31 under Prop 8 have declined to a level of insignificance and they are not expected to increase to any noticeable degree. The Successor Agency has not included any estimate of revaluation of Prop 8 reduced properties in its projections of Tax Revenues in this Official Statement.
Assessed Valuation Appeals
Pursuant to California law, property owners may apply for a reduction of their property tax assessment by filing a written application, in form prescribed by the State Board of Equalization, with the appropriate county board of equalization or assessment appeals board.
After the applicant and the assessor have presented their arguments, the Appeals Board makes a final decision on the proper assessed value. The Appeals Board may rule in the assessor’s favor, in the applicant’s favor, or the Board may set their own opinion of the proper assessed value, which may be more or less than either the assessor’s opinion or the applicant’s opinion. Any reduction in the assessment ultimately granted applies to the year for which application is made and during which the written application was filed. The assessed value may be increased to its pre reduction level for fiscal years following the year for which the reduction application is filed if the real estate market recovers.
Appeals for reduction in the “base year” value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter. The base year is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date.
Most of the appeals filed in the Project Area are based on Section 51 of the Revenue and Taxation Code which requires that for each lien date the value of real property shall be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. Significant reductions have taken place in some counties due to declining real estate values. Reductions made under this code section may be initiated by the County Assessor or requested by the property owner. After a roll reduction is granted under this section, the property is reviewed on an annual basis to determine its full cash value and the valuation is adjusted accordingly. This may result in further reductions or in value increases. Such increases must be in accordance with the full cash value of the property and it may exceed the maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA.
According to the Fiscal Consultant, as of July 2, 2024, there are currently 344 pending appeals within the Project Area. In order to estimate the potential reduction in assessed value that may occur as a result of these pending appeals, the Fiscal Consultant reviewed the historical averages for the number of appeals allowed and the amount of assessed value removed and then applied those averages to the currently pending appeals and estimated the number of pending appeals that may be allowed and the amount of assessed value that may be removed as a result of the pending appeals.
Eight of the Project Area’s top taxpayers have pending appeals of their assessed value. Rancho Mall LLC, BTC III Arrow Route CC LP, Solamonte Owner LLC, GSIC III Cucamonga Owner, Homecoming I at the Resort LLC, Frito Lay Inc., Schlosser Forge Company, and Ironwood North GW LLC all have assessment appeals pending. The estimated impact of value losses resulting from these pending appeals has been incorporated into projections of Tax Revenues in this Official Statement. See “ESTIMATED REVENUES AND BOND RETIREMENT,” herein. Table 4 below shows the pending assessment appeals by the Project Area’s largest taxpayers.
32 TABLE 4
SUCCESSOR AGENCY TO THE
RANCHO CUCAMONGA REDEVELOPMENT AGENCY
Rancho Redevelopment Project Area
Pending Assessment Appeals by Largest Taxpayers
Taxpayer
Fiscal Year
of
Appeal
No. of
Parcels
Under
Appeal
Value Under
Appeal
Owner
Opinion of
Value
Maximum
Potential
Value
Reduction
Rancho Mall LLC 2022-23 1 $ 20,497,982 $ 16,000,000 $ 4,497,982 Rancho Mall LLC 2023-24 1 20,907,942 14,000,000 6,907,942 BTC III Arrow Route CC LP 2023-24 1 100,021,200 69,845,440 30,175,760 Solamonte Owner LLC 2023-24 1 229,561,200 114,780,600 114,780,600 GSIC II Cucamonga Owner LP 2023-24 2 220,660,000 166,000,000 54,660,000 Homecoming I at the Resort LLC 2023-24 4 111,780,103 96,536,948 15,243,155 Frito Lay Inc. 2022-23 1 119,593,512 103,867,627 15,725,885 Frito Lay Inc. 2023-24 1 140,684,123 70,342,061 70,342,062 Schlosser Forge Company 2023-24 1 130,973,324 78,583,995 52,389,329 Ironwood North GW LLC 2023-24 4 164,310,081 82,155,042 82,155,039 _________________________________
Source: San Bernardino County Assessor; HdL Coren & Cone The following Table 5 shows the amount of assessed value that is presently under appeal within the Project Area and the estimated reduction of value that has been factored into the projections of Tax Revenues in this Official Statement for 2025-26. The assessment appeals data below reflects appeals filed for fiscal years 2019- 20 through 2024-25.
TABLE 5
SUCCESSOR AGENCY TO THE
REDEVELOPMENT AGENCY OF THE CITY OF RANCHO CUCAMONGA
Rancho Redevelopment Project Area
Estimated Appeals Loss
Fiscal Year 2025-26
Total
No. of
Appeals
No. of
Resolved
Appeals
No. of
Successful
Appeals
Average
Reduction
No. of
Appeals
Pending
Value Under
Pending Appeal
Est. No. of
Successful
Appeals
Est. Value
Reduction for
2025-26
344 212 136 15.31% 132 $2,202,771,938 85 $216,392,279
__________________
Sources: San Bernardino County Assessor 2024-25 Combined Tax Rolls & Most Recent Appeals Roll; Rancho Cucamonga Redevelopment Agency and HdL Coren & Cone.
No Teeter Plan
As it relates to the Successor Agency, the County has not adopted the Alternative Method of Distribution of Tax Levies and Collections of Tax Sale Proceeds (the “Teeter Plan”). The Teeter Plan (Section 4701 et seq. of the California Revenue and Taxation Code) allows counties to distribute secured property tax revenue to participating jurisdictions without regard to delinquencies by maintaining a reserve fund to cover delinquencies and allocating revenue to the participating jurisdictions based on the original secured roll, with the County retaining all delinquent tax payments and penalties. Therefore, the Successor Agency is affected by delinquent tax payments. The Successor Agency is unaware of any plans by the County to change the current mechanism, although no assurances can be made.
Annual Tax Collections
The San Bernardino County Auditor-Controller apportions tax revenues to the RPTTF based upon the amount of the tax levy that is received from the taxpayers. Secured collection rates for the Project Area have been
33 consistently high. The following Table 6 illustrates the final tax revenue collections for the previous five fiscal years.
TABLE 6
SUCCESSOR AGENCY TO THE
REDEVELOPMENT AGENCY OF THE CITY OF RANCHO CUCAMONGA
Rancho Redevelopment Project Area
Project Area Property Tax Collections History
Fiscal
Year
Adjusted
Tax Levy
Current Year
Apportioned
Current Year
Collection %
Prior Year
Collections(1)
Total
Apportioned
Total
Collection %
2019-20 $123,370,681 $122,116,816 98.98% $3,324,619 $125,441,435 101.68% 2020-21 127,510,654 132,199,797 103.68 6,750,498 138,950,295 108.97 2021-22 138,417,667 138,237,172 99.87 6,482,956 144,720,128 104.55 2022-23 154,148,272 151,940,659 98.57 7,410,367 159,351,025 103.38 2023-24 164,415,671 164,646,823 100.14 5,674,541 170,321,364 103.59 __________________
(1) Prior Year Collections include Supplemental Revenue, reductions for taxpayer refunds and revenue from prior years.
Sources: San Bernardino County Auditor Controller’s Office and HdL Coren & Cone.
Property Value by Land Use
Taxable values in the Project Area are diversified with residential property values making up approximately 45.6% of all value. Industrial uses account for approximately 29% of the Project Area taxable values and commercial uses account for approximately 15.6%. Another approximately 7.2% of taxable value is contained within the unsecured taxable values. Together, these four land use categories account for approximately
97.3% of all taxable value in the Project Area.
34 The following Table 7 illustrates the land use of property within the entire Project Area and its assessed value.
TABLE 7
SUCCESSOR AGENCY TO THE
RANCHO CUCAMONGA REDEVELOPMENT AGENCY
Rancho Redevelopment Project Area
Land Use Statistics
(Fiscal Year 2024-25)
Land Use No. Parcels Assessed Value Percent of Total
Residential 12,406 $7,833,615,366 45.57%
Commercial 702 2,674,644,407 15.56
Industrial 720 4,981,999,602 28.98
Recreational 7 35,550,979 0.21
Institutional 28 21,506,067 0.13
Government Owned 1 1,695,898 0.01
Miscellaneous 26 75,367,376 0.44
Exempt 1,328 0 0.00
Vacant Land 131 332,662,025 1.94
Subtotal: 15,349 $15,957,041,720 92.82%
SBE Non-unitary
$ 373,306 0.00%
Unsecured 1,234,352,856 7.18
Subtotal: $1,234,726,162 7.18%
Totals: 15,349 $17,191,767,882 100.00%
___________________________
Source: HdL Coren & Cone.
The remaining area within the Project Area generally includes parcels which follow the major east/west arterial of Foothill Boulevard. Land use within this area is largely devoted to commercial and office uses with scattered sites of vacant land.
No Plan Limitations
In 1993, the California Legislature enacted AB 1290. Among the changes to the Redevelopment Law accomplished by AB 1290 was a provision which limits the period of time for incurring and repaying loans, advances, and indebtedness which are payable from tax increment revenues. In general, a redevelopment plan may terminate not more than 40 years following the date of original adoption, and loans, advances, and indebtedness may be repaid during a period extending not more than 10 years following the date of termination of the redevelopment plan.
In compliance with AB 1290, the City adopted Ordinance No. 537, on November 16, 1994, with respect to the Project Area, and enacted the limitations listed below. The Redevelopment Plan was extended an additional year in accordance with Paragraph (D) of Section 33333.6 (e)(2) with the adoption of Ordinance 742 on May 18, 2005, and further extended a year with the adoption of Ordinance 758 on May 3, 2006.
On September 22, 2015, the State Governor signed SB 107. This legislation implemented a number of revisions to the California Health and Safety Code, including an amendment to Section 34189 that impacts the time and tax increment limits of former redevelopment project areas. The legislation eliminated the effectiveness of both annual and cumulative tax increment limits and time limits on repayment of indebtedness for all enforceable obligations (as defined under Health and Safety Code Sections 34171(d)(1) and 34191.4), except in
35 cases where contractual agreements that contain specific terms to terminate payment based on a project area reaching its tax increment and/or time limits. The Auditor-Controller has informed the Fiscal Consultant that, in light of the amended Section 34189, the Auditor-Controller will not limit the amount of tax increment revenue deposited into the RPTTF due to the time limits or due to the annual tax increment limit contained in the Redevelopment Plan. Pursuant to SB 107, Tax Revenues will continue to be allocated from the Project Area until such time as all authorized enforceable obligations, including the Bonds, have been repaid.
36 ESTIMATED REVENUES AND BOND RETIREMENT
The Successor Agency has retained HdL Coren & Cone (the “Fiscal Consultant”) to analyze the Project Area and to project future tax increment revenues for the Project Area. The Fiscal Consultant’s report is included as Appendix A hereto and should be read in its entirety.
The Project Area base year 2007-08 revised assessed valuation is $298,918,011. The assessed valuation for Fiscal Year 2024-25 is $17,191,767,882, which produces a total incremental value of $16,892,849,871. The total tax increment revenues for Fiscal Year 2024-25 are estimated to be approximately $173,297,000 and total Tax Revenues, excluding debt service on the Housing Obligations, are estimated to be approximately $114,899,000. Table 8 sets forth estimated Fiscal Year 2024-25 tax increment revenues, less County collection charges and less payments to certain affected taxing agencies for statutory tax sharing and existing pass-through agreements (not including Pass-Through Agreements with school districts), and Tax Revenues and forecasts growth in tax increment revenues and Tax Revenues through Fiscal Year 2033-34, based upon the following assumptions:
(1) 2024-25 taxable values are as reported by San Bernardino County. (2) Real property consists of land and improvements. Real property values are adjusted for inflation at 2.0% annually. Real property values for Fiscal Year 2025-26 are increased by $103.9 million for verified sales as of January 1, 2024, and decreased by $216.4 million for projected value loss on pending assessment appeals.
(3) Assessed value of personal property is held constant at 2024-25 level. (4) Projected Gross Tax Increment is based upon incremental values factored against the general ley tax rate of $1.00 per $100 of taxable value. (5) Unitary Revenue is actual for 2023-24 and is assumed to remain constant for the life of the plan.
(6) County SB 2557 Administrative charge is estimated at 0.58% of Gross Revenues. (7) County Collection Charge is 0.25% of gross revenue. (8) San Bernardino County receives its share (14.64%) of two percent growth on base year real property value. In addition, the County receives as part of its share a mitigation payment that is derived by calculating the population within the Project Area (66,666) and multiplying that amount by the county-wide per capita service cost for County supplied services ($145.15). The sum of all payments may never exceed the total County share of tax increment revenue. (9) Rancho Cucamonga Library receives tax sharing payments that reflect 1.40% of general levy tax increment revenue for provision of library services. (10) San Bernardino County Flood Control District receives its share (2.76%) of general levy tax increment revenue.
(11) Inland Empire Utilities Agency, formerly the Chino Basin MWD, receives its share (4.40%) of general levy tax increment revenue.
(12) Rancho Cucamonga Fire Protection District share (12.32%) of general levy tax increment revenue is deposited in an agency fund and held for use in capital acquisition expenditures of the Fire Protection District.
37 (13) Due to the amendment of the Redevelopment Plan, taxing entities receive their shares of 25% of tax revenue on incremental value above the year 2004-05 value net of the former Low and Moderate Income Housing Fund. In addition, 11 years after initiation of Tier 1 and using the year 10 value as an adjusted base, Taxing Entities receive 21% of tax revenue on incremental value above the year 10 value net of Housing Set-Aside. A Tier 3 statutory tax sharing payment is provided for in the Redevelopment Law, but is not initiated until the 31st year after the initiation of the tax sharing payments.
Under the Redevelopment Law, the City is considered a taxing entity and may elect to receive its share of the required Tier 1 payments. The City may not, however, receive any share of the Tier 2 and Tier 3 payments. The City has elected to receive its share of all Tier 1 payment amounts. Payments are made only to Taxing Entities with no tax sharing agreements and may be, but have not been, subordinated to debt service on the 2016 Bonds and the Series 2025 Bonds. Statutory tax sharing payments are projected through the last date to receive tax increment revenue.
Actual levels of future tax increment revenues will depend upon the rate of growth in tax increment resulting from new development, change of ownership and inflation, and changes in tax rates, and may differ from the projections presented herein. See the Fiscal Consultant’s Report attached hereto as Appendix A.
38 TABLE 8
SUCCESSOR AGENCY TO THE
RANCHO CUCAMONGA REDEVELOPMENT AGENCY
Estimated Net Tax Increment Revenues Prior to Payment of Housing Obligations Fiscal Years 2024-25 through 2033-34
(In Thousands)
Year
Total
Taxable
Value
Taxable
Value
Over Base
Gross
Tax
Revenue(1)
SB 2557
and
County
Collection
Charges
County
Inflation
and
Mitigation
Payment
County
Flood
Control
Tax
Sharing
City
Library
Tax
Sharing
City Fire
Tax
Sharing
Inland
Empire
Tax
Sharing
Stat.
Tax
Sharing
Tier 1
Stat.
Tax
Sharing
Tier 2
Net
Tax
Revenue
Prior to
Payment of
Housing
Obligations(2)
2024-25 $17,191,768 $16,892,850 $173,297 $(1,438) $(9,079) $(4,783) $(2,426) $(21,342) $(7,629) $(8,195) $(3,506) $114,899 2025-26 17,407,800 17,108,882 175,458 (1,456) (9,620) (4,843) (2,456) (21,608) (7,725) (8,337) (3,607) 115,805 2026-27 17,744,996 17,446,078 178,830 (1,484) (10,194) (4,936) (2,504) (22,023) (7,873) (8,559) (3,765) 117,491 2027-28 18,088,936 17,790,018 182,269 (1,512) (10,801) (5,031) (2,552) (22,447) (8,024) (8,786) (3,927) 119,189 2028-29 18,439,754 18,140,836 185,777 (1,542) (11,445) (5,128) (2,601) (22,879) (8,179) (9,017) (4,091) 120,896 2029-30 18,797,589 18,498,671 189,356 (1,571) (12,127) (5,226) (2,651) (23,319) (8,336) (9,253) (4,259) 122,611 2030-31 19,162,581 18,863,663 193,005 (1,602) (12,850) (5,327) (2,702) (23,769) (8,497) (9,494) (4,431) 124,334 2031-32 19,534,872 19,235,954 196,728 (1,632) (13,615) (5,430) (2,754) (24,227) (8,661) (9,739) (4,606) 126,063 2032-33 19,914,609 19,615,691 200,526 (1,664) (14,427) (5,535) (2,807) (24,695) (8,828) (9,990) (4,784) 127,796 2033-34 20,301,941 20,003,023 204,399 (1,696) (15,287) (5,642) (2,862) (25,172) (8,999) (10,245) (4,966) 129,531 _________________________
(1) See Table 1 in Report of Fiscal Consultant in Appendix A hereto, and discussion under “ESTIMATED REVENUES AND BOND RETIREMENT,” herein. (2) Does not include Housing Obligations; See Tables 10 and 11, below.
Source: San Bernardino County Office of the Assessor; HdL Coren & Cone.
39 The following Table 9 sets forth estimated Fiscal Year 2024-25 tax increment revenues, less County collection charges and less payments to certain affected taxing agencies for statutory tax sharing and existing pass-through agreements (not including Pass-Through Agreements with school districts), and Tax Revenues and forecasts growth in tax increment revenues and Tax Revenues through Fiscal Year 2033-34, in the same manner as Table 8, however, it assumes zero growth.
