equitable principles , including but not limited to concepts of materiality, reasonableness, good faith, and fair dealing, which may limit the specific enforcement under state law of certain remedies, and the possible unavailability of specific performance or injunctive relief, regardless of whether considered in a proceeding in equity or law; the exercise by the United States of America of the powers delegated to it by the Federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State of California and its governmental bodies in the interest of servicing a significant and legitimate public purpose.
Although the Facility Lease and the Indenture provide that if the City defaults the Trustee may re -enter the Leased Property and re -let the Leased Property, portions of the Leased Prope rty may not be easily recoverable, and even if recovered, could be of little value to others because of the specialized nature of the Leased Property. Additionally, the Trustee may have limited ability to re -let the Leased Property to provide a source of rental payments sufficient to pay the principal of and interest on the Bonds. Furthermore, due to the governmental nature of the Leased Property, it is not certain whether a court would permit the exercise of the remedy of re-letting with respect thereto.
Alternatively, the Trustee may terminate the Facility Lease and proceed against the City to recover damages pursuant to the Facility Lease. Any suit for money damages would be subject to limitations on legal remedies against public agencies in the State, including a limitation on enforcement of judgement against funds needed to serve the public welfare and interest.
Bond Counsel has limited its opinion as to the enforceability of the Bo nds and of the Indenture to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws affecting generally the enforcement of creditors’ rights. The lack of availability of certain remedies or the limitation of remedies ma y entail risks of delay, limitation, or modification of the rights of the Owners of the Bonds.
Bankruptcy
Under Chapter 9 of the United States Bankruptcy Code (Title 11, United States Code) (the ―Bankruptcy Code‖), which governs bankruptcy proceedings of public entities such as the City, no involuntary bankruptcy petition may be filed against a public entity. Upon satisfaction of certain prerequisite conditions, however, a voluntary bankruptcy petition may be fil ed by the City. The filing of a bankruptcy petition results in a stay against enforcement of remedies under agreements to which the bankrupt entity is a party. A bankruptcy filing by the City could thus limit remedies under the Facility Lease. A bankrup tcy debtor may choose to assume or reject executory contracts and leases, such as the Facility Lease. In the event of rejection of a lease by debtor 555
24 lessee, the leased property is returned to the lessor and the lessor has a claim for a limited amount of t he resulting damages.
Under the Indenture, the Trustee holds a security interest in the Revenues, including Base Rental Payments, for the benefit of the Owners of the Bonds, but such security interest arises only when the Base Rental Payments are actually received by the Trustee following payment by the City. The Leased Property is not subject to a security interest, mortgage , or any other lien in favor of the Trustee for the benefit of Owners.
In the event of a bankruptcy filed by the City and the subseq uent rejection of the Facility Lease by the City, the Authority would recover possession of the Leased Property and the Trustee, as assignee of the Authority, would have a claim for damages against the City. The Trustee ’s claim would constitute a secured claim only to the extent of Revenues in the possession of the Trustee; the balance of such claim would be unsecured.
Bankruptcy proceedings would subject the Owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or oth erwise, and consequently entail risks of delay, limitation, or modification of their rights with respect to the Bonds. In a bankruptcy case, the amount recovered by Owners of the Bonds could be affected by whether the Facility Lease is determined to be a ―true lease‖ or a loan or other financing arrangement (a ―financing lease‖), and the Owners ’ recovery could be reduced in either case. If the Facility Lease is determined by the bankruptcy court to constitute a ―true lease‖ (rather than a financing lease) , the City could choose not to perform under the Facility Lease by rejecting it and the claim of the Owners could be substantially limited pursuant to Section 365 of the Bankruptcy Code to a fraction of the scheduled amount of Base Rental Payments, and that reduced claim amount could be impaired as an unsecured claim under a plan of adjustment. If a bankruptcy court were to treat the Facility Lease as a financing lease then, under a plan of adjustment, the priority, payment terms, collateral, payment dates , payment sources, covenants and other terms or provisions of the Facility Lease and the Bonds may be altered. Such a plan could be confirmed even over the objections of the Trustee and the Owners, and without their consent. For example, the amount of the Base Rental Payments from the City might be substantially reduced because of the power of the bankruptcy court under the Bankruptcy Code to adjust secured claims to the value of their collateral, which, as described above, could be limited to the Revenues held by the Trustee. In addition there can be a substantial disparity in treatment based on the nature of the Leased Property. Whether the Facility Lease is characterized by the bankruptcy court as a true lease or a financing lease, either scenario coul d result in the Owners not receiving the full amount of the principal and interest due on the Bonds.
Actions could be taken in a bankruptcy of the City that could adversely affect the exclusion of interest on the Series 2022A Bonds from gross income for fe deral income tax purposes. In addition, there may be other possible effects of the bankruptcy of the City that could result in delays or reductions in payments of the principal of and interest on the Bonds, or in other losses to the Owners of the Bonds.
Possible Insufficiency of Insurance Proceeds
The Facility Lease obligates the City to keep in force various forms of insurance, subject to deductibles, for repair or replacement of the Leased Property in the event of damage, destruction , or title defects, subject to certain exceptions. The Authority and the City make no representation as to the ability of any insurer to fulfill its obligations under any insurance policy obtained pursuant to the Facility Lease, and no assurance can be given as to the adequa cy of any such insurance to fund necessary repair or replacement or to pay principal of and interest on the Bonds when due. In addition, insurance for certain risks, such as earthquakes and floods, are not required under the Facility Lease. See ―SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Insurance.‖
No Liability of Authority to the Owners
Except as expressly provided in the Indenture, the Authority will not have any obligation or liability to the Owners of the Bonds with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the City of other agreements and covenants required to be performed by it 556
25 contained in the Facility Lease or the Indenture, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained in the Indenture.
Loss of Tax Exemption
As discussed under the heading ―TAX MATTERS,‖ certain acts or omissions of the City in violation of its covenants in the Indenture and the Facility Lease, as well as certain other matters, could result in the interest on the Series 2022A Bonds being includable in gross income for purposes of federal income taxation retroactive to the date of delivery of the Series 2022A Bonds. Should such an event of taxability occur, the Series 2022A Bonds would not be subject to special prepayment and would remain Outstanding until maturity or until prepaid under the provisions of the Indenture.
COVID-19
The global outbreak in 2020 of the novel coronavirus COVID -19 (―COVID-19‖) was declared to be a pandemic by the World Health Organization and had an adverse effect on, among other things, the national economy, the global supply chain, international travel, and travel-related industries. The outbreak of COVID-19 has negatively affected the national and local economy and financial markets, and may continue to negatively affect economic output worldwide and within the State and the City. On June 15, 2021 the Governor terminated the executive orders that imposed the prior stay at home directors and the State’s Blueprint for a Safer Economy plan. As of June 15, 2021, the vast majority of restrictions imposed after March 2020 were terminated.
The ongoing pandemic and the actions taken by the federal, State, and local governments had a significant impact on the State and City operations and finances. Although various measures were implemented to address the impacts of the pan demic on the City’s operations and finances, the City cannot predict the effectiveness and duration of these measures. The actual impact of COVD -19 on the City, its economy, and its finances will depend on future events, including future events outside of the control of the City.
Dependence on State for Certain Revenues
In 2008, the State began exp eriencing the most significant economic downturn and financial pressure since the Great Depression of the 1930s. Despite the recent significant budgetary improvements, according to the State, there remain a number of major risks and pressures that threate n the State ’s financial condition, including a stock market correction, federal policy, slower global growth , and a national recession. The State’s revenues (particularly the personal income tax) can be volatile and correlate to overall economic condition s.
There can be no assurances that the State will not face fiscal stress and cash pressures again, or that other changes in the State or national economies will not materially adversely affect the financial condition of the State.
The City cannot predict the extent of any budgetary problems the State will encounter in future fiscal years, and it is not clear what measures would be taken by the State to balance its budget, as required by law. In addition, the City cannot predict the impact that State budgets will have on the City’s finances and operations or what actions will be taken in the future by the State Legislature and the Governor to deal with changing State revenues and expenditures. Current and future State budgets will be affected by national and State economic conditions and other factors over which the City has no control.
A number of the City ’s revenues are collected and dispersed by the State (such as sales tax and motor - vehicle license fees) or allocated in accordance with State law (most im portantly, 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 reven ues to local governments (including the City) or shift financial responsibility for programs to local governments as part of the State’s efforts to address any such related State financial difficulties. 557
26 See ―CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXE S AND APPROPRIATIONS — Proposition 1A‖ and ―— Proposition 22‖ below.
Current Initiatives
There is currently one petition for initiatives which has been filed with the City Clerk authored by citizens of the City which, if passed by voters, could impact the City’s finances and governance. Currently, the County’s elections division is verifying that the petition signatures are adequate and if deemed adequate, such initiatives will be placed on the November 8, 2022 ballot. The initiative is described briefly below.
Oxnard Term Limits Act . This initiative is proposed by citizens . This initiative would limit the mayor and council members to no more than two consecutive four-year terms.
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS Principal of and interest on the Bonds are payable from Base Rental Payments made from the City ’s General Fund. See the caption ―SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.‖ Articles XIIIA, XIIIB, XIIIC and XIIID of the State Constitution, Propositions 62, 111, 218, 1A and 22, and certain other provisions of law discussed below are included in this Official Statement to describe the potential effect of these Constitutional a nd statutory measures on the ability of the City to levy taxes and spend tax proceeds for operating and other purposes.
Article XIIIA of the State Constitution
On June 6, 1978, State voters approved Proposition 13, which added Article XIIIA to the State Constitution. Article XIIIA, as amended, limits the amount of any ad valorem tax on real property to 1% of the full cash value thereof, except that additional ad valorem property taxes may be levied to pay debt service: (i) on indebtedness approved by the voters prior to December 1, 1978; (ii) on bonded indebtedness approved by a two- thirds vote on or after December 1, 1978, for the acquisition or improvement of real property; or (iii) bonded indebtedness incurred by a school district, community college dist rict, or county office of education for the construction, reconstruction, rehabilitation , or replacement of school facilities, including the furnishing and equipping of school facilities or the acquisition or lease of real property for school facilities, a pproved by 55% of the voters voting on the proposition. Article XIIIA defines full cash value to mean ―the county assessor ’s valuation of real property as shown on the 1975 -76 tax bill under ―full cash value,‖ or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.‖ This full cash value may be increased at a rate not to exceed 2% per year to account for inflation.
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, including a general economic downturn, 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 other minor or technical ways.
Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA.
Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter - approved indebtedness). The 1% property tax is automatically levied by counties and distributed according to a formula among taxing agencies.
Increases in assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in the ―taxing area‖ based upon their respective ―situs.‖ Any such allocation made to a local agency continues as part of its allocation in future years.
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27 All taxable property is shown at full cash value on the tax rolls. Consequently, the tax rate is expressed as $1 per $100 of taxable value. All taxable property valu e included in this Official Statement is shown at 100 percent of taxable value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value.
Article XIIIB of the State Constitution
In addition to the limits that Article XIIIA impos es on property taxes that may be collected by local governments, certain other revenues of the State and most local governments are subject to an annual ―appropriations limit‖ imposed by Article XIIIB which effectively limits the amount of such revenues th at such entities are permitted to spend. Article XIIIB, approved by the voters in June 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each government entity applies to ―proceeds of taxes,‖ which consist of tax re venues and the investment proceeds thereof, State subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed ―the cost reasonably borne by such entity in providing th e regulation, product or service. ‖ ―Proceeds of taxes‖ excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the appropriation of funds which are not ―proceeds of taxes, ‖ such as reasonable user charges or fees, and certain other non-tax funds. Article XIIIB also does not limit appropriation of local revenues to pay debt service on bonds existing or authorized as of January 1, 1979, or subsequently authorized by the voter s, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990 levels. The appropriations limit may also be exceeded in case of emergency; however, the appropriations limit for the next three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two -thirds of the legislative body of the local government.
The State and each local government entity has its own appropria tions limit. Each year, the limit is adjusted to allow for changes, if any, in the cost of living, the population of the jurisdiction, and any transfer to or from another government entity of financial responsibility for providing services. Proposition 1 11 requires that each local government’s actual appropriations be tested against its limit every two years.
If the aggregate ―proceeds of taxes‖ for the preceding two -year period exceeds the aggregate limit, the excess must be returned to the agency ’s taxp ayers through tax rate or fee reductions over the following two years.
The City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB.
Articles XIIIC and XIIID of the State Constitution
On November 5, 1996, State voters approved Proposition 218, known as the ―Right to Vote on Taxes Act.‖ Proposition 218 adds Articles XIIIC and XIIID to the State Constitution and contains a number of interrelated provisions affecting the ability of the City to levy and collect both existi ng and future taxes, assessments and property -related fees and charges. The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed below, and it is not possible at this time to predict with certainty the outcome of such determination.
Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City require a majority vote a nd taxes for specific purposes, even if deposited in the City ’s General Fund, require a two -thirds vote. The voter approval requirements of Proposition 218 reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase such taxes in the future to meet increased expenditure needs.
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28 Article XIIID also adds several provisions making it generally more difficult for local agencies to levy and maintain property -related fees, charges, and assessments for municipal services and programs, such as hearings and stricter and more individualized benefit requirements and findings. These provisions include, among other things: (i) a prohibition against assessments which exce ed the reasonable cost of the proportional special benefit conferred on a parcel; (ii) a requirement that assessments must confer a ―special benefit,‖ as defined in Article XIIID, over and above any general benefits conferred; (iii) a majority protest proc edure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party; and (iv) a prohibition against fees and charges which are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. If the City is unable to continue to collect these revenues, the services and programs funded with these revenues would have to be curtailed and/or the City’s General Fund might have to be used to support them. The City is unable to predict whether or not in th e future it will be able to continue all existing services and programs funded by the fees, charges and assessments in light of Proposition 218 or, if these services and programs are continued, which amounts (if any) would be used from the City ’s General Fund to continue to support such activities.
Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. This extension of the initiative power is not limited to taxes impose d on or after November 6, 1996, the effective date of Proposition 218, and could result in retroactive repeal or reduction in any existing taxes, assessments, fees and charges, subject to overriding federal constitutional principles relating to the impairm ents 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 effec tive date of Proposition 218) assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights ‖ protected by the United States Constitution. In November 2016, the voters within the City approved an initiative to repeal increases to the City ’s wastewater service charges which were adopted in January 2016. No assurance can be given that the voters of the City will not, in the future, approve an additional initiative or initiatives which re duce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund.
Proposition 62
Proposition 62 was adopted by the voters at the November 4, 1986, general election and: (a) requires that any new or higher taxes for general governmental purposes imposed by local governmental entities such as the City be approved by a two-thirds vote of the governmental entity’s legislative body and by a majority vote of the voters of the governmental entity voting in an election on the tax; (b) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two-thirds vote of the voters of the governmental entity voting in an election on the tax; (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was imposed; (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as p ermitted by Article XIIIA; (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities; and (f) requires that any tax imposed by a local governmental entity on or after July 1, 1985, be rati fied by a majority vote of the voters voting in an election on the tax within two years of the adoption of the initiative or be terminated by November 15, 1988.
On September 28, 1995, the California Supreme Court, in the case of Santa Clara County Local Transportation Authority v. Guardino, upheld the constitutionality of Proposition 62. In this case, the court held that a countywide sales tax of one -half of one percent was a special tax that, under Section 53722 of the Government Code, required a two -thirds voter approval. Because the tax received an affirmative vote of only
54.1%, this special tax was found to be invalid. The decision did not address the question of whether or not it should be applied retroactively.
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29 Following the California Supreme Court’s decision upholding Proposition 62, several actions were filed challenging taxes imposed by public agencies since the adoption of Proposition 62, which was passed in November 1986. On June 4, 2001, the California Supreme Court released its decision in one of these cases, Howard Jarvis Taxpayers Association v. City of La Habra, et al. In this case, the court held that public agency’s continued imposition and collection of a tax is an ongoing violation, upon which the statute of limitations period begins anew with each collection. The court also held that, unless another statute or constitutional rule provided differently, the statute of limitations for challenges to taxes subject to Proposition 62 is three years.
Accordingly, a challenge to a tax subje ct to Proposition 62 may only be made for those taxes received within three years of the date the action is brought.
The City has not experienced any substantive adverse financial impact as a result of the passage of Proposition 62.
Proposition 1A
Proposition 1A was approved by the voters at the November 2, 2004 election. Proposition 1A amended the State Constitution to, among other things, reduce the Legislature ’s authority over local government revenue sources by placing restrictions on the State ’s access to local governments ’ property, sales, and vehicle license fee revenues as of November 3, 2004. Beginning with Fiscal Year 2008 -09, the State may borrow up to eight percent of local property tax revenues, but only if the Governor proclaims such action i s necessary due to a severe State fiscal hardship and two –thirds of both houses of the Legislature approves the borrowing. The amount borrowed is required to be paid back within three years. The State also will not be able to borrow from local property t ax revenues for more than two fiscal years within a period of 10 fiscal years. In addition, the State cannot reduce the local sales tax rate or restrict the authority of local governments to impose or change the distribution of the statewide local sales tax.
Many of the provisions of Proposition 1A have been superseded by Proposition 22 enacted in November 2010 and described below.
Proposition 22
On November 2, 2010, the voters of the State approved Proposition 22, known as ―The Local Taxpayer, Public Safety, and Transportation Protection Act ‖ (―Proposition 22 ‖). Proposition 22, among other things, broadens the restrictions established by Proposition 1A. While Proposition 1A permits the State to appropriate or borrow local property tax revenues on a t emporary basis during times of severe financial hardship, Proposition 22 amends Article XIII of the State Constitution to prohibit the State from appropriating or borrowing local property tax revenues under any circumstances. The State can no longer borro w local property tax revenues on a temporary basis even during times of severe financial hardship. Proposition 22 also prohibits the State from appropriating or borrowing proceeds derived from any tax levied by a local government solely for the local gove rnment’s purposes. Furthermore, Proposition 22 restricts the State ’s ability to redirect redevelopment agency property tax revenues to school districts and other local governments and limits uses of certain other funds although this provision no longer ha s any meaningful impact given the statewide dissolution of redevelopment agencies. Proposition 22 is intended to stabilize local government revenue sources by restricting the State government’s control over local revenues. The City cannot predict whether Proposition 22 will have a beneficial effect on the City’s financial condition.
Proposition 26
On November 2, 2010, State voters also 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 wh ich does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (b) a charge imposed 561
30 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 to a local government for issuing licenses and permits, performing investigations, inspec tions, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof; (d) a charge imposed for entrance to or use of local government property, or the purchase, rental or lease of local government property ; (e) a fine, penalty or other monetary charge imposed by the judicial branch of government or a local government as a result of a violation of law; (f) a charge imposed as a condition of property development; and (g) assessments and property -related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more th an necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activit y. The City does not believe that Proposition 26 will adversely affect its General Fund revenues.
Proposition 19
On November 3, 2020, ―Proposition 19‖ was approved by the electorate. Proposition 19 amended California Constitution Article XIIIA to permit eligible homeowners to transfer tax assessments anywhere in the State, narrow existing special rules for inherited properties, and broaden the scope of triggers for reassessment of properties. Any additional revenues and net savings resulting from Proposi tion 19 will be allocated to fire protection services and reimbursing local governments for taxation -related changes. The City cannot make any assurance as to what effect the implementation of Proposition 19 will have on City revenues or assessed valuation of real property in the City.
Possible Future Initiatives
Articles XIIIA, XIIIB, XIIIC and XIIID and Propositions 218, 111, 62, 1A, 22 and 26 were each adopted as measures that qualified for the ballot pursuant to the State ’s initiative process. From ti me to time other initiative measures could be adopted, further affecting revenues of the City or the City ’s ability to expend revenues. The nature and impact of these measures cannot be anticipated by the City.
TAX MATTERS
In the opinion of Nixon Peabody LLP, Bond Counsel, under existing law and assuming compliance with the tax covenants described herein, and the accuracy of certain representations and certifications made by the City and the Authority as described herein, interest on the Series 2022A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the ―Code‖). Bond Counsel is also of the opinion that interest on the Series 2022A Bonds is not treated as a preference item in calculating the alternative minimum tax imposed under the Code on individuals. Interest on the Series 2022B Bonds is not excluded from gross income for federal income tax purposes. Bond Counsel is further of the opinion that interest on the Series 2022A Bonds and the Series 2022B Bonds is exempt from personal income taxes of the State of California (the ―State‖) under present State law. See ―TAX MATTERS – Series 2022A Bonds‖ and ―TAX MATTERS – Series 2022B Bonds‖ herein regarding certain other tax considerations.
Tax Matters – Series 2022A Bonds
Federal Income Taxes
The Internal Revenue Code of 1986, as amended (the ―Code‖), imposes certain requirements that must be met subsequent to the issuance and delivery of the Series 2022A Bonds for interest th ereon to be and remain excluded from gross income for federal income tax purposes. Noncompliance with such requirements could 562
31 cause the interest on the Series 2022A Bonds to be included in gross income for federal income tax purposes retroactive to the da te of issue of the Series 2022A Bonds. Pursuant to the [Resolution/Indenture, the Loan Agreement] and the Tax Certificate, by and among the City and the Authority (the ―Tax Certificate‖) the City has covenanted to comply with the applicable requirements of the Code in order to maintain the exclusion of the interest on the Series 2022A Bonds from gross income for federal income tax purposes pursuant to Section 103 of the Code. In addition, the City has made certain representations and certifications in the [Resolution/Indenture, the Loan Agreement] and the Tax Certificate. Bond Counsel will not independently verify the accuracy of those representations and certifications.
In the opinion of Nixon Peabody LLP, Bond Counsel, under existing law and assuming compliance with the aforementioned covenant, and the accuracy of certain representations and certifications made by the City and the Authority described above, interest on the Series 2022A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Code. Bond Counsel is also of the opinion that such interest is not treated as a preference item in calculating the alternative minimum tax imposed under the Code. For taxable years beginning after December 31, 2022, interest on the Series 2022A Bonds will be taken into account in computing the alternative minimum tax imposed on certain corporations under the Code to the extent that such interest is included in the ―adjusted financial statement income‖ of such corporations.
State Taxes
Bond Counsel is also of the opinion that interest on the Series 2022A Bonds is exempt from personal income taxes of the State, under present State law. Bond Counsel expresses no opinion as to other State or local tax consequences arising with resp ect to the Series 2022A Bonds nor as to the taxability of the Series 2022A Bonds or the income therefrom under the laws of any state other than the State of California.
Original Issue Discount
Bond Counsel is further of the opinion that the excess of the principal amount of a maturity of the Series 2022A Bonds over its issue price (i.e., the first price at which price a substantial amount of such maturity of the Series 2022A Bonds was sold to the public, excluding Series 2022A Bond houses, brokers or simil ar persons or organizations acting in the capacity of underwriters or wholesalers) (each, a ―Discount Series 2022A Bond‖ and collectively the ―Discount Series 2022A Bonds‖) constitutes original issue discount which is excluded from gross income for federal income tax purposes to the same extent as interest on the Series 2022A Bonds. Further, such original issue discount accrues actuarially on a constant interest rate basis over the term of each Discount Series 2022A Bond and the basis of each Discount Seri es 2022A Bond acquired at such issue price by an initial purchaser thereof will be increased by the amount of such accrued original issue discount. The accrual of original issue discount may be taken into account as an increase in the amount of tax -exempt income for purposes of determining various other tax consequences of owning the Discount Series 2022A Bonds, even though there will not be a corresponding cash payment. Owners of the Discount Series 2022A Bonds are advised that they should consult with t heir own advisors with respect to the state and local tax consequences of owning such Discount Series 2022A Bonds.
Original Issue Premium
Series 2022A Bonds sold at prices in excess of their principal amounts are ―Premium Series 2022A Bonds‖. An initial p urchaser with an initial adjusted basis in a Premium Series 2022A Bond in excess of its principal amount will have amortizable Series 2022A Bond premium which offsets the amount of tax -exempt interest and is not deductible from gross income for federal inc ome tax purposes. The amount of amortizable Series 2022A Bond premium for a taxable year is determined actuarially on a constant interest rate basis over the term of each Premium Series 2022A Bond based on the purchaser’s yield to maturity (or, in the cas e of Premium Series 2022A Bonds callable prior to their maturity, over the period to the call date, based on the purchaser’s yield to the call date and giving effect to any call premium). For purposes of determining gain or loss on the sale or other dispo sition of a Premium Series 2022A Bond, an initial purchaser who acquires such 563
32 obligation with an amortizable Series 2022A Bond premium is required to decrease such purchaser’s adjusted basis in such Premium Series 2022A Bond annually by the amount of amort izable Series 2022A Bond premium for the taxable year. The amortization of Series 2022A Bond premium may be taken into account as a reduction in the amount of tax-exempt income for purposes of determining various other tax consequences of owning such Series 2022A Bonds. Owners of the Premium Series 2022A Bonds are advised that they should consult with their own advisors with respect to the state and local tax consequences of owning such Premium Series 2022A Bonds.
Ancillary Tax Matters
Ownership of the Series 2022A Bonds may result in other federal tax consequences to certain taxpayers, including, without limitation, certain S corporations, foreign corporations with branches in the United States, property and casualty insurance companies, individuals recei ving Social Security or Railroad Retirement benefits, individuals seeking to claim the earned income credit, and taxpayers (including banks, thrift institutions and other financial institutions) who may be deemed to have incurred or continued indebtedness to purchase or to carry the Series 2022A Bonds. Prospective investors are advised to consult their own tax advisors regarding these rules.
Interest paid on tax -exempt obligations such as the Series 2022A Bonds is subject to information reporting to the Internal Revenue Service (the ―IRS‖) in a manner similar to interest paid on taxable obligations.
In addition, interest on the Series 2022A Bonds may be subject to backup withholding if such interest is paid to a registered owner that (a) fails to provide c ertain identifying information (such as the registered owner’s taxpayer identification number) in the manner required by the IRS, or (b) has been identified by the IRS as being subject to backup withholding.
Bond Counsel is not rendering any opinion as to any federal tax matters other than those described in the opinions attached as Appendix [_]. Prospective investors, particularly those who may be subject to special rules described above, are advised to consult their own tax advisors regarding the federal tax consequences of owning and disposing of the Series 2022A Bonds, as well as any tax consequences arising under the laws of any state or other taxing jurisdiction.
