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JOINT COMMUNITY FACILITIES AGREEMENT
(Patterson Joint Unified School District and West Patterson Financing Authority) Relating to West Patterson Financing Authority Community Facilities District No. 2018-1 THIS JOINT COMMUNITY FACILITIES AGREEMENT (this “Agreement”), dated as of _____________, 2022, is by and between the West Patterson Financing Authority, a joint powers agency, organized and operating pursuant to California law, on behalf of itself and Community Facilities District No. 2018-1 (Villages of Patterson), a Mello-Roos community facilities district formed by the West Patterson Financing Authority pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (collectively, the “Authority”), and the Patterson Joint Unified School District a California public school district organized and existing pursuant to California law (the “School District”). The Authority and the School District may hereinafter be referred to as a “Party,” and collectively herein as the “Parties.”
BACKGROUND
A. The Authority has established the “West Patterson Financing Authority Community Facilities District No. 2018-1 (Villages of Patterson)” (the “CFD”), pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Part 1 (commencing with Section 53311) of Division 2 of Title 5 of the California Government Code (the “Act”).
B. The CFD is authorized to finance certain public capital facilities and improvements (the “Facilities”), as more completely described in Exhibit A to Resolution No. 2018-01 of the Authority, which was adopted by the governing board of the Authority on September 4, 2018 (the “Resolution of Formation”).
C. A portion of the authorized Facilities will be owned and operated by the School District (the “School District Facilities”). The School District Facilities are described in Exhibit A to this Agreement, which Exhibit is incorporated herein by this reference.
D. The Authority has issued, and it is anticipated that the Authority will in the future issue, for and on behalf of the CFD, one or more series of bonds, or incur other form(s) of indebtedness (collectively, the “Bonds”), secured by special taxes to be levied on non-exempt property located within the boundaries of the CFD (“Special Taxes”). Pursuant to Section 53316.2 of the Act, the Authority may finance through the CFD the School District Facilities only pursuant to a joint community facilities agreement entered into by and between the Authority and the School District. Pursuant to Section 53316.2, subdivision (e)(3), the Authority is reasonably expected to have responsibility for providing facilities to be financed by a larger share of the proceeds of special taxes and bonds of the CFD than the School District.
E. The Authority and the School District have determined that it would be of benefit to the residents of each of their respective jurisdictions to enter into this Agreement to provide for the financing of the School District Facilities by the Authority through the CFD. {CW114670.7} 2
AGREEMENT
In consideration of the mutual promises and covenants set forth herein, and for other valuable consideration, the sufficiency of which is hereby acknowledged, the Authority and the School District agree as follows:
1. Recitals. The foregoing recitals are true and correct and are hereby incorporated as effective and operative provisions of this Agreement.
2. Responsibilities. The Parties expressly agree as follows:
a. The Parties acknowledge and agree that the Authority shall be solely responsible for the costs of the formation of the CFD.
b. As provided by Section 53316.6 of the Act, the Authority shall be responsible for constructing or otherwise acquiring, maintaining and operating the Facilities of the Authority financed by the CFD, and the School District shall be responsible for constructing or otherwise acquiring, maintaining and operating the School District Facilities.
c. This Agreement shall not supersede, amend or impair that certain School Facilities Funding and Mitigation Agreement entered into by and between the School District and Northeast Territories Patterson, LP, dated as of November 28, 2006 (“Funding Agreement”), as may be amended by the parties therein. d. This Agreement shall, upon approval, execution and delivery by the Parties, constitute a “joint community facilities agreement”, within the meaning of Section 53316.2 of the Act pursuant to which the CFD will be authorized to finance the acquisition and construction of the School District Facilities. e. The Parties expressly agree that for purposes of this Agreement the School District may presume that the proceedings for the formation of the CFD, actions for approval of the levy and collection of the Special Taxes and authorization for the CFD to incur bonded indebtedness were validly undertaken and completed. f. For all purposes under this Agreement, compliance with the provisions of Section 53316.2 of the Act is the sole responsibility and liability of the Authority.