TABLE 9
SUCCESSOR AGENCY TO THE
RANCHO CUCAMONGA REDEVELOPMENT AGENCY
Estimated Net Tax Increment Revenues Prior to Payment of Housing Obligations Fiscal Years 2024-25 through 2033-34
(In Thousands)*
Year
Total
Taxable
Value
Taxable
Value
Over Base
Gross
Tax
Revenue(1)
SB 2557
and
County
Collection
Charges
County
Inflation
and
Mitigation
Payment
County
Flood
Control
Tax
Sharing
City
Library
Tax
Sharing
City Fire
Tax
Sharing
Inland
Empire
Tax
Sharing
Stat.
Tax
Sharing
Tier 1
Stat.
Tax
Sharing
Tier 2
Net
Tax
Revenue
Prior to
Payment of
Housing
Obligations(2)
2024-25 $17,191,768 $16,892,850 $173,297 $(1,438) $(9,079) $(4,783) $(2,426) $(21,342) ($7,629) $(8,195) $(3,506) $114,899 2025-26 17,079,253 16,780,335 172,172 (1,429) (9,620) (4,752) (2,410) (21,203) (7,580) (8,120) (3,453) 113,604 2026-27 17,079,253 16,780,335 172,172 (1,429) (10,194) (4,752) (2,410) (21,203) (7,580) (8,120) (3,453) 113,031 2027-28 17,079,253 16,780,335 172,172 (1,429) (10,801) (4,752) (2,410) (21,203) (7,580) (8,120) (3,453) 112,423 2028-29 17,079,253 16,780,335 172,172 (1,429) (11,445) (4,752) (2,410) (21,203) (7,580) (8,120) (3,453) 111,780 2029-30 17,079,253 16,780,335 172,172 (1,429) (12,127) (4,752) (2,410) (21,203) (7,580) (8,120) (3,453) 111,098 2030-31 17,079,253 16,780,335 172,172 (1,429) (12,850) (4,752) (2,410) (21,203) (7,580) (8,120) (3,453) 110,375 2031-32 17,079,253 16,780,335 172,172 (1,429) (13,615) (4,752) (2,410) (21,203) (7,580) (8,120) (3,453) 109,609 2032-33 17,079,253 16,780,335 172,172 (1,429) (14,427) (4,752) (2,410) (21,203) (7,580) (8,120) (3,453) 108,797 2033-34 17,079,253 16,780,335 172,172 (1,429) (15,287) (4,752) (2,410) (21,203) (7,580) (8,120) (3,453) 107,937 _________________________
* Assumes zero growth.
(1) See Table 1 in Report of Fiscal Consultant in Appendix A hereto, and discussion under “ESTIMATED REVENUES AND BOND RETIREMENT,” herein. (2) Does not include Housing Obligations; See Table 10, below.
Source: San Bernardino County Office of the Assessor; HdL Coren & Cone.
40 The following Table 10 shows a projection of the amounts allocable to pay the Housing Obligations from the money that, prior to the Dissolution Act, would have been deposited in the Low and Moderate Income Housing Fund. Tax Revenues include the remaining amounts after payment of the Housing Obligations.
TABLE 10
SUCCESSOR AGENCY TO THE
RANCHO CUCAMONGA REDEVELOPMENT AGENCY
Estimated Remaining Housing Tax Revenues
Fiscal Years 2024-25 through 2033-34
(in thousands)
Housing Obligations
Year(1)
Former
Housing
Set Aside(2)
Less
2007B
Housing
Bond
Debt
Service(3)
Less
Pacific
Life Loan
Payments(4)
Less
Housing
Pledge
Agreement
Payments(5)
Total
Housing
Obligations
Remaining
after
Housing
Obligations
2025 $20,596 $ 6,301 $1,400 $ 339 $8,040 $12,556
2026 20,746 6,303 700 339 7,342 13,404
2027 21,033 10,111 - - 10,111 10,923
2028 21,322 10,115 - - 10,115 11,208
2029 21,612 10,113 - - 10,113 11,500
2030 21,903 10,112 - - 10,112 11,791
2031 22,194 207 - - 207 21,987
2032 22,485 - - - - 22,485
2033 22,775 - - - - 22,776
2034 23,066 - - - - 23,066
TOTALS(6) $53,262 $2,100 $678 $56,040
_________________________
(1) Represents tax revenues for fiscal years and debt payments for bond years ending September 1 of each year. (2) Represents 20% of the Gross Tax Revenue shown in Table 8. (3) Payments are due on March 1 and September 1 through the September 1, 2034 final maturity. Annual payment shown above represent bond years ending September 1.
(4) Payments are due each March 20 and September 20 through the March 20, 2026 final maturity. Annual payments are aligned to match bond years ending September 1.
(5) Payments are due each March 1 and September 1 through the September 1, 2026 final maturity. Annual payments shown above align to bond years ending September 1.
(6) Numbers may not add due to rounding.
Source: San Bernardino County Office of the Assessor; HdL Coren & Cone.
41 The following Table 11 projects debt service coverage for the 2016 Bonds and the Series 2025 Bonds showing only projected Tax Revenue.
TABLE 11
SUCCESSOR AGENCY TO THE
RANCHO CUCAMONGA REDEVELOPMENT AGENCY
Estimated Debt Service Coverage
Fiscal Years 2024-25 through 2033-34
(In Thousands)
Bond Year
(as of
September 1
Net Tax
Revenues
Prior to
Payment of
Housing
Obligations(1)
Less
Housing
Obligations(2)
Estimated
Tax
Revenues
2016
Bonds
Debt
Service
2025
Bonds
Debt
Service*
Total
Debt
Service(3)
Estimated
Aggregate
Tax
Revenue
Coverage*
2025 $114,899 $(8,040) $106,859 $3,905 $14,944 $18,849 5.67x 2026 115,805 (7,342) 108,463 3,902 13,663 17,565 6.18
2027 117,491 (10,111) 107,381 1,513 13,662 15,175 7.08
2028 119,189 (10,115) 109,074 1,513 13,662 15,175 7.19
2029 120,896 (10,113) 110,783 1,513 13,662 15,175 7.30
2030 122,611 (10,112) 112,499 1,513 13,660 15,173 7.41
2031 124,334 (207) 124,127 10,293 13,660 23,953 5.18
2032 126,063 0 126,063 10,467 13,661 24,128 5.22
2033 127,796 0 127,796 10,464 10,464 12.21
2034 129,531 0 129,531 10,462 10,462 12.38
_________________________
* Preliminary; subject to change.
(1) See Table 8 for the calculation of net tax revenues prior to payment of Housing Obligations; payable from former housing set-aside on a basis senior to the Bonds.
(2) See Table 10 for details on the Housing Obligations. (3) Assumes refunding of 2014 Bonds.
Source: San Bernardino County Office of the Assessor; HdL Coren & Cone.
42 BOND OWNERS’ RISKS
The following factors, along with all other information in this Official Statement, should be considered by potential investors in evaluating the Bonds and the credit quality of the Bonds. The following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to investing 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. For a discussion of certain matters that will or could cause reductions in the Tax Revenues available in future years, see “LIMITATIONS ON TAX REVENUES” of this Official Statement.
Limited Special Obligations
The Bonds will be special obligations of the Successor Agency, payable from and secured as to the payment of the principal thereof and the redemption premium, if any, and the interest thereon in accordance with their terms and the terms of the Indenture. Neither the State nor any public agency (other than the Successor Agency) is obligated to pay the principal of or redemption premium, if any, or interest on the Bonds, and neither the faith and credit nor the taxing power of the State or any public agency thereof is pledged to the payment of the principal of or redemption premium, if any, or interest on the Bonds. The payment of the principal of or redemption premium, if any, or interest on the Bonds does not constitute a debt, liability or obligation of the State or any public agency (other than the Successor Agency).
Recognized Obligation Payment Schedule
The Dissolution Act provides that only those payments listed in a Recognized Obligation Payment Schedule may be made by the Successor Agency from the funds specified in the Recognized Obligation Payment Schedule. The Dissolution Act requires the Successor Agency to prepare and submit to the Successor Agency’s Oversight Board and the State Department of Finance for approval by February 1 of each year, a Recognized Obligation Payment Schedule pursuant to which enforceable obligations (as defined in the Dissolution Act) of the Successor Agency are listed, together with the source of funds to be used to pay for each enforceable obligation.
Tax Revenues will not be withdrawn from the Redevelopment Property Tax Trust Fund by the County Auditor- Controller and remitted to the Successor Agency without a Recognized Obligation Payment Schedule approved by the State Department of Finance. See “SECURITY FOR THE BONDS – Recognized Obligation Payment Schedule.” If the Successor Agency were to fail to complete an approved Recognized Obligation Payment Schedule, the availability of Tax Revenues to the Successor Agency could be adversely affected for such period.
If a successor agency fails to submit to the State Department of Finance an oversight board-approved Recognized Obligation Payment Schedule complying with the provisions of the Dissolution Act within five business days of the date upon which the Recognized Obligation Payment Schedule is to be used to determine the amount of property tax allocations, the State Department of Finance may determine if any amount should be withheld by the applicable county auditor-controller for payments for enforceable obligations from distribution to taxing entities pursuant to clause (iv) in the following paragraph, pending approval of a Recognized Obligation Payment Schedule. Upon notice provided by the State Department of Finance to the county auditor-controller of an amount to be withheld from allocations to taxing entities, the county auditor-controller must distribute to taxing entities any monies in the Redevelopment Property Tax Trust Fund in excess of the withholding amount set forth in the notice, and the county auditor-controller must distribute withheld funds to the successor agency only in accordance with a Recognized Obligation Payment Schedule when and as approved by the State Department of Finance
Typically, under the Redevelopment Property Tax Trust Fund distribution provisions of the Dissolution Act, the County Auditor-Controller is to distribute funds for each six-month period in the following order specified in Section 34183 of the Dissolution Act: (i) first, subject to certain adjustments for subordinations to the extent permitted under the Dissolution Act (as described above under “SECURITY FOR THE BONDS – Pledge of Tax Revenues”) and no later than each January 2 and June 1, to each local agency and school entity, to the extent applicable, amounts required for pass-through payments such entity would have received under provisions of the Redevelopment Law, as those provisions read on January 1, 2011; (ii) second, on each January 2 and June 1, to a successor agency for payments listed in its Recognized Obligation Payment Schedule, with debt service payments
43 scheduled to be made for tax allocation bonds having the highest priority over payments scheduled for other debts and obligations listed on the Recognized Obligation Payment Schedule; (iii) third, on each January 2 and June 1, to a successor agency for the administrative cost allowance, as defined in the Dissolution Act; and (iv) fourth, on each January 2 and June 1, to taxing entities any moneys remaining in its Redevelopment Property Tax Trust Fund after the payments and transfers authorized by clauses (i) through (iii), in an amount proportionate to such taxing entity’s share of property tax revenues in the tax rate area in that fiscal year (without giving effect to any pass- through obligations that were established under the Redevelopment Law).
If the Successor Agency does not submit an Oversight-Board approved Recognized Obligation Payment Schedule within five business days of the date upon which the Recognized Obligation Payment Schedule is to be used to determine the amount of property tax allocations and the State Department of Finance does not provide a notice to the County Auditor-Controller to withhold funds from distribution to taxing entities, amounts in the Redevelopment Property Tax Trust Fund for such six-month period would be distributed to taxing entities pursuant to clause (iv) above. The Successor Agency, however, has covenanted in the Indenture to take all actions required under the Dissolution Act to include scheduled debt service on the Bonds or required under the Indenture to replenish the Reserve Account, in Recognized Obligation Payment Schedules to enable the County Auditor- Controller to distribute from the Redevelopment Property Tax Trust Fund to the Successor Agency’s Redevelopment Obligation Retirement Fund on each January 2 and June 1 amounts required for the Successor Agency to pay principal of, and interest on, the Bonds coming due in the respective six-month period, including listing a reserve on the Recognized Obligation Payment Schedule to the extent required by the Indenture or when the next property tax allocation is projected to be insufficient to pay all obligations due under the provisions of the Bonds for the next payment due in the following six-month period.
AB 1484 also added provisions to the Dissolution Act implementing certain penalties in the event the Successor Agency does not timely submit a Recognized Obligation Payment Schedule. If the Successor Agency does not submit an Oversight Board-approved Recognized Obligation Payment Schedule, the County will be subject to a civil penalty equal to $10,000 per day for every day the schedule is not submitted to the State Department of Finance. Additionally, the Successor Agency’s administrative cost allowance is reduced by 25% if the Successor Agency does not submit an Oversight Board-approved Recognized Obligation Payment Schedule.
Commencing on February 1, 2016, pursuant to SB 107 successor agencies were transitioned to an annual Recognized Obligation Payment Schedule process pursuant to which successor agencies are required to file Recognized Obligation Payment Schedules with the State Department of Finance and the County Auditor- Controller for approval each February 1 for the July 1 through June 30 period immediately following such February 1, commencing with the July 1, 2016 through June 30, 2017 period.
Commencing September 22, 2015, successor agencies which received a Finding of Completion and the concurrence of the State Department of Finance as to the items that qualify for payment, among other conditions, may, at their option, file a “Last and Final” Recognized Obligation Payment Schedule. If approved by the State Department of Finance the Last and Final Recognized Obligation Payment Schedule will be binding on all parties, and the Successor Agency will no longer submit a Recognized Obligation Payment Schedule to the State Department of Finance or the Oversight Board. The County Auditor-Controller will remit the authorized funds to the Successor Agency in accordance with the approved Last and Final Recognized Obligation Payment Schedule until each remaining enforceable obligation has been fully paid. A Last and Final Recognized Obligation Payment Schedule may only be amended twice, and only with approval of the State Department of Finance and the County Auditor-Controller. The Successor Agency has not submitted a Last and Final Recognized Obligation Payment Schedule and does not currently plan to file a Last and Final Recognized Obligation Payment Schedule.
Challenges to Dissolution Act
Several successor agencies, cities and other entities have filed judicial actions challenging the legality of various provisions of the Dissolution Act. One such challenge is an action filed on August 1, 2012, by Syncora Guarantee Inc. and Syncora Capital Assurance Inc. (collectively, “Syncora”) against the State, the State Controller, the State Director of Finance, and the Auditor-Controller of San Bernardino County on his own behalf and as the representative of all other County Auditors in the State (Superior Court of the State of California,
44 County of Sacramento, Case No. 34-2012-80001215). Syncora are monoline financial guaranty insurers domiciled in the State of New York, and as such, provide credit enhancement on bonds issued by state and local governments and do not sell other kinds of insurance such as life, health, or property insurance. Syncora provided bond insurance and other related insurance policies for bonds issued by former California redevelopment agencies.
The complaint alleged that the Dissolution Act, and specifically the “Redistribution Provisions” thereof (i.e., California Health and Safety Code Sections 34172(d), 34174, 34177(d), 34183(a)(4), and 34188) violate the “contract clauses” of the United States and California Constitutions (U.S. Const. art. 1, § 10, cl.1; Cal. Const. art. 1, § 9) because they unconstitutionally impair the contracts among the former redevelopment agencies, bondholders and Syncora. The complaint also alleged that the Redistribution Provisions violate the “Takings Clauses” of the United States and California Constitutions (U.S. Const. amend. V; Cal Const. art. 1 § 19) because they unconstitutionally take and appropriate bondholders’ and Syncora’s contractual right to critical security mechanisms without just compensation.
After hearing by the Sacramento County Superior Court on May 3, 2013, the Superior Court ruled that Syncora’s constitutional claims based on contractual impairment were premature. The Superior Court also held that Syncora’s takings claims, to the extent based on the same arguments, were also premature. Pursuant to a Judgment stipulated to by the parties, the Superior Court on October 3, 2013, entered its order dismissing the action. The Judgment, however, provides that Syncora preserves its rights to reassert its challenges to the Dissolution Act in the future. The Successor Agency does not guarantee that any reassertion of challenges by Syncora or that the final results of any of the judicial actions brought by others challenging the Dissolution Act will not result in an outcome that may have a material adverse effect on the Successor Agency’s ability to timely pay debt service on the Bonds.
Reduction in Taxable Value
Tax increment revenues allocated to the Successor Agency are determined by the amount of incremental taxable value in the Project Area allocable to the Project Area and the current rate or rates at which property in the Project Area is taxed. The reduction of taxable values of property caused by economic factors beyond the Successor Agency’s control, such as a relocation out of the Project Area by one or more major property owners, or the transfer, pursuant to California Revenue and Taxation Code Section 68, of a lower assessed valuation to property within the Project Area by a person displaced by eminent domain or similar proceedings, or the discovery of hazardous substances on a property within the Project Area (see “Hazardous Substances,” below) or the complete or partial destruction of such property caused by, among other eventualities, an earthquake (see “Earthquake,” below), flood or other natural disaster, could cause a reduction in the Tax Revenues securing the Bonds. Property owners may also appeal to the County Assessor for a reduction of their assessed valuations or the County Assessor could order a blanket reduction in assessed valuations based on then current economic conditions. See “APPENDIX A – Report of Fiscal Consultant - Assessment Appeals.” Any such reductions of assessed valuations and the resulting decline in tax increment revenues could have an adverse effect on the Successor Agency’s ability to make timely payments of principal of and interest on the Bonds, which could reduce revenues available to pay debt service on the Bonds.