Changes in Law and Post Issuance Events
Legislative or administrative actions and court d ecisions, at either the federal or state level, could have an adverse impact on the potential benefits of the exclusion from gross income of the interest on the Series 2022A Bonds for federal or state income tax purposes, and thus on the value or marketabi lity of the Series 2022A Bonds. This could result from changes to federal or state income tax rates, changes in the structure of federal or state income taxes (including replacement with another type of tax), repeal of the exclusion of the interest on the Series 2022A Bonds from gross income for federal or state income tax purposes, or otherwise. It is not possible to predict whether any legislative or administrative actions or court decisions having an adverse impact on the federal or state income tax tre atment of holders of the Series 2022A Bonds may occur.
Prospective purchasers of the Series 2022A Bonds should consult their own tax advisors regarding the impact of any change in law on the Series 2022A Bonds.
Bond Counsel has not undertaken to advise in the future whether any events after the date of issuance and delivery of the Series 2022A Bonds may affect the tax status of interest on the Series 2022A Bonds. Bond Counsel expresses no opinion as to any federal, state or local tax law consequences wi th respect to the Series 2022A Bonds, or the interest thereon, if any action is taken with respect to the Series 2022A Bonds or the proceeds thereof upon the advice or approval of other counsel.
Tax Matters – Series 2022B Bonds
Federal Income Taxes
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33 The following is a summary of certain anticipated United States federal income tax consequences of the purchase, ownership and disposition of the Series 2022B Bonds. The summary is based upon the provisions of the Code, the Treasury Regulations promulgated ther eunder and the judicial and administrative rulings and decisions now in effect, all of which are subject to change. Such authorities may be repealed, revoked, or modified, possibly with retroactive effect, so as to result in United States federal income t ax consequences different from those described below. The summary generally addresses Series 2022B Bonds held as capital assets within the meaning of Section 1221 of the Code and does not purport to address all aspects of federal income taxation that may affect particular investors in light of their individual circumstances or certain types of investors subject to special treatment under the federal income tax laws, including but not limited to financial institutions, insurance companies, dealers in securi ties or currencies, persons holding such Series 2022B Bonds as a hedge against currency risks or as a position in a ―straddle,‖ ―hedge,‖ ―constructive sale transaction‖ or ―conversion transaction‖ for tax purposes, or persons whose functional currency is n ot the United States dollar.
It also does not deal with holders other than original purchasers that acquire Series 2022B Bonds at their initial issue price except where otherwise specifically noted. Potential purchasers of the Series 2022B Bonds should consult their own tax advisors in determining the federal, state, local, foreign and other tax consequences to them of the purchase, holding and disposition of the Series 2022B Bonds.
The City and the Authority have not sought and will not seek any rulings from the Internal Revenue Service with respect to any matter discussed herein. No assurance can be given that the Internal Revenue Service would not assert, or that a court would not sustain, a position contrary to any of the tax characterizations and tax consequences set forth below.
U.S. Holders
As used herein, the term ― U.S. Holder‖ means a beneficial owner of Series 2022B Bonds that is (a) an individual citizen or resident of the United States for federal income tax purposes, (b) a corporation, including an entity treated as a corporation for federal income tax purposes, created or organized in or under the laws of the United States or any State thereof (including the District of Columbia), (c) an estate whose income is subject to federal income taxation regardless of its source, or (d) a trust if a court within the United States can exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust. Notwithstanding clause (d) of the preceding sentence, to the extent provided in Treasury regulations, certain trusts in existence on August 20, 1996, and treated as United States persons prior to that date that elect to continue to be treated as United Sta tes persons also will be U.S.
Holders. In addition, if a partnership (or other entity or arrangement treated as a partnership for federal income tax purposes) holds Series 2022B Bonds, the tax treatment of a partner in the partnership generally will depen d upon the status of the partner and the activities of the partnership. If a U.S. Holder is a partner in a partnership (or other entity or arrangement treated as a partnership for federal income tax purposes) that holds Series 2022B Bonds, the U.S. Holder is urged to consult its own tax advisor regarding the specific tax consequences of the purchase, ownership and dispositions of the Series 2022B Bonds.
Taxation of Interest Generally
Interest on the Series 2022B Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Code and so will be fully subject to federal income taxation. Purchasers will be subject to federal income tax accounting rules affecting the timing and/or characterization of payments received with respect to such Series 2022B Bonds. In general, interest paid on the Series 2022B Bonds and recovery of any accrued original issue discount and market discount will be treated as ordinary income to a bondholder, and after adjustment for the foregoing, princi pal payments will be treated as a return of capital to the extent of the U.S.
Holder’s adjusted tax basis in the Series 2022B Bonds and capital gain to the extent of any excess received over such basis.
Recognition of Income Generally
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34 Section 451(b) of the Code provides that purchasers using an accrual method of accounting for U.S. federal income tax purposes may be required to include certain amounts in income no later than the time such amounts are reflected on certain financial statements of such purchas er. In this regard, Treasury Regulations provide that, with the exception of certain fees, the rule in section 451(b) will generally not apply to the timing rules for original issue discount and market discount, or to the timing rules for de minimis origi nal issue discount and market discount. Prospective purchasers of the Series 2022B Bonds should consult their own tax advisors regarding any potential applicability of these rules and their impact on the timing of the recognition of income related to the Series 2022B Bonds under the Code.
Original Issue Discount
The following summary is a general discussion of certain federal income tax consequences of the purchase, ownership and disposition of Series 2022B Bonds issued with original issue discount (― Discount Series 2022B Bonds ‖). A Series 2022B Bond will be treated as having been issued with an original issue discount if the excess of its ―stated redemption price at maturity‖ (defined below) over its issue price (defined as the initial offering price to the public at which a substantial amount of the Series 2022B Bonds of the same maturity have first been sold to the public, excluding bond houses and brokers) equals or exceeds one quarter of one percent of such Series 2022B Bond’s stated redemption pr ice at maturity multiplied by the number of complete years to its maturity (or, in the case of an installment obligation, its weighted average maturity).
A Series 2022B Bond’s ―stated redemption price at maturity‖ is the total of all payments provided by the Series 2022B Bond that are not payments of ―qualified stated interest.‖ Generally, the term ―qualified stated interest‖ includes stated interest that is unconditionally payable in cash or property (other than debt instruments of the Authority) at least annually at a single fixed rate or certain floating rates.
In general, the amount of original issue discount includible in income by the initial holder of a Discount Series 2022B Bond is the sum of the ―daily portions‖ of original issue discount with resp ect to such Discount Series 2022B Bond for each day during the taxable year in which such holder held such Series 2022B Bond.
The daily portion of original issue discount on any Discount Series 2022B Bond is determined by allocating to each day in any ―accrual period‖ a ratable portion of the original issue discount allocable to that accrual period.
An accrual period may be of any length, and may vary in length over the term of a Discount Series 2022B Bond, provided that each accrual period is not longer t han one year and each scheduled payment of principal or interest occurs at the end of an accrual period. The amount of original issue discount allocable to each accrual period is equal to the difference between (i) the product of the Discount Series 2022B Bond’s adjusted issue price at the beginning of such accrual period and its yield to maturity (determined on the basis of compounding at the close of each accrual period and appropriately adjusted to take into account the length of the particular accrual period) and (ii) the amount of any qualified stated interest payments allocable to such accrual period. The ―adjusted issue price‖ of a Discount Series 2022B Bond at the beginning of any accrual period is the sum of the issue price of the Discount Series 2022B Bond plus the amount of original issue discount allocable to all prior accrual periods minus the amount of any prior payments on the Discount Series 2022B Bond that were not qualified stated interest payments. Under these rules, holders generally wi ll have to include in income increasingly greater amounts of original issue discount in successive accrual periods.
Holders utilizing the accrual method of accounting may generally, upon election, include in gross income all interest (including stated inte rest, acquisition discount, original issue discount, de minimis original issue discount, market discount, de minimis market discount, and unstated interest, as adjusted by any amortizable bond premium or acquisition premium) on a Series 2022B Bond by using the constant yield method applicable to original issue discount, subject to certain limitations and exceptions. 566
35 Market Discount
A holder who purchases a Series 2022B Bond at a price which includes market discount (i.e., at a purchase price that is less t han its adjusted issue price in the hands of an original owner) in excess of a prescribed de minimis amount will be required to recharacterize all or a portion of the gain as ordinary income upon receipt of each scheduled or unscheduled principal payment o r upon other disposition. In particular, such holder will generally be required either (a) to allocate each such principal payment to accrued market discount not previously included in income and to recognize ordinary income to that extent and to treat an y gain upon sale or other disposition of such a Series 2022B Bond as ordinary income to the extent of any remaining accrued market discount or (b) to elect to include such market discount in income currently as it accrues on all market discount instruments acquired by such holder on or after the first day of the taxable year to which such election applies.
The Code authorizes the Treasury Department to issue regulations providing for the method for accruing market discount on debt instruments the principa l of which is payable in more than one installment. Until such time as regulations are issued by the Treasury Department, certain rules described in the legislative history of the Tax Reform Act of 1986 will apply. Under those rules, market discount will be included in income either (a) on a constant interest basis or (b) in proportion to the accrual of stated interest.
A holder of a Series 2022B Bond who acquires such Series 2022B Bond at a market discount also may be required to defer, until the maturit y date of such Series 2022B Bond or the earlier disposition in a taxable transaction, the deduction of a portion of the amount of interest that the holder paid or accrued during the taxable year on indebtedness incurred or maintained to purchase or carry a Series 2022B Bond in excess of the aggregate amount of interest (including original issue discount) includable in such holder’s gross income for the taxable year with respect to such Series 2022B Bond. The amount of such net interest expense deferred in a taxable year may not exceed the amount of market discount accrued on the Series 2022B Bond for the days during the taxable year on which the holder held the Series 2022B Bond and, in general, would be deductible when such market discount is includable in income. The amount of any remaining deferred deduction is to be taken into account in the taxable year in which the Series 2022B Bond matures or is disposed of in a taxable transaction. In the case of a disposition in which gain or loss is not recognize d in whole or in part, any remaining deferred deduction will be allowed to the extent gain is recognized on the disposition. This deferral rule does not apply if the bondholder elects to include such market discount in income currently as described above.
Series 2022B Bond Premium
A holder of a Series 2022B Bond who purchases such Series 2022B Bond at a cost greater than its remaining redemption amount will have amortizable bond premium. If the holder elects to amortize this premium under Section 171 of the Code (which election will apply to all Series 2022B Bonds held by the holder on the first day of the taxable year to which the election applies and to all Series 2022B Bonds thereafter acquired by the holder), such a holder must amortize the premium us ing constant yield principles based on the holder’s yield to maturity. Amortizable bond premium is generally treated as an offset to interest income, and a reduction in basis is required for amortizable bond premium that is applied to reduce interest payments. Purchasers of Series 2022B Bonds who acquire such Series 2022B Bonds at a premium should consult with their own tax advisors with respect to federal, state and local tax consequences of owning such Series 2022B Bonds.
Surtax on Unearned Income
Section 1411 of the Code generally imposes a tax of 3.8% on the ―net investment income‖ of certain individuals, trusts and estates. Among other items, net investment income generally includes gross income from interest and net gain attributable to the disposit ion of certain property, less certain deductions. U.S. Holders 567
36 should consult their own tax advisors regarding the possible implications of this provision in their particular circumstances.
Sale or Redemption of Series 2022B Bonds
A bondholder’s adjusted tax basis for a Series 2022B Bond is the price such holder pays for the Series 2022B Bond plus the amount of original issue discount and market discount previously included in income and reduced on account of any payments received on such Series 2022B Bond other than ―qualified stated interest‖ and any amortized bond premium. Gain or loss recognized on a sale, exchange or redemption of a Series 2022B Bond, measured by the difference between the amount realized and the bondholder’s tax basis as so adjusted, will generally give rise to capital gain or loss if the Series 2022B Bond is held as a capital asset (except in the case of Series 2022B Bonds acquired at a market discount, in which case a portion of the gain will be characterized as interest and therefore ordinary income).
If the terms of a Series 2022B Bond are materially modified, in certain circumstances, a new debt obligation would be deemed ―reissued‖, or created and exchanged for the prior obligation in a taxable transaction. Among the modificatio ns which may be treated as material are those related to the redemption provisions and, in the case of a nonrecourse obligation, those which involve the substitution of collateral. In addition, the defeasance of a Series 2022B Bond under the defeasance pr ovisions of the [Resolution/Indenture] could result in a deemed sale or exchange of such Series 2022B Bond.
EACH POTENTIAL HOLDER OF SERIES 2022B BONDS SHOULD CONSULT ITS OWN TAX ADVISOR CONCERNING (1) THE TREATMENT OF GAIN OR LOSS ON SALE, REDEMPTION OR DEFEASANCE OF THE SERIES 2022B BONDS, AND (2) THE CIRCUMSTANCES IN WHICH SERIES 2022B BONDS WOULD BE DEEMED R EISSUED AND THE LIKELY EFFECTS, IF ANY, OF SUCH REISSUANCE.
Non-U.S. Holders
The following is a general discussion of certain United States federal income tax consequences resulting from the beneficial ownership of Series 2022B Bonds by a person other than a U.S. Holder, a former United States citizen or resident, or a partnership or entity treated as a partnership for United States federal income tax purposes (a ―Non-U.S. Holder‖).
Subject to the discussion of backup withholding and the Foreign Account Tax Compliance Act (―FATCA‖), payments of principal by the Authority or any of its agents (acting in its capacity as agent) to any Non-U.S. Holder will not be subject to federal withholding tax. In the case of payments of interest to any Non - U.S. Holder, however, federal withholding tax will apply unless the Non-U.S. Holder (1) does not own (actually or constructively) 10 percent or more of the voting equity interests of the Authority, (2) is not a controlled foreign corporation for United States tax purposes that is related to the Authority (directly or indirectly) through stock ownership, and (3) is not a bank receiving interest in the manner described in Section 881(c)(3)(A) of the Code. In addition, either (1) the Non -U.S. Holder must certify on the appli cable IRS Form W -8 (series) (or successor form) to the Authority, its agents or paying agents or a broker under penalties of perjury that it is not a U.S. person and must provide its name and address, or (2) a securities clearing organization, bank or othe r financial institution, that holds customers’ securities in the ordinary course of its trade or business and that also holds the Series 2022B Bonds must certify to the Authority or its agent under penalties of perjury that such statement on the applicable IRS Form W -8 (series) (or successor form) has been received from the Non -U.S.
Holder by it or by another financial institution and must furnish the interest payor with a copy.
Interest payments may also be exempt from federal withholding tax depending on the terms of an existing federal income tax treaty, if any, in force between the U.S. and the resident country of the Non -U.S.
Holder. The U.S. has entered into an income tax treaty with a limited number of countries. In addition, the terms of each treaty differ in their treatment of interest and original issue discount payments. Non -U.S. Holders are 568
37 urged to consult their own tax advisor regarding the specific tax consequences of the receipt of interest payments, including original issue discount. A Non -U.S. Holder that does not qualify for exemption from withholding as described above must provide the Authority or its agent with documentation as to his, her, or its identity to avoid the U.S. backup withholding tax on the amount allocable to a Non -U.S. Ho lder. The documentation may require that the Non-U.S. Holder provide a U.S. tax identification number.
If a Non -U.S. Holder is engaged in a trade or business in the United States and interest on a Series 2022B Bond held by such holder is effectively conne cted with the conduct of such trade or business, the Non - U.S. Holder, although exempt from the withholding tax discussed above (provided that such holder timely furnishes the required certification to claim such exemption), may be subject to United States federal income tax on such interest in the same manner as if it were a U.S. Holder. In addition, if the Non -U.S. Holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% (subject to a reduced rate under an applicable treaty) of its effectively connected earnings and profits for the taxable year, subject to certain adjustments. For purposes of the branch profits tax, interest on a Series 2022B Bond will be included in the earnings and profits of the holder if the interest is effectively connected with the conduct by the holder of a trade or business in the United States. Such a holder must provide the payor with a properly executed IRS Form W -8ECI (or successor form) to claim an exemption from United States federal withholding tax.
Generally, any capital gain realized on the sale, exchange, retirement or other disposition of a Series 2022B Bond by a Non -U.S. Holder will not be subject to United States federal income or withholding taxes if (1) the gain is not effectively conne cted with a United States trade or business of the Non -U.S. Holder, and (2) in the case of an individual, the Non -U.S. Holder is not present in the United States for 183 days or more in the taxable year of the sale, exchange, retirement or other disposition, and certain other conditions are met.
For newly issued or reissued obligations, such as the Series 2022B Bonds, FATCA imposes U.S. withholding tax on interest payments and, for dispositions after December 31, 2018, gross proceeds of the sale of the Seri es 2022B Bonds paid to certain foreign financial institutions (which is broadly defined for this purpose to generally include non-U.S. investment funds) and certain other non -U.S. entities if certain disclosure and due diligence requirements related to U.S . accounts or ownership are not satisfied, unless an exemption applies. An intergovernmental agreement between the United States and an applicable non -U.S. country may modify these requirements. In any event, bondholders or beneficial owners of the Series 2022B Bonds shall have no recourse against the Authority, nor will the City or the Authority be obligated to pay any additional amounts to ―gross up‖ payments to such persons, as a result of any withholding or deduction for, or on account of, any present or future taxes, duties, assessments or government charges with respect to payments in respect of the Series 2022B Bonds. However, it should be noted that on December 13, 2018, the IRS issued Proposed Treasury Regulation Section 1.1473 -1(a)(1) which propose s to remove gross proceeds from the definition of ―withholdable payment‖ for this purpose.
Non-U.S. Holders should consult their own tax advisors with respect to the possible applicability of federal withholding and other taxes upon income realized in respect of the Series 2022B Bonds.
Information Reporting and Backup Withholding
For each calendar year in which the Series 2022B Bonds are outstanding, the Authority, its agents or paying agents or a broker is required to provide the IRS with certain informati on, including a holder’s name, address and taxpayer identification number (either the holder’s Social Security number or its employer identification number, as the case may be), the aggregate amount of principal and interest paid to that holder during the calendar year and the amount of tax withheld, if any. This obligation, however, does not apply with respect to certain U.S. Holders, including corporations, tax -exempt organizations, qualified pension and profit sharing trusts, and individual retirement accounts and annuities.
If a U.S. Holder subject to the reporting requirements described above fails to supply its correct taxpayer identification number in the manner required by applicable law or under -reports its tax liability, the 569
38 Authority, its agents or paying agents or a broker may be required to make ―backup‖ withholding of tax on each payment of interest or principal on the Series 2022B Bonds. This backup withholding is not an additional tax and may be credited against the U.S. Holder’s federal inc ome tax liability, provided that the U.S. Holder furnishes the required information to the IRS.
Under current Treasury Regulations, backup withholding and information reporting will not apply to payments of interest made by the Authority, its agents (in th eir capacity as such) or paying agents or a broker to a Non-U.S. Holder if such holder has provided the required certification that it is not a U.S. person (as set forth in the second paragraph under ―Non-U.S. Holders‖ above), or has otherwise established an exemption (provided that neither the Authority nor its agent has actual knowledge that the holder is a U.S. person or that the conditions of an exemption are not in fact satisfied).
Payments of the proceeds from the sale of a Series 2022B Bond to or thr ough a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, information reporting (but not backup withholding) may apply to those payments if the broker is one of the following: (i) a U.S. person; (ii) a controlled foreign corporation for U.S. tax purposes; (iii) a foreign person 50 -percent or more of whose gross income from all sources for the three -year period ending with the close of its taxable year preceding the payment was effectively conn ected with a United States trade or business; or (iv) a foreign partnership with certain connections to the United States.
Payment of the proceeds from a sale of a Series 2022B Bond to or through the United States office of a broker is subject to information reporting and backup withholding unless the holder or beneficial owner certifies as to its taxpayer identification number or otherwise establishes an exemption from information reporting and backup withholding.
The preceding federal income tax discussio n is included for general information only and may not be applicable depending upon a holder’s particular situation. Holders should consult their tax advisors with respect to the tax consequences to them of the purchase, ownership and disposition of the S eries 2022B Bonds, including the tax consequences under federal, state, local, foreign and other tax laws and the possible effects of changes in those tax laws.
State Taxes
Bond Counsel is of the opinion that interest on the Series 2022B Bonds is exempt from personal income taxes of the State, under present State law. Bond Counsel expresses no opinion as to other State or local tax consequences arising with respect to the Series 2022B Bonds nor as to the taxability of the Series 2022B Bonds or the income therefrom under the laws of any state other than the State of California. 570
39 Changes in Law and Post Issuance Events
Legislative or administrative actions and court decisions, at either the federal or state level, could have an impact on the inclusion in gross income of interest on the Series 2022B Bonds for federal or state income tax purposes, and thus on the value or marketability of the Series 2022B Bonds. This could result from changes to federal or state income tax rates, changes in the structure of federal or state income taxes (including replacement with another type of tax), or otherwise. It is not possible to predict whether any such legislative or administrative actions or court decisions will occur or have an adverse impact on the federal or state income tax treatment of holders of the Series 2022B Bonds. Prospective purchasers of the Series 2022B Bonds should consult their own tax advisors regarding the impact of any change in law or proposed change in law on the Series 2022B Bonds.
IN ALL EVENTS, ALL INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS IN
DETERMINING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE SERIES 2022B BONDS.
Considerations For ERISA And Other U.S. Benefit Plan Investors – The Bonds The Employee Retirement Income Security Act of 1974, as amended (―ERISA‖), imposes certain fiduciary obligations and prohibited transaction restrictions on employee pension and welfare benefit plans subject to Title I of ERISA (― ERISA Plans‖). Section 4975 of the Code imposes essentially the same prohibited transaction restrictions on tax -qualified retirement plans described in Section 401(a) and 403(a) of the Code, which are exempt from tax under Section 501(a) of the Code, other than governmental and church plans as defined herein (―Qualified Retirement Plans‖), and on Individual Retirement Accounts (―IRAs‖) described in Section 408(b) of the Code (collectively, ―Tax -Favored Plans‖). Certain employee benefit plans such as governmental plans (as defined in Section 3(32) of ERISA) (―Governmental Plans‖), and, if no election has been made under Section 410(d) of the Code, church plans (as defined in Section 3(33) of ERISA) (―Church Plans‖), are not subject to ERISA requirements. Addi tionally, such Governmental and Church Plans are not subject to the requirements of Section 4975 of the Code but may be subject to applicable federal, state or local law (―Similar Laws‖) which is, to a material extent, similar to the foregoing provisions o f ERISA or the Code .
Accordingly, assets of such plans may be invested in the Bonds without regard to the ERISA and Code considerations described below, subject to the provisions of Similar Laws.
In addition to the imposition of general fiduci ary obligations, including those of investment prudence and diversification and the requirement that a plan’s investment be made in accordance with the documents governing the plan, Section 406 of ERISA and Section 4975 of the Code prohibit a broad range o f transactions involving assets of ERISA Plans and Tax-Favored Plans and entities whose underlying assets include plan assets by reason of ERISA Plans or Tax -Favored Plans investing in such entities (collectively, ―Benefit Plans‖) and persons who have cert ain specified relationships to the Benefit Plans (―Parties In Interest‖ or ―Disqualified Persons‖), unless a statutory or administrative exemption is available. The definitions of ―Party in Interest‖ and ―Disqualified Person‖ are expansive. While other en tities may be encompassed by these definitions, they include, most notably: (1) fiduciary with respect to a plan; (2) a person providing services to a plan; (3) an employer or employee organization any of whose employees or members are covered by the plan; and (4) the owner of an IRA. Certain Parties in Interest (or Disqualified Persons) that participate in a prohibited transaction may be subject to a penalty (or an excise tax) imposed pursuant to Section 502(i) of ERISA (or Section 4975 of the Code) unless a statutory or administrative exemption is available. Without an exemption an IRA owner may disqualify his or her IRA.
Certain transactions involving the purchase, holding or transfer of the Bonds might be deemed to constitute prohibited tran sactions under ERISA and Section 4975 of the Code if assets of the Authority were deemed to be assets of a Benefit Plan. Under final regulations issued by the United States Department of Labor (the ―Plan Assets Regulation‖), the assets of the Authority wo uld be treated as plan assets of a Benefit Plan for the purposes of ERISA and Section 4975 only of the Code if the Benefit Plan acquires an ―equity interest‖ in the 571
40 Authority and none of the exceptions contained in the Plan Assets Regulation is applicable. An equity interest is defined under the Plan Assets Regulation as an interest in an entity other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features. Although there is little guidance on this matter, it appears that the Bonds should be treated as debt without substantial equity features for purposes of the Plan Assets Regulation. This determination is based upon the traditional debt features of the Bonds, including the reasonable exp ectation of purchasers of Bonds that the Bonds will be repaid when due, traditional default remedies, as well as the absence of conversion rights, warrants and other typical equity features.
However, without regard to whether the Bonds are tr eated as an equity interest for such purposes, though, the acquisition or holding of Bonds by or on behalf of a Benefit Plan could be considered to give rise to a prohibited transaction if the Authority or the Trustee, or any of their respective affiliates, is or becomes a Party in Interest or a Disqualified Person with respect to such Benefit Plan.
Most notably, ERISA and the Code generally prohibit the lending of money or other extension of credit between an ERISA Plan or Tax -Favored Plan and a Party in Interest or a Disqualified Person, and the acquisition of any of the Bonds by a Benefit Plan would involve the lending of money or extension of credit by the Benefit Plan. In such a case, however, certain exemptions from the prohibited transact ion rules could be applicable depending on the type and circumstances of the plan fiduciary making the decision to acquire a Bond. Included among these exemptions are: Prohibited Transaction Class Exemption (―PTCE‖) 96 -23, regarding transactions effected by certain ―in -house asset managers‖; PTCE 90 -1, regarding investments by insurance company pooled separate accounts; PTCE 95 -60, regarding transactions effected by ―insurance company general accounts‖; PTCE 91 -38, regarding investments by bank collective investment funds; and PTCE 84-14, regarding transactions effected by ―qualified professional asset managers.‖ Further, the statutory exemption in Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code provides for an exemption for transactions involving ―adequate consideration‖ with persons who are Parties in Interest or Disqualified Persons solely by reason of their (or their affiliate’s) status as a service provider to the Benefit Plan involved and none of whom is a fiduciary with respect to the Benefit Plan assets involved (or an affiliate of such a fiduciary). There can be no assurance that any class or other exemption will be available with respect to any particular transaction involving the Bonds, or that, if available, the exemption would cover all possible prohibited transactions.
