WRD PFAS Remediation Program Water Replenishment District of Southern California FUNDING APPLICATION - Section 7B
Summary of Costs for TREATMENT SYTEM (TS) #2 - Provide TS Name/ID:
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
APPLICANTS: Please complete all cells highlighted in yellow.
Plant No. 2 Washington Blvd
Notes to Applicant: Please be very specific and list your TS project tasks under the appropriate category. Not all categories may apply to your TS project. At a minimum, applicant must complete "Total at TS Project Completion - Amount Request (Reimbursement by WRD)" for all applicable categories. All costs that are not reimbursable should be applied to the "Non-Reimbursable" columns. Non-reimbursable costs include any site improvements not directly related to the PFAS treatment. Any reimbursable costs that are in the "Spent to Date" category must include documentation; identify the supporting documentation described in the "Description" column.
TREATMENT SYSTEM (TS) #2 SPENT TO DATE TOTAL AT TS PROJECT COMPLETION
DESCRIPTION OF TS PROJECT TASK
TS Project Task (including Identification of the Supporting Documentation that will be provided to WRD) 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 1 $ ‐ ‐ $ ‐ $ ‐ $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 1 $ ‐ ‐ $ ‐ $ ‐ $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 1 $ ‐ ‐ $ ‐ $ ‐ $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ 1,874,384.71 $ $ ‐ 3,783,255.67 $ Subtotal $ ‐ ‐ $ $ ‐ 22,809.00 $ Subtotal 1 Demolition of existing piping $ ‐ ‐ $ $ ‐ 22,809.00 $ D. Permits
E. Bid Phase ServicesF. Other Planning and Design Services II. CONSTRUCTION
A. Demolition
WRD PFAS Remediation Program Water Replenishment District of Southern California FUNDING APPLICATION - Section 7B
Summary of Costs for TREATMENT SYTEM (TS) #2 - Provide TS Name/ID:
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
APPLICANTS: Please complete all cells highlighted in yellow.
Plant No. 2 Washington Blvd
Notes to Applicant: Please be very specific and list your TS project tasks under the appropriate category. Not all categories may apply to your TS project. At a minimum, applicant must complete "Total at TS Project Completion - Amount Request (Reimbursement by WRD)" for all applicable categories. All costs that are not reimbursable should be applied to the "Non-Reimbursable" columns. Non-reimbursable costs include any site improvements not directly related to the PFAS treatment. Any reimbursable costs that are in the "Spent to Date" category must include documentation; identify the supporting documentation described in the "Description" column.
TREATMENT SYSTEM (TS) #2 SPENT TO DATE TOTAL AT TS PROJECT COMPLETION
DESCRIPTION OF TS PROJECT TASK
TS Project Task (including Identification of the Supporting Documentation that will be provided to WRD) 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ $ ‐ 1,092,622.00 $ Subtotal 1 Exterior Improvements $ ‐ ‐ $ $ ‐ 25,555.00 $ 2 Utilities $ ‐ ‐ $ $ ‐ 694,727.00 $ 3 Process Pipe $ ‐ ‐ $ $ ‐ 372,340.00 $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ 38,745.82 $ $ ‐ 150,273.78 $ Subtotal 1 Professional Services Agreement to
Control Automation Design, Inc. to
provide custom design, fabrication
and design services for SCADA and
other PAS related systems
$ ‐ 38,745.82 $ $ ‐ 38,745.82 $ PSA No. 21‐56 with Control Automation Design, Inc., dated June 8, 2021 2 Rehabilitation of Well 1 $ ‐ ‐ $ $ ‐ 111,527.96 $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ 1,835,638.89 $ $ ‐ 2,012,479.89 $ Subtotal D. Treatment Equipment (includes procurement of vessels & media) B. Site Civil (includes on‐site piping)
C. Well and Pump Modifications
WRD PFAS Remediation Program Water Replenishment District of Southern California FUNDING APPLICATION - Section 7B
Summary of Costs for TREATMENT SYTEM (TS) #2 - Provide TS Name/ID:
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
APPLICANTS: Please complete all cells highlighted in yellow.
Plant No. 2 Washington Blvd
Notes to Applicant: Please be very specific and list your TS project tasks under the appropriate category. Not all categories may apply to your TS project. At a minimum, applicant must complete "Total at TS Project Completion - Amount Request (Reimbursement by WRD)" for all applicable categories. All costs that are not reimbursable should be applied to the "Non-Reimbursable" columns. Non-reimbursable costs include any site improvements not directly related to the PFAS treatment. Any reimbursable costs that are in the "Spent to Date" category must include documentation; identify the supporting documentation described in the "Description" column.
TREATMENT SYSTEM (TS) #2 SPENT TO DATE TOTAL AT TS PROJECT COMPLETION
DESCRIPTION OF TS PROJECT TASK
TS Project Task (including Identification of the Supporting Documentation that will be provided to WRD) 1 Ion Exchange Vessels 1,062,354.75 $ ‐ $ $ ‐ 1,062,354.75 $ PSA No. 21‐51 with Aqueous Vets, dated March 23, 2021 2 Pre‐Filter (Cartridge Filter) $ ‐ ‐ $ $ ‐ 176,841.00 $ Amendment No. 1 to PSA No. 21‐51 with Aqueous Vets, dated June 8, 2021 3 Ion exchange resin (initial fill) 748,343.14 $ ‐ $ $ ‐ 748,343.14 $ Agreement No. 1 to PSA No. 21‐58 with Calgon Carbon Corp, dated August 10, 2021 4 Butterfly Valves 24,941.00 $ ‐ $ $ ‐ 24,941.00 $ Agreement No. 1 to PSA No. 21‐59 with Dezurik Inc, dated August 26, 2021 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 1 $ ‐ ‐ $ ‐ $ ‐ $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 1 $ ‐ ‐ $ ‐ $ ‐ $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ $ ‐ 505,071.00 $ Subtotal 1 Concrete Work $ ‐ ‐ $ $ ‐ 244,405.00 $ 2 Electrical Work $ ‐ ‐ $ $ ‐ 52,545.00 $ 3 Instrumentation & Controls $ ‐ ‐ $ $ ‐ 208,121.00 $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ E. Storage Modifications
F. Chemical System ModificationsG. Other Construction Tasks
WRD PFAS Remediation Program Water Replenishment District of Southern California FUNDING APPLICATION - Section 7B
Summary of Costs for TREATMENT SYTEM (TS) #2 - Provide TS Name/ID:
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
APPLICANTS: Please complete all cells highlighted in yellow.
Plant No. 2 Washington Blvd
Notes to Applicant: Please be very specific and list your TS project tasks under the appropriate category. Not all categories may apply to your TS project. At a minimum, applicant must complete "Total at TS Project Completion - Amount Request (Reimbursement by WRD)" for all applicable categories. All costs that are not reimbursable should be applied to the "Non-Reimbursable" columns. Non-reimbursable costs include any site improvements not directly related to the PFAS treatment. Any reimbursable costs that are in the "Spent to Date" category must include documentation; identify the supporting documentation described in the "Description" column.
TREATMENT SYSTEM (TS) #2 SPENT TO DATE TOTAL AT TS PROJECT COMPLETION
DESCRIPTION OF TS PROJECT TASK
TS Project Task (including Identification of the Supporting Documentation that will be provided to WRD) 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 12 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ $ ‐ 115,903.00 $ Subtotal 1 Construction Management and
Inspection Services $ ‐ ‐ $ $ ‐ 115,903.00 $ PO to on‐call PSA No. 20‐1941 with TRC Engineers; NTP dated November 15, 2021 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ $ ‐ 11,616.00 $ Subtotal 1 Startup $ ‐ ‐ $ $ ‐ 11,616.00 $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ III. ENGINEERING SERVICES DURING
CONSTRUCTIONIV. CONSTRUCTION MANAGEMENTIV. STARTUP AND COMMISSIONING
WRD PFAS Remediation Program Water Replenishment District of Southern California FUNDING APPLICATION - Section 7B
Summary of Costs for TREATMENT SYTEM (TS) #2 - Provide TS Name/ID:
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
APPLICANTS: Please complete all cells highlighted in yellow.
Plant No. 2 Washington Blvd
Notes to Applicant: Please be very specific and list your TS project tasks under the appropriate category. Not all categories may apply to your TS project. At a minimum, applicant must complete "Total at TS Project Completion - Amount Request (Reimbursement by WRD)" for all applicable categories. All costs that are not reimbursable should be applied to the "Non-Reimbursable" columns. Non-reimbursable costs include any site improvements not directly related to the PFAS treatment. Any reimbursable costs that are in the "Spent to Date" category must include documentation; identify the supporting documentation described in the "Description" column.
TREATMENT SYSTEM (TS) #2 SPENT TO DATE TOTAL AT TS PROJECT COMPLETION
DESCRIPTION OF TS PROJECT TASK
TS Project Task (including Identification of the Supporting Documentation that will be provided to WRD) 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 1 $ ‐ ‐ $ ‐ $ ‐ $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ 2,397,229.91 $ $ ‐ 4,433,619.87 $ Yes Monthly One-time lump sum at end of the project
Will you be seeking or receiving other grant funding besides the WRD PFAS Program? If so, please describe below and include the amount of reimbursement.
IV. PROJECT CLOSEOUT AND OTHER
MISC. TASKS
TOTAL
What frequency of reimbursement will you be seeking?
WRD PFAS Remediation Program Water Replenishment District of Southern California FUNDING APPLICATION - Section 7C
Summary of Costs for TREATMENT SYTEM (TS) #3 - Provide TS Name/ID:
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
$ ‐ 261,422.60 $ $ ‐ 261,422.60 $ Subtotal $ ‐ 3,583.80 $ $ ‐ 3,583.80 $ Subtotal 1 PFAS Treatment Study $ ‐ 3,583.80 $ $ ‐ 3,583.80 $ Final PFAS Treatment Study Report dated July 22, 2020 by IMEG Corporation 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 1 $ ‐ ‐ $ ‐ $ ‐ $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ 257,838.80 $ $ ‐ 257,838.80 $ Subtotal 1 Jacobs Professional Services
Agreement for Design, Bidding and
Construction Support Services
$ ‐ 257,838.80 $ $ ‐ 257,838.80 $ PSA No. 20‐50 with Jacobs Engineering, dated November 10, 2020. Final PS&E 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ APPLICANTS: Please complete all cells highlighted in yellow.
Well No. 5 Slauson Ave
Notes to Applicant: Please be very specific and list your TS project tasks under the appropriate category. Not all categories may apply to your TS project. At a minimum, applicant must complete "Total at TS Project Completion - Amount Request (Reimbursement by WRD)" for all applicable categories. All costs that are not reimbursable should be applied to the "Non-Reimbursable" columns. Non-reimbursable costs include any site improvements not directly related to the PFAS treatment. Any reimbursable costs that are in the "Spent to Date" category must include documentation; identify the supporting documentation described in the "Description" column.
TREATMENT SYSTEM (TS) #4 SPENT TO DATE TOTAL AT TS PROJECT COMPLETION
DESCRIPTION OF TS PROJECT TASK
TS Project Task (including Identification of the Supporting Documentation that will be provided to WRD) I. PLANNING AND DESIGN
A. Planning (i.e. condition assessment,
feasibility, etc.)
B. Preliminary Design (i.e.
geotechnical, surveying, etc.)
C. Final Design
WRD PFAS Remediation Program Water Replenishment District of Southern California FUNDING APPLICATION - Section 7C
Summary of Costs for TREATMENT SYTEM (TS) #3 - Provide TS Name/ID:
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
APPLICANTS: Please complete all cells highlighted in yellow.
Well No. 5 Slauson Ave
Notes to Applicant: Please be very specific and list your TS project tasks under the appropriate category. Not all categories may apply to your TS project. At a minimum, applicant must complete "Total at TS Project Completion - Amount Request (Reimbursement by WRD)" for all applicable categories. All costs that are not reimbursable should be applied to the "Non-Reimbursable" columns. Non-reimbursable costs include any site improvements not directly related to the PFAS treatment. Any reimbursable costs that are in the "Spent to Date" category must include documentation; identify the supporting documentation described in the "Description" column.
TREATMENT SYSTEM (TS) #4 SPENT TO DATE TOTAL AT TS PROJECT COMPLETION
DESCRIPTION OF TS PROJECT TASK
TS Project Task (including Identification of the Supporting Documentation that will be provided to WRD) 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 1 $ ‐ ‐ $ ‐ $ ‐ $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 1 $ ‐ ‐ $ ‐ $ ‐ $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 1 $ ‐ ‐ $ ‐ $ ‐ $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ 633,220.69 $ $ ‐ 1,037,094.69 $ Subtotal $ ‐ ‐ $ $ ‐ 20,998.00 $ Subtotal 1 Existing Conditions $ ‐ ‐ $ $ ‐ 20,998.00 $ D. PermitsE. Bid Phase ServicesF. Other Planning and Design Services II. CONSTRUCTION
A. Demolition
WRD PFAS Remediation Program Water Replenishment District of Southern California FUNDING APPLICATION - Section 7C
Summary of Costs for TREATMENT SYTEM (TS) #3 - Provide TS Name/ID:
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
APPLICANTS: Please complete all cells highlighted in yellow.
Well No. 5 Slauson Ave
Notes to Applicant: Please be very specific and list your TS project tasks under the appropriate category. Not all categories may apply to your TS project. At a minimum, applicant must complete "Total at TS Project Completion - Amount Request (Reimbursement by WRD)" for all applicable categories. All costs that are not reimbursable should be applied to the "Non-Reimbursable" columns. Non-reimbursable costs include any site improvements not directly related to the PFAS treatment. Any reimbursable costs that are in the "Spent to Date" category must include documentation; identify the supporting documentation described in the "Description" column.
TREATMENT SYSTEM (TS) #4 SPENT TO DATE TOTAL AT TS PROJECT COMPLETION
DESCRIPTION OF TS PROJECT TASK
TS Project Task (including Identification of the Supporting Documentation that will be provided to WRD) 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ $ ‐ 160,053.00 $ Subtotal 1 Exterior Improvements $ ‐ ‐ $ $ ‐ 162.00 $ 2 Utilities $ ‐ ‐ $ $ ‐ 34,496.00 $ 3 Process Pipe $ ‐ ‐ $ $ ‐ 125,395.00 $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ 19,372.76 $ $ ‐ 19,372.76 $ Subtotal 1 Professional Services Agreement to
Control Automation Design, Inc. to
provide custom design, fabrication
and design services for SCADA and
other PAS related systems
$ ‐ 19,372.76 $ $ ‐ 19,372.76 $ PSA No. 21‐56 with Control Automation Design, Inc., dated June 8, 2021 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ 613,847.93 $ $ ‐ 643,290.93 $ Subtotal D. Treatment Equipment (includes procurement of vessels & media) B. Site Civil (includes on‐site piping)
C. Well and Pump Modifications
WRD PFAS Remediation Program Water Replenishment District of Southern California FUNDING APPLICATION - Section 7C
Summary of Costs for TREATMENT SYTEM (TS) #3 - Provide TS Name/ID:
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
APPLICANTS: Please complete all cells highlighted in yellow.
Well No. 5 Slauson Ave
Notes to Applicant: Please be very specific and list your TS project tasks under the appropriate category. Not all categories may apply to your TS project. At a minimum, applicant must complete "Total at TS Project Completion - Amount Request (Reimbursement by WRD)" for all applicable categories. All costs that are not reimbursable should be applied to the "Non-Reimbursable" columns. Non-reimbursable costs include any site improvements not directly related to the PFAS treatment. Any reimbursable costs that are in the "Spent to Date" category must include documentation; identify the supporting documentation described in the "Description" column.
TREATMENT SYSTEM (TS) #4 SPENT TO DATE TOTAL AT TS PROJECT COMPLETION
DESCRIPTION OF TS PROJECT TASK
TS Project Task (including Identification of the Supporting Documentation that will be provided to WRD) 1 Ion Exchange Vessels 354,118.25 $ ‐ $ $ ‐ 354,118.25 $ PSA No. 21‐51 with Aqueous Vets, dated March 23, 2021 2 Pre‐Filter (Cartridge Filter) $ ‐ ‐ $ $ ‐ 29,443.00 $ Amendment No. 1 to PSA No. 21‐51 with Aqueous Vets, dated June 8, 2021 3 Ion exchange resin (initial fill) 249,447.68 $ ‐ $ $ ‐ 249,447.68 $ Agreement No. 1 to PSA No. 21‐58 with Calgon Carbon Corp, dated August 10, 2021 4 Butterfly Valves 10,282.00 $ ‐ $ $ ‐ 10,282.00 $ Agreement No. 1 to PSA No. 21‐59 with Dezurik Inc, dated August 26, 2021 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 1 $ ‐ ‐ $ ‐ $ ‐ $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 1 $ ‐ ‐ $ ‐ $ ‐ $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ $ ‐ 193,380.00 $ Subtotal 1 Concrete Work $ ‐ ‐ $ $ ‐ 46,614.00 $ 2 Electrical Work $ ‐ ‐ $ $ ‐ 63,647.00 $ 3 Instrumentation & Controls $ ‐ ‐ $ $ ‐ 83,119.00 $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ E. Storage ModificationsF. Chemical System ModificationsG. Other Construction Tasks
WRD PFAS Remediation Program Water Replenishment District of Southern California FUNDING APPLICATION - Section 7C
Summary of Costs for TREATMENT SYTEM (TS) #3 - Provide TS Name/ID:
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
APPLICANTS: Please complete all cells highlighted in yellow.
Well No. 5 Slauson Ave
Notes to Applicant: Please be very specific and list your TS project tasks under the appropriate category. Not all categories may apply to your TS project. At a minimum, applicant must complete "Total at TS Project Completion - Amount Request (Reimbursement by WRD)" for all applicable categories. All costs that are not reimbursable should be applied to the "Non-Reimbursable" columns. Non-reimbursable costs include any site improvements not directly related to the PFAS treatment. Any reimbursable costs that are in the "Spent to Date" category must include documentation; identify the supporting documentation described in the "Description" column.
TREATMENT SYSTEM (TS) #4 SPENT TO DATE TOTAL AT TS PROJECT COMPLETION
DESCRIPTION OF TS PROJECT TASK
TS Project Task (including Identification of the Supporting Documentation that will be provided to WRD) 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 12 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ $ ‐ 35,172.00 $ Subtotal 1 Construction Management and
Inspection Services $ ‐ ‐ $ $ ‐ 35,172.00 $ PO to on‐call PSA No. 20‐1941 with TRC Engineers; NTP dated November 15, 2021 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ $ ‐ 11,616.00 $ Subtotal 1 Startup $ ‐ ‐ $ $ ‐ 11,616.00 $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ III. ENGINEERING SERVICES DURING
CONSTRUCTIONIV. CONSTRUCTION MANAGEMENTIV. STARTUP AND COMMISSIONING
WRD PFAS Remediation Program Water Replenishment District of Southern California FUNDING APPLICATION - Section 7C
Summary of Costs for TREATMENT SYTEM (TS) #3 - Provide TS Name/ID:
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
APPLICANTS: Please complete all cells highlighted in yellow.
Well No. 5 Slauson Ave
Notes to Applicant: Please be very specific and list your TS project tasks under the appropriate category. Not all categories may apply to your TS project. At a minimum, applicant must complete "Total at TS Project Completion - Amount Request (Reimbursement by WRD)" for all applicable categories. All costs that are not reimbursable should be applied to the "Non-Reimbursable" columns. Non-reimbursable costs include any site improvements not directly related to the PFAS treatment. Any reimbursable costs that are in the "Spent to Date" category must include documentation; identify the supporting documentation described in the "Description" column.
TREATMENT SYSTEM (TS) #4 SPENT TO DATE TOTAL AT TS PROJECT COMPLETION
DESCRIPTION OF TS PROJECT TASK
TS Project Task (including Identification of the Supporting Documentation that will be provided to WRD) 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ ‐ $ ‐ $ ‐ $ Subtotal 1 $ ‐ ‐ $ ‐ $ ‐ $ 2 $ ‐ ‐ $ ‐ $ ‐ $ 3 $ ‐ ‐ $ ‐ $ ‐ $ 4 $ ‐ ‐ $ ‐ $ ‐ $ 5 $ ‐ ‐ $ ‐ $ ‐ $ 6 $ ‐ ‐ $ ‐ $ ‐ $ 7 $ ‐ ‐ $ ‐ $ ‐ $ 8 $ ‐ ‐ $ ‐ $ ‐ $ 9 $ ‐ ‐ $ ‐ $ ‐ $ 10 $ ‐ ‐ $ ‐ $ ‐ $ $ ‐ 894,643.29 $ $ ‐ 1,345,305.29 $ Yes Monthly One-time lump sum at end of the project
Will you be seeking or receiving other grant funding besides the WRD PFAS Program? If so, please describe below and include the amount of reimbursement.
IV. PROJECT CLOSEOUT AND OTHER
MISC. TASKS
TOTAL
What frequency of reimbursement will you be seeking?
Water Replenishment District of Exhibit C PFAS Program Participation Agreement Southern California City of Pico Rivera
EXHIBIT C
SUMMARY OF PROJECT COSTS
SUMMARY OF PFAS REMEDIATION PROJECT COST
S
City of Pico Rivera
Treatment System (TS)
Pumper
Requested
Amount
Amount
Qualified for
Funding
Amount Not
Qualified for
Funding
WRD Recommended
Funding Amount
TS1: Plant No. 1 Gallatin Rd ‐ Wells W1 & W2 4,958,747.84 $ 4,817,964.61 $ (140,783.23) $ 2,938,958.00 $ TS2: Plant No. 2 Washington Blvd ‐ Wells W3 & W4 4,433,619.87 $ 4,322,091.91 $ (111,527.96) $ 2,074,604.00 $ TS3: Well W5 Slauson Ave 1,345,305.29 $ 1,345,305.29 $ $0.00 838,574.00 $ TOTAL: $ 10,485,361.81 10,737,673.00 $ (252,311.19) $ $5,853,000 (rounded) See next pages for detailed costs regarding each of the proposed PFAS treatment systems.
SUMMARY OF PFAS REMEDIATION PROJECT COSTS
City of Pico Rivera ‐ Plant No. 1 Gallatin Rd (Wells W1 & W2)
DESCRIPTION OF TS PROJECT TASK
Amount Requested
(Reimbursement by
WRD)
Non‐
Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐
Reimbursable
Cost
(including Identification of the Supporting
Documentation that will be provided to
WRD)
$ ‐ 522,845.20 $ $ ‐ 522,845.20 $ Subtotal $ ‐ 522,845.20 $ $ ‐ 7,167.60 $ $ ‐ 7,167.60 $ Subtotal 1 PFAS Treatment Study 7,167.60 $ ‐ $ $ ‐ 7,167.60 $ Final PFAS Treatment Study Report dated July 22, 2020 by IMEG Corporation $ 7,167.60 $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ 515,677.60 $ $ ‐ 515,677.60 $ Subtotal 1 Jacobs Professional Services Agreement for
Design, Bidding and Construction Support
Services
$ ‐ 515,677.60 $ $ ‐ 515,677.60 $ PSA No. 20‐50 with Jacobs Engineering, dated November 10, 2020 $ 515,677.60 $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ 2,051,225.41 $ $ ‐ 4,294,656.64 $ Subtotal $ 4,153,873.41 $ 140,783.23 $ ‐ ‐ $ $ ‐ 52,264.00 $ Subtotal 1 Existing Conditions $ ‐ ‐ $ $ ‐ 52,264.00 $ Included within Jacobs Basis of Estimate‐ Updated 9/29/21 $ 52,264.00 $ ‐ ‐ $ $ ‐ 1,233,206.00 $ Subtotal 1 Exterior Improvements $ ‐ ‐ $ $ ‐ 43,762.00 $ Included within Jacobs Basis of Estimate‐ Updated 9/29/21 $ 43,762.00 2 Utilities $ ‐ ‐ $ $ ‐ 635,465.00 $ Included within Jacobs Basis of Estimate‐ Updated 9/29/21 $ 635,465.00 3 Process Pipe $ ‐ ‐ $ $ ‐ 553,979.00 $ Included within Jacobs Basis of Estimate‐ Updated 9/29/21 $ 553,979.00 $ ‐ 38,745.52 $ $ ‐ 179,528.75 $ Subtotal 1 Professional Services Agreement to Control
Automation Design, Inc. to provide custom
design, fabrication and design services for
SCADA and other PAS related systems
$ ‐ 38,745.52 $ $ ‐ 38,745.52 $ PSA No. 21‐56 with Control Automation Design, Inc., dated June 8, 2021 $ 38,745.52 2 Rehabilitation of Well 1 $ ‐ ‐ $ $ ‐ 140,783.23 $ $ ‐ $ 140,783.23 C. Final DesignD. PermitsE. Bid Phase ServicesF. Other Planning and Design Services II. CONSTRUCTION
B. Site Civil (includes on‐site piping)
C. Well and Pump ModificationsA. Planning (i.e. condition assessment, feasibility, etc.)
B. Preliminary Design (i.e. geotechnical,
surveying, etc.)