Risks of Real Estate Secured Investments Generally
The Owners and Beneficial Owners of the Bonds will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (a) adverse changes in local market conditions, such as changes in the market value of real property within and in the vicinity of the respective project areas, the supply of or demand for competitive properties in such project areas, and the market value of competitive properties in the event of sale or foreclosure, (b) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies, and (c) natural disasters (including, without limitation, earthquakes, fires, droughts and floods), which may result in uninsured losses.
45 [Debt Service Reserve Policy Risk Factors
The Reserve Requirement for the Series 2025 Bonds will be satisfied by the delivery of the Reserve Policy by the Insurer on the Closing Date. The amounts available under the Reserve Policy shall be used and withdrawn by the Trustee solely for the purpose of making transfers in the event of any deficiency at any time in any of such account with respect to the payment of debt service on the Series 2025 Bonds. The Successor Agency has no obligation to replace the Reserve Policy or to fund the Reserve Subaccount with cash if, at any time that the Series 2025 Bonds are Outstanding, any rating assigned to the Insurer is downgraded, suspended or withdrawn or amount are not available under the Reserve Policy, other than in connection with a draw thereon.
The obligations of the Insurer under the Reserve Policy are contractual obligations and in an event of default by the Insurer, the remedies available may be limited by applicable bankruptcy law or state law related to insolvency of insurance companies.
Neither the Successor Agency nor the Underwriter have made independent investigation into the claims paying ability of the Insurer and no assurance or representation regarding the financial strength or projected financial strength of the Insurer is given. Thus, when making an investment decision, potential investors should carefully consider the ability of the Successor Agency to pay principal and interest on the Series 2025 Bonds and the claims paying ability of the Insurer, particularly over the life of the investment.] Reduction in Inflationary Rate and Changes in Legislation As described in greater detail below (see “LIMITATIONS ON TAX REVENUES”), Article XIIIA of the California Constitution provides that the full cash value base of real property used in determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data. Such measure is computed on a calendar year basis. Article XIIIA limits inflationary assessed value adjustments to the lesser of the actual inflationary rate or 2% and there have been several years in which taxable values were adjusted by an actual inflationary rate that was less than 2%. The adjusted inflationary rate for fiscal year 2023-24 is 2.00%.
The Successor Agency is unable to predict whether future annual inflationary adjustments to the taxable value base of real property within the Project Area will be in the amount of the full 2% permitted under Article XIIIA or will be in an amount less than 2%. The projections assume a growth rate of 2%, however, the growth rate may be lower.
Change in Law
In addition to the other limitations on Tax Revenues, the California electorate or Legislature could adopt a constitutional or legislative property tax decrease with the effect of reducing Tax Revenues payable to the Successor Agency. There is no assurance that the California electorate or Legislature will not at some future time approve additional limitations that could reduce the Tax Revenues and adversely affect the security of the Bonds.
By way of example of two recent failed tax initiatives, an initiative measure (the “Split Roll Initiative”) to amend Article XIIIA qualified for the State’s November 2020 ballot but was defeated at the polls. If adopted, the Split Roll Initiative would have based property taxes for commercial and industrial properties on market values beginning in tax year 2020-21. Nearly a year later, another initiative proposal, the “Housing Affordability and Tax Cut Act of 2022,” would have taxed tax many types of California properties, including commercial properties, residential properties, industrial properties, mixed-use properties and vacant land with a full cash value of more than $4 million. Effectively, it would have dismantled Proposition 13’s property tax safeguards. Proponents had until the end of April 2022 to gather the required number of signatures, but failed to do so. The Successor Agency is unable to predict how any similar initiative, if adopted, would affect the relationship of the assessed value between land use types (i.e., residential versus commercial) in the Project Area or what other impacts such an Initiative might have on the local economy or the Tax Revenues.
46 Availability of Property and Casualty Insurance
On May 26, 2023, in relation to California, State Farm General Insurance Company (“State Farm”) announced that it would cease accepting certain new applications, including all business and personal lines property and casualty insurance, effective May 27, 2023. State Farm indicated in its release that the decision was due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market. State Farm indicated it would work constructively with the California Department of Insurance and State policy makers to help build market capacity in California. It was taking this action, however, to improve the company’s financial strength and would continue to evaluate its approach based on changing market conditions. State Farm independent contractor agents licensed and authorized in California continue to serve existing customers for these products and new customers for products not impacted by the decision. Any adverse impact of the foregoing on property values in the Project Area and the real estate market in general cannot be predicted.
Bankruptcy of Landowners
The bankruptcy of a major assessee in the Project Area could delay and/or impair the collection of property taxes by the County with respect to properties in the bankruptcy estate. Although the Successor Agency is not aware of any major property owners in the Project Area that are in bankruptcy or threatening to declare bankruptcy, the Successor Agency cannot predict the effects on the collections of Tax Revenues if such an event were to occur.
Earthquake and Other Natural Calamities
There are several earthquake faults in the Rancho Cucamonga area that potentially could result in damage to buildings, roads, bridges, and property within the Project Area in the event of an earthquake. Past experiences, including the July 1992, Landers 7.5 and Big Bear 6.6 Richter Scale earthquakes, have not resulted in damage to infrastructure or property in Rancho Cucamonga. One fault that could affect the Project Area is the San Andreas Fault, which is located approximately 20 miles northeast of the City. The Cucamonga Fault lies at the north end of territory recently annexed to the City and the Etiwanda Fault (also known as the Red Hill Fault) lies within the City boundaries.
If an earthquake were to substantially damage or destroy taxable property within the Project Area, the assessed valuation of such property would be reduced. Such a reduction of assessed valuations could result in a reduction of the Tax Revenues that secure the Bonds, which in turn could impair the ability of the Successor Agency to make payments of principal of and/or interest on the Bonds when due.
The City is exposed to wildfire hazard conditions. The portions of the City and Project Area have been designated a high fire hazard area by the State. The areas surrounding the City to the north have experienced wildfires in the past 10 years, the most significant being the Etiwanda Fire in April 2014 which burned over 2,100 acres of open space and destroyed one structure. Currently, fire hazard severity is a function of fuel conditions, historic climate, wind conditions, and topography. Population density or the number of structures in a particular region are not currently used to determine the fire hazard severity for a particular region. The fact that an area is in a low to moderate hazard area does not mean it cannot experience a damaging fire; it means only that the probability is reduced, generally because the number of days a year that the area has “fire weather” is less.
Additionally, portions of the Project Area are located in a 100-year flood plain.
From time to time, the region is subject to other natural calamities which could adversely affect economic activity in the City, and which could have a negative impact on the general economy and the values of properties in the Project Area. There can be no assurance that the occurrence of any natural calamity, such as earthquake, flooding or wildfire, would not cause substantial reduction in the assessed valuations of properties in the Project Area. Such a reduction of assessed valuations could result in a reduction of the Tax Revenues that secure the Bonds.
47 Concentration of Property Ownership
Based on Fiscal Year 2024-25 locally assessed taxable valuations, the top eleven taxable property owners in the Project Area represent approximately 16.74% of the total Fiscal Year 2024-25 taxable value and approximately 17.04% of the incremental value. Although the bankruptcy, termination of operations or departure from the Project Area by one of the largest property owners from the Project Area could adversely impact the availability of Tax Revenues to pay debt service on the Bonds, the Successor Agency believes any such adverse impact is unlikely in light of debt service coverage.
Levy and Collection of Taxes
The Successor Agency has no independent power to levy and collect property taxes. Any reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the Tax Revenues and, accordingly, could have an adverse impact on the ability of the Successor Agency to make debt service payments on the Bonds. Likewise, delinquencies in the payment of property taxes could have an adverse effect on the Successor Agency’s ability to make timely debt service payments on the Bonds.
Estimated Revenues
In estimating that Tax Revenues will be sufficient to pay debt service on the Bonds, the Successor Agency has made certain assumptions with regard to present and future assessed valuation in the Project Area, future tax rates and percentage of taxes collected. The Successor Agency believes these assumptions to be reasonable, but there is no assurance these assumptions will be realized and to the extent that the assessed valuation and the tax rates are less than expected, the Tax Revenues available to pay debt service on the Bonds will be less than those projected and such reduced Tax Revenues may be insufficient to provide for the payment of principal of, premium (if any) and interest on the Bonds.
Hazardous Substances
An additional environmental condition that may result in the reduction in the assessed value of property would be the discovery of a hazardous substance that would limit the beneficial use of taxable property within the Project Area. 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 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 Project Area be affected by a hazardous substance, could be to reduce the marketability and value of the property by the costs of remedying the condition.
Direct and Overlapping Indebtedness
The ability of land owners within the respective project area to pay property tax installments as they come due could be affected by the existence of other taxes and assessments, imposed upon the land. In addition, other public agencies whose boundaries overlap those of the respective project area could, without consent of the Successor Agency, and in certain cases without the consent of the owners of the land within the Project Area, impose additional taxes or assessment liens on the property to finance public improvements.
Future Legislation and Initiatives
Article XIIIA, Article XIIIB and Proposition 218 were each adopted as measures that qualified for the ballot pursuant to California’s initiative process. From time to time other initiative measures could be adopted, further affecting revenues of the Successor Agency or the Successor Agency’s ability to expend revenues. In addition, the California electorate or Legislature could adopt future limitations with the effect of reducing Tax Revenues payable to the Successor Agency. The nature and impact of any such measure cannot currently be anticipated.
48 Assessment Appeals
Property taxable values may be reduced as a result of a successful appeal of the taxable value determined by the County Assessor. An appeal may result in a reduction to the County Assessor’s original taxable value and a tax refund to the applicant property owner. A reduction in taxable values within the Project Area and the refund of taxes which may arise out of successful appeals by property owners will affect the amount of Tax Revenues.
The Successor Agency has in the past experienced reductions in its tax increment revenues as a result of assessment appeals. The actual impact to tax increment is dependent upon the actual revised value of assessments resulting from values determined by the County Assessment Appeals Board or through litigation and the ultimate timing of successful appeals. For a discussion of historical assessment appeals in the Project Area and summary information regarding pending and resolved assessment appeals for the Successor Agency, see Appendix A - Fiscal Consultant’s Report.
Economic Risks
The Successor Agency’s ability to make payments on the respective Bonds will be partially dependent upon the economic strength of the Project Area. If there is a decline in the general economy of the Project Area, the owners of property may be less able or less willing to make timely payments of property taxes causing a delay or stoppage of tax increment revenues. In the event of decreased values, Tax Revenues may decline even if property owners make timely payment of taxes.
Investment Risk
Funds held under the Indenture are required to be invested in Permitted Investments as provided under the Indenture. See APPENDIX A attached hereto for a summary of the definition of Permitted Investments. The funds and accounts of the Successor Agency, into which a portion of the proceeds of the Bonds will be deposited and into which Tax Revenues are deposited, may be invested by the Successor Agency in any investment authorized by law. All investments, including the Permitted Investments and those authorized by law from time to time for investments by municipalities, contain a certain degree of risk. Such risks include, but are not limited to, a lower rate of return than expected and loss or delayed receipt of principal.
Further, the Successor Agency cannot predict the effects on the receipt of Tax Revenues if the County were to suffer significant losses in its portfolio of investments or if the County or the City were to become insolvent or declare bankruptcy. See “BONDOWNER’S RISKS – Bankruptcy.” Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds, or, if a secondary market exists, that the Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances.
Bankruptcy
The rights of the Owners of the Bonds may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights under currently existing law or laws enacted in the future and may also be subject to the exercise of judicial discretion under certain circumstances. The opinions of Bond Counsel as to the enforceability of the obligation to make payments on the Bonds will be qualified as to bankruptcy and such other legal events. See “APPENDIX F – Form of Opinion of Bond Counsel.” Loss of Tax Exemption
As discussed under the caption “OTHER INFORMATION – Tax Matters,” the interest on the Bonds could become includable in gross income for federal income tax purposes retroactive to the date of issuance of
49 the Bonds as the result of a failure of the Successor Agency to comply with certain provisions of the Tax Code.
Should such an event of taxability occur, such Bonds are not subject to early redemption and will remain outstanding to maturity or until redeemed under the redemption provisions of the Indenture.
Federal Tax-Exempt Status of the Bonds
The Tax Code imposes a number of requirements that must be satisfied for interest on state and local obligations, such as the Bonds, to be excludable from gross income for federal income tax purposes. These requirements include limitations on the use of Bond proceeds, limitations on the investment earnings on Bonds proceeds prior to expenditure, a requirement that certain investment earnings on the Bond proceeds be paid periodically to the United States and a requirement that the issuers file an information report with the Internal Revenue Service (the “IRS”). The Successor Agency has covenanted in certain of the documents referred to herein that they will comply with such requirements. Failure to comply with the requirements stated in the Code and related regulations, rulings and policies may result in the treatment of interest on the Bonds as taxable, retroactively to the date of issuance of such Bonds.
IRS Audit of Tax-Exempt Issues
The IRS has a program for the auditing of tax-exempt issues, including both random and targeted audits.
It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an audit of similar obligations).
Cybersecurity
The City, like many other public and private entities, relies on a large and complex technology environment to conduct its operations. As a recipient and provider of personal, private, or sensitive information, the City is subject to cyber threats including, but not limited to: hacking, malware, social engineering, and other attacks on its computer systems and sensitive digital networks. No assurance can be given that the City’s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City or the Successor Agency, or the administration of the Bonds. The Successor Agency is also reliant on other entities and service providers in connection with the administration of the Bonds, including without limitation on the County Tax Collector for the levy and collection of Tax Revenues, the County Auditor-Controller for the submission of the ROPS, the Trustee, and the Dissemination Agent. No assurance can be given that the City or the Successor Agency and these other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners. In the previous five years, the City has not suffered any material cybersecurity attacks or breaches.
LIMITATIONS ON TAX REVENUES
Property Tax Limitations - Article XIIIA
Article XIIIA of the California Constitution. Section 1(a) of Article XIIIA of the California Constitution limits the maximum ad valorem tax on real property to one percent of full cash value, to be collected by the counties and apportioned according to law. Section 2 of Article XIIIA defines “full cash value” to mean “the county assessor’s valuation of real property as shown on the 1975/76 tax bill under full cash value or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or reduction in the consumer price index or comparable data for the area under taxing jurisdiction or reduced in the event of declining property value caused by substantial damage, destruction or other factors.
Legislation enacted by the California Legislature to implement Article XIIIA provides that notwithstanding any other law, local agencies may not levy any ad valorem property tax except to pay debt service on indebtedness approved by the voters as described above.
In the general elections of 1986, 1988, and 1990, the voters of the State approved various measures which further amended Article XIIIA. One such amendment generally provides that the purchase or transfer of (i) real
50 property between spouses or (ii) the principal residence and the first $1,000,000 of the full cash value of other real property between parents and children, do not constitute a “purchase” or “change of ownership” triggering reassessment under Article XIIIA. This amendment will reduce the tax increment of the Successor Agency. Other amendments permitted the Legislature to allow persons over 55 who sell their residence and on or after November 5, 1986, to buy or build another of equal or lesser value within two years in the same county, to transfer the old residence’s assessed value to the new residence, and permitted the Legislature to authorize each county under certain circumstances to adopt an ordinance making such transfers or assessed value applicable to situations in which the replacement dwelling purchased or constructed after November 8, 1988, is located within that county and the original property is located in another county within California.
In the June 1990 election, the voters of the State approved additional amendments to Article XIIIA permitting the State Legislature to extend the replacement dwelling provisions applicable to persons over 55 to severely disabled homeowners for replacement dwellings purchased or newly constructed on or after June 5, 1990, and to exclude from the definition of “new construction” triggering reassessment improvements to certain dwellings for the purpose of making the dwelling more accessible to severely disabled persons. In the November 1990 election, the voters approved the amendment of Article XIIIA to permit the State Legislature to exclude from the definition of “new construction” seismic retrofitting improvements or improvements utilizing earthquake hazard mitigation technologies constructed or installed in existing buildings after November 6, 1990.
On November 3, 2020, State voters approved Proposition 19, a legislatively referred constitutional amendment (“Proposition 19”), which amended Article XIIIA to (i) expand special rules that give property tax savings to homeowners that are over the age of 55, severely disabled, or whose property has been impacted by wildfire or natural disaster, when they buy a different home; (ii) narrow existing special rules for inherited properties; and (iii) dedicate most of the potential new State revenue generated from Proposition 19 toward fire protection. No assurance can be given as to what effect the implementation of Proposition 19 will have on the future assessed valuation of real property in the Project Area.
These amendments and any future amendments may reduce the tax increment of the Successor Agency.
Both the California Supreme Court and the United States Supreme Court have upheld the constitutionality of Article XIIIA.
Article XIIIB of the California Constitution. On November 6, 1979, California voters approved Proposition 4, the Gann Initiative, which added Article XIIIB to the California Constitution. The principal effect of Article XIIIB is to limit the annual appropriations of the State and any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the government entity.
Appropriations subject to Article XIIIB include generally the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance and disability insurance funds.
Effective September 30, 1980, the California Legislature added Section 33678 to the Redevelopment Law which provides that the allocation of taxes to a redevelopment agency for the purpose of paying principal of, or interest on, loans, advances, or indebtedness will not be deemed the receipt by the agency of proceeds of taxes levied by or on behalf of the agency within the meaning of Article XIIIB or any statutory provision enacted in implementation thereof, including Section 33678 of the Redevelopment Law. The constitutionality of Section 33678 has been upheld by the Second and Fourth District Courts of Appeal in two decisions: Bell Community Redevelopment Agency v. Woosely and Brown v. Community Redevelopment Agency of the City of Santa Ana. On the basis of these decisions, the Successor Agency has not adopted an appropriations limit.