3. Bond Proceeds. The governing board of the Authority, acting as the legislative body of the CFD, may, in its sole discretion, authorize the issuance of Bonds, which is expected to occur in multiple series. In no event shall the School District have any right to compel the Authority to issue Bonds to finance School District Facilities or to disburse Bond proceeds to pay the costs of the design, acquisition, construction and/or installation of the School District Facilities. School District shall have no obligation, responsibility, or authority with respect to the issuance and sale of the Bonds, the Bond proceeds available to finance School District Facilities, the payment of the principal and interest on the Bonds, or for the levy of the Special {CW114670.7} 3
Taxes to provide for the payment of principal and interest thereon. The Authority shall have the sole authority and responsibility for all such matters.
If and to the extent the Bonds are issued, and in accordance with this Agreement, the Authority will determine the amount of the Bond proceeds allocable to contribute toward the cost of the School District Facilities from each series (the "School District Bond Proceeds"), and shall cause the deposit of such School District Bond Proceeds into a separate account established by the bond fiscal agent agreement, or other similar agreement, related to the Bonds (the “School District Bond Proceeds Account”). The Authority shall be responsible for investment and disbursement of the moneys in the School District Bond Proceeds Account. The Authority makes no representation that the School District Bond Proceeds will be sufficient to finance the construction of the School District Facilities and the Authority shall have no liability to the School District if such School District Bond Proceeds are insufficient for such purpose.
In accordance with the terms of this Agreement, upon receipt of a disbursement request from the School District, the Authority will direct that monies in the School District Bond Proceeds Account be disbursed to or on behalf of and at the direction of the School District. Each such disbursement request shall state (i) the name and address of the person to whom payment is to be made, (ii) the amount to be paid, (iii) that an obligation in such amount has been incurred by the School District, (iv) the purpose for which the obligation to be paid was incurred, (v) that each item of the obligation to be paid constitutes a cost of the School District Facilities, (vi) that the obligation to be paid has not been the subject of a prior School District request for disbursement from the School District Bond Proceeds Account, (vii) that each portion of the School District Facilities for which payment is requested was constructed under the direction and supervision, or under the authority of, the School District or was constructed as if it had been constructed under the direction and supervision, or under the authority of, the School District, and (viii) the disbursement of the School District Bond Proceeds will comply with Section 4 of this Agreement.
The Authority shall process in a timely manner written requests for disbursements received from the School District that conform to the requirements of this Agreement.
The Parties hereto specifically agree that the liabilities of the Authority, including liabilities, if any, of the Authority pursuant to the documents providing for the issuance of Bonds shall not be or become liabilities of School District.
4. Payment Schedule. The Authority acknowledges that it is obligated to remit Twelve Million Dollars ($12,000,000) to the School District in the form of Bond proceeds that the Authority receives from the CFD (“CFD Payment”). The Authority and the School District agree that the Authority shall remit the CFD Payment to the School District as follows:
a. First Bond Issuance: The School District shall receive One Million Dollars ($1,000,000) of the first Bond series issued from CFD 2018-1. The Authority acknowledges and represents that this One Million Dollars ($1,000,000) is in its possession and available to expend for such purpose. The Authority shall remit this One {CW114670.7} 4
Million Dollars ($1,000,000) to the School District within sixty (60) days of the Effective Date (as defined below).
b. Second Bond Issuance: The School District shall receive Five Million Dollars ($5,000,000) of the second Bond series issued from the CFD. The Authority shall remit Five Million Dollars ($5,000,000) to the School District within sixty (60) days of receiving the second series of Bond proceeds.
c. Fourth Bond Issuance: The School District shall receive Six Million Dollars ($6,000,000) of the fourth Bond series issued from the CFD. The Authority shall remit Six Million Dollars ($6,000,000) to the School District within sixty (60) days of receiving the fourth series of Bond proceeds. In the event the fourth Bond series does not generate sufficient proceeds to remit Six Million Dollars ($6,000,000) to the School District, then the Authority shall remit any remainder owed to the School District as described in subdivision (d) below.
d. Fifth Bond Issuance: This subdivision (d) shall only apply in the event the School District has not received the full CFD Payment after the fourth Bond series issued through the CFD. Where the Authority determines, in its sole discretion, that it cannot remit the full Six Million Dollars ($6,000,000) owed to the School District at the time of the fourth Bond series, then the Authority shall remit any amount of the CFD Payment that remains unpaid to the School District from the fifth bond series (“Remainder”). The Authority shall remit the Remainder to the School District within sixty (60) days of receiving the fifth series of Bond proceeds.