By acquiring a Bond (or interest therein), each purchaser and transferee (and if the purchaser or transferee is a plan, its fiduciary) is deemed to represent and warrant that either (i) it is not acquiring the Bon d (or interest therein) with the assets of a Benefit Plan, Governmental plan or Church plan; or (ii) the acquisition and holding of the Bond (or interest therein) will not give rise to a nonexempt prohibited transaction under Section 406 of ERISA or Sectio n 4975 of the Code or Similar Laws. A purchaser or transferee who acquires Bonds with assets of a Benefit Plan represents that such purchaser or transferee has considered the fiduciary requirements of ERISA, the Code or Similar Laws and has consulted with counsel with regard to the purchase or transfer.
Because the Authority, the Trustee, Underwriters or any of their respective affiliates may receive certain benefits in connection with the sale of the Bonds, the purchase of the Bonds using plan assets of a Benefit Plan over which any of such parties has investment authority or provides investment advice for a direct or indirect fee may be deemed to be a violation of the prohibited transaction rules of ERISA or Section 4975 of the Code or Similar Laws for wh ich no exemption may be available. Accordingly, any investor considering a purchase of Bonds using plan assets of a Benefit Plan should consult with its counsel if the Authority, the Trustee or the Underwriters or any of their respective affiliates has investment authority or provides investment advice for a direct or indirect fee with respect to such assets or is an employer maintaining or contributing to the Benefit Plan.
Any ERISA Plan fiduciary considering whether to purchase the Bonds on behalf of a n ERISA Plan should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and Section 4975 of the Code to such an investment and the availability of any 572
41 of the exemptions referre d to above. Persons responsible for investing the assets of Tax -Favored Plans that are not ERISA Plans should seek similar counsel with respect to the prohibited transaction provisions of the Code and the applicability of Similar Laws.
CERTAIN LEGAL MATTERS
The validity of the Bonds and certain other legal matters are subject to the respective approving opinions of Nixon Peabody LLP, Bond Counsel. Best Best & Krieger LLP, is acting as Disclosure Counsel for the City. The City Attorney will pass on certain legal matters for the City and Authority. Complete copy of the proposed form of opinion of Bond Counsel is contained in Appendix D hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Bond Counsel and Disclosure Counsel will receive compensation from the City contingent upon the sale and delivery of the Bonds.
From time to time, Bond Counsel a nd Disclosure Counsel represent the Underwriter on matters unrelated to the Bonds. Certain le gal matters will be passed upon for the Underwriter by Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach , California. Counsel to the Underwriter will receive compensation contingent upon that issuance of the Bonds.
ABSENCE OF LITIGATION
Except as described below, to the best knowledge of the City and the Authority, there is no action, suit or proceeding pending or threatened either restraining or enjoining the execution or delivery of the Bonds, the Site Lease , the Facility Lease , the Assignment Agreement , or the Indenture, or in any way contesting or affecting the validity of the foregoing or any proceedings of the Authority or the City taken with respect to any of the foregoing. The City is routinely a party to a variety of lawsu its and administrative proceeds that may affect the General Fund of the City. For all pending or threatened litigation matters and administrative proceedings not listed below, the City believes, based on current facts and circumstances, that a final determination of such matters should not materially affect the General Fund’s financial position.
Infrastructure Use Fee Litigation
Aaron Starr v. City of Oxnard. Mr. Starr filed suit against the City to challenge the legality of the City’s collection of infrastructure use fees paid by the City ’s utility funds to the City ’s General Fund. The suit called for the reimbursement of all infrastructure use fees paid to the City ’s utility funds and eliminating the infrastructure use fee (―IUF‖) charge in all futu re years. Prior to the Court’s ruling, the City adopted a conservative approach to the potential future loss of annual user fee revenues by eliminating the infrastructure use fee related to public safety ($3 million annually) for all future budgets.
In a series of decisions by the Ventura County Superior Court which culminated in its final ruling in July 2021 regarding the City’s IUF, the Court ordered the City to reimburse its utility funds a total of $36.5 million over a three -year period and to remove the IUF from utility charges effective in June 2021. Based on the Court’s order, the City no longer includes the IUF in the current utility rates effective June 2021.
Additionally, the City went beyond the Court order and implemented a one -time credit of IUF fees charged from January 2020 through May 2021. The City processed credits, totaling $7.1 million, to residential and commercial ratepayers on their October 2021 utility bill. Customers saw IUF related utility rate reductions ranging from 2.7% to 3.5%. The lower utility rates will result in approximately $4 million annual aggregate reduction in revenues for the City’s three utility funds.
In Fiscal Year 2020 -21, the City’s General Fund balance decreased by approximately $18.3 million compared to a $5.6 million decrease in Fiscal Year 2019-20. The significant change was a result of the negative impact to the City’s General Fund position that resulted from the IUF reimbursement, partially offset by the economic recovery, CARES Act grants, and the Measure ―E‖ sales tax measure. 573
42 UNDERWRITING
The Bonds are being purchased by Stifel, Nicolaus & Company (the ―Underwriter‖). The Underwriter will p urchase the Series 2022 A Bonds from the Authority at an aggregate purchase price of $ __________ (representing the principal amount of the Series 2022A Bonds, plus $__________ of original issue premium and less $__________ of Underwriter’s discount). The Underwriter will purchase the Series 2022B Bonds from the Authority at an aggregate purchase pri ce of $ __________ (representing the pri ncipal amount of the Series 2022B Bonds, plus $__________ of original issue premium and less $__________ of Underwriter’s discount).
The Bonds are offered for sale at the initial yields stated on the pages following the cover page of this Official Statement, which may be changed from time to time by the Underwriter. The Bonds may be offered and sold to certain dealers at yield higher than the public offering yields.
RATINGS
[In connection with the issuance and delivery of the Bonds, S&P Global Ratings (―S&P‖) is expected to assign its municipal bond rating of ―[__]‖ to the Bonds with the understanding that, upon delivery of t he Series Bonds, policies insuring the payment when due of the principal of and interest on each series of Bonds will be issued by [INSURER]. S&P has assigned an underlying credit rating of ―[__]‖ to the Bonds. Such rating s reflect only the views of S&P and any desired explanation of the significance of such ratings should be obtained from S&P. Generally, a rating agency bases its ratings on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by S&P, if in the judgment of S&P, circumstances so warrant. Any such downward revision or withdrawal of either rating may have an adverse effect on the market price of the Bonds. The Underwriter has not undertaken any responsibility either to bring to the attention of the owners of the Bonds a proposed change in or proposed withdrawal of any rating or to oppose any such proposed revision or withdrawal.]
MUNICIPAL ADVISOR
NHA Advisors, LLC, San Rafael, California, served as municipal advisor (the ―Municipal Advisor‖) to the Authority and the City with respect to the sale of the Bonds. The Municipal Advisor will re ceive compensation contingent upon the sale and delivery of the 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 in this Official Statement.
NHA Advisors, is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.
CONTINUING DISCLOSURE
The City will covenant for the benefit of the Owners of the Bonds to provide annually certain financial information and operating data relating to the Bonds and the City (the ―Annual Report‖), and to provide notices of the occurrence of certain enumerated events. For a complete listing of items of information which will be provided in each Annual Report and further description of the City ’s undertaking with respect to the Annual Report and certain enumerated events, see APPENDIX E — ―FORM OF CONTINUING DISCLOSURE CERTIFICATE.‖ The Annual Report is to be provided by the City not later than March 1 after the end of the City’s fiscal year, commencing with the report for fiscal year 2022-23 with respect to the Bonds. Each Annual Report will be filed by the City with the Municipal Securities Rulemaking Board. These covenants have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2 - 12(b)(5) (the ―Rule‖).
[TO COME]
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43 The City and its related entities subsequently made all remedial filings of all annual operating data, audited financial statements, and significant event notices covering the prior five -year period and have taken steps, which include the hiring of NH A Advisors, LLC as its dissemination agent. Additionally, the Oxnard Housing Authority amended its continuing disclosure undertaking relating to outstanding Oxnard Housing Authority indebtedness to modify the filing deadline date for subsequent reports beg inning in 2018 from October 31 to March 31 to ensure compliance with future continuing disclosure.
FINANCIAL STATEMENTS OF THE CITY
Included herein as Appendix C are the audited financial statements of the City as of and for the year ended June 30, 2021 , together with the report thereon dated December 30, 2021 of Eadie & Payne, LLP , Riverside, California, certified public accountants (the ―Auditor‖). Such audited financial statements have been included herein in reliance upon the report of the Auditor. T he Auditor has not been engaged to perform and has not performed, since the date of its report (December 30, 2021 ) included in Appendix C to this Official Statement, any procedures on the financial statements addressed in such report. The Auditor also has not performed any procedures relating to this Official Statement.
MISCELLANEOUS
References are made herein to certain documents and reports which are brief summaries thereof which do not purport to be complete or definitive and reference is made to such d ocuments and reports for full and complete statements of the contents thereof. Copies of the Indenture, the Facility Lease, the Site Lease and other documents are available, upon request, and upon payment to the City of a charge for copying, mailing and handling, from the City Clerk at the City of Oxnard, 300 West 3rd Street, Oxnard, California 93030.
Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Authority or the City and the purchasers or Owners of any of the Bonds.
The execution and delivery of this Official Statement have been duly authorized by the Authority and the City.
CITY OF OXNARD FINANCING AUTHORITY
By:
Alexander Nguyen, Executive Director
CITY OF OXNARD
By:
Alexander Nguyen, City Manager
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APPENDIX A
INFORMATION REGARDING THE CITY OF OXNARD
General
The City of Oxnard (the ―City‖) was incorporated in 1903 and is located in western Ventura County (the ―County‖) on the shore of the Pacific Ocean. The City is approximately 65 miles northwest of the City of Los Angeles, 35 miles south east of the City of Santa Barbara, and 6 miles so uth of the county seat of the County. The City is the most populous city in the County, with a population estimated at 200,050 as of 2022, accounting for approximately 24% of the County ’s population. The City has a diversified economic base composed of agriculture and related business, retail, various services, and governmental agencies.
The City provides the full range of municipal services including public safety (police and fire), street construction and maintenance, solid waste collection and disposal , water and sewer utilities, culture and recreation, public improvements, planning and zoning, and general administrative and support services. [FORBES RANKING TO COME].
Transportation
Oxnard is served by all major modes of transportation. Both U.S. Highway 101 and State Highway 1 pass through the City, linking it with the Los Angeles metropolitan area and Santa Barbara County. Rail passenger service is provided by AMTRAK, which has a st ation in the City. Two trains pass through daily in each direction and stop at the Oxnard station. Metrolink provides commuters from the Oxnard Transportation Center with several daily routes to the Los Angeles basin, including downtown Los Angeles. Union Pacific Railroad provides freight rail service through the City. The Ventura County Railroad Company connects Port Hueneme, the Ormond Beach Industrial Area, the Naval Construction Battalion Center, and surrounding industrial areas to the Union Pacific lin e. The Port of Hueneme, owned and operated by the Oxnard Harbor District, an independent special district, is the only commercial deep-draft harbor between Los Angeles and San Francisco. The port has five 600 - to 700-foot berths and a 35 -foot entrance channel depth. The Channel Islands Harbor, owned and operated by the County of Ventura, is a modern 3,000 slip boat marina, which also serves the Oxnard area in the capacity of a recreational marina and covers approximately 310 acres. The Oxnard Airport is ope rated by Ventura County as a general and commercial aviation airfield. The Oxnard Airport handles passenger as well as cargo services. Local bus service is provided by Gold Coast Transit, a regional public transit agency funded by the County and member cit ies. Service is available in Ojai, Ventura, Oxnard, and Port Hueneme. The Greyhound bus line provides passenger and parcel service from its Oxnard station. A multi-modal transportation center located in downtown Oxnard brings together all these forms of transportation.
Education
There are 35 elementary, 8 junior high, and 5 senior high schools located in and immediately around the City, plus eight parochial and private schools. The City is served by Oxnard College, a California community college. The 119 -acre campus is located on Rose Avenue between Channel Island s Boulevard and Pleasant Valley Road. Oxnard College currently offers degree and certificate programs. The California State University campus at Channel Islands (CSUCI) opened in fall 2002 and has a current enrollment of over 7,400 students. In addition, two campuses of the University of California, Santa Barbara (UCSB) and Los Angeles (UCLA), one campus of the California State University, Northridge (CSUN), and two private universities, Pepperdine a nd California Lutheran University, are within a 50-minute drive.
Recreation
The City offers its residents a wide range of recreational facilities. The beach, marina neighborhood, and regional parks add up to nearly 1,500 acres of park land. McG rath State Beach Park, located south of the Santa Clara River mouth, covers approximately 295 acres and includes over a mile of ocean frontage. Overnight 576
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camping and day picnics are the main use of that park. Oxnard Beach Park includes approximately 62 acres with concession stands and facilities for day picnics and sports. Silver Strand Beach, south of the Harbor entrance, and Hollywood Beach, north of the entrance, are day beach facilities. Channel Islands Harbor is a recreational boating marina administered by Ventur a County. The City has over 30 neighborhood parks located throughout the City. A tennis and softball center is located at Community Center Park. Additionally, Wilson Park contains the largest senior citizen center in the County.
The City owns River Ridge G olf Club, consisting of two 18 -hole championship golf courses, the Vineyard Course and the Victoria Lakes Course. The City also owns a 1,600 -seat Performing Arts & Convention Center located on Hobson Way in the center of the City.
City Council and Management
The City was incorporated as a general law city on June 30, 1903, and operates under a council-manager form of government. The City is governed by an elected Mayor holding a four-year term and six councilmembers elected by districts for four-year overlapping terms.
The members of the City Council and the expiration dates of their respective terms are as follows:
CITY OF OXNARD
City Council
Name Term Expires
John C. Zaragoza, Mayor 2024
Bryan A. MacDonald, Mayor Pro Tem 2024
Bert E. Perello, Councilmember 2022
Oscar Madrigal, Councilmember 2024
Gabe Teran, Councilman 2022
Gabriela Basua, Councilwoman 2022
Vianey Lopez, Councilmember 2024
City Management
The City Manager ’s office oversees all of the City ’s department s responsible for City services and operations. The following is a brief overview of the experience of key City staff:
City Manager. Mr. Alexander Nguyen was appointed City Manager in July 2018. Mr. Nguyen came to the City with 20 years of municipal experience from the cities of Oakland, Alameda and Riverside. In Oakland, he served two years as Chief of Staff for a City Council office and 11 years as Chief of Staff for the elected City Attorney, where he was also co -creator and Executive Director of the N eighborhood Law Corps. In Alameda, Mr. Nguyen served as Assistant City Manager. He also led the effort to build the city ’s first dedicated emergency operations center, along with a new fire station. In Riverside, Mr. Nguyen also served as Assistant City Manager and led the effort to design a new Main Library and City Archive in the downtown area. He also led the city ’s Office of Homeless Solutions, which developed Riverside ’s homeless policy and Housin g First Plan. His portfolio in Riverside also inclu ded p olice, fire, parks, museum and c itizens police review commission.
Assistant City Manager. Ms. Ashley Golden, D irector of Oxnard ’s Development Services, was appointed as Assistant City Manager in December 2018. Ms. Golden has more than 14 years of experience with the City ’s development s ervices department where she provided oversight and administrative resources for planning, code compliance, and building & e ngineering services. She was appointed D irector of Development Services in 2015 and has previously served as interim Assistant City Manager when there was a vacancy in 2016 and 2018. She also has more than three years of experience with the Sacramento Housing and Redevelopment Agency as Redevelopment Planner and Community Development Program technician. 577
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Deputy City Manager . Ms. Shiri Klima was appointed Deputy City Manager in January 2019, to oversee the Finance, Information Technology and Human Resources Departments. Ms. Klima served a s an Assistant City Attorney in Oxnard for over two years and has a decade of experience with municipal government, having advised many cities including Indio, Highland, Yucaipa, Rancho Palos Verdes, Beverly Hills, Agoura Hills and Wasco as well as a workf orce development joint powers authority in southeast L.A.
County.
Chief Financial Officer. Ms. Betsy George joined the City in June 2021, bringing more than 25 years of accounting and finance experience in both the public and private sector. Ms. George pr eviously served as Chief Financial Officer for the Ventura County Human Services Agency and as Assistant Superintendent, Business Services and Director of Budget & Finance for the Ventura Unified School District. [MORE TO COME]
Employee Relations
As of June 30, 2022, the City had approximately 1,210 full-time employees and 11 part-time employees.
Such amounts do not include the City’s temporary and seasonal workers which totaled 347 employees as of June 30, 2022. Temporary workers are not represented by an employee association. In accordance with the provisions of California Government Code Section 3500, the City participates in labor negotiations with its employee associations. The result of the negotiation processes are memorialized in memoranda of understanding (MOU’s) reached between the City and the City employee associations. The table below lists the City ’s six employee associations and the approximat e membership as of June 30, 2022 , as well as the unr epresented executive employees.
Unit/Affiliation
Number of
Members
MOU
Expiration
International Association of Fire Fighters 112 6/30/2021 International Union of Operating Engineers, Local No. 501 AFL-CIO 372 6/30/2025 Oxnard Mid Manager’s Association 146 6/30/2025
Oxnard Peace Officers Association 237 6/30/2024
Oxnard Public Safety Managers Association 19 6/30/2021
Services Employees International Union Local 721, CLC 283 6/30/2025 Unrepresented and Executive Employees 391 N/A
Elected Officials 9 N/A
________________________
Source: City.
The City does not currently have any outstanding material labor disputes.
Risk Management
The City provides general liability and workers’ compensation insurance under self-insurance programs with an annual limit per occurrence of $1 million for each program. Excess insurance i n the layer of $1 million to $15 million per occurrence/$18 million annual aggregate is purchased for general liabil ity claims and statutory coverage is purchased for workers ’ compensation claims. The City contracts with outside service agencies to assist in the administration of the self -insurance programs. Estimated liabilities related to outstanding workers’ compensation and public liability claims, including estimates for incurred but not reported claims, are based upon actuarial studies and are recorded in internal service funds.
In August 1988, the City adopted a resolution to execute a Joint Powers Agreement (JPA) creating the Big Independent Cities Excess Pool Joint Powers Authority (BICEP), a risk management pool. Through BICEP, five cities (Oxnard, Ventura, Huntington Beach, Santa Ana, West Covina) share the cost of insuring catastrophic general liability losses incurred by the members for claims between $1 million and $25 million, thereby eliminating the need for individual excess commercial insurance policies. The purpose of this JPA is to jointly fund the purchase of reinsurance and the provision of necessary administrative services. Such administrative 578
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services may include, but shall not be limited to, risk management consulting, loss prevention and control, centralized loss reporting, actuarial consulting, claims adjustment, and legal defense service. BICEP is governed by a five-member board of directors representing each member city. Each member is appointed and serves at the pleasure of the member city council.
All funds of the City participate in general liability and workers ’ compensation insurance programs and make payments to internal service funds on the basis of loss experience and exposure. The total unpaid claims and claims adjustment expense liability (long -term obligations) of $ 32,782,000, which includes the amounts identified below under ―-General Liability‖ and ―-Workers’ Compensation‖ recorded at June 30, 2021, is based on results of actuarial studies and includes an estimate for claims incurred but not reported at the balance sheet date. The City has not established a trust to offset such costs. Claims liabilities are calculated considering the effects of inflation, recent claims settlement trends including frequency and amount of payouts, and other economic and societal factors. General liability and workers ’ compensation liabilities are carried at present value using a discount rate of 1.0%.
General Liability
The City is self -insured for general liability claims up to $1,000,000. The City purchases commercial excess liability insurance with limits of $15 million per occurrence with an aggregate limit of $18 million annually. Prior to f iscal year 2019-20, the City was covered through the Big Independent Cities Excess Pool (BICEP) for claims between $1,000,000 and $25,000,000. Self-insured general liability claims are administered through a third -party administrator, with the City Attorney’s approval required for settlements over $15,000.
Litigated claims are settled directly through t he City Attorney’s Office. The City Council delegates (a) to the Risk Manager or his/her designee the authority to reject, allow, settle or compromise claims or actions against the City up to $15,000 and (b) to the City Manager and the City Attorney joint authority to allow, settle , or compromise claims or actions against the City up to $50,000 per claim or action . [A liability review committee established by the City Council, which consists of the City Attorney, the Risk Manager, the Chief Financial Officer, the Police Chief and representatives of departments and divisions with the highest instances of public liability or property damage claims, have been delegated the authority to settle or compromise claims or actions against the City greater than $50,000, and up to $75,000 per claim or action. A settlement of any claim or action requiring payment in excess of $75,000 must be presented to City Council.
The City’s excess general liability insurance premium for Fiscal Year 2020 -21, inclusive of brokerage fees, was $719,800 . During the past five -year period, the average claims filed each year for general liability amounted to 207 claims per year totaling $1,280,143 per year (an average of $6,172 per claim). In addition, there have been no insurance settlements that have exceeded the City’s insurance coverage for each of the past three years.
The total unpaid claims and claims adjustment expense liability (long-term obligations) recorded at June 30, 2021 was $6,344,805.
Workers’ Compensation
The City is self -insured for workers ’ compensation claims up to $1,000,000. For claims over $1,000,000, the City has purchase d excess workers ’ compensation insurance through the CSAC Excess Insurance Authority (CSAC -EIA), a California risk -sharing Joint Powers Authority . The claims are processed by a third-party administrator similar to general liability claims.
The City ’s premium for workers ’ compensation insurance coverage in F iscal Year 2020 -21 was $309,659.
Within the City ’s self-insured program for workers ’ compensation, there has been an average of 313 claims filed per year for the past five years, with an average of approx imately $ 4,688,681 per year in total 579
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reported losses (an average of $ 14,980 per claim). In addition, there have been no insurance settlements that have exceeded the City’s insurance coverage for each of the past three years.
The total unpaid claims and claims adjustment expense liability (long -term obliga tions) recorded at June 30, 2021 was $28,919,771. See ―SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Insurance‖ in the Official Statement for the requirement to maintain certain insurance coverage und er the Facility Lease.
[No significant reduction in insurance coverage occurred during the last two fiscal years.]
CITY FINANCIAL INFORMATION
Accounting and Financial Reporting
The basic financial statements of the City are prepared in conformity with acc ounting principles generally accepted in the United States of America (GAAP).
The City’s government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non -fiduciary activities of the City and its component units.
Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely, to a significant extent, on fees and charges for services. The statement of activities demonstrates the degree to which the direct expenses of a given function or segments are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requ irements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary f unds even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.
Governmental fund financial statements, such as the City ’s general fund (the ―General Fund ‖), are reported using the current financial resources measurement focus and the modified accrual basis of accounting.
Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 d ays of the end of the applicable fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Debt service expenditures, however, as well as expenditures related to compensated absences, and claims and judgments, are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long -term debt and acquisitions under capital leases are reported as other financing sources. Property taxes and taxpayer-assessed tax revenues, net of estimated refunds and uncollectible amounts, and interest associated with the applicable fiscal period are all considered subject to accrual and so have been recognized as revenues of the then -current fiscal period.
Expenditure driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met, and the amount is received during the period or within the availability period for this revenue so urce (within 60 days of year -end). All other revenue items are considered to be measurable and available only when cash is received by the government.
Budget Procedure, Current Budget and Historical Budget Information The City’s fiscal year begins on July 1 of each year and ends on June 30 of the subsequent year. The annual budget serves as the foundation for the City ’s financial planning and control. The City Council is required to adopt an annual budget resolution by July 1 of each fiscal year. The City Council also adopts annual 580
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financial plans for the enterprise and internal service funds and five -year capital budget plans for capital expenditures accounted for primarily in proprietary funds.
The City Manager and City staff review estimates of revenues and expenditures for each City department for the ensuing fiscal year. At least 30 days prior to the beginning of each fiscal year, the City Manager submits the proposed budget to the City Council. After reviewing and making such revisions as it deems advi sable, the City Council determines the time for the holding of a public meeting to discuss the proposed budget. At the conclusion of the public meeting, the City Council further considers the proposed budget and makes any revisi ons that it deems advisable. On or before June 30, the City Council adopts the budget with revisions, if any, by the affirmative vote of at least a majority of the members of the City Council.
The budget for fiscal year 2022-23 was approved on [June 7, 2022 ] (the ―Adopted Budget ‖). The Adopted Budget projects General Fund revenues to be approximately $ [208,195,175], an increase of approximately [4.3]% from the fiscal year 2021-22 adopted budget of approximately $199.5 million. The most significant revenue increases are approximately $3.2 million in property tax revenues and $4 million in sales tax revenue over the adopted budg et revenue for fiscal year 20 21-22. The Adopted Budget projects General Fund expenditures of approximately $ [216.1] million in fiscal year 2022 -23, an increase o f approximately [7.6]% from General Fund expenditures in the fiscal year 2021-22 adopted budget of approximately $[200.8] million.
In fiscal year 2020-21, the City’s General Fund was reduced by approximately $36.4 million due to the reimbursement of infrastructure use fees in connection with the related litigation. See Table 3, below, and ―ABSENCE OF LITIGATION – Infrastructure Use Fee Litigation‖ in the Official Statement. 581
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Set forth below is the adopted General Fund budget versus actual comparison for fiscal year 2020-21, with variance.