Proposition 218. On November 5, 1996, the voters of the State approved Proposition 218, the “Right to Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which contain a number of provisions affecting the ability of the public agencies to levy and collect both existing and future taxes, assessments, fees and charges.
51 Article XIIIC removes limitations on the initiative power in matters of local taxes, special taxes, assessments, fees and charges. While the matter is not free from doubt, it is likely that a court would hold that the initiative power cannot be used to reduce or repeal the levy of property taxes or to materially affect the collection and pledge of Tax Revenues.
The interpretation and application of the initiative provisions of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed above, and while it is not possible at this time to predict with certainly the outcome of such determination, the Successor Agency does not believe that Proposition 218 will materially affect its ability to pay principal of or interest on the 2016 Bonds or the Series 2025 Bonds.
Implementing Legislation
Legislation enacted by the California Legislature to implement Article XIIIA provides that all taxable property is shown at full assessed value as described above. In conformity with this procedure, all taxable property value is shown at 100% of assessed value and all general tax rates reflect the $1.00 per $100 of taxable value. Tax rates for bond debt service and pension liability are also applied to 100% of assessed value.
Future assessed valuation growth allowed under Article XIIIA (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 in the following year. The Successor Agency is not able to predict the nature or magnitude of future revenue sources which may be provided by the State to replace lost property tax revenues. Article XIIIA effectively prohibits the levying of any other ad valorem property tax above the 1% limit except for taxes to support indebtedness approved by the voters as described above.
Unitary Property
Assembly Bill 2890 (Statutes of 1986, Chapter 1457), which added Section 98.9 to the California Revenue and Taxation Code, provided that, commencing with the Fiscal Year 1988-89, assessed value derived from State- assessed unitary property (consisting mostly of operational property owned by utility companies) was to be allocated county-wide as follows: (i) each tax rate area will receive the same amount from each assessed utility received in the previous fiscal year unless the applicable county-wide values are insufficient to do so, in which case values will be allocated to each tax rate area on a pro rata basis; and (ii) if values to be allocated are greater than in the previous fiscal year, each tax rate area will receive a pro rata share of the increase from each assessed utility according to a specified formula. Additionally, the lien date on State-assessed property was changed from March 1 to January 1.
Assembly Bill 454 (Statutes of 1987, Chapter 921) further modified the distribution of tax revenues derived from property assessed by the State Board of Equalization. Chapter 921 provided for the consolidation of all State-assessed property, except for regulated railroad property, into a single tax rate area in each county.
Chapter 921 further provided for a new method of establishing tax rates on State-assessed property and distribution of property tax revenues derived from State-assessed property to taxing jurisdictions within each county as follows: for revenues generated from the 1% tax rate, each jurisdiction, including redevelopment project areas, will receive a percentage up to 102% of its prior year State-assessed unitary revenue; and if county-wide revenues generated for unitary property are greater than 102% of the previous year’s unitary revenues, each jurisdiction will receive a percentage share of the excess unitary revenue generated from the application of the debt service tax rate to county-wide unitary taxable value, further, each jurisdiction will receive a percentage share of revenue based on the jurisdiction’s annual debt service requirements and the percentage of property taxes received by each jurisdiction from unitary property taxes in accordance with a new formula. Railroads will continue to be assessed and revenues allocated to all tax rate areas where railroad property is sited.
The intent of Chapters 1457 and 921 was to provide redevelopment agencies with their appropriate share of revenue generated from the property assessed by the State Board of Equalization.
52 The Successor Agency has projected the amount of unitary revenues to be allocated for fiscal year 2024- 25 and each fiscal year thereafter within the Project Area based on unitary revenues for fiscal year 2023-24. The Successor Agency cannot predict the effect of any future litigation or settlement agreements on the amount of unitary tax revenues received or to be received nor the impact on unitary property tax revenues of any transfer of electrical transmission lines to tax-exempt agencies.
Tax Increment Limitation; Senate Bill 211
Assembly Bill 1290 (“AB 1290”) was signed into law by the Governor in December 1993 and amends various provisions of the Redevelopment Law. AB 1290 provides for the placement of time limits on the effectiveness of every redevelopment plan, and provides that after 10 years from the termination date of a plan’s effectiveness, no redevelopment agency, subject to certain exceptions, will pay indebtedness or receive property taxes in connection therewith. In addition, in connection with the shift of tax increment revenues, (i) SB 1045 allowed the Former Agency to extend the effective date of the related redevelopment plan, and the date to receive Tax Revenues in the Project Area, by one year, and (ii) SB 1096 allowed the Former Agency to extend the effective date of the related redevelopment plan, and the date to receive Tax Revenues, by two years subject to compliance with major housing requirements. The Former Agency has taken such action with respect to SB 1045, and the projections of Tax Revenues reflect such extensions. Pursuant to the related redevelopment plan, the expiration date of the related redevelopment plan is as described in “THE RANCHO REDEVELOPMENT PROJECT,” herein.
On October 10, 2001 the Governor of the State signed into law Senate Bill 211 (“SB 211”), which allows redevelopment agencies to eliminate or extend the time limits on their ability to incur debt for project areas established prior to January 1, 1994. Additionally, SB 211 allows redevelopment agencies to extend the termination date of their redevelopment plans and the deadline for the receipt of tax increment for the repayment of debt by 10 years for project areas established prior to January 1, 1994. In order to extend the termination of the redevelopment plans or the deadline for the receipt of tax increment for the repayment of debt, the redevelopment agency must make certain findings of blight in the applicable project areas. Additionally, if a redevelopment agency elects to extend the time limits on the incurrence of debt, the termination of the redevelopment plans or the deadline for the receipt of tax increment for the repayment of debt, the redevelopment agency must make certain additional statutory pass-throughs to other taxing entities. The Former Agency did not extend any of the related redevelopment plan limitations with respect to the respective project area pursuant to SB 211.
SB 107 clarifies that former tax increment limits set forth in redevelopment plans no longer apply for purposes of paying approved enforceable obligations such as the Bonds.
Tax Collection Fees
Legislation enacted by the State Legislature authorizes county auditors to determine property tax administration costs proportionately attributable to local jurisdictions and to submit invoices to the jurisdictions for such costs. Subsequent legislation specifically includes redevelopment agencies among the entities which are subject to a property tax administration charge. The County administration fee amounts to approximately [__]% of the tax increment revenues from a Project Area. The calculations of Tax Revenues take such administrative costs into account.
Future Initiatives
Article XIIIA, Article XIIIB and Proposition 218 were each adopted as measures that qualified for the ballot under California’s initiative process. From time to time other initiative measures could be adopted, further affecting Agency revenues or the Successor Agency’s ability to expend revenues.
53 OTHER INFORMATION
Continuing Disclosure
Continuing Disclosure Certificate of Successor Agency. The Successor Agency will undertake all responsibilities for continuing disclosure to Owners of the Series 2025 Bonds as described below, and Willdan Financial Services will act as Dissemination Agent, as described in the Continuing Disclosure Certificate. See “APPENDIX G - FORM OF CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5) (the “Rule”).
Historical Compliance by the City and Related Entities. [During the five years preceding the date of this Official Statement, the City, Successor Agency, and the Rancho Cucamonga Public Finance Authority complied with their respective continuing disclosure filing undertaking under the Rule, except [__].
To ensure compliance with the continuing disclosure undertakings of the City and its related entities under the Rule, the Finance Director is responsible for preparing and filing annual disclosure reports. Additionally, Willdan Financial Services has been selected by the Successor Agency to serve as dissemination agent with respect to the Successor Agency’s undertaking for the Series 2025 Bonds under the Rule.
Litigation
At the time of delivery of and payment for the Series 2025 Bonds and the Successor Agency will certify that, except as disclosed herein, to its best knowledge there is no litigation, action, suit, proceeding or investigation, at law or in equity, before or by any court, governmental agency or body, pending against or threatened against the Successor Agency in any way affecting the existence of the Successor Agency or the titles of its officers to their offices or seeking to restrain or enjoin the issuance, sale or delivery of the Series 2025 Bonds, the application of the proceeds thereof in accordance with the Indenture, or the collection or application of Tax Revenues to be pledged to pay the principal of and interest on the Series 2025 Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Series 2025 Bonds, the Indenture, or any action of the Successor Agency contemplated by any of said documents, or in any way contesting the completeness or accuracy of this Official Statement or the powers of the Successor Agency or its authority with respect to the Indenture or any action of the Successor Agency contemplated by said documents, or in any way contesting the completeness or accuracy of this Official Statement or the powers of the Successor Agency or its authority with respect to the Indenture or any action of the Successor Agency contemplated by said documents, or which would adversely affect the exclusion of interest paid on the Series 2025 Bonds from gross income for Federal income tax purposes or the exemption of interest paid on the Series 2025 Bonds from California personal income taxation, nor, to the knowledge of the Successor Agency, is there any basis therefor.
Tax Matters
In the opinion of Best Best & Krieger LLP, Riverside, California, subject, however, to certain qualifications described in this Official Statement, under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, the interest on the Series 2025 Bonds is excluded from gross income for federal income tax purposes, and interest on the Series 2025 Bonds is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; however, for tax years beginning after December 31, 2022, interest on the Series 2025 Bonds is taken into account in determining the annual adjusted financial statement income of certain corporations for the purpose of computing the alternative minimum tax imposed on certain corporations. In the further opinion of Bond Counsel, interest on the Series 2025 Bonds is exempt from California personal income tax.
The opinions set forth in the preceding paragraph are subject to the condition that the Successor Agency comply with all requirements of the Internal Revenue Code of 1986, as amended (“Tax Code”) that must be satisfied subsequent to the issuance of the Series 2025 Bonds. The Successor Agency has covenanted to comply with each such requirement.
54 If the initial offering price to the public (excluding bond houses and brokers) at which a Series 2025 Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public (excluding bond houses and brokers) at which a Series 2025 Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “original issue premium” for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium is disregarded.
Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Series 2025 Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Series 2025 Bonds to determine taxable gain upon disposition (including sale, prepayment, or payment on maturity) of such Series 2025 Bond.
The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Series 2025 Bonds who purchase the Series 2025 Bonds after the initial offering of a substantial amount of such maturity. Owners of such Series 2025 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series 2025 Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Series 2025 Bonds under federal individual alternative minimum taxes.
Under the Tax Code, original issue premium is amortized on an annual basis over the term of the Series 2025 Bond (said term being the shorter of the Series 2025 Bond’s maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Series 2025 Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Series 2025 Bond is amortized each year over the term to maturity of the Series 2025 Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Series 2025 Bond premium is not deductible for federal income tax purposes.
Owners of premium Series 2025 Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Series 2025 Bonds.
Current and future legislative proposals, if enacted into law, clarification of the Tax Code or court decisions may cause interest with respect to the Series 2025 Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Tax Code or court decisions may also affect the market price for, or marketability of, the Series 2025 Bonds. Prospective purchasers of the Series 2025 Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
Bond Counsel’s opinion may be affected by action taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Series 2025 Bonds. Bond Counsel has not undertaken to determine, or to inform any person, whether any such action or events are taken or do occur, or whether such actions or events may adversely affect the value or tax treatment of a Series 2025 Bond, and Bond Counsel expresses no opinion with respect thereto.
The IRS has initiated an expanded program for auditing tax-exempt bond issues, including both random and targeted audits. It is possible that the Series 2025 Bonds will be selected for audit by the IRS. It is also possible that the market value of the Series 2025 Bonds might be affected as a result of such an audit (or by an audit of similar bonds).
55 Although Bond Counsel has rendered an opinion that interest on the Series 2025 Bonds is excluded from gross income for federal income tax purposes provided the Successor Agency continues to comply with certain requirements of the Tax Code, the accrual or receipt of interest on the Series 2025 Bonds may otherwise affect the tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient’s particular tax status and other items of income or deductions. Bond Counsel expresses no opinion regarding any such consequences. Accordingly, all potential purchasers should consult their tax advisors before purchasing any of the Series 2025 Bonds.
A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix F.
Legal Opinion
Best Best & Krieger LLP, Riverside, California, will render its opinion with respect to the validity of the Series 2025 Bonds in substantially the form set forth in Appendix F hereto. Copies of the approving opinion will be available at the time of delivery of the Series 2025 Bonds.
In addition, Best Best & Krieger LLP, as Disclosure Counsel, will deliver to the Successor Agency and to the Underwriter a letter in customary form concerning the information set forth in this Official Statement.
Municipal Advisor
Fieldman, Rolapp & Associates has acted as Municipal Advisor to the Successor Agency in conjunction with the issuance of the Series 2025 Bonds. The Municipal Advisor has assisted in matters related to the planning, structuring, execution, and delivery of the Series 2025 Bonds. The Municipal Advisor will receive compensation contingent upon the sale and delivery of the Series 2025 Bonds. The Municipal Advisor has not audited, authenticated, or otherwise independently verified the information set forth in this Official Statement, or any other related information available, with respect to accuracy and completeness of disclosure of such information.
Because of this limited participation, the Municipal Advisor makes no guaranty, warranty, or other representation with respect to the accuracy or completeness of this Official Statement, or any other matter related to this Official Statement.
Ratings
The Successor Agency has obtained a rating on the Series 2025 Bonds of “[_]” from S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC (“S&P).
The rating issued reflects only the view of such rating agency, and any explanation of the significance of such rating should be obtained from such rating agency. There is no assurance that such rating will be retained for any given period of time or that they will not be revised downward or withdrawn entirely by such rating agency if, in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of any rating obtained may have an adverse effect on the market price of the Series 2025 Bonds.
Underwriting
Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) has agreed to purchase the Series 2025 Bonds at a price of $________ (being the principal amount of the Series 2025 Bonds, [plus] a [net original issue premium] of $________, less an underwriter’s discount of $________) under a Bond Purchase Contract between the Successor Agency and the Underwriter.
The Underwriter may offer and sell the Series 2025 Bonds to certain dealers and others at a price lower than the offering price stated on the inside cover page hereof. The offering price may be changed from time to time by the Underwriter.
56 Miscellaneous
All quotations from and summaries and explanations of the Indenture and other statutes and documents contained herein do not purport to be complete, and reference is made to such documents, Indenture and statutes for full and complete statements of their provisions.
This Official Statement is submitted only in connection with the sale of the Series 2025 Bonds by the Successor Agency. All estimates, assumptions, statistical information and other statements contained herein, while taken from sources considered reliable, are not guaranteed by the Successor Agency. The information contained herein should not be construed as representing all conditions affecting the Successor Agency or the Series 2025 Bonds.
SUCCESSOR AGENCY TO THE RANCHO
CUCAMONGA REDEVELOPMENT AGENCY
By:
City Manager of the City of Rancho Cucamonga
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APPENDIX A
REPORT OF THE FISCAL CONSULTANT
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APPENDIX B
GENERAL INFORMATION CONCERNING THE CITY OF RANCHO CUCAMONGA General
The City of Rancho Cucamonga (the “City”) is located in San Bernardino County, in the southeastern part of California. It is situated at the foothills of the San Gabriel Mountains and part of the Inland Empire, a metropolitan area east of the Los Angeles metropolitan area. The City enjoys a strategic location with proximity to major highways, providing easy access to other parts of California. This geographical setting offers a unique blend of urban and natural environments, with scenic mountain views and urban amenities.
The City’s current estimated population is approximately 174,000, making it the fourth most populous in San Bernardino County and 26th in California. In terms of size and population, the City is significantly larger than many other cities in California, reflecting its status as a major suburban city. Its growth and development can be characterized by a combination of its favorable location, diverse population, and a range of economic activities, including historical ties to agriculture and winemaking.
The City is a 47 square mile city. Although the City was incorporated in 1977, the community was shaped years prior. Alta Loma, Etiwanda, and Cucamonga experienced massive and uncontrolled growth due to Los Angeles and Orange County families seeking affordable housing. The City provides a full range of municipal services, including police, public works, planning, building and safety, recreation, library, animal care and control, community improvement, and economic development.
The City contracts with other governmental entities, private firms, and individuals to deliver specific services, including police services provided by the San Bernardino Sheriff’s Department. Fire services are provided by the Rancho Cucamonga Fire Protection District, a legally separate entity, but are included within the City’s reporting entity for financial reporting purposes. A different government agency provides water and sewer services.
Location is one of the City’s principal advantages. Major ground transportation routes in and out of Southern California and the Ontario International Airport are nearby. Retail, office, civic and cultural uses are contained anchored around Victoria Gardens, a sizeable and popular regional mall.
Community venues include an adult sports complex, community center, cultural center, senior center, two libraries, and over 150 miles of hiking, biking and equestrian trails which have attracted families to live in the City.
Population
Prior to incorporation, the area generally within the corporate boundaries of the City experienced a rapid growth in population. Population figures for the City, the County and the State for the last five years are shown in the following table.
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CITY OF RANCHO CUCAMONGA AND
COUNTY OF SAN BERNARDINO
Population Estimates
Year
City of
Rancho Cucamonga
County of
San Bernardino
State of
California
2020 174,253 2,181,654 39,538,223
2021 174,111 2,179,006 39,327,868
2022 173,896 2,179,845 39,114,785
2023 172,344 2,172,694 39,061,058
2024 173,316 2,181,433 39,128,162
Source: State Department of Finance estimates (as of January 1).
Employment
The City is included in the Riverside–San Bernardino–Ontario Metropolitan Statistical Area (“MSA”).