Not Fundable
Qualified for
WRD PFAS
Funding
(Fundable)
A. Demolition
TREATMENT SYSTEM (TS) #1 (Wells 1 & 2) SPENT TO DATE TOTAL AT TS PROJECT COMPLETION TS Project Task
I. PLANNING AND DESIGN
Plant No. 1 Gallatin Rd (Wells W1 and W2) ‐ Page 1 of 2
SUMMARY OF PFAS REMEDIATION PROJECT COSTS
City of Pico Rivera ‐ Plant No. 1 Gallatin Rd (Wells W1 & W2)
DESCRIPTION OF TS PROJECT TASK
Amount Requested
(Reimbursement by
WRD)
Non‐
Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐
Reimbursable
Cost
(including Identification of the Supporting
Documentation that will be provided to
WRD)
Not Fundable
Qualified for
WRD PFAS
Funding
(Fundable)
TREATMENT SYSTEM (TS) #1 (Wells 1 & 2) SPENT TO DATE TOTAL AT TS PROJECT COMPLETION TS Project Task
$ ‐ 2,012,479.89 $ $ ‐ 2,012,479.89 $ Subtotal 1 Ion Exchange Vessels 1,062,354.75 $ ‐ $ $ ‐ 1,062,354.75 $ PSA No. 21‐51 with Aqueous Vets, dated March 23, 2021 $ 1,062,354.75 2 Pre‐Filter (Cartridge Filter) 176,841.00 $ ‐ $ $ ‐ 176,841.00 $ Amendment No. 1 to PSA No. 21‐51 with Aqueous Vets, dated June 8, 2021 $ 176,841.00 3 Ion exchange resin (initial fill) 748,343.14 $ ‐ $ $ ‐ 748,343.14 $ Agreement No. 1 to PSA No. 21‐58 with Calgon Carbon Corp, dated August 10, 2021 $ 748,343.14 4 Butterfly Valves 24,941.00 $ ‐ $ $ ‐ 24,941.00 $ Agreement No. 1 to PSA No. 21‐59 with Dezurik Inc, dated August 26, 2021 $ 24,941.00 $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ $ ‐ 817,178.00 $ Subtotal 1 Concrete Work $ ‐ ‐ $ $ ‐ 257,752.00 $ Included within Jacobs Basis of Estimate‐ Updated 9/29/21 $ 257,752.00 2 Electrical Work $ ‐ ‐ $ $ ‐ 184,560.00 $ Included within Jacobs Basis of Estimate‐ Updated 9/29/21 $ 184,560.00 3 Instrumentation & Controls $ ‐ ‐ $ $ ‐ 365,071.00 $ Included within Jacobs Basis of Estimate‐ Updated 9/29/21 $ 365,071.00 4 Earthwork $ ‐ ‐ $ $ ‐ 9,795.00 $ Included within Jacobs Basis of Estimate‐ Updated 9/29/21 $ 9,795.00 $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ $ ‐ 129,630.00 $ Subtotal $ ‐ 129,630.00 $ 1 Construction Management and Inspection
Services $ ‐ ‐ $ $ ‐ 129,630.00 $ PO to on‐call PSA No. 20‐1941 with TRC Engineers; NTP dated November 15, 2021 $ 129,630.00 $ ‐ ‐ $ $ ‐ 11,616.00 $ Subtotal $11,616.00 $ ‐ 1 Startup $ ‐ ‐ $ $ ‐ 11,616.00 $ Included within Jacobs Basis of Estimate‐ Updated 9/29/21 $ 11,616.00 $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ 2,574,070.61 $ $ ‐ 4,958,747.84 $ $4,817,964.61 $140,783.23 IV. PROJECT CLOSEOUT AND OTHER MISC.
TOTAL
E. Storage ModificationsF. Chemical System ModificationsG. Other Construction Tasks III. ENGINEERING SERVICESIV. CONSTRUCTION MANAGEMENT
IV. STARTUP AND COMMISSIONINGD. Treatment Equipment (includes procurementof vessels & media) Plant No. 1 Gallatin Rd (Wells W1 and W2) ‐ Page 2 of 2
SUMMARY OF PFAS REMEDIATION PROJECT COSTS
City of Pico Rivera ‐ Plant No. 2 Washington Blvd (Wells W3 & W4)
DESCRIPTION OF TS PROJECT TASK
Amount Requested
(Reimbursement by
WRD)
Non‐
Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
(including Identification of the Supporting
Documentation that will be provided to WRD)
$ ‐ 522,845.20 $ $ ‐ 522,845.20 $ Subtotal $ ‐ 522,845.20 $ $ ‐ 7,167.60 $ $ ‐ 7,167.60 $ Subtotal 1 PFAS Treatment Study 7,167.60 $ ‐ $ $ ‐ 7,167.60 $ Final PFAS Treatment Study Report dated July 22, 2020 by IMEG Corporation $ 7,167.60 $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ 515,677.60 $ $ ‐ 515,677.60 $ Subtotal 1 Jacobs Professional Services Agreement for
Design, Bidding and Construction Support
Services
$ ‐ 515,677.60 $ $ ‐ 515,677.60 $ PSA No. 20‐50 with Jacobs Engineering, dated November 10, 2020 $ 515,677.60 $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ 1,874,384.71 $ $ ‐ 3,783,255.67 $ Subtotal $ 3,671,727.71 $ 111,527.96 $ ‐ ‐ $ $ ‐ 22,809.00 $ Subtotal 1 Demolition of existing piping $ ‐ ‐ $ $ ‐ 22,809.00 $ $ 22,809.00 $ ‐ ‐ $ $ ‐ 1,092,622.00 $ Subtotal 1 Exterior Improvements $ ‐ ‐ $ $ ‐ 25,555.00 $ $ 25,555.00 2 Utilities $ ‐ ‐ $ $ ‐ 694,727.00 $ $ 694,727.00 3 Process Pipe $ ‐ ‐ $ $ ‐ 372,340.00 $ $ 372,340.00 $ ‐ 38,745.82 $ $ ‐ 150,273.78 $ Subtotal 1 Professional Services Agreement to Control
Automation Design, Inc. to provide custom
design, fabrication and design services for
SCADA and other PAS related systems
$ ‐ 38,745.82 $ $ ‐ 38,745.82 $ PSA No. 21‐56 with Control Automation Design, Inc., dated June 8, 2021 $ 38,745.82 2 Rehabilitation of Well 1 $ ‐ ‐ $ $ ‐ 111,527.96 $ $ 111,527.96 A. Planning (i.e. condition assessment,
feasibility, etc.)
B. Preliminary Design (i.e. geotechnical,
surveying, etc.)
C. Final Design
D. PermitsE. Bid Phase Services
F. Other Planning and Design Services
II. CONSTRUCTIONA. Demolition
B. Site Civil (includes on‐site piping)
C. Well and Pump Modifications
Not Fundable
I. PLANNING AND DESIGN
TREATMENT SYSTEM (TS) #2 (Wells 3 & 4) SPENT TO DATE TOTAL AT TS PROJECT COMPLETION Qualified for
WRD PFAS
Funding
(Fundable)
TS Project Task
Plant No. 2 Washington Blvd (Wells W3 and W4) ‐ Page 1 of 2
SUMMARY OF PFAS REMEDIATION PROJECT COSTS
City of Pico Rivera ‐ Plant No. 2 Washington Blvd (Wells W3 & W4)
DESCRIPTION OF TS PROJECT TASK
Amount Requested
(Reimbursement by
WRD)
Non‐
Reimbursable
Cost
Amount Requested
(Reimbursement by
WRD)
Non‐Reimbursable
Cost
(including Identification of the Supporting
Documentation that will be provided to WRD) Not Fundable TREATMENT SYSTEM (TS) #2 (Wells 3 & 4) SPENT TO DATE TOTAL AT TS PROJECT COMPLETION Qualified for
WRD PFAS
Funding
(Fundable)
TS Project Task
$ ‐ 1,835,638.89 $ $ ‐ 2,012,479.89 $ Subtotal 1 Ion Exchange Vessels 1,062,354.75 $ ‐ $ $ ‐ 1,062,354.75 $ PSA No. 21‐51 with Aqueous Vets, dated March 23, 2021 $ 1,062,354.75 2 Pre‐Filter (Cartridge Filter) $ ‐ ‐ $ $ ‐ 176,841.00 $ Amendment No. 1 to PSA No. 21‐51 with Aqueous Vets, dated June 8, 2021 $ 176,841.00 3 Ion exchange resin (initial fill) 748,343.14 $ ‐ $ $ ‐ 748,343.14 $ Agreement No. 1 to PSA No. 21‐58 with Calgon Carbon Corp, dated August 10, 2021 $ 748,343.14 4 Butterfly Valves 24,941.00 $ ‐ $ $ ‐ 24,941.00 $ Agreement No. 1 to PSA No. 21‐59 with Dezurik Inc, dated August 26, 2021 $ 24,941.00 $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ $ ‐ 505,071.00 $ Subtotal 1 Concrete Work $ ‐ ‐ $ $ ‐ 244,405.00 $ $ 244,405.00 2 Electrical Work $ ‐ ‐ $ $ ‐ 52,545.00 $ $ 52,545.00 3 Instrumentation & Controls $ ‐ ‐ $ $ ‐ 208,121.00 $ $ 208,121.00 $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ $ ‐ 115,903.00 $ Subtotal $ ‐ 115,903.00 $ 1 Construction Management and Inspection
Services $ ‐ ‐ $ $ ‐ 115,903.00 $ PO to on‐call PSA No. 20‐1941 with TRC Engineers; NTP dated November 15, 2021 $ 115,903.00 $ ‐ ‐ $ $ ‐ 11,616.00 $ Subtotal $ ‐ 11,616.00 $ 1 Startup $ ‐ ‐ $ $ ‐ 11,616.00 $ $ 11,616.00 $ ‐ ‐ $ ‐ $ ‐ $ Subtotal TOTAL $ ‐ 2,397,229.91 $ $ ‐ 4,433,619.87 $ $4,322,091.91 $111,527.96 IV. PROJECT CLOSEOUT AND OTHER MISC. TASKS
F. Chemical System ModificationsG. Other Construction Tasks III. ENGINEERING SERVICESIV. CONSTRUCTION MANAGEMENT
IV. STARTUP AND COMMISSIONINGE. Storage ModificationsD. Treatment Equipment (includes procurement of vessels & media)
Plant No. 2 Washington Blvd (Wells W3 and W4) ‐ Page 2 of 2
SUMMARY OF PFAS REMEDIATION PROJECT COSTS
City of Pico Rivera ‐ Well W5 Slauson Ave
DESCRIPTION OF TS PROJECT TASK
Amount Requested
(Reimbursement by
WRD)
Non‐
Reimbursable
Cost
Amount Requested
(Reimbursement by WRD)
Non‐Reimbursable
Cost
(including Identification of the Supporting
Documentation that will be provided to WRD)
$ ‐ 261,422.60 $ $ ‐ 261,422.60 $ Subtotal $ ‐ 261,422.60 $ $ ‐ 3,583.80 $ $ ‐ 3,583.80 $ Subtotal 1 PFAS Treatment Study 3,583.80 $ ‐ $ $ ‐ 3,583.80 $ Final PFAS Treatment Study Report dated July 22, 2020 by IMEG Corporation $ 3,583.80 $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ 257,838.80 $ $ ‐ 257,838.80 $ Subtotal 1 Jacobs Professional Services Agreement for
Design, Bidding and Construction Support
Services
$ ‐ 257,838.80 $ $ ‐ 257,838.80 $ PSA No. 20‐50 with Jacobs Engineering, dated
November 10, 2020.
Final PS&E
$ 257,838.80
$ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ 633,220.69 $ $ ‐ 1,037,094.69 $ Subtotal $ ‐ 1,037,094.69 $ $ ‐ ‐ $ $ ‐ 20,998.00 $ Subtotal 1 Existing Conditions $ ‐ ‐ $ $ ‐ 20,998.00 $ $ 20,998.00 $ ‐ ‐ $ $ ‐ 160,053.00 $ Subtotal 1 Exterior Improvements $ ‐ ‐ $ $ ‐ 162.00 $ $ 162.00 2 Utilities $ ‐ ‐ $ $ ‐ 34,496.00 $ $ 34,496.00 3 Process Pipe $ ‐ ‐ $ $ ‐ 125,395.00 $ $ 125,395.00 $ ‐ 19,372.76 $ $ ‐ 19,372.76 $ Subtotal 1 Professional Services Agreement to Control
Automation Design, Inc. to provide custom
design, fabrication and design services for
SCADA and other PAS related systems
$ ‐ 19,372.76 $ $ ‐ 19,372.76 $ PSA No. 21‐56 with Control Automation Design, Inc., dated June 8, 2021 $ 19,372.76 $ ‐ 613,847.93 $ $ ‐ 643,290.93 $ Subtotal 1 Ion Exchange Vessels 354,118.25 $ ‐ $ $ ‐ 354,118.25 $ PSA No. 21‐51 with Aqueous Vets, dated March 23, 2021 $ 354,118.25 2 Pre‐Filter (Cartridge Filter) $ ‐ ‐ $ $ ‐ 29,443.00 $ Amendment No. 1 to PSA No. 21‐51 with Aqueous Vets, dated June 8, 2021 $ 29,443.00 3 Ion exchange resin (initial fill) 249,447.68 $ ‐ $ $ ‐ 249,447.68 $ Agreement No. 1 to PSA No. 21‐58 with Calgon Carbon Corp, dated August 10, 2021 $ 249,447.68 4 Butterfly Valves 10,282.00 $ ‐ $ $ ‐ 10,282.00 $ Agreement No. 1 to PSA No. 21‐59 with Dezurik Inc, dated August 26, 2021 $ 10,282.00 $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ $ ‐ 193,380.00 $ Subtotal 1 Concrete Work $ ‐ ‐ $ $ ‐ 46,614.00 $ $ 46,614.00 2 Electrical Work $ ‐ ‐ $ $ ‐ 63,647.00 $ $ 63,647.00 3 Instrumentation & Controls $ ‐ ‐ $ $ ‐ 83,119.00 $ $ 83,119.00 F. Chemical System ModificationsG. Other Construction Tasks E. Storage Modifications
A. Planning (i.e. condition assessment, feasibility,
etc.)B. Preliminary Design (i.e. geotechnical, surveying, etc.)C. Final Design
D. Permits
E. Bid Phase Services
F. Other Planning and Design Services
II. CONSTRUCTIONA. Demolition
B. Site Civil (includes on‐site piping)
C. Well and Pump ModificationsD. Treatment Equipment (includes procurement of vessels & media)
Not Fundable
I. PLANNING AND DESIGN
TREATMENT SYSTEM (TS) #3 (Well5) SPENT TO DATE TOTAL AT TS PROJECT COMPLETION Qualified for
WRD PFAS
Funding
(Fundable)
TS Project Task
Well W5 Slauson Ave ‐ Page 1 of 2
SUMMARY OF PFAS REMEDIATION PROJECT COSTS
City of Pico Rivera ‐ Well W5 Slauson Ave
DESCRIPTION OF TS PROJECT TASK
Amount Requested
(Reimbursement by
WRD)
Non‐
Reimbursable
Cost
Amount Requested
(Reimbursement by WRD)
Non‐Reimbursable
Cost
(including Identification of the Supporting
Documentation that will be provided to WRD) Not Fundable TREATMENT SYSTEM (TS) #3 (Well5) SPENT TO DATE TOTAL AT TS PROJECT COMPLETION Qualified for
WRD PFAS
Funding
(Fundable)
TS Project Task
$ ‐ ‐ $ ‐ $ ‐ $ Subtotal $ ‐ ‐ $ $ ‐ 35,172.00 $ Subtotal $ ‐ 35,172.00 $ 1 Construction Management and Inspection
Services $ ‐ ‐ $ $ ‐ 35,172.00 $ PO to on‐call PSA No. 20‐1941 with TRC Engineers; NTP dated November 15, 2021 $ 35,172.00 $ ‐ ‐ $ $ ‐ 11,616.00 $ Subtotal $ ‐ 11,616.00 $ 1 Startup $ ‐ ‐ $ $ ‐ 11,616.00 $ $ 11,616.00 $ ‐ ‐ $ ‐ $ ‐ $ Subtotal TOTAL $ ‐ 894,643.29 $ $ ‐ 1,345,305.29 $ $ ‐ 1,345,305.29 $ IV. PROJECT CLOSEOUT AND OTHER MISC. TASKS
III. ENGINEERING SERVICESIV. CONSTRUCTION MANAGEMENT
IV. STARTUP AND COMMISSIONING
Well W5 Slauson Ave ‐ Page 2 of 2
WRD PFAS REMEDIATION PROGRAM – FUNDING SUPPORT ONLY
FINANCIAL CAPABILITY RESOLUTION
WHEREAS, the City of Pico Rivera ("Pumper") desires to
finance the costs of designing and constructing and/or reconstructing their Water Producing Facilities, including certain drinking water wells, treatment facilities, pipelines, and other infrastructure ("Project") for the removal of per- and polyfluoroalkyl substances (“PFAS”) in drinking water wells that have concentrations above their respective Response Levels or Maximum Contaminant Levels; and
WHEREAS, the Pumper intends to finance the construction and/or reconstruction of the Project or portions of the Project with moneys ("Project Funds") provided by the Water Replenishment District of Southern California (“WRD”); and WHEREAS, the Pumper and WRD have executed a PFAS Remediation Program Participation Agreement (“Agreement”) that specifies the details of the Project and Project Funds to be utilized for capital costs associated with the Project; and
WHEREAS, the Pumper shall submit all documents requested by WRD and per the Agreement before WRD can release any Project Funds to the Pumper; and WHEREAS, WRD shall review the required documents submitted by the Pumper and upon approval, reimburse the Pumper for their Project expenditures in accordance with the Agreement.
NOW, THEREFORE, THE PUMPER DOES HEREBY RESOLVE, ORDER, AND DETERMINE AS FOLLOWS:
1. The total Project Cost is estimated to be $10,737,673 and the Project Funds to be provided by WRD shall not exceed $5,853,000.
2. The Pumper hereby certifies that it has adequate financial reserves and the ability to cover any and all Project expenditures in excess of the Project Funds to ensure proper planning, management, and completion of the Project as described in the Agreement.
3. The Pumper hereby states its intention to pay all Project expenditures prior to the issuance of any reimbursement request to WRD for Project Funds.
4. The Pumper designates _ Pico Rivera Water Authority as the authorized representative that will carry out the Pumper’s responsibilities under the Agreement, including providing certifications, assurances, and commitments that may be required from the Pumper under WRD’s PFAS Remediation Program and compliance with all applicable state and federal laws.
5. The Pumper agrees to comply with all terms and requirements specified in the Program Agreement and all associated funding documents.
6. This resolution is being adopted no later than 60 days after the date on which the Pumper will expend moneys for Project expenditures that qualify for reimbursement with Project Funds.
7. This resolution is adopted as official intent of the Pumper to comply with all state, federal, and any other regulations relating to any Project Funds received from WRD.
8. To the best of our knowledge, this Pumper is not aware of the previous adoption of official intents by the Pumper that have been made as a matter of course for the purpose of reimbursing Project expenditures.
9. All the recitals in this Resolution are true and correct and this Pumper so finds, determines, and represents.
Enclosure 2
WRD PFAS REMEDIATION PROGRAM – FUNDING SUPPORT ONLY
PASSED, APPROVED AND ADOPTED THIS __26__day of _ April 2022 by the following vote:
AYES:
NOES:
ABSENT:
CERTIFICATION
I do hereby certify that the foregoing is a full, true, and correct copy of a resolution duly and regularly adopted at a meeting of the Pico Rivera Water Authority held on April 26, 2022 . (Name, Signature, and Seal of the Clerk or Authorized Record Keeper of the Governing Board of the Pumper)
To: Mayor and City Council
From: City Manager
Meeting Date: April 26, 2022
Subject: APPROVE A RESOLUTION APPROVING THE FORM OF A
PRELIMINARY OFFICIAL STATEMENT, THE FORM OF A
CONTINUING DISCLOSURE CERTIFICATE, AND A
PENSION FUNDING POLICY, and AMENDING
RESOLUTION NO. 7134 ALL IN CONNECTION WITH THE
PROPOSED PENSION OBLIGATION BONDS, SERIES
2022
Recommendation:
1. Approve a resolution approving the Preliminary Official Statement, Continuing Disclosure Certificate, and Pension Funding Policy and amending Resolution No. 7134, all in connection with the City of Pico Rivera Pension Obligation Bonds, Series 2022 to refinance of the City of Pico Rivera (City) pension obligations to CalPERS.
Fiscal Impact:
The issuance of the Pension Obligation Bonds (POBs) to refinance approximately 62% of the City’s unfunded actuarial liability (UAL), is estimated to reduce the currently scheduled UAL payments by approximately a total of $7.5 million and achieve a 90% funded ratio post issuance, based on a 20-year POB and interest rates as of April 2022.
The City’s UAL is a dynamic liability and will be adjusted in future years based on a variety of factors including CalPERS investment returns and adjustments to actuarial assumptions. All costs of issuance of the Series 2022 POBs will be paid from a portion of the bond proceeds and contingent upon the successful bond issuance.
Background:
CalPERS Plan
The City provides retirement benefits to its employees by contracting with the California Public Employees’ Retirement System (CalPERS). CalPERS offers a defined benefit plan where retirement benefits are based on a formula. Retirement benefit formulas (e.g. 2.5% at 55) are calculated based on an employee's years of service credit, age at retirement, and final compensation, which is determined by an employee’s average CITY COUNCIL AGENDA REPORT - MEETING OF APRIL 26, 2022
ADOPT A RESOLUTION APPROVING THE PRELIMINARY OFFICIAL STATEMENT,
CONTINUING DISCLOSURE CERTIFICATE AND PENSION FUNDING POLICY FOR THE PROPOSED PENSION OBLIGATION BONDS, SERIES 2022
salary, excluding overtime, for a defined period of employment. Retirement formulas for employee groups vary based on the date of entering CalPERS membership (Classic or PEPRA if entered into CalPERS after January 1, 2013). The City currently has three (3) benefit levels offered to eligible employees:
• Tier 1 – Employees hired prior to local pension reform action by City Council on June 30, 2002; earn 2.5% of salary for each year employed with the City (based on a three-year average) at the age of 55. The employee contribution rate for Tier 1 is 8.000% of their annual salary;
• Tier 2 – Employees hired after local pension reform, who previously worked for another governmental agency with a reciprocating pension plan; earn 2% of salary for each year employed with the City (based on a three-year average) at the age of 60. The employee contribution rate for Tier 2 is 7.000% of their annual salary;
• Tier 3 – Employees hired after state-wide pension reform effective January 1, 2013; who have not previously worked for another governmental agency with a reciprocating pension plan, or have not worked for such an agency within six (6) months of being hired by the City. These employees earn 2% salary for each year employed with the City (based on a three-year average) at the age of 62.
The employee contribution rate for Tier 3 is 6.250% of their annual salary; The City’s annual pension obligations are comprised of two (2) primary components: 1) Normal Costs and 2) UAL Payments. Normal Costs represent the pension benefits earned by current employees during the fiscal year. The UAL is the annual dollar amount needed to fund past service credit earned for (active or retired) members, as of the current valuation date. The UAL is equal to the difference between the present value of benefits earned to date, less the current market value of the assets. As of the most recent Actuarial Valuation (dated as of June 30, 2020), the City’s UAL was equal to approximately $42.9 million.
For fiscal year (FY) 2020-21, CalPERS reported a 21.3% investment return (well above its 7.0% target or Discount Rate for such fiscal year), which will provide a significant credit to the City’s UAL repayment schedule (a portion of which will be offset by the lowering of the Discount Rate from 7.0% to 6.8%). The City estimates that the City’s UAL will be approximately $31.1 million, as of June 30, 2021, after factoring in the net credit. While this is good news, the City’s UAL remains an important issue to address.
Moreover, CalPERS’ FY 2021-22 year-to-date investment return is below its target/Discount Rate, and the City should expect that a new adjustment will be reflected in its Actuarial Valuation as of June 30, 2022.
Authorization to Issue POBs/Validation
CITY COUNCIL AGENDA REPORT - MEETING OF APRIL 26, 2022
ADOPT A RESOLUTION APPROVING THE PRELIMINARY OFFICIAL STATEMENT,
CONTINUING DISCLOSURE CERTIFICATE AND PENSION FUNDING POLICY FOR THE PROPOSED PENSION OBLIGATION BONDS, SERIES 2022
On April 13, 2021, the City Council approved the form of a trust agreement and purchase contract, authorizing the issuance of POBs, and authorized judicial validation proceedings relating to the issuance of such bonds.
On September 23, 2021, the Los Angeles County Superior Court of the State of California issued a Default Judgement in Validation Proceedings related to our intent to issue and sell POBs. The Validation Judgment confirms that the City’s Unfunded Liability is an “obligation imposed by law,” which may be refinanced with POBs. As this ruling is final and leaves no question that these bonds can be issued under the Refunding Bond Law cited above, the City can move forward with taking the appropriate steps, including the sale of POBs.
Discussion:
Proposed Pension Obligation Bonds
By issuing POBs to refinance approximately 62% of the City’s UAL, staff estimates that based on current market conditions, the budgetary savings will be approximately $7.5 million. Staff estimates that the City’s UAL will be 90% funded post issuance of the POBs. The POBs are expected to be issued with a term of not-to-exceed 20 years, which is five (5) years shorter than the City’s prepaid CalPERS bases. The true interest cost is projected to be approximately 4.46% as of April 1, 2022. Final borrowing costs and estimated budgetary savings will be determined at the sale of the POBs, currently scheduled for May 2022. Set forth below is a projected analysis for the issuance of POBs.
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
20232024202520262027202820292030203120322033203420352036203720382039204020412042204320442045204620472048 Millions
20-Year POBs - 90% Funding Ratio
Remaining UAL
POB Debt Service
Budgetary Savings
UAL After FY21 Credit
Original UAL Payments
Interest rates have been volatile in recent months as a result of inflationary pressures resulting from the COVID-19 pandemic and as a result of international events, such as the war in Ukraine. As shown in the chart below, the 10-year and 30-year US Treasury Par Value $ 19,420,000
Term 20
UAL Payments 36,573,134
POB Payments 28,986,441
Budgetary Savings 7,586,693
NPV Savings 5,040,043
% Savings 26%
TIC% 4.46%
90% POB - After FY21 Credit
CITY COUNCIL AGENDA REPORT - MEETING OF APRIL 26, 2022
ADOPT A RESOLUTION APPROVING THE PRELIMINARY OFFICIAL STATEMENT,
CONTINUING DISCLOSURE CERTIFICATE AND PENSION FUNDING POLICY FOR THE PROPOSED PENSION OBLIGATION BONDS, SERIES 2022
rates have increased over 1.20% and 0.85%, respectively, since December 2021. In addition, credit spreads have widened, and as a result, the estimated borrowing cost for the City’s proposed POBs is currently at 4.46%, just .04% below the not-to-exceed parameter. Despite the increase in interest rates, the City estimates that a POB issuance would result in budgetary savings of approximately $7.5 million. In order to provide the City flexibility to execute a POB financing under current market conditions, tonight’s item amends the not-to-exceed true interest cost from 4.5% (set forth in Resolution No. 7134) to 5.00%. All other terms of the authorizing resolution, including provisions regarding the final term of the POBs, remain unchanged.
In determining the proposed POB structure, staff and the City’s municipal advisor, Urban Futures Inc. (UFI), conducted rigorous scenario analysis to evaluate risks associated with POBs. One of the risks of a POB issuance is market timing risk, which is the risk of underperformance of CalPERS investments after making a significant onetime payment. Due to the recent turbulence in global financial markets, staff determined it was prudent to refund less than 100% of the UAL, which helps to mitigate market timing risk. By funding 62% of the City’s UAL, the City is able to achieve a 90% funded ratio, which Standard & Poor’s considers “Strong.” In addition, the City is proposing to issue the POBs with a maximum term of 20 years, which is five (5) years less than the CalPERS prepaid bases. The POBs are being structured to maximize overall savings with the goal of achieving fiscal sustainability.