5. Modifications to Payment Schedule. The School District acknowledges that circumstances may arise where certain eligible Authority or City (as defined below) Facilities may require Bond proceeds to be allocated prior to providing Bond proceeds for the School District Facilities (as set out in Section 4 above). The Authority shall have the sole discretion to determine if it cannot adhere to the payment schedule described in Section 4. In such event, the Authority shall immediately notify the School District in writing, and the Authority and the School District shall meet and confer to modify the payment schedule described in Section 4. In no event, however, shall the School District receive less than Six Million Dollars ($6,000,000) through the second bond series in accordance with Sections 4(a) and 4(b) above. In no event, however, shall the School District receive less than a total of Twelve Million Dollars ($12,000,000) through the fifth bond series.
6. Sizing of Bond Series. Nothing in this Agreement is intended to limit the Authority’s discretion under the Act to authorize and issue Bonds on behalf of the CFD. The Authority cannot assure that it will be able to issue or sell the Bonds. The authorized officers of the CFD, however, shall size each subsequent Bond series in an amount sufficient to comply with the payment schedule described in Section 4.
7. No General Obligation of City or Authority. The obligations arising from this Agreement are not a debt of the City of Patterson (the “City”) or the Authority nor a pledge, charge, lien or encumbrance upon any of their respective properties or upon any of their respective incomes, receipts, or revenues, except the revenues of the CFD arising from Bond {CW114670.7} 5
sales and/or receipt of Special Taxes. Neither the City’s General Fund nor any other fund of the City or the Authority shall be liable for the payment of any obligations arising from this Agreement. The credit or taxing power of the City is not pledged for the payment of any obligation arising from this Agreement.
8. Construction of School District Facilities. The School District covenants to provide for the design, installation, construction and/or completion of the School District Facilities pursuant to plans and specifications approved by the School District. The School District covenants that it will undertake the School District Facilities projects in compliance with applicable provisions of California and federal law, including but not limited to the Act. The School District shall apply proceeds of the Bonds to the payment of costs of construction of any portion of the School District Facilities only if such portion of the School District Facilities is constructed under the direction and supervision, or under the authority of, the School District or is constructed as if it had been constructed under the direction and supervision, or under the authority of, the School District. The Authority shall have no responsibility for design, construction, installation, or completion of the School District Facilities. Nothing in this Agreement is intended to limit City’s authority to review and approve development of the School District Facilities, consistent with California law and the Patterson Municipal Code.
9. Ongoing Ownership, Operation and Maintenance. The Authority and the School District agree that the School District shall be solely responsible for the ownership, maintenance and operation of the School District Facilities.
10. Federal Tax Matters. The School District hereby makes the following covenants regarding its proposed use of the School District Bond Proceeds and the School District Facilities:
a. Expenditure of School District Bond Proceeds. To assist the Authority in complying with federal tax law matters in connection with the issuance of any Bonds, the School District agrees that, at or before the issuance of a Series of Bonds that will finance School District Facilities, the School District will execute and deliver such certifications and covenants as may be reasonably required for the Authority’s bond counsel to conclude that interest on such Bonds will be excluded from gross income for federal income tax purposes.
b. Private Business Tests; Private Loan Financing Test. The School District shall assure that the School District Bond Proceeds are not used in a manner so as to cause the Bonds to satisfy the private business tests of section 141(b) of the Internal Revenue Code of 1986, as amended (the “Code”), or the private loan financing test of section 141(c) of the Code.
c. Ongoing Reporting. To enable the Authority to comply with the Authority’s arbitrage calculation, reporting and payment obligations with respect to the Bonds, the School District agrees to allow the Authority to inspect the records relating to the investment and expenditure of the School District Bond Proceeds during normal School District business hours upon reasonable notice.
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11. Indemnification.
a. Indemnification by the Authority. The Authority shall assume the defense of, indemnify and save harmless, the School District, its officers, employees and agents, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from, any act or omission of the Authority with respect to this Agreement; provided, however, that the Authority shall not be required to indemnify any person or entity as to damages resulting from negligence or willful misconduct of such person or entity or their officers, agents or employees in which event the Parties shall be responsible and liable on a comparative basis.