The unemployment rate in the Riverside-San Bernardino-Ontario MSA was 5.8% in July 2024, up from a revised
5.3 percent in June 2024, and above the year-ago estimate of 4.9%. This compares with an unadjusted unemployment rate of 5.8 percent for California and 4.5% for the nation during the same period. The unemployment rate was 5.9 percent in Riverside County, and 5.7% in San Bernardino County.
The following table summarizes the civilian labor force, employment and unemployment in the MSA for the calendar years 2020 through 2023, and year to date for 2024. These figures are county-wide statistics and may not necessarily accurately reflect employment trends in the City.
RIVERSIDE–SAN BERNARDINO–ONTARIO METROPOLITAN STATISTICAL AREA Civilian Labor Force, Employment and Unemployment
(Annual Averages)
2020 2021 2022 2023 2024(3)
Civilian Labor Force (1) 2,091,700 2,120,600 2,148,700 2,164,900 2,179,300 Employment 1,885,400 1,964,300 2,058,400 2,058,200 2,052,100 Unemployment 206,200 156,300 90,200 106,700 127,200
Unemployment Rate 9.9% 7.4% 4.2% 4.9% 5.8%
Wage and Salary Employment: (2)
Total Farm 14,100 13,700 13,800 13,800 14,100
Total Nonfarm 1,495,800 1,575,100 1,659,800 1,658,200 1,692,400 Mining, Logging and Construction 106,200 111,500 116,300 119,700 121,100 Mining and Logging 1,300 1,400 1,500 1,500 1,600
Construction 104,900 110,100 114,700 118,200 119,500
Manufacturing 96,000 96,100 100,000 98,900 96,200
Trade, Transportation, and Utilities 406,900 443,200 464,900 451,400 453,000 Information 12,400 12,500 13,000 13,500 13,200
Financial Activities 44,100 45,200 46,000 44,800 44,500 Professional and Business Services 152,100 166,600 173,900 162,400 164,500 Private Education and Health Services 248,800 254,300 267,500 287,000 308,300 Leisure and Hospitality 141,300 160,200 180,900 185,500 185,700 Other Services 40,200 43,600 47,400 49,500 49,200
Government 248,000 242,000 250,000 245,500 256,700
Total, All Industries 1,509,900 1,588,800 1,673,500 1,672,000 1,706,500 (1) Civilian labor force data are by place of residence; include self-employed individuals, unpaid family workers, household domestic workers, & workers on strike. Data may not add due to rounding. The unemployment rate is calculated using unrounded data. (2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, & workers on strike. Data may not add due to rounding.
(3) Preliminary as of August 16, 2024.
Source: State of California Employment Development Department.
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Between July 2023 and July 2024, total nonfarm employment increased by 34,200, a 2.1 percent change.
Agricultural employment increased by 300 jobs or 2.2 percent. • Private education and health services added 21,300 jobs over the year. Most of the job additions registered in health care and social assistance (up 18,600). Private educational services added 2,700 jobs, completing the overall sectoral increase.
• Government added 11,200 jobs. Local government (up 10,400) gained the most within the sector.
State and federal government added 400 jobs each, completing the overall sectoral expansion. • Manufacturing declined the most over the year, losing 2,700 jobs. Durable goods declined by 1,700 jobs, while non-durable goods fell by 1,000 jobs.
• Three other sectors declined over the year, including information, financial activities, and other services, which all lost 300 jobs each.
Major Employers
The following table shows the major manufacturing and non-manufacturing employers within the City and their estimated number of employees as of June 30, 2023:
CITY OF RANCHO CUCAMONGA
Major Employers
As of June 30, 2023
Company Type of Business No. of Employees(1)
Inland Empire Health Plan (IEHP) Government/Public Entity 3,511 Chaffey Community College Public Educational Institution 1,619 Etiwanda School District Public Educational Institution 1,854 Frito-Lay Private Corporation 950
Majestic Terminal Services, Inc Private Corporation 684 City of Rancho Cucamonga Government/Public Entity 662
Amphastar Pharmaceutical Private Corporation 641
Central School District Public Educational Institution 591 National Community Renaissance Of California Non-Profit Organization 550 Reyes Coca Cola Bottling, LLC Private Corporation 453
Kindred Hospital Rancho Private Corporation 305
Bass Pro Shops Outdoor World Private Corporation 338
Evolution Fresh Private Corporation 279
(1) Includes full-time and part-time employees.
Source: City of Rancho Cucamonga, Finance Department, Comprehensive Annual Financial Report (CAFR), year ended June 30, 2023.
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Commercial Activity
A summary of historic taxable sales within the City during the past five years in which data is available is shown in the following table.
CITY OF RANCHO CUCAMONGA
Taxable Transactions
Retail and Food
Services Taxable
Transactions
All Outlets
Taxable
Transactions Per Capita
2019 $2,039,172,564 $2,756,122,394 15,361.97
2020 1,740,252,065 2,407,341,538 13,715.32
2021 2,320,302,491 3,197,578,948 18,258.21
2022 2,425,905,150 3,493,001,157 20,019.95
2023 2,349,081,455 3,245,281,459 18,699.94
Source: California Department of Tax and Fee Administration.
A summary of historic taxable sales within the County during the past five years in which data is available is shown in the following table.
COUNTY OF SAN BERNARDINO
Taxable Transactions
Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)
Number
of Permits
Taxable
Transactions
2019 64,771 $ 41,768,747,848
2020 71,145 43,265,512,311
2021 66,585 55,378,096,658
2022 68,480 59,992,846,106
2023 67,336 57,933,854,583
Source: California Department of Tax and Fee Administration.
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APPENDIX C
CITY OF RANCHO CUCAMONGA
AUDITED FINANCIAL STATEMENTS FOR
FISCAL YEAR ENDED JUNE 30, 2023
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APPENDIX D
SUMMARY OF CERTAIN PROVISIONS OF THE LEGAL DOCUMENTS
The following is a summary of certain provisions of the Original Indenture and the Seventh Supplemental Indenture not otherwise described in the text of this Official Statement. This summary is not intended to be definitive, and reference is made to the text of the Original indenture and the Seventh Supplemental Indenture for the complete provisions thereof.
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APPENDIX E
DTC AND THE BOOK ENTRY SYSTEM
The description that follows of the procedures and recordkeeping with respect to beneficial ownership interests in the Series 2025 Bonds, payment of principal of, premium, if any, and interest on the Series 2025 Bonds to Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in the Series 2025 Bonds, and other related transactions by and between DTC, Participants and Beneficial Owners, is based on information furnished by DTC which the Successor Agency believes to be reliable, but the Successor Agency does not take responsibility for the completeness or accuracy thereof. The Successor Agency cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners either (a) payments of principal, premium, if any, and interest with respect to the Series 2025 Bonds or (b) certificates representing ownership interests in or other confirmation of ownership interests in the Series 2025 Bonds, or that they will so do on a timely basis or that DTC, DTC 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.
The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Series 2025 Bonds. The Series 2025 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 will be issued for each maturity (and each individual yield in the case of bifurcated maturities) of the Series 2025 Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s 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; provided that nothing contained in such website is incorporated into this Official Statement.
Purchases of Series 2025 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2025 Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2025 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 Series 2025 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial
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Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2025 Bonds, except in the event that use of the book-entry system for the Series 2025 Bonds is discontinued.
To facilitate subsequent transfers, all Series 2025 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 Series 2025 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2025 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2025 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2025 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2025 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Indenture. For example, Beneficial Owners of Series 2025 Bonds may wish to ascertain that the nominee holding the Series 2025 Bonds for their benefit will agree to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Series 2025 Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2025 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 Successor Agency 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 Series 2025 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Series 2025 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 Successor Agency or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the Successor Agency, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Successor Agency 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.
The Successor Agency may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, bond certificates will be printed and delivered to DTC.
NEITHER THE SUCCESSOR AGENCY NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY
OR OBLIGATION TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS
WITH RESPECT TO THE PAYMENTS OR THE PROVIDING OF NOTICE TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS OR THE SELECTION OF SERIES 2025 BONDS FOR REDEMPTION.
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DTC (or a successor securities depository) may discontinue providing its services as securities depository with respect to the Series 2025 Bonds at any time by giving reasonable notice to the Successor Agency. The Successor Agency, in its sole discretion and without the consent of any other person, may terminate the services of DTC (or a successor securities depository) with respect to the Series 2025 Bonds. The Successor Agency undertakes no obligation to investigate matters that would enable the Successor Agency to make such a determination. In the event that the book-entry system is discontinued as described above, the requirements of the Indenture will apply.
THE SUCCESSOR AGENCY AND THE UNDERWRITER CANNOT AND DO NOT GIVE ANY
ASSURANCES THAT DTC, THE PARTICIPANTS OR OTHERS WILL DISTRIBUTE PAYMENTS OF PRINCIPAL, INTEREST OR PREMIUM, IF ANY, WITH RESPECT TO THE SERIES 2025 BONDS PAID
TO DTC OR ITS NOMINEE AS THE REGISTERED OWNER, OR WILL DISTRIBUTE ANY REDEMPTION
NOTICES OR OTHER NOTICES, TO THE BENEFICIAL OWNERS, OR THAT THEY WILL DO SO ON A
TIMELY BASIS OR WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. THE SUCCESSOR AGENCY AND THE UNDERWRITER ARE NOT RESPONSIBLE OR
LIABLE FOR THE FAILURE OF DTC OR ANY PARTICIPANT TO MAKE ANY PAYMENT OR GIVE ANY NOTICE TO A BENEFICIAL OWNER WITH RESPECT TO THE SERIES 2025 BONDS OR AN ERROR OR DELAY RELATING THERETO.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Successor Agency deems reliable, but the Successor Agency takes no responsibility for the accuracy thereof.
DTC may discontinue providing its services as securities depository with respect to the Series 2025 Bonds at any time by giving reasonable notice to the Successor Agency or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2025 Bonds are required to be printed and delivered as described in the Indenture.
The Successor Agency may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Series 2025 Bonds will be printed and delivered as described in the Indenture and payment of interest to each Owner who owns of record $1,000,000 or more in aggregate principal amount of Series 2025 Bonds may be made to such Owner by wire transfer to such wire address within the United States that such Owner may request in writing for all Interest Payment Dates following the 15th day after the Trustee’s receipt of such request.
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APPENDIX F
FORM OF OPINION OF BOND COUNSEL
[Closing Date]
Successor Agency to the
Rancho Cucamonga Redevelopment Agency
10500 Civic Center Drive
Rancho Cucamonga, CA 91730
Re: $__________ Successor Agency to the Rancho Cucamonga Redevelopment Agency Rancho Redevelopment Project Area Tax Allocation Refunding Bonds, Series 2025 Ladies and Gentlemen:
We have reviewed the Constitution and laws of the State of California and certain proceedings taken by the Successor Agency to the Rancho Cucamonga Redevelopment Agency (the “Agency”) in connection with the issuance by the Successor Agency to the Rancho Cucamonga Redevelopment Agency Rancho Redevelopment Project Area Tax Allocation Refunding Bonds, Series 2025 (the “Bonds”), pursuant to the provisions of Section 34177.5(a)(1) of the California Health and Safety Code and Article 11 (commencing with Section 53580) of Chapter 3 of Part I of Division 2 of Title 5 of the California Government Code (the “Refunding Law”) and pursuant to that certain Trust Indenture, dated as of March 1, 1990 (the “Original Indenture”), by and between the former Rancho Cucamonga Redevelopment Agency (the “Former Agency”), as succeeded by the Agency, and Computershare Trust Company, National Association, formerly Wells Fargo Bank, N.A., as successor in interest to Bank of America National Trust and Savings Association (the “Trustee”), as amended and supplemented by that certain First Supplemental Indenture, dated as of January 1, 1994 (the “First Supplemental Indenture”), by and between the Former Agency and the Trustee, as successor in interest to Bank of America National Trust and Savings Association, that certain Second Supplemental Indenture, dated as of August 1, 1999 (the “Second Supplemental Indenture”), by and between the Former Agency and the Trustee, as successor in interest to U.S.
Bank Trust National Association, that certain Third Supplemental Indenture, dated as of August 1, 2001 (the “Third Supplemental Indenture”), by and between the Former Agency and the Trustee, that certain Fourth Supplemental Indenture, dated as of March 1, 2004 (the “Fourth Supplemental Indenture”), by and between the Former Agency and the Trustee, that certain Fifth Supplemental Indenture, dated as of July 1, 2014 (the “Fifth Supplemental Indenture”), by and between the Successor Agency and the Trustee, and that certain Sixth Supplemental Indenture, dated as of October 1, 2016 (the “Sixth Supplemental Indenture”), by and between the Successor Agency and the Trustee, and as further amended and supplemented by that certain Seventh Supplemental Indenture, dated as of [January 1, 2025], by and between the Successor Agency and the Trustee (the “Seventh Supplemental Indenture,” and together with the Original Indenture, First Supplemental Indenture, Second Supplemental Indenture, Third Supplemental Indenture, Fourth Supplemental Indenture, Fifth Supplemental Indenture and the Sixth Supplemental Indenture, the “Indenture”). The proceeds of the Bonds have been applied by the Agency to refinance certain redevelopment activities of the Former Agency. We have also examined such certified proceedings and other papers and materials as we deem necessary to render this opinion.
In such connection, we have reviewed the Indenture, the tax certificate of the Agency for the Bonds dated the date hereof (the “Tax Certificate”), certificates of the Agency and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other events come to our attention after the date hereof. Accordingly, this opinion speaks only as of its date and is not intended to, and may not, be relied upon in connection with any such actions, events or matters. Our engagement with respect to
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the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Agency. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to ensure that future actions, omissions or events will not cause interest on the Bonds to be included in gross income for federal income tax purposes.
We call attention to the fact that the rights and obligations under the Bonds, the Indenture and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases, and to the limitations on legal remedies against cities and their subordinate entities in the State of California. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum, choice of venue, waiver or severability provisions contained in the documents mentioned in the preceding sentence. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering materials relating to the Bonds and express no opinion with respect thereto.
Based upon the foregoing, we are of the opinion, under existing law, that:
1. The Agency is a successor agency duly organized and validly existing under the laws of the State of California, with power to enter into the Indenture, to perform the agreements on its part contained therein and to issue the Bonds;
2. The Bonds constitute the valid and legally binding special obligations of the Agency enforceable in accordance with their terms and payable solely from the sources provided therefor in the Indenture;
3. The Indenture has been duly approved by the Agency and constitutes the valid and legally binding obligation of the Agency enforceable against the Agency in accordance with its terms except as such enforcement may be limited by bankruptcy, insolvency, moratorium, transfer or conveyance, or other laws affecting creditor’s rights generally, or the exercise of judicial discretion in accordance with general principals of equity or otherwise in appropriate cases; provided, however, we express no opinion with respect to any indemnification, contribution, choice of law or waiver provisions contained therein;
4. The Indenture establishes a first lien on and pledge of the Tax Revenues (as such term is defined in the Indenture) and other funds pledged thereby for the security of the Bonds, in accordance with the terms of the Indenture;
5. Interest on the Bonds is exempt from California personal income taxation; and
6. Under existing statutes, regulations, rulings and court decisions, the interest on the Bonds is excluded from gross income for purposes of federal income taxation; however, for tax years beginning after December 31, 2022, interest on the Bonds is taken into account in determining the annual adjusted financial statement income of certain corporations for the purpose of computing the alternative minimum tax imposed on certain corporations. Although the interest on the Bonds is excluded from gross income for purposes of federal income taxation, the accrual or receipt of interest on the Bonds, or any portion thereof, may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend on the recipient’s particular tax status or other items of income or deduction. We express no opinion regarding any such consequences.
Respectfully submitted,
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APPENDIX G
FORM OF CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the Successor Agency to the Rancho Cucamonga Redevelopment Agency (the “Agency”) in connection with the issuance of $[__________] aggregate principal amount of Successor Agency of the Rancho Cucamonga Redevelopment Agency Rancho Redevelopment Project Area Tax Allocation Refunding Bonds, Series 2025 (the “Bonds”). The Bonds are being issued pursuant to that certain Trust Indenture, dated as of March 1,1990 (the “Original Indenture”), by and between the former Rancho Cucamonga Redevelopment Agency (the “Former Agency”), as succeeded by the Agency, and Computershare Trust Company, National Association, formerly Wells Fargo Bank, N.A., as successor in interest to Bank of America National Trust and Savings Association (the “Trustee”), as amended and supplemented by that certain First Supplemental Indenture, dated as of January 1, 1994 (the “First Supplemental Indenture”), by and between the Former Agency and the Trustee, as successor in interest to Bank of America National Trust and Savings Association, that certain Second Supplemental Indenture, dated as of August 1, 1999 (the “Second Supplemental Indenture”), by and between the Former Agency and the Trustee, as successor in interest to U.S. Bank Trust National Association, that certain Third Supplemental Indenture, dated as of August 1, 2001 (the “Third Supplemental Indenture”), by and between the Former Agency and the Trustee, that certain Fourth Supplemental Indenture, dated as of March 1, 2004 (the “Fourth Supplemental Indenture”), by and between the Former Agency and the Trustee, that certain Fifth Supplemental Indenture, dated as of July 1, 2014 (the “Fifth Supplemental Indenture”), by and between the Successor Agency and the Trustee, and that certain Sixth Supplemental Indenture, dated as of October 1, 2016 (the “Sixth Supplemental Indenture”), by and between the Successor Agency and the Trustee, and as further amended and supplemented by that certain Seventh Supplemental Indenture, dated as of [January 1, 2025], by and between the Successor Agency and the Trustee (the “Seventh Supplemental Indenture,” and together with the Original Indenture, First Supplemental Indenture, Second Supplemental Indenture, Third Supplemental Indenture, Fourth Supplemental Indenture, Fifth Supplemental Indenture and the Sixth Supplemental Indenture, the “Indenture”).