Pension Policy
The attached resolution (Enclosure 1), also approves the Pension Funding Policy (Policy) (Enclosure 4). The Policy is intended to support the decision-making process of the City as it applies to the City’s unfunded pension liability, and includes various pension funding strategies, such as the issuance of POBs. The policy contains certain CITY COUNCIL AGENDA REPORT - MEETING OF APRIL 26, 2022
ADOPT A RESOLUTION APPROVING THE PRELIMINARY OFFICIAL STATEMENT,
CONTINUING DISCLOSURE CERTIFICATE AND PENSION FUNDING POLICY FOR THE PROPOSED PENSION OBLIGATION BONDS, SERIES 2022
criteria for the issuance of POBs, which are currently being met for the City’s proposed issuance:
• The bonds shall be structured to target a pension funding ratio of not to exceed 100% with the application of bond proceeds.
• The bonds shall not be structured to extend the final maturity date or defer payments.
• The bonds shall be structured with the most flexible prepayment option that can be achieved in the market without interest rate penalty at the time of issuance. • The bonds shall not finance non-current normal costs; they shall only be used to refinance unfunded pension liabilities.
• The POBs shall result in positive budgetary savings as determined by the City Manager/Administrative Services Director.
• Issuance of POBs requires approval by City Council.
In addition, the policy directs that if the City issues POBs, the City should seek to reinvest all, or a portion of the savings in the Section 115 Trust. The goal of increasing the funding level of the Section 115 Trust will be to maintain budget smoothing and service sustainability in future years.
Documents for City Council Consideration
• Preliminary Official Statement - This is the City’s document used by the Underwriters to market the bonds for purchase. The City Council and City staff are required by federal securities laws to ensure that the Preliminary Official Statement contains all material information that a investor would need to make a decision whether or not to purchase the Bonds and that the Preliminary Official Statement (with certain permitted exceptions to complete with the final Official Statement), does not omit any facts that would be necessary to make the information presented complete and not misleading.
• Continuing Disclosure Certificate - This document outlines the City’s requirements to provide certain annual reports to investors and notices of certain listed events in order to allow the Underwriter to comply with federal securities laws.
• Pension Funding Policy – The Policy is intended to support the decisionmaking process of the City Council as it applies to the City’s unfunded pension liability and provides funding strategies, guidelines for the issuance of POBs, as well objectives for the reinvestment of savings and use of Section 115 Trust Funds.
CITY COUNCIL AGENDA REPORT - MEETING OF APRIL 26, 2022
ADOPT A RESOLUTION APPROVING THE PRELIMINARY OFFICIAL STATEMENT,
CONTINUING DISCLOSURE CERTIFICATE AND PENSION FUNDING POLICY FOR THE PROPOSED PENSION OBLIGATION BONDS, SERIES 2022
Conclusion:
The issuance of POBs, in accordance with the City’s proposed Pension Funding Policy, to refinance approximately 62% of the City’s UAL is estimated to reduce the currently scheduled UAL payments by approximately a total of $7.5 million and achieve a 90% funded ratio post issuance, based on a 20-year POB and interest rates as of April 2022.
All costs of issuance of the Series 2022 POBs will be paid from a portion of the bond proceeds and contingent upon the successful bond issuance. Final borrowing costs and estimated budgetary savings will be determined at the sale of the POBs, currently scheduled for May 2022.
Steve Carmona
SC:AG:ep
Enclosures: 1) Resolution
2) Preliminary Official Statement
3) Continuing Disclosure Certificate
4) Pension Funding Policy
RESOLUTION NO. ____
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PICO
RIVERA, CALIFORNIA, APPROVING THE FORM OF A PRELIMINARY
OFFICIAL STATEMENT IN CONNECTION WITH TAXABLE PENSION
OBLIGATION BONDS TO REFINANCE THE CITY’S OBLIGATION TO
THE CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM,
APPROVING THE FORM OF A CONTINUING DISCLOSURE
CERTIFICATE, APPROVING A PENSION FUNDING POLICY,
AMENDING RESOLUTION NO. 7134 AND APPROVING ADDITIONAL
ACTIONS RELATED THERETO
WHEREAS, the City of Pico Rivera (the “City”) has previously adopted a retirement plan pursuant to the Public Employees’ Retirement Law, commencing with Section 20000 of the Government Code of the State of California, as amended (the “Retirement Law”) and elected to become a contracting member of the California Public Employees’ Retirement System (“PERS”);
WHEREAS, the Retirement Law and the contract (the “PERS Contract”) effective February 1, 1959, between the Board of Administration of PERS and the City Council of the City (the “City Council”) obligates the City: (i) to make contributions to PERS to fund pension benefits for certain City employees; (ii) to amortize the unfunded accrued actuarial liability with respect to such pension benefits; and (iii) to appropriate funds for the foregoing purposes;
WHEREAS, pursuant to Resolution No. 7129 adopted by the City Council on April 27, 2021 (the “Prior Resolution”), the City previously authorized the issuance of its City of Pico Rivera Pension Obligation Bonds, Series 2022 (Federally Taxable) (the “Bonds”) pursuant to the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code (the “Bond Law”), in a maximum principal amount not to exceed that required for the purpose of refunding all or a portion of the City’s current obligation to PERS for fiscal year 2021-22, pursuant to the PERS Contract, to pay all or a portion of the unfunded accrued actuarial liability of the City (the “Unfunded Liability”) with respect to pension benefits under the Retirement Law and the PERS Contract, to pay capitalized interest on the Bonds and to pay the costs of issuance of such Bonds, including the underwriter’s discount and any original issue discount on such Bonds; WHEREAS, pursuant to the Prior Resolution, the City Council also approved the forms of certain legal documents in connection with the issuance of the Bonds, including a Trust Agreement and a Bond Purchase Agreement;
WHEREAS, pursuant to the Prior Resolution, the City Council also authorized the institution of a proceeding for judicial validation of the Bonds and the Trust Agreement in the Superior Court of Los Angeles County, under and pursuant to the RESOLUTION NO. _____
provisions of Sections 860 et seq. of the California Code of Civil Procedure (the “Validation Proceeding”);
WHEREAS, a default judgment was entered in the Validation Proceeding on September 23, 2021, determining that the Bonds and the Trust Agreement will be valid and legal obligations of the City;
WHEREAS, the City Council has determined that it is in the best interests of the City and its residents to proceed with the issuance of the Bonds and the sale thereof to the underwriter named in the Bond Purchase Agreement;
WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (“Rule 15c2-12”) requires that, in order to be able to purchase or sell the Bonds, the underwriter thereof must have reasonably determined that the City has undertaken in a written agreement or contract for the benefit of the holders of the Bonds to provide disclosure of certain financial information and certain events on an ongoing basis; WHEREAS, in order to cause such requirement to be satisfied, the City desires to execute and deliver a Continuing Disclosure Certificate (the “Continuing Disclosure Certificate”) in connection with the issuance of the Bonds; WHEREAS, Rule 15c2-12 also requires that, in order to offer the Bonds for sale to the public, the underwriter must receive a disclosure document with respect to the Bonds and the City;
WHEREAS, in order to cause such requirement to be satisfied, the City has prepared a Preliminary Official Statement (the “Preliminary Official Statement”) in connection with the issuance of the Bonds;
WHEREAS, all acts, conditions and things required by the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the financing authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such financing for the purpose, in the manner and upon the terms herein provided;
WHEREAS, the City Council desires to amend Resolution No. 7134 to provide that the true interest cost of the Bonds shall not exceed 5.00%; and WHEREAS, the City Council recognizes that issuance of the Bonds is one tactic in a broader strategy to manage the City’s pension costs and, as such, recognizes the benefits of adopting a pension funding policy.
RESOLUTION NO. _____
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Pico Rivera as follows:
SECTION 1: The City Council does hereby find and declare that the above recitals are true and correct.
SECTION 2: The City Council hereby reaffirms its approval of the issuance of the Bonds upon the terms and conditions set forth in the Prior Resolution and authorizes staff to proceed with a public sale of the Bonds.
SECTION 3: The form of Preliminary Official Statement presented at this meeting, with such changes, insertions and omissions therein as may be approved by the Mayor, the Mayor Pro Tem, the City Manager, the Assistant City manager or the Director of Finance, and their authorized designees (the “Designated Officers”), is hereby approved, and the use of the Preliminary Official Statement in connection with the offering and sale of the Bonds is hereby authorized and approved. Each Designated Officer is hereby authorized to certify on behalf of the City that the Preliminary Official Statement is deemed final as of its date within the meaning of Rule 15c2-12 (except for the omission of certain final pricing, rating and related information as permitted by Rule 15c2-12). The Designated Officers are each hereby authorized and directed to furnish, or cause to be furnished, to prospective bidders for the Bonds a reasonable number of copies of the Preliminary Official Statements.
SECTION 4: The preparation and delivery of an Official Statement, and its use in connection with the offering and sale of the Bonds, is hereby authorized and approved.
The Official Statement shall be in substantially the form of the Preliminary Official Statement, with such changes, insertions and omissions as may be approved by a Designated Officer (including changes to reflect the delivery of a municipal bond insurance policy and/or debt service reserve insurance policy for the Bonds, as approved pursuant to the Prior Resolution), such approval to be conclusively evidenced by the execution and delivery thereof. The Designated Officers are each hereby authorized and directed, for and in the name of and on behalf of the City, to execute the final Official Statement and any amendment or supplement thereto for and in the name and on behalf of the City.
SECTION 5: The form of Continuing Disclosure Certificate presented at this meeting is hereby approved, and the Designated Officers are each hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Continuing Disclosure Certificate in substantially said form, with such changes, insertions and omissions therein as the Designated Officer executing the same may require or approve, such approval to be conclusively evidenced to the execution and delivery thereof.
SECTION 6: U.S. Bank Trust Company, National Association is hereby appointed to act as Trustee under the Trust Agreement.
RESOLUTION NO. _____
SECTION 7: Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) is hereby appointed to act as Underwriter under the Bond Purchase Agreement.
SECTION 8: The Designated Officers are, and each of them hereby is, authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the transactions contemplated hereby, including, but not limited to, the execution and delivery of any documents required by PERS in order to complete the issuance of the Bonds and the refunding of the Unfunded Liability. All actions heretofore taken by the Designated Officers and by any other officers, employees or agents of the City with respect to the issuance of the Bonds, or in connection with or related to any of the agreements or documents referenced herein, are hereby approved, confirmed and ratified.
SECTION 9: The City Council hereby approves the Pension Funding Policy presented at this meeting.
SECTION 10: Section 6 of Resolution No. 7134 is hereby amended to provide that the true interest cost of the Bonds shall not exceed 5.00%.
SECTION 11: The City Clerk shall attest to the passage of this resolution and it shall thereupon be in full force and effect.
APPROVED AND PASSED this 26th day of April, 2022.
Dr. Monica Sánchez, Mayor
ATTEST: APPROVED AS TO FORM:
Anna M. Jerome, City Clerk Arnold M. Alvarez-Glasman, City Attorney AYES:
NOES:
ABSENT:
ABSTAIN:
4861-4868-8141.5
PRELIMINARY OFFICIAL STATEMENT DATED _______, 2022
NEW ISSUE—BOOK-ENTRY ONLY RATING: S&P: “______”
(See “RATING” herein)
In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest on the Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended, but is exempt from State of California personal income tax. See “TAX MATTERS.”
$__________*
CITY OF PICO RIVERA
PENSION OBLIGATION BONDS, SERIES 2022
(FEDERALLY TAXABLE)
Dated: Date of Delivery Due: April 1, as shown on the inside front cover The City of Pico Rivera (the “City”) is issuing its $_______ Pension Obligation Bonds, Series 2022 (Federally Taxable) (the “Bonds”), pursuant to a Trust Agreement, dated as of __________ 1, 2022, by and between the City and U.S. Bank Trust Company, National Association, as trustee, and pursuant to Articles 10 and 11 (commencing with Section 53570) of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code. The Bonds are being issued to: (i) refund a portion of the City’s currently unamortized, unfunded accrued liability (“Unfunded Liability”) to the California Public Employees’ Retirement System (“CalPERS”) for the benefit of the City’s employees, and (ii) pay costs of issuance of the Bonds. See “PLAN OF REFINANCING” herein.
The Bonds will be delivered in fully registered form only, and when delivered will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). See “THE BONDS—General” herein. So long as Cede & Co. is the registered owner of the Bonds, references herein to the owners of the Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the Bonds.
The interest on the Bonds is payable semiannually on April 1 and October 1 (each an “Interest Payment Date”) of each year, commencing October 1, 2022, through the maturity date of such Bonds. The Bonds will be issued in denominations of $5,000 or any integral multiple thereof. The Bonds will be issued in such principal amounts, and will bear interest at the rates, payable on the dates as shown on the inside front cover of this Official Statement.
The Bonds are subject to optional redemption prior to maturity as described herein. See “THE BONDS” herein.
THE OBLIGATIONS OF THE CITY UNDER THE BONDS, INCLUDING THE OBLIGATION TO MAKE ALL
PAYMENTS OF THE INTEREST ON AND THE PRINCIPAL OF THE BONDS WHEN DUE OR UPON PRIOR REDEMPTION, ARE ABSOLUTE AND UNCONDITIONAL, WITHOUT ANY RIGHT OF SET-OFF OR COUNTERCLAIM.
THE BONDS DO NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO
LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. SEE “SECURITY AND SOURCE OF PAYMENT FOR THE BONDS.” This cover page and the inside front cover page contain information for reference only. They are not a summary of this issue. Investors must read the entire Official Statement to obtain information essential in making an informed investment decision.
The Bonds will be offered when, as and if issued, and received by the Underwriter, subject to approval as to their legality by Stradling Carlson Yocca & Rauth, a Professional Corporation, Newport Beach, California, as Bond Counsel to the City. Certain additional matters will be passed upon by Nixon Peabody LLP, as Disclosure Counsel to the City. Certain other legal matters will be passed upon for the City by the City Attorney, for the Underwriter by Jones Hall, A Professional Law Corporation, San Francisco, California and for the Trustee by its counsel. The Bonds, in book-entry form, will be available for delivery through the facilities of DTC in New York, New York, on or about _________, 2022.
STIFEL
Dated: __________, 2022
_______________
* Preliminary; subject to change.
4861-4868-8141.5
$_________
CITY OF PICO RIVERA
PENSION OBLIGATION BONDS, SERIES 2022
(FEDERALLY TAXABLE)
MATURITY SCHEDULE
Base CUSIP†: ___________
Maturity
(April 1)
Principal
Amount
Interest
Rate Yield Price CUSIP†
$_____ __% Term Bonds due April 1, 20___ - Yield____%; Price ________; CUSIP† _________ † CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright(c) 2022 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only.
None of the City, the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers. 4861-4868-8141.5
CITY OF PICO RIVERA
COUNTY OF LOS ANGELES, CALIFORNIA
CITY COUNCIL
Dr. Monica Sanchez, Mayor
Erik Lutz, Mayor Pro-Tem
Gustavo V. Camacho, Councilmember
Raul Elias, Councilmember
Andrew C. Lara, Councilmember
CITY OFFICIALS
Steve Carmona, City Manager
Angelina Garcia, Assistant City Manager/Director of Administrative Services Anna M. Jerome, CMC, City Clerk
Alvarez-Glasman & Colvin, City Attorney
MUNICIPAL ADVISOR
Urban Futures, Inc.
Tustin, California
BOND COUNSEL
Stradling Yocca Carlson & Rauth,
a Professional Corporation
Newport Beach, California
DISCLOSURE COUNSEL
Nixon Peabody LLP
Los Angeles, California
TRUSTEE
U.S. Bank Trust Company, National Association
Los Angeles, California
4861-4868-8141.5
No dealer, broker, salesperson or other person has been authorized by the City or the Underwriter to give any information or to make any representations with respect to the Bonds other than those contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by the City or the Underwriter. The information set forth herein has been obtained from sources which are believed to be current and reliable. This information and the expression of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. Estimates and opinions are included and should not be interpreted as statements of facts.
Summaries of documents do not purport to be complete statements of their provisions and such summaries are qualified by references to the entire contents of the summarized documents.
This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
The Underwriter has provided the following sentence for inclusion in this Official Statement:
The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibility to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
This Official Statement is not to be construed as a contract with the purchasers of any of the Bonds.
Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts. Reference is hereby made to such documents on file with the City for further information in connection therewith. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not reproduced or used, in whole or in part, for any other purpose.
NONE OF THE BONDS HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. NONE OF THE
BONDS HAVE BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY
OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICE OF THE BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements.” Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “budget” or other similar words. Forward-looking statements in this Official Statement are subject to risks and uncertainties. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
The City does not plan to issue any updates or revisions to those forward-looking statements if or when expectations or events, conditions or circumstances on which such statements are based occur.
The City maintains a website. The information on such website is not part of this Official Statement and is not intended to be relied on by investors with respect to the Bonds unless specifically set forth or incorporated herein.
4861-4868-8141.5
TABLE OF CONTENTS
Page Page
i
INTRODUCTION ................................................ 1 General............................................................... 1 Validation........................................................... 2 No Debt Service Reserve Fund .......................... 2 Continuing Disclosure........................................ 2 Forward-Looking Statements............................. 2 Miscellaneous..................................................... 3 THE BONDS........................................................ 3 General............................................................... 3 Optional Redemption of the Bonds.................... 3
Notice of Redemption ........................................ 4 Selection of Bonds for Redemption ................... 5
SECURITY AND SOURCE OF PAYMENT
FOR THE BONDS ............................................... 6 Bond Payments .................................................. 6 Revenue Fund .................................................... 6 Limited Obligations ........................................... 7 PLAN OF REFINANCING.................................. 7
ESTIMATED SOURCES AND USES OF
FUNDS ................................................................. 8
ANNUAL DEBT SERVICE
REQUIREMENTS................................................ 8 THE CITY ............................................................ 9 General Information........................................... 9 Government........................................................ 9 Budgetary Process and Administration;
General Fund ................................................. 10 Revenue and Expenditure Trends .................... 10
Financial Statements........................................ 15 Property Taxes ................................................. 15 Largest Property Taxpayers ............................. 18 Sales and Use Taxes......................................... 18 Utility Users Taxes........................................... 19 Certain Outstanding Obligations...................... 19 Reserve Policy.................................................. 19 Investment Policy............................................. 20 Labor Relations................................................ 20 Pension Plans................................................... 21 Defined Contribution Pension Plans................ 23
Other Post-Employment Benefits .................... 24
State Budget Information ................................. 25 RISK FACTORS ................................................ 26 City Obligations............................................... 26 COVID-19 Pandemic ....................................... 26 Increasing Retirement Related Costs............... 27
Dependence on State for Certain Revenues..... 27
Natural Disasters.............................................. 27 Hazardous Substances ......................................27 Cybersecurity....................................................28 Limitation on Sources of Revenues;
Additional Expenditures ................................28 Limitation on Remedies; Bankruptcy...............28
Limited Secondary Market ...............................29 Changes in Law ................................................29
CONSTITUTIONAL AND STATUTORY
LIMITATIONS ON TAXES AND
APPROPRIATIONS ...........................................30 Article XIII A of the California Constitution ...30
Article XIII B of the California Constitution....30
Proposition 62...................................................32 Proposition 218.................................................32 Unitary Property ...............................................35 Proposition 22...................................................35 Proposition 1A..................................................35 Proposition 26...................................................36 Future Initiatives...............................................36 TAX MATTERS.................................................36 VALIDATION....................................................37 CERTAIN LEGAL MATTERS..........................38
LITIGATION......................................................38 RATING..............................................................38 FINANCIAL STATEMENTS OF THE CITY ...38
CONTINUING DISCLOSURE ..........................38
UNDERWRITING..............................................39 MUNICIPAL ADVISOR....................................39 MISCELLANEOUS............................................39 APPENDIX A—AUDITED FINANCIAL
STATEMENTS FOR THE FISCAL YEAR
ENDED JUNE 30, 2021.......................................A-1 APPENDIX B—ECONOMIC AND
DEMOGRAPHIC INFORMATION
REGARDING THE CITY OF PICO RIVERA ... B-1
APPENDIX C—SUMMARY OF CERTAIN
PROVISIONS OF THE TRUST
AGREEMENT ..................................................... C-1 APPENDIX D—FORM OF BOND COUNSEL
OPINION .............................................................D-1 APPENDIX E—FORM OF CONTINUING
DISCLOSURE CERTIFICATE........................... E-1
APPENDIX F—BOOK-ENTRY SYSTEM .........F-1
4861-4868-8141.5
OFFICIAL STATEMENT
$________*
CITY OF PICO RIVERA
PENSION OBLIGATION BONDS, SERIES 2022
(FEDERALLY TAXABLE)
INTRODUCTION
This introduction contains only a brief summary of certain of the terms of the Bonds being offered, and a brief description of the Official Statement. All statements contained in this introduction are qualified in their entirety by reference to the entire Official Statement. References to, and summaries of, provisions of the Constitution and laws of the State of California and any documents referred to herein do not purport to be complete and such references are qualified in their entirety by reference to the complete provisions. This Official Statement speaks only as of its date, and the information contained herein is subject to change.
General
This Official Statement provides certain information concerning the issuance, sale and delivery of the City of Pico Rivera Pension Obligation Bonds, Series 2022 (Federally Taxable) (the “Bonds”), in the aggregate principal amount of $_________*
. All capitalized terms used in this Official Statement and not otherwise defined herein have the same meanings as in the Trust Agreement (the “Trust Agreement”), dated as of _________ 1, 2022, by and between the City of Pico Rivera (the “City”) and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). For definitions of certain words and terms used but not otherwise defined herein, see APPENDIX C—“SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT.”
The City is a member of the California Public Employees’ Retirement System (“CalPERS”), an agent multiple-employer public employee defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California (the “State”), including the City. As such, the City is obligated by the Public Employees’ Retirement Law, constituting Part 3 of Division 5 of Title 2 of the California Government Code (the “Retirement Law”), and the contract between the Board of Administration of CalPERS and the City Council of the City, effective February 1, 1959 (as amended, the “CalPERS Contract”), to make contributions to CalPERS to (a) fund pension benefits for City employees who are members of CalPERS, (b) amortize the unfunded actuarial liability with respect to such pension benefits, and (c) appropriate funds for such purposes. The City participates in a retirement plan (with tiers within the plan) under the CalPERS Contract. The City is authorized pursuant to Articles 10 and 11 (commencing with Section 53570) of Chapter 3 of Division 2 of Title 5 of the California Government Code (the “Refunding Bond Law”), to issue bonds for the purpose of refunding obligations evidenced by the CalPERS Contract. The Bonds are authorized and issued pursuant to the Trust Agreement and a resolution of issuance adopted by the City Council of the City (the “Council”) on May 25, 2021 (the “Resolution”). The proceeds from the sale of the Bonds (exclusive of costs of issuance) will be used to refund a portion of the City’s obligations to CalPERS evidenced by the retirement plan in which the City participates pursuant to the CalPERS Contract and representing the current unamortized, unfunded * Preliminary; subject to change.
4861-4868-8141.5
2 accrued liability (the “Unfunded Liability”) with respect to certain pension benefits under the Retirement Law.
The obligations of the City under the CalPERS Contract and the Bonds, including the City’s obligation to make all payments of interest and principal when due, are absolute and unconditional, without any right of set-off or counterclaim. The Bonds are not limited as to payment to any special source of funds of the City.
THE BONDS DO NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE
CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. NEITHER THE BONDS NOR
THE OBLIGATION OF THE CITY TO MAKE PAYMENTS WITH RESPECT TO THE BONDS
CONSTITUTES AN INDEBTEDNESS OF THE CITY, THE STATE OR ANY OF ITS POLITICAL
SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.
Validation
On September 23, 2021, a default judgment (the “Validation Judgment”) was entered by the Superior Court of the State of California for the County of Los Angeles in the case entitled City of Pico Rivera v. All Persons Interested et al., (Case No. 21NWCP00205). The Validation Judgment was entered in connection with an action which was initiated by the City in connection with the issuance of City pension obligation bonds, including the Bonds. See “VALIDATION.” No Debt Service Reserve Fund
The City will not fund a debt service reserve fund in connection with the issuance of the Bonds.
Continuing Disclosure
The City has covenanted for the benefit of the Holders of the Bonds to provide, or cause to be provided, to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access platform (EMMA) certain annual financial information and operating data and, in a timely manner, notice of certain enumerated events. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) (the “Rule”). See “APPENDIX E—FORM OF CONTINUING DISCLOSURE CERTIFICATE” for a description of the specific nature of the annual report and notices of enumerated events and a summary description of the terms of the Continuing Disclosure Certificate pursuant to which such reports are to be made. The City and its related entities have entered into previous undertakings to provide continuing disclosure pursuant to the Rule. See “CONTINUING DISCLOSURE” herein.
Forward-Looking Statements
Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements.” Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “budget” or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Although such expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The 4861-4868-8141.5
3 City is not obligated to issue any updates or revisions to the forward-looking statements if, or when, its expectations, or events, conditions or circumstances on which such statements are based change.
Miscellaneous
The information and expressions of opinion herein speak only as of their date and are subject to change without notice. Neither the delivery of this Official Statement nor any sale made hereunder nor any future use of this Official Statement will, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof.
Included herein are brief summaries of the Trust Agreement and certain documents and reports, which summaries do not purport to be complete or definitive, and reference is made to such documents and reports for full and complete statements of the contents thereof. See APPENDIX C—“SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT” attached hereto. 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 City and the purchasers or Holders of the Bonds. Copies of the documents are on file and available for inspection at the corporate trust office of the Trustee in Los Angeles, California. All capitalized terms used in this Official Statement and not otherwise defined herein have the same meanings as the Trust Agreement. See APPENDIX C—“SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT” attached hereto for definitions of certain words and terms used but not otherwise defined herein.
THE BONDS
General
The Bonds will be issued in fully registered form only and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”).
DTC will act as Securities Depository for the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only, in the denominations hereinafter set forth. Principal, premium, if any, and interest on the Bonds will be payable by the Trustee to DTC, which is obligated in turn to remit such principal and interest to DTC Participants for subsequent disbursement to Beneficial Owners (herein defined) of the Bonds. See APPENDIX F—“BOOK-ENTRY SYSTEM” herein.