TABLE 1
CITY OF OXNARD
GENERAL FUND BUDGET VERSUS ACTUAL
FISCAL YEAR 2020-21
(in thousands)
Revenues
Taxes
Original
Budget
Final
Budget Actual
Variance
With Final
Budget
Positive
(Negative)
Property Taxes $ 61 ,114 $ 61 ,114 $ 61,260 $ 146
Sales Tax 43,094 43,094 67,923 24,830(1)
Transient Occupancy Tax 4,786 4,786 4,267 (519)
Business License Tax 5,905 5,905 5,965 60
Franchise Tax 3,844 3,844 3,905 61
Deed Transfer Tax 707 707 911 204
Licenses and Permits 2,668 3,021 3,968 947
Intergovernmental 2,116 2,116 6,172 4,056
Charges for Services 19,197 20,089 18,017 (2,072)
Fines and Forfeitures 2,933 2,933 1,852 (1,080)
Interest on Investments 473 473 348 (125)
Special Assessments 445 445 492 47
Miscellaneous 2,360 3,421 2,610 (811)
Total Revenues 149,640 151,946 177,690 25,745
Expenditures
Current
General Government 18,483 17,398 16,501 897
Public Safety 91,081 93,462 93,487 (25)
Transportation 6,712 6,952 6,151 801
Community Development 12,703 16,094 12,546 3,547
Culture, Leisure and Library Services 19,481 19,219 17,734 1,484 Capital Outlay 7,305 8,007 4,797 3,210
Debt Service
Principal 712 712 820 (108)
Interest and Fiscal Charges 534 509 502 8
Total Expenditures 157,011 162,353 152,539 9,814
Excess of Revenues Over/(Under)
Expenditures (7,371) (10,407) 25,152 35,559
Other Financing Sources/(Uses)
Reimbursement of IUF Fees - (5,000) (36,471) (31,471)
Transfer out golf course - - (1,236) (1,236)
Net Transfers (6,456) (6,783) (5,728) 1,055
Total Other Financing Sources/(Uses) (6,456) (11,783) (43,435) (31,653) Net Change in Fund Balance $ (13,827)
(13,82
7)
$ (22,190)
(22,19
0)
$ (18,284)
(18,28
4)
$ 3,906
(1) Increase primarily due to Measure E revenues.
Source: City’s Comprehensive Annual Financial Report for fiscal year ended June 30, 2021.
Set forth below is the adopted budget for fiscal year 2022-23 and the projected budgets for fiscal yea rs 2023-24 through 2026 -27. The following is solely an estimated forecast of General Fund revenues and expenditures of the City based upon current conditions in the City. The City cannot make any guarantees that such estimates will materialize as set forth below.
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TABLE 2
CITY OF OXNARD
GENERAL FUND BUDGET FORECAST
FISCAL YEARS 2022-23 through 2026-27(1)
GENERAL FUND Budgeted
2022-23
Projected
2023-24
Projected
2024-25
Projected
2025-26
Projected
2026-27
Revenues:
Property Tax(2) $ 66,734,379 $ 68,069,067 $ 70,111,139 $ 72,214,473 $ 73,658,762 Sales Tax – Measure E(3) 55,061,000 57,043,196 59,039,708 61,047,058 63,122,658 Sales Tax(3) 40,602,752 42,064,451 43,536,707 45,016,955 46,547,531 Franchises(6) 4,171,695 4,213,412 4,255,546 4,298,101 4,341,082 Business License Tax(4) 6,719,875 6,787,074 6,854,945 6,923,494 6,992,729 Transient Occupancy Tax(5) 5,602,162 5,658,184 5,714,766 5,771,914 5,829,633 Deed Transfer Tax(6) 985,175 995,027 1,004,977 1,015,027 1,025,177 Building Fees & Permits(6) 1,751,284 1,768,797 1,786,485 1,804,350 1,822,394 Intergovernmental 2,465,849 2,515,166 2,565,469 2,616,778 2,669,114 Service Fees & Charges(6) 6,891,170 6,960,082 7,029,683 7,099,980 7,170,980 Fines & Forfeitures(6) 2,608,294 2,634,377 2,660,721 2,687,328 2,714,201 Indirect Cost Reimbursement 8,283,085 8,531,578 8,787,525 9,051,151 9,322,686 Interest Income 896,078 896,078 896,078 896,078 896,078 Transfers In-Other Income 2,013,671 2,013,671 2,013,671 2,013,671 2,013,671 Other Revenue 3,204,820 3,204,820 3,204,820 3,204,820 3,204,820 Special Assessments 203,886 207,964 212,123 216,365 220,692 Total Revenue $ 208,195,175 $213,562,944 $219,674,363 $225,877,543 $ 231,552,208 Expenditures:
Regular Salaries(7) $ 73,051,982 $ 75,243,541 $ 79,233,347 $ 81,610,347 $ 84,058,657 Part-time Wages 1,833,700 1,833,700 1,833,700 1,833,700 1,833,700 Overtime 8,129,947 8,129,947 8,129,947 8,129,947 8,129,947 Pension (CaIPERS+PARS)(8) 18,355,350 18,580,738 19,607,279 19,169,926 19,119,314 Health/Insurance/Benefits 20,825,449 21,450,212 22,093,718 22,756,530 23,439,226 Retiree Medical 2,101,359 2,143,386 2,186,254 2,229,979 2,274,579 Workers Comp/Safety Program 6,630,346 6,762,953 6,898,212 7,036,176 7,176,900 Other Personnel Costs 99,458 101,447 103,476 105,546 107,657 Vacancy Savings(9) (6,166,588) (7,759,253) (8,116,896) (8,355,229) (8,600,609) Subtotal Personnel $124,861,003 $ 126,486,671 $ 131,969,038 $134,516,922 $137,539,371 Services & Supplies(10) $ 20,339,108 $ 20,745,890 $ 21,903,308 $ 22,341,374 $ 22,788,201 Internal Service 20,614,377 21,232,808 21,869,792 22,525,886 23,201,663 Utilities(10) 4,499,605 4,589,597 4,681,389 4,775,017 4,870,517 Animal Shelter 2,156,159 2,263,967 2,377,165 2,496,023 2,620,824 Other Expense(10) 2,284,516 2,330,206 2,376,810 2,424,346 2,472,833 Debt Service(11) (14) 1,875,689 1,875,688 1,875,688 - - Lease Pymt Cap Growth Fees 1,013,749 1,004,616 988,611 973,881 962,295 Capital Outlay(13) 528,000 538,560 549,331 560,318 571,524 Transfers Out-Assess Dists 197,407 197,407 197,407 197,407 197,407 Transfers Out-Grants 50,138 50,138 50,138 50,138 50,138 Transfers Out-Debt Service (12) (14) 6,826,178 10,855,102 11,928,104 11,515,976 12,506,183 Transfers Out-Storm Water 1,716,778 1,751,114 1,786,136 1,821,859 1,858,296 Transfers Out-Capital Outlay 12,849,377 8,515,865 7,815,865 6,965,865 5,300,000 Transfers Out-ISF/OPD Training 132,935 132,935 132,935 132,935 132,935 Infrastructure Use Fee Repayment 10,000,000 9,500,000 - - - Contingencies 6,184,628 9,992,645 8,203,174 10,965,604 10,894,294 Total Expenditures $216,129,647 $222,063,209 $218,704,891 $ 222,263,551 $225,966,481 Net Revenue (Deficit) $ 7,934,472) $ (8,500,265) $ 969,472 $ 3,613,991 $ 5,585,727 Beginning Fund Balance 40,896,706 32,962,234 24,461,969 25,431,441 29,045,432 Ending Fund Balance $32,962,234 $24,461,969 $25,431,441 $29,045,432 $34,631,159 Unassigned Balance as % of Total Exp 15.3% 11.0% 11.6% 13.1% 15.3% ________________________
(1) The following footnotes 2-13 set forth the underlying assumptions for the General Fund forecast presented in this table. (2) Property Tax revenue projections incorporate property tax consultant's projection of approximately 2% to 3% annual grow th based on combined effects of inflation adjustment allowed annually by Proposition 13; Proposition 8 revaluations; new construction; and property ownership changes . (3) Sales Tax revenue projections for Bradley Burns base (1%) and Measure E (1.5%) incorporate sales tax consultant's projection of annual growth from FY 2023‐24 onward, atop a base forecast by staff for current and budget year, incorporating results year‐to‐date, national con sumer spending data, and short‐ term consensus economic forecast for U.S. economy.
(4) Business License Tax projections assume leveling out at 1% annual growth. (5) Transient Occupancy Tax (TOT) projections assume 1% annual growth after FY 2022‐23. (6) Other Revenues / Fees projections assume 1% annual growth (7) Regular Salaries assumed to grow 3% annually from combined step and COLA increases.. (8) Pension Costs reflect projections by CalPERS and MassMutual (for PARS) of future payments for unfunded accrued liabilities, a nd normal cost contribution rate changes. An additional $15,749,860 of public safety pension costs in FY 2022‐23 will be paid from the proceeds of the public safety property tax approved by Oxnard voters in 1951. (9) Vacancy Savings assumption of 6 % for FY 2022‐23 and 7.5% for subsequent years. (10) Non‐personnel costs including Services & Supplies assumed to grow 2% annually. (11) Debt Service drops by $1.9 million in FY 2025‐26 after the 2015 loan from the Measure O Fund to the General Fund is fully ret ired in FY 2024‐25. (12) Transfers Out‐Debt Service increases from FY 2022‐23 base year as follows: FY 2023‐24 $4.2 million, FY 2024‐25 $5.2 million, FY 2025‐26 $4.8 million, an d FY 2026‐27 $5.8 million to reflect estimated additional debt service for planned Capital Improvement Proacts, Aquatic Center, Senior Center and Fire Station Replacements. (13) Capital Outlay includes Capital Improvement Program (CIP) for FY 2022‐23, and projected CIP for subsequent years based on 20 22‐27 Five Year Capital Improvement Program. (14) Does not account for the Bonds.
Source: Adopted Budget of the City for fiscal year 2022-23. 583
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Comparative Change in Fund Balance of the City General Fund The table below presents the City ’s audited General Fund Statement of Revenues, Expenditures and Change in Fund Balance for fiscal years 2017-18 through 2020-21 and estimated actuals for fiscal year 2021-22.
TABLE 3
CITY OF OXNARD
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GENERAL FUND GROUP
FISCAL YEARS 2017-18 THROUGH 2021-22
2017-18 2018-19 2019-20 2020-21 2021-22(6)
REVENUES(1)
Taxes $112,368,183 $120,903,292 $118,930,205 $144,231,483(5) [__] Licenses and permits 2,524,505 3,007,750 2,777,998 3,967,887 Intergovernmental 1,908,513 2,259,907 1,769,163 6,172,234 Charges for Services 19,345,462 20,895,034 22,658,976 18,016,882 Fines and Forfeitures 2,367,166 2,368,800 3,282,319 1,852,220 Interest on Investments 383,016 1,847,513 776,023 347,612 Special Assessments 536,113 528,790 493,497 492,244
Miscellaneous 5,244,292 7,664,832 4,500,462 2,609,806 Total Revenues $144,677,250 $159,475,918 $155,188,643 $177,690,368 EXPENDITURES(2)
Current:
General Government $ 17,635,849 $ 17,251,171 $ 21,354,077 $ 16,501,005 Public Safety 82,483,021 86,529,178 92,090,922 93,487,162 Transportation 6,176,942 5,519,634 5,795,027 6,150,873
Community Development 10,606,545 11,385,339 12,115,326 12,546,149 Culture and Leisure 18,914,570 19,968,684 - -
Library Services 3,311,739 3,196,990 - -
Culture, Leisure and Libraries(3) 21,407,281 17,734,480 Capital Outlay 2,826,991 5,417,773 1,038,678 4,797,421
Debt Service:
Principal 715,000 745,000 780,000 820,000
Interest and Fiscal Charges 608,242 574,539 567,706 501,535 Total Expenditures $143,278,899 $150,588,308 $155,149,017 $152,538,625 Excess of Revenues Over (Under)
Expenditures
$ 1,398,351 $ 8,887,610 $ 39,626 $ 25,151,743
OTHER FINANCING SOURCES
(USES)
Reimbursement of IUF Fees(4) - - - (36,470,697)(4)
Transfer to Golf Course Fund - - - (1,236,347)
Transfers In 4,801,088 4,240,137 5,614,357 1,609,003
Transfers Out (12,005,796) (11,355,702) (11,217,411) (7,337,227) Total Other Financing Sources (Uses) $ (7,204,708) $ (7,115,565) $ (5,603,054) $ (43,435,268) Net Change in Fund Balances (5,806,357) 1,772,045 (5,563,428) (18,283,525) Fund Balances, July 1 46,268,790 40,462,433 42,234,478 38,340,504 Prior Period Adjustment - - 1,669,454 (208,913) Fund Balances, June 30 $ 40,462,433 $ 42,234,478 $ 38,340,504 $ 19,848,066 ________________________
(1) Revenues of the street maintenance and pension override tax funds are not legally available to pay debt service on the Bonds. Those amounts are $[__]. (2) Expenditures from the street maintenance and pension override tax funds are [__]. (3) Beginning in fiscal year 2019-20, the expenditures previously listed as separate line items ―Culture and Leisure‖ and ―Library Services‖ were combined into one line item for purposes of the City’s audits.
(4) Related to Infrastructure Use Fee Litigation.
(5) Increase from previous year primarily due to Measure E Revenues. (6) Estimated.
Source: City of Oxnard Comprehensive Annual Financial Reports for Fiscal Years Ended June 30, 2018-2021 and the City. 584
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Comparative General Fund Group Balance Sheets of the City The table below presents the City ’s audited General Fund Group Balance Sheets for fiscal years 2017- 18 through 2020-21 and estimated actuals for fiscal year 2021-22.
TABLE 4
CITY OF OXNARD
GENERAL FUND GROUP BALANCE SHEETS
FIVE YEAR COMPARISON
FISCAL YEARS 2017-18 THROUGH 2021-22
2017-18 2018-19 2019-20 2020-21 2021-22(2)
ASSETS(1)
Cash and cash equivalents $35,830,461 $42,276,708 $36,762,494 $39,912,571 [__] Accounts and other receivables 3,643,938 3,241,621 3,379,987 3,511,338 Due from other funds 5,878,372 5,921,153 8,869,987 8,150,400 Due from other government 8,821,609 10,640,180 9,852,706 24,477,137 Due from Successor Agency 8,809 297,915 534,539 182,760 Other assets 377,086 377,045 438,539 -
Total Assets $54,560,275 $62,754,622 $59,8838,252 $76,234,206
LIABILITIES AND DEFERRED
INFLOWS OF RESOURCES
Liabilities:
Accounts payable $ 3,439,160 $ 6,080,193 $4,464,768 $6,357,719 Other liabilities 6,457,069 11,322,272 13,873,239 15,968,284 Due to other funds 3,211,474 2,113,680 2,098,537 14,371,920 Due to other agencies 3,381 - - -
Advances from other funds 984,753 856,237 723,865 19,470,697 Unearned revenues 2,005 140,812 337,339 217,520 Total Liabilities $14,097,842 $20,513,194 $21,497,748 $56,386,140
DEFERRED INFLOWS OF
RESOURCES
Deferred inflow on receivables and
loans
- 6,950 - -
Total Deferred Inflows of Resources - $6,950 - -
FUND BALANCES
Restricted for:
Debt service - - - -
Transportation Systems - - - -
Maintenance Districts - - - -
Streets and Traffic
improvements/maintenance
10,558,537 10,402,918 - -
Infrastructure developments - - - -
Housing - - - -
Culture and Leisure - 125,065 - -
Public safety - - - -
Grants - - - -
Committed to:
Measure ―O‖ eligible services - 22,560,234 18,020,835 18,314,275 General Plan Maintenance - - 1,127,968 -
Streets and Traffic
Improvements/Maintenance
- - 13,917,604 4,582,215
Assigned to:
Capital Projects - - - -
Measure ―O‖ Service Enhancement 12,662,261 - - -
Other Purposes - 282,831 - -
Unassigned 17,241,635 8,863,430 5,274,097 (3,048,424) Total Fund Balances $40,462,433 $42,234,478 $38,340,504 $19,848,066 Total Liabilities and Fund Balances $54,560,275 $62,754,622 $59,838,252 $76,234,206 ________________________
(1) Includes assets attributable to the street maintenance and pension override tax funds, revenues of which are not pledged towa rds the repayment of the Bonds.
(2) Estimated.
Source: City of Oxnard Comprehensive Annual Financial Reports for fiscal years ended June 30, 2018-2021 and the City. 585
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Major Revenues
The City’s General Fund derives its revenues from a variety of sources including ad valorem property taxes, sales taxes, transient occupancy tax , business licenses, franchise tax, and other miscellaneous revenues.
The City ’s total General Fund revenues for sel ected major revenue sources for fiscal years 2016-17 through 2020-21 and an estimate for fiscal year 2021-22 are set forth below.
TABLE 5
CITY OF OXNARD
GENERAL FUND
SELECTED MAJOR REVENUE SOURCES
FISCAL YEARS 2016-17 THROUGH 2021-22
Fiscal
Year
Property
Tax
Sales
Tax(2)
Business
License
Transient
Occupancy
Tax
Franchise
Tax
2016-17 50,886,499 29,918,706 5,348,086 5,174,427 3,238,967 2017-18 53,262,254 29,665,172 5,570,488 5,749,572 3,548,671 2018-19 56,463,690 33,330,921 6,167,473 5,557,471 3,503,323 2019-20 57,148,892 31,958,692 6,087,059 4,302,489 3,597,507 2020-21 61,260,102 50,519,062 5,964,716 4,267,463 3,904,884 2021-22(1) [__]
________________________
(1) Estimated
(2) Does not include Measure O sales tax revenues; includes Measure E revenues.
Source: The City.
Property Taxes
Property taxes have historically provided the largest tax revenue source for the City. In fiscal year 2020- 21, property taxes allocated to the General Fund were approximately $61,260,000, providing 42% of General Fund tax revenues and approximately 34% of total General Fund revenues . In California, property 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 levied on unsecured property does not become a lien against the taxed unsecured property, but 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 valuation of property is determined as of January 1 each year, and installments of taxes levied upon secured property become delinquent on the f ollowing December 10th and April 10th of the subsequent calendar year. Taxes on unsecured property are due July 1, and become delinquent August 31.
Secured and unsecured properties are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The exclusive means of forcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the property secu ring the taxes for the amount of taxes that are delinquent. The taxing authority has four methods of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifyin g certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Recorder’s Office in order to obtain a lien on certain property of the taxpayer, and (4) seizure and sa le of personal property, improvement or possessory interest belonging or taxable to the assessee.
A ten percent 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. Such property may thereafter be redeemed by the payment of the delinquent taxes and the ten percent penalty, pl us interest at the rate of 1.5 % per mont h to the time of 586
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redemption. If taxes are unpaid for a period of five years or more, the property is subject to sale by the county tax collector. A ten percent penalty also applies to the delinquent taxes or property on the unsecured roll, and further, an additional penalty of 1.5 % per month accrues with respect to such taxes beginning on the varying dates related to the tax billing date.
Legislation enacted in 1984 (Section 75 et seq . of the Revenue and Taxation Code of the State of California), provides for the supplemental assignment and taxation of property as of the occurrence of a change in ownership or completion of new construction. Previously, statutes enabled the assessment of such changes only as of the next tax lien date following the change and thus delayed the realization of increased property taxes from the new assessment for up to 14 months. 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, with the exception of tax bills dated January 1 through May 31, which are calculated on the basis of the remainder of the current fiscal year and the full 12 months of the next fiscal year.
In the past, the State Legislature has shifted property taxes from cities, counties, and special districts to the Educational Revenue Augmentation Fund. The term ―ERAF‖ is often used as a shorthand reference for this shift of property taxes. In 1992-93 and 1993-94, 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. The 2004 -05 State budget included an additional $1.3 billion shift of property taxes from certain local agencies, including the City, to occur in fiscal years 2004 -05 and 2005 -06. See ―CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS — Proposition 1A‖ and ―— Proposition 22‖ for a description of certain li mitations on the State’s authority over local government revenue sources.
See ―— Retirement System — Public Safety Pension Tax Override‖ below for a description of a voter - approved tax for purposes of paying certain costs of safety-employees retirement benefit costs.
Certain counties in the State operate under a statutory program entitled Alternate Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the ―Teeter Plan‖). Under the Teeter Plan local taxing entities receive 100% of their tax levies net of delinquencies, but do not receive interest or penalties on delinquent taxes collected by the county. The County has not adopted the Teeter Plan, and consequently the Teeter Plan is not available to local taxing entities within the C ounty, such as the City. The City ’s receipt of property taxes is therefore subject to delinquencies and the County will pay to the City only actual amounts collected.
The table below sets forth the assessed valuations for all taxable property in the City for the fiscal years 2018-19 through 2022-23.
TABLE 6
CITY OF OXNARD
ASSESSED VALUATIONS OF ALL TAXABLE PROPERTY
FISCAL YEARS 2018-19 THROUGH 2022-23
Fiscal
Year Local Secured Utility Unsecured Total % Change
2018-19 $19,227,897,221 $ 49,064,549 $1,028,490,621 $ 20,305,452,391 - 2019-20 20,067,694,458 21,500,824 1,131,341,172 21,220,536,454 4.51% 2020-21 20,905,531,441 60,058,159 1,113,997,800 22,079,587,400 4.05 2021-22 21,735,425,737 240,057,529 1,147,328,892 23,122,812,158 4.72 2022-23 23,471,037,311 46,450,803 1,222,931,508 24,740,419,622 7.00 ___________________________
Source: California Municipal Statistics, Inc.
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The table below sets forth secured property tax collections and delinquencies in the City as of June 30 , 2021 for the previous five fiscal years . The City ’s receipt of its property tax revenues is impacted by delinquencies in payment, as well as by the collection of interest and penalties on past delinquencies.
TABLE 7
CITY OF OXNARD
PROPERTY TAX LEVIES AND COLLECTIONS
FISCAL YEARS 2016-17 THROUGH 2020-21
Collected within the
Fiscal Year of the Levy
Collections
in Subsequent
Years
Total Collections to Date
Year
Ended
June 30
Total Tax
Levy for
Fiscal Year(1)* Amount(2)*
Percentage
of Levy Amount
Percentage
of Levy
2017 61,751,329 58,086,482 94.07% 1,523,414 59,609,896 96.53% 2018 68,260,701 65,473,266 95.92 903,482 66,376,748 97.24 2019 71,278,856 68,423,547 95.99 1,290,711 69,714,258 97.80 2020 73,286,724 71,206,672 97.16 1,175,364 72,382,036 98.77 2021 82,559,732 77,736,649 94.16 1,714,499 79,451,148 96.23
(1) Sourced from the City of Oxnard Finance Department
(2) Sourced from the County of Ventura
* Correction – Property tax levy and collection amounts include secured and unsecured property taxes, property tax in lieu of vehicle license fee (VLP), public safety property tax and distributions from the Redevelopment Property Tax Trust Fund (RPTTF), and exclude special assessments.
Source: Unaudited Schedule IX of City of Oxnard Comprehensive Annual F inancial Report for Fiscal Year ended June 30, 2021.
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The top ten property taxpayers in the City for fiscal year 2020-21 are shown in the below table.
TABLE 8
CITY OF OXNARD
TOP TEN PROPERTY TAXPAYERS
FISCAL YEAR 2020-21
Property Owner Land Use
Taxable Assessed
Value
Percentage
of Total Taxable
Assessed Value
1. Procter & Gamble Paper Products Manufacturing $ 316,482,826 1.43%
2. Essex Arbors LP Apartments 227,354,461 1.03
3. SOCM I LLC Real Estate 133,606,603 0.60
4. Serenade Apts Properties Owner LLC Apartments 116,088,168 0.53
5. HAAS Automation Inc. [Manufacturing] 111,346,900 0.50
6. G I IX Esplanade Property Real Estate 96,890,957 0.44
7. California Resources Petroleum(1) Petroleum 85,501,514 0.39
8. New-Indy Oxnard LLC Manufacturing 83,281,530 0.38
9. 450 Forest Park Apartments LLC Apartments 78,628,740 0.36
10. Duesenberg Investment Company Real Estate 78,242,020 0.35 Top Ten Total $ 932,698,873 6.01%
City Total Taxable Assessed Value $22,088,200,428 100.00%
(1) Pending appeals on parcels.
Source: HdL Coren & Cone , as shown in unaudited Schedule VIII of the City’s Comprehensive Annual Financial Report for fiscal year ended June 30, 2021.
Sales Taxes
[In fiscal year 2020-21, sales tax receipts were approximately $67,923,000, providing approximately 47% of General Fund tax revenues and approximately 38% of total General Fund revenues. Pursuant to the City’s Adopted Budget for fiscal year 2022 -23, sales tax receipts (including Measure E revenues) are projected to be $[___], providing approximately [__]% of projected General Fund tax revenues and approximately 45.9% of total General Fund revenues for fiscal year 2022-23.] Sale tax receipts for fiscal year 2020-21 increased by approximately $21.6 million over fiscal year 2019- 20 year-end results. The City attributes this increase to increased sales tax revenues from Measure ―E,‖ which imposed a 1.5 cent local transaction and use tax (see below), and stronger sales drive n by federal stimulus and less than anticipated COVID-19 impact.
In November 2008, City voters approved a one -half cent sales tax increase known as ―Measure O .‖ Collection of Measure O sales taxes began in April 2009 and will sunset in 2029. Measure O sale s taxes represent a general purpose tax, and the City ’s policy is to use additional revenue generated from Measure O sales taxes to improve services to the community by adding and improving City facilities and programs.
Measure O sales tax revenues have strengthened the City’s cash and fund balance positions, growing from $8.9 million in Fiscal Year 2009-10 to $[__] million estimated in Fiscal Year 2021-22. Measure O sales tax revenues are held in a separate fund which is within the General Fund group of f unds. Measure O sales tax revenue is already incorporated in the sales tax revenue figures used above. 589
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A petition was circulated to place an initiative on the November 3, 2020 ballot providing for the early termination of Measure O if the City does not meet certain specific pavement standards for city streets and alleys. The measure provides that if the network of streets and alleys owned by the City do es not meet the following Pavement Condit ion Index (PCI) criterion , based on a numerical scale from 0 to 100, Measure O would expire on the dates set forth below:
Date of Compliance PCI Criterion Date of Termination of Measure O 9/30/2022 65 3/31/2023
9/30/2024 70 3/31/2025
9/30/2026 75 3/31/2027
9/30/2028 80 3/31/2029
The petition gained enough signatures and , after the results of pre -election litigation, was placed on the November 3, 2020 ballot as Measure ―N.‖ Measure ―N‖ was passed by the City’s voters . The City’s finances would be affected if and only if the pavement condition standards cited above are not met for the City -owned street and alley network by the specific dates of compliance. In the most extreme case, the approximately $15 million annual revenue to the Measure ―O‖ (Half-Cent Sales Tax) Fund would cease six (6) years prior to its currently scheduled expiration date of March 31, 2029. In such case, the City, upon approval of the City Council, would need to offset several expenditures currently funded by Measure ―O,‖ including terminating certain capital improvement and maintenance projects. Conversely, if the Citywide pavement conditions are met on the various trigger dates, then Measure ―N‖ would have no effect on the Measure ―O‖ (Half-Cent) Sales Tax Fund and the City’s finances. Additionally, Measure ―N‖ permits the City Council to extend the half -cent sales tax for additional five (5) year periods beyond the currently scheduled termination date of March 31, 2029 if a third party civil engineering consultant find s that the PCI for the City -owned street and alley network is at least 80 by April 1, 2028.