The Agency covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Agency for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with Securities and Exchange Commission (“S.E.C.”) Rule 15c2- 12(b)(5).
SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report Date” shall mean the date in each year not later than April 1 following the end of the Agency’s fiscal year, the end of which, as of the date of this Disclosure Certificate, is June 30 in each year. “City” shall mean the City of Rancho Cucamonga, California. “Dissemination Agent” shall mean, initially, Willdan Financial Services, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent that is so designated in writing by the Agency and which has filed with the then current Dissemination Agent a written acceptance of such designation. “EMMA” shall mean the MSRB’s Electronic Municipal Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/. “Financial Obligation” shall mean (a) a debt obligation; (b) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of (a) or (b). The term “Financial Obligation” does not include municipal securities (as such term is defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as such term is defined in the Rule) has been provided to EMMA consistent with the Rule.
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“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board. “Official Statement” shall mean the Official Statement relating to the Bonds. “Initial Purchaser” shall mean Stifel, Nicolaus and Company, Incorporated, the initial purchaser of the Bonds required to comply with the Rule in connection with the offering of the Bonds. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
SECTION 3. Provision of Annual Reports.
(a) The Agency shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the Agency’s fiscal year (which shall be April 1 of each year, so long as the Agency’s fiscal year ends on June 30), commencing with the report for the 2023-24 fiscal year (which shall be April 1, 2025), provide to the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate.
The Annual Report may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided, however, that the audited financial statements of the Agency may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Agency’s fiscal year changes, it shall provide written notice of such change in the same manner as for a Listed Event under Section 5(c). The Annual Report shall be submitted on a standard form in use by industry participants or other appropriate form and shall identify the Bonds by name and CUSIP number.
(b) Not later than fifteen (15) Business Days prior to said date, the Agency shall provide the Annual Report to the Dissemination Agent (if other than the Agency). If the Agency is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the Agency shall send or cause to be sent to the MSRB a notice in substantially the form attached as Exhibit A or such other form as prescribed or acceptable to the MSRB. (c) The Dissemination Agent shall (if the Dissemination Agent is other than the Agency), file a report with the Agency certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided to the MSRB.
SECTION 4. Content of Annual Reports. The Agency’s Annual Report shall contain or include by reference the following:
(a) Audited financial statements of the Agency for the preceding fiscal year prepared in accordance with generally accepted accounting principles and the laws of the state of California, including all statements and information prescribed for inclusion therein by the Governmental Accounting Standards Board; provided that, in the event the Agency’s audited financial statements for any fiscal year are included as part of the annual report of the City for such fiscal year, the audited financial statements of the Agency may be submitted together with the City’s comprehensive audited financial report. If the audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be provided to the MSRB in the same manner as the Annual Report when they become available.
To the extent not included in the audited financial statement of the Agency, the Annual Report shall also include the following:
(b) Principal amount of Bonds outstanding.
(c) Agency outstanding debt, including without limitation any Parity Bonds and subordinate debt.
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(d) Information regarding total assessed valuation of taxable properties within the Project Area, as set forth in Table 3 of the Official Statement of the Agency, dated [___________], 2025 (the “Official Statement”), if and to the extent provided to the Agency by the County of San Bernardino (the “County”). (e) Information regarding total secured tax charges and delinquencies on taxable properties within the Project Area, including without limitation the identities of any delinquent taxpayers that account for more than 10% of the total tax levy within the Project Area, if and to the extent provided to the Agency by the County. (f) Information regarding the top ten (10) tax payers of property taxes within the Project Area, as set forth in Table 1 of the Official Statement, if and to the extent provided to the Agency by the County. (g) Information regarding assessment appeals by large taxpayers and the estimated loss on appeal as shown in Tables 4 and 5 in the Official Statement.
(h) Debt service coverage on the Bonds and any Parity Bonds for the most recently completed fiscal year in substantially the form of Table 11 of the Official Statement; no projected coverage needs to be presented. (i) Information on the total amount of tax increment allocated to the Agency in such fiscal year and the annual maximum amount of tax increment which may be received by the Agency in such fiscal year.
Any or all of the items listed above may be set forth in one or a set of documents or may be included by specific reference to other documents, including official statements of debt issues of the Agency or related public entities, which have been available to the public on the MSRB’s website. The Agency shall clearly identify each such other document so included by reference.
SECTION 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the Agency shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds:
(i) principal and interest payment delinquencies;
(ii) non-payment related defaults, if material;
(iii) unscheduled draws on any reserve fund for the Bonds reflecting financial difficulties; (iv) unscheduled draws on any credit enhancements securing the Bonds reflecting financial difficulties;
(v) substitution of any credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB), or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;
(vii) modifications to the rights of owners of the Bonds, if material; (viii) Bond calls, if material, and tender offers for the Bonds; (ix) defeasances;
(x) any release, substitution, or sale of property securing repayment of the Bonds, if material; (xi) rating changes;
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(xii) any bankruptcy, insolvency, receivership, or similar event of the Agency. This Listed Event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the Agency in a proceeding under the Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Agency, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Agency; (xiii) the consummation of a merger, consolidation, or acquisition involving the Agency or the sale of all or substantially all of the assets of the Agency, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (xiv) appointment of a successor or additional trustee or the change of name of a trustee, if material;
(xv) the incurrence of a Financial Obligation of the Agency, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the Agency, any of which affect security holders, if material; and (xvi) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the Agency, any of which reflect financial difficulties. (b) Upon and after the occurrence of a Listed Event listed under subsection (a)(ii), (a)(vii), (a)(viii) (if the event is a bond call), (a)(x), (a)(xiii) (if the event is a bond call), (a)(xiv), (a)(xv) or (a)(xvi) above, the Agency shall as soon as possible determine if such event would be material under applicable federal securities laws. If the Agency determines that knowledge of the occurrence of such Listed Event would be material under applicable federal securities laws, the Agency shall, or shall cause the Dissemination Agent (if not the Agency) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. (c) Upon and after the occurrence of any Listed Event (other than a Listed Event listed under subsection (a)(ii), (a)(vii), (a)(viii) (if the event is a bond call), (a)(x), (a)(xiii), (a)(xiv), (a)(xv) or (a)(xvi) above), the Agency shall, or shall cause the Dissemination Agent (if not the Agency) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. (d) If the Dissemination Agent has been instructed by the Agency to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with MSRB not in excess of ten (10) business days after the occurrence of such Listed Event. Such notice must be submitted in an electronic format as prescribed by MSRB, accompanied by such identifying information as prescribed by MSRB. (e) Notwithstanding the foregoing, notice of a Listed Event described in subsection (a)(viii) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to owners of affected Bonds pursuant to the Indenture. The Agency hereby agrees that the undertaking set forth in this Disclosure Certificate is the responsibility of the Agency and that the Trustee or the Dissemination Agent shall not be responsible for determining whether the Agency’s instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule.
SECTION 6. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB.
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SECTION 7. Termination of Reporting Obligation. The Agency’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).
SECTION 8. Dissemination Agent. The Agency may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Agency pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be Willdan Financial Services.
SECTION 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Agency may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, 5(a) or 5(b), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) The amendment or waiver does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds.
In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Agency shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Agency. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in a filing with the MSRB, and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.
SECTION 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Agency from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice required to be filed pursuant to this Disclosure Certificate, in addition to that which is required by this Disclosure Certificate. If the Agency chooses to include any information in any Annual Report or notice in addition to that which is specifically required by this Disclosure Certificate, the Agency shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event or any other event required to be reported.
SECTION 11. Default. In the event of a failure of the Agency to comply with any provision of this Disclosure Certificate any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Agency to comply with its obligations under this Disclosure Certificate; provided, that any such action may be instituted only in Superior Court of the State of California in and for the County of San Bernardino or in U.S. District Court in or nearest to the County. The sole remedy under this Disclosure Certificate in the event of any failure of the Agency to comply with this Disclosure Certificate shall be an action to compel performance.
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SECTION 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Agency, the Dissemination Agent, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. (Balance of this page intentionally left blank.)
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Date: _________, 2025.
SUCCESSOR AGENCY TO THE RANCHO CUCAMONGA
REDEVELOPMENT AGENCY
By:
John R. Gillison, City Manager
ACKNOWLEDGEMENT:
WILLDAN FINANCIAL SERVICES
By: ____________________________________
Authorized Signatory
-Signature Page-
Continuing Disclosure Certificate
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CONTINUING DISCLOSURE EXHIBIT A
FORM OF NOTICE TO THE MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Name of Agency: SUCCESSOR AGENCY TO THE RANCHO CUCAMONGA
REDEVELOPMENT AGENCY
Name of Bond Issue: SUCCESSOR AGENCY TO THE RANCHO CUCAMONGA
REDEVELOPMENT AGENCY RANCHO REDEVELOPMENT
PROJECT AREA TAX ALLOCATION REFUNDING BONDS, SERIES
2025
Date of Issuance: __________________, 2025
NOTICE IS HEREBY GIVEN that the Agency has not provided an Annual Report with respect to the above- named Bonds as required by Section 4 of the Continuing Disclosure Certificate of the Agency, dated the Date of Issuance. [The Agency anticipates that the Annual Report will be filed by _____________.] Dated:_______________
SUCCESSOR AGENCY TO THE RANCHO
CUCAMONGA REDEVELOPMENT AGENCY
By [to be signed only if filed]
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APPENDIX H
STATE DEPARTMENT OF FINANCE
DETERMINATION LETTER APPROVING THE SERIES 2025 BONDS
Anzel Galvan LLP Draft of 10-29-2024
1 $[PAR]
SUCCESSOR AGENCY TO THE
RANCHO CUCAMONGA REDEVELOPMENT AGENCY
RANCHO REDEVELOPMENT PROJECT AREA
TAX ALLOCATION REFUNDING BONDS, SERIES 2025
BOND PURCHASE AGREEMENT
[Pricing Date]
Successor Agency to the
Rancho Cucamonga Redevelopment Agency
10500 Civic Center Drive
Rancho Cucamonga, California 91730
Attention: Executive Director
Ladies and Gentlemen:
Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with the Successor Agency to the Rancho Cucamonga Redevelopment Agency (the “Successor Agency”), which will be binding upon the Successor Agency and the Underwriter upon the acceptance hereof by the Successor Agency. This offer is made subject to its acceptance by the Successor Agency by execution of this Purchase Agreement and its delivery to the Underwriter on or before 6:00 p.m., California time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Successor Agency at any time prior to the acceptance hereof by the Successor Agency.
Capitalized terms that are used herein and not otherwise defined have the meanings that are set forth in the Trust Indenture, dated as of March 1,1990, between the Successor Agency, as successor to the former Rancho Cucamonga Redevelopment Agency, and Computershare Trust Company, N.A., as successor trustee (the “Trustee”), as amended and supplemented from time to time up to and including the Seventh Supplemental Indenture, dated as of [January 1, 2025] (the “Seventh Supplemental Indenture”), between the Successor Agency and the Trustee (as so amended and supplemented, the “Indenture”).
Section 1. Purchase and Sale. Upon the terms and conditions and in reliance upon the representations, warranties and covenants herein, the Successor Agency hereby agrees to sell to the Underwriter and the Underwriter hereby agrees to purchase from the Successor Agency for offering to the public, all (but not less than all) of the Successor Agency to the Rancho Cucamonga Redevelopment Agency Rancho Redevelopment Project Area Tax Allocation Refunding Bonds, Series 2025, in the aggregate principal amount of $[PAR] (the “Bonds”). The Bonds will be dated as of their date of delivery. Interest on the Bonds shall be payable semiannually on March 1, 2025 and each September 1 and March 1 thereafter, and will mature, bear interest and be subject to redemption prior to maturity as set forth in Exhibit A. The purchase price of the Bonds shall be equal to $[__________] (being the aggregate principal amount thereof [plus][less] a [net] original issue [premium][discount] of $[__________], less an underwriter’s discount of $[__________]). The Successor Agency acknowledges that the Underwriter will on the Closing Date (as such term is defined herein), on behalf of the Successor Agency, wire a portion of the purchase price in the amount of $[_____] representing ATTACHMENT 3
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8 the premium for the Reserve Policy (as such term is defined herein), directly to [__________] (the “Insurer”).
Section 2. The Bonds. The Bonds shall be secured by an irrevocable and first pledge of, and payable as to principal, interest and premium, if any, from, Tax Revenues, and other funds and accounts held by the Trustee and the Successor Agency as provided in the Indenture, on a parity with the outstanding Successor Agency to the Rancho Cucamonga Redevelopment Agency Rancho Redevelopment Project Area Tax Allocation Refunding Bonds, Series 2016 and any additional Parity Bonds issued in the future in accordance with the Indenture.
The Bonds shall be dated the Closing Date, and shall bear interest at the rates, shall mature on the dates and in the principal amounts and shall be subject to redemption, all as set forth in the attached Exhibit A.
The proceeds of the Bonds shall be used by the Successor Agency to (i) refund all of the outstanding Rancho Redevelopment Project Area Tax Allocation Refunding Bonds, Series 2014 (the “Prior Bonds”), (ii) pay the premium for a debt service reserve insurance policy to be issued by the Insurer guaranteeing certain payments into the reserve account with respect to the Bonds (the “Reserve Policy”), and (iii) pay the costs of issuing the Bonds.
The Prior Bonds will be refunded pursuant to irrevocable refunding instructions dated [__________, 2025] given by the Successor Agency to the Trustee (the “Refunding Instructions”).
The Bonds were authorized to be issued by Resolution No. SA 2024-001 of the Successor Agency, adopted on October 2, 2024 (the “Successor Agency Bond Resolution”), and Resolution No. 2024-24 of the San Bernardino Countywide Oversight Board, adopted on October 17, 2024 (the “Oversight Board Resolution”).
The Successor Agency will undertake pursuant to the provisions of a Continuing Disclosure Certificate, to be dated the date of the Closing (the “Continuing Disclosure Certificate”) and executed by the Successor Agency, to provide certain annual information and notices of the occurrence of certain events. A description of the undertaking is set forth in the Preliminary Official and will also be set forth in the Official Statement (as hereinafter defined).
The Indenture, the Continuing Disclosure Certificate, the Refunding Instructions and this Purchase Contract are sometimes collectively referred to herein as the “Successor Agency Documents.”
Section 3. Public Offering and Establishment of Issue Price. (a) The Underwriter agrees to make an initial public offering of all of the Bonds at the public offering prices (or yields) set forth in Exhibit A and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as the Underwriter deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. The Successor Agency acknowledges and agrees that: (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s-length commercial transaction between the Successor Agency, on one hand, and the Underwriter, on the other; (ii) in connection therewith and with the discussions,
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8 undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and is not acting as a Municipal Advisor (as defined in Section 15B of the Securities Exchange Act of 1934, as amended); (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the Successor Agency with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the Successor Agency on other matters); (iv) the Underwriter has financial and other interests that differ from those of the Successor Agency; and (v) the Successor Agency has consulted its own legal, financial and other advisors to the extent that it has deemed appropriate. (b) The Underwriter agrees to assist the Successor Agency in establishing the issue price of the Bonds and shall execute and deliver to the Successor Agency at Closing (as defined below) an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form set forth in Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Successor Agency and Bond Counsel (as such term is defined below), to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. All actions to be taken by the Successor Agency under this section to establish the issue price of the Bonds may be taken on behalf of the Successor Agency by the Successor Agency’s municipal advisor, Fieldman, Rolapp & Associates, Inc. (the “Municipal Advisor”) and any notice or report to be provided to the Successor Agency may be provided to the Successor Agency’s Municipal Advisor. (c) Except as otherwise set forth in Exhibit A, the Successor Agency will treat the first price at which 10% of each maturity of the Bonds (the “10% test”), identified under the column “10% Test Used” in Exhibit A, is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the Successor Agency the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Successor Agency the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date (as defined below) has occurred, until either: (i) the Underwriter has sold all of the Bonds of that maturity; or (ii), the 10% test has been satisfied as to the Bonds of that maturity, provided that, the Underwriter’s reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon the request of the Successor Agency or Bond Counsel. For purposes of this section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds. For clarity, and notwithstanding any other condition to Closing set forth in this Purchase Agreement, the sale of 10% of each maturity of the Bonds to the public prior to the Closing Date shall not be a condition to Closing.
(d) The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A, except as otherwise set forth therein. Exhibit A also sets forth, identified under the column “Hold the Offering Price Rule Used,” as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the 10% test has not been satisfied and for which the Successor Agency and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Successor Agency to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the- offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a
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8 price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
(i) the close of the fifth (5th) business day after the sale date; or (ii) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
The Underwriter will advise the Successor Agency promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. (e) The Underwriter confirms that:
(1) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group, and each broker-dealer that is a party to such third-party distribution agreement, as applicable, (A) (i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter, and (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter; (B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public; and (2) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires. (f) The Successor Agency acknowledges that, in making the representations set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third- party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the
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8 requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires. The Successor Agency further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a third-party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds.
(g) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section. Further, for purposes of this section:
(i) “public” means any person other than an underwriter or a related party; (ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the Successor Agency (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third party distribution agreement participating in the initial sale of the Bonds to the public); (iii) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and (iv) “sale date” means the date of execution of this Purchase Agreement by all parties.