The Bonds will be dated the date of delivery, mature on the dates and in the principal amounts and bear interest at the rates set forth on the inside front cover page of this Official Statement. The Bonds will be delivered in denominations equal to $5,000 or any integral multiple thereof. Interest on the Bonds will be payable on each April 1 and October 1, commencing October 1, 2022, by check mailed by first class mail on such interest payment date to such registered holders at the address shown on the registration books maintained by the Trustee; provided, however, that any Holder of at least $1,000,000 in aggregate principal amount of Bonds may be paid interest by wire transfer upon written request submitted to the Trustee prior to the Record Date immediately preceding the applicable Interest Payment Date. “Record Date” means the fifteenth day of each calendar month preceding any Interest Payment Date, regardless of whether such day is a Business Day.
Optional Redemption of the Bonds
The Bonds maturing on or after April 1, ______ may be redeemed at the option of the City from any source of funds on any date on or after _________ in whole or in part from such maturities as are 4861-4868-8141.5
4 selected by the City at a redemption price equal to the principal amount of the Bonds to be redeemed, together with accrued interest to the date of redemption, without premium.
Mandatory Sinking Fund Redemption
The Bonds maturing April 1, 20__ (the “20__ Term Bonds”) are subject to mandatory sinking fund redemption at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date, without premium. The 20__ Term Bonds shall be so redeemed on the following dates and in the following amounts:
Redemption Date
(April 1)
Principal
Amount
20__ $___
20__ ___
20__* ___
* Final maturity.
On or before each March 15 next preceding any mandatory sinking fund redemption date, the Trustee shall proceed to select for redemption pro-rata from all Term Bonds subject to mandatory sinking fund redemption at that time, an aggregate principal amount of such Term Bonds equal to the amount for such year as set forth in the table above and shall call such Term Bonds or portions thereof for redemption and give notice of such redemption in accordance with the Trust Agreement. At the option of the City, to be exercised by delivery of a written certificate to the Trustee on or before each April 1 next preceding any mandatory sinking fund redemption date, it may: (a) deliver to the Trustee for cancellation Term Bonds or portions thereof (in the amount of an Authorized Denomination) of the stated maturity subject to such redemption; or (b) specify a principal amount of such Term Bonds or portions thereof (in the amount of an Authorized Denomination) which prior to said date have been purchased or redeemed and cancelled by the Trustee at the request of the City and not theretofore applied as a credit against any mandatory sinking fund redemption requirement. Each such Term Bonds or portion thereof so delivered or previously redeemed shall be credited by the Trustee at 100% of the principal amount of the Term Bonds so delivered to the Trustee by the City against the obligation of the City on such mandatory sinking fund redemption date.
Notice of Redemption
Notice of redemption shall be given by the Trustee, not less than 20 nor more than 60 days prior to the redemption date: (i) in the case of Bonds not registered in the name of a Securities Depository or its nominee, to the respective Holders of the Bonds designated for redemption at their addresses appearing on the registration books of the Trustee; (ii) in the case of Bonds registered in the name of a Securities Depository or its nominee, to such Securities Depository for such Bonds; and (iii) to the Information Services. Notice of redemption to the Holders pursuant to clause (i) above shall be given by mail at their addresses appearing on the registration books of the Trustee, or any other method agreed upon by such Holder and the Trustee. Notice of redemption to the Securities Depositories pursuant to clause (ii) above and the Information Services pursuant to clause (iii) above shall be given by electronically secure means, or any other method agreed upon by such entities and the Trustee.
Each notice of redemption shall state the Bonds or designated portions thereof to be redeemed, the date of redemption, the place of redemption, the redemption price, the CUSIP number (if any) of the Bonds to be redeemed, the distinctive 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 4861-4868-8141.5
5 redeemed, the original issue date, interest rate and stated maturity date of each Bond to be redeemed in whole or part. Each such notice shall also state that on said date there will become due and payable on each of the Bonds to be redeemed the redemption price, and redemption premium, if any, thereof, and that from and after such redemption date interest thereon shall cease to accrue.
Failure to give the notices described in the Trust Agreement or any defect therein shall not in any manner affect the redemption of any Bonds. Any notice sent as provided in the Trust Agreement will be conclusively presumed to have been given whether or not actually received by the addressee.
Any notice of redemption may condition redemption of the Bonds on the availability of sufficient funds to effect the redemption, and the City shall have the right to rescind any notice of optional redemption previously sent pursuant to the Trust Agreement. Any such notice of rescission shall be sent in the same manner as the notice of redemption. Neither the City nor the Trustee shall incur any liability, to Bondholder, DTC, or otherwise, as a result of a rescission of a notice of redemption.
Selection of Bonds for Redemption
If less than all of the Bonds are called for redemption, the City will designate the maturities from which the Bonds are to be redeemed. For so long as the Bonds are registered in book entry form and DTC or a successor securities depository is the sole registered owner of such Bonds, if fewer than all of such Bonds of the same maturity and bearing the same interest rate are to be redeemed, the particular Bonds to be redeemed shall be selected on a pro rata pass through distribution of principal basis in accordance with the operational arrangements of DTC then in effect, and if the DTC operational arrangements do not allow for redemption on a pro rata pass-through distribution of principal basis, all Bonds to be so redeemed will be selected for redemption in accordance with DTC procedures by lot; provided further that any such redemption must be performed such that all Bonds remaining outstanding will be in authorized denominations.
In connection with any repayment of principal of the Bonds pursuant to the pass through distribution of principal as described above, the Trustee will direct DTC to make a pass-through distribution of principal to the owners of the Bonds. A form of Pro Rata Pass Through Distribution of Principal Notice will be provided to the Trustee that includes a table of factors reflecting the relevant scheduled redemption payments and DTC’s applicable procedures, which are subject to change.
For purposes of calculating pro rata pass-through distributions of principal, “pro rata” means, for any amount of principal or interest to be paid, the application of a fraction to such amounts where: (a) the numerator is equal to the amount due to the owners of the Bonds on a payment date; and (b) the denominator is equal to the total original par amount of the Bonds.
It is the City’s intent that redemption allocations made by DTC with respect to the Bonds be made on a pro rata pass-through distribution of principal basis as described above. However, the City cannot provide any assurance that DTC, DTC’s direct and indirect participants, or any other intermediary will allocate the redemption of such Bonds on such basis.
If the Bonds are not registered in book-entry form and if fewer than all of the Bonds of the same maturity and bearing the same interest rate are to be redeemed, the Bonds of such maturity and bearing such interest rate to be redeemed will be selected on a pro rata basis, and the particular Bonds of such maturity and bearing such interest rate to be redeemed will be selected by lot, provided that any such redemption must be performed such that all Bonds remaining outstanding will be in authorized denominations.
4861-4868-8141.5
6 Upon surrender of a Bond to be redeemed in part, the Trustee will authenticate for the registered owner a new Bond or Bonds of the same maturity and tenor equal in principal amount to the unredeemed portion of the Bond surrendered.
SECURITY AND SOURCE OF PAYMENT FOR THE BONDS
Bond Payments
The obligations of the City under the Bonds, including the obligation to make all payments of principal, premium, if any and interest when due, are absolute and unconditional, without any right of setoff or counterclaim.
The Trust Agreement requires that the City no later than three Business Days preceding each Interest Payment Date beginning October 1, 2022, deliver funds to the Trustee for deposit to the Revenue Fund in an aggregate amount equal to the portion of the Annual Debt Service coming due on such Interest Payment Date (less amounts on deposit in the Revenue Fund). No assurance can be given as to the amount and source of money available in the City treasury for such transfer at any particular time.
However, the Trust Agreement provides that the City shall punctually pay the interest on and the principal of and premium, if any, to become due on the Bonds.
From time to time, the City may enter into (i) one or more other trust agreements or indentures and/or (ii) one or more supplemental agreements supplementing and/or amending the Trust Agreement, for the purpose of providing for the issuance of Additional Bonds to refund the Bonds or to refund any Unfunded Liability under the CalPERS Contract, any other obligations due to CalPERS, or any bonds issued to refund the Unfunded Liability. Such Additional Bonds may be issued on a parity with the Bonds.
Revenue Fund
The Trust Agreement creates the “City of Pico Rivera 2022 Taxable Pension Obligation Bonds Revenue Fund” (the “Revenue Fund”) and a “Bond Interest Account” and “Bond Principal Account” therein.
All amounts received by the Trustee from the City in respect of interest payments on the Bonds shall be deposited in the Bond Interest Account and shall be disbursed to the applicable Bondholders to pay interest on the Bonds. All amounts held at any time in the Bond Interest Account shall be held for the security and payment of interest on the Bonds pursuant to the Trust Agreement. If at any time funds on deposit in the Bond Interest Account are insufficient to provide for the payment of such interest, the City shall promptly deposit funds to such Account to cure such deficiency. On October 2 of each year beginning in 202__, so long as no Event of Default under the Trust Agreement has occurred and is continuing, if directed by the City, the Trustee shall transfer all amounts on deposit in the Bond Interest Account to the City to be used for any lawful purpose.
All amounts received by the Trustee from the City in respect of principal payments on the Bonds shall be deposited in the Bond Principal Account and all amounts in the Bond Principal Account will be disbursed to pay principal on the Bonds pursuant to the Trust Agreement. If at any time funds on deposit in the Bond Principal Account are insufficient to provide for the payment of such principal, the City shall promptly deposit funds to such Account to cure such deficiency. 4861-4868-8141.5
7 The moneys in such Revenue Fund and the accounts therein shall be held by the Trustee in trust and applied as provided in the Trust Agreement and, pending such application, shall be subject to a lien and charge in favor of the Holders of the Bonds issued and Outstanding under the Trust Agreement.
As described above, the City may issue Additional Bonds under the Trust Agreement. In the event the City issues Additional Bonds under the Trust Agreement, amounts on deposit in the Revenue Fund and the accounts therein will secure the Bonds and such Additional Bonds on a parity basis.
Limited Obligations
THE BONDS ARE GENERAL OBLIGATIONS OF THE CITY PAYABLE FROM ANY
LAWFULLY AVAILABLE FUNDS OF THE CITY AND ARE NOT LIMITED AS TO PAYMENT TO ANY SPECIAL SOURCE OF FUNDS OF THE CITY. THE BONDS DO NOT CONSTITUTE AN
OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE
ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. NEITHER THE BONDS NOR THE OBLIGATION OF THE CITY TO MAKE
PAYMENTS WITH RESPECT TO THE BONDS CONSTITUTES AN INDEBTEDNESS OF THE
CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.
The City will in each Fiscal Year include in its budget a provision to provide funds in an amount sufficient to pay the principal, premium, if any, and interest on the Bonds coming due in such Fiscal Year, but only to the extent that such amounts exceed the amount of available funds then on deposit in the Revenue Fund, and shall make annual appropriations for all such amounts. If such principal, premium, if any, and interest on the Bonds coming due in any Fiscal Year exceeds the sum of amounts budgeted in respect thereof together with amounts then on deposit in the Revenue Fund, then the City will amend or supplement the budget to provide for such excess amounts.
PLAN OF REFINANCING
On September 23, 2021, the Superior Court of the State of California in and for the County of Los Angeles (the “County”) entered a default judgment to the effect, among other things, that (i) the Trust Agreement will be a valid, legal and binding obligation of the City and the approval thereof was in conformity with applicable provisions of law and (ii) the City has the authority under California law to provide for the refunding of its Unfunded Liability and its normal annual contributions for a fiscal year by issuing bonds, including without limitation the Bonds, and applying the proceeds of bonds to the retirement of the its Unfunded Liability and payment of its current year normal annual contributions.
CalPERS has notified the City as to the amount of the Unfunded Liability as of the delivery date of the Bonds, consisting of $__________ with respect to the City’s Miscellaneous Plan. The Bonds are being issued to finance a portion of the total Unfunded Liability as of the delivery date of the Bonds.
Upon the issuance of the Bonds, the City will pay $__________ to CalPERS for deposit to the CalPERS Payment Fund. The City projects that upon the refunding a portion of the Unfunded Liability, the funding level of the Miscellaneous Plan will be increased to _____%. See “CITY FINANCING INFORMATION – Retirement Contributions” for additional information regarding the City’s Miscellaneous Plan and the Council Plan.
4861-4868-8141.5
8 ESTIMATED SOURCES AND USES OF FUNDS
The proceeds to be received from the sale of the Bonds are estimated to be applied as set forth below.
Estimated Sources of Funds
Principal Amount of Bonds
Total Sources of Funds
Estimated Uses of Funds
Funding of the Unfunded Liability(1)
Costs of Issuance(2)
Underwriter’s Discount
Total Uses of Funds
(1) Deposit to CalPERS Payment Fund. See “PLAN OF REFINANCING” herein. (2) Includes rating fees, legal fees, printing costs, trustee fees and other costs of issuance deposited in the Costs of Issuance Fund.
ANNUAL DEBT SERVICE REQUIREMENTS
The following table sets forth the amounts required to be made available for the payment of principal of and interest on the Bonds, assuming no optional redemption occurs prior to maturity.
Fiscal Year
Ending
June 30 Principal Interest Total
Total
4861-4868-8141.5
9 THE CITY
General Information
The City is located approximately 11 miles east of downtown Los Angeles, California. The City was incorporated on January 29, 1958 and is a general law city operating under a council/manager form of government. See APPENDIX B – “ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING THE CITY OF PICO RIVERA.”
Government
City Council and Staff. The City operates under a Council/Manager form of government. The City Council is composed of five members elected at large. The Mayor is the presiding officer of the Council and is selected by the members of the City Council to serve a term of one year on a rotational basis. The City Council appoints a City Manager, City Clerk, City Attorney, and all advisory boards and commissions. The City Manager serves as the chief administrative officer of the City.
Steve Carmona, City Manager. With more than 20 years of experience in both the public and private sectors, Mr. Carmona brings a wealth of knowledge and expertise to the community. Since 2016, he has served as the City Manager and Director of Community & Economic Development. Previously, Mr. Carmona served as economic development director for the City of Los Angeles. He was involved in many notable and highly-profiled projects in the greater Los Angeles region. Mr. Carmona has served on numerous Boards, Commissions, and Committees, including the City of Los Angeles Board of Public Works. In this capacity, he delivered projects and programs that enhanced quality of life, economic growth, public health, and the environment. In addition to his public sector experience, Mr. Carmona was also highly involved in creating a business development program for the electrical industry. He played a vital role in crafting policy language that significantly improved the public sector's procurement process.
His impact in this sector was instrumental in assisting the LA Building Trades in obtaining Project Labor Agreements for high-profile projects. He earned his degree in Business Administration from California State University, Los Angeles.
Angelina Garcia, Director of Administrative Services/Interim Assistant City Manager. Ms.
Garcia has over 22 years of Financial Services experience, including audit of government agencies, notfor-profit organizations, and real estate entities. For the last 15 years, she has held various roles in municipal finance and administration, which include: Fiscal Services Manager, Manager of Budget and Business Planning, Deputy Director of Administrative Services, Director of Administrative Services/Finance, and most recently, serving a dual role as Interim Assistant City Manager/Director of Administrative Services at the City of Pico Rivera. She earned a Bachelor of Science in Business Administration with an emphasis in Accounting from California State University, Long Beach.
Administration. The major municipal departments and agencies of the City administration are:
City Manager; City Clerk; City Attorney; Finance; Human Resources; Public Works; Community and Economic Development; and Parks and Recreation. The City operates divisions within these major departments for Redevelopment, Emergency Services, Building and Safety, and Planning. The City contracts with the County of Los Angeles for police and fire protection as well as library services. 4861-4868-8141.5
10 Budgetary Process and Administration; General Fund
The City uses the following procedures when establishing the budgetary data reflected in its financial statements:
The City employs a biennial budget process where future revenue and planned expenditures are determined for two fiscal years. The fiscal year of the City begins on the first day of July of each year and ends on the thirtieth day of June the following year. In May of every other year, the City Manager submits to the City Council the proposed budget during a special budget study session. At the conclusion of the special budget study session, the City Council reviews and considers the proposed budget and makes any revisions thereof that it deems advisable and on or before June 30 it adopts the budget with revisions, if any, by the affirmative vote of at least a majority of the total members of the City Council during a public meeting. At any public meeting after the adoption of the budget, the City Council may amend or supplement the budget by motion adopted by the affirmative vote of at least a majority of the total members of the City Council. While the City Manager is authorized to move appropriations from one object to another within each budgetary program/division and within the same fund, provided that the total approved appropriations for a budget program and within the same fund are not exceeded, the City Council must approve any supplements to the budget.
The City Council employs an independent certified public accounting firm which, at such time or times as specified by the City Council, at least annually, at such other times as such firm shall determine, examines the books, records, inventories and reports of all officers and employees who receive, control, handle or disburse public funds and of all such other officers, employees or departments as the City Council may direct.
Revenue and Expenditure Trends
The General Fund City Budget includes programs and services which are provided on a largely Citywide basis. The programs and services are financed primarily by the City’s share of property taxes, sales tax, local taxes, revenues from the State and charges for services provided.
Table 1 below compares the City’s General Fund Budget adopted for Fiscal Years 2019-20 and 2020-21 with the City’s audited actual revenue and expenditures for the same Fiscal Years. 4861-4868-8141.5
11 TABLE 1
Statement of Revenues, Expenditures, and Changes in General Fund Balances Budget And Actual General Fund Balances For Fiscal Years Ended June 30, 2020 and June 30, 2021 2020 2021
Final Budget Actual Variance Final Budget Actual Variance
REVENUES
Taxes and Assessments $32,759,730 $35,065,105 $2,305,375 $33,233,376 $37,845,016 $4,611,640 Licenses and Permits 3,353,200 2,212,910 (1,140,290) 2,462,767 3,209,557 746,790 Intergovernmental 221,000 273,933 52,933 1,407,915 1,286,381 (121,534) Charges for Services 1,361,700 1,322,004 (39,696) 964,191 1,055,863 91,672 Fines, Forfeitures and Penalties 1,101,000 952,095 (148,905) 855,755 1,108,568 252,813 Investment and Rental 643,600 857,744 214,144 410,000 452,695 42,695 Miscellaneous 353,500 432,140 78,640 227,296 277,888 50,592 Total Revenues 39,793,730 41,115,931 1,322,201 39,561,300 45,235,968 5,674,668
EXPENDITURES
Current:
General Government 7,341,003 8,013,540 (672,537) 8,663,452 7,333,016 1,330,436 Public Safety 12,677,511 12,433,612 243,899 12,600,091 12,286,345 313,746 Public Works 10,422,962 8,868,826 1,554,136 9,539,125 8,179,901 1,359,224 Parks and Recreation 5,880,357 5,329,096 551,261 5,109,580 4,578,015 531,565 Community Development 4,833,730 4,057,865 775,865 4,502,510 3,926,319 576,191 Debt service:
Principal 900,000 900,000 - 925,000 925,000 -
Interest and Fiscal Charges 1,023,450 1,023,450 - 998,225 998,225 - Total Expenditures 43,079,013 40,626,389 2,452,624 42,337,983 38,226,821 4,111,162
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES (3,285,283) 489,542 3,774,825 (2,776,683) 7,009,147 9,785,830
OTHER FINANCING SOURCES
(USES)
Transfers In - 2,153,109 2,153,109 (1,386,000) 1,375,868 2,761,868 Transfers Out - - - (941,573) (282,650) 658,923
Total Other Financing
Sources (Uses) - 2,153,109 2,153,109 (2,327,573) 1,093,218 3,420,791
NET CHANGE IN FUND
BALANCE (3,285,283) 2,642,651 5,927,934 (5,104,256) 8,102,365 13,206,621 Fund Balance –
Beginning of Year 62,454,956 62,454,956 - 65,097,607 65,097,607 - FUND BALANCE – END OF YEAR $59,169,673 $65,097,607 $5,927,934 $59,993,351 $73,199,972 $13,206,621 ___________________
Source: City of Pico Rivera.
4861-4868-8141.5
12 The following table shows General Fund estimated revenues and General Fund appropriations from the adopted fiscal year 2021-22 and fiscal year 2022-23 City budget, including a mid-year projection conducted on March 8, 2022 with respect to the fiscal year 2021-22 City budget. [UPDATE 2022-23 BUDGET WHEN UPDATED INFORMATION IS AVAILABLE]
TABLE 2
General Fund Budget
Revenues and Appropriations
For Fiscal Year Ended June 30, 2022 and Mid-Year Projection Fiscal Year 2021-22
Adopted Budget Mid-Year Projected Over/Under Budget
Fiscal Year 2022-23
Approved Budget
REVENUES
Taxes and Assessments $38,375,962 $40,625,186 $2,249,224 $39,290,948 Licenses and Permits 2,756,064 2,756,064 - 2,898,270
Fees, Fines, and Forfeitures 903,229 739,129 (164,100) 1,083,456 Use of Money 159,310 159,310 - 156,594
Charges for Services 421,715 421,715 - 647,352
Other Revenue 2,817,360 2,817,360 - 3,749,795
TOTAL REVENUES $45,433,640 $47,518,764 $2,085,124 47,806,415
EXPENDITURES
General Government $10,829,315 $10,807,915 $(21,400) $11,654,703 Public Safety 12,713,448 12,713,448 - 13,349,121
Public Works 8,639,457 8,684,457 45,000 8,925,737
Parks and Recreation 5,593,484 5,608,484 15,000 5,563,062 Community Development 5,737,686 5,757,486 19,800 6,392,542 Debt Service 1,920,250 1,920,250 - 1,921,250
Principal 955,000 955,000 - 995,000
Interest 965,250 965,250 - 926,250
TOTAL EXPENDITURES $45,433,640 $45,492,040 $58,400 47,806,415 Operating Surplus (Deficit) $ - $2,026,724 $2,026,724 $ - ___________________
Source: City of Pico Rivera.
4861-4868-8141.5
13 The following table sets forth the City’s General Fund balance sheet based upon audited financial statements for Fiscal Years ended June 30, 2017 through June 30, 2021.
TABLE 3
General Fund Balance Sheet
For Fiscal Years Ended June 30, 2017 Through June 30, 2021 2017 2018 2019 2020 2021
ASSETS
Cash and Investments $31,941,681 $31,151,742 $27,701,672 $30,431,892 $38,755,401 Restricted Cash and Investments:
Cash and Investments with Fiscal Agents - - 1,061,066 1,087,825 1,372,990 Receivables:
Accounts 194,790 154,460 343,078 67,296 6,686
Taxes 4,220,650 3,978,522 4,398,776 4,762,918 5,173,945 Interest 25,551 78,931 122,019 67,688 17,421
Due from Other Funds 2,569,834 4,674,542 4,195,286 3,796,927 5,060,182 Advance to Other Funds 18,260,812 18,260,812 21,056,349 21,298,984 19,470,422 Prepaid Items 77,178 36,060 74,577 1,910 13,759
Receivables from Successor Agency 12,922,861 13,041,334 13,201,586 13,293,246 13,313,823 Total Assets $70,213,357 $71,376,403 $72,154,409 $74,808,686 $83,184,629
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
LIABILITIES:
Accounts Payable $ 2,789,208 $ 3,064,866 $ 1,768,409 $ 1,951,535 $ 2,009,833 Accrued Liabilities 524,596 676,613 446,555 367,607 312,827 Due to Other Funds 176,000 176,000 176,000 176,000 176,000 Deposits 940,800 538,651 732,496 796,397 1,046,756
Total Liabilities 4,430,604 4,456,130 3,123,460 3,291,539 3,545,416 DEFERRED INFLOWS OF RESOURCES:
Unavailable Revenue 6,048,280 6,166,753 6,575,993 6,419,540 6,439,241 FUND BALANCES (DEFICITS):
Nonspendable 25,209,917 25,168,800 28,002,854 28,172,822 26,356,109 Restricted - - 1,061,066 1,087,825 1,372,990
Committed 9,476,700 9,665,400 10,284,000 10,169,300 20,510,328 Assigned 14,426,700 13,856,200 14,039,900 13,991,300 13,717,940 Unassigned 10,621,156 12,063,120 9,067,136 11,676,360 11,242,605 Total Fund Balances (Deficit) 59,734,473 60,753,520 62,454,956 65,097,607 73,199,972 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances $70,213,357 $71,376,403 $72,154,409 $74,808,686 $83,184,629 ___________________
Source: City of Pico Rivera.
4861-4868-8141.5
14 The following table sets forth the City’s General Fund revenues, expenditures and changes in fund balances based upon audited financial statements for Fiscal Years 2016-17 through 2020-21.
TABLE 4
General Fund
Statement of Revenues, Expenditures, and Changes in Fund Balance For Fiscal Years Ended June 30, 2017 Through June 30, 2021 2017 2018 2019 2020 2021
REVENUES
Taxes and Assessments $31,852,855 $32,299,794 $34,528,658 $ 35,065,105 $ 37,845,016 Licenses and Permits 2,442,190 2,960,639 2,861,711 2,212,910 3,209,557 Intergovernmental 298,576 208,688 286,737 273,933 1,286,381 Charges for Services 2,018,892 1,470,114 1,467,293 1,322,004 1,055,863 Fines, Forfeitures and Penalties 898,203 1,002,532 1,109,430 952,095 1,108,568 Investment and Rental 91,218 332,353 882,362 857,744 452,695 Miscellaneous 304,905 5,324,467 722,989 432,140 277,888 Total Revenues 37,906,839 43,598,587 41,859,180 41,115,931 45,235,968
EXPENDITURES
Current:
General Government 11,573,687(1) 12,732,924(2) 7,098,901 8,013,540 7,333,016 Public Safety 11,358,158 11,851,116 11,971,740 12,433,612 12,286,345 Public Works 8,626,627 9,989,954 9,366,357 8,868,826 8,179,901 Parks and Recreation 4,606,045 5,177,249 5,862,032 5,329,096 4,578,015 Community Development 2,735,317 3,233,811 3,429,269 4,057,865 3,926,319 Debt Service:
Principal 980,000 865,000 885,000 900,000 925,000
Interest and Fiscal Charges 655,944 1,061,150 1,043,650 1,023,450 998,225 Bond Issuance Costs 520,424
Payments to Refunding Escrow Agent 2,368,685
Total Expenditures 43,424,887 44,911,204 39,656,949 40,626,389 38,226,821
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES (5,518,048) (1,312,617) 2,202,231 489,542 7,009,147
OTHER FINANCING SOURCES (USES)
Transfers In 6,442,764 2,229,692 1,233,262 2,153,109 1,375,868 Transfers Out (1,655,306) (506,623) (2,737,472) - (282,650) Proceeds from Bond Issuance 30,470,000 - - - -
Bond Premium 3,082,378 - - - -
Payment to Refunding Escrow Agent (33,021,008) - - - -
Total Other Financing
Sources (Uses) 946,628 1,723,069 (1,504,210) 2,153,109 1,093,218
NET CHANGE IN FUND
BALANCES (4,571,420) 410,452 698,021 2,642,651 8,102,365 Fund Balances (Deficits –
Beginning of Year 64,305,893 60,343,068 61,756,935 62,454,956 65,097,607 Fund Balances (Deficits) –
END OF YEAR $ 59,734,473 $ 60,753,520 $ 62,454,956 $ 65,097,607 $ 73,199,972 ____________________
(1) Includes approximately $4 million funding of an irrevocable trust established for the City’s other post-employment benefits. (2) Includes purchase of two private properties in connection with a street widening project of approximately $4.1 million and approximately $1 million funding of an irrevocable trust established for the City’s unfunded pension liabilities.