At the November 3, 2020 election, the City’s voters approved Measure ―E,‖ the ―City of Oxnard 911 Safety, Medical Response, Financial Recovery, and Accountability M easure,‖ which imposes a 1.5 cent local transaction and use tax (sales tax) within the City. All proceeds of the tax go to the City’s General Fund and are available for any municipal purpose. The new City -wide tax rate became effective on April 1, 2021. The Measure ―E‖ tax generated $12.6 million in additional General Fund revenue in fiscal year 2020 -21, and is projected to generate $51.9 million in fiscal year 2021 -22. [CONFIRM WITH CITY IF POLICY EXISTS REGARDING USE OF MEASURE E REVENUES]
The following table shows historical sales tax revenues from Fiscal Years 2009-10 through 2020-21.
Fiscal Year
Ended June 1
Measure O
Sales Tax
Revenues
Measure E
Sales Tax
Revenues
All Other
Sales Tax
Revenues
Total
Sales Tax
Revenues
2010 $ 8,908,667 $ - $19,194,384 $28,103,051
2011 11,161,453 - 22,235,284 33,396,737
2012 13,268,841 - 24,184,283 37,453,124
2013 10,091,602 - 25,064,411 35,156,013
2014 12,509,580 - 25,777,859 38,287,439
2015 13,398,405 - 27,385,772 40,624,737
2016 13,225,990 - 29,937,421 43,163,411
2017 14,174,002 - 29,918,706 44,092,707
2018 13,753,704 - 29,665,172 43,418,876
2019 15,187,731 - 33,330,921 48,518,650
2020 14,361,723 - 31,958,692 46,320,415
2021(1) 17,404,321 12,558,360 37,960,702 67,923,383
(1) Measure E sales tax revenue receipts reflection April – July 2021 receipts.
Source: The City.
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Pension Override Tax
The City collects a tax dedicated to paying fire and police safety employee pension costs in the California Public Employees Retirement System (PERS) which was approved by voters in 1951 . This tax is referred to as the ―Carman Override‖ based upon the California Supreme Court case Carman v. Alvord in which the Court ruled that voter approved pension costs constituted debt that could be supported by a tax levy in excess of the 1% maximum allowed by Proposition 13 (California Constitution, Article XIIIA). The tax can finance pension benefits in effect on July 1, 197 8. There is no sunset on such t ax. Each year, the City determines the amount of eligible costs that can be covered by the Carman Override. The City is also limited by a maximum tax rate of $0.076637 per $100 of assessed valuation. The City’s current tax rate for the Carman Override is $ [___] per $100 of assessed valuation. The City’s Adop ted Budget forecasts collecting $[__] of Carman Override revenues, representing [__]% of the total expected safety plan PERS costs of $[__].
Transient Occupancy Tax
A transient occupancy tax is imposed on persons staying thirty (30) days or less in a hotel, motel, inn or other lodging place within the City. There are currently [17 hotels, 52 vacation rentals , and one recreational vehicle park] within the City and subject to the transient occupancy tax . [The City anticipates the addition of two hotels which are currently under construction .] The current transient occupancy tax rate is [10]% of the room rate. There is no sunset on the transient occupancy tax. Payments are made to the City on a monthly basis and are deposited to the City ’s General Fund. In fiscal year 2020-21, transient occupancy tax receipts were $4,267,463, providing approximately 2.95% of General Fund tax revenues and approximately 2.4% of total General Fund revenues. [Based on unaudited estimated results, fiscal year 2021-22 transient occupancy tax receipts of approximately $[___] are expected to contribute approximately [__]% of General Fund tax revenues and approximately [__]% of total General Fund revenues.] The City’s Adopted Budget forecasts approximately $5,602,162 in transient occupancy tax receipts in fiscal year 2022-23.
Other Taxes and Fees
The City collects other taxes and fees which provide a smaller source of revenue for the General Fund.
Such taxes and fees include, but are not limited to franchise taxes, property transfer taxes, business licenses and penalties and interests.
State of California Motor Vehicle In-Lieu Payments
The City also received a portion of Department of Motor Vehicles license fees ( ―VLF‖) collected Statewide. Fifteen years ago, the St atewide VLF was reduced by approximately two -thirds. The Stat, however, continued to remit to cities and counties the same amount that those local agencies would have received if the VLF had not been reduced, known as the ―VLF backfill.‖ The State VLF back fill was phased out, and as of Fiscal Year 2011 -12 all of the VLF is now received through an in -lieu payment from State property tax revenues.
Long-Term Liabilities
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The City has numerous long term liabilities which are described in detail in APPENDIX C — ―AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2021.‖ The following table summarizes the City’s changes in long-term debt and liabilities as of June 30, 2021 , excluding business activities not paid by the General Fund . The tabl e below does not include long -term liabilities related to pension or post -employment benefit plans. See ―— Retirement System‖ and ―Other Post- Employment Benefits‖ below. The table below does not include long-term liabilities related to the City’s Water Fund, Wastewater Fund, Environmental Resources Fund, or of the Oxnard Housing Authority Fund. See APPENDIX C — ―AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2021— Note II, G.‖
TABLE 9
CITY OF OXNARD
LONG-TERM LIABILITIES
FISCAL YEAR 2020-21
GOVERNMENTAL ACTIVITIES:
Balance
(July 1, 2020) Additions Reductions
Balance
(June 30, 2021)
Due Within
One Year
Lease Revenue Bonds
Lease Revenue Project and Refunding Bonds,
Series 2014(3)
$11,835,000 - $(1,075,000) 10,760,000 $1,125,000
Lease Revenue Refunding Bonds,
Series 2018
25,140,000 - (1,390,000) 23,750,000 1,430,000
Lease Revenue Refunding Bonds,
Series 2019A
27,030,000 - (665,000) 26,365,000 710,000
Unamortized premiums 5,577,438 - (297,927) 5,279,511 -
Unamortized discounts (21,212) - 1,015 (20,197) -
Revenue Bonds
Gas Tax Revenue Refunding Bonds,
Series 2020
16,905,000 - (665,000) 16,240,000 710,000
Unamortized discounts 2,897,310 - (11,026) 2,886,284 -
Capital Leases
B of A Capital Lease 2009(1)
2009 CIP lease purchase, draw #10
61,639 - (61,639) - -
B of A Capital Lease 2018,
Draw #21 & #22
3,454,885 - (841,226) 2,613,659 837,961
2012 Lease Purchase(2) 2,968,737 - (327,974) 2,640,763 337,247 2014 Lease Purchase - Fire Station 8 11,366,695 - (820,000) 10,546,695 850,000 TOTAL GOVERNMENTAL ACTIVITIES $107,215,492 - $(6,153,777) $101,061,715 $6,000,208 _________________________
(1) 2009 CIP lease purchase consisted of multiple schedules based on draw requests. (2) To be refunded by the Series 2022A Bonds.
(3) To be refunded by the Series 2022B Bonds.
Source: City of Oxnard Comprehensive Annual Financial Report for fiscal year ended June 30, 2021.
Since June 30, 2021, the City has incurred the following lon g-term obligations payable from the General Fund (does not include long -term liabilities related to the City’s Water Fund, Wastewater Fund, Environmental Resources Fund, or of the Oxnard Housing Authority Fund):
2021 Equipment Lease (Environmental Services Divisi on – refuse collection and transfer vehicles financing) which was delivered in the principal amount of $10,255,000 on October 26, 2021. The 2021 Equipment Lease is a tax -exempt obligation with an interest rate of 1.4549% and a final maturity date of June 1, 2028. The 2021 Equipment Lease is currently outstanding in the amount of $[8,801,431].
2022 Equipment Lease (Fire Department vehicles) which was delivered on April 7, 2022 in the principal amount of $3,300,000. The 2022 Equipment Lease is a tax -exempt obligation with an interest rate of 2.29% and a final maturity date of December 1, 2031. The 2022 Equipment Lease is currently outstanding in the amount of $[____].
Retirement System
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City’s Pension Plans. The City provides pension benefits to its employees through four defined benefit plans: CalPERS Miscellaneous Plan, CalPERS Police Plan, CalPERS Fire, and the Retirement Enhancement Plan. For the year ended June 30, 2021, pension expense for all plans totaled $53,023,507.
CalPERS. The City contr ibutes to the California Public Employees Retirement System ( ―PERS‖), a multiple-employer, public employee defined benefit plan, which acts as a common investment and administrative agent for participating public entities within the State. The City ’s membership is reported within three plans classified into two categories: safety members (police and fire) and miscellaneous members (all other regular employees).
PERS issues a separate comprehensive annual financial report, and annual actuarial reports for t he City’s retirement plans. Copies of PERS ’ annual financial report may be obtained from their executive office at 400 ―P‖ Street, Sacramento, California 95814, or at their website at http://www.calpers.ca.gov. The foregoing reference to an internet websit e is made for reference and convenience only; the information contained within the website has not been reviewed by the City or the Authority and is not incorporated in this Official Statement by reference.
All City personnel are eligible to participate in PERS, becoming vested after five years of service.
Monthly retirement benefits are payable for life in an amount equal to a specified percentage as follows:
Miscellaneous Employees 2% at age 55 (hire date prior to January 1, 2013) 2% at age 62 (hire date on or after January 1, 2013)
Police Employees 3% at age 50 (hire date prior to January 1, 2013)
2.7% at age 57 (hire date prior to January 1, 2013)
Fire Employees 3% at 50 (hire date prior to January 1, 2013)
2.7% at age 57 (hire date prior to January 1, 2013)
For employees hired on or before December 31, 2012 ( ―classic‖ employees), the benefits are calculated at the highest consecutive 12 months for miscellaneous employees and safety employees multiplied by a total number of years employed. For new (PEPRA) members, hired January 1, 2013 or later, final compensation is the average annual pensionable compensation for a 36-consecutive-month period of employment.
For employees hired on or before December 31, 2012, required employee contributions to PERS are 7% of compensation for miscellaneous employees and 9% of compensatio n for safety employees, which the City currently pays for regular employees. Under the California Public Employees ’ Pension Reform Act of 2013 (PEPRA), for new employees hired on or after January 1, 2013, the required employee contributions to PERS are 6.00% of compensation for miscellaneous employees, 13.75% of compensation for safety police employees, and 12.25% of compensation for safety fire employees. The City is required to contribute the remaining amounts necessary to fund the benefits for its member s, using the actuarial basis recommended by the PERS actuaries and actuarial consultants and adopted by the PERS Board of Administration. The City does not provide contributions to any portion of the required employee contributions.
PERS uses a modificati on of the entry age normal actuarial cost method, which is a projected benefit cost method. That is, it takes into account those benefits that are expected to be earned in the future as well as those already accrued.
The City’s total contributions to PERS for the fiscal years ended June 30, 2019, 2020, and 2021 were $30,242,219 , $34,811,449 and $36,544,053, respectively. Contribution rates for each participating employer are determined based on the benefit structure established.
[Currently, a significant portion of the contribution requirements for police and fire are funded with a voter-approved property tax override. [The maximum property tax rate is $0.076637 per $100 of assessed values within the City] (except a portion of land annexed to the City in 1 969). For Fiscal Year 2022-23, the estimated 593
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normal cost for police employees is $7,048,393 and the estimated minimum unfunded actuarial liability payment is approximately $ 8,174,228. For Fiscal Year 2022 -23, t he estimated normal cost for fire employees is $2,487,529 and the estimated minimum unfunded actuarial liability payment is approximately $5,374,991. For Fiscal Year 2022 -23, t he estimated normal cost for PEPRA fire employees is $463,760 and the estimated minimum unfunded actuarial liability payment is approximately $22,960. For Fiscal Year 2022-23, the property tax override is expected to generate approximately $[__] million.] The funded status of each p lan as of June 30, 2020 , on an actuarial value of assets basis i s as follows (dollar amounts in thousands):
Market Value
of Assets
(MVA)
Actuarial
Accrued
Liability (AAL)
Unfunded
AAL (UAAL)
Funded Ratio
(MVA / AAL)
Covered
Payroll
Police $310,126,232 $419,224,349 $109,098,117 74.0% $25,600,769 Fire 115,788,683 176,577,564 60,788,881 65.6 8,943,441 Fire PEPRA 3,105,569 3,472,355 366,786 89.4 3,129,659
Miscellaneous 376,483,366 529,151,648 152,668,282 71.1 55,032,327
Source: CalPERS Actuarial Reports for each plan dated July 2021.
The projections below assume that all actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. Actuarial contribution rates during this project period could be significantly higher or lower than the projection shown below. The projected normal cost percentages in the projections below reflect that the normal cost will continue to decline over time as new employees are hired into PEPRA or other lower cost benefit tiers.
The projected rates for each plan as of June 30, 2020, the most recent actuarial valuation, are as follows:
Projected Future Employer Contribution Rates
2022-23 2023-24 2024-25 2025-26 2026-27 2027-28
Police 25.38% 24.7% 24.1% 23.4% 22.8% 22.2%
Fire 25.64% 25.6% 25.6% 25.6% 25.6% 25.6%
Fire PEPRA 13.66% 13.7% 13.7% 13.7% 13.7% 13.7%
Miscellaneous 9.45% 9.4% 9.3% 9.2% 9.1% 9.0%
Source: CalPERS Actuarial Reports for each plan dated July 2021.
The projections in the above table are based on a discount rate of 7.0%. In July 2021, the discount rate was automatically lowered from 7.0% to 6.8% due to the Funding Risk Mitigation Policy put in place by the CalPERS Board of Administration in 2015. Th is policy lowers the discount rate in years of good investment returns to reduce risk in the portfolio. On November 15, 2021, the CalPERS Board of Administration voted to keep the discount rate at 6.8%. The City cannot anticipate accuracy of the projections above or to what extent the contribution requirements of the City will increase in future years.
Public Agency Retirement System Retirement Enhancement Plan . The City established a Public Agency Retir ement System Retirement Enhancement Plan ( ―PARS‖) effective January 1, 2003, for selected groups of miscellaneous employees (non -safety), Service Employees International Union (SEIU), International Union of Operating Engineers (IUOE), Management, and one o f the two groups of Confidential employees.
PARS is a defined benefit 401(a) tax-qualified multiple agency trust. PARS meets the requirements of a pension trust under California Government Code. The plan provides supplemental retirement benefits in additio n to PERS. Phase II Systems is the PARS Trust Administrator. For employees meeting the eligibility requirements, the plan provides a benefit equal to the ―3% at 60‖ plan factor (formula is a static 3% at age 60 and older), less the PERS ―2% at 55‖ plan factors for all years of City service plus any military service purchased through PERS (prior to July 1, 2003) while an employee of the City.
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Eligibility for an immediate benefit is defined as reaching age 50, completing five years of service, and retiring concurrently from both the City and PERS after leaving City employment. In addition, a deferred benefit would be available to participants who complete five years of service. The City has full discretionary authority to control, amend, modify or terminate this plan at any time.
Employees and the City contribute a total of 8% of eligible employees ’ gross wages. Current employee and City contributions by employee groups are as follows:
City
Contributions
Employee
Contributions
IUOE 2.7% 5.3%
SEIU 3.5 4.5
Management 3.0 5.0
Confidential 2.5 5.5
In addition, the City is required to contribute the remaining amounts necessary to fund the benefit to its members using the actuarial basis recommended by PARS actuarial consultants. Copies of PARS annual financial report may be obtained from the PARS Executive Office, 3961 MacArthur Boulevard, Suite 200, Newport Beach, CA 92660, or at their website at http://www.pars.org. The foregoing reference to an internet website is made for reference and convenience only; the information contained within the website has not been reviewed by the City or the Authority and is not incorporated in this Official Statement by reference.
For fiscal year ended June 30, 2021 , the City contributed $3,427,026 to PARS, and recogni zed a pension benefit of $1,811,860 for the plan.
The City implemented GASB Statement No. 84, Fiduciary Activities, for fiscal year ended June 30, 2021. This statement establishes criteria for identifying fiduciary activities of all state and local gove rnments.
The focus of the criteria is generally on (1) whether a government is controlling the assets of the fiduciary activity, and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and post-employment benefit arrangements that are fiduciary activities. The provisions of this statement are effective for fiscal years beginning after December 15, 2019. The City determined that the Oxnard Community Development Commission Suc cessor Agency and the Retirement Enhancement Defined Benefit Pension Trust are fiduciary in nature under the provisions of GASB Statement No. 84. There were changes in the recognition and presentation of fiduciary fund statements of the custodial funds as a result of implementing this standard.
Other Post-Employment Benefits. The City provides post -employment benefits for retired employees.
Employees who retire from the City and receive a PERS pension are eligible for post -employment medical benefits. Retirees can enroll in any of the available PERS medical plans. This benefit continues for the life of the retiree and surviving spouse. Benefit provisions for PERS are established by the Public Employees Retirement Law (Part 3 of the California Government Cod e, Section 20000 et seq.). PERS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the PERS annual financial report may be obtained from the PERS Executive Office, 40 0 ―P‖ Street, Sacramento, California 95814, or at their website at http://www.calpers.ca.gov. The foregoing reference to an internet website is made for reference and convenience only; the information contained within the website has not been reviewed by the City or the Authority and is not incorporated in this Official Statement by reference.
The City contributes the minimum amount allowed under Government Code Section 22825 of the Public Employees Medical and Hospital Care Act. The City ’s required monthly contribution for calendar years 2020 and 2019 were $139 and $136, respectively. The statutory contribution will be indexed by the Medical CPI each year. The required contribution is based on pay -as-you-go financing requirements. Retirees must contribute any premium amounts in excess of the City contribution. 595
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The City’s total OPEB liability of $ 55,141,842 was measured as of June 30, 2020 , and was determined by an actuarial valuation as of July 1, 2019 . For the year ended June 30, 2021 , the City recognized an OPEB expense of $5,174,715.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and healthcare cost trends. Amounts determined regarding the funded status are subject to continual revisions as actual results are compared with past expectations and new estimates are made about the future.
For additional information with r espect to the City ’s OPEB plan, Appendix C – AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2021.‖
CITY FINANCIAL POLICIES
Reserve Policies
The City ’s r eserve policies require adequate reserves will be maintained for all known liabilities, including payable employee leave balances, workers ’ compensation, and self -insured retention limits. The City’s goal is to maintain an operating reserve equal to twelve percent (12%) of the General Fund operating budget. The operating reser ve is available to cover cash flow requirements, meet unanticipated revenue shortfalls, take advantage of unexpected opportunities, invest in projects with a rapid payback, ensure against physical or natural disasters, and provide interest earnings. Additionally, the City desires to maintain operating reserves in the utility funds equal to twenty-five percent (25%) of the operating budgets.
Debt Policy
Pursuant to Resolution No. 15 ,105 the City has adopted a debt management p olicy (the ―Debt Management Policy‖) in compliance with California Government Code Section 8855. The City revised its Debt Management Policy in June 2020 pursuant to Resolution No. 15,359. The City further amended its Debt Management Policy in January 2021 to add provisions to addr ess continuing disclosure and compliance requirements. The Debt Management Policy sets forth the purposes for which long-term debt financings may be undertaken (i.e. for projects that will provide benefit to constituents over multiple years). The Debt Management Policy provides that the City will limit the debt ratio of annual principal and interest due during a fiscal year to 10% of the General Fund Budget.
City Capital Management Policy
The City’s Capital Management Policy requires an annual update of th e five-year Capital Improvement Program (―CIP‖), including anticipated funding sources for projects. During each budget cycle t he five-year CIP is reviewed and approved by the City Council. Such policy requires staff to evaluate each proposed project against the City’s capital project priority criteria, which include health and safety, asset preservation and new or expanded City services.
City Investment Policy
The City invests its funds in accordance with the City ’s Investment Policy, most recently amend ed on July 30, 2022 . 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. The City ’s Investment Policy sets forth the policies and proce dures applicable to the investment of City funds and designates eligible investments. The Investment Policy sets forth a stated objective, among others, of ensuring the safety of invested funds by limiting credit and market risks. Funds are invested in the following order of priority:
Safety of Principal;
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Liquidity; and
Yield.
Eligible investments are generally limited to managed investment pools, including but not limited to the Local Agency Investment Fund which is operated by the California State Treasurer, U.S. Treasury bil ls, notes and bonds, obligations issued by United States Government agencies, obligations issued by a federal agency or United States government-sponsored enterprise, debt issued by a municipal agency, FDIC -insured or negotiable certificates of deposit rated ―Aa‖ or better by Moody ’s or ―AA-‖ or better by Standard & Poor ’s, repurchase agreements, medium term corporate notes and municipal bonds with maturities of five years or less and rated ―A‖ to ―AAA‖ by Moody ’s Investor ’s Serv ice, Inc. or Standard and Poor ’s Rating Services, banker ’s acceptances and commercial paper rated A1/P1, as applicable, or better.
The City Treasurer is required to provide a quarterly report to the City Manager and the City Council showing the type of inv estment, date of maturity, amount invested, current market value, rate of interest, and other such information as may be required by the City Council. At June 30, 2021, the par value of the City’s investment portfolio was $365,039,290 (not including the C ity’s Enhanced Retirement Trust and cash in banks or on hand) . As of such date, the City had invested approximately 24.3% of its investment portfolio in California LAIF, 58.7% in federal agency securities , 16% held by a trustee , and less than 1% of its investment portfolio in each the County Investment Pool , municipal bonds, and a certificate of deposit . For additional information with respect to the City’s cash and investments, see the audited financial statements for fiscal year 2020-21 attached to the Official Statement as Appendix C.
ECONOMIC AND DEMOGRAPHIC INFORMATION
Population
The City’s population has decreased from approximately 201,418 in 2012 to approximately 200,050 in 2022. The following table shows the approximate changes in population in the City, the County, the State, and the United States for the years 2012 through 2022.
TABLE 11
POPULATION ESTIMATES
CITY OF OXNARD, COUNTY OF VENTURA, STATE OF CALIFORNIA, AND UNITED STATES CALENDAR YEARS 2012 THROUGH 2022(1)
Year City County California United States
2012 201,418 836,774 37,971,427 313,874,218
2013 203,169 843,220 38,321,459 316,057,727
2014 205,301 848,621 38,622,301 318,386,421
2015 207,471 852,505 38,952,462 320,742,673
2016 208,603 854,886 39,214,803 323,071,342
2017 208,987 855,973 39,504,609 325,147,121
2018 209,269 857,415 39,740,508 327,167,434
2019 209,879 856,598 39,927,315 328,231,337
2020 205,950 841,219 39,648,938 331,501,080
2021 200,480 840,093 39,303,157 331,893,745
2022 200,050 833,652 39,185,605 332,838,183
(1) Unless otherwise noted, estimates for City, County, and State are as of January 1, and for the United States are as of July 1.
Source: California Department of Finance (Report E-4 Population Estimates for Cities, Counties and the State, 2011-2020 with 2010 Census Benchmarks and 2021-22 with 2020 Census Benchmark); for United States: United States Bureau of the Census.
Personal Income
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Personal Income is the income that is received by all persons from all sources. Personal Income is calculated as the sum of wage and salary disbursements, supplements to wages and salaries, proprietors’ income with inventory valuation and capital consumpti on adjustments, rental income of persons with capital consumption adjustment, personal dividend income, personal interest income, and personal current transfer receipts, less contributions for government social insurance.
The personal income of an area is the income that is received by, or on behalf of, all the individuals who live in the area; therefore, the estimates of personal income are presented by the place of residence of the income recipients.
The following tables show the personal income and per capita personal income for the County, the State and United States from 2012 through 2020.
TABLE 12
PERSONAL INCOME
COUNTY OF VENTURA, STATE OF CALIFORNIA, AND UNITED STATES CALENDAR YEARS 2010-2020
Year
County of
Ventura California United States
2012 41,563,660 1,827,166,900 14,003,346,000
2013 42,045,001 1,857,200,900 14,189,228,000
2014 44,266,607 1,980,736,800 14,969,527,000
2015 46,380,512 2,125,430,300 15,681,233,000
2016 47,741,677 2,218,457,800 16,092,713,000
2017 49,183,016 2,318,644,400 16,845,028,000
2018 51,035,138 2,431,822,000 17,681,159,000
2019 53,344,954 2,544,235,000 18,402,004,000
2020 56,728,142 2,763,312,000 19,607,447,000
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
The following table summarizes per capita personal income for the City, the County, the State and the United States for the years 2012 through 2020. This measure of income is calculated as the personal income of the residents of the area divided by the resident population of the area.
TABLE 13
PER CAPITA PERSONAL INCOME(1)
COUNTY OF VENTURA, STATE OF CALIFORNIA, AND UNITED STATES CALENDAR YEARS 2012-2020
Year
County of
Ventura California United States
2012 49,879 48,121 44,548
2013 50,189 48,502 44,798
2014 52,566 51,266 46,887
2015 54,849 54,546 48,725
2016 56,371 56,560 49,613
2017 57,981 58,813 51,573
2018 60,238 61,509 53,817
2019 63,190 64,333 55,724
2020 67,422 69,958 59,147
(1) Per capita personal income is the total personal income divided by the total mid -year population estimates of the U.S. Bureau of the Census. All dollar estimates are in current dollars (not adjusted for inflation).
Source: U.S. Department of Commerce, Bureau of Economic Analysis. 598
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Employment
The following table summarizes the labor force, employment , and unemployment figures over the past six years for the Oxnard-Thousand Oaks-Ventura Metropolitan Statistical Area (―MSA‖), the State of California and the nation as a whole.