Section 4. The Official Statement. By its acceptance of this proposal, the Successor Agency ratifies, confirms and approves of the use and distribution by the Underwriter prior to the date hereof of the Preliminary Official Statement relating to the Bonds dated [POS Date] (including the cover page, all appendices and all information incorporated therein and any other supplements or amendments thereto and as disseminated in its printed physical form or in electronic form in all respects materially consistent with such physical form, the “Preliminary Official Statement”) that an authorized officer of the Successor Agency deemed “final” as of its date, for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 15c2-12”), except for certain information that is permitted to be omitted therefrom by Rule 15c2-12. The Successor Agency agrees to deliver or cause to be delivered to the Underwriter, within seven business days of the date hereof, copies of the final official statement, dated the date hereof, relating to the Bonds (including all information that was previously permitted to have been omitted by Rule 15c2-12), including the cover page, all appendices, all information incorporated therein and any amendments or supplements as have
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8 been approved by the Successor Agency and the Underwriter (the “Official Statement”) in such quantity as the Underwriter shall reasonably request to comply with Section (b)(4) of Rule 15c2-12 and the rules of the Municipal Securities Rulemaking Board (the “MSRB”).
The Successor Agency authorized distribution of the Preliminary Official Statement and preparation and distribution of a final Official Statement pursuant to a resolution adopted on [November 20], 2024 (the “Successor Agency OS Resolution,” together with the Successor Agency Bond Resolution, the “Successor Agency Resolutions”).
The Underwriter hereby agrees that it will not request that payment be made by any purchaser of the Bonds prior to delivery by the Underwriter to the purchaser of a copy of the Official Statement.
The Underwriter agrees: (i) to provide the Successor Agency with final pricing information on the Bonds on a timely basis; and (ii) to file a copy of the Official Statement, including any supplements prepared by the Successor Agency in accordance with MSRB rules with the MSRB at http://emma.msrb.org. The Successor Agency hereby approves of the use and distribution by the Underwriter of the Preliminary Official Statement in connection with the offer and sale of the Bonds.
The Successor Agency will cooperate with the Underwriter in the filing by the Underwriter of the Official Statement with the MSRB.
Section 5. Representations, Warranties and Agreements of the Successor Agency.
The Successor Agency represents and warrants to the Underwriter that, as of the date hereof:
(a) The Successor Agency is a public entity existing under the laws of the State of California (the “State”), and is authorized, among other things, to (i) issue the Bonds, and (ii) secure the Bonds in the manner contemplated by the Indenture.
(b) The Successor Agency has the full right, power and authority to (i) enter into the Seventh Supplemental Indenture, the Refunding Instructions, the Continuing Disclosure Certificate and this Purchase Agreement, (ii) issue, sell and deliver the Bonds to the Underwriter as provided herein, and (iii) carry out and consummate all other transactions on its part contemplated by each of the Successor Agency Documents, and the Successor Agency has complied with all provisions of applicable law in all matters relating to such transactions. (c) The Successor Agency has duly authorized (i) the execution and delivery of the Bonds, the Seventh Supplemental Indenture, the Refunding Instructions, the Continuing Disclosure Certificate and this Purchase Agreement, and the due performance by the Successor Agency of the Successor Agency Documents, (ii) the distribution and use of the “deemed final” Preliminary Official Statement and the execution, delivery and distribution of the final Official Statement, and (iii) the taking of any and all such action as may be required on the part of the Successor Agency to carry out, give effect to and consummate the transactions on its part contemplated by such instruments. All consents or approvals necessary to be obtained by the Successor Agency in connection with the foregoing have been received, and the consents or approvals so received are still in full force and effect. (d) As of the date thereof and hereof, the information contained in the Preliminary Official Statement (excluding therefrom for any information relating to the Insurer, the Reserve Policy, The Depository Trust Company (“DTC”) and its book-entry system included therein and the information therein under the caption “OTHER INFORMATION – Underwriting” is true and correct in all material respects, and the Preliminary Official Statement did not contain, and as of the date hereof does not
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8 contain, any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein in light of the circumstances under which they were made, not misleading. (e) As of the date thereof and at all times subsequent thereto to and including the date which is 25 days following the End of the Underwriting Period (as such term is hereinafter defined) for the Bonds, the information contained in the Official Statement (excluding therefrom for any information relating to the Insurer, the Reserve Policy, DTC and its book-entry system included therein and the information therein under the caption “OTHER INFORMATION – Underwriting” is true and correct in all material respects, and the Official Statement did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made not misleading. (f) Neither the execution and delivery by the Successor Agency of the Bonds, the Seventh Supplemental Indenture, the Refunding Instructions, the Continuing Disclosure Certificate or this Purchase Agreement, nor the consummation of the transactions on the part of the Successor Agency contemplated in the Successor Agency Documents or the compliance with the provisions thereof will conflict with, or constitute on the part of the Successor Agency a violation of, or a breach of or default under, (i) any statute, indenture, mortgage, note or other agreement or instrument to which the Successor Agency is a party or by which it is bound, (ii) any provision of the State Constitution, or (iii) any existing law, rule, regulation, ordinance, judgment, order or decree to which the Successor Agency (or the members of the Successor Agency or any of its officers in their respective capacities as such) is subject.
(g) The Successor Agency has never been in default at any time, as to payment of principal of or interest on any debt obligation which it has issued, except as otherwise specifically disclosed in the Preliminary Official Statement and the Official Statement; and the Successor Agency has not entered into any contract or arrangement of any kind which might give rise to any lien or encumbrance on the Tax Revenues except as is expressly disclosed in the Preliminary Official Statement and the Official Statement.
(h) As of the date hereof, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, which has been served on the Successor Agency or, to the best knowledge of the Successor Agency, threatened, which in any way questions the powers of the Successor Agency referred to in paragraph (b) above, or the validity of any proceeding taken by the Successor Agency in connection with the issuance of the Bonds, or wherein an unfavorable decision, ruling or finding could materially adversely affect the transactions contemplated by the Successor Agency Documents, or which, in any way, could adversely affect the validity or enforceability of the Successor Agency Documents or, to the knowledge of the Successor Agency, which in any way questions the status of the Bonds under state tax laws or federal tax law or regulations or which in any way could materially adversely affect the availability of Tax Revenues. (i) Any certificate signed by any official of the Successor Agency and delivered to the Underwriter in connection with the offer or sale of the Bonds shall be deemed a representation and warranty by the Successor Agency to the Underwriter as to the truth of the statements therein contained. (j) The Successor Agency will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter and at the expense of the Underwriter as the Underwriter may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United
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8 States as the Underwriter may designate and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds, provided; however, that the Successor Agency will not be required to execute a special or general consent to service of process or qualify as a foreign corporation in connection with any such qualification in any jurisdiction. (k) All authorizations, approvals, licenses, permits, consents, elections, and orders of or filings with any governmental authority, legislative body, board, agency or commission having jurisdiction in the matters which are required by the Closing Date for the due authorization of, which would constitute a condition precedent to or the absence of which would adversely affect the due performance by the Successor Agency of, its obligations in connection with the Successor Agency Documents have been duly obtained or made and are in full force and effect. (l) Between the date of this Purchase Agreement and the Closing Date, the Successor Agency will not offer or issue any bonds, notes or other obligations for borrowed money not previously disclosed to the Underwriter.
(m) The Successor Agency will apply the proceeds of the Bonds in accordance with the Indenture and the Refunding Instructions.
(n) Except as otherwise described in the Preliminary Official Statement and the Official Statement, as of the Closing Date, the Successor Agency will not have outstanding any indebtedness which indebtedness is secured by a lien on the Tax Revenues of the Successor Agency on a parity with or senior to the lien provided for in the Indenture on the Tax Revenues. (o) Except as described in the Preliminary Official Statement and the Official Statement, none of the Successor Agency, the City of Rancho Cucamonga, California (the “City”) or any other related entities staffed by the City have failed, within the last five years, to comply with any undertaking of the Successor Agency, the City, or such related entities, respectively pursuant to Rule 15c2-12.
(p) If between the date hereof and the date which is 25 days after the End of the Underwriting Period (as defined herein) for the Bonds, an event occurs which would cause the information contained in the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make such information herein, in the light of the circumstances under which it was presented, not misleading, the Successor Agency will notify the Underwriter, and, if in the opinion of the Underwriter or the Successor Agency, or respective counsel thereof, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Successor Agency will cooperate in the preparation of an amendment or supplement to the Official Statement, and shall pay all expenses thereby incurred. For the purposes of this subsection, between the date hereof and the date which is 25 days after the End of the Underwriting Period for the Bonds, the Successor Agency will furnish such information with respect to itself as the Underwriter may from time to time reasonably request. As used herein, the term “End of the Underwriting Period” means the later of such time as: (i) the Successor Agency delivers the Bonds to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Notwithstanding the foregoing, unless the Underwriter gives notice to the contrary, the “End of the Underwriting Period” shall be the Closing Date.
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8 (q) If the information contained in the Official Statement is amended or supplemented pursuant to paragraph (p) hereof, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subparagraph) at all times subsequent thereto up to and including the date which is 25 days after the End of the Underwriting Period for the Bonds, the portions of the Official Statement so supplemented or amended (including any financial and statistical data contained therein) will not contain any untrue statement of a material fact required to be stated therein or necessary to make such information therein in the light of the circumstances under which it was presented, not misleading.
(r) The Oversight Board has duly adopted the Oversight Board Resolution approving the Successor Agency Bond Resolution and the issuance of the Bonds and no further Oversight Board approval or consent is required for the issuing of the Bonds or the consummation of the transactions described in the Preliminary Official Statement.
(s) The Department of Finance of the State (the “Department of Finance”) has issued a letter dated [_____], 2024 (the “DOF Letter”), approving the issuance of the Bonds. No further Department of Finance approval or consent is required for the issuance of the Bonds or the consummation of the transactions described in the Preliminary Official Statement. Except as disclosed in the Preliminary Official Statement and the Official Statement, the Successor Agency is not aware of the Department of Finance directing or having any basis to direct the Auditor-Controller of the County of San Bernardino to deduct unpaid unencumbered funds from future allocations of property tax to the Successor Agency pursuant to Section 34183 of the Dissolution Act. (t) As of the time of acceptance hereof, the Successor Agency has materially complied with the filing requirements of the Dissolution Act, including, without limitation, the filing of all Recognized Obligation Payment Schedules, as required by the Dissolution Act.
Section 6. Closing. At 8:30 a.m., California time, on [Closing Date], or at such other time or date as the Successor and the Underwriter agree upon (the “Closing Date”), the Successor Agency shall deliver or cause to be delivered to the Trustee, the Bonds, in definitive form, registered in the name of Cede & Co., as the nominee of DTC, so that the Bonds may be authenticated by the Trustee and credited to the account specified by the Underwriter under DTC’s FAST procedures. Concurrently with the delivery of the Bonds, the Successor Agency will deliver the documents hereinafter mentioned at the offices of Best Best & Krieger LLP, Riverside, California (“Bond Counsel”), or another place to be mutually agreed upon by the Successor Agency and the Underwriter. The Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof by wire transfer in immediately available funds. This payment for and delivery of the Bonds, together with the delivery of the aforementioned documents, is herein called the “Closing.” The Bonds shall be registered in the name of Cede & Co., as nominee of DTC in denominations of five thousand dollars ($5,000) or any integral multiple thereof. The Successor Agency acknowledges that the services of DTC will be used initially by the Underwriter in order to permit the issuance of the Bonds in book-entry form, and agree to cooperate fully with the Underwriter in employing such services.
Section 7. Conditions to the Obligations of the Underwriter. The Underwriter has entered into this Purchase Agreement in reliance upon the representations and warranties of the Successor Agency contained herein. The obligations of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in
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8 all material respects of the statements of the officers and other officials of the Successor Agency, as well as authorized representatives of Bond Counsel, the Trustee and others made in any certificates or other documents furnished pursuant to the provisions hereof; to the performance by the Successor Agency of its obligations to be performed under the Successor Agency Documents at or prior to the Closing Date; and to the following additional conditions:
(a) The representations, warranties and covenants of the Successor Agency contained herein shall be true and correct at the date hereof and at the time of the Closing, as if made on the Closing Date.
(b) At the time of Closing, the Successor Agency Documents shall be in full force and effect as valid and binding agreements between the parties thereto, and the Successor Agency Documents and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter. (c) At the time of the Closing, no material default shall have occurred or be existing under the Successor Agency Documents or any other agreement or document pursuant to which any of the financial obligations of the Successor Agency were executed and delivered, and the Successor Agency shall not be in default in the payment of principal or interest with respect to any of its financial obligations, which default would materially adversely impact the ability of the Successor Agency to pay debt service on the Bonds.
(d) In recognition of the desire of the Successor Agency and the Underwriter to effect a successful public offering of the Bonds, and in view of the potential adverse impact of any of the following events on such a public offering, this Purchase Agreement shall be subject to termination in the discretion of the Underwriter by notification, in writing, to the Successor Agency prior to delivery of and payment for the Bonds, if between the date hereof and the time of Closing, in the Underwriter’s sole and reasonable judgment any of the following events shall occur (each a “Termination Event”):
(i) the market price or marketability of the Bonds, or the ability of the Underwriter to enforce contracts for the sale of the Bonds, shall be materially adversely affected by any of the following events:
(A) legislation shall have been enacted by the Congress of the United States or the legislature of the State or shall have been favorably reported out of committee of either body or be pending in committee of either body, or shall have been recommended to the Congress for passage by the President of the United States or a member of the President’s Cabinet, or a decision shall have been rendered by a court of the United States or the State or the Tax Court of the United States, or a ruling, resolution, regulation or temporary regulation, release or announcement shall have been made or shall have been proposed to be made by the Treasury Department of the United States or the Internal Revenue Service, or other federal or state authority with appropriate jurisdiction, with respect to federal or state taxation upon interest received on obligations of the general character of the Bonds; (B) there shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (2) any other calamity or crisis
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8 in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis; or
(C) a general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of U.S.
Securities and Exchange Commission (“SEC”) or any other governmental authority having jurisdiction; or
(D) legislation shall have been enacted by the Congress of the United States or shall have been favorably reported out of committee or be pending in committee, or shall have been recommended to the Congress for passage by the President of the United States or a member of the President's Cabinet, or a decision by a court of the United States shall be rendered, or a ruling, regulation, proposed regulation or statement by or on behalf of the SEC or other governmental agency having jurisdiction of the subject matter shall be made, to the effect that any obligations of the general character of the Bonds are not exempt from registration under or other requirements of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended and as then in effect; or (E) except as disclosed in or contemplated by the Official Statement, any material adverse change in the affairs of the Successor Agency shall have occurred; or (F) any rating of the Bonds or Parity Bonds shall have been downgraded, withdrawn or placed on credit watch with negative outlook by any major credit rating agency; or (ii) any event or circumstance shall exist that either makes untrue or incorrect in any material respect any statement or information in the Official Statement (other than any statement provided by the Underwriter) or is not reflected in the Official Statement but should be reflected therein in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and, in either such event, the Successor Agency refuses to permit the Official Statement to be supplemented to supply such statement or information, or the effect of the Official Statement as so supplemented is to materially adversely affect the market price or marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or (iii) a general banking moratorium shall have been declared by federal or State authorities having jurisdiction and be in force; or
(iv) a material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; or
(v) any new restriction on transactions in securities materially affecting the market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or a charge to the net capital requirements of, underwriters shall have been established by the New
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8 York Stock Exchange, the SEC, any other federal or State agency or the Congress of the United States, or by Executive Order; or
(vi) a decision by a court of the United States shall be rendered, or a stop order, release, regulation or no-action letter by or on behalf of the SEC or any other governmental agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the issuance, offering or sale of the Bonds, including the underlying obligations as contemplated by this Purchase Agreement or by the Official Statement, or any document relating to the issuance, offering or sale of the Bonds, is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939; or (vii) the commencement of any action, suit or proceeding described in Section 5(h) of this Purchase Agreement.