Source: City of Pico Rivera.
4861-4868-8141.5
15 The following table shows the source of tax revenues of the General Fund for the past three fiscal years.
TABLE 5
General Fund Tax Revenues By Source
2018-19 2019-20 2020-21
% of Total General
Fund Taxes
2020-21
Sales and Use Taxes(1) $18,403,221 $18,299,271 $20,260,436 55% Property Taxes 10,646,729 11,132,519 11,792,050 32
Franchise Taxes 855,636 880,568 941,607 3
Utility Users taxes 2,939,221 3,064,500 3,157,258 9
Transient Occupancy Tax 461,474 438,232 433,797 1
Property Transfer Tax 157,377 185,014 194,868 -
Total General Fund Taxes $33,463,658 $34,000,104 $36,780,017 100% _______________________________ (1) Excludes $1,065,000 of sales taxes within the Project Area pledged to the Agency. Sales tax revenues generated by Measure P were $9,266,752, $9,704,706 and 11,319,835 for Fiscal Years 2018-19, 2019-20 and 2020-21, respectively.
See “THE CITY – Sales and Uses Taxes.”
Source: City of Pico Rivera.
Financial Statements
All governmental funds are accounted for using the modified accrual basis of accounting. The City’s revenues are recognized when they become measurable and available as net current assets.
Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. The exception to this general rule is principal and interest on general long-term debt, which is recognized when due. Some debts and obligations may be payable from selfsupporting enterprises or revenue sources other than property taxation. Special assessment bonds are not included in the tabulation; lease revenue obligations payable from the General Fund or equivalent sources are included.
All proprietary funds are accounted for using the accrual basis for accounting. Revenues are recognized when they are earned, and expenses are recognized when they are incurred. Receivables are recorded and determined at the time of consumption, and unbilled receivables are not recorded. See APPENDIX A - “AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2021.”
The audited combined financial statements of the City are available through links obtained at the City’s website at http://www.pico-rivera.org/. The audited combined financial statements of the City are also available upon request. Such request should be directed to the City Clerk’s Office, 6615 Passons Blvd., Pico Rivera, California 90660. The information set forth on such website is not incorporated herein by reference.
Property Taxes
The assessed valuation of property in the City is established by the County Assessor, except for public utility property which is assessed by the State Board of Equalization. Assessed valuations are 4861-4868-8141.5
16 reported at 100% of the full cash value of the property, as defined in Article XIII A of the California Constitution. (See “RISK FACTORS – Risks Related to Taxation in California” below).
Certain classes of property such as churches, colleges, not-for-profit hospitals and charitable institutions are exempt from property taxation and do not appear on the tax rolls. The table below presents the assessed valuations in the City from Fiscal Years 2016-17 through 2020-21.
TABLE 6
Assessed Valuation of Taxable Property
Fiscal Years 2017-18 through 2021-22
Residential
Property
Commercial
Property
Industrial
Property
Other
Property*
Tax-Exempt
Property
Total Taxable
Assessed Value
2017-18 $3,334,334,379 $590,956,777 $695,508,846 $292,833,875 $2,060,757 $4,915,694,634 2018-19 3,517,570,969 596,369,740 740,474,135 315,837,843 100,235 5,170,352,922 2019-20 3,706,643,219 629,479,041 771,749,293 365,146,561 102,238 5,473,120,352 2020-21 3,895,827,995 639,397,804 823,738,292 382,305,577 104,282 5,741,373,950 2021-22 4,079,513,033 657,191,391 978,113,682 374,506,281 105,361 6,089,429,748 ____________________
* Other property includes recreational, institutional, vacant and miscellaneous property.
Source: City of Pico Rivera.
Economic and other factors beyond the City’s control, such as economic recession, deflation of land values, or the complete or partial destruction of taxable property caused by, among other eventualities, earthquake, flood or other natural disaster could cause a reduction in the assessed value of taxable property in the City.
Taxes are levied by the County for each Fiscal Year on taxable real and personal property which is situated in the City as of the preceding January 1. Effective July 1, 1983, real property which changes ownership or is newly constructed is revalued at the time the change in ownership occurs or the new construction is completed. The current year property tax rate will be applied to the reassessment, and the taxes will then be adjusted by a proration factor to reflect the portion of the remaining tax year for which taxes are due.
For assessment and collection purposes, property is classified either as “secured” or “unsecured.” Property assessed as “secured” is listed accordingly on separate parts of the assessment roll containing State-assessed property and property the taxes on which are a lien on real property sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.”
Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each Fiscal Year, and if unpaid become delinquent on December 10 and April 10, respectively, subject to a penalty of ten percent. Property on the secured roll with respect to which taxes are delinquent becomes tax defaulted on or about June 30 of the Fiscal Year. Such property may thereafter be redeemed by payment of a penalty of 1.5 percent per month to the time of redemption, plus costs and a redemption fee.
If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the County Tax Collector.
Property taxes on the unsecured roll are due as of the January 1 lien date and, in general, become delinquent on August 31, subject to a ten percent penalty. If unsecured taxes are unpaid on October 31, an additional penalty of 1.5 percent attaches to them on the first day of each month until paid. The City has four ways of collecting delinquent unsecured personal property taxes: (1) bringing a civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in 4861-4868-8141.5
17 order to obtain a lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Clerk and Recorder’s office in order to obtain a lien on certain property of the taxpayer, and (4) seizing and selling personal property, improvements or possessory interests belonging or assessed to the assessee.
The City also receives property tax revenues in lieu of Vehicle License Fees (“VLF”). VLF is a state imposed and collected tax on ownership of a registered vehicle. Since the State lowered the VLF rate in the mid-1990s, the State has reimbursed counties and cities for their lost revenue. Before 2004, the reimbursements were made from State general fund revenues. Starting in 2004, the State paid for the lost VLF revenue by redirecting a portion of property taxes originally allocated to the schools to counties and cities, called the VLF swap. Previously, the amounts counties and cities received were based on their populations. Currently, counties’ and cities’ VLF swap amounts increase annually based on growth in the secured assessed value of property within their boundaries.
No Teeter Plan. The Los Angeles County Board of Supervisors elected to discontinue the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sales Proceeds (commonly referred to as the “Teeter Plan”) on July 1, 2009. Under the terms of the Teeter Plan, the County had remitted to local agencies the amount of uncollected taxes in exchange for retaining any subsequent delinquent payments, penalties and interest that would have been due to the local agency. As the Teeter Plan has been discontinued, the City’s property tax revenues reflect both reduced property tax revenue from uncollected taxes and increased revenue from the subsequent receipt of delinquent taxes, interest and penalty payments
The following table sets forth the levies, collections and percent of collections and levies for property taxes (excluding property taxes in lieu of VLF) in the City for the last five Fiscal Years.
TABLE 7
Property Tax Levies and Collections
Fiscal Years 2016-17 through 2020-21
Fiscal Year
Ending
June 30 Taxes Levied
Amount Collected in
the Fiscal Year
of Levy
Percent of
Levy
2017 $2,674,309 $2,638,929 98.68%
2018 2,840,017 2,798,898 98.55
2019 2,955,805 2,914,751 98.61
2020 3,169,235 3,055,052 96.40
2021 3,322,924 3,261,695 98.16
____________________
Source: City of Pico Rivera.
For a number of years, the State Legislature has shifted property taxes from cities, counties and special districts to the Educational Revenue Augmentation Fund (“ERAF”). In Fiscal Years 1993 and 1994, in response to serious budgetary shortfalls, the State Legislature and administration permanently redirected over $3 billion of property taxes from cities, counties, and special districts to schools and community college districts pursuant to ERAF shifts. The Fiscal Year 2005 State Budget included an additional $1.3 billion shift of property taxes from certain local agencies, including the City, in Fiscal Years 2005 and 2006.
On November 2, 2004, State voters approved Proposition 1A, which amended the State Constitution to significantly reduce the State’s authority over major local government revenue sources.
Under Proposition 1A, the State may not: (i) reduce local sales tax rates or alter the method of allocating the revenue generated by such taxes; (ii) shift property taxes from local governments to schools or 4861-4868-8141.5
18 community colleges; (iii) change how property tax revenues are shared among local governments without two-thirds approval of both houses of the State Legislature; or (iv) decrease Vehicle License Fee revenues without providing local governments with equal replacement funding. Beginning in Fiscal Year 2009, the State may shift to schools and community colleges a limited amount of local government property tax revenue if certain conditions are met, including: (a) a proclamation by the Governor that the shift is needed due to a severe financial hardship of the State; and (b) approval of the shift by the State Legislature with a two-thirds vote of both houses. Under such a shift, the State must repay local governments for their property tax losses, with interest, within three years. Proposition 1A does allow the State to approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county.
On July 27, 2009, the Governor signed a revised Fiscal Year 2010 State budget that included an ERAF shift of approximately 8% of 1% ad valorem property tax revenues from certain local agencies, including the City.
Largest Property Taxpayers
The ten largest property taxpayers in the City, as shown on the 2021-22 combined tax roll, are listed below:
TABLE 8
Principal Taxpayers for Fiscal Year Ended June 30, 2021 Property Owner Assessed Valuation % of Total (1)
1. Paramount Pico Rivera Industrial LLC $83,995,603 1.38%
2. Vestar California XXVI LLC 75,216,953 1.24
3. Bcore Mercury Lane Owner LLC 62,000,000 1.02
4. Majestic Amb Pico Rivera 48,030,449 0.79
5. 8540 Whittier Boulevard Investors LLC 41,400,435 0.68
6. Wal Mart Real Estate Business 38,210,384 0.63
7. Pico Rivera Holding LVT 37,132,826 0.61
8. Pavilion Affordable Housing LP 33,975,375 0.56
9. Howards Pico Real Estate LLC 33,230,739 0.55
10. RLF I-Pico SPE LLC 33,184,263 0.54
TOTAL $453,192,764 7.99% ______________________________ (1) 2021-22 Local Secured Assessed Valuation: $6,089,729,7480.
Source: City of Pico Rivera.
Sales and Use Taxes
As of July 2, 1990, the City was authorized to receive an amount equal to one percent (1.00%) of taxable sales within its jurisdiction. As of December 17, 1990, by Ordinance No. 1-90 of the former Pico Rivera Redevelopment Agency (as succeeded by the Successor Agency to the Pico Rivera Redevelopment Agency, the “Agency”) and an agreement between the City and the Agency also dated as of December 17, 1990, the Agency elected to receive, with the agreement of the City, sixty-eight percent (68%) of the City’s share of sales tax generated within the Pico Rivera Redevelopment Project Area (the “Project Area”). Those sales taxes allowable to the Agency (the “Agency Portion”) up to $1,065,000 have been committed by the Agency for Agency obligations, which are scheduled to mature on December 1, 2025. Such Agency Portion will be available to the City starting on December 2, 2025. 4861-4868-8141.5
19 The Project Area consists of approximately 680 acres, or approximately twelve and seven one hundredths percent (12.07%) of the acreage of the City. For fiscal year 2020-21, businesses within the Project Area reported sales and use taxes of $3,046,522. During the same period, excluding those businesses located within the Project Area, businesses within the City reported sales and use taxes of $6,959,079.
In November 2008, the voters of the City approved Measure P (“Measure P”), which imposes an additional retail transactions and use tax of one percent (1.00%) of taxable sales within the City. Taxes generated by Measure P are required to be distributed to the City’s General Fund and no portion thereof is allocable to the Agency. With Measure P in place, the overall sales and use tax rate effective within the City is 10.0%.
Sales and use taxes are often a volatile source of revenues, fluctuating significantly with changing economic conditions. However, sales and use taxes have been a relatively steady source of revenues for the City in the past five fiscal years; over that period, there has been an overall increase in sales and use taxes. While there have been no attempts to date to rescind the additional taxes imposed by Measure P, there could be future attempts to rescind the tax, in whole or in part, and there can be no assurance that such Measure P taxes will always remain in effect.
The top 25 sales tax producers accounted for 68.95% of the sales tax revenues during Fiscal Year 2020-21.
Utility Users Taxes
The City imposes a utility users tax (Telephone Tax: 5%, Electricity Tax: 4.5%, Gas Tax: 4.5%, Video Users Tax: 5%). The City’s utility users tax was enacted by the City Council on November 1, 1993 and ratified by the voters on November 5, 2002. While there have been no formal attempts to date to rescind the utility users tax, there could be future attempts to rescind the tax, in whole or in part, and there can be no assurance that the utility users tax will always remain in effect.
Certain Outstanding Obligations
Excepting for the City’s obligations under the lease agreement in connection with the Pico Rivera Public Financing Authority Lease Revenue Refunding Bonds, Series 2016, the City has not entered into leases which constitute currently outstanding obligations of the City’s General Fund. See “THE CITY – Sales and Uses Taxes” regarding the share of sales taxes within the Project Area pledged to the Agency.
In order to retain the operations of a certain employer within the City, the City has entered into an economic development subsidy agreement with this employer. Under this agreement, the City is to pay the employer an amount equal to 25% of sales tax revenues generated by the employer up to a sales tax revenue threshold and 55% of sales tax revenues in excess of that threshold, payable on or before July 30 for the previous calendar years for the period from January 1, 2017 through December 31, 2027. In no event will the total payments to the employer exceed $3,280,000 for the term of the agreement. Payment on this agreement is contingent on the employer meeting certain operating covenants and other restrictive covenants. Payments made to this employer for the year ended June 30, 2021, totaled $278,492.
Reserve Policy
In an effort to further secure the City’s long-term financial health, the City Council first adopted comprehensive reserve policies as part of the Fiscal Year 2016-17 budget adoption process. These policies solidified the City's commitment to setting aside funds for economic uncertainty, while expanding the policy to allow for assignments of fund balance for capital projects, equipment replacement, leave accruals, and other expenses.
4861-4868-8141.5
20 The policies were further refined and adopted by City Council as part of the Fiscal Year 2020-21 budget process. On July 28, 2020, the City Council adopted revised “risk-based” General Fund and Proprietary Fund Reserve Policies, which increased to the General Fund’s Emergencies/Economic Stabilization Reserve from 25 percent to 50 percent. The revised policy also set certain triggers to allow staff and City Council to reassess budgeted service levels during economic downturns to ensure ongoing economic stability.
The City strives to be well-positioned to weather potential economic downturns, natural disasters or other calamities which might impinge upon operating revenue. The City’s reserves, as governed by the adopted reserve policies, have been classified in an effort to address any number of one-time uses. Future budgets will address these reserves, seeking to further strengthen the City’s economic health by setting aside additional fund balance for anticipated uses (i.e., addressing long-term unfunded liabilities).
Investment Policy
Funds held by the City are invested in accordance with the City’s Statement of Investment Policy (the “Investment Policy”) prepared by the Treasurer as authorized by Section 53601 of the Government Code of California.
The City believes that its funds are prudently invested and that the investments therein are scheduled to mature at the times and in the amounts that are necessary to meet the City’s expenditures and other scheduled withdrawals.
The City’s statement of Investment Policy rendered to the City Council by the City Treasurer pursuant to Section 53646 of the California Government Code states that the basic premise underlying the City’s investment philosophy is to minimize credit and market risks while maintaining a competitive yield on its portfolio. Hence, safety of principal is the foremost objective of the City, followed by liquidity and yield. Under provisions of the Investment Policy, the City may invest in time deposits, bankers acceptances, money market funds, U.S. Treasury Bills and notes, governmental agency securities, repurchase agreements, reverse repurchase agreements, commercial paper, medium term notes of corporations operating within the United States rated “A” or better by S&P Global Ratings or by Moody’s Investors Services, and State Local Agency Investment Fund (“LAIF”), which is under the oversight of the State Treasurer.
For additional information concerning the City investments, see APPENDIX A - “AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2021.” Labor Relations
The City recognizes two employee organizations, SEIU Local 721 (“SEIU”) and the MidManagers, Professionals and Confidential Employees Association (“CEA”), which collectively represent approximately all, full-time, regular City employees in a variety of classifications. SEIU Local 721 represents the City’s part-time employees in a variety of classifications. The City’s Recreation & Education Accelerating Children's Hopes (REACH) program staff is not represented.
The collective bargaining agreements with SEIU Local 721 and CEA were in effect from July 1, 2017 through June 30, 2020, extended to June 30, 2021 and then extended again while the parties negotiate successor collective bargaining agreements. The current extension keeps the Memorandum of Understanding between the parties in full force and effect until either party provides a 30-day notice. The City has not experienced a work stoppage by City Employees in at least the last twenty years. 4861-4868-8141.5
21 Pension Plans
The information below does not take into account the refunding of certain of the Unfunded Liability by the Bonds.
The City contributes to the California Public Employees Retirement System (“CalPERS”), an agent multiple-employer public employee defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute. Copies of CalPERS’ annual financial report may be obtained from their executive office: 400 P Street, Sacramento, California 95814.
All qualified permanent and probationary employees are eligible to participate in the City’s CalPERS Miscellaneous Plan. Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.
The City also has available a supplemental retirement benefit plan for City council members (“Council Plan”) on or after July 1, 2002. This plan is a single-employer defined benefit pension plan administered by Public Agency Retirement Services (“PARS”), who serves as the trustee for the Council Plan. As a result of PEPRA (as defined below) amendments, the City has decided to close this plan to any new council members elected or appointed on or after January 1, 2013.
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for nonduty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.
The Council Plan provides a benefit equal to 4% of final compensation times benefit service, capped at 10 years of service. This plan is a single-employer defined benefit plan. Eligibility for these benefits is defined as reaching age 55 and completing 5 years of continuous City council service.
Employees terminating employment with the City after 5 years of service but prior to age 55 will receive a deferred retirement benefit to commence at age 55.
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. City contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contributions requirements are classified as plan member contributions. The Council Plan only requires employer contributions equal to an actuarially determined rate. During the Fiscal Year June 30, 2021, the City contributed $3,510,945 and $7,183 to the Miscellaneous Plan and Council Plan, respectively. 4861-4868-8141.5
22 The City’s net pension liability for each plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the CalPERS plan is measured as of June 30, 2020, using an annual actuarial valuation as of June 30, 2019, rolled forward to June 30, 2020, using standard update procedures. The net pension liability of the Council Plan is measured as of June 30, 2021, using an actuarial valuation date of June 30, 2021.
The changes in the net pension liability for the Miscellaneous Plan are as follows:
Increase (Decrease)
Total Pension
Liability
Plan Fiduciary Net
Position
Net Pension
Liability (Asset)
Balance at June 30, 2019 (Measurement Date) $115,587,812 $76,599,817 $38,987,995 Changes in the Year:
Service Cost 1,776,130 - 1,776,130
Interest on the Total Pension Liability 8,115,666 - 8,115,666 Differences between Expected and Actual
Experience
(96,456) - (96,456)
Changes in Assumptions - - -
Plan-to-Plan Resource Movement - - -
Contribution - Employer - 3,510,945 (3,510,945)
Contribution - Employee - 824,722 (824,722)
Net Investment Income - 3,795,360 (3,795,360)
Administrative Expenses - (107,987) 107,987
Benefit Payments, Including Refunds of
Employee Contributions
(5,747,216) (5,747,216) -
Net Changes 4,048,124 2,275,824 1,772,300
Balance at June 30, 2020 (Measurement Date) $119,635,936 $78,875,641 $40,760,295 The changes in the net pension liability for the Council Plan are as follows:
Increase (Decrease)
Total Pension
Liability
Plan Fiduciary Net
Position
Net Pension
Liability (Asset)
Balance at June 30, 2020 (Measurement Date) $202,033 $165,201 $36,832 Changes in the Year:
Service Cost 2,351 - 2,351
Interest on the Total Pension Liability 12,821 - 12,821 Differences between Actual and Expected
Experience
Changes in Economic/Demographic 22,057 - 22,057
Changes in Assumptions (2,461) - (2,461)
Changes in Benefit Terms - - -
Contribution - Employer - 7,183 (7,183)
Contribution - Employee - - -
Net Investment Income - 42,720 (42,720)
Administrative Expenses - (925) 925
Benefit Payments, Including Refunds of
Employee Contributions
(14,492) (14,492) -
Net Changes 20,276 34,486 (14,210)
Balance at June 30, 2021 (Measurement Date) $222,309 $199,687 $22,622 The discount rate used to measure the total pension liability for CalPERS was 7.15%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 4861-4868-8141.5
23 On November 15, 2021, CalPERS announced the discount rate, or assumed rate of return, will drop to 6.8%, from its current level of 7.0%, due to a double digit (approximately 21.3%) net return on investments for the 12-month period that ended June 30, 2021. Under the Funding Risk Mitigation Policy approved by the CalPERS Board of Administration in 2015, the double-digit return will trigger a reduction in the discount rate used to calculate employer and PEPRA member contributions. To the extent actual investment returns differ from the assumed rate of return, the actual contribution requirements for fiscal year 2023-24 will differ from the projected contributions.
For additional information, see APPENDIX A – “AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2021 – Notes 8 and 9 and Required Supplemental Information.” California Public Employees’ Pension Reform Act of 2013. The Governor signed the California Public Employee’s Pension Reform Act of 2013 (the “Reform Act” or “PEPRA”) into law on September 12, 2012. The Reform Act affects CalPERS, most substantially as it relates to new employees hired after January 1, 2013 (the “Implementation Date”). For non-safety CalPERS participants hired after the Implementation Date, the Reform Act changes the normal retirement age by increasing the eligibility for the 2% age factor from age 55 to 62 and also increases the eligibility requirement for the maximum age factor of 2.5% to age 67.
The Reform Act also implements certain other changes to CalPERS including the following: (a) all new participants enrolled in CalPERS after the Implementation Date are required to contribute at least 50% of the total annual normal cost of their pension benefit each year as determined by an actuary, (b) CalPERS is required to determine the final compensation amount for employees based upon the highest annual compensation earnable averaged over a consecutive 36-month period as the basis for calculating retirement benefits for new participants enrolled after the Implementation Date, and (c) “pensionable compensation” is capped for new participants enrolled after the Implementation Date at 100% of the federal Social Security contribution and benefit base for members participating in Social Security or 120% for CalPERS members not participating in social security.
Defined Contribution Pension Plans
The City provides pension benefits for all of its part-time employees through a defined contribution plan. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. The plan is administered by Nationwide Retirement Solutions. All parttime employees are eligible to participate from the date of employment. Federal legislation requires contributions of at least 7.5% to a retirement plan, and City Council resolved to match the employees’ contributions of 3.75%. The City’s contributions for each employee (and interest earned by the accounts) are fully vested immediately.
For the year ended June 30, 2021, the City’s payroll covered by the plan was $1,245,046. The City made employer contributions of $46,691 (3.75% of current covered payroll), and employees contributed $46,691 (3.75% of current covered payroll).
The City also offers its employees a deferred compensation plan created in accordance with Internal Revenue Code 457. The plan, available to all City employees, permits them to defer a portion of their salaries until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. The plan assets are under the participants control and are principally invested in demand deposits and mutual funds and are held in trust for the exclusive benefit of the participants and their beneficiaries. The assets are not the property of the City and, as such, are not subject to the claims of the City’s general creditors. As a result, these assets are not reported in the City’s financial statements.
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24 Other Post-Employment Benefits
The City has established an agent multiple-employer Defined Benefit Postemployment Healthcare Plan (DPHP) that provides postretirement medical benefits to retirees through the California Public Employees Medical and Hospital Care Act (PEMCHA) and managed through the California Employers’ Retiree Benefit Trust (CERBT). The plan provides retiree medical benefits to eligible retirees and their eligible dependents. Employees must retire directly from the City under CalPERS.
Employees must also meet basic retirement requirements per CalPERS. That is, employees must be at least age 50 and have at least five years of CalPERS service or qualify for a disability retirement.
The benefits received by the retired employees vary based on the date they were hired by the City. For employees hired on or before June 30, 2012, the City pays the full premium for the retiree and his/her dependents. For employees hired after June 30, 2012, the City contributes the PEMCHA minimum. The PEMCHA minimum is updated annually by the CalPERS board. Regardless of hire date, the same benefit continues to the surviving spouse.
The City’s obligation to pay medical costs for retirees relates only to those medical coverage costs provided through CalPERS. The City is not obligated to pay Medicare Part B premiums for those retirees who are age 65 or above and who are enrolled in a supplemental Medicare plan. When the retiree reaches age 65, the Basic Medical Plan is required to be transferred to a supplemental Medicare plan. A separate financial report is not prepared for the plan.
As of the measurement date of June 30, 2020, the following current and former employees were covered by the benefit terms under the plan:
Inactive Employees or Beneficiaries
Currently Receiving Benefits 113
Inactive Employees or Beneficiaries Entitled to
but not yet Receiving Benefits 17
Active Employees 151
Total 281
The DPHP and its contribution requirements are established by City policy and may be amended by the City Council. The annual contribution is based on the actuarially determined contribution. For the fiscal year ended June 30, 2021, the City’s cash contributions were $1,046,078 in payments to the trust and the estimated implied subsidy was $155,000 and $2,521 administrative expense paid by the city resulting in payments of $1,203,599.