TABLE 14
LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT
OXNARD-THOUSAND OAKS-VENTURA METROPOLITAN STATISTICAL AREA ANNUAL AVERAGE FOR CALENDAR YEARS 2017 THROUGH 2022
Year and Area Labor Force Employment(1) Unemployment(2) Unemployment
Rate(%)(3)
2017
MSA 423,700 404,500 19,200 4.5%
State of California 19,185,400 18,258,100 927,300 4.8
United States(4) 160,320,000 153,337,000 6,982,000 4.4
2018(5)
MSA 423,000 406,800 16,300 3.9%
State of California 19,289,500 18,468,100 821,400 4.3
United States(4) 162,075,000 155,761,000 6,314,000 3.9
2019
MSA 422,100 406,600 15,500 3.7%
State of California 19,409,400 18,612,600 796,800 4.1
United States(4) 163,539,000 157,538,000 6,001,000 3.7
2020
MSA 409,400 373,300 36,100 8.8%
State of California 18,931,100 16,996,700 1,934,500 10.2 United States(4) 160,742,000 147,795,000 12,947,000 8.1 2021
MSA 404,900 380,000 24,900 6.2%
State of California 18,923,200 17,541,900 1,381,200 7.3 United States(4) 161,204,000 152,581,000 8,623,000 5.3
2022(5)
MSA 409,200 396,200 13,000 3.2%
State of California 19,237,100 18,486,400 750,800 3.9
United States(4)(6) - - - -
(1) Includes persons involved in labor-management trade disputes. (2) Includes all persons without jobs who are actively seeking work. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table.
(4) Not strictly comparable with data for prior years.
(5) As of July 2022.
(6) 2022 data not yet available.
Note: Data is not seasonally adjusted.
Source: California Employment Development Department and U.S. Department of Labor, Bureau of Labor Statistics. 599
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The table below summarizes employment by industry in the MSA from 2017 to 2021. Trade, Transportation and Utilities, Retail Trade, Edu cation and Health Services , Professional and Business Services and Government are the largest employment sectors in the MSA.
TABLE 15
ANNUAL AVERAGE INDUSTRY EMPLOYMENT
OXNARD-THOUSAND OAKS-VENTURA
METROPOLITAN STATISTICAL AREA
CALENDAR YEARS 2017-2021
(IN THE THOUSANDS)
Industry Title 2017 2018 2019 2020 2021
Total Farm 23,800 24,300 24,700 25,000 23,400
Total Nonfarm 304,900 308,500 312,100 290,200 296,900
Total Private 258,000 262,700 265,000 245,500 252,500
Mining and Logging 900 900 900 900 900
Mining, Logging and Construction 16,600 17,700 18,000 17,700 17,900 Construction 15,700 16,800 17,100 16,800 17,000
Manufacturing 25,600 26,200 26,600 25,800 26,300
Trade, Transportation and Utilities 58,600 58,100 57,100 52,900 55,100 Wholesale Trade 12,700 12,500 12,500 11,900 12,000
Retail Trade 39,800 39,200 38,300 34,900 36,500
Transportation, Warehousing
and Utilities
6,100 6,300 6,300 6,100 6,600
Information 5,300 5,400 5,200 4,000 3,900
Financial Activities 16,900 16,400 15,900 15,700 15,500 Professional and Business Services 42,200 42,900 44,400 42,600 43,500 Educational and Health Services 45,900 47,700 49,600 48,300 48,700 Leisure and Hospitality 37,200 37,800 38,500 30,200 33,000 Other Services 9,600 9,500 9,700 8,300 8,800
Government 46,900 46,900 47,100 44,700 44,400
Total, All Industries 328,700 332,800 336,800 315,200 320,300
Source: State of California, Employment Development Department, Labor Market Information Division, Oxnard-Thousand Oaks - Ventura Annual Average Labor Force and Industry Employment, March 2021 Benchmark. 600
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Commercial Activity
The following table summarizes the annual volume of taxable transactions wi thin the City for the years 2016 through 2021.
TABLE 16
TABLE OF TAXABLE SALES BY CATEGORY
CITY OF OXNARD
CALENDAR YEARS 2016 THROUGH 2021
ADJUSTED FOR ECONOMIC DATA
(000’S)
2016 2017 2018 2019 2020 2021
Motor Vehicle and Parts Dealers $ 596,911,284 $ 610,449,669 $ 596,570,616 $600,705,950 $ 576,720,436 $ 636,172,333 Home Furnishings and Appliance Stores 147,257,458 146,130,441 143,011,416 135,172,946 116,514,538 155,007,191 Building Material and Garden Equipment
and Supplies Dealers
152,212,526 171,303,597 212,383,840 215,202,289 244,526,289 268,065,948 Food and Beverage Stores 118,224,838 138,404,317 155,163,426 155,055,308 155,964,041 159,508,945 Gasoline Stations 185,779,608 193,578,251 220,672,141 219,005,850 150,726,338 216,003,623 Clothing and Clothing Accessories Stores 121,865,488 122,142,546 121,784,101 124,302,658 94,247,909 141,693,586 General Merchandise Stores 316,496,497 328,406,863 340,937,936 351,057,417 364,082,620 423,502,446 Food Services and Drinking Places 294,177,130 319,053,446 323,948,572 342,640,017 296,700,472 379,996,534 Other Retail Group 197,738,936 171,384,463 157,914,525 157,740,958 138,808,371 158,615,009 Total Retail and Food Services $2,130,663,765 $2,200,853,593 $2,272,386,573 $2,300,883,393 $2,138,291,014 $2,538,565,615 All other outlets 553,400,971 580,323,296 617,209,797 644,572,588 618,190,924 754,325,716 Total all outlets $2,684,064,736 $2,781,176,889 $2,889,596,370 2,945,455,981 $2,756,481,938 $3,292,891,331
Sources: California Department of Tax and Fee Administration. 601
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APPENDIX B
SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS
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APPENDIX C
AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE YEAR ENDED JUNE 30, 2021 603
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APPENDIX D
PROPOSED FORM OF BOND COUNSEL OPINION
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (t his ―Disclosure Certificate‖) is executed and delivered by the City of Oxnard, California (the ―City‖) in connection with the issuance of $_________ aggregate principal amount of the City of Oxnard Financing Authority Lease Reven ue Refunding Bonds, Series 2022A (Federally Taxable) and $_________ aggregate principal amount of the City of Oxnard Financing Authority Lease Revenue Refunding Bonds, Series 2022B (Tax-Exempt) (together, the ―Bonds‖). The Bonds are being issued pursuant to that certain Indenture, dated as of December 1, 2019 (the ―Indenture‖), by and among the City, the City of Oxnard Financing Authority (the ―Authority‖), and Wells Fargo Bank National Association, as trustee, as supplemented by that certain First Supplement to Indenture, by and a mong the City, the Authority, and Computershare Trust Company, N.A (the ―Trustee‖).
Capitalized terms not defined herein shall have the meaning set forth in the Indenture. The City covenants and agrees as follows:
Section 1. Purpose of this Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule (as the foregoing capitalized terms are hereinafter defined).
Section 2. Definitions. The following capitalized terms shall have the following meanings:
―Beneficial Owner ‖ shall mean any person which has the power, directly or indirectly, to vote or consent with respect t o, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries).
―Dissemination Agent ‖ shall mean NHA Advisors, San Rafael , California, or any successor Dissemination Agent designated in writing by the City, which has filed with the City a written acceptance of such designation.
―Financial Obligation‖ shall mean, for purposes of the Listed Events set out in Section 5(a)(10) and Section (5)(b)(8), a (i) debt obligation; (ii) derivative inst rument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term ―Financial Obligation‖ shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule.
―Listed Events‖ shall mean any of the events listed in Section 5 of this Disclosure Certificate. ―MSRB‖ shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access ( ―EMMA‖) website of the MSRB, currently located at http://emma.msrb.org.
―Official Statement‖ shall mean the Official Statement for the Bonds dated [DATE], as amended or supplemented.
―Participating Underwriter‖ shall mean the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.
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―Rule‖ shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissem ination Agent by written direction to such Dissemination Agent to, not later than March 1 after the end of the City ’s fiscal year (which currently ends on June 30), commencing with the report due for the fiscal year ended June 30, 2022 , provide to the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the City may be submitted separately from and later than the balance of the Annual Report if they are not available by the date required above for the filing of the Annual Report.
An Annual Report shall be provided at least annually notwithstanding any fiscal year longer than 12 calendar months. The City’s fiscal year is currently effective from July 1 to the immediately succeeding June 30 of the following year. The City will promptly notify the MSRB of a change in the fiscal year dates. (b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to the MSRB, the City shall provide the Annual Report to the Dissemination Agent (if the Dissemination Agent is not the City). If by fifteen (15) Business Days prior to the date specified in (a) for the Annual Report, the Dissemination Agent (if other than the City) has not received a copy of the A nnual Report, the Dissemination Agent shall notify the City of such failure to receive the report. If the Dissemination Agent is other than the City, the City shall provide a written certification with each Annual Report furnished to the Dissemination Age nt to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the City and shall have no duty or obligation to review such Annual Report. (c) If the City fails to provide an Annual Report by the date required in subsection (a), the Dissemination Agent shall send a notice of such failure to file to the MSRB, in the form required by the MSRB.
Section 4. Content of Annual Report. The City’s Annual Report shall contain or include by reference:
(a) Financial Statements. The audited financial statements of the City for the most recent fiscal year of the City then ended. If the City prepares audited financial statements and if the audited financial statements are not available by the time the Annual Report is required to be filed, the Annual Report shall contain any unaudited financial statements of the City in a format similar to the financial statements, and the audited financial stateme nts shall be filed in the same manner as the Annual Report when they become available. Audited financial statements of the City shall be audited by such auditor as shall then be required or permitted by State law. Audited financial statements, if prepare d by the City, shall be prepared in accordance with generally accepted accounting principles as prescribed for governmental units by the Governmental Accounting Standards Board; provided, however, that the City may from time to time, if required by federal or state legal requirements, modify the basis upon which its financial statements are prepared. In the event that the City shall modify the basis upon which its financial statements are prepared, the City shall provide a notice of such modification to th e MSRB, including a reference to the specific federal or state law or regulation specifically describing the legal requirements for the change in accounting basis. (b) Financial and Operating Data . Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in Appendix A to the Official Statement, as follows:
1. A table comparing general fund budget to actual results for the most recently completed fiscal year;
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2. Major tax revenue sources for the general fund for the most recently completed fiscal year;
3. Property tax levies, collections, and delinquencies for the most recently completed fiscal year; and
4. Update on the City ’s long term debt outstanding as of the most recently completed fiscal year.
With respect to requirement 1 above, if the adopted budget for the fiscal year during which the Annual Report is filed does not need not be reported.
Financial information relating to the City referenced in Section 4(b) may be updated from time to time, and such updates may involve displaying data in a different format or table or eliminating data that is no longer available.
The City has not undertaken in this Disclosure Certificate to provide all information an investor may want to have in making decisions to hold, sell or buy Bonds but only to provide the specific information listed above.
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, whi ch have been submitted to the MSRB or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The City shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not later than ten business days after the occurrence of the event:
1. Principal and interest payment delinquencies;
2. Unscheduled draws on debt service reserves reflecting financial difficulties;
3. Unscheduled draws on credit enhancements reflecting financial difficulties;
4. Substitution of credit or liquidity providers, or their failure to perform;
5. Adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB);
6. Tender offers;
7. Defeasances;
8. Rating changes;
9. Bankruptcy, insolvency, receivership or similar event of the obligated person; or
10. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the obligated person, any of which reflect financial difficulties.
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 o r similar officer for an obligated person in a proceeding under the Wells Fargo Bankruptcy Code or in any other proceeding under state or federal law in 607
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which a court or governmental authority has assumed jurisdiction over substantially all of the assets o r business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of a n 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.
(b) 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, in a timely manner not later than ten business days after the occurrence of the event:
1. Unless described in paragraph 5(a)(5), notices or determinati ons by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds;
2. Modifications to rights of Bond holders;
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 an obligated person or the sale of all or substantially all of the assets of the obligat ed person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms;
7. Appointment of a successor or additional trustee or the change of name of a trustee; or
8. Incurrence of a Financial Obligation of the obligated person, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation o f the obligated person, any of which affect security holders.
(c) Whenever the City obtains knowledge of the occurrence of a Listed Event described in Section 5(b), the City shall determine if such event would be material under applicable federal securities laws. (d) If the City learns of the occurrence of a Listed Event described in Section 5(a), or determines that knowledge of a Listed Event described in Section 5(b) would be material under applicable federal securities laws, the City shall within ten bus iness days of occurrence file a notice of such occurrence with the MSRB.
Notwithstanding the foregoing, notice of the Listed Event described in subsections (b)(3) need not be given under this subsection any earlier than the notice (if any) of the underlyi ng event is given to owners of affected Bonds pursuant to the Indenture.
Section 6. Format for Filings with MSRB . Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such ident ifying information as is prescribed by the MSRB.
Section 7. Termination of Reporting Obligation . The City ’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance or payment in full of all of the Bonds. If such terminatio n occurs prior to the final maturity date of the Bonds, the City shall give notice of such termination in a filing with the MSRB.
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in car rying out its obligations under this Disclosure Certificate, and may discharge any such 608
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Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Certificate.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this D isclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3, 4 or 5(a) or (b), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would , in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) The amendment or waiver does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds.
Section 10. Additional Information. Nothing in this Disclosure Ce rtificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosu re Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future notice of occurrence of a Listed Event.
Section 11. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, any Owner or Beneficial Owner of Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture or the Facility Lease , and the sole remedy under this Disclosure Certificate in the event of any failure of the Cit y to comply with this Disclosure Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent . A Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save such Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys ’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent ’s negligence or willful misconduct. The obligations of the Cit y under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
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Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, if any, the Participating Underwriter and the Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Date: [DATE] CITY OF OXNARD, CALIFORNIA
By:
Alexander Nguyen, Executive Director
Acknowledged and Accepted:
NHA Advisors, as Dissemination Agent
By:
Authorized Officer
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APPENDIX F
BOOK-ENTRY ONLY SYSTEM
The following information has been provided by DTC for use in securities offering documents, and the Authority and the City take no responsibility for the accuracy or completeness thereof. Neither the Authority nor the City can give or does give any assur ances that DTC, DTC Direct Participants or DTC Indirect Participants will distribute to the Beneficial Owners either (a) payments of interest, principal or premium, if any, with respect to the Bonds or (b) certificates representing ownership interest in or other confirmation of ownership interest in the Bonds, or that they will so do on a timely basis or that DTC, DTC Direct Participants or DTC Indirect Participants will act in the manner described in this Official Statement. The current ―Rules‖ applicable to DTC are on file with the Securities and Exchange Commission and the current ―Procedures‖ of DTC to be followed in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company ( ―DTC‖), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered Bond certificate will be issued for each issue of the Bonds, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued wi th respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.
2. DTC, the world ’s largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a ―banking organization‖ within the meaning of the New York Banking Law, a member of the Federal Reserve System, a ―clearing corporation‖ within the meaning of the New York Uniform Commercial Code, and a ―clearing agency‖ registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instrum ents (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, tr ust 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 Incom e 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 has an S&P Global Ratings rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information on such website is not incorporated herein.
3. Purchases of Bonds under the DTC system must be made by or th rough Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond ( ―Beneficial Owner ‖) is in turn to be recorded on the Direct and Indirect Participants ’ records.
Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Own ers. Beneficial Owners will not 611
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receive certificates representing their ownership interests in the Bonds, except in the event that use of the book - entry system for the Bonds is discontinued.
4. To facilitate subsequent transfers, all Bonds deposited by Di rect 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 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, whi ch may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, b y 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 . None of the Authority, the City or the Trustee will have any responsibility or obligation to such Direct Participants and Indirect Participants or the persons for whom they act as nominees with respect to the Bonds. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Indenture and the Facility Lease. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC ’s practice is to determine by lot the amount of the interest of each Direct Parti cipant in such maturity to be redeemed.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the 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 the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Principal and interest payments with respect to the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC ’s practice is to credit Direct Participants’ accounts upon DTC ’s receipt of funds and corresponding detail information from the Trustee, on payable dates in accordance with their respective holdings shown on DTC ’s records. Payments by Participants to Beneficial Owners will be governed by st anding instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in ―street name, ‖ and will be the responsibility of such Participant and not of DTC, the Authority, the City or the Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority, the City or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as depository with respect to the 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, Bond certificates are required to be printed and delivered.
10. The Authority may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. 612
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11. The inf ormation in this section concerning DTC and DTC ’s book -entry 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 accuracy thereof.
The foregoing descrip tion of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal of and interest and other payments with respect to the Bonds to Direct Participants, Indirect Participants or Beneficial Owners, con firmation and transfer of beneficial ownership interest in such Bonds and other related transactions by and between DTC, the Direct Participants, the Indirect Participants and the Beneficial Owners is based solely on information provided by DTC.
Accordingly, no representations can be made concerning these matters and neither the Direct Participants, the Indirect Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters but should instead confirm the same with DTC or the Participants, as the case may be.
In the event that the book -entry system is discontinued as described above, the requirements of the Indenture will apply.
THE TRUSTEE, AS LONG AS A BOOK -ENTRY ONLY SYSTEM IS US ED FOR THE BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTH ER NOTICES TO OWNERS TO ONLY DTC.
ANY FAILURE OF DTC T O ADVISE ANY DTC PAR TICIPANT, OR OF ANY DTC PARTICIPANT TO
NOTIFY ANY BENEFICIA L OWNER, OF ANY NOTI CE AND ITS CONTENT O R EFFECT WILL NOT
AFFECT THE VALIDITY OR SUFFICIENCY OF TH E PROCEEDINGS RELATI NG TO THE
REDEMPTION OF THE BONDS CALLED FOR REDEMPTIO N OR OF ANY OTHER AC TION PREMISED ON SUCH NOTICE.
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APPENDIX G
SPECIMEN MUNICIPAL BOND INSURANCE POLICY
]TBD]
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CITY COUNCIL AGENDA REPORT
REPORTS
AGENDA ITEM NO. M.1
DATE: October 18, 2022
TO: City Council
FROM: Ashley Golden, Assistant City Manager, (805) 385-7478, [email protected]
SUBJECT: Climate Action and Adaptation Plan and an Addendum to the 2030 General Plan Program Environmental Impact Report (PEIR; SCH # 2007041024). (15/10/10)
RECOMMENDATION
That the City Council:
1. Approve the associated Addendum to the PEIR;
2. Approve the Draft CAAP with recommended edits and any further Council edits; and
3. Direct staff to produce the Final CAAP.
(Community Services, Public Safety, Housing & Development Committee and Public Works & Transportation Committee both received a presentation and provided feedback on the City’s Draft CAAP. No formal vote taken.)
(Presentation will be live upon consultant's request.)
BACKGROUND
EXECUTIVE SUMMARY
The City’s Draft CAAP (“CAAP”) builds on the City’s successes of implementing the City’s 2030 General Plan and recommits to furthering the City’s sustainability goals and policies. The CAAP presents an inventory of GHG emissions originating from the City, and sets forth strategies and actions to reduce emissions and help the community adapt to a changing climate. Together with the community and partnering organizations, the City is leading a coordinated effort to build an equitable, sustainable and resilient community for current and future generations. The CAAP has two primary objectives:
1. To reduce GHG emissions through the implementation of reduction measures to meet reduction targets mandated by the State of California via Senate Bill 32 (SB 32), which calls for a statewide reduction of GHG emissions to 40 percent below 1990 levels by 2030; and
2. To enhance the community’s resilience to a changing climate by addressing the vulnerabilities and risks, such as flooding, extreme heat, and degraded air quality,s that are expected to occur as a result of those impacts.
The CAAP is intended to reduce GHG to meet established thresholds and to strengthen the City’s resilience by addressing the vulnerabilities and risks that are expected to occur as a result of identified hazards. The CAAP also recommends adaptation strategies needed to ensure community preparedness and resilience.
The Planning Commission reviewed the Draft CAAP during two meetings. At the July 7th Planning Commission study session, the Commission reached consensus to revise the CAAP to address seven items. Seven additional topics were 615
raised at the July 7th meeting for which there was no consensus. Upon further analysis by staff and a discussion at the Planning Commission's September 1, 2022 meeting, these seven items were scaled back and the Commission agreed with staff that the CAAP should be revised to address only three items (instead of seven). These recommended changes are memorialized in the Planning Commission’s resolution of approval for a total of 10 changes recommended by the Planning Commission.
With Council concurrence, the Planning Commission’s recommendations and community input will result in slight changes to the Draft CAAP with added language to various chapters of the CAAP. A matrix summarizing these revisions (“CAAP Stakeholder and Community Comment Letters and City Response matrix) is provided in Attachment D to the September 1, 2022 Planning Commission staff report (see Attachment 2). After the October 18 Council meeting, edits will be incorporated to create the Final CAAP.
BACKGROUND
On March 30, 2021 the City Council received a presentation regarding the preparation of the CAAP document, including a detailed summary of what creates climate impacts in the City, an analysis of the City's GHG emissions in relation to statewide targets, and identification of what the City can do to reduce its emissions (see Attachment 3). The staff report established that the CAAP was being developed to align with California’s statewide target mandated by SB 32; this requires the State to reduce GHG emissions 40 percent below 1990 levels by 2030. As supported by the City Council at this meeting, the City’s CAAP GHG strategies, programs and policies, and overall approach have been developed to align with Council direction which helps the City meet the City’s GHG reduction objectives (see Analysis section of this staff report).
The analysis in the March 30, 2021 staff report (with GHG emission information further refined in the January 25, 2022 Committee staff report; Attachment 4) provided detail on the City’s community and municipal operations GHG emissions inventories and forecasts. By knowing where the City’s GHG emissions originate, GHG reduction strategies were able to be developed. Updated transportation analysis using the City’s 2018 inventory (the most recent year with accurate available data) showed that overall, City GHG emissions were comprised as follows:
On-Road Transportation (44%) - Emissions from cars and trucks that travel local roads and highways; Electricity (24%) - Emissions from the generation of electricity that is used by the community; Natural Gas (19%) - Emissions from the combustion of natural gas used by buildings and industry; Solid Waste (8%) - Emissions from the decomposition of waste sent to landfills; Off-Road Sources (4%) - Emissions from operation of construction and other off-road equipment; Water and Wastewater (1%) - Includes emissions from the electricity used to pump water and wastewater, as well as direct emissions resulting from wastewater treatment processes and local septic tanks; and Other (<1%) - emissions from passenger rail (Amtrak and MetroLink).
The March 2021 staff report explained that achieving a GHG target in alignment with SB 32 would require examination of the following sector-specific strategies:
Green the electricity supply: This strategy reduces emissions from electricity used by buildings, lighting, and water delivery by increasing the percentage of power being supplied by renewable (i.e., zero-emissions) electricity.
Electrify buildings: This strategy reduces emissions from the consumption of natural gas by shifting the energy use to electricity, which has a lower carbon footprint, particularly when paired with the use of low- or zero- carbon electricity.
Electrify transportation: This strategy reduces emissions from on-road vehicles, the biggest contributor to the City’s emissions, by supporting the transition to plug-in electric (PEV) and hydrogen- powered vehicles.Improve energy efficiency of buildings: This strategy reduces emissions from electricity and natural gas by reducing the energy needed for heating, cooling and lighting. While new buildings will generally be highly energy efficient due to increasingly stringent building codes (e.g., Title 24), many existing buildings can be greatly improved with respect to energy efficiency.
Reduce vehicle miles traveled (VMT): This strategy reduces emissions from on-road vehicles through land-use planning that emphasizes access to transit and reduces the need for vehicular travel through density increases, support for a mix of uses, and safe and convenient pedestrian and bicycle infrastructure. 616
Strive for zero waste: This strategy reduces emissions from landfill decomposition of organic waste by reducing the amount of waste sent to the landfill.
Conserve water: This strategy reduces emissions associated with the energy needed to treat and deliver water to the City’s end consumers by reducing the amount of water consumed in the City.
On January 25, 2022, City Staff provided the Community Services, Public Safety, Housing & Development Committee (“Committee”) with an update on the City’s CAAP community engagement methods and recommendations and provided the Committee with information on the strategies and key GHG reduction opportunities available to the City (See Attachment 4). The Committee was supportive of staff’s recommendations; no public comments were received.
In response to the feedback provided and concurrence achieved in this meeting regarding high level GHG reduction strategies, the Draft CAAP was further refined and developed with community input and opportunities for engagement and feedback, including two meetings with the Planning Commission, which are further elaborated on later in the staff report.
DISCUSSION
Like other communities in California, Oxnard is likely to face serious economic, social, and environmental challenges in the coming decades due to rising temperatures, sea level rise, extreme storms, wind events, more severe droughts, and diminishing air quality that is expected to occur because of climate change. These impacts present significant threats to community health and wellbeing, which will not affect everyone equally. Vulnerable groups, such as the elderly, low- income families, farmworkers/agricultural workers, undocumented immigrants, communities of color, and individuals already suffering from chronic diseases, will be disproportionately impacted by these changes.
Resilience, as defined by the State of California’s Adaptation Planning Guide, is the “capacity of any entity— an individual, a community, an organization, or a natural system— to prepare for disruptions, to recover from shocks and stresses, and to adapt and grow from a disruptive experience.” Climate adaptation is defined by this same source as “actions that address the projected impacts on all aspects of community function that may result from climate change.
This can include impacts related to hazard events such as flooding and wildfire, as well as slow changes that affect agricultural, forestry, and fisheries productivity; ecosystem structure and function; and public health.”
CAAP Structure
The CAAP contains an executive summary and five Chapters, as well as Appendices, which provide additional detail on topics covered in the CAAP (see Attachment 1 - https://www.oxnard.org/climate-action-plan/). Executive Summary — The executive summary includes a synopsis of the Draft CAAP, including the plan’s organization and a summary of the City’s GHG emissions inventory and target, and the CAAP’s strategies for reducing emissions and adapting to climate change.
Chapter 1— Introduction and Background: This Chapter provides an overview of the document, the purpose and scope of the CAAP, the basic science behind climate change, and the importance of considering equity when taking action. In addition, Chapter 1 provides a brief explanation of potential impacts of climate change in the City of Oxnard, the community benefits of taking action, the process for engaging with the community and stakeholders, and a discussion of the state and local actions to reduce GHG emissions. Chapter 2— Understanding Oxnard’s Greenhouse Gas Emissions: This Chapter presents a summary of GHG emissions being generated by the community and by municipal operations. It provides an understanding of where GHG emissions are originating from, including trends and forecasts, and what can be done to reduce them.