b. Indemnification by the School District. The School District shall assume the defense of, indemnify and save harmless, the Authority, its officers, employees and agents, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from, any act or omission of the School District with respect to this Agreement, the design, engineering, construction, operation and maintenance of the School District Facilities; provided, however, that the School District shall not be required to indemnify any person or entity as to damages resulting from negligence or willful misconduct of such person or entity or their officers, agents or employees in which event the Parties shall be responsible and liable on a comparative basis. c. Comparative Liability. Notwithstanding anything to the contrary, in the event a court of competent jurisdiction, or an arbitrator if the Parties have agreed to arbitration, determines that more than one of the Parties are, to some extent, responsible for the existence of any Liability, those Parties shall request that the court or arbitrator determine their comparative liability with respect to that Liability. Thereafter, those Parties shall be responsible for any damages payable on account of such Liability consistent with such comparative liability determination, and a Party shall be entitled to reimbursement, for damages that it has paid in excess of its share of damages based on such comparative liability determination, from the other responsible Party or Parties. d. Statutory Liability. Notwithstanding anything to the contrary, in the event a final judgment issued by a court of competent jurisdiction, or an arbitrator if the Parties have agreed to arbitration, determines that this Agreement is an agreement within the scope of Government Code section 895 and, in connection therewith, imposes liability on either the Authority or the School District solely by virtue of Government Code section 895.2, then the Authority or School District, as applicable, shall be entitled to contribution as provided by Government Code section 895.6. In the event Government Code sections 895, 895.2 and/or 895.6 are amended or repealed, the requirements of this Subsection shall apply with respect to any similar, successor or superseding law that imposes liability on either the Authority or the School District consistent with provisions of Government Code sections 895.2 and 895.6 in effect as of the Effective Date. {CW114670.7} 7
12. Administration of the CFD. The Authority shall have the power, duty and responsibility to provide for the administration of the CFD (including costs thereof), subject to the terms hereof, including employing and compensating all consultants and providing for the various other obligations set forth in this Agreement. It is understood and agreed by Parties that School District was not, and will not be considered to be, a participant in the proceedings relative to formation of the CFD or the issuance of the Bonds, other than as a Party to this Agreement.
For avoidance of doubt, all proceeds of the Special Taxes levied by the CFD shall, as and when collected, be allocated and distributed for use by the Authority and/or the CFD, not any other Party or any third party.
13. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible.
14. Effective Date. This Agreement shall become effective and of full force and effect as of the date (“Effective Date”) it is approved and executed by the last of the School District and the Authority, to be confirmed upon execution of this Agreement by the authorized representatives of the Parties.
15. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. This Agreement may not be assigned by either of the parties thereto.
16. Notices.
Any notice, payment, or instrument required or permitted by this Agreement to be given or delivered to any Party shall be deemed to have been received only upon actual receipt by that Party. Such notices, payments, or instruments may be delivered by: (i) personal delivery, delivery charges prepaid and signature on delivery receipt requested; (ii) registered or certified U.S. Mail, postage prepaid and return receipt requested; or (iii) FedEx, UPS, or other reliable private delivery service, delivery charges prepaid and signature on electronic or other delivery receipt requested. A copy of each notice and other instrument sent to the Authority shall be sent to the Authority’s legal counsel, and a copy of each notice and other instrument sent to the School District shall be sent to the School District’s legal counsel. No Party may unreasonably refuse to accept delivery of any communications sent in accordance with this Section in an attempt to avoid the giving or service of the communication, and any such refusal by a Party shall be deemed and construed as a material breach of such Party’s obligations pursuant to this Agreement. For avoidance of doubt, this Section shall not be deemed or construed to apply to service of process in accordance with any applicable law or rule of court. Subject to the foregoing, written communications shall, as applicable, be addressed as follows:
Authority: City of Patterson
1 Plaza
Patterson, California 95363
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Attn: City Manager
Email: [email protected]
Authority Legal Counsel: White Brenner LLP
1414 K Street, Third Floor
Sacramento, California 95814
Attn: Nubia Goldstein, Esq.
Email: [email protected]
School District: Patterson Joint Unified School District Attention: ______________________
510 Keystone Boulevard
Patterson, CA 95363
School District Legal Counsel: Atkinson, Andelson, Loya, Ruud & Romo Attention: _______________________
20 Pacifica, Suite 1100
Irvine, CA 92618
Each Party can change its address for delivery of notice by delivering written notice of such change of address to the other Parties. A Party that incurs a change of address shall endeavor to provide such notice within ten (10) calendar days prior to the change taking effect.
17. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party‘s right to insist and demand strict compliance by the other party with the terms of this Agreement thereafter.