The City’s net OPEB liability was measured as of June 30, 2020, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2019, rolled forward to June 30, 2020 using standard update procedure. 4861-4868-8141.5
25 The changes in the net OPEB liability are as follows:
Increase (Decrease)
Total OPEB
Liability
Plan Fiduciary
Net Position
Net Pension
Liability (Asset)
Balance at June 30, 2019 (Measurement Date) $26,589,544 $4,764,296 $21,825,248 Changes in the Year:
Service Cost 585,937 - 585,937
Interest on the Total OPEB Liability 1,790,952 - 1,790,952 Differences between Actual and Expected Experience - - - Changes in Assumptions (495,461) - (495,461)
Changes in Benefit Terms - - -
Contribution - Employer - 1,288,526 (1,288,526)
Net Investment Income - 168,441 (168,441)
Administrative Expenses - (5,129) 5,129
Benefit Payments, (1,285,726) (1,285,726) -
Net Changes 595,702 166,112 429,590
Balance at June 30, 2020 (Measurement Date) $27,185,246 $4,930,408 $22,254,838 For the year ended June 30, 2021, the City recognized OPEB expense of $1,607,291. At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:
Deferred
Outflows of
Resources
Deferred Inflows
of Resources
OPEB Contributions Subsequent to Measurement Date $1,203,599 $ - Differences Between Actual and Expected Experience - (1,444,666) Change in Assumptions - (600,429)
Net Differences Between Projected and Actual Earnings on Plan Investments 111,495 - Total $1,315,094 $(2,045,095)
An amount of $1,203,599 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ending June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows:
Year Ending June 30, Amount
2022 $(453,216)
2023 (447,217)
2024 (437,014)
2025 (442,162)
2026 (115,880)
Thereafter (38,111)
At June 30, 2021, the City had no outstanding amount of contributions to the OPEB plan required for the year ended June 30, 2021.
State Budget Information
The following information concerning the State’s budgets has been obtained from publicly available information which the City believes to be reliable; however, the City does not guarantee the accuracy or completeness of this information and has not independently verified such information.
Furthermore, it should not be inferred from the inclusion of this information in this Official Statement that the principal of or interest due with respect to the Bonds is payable from any funds of the State.
In 2008, the State began experiencing the most significant economic downturn and financial pressure since the Great Depression of the 1930s. Despite the recent significant budgetary improvements, 4861-4868-8141.5
26 according to the State, there remain a number of major risks and pressures that threaten the State’s financial condition, including the threat of recession, potential changes to federal fiscal policies and large unfunded liabilities now totaling in excess of $200 billion for CalPERS, CalSTRS, the University of California (“UC”) Retirement System and the State’s and UC’s retiree healthcare benefits plans. The State’s revenues (particularly the personal income tax) can be volatile and correlate to overall economic conditions. 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, including the current economic downturn, over which the City has no control. See “RISK FACTORS—Dependence on State for Certain Revenues.”
RISK FACTORS
The following information should be considered by prospective investors, in addition to the other matters set forth in this Official Statement in evaluating the Bonds. However, it does not purport to be a comprehensive or exhaustive discussion of risks or other considerations which may be relevant to an investment in the Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. There can be no assurance that other risk factors not discussed herein will not become material in the future.
City Obligations
The City has other obligations payable from its General Fund, including but not limited to debt obligations, lease obligations and other obligations related to post-employment retirement benefits as well as certain other liabilities. The Trust Agreement does not prohibit the County from incurring additional lease and other obligations payable from the City’s General Fund. See “THE CITY—Certain Outstanding Obligations” for further discussion of the City’s obligations.
COVID-19 Pandemic
The City declared a state of emergency due to the COVID-19 pandemic in March 2020. At the time, the economic impact on the City was unknown. Accordingly, the City prepared for a downturn in revenues due to the State mandatory “shelter-at-home” orders. The City did not experience a significant downturn overall, and was able to maintain a consistent revenue base over the last two fiscal years. The City received $736,000 in fiscal relief through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in August of 2020. Additionally, the City was allocated $14,772,455 in American Rescue Plan Act (ARPA) funds that it designated to fund public safety services and water treatment capital improvements.
The actual impact of COVID-19 on the City, its economy and its finances will depend on future events, including future events outside of the control of the City, and actions by the federal government, the State and the County. The City cannot predict the extent or duration of the outbreak or what overall impact it may have on the City’s financial condition or operations. Any financial information, including projections, forecasts and budgets presented herein do not account for all of the potential effects of COVID-19 unless specifically referenced.
4861-4868-8141.5
27 Increasing Retirement Related Costs
The City is required to make contributions to CalPERS for City employees. Such obligations are a significant financial obligation of the City and are projected to increase significantly in the future.
Actual contribution rates will depend on a variety of factors, including but not limited to actual investment returns, and future changes to benefits or actuarial assumptions. There can be no assurances that actual increases in required contributions will not be higher than the projections. See “THE CITY— Pension Plans.”
Dependence on State for Certain Revenues
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 importantly, property taxes).
Therefore, State budget decisions can have an impact on City finances. In the event of a material economic downturn in the State, there can be no assurance that any resulting revenue shortfalls to the State will not reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of the State’s efforts to address any such related State financial difficulties. See, however, “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Proposition 22” herein.
Natural Disasters
The occurrence of an earthquake, fire, flooding or other natural disaster which resulted in significant damage within the City or otherwise significantly impacted the economy of the City could materially adversely affect the financial condition of the City. In addition, the City’s economy could be impacted in the future by potential future increased state or federal regulations.
Earthquakes are considered a threat to the City due to the highly active seismic region in which the City lies and the proximity of fault zones, which could influence the entire southern coastal portion of the State. Although no major earthquake has caused substantial damage to the City, the City is located over the San Andreas Fault.
An earthquake along one of the faults in the vicinity of the City, either known or unknown, could cause a number of casualties and extensive property damage. The effects of such an earthquake 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 could easily exceed the resources of the City.
The extent of flooding associated with a 1-percent annual probability of occurrence (the base flood or 100-year flood) is used as the regulatory boundary by many agencies. Also referred to as the special flood hazard area (SFHA), this boundary is a convenient tool for assessing vulnerability and risk in flood-prone communities. The City is in the 0.2-percent-annual-chance risk and not within a 100-year floodplain. The areas outside an SFHA and higher than the elevation of the 0.2-percent-annual chance flood, are labeled Zone C or Zone X.
Hazardous Substances
The discovery of a hazardous substance that limits the beneficial use of taxable property within the City could result in the reduction in the assessed value of property, and therefore property tax revenue available to make debt service on the Bonds. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well- 4861-4868-8141.5
28 known and widely applicable of these laws, but State laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner or operator may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the City be affected by a hazardous substance, could be to reduce the marketability and value of such property by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.
Hazardous substance liabilities may arise in the future with respect to any of the property in the City as a result of the existence, currently, of a substance that is presently classified as hazardous but which has not been released or the release of which is not presently threatened. Hazardous substance liabilities may also arise in the future as a result of the existence, currently, on a parcel of a substance that is not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise from the method of handling such a substance.
Cybersecurity
The City relies on computers and technology to conduct its operations. 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. To date, there have been no significant, cyber-attacks on the City’s computers and technologies.
In the last twelve months, the City has implemented multiple control and software systems to mitigate the risk of cyber threats and attacks. While the City is routinely maintaining its technology 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 attack on the City’s computer and technology could negatively impact the City’s operations, and the costs related to such attacks could be substantial.
Limitation on Sources of Revenues; Additional Expenditures There are limitations on the ability of the City to increase revenues payable to the City’s General Fund. The ability of the City to increase taxes is limited by Article XIII A, Article XIII B, Article XIII C, Article XIII D and Proposition 62. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.” In addition to limitations that have been imposed on the ability of the City to raise revenues, State and federally mandated expenditures by City’s for justice, health and welfare have increased. There can be no assurances that state or federal actions affecting the City will not have a material adverse financial impact on the City.
Limitation on Remedies; Bankruptcy
The enforceability of the rights and remedies of the Holders of the Bonds are subject to a number of limitations, including bankruptcy, moratorium, insolvency or other laws affecting creditor’s rights or remedies and is subject to general principles of equity (regardless of whether such enforceability is considered in equity or at law), to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against governmental entities in the State of California.
In addition, the rights and remedies of the Holders of the Bonds may be limited by and are subject to the provisions of federal bankruptcy laws and to other laws or equitable principles that may affect the enforcement of creditors’ rights. The City is a governmental unit and therefore cannot be the subject of an involuntary case under the United States Bankruptcy Code (the “Bankruptcy Code”). However, the City is a municipality and therefore may seek voluntary protection from its creditors pursuant to Chapter 4861-4868-8141.5
29 9 of the Bankruptcy Code for purposes of adjusting its debts. Should the City file for bankruptcy, there could be adverse effects on the Holders of the Bonds.
If the City is in bankruptcy, the parties (including the Trustee and the Holders of the Bonds) may be prohibited from taking any action to collect any amount from the City or to enforce any obligation of the City, unless the permission of the bankruptcy court is obtained. These restrictions may also prevent the Trustee from making payments to the Holders of the Bonds from funds in the Trustee’s possession.
The Bonds are not secured by any property other than the funds that the City has actually deposited with the Trustee. The Bonds are not secured by funds in the City treasury which are allocated for deposit in the Revenue Fund in the City treasury. If the City is in bankruptcy, it may not be obligated to make any further deposits with the Trustee, it may not be obligated to make any further allocations of funds for deposit to the Revenue Fund, and it may not be obligated to turn over to the Trustee any moneys in the City treasury that have been allocated for deposit to the Revenue Fund. As a result, the Bonds would likely be treated as unsecured obligations of the City in the bankruptcy case. Under such circumstances, the Holders of the Bonds could suffer substantial losses.
The City may be able, without the consent and over the objection of the Trustee or the Holders of the Bonds, to alter the priority, interest rate, payment terms, maturity dates, payment sources, covenants, and other terms or provisions of the Trust Agreement and the Bonds, as long as the bankruptcy court determines that the alterations are fair and equitable.
There may be delays in payments on the Bonds while the court considers any of these issues.
There may be other possible effects of a bankruptcy of the City that could result in delays or reductions in payments on the Bonds, or result in losses to the Holders of the Bonds. Regardless of any specific adverse determinations in a City bankruptcy proceeding, the fact a City bankruptcy proceeding has occurred could have an adverse effect on the liquidity and value of the Bonds.
In two situations in the State, holders of pension obligations bonds issued by cities that participate in CalPERS experienced significant losses in their investment in such pension obligation bonds as a result of the cities subsequently seeking voluntary protection from their creditors pursuant to Chapter 9 of the Bankruptcy Code.
Limited Secondary Market
As stated herein, investment in the Bonds poses certain economic risks which may not be appropriate for certain investors, and only persons with substantial financial resources who understand the risk of investment in the Bonds should consider such investment. 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.
Changes in Law
There can be no assurance that the electorate of the State will not at some future time adopt additional initiatives or that the State Legislature will not enact legislation that will amend the laws or the Constitution of the State resulting in a reduction of the general fund revenues of the City and consequently, having an adverse effect on the security for the Bonds. 4861-4868-8141.5
30 CONSTITUTIONAL AND STATUTORY LIMITATIONS
ON TAXES AND APPROPRIATIONS
Article XIII A of the California Constitution
On June 6, 1978, California voters approved Proposition 13, adding Article XIII A to the California Constitution. Article XIII A, among other things, affects the valuation of real property for the purpose of taxation in that it defines the full cash property value to mean “the county assessor’s valuation of real property as shown on the 1975-76 tax bill under ‘full cash value,’ or thereafter, the appraised value of real property newly constructed, or when a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or a reduction in the consumer price index or comparable local data for the area under taxing jurisdiction, or reduced in the event of declining property value caused by substantial damage, destruction or other factors including a general economic downturn. Any reduction in assessed value is temporary and may be adjusted for any given year by the Assessor. The assessed value increases to its prereduction level (escalated to the annual inflation rate of no more than two percent) following the year(s) for which the reduction is applied. The amendment further limits the amount of any ad valorem tax on real property to 1% of the full cash value except that additional taxes may be levied to pay (i) debt service on indebtedness approved by the voters prior to July 1, 1978, (ii) bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978 by two-thirds of the votes cast by the voters voting on the proposition; and (iii) bonded indebtedness incurred by a school district or community college district for the construction, reconstruction, rehabilitation or replacement of school facilities or the acquisition or lease of real property for school facilities, approved by 55% of the voters of the school district or community college district, but only if certain accountability measures are included in the proposition.
On June 3, 1986, California voters approved Proposition 46, which added an additional exemption to the 1% tax limitation imposed by Article XIII A. Under this amendment to Article XIII A, local governments and school districts may increase the property tax rate above 1% for the period necessary to retire new general obligation bonds, if two-thirds of those voting in a local election approve the issuance of such bonds and the money raised through the sale of the bonds is used exclusively to purchase or improve real property.
Legislation enacted by the State Legislature to implement Article XIII A provides that all taxable property is shown at full assessed value as described above. In conformity with this procedure, all taxable property value included in this Official Statement (except as noted) is shown at 100% of assessed value and all general tax rates reflect the $1 per $100 of taxable value. Tax rates for voter approved bonded indebtedness are also applied to 100% of assessed value.
Future assessed valuation growth allowed under Article XIII A (new construction, change of ownership, 2% annual value growth) will be allocated on the basis of “situs” among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and school districts will share the growth of “base” revenue from the tax rate area. Each year’s growth allocation becomes part of each agency’s allocation the following year. The City is unable to predict the nature or magnitude of future revenue sources which may be provided by the State to replace lost property tax revenues. Article XIII A effectively prohibits the levying of any other ad valorem property tax above the 1% limit except for taxes to support indebtedness approved by the voters as described above.
Article XIII B of the California Constitution
On November 6, 1979, California voters approved Proposition 4, which added Article XIII B to the California Constitution. In June 1990, the voters through their approval of Proposition III amended Article XIII B. Article XIII B of the California Constitution limits the annual appropriations of the State 4861-4868-8141.5
31 and any city, county, school district, special district, authority or other political subdivision of the State (e.g. local governments) to the level of appropriations for the prior fiscal year, as adjusted annually for changes in the cost of living, population and services rendered by the governmental entity. The “base year” for establishing such appropriation limit is the 1978-79 fiscal year. Increases in appropriations by a governmental entity are also permitted (i) if financial responsibility for providing services is transferred to a governmental entity, or (ii) for emergencies so long as the appropriations limits for the three years following the emergency are reduced accordingly to prevent any aggregate increase above the Constitutional limit. Decreases are required where responsibility for providing services is transferred from the government entity.
Appropriations subject to Article XIII B include generally any authorization to expend during the fiscal year the proceeds of taxes levied by or for the State, exclusive of certain State subventions for the use and operation of local government, refunds of taxes, benefit payments from retirement, unemployment insurance and disability insurance funds. Appropriations subject to limitation of an entity of local government include any authorization to expend during a fiscal year the proceeds of taxes levied by or for that entity and the proceeds of certain State subventions to that entity and refunds of taxes.
Appropriations subject to limitation pursuant to Article XIII B do not include debt service on indebtedness existing or legally authorized as of January 1, 1979, on bonded indebtedness thereafter approved according to law by a vote of the electors of the issuing entity voting in an election for such purpose, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified outlay projects, and appropriations by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990 levels. “Proceeds of taxes” include, but are not limited to, all tax revenues and the proceeds to any entity of government from (i) regulatory licenses, user charges, and user fees to the extent such proceeds exceed the cost of providing the service or regulation, (ii) the investment of tax revenues and (iii) certain State subventions received by local governments.
Article XIII B includes a requirement pursuant to which fifty percent (50%) of all revenues received by the State in a fiscal year and in the fiscal year immediately following it in excess of the amount which may be appropriated by the State in compliance with Article XIII B during that fiscal year and the fiscal year immediately following it shall be transferred and allocated, from a fund established for that purpose, pursuant to Article XVI of the State Constitution. In addition, fifty percent (50%) of all revenues received by the State in a fiscal year and in the fiscal year immediately following it in excess of the amount which may be appropriated by the State in compliance with Article XIII B during that fiscal year and the fiscal year immediately following it shall be returned by revising tax rates or fee schedules within the next two subsequent fiscal years. Further, Article XIII B includes a requirement that all revenues received by an entity of government, other than the State, in a fiscal year and in the fiscal year immediately following it that exceed the amount which may be appropriated by that entity in compliance with Article XIII B during that fiscal year and the fiscal year immediately following it shall be returned by revising tax rates or fee schedules within the next two subsequent fiscal years.
As amended in June 1990, the appropriations limit for the City in each year is based on the limit for the prior year, adjusted annually for changes in the costs of living and changes in population, and adjusted, where applicable, for transfer of financial responsibility of providing services to or from another unit of government. The change in the cost of living is, at the City’s option, either (i) the percentage change in California per capita personal income from the preceding fiscal year, or (ii) the percentage change in the local assessment roll from the preceding fiscal year for the jurisdiction due to the addition of local nonresidential new construction. Pursuant to the Revenue and Taxation Code, the State’s Department of Finance annually transmits to each city and each county an estimate of the percentage change in the population of the city or the county.
4861-4868-8141.5
32 Article XIII B permits any government entity to change the appropriations limit by vote of the electorate in conformity with statutory and Constitutional voting requirements, but any such voterapproved change can only be effective for a maximum of four years.
The City Council adopted the annual appropriation limit for the Fiscal Year 2021-22 of $178,270,467. The limitation applies only to proceeds of taxes (and investment earnings thereon) and therefore does not apply to service fees and charges, fines, and revenue from the sale of property and taxes received from the State and federal governments that are tied to special programs (or investment earnings on the foregoing). In Fiscal Year 2021-22, the funds subject to limitation total $39,286,185 (total general operating budget minus revenues excluding taxes, investment earnings thereon, and debt service).
Proposition 62
Proposition 62, which was adopted by the voters at the November 4, 1986 general election, (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 government 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 permitted by Article XIII A of the California Constitution, (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 August 1, 1985, be ratified 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 county-wide sales tax of one-half of one percent was a special tax under Section 53722 of the Government Code, and was held invalid without the required two-thirds voter approval. The decision did not address the question of whether or not it should be applied retroactively.
Following the Guardino decision upholding Proposition 62, several actions were filed challenging taxes imposed by public agencies since the adoption of Proposition 62. 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 a 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 subject to Proposition 62 may only be made for those taxes received within three years of the date the action is brought.
The City believes that all taxes currently being collected by it comply with the requirements of Proposition 62.
Proposition 218
On November 5, 1996, the California voters approved Proposition 218, a constitutional initiative entitled the “Right to Vote on Taxes Act” (“Proposition 218”). Proposition 218 added Articles XIII C and XIII D to the California Constitution and contains a number of interrelated provisions limiting the ability of local governments, including the City, to impose and collect both existing and future taxes, 4861-4868-8141.5
33 assessments, fees and charges. The City is unable to predict how Proposition 218 will be interpreted and applied by the courts in the future. Proposition 218 could substantially restrict the City’s ability to raise future revenues and could subject certain existing sources of revenue to reduction or repeal, and increase the City’s costs to hold elections, calculate fees and assessments, notify the public and defend its fees and assessments in court. Further, as described below, Proposition 218 provides for broad initiative powers to reduce or repeal local taxes, assessments, fees and charges. However, other than any impact resulting from the exercise of this initiative power, the City does not presently believe that the potential impact on the financial condition of the City as a result of the provisions of Proposition 218 will adversely affect the City’s ability to pay principal of and interest on the Bonds and perform its other obligations as and when due.
Article XIII C requires that all new, extended, or increased local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City require a majority vote of the electorate and taxes for specific purposes, even if deposited in the City’s General Fund, require a two-thirds vote of the electorate. These voter approval requirements of Proposition 218 reduce the flexibility of the City to raise revenues through General Fund taxes, 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 requirements.
Article XIII C also expressly extends the initiative power to give voters the power to reduce or repeal local taxes, assessments, fees and charges, regardless of the date such taxes, assessments, fees or charges were imposed. This extension of the initiative power is not limited by the terms of Proposition 218 to local taxes, assessments, fees or charges imposed after November 6, 1996 and absent other legal authority could result in retroactive reduction in any existing taxes, assessments or fees and charges.
The repeal of local taxes, assessments, fees or charges could be challenged as a violation of the prohibition against impairing contracts under the contract clause of the United States Constitution.
Subsequent to the amendment of Article XIII C, the State Legislature approved SB 919 (the “Proposition 218 Omnibus Implementation Act”), which directed 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 November 6, 1998, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights” protected by the United States Constitution. However, no assurance can be given that the voters of the City will not, in the future, approve an initiative which reduces or repeals local taxes, assessments, fees or charges that are or will be deposited into the City’s General Fund. Further, “fees” and “charges” are not defined in Article XIII C or Proposition 218 Omnibus Implementation Act, and it is unclear whether these terms are intended to have the same meanings for purposes of Article XIII C as they do in Article XIII D, as described below.
Accordingly, the scope of the initiative power under Article XIII C could include all sources of General Fund moneys not received from or imposed by the federal or State government or derived from investment income.
The initiative power granted under Article XIII C, by its terms, applies to all local taxes, assessments, fees and charges and is not limited to local taxes, assessments, fees and charges that are property related. The City is unable to predict whether the courts will interpret the initiative provision to be limited to property related fees and charges. No assurance can be given that the voters of the City will not, in the future, approve an initiative which reduces or repeals local taxes, assessments, fees or charges which are deposited into the City’s General Fund. The City believes that in the event that the initiative power was exercised so that all local taxes, assessments, fees and charges which may be subject to the provisions of Proposition 218 are reduced or substantially reduced, the financial condition of the City, including its General Fund, would be materially adversely affected. As a result, there can be no assurances that the City would be able to pay the principal of and interest on the Bonds as and when due or any of its other obligations payable from the City’s General Fund. 4861-4868-8141.5
34 Article XIII D added several requirements that generally made it more difficult for local agencies, such as the City, to levy and maintain “assessments” for municipal services and programs. “Assessment” is defined in Proposition 218 and the Proposition 218 Omnibus Implementation Act (as enacted in Government Code Section 53750) to mean any levy or charge upon real property for a special benefit conferred upon the real property. This includes maintenance assessments imposed in County service areas and in special districts. In most instances, in the event that the City is unable to collect assessment revenues relating to specific programs as a consequence of Proposition 218, the City will curtail such services rather than use amounts in the General Fund to finance such programs. Accordingly, the City anticipates that any impact Article XIII D may have on existing or future taxes, fees, and assessments will not adversely affect the ability of the City to pay the principal of and interest on the Bonds, as and when due. However, no assurance can be given that the City may or will be able to reduce or eliminate such services to avoid new costs for the City General Fund in the event the assessments that presently finance them are reduced or repealed.
Article XIII D also adds several provisions affecting “fees” and “charges” which are defined as “any levy other than an ad valorem tax, a special tax, or an assessment, imposed by an agency (subdivision (a) of Section 2 of Article XIII D defines an agency as any local government as defined in subdivision (b) of Section 1 of Article XIII C) upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service.” All new fees and charges and, after June 30, 1997, all existing property related fees and charges that are extended, imposed or increased must conform to requirements prohibiting, among other things, fees and charges which (i) generate revenues exceeding the funds required to provide the property related service, (ii) are used for any purpose other than those for which the fees and charges are imposed, (iii) are for a service not actually used by, or immediately available to, the owner of the property in question, or (iv) are used for general governmental services, including police, fire, ambulance or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. Further, before any property related fee or charge may be imposed or increased, written notice must be given to the record owner of each parcel of land affected by such fee or charge. The City must then hold a hearing upon the proposed imposition or increase of such property-related fee or charge, and if written protests against the proposal are presented by a majority of the owners of the identified parcels, the City may not impose or increase the fee or charge. Moreover, except for fees or charges for sewer, water and refuse collection services, no property related fee or charge may be imposed or increased without majority approval by the property owners subject to the fee or charge or, at the option of the City, two-thirds voter approval by the electorate residing in the affected area. The annual amount of revenues that are received by the City and deposited into its General Fund which may be considered to be property related fees and charges under Article XIII D is not substantial. Accordingly, the City does not presently anticipate that any impact Article XIII D may have on future fees and charges will adversely affect the ability of the City to pay the principal of and interest on the Bonds as and when due. However, no assurance can be given that the City may or will be able to reduce or eliminate such services to avoid new costs for the City’s General Fund in the event the fees and charges that presently finance them are reduced or repealed.
The fees and charges of the City’s enterprise funds, including those which are not property related for purposes of Article XIII D, may be determined to be fees and charges subject to the initiative power as provided in Article XIII C, as described above. In the event that fees and charges cannot be appropriately increased or are reduced pursuant to the exercise of the initiative power, the City may have to choose whether to reduce or eliminate the service financed by such fees or charges or finance such service from its General Fund. Further, no assurance can be given that the City may or will be able to reduce or eliminate such services in the event the fees and charges that presently finance them are reduced or repealed.
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35 Unitary Property
Some amount of property tax revenue of the City is derived from utility property which is considered part of a utility system with components located in many taxing jurisdictions (“unitary property”). Under the State Constitution, such property is assessed by the State Board of Equalization (“SBE”) as part of a “going concern” rather than as individual pieces of real or personal property. Stateassessed unitary and certain other property is allocated to the counties by SBE, taxed at special countywide rates, and the tax revenues distributed to taxing jurisdictions (including the City) according to statutory formula generally based on the distribution of taxes in the prior year.
Proposition 22
Proposition 22 (“Proposition 22”), which was approved by California voters in April 2010, prohibits the State, even during a period of severe fiscal hardship, from delaying the distribution of tax revenues for transportation, redevelopment, or local government projects and services and prohibits fuel tax revenues from being loaned for cash-flow or budget balancing purposes to the State General Fund or any other State fund. Due to the prohibition with respect to State’s ability to take, reallocate, and borrow money raised by local governments for local purposes, Proposition 22 supersedes certain provisions of Proposition 1A of 2004. See “—Proposition 1A” herein. In addition, Proposition 22 generally eliminates the State’s authority to temporarily shift property taxes from cities, counties, and special districts to schools, temporarily increase school and community college district’s share of property tax revenues, prohibits the State from borrowing or redirecting redevelopment property tax revenues or requiring increased pass-through payments thereof, and prohibits the State from reallocating vehicle license fee revenues to pay for State imposed mandates. In addition, Proposition 22 requires a two-thirds vote of each house of the State Legislature and a public hearing process to be conducted in order to change the amount of fuel excise tax revenues shared with cities and counties. The State’s Legislative Analyst’s Office (LAO) states that Proposition 22 will prohibit the State from enacting new laws that require redevelopment agencies to shift funds to schools or other agencies.
Proposition 22 prohibits the State from borrowing sales taxes or excise taxes on motor vehicle fuels or changing the allocations of those taxes among local government except pursuant to specified procedures involving public notices and hearings. In addition, Proposition 22 requires that the State apply the formula setting forth the allocation of State fuel tax revenues to local agencies revert to the formula in effect on June 30, 2009. The LAO anticipates that Proposition 22 will require the State to adopt alternative actions to address its fiscal and policy objectives, particularly with respect to short-term cash flow need.