Finally, Chapter 2 establishes Oxnard’s GHG reduction target. Chapter 3— Reducing Greenhouse Gas Emissions: This Chapter describes the GHG reduction strategies and actions the City will implement at the local level regarding energy use, transportation and land use, solid waste management, and water consumption. Chapter 3 addresses each of these sectors, summarizing their contribution to total citywide emissions and describing the strategies and actions that will be implemented to reduce emissions from each category over time.
Chapter 4— Community Resilience and Adaptation: This Chapter presents an overview of the impacts the City of Oxnard is expected to experience due to projected changes in the climate including: extreme heat, extreme drought, smoke and air pollution, sea level rise, and extreme storms and stormwater flooding It also explains 617
what the City can do to begin preparing for these items.. It describes expected local impacts and vulnerabilities, and potential adaptation planning strategies.
Chapter 5— Implementation and Monitoring: This Chapter outlines recommended steps for implementing the GHG-reduction strategies described in Chapters 3 and 4, and for monitoring the progress of implementation. It identifies funding sources and assigns implementation and monitoring responsibility to specific City departments, presenting a schedule for implementation.
Appendices — The CAAP document contains Appendices A - F to document work on the CAAP to support CAAP implementation; including Appendix A— Community and Stakeholder Engagement Reports; Appendix B— Major Climate Policies and Regulations in California as of 2022: Appendix C— Greenhouse Gas Quantification Methods; Appendix D— City of Oxnard Social Vulnerability Index; Appendix E— Partnering Organizations; and Appendix F— Funding Sources.
Timeframe for GHG Reduction Actions
The Draft CAAP document identifies near term (Fiscal Years (FY) 2022-2025), mid term (FY 2025 to 2027), and long term (FY 2027-2030) implementation measures in order to realize state mandated GHG reduction goals. The long term actions are important for staying on track to achieve the deeper reductions needed throughout the State to reach carbon neutrality by 2045 (as called for in Governor’s Executive Order B-55-18).
The City’s Capital Improvement Program (CIP: FYs 2022-2027) was adopted on May 3, 2022, with funding approved for projects in FYs 2022-2024. The Draft CAAP identifies a number of near-term (FY 2022-2025) GHG reduction actions.
However, since CIP projects through 2024 are already approved, the City will have limited time to execute near-term CAAP strategies. City Council prioritization of GHG reduction actions will need to occur as part of the City’s yearly budgeting and CIP approval process. It is recommended in the Final CAAP that implementation timeframes for GHG reduction activities only change as follows to align with future CIP adoptions:
For GHG Reduction Actions
Draft CAAP Chapter 5 Time Frames Staff Recommended Final CAAP Chapter 5 Time Frames Near Term 2022–2025 Now 2022-2026
Mid Term 2025–2027 Now 2026-2030
Long Term 2027– 2030*
*Currently there are no GHG reduction strategies
identified for the Long-Term measures. However, that
could change with future updates to the CAAP
Now 2030-2035
Timeframe for Resilience and Adaptation Actions
Due to the inherent uncertainty of how future climate hazards will develop and the range of time frames in which the community will experience impacts, the time frames indicated for resilience and adaptation strategies differ from those used for the GHG Reduction Actions.
ANALYSIS
GHG Reduction Strategies Included in the Draft CAAP
The CAAP identifies key actions and strategies to help the City achieve the state mandated GHG emission reductions - 40 percent below 1990 levels by 2030. These are highlighted below. It is important to note that some of these actions and strategies are already occurring in compliance with State laws (ex., recycling and waste diversion) but are important to achieving the City’s GHG reduction goals:
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CAAP Actions to Achieve GHG Reductions
*All Strategies and Actions can be found in Chapter 3 and Chapter 5 of the Climate Action and Adaptation Plan.
Category CAAP Strategy Strategy
to Achieve
GHG
Reduction
Goal
Key Implementing Actions
E1: Procure Zero-
Carbon Electricity
X E1.1 – Invest City staff time and financial resources in maintaining a minimum 95 percent community participation rate in CPA’s 100 Percent Green option, or equivalent, through the year 2030
E2: Increase Local
Solar Energy
Generation
E2.1– Partner with interested developers to create Community Solar projects in the CPA program, or equivalent Community Renewables program offered by SCE
Clean Energy
(E)
E3: Develop Energy
Storage/Microgrids
E3.1 – Partner with CPA to develop their Power Response Program, which offers incentives to commercial and residential customers for the installation of energy storage to enable load-shifting during times of peak demand E3.3 – Identify potential partnerships, funding, or financing sources for installing storage and microgrids in the community
B1: Improve
Efficiency of
Existing Buildings
X B1.1 – Partner with existing agencies such as CPA, 3C-REN, SoCalREN, and/or the Ventura County Regional Energy Alliance (VCREA) to promote and take advantage of local energy programs; meet with these agencies on a quarterly basis
Green
Buildings (B)
B2: Electrify
Buildings
B2.1 – Partner with existing agencies such as CPA, 3C-REN, and/or VCREA to promote and take advantage of local programs, including rebates and financing options for building and appliance electrification; meet with these organizations on a quarterly basis
B2.3 – Work with electric utility to create an educational campaign for building owners on the health, climate, and cost benefits of electric-powered kitchen equipment, and distribute information about available products and installation services
T1.1 -Develop a citywide ZEV Master Plan that evaluates near-term and long- term needs for EV charging and hydrogen-fueling infrastructure, including home EV charging, and identifies optimal EV charging locations and gaps in publicly accessibility (especially for disadvantaged communities) T1: Expand Zero-
Emission-Vehicle
(ZEV) Charging and
Fueling
Infrastructure
X
T1.4 – Meet with utilities and state agencies quarterly to track and coordinate the promotion of funding offerings to Oxnard residents and businesses T2.1 – Develop a ZEV Master Plan for the City fleet that evaluates costs, budget needs and infrastructure needs for the short and long term, including optimal EV charging locations, funding opportunities, and opportunities for public-private partnerships.
Transportation
(T)
T2: Transition City
Fleet to ZEVs
X
T2.2 - Pass a resolution that supports City fleet vehicle purchases (or at minimum, utility and truck purchases) to be ZEVs in alignment with the CARB's proposed regulation to require public fleets to purchase 100 percent zero-emissions trucks by the year 2027
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T3: Expand
Infrastructure for
Pedestrians, Bikes,
and Micro-mobility
Solutions
X T3.1 – Adopt the forthcoming STP, which will include projects that expand the reach of the pedestrian and bicycle network throughout the city and provide comfortable opportunities to use active transportation
T4.1 – Partner with GCTD and VCTC to assess current transit routes and identify opportunities for improvement geared towards Oxnard residents T4.2 – Partner with GCTD and VCTC to upgrade transit stops with weather protection, security measures, increased comfort and accessibility, and access to accurate information on transit routes, schedules, fares, connections, and destinations
T4: Improve Transit
Effectiveness and
Accessibility
T4.5 – Partner with GCTD and VCTC to enhance multi-modal connections to transit facilities by implementing pedestrian and bicycle improvements near transit stops and mobility hubs, as identified in the STP T5.1 - Consider updates to the TDM Ordinance to require encourage the development of TDM plans for all major developments or facility expansions to encourage ridesharing and other shared mobility improvements, thereby reducing vehicle trips
T5.2 – Through the implementation of the forthcoming STP, potentially introduce an e-bikeshare, and/or EV carshare program that incentivize third- party providers to locate in Oxnard; offer reduced parking requirements for new development projects that provide dedicated carshare facilities T5: Expand Car and
Bike Sharing
X
T5.3 – Through implementation of the STP, identify support for and/or ways to expand access to e-bikeshare and neighborhood EVs to ultimately enable their use in the public right-of-way
Waste
Reduction and
Recycling (R)
R1: Recycling and
Organic Waste
Diversion
X R.1 and R.2 - Continue to implement waste diversion mandates Water
Conservation
and Reuse (W)
W1: Increase Water
Conservation and
Reuse
X W1.1 – Maximize the use of recycled water or graywater for agricultural and for irrigation at all large new developments
Land Use (L) L1: Support Transit-
Oriented and Mixed
Use Development
X L1.1 – Through the forthcoming General Plan update, identify areas within the city where development should be focused to increase density and diversity of land use to achieve reductions in VMT
Planning Commission Input
On July 7, 2022, the Planning Commission held a study session on the CAAP (see Attachment 5). During the meeting staff provided clarity on specific minor edits to the CAAP in response to community input on the Draft CAAP document and previous Planning Commission comments which are broadly summarized as follows. If supported by City Council, Planning Commission recommendations will be incorporated into the Final CAAP.
1. Update Executive Summary (ES) to describe actions the community can take to advance the City’s climate goals:
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a. Final CAAP language will add “What the Community Can Do To Help” section and point to existing detail in Chapter 5.
2. Add aspirational language/sense of urgency within the ES and the opening text; reduce jargon throughout the plan. Final CAAP language will:
a. Revise language in ES to make it more accessible to the layperson, and review CAAP for terms that need explanation or can be reworded.
3. In Chapter 4, refine language on page 4-18 to acknowledge that Oxnard is susceptible to wildland fires along the riverbed. Final CAAP language will:
a. Remove statement “While Oxnard is not directly threatened by wildland fires…”
4. In Chapter 4, emphasize severity of State’s current drought & water shortage; include rainwater harvesting as strategy:
a. Rainwater catchment systems already included as action under Extreme Drought Strategy Extreme Drought (ED) 2 on page 4-19.
b. Final CAAP language will strengthen Strategy ED3 (drought tolerant landscaping) to specify rainwater harvesting as an alternative irrigation option.
c. Final CAAP language will expand Water Conservation and Reuse Strategy W1 to encourage rainwater catchment systems.
5. In Chapter 4, add climate emergency planning components for residents; include educational support to help form household plans and create support networks. The Final CAAP will:
a. Expand the Community Preparedness (CP) Strategy CP1 re: public education, emergency preparedness fairs, and networking on page 4-9.
6. In Chapter 4, consider allowing the use of greywater in the City. The Final CAAP will modify page 4-16 to capture the following:
a. Extreme Drought Strategy ED2 (expand community water recycling) on page 4-19 encourages the use of greywater and rainwater catchment systems.
b. Final CAAP will expand Water Conservation and Reuse Strategy (W) W1 on page 4-19 will be revised to encourage the installation of greywater reuse systems.
7. In Chapter 3, update the discussion pertaining to public EV charging The Final CAAP will be revised:
a. Transportation Action T1.1 on page 3-21 calls for developing a citywide Zero Emission Vehicle (ZEV) Master Plan.
b. Final CAAP language will be enhanced on page 3-21 to encourage EV systems that are solar infrastructure reliant; and placement at all feasible placement locations (e.g., street light pole placement and right of way considerations).
During the July 7, 2022 Planning Commission meeting there were seven topic areas which required further discussion and analysis. The September 1, 2022 Planning Commission meeting was focused on reviewing these seven topic areas where, at the July 7 Planning Commission meeting, there was no consensus (see Attachment 2, September 1, 2022 staff report), and adopting a resolution recommending City Council approval of the CAAP. As a result of the September 1, 2022 meeting these seven topic areas were reduced to three. The Planning Commission was agreeable to omitting four of the items that were discussed at the September 1, 2022 meeting as memorialized within Exhibit A to the Planning Commission Resolution (Attachment 2). In total, ten changes were recommended from Planning Commission input. If supported by City Council, these recommendations will be memorialized in the Final CAAP.
1. Exceed the State GHG emission reduction target of 40 percent below 1990 levels by 2030.
Planning Commission suggested that the City’s CAAP Revision: The City’s CAAP should be revised to increase the 621
GHG emission reduction target of 60% below 1990 levels by 2030. Funding should be reallocated to evaluate and reconsider reduction targets and policy changes to achieve GHG emission reduction targets of 60% below 1990 levels by 2030.
Staff Recommended Draft CAAP Revision: Staff disagrees with this change as City Council identified the desired percentage in March 2021 and changing this percentage would result in an approximately two (2) year delay in presenting the Final CAAP to the City Council but supporting language is recommended. Therefore, the City’s CAAP should continue to set targets at 40% below 1990 levels.
However, staff does suggest additional language to address Commission input and the recent passage of Assembly Bill (AB) 1227 - Page 2-10 should be revised to state that the City's CAAP has an aspirational GOAL to achieve carbon neutrality by 2045, and will revisit the feasibility of that goal during the next CAAP update, and after the California Air Resources Board (CARB) has adopted its next Scoping Plan update. It is also recommended that the section acknowledge that additional updates may be necessary to adjust this target goal in the next CAAP update due to the recent passage of AB 1227.
2. Require Project Labor Agreements (PLA) as a way to reduce Vehicle Miles Traveled (VMT).
Planning Commission Suggested Draft CAAP Revision: The description of Strategy L1 on Page 3-30 should be revised to include PLA’s as a way to reduce VMT: The City should consider requiring PLAs on development projects as a way to reduce VMT.
Staff Recommended Draft CAAP Revisions: Staff disagrees with this change as VMT is largely driven by land use policy (density, mix of land uses), transit and pedestrian opportunities, and commuter trips but is agreeable to augmented language. Additionally, PLA’s will not result in a reduction in customer VMT, or commercial/industrial VMT. Although a PLA could reduce VMT there are many other implications to PLAs that are not related to the CAAP and furthermore City Council has not established a PLA policy.
However, staff does suggest additional language to address Commission and community input - Page 3-30, Strategy L1 should be revised to acknowledge the relationship between VMT and land use policy (density, mix of uses), transit and pedestrian opportunities, and commuter trips.
3. CAAP Implementation Plan Should Include Yearly Budget Recommendations on Renewable Expenditures.
Planning Commission Suggested Draft CAAP Revisions: The description of Implementation Steps on pages 5-5 and 5-6 should be revised to include a recommendation that the City’s Fiscal Year budget allocate a $1Million annually to implement CAAP near term actions, especially with consideration to the City’s two-year Capital Improvement Program (CIP) process.
Staff Recommended Draft CAAP Revisions: It is not recommended that a specific percentage or dollar figure be included given that costs are not known at this time and State and Federal renewable energy resource funding is increasing. Appendix F to the CAAP identifies potential Federal, State, Regional and private funding sources for implementing elements of the CAAP.
However, staff does suggest additional language to address Commission input - Page 5-6, (funding bullet) should be augmented with language to state that the City will consider the CAAP in yearly departmental budgeting and CIP activities and seek out Federal & State funding opportunities where funding aligns with Council priorities and the CAAP programs. The Planning Commission was agreeable to the staff's recommended language for these three items.
Next Steps
In order to save fiscal resources (production of Final Draft CAAP prior to presentation of the document to Committee and City Council), once the CAAP is reviewed and approved by City Council, the CAAP will be revised to produce a Final CAAP which will be comprised of the following:
Introductory comments from Mayor John Zaragoza;
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Planning Commission recommended edits (Exhibit A, to Resolution No. 2022-32 in Attachment 3 to the September 1, 2022 Planning Commission staff report (Attachment 2)) as approved by City Council; Suggested edits to CAAP as agreed upon by staff, and minor typos identified by the CAAP consultant as reflected within the July 2022 summary document in Attachment 2 to the September 2022 Planning Commission staff report (Attachment 2);
Update to Chapter 5 to implementation GHG reduction actions and the timeframes as identified within this staff report; Incorporation of May 14, 2022 powerpoint presentation to the community during review of CAAP; Updated City of Oxnard photos; and
Inclusion of the City Council approved resolution of approval.
Community Input and Notice
In early 2021 staff assembled a Stakeholder Group to help guide in the development and visioning of the CAAP document. The roughly 125 member stakeholder group was focused on the following topic/issue areas: Environmental, Businesses, Utilities & Franchisees/Agency Representatives, Community Organizations, Education and Health Care, and City Staff. Over the past two years, this group has been consulted and engaged to secure feedback and input. Due to the pandemic, outreach measures, approaches, and protocols had to be adjusted. Appendix A of the CAAP document summarizes community / stakeholder meeting efforts, dates and outcomes. The Final CAAP will include presentation information from the May 2022 community meetings. These documents were not available at the time of publication of the Draft CAAP. These engagement efforts helped identify climate impacts of concern in the Community Vulnerability Assessment, and to identify effective CAAP strategies and actions for improving community resilience and reducing GHG emissions.
The City of Oxnard’s Draft CAAP was released in late April 2022 and notification was sent to the City’s CAAP interested parties list for a Stakeholder meeting held on May 5. Social media outreach efforts to the public also began on May 3 with media posts highlighting the release of the CAAP on the City’s website, scheduled virtual drop in hours for May 9, and a virtual public meeting on May 14. Subsequent posts were released on the City of Oxnard’s Official Instagram account on May 6, May 8, and May 13.
No notice of public hearing was required to be published in the newspaper ahead of the Planning Commission Study Session Meeting scheduled on July 7. A notice was sent to the City’s CAAP interested parties list and the City’s Public Information Office posted on social media to engage the public ahead of the meeting on July 5. A summary of community engagement efforts is contained in Attachment 6.
In preparation for the Committee Meeting on September 27 and the City Council meeting on October 18, social media posts were released using the City’s Public Information Office channels and through the City’s CAAP website - https://www.oxnard.org/climate-action-plan/.
ENVIRONMENTAL REVIEW
The City Council certified the General Plan Program Environmental Impact Report (PEIRSCH # 2007041024) in October 2011, and addenda environmental evaluations were prepared for subsequent General Plan revisions. Pursuant to the CEQA Section 15164, the City has prepared an Addendum (see Attachment 2, Planning Commission Resolution of Approval) affirming that the analysis contained in the 2030 General Plan PEIR adequately addresses the potential environmental impacts associated with implementation of the CAAP. The CAAP is an implementing action of the 2030 General Plan. The previously certified PEIR may be viewed on the City’s website at City of Oxnard 2030 General Plan PEIR Volume I, Recirculated Draft.
As demonstrated in the environmental analysis of the Addendum, none of the conditions that had been analyzed in the 2030 General Plan PEIR would change with adoption and implementation of the CAAP. Furthermore, no new information of substantial importance meeting the criteria listed in State CEQA Guidelines Section 15162 have been identified. The City has determined that there is no legal or evidentiary basis for the preparation of a Subsequent or Supplemental EIR pursuant to State CEQA Guidelines Sections 15162 and 15163, and that an Addendum to the 2030 General Plan PEIR, as contemplated by State CEQA Guidelines Section 15164, is the appropriate environmental document for the proposed project. The General Plan Addendum has been prepared in compliance with Public Resources Code Section 21000 et seq., and Title 14, Chapter 3 of the California Administrative Code (State CEQA Guidelines). 623
STRATEGIC PRIORITIES
This agenda item supports the Infrastructure and Natural Resources strategy. The purpose of the Infrastructure and Natural Resources strategy is to preserve and improve our roads, utilities, parks, trees, water supply and natural resources through effective planning, prioritization, and an equitable and efficient use of available funding.
This agenda item supports the Quality of Life strategy. The purpose of the Quality of Life strategy is to restore and increase quality services and programs that enrich Oxnard's diverse community, promote safe neighborhoods, encourage community engagement, and support our Planning Commission CAAP Staff Report September 1, 2022 residents in their efforts to improve their quality of life.
FINANCIAL IMPACT
There is no fiscal impact associated with adoption of the CAAP document; however, strategies and actions contained in the CAAP will have a financial impact. Funding will be needed in the future to implement the GHG reduction strategies and Climate Change Resilience and Adaptation Strategies.
The GHG reduction strategies and actions in the CAAP were formulated with an understanding that the City has limited staff time and financial resources to implement them. The cost-benefit ratios presented in Chapter 3 of the CAAP are based on the anticipated impact to the city budget, including any upfront capital investment needed to implement a strategy, ongoing annual costs, and City staff time required. Fiscal impacts of implementing the CAAP will require funding from General Fund and may be requested through City’s CIP process.
For many of the actions, detailed cost estimates will be needed to inform and guide the implementation process, and be refined over time with more-precise implementation level data. One of the first recommended CAAP implementation measures will be to develop a fiscal analysis associated with implementation of key near term objectives. This fiscal analysis will assist the City in developing CAAP related budget documents to implement the CAAP over the next five (5) years.
The City’s costs for implementation may include the creation or promotion of voluntary programs, continuing administration of those programs, coordination and outreach with other government agencies and businesses, hiring staff to lead the actions and/or track and prepare grant applications, and— in some cases— exploration or study of potential regulatory mechanisms not yet codified. Some strategies require up-front capital expenditures by the City. The CAAP recognizes the value of leveraging partnerships, seeking grants, and evaluating funding sources. Further, the CAAP should be updated every five (5) years to evaluate the effectiveness of programs, changes in technologies, and to reflect new land use patterns - especially considering the City will embark upon an update to the City’s General Plan which will kick off in early 2023 and will take approximately three (3) to four (4) years to complete.
COMMITTEE OUTCOME
On September 27, 2022, the Community Services, Public Safety, Housing & Development Committee and Public Works & Transportation Committee both received a presentation and provided feedback on the City’s Draft CAAP. There was no formal vote taken.
Prepared by: Kathleen Mallory, Planning & Sustainability Manager
ATTACHMENTS
1. CAAP-Public-draft-2022.pdf (oxnard.org)
2. September 1, 2022 Planning Commission Staff Report (Attachment 1 removed due to duplication)
3. March 30, 2021 City Council staff report
4. January 25, 2021 Committee Staff Report
5. July 7, 2022 Planning Commission staff report (Attachment A,B, and D removed due to duplication)
6. Summary of Community Input
7. September 27, 2022 Committee Staff Report
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Attachment 1Seehttps://www.oxnard.org/climate-action-plan City of Oxnard’s Climate Action and Adaptation Plan
The City’s Climate Action and Adaptation Plan can be downloadedhere. This document will bereviewed by the Committees and considered by the City Council in Fall 2022.