18. No Third-Party Beneficiaries. This Agreement is intended for the benefit of the Parties hereto, and is not for the benefit of, nor may any provision hereof be enforced by, any other third party.
19. Time is of the Essence. Time is of the essence in this Agreement in each term and covenant and condition contained herein.
20. Captions. The captions to Sections used herein are for convenience purposes only and, therefore, shall not be deemed or construed to qualify, circumscribe, or otherwise limit the respective meanings of the provisions set forth in this Agreement.
21. Interpretation. This Agreement shall be deemed to have been prepared by the Parties jointly, and no ambiguity shall be resolved against a Party solely because it or its attorney(s) were primarily responsible for drafting this Agreement or any particular provision herein.
22. Governing Law. Notwithstanding any conflict-of-law, choice-of-law, or other provision of any federal or state law, this Agreement shall be governed by, and construed in {CW114670.7} 9
accordance with, the laws of the State applicable to contracts made and performed in said State.
Each and every claim, demand, action, arbitration (if the affected Parties agree to arbitrate), and other proceeding arising from this Agreement shall be initiated and conducted solely in the County of Stanislaus, California; provided that a court of competent jurisdiction in its discretion may determine that it is necessary, in order to ensure fundamental fairness, that venue be located outside the boundaries of the Authority.
23. Entire Agreement. This Agreement contains the entire agreement of the Parties with respect to the matters provided for herein and supersedes all prior and contemporaneous agreements, negotiations, and discussions (whether written or oral) among any of the Parties relating to the subject matter of this Agreement.
24. Cooperation and Execution of Documents. Each Party agrees to complete and execute any further or additional documents that reasonably are necessary to complete the terms of, or secure the express benefits to another Party of, this Agreement.
25. Amendments. Amendments to this Agreement shall be made only by written instrument executed by each of the parties hereto.
26. No Termination Due to Changes in Law. The provisions of this Agreement shall not be affected by: (i) any change to applicable law that occurs on or after the Effective Date; (ii) any legislation enacted, whether through the legislative or initiative process, on or after the Effective Date; or (iii) any judicial decisions issued on or after the Effective Date that otherwise would affect the matters addressed in this Agreement, except for decisions specifically pertaining to this Agreement.
27. Signatories. Each person who has signed this Agreement on behalf of a Party thereby represents and warrants that he, she, or they has been appropriately authorized that Party to sign, and thereby bind such Party to, this Agreement.
28. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.
[SIGNATURES ON FOLLOWING PAGE]
{CW114670.7} - Joint Community Facilities Agreement – Signature Page - IN WITNESS WHEREOF the foregoing Agreement is executed on the date and year first above-written.
PATTERSON JOINT UNIFIED SCHOOL DISTRICT
By: ___________________________
Print: __________________________
Title: __________________________
Date: _________________________
WEST PATTERSON FINANCING
AUTHORITY
By: ___________________________
Print: __________________________
Title: __________________________
Date: _________________________
{CW114670.7}
EXHIBIT A
SCHOOL DISTRICT FACILITIES
School District Facilities
“School District Facilities” means any school and/or administrative facilities with a useful life of five years or longer needed by the School District, including, without limitation:
(i) real property sites; (ii) on-site and off-site improvements, including, among others, any curbs, gutters and sidewalks, storm drains and other drainage facilities, access roadways and street improvements, utility lines and facilities; playground areas and equipment, and landscaping; (iii) classrooms, restrooms, and food-service facilities; (iv) on-site office and other administrative spaces; (v) central (off-site) support and administrative facilities, including, among other things, maintenance and transportation facilities and teacher housing; (vi) interim student housing; and (vii) furniture and equipment (including, among other things and to the extent permitted by law, vehicles and technology equipment and infrastructure). The term “School District Facilities” also includes the costs attributable to (i) planning, engineering, designing, coordinating, leasing, financing, acquiring, expanding, relocating, rehabilitating, and/or constructing School Facilities (or any combination thereof), including, without limitation, services such as design, construction management, inspection, materials testing, and construction staking; and (ii) all other expenses incidental to acquiring, constructing, or otherwise making School District Facilities available for School District purposes. To the extent authorized pursuant to the Act and other applicable law, “School Facilities” also includes costs associated with the maintenance and operation of School District Facilities. For avoidance of doubt, all School Facilities, regardless of source(s) of funding, shall be the sole and separate property of the School District.