Subject to Section 14 of this Purchase Agreement, upon the occurrence of a Termination Event and the termination of this Purchase Agreement by the Underwriter, all obligations of the Successor Agency and the Underwriter under this Purchase Agreement shall terminate, without further liability. (e)at or prior to the Closing, the Underwriter shall receive the following certificates, documents, in each case satisfactory in form and substance to the Underwriter:
(i) The Successor Agency Documents, each duly executed and delivered by the respective parties thereto, with only such amendments, modifications or supplements as may have been agreed to in writing by the Underwriter;
(ii) The approving opinion of Bond Counsel dated the Closing Date and addressed to the Successor Agency, in substantially the form attached as Appendix F to the Official Statement, and a reliance letter or letters thereon addressed to the Underwriter, the Insurer and the Trustee; (iii) A supplemental opinion of Bond Counsel dated the Closing Date and addressed to the Underwriter, to the effect that:
(A) the statements on the cover of the Official Statement and in the Official Statement under the captions “INTRODUCTION,” “PLAN OF FINANCE” “THE SERIES 2025 BONDS,” “SECURITY FOR THE BONDS,” and “OTHER INFORMATION – Tax Matters,” and in Appendices D and E, excluding any material that may be treated as included under such captions and appendices by any cross-reference, insofar as such statements expressly summarize provisions of the Successor Agency Documents and Bond Counsel's final opinion concerning certain federal tax matters relating to the Bonds, are accurate in all material respects, provided that Bond Counsel need not express any opinion with respect to any financial or statistical data contained therein or with respect to the book-entry system in which the Bonds are initially issued; (B) The Purchase Agreement, the Refunding Instructions and the Continuing Disclosure Certificate have been duly authorized, executed and delivered by the Successor Agency and constitute the valid, legal and binding agreements of the Successor Agency, enforceable in accordance with their respective terms, except that the rights and obligations under the Purchase Agreement, the Refunding Instructions and the Continuing Disclosure Certificate are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws
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8 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;
(C) The Bonds are exempt from registration requirements pursuant to the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended;
(iv) The final Official Statement executed by an authorized officer of the Successor Agency;
(v) Certified copies of the Successor Agency Resolutions and the Oversight Board Resolution;
(vi) Specimen Bonds;
(vii) Evidence that the rating on the Bonds is as described in the Official Statement; (viii) A certificate, dated the Closing Date, of the Successor Agency executed by the Executive Director of the Successor Agency (or other duly appointed officer of the Successor Agency authorized by resolution of the Successor Agency) to the effect that (A) there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body which has been served on the Successor Agency or, to the knowledge of the Successor Agency, threatened against or affecting the Successor Agency to restrain or enjoin the Successor Agency’s participation in, or in any way contesting the existence of the Successor Agency or the powers of the Successor Agency with respect to, the transactions contemplated by the Successor Agency Documents, and consummation of such transactions; (B) the representations and warranties of the Successor Agency contained in this Purchase Agreement are true and correct as of the date hereof, and the Successor Agency has complied with all agreements and covenants and satisfied all conditions to be satisfied at or prior to the Closing Date as contemplated by the Successor Agency Documents; (C) no event affecting the Successor Agency has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (D) no further consent is required to be obtained for the inclusion of the audited financial statements of the Successor Agency for the fiscal year ended [June 30, 2023], as Appendix C to the Official Statement; (E) the refunding of the outstanding Prior Bonds with the proceeds of the Bonds will achieve debt service savings in compliance with the parameters set forth in Section 34177.5(a) of the Health and Safety Code of the State in that (i) the total interest cost to maturity on the Bonds plus the principal amount of the Bonds does not exceed the total remaining interest cost to maturity on the outstanding Prior Bond plus the remaining principal amount of the outstanding Prior Bonds, and (ii) the principal amount of the Bonds does not exceed the amount required to defease the outstanding Prior Bonds, to establish customary debt service reserves, and to pay related costs of issuance, as evidenced by the pertinent debt service schedules attached to such certificate; and (F) all costs of issuance being paid from proceeds constitute related costs of issuance within the meaning of Section 34177.5(a) of the Health and Safety Code and all Costs of Issuance are properly chargeable to the Bonds in accordance with proper governmental accounting principles;
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8 (ix) An opinion of the City Attorney, as counsel to the Successor Agency, dated the Closing Date and addressed to the Successor Agency, the Insurer and the Underwriter to the effect that:
(A) the Successor Agency is a public body, duly existing under the laws of the State;
(B) the Successor Agency has full legal power and lawful authority to execute and deliver the Seventh Supplemental Indenture, the Refunding Instructions, the Continuing Disclosure Certificate and this Purchase Agreement;
(C) the Successor Agency Resolutions were duly adopted at meetings of the governing body of the Successor Agency, which were called and held pursuant to the law and with all public notice required by law and at which a quorum was present and acting throughout, and the Successor Agency Resolutions are in full force and effect and have not been modified, amended or rescinded;
(D) the Seventh Supplemental Indenture, the Refunding Instructions, the Continuing Disclosure Certificate and this Purchase Agreement have been duly authorized, executed and delivered by the Successor Agency and, assuming due authorization, execution and delivery by the other parties thereof, the Successor Agency Documents constitute the valid, legal and binding agreements of the Successor Agency enforceable in accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally; (E) the information in the Preliminary Official Statement and the Official Statement under the captions “INTRODUCTION – The City and the Successor Agency,” “– The Project Area,” “SECURITY FOR THE BONDS,” “THE SUCCESOR AGENCY,” and “THE RANCHO REDEVELOPMENT PROJECT,” insofar as such statements purport to summarize information with respect to the Successor Agency, the Project Area (as defined therein) and the Successor Agency’s tax sharing and other obligations with respect to the Project Area, fairly and accurately summarizes the information presented therein; (F) to the best knowledge of the City Attorney after due inquiry, except as otherwise disclosed in the Official Statement, there is no litigation, action, suit, proceeding or investigation (or any basis therefor) at law or in equity before or by any court, governmental agency or body, pending by way of a summons served against the Successor Agency or, to the knowledge of the City Attorney, threatened in writing against the Successor Agency, challenging the creation, organization or existence of the Successor Agency, or the validity of the Successor Agency Documents or seeking to restrain or enjoin any of the transactions referred to therein or contemplated thereby or contesting the authority of the Successor Agency to enter into or perform its obligations under the Successor Agency Documents, or under which a determination adverse to the Successor Agency would have a material adverse effect upon the availability of Tax Revenues, or which, in any manner, questions the right of the Successor Agency to enter into Seventh Supplemental Indenture, the Refunding Instructions, the Continuing Disclosure Certificate and this Purchase Agreement, and perform its obligations under the Successor Agency Documents; and (G) without having undertaken to determine independently or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Preliminary
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8 Official Statement and the Official Statement, nothing has come to the attention of the City Attorney which would lead the City Attorney to believe that the Preliminary Official Statement and the Official Statement as of their respective dates or the Closing Date (excluding therefrom the financial information and the statistical data included thereon included in the Preliminary Official Statement and the Official Statement, as to which no opinion is expressed) contain any untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstance under which they were made, not misleading. (x) An opinion of counsel to the Trustee, dated the Closing Date and addressed to the Successor Agency, the Insurer and the Underwriter, to the effect that:
(A) the Trustee is a national banking association organized and existing under the laws of the United States of America, having full power to enter into, accept and administer the trust created under the Indenture and the Refunding Instructions; (B) the Seventh Supplemental Indenture and the Refunding Instructions have been duly authorized, executed and delivered by the Trustee, and the Indenture and the Refunding Instructions constitute the legal, valid and binding obligations of the Trustee enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and by the application of equitable principles, if equitable remedies are sought;
(C) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the execution and delivery of Seventh Supplemental Indenture and the Refunding Instructions or the consummation of the transactions contemplated by the Indenture and the Refunding Instructions; and
(D) the Trustee has duly authenticated the Bonds.
(xi) A certificate, dated the Closing Date, signed by a duly authorized official of the Trustee, in form and substance satisfactory to the Underwriter, and an incumbency certificate of the Trustee;
(xii) A letter of Best Best & Krieger, Riverside, California, as disclosure counsel to the Successor Agency, dated the Closing Date and addressed to the Underwriter and the Insurer substantially to the effect that they are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Preliminary Official Statement and in the Official Statement and make no representation that they have independently verified the accuracy, completeness or fairness of any such statements; however, in connection with the Preliminary Official Statement and the Official Statement, they have reviewed certain documents and have participated in conferences in which the contents of the Preliminary Official Statement and the Official Statement and related matters were discussed. During the course of their work on this matter, no facts have come to their attention that have caused them to believe that the Preliminary Official Statement as of its date and the date hereof and the Official Statement as of its date or the Closing Date (except for the following items, which are expressly excluded from the scope of this sentence: any financial, statistical and demographic data, forecasts, numbers, charts, estimates, assumptions, expressions of opinion, information regarding the Insurer and the Reserve Policy, and information concerning The Depository Trust Company and the book-entry system for the Bonds, that is contained
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8 or incorporated by reference in the Preliminary Official Statement and the Official Statement, and the appendices to the Preliminary Official Statement and the Official Statement) contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (xiii) An opinion of Anzel Galvan LLP, San Francisco, California, counsel to the Underwriter, in form and substance satisfactory to the Underwriter; (xiv) A certificate of an officer of HdL Coren & Cone, as fiscal consultant (the “Fiscal Consultant”), dated the date of the Closing, to the effect that, to the best of its knowledge, the assessed valuations and other fiscal information contained in the Official Statement, including the report of the Fiscal Consultant attached thereto as Appendix A, are presented fairly and accurately, and consenting to the use of its report as Appendix A to the Preliminary Official Statement and the Official Statement;
(xv) For the Bonds, the preliminary and final Statement of Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 53583 of the Government Code and Section 8855(g) of the Government Code; (xvi) An executed a copy of the DOF Letter;
(xvii) A certificate, dated the Closing Date, signed by a duly authorized official of the Municipal Advisor to the effect that the refunding of the outstanding Prior Bonds with the proceeds of the Bonds will achieve debt service savings in compliance with the parameters set forth in Section 34177.5(a) of the Health and Safety Code of the State in that (i) the total interest cost to maturity on the Bonds plus the principal amount of the Bonds does not exceed the total remaining interest cost to maturity on the outstanding Prior Bonds plus the remaining principal amount of the outstanding Prior Bonds, and (ii) the principal amount of the Bonds does not exceed the amount required to defease the outstanding Prior Bonds, to establish customary debt service reserves, and to pay related costs of issuance, as evidenced by the pertinent debt service schedules attached to such certificate; (xviii) Certificates regarding tax, arbitrage and use of proceeds of the Successor Agency relating to the Bonds, in form and substance to the reasonable satisfaction of Bond Counsel and the Underwriter;
(xix) A certificate, dated the date of the Preliminary Official Statement, of the Successor Agency, as required under Rule 15c2-12;
(xx) A copy of the executed Blanket Issuer Letter of Representations by and between the Successor Agency and DTC relating to the book-entry system; (xxi) Evidence satisfactory to the Underwriter that the Trustee has received the Reserve Policy from the Insurer;
(xxii) An opinion of counsel to the Insurer, in form and substance satisfactory to the Underwriter and Bond Counsel, with respect to, among other matters, the Reserve Policy, and disclosures relating thereto in the Official Statement;
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8 (xxiii) A certificate of the Insurer, in form and substance satisfactory to the Underwriter and Bond Counsel, with respect to, among other matters, the Reserve Policy, and disclosures relating thereto in the Official Statement; (xxiv) A defeasance opinion of Bond Counsel dated the Closing Date and addressed to the Underwriter, the Trustee, and the Insurer, substantially to the effect that the pledge of Tax Revenues and other funds provided for in the Indenture and all other obligations of the Successor Agency under the Indenture with respect to the Prior Bonds have ceased and terminated, except as expressly provided in the Indenture;
(xxv) A verification report of Robert Thomas CPA, LLC with respect to the sufficiency of amounts deposited with the Trustee under the Refunding Instructions to defease and redeem the Prior Bonds; and
(xxvi)Such additional legal opinions, certificates, proceedings, instruments or other documents as Bond Counsel or the Underwriter may request.
Section 8. Expenses. Whether or not the Bonds are sold to the Underwriter, the Underwriter shall be under no obligation to pay any expenses incident to the performance of the obligations of the Successor Agency hereunder. If the Bonds are delivered by the Successor Agency to the Underwriter, the Successor Agency shall pay, from the proceeds of the Bonds or from other funds of the Successor Agency, the following expenses: (a) the cost of preparing, duplicating or printing, mailing and delivering the Successor Agency Documents, the Preliminary Official Statement, the Official Statement and all other agreements and documents that are contemplated hereby (and drafts of any thereof); (b) the cost of preparation and printing of the definitive Bonds; (c) the fees and expenses of the Successor Agency, the Trustee, Bond Counsel, Disclosure Counsel, the Municipal Advisor, any entity retained by the Successor Agency or the City to perform continuing disclosure compliance research or provide continuing disclosure compliance reports and any other experts or consultants retained by the Successor Agency or the City; (d) the charges of any rating agency with respect to the Bonds; (e) reimbursement to the Underwriter for payment of any fees and expenses reasonably incurred in connection with the initial offering, sale and delivery of the Bonds, including but not limited to industry fees (e.g., DTC, DAC, IPREO, CUSIP and Day Loan fees) only if the Successor Agency and Underwriter have previously discussed and approved the allocation of proceeds towards these fees, and meal and travel expenses of the personnel of the City or the Successor Agency, but not including entertainment expenses or those to be paid by the Underwriter pursuant to the last paragraph of this Section 8, and (f) all other fees and expenses, not including entertainment expenses, reasonably incurred in connection with the preparation of the Successor Agency Documents, the Preliminary Official Statement, the Official Statement and all other agreements and documents that are contemplated hereby (and drafts of any thereof) and/or the initial offering, sale and delivery of the Bonds. The Successor Agency has authorized, and does hereby authorize, the Underwriter to pay such expenses on behalf of the Successor Agency from proceeds of the Bonds at Closing as further described in the closing memorandum relating to the Bonds.
If the Bonds are sold to the Underwriter by the Successor Agency, the Successor Agency shall pay out of the proceeds of the Bonds the discount of the Underwriter or the purchase price paid for the Bonds shall reflect such discount.
Except as otherwise provided in this Section 8, the Underwriter shall pay the cost, if any, of qualifying the Bonds for sale in the various states chosen by the Underwriter, all advertising expenses
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8 in connection with the public offering of the Bonds and all other expenses incurred by it in connection with its public offering and distribution of the Bonds, not described above.
Section 9. Notices. Any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, 2121 Avenue of the Stars, Suite 2150, Los Angeles, California 90067, Attention: Sara Oberlies Brown. Any notice or communication to be given to the Successor Agency under this Purchase Agreement may be given by delivering the same in writing to the applicable address set forth on the first page of this Purchase Agreement.
Section 10. Parties in Interest. This Purchase Agreement is made solely for the benefit of the Successor Agency and the Underwriter (including the successors or assigns thereof) and no other person shall acquire or have any right hereunder or by virtue hereof. Except as otherwise expressly provided herein, all of the agreements and representations of the Successor Agency contained in this Purchase Agreement and in any certificates delivered pursuant hereto shall remain operative and in full force and effect regardless of: (i) any investigation made by or on behalf of the Underwriter; (ii) delivery of and payment for the Bonds hereunder; or (iii) any termination of this Purchase Agreement.
Section 11. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof.
Section 12. Entire Agreement. This Purchase Agreement contains the entire agreement between the parties relating to the subject matter hereof and supersedes all oral statements, prior writings and representations with respect thereto.
Section 13. Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
Section 14. Survival of Representations and Warranties. The representations and warranties of the Successor Agency in or made pursuant to this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or termination of this Purchase Agreement and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the Successor Agency and regardless of delivery of and payment for the Bonds.
Section 15. Waiver of Jury Trial. THE SUCCESSOR AGENCY HEREBY
IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS PURCHASE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
[Signature Page Follows]
S-1
Section 16. Governing Law. This Purchase Agreement shall be governed by and construed in accordance with the laws of the State.
Very truly yours,
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Authorized Officer
Accepted and agreed to as of
the date first above written, and the time identified
below:
SUCCESSOR AGENCY TO THE
RANCHO CUCAMONGA REDEVELOPMENT AGENCY
By:
Executive Director
Time of Execution: California time
A-1
EXHIBIT A
MATURITY SCHEDULE
Maturity Date
(September 1)
Principal
Amount
Interest
Rate Yield
Initial
Offering
Price
10% Test
Used
10% Test
Satisfied
Hold-the-
Offering-
Price Rule
Used
$ % %
REDEMPTION PROVISIONS
The Bonds are not subject to redemption prior to maturity.
B-1
EXHIBIT B
FORM OF ISSUE PRICE CERTIFICATE
SUCCESSOR AGENCY TO THE
RANCHO CUCAMONGA REDEVELOPMENT AGENCY
RANCHO REDEVELOPMENT PROJECT AREA
TAX ALLOCATION REFUNDING BONDS, SERIES 2025
The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (“Stifel”) hereby certifies as set forth below with respect to the sale and delivery of the above-captioned obligations (the “Bonds”).
1.Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.
2.Initial Offering Price of the Hold-the-Offering-Price Maturities. (a) Stifel offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.
(b) As set forth in the Bond Purchase Agreement, dated [Pricing Date], by and between Stifel, as the Underwriter (as defined below), and the Issuer (as defined below), Stifel has agreed in writing that:
(i) for each Maturity of the Hold-the-Offering-Price Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering-price rule”); and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any third-party distribution agreement shall contain the agreement of each broker-dealer who is a party to the third-party distribution agreement, to comply with the hold-the-offering-price rule. Pursuant to such agreement, no Underwriter has offered or sold any Maturity of the Hold-the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.
3.Defined Terms.
(a)General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(b)Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.”
(c)Holding Period means, with respect to a Hold-the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date (which Sale Date is [Pricing Date]), or (ii) the date on which Stifel has sold at least 10% of such Hold- the-Offering-Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity.
(d)Issuer means the Successor Agency to the Rancho Cucamonga Redevelopment Agency.
B-2
(e)Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
(f)Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly.
(g)Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is [Pricing Date]. (h)Underwriter means: (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public; and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Stifel’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Best Best & Krieger LLP, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. The certifications contained herein are not necessarily based on personal knowledge, but may instead be based on either inquiry deemed adequate by the undersigned or institutional knowledge (or both) regarding the matters set forth herein.
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Name:
By:
Name:
Dated: [Closing Date]
B-3
SCHEDULE A
SALE PRICES OF THE GENERAL RULE MATURITIES AND INITIAL OFFERING PRICES
OF THE HOLD-THE-OFFERING-PRICE MATURITIES
(Attached)
B-4
SCHEDULE B
PRICING WIRE OR EQUIVALENT COMMUNICATION
(Attached)