You can download theClimate Action and AdaptationPlan here. 625
PLANNING COMMISSIONSTAFF REPORT
TO: Planning Commission
FROM: Kathleen Mallory, AICP, Planning & SustainabilityManager DATE: September 1, 2022
SUBJECT: PlanningCommissionAdoptionof a ResolutionRecommendingCityCouncilapprovaloftheCityofOxnardClimateActionandAdaptationPlanandanAddendumtothe2030GeneralPlanProgramEnvironmentalImpact Report (PEIR; SCH # 2007041024). 1) Recommendation:That the Planning Commission:
a) Receive a presentation on theClimate Action and AdaptationPlan (CAAP); andb) Receive public comments on the Draft CAAP document; andc) ApproveResolution2022-XXrecommendingCityCounciladopttheCAAPandthe Addendum to the PEIR. 2) Background:OnJuly7,2022,thePlanningCommissionconductedapublicmeetingon theaforementionedCAAP(seeAttachment1 - FullJuly7, 2022PCPacket).AdditionalbackgroundontheCAAPprocessisprovidedinthePlanningCommissionstaff reportfortheJuly7,2022studysession,andontheCity’s CAAPwebpageathttps://www.oxnard.org/climate-action-plan/. At the July 7, 2022 PlanningCommissionmeeting,thePlanningCommissionreceiveda presentationfromtheCity’s CAAPconsultantontheDraftCAAPdocument;receivedpubliccommentontheDraftCAAPdocument;andprovidedfeedbackontheDraftCAAPdocument.Duringthemeetingtherewasa dialoguebetweentheCommission,andPlanningaswellasPublicWorksStaff, andtheCity’s CAAPconsultant;onlydiscussionitemswhichresultin changeto theCAAPdocumentorwhichrequirefurtherdialoguebetweentheCommissionarebeingdiscussedinthisreport.InputfromthePlanningCommissionmeetingfallsintotwocategories:Commissioninputforwhichthereappearedto be generalconsensus(see Attachment2) and inputfor whichrecommendationsandsuggestedCAAPrevisionlanguagerequiresfurtherdiscussion;Seeanalysisofthisstaff reportandtheresolutionofapproval.(seeAttachment3,Exhibit A, to the Resolution Recommending Approval of the CAAP). 3) Analysis:BasedupondiscussionduringtheJuly7, 2022meeting,thePlanningCommission generally had consensus with the following CAAP text revisions:
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Draft CAAPPlanning Commission: September 1, 2022Page2of 8 Revisionsto theDraftCAAPfor WhichTherewasConsensus(inadditiontoAttachment 2 - Revisions Due to July 7, 2022 Commission Meeting):
● UpdatetheExecutiveSummarysectionoftheCAAPtoincludeinformationonwhatactionsthecommunitycandotoadvancetheCity’s climategoals(presentlyonpages5-2and5-3oftheCAAP, includingTable5-1).Staffcomment:Wewilladda sectionattheend,aspartoftheimplementationsectionoftheExecutiveSummary, titled“WhattheCommunityCanDoToHelp”tohighlightthecriticalrolethatthecommunitywillplayin helpingtheCityattainitsGHGreductiongoal.We willpointto Table5-1,andalsoadda sidebarthatemphasizeslittleinvestmentsthatthecommunitycanmakethatyieldsignificantreductionsinGHGemissions,includingthoselistedforCleanEnergy, Transportation,andWasteReductionandRecyclinginTable5-1.WewillincludetheassociatediconforeachoftheseactionssotheystandoutandrelatebacktotheGHGreductionstrategiessummarized in the Executive Summary. ● AddaspirationallanguageandasenseofurgencywithintheExecutiveSummaryandtheopeningtext.ReducejargontomaketheplanmoreusabletothepublicStaffcomment:TheCAAPisa planningdocumentwhichidentifiesthatclimatechangeis happeningandidentifiestargetsandimplementationmeasures forreducingtheCity’s impactonclimatechangeandstrengtheningthecommunity’sresilience.TheCAAPisnotintendedtoincitealarmormakeclaimsthatpotentialimpactsare imminent.Additionaldiscussionon thistopicis providedunderComments10and11 oftheCAAPStakeholderandCommunityCommentLetters(Attachment2 toJuly7,2022PlanningCommissionPacket).Withrespecttothecommentrelatedto reducingjargon,we recognizethatpartof theCAAPistechnicalin nature, suchasChapter3, whichdescribeswhere theCity’s GHGemissionsarecomingfrom.Nevertheless,weunderstandtheimportanceofwritingforthelayperson.WehaveincludedaTermsandAbbreviationssectionupfrontintheCAAPbeforetheExecutiveSummary, andhavetriedtoavoidtechnicaljargon,ordefinesuchtermsandreferencesinasidebarwithinthechapter. Forexample,onpage1-2whereweciterelevantlegislationrelatedtotheCAAP, wedefinethebillsinatextbox(e.g.,SB379).Similarly, somefiguresaredesignedtoillustratetechnicalconcepts,suchasFigure1-2TheGreenhouseEffect.WewillreviewtheCAAPagainfortermsthatneedexplanationorsidebardefinitions,andrewordterms as appropriate to be more accessible to the layperson. ● Refinewildfirelanguageonpage4-18regardinghowOxnardis threatenedbywildfires;Oxnardissusceptibletowildlandfiresalongtheriverbed,whichcouldreachOxnard.Staffcomment:We willremovethebeginningofthetextonpage4-18, to remove “While Oxnard is not directly threatened by wildland fires.” ● IncorporatelanguagethatrecognizesthecurrentwatershortagethattheStateisexperiencingdueto climatechange.Potentiallyincluderainwaterharvestingmechanismsto addressshortage,suchasrainwatercollectionfromraingutters.Staffcomment:Rainwatercatchmentsystemsare alreadyidentifiedaspartof 627
Draft CAAPPlanning Commission: September 1, 2022Page3of 8 StrategyED2onpage4-19,whichincludesanactiontodistributeinformationalmaterialstoencouragetheuseofgreywaterandrainwatercatchmentsystemsforbusinessesandresidents.We canstrengthena relatedstrategy(ED3)tospecifyrainwaterharvestingasanexampleof alternativeirrigation,inadditiontotheothermethodslistedto reducewateruse,includingtheplantingof droughttolerant,nativeplants.We canalsoaddanimplementingactiontoStrategyW1:IncreaseWaterConservationandreusetoencouragetheinstallationofrainwatercatchment systems as a means of reducing water consumption. ● Addaresilience,emergencyplanningcomponentforindividualresidents.Provideeducationalsupporttohelpresidentsformaplanfortheirhouseholds,andhowtocreatea networkofpeoplewhocaneachprovidea necessaryitemforsurvival.Staffcomment:Publiceducationis thefirststrategy(CP1)in theCommunityPreparednesssectionintheCAAP. StrategyCP1onpage4-9willbeexpandedtoincludethe suggestionsmentionedby the Commission,suchas emergencypreparedness fairs and networking. ● TheCityshouldconsiderallowingtheuseofgreywaterintheCity. Staffcomment:TheCaliforniaPlumbingCodeallowsuseofgreywaterincertaincircumstances.StrategyED2onpage4-19isfocusedonexpandingcommunitywaterrecyclingprograms,whichincludesdistributinginformationalmaterialstoencouragetheuseofgreywaterandrainwatercatchmentsystemsforbusinessesandresidentstoenhancetheeffectivenessofcommunitywaterrecyclingprograms.ThisstrategywillbestrengthenedtoencouragetheexpansionofgreywaterusewithintheCity.We will alsoaddan implementingactionto StrategyW1:IncreaseWaterConservationandreusetoencouragetheinstallationofgreywaterreusesystemsas a means of reducing water consumption. ● Rollouta planto implementpublicElectricVehicle(EV)chargingstationsandrequireEVchargersfor handicapparkingspaces.Staffcomment:TheCAAPincludesa goalof 1,500newEVchargingstationsby 2030.EVchargingiscurrentlyallowedwithinhandicappedparkingspaces(providingadequateaccessibilityclearanceis achieved).TheCityhasadoptedEVaccommodationmeasures consistentwithCaliforniaAB1236(2015)andAB970(2021)tostreamlinepermittingproceduresforelectricvehiclechargingstations.AdditionalinformationonthistopicisprovidedunderComment15,21&43oftheCAAPStakeholderandCommunityCommentLetters(Attachment2 to July7, 2022PlanningCommissionPacket).TextpertainingtotheCity’s ZEVMasterPlanwillbeaugmentedtoencouragelookingat:EVsystemswhicharesolarinfrastructurereliant;andallfeasibleplacementlocations,includingCaliforniaBuildingCodecompliantplacementmeasures(e.g.,streetlightpoleplacementandrightofwayconsiderations). 628
Draft CAAPPlanning Commission: September 1, 2022Page4of 8 CAAPRevisionLanguageRequiringFurtherCommissionDiscussion(Attachment3,Exhibit A):
1. ExceedtheStateGHGemissionreductiontargetof40%below1990levelsby2030.Considerincreasingthisto50%or60%below1990levelsby2030.Staffcomment:TheCityCouncilidentifiedthedesired percentagein March 2021.Changingthispercentagewouldresultinanapproximatelytwo(2)yeardelayinpresentingtheFinalCAAPtotheCityCouncil.AdditionaldiscussiononthistopicisprovidedunderComment62oftheCAAPStakeholderandCommunityCommentLetters(Attachment2toJuly7,2022PlanningCommissionPacket).Further, theCity’s establishedreductiontargetisagoalandcouldbeexceededatanytimeinthe next five (5) years.
Nevertheless,ExhibitAtoAttachment3includeslanguagetoaddressCommissioninput.
Alternativelanguageissuggested:Staffisinsupportofaddingthefollowingtextto page2-10in thedocument:"TheCity'sCAAPhasanaspirationalGOALtoachievecarbonneutralityby 2045,andwillrevisitthefeasibilityof thatgoalduringthenextCAAPupdate,andaftertheCaliforniaAirResourcesBoard(CARB) has adopted its next Scoping Plan update."
2. Projectlaboragreements(PLA)shouldberequiredin orderto reduceVehicleMilesTraveled(VMT).Staffcomment:ItisnotrecommendedtorequirePLA’sonprojectsgiventhatVMTislargelydrivenbylandusepolicy(density, mixoflanduses),transitandpedestrianopportunities,andcommutertrips. Additionally,PLA’s willnotresultinareductionincustomerVMT, commercial/industrialVMT.More informationon VMTwillbecommunicatedto thePlanningCommissionduringastudysessionwhichwilloccurlaterthisyear. AdditionalinformationonthistopicisprovidedunderComment36oftheCAAPStakeholderandCommunityComment Letters (Attachment 2 to July 7, 2022 Planning Commission Packet).
Nevertheless,ExhibitAtoAttachment3includeslanguagetoaddressCommissioninput.
Alternativelanguageissuggested:ThestrategydescriptionforL1onpage3-30isrecommendedto be revisedto acknowledgetheimpactthatlanduse,transit,pedestrianaccess,mobility, anddensityhaveinimpactingVMTandsustainabilitygoals.
3. Includea recommendationthattheCity’s FiscalYearbudgetallocate$1Millionannuallyto implementCAAPneartermactions.Staff comment:It is notrecommendedthata specificpercentageordollarfigure beincludedgiventhatcostsarenotknownatthistimeandStateandFederalrenewableenergyresourcefundingisincreasing.AppendixFtotheCAAPidentifiespotentialFederal,State,Regional and private funding sources for implementing elements of the CAAP. 629
Draft CAAPPlanning Commission: September 1, 2022Page5of 8 Nevertheless,ExhibitAtoAttachment3includeslanguagetoaddressCommissioninput.
Alternativelanguageissuggested:TheImplementationStepssectiononpages5-5and5-6isrecommendedtoberevisedtoencouragetheCityCounciltocontinueimplementingCAAPrelatedprogramson a yearlybasisthroughfundingofdepartmental goals, policies, and CAAP measures.
4. OnCityprojectsitesforwhichleaseagreementsarebeingconsidered,requirerenewableenergyusageonasiteinthe80%to100%range.Staffcomment:TheCityprocuresenergyfromtheCleanPowerAlliance(CPA).TheCityselectedthe100%renewablelevelforallCPAaccountswithintheCity(otherthantheCity’senterpriseaccounts);projectsitesandaccountsareautomaticallyenrolledinthispercentageunlesstheyoptdowntoalowerenergytieroroutoftheCPAprogram.IfenergyisprocuredfromSouthernCaliforniaEdison(SCE)forcertainaccounts,thecontentofrenewableenergywillgraduallyincreaseasrequiredbythePublicUtilityCommissionpursuantto SB100andtheRenewablesPortfolioStandard.AdditionalinformationonthistopicisprovidedunderComment64oftheCAAPStakeholderandCommunityCommentLetters(Attachment2 to July7, 2022PlanningCommissionPacket).TheCAAPestablishedStrategyE.1to procurezero-carbon electricity from the CPA; therefore, no CAAP change is recommended.
Nevertheless,ExhibitA toAttachment3includestheCommission’s recommendedinput.
Alternativelanguageisnotprovidedasstaffdoesnotrecommendincludingthisadditional language for the reasons communicated under “staff comment”, above.
5. Requiresolarpanelsandbatterystorageon newdevelopmentprojectsoveracertainsize(suchas multifamilybuildings).Thiswouldbe a steptowardstransitioningtorenewables.Staffcomment:TheCaliforniaBuildingCoderequiressolarpanelsonnewsingle-familyresidentialhomes;thiswillalsoberequiredonmulti-familyhousingwithcertaincharacteristicsandnonresidentialbuildingsforselectbusinesseseffectiveJan.2023. StartingJanuary2023,all buildingsrequiredto havea PVsystemshallalsoberequiredto havea batterystoragesystem.Assuch,theStateisalreadymovinginthedirectionofrequiringsolarandbattery storage in new construction.
Nevertheless,ExhibitA toAttachment3includestheCommission’s recommendedinput,whichstaffrecognizeswasprovidedwithouta full understandingofCalifornia energy code requirements and stipulations.
Alternativelanguageisnotprovidedasstaffdoesnotrecommendincludingthisrequirement,sincestartingJanuary2023,theStatebuildingcodewillrequirenewsinglefamilyandin certainscenariosmultifamilyhomesandnon-residentialbuildings to have a solar PV system and a battery storage system. 630
Draft CAAPPlanning Commission: September 1, 2022Page6of 8
6. Acceleratethe requirementfor electrificationof newbuildingsthroughtheadoptionof reachcodesthatbannaturalgas in newconstructionnow. Indiscussionat theCommissionmeeting,membersoftheCommissionanda fewmembersof the publicstatedthat the Citywouldlosean opportunitytodecarbonizebuildingsifitwaitedfive(5)yearstoreviewtheCAAPandreviseitto implementthis requirement.Staffcomment:California'sbuildingenergyefficiencystandards(Title24,Part6)willrequireconstructionofnewhomesandmultifamilydwellingsto be 'electricready'effectiveJanuary1, 2023(electricreadymeansthateachhousebuiltin Californiaafter2022willeitherhaveelectricalcircuitsthancansupportallappliancesordedicatedcircuitsandpanelsto easilyconvertfromnaturalgastoelectricinthefuture).There are alsonewrequirementsforenergy storagesystemsin commercialbuildings,butelectricreadyisnotrequiredfornewcommercialorindustrialbuildings.Future energyandbuildingcodeupdatesare expectedtohaveevenmore progressivebuildingelectrificationrequirements.WhiletheCityrecognizesthatbuildingelectrificationis beneficialfroma GHGreductionperspective,it alsoseestheneedtoretainnaturalgasas a reliableenergy source fortimeswhentheelectricitygridisdisrupted,atleastfortheforeseeablefuture untiladequatelocalenergystoragecapacityis developed.TheCityofOxnard’s populationisconsideredanatriskpopulation,where powerredundancyandenergysecurityisneededfortheCity’spopulation.
TheDraftCAAPdemonstratesthattheCitycanachieveits2030GHGtargetwithoutinstitutinganelectrificationreachcode,akathebanningofuseofgasinnewconstruction.AdditionalinformationonthistopicisprovidedunderComment20oftheCAAPStakeholderandCommunityCommentLetters(Attachment2 toJuly 7, 2022 Planning Commission Packet).
Nevertheless, Exhibit A to Attachment 3 includes the Commission input.
Alternativelanguageisnotprovidedasstaffdoesnotrecommendincludingthisadditionallanguage,sincefortheforeseeablefuture naturalgasis neededtoprovidecriticalenergyresilience,andstartinginJanuary2023theStatebuildingcodewillhaveincreasinglyprogressiveenergystorageandbuildingelectrificationrequirements for new homes and non-residential buildings.
7. A programor policyshouldbe includedin theCAAPto transitionexistingbuildingsawayfromgastoall-electricinfrastructure.TheuseofnaturalgasshouldbephasedoutofuseintheCity. Staffcomment:StrategyB2includesimplementingactionsto seekfundingandpartnershipsfortransitioningexistingbuildingstoelectrification.TheStateisalsoimplementingclimategoalsanditislikelythatinthe future the Statewillbe developinga retrofitprotocoland/orincludingincentivesto encouragethetransitionof existinggasinfrastructure to electric.Theprocessofconvertinganexistingbuildingfromgastoelectricisasignificantone- andincludesaddedbuildingretrofitcosts(plumbinga dryerfromgastoelectricfor example),andinvolvessubstantialimplementationchallengesand 631
Draft CAAPPlanning Commission: September 1, 2022Page7of 8 questions.Furthermore, whiletheCityrecognizesthatbuildingelectrificationisbeneficialfroma GHGreductionperspective,it alsoseestheneedto retainnaturalgasas a reliableenergy source fortimeswhentheelectricitygridisdisrupted,atleastfortheforeseeablefuture untiladequatelocalenergystoragecapacityis developed.TheCityofOxnard’s populationisconsideredanatriskpopulation,where powerredundancyandenergysecurityisneededfortheCity’spopulation.AdditionalinformationonthistopicisprovidedunderComment20ofthe CAAP Stakeholder and Community Comment Letters (Attachment 2).
TheDraftCAAPdemonstratesthattheCitycanachieveits2030GHGtargetwithout banning the use of natural gas in existing buildings.
Nevertheless, Exhibit A to Attachment 3 includes the Commission input.
Alternativelanguageisnotprovidedasstaffdoesnotrecommendincludingthisadditionallanguage,sincefortheforeseeablefuture naturalgasis neededtoprovidecriticalenergy resilience,andtheprocessof convertingan existingbuildingfromgastoelectriciscomplexandexpensive.Inaddition,StrategyB2includesActionsB2.1,B2.2andB2.3to supportelectrificationof existingbuildings. 4) CaliforniaEnvironmentalQualityAct(CEQA)Review:TheGeneralPlanProgramEnvironmentalImpactReportwas certifiedin 2011. Sincethen, addendaenvironmentalevaluationswerepreparedfor subsequentGeneralPlanrevisions.PursuanttotheCEQASection15164,theCityhaspreparedanAddendum(attachedtoAttachment3)affirmingthattheanalysiscontainedinthe2030GeneralPlanPEIRadequatelyaddressesthe potentialenvironmentalimpactsassociatedwithimplementationof theCAAP. TheCAAPis an implementingactionofthe2030GeneralPlan.ThepreviouslycertifiedPEIRmaybeviewedontheCity’s websiteatCity of Oxnard 2030 General Plan PEIR Volume I, Recirculated Draft.
As demonstratedin the environmentalanalysisof theAddendum,noneof theconditionsthathadbeenanalyzedinthe2030GeneralPlanPEIRwouldchangewithadoptionandimplementationof theCAAP. Furthermore,no newinformationofsubstantialimportancemeetingthecriterialistedinStateCEQAGuidelinesSection15162havebeenidentified.TheCityhasdeterminedthatthereis no legalorevidentiarybasisforthepreparationofaSubsequentorSupplementalEIRpursuanttoStateCEQAGuidelinesSections15162and15163,andthatanAddendumtothe2030GeneralPlanPEIR,ascontemplatedbyStateCEQAGuidelinesSection15164,istheappropriateenvironmentaldocumentfor theproposedproject.TheGeneralPlanAddendumhasbeenpreparedin compliancewithPublicResourcesCodeSection21000et seq.,andTitle14,Chapter3 oftheCaliforniaAdministrativeCode(StateCEQA Guidelines). 632
Draft CAAPPlanning Commission: September 1, 2022Page8of 8 5) CommunityOutreach:TheCityhasheldnumerousworkshopsandpublicoutreachon theCAAP. A listofoutreacheventsis providedin theJuly7, 2022PlanningCommission CAAP Staff Report.
Attachments:
1. July7,2022PlanningCommissionstaff reportPlanningCommissionCAAPStaffReport July 7, 2022, including CAAPCAAP-Public-draft-2022.pdf(oxnard.org)2. July 7, 2022 Planning Commission Agreed upon Draft CAAP Revisions3. ResolutionofApproval,IncludingExhibitA-CommissionRecommendationsforCity Council - Including Addendum No. 1 to the PEIR for 2030 General Plan 633
Attachment 1
July 7, 2022 Planning Commission Staff Report
Planning Commission CAAP Staff Report July 7, 2022, including CAAP CAAP- Public-draft-2022.pdf (oxnard.org)
Removed to avoid duplication
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Attachment 2
July 7, 2022 Planning Commission Agreed upon Draft CAAP Revisions
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Attachment 2
CategoryComment Number & DocumentDate NameContact infoStakeholder or Member of the public Comment Proposed Action by CommenterRelevant Chapter Response to CommentAction to be Taken 87 7/7/22 Incorporate the water shortage into EB3. Potentially including rainwater harvesting Staff will expand Potential Adaptation Strategy ED3 (Page 4-19), which discusses use of drought tolerant, antive plants and alternative irrigation, to include these recommendations. 88 7/6/22, via emailSteve NashKathleen MalloryPlanning CommissionerChange Pg. 4-3 - change text from "homeless" to "unhoused"Chapter 4Will make change Relevant section will be amended 89 7/6/22, via emailSteve NashKathleen MalloryPlanning CommissionerChange Pg. 4-32 - insert "high" after "particularly".Chapter 4Will make change Relevant section will be amended 100 7/7/22 CommissionerUpdate the Executive Summary section of the CAAP to include information on what actions the community can do to advance the City’s climate goals (presently on pages 5-2 and 5-3 of the CAAP , including Table 5-1) Action: Update the Executive Summary section of the CAAP to include information on what actions the community can do to advance the City’s climate goals (presently on pages 5-2 and 5-3 of the CAAP , including Table 5-1)ES Staff will add a section at the end, as part of the Implementation section of the Executive Summary, titled “What the Community Can Do To Help” to highlight the critical role that the community will play in helping the City attain its GHG reduction goal. We will point to Table 5-1, and also add a sidebar that emphasizes little investments that the community can make that yield significant reductions in GHG emissions, including those listed for Clean Energy, Transportation, and Waste Reduction and Recycling in Table 5-1. We will include the associated icon for each of these actions so they stand out and relate back to the GHG reduction strategies summarized in the Executive Summary.
Relevant section will be included
101 7/7/22 CommissionerAdd aspirational language and a sense of urgency within the Executive Summary and the opening text. Reduce jargon to make the plan more usable to the public Add aspirational language and a sense of urgency within the Executive Summary and the opening text. Reduce jargon to make the plan more usable to the public ES The CAAP is a planning document which identifies that climate change is happening and identifies targets and implementation measures for reducing the City’s impact on climate change and strengthening the community’s resilience. The CAAP is not intended to incite alarm or make claims that potential impacts are imminent. Additional discussion on this topic is provided under Comments 10 and 11 of the CAAP Stakeholder and Community Comment Letters (Attachment 2 to July 7, 2022 Planning Commission Packet). With respect to the comment related to reducing jargon, we recognize that part of the CAAP is technical in nature, such as Chapter 3, which describes where the City’s GHG emissions are coming from. Nevertheless, we understand the importance of writing for the layperson. We have included a Terms and Abbreviations section upfront in the CAAP before the Executive Summary, and have tried to avoid technical jargon, or define such terms and references in a sidebar within the chapter. For example, on page 1-2 where we cite relevant legislation related to the CAAP , we define the bills in a text box (e.g., SB 379). Similarly, some figures are designed to illustrate technical concepts, such as Figure 1-2 The Greenhouse Effect. We will review the CAAP again for terms that need explanation or sidebar definitions, and reword terms as appropriate to be more accessible to the layperson.
Technical language will be defined or edited as appropriate 101 7/7/22 CommissionerRefine wildfire language on page 4-18 regarding how Oxnard is threatened by wildfires; Oxnard is susceptible to wildland fires along the riverbed, which could reach Oxnard Refine wildfire language on page 4-18 regarding how Oxnard is threatened by wildfires to not suggest that the City is not susceptible to wildfire at all.Chapter 4We will remove the beginning of the text on page 4-18, to remove “While Oxnard is not directly threatened by wildland fires.Text will be edited as noted in response to comment 103 7/7/22 CommissionerIncorporate language that recognizes the current water shortage that the State is experiencing due to climate change. Potentially include rainwater harvesting mechanisms to address shortage, such as rainwater collection from rain gutters.
Augment Strategies ED3 and W1 to include rainwater harvesting mechanisms as a strategy to conserve water.Chapters 3 and 4 Rainwater catchment systems are already identified as part of Strategy ED2 on page 4-19, which includes an action to distribute informational materials to encourage the use of greywater and rainwater catchment systems for businesses and residents. We can strengthen a related strategy (ED3) to specify rainwater harvesting as an example of alternative irrigation, in addition to the other methods listed to reduce water use, including the planting of drought tolerant, native plants. We can also add an implementing action to Strategy W1: Increase Water Conservation and reuse to encourage the installation of rainwater catchment systems as a means of reducing water consumption.
Text will be added as noted in response to comment
104 7/7/22 CommissionerAdd a resilience, emergency planning component for individual residents. Provide educational support to help residents form a plan for their households, and how to create a network of people who can each provide a necessary item for survival.
Augment Strategy CP1 on page 4-9 to provide educational support to help residents form a plan for their households and understand how to create a network of people who can each provide a necessary item for survival.Chapter 4Public education is the first strategy (CP1) in the Community Preparedness section in the CAAP . Strategy CP1 on page 4-9 will be expanded to include the suggestions mentioned by the Commission, including emergency preparedness fairs and networking.
Text will be added as noted in response to comment
105 7/7/22 CommissionerThe City should consider allowing the use of greywater in the City.Augment Strategy ED2 and Strategy W1 to encourage the installation of greywater reuse systems as a means of reducing water consumption. Chapters 3 and 4 The California Plumbing Code allows use of greywater in certain circumstances. Strategy ED2 on page 4-19 is focused on expanding community water recycling programs, which includes distributing informational materials to encourage the use of greywater and rainwater catchment systems for businesses and residents to enhance the effectiveness of community water recycling programs. This strategy will be strengthened to encourage the expansion of greywater use within the City. We can also add an implementing action to Strategy W1: Increase Water Conservation and reuse to encourage the installation of greywater reuse systems as a means of reducing water consumption.
Text will be added as noted in response to comment
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Attachment 2
CategoryComment Number & DocumentDate NameContact infoStakeholder or Member of the public Comment Proposed Action by CommenterRelevant Chapter Response to CommentAction to be Taken 106 7/7/22 CommissionerRollout a plan to implement public Electric Vehicle (EV) charging stations, and require EV chargers for handicap parking spaces.Chapter 3 The CAAP includes a goal of 1,500 new EV charging stations by 2030. EV charging is currently allowed within handicapped parking spaces (provide adequate accessibility clearance is achieved). The City has adopted EV accommodation measures consistent with California AB 1236 (2015) and AB 970 (2021) to streamline permitting procedures for electric vehicle charging stations. Additional information on this topic is provided under Comment 15, 21 & 43 of the CAAP Stakeholder and Community Comment Letters (Attachment 2 to July 7, 2022 Planning Commission Packet). Text pertaining to the City’s ZEV Master Plan will be augmented to encourage looking at: EV systems which are solar infrastructure reliant; and all feasible placement locations, including California Building Code compliant placement measures (e.g., street light pole placement and right of way considerations).
Text will be added as noted in response to comment
637
Attachment
Resolution of Approval, ,nFluding ([KiEit A ± Commission ReFommendations for City CounFil ± ,nFluding Addendum 1o to tKe P(,R for 200 *eneral Plan 638
RESOLUTION NO. 2022 – ____
RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF
OXNARD RECOMMENDING THAT THE CITY COUNCIL APPROVE THE ADDENDUM TO THE 2030 GENERAL PLAN CERTIFIED
PROGRAM ENVIRONMENTAL IMPACT REPORT (PEIR; SCH #
2007041024) AND THE CLIMATE ACTION AND ADAPTATION PLAN (CAAP). FILED BY CITY OF OXNARD, COMMUNITY
DEVELOPMENT DEPARTMENT, 214 SOUTH C STREET, OXNARD, CA, 93030.
WHEREAS, Government Code Section 65300 requires each legislative body and planning agency to prepare and adopt a comprehensive, long-term general plan for the physical development of the city and any land outside its boundaries which in the planning agency’s judgment bears relation to its planning; and
WHEREAS, the State of California Senate Bill 32 (SB 32) calls for a statewide reduction of Greenhouse Gas (GHG) emissions to 40 percent below 1990 levels by 2030 ; and WHEREAS, the State of California SB 379 requires for the City to identify the threats the City faces with climate change and provide a list of recommended strategies to address climate change ; and
WHEREAS, the City of Oxnard 2030 General Plan was adopted on October 11, 2011; and the operative documents of the Oxnard 2030 General Plan consist of the (1) Background Report (2006), and the (2) Goals and Policies (2011); and WHEREAS, in 2011 the City of Oxnard City Council certified the 2030 General Plan Program Environmental Impact Report (SCH #2007041024); and
WHEREAS, pursuant to the California Quality Act Guidelines Section 15164, the City has prepared an Addendum affirming that the analysis contained in the 2030 General Plan PEIR adequately addresses the potential environmental impacts associated with implementation of the Final CAAP; and
WHEREAS, the City of Oxnard 2030 General Plan includes a Sustainable Community (SC) Element that draws from SB32 and directs the development of a CAAP with the following Goals:
● SC-1.2 – Support Statewide Global Warming and Climate Change Mitigation:
Continue to monitor and support the efforts of the California Air Resources Board and other agencies as they formulate Global Warming and Climate Change adaptation and mitigation strategies and programs.
● SC-1.3 – Develop a Climate Action and Adaptation Plan (CAAP) That Supports the Regional SB 375 Sustainable Communities Strategy: Develop a Climate Action and Adaptation Plan that implements requirements adopted by the California Air Resources Board and/or the Ventura County APCD that establishes a GHG emissions qualitative and quantitative threshold of significance, establishes GHG 639
Resolution No. 2022-
Resolution Recommending City Council Approval of the Draft CAAP