Proposition 1A
As part of former Governor Schwarzenegger’s agreement with local jurisdictions, Senate Constitutional Amendment No. 4 was enacted by the Legislature and subsequently approved by the voters as Proposition 1A (“Proposition 1A”) at the November 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 8 percent of local property tax revenues, but only if the Governor proclaims such action is 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 tax revenues for more than 2 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. 4861-4868-8141.5
36 The 2009-10 State budget included a Proposition 1A diversion of $1.935 billion in local property tax revenues from cities, counties, and special districts to the State to offset State general fund spending, of which the City’s portion was $833,681. Such diverted revenues must be repaid, with interest, no later than June 30, 2013. The City participated in a State-sponsored program financing the Proposition 1A diversion and, accordingly, received its full share of property tax revenues.
Proposition 26
On November 2, 2010, voters in the State 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: (1) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (2) a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (3) a charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof; (4) a charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property; (5) 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; (6) a charge imposed as a condition of property development; and (7) assessments and property-related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.
The City does not believe that Proposition 26 will adversely affect its General Fund revenues.
Future Initiatives
Articles XIIIA, XIIIB, XIIIC and XIIID and Propositions 22 and 26 were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. The limitations imposed upon the City by these provisions hinder the City’s ability to raise revenues through taxes or otherwise and may therefore prevent the City from meeting increased expenditure requirements. From time to time, other initiative measures could be adopted, some of which may place further limitations on the ability of the State, the City or local districts to increase revenues or to spend money or which could have other financially adverse effects such as requiring the City to undertake new responsibilities. Such other initiatives could have a material adverse effect on the City’s financial condition.
TAX MATTERS
In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest on the Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), but is exempt from State of California personal income tax.
With certain exceptions, the difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of the same maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond (to the extent the redemption price at maturity is greater than the issue price) constitutes original issue discount. Original issue discount accrues under a 4861-4868-8141.5
37 constant yield method. The amount of original issue discount deemed received by the Beneficial Owner of a Bond will increase the Beneficial Owner’s basis in the Bond. Beneficial Owners of the Bonds should consult their own tax advisors with respect to taking into account any original issue discount on the Bonds.
The amount by which a Beneficial Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which the Beneficial Owner of a Bond may elect to amortize under Section 171 of the Code; such amortizable bond premium reduces the Bond Beneficial Owner’s basis in the applicable Bond (and the amount of taxable interest received with respect to the Bonds), and is deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a Bond Beneficial Owner realizing a taxable gain when a Bond is sold by the Beneficial Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Beneficial Owner. The Beneficial Owners of the Bonds that have a basis in the Bonds that is greater than the principal amount of the Bonds should consult their own tax advisors with respect to whether or not they should elect such premium under Section 171 of the Code.
In the event of a legal defeasance of the Bonds, such Bonds might be treated as retired and “reissued” for federal tax purposes as of the date of the defeasance, potentially resulting in recognition of taxable gain or loss to the applicable Beneficial Owner generally equal to the difference between the amount deemed realized from the deemed prepayment and reissuance and the Beneficial Owner’s adjusted tax basis in such Bond.
The tax discussion set forth above is included for general information only and may not be applicable depending upon a Bond Owner’s particular situation. The ownership and disposal of the Bonds and the accrual or receipt of interest on the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. BEFORE
PURCHASING ANY OF THE BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT
THEIR INDEPENDENT TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES RELATING TO THE BONDS AND THE TAXPAYER’S PARTICULAR CIRCUMSTANCES.
A copy of the proposed form of opinion of Bond Counsel with respect to the Bonds is set forth in Appendix D.
VALIDATION
On June 15, 2021, the City, acting pursuant to the provisions of Section 860 et seq. of the California Code of Civil Procedure, filed a complaint in the Superior Court of the State of California in and for the County of Los Angeles seeking judicial validation of the transactions relating to the CalPERS Contract and the Bonds and certain other matters entitled City of Pico Rivera v. All Persons Interested et al. (Case No. 21NWCP00205). On September 23, 2021, the court entered the Validation Judgment to the effect, among other things, (i) the Trust Agreement will be a valid, legal and binding obligation of the City and the approval thereof was in conformity with applicable provisions of law and (ii) the City has the authority under California law to provide for the refunding of its Unfunded Liability by issuing the Bonds and applying the proceeds of the Bonds to the retirement of the its Unfunded Liability. Pursuant to Section 870 of the California Code of Civil Procedure, the last day to timely file a notice of appeal to this judgment was October 23, 2021. On October 24, 2021, the judgment became binding and conclusive in accordance with California law. The City is unaware of any threatened or pending challenge to this judgment. In issuing its approving opinion, Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, will rely, among other things, upon the abovedescribed judgment. 4861-4868-8141.5
38 CERTAIN LEGAL MATTERS
The validity of the Bonds and certain other legal matters are subject to the approving opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel.
A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix D hereto.
Certain additional matters will be passed upon by Nixon Peabody LLP, as Disclosure Counsel to the City.
Certain legal matters will be passed upon for the City by the City Attorney, for the Underwriter by Jones Hall, A Professional Law Corporation, San Francisco, California and for the Trustee by its counsel. Bond Counsel has not undertaken any responsibility to the owners of the Bonds for the accuracy, completeness or fairness of this Official Statement or other offering materials relating to the Bonds, and expresses no opinion relating thereto.
LITIGATION
To the best knowledge of the City there is no action, suit or proceeding known to be pending or threatened, restraining or enjoining the execution and delivery or the issuance of the Bonds, or the execution and delivery of the Trust Agreement, or in any way contesting or affecting the validity of any of the foregoing or any proceedings of the City taken with respect to any of the foregoing.
There are a number of lawsuits and claims pending against the City. In the opinion of the City, such other lawsuits and claims presently pending will not have a material adverse effect on the ability of the City to pay the principal of and interest on the Bonds.
RATING
S&P Global Ratings (“S&P”) has assigned the rating of “_____” to the Bonds. An explanation of the significance and status of such rating may be obtained from S&P. There is no assurance that such rating will continue for any given period of time or that it will not be revised or withdrawn entirely by any of S&P, if in its judgment, circumstances so warrant. A revision or withdrawal of any rating for the Bonds could have an effect on the market prices and marketability of the Bonds. The City cannot predict the timing or impact of future actions by S&P.
FINANCIAL STATEMENTS OF THE CITY
Included herein as Appendix A 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 27, 2021 of CliftonLarsonAllen LLP (the “Auditor”). The Auditor has not undertaken to update the audited financial statements of the City or its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by the Auditor with respect to any event subsequent to its report dated December 27, 2021.
CONTINUING DISCLOSURE
The City has covenanted for the benefit of owners of the Bonds to provide certain financial information and operating data relating to the City by not later than March 31 of each year commencing with the report for the 2021-22 Fiscal Year (the “Annual Report”) and to provide notices of the occurrence of certain enumerated events. The Annual Report and the notices of enumerated events will be filed by the Dissemination Agent with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system (“EMMA”) or any successor assigned by the Municipal Securities Rulemaking Board or Securities and Exchange Commission. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (the “Rule”). The specific nature of the information to be contained in the Annual 4861-4868-8141.5
39 Report or the notices of enumerated events by the City is set forth in APPENDIX E—“FORM OF CONTINUING DISCLOSURE CERTIFICATE.”
[SUMMARY OF PRIOR COMPLIANCE TO COME]
UNDERWRITING
The Bonds are being purchased by Stifel, Nicolaus & Company Incorporated, as Underwriter.
The Underwriter has agreed to purchase the Bonds at a purchase price of $__________ (representing the principal amount of the Bonds less an underwriting discount of $_________). The Bond Purchase Agreement with respect to the Bonds provides that the Underwriter will purchase all of the Bonds, if any are purchased. The obligation of the Underwriter to accept delivery of the Bonds is subject to certain conditions contained in such Bond Purchase Agreement.
[The Underwriter has entered into an agreement with its affiliate, Vining-Sparks IBG, LLC (“Vining-Sparks”) for the distribution of certain municipal securities offerings at the original issue price.
Pursuant to that distribution agreement, Vining-Sparks may purchase Bonds from the Underwriter at the original issue price less a negotiated portion of the selling concession applicable to any Bonds that Vining-Sparks sells.]
The Bonds are offered for sale at the initial prices stated on the inside 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 prices lower than the public offering prices.
MUNICIPAL ADVISOR
The City has retained Urban Futures, Inc., Tustin, California, as Municipal Advisor for the sale 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.
MISCELLANEOUS
The foregoing and subsequent summaries or descriptions of provisions of the Bonds and the Trust Agreement and all references to other materials not purporting to be quoted in full, are only brief outlines of some of the provisions thereof. Reference is made to said documents for full and complete statements of the provisions of such documents. The appendices attached hereto are a part of this Official Statement.
Copies of the Trust Agreement, in reasonable quantity, may be obtained during the offering period from the Underwriter and thereafter upon request to the principal corporate trust office of the Trustee. Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized.
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40 The execution and delivery of this Official Statement has been duly authorized by the City. This Official Statement is not to be construed as a contract or an agreement between the City and the purchasers or owners of any of the Bonds.
CITY OF PICO RIVERA
By:
City Manager
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APPENDIX A
AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
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APPENDIX B
ECONOMIC AND DEMOGRAPHIC INFORMATION
REGARDING THE CITY OF PICO RIVERA
This appendix sets forth general economic and demographic information in and about the City of Pico Rivera. The following information concerning the City, County of Los Angeles (the “County”) and the State of California (the “State”) is included only for general background purposes. It is not intended to suggest that the Bonds are payable from any source other than Deposit Amounts.
Location
The City of Pico Rivera (the “City”) is situated approximately 11 miles southeast of downtown Los Angeles, on the eastern edge of the Los Angeles basin, and on the southern edge of the area known as the San Gabriel Valley. The City encompasses approximately 8.8 square miles and is located near major highways — Interstate 605 (San Gabriel Freeway), Interstate 5 (Santa Ana Freeway) and Interstate 60 (Pomona Freeway).
Governmental Services
The City was incorporated in 1958. It is a general law city with a Council-Manager form of municipal government. The voters elect a five-member City Council, which in turn appoints a City Manager to carry out its policies and serve as the administrative head of the city organization. The City Manager oversees all City employees who implement the City’s programs, services, and projects, with the exception of police, fire and library services. Those services are provided through contracts with the County of Los Angeles.
The City currently has a staff of 144 authorized full-time employees and 100 part-time employees which number varies throughout the year.
Public Safety and Welfare. As stated, the City contracts with the County of Los Angeles for police protection. The County provides the City 27 sworn police officers. Also, the City contracts with the Los Angeles County Fire Protection District for fire protection. There are [three] fire stations located in the City, manned by 48 sworn persons.
Public Services. The City provides water service to the majority of its residents. It also operates a transit system including a dial-a-ride bus service and special elderly and disabled transportation services.
Community Services. Other services provided by the City include building permit and inspection, landscape and public infrastructure maintenance, graffiti abatement, street sweeping, traffic signal maintenance and municipal code compliance.
Population
The City is located in Los Angeles County and as of January 1, 2021 had an estimated population of 63,157. Table 1 sets forth total population for the City, the County of Los Angeles (the “County”) and the State of California (the “State”).
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Table 1
City of Pico Rivera, County of Los Angeles and State of California Population Estimates as of January 1
2017 2018 2019 2020 2021
Pico Rivera 64,170 64,306 63,390 63,530 63,157
Los Angeles County 10,231,271 10,254,658 10,184,378 10,135,614 10,044,458 California 39,500,973 39,740,508 39,695,376 39,648,938 39,466,855 Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties and the State.
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Employment
Table 2 summarizes the labor force, employment and unemployment figures over the period 2017 through 2021 for the City, the County, the State and United States.
Table 2
City of Pico Rivera, County of Los Angeles, State of California and United States Labor Force, Employment and Unemployment Yearly Average Year and Area Labor Force Employment(1) Unemployment(2) Unemployment
Rate (%)(3)
2017
Pico Rivera 30,400 28,800 1,600 5.2
Los Angeles County 5,088,900 4,843,700 245,200 4.8
California 19,173,800 18,246,800 927,000 4.8
United States 160,543,000 153,561,000 6,982,000 4.4
2018
Pico Rivera 30,400 28,800 1,600 5.2
Los Angeles County 5,094,300 4,857,300 237,000 4.7
California 19,263,900 18,442,400 821,500 4.3
United States 163,124,000 156,810,000 6,314,000 3.9
2019
Pico Rivera 30,300 28,800 1,500 5.0
Los Angeles County 5,122,800 4,888,600 234,300 4.6
California 19,353,700 18,550,500 803,200 4.2
United States 164,579,000 158,578,000 6,001,000 3.7
2020
Pico Rivera 29,100 25,300 3,900 13.3
Los Angeles County 4,921,500 4,291,700 629,800 12.8
California 18,821,200 16,913,100 1,908,100 10.1
United States 160,567,000 147,620,000 12,947,000 8.1
2021
Pico Rivera 29,300 27,600 1,700 5.8
Los Angeles County 4,980,200 4,701,400 278,800 5.6
California 19,041,000 18,127,700 913,300 4.8
United States 161,204,000 152,581,000 8,623,000 5.4
(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.
Source:California Employment Development Department and U.S. Department of Labor, Bureau of Labor Statistics.
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Table 3 represents the Annual Average Labor Force and Industry Employment for the area for the period from 2017 through 2021. These figures are metropolitan-wide statistics and may not necessarily accurately reflect employment trends in the City.
Table 3
Los Angeles-Long Beach-Glendale Metropolitan Division
Industry Employment & Labor Force – 2017-2021 by Annual Average 2017 2018 2019 2020 2021
Total Farm 5,700 4,600 4,400 4,400 4,600
Total Nonfarm 4,449,200 4,516,100 4,561,500 4,146,700 4,479,300 Total Private 3,863,100 3,925,500 3,974,600 3,581,000 3,909,100 Goods Producing 491,100 490,800 492,500 460,900 469,700 Natural Resources, Mining and Construction 140,800 148,200 151,800 147,200 155,200 Construction 138,700 146,300 149,800 145,500 153,600
Manufacturing 350,400 342,600 340,700 313,800 314,500
Durable Goods 201,400 199,900 201,500 189,500 185,700
Nondurable Goods 148,900 142,600 139,200 124,200 128,800 Service Providing 3,958,100 4,025,300 4,069,000 3,685,800 4,009,600 Private Service Producing 3,372,000 3,434,700 3,482,100 3,120,100 3,439,400 Trade, Transportation and Utilities 845,700 851,600 851,400 787,300 857,700 Wholesale Trade 221,500 223,200 220,500 200,100 205,300 Retail Trade 426,100 424,800 417,900 378,600 425,000
Transportation, Warehousing and
Utilities 198,200 203,600 213,000 208,600 227,400
Information 214,900 216,400 217,900 185,800 227,800
Financial Activities 221,600 223,200 223,500 211,500 211,500 Professional and Business Services 612,100 630,400 643,900 593,300 660,000 Educational and Health Services 797,400 817,900 839,900 820,900 862,300 Leisure and Hospitality 524,600 536,500 547,200 394,400 475,100 Other Services 155,700 158,800 158,400 127,000 145,000
Government 586,100 590,600 586,900 565,600 570,200
Total, All Industries 4,454,900 4,520,700 4,565,800 4,151,000 4,483,900 Note: The “Total, All Industries” data is not directly comparable to the employment data found herein.
Source: State of California, Employment Development Department, Labor Market Information Division, Los Angeles MSA Annual Average Labor Force and Industry Employment. 4861-4868-8141.5
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Principal Employers
Table 4 sets forth the principal employers in the City.
Table 4
City of Pico Rivera
Principal Employers, Fiscal Year Ended June 30, 2021
Organization Employees Business Type
Wal-Mart Supercenter 523 Department Store
Los Angeles Unified School District 347 Government
Rivera Nursing & Convalescent 279 Healthcare & Hospitals Cintas Corp 219 Laundromat & Laundry Services
Target 193 Department Store
Feit Electric Company 184 Warehouse for Distribution
Manning Beef LLC 170 Meat - Miscellaneous
Bimbo Bakeries 160 Yard Storage Use Only
American Meat Companies 130 Meat - Wholesale
Unisource Solutions 122 Wholesale Business
Source: HDL Companies.
Commercial Activity
Trade outlet and retail sales activity are summarized in Tables 5 and 6 based on reports of the California Department of Tax and Fee Administration.
Table 5
City of Pico Rivera
Total Taxable Transactions and Number of
Sales Permits, 2016 through 2020
(Transactions in $000s)
Calendar
Year
Retail & Food
Services
Transactions
Retail & Food
Services
Permits
All Other
Transactions
All Other
Permits
2016 521,972 679 261,012 433
2017 540,892 669 223,665 433
2018 586,820 713 270,937 471
2019 591,371 748 243,079 477
2020 519,953 849 248,599 532
Source: California Department of Tax and Fee Administration. 4861-4868-8141.5
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Table 6
City of Pico Rivera
Taxable Retail and Food Services Transactions
2016 through 2020
(Transactions in $000s)
Type of Business 2016 2017 2018 2019 2020
Motor Vehicle & Parts Dealers 9,578 9,369 9,130 9,022 9,594 Home Furnishings & Appliance Stores 37,283 39,328 45,143 35,250 33,526 Building Material & Garden
Equipment & Supplies Dealers 66,666 71,199 95,434 92,869 49,870 Food & Beverage Stores 40,282 42,479 43,418 45,370 11,634 Gasoline Stations 69,137 70,045 76,270 68,687 45,482
Clothing & Clothing Accessories
Stores
38,343 36,062 33,955 37,332 38,647
General Merchandise Stores 114,872 117,113 121,646 123,175 135,997 Food Services & Drinking Places 118,782 125,745 127,346 143,264 124,642 Other Retail Group 27,029 29,551 34,479 36,403 35,828
Total Retail and Food Services 521,972 540,892 586,820 591,371 519,953 All Other Outlets 261,012 223,665 270,937 243,079 248,599 Total All Outlets 782,983 764,557 857,757 834,450 768,552 Source: California Department of Tax and Fee Administration. 4861-4868-8141.5
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Building Activity
Table 7 summarizes building activity in the City of Pico Rivera since 2017.
Table 7
City of Pico Rivera
Building Permit Valuations
2016-2020
2017 2018 2019 2020 2021
Residential
Single Family
Multi-Family
Alteration/Additions
Total
Non-Residential
New Commercial
New Industry
Other(1)
Alteration/Additions
Total
Total
Single Family Units
Multi-Family Units
Total
(1) Includes religious buildings, hospitals and institutional buildings, schools and educational buildings, residential garages, public works and utilities buildings and non-residential alterations and additions.
Source: Construction Industry Research Board.
Utilities
The City receives water service from the Pico Rivera Water Authority (“PRWA”). The PRWA produces 100% of its demand through groundwater. The City’s Utility Programs Division oversees the following: Water Compliance, Energy management, Storm Water management, water conservation, sanitary Sewer Management, and oversight of contracted services such as Sanitary Sewer and Storm Drains/Catch Basin maintenances.
Transportation
The City is located at the juncture of the Santa Ana Freeway (Interstate 5) and the San Gabriel River Freeway (Interstate 605) in the eastern portion of Los Angeles County, approximately 11 miles from downtown Los Angeles, California. The Glenn Anderson Freeway (Interstate 105) provides a direct link between Interstate 605 and the Los Angeles International Airport. 4861-4868-8141.5
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Air cargo and passenger flight services are provided at Los Angeles International Airport, 20 miles west, which is served by all major airlines; Long Beach Airport, 15 miles southwest; and John Wayne Airport in Orange County, a forty-minute drive. All of these airports provide regional services.
Local bus transportation is provided through Montebello Bus Lines and the Metropolitan Transit Authority, including Park-and-Ride service to downtown Los Angeles. There are bus service connections to most surrounding areas. The City also operates a transit system including a bus dial-a-ride service and special elderly and disabled transportation services.
Rail freight service is available from the BNSF Railway (formerly known as the Burlington northern and Santa Fe Railway) and its wholly owned subsidiary Los Angeles Junction Railway which serve the industrial area of the City. Water transportation is available at Long Beach and Los Angeles harbors, one hour west, where the City is also served by each city’s respective port. In addition, truck freight service is available from both local and national trucking companies.
Education
The City is served by two public school districts: El Rancho Unified School District and Montebello Unified School District. Additionally, there are also two parochial schools (grades 1-8) and one private school (K-12). Within the City, El Rancho Unified School District has eight elementary schools, three middle schools, one comprehensive high school, one adult school and one continuation high school. Montebello Unified School District has one elementary school located within the City.
Additionally, nearby community colleges and universities that provide higher education include Rio Hondo College, Cerritos College, California State University Los Angeles, Cal State Long Beach, and Cal Poly Pomona.
Recreation and Culture
The City’s park system consists of nine parks covering over 120 acres and containing 21 athletic fields, two gymnasiums, and four community centers. Additionally, the Department of Parks & Recreation offers year-round instruction classes, special or season events, sports leagues, workshops, recreational programs and community celebrations for all ages. The City also operates a 9-hole executive golf course that was built in 1968 on the U.S. Army Corps of Engineers land. Lastly, two public libraries that are provided by the Los Angeles County Library System are located within the City. 4861-4868-8141.5
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APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT
The following is a summary of certain definitions and provisions of the Trust Agreement which is not described elsewhere in the Official Statement. This Summary does not purport to be comprehensive and reference should be made to the Trust Agreement for a full and complete statement of its provisions. 4861-4868-8141.5
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APPENDIX D
FORM OF BOND COUNSEL OPINION
Upon the issuance of the Bonds, Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, proposes to render its final approving opinion in substantially the following form:
[Date of Delivery]
City Council
City of Pico Rivera
Pico Rivera, California
Re: $___________ City of Pico Rivera Pension Obligation Bonds, Series 2022 (Federally Taxable)
Ladies and Gentlemen:
We have examined certified copies of proceedings of the City of Pico Rivera (the “City”) relative to the issuance and sale by the City of its Pension Obligation Bonds, Series 2022 (Federally Taxable) in the aggregate principal amount of $[ ] (the “Bonds”), and such other information and documents as we consider necessary to render this opinion.
The Bonds have been issued pursuant to the authority contained in Articles 10 and 11 of Chapter 3 of Division 2 of Title 5 of the Government Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented, and the Trust Agreement, dated as of [ , 2022] (the “Trust Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). All terms which are not defined herein have the meanings ascribed to those terms in the Trust Agreement.
The Bonds have been issued for the purpose of refunding the City’s obligations to the California Public Employees Retirement System (“CalPERS”) evidenced by the contract between the Board of Administration of CalPERS and the City Council of the City, effective February 1, 1959, as such contract has been amended from time to time, to pay unamortized, unfunded accrued liability with respect to pension benefits under the Public Employees’ Retirement Law, constituting Part 3 of Division 5 of Title 2 of the California Government Code.
In connection with the issuance of Bonds, we have reviewed the Trust Agreement, certificates of the City, the Trustee, and others, opinions of the City Attorney and counsel to the Trustee, and such other documents, opinions and matters to the extent that we deemed necessary to render the opinions which are set forth herein. In rendering this opinion, we have relied upon certain representations of fact and certifications made by the City, the initial purchasers of the Bonds and others. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us.
The opinions that are expressed herein are based upon our analysis and interpretation of existing statutes, regulations, rulings and judicial decisions, including the default judgment entered on September 23, 2021 by the Superior Court of California, County of Los Angeles, in the action entitled City of Pico Rivera v. All Persons Interested et al., Case No. 21NWCP00205, and cover certain matters that are not 4861-4868-8141.5
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directly addressed by such authorities. The opinions that are expressed herein may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. Our engagement as to the Bonds terminates as of the date of issuance of the Bonds.
Based upon our examination of all of the foregoing, and in reliance thereon and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that:
1. The Trust Agreement has been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the Trustee, constitutes the valid and binding obligation of the City enforceable in accordance with its terms.
2. The Bonds have been duly authorized and issued by the City and are valid and binding obligations of the City enforceable in accordance with their terms. The Bonds do not constitute a debt of the City, the State of California or any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and do not constitute an obligation for which the City, the State of California or any political subdivision thereof is obligated to levy or pledge any form of taxation or for which the City, the State of California or any political subdivision thereof has levied or pledged any form of taxation.
3. Upon issuance and authentication of the Bonds in accordance with the Trust Agreement, the Bonds will be entitled to the benefits of the Trust Agreement.
4. Interest on the Bonds is exempt from State of California personal income tax.
Other than expressly stated herein, we express no other opinion regarding tax consequences with respect to the Bonds.
Our opinion is limited to matters governed by the laws of the State of California. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.
The opinions that are expressed herein are based upon our analysis and interpretation of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the rights and obligations under the Trust Agreement and the Bonds are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State.
By delivering this opinion, we are not expressing any opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in the Bonds or the Trust Agreement, nor are we expressing any opinion with respect to the state or quality of title to or interest in any assets described in or as subject to the lien of the Trust Agreement or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any assets thereunder. 4861-4868-8141.5
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We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and expressly disclaim any duty to advise the Owners of the Bonds with respect to matters contained in the Official Statement.
Respectfully submitted
4861-4868-8141.5
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
4861-4868-8141.5
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APPENDIX F
BOOK-ENTRY SYSTEM
The information in this Appendix F has been provided by DTC for use in securities offering documents, and the City takes no responsibility for the accuracy or completeness thereof. The City cannot give or does give any assurances 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.
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 instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized bookentry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC 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 through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 4861-4868-8141.5
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Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive 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 Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of 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, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Neither the City nor 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 Trust Agreement. 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 Participant 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 Trustee 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 standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the 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 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. 4861-4868-8141.5
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9. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the City 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 City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). If the City determines not to continue the DTC bookentry only system, or DTC discontinues providing its services with respect to the Bonds and the City does not select another qualified securities depository, the City will deliver physical Bond certificates to the Beneficial Owners. The Bonds may thereafter be transferred upon the books of the Trustee by the registered owners, in person or by authorized attorney, upon surrender of Bonds at the Office of the Trustee in Costa Mesa, California, accompanied by delivery of an executed instrument of transfer in a form approved by the Trustee and upon payment of any charges provided for in the Trust Agreement.
Certificated Bonds may be exchanged for Bonds of other authorized denominations of the same aggregate principal amount and maturity at the Office of the Trustee in Costa Mesa, California, upon payment of any charges provided for in the Trust Agreement. No transfer or exchange of Bonds will be made by the Trustee during the period between the record date and the next Interest Payment Date.
THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE
BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS TO ONLY DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC
PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT
OR EFFECT WILL NOT AFFECT THE VALIDITY OR SUFFICIENCY OF THE PROCEEDINGS
RELATING TO THE REDEMPTION OF THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.
11. The foregoing description 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, confirmation 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.
SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE BONDS, AS NOMINEE
OF DTC, REFERENCES HEREIN TO THE HOLDERS OF THE BONDS (OTHER THAN UNDER THE CAPTION “TAX MATTERS” HEREIN) SHALL MEAN CEDE & CO., AS AFORESAID, AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE BONDS.
12. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.
To: Mayor and City Council
From: City Manager
Meeting Date: April 26, 2022
Subject: THIRD QUARTER TREASURER’S REPORT AND THE
MONTHLY INVESTMENT TRANSACTION REPORT AS OF
MARCH 31, 2022 – FISCAL YEAR 2021-2022
Recommendation:
1. Receive and file the Treasurer’s Report for the quarter ending March 31, 2022, which represents balances and activities for the third quarter (January through March) of the 2021-22 fiscal year; and
2. Receive and file the Treasurer’s Monthly Investment Transaction Report as of March 31, 2022.
Fiscal Impact:
There is no fiscal impact from this item. On a quarterly basis, Administrative Services Department staff allocates the appropriate interest income to the various funds. This shows as revenues to the respective funds.
Discussion:
The Treasurer's Report (Enclosure 1) provides a synopsis of investment activity for the City of Pico Rivera’s (City) investment portfolio for the fiscal year (FY) 2021-22 third quarter ending March 31, 2022. The report provides information on assets, allocations, average maturities, yields and valuations for each of the three (3) portfolios. A discussion of market conditions is included to give additional perspective to these measurements.
As of March 31, 2022, the City's investment portfolios are in full compliance with the City's Investment Policy, California Government Code Section 53601, and have sufficient cash flow from a combination of liquid and maturing securities, bank deposits and income to meet the City's expenditure requirements. The paragraphs below provide a summary of the investment results from the third quarter.
Total Pooled Cash and Investments during the quarter totaled $86,054,382. This total amount consisted of $6,963,887 in the City’s accounts with its banking partner Commercial Bank of California (CBC), $53,019,980 in the State Treasurer’s Local Agency CITY COUNCIL AGENDA REPORT – MEETING OF APRIL 26, 2022
THIRD QUARTER TREASURER’S REPORT AND THE MONTHLY INVESTMENT TRANSACTION REPORT AS OF MARCH 31, 2022 – FISCAL YEAR 2021-2022
Investment Fund (LAIF) and $26,070,515 managed by Chandler Asset Management (Chandler). The City also had $1,817,556 held by various Trustee Accounts, all related to the City’s bond issues (1999 Water Revenue Bonds, etc.).
The total 2018 Certificates of Participation, Series A (COPS) managed by Wilmington Trust reflect an ending balance of $14,305,383.
The Pico Rivera Innovative Municipal Energy (PRIME) accounts, an Enterprise Fund, reflect two (2) primary accounts. The first account, Insured Cash Sweep (ICS) account, receives and records investment income. The ICS account as of March 31, 2022 has an ending balance of $5,927,962. The second account, Public Fund account, receives Electronic Data Interchange (EDI) collection payments and executes vendor payments for the purchase of energy. The Public Fund account as of March 31, 2022 has an ending balance of $1,354,308. The ICS and Public Fund accounts are managed by River City Bank (RCB).
Chandler Asset Management Managed Portfolio
The City entered into a discretionary investment advisory agreement in December 2017, with Chandler, an SEC-registered investment advisor, to manage a portion of the City's portfolio in a disciplined, active manner that complies with the City's investment policy and stated objectives of safety, liquidity and yield. After detailed consultation with Chandler's investment team, the City selected the Limited Maturity investment strategy, benchmarked against the Bank of America Merrill Lynch 1-3 Year US Treasury & Agency Index. The strategy invests in a well-diversified portfolio of high-quality fixed income securities. To maintain compliance with the City's investment policy, Chandler continues to invest in securities that reflect the guidelines set forth in the City's Investment Policy, most recently approved on June 22, 2021.
To ensure the safety of the portfolio, investments that hold the highest credit quality are selected. The Chandler Managed Portfolio is comprised primarily of Treasury Securities and Federal Government sponsored entity debt, otherwise known as federal agency securities. Federal agency securities continue to be regarded as among the safest securities in the global market. Two (2) of the government sponsored agencies, Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), remain under conservatorship and carry an implicit guarantee by the Federal Government. In addition, both are carefully monitored by the City’s investment manager and Treasurer to ensure the continued safety of the City’s funds.
The Portfolio Holding Report (Table 1) reflects the types of security holdings in the City’s investment fund. The portfolio March 31, 2022 market value represents a total of $26,070,515, a decrease of $568,240 from the December 31, 2021 market value of $26,638,755. At the period ending March 31, 2022, the portfolio held a diverse portfolio by holding nine (9) different security types. The largest security holding consists of Treasury Securities of $10,451,557. These Treasury Securities are one of the highestquality debt instruments.
CITY COUNCIL AGENDA REPORT – MEETING OF APRIL 26, 2022
THIRD QUARTER TREASURER’S REPORT AND THE MONTHLY INVESTMENT TRANSACTION REPORT AS OF MARCH 31, 2022 – FISCAL YEAR 2021-2022
The Portfolio Holdings Report also provides the portfolio’s Par values (nominal value of a bond); Book yield (Internal Rate of Return); Book value (value of a security); Market YTM (long-term bond yield); Market value (amount security can be sold on a given market); accrued interest (interest earned); total portfolio (Market value + accrued interest); and finally, Maturity Duration (bond sensitivity of price that may change in interest rates during duration).
Table 1 - Portfolio Holding Report
The Investments by Type (Chart 1) reflects the makeup of the portfolio holdings by security type. The portfolio holds 40% in US Treasuries (government treasury bonds, notes, and bills), 20% of total investments in federal agency securities, 18% in mediumterm corporate notes, 7% in asset-backed securities, which are collateralized by a pool of assets, and the remainder in money market funds.
Chart 1 - Investments by Type
The Investment Rating chart (Chart 2) illustrates the portfolios’ investment grade of holdings. This rating provides the City assurance of risk associated with quality of the holdings investment grade. As is demonstrated, in the chart below, 91.6% of the total CITY COUNCIL AGENDA REPORT – MEETING OF APRIL 26, 2022
THIRD QUARTER TREASURER’S REPORT AND THE MONTHLY INVESTMENT TRANSACTION REPORT AS OF MARCH 31, 2022 – FISCAL YEAR 2021-2022
portfolio consists of investments rated “A” or higher as of March 31, 2022, a slight decrease of 0.1% from December 31, 2021.
Chart 2 - Investment Ratings
The City’s portfolio remains highly rated, liquid, and stable despite the economic uncertainties. The bond market experienced a historic level of volatility during the first quarter as the Russian invasion of Ukraine exacerbated ongoing domestic pricing pressures while the Federal Reserve began tightening monetary policy to address these inflationary challenges. Economic growth moderated from the previous quarter but remained robust, as evidenced by the continued strong level of job creation. During the quarter, bond yields rose sharply in response to the Fed’s normalization of monetary policy, including a 25 basis point increase in the Fed Funds rate and the forward guidance regarding future interest hikes and balance sheet reduction, or “quantitative tightening”.
Local Agency Investment Funds (LAIF)
To manage liquidity, the Pico Rivera Pooled Investment Portfolio is invested in LAIF. The LAIF December 31, 2021 market value represents a total of $37,494,731 and the March 31, 2022 market value of $53,019,980. The increase of $15.5 million in balance from last quarter was related to the net transfers of $15.5 million to LAIF in January, February and March. Most of the transfers were attributable to revenues from property tax of $9.0 million, revenues from Redevelopment Property Tax Trust Fund of $2.1 million, revenues from sales tax of $1.7 million and revenue from water bond refund of $1.2 million. The LAIF Quarterly Performance ending March 31, 2022 notes an Apportionment Rate at .32% and a quarterly yield of .29%.
AAA
9.4%
AA
68.2%
A
14.0%
<A
0.0% NR
8.4%
CITY COUNCIL AGENDA REPORT – MEETING OF APRIL 26, 2022
THIRD QUARTER TREASURER’S REPORT AND THE MONTHLY INVESTMENT TRANSACTION REPORT AS OF MARCH 31, 2022 – FISCAL YEAR 2021-2022
The City participates in the State of California LAIF portfolio program. The program consists of local agencies participating in a large portfolio to invest using the State Treasurer's Office for investments at no additional cost to the taxpayer. The Local Investment Advisory Board (LIAB) provides oversight for LAIF.
LAIF administrative costs are minimal and assessed quarterly. The Government Code states administrative costs are not to exceed 5% of the quarterly earnings of the fund.
The characteristics of the LAIF portfolio reflect minimal credit risk with safety in investing of high-quality securities. LAIF funds are protected by statute and are not borrowable.
As Graph 1 below demonstrates, the Chandler Asset Management Performance (CAMP) portfolio has outperformed the LAIF portfolio over the last four (4) years.
Graph 1 – LAIF and CAMP from
March 2018 through March 2022
The comparison of LAIF to the CAMP is the difference in investment security types; whereas LAIF takes on a more conservative approach per Investment Policy, LAIF and CAMP follow similar investment guidelines for safety, liquidity and return.
Staff has continuously monitored the City’s investment portfolio and performance on an ongoing basis. As evident by Graph 1 above, the CAMP has outperformed the return experienced from our LAIF portfolio. As staff has demonstrated above, the CAMP is managed within the City’s investment policy guidelines with more favorable returns than LAIF.
Monthly Investment Transaction Report
Per the City’s Investment Policy approved by the City Council on June 22, 2021, the City Treasurer submits a monthly investment transaction report to the City Council within 30 CITY COUNCIL AGENDA REPORT – MEETING OF APRIL 26, 2022
THIRD QUARTER TREASURER’S REPORT AND THE MONTHLY INVESTMENT TRANSACTION REPORT AS OF MARCH 31, 2022 – FISCAL YEAR 2021-2022
days of the end of the reporting period in accordance with California Government Code Section 53607.
The monthly investment transactions summary updates the City Council on the City’s monthly transactions of the City’s investment portfolio for the month ending March 31, 2022. The statements enclosed include transactions of the City’s investments with Local Agency Investments Funds (LAIF) and Chandler Asset Management (Enclosures 2 and 3).
Conclusion:
All investments are maintained in accordance with California Government Code Section 53601 and the City’s investment policy approved by the City Council on June 22, 2021.
The City Treasurer (Director of Administrative Services) certifies that the funds are invested to provide sufficient cash flow for a period of six (6) months.
Steve Carmona
SC:AG:JM:ep
Enclosures: 1) Treasurer’s Report for Third Quarter Ending March 31, 2022 2) LAIF Statement for the Month Ending March 31, 2022
3) Chandler Asset Management Transaction Ledger for March 2022
CITY OF PICO RIVERA
TREASURER'S REPORT3RD QTR JAN 2022 ‐ MAR 2022
TYPE OF INVESTMENT Interest Rate Issuer Reporting Date Investment Income Ending Balance Source of Market Valuation Local Agency Investment Fund (LAIF) 0.21 LAIF 3/31/2022 39,763.33 53,019,980.19 LAIF Statements Demand Deposits 0.05 CBC 3/31/2022 75.29 6,963,887.15 CBC Statements Chandler Investments* ‐0.51 Chandler Investments 3/31/2022 62,369.00 26,070,515.00 Chandler Portfolio Summary TOTAL CASH & INVESTMENTS: Exclude Water Fund 550 TOTAL CASH & INVESTMENTS: $ 102,207.62 $ 86,054,382.34 Revenue Bonds, 1999 Bond Fund Water Authority 122073‐001 US Bank 3/31/2022 ‐ 144.13 US Bank/RECON Statements Revenue Bonds, 1999 Bond Fund Water Authority 122073‐002 US Bank 3/31/2022 1.75 237,645.83 US Bank/RECON Statements Revenue Bonds, 1999 Bond Fund Water Authority 122073‐003 US Bank 3/31/2022 11.15 976,250.04 US Bank/RECON Statements Revenue Bonds, 1999 Water Rate Stabilization 122073‐011 US Bank 3/31/2022 8.86 600,000.00 US Bank/RECON Statements Revenue Bonds, 2021 Tax Allocation Refunding Bonds 245558‐000 US Bank 3/31/2022 ‐ ‐ US Bank/RECON StatementsRevenue Bonds, 2021 Tax Allocation Refunding Bonds 245558‐001 US Bank 3/31/2022 ‐ ‐ US Bank/RECON StatementsRevenue Bonds, 2021 Tax Allocation Refunding Bonds 245558‐002 US Bank 3/31/2022 ‐ ‐ US Bank/RECON StatementsRevenue Bonds, 2021 Tax Allocation Refunding Bonds 245558‐003 US Bank 3/31/2022 0.05 3,515.62 US Bank/RECON Statements Revenue Bonds, 2021 Tax Allocation Refunding Bonds 245558‐004 US Bank 3/31/2022 ‐ ‐ US Bank/RECON Statements TOTAL FISCAL AGENT (TRUSTEE) INVESTMENTS TOTAL (TRUSTEE) INVESTMENTS: $ 21.81 $ 1,817,555.62 TOTAL CASH & TRUSTEE INVESTMENTS: $ 102,229.43 $ 87,871,937.96 Dividends Ending Balance
2018 COPS 130877 Wilmington Trust 3/31/2022 886.51 14,305,382.85 Wilmington Trust Statement TOTAL 2018 COPS: $ 886.51 $ 14,305,382.85
ENTERPRISE FUNDS Interest earned Ending BalanceRiver City Bank (PRIME) RIVER CITY BANK INSURED CASH SWEEP (ICS) Account 3/31/2022 1,947.04 5,927,961.78 River City Bank River City Bank (PRIME) RIVER CITY BANK Operating Account 3/31/2022 ‐ 1,354,307.82 River City Bank TOTAL River City Bank: $ 1,947.04 $ 7,282,269.60
Angelina GarciaDirector of Administrative Services, City Treasurer and Interim Assistant City Manager, City of Pico Rivera * Total‐Rate‐Return (TRR) 3 month: TRR measuring performance, actual rate of return of an investment or a pool of investments over a given evaluation period. TRR includes interest, capital gains, dividends and distributions realized over a given period of time.
I certify that this investment portfolio is in conformity with the Investment Policy of the City of Pico Rivera. The investment Program provides sufficient liquidity to meet a minimum of the next six month's estimated expenditures.
4/6/22, 5:04 PM LAIF Regular Monthly Statement
https://laifms.treasurer.ca.gov/RegularStatement.aspx 1/1 Local Agency Investment Fund
P.O. Box 942809
Sacramento, CA 94209-0001
(916) 653-3001
April 06, 2022
LAIF Home
PMIA Average Monthly Yields
CITY OF PICO RIVERA
CITY TREASURER
6615 S. PASSONS BLVD
PICO RIVERA, CA 90660
Account Number: 98-19-653
March 2022 Statement
Tran Type Definitions
Effective
Date
Transaction
Date
Tran
Type
Confirm
Number
Web
Confirm
Number Authorized Caller Amount
3/1/2022 3/1/2022 RD 1698401 1658655 JIE GUO 2,500,000.00 Account Summary
Total Deposit: 2,500,000.00 Beginning Balance: 50,519,980.19 Total Withdrawal: 0.00 Ending Balance: 53,019,980.19
Transaction
Date Tran Category
Tran Type
Description Security Description Quantity Price Principal Interest Total Amount 3/1/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 0.84 1.00000 0.84 - 0.84 3/1/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 4,266.50 1.00000 4,266.50 - 4,266.50 3/8/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 7,112.50 1.00000 7,112.50 - 7,112.50 3/10/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 4,812.50 1.00000 4,812.50 - 4,812.50 3/11/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 4,306.25 1.00000 4,306.25 - 4,306.25 3/15/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 75,939.53 1.00000 75,939.53 - 75,939.533/15/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 7,960.70 1.00000 7,960.70 - 7,960.70 3/15/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 6,787.10 1.00000 6,787.10 - 6,787.10 3/15/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 6,112.93 1.00000 6,112.93 - 6,112.93 3/15/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 7,758.47 1.00000 7,758.47 - 7,758.47 3/15/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 47.33 1.00000 47.33 - 47.333/15/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 47.67 1.00000 47.67 - 47.673/15/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 43.33 1.00000 43.33 - 43.333/15/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 3,373.72 1.00000 3,373.72 - 3,373.72 3/15/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 160.84 1.00000 160.84 - 160.843/15/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 26.25 1.00000 26.25 - 26.253/15/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 12,504.36 1.00000 12,504.36 - 12,504.36 3/15/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 16,168.34 1.00000 16,168.34 - 16,168.343/15/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 25.50 1.00000 25.50 - 25.503/16/2022 Acquisitions Purchase John Deere Owner Trust 2022-A A3 110,000.00 0.99978 109,975.67 - 109,975.67 3/17/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 341.25 1.00000 341.25 - 341.253/18/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 1,481.25 1.00000 1,481.25 - 1,481.25 3/18/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 35.37 1.00000 35.37 - 35.373/19/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 3,750.00 1.00000 3,750.00 - 3,750.00 3/21/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 66.00 1.00000 66.00 - 66.00 3/21/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 23.63 1.00000 23.63 - 23.633/21/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 7,311.24 1.00000 7,311.24 - 7,311.243/21/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 60.71 1.00000 60.71 - 60.713/23/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 1,050.00 1.00000 1,050.00 - 1,050.003/25/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 965.42 1.00000 965.42 - 965.423/25/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 22.00 1.00000 22.00 - 22.003/25/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 1,177.00 1.00000 1,177.00 - 1,177.003/25/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 1,100.00 1.00000 1,100.00 - 1,100.003/25/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 6,023.21 1.00000 6,023.21 - 6,023.213/25/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 77.92 1.00000 77.92 - 77.923/30/2022 Acquisitions Purchase US Treasury Note 425,000.00 0.97586 414,740.23 3,169.89 417,910.123/31/2022 Acquisitions Purchase First American Govt Obligation Fund Class Y 8,843.75 1.00000 8,843.75 - 8,843.753/16/2022 Acquisitions Short Sale First American Govt Obligation Fund Class Y (109,975.67) 1.00000 (109,975.67) - (109,975.67)3/16/2022 Dispositions Closing Purchase First American Govt Obligation Fund Class Y (109,975.67) 1.00000 (109,975.67) - 109,975.673/15/2022 Dispositions Paydown John Deere Owner Trust 2021-A A3 - - - 25.50 (25.50)3/15/2022 Dispositions Paydown John Deere Owner Trust 2021-B A3 - - - 47.67 (47.67)3/15/2022 Dispositions Paydown John Deere Owner Trust 2019-A A3 6,730.15 1.00000 6,730.15 56.95 (6,787.10)3/15/2022 Dispositions Paydown John Deere Owner Trust 2020-A A3 6,036.09 1.00000 6,036.09 76.84 (6,112.93)3/15/2022 Dispositions Paydown Mercedes-Benz Auto Lease Trust 2021-B A3 - - - 43.33 (43.33)3/15/2022 Dispositions Paydown Toyota Auto Receivable Own 2020-A A3 15,898.46 1.00000 15,898.46 269.88 (16,168.34)3/15/2022 Dispositions Paydown Honda Auto Receivables Trust 2022-1 A3 - - - 160.84 (160.84)3/15/2022 Dispositions Paydown Honda Auto Receivables Trust 2019-3 A3 7,869.75 1.00000 7,869.75 90.95 (7,960.70) 3/15/2022 Dispositions Paydown John Deere Owner Trust 2020-B A3 3,354.66 1.00000 3,354.66 19.06 (3,373.72)3/15/2022 Dispositions Paydown Nissan Auto Receivables Owner 2019-C A3 7,620.10 1.00000 7,620.10 138.37 (7,758.47) City of Pico Rivera Portfolio
Chandler Investment Transactions
March 2022
Transaction
Date Tran Category
Tran Type
Description Security Description Quantity Price Principal Interest Total Amount City of Pico Rivera Portfolio
Chandler Investment Transactions
March 2022
3/15/2022 Dispositions Paydown Toyota Auto Receivables 2020-D A3 - - - 26.25 (26.25)3/15/2022 Dispositions Paydown Toyota Auto Receivables Trust 2021-D A3 - - - 47.33 (47.33)3/15/2022 Dispositions Paydown Toyota Auto Receivables Trust 2018-D A3 12,453.00 1.00000 12,453.00 51.36 (12,504.36)3/18/2022 Dispositions Paydown Honda Auto Receivables Trust 2020-3 A3 - - - 35.37 (35.37)3/21/2022 Dispositions Paydown Honda Auto Receivables Trust 2021-4 A3 - - - 66.00 (66.00)3/21/2022 Dispositions Paydown Verizon Owner Trust 2020-B A - - - 60.71 (60.71)3/21/2022 Dispositions Paydown Honda Auto Receivables Trust 2021-1 A3 - - - 23.63 (23.63)3/21/2022 Dispositions Paydown Verizon Owner Trust 2019-C A1A 7,207.88 1.00000 7,207.88 103.36 (7,311.24) 3/25/2022 Dispositions Paydown BMW Vehicle Lease Trust 2021-2 A3 - - - 22.00 (22.00)3/25/2022 Dispositions Paydown FHLMC K721 A2 5,538.40 1.00000 5,538.40 484.81 (6,023.21) 3/25/2022 Dispositions Paydown FHLMC K031 A2 - - - 1,100.00 (1,100.00) 3/25/2022 Dispositions Paydown FHLMC K034 A2 - - - 1,177.00 (1,177.00) 3/25/2022 Dispositions Paydown BMW Vehicle Lease Trust 2022-1 A3 - - - 77.92 (77.92)3/25/2022 Dispositions Paydown FHLMC K032 A2 - - - 965.42 (965.42) 3/15/2022 Dispositions Sale US Treasury Note 75,000.00 1.00676 75,506.84 432.69 (75,939.53) 3/16/2022 Dispositions Sale First American Govt Obligation Fund Class Y 109,975.67 1.00000 109,975.67 - (109,975.67)3/30/2022 Dispositions Sale US Treasury Note 325,000.00 1.00449 326,459.96 2,142.86 (328,602.82)3/30/2022 Dispositions Sale First American Govt Obligation Fund Class Y 89,307.30 1.00000 89,307.30 - (89,307.30) 3/3/2022 Dispositions Security Withdrawal First American Govt Obligation Fund Class Y 2,178.17 1.00000 2,178.17 - (2,178.17) 3/25/2022 Dispositions Security Withdrawal First American Govt Obligation Fund Class Y 216.41 1.00000 216.41 - (216.41) 3/1/2022 Other Transactions Dividend First American Govt Obligation Fund Class Y 29,959.57 0.84 - 0.843/1/2022 Other Transactions Interest JP Morgan Chase & Co Callable Note 2X 3/1/2024 265,000.00 4,266.50 - 4,266.503/8/2022 Other Transactions Interest John Deere Capital Corp Note 275,000.00 2,956.25 - 2,956.253/8/2022 Other Transactions Interest FHLB Note 350,000.00 4,156.25 - 4,156.25 3/10/2022 Other Transactions Interest FHLB Note 350,000.00 4,812.50 - 4,812.503/11/2022 Other Transactions Interest Toronto Dominion Bank Note 265,000.00 4,306.25 - 4,306.253/17/2022 Other Transactions Interest Wal-Mart Stores Callable Note Cont 08/17/2026 65,000.00 341.25 - 341.25 3/18/2022 Other Transactions Interest Charles Schwab Corp Callable Note Cont 2/18/2024 395,000.00 1,481.25 - 1,481.25 3/19/2022 Other Transactions Interest Intl. Bank Recon & Development Note 300,000.00 3,750.00 - 3,750.00 3/23/2022 Other Transactions Interest Inter-American Dev Bank Note 420,000.00 1,050.00 - 1,050.003/31/2022 Other Transactions Interest US Treasury Note 450,000.00 3,656.25 - 3,656.253/31/2022 Other Transactions Interest US Treasury Note 700,000.00 1,750.00 - 1,750.003/31/2022 Other Transactions Interest US Treasury Note 500,000.00 3,437.50 - 3,437.50 Changes of Market Values and Accrued Interests (375,945.40) Net Investment Transactions $ (306,410.30)
Beginning Balance as of 2/28/2022 26,376,925.04Ending Balance as of 3/31/2022 $ 26,070,514.74 To: Chairman and Directors
From: Executive Director
Meeting Date: April 26, 2022
Subject: APPROVAL OF THE FORGIVENESS OF A DEBT OWING
TO THE SUCCESSOR AGENCY FROM SEQUOYAH
HOLDINGS, LLC
Recommendation:
1. Approve a resolution of the Successor Agency to the Pico Rivera Redevelopment Agency (Successor Agency) approving the forgiveness of a debt owing to the Successor Agency from Sequoyah Holdings, LLC.
Fiscal Impact:
The Successor Agency’s receivables will be reduced by $315,686. It is important to note that the Successor Agency’s receivables may only be used for the payment of approved enforceable obligations or deposited into the Redevelopment Property Tax Trust Fund that is distributed to all taxing entities within the tax rate area. There is no negative impact to the City’s General Fund with the forgiveness of this debt.
Discussion:
The Successor Agency is proposing the full discharge and forgiveness of two (2) consolidated loans (Redevelopment Loans) that were issued by the former City of Pico Rivera Redevelopment Agency (Former Agency) to Sequoyah Holdings, LLC, the owners and operators of the Dal Rae Restaurant (Dal Rae), which were secured via a Deed of Trust on January 11, 2000. The loans were in the amount of $250,000 and $185,000, respectively. The remaining balance of the loans is $315,686 of the initial $435,000 Redevelopment Loans.
The Dal Rae has operated in the City for more than 60 years and is a Los Angeles Landmark that is a known destination restaurant for diners wanting an excellent meeting place between Los Angeles and Orange County. The Restaurant offers direct and indirect economic benefits to residents and businesses in the City. The Former Agency issued the Redevelopment Loans to provide assistance to the property owners and for building upgrades and improvements.
CITY COUNCIL AGENDA REPORT – MEETING OF APRIL 26, 2022
APPROVAL OF THE FORGIVENESS OF A DEBT OWING TO THE SUCCESSOR
AGENCY FROM SEQUOYAH HOLDINGS, LLC